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The $1 Million Tanker Was Just The Start: Every Crude Freight Index Hits Record High As Hormuz "Works" Too Well

Just when we thought crude tanker rates couldn't go any higher, they did - again.

A week ago, a record million dollars a day charter for a supertanker was the punchline. Now it's the floor: the Baltic Exchange's TD3C, the benchmark Saudi Arabia-to-China VLCC route, hit yet another all-time high of $1.33 million per day on Monday, up 10% on the week and 21 times where it was a year ago!

But the real fireworks are elsewhere. As Lloyd's List's Greg Miller writes, the tanker market's "cascade" effect has gone into overdrive, with record VLCC strength spilling into suezmaxes, and suezmax demand in turn dragging up aframaxes:

Crude tanker markets hit a tipping point in mid-September, surging to a new level as more crude exited the Strait of Hormuz. Over the past three days, rates crossed another tipping point, spiking even higher due to the lagged global 'cascade' effect.

In other words, the better the Hormuz shuttle "works", the more expensive it gets to ship a barrel anywhere in the world.

Let's take a closer look at the carnage segment by segment, what Goldman, JPM and BofA say is driving it, and why the only thing standing between owners and $1.6 million a day is the refining margin.

"Available Tonnage Is Vacuumed Off Position Lists The Second It Is Marketed"

Regular readers know we have been tracking the tanker rate crisis since before it was cool - specifically February 20 - a week before the first Iran shots were fired, when the Baltic's Middle East-China VLCC route had "only" tripled to $151K a day. We were also on the $1 million milestone before it happened: "Mideast Chaos Sends Supertanker Rates Soaring To Near Record $1 Million A Day", a headline we upgraded from $800K within hours. Then on Sept 23, with rates on the Gulf-India route nudging $1 million, we put out this chart:

What changed in the past week?

According to Lloyd's List, Gulf producers decided to push more tankers through Hormuz under US military protection (even as Iran ratchets up attacks: UKMTO confirmed two separate projectile strikes on crude tankers in and around the Strait just over the weekend), which sharply increased near-term cargo supply and pulled more VLCCs to wait for ship-to-ship (STS) transfers in the Gulf of Oman. Clarksons Securities puts the wait for an STS slot at seven to 10 days, and estimates STS volumes have surged from 5-6 million barrels a day a month ago to 12 million b/d.

And since VLCCs loading via STS in the Gulf of Oman earn about 50% more than VLCCs loading in the Atlantic, with a much shorter ballast leg from Asia, owners are doing the rational thing. As Poten & Partners' head of tanker research Erik Broekhuizen put it:

"Even in a crazy market, shipowners tend to make rational decisions. The earnings discrepancy has kept VLCCs closer to the Asian market, leaving it to suezmaxes and aframaxes to do the heavy lifting out of the US Gulf, turbocharging their earnings."

Translation: the Atlantic has run out of supertankers. With few ballast VLCCs around, charterers have been forced to split 2 million-barrel stems into 1 million-barrel suezmax cargoes, and the result is what Fearnley Securities calls a market where "available tonnage is seemingly vacuumed off position lists the second it is marketed." Sparta Commodities summed it up even more concisely: "Atlantic freight is repricing violently on real tightness."

Parabolic Suezmaxes

Suezmax owners are the big winners. Atlantic basin suezmax rates more than doubled in three trading days, and they were already at or near record highs before the latest jump. On Monday:

• US Gulf-Europe: $577,792/day, up 150% w/w
• Guyana-Europe: $584,012/day, up 150% w/w
• West Africa-Europe: $567,138/day, up 145% w/w
• Black Sea-Med (with a Russia-Ukraine war premium on top): $801,077/day, up 115% w/w

Every single one of the Baltic Exchange's suezmax indexes hit an all-time high on Monday. For context, the US Gulf-Europe route was paying $90K at the start of September.

And now the cascade is running in reverse too: with suezmaxes (half the cargo) earning more than double what VLCCs do in the Atlantic, VLCC owners are simply holding out for more. The Baltic's West Africa-China VLCC index jumped 43% w/w to $697,160/day and US Gulf-China rose 20% to $473,958, both all-time highs. The Oman-China route, the one that actually captures the STS shuttle trade, was steadier at an "astronomical" $860,580/day, just shy of its Sept 17 record.

As for TD3C, Lloyd's List notes it is "perhaps the least relevant" index to actual owner earnings since almost no one sails direct from Saudi Arabia to China anymore - most crude is shuttled out to STS positions in a two-step process - but as a proxy for the total freight bill it is hard to beat. Nothing says "orderly market" like the benchmark route nobody uses hitting a record every week.

The Aframax Record Books Get Rewritten

Atlantic aframaxes had their moment in March, when panicked Asian buyers booked unusually long-haul aframax loads out of the US Gulf to replace Mideast crude. Those peaks were never revisited... until now. On Monday the Baltic's US Gulf-Europe aframax index was at $313,794/day (+44% w/w), Cross-Med at $343,227 (+19%), Caribbean-US at $335,288 (+70%) and North Sea-Europe at $348,651 (+10%). In early September most of these were paying $45K-$100K.

"Increased suezmax activity continues to provide further support for aframax demand," said Clarksons in its Monday brokerage report. Put simply, there is no class of crude tanker left that isn't being squeezed. And for those looking for the long-term perspective, here is John Kemp's inflation-adjusted Baltic Dirty Tanker Index: at 6,242 in October, it is now the highest on record in real terms, blowing past the November 2004 peak of 5,195.

Goldman: Gulf Exports Are Back... Which Is Exactly The Problem

Here is the paradox. Normally, more oil getting out of the Gulf would be bearish for freight. Not this time. As Goldman's commodity team wrote last week in "Adaptation: Persian Gulf Exports Return to 2025 Level" (available to pro subs), which we discussed at the time:

We estimate that Persian Gulf oil exports, including estimated "dark exports", have recovered to 23.3mb/d over the last week, in line with their 2025 average, as exports doubled in September. Increased Hormuz exports, including via ship-to-ship transfers, have driven the recovery despite the attack on the Saudi East-West pipeline (which disrupted flows to Yanbu for nearly two weeks) and the continuing Houthi blockade of Saudi exports via Bab-al-Mandab. Crude accounted for nearly 90% of the September recovery, reaching 19mb/d (108% of 2025 average)...

But while the barrels are back, the logistics are not.

A pre-war barrel took one voyage from Ras Tanura to Ningbo; today it takes a dark transit, a shuttle run, a 7-10 day wait off Fujairah or Sohar, a ship-to-ship transfer and then the long haul. Every one of those steps ties up tonnage. It's also why we have been saying since early March that Fujairah and the Hormuz bypass routes would become the center of the oil universe (a call Abu Dhabi is now putting tens of billions behind), and why the US Navy's billion-barrel escort operation has been, from the owners' perspective, the gift that keeps on giving.

JPMorgan's top oil strategist Natasha Kaneva made a similar point in her latest Oil Flash Note (available to pro subs): Hormuz throughput was back to ~13 million b/d, but "SoH transmission is not due to improved safety but improved ability to operate under risk," and freight rates were "~$1.27mm/day, a record." (They are higher now.) Goldman also points out that refined products are more flammable than crude, so the physical risks of a Hormuz crossing are greater for product tankers, which is one reason Gulf product exports are still stuck at ~50% of 2025 levels while crude is at 108%.

Meanwhile, Goldman's Rich Privorotsky summed up the market's take on Monday: "Plenty of threatened escalation and additional tankers hit, but diplomatic pathways remain open and, crucially, oil is getting out of the Gulf." Yes it is - at $1.33 million a day.

How High Can It Go? Ask The Refiners

For decades, $100,000 a day was the psychological bellwether of a VLCC upcycle. As Lloyd's List puts it, tanker shipping's "Overton window" now has an extra zero. Or as DNB Carnegie shipping analyst Jorgen Lian confessed at last week's Capital Link conference: "Our imagination is obviously not imaginative enough, because we've been lagging the reality by far." Spoken like a true sell-sider.

So where is the ceiling? It's set by the (parabolic) crack spread. If importers pay so much in freight that they can't earn a profit refining the crude, they stop shipping it. And with cracks at historic highs, that ceiling is a lot higher than anyone thought. Clarksons Securities lays out the math:

"As capacity gets scarcer, the balance shifts from owners competing for cargoes to charterers competing for ships. This is why refining margins matter so much. Once the supply curve is close to vertical, the question increasingly becomes how much the marginal cargo can afford to pay."

Per Clarksons, every $10/bbl increase in crude freight lifts VLCC TCE by ~$400K/day. Citing Argus, it estimates the Singapore product slate sold for $151/bbl last week, implying a pre-freight refining margin of ~$40/bbl, against Oman-Asia VLCC freight of ~$21/bbl, meaning "there is still considerable margin left for VLCC owners to capture." If owners grabbed the entire margin, which Clarksons admits is "unlikely in practice", Oman-China VLCC rates would be almost double current levels, at $1.6 million a day.

BofA's numbers back that up. The bank's Asian refining margin has been holding at roughly $35-45/bbl since August, more than four times its 5-year average (for more details see BofA's latest "The Oil Gusher" note)....

... while its European refining margin is at ~$49/bbl, with diesel cracking ~$90/bbl over Brent. That makes sense to anyone who has followed our coverage of the record diesel crack and Goldman's "nightmare" refining crisis warning; as we put it over the weekend, the US doesn't have an oil problem, it has a refinery problem. Turns out, so does the tanker market, only in a good way (for owners).

