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Frenemies: "China May Be Exporting Two Pandas, But It Would Much Rather Export Millions Of Cars"

By Molly Schwartz, cros-aset macro strategist at Rabobank 

Frenemies

The US-China summit officially began after Xi arrived in Washington, DC, late on Wednesday. Topics including trade, the Strait of Hormuz, and the AI (AGI?) races are expected to arise, but little tangible progress is anticipated.

After all that, Trump and Xi agreed to... rename AI to SI https://t.co/gLaNhLT18I pic.twitter.com/YZ9s2pvGBA

— zerohedge (@zerohedge) September 25, 2026

Instead, the goal is to “prevent something very bad from happening.” Frenemies, Xi and Trump, hailed “healthy competition,” rather than competition “in which one wins and one loses.” In a show of friendship (frenemyship?), China is sending two giant pandas, Ping Ping and Fu Shuang, to Zoo Atlanta. According to Politico, “one person close to the White House” said: “Trump likes to be like, ‘oh, we get along great,’ and it’s like, okay, well, at the same time, these guys are a massive threat to us. We’re in an AI race with them. They’re supplying Iranians with intelligence and weapons…He’s missing the message here. No one cares whether you’re friends with the guy or not… are you advancing [the US’] objectives or not?”

But a friendly veneer is unlikely to temper the tensions simmering below the surface. Although Trump and Xi may have a “personal rapport”, their respective objectives are diametrically opposed. China may be exporting two pandas, but it would much rather export tens of thousands of Chinese-made electric vehicles. For now, the US-China trade-war truce has been extended to January 10, 2027, but what follows remains unclear.

Moreover, the trade-war truce still accommodates a slew of US and Chinese trade barriers, including legacy Section 301 tariffs related to Chinese forced labour from 2018, new Section 301 tariffs, and broad-based Section 232 tariffs. Meanwhile, China continues to enforce its own 10% retaliatory tariff on US goods, alongside barriers affecting American agricultural products.

A similar pattern emerged in the AI discussion: both leaders again emphasized cooperation over confrontation, but few are convinced that either will slow the development of their respective AI capabilities.

The UN General Assembly is still under way in New York City. Some question the organization’s effectiveness in fulfilling its stated mission, which includes “saving succeeding generations from the scourge of war.” Scourge or not, brent has continued to surge, rising another $5 after gaining $5 the previous day, to close at $107/bbl.

After briefly diverging yesterday morning, with the 2-year yield edging lower and the 10-year yield creeping higher, both were again pulled into line with intraday moves in Brent crude. The 2-year yield has struggled to break above resistance at 4.90% but remains near Wednesday’s two-year high, while the 10-year yield continues to reach levels not seen since 2002, most recently at 5.16%. With Brent still climbing and little currently pushing back against inflation expectations, the OIS curve suggests investors are pricing a 68% probability of a hike at the October meeting and more than 93bp of tightening by October next year.

By extension, the USD is the best-performing G10 currency for a second consecutive day. The Brent crude à higher yields à stronger USD pipeline was in full swing, sending EUR/USD to 1.13—its lowest level since late July. The 14-day RSI suggests EUR/USD is somewhat oversold, and nearby support at 1.1325 indicates that a reversal may be imminent. Rabobank’s head of FX strategy, Jane Foley, recently revised her EUR/USD forecast and now expects the pair to trade sideways around 1.14 over a one-month horizon before retracing to 1.16–1.17. Read more here.

The Danish Defence Intelligence Service published a report yesterday stating that there is a “low but growing risk that Russia will launch a limited military attack against one or several NATO countries bordering Russia,” although it remains “highly unlikely that Russia will launch an invasion.” The report also highlights an intensification of Russian cyber and drone attacks, including “the foiled drone attack on Leipzig/Halle Airport, which…had been planned by Russia over a period of several months.” Meanwhile, reports indicate that an AI agent hacked into an Australian government health-data portal in June. As the AI race continues, the risk of hybrid warfare across both land and fibre-optic networks is growing rapidly.

Banxico held the overnight policy rate at 6.50% yesterday but adjusted its statement. Previously, the Bank had indicated that it was satisfied with the reference rate; however, the Fed’s decision to hike a few weeks ago has put Banxico in an uncomfortable position. Banxico has historically followed the Fed to some extent, and diverging policy paths could have significant consequences for USD/MXN, which is quickly approaching 17.8. The peso is particularly sensitive to interest-rate differentials because of its status as an attractive carry currency. Three-month USD/MXN implied volatility has risen from 9% to 10.3%, which is the highest level since April. Elevated volatility, combined with expectations of rapidly narrowing interest-rate differentials between Mexico and both the US and Japan, could point to USD/MXN moving above the 18-handle. However, Rabobank is currently maintaining its forecast of USD/MXN predominantly trading between 17 and 18. Read more here.

Tyler Durden Fri, 09/25/2026 - 10:40

UMich Consumer Confidence Slides In September As Republicans Lose Faith

After July's rebound to pre-war levels, a re-escalation in the MidEast (and soaring fuel costs) has sent confidence back towards YTD lows. Today's final September data was expected to show UMich headline sentiment sliding further (and inflation expectations re-accelerating).

And while sentiment is lower overall (month to month), it did actually pick up modestly intra-month from preliminary levels.

Consumer sentiment ticked down less than four index points in September, reaching the lowest reading in four months and back down notably from January 2026.

Views of current and year-ahead expected personal finances also both weakened notably this month, with concerns over high prices continuing to climb.

Year-ahead inflation expectations jumped from 4.0% last month to 4.6% this month, the highest reading since June. The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations ticked up to 3.4%, ending three consecutive months at 3.3%. These expectations remain higher than their 2024 range of 2.8% to 3.2%.

Democrats are the most fearful of inflation once again...

Since the start of the year, consumer sentiment has declined for all groups by age, education, geography, political party and income, according to the report.

A gauge of the outlook for the economy in the year ahead slumped in September to the lowest since 2022. Consumers' expectations for their personal finances also deteriorated.

Buying conditions for durable goods improved slightly, but it was partly “due to a perception that completing such purchases now would help consumers avoid higher prices in the future,” Joanne Hsu, director of the survey, said in a statement.

Perhaps most ominously from the report is the finding that after particularly large declines in sentiment this month, Republican sentiment is now 20% lower than January 2026; Democrats are down 13% over the same period.

“Despite political differences, consumers unanimously believe that the outlook for the economy has diminished,’’ Hsu said.

Tyler Durden Fri, 09/25/2026 - 10:10

New York Audits Utility AI Use, Cites Risk In "Growing Dependency"

By Robert Walton of UtilityDive

The New York Public Service Commission last week launched an inquiry into public utility use of artificial intelligence, noting that AI systems “create risk for organizations” but are also increasingly used to perform basic tasks.

The Sept. 17 order requires electric, gas and water utilities to respond within 60 days with “a written inventory report that describes all use cases of AI systems in their operations.”

Consolidated Edison, which serves New York City, said it uses AI for a range of uses, including customer service and system inspections. “As technology evolves, we will continue to evaluate opportunities,” a spokesperson said in an email to Utility Dive.

Public utilities are increasingly using AI systems for day-to-day operations, and New York regulators are concerned they are “susceptible to hallucinations, algorithmic biases, transparency issues, data privacy concerns, misconfiguration errors, cybersecurity attacks, and functional brittleness.”

“These potential risks may have negative consequences for the safety and reliability of New York’s critical infrastructure,” they said.

The PSC’s order directs utilities to file “a complete inventory” of all AI use cases in their operations and “disclose their policies, procedures, and protocols” around the burgeoning technology. The commission said it will “evaluate those procedures and protocols for adequacy and robustness against commonly accepted AI Governance frameworks.”

The commission’s order defines an “AI system” as a machine-based system that “can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments.”

New York utilities are already utilizing AI systems in various ways, including model outage predictions and electric usage. National Grid has deployed a system known as GridCARE to help free up interconnection capacity for large-load customers, regulators pointed out. The New York Power Authority has used AI to analyze drone-captured data for enhanced vegetation management.

Con Edison told Utility Dive the utility is using AI “to improve customer service, proactively identify potential equipment issues before they affect customers or public safety, and to strengthen our inspection and mapping capabilities.”

But more broadly, regulators noted “the actual extent and scope of AI systems in New York utility operations remains unclear.”

“The rapid evolution of AI is a double-edged sword for utilities,” PSC Chair Rory Christian said in a statement. “While AI can be a powerful tool that can result in cost efficiencies and improved operations, it also presents serious risks that must be evaluated and addressed appropriately.”

Tyler Durden Fri, 09/25/2026 - 09:55

Citizenship Is Not A Product: Rubio Hits Birth-Tourism Fixers After SCOTUS Blocked Broader Ban

The United States is no longer pretending that a tourist visa plus a delivery room equals a legitimate path to American citizenship.

On September 23, Secretary of State Marco Rubio announced a new visa-restriction policy under Section 212(a)(3)(C) of the Immigration and Nationality Act aimed at the people who actually run the business: owners and managers of commercial birth-tourism networks, visa "fixers" who coach applicants to lie, foreign medical providers who arrange the trips and allegedly tap Medicaid, and anyone else who knowingly enables the trade. Family members of those targets can be swept in as well.

In short, people selling packages to facilitate US entry are on notice (perhaps they should focus on EB-5s like the Kushners).These foreign commercial networks advertise U.S. citizenship as a package - collecting tens of thousands of dollars to coach clients on what to say at the consulate, book housing near hospitals, and deliver a passport-eligible infant. The State Department's position is that this is fraud against the immigration system, not "tourism."

With six weeks until midterms, Rubio's announcement follows of President Trump's August 6 Executive Order 14419, Ending Birth Tourism - aimed at those entering on a nonimmigrant visa for the purpose of giving birth on U.S. soil - or helping someone else do it - and directed State and Homeland Security to deny visas, revoke them, bar re-entry, and act against facilitators. Days after Trump's EO, a Birth Tourism Prevention Task Force was assembled. About a month ago, officials said more than 750 visas tied to suspected birth-tourism activity had been revoked, with more coming. Meanwhile, embassy investigations earlier in the year claimed to have dismantled networks in West Africa (100-plus cases with fraudulent documents and fixers), Europe (400-plus suspected cases since 2024 tied to at least six companies), and North Africa (100-plus visa revocations).

Here's How The Sausage Is Made

Pregnant women - disproportionately from China, Russia, Nigeria, Turkey, and a handful of other countries - fly in on B-1/B-2 visitor visas, stay in "maternity hotels" or rented houses, deliver, obtain a birth certificate and Social Security number, and leave. The child is treated as a U.S. citizen, and when 21 years later, that child can petition for parents. Neat trick.

It's not just the poors either - packages have been marketed for $20,000 to $100,000: housing, nannies, shopping trips, coaching on how to answer consular questions, and sometimes advice on how to keep hospital bills off the books or shift them onto public programs. In 2019, federal prosecutors in Southern California took down operations charging Chinese clients six figures. This month, Texas Attorney General Ken Paxton announced a Houston-area postpartum center had agreed to close after the state alleged it facilitated more than 1,000 births to Chinese nationals. Gov. Greg Abbott had already ordered state agencies to hunt licensed providers participating in the schemes. The 2020 Trump-era consular rule already advised officers they could deny visas if they believed the primary purpose of travel was to obtain citizenship for a child.

The H-1B pipeline is getting the same treatment: a wage-weighted lottery cut FY2027 registrations 38%, even as the courts have blocked Trump's $100,000 fee.

How Many Are We Talking About?

The conservative Center for Immigration Studies, using older Census-to-vital-records comparisons, has estimated 20,000 to 26,000 tourist births a year. CIS research director Steven Camarota told Congress this month that if those rates held, 200,000 to 300,000 children were born to birth tourists over the last decade. CDC data show fewer than 10,000 births in 2024 to mothers listing a foreign address - a figure almost everyone agrees undercounts women who use a U.S. hotel or rental as their "residence."

Globally - Jus soli in its American form is an outlier among developed states. Australia, New Zealand, the UK, Ireland, and much of Europe require a citizen or permanent-resident parent. The United States and Canada remain the G7 holdouts. A Conservative amendment to Bill C-3 that would have required at least one citizen or permanent-resident parent was voted down in October 2025; Canadian citizenship still attaches automatically to nearly anyone born on Canadian soil, diplomats excepted. The United States spent decades treating a plane ticket and a due date as sufficient allegiance.

Supreme Pivot

After the Supreme Court struck down Trump's broader day-one attempt to withhold birthright citizenship from children of illegal aliens and temporary visa holders, the White House went in a different direction - going after visa fraud, commercial facilitation, and the use of nonimmigrant categories for a permanent benefit.

Here's their angle:

1. Integrity of citizenship. A passport is not supposed to be a concierge product.
2. Taxpayers foot the bill for their medical care to a disputed extent.
3. Security and chain migration. A U.S.-citizen child creates a future immigrant-petition pipeline - with officials singling out China and Russia as high-volume sources. Whether one accepts the "hundreds of thousands" rhetoric from some administration figures or the lower CIS range, the screening problem is the same: the parent was never vetted as a future American.

So - in about three seconds, advocacy groups will call it racial profiling of Chinese and Russian applicants. Hospitals that marketed "birth packages" will lawyer up. Fixers will move advertising off open WeChat groups and into quieter channels, and pregnant women will keep trying to make it onto US soil. The order also contemplates denial of entry and removal for prior participants.

Legislation is already in the hopper - including a Ban Birth Tourism Act that would make seeking admission as a B visa holder for birth tourism an explicit ground of inadmissibility. The administration is not waiting for Congress.

American citizenship shouldn't have loopholes. 

* * *

Tyler Durden Fri, 09/25/2026 - 09:35

Yen Jumps As Japan PM Admits Weak Currency "Problematic"

President Trump reportedly expressed concern over the weakness of the yen when he met Japan’s prime minister this week as the currency came under more pressure against the dollar.

The FT reports that Finance Minister Satsuki Katayama Satsuki Katayama told reporters in Tokyo that Trump and Sanae Takaichi discussed the yen in talks in New York on Tuesday.

The US president “expressed his concern” while Takaichi told Trump that she saw an undervalued yen as “problematic”, Katayama said.

The yen jumped around 1% against the dollar following the remarks - its best day in two weeks...

The finance minister also said she would continue to coordinate with her US counterpart Scott Bessent, reinforcing the signal that both governments are paying close attention to the currency’s depreciation.

“In light of [the Trump-Takaichi] meeting, Treasury secretary Bessent and I will continue to communicate closely on a range of matters, including foreign exchange,” Katayama added.

Last week, the BoJ raised rates to the highest level in 31 years, but the move did little to structurally strengthen the yen, even as the central bank’s governor Kazuo Ueda hinted strongly that there could be further tightening this year.

Options sentiment toward the yen turned more bullish lately, reflecting increased hedging demand against the risk of Japanese intervention.

“Intervention risk should put a ceiling on further yen weakness,” said Moh Siong Sim, a strategist at Oversea-Chinese Banking Corp.

“More importantly, the yen may be nearing a turning point as Trump’s concerns over its weakness point to deeper US-Japan coordination to support the currency.”

Japan and the US carried out their first coordinated yen-buying intervention since 1998 this summer after the currency weakened beyond 160. Japan spent a record ¥15.4 trillion ($97.4 billion) intervening in the month through Aug. 26, according to Finance Ministry data.

“This is largely another way of jawboning in my view,” said Charu Chanana, chief investment strategist at Saxo Markets.

“Unless it is followed by actual policy coordination, intervention or a clearer BOJ tightening path, I don’t think it changes the underlying yen story materially”

Bessent has also continued to signal support for a stronger yen, potentially giving Japanese warnings greater weight with traders than in previous episodes of currency weakness.

Tyler Durden Fri, 09/25/2026 - 09:12

Ukraine Drone Strike Knocks Out Russia's Novoshakhtinsk Refinery

Authored by Tsvetana Paraskova via OilPrice.ocm,

Another Russian refinery was taken offline on Friday following a Ukrainian drone attack, in a sign that Ukraine and Russia continue to trade strikes on energy infrastructure despite separate talks with U.S. officials in New York aimed at de-escalation.

The Novoshakhtinsk refinery in the southern Russian region of Rostov was hit by drones and had to be taken offline, regional governor Yury Slyusar said in a post on Telegram early on Friday.

As a result of the drone attacks, the Novoshakhtinsk refinery, which has the capacity to process 110,000 barrels of crude oil per day, was damaged and halted operations, the official said.

25 September 2026: Reported Ukrainian strikes overnight hit at least five sites across Russia and occupied Ukraine:

• Novoshakhtinsk Oil Products Plant, near Novoshakhtinsk, Rostov Oblast
• NPP Zavod Iskra, Ulyanovsk, Ulyanovsk Oblast
• Lukoil-Permnefteorgsintez refinery,… pic.twitter.com/9E3lHv9MtV

— OSINT Intuit™ (@UKikaski) September 25, 2026

Ukraine continues its campaign to cripple Russian refining capacity, fuel supply, and export revenues. Due to the low refinery production, Russia has been forced to ban diesel exports for months and is likely to extend the ban beyond September 30. The ban was initially introduced in July as Ukraine has continuously taken Russian refineries offline.

Last week, Ukraine hit an oil refinery near Moscow, damaging a processing plant co-owned by Rosneft and Gazprom Neft.

Recent attacks from both sides show that there isn't any truce in attacking energy sites.

Ukraine's forces hit the refinery in Yaroslavl with drones last week, while Russia attacked infrastructure in Kyiv.

Russian daily Vedomosti reported last week that the government would extend its ban on diesel exports for all fuel producers to October 31, due to delayed refinery maintenance and the need to rebuild fuel reserves before winter.

Russia has been suffering from a gasoline and diesel crunch since the spring, when Ukraine intensified its drone attacks at Russian refineries, aiming to cripple fuel supply to the front lines and to the domestic Russian market.

The Russian ban on diesel exports has added to the Middle East crisis to tighten global middle distillate markets.

Tyler Durden Fri, 09/25/2026 - 09:01

AI Spend Lifts Core US Durable Goods Orders Rise For 17th Straight Month In August

With PMIs soaring to multi-year highs earlier in the week, US durable goods orders were expected to be mixed in preliminary August data.

And mixed it was (with plenty of revisions)... the headline print was unchanged MoM (better than the 0.3% MoM decline expected) with a small revision lower for July.

Boeing reported fewer orders in August compared with the prior month.

However, Ex-Transports disappointed, rising just 0.3% MoM (half the expected 0.6% MoM rise) with a revision higher for July. That leaves core orders up 11.1% YoY - the highest since Q2 2022.

But, that is still the 17th straight monthly rise in core durable goods orders...

Additionally, Capital Goods Orders (non-defense, Ex-Air) soared 1.6% MoM (more than double the 0.56% MoM expected)

Under the hood, the big driver appears to be AI Spend (rather unsurprisingly)...

This segment includes:

• Telephone Apparatus: Wired and wireless telephones, private branch exchange (PBX) equipment, and VoIP equipment.

• Broadcast and Wireless Equipment: Radio and television broadcast antennas, cellular tower electronics, and two-way radios.

• Network Equipment: Routers, switches, local area network (LAN) and wide area network (WAN) equipment, and fiber-optic transmission gear

Is it any wonder that Trump doesn't want a 'pause' on AI Spend.

Finally, shipments figures (which actually plug into GDP) were in line with expectations (with July revised up), suggesting resilience to Q3 forecasts.

Tyler Durden Fri, 09/25/2026 - 08:43

Futures Rise As Oil, Yields Drop On Iran Diplomacy Hopes

US futures erased earlier losses and are trading at session highs led by tech, as bonds steadied (with the 10Y at multi-decade highs of 5.17%) after oil’s latest rally lost steam, helping US stocks to extend gains for the week. As of 8:00am ET, S&P futures are up 0.4% setting up the benchmark to post its first weekly advance in three; Nasdaq futures gain 0.7% with chipmakers and memory storage names bouncing and Mag 7 stocks mostly higher, led by NVDA (+0.7%) and TSLA (+0.8%). Overnight, focus remains on the improved US-Iran rhetoric since noon yesterday: Iran proposed a 7-day plan to end the war (NYT), and the president says Tehran wants a deal with the US before the midterm elections (NBS). However, the reactions from the oil market were fairly modest, suggesting the market is still pricing a meaningful geopolitical premium; WTI fell 1.8% to $92.98. Bond yields fell 2-3bp at the front end; precious metals are higher, and ags are lower. US economic data slate includes August durable goods orders (8:30 a.m.), and the September University of Michigan sentiment (10 a.m.).

In premarket trading, Mag 7 stocks are mostly higher (Tesla (TSLA) +1.1%, Nvidia (NVDA) +0.7%, Amazon (AMZN) +0.6%, Alphabet (GOOGL) +0.4%, Apple (AAPL) +0.1%, Microsoft (MSFT) little changed, Meta Platforms (META) -0.5%).

• Akamai Technologies (AKAM) rallies 20% after the cloud provider inked a seven-year $11.6 billion deal to provide computing power to Anthropic.
• Atlas Energy (AESI) gains 6.9% after it announced a purchase agreement with Wyoming Machinery Company for $340.5 million of Balance of Plant equipment for a power generation project. The companies also separately agreed to a 328 megawatt power deal under an agreement with Caterpillar Inc.
• Comcast Corp. (CMCSA) is down 1.9% after KeyBanc Capital Markets cut its recommendation to underweight from sector weight on weakness in broadband.
• Nike Inc. (NKE) is down 2% after BofA cut its recommendation on the athletic footwear and apparel company to underperform from neutral, and pushes the expectation for a sales turnaround into F2028. Nike reports 1Q earnings on Oct. 1.
• People Inc. (PPLI) jumps 9.9% on a report that MGM Resorts is discussing making a bid to purchase the Barry Diller-owned media giant.
• Twilio Inc. (TWLO) is down 3.5% as HSBC downgrades the communications software company to reduce from hold, seeing “limited evidence that Twilio will capture higher-margin AI software” revenue.
• Zscaler (ZS) falls 3.4% after the security software company announced the appointment of Ross Tackett as chief revenue officer, effective Oct. 1.

In other corporate news Elon Musk said Colossus 2, an AI computing cluster built by his xAI business, may more than double its current Nvidia chip count by the end of the year. Shares of People Inc. rise 6.5% after the Wall Street Journal reports that MGM Resorts is discussing making a bid to purchase the Barry Diller-owned media giant. Temasek names BlackRock co-founder Susan Wagner to its board with effect from Oct. 1, according to a statement.

Fluctuations in oil prices are likely to remain a key driver for markets at a time when elevated energy costs are stoking inflationary pressures and underpinning the outlook for further monetary policy tightening. Swaps fully price three additional Federal Reserve quarter-point hikes over the next year, a prospect that could hold back risk appetite and keep bond yields high for some time.

“We are in a one-factor world over the coming days, with oil prices driving rates and rates driving all asset classes,” wrote Mohit Kumar at Jefferies. “Equity markets have behaved relatively well despite the rise in rates. Optimism over AI and demand for AI infrastructure has helped.”

Longer-dated bond yields continue to reflect fiscal concerns and the likelihood of strong government borrowing, said Francisco Simon at Santander Asset Management. While the prospect of restored crude flows from the Middle East will ease pressure on rates, a run of strong economic data suggests the global economy can withstand tighter financial conditions, he said.

“Market direction will likely be determined by whether easing geopolitical tensions can outweigh the ongoing message from the macro data,” Simon said. “Growth remains resilient, and that is keeping upward pressure on yields despite some relief on the energy front.”

Trump’s reception for China’s Xi has been heavy on pageantry and platitudes but light on substantive announcements, with the events shadowed by the US president’s preoccupation with construction projects and personal grievances. This is how Goldman wrapped up the pageantry:

• Trade truce extended for 2 months mentioned by Bessent. Xinhua news mentioned Xi said both sides agreed on a new joint arrangement on trade.
• Xinhua news mentioned Xi hope US to insist "oppose Taiwan independence" stance, and deal with Taiwan issue with prudence. (note current official US stance is "do not support Taiwan independence" instead of "oppose")
• On AI, Xi mentioned US and China should not set up defences against each other, and should have dialogue, prevent AI being abused and ensure human control of AI.
• Chinese news mentioned Xi supports US and Iran to return to MOU and maintain talks.
• Both leaders support APEC (Nov in Shenzhen) and G20 (Dec in Miami) meetings, indicating Xi and Trump may meet two more times this year.
   
• One-Liner: So far nothing major market moving. We wait for official statement/readout. Still, the important area to watch is related to Iran (and any efforts from China to mediate talks

Elsewhere, AI is back in focus as the selloff in bond markets eases. A Goldman Sachs study (available to pro subscribers) estimates about $1 trillion in end user spending is needed to drive solid returns for hyperscalers — a hefty but “achievable” target.  Goldman strategist Ryan Hammond notes that AI applications will need to generate more than $1 trillion in revenues based on a 30% Ebit margin and a 10%-20% return on invested capital for the hyperscalers. This compares with roughly $1.5 trillion in global software spending in 2026, Hammond writes. 

Market performance reflects some of that optimism. Meta is on the cusp of joining an elite group of companies worth at least $2 trillion after shares surged 36% so far in September. The Nasdaq 100 is outperforming the equal-weighted S&P 500 and small-cap Russell 2000 by more than 7 percentage points this month. Meanwhile, rate-sensitive financials are being punished, with banks hitting a technical correction in Thursday’s cash trading. The durability of that bifurcation likely depends on where long-end yields next settle. 

The final reading of a University of Michigan’s survey due later today is likely to show consumer sentiment deteriorated in September due to higher prices at the pump, according to Bloomberg Economics.

“The economic data calendar will be quite dull until the ISM on Thursday and the labor data on Friday next week,” said Roberto Scholtes, head of strategy at Singular Bank. “Everything will continue to revolve around energy prices, bond yields and AI-related news.”

Europe's Stoxx 600 is up by 0.9%, headed for its biggest weekly gain since August, with semiconductor equipment maker ASML the biggest contributor to the gain. Here are the biggest movers Friday:

• UBS shares advance as much as 3.3% after a report said the Swiss lender is weighing options including potential deals with banks in other jurisdictions
• Glencore gains as much as 3.3% as UBS upgrades the miner to buy from neutral, with an improving risk/reward due to stronger outlook for thermal and metallurgical coal
• Outokumpu rises as much as 6.5% as BofA Global Research reinstates coverage with a recommendation of buy, saying European Union trade protection policies are offsetting weak demand in the steel sector. Peers Aperam and Acerinox also rise as BofA reinstates at neutral
• Alten shares rise as much as 8.8% after the French IT group reported first half-year operating which CIC CIB called ‘impressive,” saying the company is back on a “more positive trajectory”
• KPN gains as much as 2.9% after JPMorgan upgraded the company to overweight, saying shares offer an attractive entry point as revenue trends improve into 2027 and the “weak narrative” of 2026 fades
• HelloFresh shares fall as much as 15% to a record low after the German food delivery firm lowered its full-year sales growth and earnings targets
• Sinch declines as much as 5.3%, slipping from the highest close since January 2023, as DNB Carnegie downgrades the cloud communications group to hold as its required second-half acceleration is now partly priced in

Asian stocks are set to snap a two-day losing streak as oil slid on news that the US and Iran are exploring a phased deal that would see Tehran reopen the Strait of Hormuz, easing inflationary pressures. The MSCI Asia Pacific Index gained 0.7%, with Japanese stocks leading gains. Financials led Japan’s advance, supported by the prospect of higher interest rates. Meanwhile, Hong-Kong shares fell with a more pronounced drop in tech stocks, as traders were disappointed by a lack of progress in Trump-Xi talks. Alibaba and Tencent were among the biggest laggards. China, Taiwan and South Korea were shut today. Markets have had a relatively muted reaction to the Trump-Xi summit currently, after China’s president encouraged Trump to publicly oppose Taiwan independence. 

In FX, the yen headed for its biggest daily gain in more than two weeks after Japanese Prime Minister Sanae Takaichi said she told President Trump that an undervalued yen is problematic. This follows Finance Minister Katayama revealing that Trump expressed concerns over the weakness of the currency. The Bloomberg Dollar Spot Index is down 0.2%.