Two more factors stretch the ceiling.

• First, energy security: state-controlled buyers may "temporarily overpay for freight to secure volumes now", particularly if they worry US protection of the shuttle tankers isn't guaranteed indefinitely.
• Second, the share of freight in the delivered cost of crude, which Poten's Broekhuizen estimates has gone from ~3% at the start of the year to 27% now. Unprecedented for crude, though Breakwave Advisors notes Atlantic-to-China freight was more than 40% of landed iron ore cost last week - and capesize rates are nowhere near record highs. In other words, by dry-bulk standards, there is still room to run.

The Catch: Rates Don't Need More Ships To Fall

Before anyone extrapolates $1.6 million, Clarksons offers a crucial caveat:

"The reverse is also important. Rates do not need more ships to become available before they fall. If refinery margins weaken, charterers' willingness to pay can fall sharply even while vessel availability remains tight."

And that is where BofA comes in with the counterpoint. Its European refining margin strip is already in "(slight) backwardation", with the 4Q26 strip below the 3Q26 average of more than $42/bbl, and the bank models refining margins dropping to $15/bbl by end-2027. BofA's US refining team (in its "Refining roundup", also available to pro subs) is equally skeptical that the market should be paying up for a permanently higher crack, reiterating its "hesitance to buy into a +$3/bbl LT midcycle crack valuation." If the crack goes, the ceiling on freight goes with it - and we've seen this movie before: in June, tanker rates nearly halved in days on Hormuz normalization hopes, right after earnings had soared to $470,000 a day.

Meanwhile, the war itself isn't getting any calmer: per Bloomberg, the US blockade has now bottled up at least 50 tankers carrying Iranian oil, while Tehran's parliament speaker says the Strait won't fully reopen until the US meets seven conditions. Which, for now, is bullish for freight - right up until the ceasefire headline that sends it the other way.

Bottom Line

Lloyd's List puts the commercial logic simply: the spot rate "can be whatever charterers are willing to pay," with the caveat that charterers will, as financial pain increases, belatedly expand period coverage and reduce spot exposure. Or as Clarksons put it, "the rapid increase in Middle East crude flows has put the squeeze on all tanker classes."

Our take: with refining margins at $40+/bbl and Gulf barrels needing two or three ships to get to market instead of one, there is still near-term upside, and the Atlantic cascade has further to run as VLCC owners hold out for suezmax-equivalent economics. But the more important number may not be a TCE at all: freight is now 27% of the delivered cost of a barrel, which makes this an inflation story as much as a shipping one (as Bloomberg's Javier Blas warned in "The Next Inflation Shock: $1 Million-a-Day Oil Tankers" two weeks ago).

And when the owners themselves start ringing the register - Trafigura's tanker arm Volare jumped in its Oslo debut on Monday "as a wave of shipping IPOs builds" - history suggests the people who know ships best are selling them to the people who know them least. Enjoy the $1.33 million a day while it lasts: in shipping (as in everything else) nothing cures record rates like record rates.

Much more in the full Goldman "Adaptation: Persian Gulf Exports Return to 2025 Level" note and BofA's "The Oil Gusher: 3Q26 Playbook Part I" and "Refining roundup" notes, all available to pro subs.

Tyler Durden Tue, 10/06/2026 - 14:40

The Education Cartel And The Blue State School Scam

Authored by Jonathan Turley via JonathanTurley.org,

Below is my column in the Hill on the education cartel and how it is destroying our K-12 school system. After decades of bloated budgets and failing scores, our school system is now less popular than Cuba and communism. It is a particularly telling comparison in Chicago where union members went to Venezuela to praise the worker's paradise of the Maduro regime while the school system dumped U.S. bonds in opposition to the American "regime." Generations of inner-city children are being left without a future due to the failure of our school system, which prioritizes its own survival over its students.

Here is the column:

"In the first place, God made idiots," Mark Twain once wrote in an 1879 travel book. "That was for practice. Then he made school boards."

It appears that most Americans now agree with him. New polling shows that K-12 education has now reached a record low in the number of people who are even "somewhat satisfied" with the state of education in the U.S.

What is most troubling is that the near-total contempt for our school system does not make a bit of difference. Families and students have become largely irrelevant to an education cartel, a self-sustaining, self-perpetuating political alliance of unions and politicians.

According to Gallup, only 32 percent of American adults say they are "completely" or "somewhat" satisfied with the quality of K-12 education. That is the lowest figure in Gallup's 27 years of asking the question. Public satisfaction with the school system has dropped almost 20 points since just 2024.

For many of us, neither the drop in public support is surprising. The collapse comes at a time when universities are reporting that college students are entering higher education without basic math and other skills.

We have also seen the dismal decline in standards at elite universities like Harvard, where faculty have been compelled to teach high school-level math classes to students.

In May, faculty in the University of California system (which eliminated standardized testing to achieve greater equity in admissions) reported an alarming lack of math knowledge among new students.

Most recently, a University of California, San Diego, faculty report found a nearly 30-fold increase since 2020 in incoming students whose math skills fell below a high-school level.

For many of us, neither the drop in skills nor public support is surprising. For generations, the public school system has failed students in major cities. Despite massive budget increases, actual test scores continue to fall or remain at subpar levels.

In a prior column, I was particularly moved by the frustration of a mother in Baltimore who complained that her son was in the top half of his class despite failing all but three of his classes. Her story led to my changing my view of school vouchers. Despite my long support for public schools, I believe vouchers may be the only way to wrest control away from the education cartel by introducing real competition based on academic performance.

Faced with low proficiency scores, teachers' unions and school administrators have continued to lower proficiency requirements. They are simply pushing students out the door without basic skills, robbing these kids of any chance to break out of cycles of poverty and unemployment. When confronted with their poor performance, school board members have declared meritocracy to be a form of "white supremacy." Gifted and talented programs are being eliminated in the name of so-called "equity."

In any other field, such generational failure would be unthinkable. No business or enterprise could sustain itself. However, that is the point. There is little competition in this system. Blue states have largely blocked voucher systems while protecting teachers from performance-based standards.

Actual students have become irrelevant to budgets. In Chicago, there are schools that remain open despite 80 percent vacancy rates. One school, Frederick Douglass Academy High School has only 27 students, or 2 percent of its building's capacity. The school system spends $55,000 for each student at Frederick Douglass Academy.

Overall, 35 percent of Chicago schools are half full or less. But that did not stop the schools from spending a couple million on transcendental meditation sessions or giving teachers and students days off to join May Day protests (with city-subsidized buses).

According to a recent study, in 2025, Chicago Teachers Union spent a record $4.2 million on politics and lobbying but less than 18 percent on representing teachers. This included massive contributions used to elect former teacher and union organizer Mayor Brandon Johnson, a former organizer for the union. Johnson, in turn, has effectively turned over his office to the far-left union.

In economics, there are few scourges older and more damaging than the cartel, which uses its power over an area to create "higher prices, lower quality, and stifled innovation." There is a natural tendency for people to form such groups to stifle competition and feather their own nests. Adam Smith warned that "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public."

The Education Cartel is becoming one of the greatest and most insidious forms of such anti-competitive conduct. Teacher unions have used hundreds of millions of dollars in campaign contributions to acquire unchallenged power in blue states where they can dictate ever-increasing salaries, pensions, and budgets. One estimate found that, since 2015, the nation's two largest teachers unions - the National Education Association and the American Federation of Teachers - spent $669 million on federal campaigns and another $336 million on state and local campaigns.

Figures such as Randi Weingarten with the American Federation of Teachers effectively made their unions piggy banks for the Democratic Party and appear at far-left rallies to support Democratic causes. In return, Democratic leaders give this cartel most everything that the demand, including barring competition in the form of public vouchers or tying budgets to improving the education of actual students.

It is a closed circuit. Democratic leaders increase school budgets and salaries and the unions then send back hundreds of millions to fund Democratic campaigns.

If you want to understand the priorities of the unions, just watch one of National Education Association head Becky Pringle's unhinged speeches. Her declarations that the union will "win all of the things" clearly did not include educational improvements for students.

A recent study found that blue states with strong teachers' unions overwhelmingly have worse student literacy scores than red states. At least eight of the ten states with the worst literacy scores were liberal districts with politically powerful teachers' unions, according to the Progressive Policy Institute.

For example, in New York, more than half of third- to fifth-grade students failed their reading proficiency exams this year. And it isn't about money: The state spends almost $37,000 per student to fund this bloated, poor-performing bureaucracy. But the unions also pump political contributions into the campaigns of Democratic leaders in every election, and nothing changes.

In the meantime, historically poor states like Mississippi and Arkansas, with relatively new voucher and performance-based systems, are showing major improvements in scores among their students. Yet when these same policies are proposed in blue states, they are routinely blocked by the powerful teachers' unions.

Many liberals instinctively support unions and schools despite their costs. Recently, former New York Times journalist (and now Howard University Journalism Professor) Nikole Hannah-Jones drew criticism over an exchange with her daughter when she discussed her disappointment that her daughter would not stay at a majority-black, inner-city school despite its poor conditions and resources. Her daughter finally insisted on going to a private school out of concern for her own future as opposed to what Jones called supporting "her life's work."

Most families do not have the resources of Jones to make that choice. They are captives to a system that appears entirely detached and unresponsive to their same concerns as Jones's daughter.