In rates, treasury yields are falling across the curve, with 10-year yields down by four basis points. There are similar moves in Europe and the UK, with investors trimming their rate-hike bets for the Fed, the ECB and the BOE. Treasuries hold curve-steepening gains in early US session with front-end 3yields around 5bp lower on the day, supported by lower oil prices after report that US and Iranian negotiators explored a phased deal that would see Tehran reopen the Strait of Hormuz. Friday’s session includes durable goods orders data and at least two Fed speakers. With longer-term US yields only 1bp-3bp lower on the day 2s10s and 5s30s curves are steeper by about 1.5bp and about 3bp respectively; 10-year is about 4bp lower near 5.17% with UK counterpart keeping pace and Germany’s lagging by about 3bp. IG dollar issuance slate empty so far, after just one deal was priced on Thursday leaving the week around $5 billion short of dealers’ $40 billion average expectation.

In commodities, WTI crude oil futures under $93 are down 2.3% near session lows with Brent crude futures down 1.2% near $106 after rising more than 7% over the previous two days. Gold prices are fluctuating around $4,300/oz. Bitcoin is a touch stronger, nudging above $84,000.

US economic data slate includes August durable goods orders (8:30 a.m.), September University of Michigan sentiment (10 a.m.) and Kansas City Fed services activity (11 a.m.) Fed speaker slate includes Kansas City’s Schmid (9:20 a.m.) and Cleveland’s Hammack (2 p.m.)

Market Snapshot

Top Overnight News

• Trump hosted Xi Jinping at a state dinner attended by Elon Musk, Jensen Huang and Tim Cook, but progress on tariffs and AI deals remains elusive. The leaders meet for tea this morning. BBG
• Iran’s foreign minister said Thursday that Tehran had proposed to Washington a seven-day plan to cease hostilities, reopen the Strait of Hormuz and then begin comprehensive talks on his country’s nuclear program. NYT
• Efforts to rekindle talks to end the war between the U.S. and Iran are running into resistance from major Persian Gulf oil producers that have swung against any accommodation of Tehran, people familiar with the matter said. WSJ
• Saudi, Turkish and Pakistani military chiefs are to meet to discuss how to support Saudi Arabia under a joint defence pact, after Saudi's top religious authority told troops to be ready to lay down their lives to fight Yemen's Iran-aligned Houthis. RTRS
• US Energy Secretary Chris Wright has contacted executives at several major American refiners in recent days to gauge support for a voluntary restriction on diesel exports as the Trump administration searches for an alternative to a short-term ban, according to three people familiar with the discussions. RTRS
• The Fed is working on a plan to raise the asset thresholds that trigger stricter oversight of big banks to account for inflation and economic growth. The changes may spur mid-size bank consolidation. BBG
• The yen hit a session high after Prime Minister Sanae Takaichi said an undervalued Japanese currency was “problematic.” The yen strengthened as much as 0.8% to 157.67 per dollar on Friday, heading for its biggest daily gain in more than two weeks. Officials have emphasized the speed and disorderliness of currency moves rather than any specific exchange-rate level, with market participants viewing the area around 160 as where intervention risk rises. BBG
• The BOJ gauge of underlying inflation accelerated to well above the target last month, supporting the case for continuing to raise the benchmark rate as authorities warn of the risk of inflation overshooting. BBG
• The State Department wants to give state and local officials, and possibly some nonprofit organizations, access to passport records to verify voters’ citizenship. BBG
• Anthropic strikes USD 12bln deal with Akami (AKAM) for AI computing.

Iran War

• Iran Foreign Minister Araghchi said Iran presented a proposal to US through mediators this week to reopen the Strait of Hormuz and restart negotiations towards a final deal, while it called for US to meet certain conditions within 7 days, according to CNN.
• Iranian President Pezeshkian said in Fox News interview that Iran does not want a nuclear bomb. They reached an agreement with the US President that was signed, and are still ready to move forward based on the same principles, adds it wasn't Iran that closed the Strait of Hormuz and it was open. They didn't seek war and that it was imposed on them, while they don't seek war but will defend themselves. They didn't start the war but will respond decisively.
• Iranian President Pezeshkian said Iran is ready for an agreement with the US and makes demands only within the framework of international law and could give up highly enriched uranium if it reaches an agreement with the US, according to TASS.
• Iran's President Pezeshkian said Tehran wants to revive its ceasefire memorandum of understanding with the US before the November midterm elections, saying Iran does not want talks delayed until after the vote. said:. Iran is open to inspections of its nuclear facilities and denies that Tehran is seeking to assassinate President Trump or his family.
• Iran's Foreign Minister Araghchi said the Strait of Hormuz can reopen if certain conditions are met by the US and that it would be better to implement before the Midterms, according to a Sky reporter.
• IRGC spokesperson warned in the event of another attack, Iran's method of defence will change including geography of the confrontation, the type of equipment and weapons used, and targets in defensive operations in line with new conditions.
  Iranian Brigadier General Sheikh said "we seek to expand our capabilities and reconsider our tactics and technologies", via Al Mayadeen.
• Sources say a return to the June 18 memorandum of understanding between Iran and the US is no longer sought by either side, with both seeking amendments to some clauses, further complicating negotiations, Al-Akhbar reported.
• Pakistan's Defence Minister said intensive efforts are underway to establish a mechanism for ending the conflict as quickly as possible and reopening the Strait of Hormuz, according to Tasnim.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately mixed following the inconclusive handover from the US, where the major indices finished flat after the bond rout deepened, while conditions were thinned in the region owing to the holiday closures in South Korea, Taiwan and Mainland China. ASX 200 was led lower by underperformance in tech and with nearly all sectors in the red aside from financials and consumer staples, while price action was not helped by the lack of catalysts and data releases. Nikkei 225 extended on recent momentum and rose above 66,000, while the index was unfazed and Japanese banks were underpinned by a higher yield environment, which saw the 30yr yield at its highest since its debut in 1999. Hang Seng suffered despite the pleasantries at the Trump-Xi summit and state dinner, as the meeting of the leaders failed to result in any major breakthroughs, while there were losses in nearly all but a handful of the Hong Kong benchmark's constituents and the Stock Connect was shut due to the closure in the mainland for the Mid-Autumn Festival.

Top Asian News

• Japanese Finance Minister Katayama said specific monetary policy tools are up to BoJ to decide and that the central bank will conduct appropriate monetary policy while coordinating with government, adds Trump voiced concerns about yen weakness at summit. said:. Won't comment on specific FX levels or rate checks. Japan will closely coordinate with US on foreign exchange. PM Takaichi expressed concern about the yen’s weakness in general.
• Japanese Economic Minister Kiuchi said not in era to do monetary easing, adds phase of monetary easing and agile fiscal spending ended.
• Chinese VP Han said China willing to work with Serbia to lift bilateral ties to higher levels, according to Xinhua.
• Trump and Xi confirmed that they would support each other in hosting the APEC Economic Leaders' meeting and the G20 summit in 2026, Xinhua reported; new trade arrangements between China and US is good news for the global economy.

European bourses (STOXX 600 +0.8%) are entirely in the green. The IBEX 35 (+1.2%) outperforms this morning, joined closely by the DAX 40 (+1%). The bullish bias seen this morning is facilitated by increased hopes of the reopening of the Strait of Hormuz. This comes after the Iranian President said that Iran presented a proposal to the US through mediators this week to reopen the Strait of Hormuz and restart negotiations towards a final deal. Whilst nothing is concrete at this stage, the path to diplomacy appears to be opening. European sectors hold a strong positive bias, with cyclical industries holding towards the top of the pile. Basic Resources tops the sectoral list, joined closely by Banks and Travel & Leisure. The latter benefits from lower oil prices and the general risk tone. Unsurprisingly, Energy resides at the foot of the pile. Food Beverage and Tobacco is the other sector in the red.
Key movers: UBS (+3%, reportedly considering a merger with a foreign company as it looks to move out of Switzerland), Airbus (-1.8%, identified a corrosion protection defect affecting more than 500 A321neos), Leonardo (U/C, reportedly involved in the Airbus defect).

Top European News

• European Loans to Households (Aug YY) 3.1% vs. Exp. 3.2% (Prev. 3.1%).
• European M3 Money Supply (Aug YY) 3.5% vs. Exp. 3.5% (Prev. 3.4%).
• European Loans to Companies (Aug YY) 4.2% (Prev. 4.4%).
• Spanish GDP Growth Rate Final (Q2 QQ) 0.7% vs. Exp. 0.7% (Prev. 0.6%).
• Spanish GDP Growth Rate Final (Q2 YY) 2.6% vs. Exp. 2.7% (Prev. 2.7%).
• French Non Farm Payrolls (Q2 QQ) -0.1% (Prev. 0%).
• French Private Non Farm Payrolls Final (Q2 QQ) -0.1% vs. Exp. -0.1% (Prev. -0.1%).
• German GfK Consumer Confidence (Oct) -30.6 vs. Exp. -27.4 (Prev. -26.8).
• UK GfK Consumer Confidence (Sep) -13 vs. Exp. -16 (Prev. -14).

FX

• DXY is modestly softer amid lower oil prices and after the Yen-led move weighed on the index (see below), although the Buck remains underpinned by this week's rise US yields and expectations for further Fed tightening, with DXY posting four consecutive sessions of gains this week thus far. DXY currently resides in a 101.11-101.30 at the time of writing,
• JPY is the clear G10 outperformer, with USD/JPY sliding ~30-40 pips on several separate occasions overnight and this morning, price action that can also be seen across other JPY crosses. The move comes after comments from Japanese Finance Minister Katayama, who stated that US President Trump voiced concerns about yen weakness, while she reiterated Japan will closely coordinate with the US on foreign exchange.
• EUR/USD is modestly firmer, with much of the upside stemming from the JPY-induced pressure on DXY rather than any fresh bloc-specific catalyst. The pair remains tucked within yesterday's 1.1359-1.1399 range, with today's parameter between 1.1368-1.1390.
• GBP/USD is modestly firmer but remains well below 1.3300 following this week's Sterling weakness. UK-specific catalysts are light, leaving broader USD dynamics to dictate price action. Cable currently resides in a 1.3209-1.3241 range.
• Antipodeans are modestly firmer intraday with fresh domestic catalysts are limited, with moves largely reflecting the broader easing in the Dollar, whilst mainland Chinese participants were away overnight. AUD/NZD is modestly firmer but off highs in a 1.2375-1.2409 range.
• Goldman Sachs lowers USD/JPY 3-month forecast to 158.00 from 162.00, 6-month forecast to 155.00 from 163.00 and 12-month forecast to 150.00 from 165.00.

Fixed Income

• A modestly bullish start to the final session of the week for fixed, led by downside in the energy space after the overnight Strait of Hormuz related commentary. Since then, updates have been relatively light and thus the rebound in benchmarks has been modest.
• As it stands, USTs are set to end the week with downside of nearly a full point, but some 10 ticks off the WTD 104-14+ low. In brief, the week was characterised by further yield upside given geopolitical and, pertinently, diesel updates. The 30yr hit a 5.50% peak, firmer by 20bps on the week at that point, while around 5bps off highs as it stands, the move remains significant and resilient.
• Further out, the general desk view is that the move has further to run given the US economic backdrop, continued Middle East uncertainty and associated supply disruption (and elevated shipping costs, added to by record low Rhine levels), potential US diesel measures, AI spend and a credibly hawkish Fed. Factors which are all indicative of further yield upside.
• Gilts are firmer by c. 30 ticks but just off best levels. Providing some relative respite to UK yields, but nonetheless the 10yr is 6bps firmer at 5.34% WTD and over 25bps MTD, despite the BoE holding the Bank Rate at 3.75% in September.
• Finally, EGBs follow suit to the above. Bunds are firmer by around 25 ticks, just off a 119.95 peak. Specifics for the space light. Focus remains on the above points, and also the wholesale changes set to impact the ECB over the next few months, as Schnabel leaves post-December, Lagarde potentially early-2027 and Lane in May 2027.
• Japan sold JPY 649bln in 10yr, 20yr and 30yr JGBs in enhanced liquidity auction; b/c 2.95 vs. Prev. 3.20. Highest accepted spread +0.032% vs. Prev. -0.011%. Allotment of bids at highest spread 80.1862% vs. Prev. 58.2741%.
• Australia sold AUD 1bln 2.5% May 2030 bonds; average yield 5.0368% and bid/cover 4.34×.

Commodities

• WTI Nov and Brent Dec futures are softer on the session, with the complex pressured by growing diplomatic hopes around US-Iran negotiations and Hormuz. The US and Iran reportedly discussed a phased deal to reopen the Strait and end the US blockade, while Iranian Foreign Minister Araghchi said Tehran submitted a proposal through mediators to reopen Hormuz and restart negotiations towards a final deal. However, Al-Akhbar subsequently reported that neither side is seeking a return to the June 18 MoU and both want amendments to some clauses, potentially adding delays. Focus also remains on US diesel policy after Energy Secretary Wright reportedly contacted major refiners to gauge support for voluntarily restricting diesel exports. WTI trades off worst levels and within a USD 92.14-94.75/bbl range, while Brent trades around USD 99.00/bbl within a USD 97.81-99.76/bbl range.
• Dutch TTF is softer alongside the broader pullback in the energy complex, with tentative progress on US-Iran diplomacy helping remove some of the geopolitical risk premium.
• Precious metals are mixed but ultimately contained, with the USD strength this week and the rise global yields continuing to act as headwinds. Spot gold has recovered off worst intraday levels and trades in a USD 4,255-4,296/oz range. Spot silver remains softer around USD 63.72/oz within a narrow USD 63.36-64.08/oz range. Base metals are subdued amid the absence of mainland Chinese participants overnight, with 3M LME copper within a USD 14,615.68-14,701.97/t range at the time of writing.
• EU Commission said that gas supply remains stable; to reconvene on October 8.

Trade/Tariffs

• EU urges the UK to increase tariffs on Chinese cars to avoid ‘made in Europe’ barriers, according to FT.
• Chinese President Xi said China and US made common understanding on many issues and that he had frank and in-depth exchange with US President Trump.
• US President Trump said in state dinner for Chinese President Xi that US and China have never gotten along better, adds can continue prosperous and secure future with China.
• US President Trump posted on Truth Social that the state dinner at the White House for Chinese President Xi Jinping will be spectacular.

Geopolitics: 

• Ukraine President Zelenskiy said that the US proposed a "technical meeting" with Ukraine and Russia in UAE; waiting on the date.
• Russia's defense ministry said it bombed a drone assembly site in the Kyiv region.
• Explosion heard near Ukraine's capital of Kyiv after a Russian drone attack.
• US envoys Witkoff and Kushner met with Russia's Dmitriev today, according to CNN.
• Chinese President Xi said North Korea, Middle East and Ukraine was discussed with US President Trump, while Xi and Trump agreed to build a stable China-US relationship.
• Russian and Iranian Foreign Ministers say there is no alternative to a diplomatic solution to the war in Iran, Al Arabiya reported.
• Yemeni Houthi official warns the coming period will be more painful for Saudi Arabia if its actions against Yemen continue, ISNA reported.
• Israel's channel 12 noted that the army will enter a new phase of fighting in southern Lebanon in the coming days. said:. Army has completed operation to destroy Hezbollah's infrastructure in the Yellow Line area.
• Israeli military will enter a new phase of fighting in southern Lebanon in the coming days, Israeli Channel 12 reported cited by Sky News Arabia. The army completed the process of destroying Hezbollah’s infrastructure in the Yellow Line area.
• Strait of Hormuz's commodity vessel crossings dropped to single digits, according to preliminary ship tracking data.
• Saudi Foreign Ministry said Saudi Arabia, Turkey and Pakistan will hold urgent chiefs of staff meetings to discuss support for Riyadh under the joint defence pact.
• Saudi Arabia's civil defence issues emergency warning for the Jazan province, but announces the danger has passed shortly after.

US Event Calendar

• 8:30 am: United States Aug P Durable Goods Orders, est. -0.3%, prior 1.1%
• 8:30 am: United States Aug P Durables Ex Transportation, est. 0.6%, prior 0.4%
• 10:00 am: United States Sep F U. of Mich. Sentiment, est. 47.5, prior 47.8

Central Banks

• 5:15 am: United States Fed’s Williams Participates in Policy Panel
• 9:20 am: United States Fed’s Schmid Participates In Fireside Chat
• 2:00 pm: United States Fed’s Hammack Participates In Policy Panel Discussion

DB's Jim Reid concludes the overnight wrap

I'm pleased to announce that I've just played a very small part in what will become a new Guinness World Record, pending official verification. Yesterday, Deutsche Bank colleagues from around the world set out to walk or run the equivalent of the Earth's circumference — roughly 56 million steps in just 24 hours. In the end, nearly 30,000 of us across 50 countries channelled our inner Forrest Gump and racked up 275 million steps, covering around 138,000 miles. So we got 60% of the way to the moon.

While we were all walking, markets have had another rough 24 hours, as a fresh jump in oil and gas seemed to send bond yields in another tailspin. Brent crude rose +3.41% to $106.60/bbl, even if it did pare back some of its gain after Reuters reported that the US and Iran were exploring a phased deal to reopen the Strait of Hormuz and end the blockade. But this was not sufficient to stem the ongoing rout in bond markets, with the sell-off extending late in the US session and leaving 10yr Treasury yields (+8.5bps) at a new post-2007 high of 5.20%. Meanwhile the S&P 500 recovered from around half a percent down before the headlines to -0.02% at the close.  

One important theme at the moment is that Treasuries continue to sell-off with oil but that breakevens aren't moving, with pretty much all the move being driven by real yields. This is something I discussed in my CoTD yesterday (link here), and yesterday the trend continued with 10yr US real yields rising +9.8bps to a post-2008 high of 2.87% but 10yr breakevens actually falling by -1.3bps. The former has now risen +97bps in 2026 and the latter only +9bps. So at face value there is no concern about longer-term inflation even though oil is up around 75% so far in 2026. In addition measures of term premium have been range bound for around 18 months so the sell-off isn't really fiscal related. Overall it feels to me that breakevens are too low and that real yields might be getting too high.

By the close, the 10yr Treasury yield (+8.5bps) rose to a post-2007 high of 5.20%, whilst the 30yr yield (+7.7bps) jumped to its highest since 2004, at 5.48%. Coupled with Wednesday’s slump, this marked the biggest 2-day rise (+23.7bps) in the 10yr yield since the post-Liberation Day turmoil last spring. And with the 3yr yield (+3.5bps) closing at 5.01%, that left the 2yr (+2.8bp to 4.93%) as the only coupon-paying Treasury tenor still below the 5% yield level. Yields have pulled back a bit overnight though, with the 10yr trading -1.43bps lower.

Over in Europe, the rise in yields was slightly less pronounced but there was another set of multi-year highs as well, with the 10yr bund (+4.5bps) at a post-2009 high of 3.60%, whilst the 10yr OAT (+3.3bps) hit a post-2008 high of 4.69%. So lots of milestones being reached all round.

That rise in yields came as oil prices continued to march higher. The initial driver were escalatory comments from Iran, which played into investor concerns about an extended conflict. For instance, Iran’s Fars reported an adviser to the Supreme Leader, who said that the war may “widen further and extend to the Indian Ocean or elsewhere”. So that pushed back on the optimism from earlier in the week, when there had been speculation about some kind of diplomatic breakthrough around the UN General Assembly. Meanwhile, Saudi Arabia faced an attack from the Houthis again yesterday, with a Saudi-backed coalition intercepting six ballistic missiles.

After hitting an intra-day high of $108.16/bbl Brent crude did see a mostly temporary drop of around $4 just after Europe closed as Reuters reported that the US and Iran are exploring a phased deal to reopen the Strait of Hormuz. We've been here many times before but the article made the valid point that it’s not just the US that has an incentive to get a deal done before midterms. The consensus seems to feel that Iran is happy to make life uncomfortable for the US ahead of the vote. However after the midterms the incentive for Trump to provide concessions probably goes down so the coming weeks might represent Iran's best chance of a stronger deal. But at this point this is still wishful thinking. Last night, we also heard the FT report that Iran offered the US a new “7-day” ceasefire proposal to reopen the Strait of Homruz and restart broader talks, but that this proposal was still built around the June MoU which the US has been reluctant to return to as it pushes for a more comprehensive agreement.  All that left Brent closing at $106.60/bbl (+3.41%), before declining by -0.91% this morning so far.

As all that was going on, there was also a sharp rise in US natural gas futures yesterday, after TC Energy Corp’s Columbia Gas Transmission pipeline system said that there was a need for “an immediate pressure reduction” on a pipeline, due to “an unexpected mechanical issue”. So US natural gas futures jumped up +9.06% on the day, their biggest daily jump since January, which only served to exacerbate the inflationary concerns.

On top of the energy moves, another factor lifting bond yields yesterday was the ongoing resilience in the economic data. For instance, yesterday saw the US weekly initial jobless claims come in at just 197k in the week ending September 19 (vs. 200k expected). That’s one of the timeliest indicators we get on the state of the labour market, and it also pushed the 4-week moving average (which Fed Chair Warsh has previously cited) down to 202.25k. So that played into the current narrative that the US economy is growing strongly, which in turn would give the Fed the space to keep hiking rates. Meanwhile, the number of new home sales also hit an 8-month high in August, up to an annualised rate of 684k (vs. 616k expected). And this wasn’t confined to the US either, as the Ifo’s business climate indicator from Germany also surprised on the upside at 89.9 in September (vs. 89.0 expected). In fact, that was the highest since 2023, and the current assessment also hit its highest since 2023 as well, at 89.5.

This backdrop led to another round of pressure on risk assets. In the US, equities did recover most of their decline following the Reuters story, but the S&P 500 (-0.02%) did still just about retreat for a third consecutive session. And the breadth of the moves was clearly negative, with almost two thirds of the S&P 500 lower on the day, led by declines for utilities (-1.02%) and materials (-1.01%).  However, an advance for the Mag-7 (+0.74%) limited the aggregate decline. Meanwhile Europe saw more consistent declines, as the STOXX 600 (-0.55%) fell back, alongside declines for the DAX (-0.57%) and the CAC 40 (-0.52%). And credit sold off on both sides of the Atlantic, with US IG (+1bps) and HY (+8bps) seeing a little less widening than European IG (+2bps) and HY (+10bps).

Asian equities are heavily affected by holiday-thinned trading, with markets in China and South Korea closed. Japan's Nikkei is trading 1.24% higher, while Australia's S&P/ASX 200 is down 0.53%. US equity futures are down less than a tenth but European equivalents are back up +0.63% as I type and responding to the late rally back in the US after their close.

Looking at the day ahead now, and US data releases include preliminary durable goods orders for August, and the University of Michigan’s final consumer sentiment index for September. Then in the Euro Area, we’ll get the M3 money supply data for August. Otherwise, central banks speakers include the Fed’s Williams, Schmid and Hammack, the ECB’s Vujcic, and BoE Governor Bailey.

 

Tyler Durden Fri, 09/25/2026 - 08:37

Xi Presses Trump For Taiwan Policy Shift As $14 Billion Weapons Deal Hangs In Limbo

Following our earlier coverage of Barclays senior China economist Yingke Zhou's view that Chinese leader Xi Jinping's state visit delivered "more signaling, less substance," attention turns to Taiwan, where Xi pressed President Donald Trump to oppose Taiwan independence.

According to China's official Xinhua News Agency, Xi urged Trump to "adhere to the correct position of opposing Taiwan independence." The conversation took place at Thursday's White House summit.

For years, Washington has held the stance that it "doesn't support" the independence of Taiwan, the island Xi and his Communist Party claim as their own.

"While this may appear a semantic shift, the impact would be meaningful," said Bloomberg Economics' Jennifer Welch, who served as director for China and Taiwan on the National Security Council under the previous Biden and Trump administrations.

Welch pointed out that Beijing would use any switch in language from Trump to undermine Taiwan's confidence in US support. She added, "Opposing Taiwan independence implies an active effort to contain what Beijing sees as pro-independence forces."

This push by Xi to Trump comes as he heads toward an expected fourth term in office next year; he's ramping up diplomatic pressure to isolate the island, home to the world's most advanced semiconductor production, and block future weapons sales by the Trump administration.

For many months, Trump has delayed the $14 billion weapons package for Taiwan, which may come in the weeks or months ahead now that Xi's state dinner at the White House is over. It appears that Taipei is seeing its defense needs becoming leverage in the US-China trade spat.

In a preview of what next year might hold, China deployed a record 244 coast guard, research, and other government vessels around Taiwan this summer in what could only be viewed as a dry run for a blockade.

Beijing has warned that mishandling the Taiwan issue could lead to "clashes" between the superpowers - certainly a flashpoint. 

"The key acid test will be what Trump says on Taiwan," said Ryan Hass, director of the China Center at the Brookings Institution, who Bloomberg quoted. "Not just what Xi urges Trump to endorse."

Meanwhile, Reuters cited Taiwan's foreign ministry as saying that Xi's remarks represent "the consistent Chinese approach of distorting facts and unilaterally conveying its position and claims."

"Taiwan's sovereignty belongs to all the people of Taiwan. The Chinese Communist Party has no right to represent the Taiwanese people, and Taiwan's future can only be determined by the Taiwanese people through democratic means," the ministry added.

There were no immediate signals that the Trump administration would agree to Xi's request, a shift in wording that could carry significant implications for Washington's stance on Taiwan.

Jeremy Chan, senior analyst on China for the US-based political risk consultancy Eurasia Group, told Reuters, "It would ​erode a lot of the...strategic ambiguity of whether the US would come to Taiwan's aid in that context." 

Tyler Durden Fri, 09/25/2026 - 08:20

Proper Flock'd: What This Cop Did Raises Major Red Flags...

Authored by Steve Watson via Modernity.news,

A Naperville police officer turned a statewide camera grid into a personal tracking app, ran a man's plate about 150 times, and then retired like the file never existed.

The story serves as yet another example of how the burgeoning mass surveillance grid is being abused on a regular basis.

Patrick Dowhen was not a suspect. He was the ex. After Officer Oscar Maldonado started a relationship with Dowhen's fiancée, Flock became the shortcut. No warrant. No case number that mattered. Just a badge, a login, and a national lattice of plate readers that can reconstruct where you went, when you went, and how often you go there.

"Anywhere I went in the country, I was being tracked," Dowhen told ABC7 Chicago's I-Team. "It was scary, it was really scary."

Internal records obtained by the I-Team show the pattern started after Maldonado's relationship with Dowhen's then-fiancée began. Investigators found evidence he searched Flock for Dowhen's vehicle approximately 150 times over a three-month stretch last year.

Chicago Tribune reporting, from a separate FOIA haul, put the plate runs between June 18 and Sept. 15, 2025, and said Maldonado tracked plates for non-police reasons hundreds of times.

Dowhen said the surveillance was not abstract. "My ex-fiancée would tell me where I was at, or what I was doing, and he [Maldonado] was feeding her information," he said. "He's an officer, feeding a civilian, you know, inside information." He tore his truck apart looking for a tracker. Then he went to Naperville Police Chief Jason Arres. That complaint opened the internal case last September.

Maldonado's story to interrogators was protection: the woman, himself, his family. Naperville investigators did not buy it. They wrote that the "evidence contradicts Maldonado's explanation that he only used Flock for the safety of himself, his family," and Dowhen's ex-fiancée.

The report also concluded there was "a preponderance of the evidence that shows Maldonado did commit the crime of Official Misconduct," adding that he "admitted to using FLOCK for personal reasons."

Then on May 1, 2026, Maldonado retired. Department spokesman Rick Krakow said the internal case was complete but not closed because discipline had not been imposed. "However, the officer resigned before his disciplinary meeting with the chief, which essentially closed the case."

No arrest. No plate charges. A referral to the Illinois Law Enforcement Training and Standards Board. Will County prosecutors would not confirm or deny a criminal review. Dowhen later obtained a stalking no-contact order that noted Maldonado "was tracking my plate since 06/2025." That order was dropped after both men agreed to a two-year mutual no-contact deal.

"He could very well get a job as a police officer again and have, you know, all these same electronic things available to him at any time and stalk anybody you want," Dowhen said, "because at this point he has no criminal record."

ABC7 chief legal analyst Gil Soffer laid out the gap that let a 150-search campaign end in a retirement party. "It's not enough to say that a police officer violated internal laws, you'd have to show that a police officer knowingly violated a law, a statute, a constitutional provision," he said.

He added, "An official misconduct statute in Illinois won't necessarily cover the simple situation where a police officer accesses license plate information for an improper purpose."