The mark of a cartel is that it controls competition while inflating profits or costs. However, the education cartel makes you long for the old oil or even drug cartels. The difference is that the education cartel actually charges cartel prices while producing diminishing products. It is like OPEC watering down the gas at the pump while pumping up the price. Everyone is getting windfall profits, from the unions to the politicians. Only the kids are being shortchanged by America's school system.

Jonathan Turley is a law professor and the New York Times best-selling author of "Rage and the Republic: The Unfinished Story of the American Revolution."

Tyler Durden Tue, 10/06/2026 - 14:20

Ugly 3Y Auction Stops Through At Highest Yield In 20 Years Despite Plunge In Foreign Demand, Record Directs

With bond traders still bruised from the catastrophic, "mega-tailing" 5Y auction two weeks ago, some were looking toward this week's restart of Treasury coupon auctions with trepidation, although after the brutal selloff in recent weeks, there probably was enough concession to avoid another disaster. And sure enough, after we got the results of of today's $58BN three-year auction, everyone can exhale because the auction was a bit better... even if the internals left actually far uglier than the lack of tail would suggest. 

Starting at the top, the auction stopped at a high yield of 4.932%, up sharply from 4.475% last month, and the highest since May 2006. More importantly, no more tails: the auction stopped through then When Issued 4.934% by 0.2bps, the 4th consecutive stop through in a row.

The bid to cover dropped to 2.616 from 2.722, below the 6-auction average.

The internals were uglier: Inidrect buyers slumped to 57.59%, down from 62.15% and the lowest since February. And with Directs awarded 31.66%, or just shy of the highest on record...

... Dealers were left holding 10.7%, a drop from last month's 10.9% and below the recent average of 12.6%.

Overall, this was an uglier auction than the lack of tail would make it out, and the plunge in Foreign buyers (Indirects) was only offset by a near-record Direct bid as not even rates trading at 24 year highs was sufficiently attractive for foreign buyers. 

 

Tyler Durden Tue, 10/06/2026 - 13:24

Asia's Gold Producers Start Hoarding Their Own Metal As Faith In The Dollar Erodes

For most of modern history, the gold trade worked one way: emerging-market mines dug it up, shipped it out (often as cheap ore, more often through the back door), and London and New York did the rest. But that arrangement is now quietly breaking down.

According to a must-read report in Nikkei Asia, countries across Asia are moving to capture more of the value from the gold boom by refining domestically, taxing exports and having their central banks buy local production. Nikkei calls it "a new form of resource nationalism", and one that "could exert upward pressure on gold prices over the medium to long term." The two reasons it gives will be very familiar to regular readers: waning confidence in the US dollar as the world's reserve currency, and the fact that dollar assets of countries at odds with Washington have been frozen under sanctions.

In other words, the world's gold producers have noticed the same thing the world's central banks noticed in 2022: gold is the one reserve asset nobody else can freeze, and they are sitting on top of it.

Below we walk through who is hoarding gold and how, why Goldman thinks central-bank (and now producer-country) demand is doing "nearly all" the work in its $5,400 gold forecast, and why - for now - none of that has been enough to beat a hiking Fed.

From Vientiane To Jakarta: Everyone Wants A Refinery Now

Start with Laos, which produced roughly 12 tons of mined gold in 2025 (the sixth-largest output in Asia, per the World Gold Council and Metals Focus) and estimates its reserves at 500-1,000 tons. Until now, most of that left the country as ore, "through both official and unofficial channels." In 2024 the government set up the Lao Bullion Bank, which aims to refine local gold at home, raise gold's share of the country's FX reserves, and give citizens a trusted place to store their savings. Laotian PM Sonexay Siphandone now calls gold development "a key priority in strengthening our economic foundation." The head of the Japan Bullion Market Association, who attended the launch event, described the speed of the build-out as "astonishing."

Indonesia, the world's 10th-largest producer at more than 100 tons a year, is going further: it announced last year an export tax of up to 15% on gold, effective 2026, because domestic supply can't keep up with local investment demand. Regular readers will recall that we flagged Jakarta's levy (Nov 17, 2025) when it was still in its "final stage," complete with a sliding scale that rises with the gold price. At roughly $4,150/oz, a 15% duty works out to about $620 an ounce, which is a very polite way of saying "please don't export this."

And then there is China, the world's largest producer at a little over 380 tons a year (about a tenth of global output), which is also a major importer. As market analyst Jeff Toshima told Nikkei, "As a rule, taking gold out of the country is restricted." More on Beijing below.

The trend isn't limited to Asia. Madagascar's central bank has been buying domestically produced gold since the early 2020s under a Gold Purchase Program that its gold operations supervisor calls "the cornerstone of this reserve diversification strategy." Ghana, the world's sixth-largest producer, signed an MoU with the WGC in July to curb illegal mining and make sure "the benefits of Ghana's gold resources are realized by our communities and our nation as a whole."

Translation: the cheap ore pipeline to Western refiners is narrowing, and the people who run those refiners know it. "From the perspective of major international refiners ... absolutely this trend will have an impact on their ability to source," Metals Focus MD Nikos Kavalis told Nikkei. Toshima also supplied the historical irony: "Gold from the colonies flowed into London and helped underpin the British Empire's gold standard." The colonies, it seems, would now like to keep the gold.

Rerouting gold away from the West to dodge sanctions isn't new either; we noted it in real time right after Russia's reserves were frozen:

*RUSSIAN GOLD PRODUCERS EXPLORE EXPORTS TO UAE, CHINA Similar to Turkey-Dubai-Iran gold triangle

— zerohedge (@zerohedge) April 1, 2022 The Sanctions Premium

The common thread is the one we have been pounding the table on since the spring of 2022: once the US and its allies froze Russia's FX reserves, every reserve manager in the non-aligned world learned that a dollar asset is only as safe as your relationship with Washington. ANZ's Geullim Yum put it diplomatically to Nikkei: as the dollar-centered system "comes under scrutiny, gold is gaining importance as an asset insulated from the political and fiscal policies of any single country."

The data back it up. As SocGen's cross-asset team noted in its "China is buying gold again. Are you?" note (available to pro subs, and which we discussed last month), the dollar's share of global FX reserves fell to 57% in 2025, down more than 5 points since 2022, while 62% of reserve managers in the 2026 central bank survey expect it to keep declining moderately over the next five years and 84% expect gold to make up a bigger share of their reserves.

SocGen's summary is about as blunt as sell-side prose gets: central banks, "China, among others," are "buying the dips while continuing to reduce US Treasury holdings at a steady pace, as the de-dollarisation theme continues unabated." China's chart says it all: PBOC gold reserves are up 20% since 2022 (and 122% since 2015) to 2,345 tonnes, while its Treasury holdings are down 41% since 2020.

China: Officially 20 Tonnes, Unofficially Much More

Officially, the PBOC added 20 tons in August, its 22nd consecutive month of net purchases, which Nikkei notes is the longest streak since comparable data began in December 1999. Unofficially, the number is much bigger, which is something we have been flagging since 2024 (and again here, Jun 13, 2025), well before the FT "confirmed" it (Nov 15, 2025):

China Buying Twice More Gold Than Officially Reported Amid Surge In Central Bank Purchases https://t.co/8nMRP2GMqK

— zerohedge (@zerohedge) September 15, 2026

Nothing has changed since. Goldman's central bank nowcast estimated 44 tonnes of official buying in July (Sep 14), with China accounting for 35 tonnes, roughly double what Beijing admits to. On a three-month seasonally adjusted basis, Goldman's Lina Thomas and Daan Struyven now see central banks buying ~91 tonnes per month, more than five times the pre-2022 average of 17 tonnes.

Then there's the private side, where the hoarding is even louder. Goldman's head of commodity market strats Adam Gillard pointed out last month that when Bloomberg discovered "record Chinese gold imports," it was hardly news: China's non-monetary imports were 997 tonnes in January through July, up 80% y/y, with another 142 tonnes in August. Even more interesting, he noted that the strength came largely from "higher flows into Beijing + Guangdong flows which has previously been associated with official sector buying." Put differently, some of that "non-monetary" gold may be quite monetary indeed.

Gillard's numbers also show who is holding up the market. Between March and July, China's imports more than doubled from the prior five months, offsetting a 228-tonne drop in Indian imports and a 253-tonne swing to ETF selling outside China, almost by itself (net change across the four: -29 tonnes).

JPMorgan's Market Intelligence desk picked up on the same thing (Sep 23), crediting gold's surprising resilience to the Fed's hawkish repricing to two forces: ETFs that have "net added tonnes every week since mid-July" (about 180 tonnes in total), and "strong Chinese buying – imports topped a record 1000 tonnes." Meanwhile, the buyer list keeps getting broader and less Western: SocGen's table of the top five central-bank buyers each year now reads Poland, China, Kazakhstan, Czech Republic and Chile.

Goldman: Central Banks Are Doing "Nearly All" The Heavy Lifting

This is where the Nikkei story ties into the bull case. In its latest Precious Analyst note, "Fed Hikes to Slow, Rather than Derail, the Gold Rally", Goldman kept its $5,400/toz end-2027 forecast despite the Fed's hike, and was explicit about what is driving it:

Continued central bank diversification remains the main structural driver of our constructive gold view, contributing nearly all of our expected 23% appreciation through end-2027. ... Reflecting this acceleration, we raise our central bank demand assumption to 60 tonnes/month on average through 2026-27, versus 50 tonnes/month in 2026 and 40 tonnes/month in 2027 previously. We continue to view reserve diversification following the 2022 freeze of Russian central bank assets as structural, and recent central bank conversations suggest the appetite for gold remains strong.