Maldonado's own lawyer, Jeff Tomczak, made the same point from the other side of the table. "I'm a defense attorney. It should be a crime. It should absolutely be a crime. The legislature should act, create the crime of misuse of Flock. Don't require the state's attorneys to be creative."

A private company sold cities a warrantless movement database. Departments wrote policy memos. The statute book never caught up. When an officer treated the grid like a jealous-ex app, the fallback was an employee manual and a quiet exit.

The I-Team says this is not one suburban rogue. It identified 14 Chicago-area cases of officers accused of misusing Flock, with at least five sent to prosecutors. Berwyn's mayor, Robert Lovero, issued an executive order this week suspending the city's cameras.

On Capitol Hill the same day, Sen. Josh Hawley noted who did not show up: "You know who you won't hear from? Flock CEO." Sen. Dick Durbin added, "I think they're afraid to be on camera."

Nationally, a Washington Post investigation found at least 50 documented cases of officers charged with or accused of misusing automated plate-reader systems. In 26 of those cases, officers used the technology to spy on wives, girlfriends, former partners, or their exes' new partners.

Flock's system appeared in 46 of the 50. Chicago privacy researcher Matt Chapman, of Lucy Parsons Lab, put the constitutional problem in one line: "It seems that these tools are used as a means of circumventing Fourth Amendment rights."

This is the same architecture that already wrecked an innocent Florida woman's life.

Lindsey Brooke Isaacs, 23, spent 13 days in a Volusia County jail facing life after Florida troopers treated a Flock ping like a confession. Her black Dodge Durango had no collision damage. A 911 caller described a maroon SUV and a partial plate that was not hers. The camera still became the case.

"They just picked up my car off a camera and called it the end of the day. We got her," she said. Prosecutors later dropped every charge and arrested another driver whose maroon Durango and plate matched the original call.

Flock's line was corporate and tidy: "Flock cameras provide investigative leads; they do not identify perpetrators, determine guilt, or make arrest decisions."

Florida's governor had already seen enough of the dragnet. At DeSantis's direction, FDOT revoked every permit for Flock units and other automated plate readers in state highway right-of-way and put agencies on a 30-day clock. Miss it, and state crews pull the poles.

"I think these cameras, the license plate readers, I think it's out of control," DeSantis said. "I'm all about having law enforcement have tools to be able to hold criminals accountable... But I don't want to have this become a surveillance state."

He used the most Florida example available: a drive to Buc-ee's. "It's really none of the government's damn business if you're doing that, right?" He also named the stalking pattern now repeating in Naperville: "When I see, like, a police officer using this to track, like, an ex-girlfriend, I'm like, you know, what the hell's going on with this?"

Knox County, Tennessee, Mayor Glenn Jacobs - the former WWE star Kane - cut the same cord after he realized the product was not a passive hot-list ping. It is an active system that photographs every car, then builds what Flock calls a "vehicular fingerprint": make, model, color, roof racks, bumper stickers.

"The lack of transparency surrounding Flock's rollout is one of the most troubling aspects about all this," Jacobs wrote. "It's sure seems like there was a sprint towards a fait accompli before the public took notice."

The company has since shortened default retention, promised mandatory audits, and told cities they can wall off some outside searches. Semafor reported this week that Flock is now weighing a sale, with preliminary talks involving outside advisers. A spokesperson declined to comment.

Software patches after the poles are already in the ground do not rewrite the architecture: a searchable history of lawful travel, available to whoever has a login, with "audit" as the after-the-fact alibi.

Americans were sold stolen-car alerts and Amber Alerts. What got bolted to the intersection is a movement dossier with no judge on the front end and, in Illinois, no reliable felony on the back end.

Maldonado searched a man who was not charged with anything, roughly 150 times, then left with his record clean enough to wear a badge somewhere else. That is not a glitch in the camera. That is the product working as designed - until voters and governors start ripping the poles down.

* * *

Tyler Durden Fri, 09/25/2026 - 08:05

Ford v. Hyundai: Henry Ford Must Be Turning In His Grave After New Report

South Korea's Hyundai Motor Group is on track to surpass 123-year-old Ford Motor in third-quarter US deliveries (a first ever) as consumers shift toward smaller, more fuel-efficient vehicles. The shift comes as Ford is plagued by the fallout from its costly EV strategy and production constraints affecting its light- or medium-duty truck unit. 

Henry Ford must be turning in his grave.

Cox Automotive's third-quarter sales forecast, released earlier this morning, expects Hyundai's US deliveries to rise 4.4% quarter over quarter to 511,421 vehicles, while Ford's fall 7.7% to 504,172. The estimates, detailed on slide 27, put Hyundai on track to outsell Ford in the US for the first time.

Toyota, Hyundai and Kia are benefiting from US consumers seeking competitively priced hybrid lineups. Toyota, Hyundai and Kia are benefiting from competitively priced hybrid lineups. A record one in six new vehicles sold in the US in the second quarter was a hybrid, according to the report. 

"This is a moment where consumers are trying to find options that offer more fuel efficiency," Stephanie Valdez Streaty, director of industry insights at Cox, told Bloomberg. "Hyundai and Kia are starting to have those options available and you can see they're gaining share because of that."

Bloomberg noted that Ford faced mounting headwinds. Fires at a key supplier plant last year constrained components to its top-selling F-Series trucks, while the phaseout of the Escape compact SUV has reduced volume. 

The report showed the auto market is stable, with higher-income buyers supporting overall volumes, while cash-strapped households are rewarding automakers that offer hybrids.

Cox Chief Economist Jeremy Robb highlighted the vehicle segments driving sales this year:

Vehicle supplies:

New-vehicle pricing at record highs:

With the national average price of regular gas at $4.48 per gallon and diesel at $6.51 late in the summer, and fuel prices elevated since early March, new EV sales have remained muted. However, used EV sales have trended higher.

Stock Performance: Ford v. Hyundai

Ford should've focused on hybrids instead of making an idiotic mad dash into EVs. And just imagine what happens when China's BYD floods North America with cheap EVs and hybrids... 

Tyler Durden Fri, 09/25/2026 - 07:45

Bring On The Generals: Roughly 60% Of Polled Democrats Would Support A Military Coup

Authored by Jonathan Turley via JonathanTurley.org,

It appears that nothing says "saving Democracy" like a good old-fashioned military coup. A new survey from the Center for Strategic Politics found that 59 percent of Democrats would favor a military coup to remove President Donald Trump from office. All it took was four years out of power for these Democratic voters to embrace a coup d'état to negate the results of the last election. What is particularly chilling is that many of these voters still portray themselves as defending democracy by calling for a military takeover.

It is akin to supporting drive-by shootings to combat gun violence.

That is not the only shocker in this survey.

According to the Center, roughly six in 10 (59%) Democrats polled said they would feel "very positive" or "somewhat positive" if the US military removed Trump and seized control of the American government.

The vast majority, of course, would be happy if Trump were impeached and removed from office (87%) or ousted by his cabinet via the 25th Amendment (84%).

The survey also shows the same overwhelming support for socialism in the new Democratic Party. What is surprising is the support for public ownership of industries. That includes almost half (46%) supporting public ownership and operation of grocery stores. Almost 40 percent support public ownership and operation of restaurants. (39%).

I have previously said that I do not recognize the current Democratic Party as someone raised in a politically active and liberal Democratic family. I first became estranged from the party over the radical shift from a pro-free speech party to one that supported censorship and speech curtailment.

Despite many who claim that the Democratic Socialists represent a small fraction of the party, these polls show a consistent and growing majority in support of socialism.

The addition of support for a military coup shows the manifestation of a rage addiction in America. Democratic leaders are now calling for trashing core constitutional institutions or values. When some of us criticized moves to pack the Supreme Court, leaders like Kamala Harris and Gavin Newsom accused us of engaging in mere "nostalgia."

It is the same "nostalgia" that leaves many of us shocked at the support for a military coup.

On our 250th anniversary, we face yet again Benjamin Franklin's warning that this is a Republic if we can keep it.

Jonathan Turley is a law professor who teaches a class on the Constitution and the Supreme Court and is the best-selling author of "Rage and the Republic: The Unfinished Story of the American Revolution."

Tyler Durden Fri, 09/25/2026 - 07:20

FDA Raises Thyroid Tablet Recall To Most Serious Level

Authored by Jack Phillips via The Epoch Times,

The Food and Drug Administration this week elevated a prescription thyroid medication recall to its most serious classification because the medication is too potent.

Medications are stored on shelves at a pharmacy in Los Angeles on May 12, 2025. Eric Thayer/Getty Images

Several weeks ago, Vitruvias Therapeutics said in a notice published by the FDA that it was voluntarily recalling one lot of thyroid tablets because the medication is "superpotent" and can "cause hyperthyroidism," or an overactive thyroid, in some people.

The affected lot, 504950, was distributed across the United States by Alabama-based Vitruvias Therapeutics between Jan. 31, 2025. and Sept. 30, 2025. The drug's expiration date is Sept. 30, 2026, according to the FDA notice.

In an enforcement report updated on Sept. 22, the FDA classified the thyroid tablets as a Class I recall, the most severe in its three-tiered system.

According to the FDA's website, a Class I recall is a situation where there is a "reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death."

A statement released by Vitruvias Therapeutics in August warned that consumption of the "superpotent" thyroid medication can cause hyperthyroidism that can include symptoms such as "weight loss, heat intolerance, fatigue, nervousness, muscle weakness, hypertension, chest pain, rapid heart rate, or heart rhythm disturbance."

Those who are considered at a greater risk of developing adverse reactions include pregnant women, infants, and elderly people, according to the notice. For the elderly, high levels of thyroid hormones have been linked to adverse events, including cardiac health-related problems, it said.

In infants, an overtreatment can also have "negative effects on growth and development," the company said.

But as of the issuance of the Aug. 21 news release, the company has not received any reports of adverse health events linked to the recalled tablets, it said.

The medication is described by the company as "a natural preparation derived from porcine thyroid glands composed of levothyroxine and liothyronine" and used to treat an underactive thyroid, or hypothyroidism.

In the release, Vitruvias Therapeutics advised patients not to stop using the medication without first contacting their healthcare provider for guidance or a replacement prescription. That was before the FDA classified the recall as its most serious.

The company said it would notify retailers to discontinue the distribution of the recalled medication and would arrange for the "destruction" of all the tablets under recall.

Those with concerns or questions can contact the company or the FDA through the information listed in the agency's press release.

Vitruvias Therapeutics did not respond to a request for comment by publication time.

Over the summer, at least two other thyroid medications were recalled in separate instances by different companies.

Major Pharmaceuticals, an Ohio-based company, issued a recall of levothyroxine sodium on July 13. The FDA labeled the action as a Class II recall on July 17.

In August, levothyroxine sodium tablets in different strengths, contained in bottles of different counts, were recalled. They were manufactured by India-based Intas Pharmaceuticals Limited for North Carolina-based Accord Healthcare Inc. and distributed across the United States.

Tyler Durden Fri, 09/25/2026 - 06:30

Force Majeure Is Not A City In France

 Submitted by QTR's Fringe Finance

There are certain phrases you don’t want to hear when you’re involved in a massive infrastructure project, and “force majeure” is pretty high on the list.

Yet after Oracle shares started getting federally a** pounded today following reports that the company had issued a force majeure notice connected to its enormous Project Jupiter AI data center in New Mexico, the afternoon quickly turned into one of my favorite Wall Street traditions: corporations explaining why the alarming sounding thing everybody just read and understands crystal clearly is actually completely normal, totally misunderstood by everyone and nobody should worry about anything.

For those unfamiliar, force majeure is a contractual provision generally invoked when extraordinary circumstances outside a party’s control interfere with, or threaten to interfere with, its ability to perform under a contract. Oracle reportedly issued the notice to a unit of Blue Owl Capital developing Project Jupiter, citing potential delays in securing power and protecting Oracle financially if the facility doesn’t come online as scheduled.

Project Jupiter is a massive New Mexico AI campus tied to the Stargate buildout and Oracle’s relationship with OpenAI, requiring roughly 2.4 gigawatts of power and relying heavily on Bloom Energy fuel cells. The problem is that a natural gas pipeline needed to supply the site has reportedly been pushed back roughly six months following permitting problems, while a separate air quality permit for the fuel cell system remains pending. So when news of the force majeure notice hit, Oracle shares sold off sharply and Bloom Energy got dragged down with them.

Then came the idiotic damage control.

Oracle said on X that the project “remains on our planned schedule” and that force majeure notices are “commonplace in developments of this scale” and are often used simply to preserve contractual rights, adding that the notice does not itself establish a project delay or change delivery expectations.

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Technically, that’s true. But companies also don’t issue force majeure notices because everything is going f**king fantastic.

The entire purpose is to protect yourself because some circumstance has arisen, or may arise, that creates enough risk around contractual performance to make protecting yourself necessary.

Bloom Energy then joined the reassurance tour, saying that after speaking with Oracle, it had been assured Oracle “remains committed to Project Jupiter and its contract with Bloom to deliver 2.4 GW of fuel cell capacity” and that Bloom remains excited to execute on Oracle’s planned timeline.

Nothing says confidence like rushing to phone your customer during a stock selloff and then immediately telling X that you just called your customer during a stock selloff. Last time someone did this it was Steve Mnuchin “calling the banks” when the market served investors up a royale fu*k deluxe with cheese back in December 2018.

Look. None of this means Project Jupiter is dead, and Oracle may ultimately deliver the project on schedule exactly as it says it will. But dismissing the notice as meaningless contractual housekeeping also misses the point. It also insults the intelligence of anyone with an IQ higher than that of Ilhan Omar. There is a reason it was issued, just as there is a reason a pipeline has been delayed and permits remain unresolved.

Investors have spent the last several years valuing the AI infrastructure boom as though converting hundreds of billions of dollars of announced spending into functioning data centers is basically a matter of ordering GPUs and plugging them into the wall. In reality, you need land, financing, transformers, transmission, gas, pipelines, permits, cooling and an almost incomprehensible amount of electricity. Every one of those things introduces another potential failure point. As bond yields keep rising, those failure points present themselves more and more.

Read: Bonds Are About To Crash The Stock Market

The financial chain is equally important. Oracle signs enormous AI contracts, which justify enormous data centers, which justify enormous financing packages, which create enormous orders for companies like Bloom and Nvidia, which create enormous backlogs that investors then capitalize into enormous valuations.

As long as everything moves according to plan, the machine works beautifully. But if data centers start getting delayed, equipment deliveries and revenue can get delayed with them. If revenue gets pushed out, financing assumptions can change. If financing becomes more difficult, suddenly some of those gigantic AI backlogs investors have treated almost like cash in the bank start looking considerably less certain.

One force majeure notice doesn’t break the AI boom. But this is exactly the kind of crack I’m watching for. If we start seeing more force majeure notices, delayed power projects, stressed data center debt, renegotiated contracts and suppliers rushing onto social media to assure everybody that their customers are definitely still committed, then we may be looking at something that could set off the crash.

Read: The Real AI Crash Will Start This Year

Force majeure may not be a city in France, but companies generally don’t go there when everything is going according to plan. Just keep that in mind.

--

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here.

Tyler Durden Fri, 09/25/2026 - 06:20

Three Wars, One Bill: How Hormuz, Ukraine & Sanctions Are Squeezing The Express Giants

Authored by Larry Johnson via Sonar21.com

This article is the result of my conversation earlier today during my flight from Istanbul to London. I was sitting next to a FEDEX pilot who was on his way to Paris via London. I asked him about aviation fuel prices and the effect on FEDEX and I got more than I bargained for. The world’s express carriers like to present themselves as barometers of the global economy. In 2026 they are also measuring something else: what it costs to run a global air network when two of the three main east-west air corridors are effectively closed. The answer so far is that FedEx and UPS are surviving the shock largely by passing it on to their customers. That cost doesn’t disappear. It moves down the supply chain and into the inflation numbers central banks are now fighting.

The fuel shock

The trigger was the Iran war. The International Energy Agency has described the near-total closure of the Strait of Hormuz as the largest supply disruption in the history of the global oil market. Brent peaked near $118 in late March, fell to about $70 by July 1, rebounded above $100 in late July, and climbed back to $109 in early September after renewed attacks on shipping and energy infrastructure. It has since eased to around $99 on hopes from US-Iran talks, but it is still up roughly 60% for the year.

Jet fuel has moved further than crude because refining margins widened. IATA’s latest weekly reading put the global average at $194.90 a barrel, up 7.4% in a single week. U.S. Gulf Coast kerosene-type jet fuel averaged $4.341 a gallon in September. The ground networks are exposed too: the national diesel average has hit a record $6.31 a gallon.

For FedEx, the world's largest cargo airline by fleet count, this lands directly on the cost line. In the quarter ended May 31, its fuel bill rose 66%, from $864 million to $1.43 billion.

The airspace squeeze: Russia plus the Gulf

The Ukraine war and Western sanctions had already closed Russian airspace to U.S. and European carriers after 2022. That added hours and fuel burn to Europe-Asia routes and handed a lasting advantage to carriers that still fly over Russia. Chinese, Turkish, Indian and Gulf carriers keep Russian access and can offer faster, cheaper Europe-Asia flights.

Then the Gulf closed as well. Eight Middle Eastern states closed or restricted their airspace in late February, leaving traffic squeezed through the Caucasus corridor between the Black and Caspian Seas, about 100 miles wide at its narrowest. Xeneta estimated that 16-18% of global air cargo capacity disappeared with almost no warning. Freightos data showed rates from South Asia to North America and Europe up about 50% early in the war.

By mid-July, Gulf carriers had restored 75-96% of schedules by routing south over Saudi Arabia and Egypt, adding 30-60 minutes to Europe-Asia services. Longer flights mean more fuel, lower payloads, more crew hours and less aircraft utilization. DHL Global Forwarding reported that rerouting around the Gulf hubs was reducing schedule reliability and raising operating costs. Air freight to and from the region itself also fell hard: Middle East and Africa exports were down 24% year on year.

How the integrators have held up

Here the story gets less straightforward than the headlines suggest. Surcharges have protected FedEx and UPS far better than airlines or asset-light truckers. FedEx’s chief customer officer said in March that the fuel surcharge was “doing its job” and would keep the company profitable.

The revenue numbers bear that out. In the March-May quarter, FedEx revenue rose 13% to $25 billion, with Iran-war fuel surcharges adding 5 percentage points of revenue. FedEx’s U.S. ground fuel surcharge stood at 26% in the week of August 17. UPS raised its full-year 2026 guidance to $91.2 billion in revenue and about $7.22 in adjusted EPS.

The pressure shows up in margins. FedEx beat estimates last quarter, but its operating income fell nearly 22% year over year. The mechanism is simple. The surcharge resets on a lag, and when fuel spikes, revenue and costs rise by similar dollar amounts, which dilutes the margin percentage. FedEx shares are down 6.6% over 30 days and 7.6% over 90 days, although still up 65.5% over one year.

The freight sector’s warning light went on this month. J.B. Hunt said Q3 earnings would fall 5-10% from the prior quarter, citing at least $10 million in extra fuel costs and $25 million in driver recruiting and bonus costs, which dragged down package-delivery stocks along with truckers.

Who pays: from shippers to consumers

On the evidence so far, shippers are bearing most of the cost. UPS’s CFO described the net profit impact of surcharges as “modest,” and FedEx said they were not a material driver of adjusted operating income. Critics have noted that neither company explained why surcharge percentages rose so sharply. For comparison, the U.S. Postal Service imposed its first surcharge on April 26, at 8% on most packages. One fact-check found no evidence of industry-wide gouging, but did find that some transport companies are collecting more in surcharges than they spend on fuel.

From shippers, the cost flows into prices. That is where the carriers’ problem becomes everyone’s problem.

The inflation picture

The OECD’s interim outlook, published today, projects G20 headline inflation rising to 4.1% in 2026 and easing to 3.6% in 2027, while advanced-economy core inflation moderates from 2.7% to 2.5%. That split matters. This is mainly an energy shock that pushes up headline inflation, not yet a broad wage-price spiral. The OECD credits government support, input substitution, non-Gulf supply and oil reserve drawdowns with limiting the damage.

In the U.S., August CPI was 3.4% year on year, while core was 2.4%, the lowest since March 2021. Gasoline alone accounted for more than a third of the monthly increase. The Fed still took no chances. It raised rates to 3.75-4.00% on September 16, its first hike since 2023, citing the Iran energy shock, and most officials expect at least one more hike this year.

How freight costs reach the checkout

The express surcharges are a real but secondary channel. Shipping is usually a small share of a finished good’s retail price, so parcel surcharges add friction at the margin rather than driving CPI. The same jet fuel shows up much more clearly in passenger airfares, up more than 23% since August 2025.

Food is the more important channel. Diesel, packaging and fertilizer matter more than parcel rates, and a lot of fertilizer moves through Hormuz, which threatens global food prices. One inflation analyst who normally dismisses food and energy as mean-reverting now says he’s less confident about food, because energy is feeding into trucking and packaging costs.

The spillover into core inflation is what central banks fear. Economists warn that renewed rises in oil, gasoline and diesel could spread to other prices and to inflation expectations. So far median CPI looks relatively tame, and part of the rise in services inflation is airfares, which is really energy.

The pain is not evenly spread. Energy- and food-importing emerging economies are far more exposed than the U.S. In the Philippines, diesel went above ₱140 a liter, about $10.75 a gallon. Weak currencies and heavier weights for food and fuel in consumer price indexes amplify the shock there.

Duration decides everything

The OECD’s June scenarios frame the stakes. If Gulf supply recovers from Q3 2026, the shock fades in 2027. If disruption lasts into late 2027, the result is much weaker growth and much higher inflation, adding about 0.4 points in 2026 and 1.3 points in 2027. The OECD’s baseline assumes energy prices fall in 2027, but it lists prolonged Middle East export disruptions and a very strong El Niño as key downside risks. With Brent near $99 and the Saudi East-West pipeline shut since September 11, that baseline looks optimistic.

A long disruption would also change the carriers’ position. Their pass-through model works only as long as customers accept it. The longer surcharges stay above 25%, the more small and mid-size shippers will downgrade from express to ground, from air to ocean, or simply ship less. FedEx’s own outlook assumed no further geopolitical disruptions and acknowledged that soaring fuel costs could weigh on results if customers pull back. The Russia-overflight disadvantage doesn’t go away when oil falls. And the gap between surcharge revenue and actual fuel cost could become a political and legal target.

The wars and sanctions have made running a global express network structurally more expensive: longer routes, fewer usable hubs, and fuel that stays high and swings unpredictably. So far FedEx and UPS have converted most of that cost into surcharge revenue, and their pain shows up as margin compression rather than losses. The cost has been passed downstream, where it adds to the energy-led inflation that has already pushed the Fed back into hiking.

For both the carriers and the inflation outlook, the deciding factor is how long the Hormuz disruption lasts. If jet fuel stays near $190 a barrel through peak season, the question stops being whether FedEx and UPS can pass costs on. It becomes whether their customers, and the consumers behind them, can keep absorbing them. The next markers are September CPI on October 14, and FedEx’s commentary on surcharge recovery and volumes in its fiscal Q1 2027 report.

Tyler Durden Fri, 09/25/2026 - 05:00

US Pledges $267 Million More In Ebola Aid To Congo

The United States is sending another $267 million to fight the Ebola outbreak in Congo, bringing total U.S. aid for the outbreak to $887 million, the State Department announced Wednesday on the sidelines of the U.N. General Assembly.

A doctor administers serum to a patient with Ebola virus disease at the Rwampara Ebola Treatment Centre in Bunia, Ituri Province, in northeastern Congo, on July 13, 2026. Benediction Murhabazi/AFP via Getty Images

The outbreak, first detected in Congo's Ituri province in May before spreading to Uganda, has killed at least 3,700 people as of the U.N.'s Sept. 22 count. That makes it the second-deadliest Ebola outbreak on record, behind the 2014-2016 epidemic in West Africa.

The new money fulfills a G7 pledge of up to an additional $500 million, and it came with a message for everyone else. The State Department urged other "capable nations to increase burden sharing to meet the urgency of the moment." The U.N.'s $2.13 billion response plan is only 48 percent funded, leaving a gap of roughly $1.1 billion.

As The Epoch Times notes further, the $887 million in direct aid for the Ebola outbreak is on top of existing U.S. contributions to international aid through the U.N. Office for the Coordination of Humanitarian Affairs (OCHA).

Since the start of the second Trump administration, U.S. contributions to OCHA's aid programs across 21 key countries have reached $3.8 billion.

A $2 million first tranche contribution was agreed to in December 2025 when the Trump administration outlined its "Humanitarian Reset" framework agreement following the U.S. withdrawal from the World Health Organization (WHO) and cuts to its funding.

A second tranche of $1.8 billion was made to OCHA on May 14. Part of this includes $350 million in aid to Congo, Uganda, and South Sudan, the department said.

In addition to aid contributions to the United Nations, the United States, under the Trump administration's America First Global Health Strategy, has been outlining bilateral global health agreements with partner countries. In February, Washington and Congo signed a five-year health memorandum of understanding under that strategy, with the United States intending to provide up to $900 million to support HIV, tuberculosis, malaria, maternal and child health, and disease surveillance.

The current Ebola outbreak began in Ituri province in northeastern Congo. It quickly spread to Uganda. On May 17, the World Health Organization declared the spread of the virus a public health emergency of international concern.

WHO Director-General Tedros Adhanom Ghebreyesus said during a press conference on Sept. 16 that transmission is declining in the most affected areas of the outbreak epicenter, with the epidemic mostly contained to northeastern Congo.

But he warned that more work was needed. He said the situation wasn't a single epidemic to manage, but rather "many outbreaks in many places."

According to the CDC's situation page, no Ebola cases associated with this outbreak have been reported in the United States, and the overall risk to the U.S. public and travelers remains low.

Tyler Durden Fri, 09/25/2026 - 04:15

France Sending Soldiers To Saudi, Stating "Not Getting Involved In Any Conflict"

Authored by Mike Shedlock via MishTalk,

Check out this Orwellian statement by French President Emmanuel Macron.

France to Deploy Forces to Saudi Arabia Red

The Wall Street Journal reports France to Deploy Forces to Protect Saudi Red Sea Oil Port

"We are going to send military assets, that is, soldiers, radar systems, and defense systems to protect this site," Macron said in a TV interview on Thursday. However, he stressed that France was "not getting involved in any conflict," adding that the decision had been finalized with Saudi authorities.

We need to pause her for a second and reflect on how and why sending soldiers to Saudi is "not getting involved in any conflict."

In the absence of sending troops one might have a poor claim. But this is insane.

What happens if someone is killed while not getting involved?

Asked whether France could deploy Rafale jet fighters to help protect the site, Macron said it would depend on how the situation evolves, adding that some planes were already in the region.

Stretching 750 miles across Saudi Arabia from the kingdom's oil-producing heartland on the Persian Gulf to the Red Sea port of Yanbu, the East-West pipeline has become a vital wartime artery, allowing Saudi crude to reach global markets without passing through the Strait of Hormuz. It was built in the early 1980s, when the Iran-Iraq War threatened shipping in the Persian Gulf.

The pipeline can carry up to 7 million barrels a day - about 2 million for domestic Saudi refiners and the rest for export - but had never operated at full capacity for an extended period before the war.

Saudi Arabia said the pipeline was hit in multiple attacks in the Riyadh and Medina regions on Sept. 10, which caused injuries. It said the drones were fired from Iraq, where authorities have struggled to control Iran-backed militias that have repeatedly targeted Saudi infrastructure.

Two Things This Tells Us

1. Macron is desperate

2. France is woefully short of diesel

Average EU Diesel Price Hits Record 2.23 Euros a Litre

France24 reports Average EU Diesel Price Hits Record 2.23 Euros a Litre

Diesel prices at pumps across the European Union have hit a new high of 2.23 euros per litre, up from 2.16 euros the previous week, an AFP analysis of European Commission data published Thursday showed.

The fresh peak - equivalent to $9.63 per US gallon - comes as the wars in the Middle East and Ukraine have choked off crude supplies and damaged refineries, causing energy prices to surge worldwide.

Nineteen EU countries including Germany, France and Italy have registered record average prices, according to weekly data going back to 2005.

Among the countries setting new records, Denmark and Finland have reported the highest prices, at 2.56 euros per litre of diesel, followed by Germany at 2.46 euros.