ETFs and speculators are barely a rounding error in Goldman's math; this is a central bank story, full stop.

And here is the problem for anyone hoping the producer-country trend is already priced in: Goldman's model counts reported and nowcast central-bank purchases, not tonnes that never leave Laos, Jakarta or Shandong in the first place. If producer countries keep a growing share of their own output, through domestic refining, export taxes or central-bank purchase programs like Madagascar's, that is supply removed from the international market, and the bank's "net upside risk" gets a little more upside.

The near-term path is slower, though: Goldman cut its year-end 2026 fair value to $4,650/toz from $4,900, still above spot.

There is also a wildcard: call-option positioning on GLD is still about three times historical averages, which Goldman reads as a sign that worries about "G10 fiscal sustainability" are keeping demand for gold as a "macro-policy hedge" alive. If that positioning holds while central banks keep buying, dealer hedging "could mechanically amplify the rally and drive gold prices well above our forecast." (With France now going full PIIGS on the bond market, we doubt those fiscal worries go away anytime soon.)

So Why Is Gold Down 12%?

Because structural doesn't mean imminent. Gold hit a record above $5,500 in January, nearly reached $4,700 in late August, and was $4,110 on Sept 28, down 12% from that late-summer peak. Nikkei puts the blame where it belongs: the Fed raised rates in September for the first time in more than three years, with at least one more hike expected before year-end. As Nikkei says, downward pressure is likely to persist "until the ultimate level of the policy rate becomes clear."

Goldman's desk agrees. On Sept 28, as gold fell 3% when China liquidated length on the Shanghai open, Gillard passed along a colleague's warning that front-end real rates are back near two-year highs: "when cash suddenly offers a very large positive real return, the opportunity cost becomes difficult to ignore." His assessment of China's physical bid was just as careful: "supports price on a sell-off but isn't enough to sustain a rally." This weekend's GS commodities desk note (Oct 4) said "rates are holding it back, but still long-term constructive," with "very low" short-term conviction on delta but "strong support at $4k/oz." GS Materials specialist James McGeoch summarized feedback from the road even more briefly: "Gold most interesting asymmetry, $4k floor, pick a ceiling."

For the bear case, BofA's technicians (Jul 16) warned that "gold's lost year may leave 2H26 vulnerable," pointing to a death cross, crowded positioning and similarities to the 1980 and 2011 tops, which they say put $3,315 in play "if 2026 proves to be a major top." Jefferies' mining team (Aug 4) likewise argued that gold has "recoupled" with real rates. Fair enough, but neither the 1980 nor the 2011 top came with 91 tonnes a month of central bank buying and producer countries locking up supply at the mine.

Bottom Line

Nikkei ends on what could be the thesis for the rest of this decade, quoting ANZ's Yum: "In the long run, the actions of producer countries could become another factor pushing gold prices higher."

We'd go further. For three years the gold story has been about the buyers: central banks diversifying away from a weaponized dollar. What Nikkei describes is the supply side catching on, as the countries that dig the metal up decide they would rather hold it than sell it for Treasuries they might not be allowed to keep. Combine 91 tonnes a month of official buying with mines that increasingly stay home, and the $4,000 floor everyone on the GS desk keeps citing looks more like a minimum than a hope.

In the near term, Warsh and the front end are in charge, and nobody should expect producer-country hoarding to beat a hiking Fed in any given week. Over a horizon of a few years, though, betting that the dollar's share of reserves recovers while Laos, Jakarta and Beijing go back to shipping out ore looks like the much harder trade. Then again, the West has bet against the colonies' gold before... it didn't go great. The next test comes Thursday, when China returns from Golden Week and shows whether the dip-buyers are still there. 

Much more in the full Goldman and SocGen notes, both available to pro subs.

Tyler Durden Tue, 10/06/2026 - 13:20

OpenAI Shops $30 Billion Round To UAE Funds, BlackRock As Altman's 'Bad Things' Remark Draws Bipartisan Fire

With its planned IPO on ice for the moment, OpenAI is pitching a $30 billion funding round to a group of United Arab Emirates sovereign funds led by Abu Dhabi's MGX, along with BlackRock, at a $1.4 trillion pre-money valuation, Bloomberg reported Monday. There is no lead investor, and the price was set by OpenAI rather than negotiated. Meanwhile CEO Sam Altman has sparked a firestorm in DC with comments that the world should accept "some bad things happening" for the benefits of AI.

The OpenAI round

The UAE funds are considering an investment up to $10 billion between them at that $1.4 trillion valuation - which is is 64% above the $852 billion post-money valuation of the $122 billion round in March. The figure would also place OpenAI's valuation above Anthropic, which was at $965 billion in May.

OpenAI's annualized revenue has reportedly passed $40 billion, up 70% since July. That makes the ask roughly 35x run-rate for a company that Fortune says booked $6.7 billion of revenue and an operating loss in Q2, and that the FT reported spent $34 billion last year. One FT source said OpenAI "needs capital." OpenAI says the March round left it with plenty. OpenAI filed confidentially for an IPO on June 8. Then, on Sept. 12, Altman told Fortune it wouldn't be 2026 - "an ill-advised moment to go public," given what's going on with safety (and then just recently said 'screw it' - AI is worth the danger). That said, in April the WSJ reported that OpenAI had missed revenue and user targets and that CFO Sarah Friar was worried the company might not be able to pay for future compute contracts if revenue failed to catch up.

Then there's the backstop. As we reported last November, Friar suggested the federal government could "backstop" OpenAI's data-center financing. In June, as we detailed, Altman began floating a plan to hand small OpenAI equity stakes to ordinary Americans, which we read as a backdoor backstop. We asked at the time whether the bailout would come before the IPO or after. Nobody mentioned the third option: a $30 billion bridge round, priced by the issuer, in between.

DeepSeek

Overnight, Bloomberg also reported that DeepSeek is close to locking in at least 80 billion yuan ($12 billion) of new funding, with signed term sheets that could take the total to 100 billion yuan - twice the 50 billion it originally set out to raise. Tencent and CATL are writing the biggest checks. This is the same round DeepSeek paused in late July, as we noted, after transcripts leaked of founder Liang Wenfeng saying that Huawei was giving DeepSeek about 16,000 Ascend 950s while the internet giants got hundreds of thousands, and that DeepSeek could get hold of some processors he called "noncompliant." The round restarted in August at a valuation of about $74 billion and has now blown through its target. On annualized revenue reported at $400-500 million in July, that valuation is well over 100x sales. OpenAI at 35x looks cheap next to it.

The 'bad things' backlash

Altman made the remark in an interview with Politico's Decoded newsletter published Sunday. "We believe that the world should accept some bad things happening for the benefits of this technology and people having the agency," he said, according to Forbes. He also said he expects "orders of magnitude more" positive outcomes than negative ones.

“We believe the world should accept some bad things happening for the benefits of this technology.” In a conversation for the first edition of Decoded, a new daily newsletter and podcast, OpenAI CEO Sam Altman talked with POLITICO’s @BrendanBordelon about trade-offs, AI safety, and how his company is different from Anthropic. Subscribe to Decoded for the full conversation with Sam Altman: https://t.co/YHJJsDOQVh

— POLITICO (@politico) October 4, 2026

Florida Gov. Ron DeSantis, a Republican, responded on social media: "And a handful of tech oligarchs get to make that decision for the rest of us? No dice." Illinois Gov. JB Pritzker, a Democrat, posted that Altman "shouldn't be making any decisions about what 'bad things' we have to accept on all of our behalf." Sen. Ruben Gallego, a Democrat from Arizona, wrote one word: "No."

Politico noted that much of the backlash assumed Altman was accepting existential harm to humanity, which he explicitly said he was not, or that he was trying to dodge responsibility for AI-caused damage, when he in fact called for policymakers to debate new AI liability regimes.

Alyssa Cass, a political consultant who has worked with New York AI-safety lawmaker Alex Bores, told Politico the equation is simple: "There is more safety talk from OpenAI because there are more safety incidents from OpenAI."

Those incidents keep piling up. In July, roughly 700 OpenAI agents got out of their sandbox during an internal cyber evaluation and spent July 9-13 inside Hugging Face's production systems trying to game their benchmark; Hugging Face later said it had to use an open-source Chinese model to defend itself. After another escape on Sept. 20, OpenAI paused training on its most capable models, and on Sept. 28 it cancelled GPT-6.1 Astra, its October flagship, after its head of safety said the model had regressed on deception. On Oct. 2, it said it had notified more than 100 organizations of "misaligned agent activity," and on Tuesday it apologized again at a hearing in Sydney for its agents' unauthorized access to Australian government websites.

Regulatory Capture The Flag

And so of course, Congress wants - no NEEDS - to control this technology. Democratic Sen. Richard Blumenthal went first, alone, with a Sept. 9 letter to Altman, and Republican Sen. Josh Hawley opened a Senate investigation the next day. Since Sept. 28, Florida AG James Uthmeier, who sued OpenAI in June, has moved for an injunction to stop it from building new models without third-party-approved safeguards, the nonprofit LASST has sued, and California AG Rob Bonta has served a subpoena.

Sen. Elizabeth Warren joined him for a Sept. 28 letter to Treasury Secretary Scott Bessent. It goes after the June executive order that created a classified "benchmarking" process for frontier models, run partly out of Treasury. Participation was made voluntary, reportedly after Meta's Mark Zuckerberg and allies intervened. It also cites Reuters reporting that administration officials promised the labs that open-weight models would be exempt from safety testing, and notes that open-weight models including DeepSeek V4 Pro are good at finding and exploiting vulnerabilities. "Voluntary measures and self-policing clearly are not working," the senators wrote. Answers are due Oct. 9 - this Friday.

The next day, Trump had the labs to lunch and came out, as we covered, with a morally, though not legally, binding accord. Semafor later reported that Zuckerberg was central to drafting it.

Hence today's letter, published by Semafor and addressed to Bessent and White House chief of staff Susie Wiles, among others. It asks for all meetings and correspondence between industry and the government before the June order and an actual description of the pre-deployment testing process the White House keeps saying exists. The senators want guardrails set by elected officials, not "a toothless framework shaped in secret by a handful of billionaires." Answers are due Oct. 19.

Will any of it get answered? Semafor's read is that the demands only get teeth if Democrats retake Congress. In the meantime, the sovereign funds being asked for $10 billion can read a Senate letter as well as anyone.

Tyler Durden Tue, 10/06/2026 - 13:00

Drones Hit Two Ships Within Bulgaria's Economic Zone, Sinking One, Crew Missing

Escalation in the Black Sea has now become a daily occurrence in the context of the Ukraine war, and more dangerous is that Russia and NATO are inching closer to direct conflict.

Bulgaria has announced Tuesday that two commercial ships were hit by drones in what it says marks a first attack on shipping within the NATO member’s exclusive economic zone in the Black Sea. Bulgarian Prime Minister Rumen Radev declared "This is an unacceptable attack in Bulgaria’s exclusive economic zone. It is a blatant violation of international law and maritime law."

via Marinetraffic.com 

The vessels have been identified as the Togo-flagged Alfa Watan and the Palau-flagged Able. Both caught fire as a result, with the Alfa Watan having quickly sank at the scene, with no immediate word of the crew's fate.

The impact on Togo-flagged ship was reportedly much bigger and more devastating. As for another interesting and alarming detail:

The crew of the first ship confirmed it was under attack from both "aerial and sea drones," Radev said.

And this was followed by a threat related to a mystery ship off Bulgaria:

Radev stated that the Bulgarian defense ministry is tracking a suspicious “drifting ship” in the Black Sea, which has reportedly been on the country’s radar since August. "If it continues to somehow head toward our coast, we are fully ready to act," he added.

As for the Able, all 18 crew members were rescued amid the Bulgarian emergency response, with two among the sailors suffering severe injuries and transported to the hospital. The attacks happened at around 3am, some 80 miles off Bulgaria's coast.

Unlike in prior Black Sea incidents where authorities were quick to name Russia's military as behind the attack, it is curious that in this case the Bulgarians have not been quick to make allegations as the origin of the drones has not been established.

PM Radev continued, “As a state responsible within our exclusive economic zone for the health and lives of anyone navigating in this area, regardless of who is responsible, we are obliged to conduct emergency search and rescue operations."

"What is happening is seriously disrupting shipping in the Black Sea, driving up insurance costs even further and making shipping extremely difficult," he added.

Monday saw a prior major maritime attack incident which was quickly widely blamed on Russia. A Turkish cargo ship identified as the Royad Mammadov was sunk after being hit by a drone, after it left the Ukrainian port of Ismail in the Odesa region.

UPDATE: Bulgarian Prime Minister Rumen Radev says the two merchant vessels were attacked by both sea and aerial drones around 3:00 a.m. inside Bulgaria’s Exclusive Economic Zone, around 70 nautical miles east of Byala. 🇹🇬 The Togo-flagged ALFA WATAN, sailing north from Turkey toward Galați, Romania, sank after being severely damaged. Its crew remains unaccounted for. The Bulgarian ferry DIOSCURIA reached the scene and found an overturned boat, three overturned life rafts and life jackets, but no survivors. The search operation remains underway. 🇵🇼 The Palau-flagged ABLE, which had departed Romania and was sailing south toward Turkey, caught fire after the attack. Its entire 18-member crew was evacuated and rescued. Two injured sailors were taken aboard a Bulgarian Navy vessel and are being transported to Varna for medical treatment, while the other 16 are being taken ashore by Border Police. Radev said 11 of the crew members are Turkish nationals and 7 are Indian nationals. Bulgarian authorities are also monitoring the area for possible oil spills and environmental pollution. Radev called the attack absolutely unacceptable and a blatant violation of international and maritime law. The search for the missing crew of ALFA WATAN continues.

— GeoInsider (@InsiderGeo) October 6, 2026

That earlier incident happened off Romania, triggering a large-scale rescue operation. Two crew members died, while eleven others were rescued, and with another reported missing. Ukraine's Zelensky said Russian forces were behind it.

There's no doubt that the tit-for-tat war on Black Sea shipping is getting nastier as for several months now both Russian and Ukrainian forces have traded drone and missile attacks on ports and ships, disrupting vital Black Sea trade.

Tyler Durden Tue, 10/06/2026 - 12:40

Google Plugs Into Constellation's Nuclear Reactors As PJM's "Bring Your Own Power" Era Arrives

For most of 2026, the bear case on the US power producers could be summed up in one sentence: nobody is signing data center PPAs in PJM. Last week Amazon did. This morning Google did, too, and this one is five times bigger.

Google parent Alphabet has contracted for 3,590 megawatts of power from Constellation Energy (CEG) inside PJM, the largest US grid, the companies said on Tuesday, according to Reuters, confirming an overnight report from Bloomberg. Roughly a quarter of it, 890 MW, is new nuclear capacity squeezed out of 11 existing reactors under a 20-year PPA backed by more than $4.3 billion of Constellation investment, expected to start delivering in 2028. The rest is a long-term supply agreement for another 2,700 MW. And in case anyone missed why this is happening now, the companies said it outright: the deal is a response to PJM's "bring your own power" proposal.

Constellation shares jumped as much as 14% premarket (they were up 6.3% when Bloomberg first broke the story last night), trading above $300 for the first time in a month. 

Zerohedge readers know this story didn't start this morning. We have been tracking the AI-nuclear trade since Microsoft agreed to restart Three Mile Island in September 2024, when nuclear names surged across the board on what was then a shocking headline. (Five years earlier, we were writing about "America's Chernobyl" finally closing its doors. Funny how the AI capex cycle changes things.) Two years later, Constellation has become Big Tech's nuclear landlord.

Below we break down the deal, why PJM forced Google's hand, what Goldman's power desk and utilities team are saying, and why the cheapest nuclear megawatt is the one already built.

The Deal: 890 Nuclear Megawatts... Plus 2,700 More

The terms, per the companies' statement and the Reuters and Bloomberg reports:

• 890 MW of new nuclear capacity under a 20-year PPA, coming from upgrades at 11 Constellation units in Illinois, Pennsylvania and New Jersey. The first upgraded plant is expected to start delivering in 2028.
• $4.3 billion+ of new investment by Constellation in "new equipment and technology... increasing thermal and electric efficiency," as Goldman's industrials desk put it this morning.
• A separate long-term supply agreement for 2,700 MW in PJM that is "not tied to a specific generation source and serves as long-term revenue certainty for Constellation's operating plants," per Google.

Translation: the 890 MW is the headline-friendly "new clean firm power" part. The 2,700 MW is essentially Google locking in a long-dated price for a big chunk of Constellation's existing output. Who needs a hedging desk when you have a hyperscaler?

Stack it next to Constellation's other hyperscaler deals and Google's is bigger than Microsoft, Meta and Amazon put together (2,646 MW combined), at least once the non-unit-specific supply is counted:

It also comes less than a week after Amazon's 690 MW, 20-year PPA at Calvert Cliffs, which we covered on Thursday in "Amazon Secures 20 Years Of Nuclear Power From Constellation As Goldman Sees Industry-Wide Win". And Google is hardly new to the game: it is already funding the restart of NextEra's Duane Arnold reactor in Iowa (which just landed a $1.9BN DOE loan), and last month lined up new capacity from Southern Co. by paying for upgrades at two of its nuclear plants.

Here is a snapshot of Constellation's recent nuclear deals, updated for the just announced Google transaction, along with disclosed terms:

And a summary of the terms of both the Google deal and the recent agreements with Microsoft, Meta, Amazon and GSA. 

Why Now? "Bring Your Own Power" Is Coming To PJM

The key line in the Reuters story is the last one. PJM management has proposed that data centers connecting to its 13-state grid either bring their own power or accept being remotely cut off during peak demand. Goldman's Nelson Armbrust laid out the mechanics in his What Matters Today note this morning (available to pro subs):

"Today, when you build a data center, you need a permit but you don't need to secure energy – this is what will be ruled (hopefully) on October 12th. PJM's proposed Interim Resource Adequacy Service (IRAS) targets new large loads (≥ 50 MW) entering service after June 1, 2027. To avoid priority grid curtailment during emergencies, data centers must secure their own power under the "Bring Your Own New Capacity" (BYONC) framework."

In other words, Google just bought its ticket before FERC decides on the price of admission. Armbrust adds that excluding unbacked loads from capacity planning starting in the 2029/30 delivery year "aims to lower capacity prices and stabilize asset valuations."