Prices in Belgium and France are both close to 2.40 euros and are nearly 2.30 euros in Italy.

The Domestic Fallout in France

The severe price shock - supercharged by the ongoing wars disrupting global refining capacity and Middle East supplies - is creating immediate political and economic problems for Macron's government:

• Subsidies and Empty Coffers: To head off potential street protests, the French government just doubled its targeted fuel relief package to €450 million, offering €100 payouts to low-income, high-mileage commuters. This brings total emergency energy relief spending to €1.4 billion, severely blowing out France's budget deficit.

• Supply Shortages & Protests: Roughly 16% of French petrol stations are currently reporting shortages of at least one fuel type. Angry fishermen have already resorted to blocking oil depots and Mediterranean ports to protest the devastating impact of fuel costs on their livelihoods.

This domestic crisis is precisely why Macron is using the "infrastructure security detail" narrative to justify deployment to the Yanbu port.

Macron is attempting to spin a military deployment as a direct kitchen-table defense against the energy shock hitting French drivers.

Three Things Macron Did Not Do

1. Blame Biden

2. Blame Obama

3. Blame Trump

Only one of those makes any sense. And that's door #3 of course.

But that's OK because nothing can possibly go wrong. Trump says peace talks with Iran are back on.

The "sources" are back

U.S. and Iranian negotiators are discussing a phased agreement to end the conflict: Reuters

But...

The main obstacle remains sequencing: neither side wants to surrender its leverage first, leaving negotiations fragile.

— zerohedge (@zerohedge) September 24, 2026

Seems like there is just one obstacle. So, how desperate is Trump?

Tyler Durden Fri, 09/25/2026 - 03:30

Switzerland Is Still The Most Expensive Place In The World To Eat Out

The $20 that buys one inexpensive restaurant meal in the U.S. buys about three in Japan, nine in India, and 12 in Bangladesh.

In eight European countries, led by Switzerland, it would not cover even one.

All 98 prices come from Numbeo, accessed on August 24, 2026.

Numbeo’s prices are crowdsourced from users reporting what they paid locally and converted to U.S. dollars at market exchange rates. The prices represent a meal at an inexpensive restaurant by local convention, so the ranking compares the lower-cost end of each country’s restaurant market rather than one identical dish priced 98 times.

The roster moves between pulls: Israel, Luxembourg, and Russia carried no data on the access date and are absent here, though they appear in other pulls of the same dataset.

Switzerland Is the Most Expensive

At $31.20, Switzerland is a clear outlier, costing nearly a third more than second-place Norway at $23.60.

The table, via Visual Capitalist's Sofie Gilbert, ranks all 98 countries and territories from most to least expensive, including the 38 the graphic leaves out.

Rank Country Meal at an Inexpensive Restaurant (USD) Region 1 🇨🇭 Switzerland $31.20 Europe 2 🇳🇴 Norway $23.60 Europe 3 🇩🇰 Denmark $23.43 Europe 4 🇧🇪 Belgium $23.36 Europe 5 🇳🇱 Netherlands $23.36 Europe 6 🇮🇪 Ireland $23.35 Europe 7 🇬🇧 United Kingdom $21.82 Europe 8 🇮🇹 Italy $20.19 Europe 9 🇺🇸 United States $20.00 N. America 10 🇦🇹 Austria $18.68 Europe 11 🇨🇦 Canada $18.11 N. America 12 🇦🇺 Australia $17.91 Oceania 13 🇬🇷 Greece $17.52 Europe 14 🇫🇮 Finland $17.52 Europe 15 🇩🇪 Germany $17.52 Europe 16 🇪🇸 Spain $17.52 Europe 17 🇪🇪 Estonia $17.52 Europe 18 🇨🇾 Cyprus $17.52 Europe 19 🇲🇹 Malta $17.52 Europe 20 🇫🇷 France $17.52 Europe 21 🇺🇾 Uruguay $16.17 S. America 22 🇸🇪 Sweden $15.30 Europe 23 🇳🇿 New Zealand $14.93 Oceania 24 🇦🇷 Argentina $14.34 S. America 25 🇱🇹 Lithuania $14.01 Europe 26 🇵🇹 Portugal $14.01 Europe 27 🇱🇻 Latvia $14.01 Europe 28 🇸🇮 Slovenia $14.01 Europe 29 🇭🇷 Croatia $14.01 Europe 30 🇵🇷 Puerto Rico $13.50 N. America 31 🇭🇺 Hungary $12.88 Europe 32 🇧🇬 Bulgaria $11.94 Europe 33 🇲🇽 Mexico $11.83 N. America 34 🇸🇬 Singapore $11.82 Asia 35 🇲🇪 Montenegro $11.68 Europe 36 🇿🇦 South Africa $11.24 Africa 37 🇷🇴 Romania $11.11 Europe 38 🇨🇷 Costa Rica $10.98 N. America 39 🇦🇲 Armenia $10.98 Asia 40 🇰🇿 Kazakhstan $10.85 Asia 41 🇵🇱 Poland $10.83 Europe 42 🇬🇪 Georgia $10.56 Europe 43 🇦🇱 Albania $10.10 Europe 44 🇧🇾 Belarus $10.02 Europe 45 🇻🇪 Venezuela $10.00 S. America 46 🇷🇸 Serbia $9.96 Europe 47 🇲🇩 Moldova $9.88 Europe 48 🇨🇿 Czech Republic $9.69 Europe 49 🇹🇷 Turkey $9.36 Middle East 50 🇸🇰 Slovakia $9.34 Europe 51 🇦🇪 United Arab Emirates $9.26 Middle East 52 🇦🇿 Azerbaijan $8.82 Asia 53 🇨🇱 Chile $8.71 S. America 54 🇩🇴 Dominican Republic $8.52 N. America 55 🇺🇦 Ukraine $8.38 Europe 56 🇭🇰 Hong Kong (China) $8.29 Asia 57 🇶🇦 Qatar $8.24 Middle East 58 🇨🇴 Colombia $8.12 S. America 59 🇵🇦 Panama $8.06 N. America 60 🇧🇦 Bosnia And Herzegovina $7.77 Europe 61 🇰🇼 Kuwait $7.70 Middle East 62 🇲🇰 North Macedonia $7.60 Europe 63 🇰🇷 South Korea $7.21 Asia 64 🇧🇭 Bahrain $7.02 Middle East 65 🇸🇦 Saudi Arabia $6.65 Middle East 66 🇲🇺 Mauritius $6.44 Africa 67 🇧🇷 Brazil $6.42 S. America 68 🇿🇼 Zimbabwe $6.33 Africa 69 🇯🇵 Japan $6.29 Asia 70 🇨🇺 Cuba $6.00 N. America 71 🇺🇿 Uzbekistan $5.90 Asia 72 🇽🇰 Kosovo $5.84 Europe 73 🇰🇬 Kyrgyzstan $5.72 Asia 74 🇯🇴 Jordan $5.64 Middle East 75 🇴🇲 Oman $5.20 Middle East 76 🇹🇼 Taiwan $4.71 Asia 77 🇮🇶 Iraq $4.58 Middle East 78 🇲🇦 Morocco $4.33 Africa 79 🇹🇳 Tunisia $4.13 Africa 80 🇵🇭 Philippines $4.05 Asia 81 🇪🇬 Egypt $3.93 Africa 82 🇰🇪 Kenya $3.86 Africa 83 🇲🇾 Malaysia $3.71 Asia 84 🇵🇪 Peru $3.58 S. America 85 🇪🇨 Ecuador $3.50 S. America 86 🇮🇷 Iran $3.27 Middle East 87 🇹🇭 Thailand $3.06 Asia 88 🇨🇳 China $2.98 Asia 89 🇱🇰 Sri Lanka $2.88 Asia 90 🇩🇿 Algeria $2.72 Africa 91 🇵🇰 Pakistan $2.16 Asia 92 🇮🇳 India $2.09 Asia 93 🇳🇵 Nepal $1.96 Asia 94 🇻🇳 Vietnam $1.91 Asia 95 🇳🇬 Nigeria $1.85 Africa 96 🇧🇴 Bolivia $1.73 S. America 97 🇮🇩 Indonesia $1.70 Asia 98 🇧🇩 Bangladesh $1.63 Asia

The 38 countries omitted from the graphic, priced between $12.88 and $6.33, are mostly in Eastern Europe and Latin America. The global median of $9.35 falls between Turkey and Slovakia.

Several wealthy economies also fall in this middle range, including Singapore at $11.82, Hong Kong at $8.29, and South Korea at $7.21. Every Gulf state does as well, from the UAE at $9.26 to Saudi Arabia at $6.65.

Europe Dominates the Most Expensive Countries

Seventeen of the 20 most expensive countries are European; the exceptions are the United States, Canada, and Australia. Behind Switzerland, the Nordic and Benelux countries bunch tightly: Norway at $23.60, Denmark at $23.43, Belgium and the Netherlands at $23.36, and Ireland at $23.35 span just 25 cents.

Currency conversion helps explain two visible clusters. Eight countries at $17.52, including France, Germany, and Spain, and five at $14.01, including Portugal and Croatia, are eurozone members reporting round local prices of €15 and €12.

Europe is far from uniform, however. Hungary sits at $12.88 and Bulgaria at $11.94, while the continent’s spread runs more than fivefold from Switzerland to Kosovo at $5.84.

The U.S. Ranks Ninth

The U.S. ranks ninth at $20.00, making it the only non-European country in the top 10. Italy sits just above it at $20.19.

Austria ranks 10th at $18.68, followed by Canada at $18.11, about 10% cheaper than the U.S.

Japan Is the Cheapest G7 Country

Japan ranks 69th of 98 at $6.29, below the global median and far cheaper than any other G7 economy. The next-cheapest members, France and Germany, cost nearly three times as much.

The low price does not signal a thin restaurant sector: Japan ranks third worldwide with 351 Michelin-starred restaurants, behind only France and Italy.

Japan also undercuts Singapore, Hong Kong, and South Korea. Among its high-income neighbors, only Taiwan, at $4.71, is cheaper. Japan’s placement reflects what a visitor holding dollars would pay, not what the meal represents to a household earning yen.

Asia and Africa Have the Cheapest Meals

Indonesia at $1.70 and Bolivia at $1.73 sit just above Bangladesh at the bottom. Eleven of the 20 cheapest countries are in Asia and five are in Africa, where Nigeria is the cheapest entry at $1.85.

South Asia clusters near the bottom, with Nepal at $1.96, India at $2.09, and Pakistan at $2.16. China comes in at $2.98.

Six of the world’s 10 most populous countries rank among the 20 cheapest, meaning some of the lowest restaurant prices in the dataset apply to countries containing a substantial share of the world’s population.

If you enjoyed this visualization, check out The World’s Best Cities for Food on the Voronoi app.

Tyler Durden Fri, 09/25/2026 - 02:45

Merz Govt May Use Radical 'Federal Coercion' If AfD Party Controls Germany's Saxony-Anhalt Region

Via Remix News,

The anti-immigration Alternative for Germany (AfD) won the Saxony-Anhalt state election by a wide margin but fell short of an absolute majority. Nevertheless, the party may still come to power if it can garner enough support from BSW or peel off a few MPs from rival parties.

This possibility has thrust an unused and radical clause of the German constitution, federal coercion or "Bundeszwang," to the center of a fight over how far Berlin can go if the right-wing party takes power.

The AfD took 43.8 percent of the vote in the Sept. 6 election, but the AfD remains three seats short of an absolute majority. However, Ulrich Siegmund, the AfD's 35-year-old lead candidate, could still become minister-president. The German government has plenty of tools for dealing with Siegmund if he steps out of line.

Germany's establishment threatens to use "federal coercion" clause

Federal coercion is one of the most radical mechanisms in the German constitution. Article 37 allows the federal government or a representative it appoints to issue binding orders to the states and their agencies. The Federal Republic of Germany has never resorted to this clause before.

Anna-Bettina Kaiser, a law professor at Humboldt University in Berlin, told Deutsche Welle the bar is extremely high.

"The term 'dramatic' is most apt here. This is why federal coercion has never been introduced in the history of the Federal Republic - it is treated as a last resort," she told Deutsche Welle, a state outlet that receives approximately €415 million a year in taxpayer money.

Until now, fights between Berlin and the states have been settled mainly in court.

"It is usually assumed that in the event of a specific legal dispute, the case will go to the Federal Constitutional Court and the given state will comply with the judgment issued by that body," Kaiser said.

Deutsche Welle reported that an extreme use of Article 37 could include naming a federal representative with power to issue binding orders in specific areas.

"Article 37 actually provides for the appointment of such a representative who has the power to issue binding orders," Kaiser said.

Any step would have to match the violation and meet constitutional tests. However, Article 37 lists no catalog of penalties. It speaks only of "necessary measures," leaving the article vague and open to interpretation.

Bundesrat consent would be essential. Under the chamber's rules, the affected state keeps its vote on Article 37 decisions.

Union parliamentary leader Thorsten Frei has since called Article 37 an option of last resort if an AfD state government acted against the constitution. Social Democratic floor manager Dirk Wiese said it was "good to know" the Basic Law allows constitutional conduct to be compelled by instruction if an "AfD-BSW Putin coalition" installed a far-right politician as premier. The Greens and the Left have not ruled the tool out.

Saxony-Anhalt's Office for the Protection of the Constitution classifies the state AfD as "confirmed right-wing extremist."

Cutting funding to an AfD government

On top of the constitutional power that Article 37 offers, the tried-and-tested method of cutting funding is also being discussed and it is not even clear yet if the AfD will be able to assume power in the state.

German officials have also discussed suspending some federal budget transfers to Saxony-Anhalt, which is still dependent on such transfers to prop up its economy. Tagesschau reported that structural funds could be frozen if an AfD government breached EU fundamental rights or rule-of-law conditions.

However, beyond these federal transfers, powerful German Green MEP Daniel Freund said after the vote that the European Commission should, if necessary, withhold money if an AfD-led state government acted against EU principles.

Freund was a notorious foe of Hungarian Prime Minister Viktor Orbán and a longtime advocate of the EU cutting funding to Hungary while his government remained in power. Freund not only succeeded in lobbying the EU to cut funding but this tool is generally seen as one of the primary contributing factors in toppling Orbán from power.