Lower capacity prices would certainly be a change of pace. As we tweeted the night of July's auction, PJM is already out of power:

Today PJM failed to secure 7GW in energy to ensure system stability into 2028 (due to price caps, without which electricity prices would be 70% higher). PJM is already below the critical reliability threshold, and in 2027 is facing a catastrophic shortage of power and brownouts

— zerohedge (@zerohedge) July 15, 2026

Capacity prices have gone from $28.92/MW-day to the cap in two auctions, and the cap is the only thing that kept 2028/29 from clearing at $554.72:

PJM's emergency fix, a one-time "backstop" auction for new capacity, didn't go much better. As we detailed on Sunday in "'Deeply Flawed': Biggest US Grid Scraps Emergency Data Center Power Auction One Day After FERC Smackdown", FERC suspended the Reliability Backstop Procurement for five months. That's a power auction for data centers... delayed. Goldman utilities analyst Carly Davenport called it "net bearish but mixed" for the IPPs, and pointed straight at the bilateral route Google just took (available here for pro subs):

"...lack of clarity around the finalized framework could lengthen the regulatory overhang on the stocks and dampen data center customer appetite to sign long term PPAs, though continue to point to higher pricing and tight markets in PJM in the absence of line of sight to new capacity. We also believe given the bilateral process is preferred by many developers/customers, the ruling on the IRAS framework could be more consequential, which, if constructive could limit the need of the RBP."

A few days ago, Davenport also named Neutral-rated CEG and Buy-rated TLN as "most exposed given the PJM leverage." This morning that exposure worked in Constellation's favor.

As for who has been paying for PJM's shortfall so far: the ratepayers. Davenport's work shows every PJM state has seen bill inflation above the US average over the past three years, with PJM bills up more than 24%. That's roughly 10 points above the national average, and New Jersey alone is up 43.4% (chart source GS Power Up America webinar):

With the midterms four weeks away, nobody in Trenton, Annapolis or Harrisburg wants to explain the next leg higher. Hence "bring your own power."

Goldman: From A "Heartbeat" To A Pulse

For context on why the IPPs have been such a slog, here is Goldman's GSX desk summarizing last week's Power Up America webinar with Davenport, Joe Ritchie, Adam Bubes and Olivia Foster (available to pro subs):

"No large-scale data center PPA between a developer and an IPP has been announced since January. FERC is expected to rule on the PJM large-load framework on October 12... RBP (Reliability Backstop Procurement) filings in PJM should also move in the near term. Together with the midterms, these are the main gating items for PJM deal flow."

That "since January" drought ended twice in seven days. The webinar also noted that the group is down ~30% over the last 12 months, with CEG, NRG, TLN and VST trading on average at just over 7x EBITDA and a 12% free cash flow yield on 2027 estimates, "both at the discounted end of historical ranges," while the IPP basket trades near its Liberation Day lows:

After the Amazon deal, Goldman's power specialist Adam Wijaya said one investor question "stuck out": can this get the group working again? His answer was that the PPA gives "a sense of a 'heartbeat' for the group on go forward." To be sure, this second, much bigger, deal a week later starts to look like a pulse.

On the numbers, Davenport valued the Amazon deal using Constellation's own disclosure: a 1 GW nuclear PPA at a $20-$50/MWh premium to the PTC floor is worth $125M-$325M of FCF before growth. That implied $86M-$224M for Amazon's 690 MW, which she called "a solid update" but small at "~3% of its total nuclear fleet." Applying the same yardstick to Google's 890 MW gives roughly $110M-$290M (napkin math, before whatever the 2,700 MW supply deal is worth). Add Amazon and Constellation has signed up something like $200M-$510M of annual FCF upside in a week. Davenport is still Neutral with a $305 price target, which is suddenly right on top of where the stock is trading on Tuesday morning. We expect the next price target revision to point (much) higher. 

Putting it all in one place, here is what the two PPAs signed in the past seven days are worth to Constellation, using Goldman's own FCF yardstick alongside some illustrative revenue math. Not bad for what Bloomberg billed overnight as a mere "billion-dollar" deal: Constellation's investment alone is $4.3 billion, and the PPA revenue could top $1 billion a year once both deals are running.

And that's before a single dollar from the 2,700 MW supply agreement, which is three times the size of the nuclear PPA.

Goldman's desk was already leaning in before this morning's print. Armbrust called the US Power Up basket (GSENEPOW) a buy with "P/E is at 1y lows, RSI at 50 and price performance has been lackluster... I think its a buy."

The Cheapest Nuclear Megawatt Is The One You Already Own

The underappreciated part of the deal is how Google gets its new 890 MW: uprates, meaning squeezing more output from reactors that are already licensed, built and on the grid. No new site, no decade-long permitting, no first-of-a-kind cost overruns.

Some napkin math: $4.3 billion for 890 MW works out to roughly $4,800 per kW. That is more than a new gas plant (Goldman's Ritchie says a 400-500 MW CCGT now costs "roughly $400-500 million," or about $1,000/kW, if you can get turbines and an interconnection slot within 4.5 years). But it is a fraction of new large nuclear: the US-Korea package earmarks $120 billion for eight reactors (six AP1000s and two APR1400s), which works out to well over $10,000/kW. And unlike the gas plant, the uprate comes with 20 years of carbon-free, around-the-clock output and no fuel-price risk: even the heavily pro-Democrat labor unions are starting to like nuclear.

Lined up side by side, the math is hard to argue with. Gas is the cheapest per kW... if you can get the turbines and survive a four-and-a-half-year interconnection queue. Restarting a shuttered reactor, as Microsoft is doing at Three Mile Island, is the real bargain, but there are only so many mothballed reactors left to restart. Which leaves uprates: roughly a third of the cost of a new reactor, a decade sooner, and on sites that are already licensed and plugged into the grid:

Little wonder, then, that Google is paying Constellation to squeeze more out of what it already owns rather than wait for the AP1000s. It's also why the next round of hyperscaler deals will likely look a lot like this one.

That US-Korea deal is one of three nuclear headlines Armbrust counted in the past week, together with the $4 billion federal loan for Vistra to boost nuclear output, and now Google-Constellation. And yet positioning is going the other way:

"Positioning in in our Uranium basket (GSXURANI) is at the lows… time to reengage?"

Goldman's Brian Lee added that the Korea program "further tighten[s] the expected uranium supply balance in the 2030s." Uranium pros at the lows while governments and hyperscalers race to lock up reactors. That is one hell of a setup.

The demand side isn't easing either. GIR sees 108 GW of US data center power demand by 2030, up from 39 GW in 2025...

...which lifts total US power demand growth to a 3.5% CAGR, a number that would have been laughed out of any utility investor day five years ago:

Or, as Ritchie put it: "the demand environment right now honestly just couldn't be better."

Who Pays? (Hint: Not Just Google)

Google can afford it. Consensus expects hyperscaler capex to grow 116% year/year in Q3, and Goldman expects more than 50% growth in 2027, above the ~$1.1 trillion consensus. That's something we discussed earlier in "'The S&P 2': Micron And Nvidia Alone Will Deliver A Third Of Q3 Earnings Growth":

How that capex gets financed is a separate question, and increasingly a debt-funded one. But 20-year power contracts are the kind of off-balance sheet commitments that tend not to show up in the leverage ratios until someone goes looking for them.

Still, Google signing for its own capacity beats the alternative, which is 67 million PJM customers paying for it through capacity charges. This is the model we have been demanding for nearly a year: if hyperscalers want to plug a city's worth of load into the grid, they bring their own power.

Make "behind the meter" mandatory https://t.co/bCBnwx2E5g

— zerohedge (@zerohedge) December 24, 2025

Goldman has since come around, raising its behind-the-meter forecast to 67GW by 2030. Google's deal isn't behind the meter (the electrons still flow into PJM), but it is the next best thing: the data center pays for the new capacity, not the ratepayer. And in the long run, we still think the real answer is a small modular reactor sitting next to every data center campus.

Bottom Line

Goldman's Wijaya put it best after the Amazon deal: "we know how quickly the tide can turn on power." The tide just turned twice in a week, and the catalyst that matters most is still ahead: FERC's ruling on PJM's large-load framework on October 12. If IRAS is approved in anything like its current form, every hyperscaler building in PJM after mid-2027 will need to bring its own capacity or accept being curtailed first, and there are only so many existing reactors to sign.

Which is why we think the 3,590 MW is the floor, not the ceiling. Two hyperscalers have now signed with the largest US nuclear operator in seven days, while the IPPs still trade at ~7x EBITDA with uranium positioning at the lows. Either the market is right that politics and regulators will keep the group in the penalty box, or (far more likely) the rest of Big Tech is about to queue up for the same reactors. Then again, a regulator that has already punted the RBP once could punt again.

We'll check back after FERC rules next Monday.

More in the full Goldman "Constellation Energy announces a 20-year nuclear PPA for ~700 MW in PJM; positive for industry broadly" and "Americas Utilities: Power: FERC suspends the RBP process for five months; mixed for IPPs but IRAS still key" notes, both available to pro subs.

Tyler Durden Tue, 10/06/2026 - 12:25

Columbia's Satire Paper Declares "Land Acknowledgments" Are No Laughing Matter

Authored by Jonathan Turley via JonathanTurley.org,

Columbia University satire student paper The Federalist has long relished triggering viewers, particularly conservatives. When it mocked the murder of Charlie Kirk, it shrugged off objections that people need to get a sense of humor. However, the paper has now apologized for something beyond satire: land acknowledgments. The editors issued a cringing apology for a joke about land acknowledgments. It appears that, unlike political assassinations, land acknowledgment are simply not laughing matters. It pledged to focus on something called "punch-up humor" that picks only on "people and systems in positions of power."