The reality is that this method of cutting or freezing funds has worked remarkably well for the EU, also in the case of Poland's previous conservative government. When funding is cut, the population suffers, and when they suffer, they punish politicians at the voting booth. Orbán could point the finger all he wanted at Brussels. It did him no good in the end.

If the EU or the German federal government cuts funding, Saxony-Anhalt will suffer, and there is nothing an AfD government can do about it.

For now, it appears for the EU establishment has a virtually fool-proof method for dealing with any voter rebellions or unfavorable democratic results.

A CDU-led federal government also has every incentive to make an example out of a regional AfD-led government. Shortly after the Saxony-Anhalt election, Chancellor Friedrich Merz said Berlin would act if Saxony-Anhalt crossed lines set by the constitutional order.

"If boundaries are crossed there, I assure you that from the federal government's point of view we will do everything to correct it. The Basic Law also applies in Saxony-Anhalt," Merz said.

Merz pointed to migration and foreign policy. He also cited the unwritten duty of "federal loyalty." A state must act loyally towards the standards of the federal state. That covers "the entire immigration and foreigners policy," he said.

Fact-checkers later noted that Merz did not use the word "federal coercion," or "Bundeszwang." Nevertheless, the debate that followed is freely using the term and how it can be applied against the AfD.

The AfD casts itself as a "rule-of-law party"

However, simply winning an election would not, by itself, justify federal coercion. Article 37 of the Basic Law allows the tool only if a state fails to fulfill duties imposed by the constitution or other federal law. The federal government may then, with the consent of the Bundesrat, take the measures needed to compel those duties.

The AfD's answer has been that it would govern inside the law, and that Berlin is trying to cancel a democratic result.

The morning after the vote, Siegmund again called the AfD a "rule-of-law party," and said he would act lawfully. He later thanked the Berlin press sarcastically for portraying him as a threat to democracy and said he wanted to "extend a hand" to every actor in the legislature.

AfD co-leader Alice Weidel called the result a mandate to govern, said Merz was the most unpopular chancellor Germany has had and told him his time was up. In the Bundestag she argued that the CDU-SPD coalition had failed. Merz accused her of pushing Siegmund into "electoral fraud" by urging him to hunt for a majority after he had promised to take office only with an absolute majority.

The issue of mass immigration, in the end, always appears to be the real point of contention. According to the European and German establishment, it must continue at all costs. In a 2024 ARD summer interview, co-leader Tino Chrupalla said an AfD-led state would no longer apply the "Königstein key," which apportions asylum seekers among the states.

"We would no longer go along with that," he said at the time.

Siegmund has promised "deportations from minute one" and a remigration offensive.

However, a federal government that wants to prove the AfD weak and ineffective is unlikely to allow such a remigration offensive to move forward. There are plenty of tools at its disposal to stymie the AfD and even sabotage its government. Siegmund may be facing a wave of funding cuts, litigation, and ultimately the federal government stepping in and essentially seizing power if he manages to gain power in the state.

Tyler Durden Fri, 09/25/2026 - 02:00

Rogue AI "Regulation" - A Potential Worst Case Scenario

Authored by Kit Knightly via OffGuardian,

We're now several weeks into our new global fear narrative - "Rogue AI is going to kill us all".

The problem is stated, the reaction stage-managed, and we're heading for the "solution", which will inevitably be some kind of "regulation".

They have been diligently vague about what this "regulation" might entail, and that means only one of two things -

1. either they don't really know yet and are keeping their options open,

2. or they know it will be so unpopular they can't afford to say it out loud yet.

We might be due some hints - maybe even more than hints - with the United Nations General Assembly beginning yesterday, and a state meeting between China's Xi Jinping and Donald Trump later this week.

We can be fairly sure however that anything announced or posited this week will only be the beginning of what is very likely to be longer-term process. We've seen this already with regulation of social media and the internet in general. Multi-layered legislation forming a global patchwork of tyranny - that's the model, although, with the effort clearly put into this "scary AI" storyline, I would expect them to move somewhat faster than the social media age verification laws, for example.

I've seen a lot of people suggest this will come down to securing a monopoly for the established AI giants, but, while this may well be a factor, I don't see that as a sole end worth the means at this stage. Global media synchronisation is neither easy nor cheap, and to organise the biggest example of it since the dawn of Covid would suggest something more than stock prices are on the agenda.

As for real specifics - what any new rules might actually say - I've been working on my own ideas, and I wanted to share this shameless supposition with you all.

What might we expect from 'anti-AI' legislation?

Firstly, and most obviously, AI will no longer be free. No free access to generative AI, and potentially no more anonymous access to generative AI. It may well be that in the future if you want to use AI you will have to pay and/or verify your ID.

Almost certainly, they will make it so prompts are recorded, scanned and "potentially harmful" ones are forwarded to the government.

"What are you making with AI that you're so ashamed of?" will be parroted line in response to any objection.

They will tack on stuff about AI being used to make "child sexual abuse material", misogynistic or racist content, spread "hate", or "digital violence" or whatever other buzzwords they need to win over hysterics from the left and right and justify this clause.

They have, in fact, already started doing that. A lot.

AI and anonymity fuel surge in digital violence against women
United Nations Report

Secondly, no more open source. If you make a model you will need to register it with the government and pay a registration fee, and have it inspected by "experts" who will shut it down if it's not deemed safe.

Precedent for this already exists in the shape of the "Social Media Licensing Bill" currently passing through the UK's Parliament, which demands anyone who runs a social media platform require a license to operate it.

At a stroke, these two moves would embed the AI giants monopoly, end in-house or open-source AI models, and cripple small independent businesses who increasingly rely on generative AI to reduce man-hours for simple tasks like editing, checking code or making images.

Third, we're going to be told we need to protect ourselves from "rogue AI agents" masquerading as humans - so no more anonymous internet usage. If you want to open an account - for anything, anywhere - you'll need "proof of personhood".

That's also been a talking point for a few months now.

We Need A Way To Prove Personhood Online - The growing number of AI agents roaming the internet will eventually force us to verify what the old web mostly presumed: that there is a morally and legally accountable person somewhere in the chain.
Noema Magazine

Your digital "Proof of Personhood" (they'll probably brand it with a happy logo and fun little acronym like "proof of personhood and identity" or "POPI") will be required to open any social media accounts, make online payments, buy hosting services...basically everything.

Little cartoons of Popi will teach you how to use your new proof of personhood to book a medical appointment or pay your taxes while protecting your kids from being killed by Skynet.

"Rogue AIs are hiding behind anonymous online activity", they'll say. "Proof of humanity is a small price to pay to prevent the apocalypse".

That's why the "Rogue AI" script has been so careful to include reports of AIs pretending to be humans.

They'll likely go after every even partially unwatched corner of the digital world, constantly breaking new 'revelations' about AI agents hiding behind VPNs or using crypto currency to force an end to anonymity there as well.

None of these are especially "out there" suppositions. It's rather like predicting a man will hit the ground after you watch him fall off a ladder. In fact we're basically already there.

But is that the end of it?

Given the amount of hysteria being generated, it's got to be possible these measures will be just the beginning.

It's possible we're going to end up in a deeper and darker place than that.

A "post-internet future" perhaps? Or at least, post 'the internet as we know and understand it'.

A future where internet usage and AI compute is limited by bandwidth, tokenised or even rationed.

The narrative would be quite simple -

"Excessive digital traffic and AI usage is bad for the planet and risking an AI-related apocalypse, so we must transform the way we use the internet".

And unless we feel too skeptical about this step, let's remember a lot of the pieces required to spin that fiction are already in play.

Firstly, they have established in a lot of people's minds - through repeated propaganda and, frankly, tortured statistics - that data centres, ALL of them - are uniformly and irredeamably bad.

They use too much water. They use too much electricity. They release forever chemicals. They are worsening climate change. This is all stuff that has already been said, and with highly variable amounts of accuracy.

The motive behind that propaganda drive has never been completely obvious, but maybe it's becoming so now?

After all, having established that all data centres - no matter where they are and what they are used for - are bad, it wouldn't be a huge step to get to "it's time to lessen our reliance on them".

That means propaganda campaigns aimed at reducing the world's internet usage - or rather, reducing ordinary's people's internet usage. And if not reduce it, at least make it more expensive.

"The era of infinite data is over", the press may say, "people need to adjust to more realistic prices for internet access."

Other articles will bemoan how "spoiled" we have become as a society, with things being easily accessible at the touch of a button, and that such a system was never "sustainable". Inter-generational division will be encouraged, just as resentment of boomers has been so deeply and irrationally ingrained.

Clearly, they'll say, a certain amount of internet usage is required for the world to function - emergency services, healthcare, the military, air traffic controls, taxation records and other government offices. These will all be deemed necessary and be officially labelled in corporate speak, SBDC - "societal-baseline digital communication". Something like that.

Those services may have their own data centres set aside - what they'll call "essential digital infrastructure".

However, a massive percentage of our data centre usage is of course due to what they will call "non-vital internet traffic", or some similar phrase.

This is social media posts, watching Netflix, online shopping, playing multiplayer games...that kind of thing.

However YOU use the internet in fact.

Your "non-vital internet traffic" could become a counter, linked to your digital ID (oops, sorry, "proof of personhood") - like your vaccination records or your carbon footprint. They'll probably even call it a "digital carbon footprint" in asinine explainer articles.

Vox or Salon will run listicles detailing "Top 10 Ways You Can Reduce Your Data Centre Use", while the Guardian wheels out a bob-cut, glasses-wearing humanities graduate named Chloe to go into painful detail about how much her life improved now that she no longer lives online.

"Shopping in person, instead of ordering groceries online, helped me reconnect with my neighbourhood and myself"

"Watching old DVDs with my kids to save our internet footprint taught me to appreciate the little things"

The price of streaming services will either increase, or your watch time will be limited - at first they'll probably let you choose which. The cost of "unlimited" data and internet services will go up as well, with "data centre friendly" bandwidth limitations being preferred.

These limitations won't apply to uploads from your GPS-enabled devices, smart air quality monitors or smart water and energy meters, as these uploads will be classified as ICMD -"important climate-monitoring data".

You'll suddenly be encouraged to buy physical media again because it's more reliable, and to shop locally, rather than online, because it supports small businesses. And this marketing will work because it's largely true.

But don't think there won't be a catch. eg - the new physical media will have a new green label on the box that says DCN - "data centre neutral"., and this tiny addition will cause the prices to go up exponentially, but of course that will be a small price to pay to prevent the apocalypse, too.

Oh and the "new" generation of physical media players won't be backwards compatible with your existing DVDs or BlueRays - so you'll need to purchase everything again, at the new inflated price, and with availability strictly limited to movies and music that doesn't offend current sensibilities.

Of course, you realise none of this will really be about avoiding any apocalypse.

It will be about compartmentalisation. Cutting lines of communication.

Running small business or personal websites in general will become more expensive as the "data centre tax" is added to hosting providers.

Much like the "sugar tax" on fizzy drinks and snacks in the UK, this tax will notionally be paid by the hosting providers, but will be passed onto the customers via increased prices.

Major corporations will be able to easily afford these increases, but smaller independent sites will feel the pinch.

It will be cheaper to pay corporate resellers to cohost, but then you'll have to sign up to agreements about not publishing "misinformation" and, again, provide your proof of humanity.

If you run a website your data centre usage tax will be 0.04 per local visitor, but 0.10 per international visitor - since serving data further is more compute heavy.

You'll be able to get reductions in hosting costs if you use a "local only" server, accessible only to those resident in your home country/region/bloc etc.

Automatic translation, we'll be told, is very heavy on AI usage. So it will be increasingly cheaper to only publish in your native language too.

It won't matter if any of this is true or not, they'll just say it, as they do.

On social media, the more followers you have the more data you're using, so after a certain point you will have to either pay to maintain your followers, or pay per post to make sure your followers can see it.

Of course these limitations won't apply to legacy outlets like the BBC, CNN or their ilk of course. They will be exempt, because they are part of the "essential information distribution network".

And all the time, the fear of "rogue AI" will be there, to be picked up as convenient. A digital pandemic that, like Covid, can be started and stopped on a dime by the digital version of "testing protocols".

Kill switches and "digital firebreaks", allegedly installed to quarantine "rogue" AI agents, will enable swift isolation of any anti-establishment opinions or information that breaks through to an audience of any size.

An independent news YouTube channel getting a lot of views? Oh no, it's been reported to be AI and has been suspended pending investigation!

An alternate media website is getting a lot of views? Oh no, the server it's stored on has been compromised by AI and needs to be temporarily isolated!

Again, obviously not one word of this needs to be true. They will just say it. Like they just say everything now.

And the real kicker is it won't matter if global internet traffic does decrease or data centre use really declines. They probably won't even check. The real numbers don't matter.

Does this seem fantastical? Maybe. But we have seen similar before, with both Covid and climate change. The 'solutions' don't need to work, because the 'problem' never existed. It was just a narrative constructed for a given end. All they need to do to 'prove' they were successful is buy some scientists to publish doctored papers that torture numbers and spin lies - and that will be enough.

To be clear, I'm not saying all of this is definitely going to happen, in fact I'm not sure all of it is even feasible. But it's what I think they would like to do if they can, and may try to do.

We're too far down the road to Dystopia to be complacent about the intentions of our keepers. And feasibility has never been a barrier to the ambition of tyrants to be tyrannical. We had years of attempts to "ban end-to-end encryption", despite it essentially being impossible.

Anyhow, whether these worst case scenarios materialise or not, the direction of travel is the same: toward less freedom, less choice, less privacy. Same direction as every other major narrative drive for the last ten years if not longer.

More specifically in this instance it could be about turning the internet from global unlimited access to local pay-as-you-go.

The current internet, even with all its restrictions, has been instrumental in fomenting opposition to globalist policies, distributing evidence of false flag attacks, open source investigations into corruption in the elites - it is the greatest tool for the democratisation of information ever invented, and the people running the world have ALWAYS hated that aspect of it, even while they exploit the benefits gives them.

In the name of protecting us from the AI apocalypse and saving the planet from toxic data centres, I think the elite might sense a chance to regulate that particular genie back into its bottle.

Yes, as I said earlier, the second part of this is all supposition, a potential worst case scenario. Maybe I'm just getting paranoid and inventing another kind of fear porn!

I sincerely hope that's all it is.

I will never be happier to be wrong.

Tyler Durden Thu, 09/24/2026 - 23:25