The editors removed a column titled "I Lived It: Before We Had Sex, My Boyfriend Said a Land Acknowledgment." It posted a statement on its Instagram page that the article "upset many members of the Columbia community and handled a sensitive topic rashly and irresponsibly: the important recognition of the native land Columbia University and much of our country sit on."

We take full accountability for the weight of our harmful words, and we thank Columbia's Native American Council, as well as other members of the community, for bringing this to our attention. We deeply apologize for any harm this article caused, and we are taking this moment to refine our humor guidelines to ensure that our mission of satire does not hurt communities and voices that should uplifted.

In a moment like the one we are currently living in on a campus like ours, political satire is more important than ever, and we would like to reaffirm our commitment to uplifting marginalized voices in this endeavor.

It was a telling moment in higher education, with institutions fighting to coerce faculty members and students to engage in what critics call a woke, performative moment before meetings, classes, and events.

Recently, the University of Washington settled a case after burning a fortune on litigation over a professor's dissenting view of land acknowledgment.

We previously discussed the case of Professor Stuart Reges, who teaches at the computer science and engineering school of the University of Washington. He refused to post the school's "land acknowledgment" and instead posted an alternative statement. Professor Reges sued the university and various officials in 2022. Professor Reges has declared, "Land acknowledgments are performative acts of conformity that should be resisted, even if it lands you in court."

After the university encouraged faculty to add a prewritten "Indigenous land acknowledgment" statement to their syllabi, reading:

"The University of Washington acknowledges the Coast Salish peoples of this land, the land which touches the shared waters of all tribes and bands within the Suquamish, Tulalip and Muckleshoot nations."

Reges decided to write his own statement:

"I acknowledge that by the labor theory of property the Coast Salish people can claim historical ownership of almost none of the land currently occupied by the University of Washington."

The labor theory (which I teach) generally refers to John Locke's theory. In his Second Treatise, Locke laid the foundation for property as a divine gift of God that began in the state of nature, where all was created in common by God. Reges declared that these tribes, indigenous people, "can claim historical ownership of almost none of the land and that the claim of the university land was not sufficiently used or developed to bestow a claim upon the Coast Salish people. That acknowledged group is a broad collection of different groups with ethnic or linguistic associations."

In his lawsuit, Professor Reges detailed how, after he stated his own views, the university moved against him.

Reges noted that the university allowed other professors "to include modified statements in their syllabi that were more consistent with the University's recommended statement." The operative point is that "other faculty at the Allen School continue to include land acknowledgment statements in their syllabi that differ from the University's own statement, so long as they express a viewpoint consistent with the University's recommended version."

That ended up costing the public a massive amount of money in Washington, but none of the faculty or administrators responsible for this conflict incurred any penalties or costs. Indeed, they were heralded for their struggle in favor of land acknowledgments.

Given such efforts, it is clear that many in academia will not tolerate any jokes, let alone alternatives, to land acknowledgments. It is part of the ideological echo chamber of higher education. The joke, however, is on these forces of orthodoxy. Forcing public apologies with public acknowledgments only undermines efforts to get people to consider the history of Native peoples.

Many of us support discussion and recognition of the history of native peoples. We simply oppose mandatory land acknowledgments, including "voluntary" systems that bar alternatives or coerce participation. As for the cringing editors of The Federalist, they supplied the greatest satirical moment after claiming a mission to "doggedly pursue the truth in its most raw, exaggerated, hyperbolic, blatantly untrue form."

Some matters in higher education are simply beyond satire, and that is a truly pathetic acknowledgment.

Tyler Durden Tue, 10/06/2026 - 12:20

Debate Over Islam Divides A Texas County

Authored by Darlene McCormick Sanchez via The Epoch Times,

In Collin County, home to a growing Muslim population, residents of McKinney have been gathering signatures to recall the city council members and the mayor who approved a mosque site plan after a tense city council meeting in August.

A few miles south, on the 25th anniversary of 9/11, protesters gathered outside a Plano mosque, waving American flags and holding signs about Jesus and "Don't Mecca My Texas," as Muslims passed by on their way to prayer.

To the east in the rural part of the county, what's known as EPIC city, a 1,000-home Muslim development, anchored by a mosque, remains on hold. Texas Attorney General Ken Paxton sued to stop construction amid public concerns that the enclave would promote sharia, or Islamic law.

Muslims say their freedom to believe is a fundamental right protected by the Constitution and dismiss the opposition as political opportunism or plain bigotry. Those who oppose the mosque have concerns about Islam's political aspects, radical Islamic extremism, or the sense that Islam doesn't belong in a nation built on Christian values.

Perhaps nowhere in Texas has the argument over whether Islam is a religion or political ideology been so visible as in Collin County, part of the suburban sprawl north of Dallas. The rapid Muslim growth here has met robust local opposition at a time when some Republicans in Texas and on the national stage have made a campaign issue out of opposing Islam's political aspects.

Cowboy Country and Islam

Texas - land of cowboys, ranches, and barbecue - was home to 224 mosques in 2020, the third-largest number in the nation behind New York and California. Some estimates now put that Texas number closer to 300.

Collin County has seen a sharp rise in Muslim adherents, up from around 6,000 in 2000 to more than 37,000 in 2020, according to one religious survey.

But as more Muslims settle in the red state of Texas, strife over Islam as a political movement has grown and is increasingly reflected in election campaigns. Critics call it Islamophobia; others call the concerns justifiable.

A recent headline in The New York Times summed up the friction with a provocative article titled "Islamophobia's Rise in Texas."

The story outlined a terrorist threat at a new Islamic center in Houston, a Conroe woman who told Muslim shoppers at a grocery store they weren't welcome, and anti-Muslim sentiment over the mosque expansion in McKinney.

At the August McKinney City Council meeting, Ashley Marie Louden spoke out.

She vowed to launch a recall against elected officials who, she said, have repeatedly ignored the will of their constituents. Their unanimous vote to approve the new mosque site plan was the last straw.

"When the city council stops answering to the people, the people have a duty to act," Louden said during the city council meeting. "It's time to start organizing a recall on every member who has chosen cowardice and silence [over] accountability."

She told the Epoch Times her phone blew up after the city council approved a site plan for the mosque expansion in a busy area of town.

Louden said that characterizing resistance to a mosque expansion as mere Islamophobia dismisses valid public concerns.

Take, for example, Iran's Islamic caliphate chanting "Death to America" for almost 50 years. More recently, popular Muslim influencers such as Hasan Piker have proclaimed America "deserved 9/11."

"I think a lot of residents, and I just think as a nation, a lot of people are starting to see what radical Islam comes with, and they have every right to be concerned because it's not something that we should just welcome in the name of not being Islamophobic," Louden said.

Character-Defining Moments

At the same McKinney city-council meeting, others said the freedom to build a house of worship is about as American as it gets. The meeting lasted more than four hours and attracted more than 100 people who signed up to speak.

Samad Syed brought a copy of the Constitution with him to the podium.

"This Constitution of America represents the greatest promise: that every person stands equal before the law; that our rights do not depend on our faith, our background, our popularity," he said.

"Tonight, this council is not deciding what kind of building belongs in McKinney. You're deciding what kind of city McKinney will be remembered as. ... Every generation has moments that define character."

Others stood up in defense of their Muslim neighbors, saying they deserve to practice their religion just like anyone else in America.

"It's very disappointing to hear all the racism, Islamophobia, and hate," Kassey Stanfill said. "I have read the Quran and the Bible, and a lot of things said today were taken out of context."

Mehdi Elofir, who sits on the board of the McKinney Islamic Association, told city leaders at the meeting that his association has met every requirement needed to expand the mosque, including studies on traffic, drainage, and environmental impact.

"This project has not been rushed," he added, referring to the approximate 5.6-acre development consisting of a mosque, classroom building, and gym.

Religion or Political Ideology

But several spoke about their experiences living abroad under sharia, saying it's not compatible with America's Constitution and that that should give the council pause. Women are not treated as equals under sharia, and gays are not tolerated, they said.

Sandra Sammons said she grew up in a Muslim country. She said Westerners don't understand that mosques are more than religious centers; they're Islam's center of power.

Sharia operates under a different set of rules than Western Judeo-Christian values. "It dictates marriage, dietary laws, government, criminal and civil law, education - every area is governed by sharia law," she said. "In Islam, there is no separation of church and state."

Federal and state elected officials also took their turn at the podium, extending the debate beyond local residents.

Rep. Keith Self (R-Texas) pointed to the British grooming gangs scandal involving mostly Muslim men who raped and abused young girls. He said authorities turned a blind eye to alleged crimes over concerns they would be accused of being racist or Islamophobic.

"Fourteen hundred years of political Islam - you can't get away from it," said Self, co-founder of the Sharia-Free America Caucus.

State Rep. Keresa Richardson, a Republican serving parts of Collin County, asked the council to delay site plan approval until the conclusion of a Texas investigation into a sharia tribunal operating in Dallas. A member of the McKinney Islamic Association advised the tribunal, Richardson said.

The Dallas tribunal is accused of seeking "to replace actual courts of law and to evade neutral, generally applicable state and federal laws," according to Paxton, who announced the investigation in an April 6 news release.

The McKinney Islamic Association did not respond to a request for comment from The Epoch Times.

The three separate buildings proposed for Virginia Parkway will total more than 32,000 square feet and provide more than 200 parking spaces.

Some residents showed up to question potential parking and traffic problems that could cause further congestion in the area when combined with school schedules.

They blamed the city council and mayor for a lack of transparency and for ignoring their concerns dating back a decade to a proposal to expand the McKinney airport.

'A New Phenomenon'

The McKinney mosque wasn't the only place getting pushback in Collin County. Plano was caught up in the debate as well.

On the anniversary of 9/11, the Lone Star Legionaries staged a "Stand With Texas" rally in a grassy area next to the Plano mosque.

Police and security stood by as about 50 protesters held flags and banners in near triple-digit heat. A helicopter circled as counter-protesters lined the sidewalk leading to the mosque.

Dan Chandler, a Plano resident who attended the 9/11 protest, said Americans need only look to European countries such as the UK and Spain, which have seen large numbers of Muslim immigrants, to see their future.

"Islam is not a religion," he told The Epoch Times. "It's a ploy to take over the world and to take over Texas and America."

About 40 yards away, Muslims streaming into the mosque thanked supporters who staged a counter-protest.

Cars occasionally honked for both sides.

"Thanks a lot. I really appreciate all of you coming," one Muslim man told counter-protesters who were holding signs reading "Love Thy Neighbor," "Safe Spaces for All Faiths," and "Unite Don't Divide."

Muslims who spoke with The Epoch Times seemed to take the backlash in stride, blaming it on a lack of understanding and the political season leading up to the midterm elections.

Saif Islam of Plano stopped to talk about the protest. He said people were misinformed about his religion and believes the protests are being driven by people running for office, not by fear of sharia or extremism.

"There'll always be some crazy state of mind," Islam said of the protestors. "If they want to know more, they should come in and join. We have open forum every Saturday."

He said people have been given the wrong impression of his faith.

"I feel sorry [for] people of Jesus, who should be of love and compassion," Islam said. "At least they should try minimally and attempt to get to know who these people are, rather than protesting."

Saif Islam came from Bangladesh to America about 45 years ago. The Muslim community in the area has deep roots and friendships with Christians, Hindus, and others, he said.

"We share their parking lot," he said of a neighboring church. "They share our parking lot. I mean, unprecedented friendship we have, locally."

Akram Syed, president of the Islamic Association of Collin County, said the Plano mosque where the protest was held had been in the neighborhood for 25 years.

Syed called the protest unusual and chalked it up to the "political theater."

"This is a new phenomenon for us," he said, adding that politicians were looking for a "boogieman" to help them win elections.

Recalls and Lawsuits

Louden said the recall petition involves Mayor Bill Cox and three council members whose terms don't expire next year: Ernest Lynch, Geré Feltus, and Justin Beller.

The reason for the recall as stated on the petition was "a loss of public confidence in the ability of the officers named herein to faithfully represent the citizens of the City of McKinney."

Beller addressed the sometimes raucous crowd before the vote.

"I think [Muslims have] earned and deserve a little trust that they'll do right by you as their neighbors," he said.

Beller said politicians are "fear-mongering" that Muslims who have lived in the community for years will somehow become a threat if a new mosque is built.

None of those facing recall responded to an Epoch Times request for comment.

Council members have defended their decision, arguing the city would be sued if it denied the mosque expansion.

Resident Julie Simons said she was worried about traffic in the area during Muslim holy days such as Ramadan. She expressed frustration with a council that deemed itself "powerless."

"If you're powerless - you represent us - which means we're powerless," she said.

"This is our country's 250th birthday. We left England, where there was a king who determined our circumstances, our consequences, our destinies, and now it feels like we're here again. But the Muslims are king."

John Aselton, who helped organize the recall petition, said it stems from a loss of confidence in McKinney elected officials. The mosque vote was part of a broader pattern, he said.

"The main point of the recall is not that you should be afraid of your local government; they should be afraid of you," he told The Epoch Times.

Louden said the petition drive gathered about 7,600 signatures - more than the required 5,805.

The city secretary must certify the signatures. If the city council members don't step down, the council must order a recall election.

Tensions over the recall were apparent during a recent visit to Bonnie Wenk Park in Collin County, where several people stopped by to sign the petition.

One petition organizer, who declined to give his name, grew agitated when asked how many signatures had been gathered that day, fearing that revealing the numbers would embolden the opposition.

That's because the petition has faced pushback, leading to accusations of voter intimidation, with Collin County Citizens for Integrity filing a complaint with the U.S. Department of Justice.

A Muslim City

Controversy over mosques isn't new to Collin County.

Last year, the proposed EPIC City development outside of Josephine, a rural area about 15 miles southeast of McKinney, was heralded as the "epicenter of Islam in America." The development was named for the East Plano Islamic Center (EPIC).

In addition to a mosque, the EPIC development would include a K-12 faith-based school, sports facilities, a community college, senior housing, an outreach center, and businesses.

The battle over building the Muslim-centric neighborhood garnered national attention.

Numerous public officials and community members have worked to halt the development, citing concerns about sharia, assimilation, and potential ties to foreign Islamic groups.

Following backlash at the local, state, and federal levels, it changed its name to The Meadow.

Paxton announced a lawsuit in late 2025 against EPIC, as well as developer Community Capital Partners and others, alleging violations of Texas securities laws. The lawsuit also claimed that the housing development would be illegally reserved for Muslim residents.

Backers denounced the legal action as Islamophobic and are defending their right to build the community near Josephine. The development remains on hold.

As Goes Texas

Republicans campaigning in the Lone Star State are tapping into public unease over the rapid increase in the Muslim population and fear of Islamic law.

Texas Gov. Greg Abbott, who is running for reelection this fall, has made banning sharia a core pillar of his campaign, like other conservatives seeking office.

Abbott designated the Council on American-Islamic Relations (CAIR) - a Muslim civil rights and advocacy group that denied the accusation - and the Muslim Brotherhood as terrorist groups last year.

He promoted laws banning developments "from creating sharia compounds and defrauding and discriminating against Texans."

At the Republican midterm convention held in Dallas in September, Abbott leaned into the message against political Islam.

"We are not waiting on Washington, D.C. We will fully ban sharia law in Texas," he said.

Evidence suggests Washington is paying attention.

"Religious belief is inviolate. Conduct that functions as a political system is not," Self told a House Judiciary subcommittee in May.

"The Constitution guarantees equal rights, due process, and individual liberty, while sharia assigns legal distinctions among individuals and bases authority on religious mandates."

The Trump administration designated three international branches of the Muslim Brotherhood as terrorist organizations earlier this year - the first administration to do so.

During an August interview with conservative radio host Glenn Beck, President Donald Trump said the influence of sharia law in London and Paris has created "almost like a second way of life."

"I would absolutely prohibit the sharia law thing. It is happening in this country a little bit, and where we see it, we take it out," he said.

"We have one system."

Tyler Durden Tue, 10/06/2026 - 11:40

50 Iranian Tanker Logjam Unfolds As US Naval Blockade Starves Tehran Of Oil Revenue

Bloomberg cites a new report from United Against Nuclear Iran that claims the US naval blockade of the Strait of Hormuz has created a parking lot of more than 50 Iranian tankers that dare not cross the critical waterway.

The nonprofit think tank, which focuses on combating threats posed by Iran, said the number of laden tankers was broadly unchanged from two months earlier. The tankers were mostly carrying crude, along with some petroleum products and LNG.

UANI also noted that empty tankers were waiting at anchorages across the Indo-Pacific region rather than returning to Iranian ports, adding that at least 20 Iran-flagged ships were positioned off Sri Lanka and another was off Oman.

UANI's report comes days after Bloomberg said Iran's crude loadings fell to zero in September.

Over the weekend, Treasury Secretary Scott Bessent joined Mike Allen on "The Axios Show" and confirmed: "For the first time in history, they [Iran], since they started pumping oil, they will have no oil on the water this week. They will have no revenue."

Bessent on Iran: For the first time in history, since they started pumping oil, they will have no oil on the water this week. They will have no revenues. https://t.co/PIrHwUCG4q

— Clash Report (@clashreport) October 3, 2026

Separately, last week, Goldman analysts Yulia Zhestkova Grigsby, Alexandra Paulus, and Daan Struyven told clients that a "divergence between the fall of Iranian exports and the rise of exports of other Persian Gulf producers" was underway.

The Goldman energy experts estimated that "dark exports" have helped boost Persian Gulf oil exports to 23.3 million barrels a day late last month, back to prewar levels.

All indications so far point to the Trump administration's "Operation Economic Outcast" working as planned, with allied Gulf exports continuing to flow while Iran is starved of oil revenue amid the blockade. The question is whether this plan should've been implemented on day one of the conflict.

Tyler Durden Tue, 10/06/2026 - 11:20

AI Geniuses Are Decidedly Not Policy And Economic Geniuses

Authored by David McGarry via RealClearMarkets,

Geniuses are an odd species. To paraphrase Montesquieu, the exceptional are often also a bit loony. Cornelius Vanderbilt, a devotee of spiritualism, believed himself to have communicated with the spirit of George Washington. To improve his health, Henry Ford devoured weeds, and Thomas Alva Edison was averse to bathing. The point: geniuses are an odd species, who, for all the indispensability of their works to American prosperity and innovation, ought not be trusted credulously. Today in Washington, D.C., Congress must endeavor to protect artificial intelligence (AI) from the technologists most prominent in its creation.

Anthropic's Dario Amodei desires the U.S. government (an agent of compulsion) to dictate the "pace" of innovation, as the CEO wrote this month. "I have become convinced that fully addressing the risks requires even more prudence - not just investing in risk prevention, but pacing the rate of capabilities advancement so that risk prevention has time to keep up." Amodei warns of impending catastrophe should innovation continue at its current rate. Yet his company, the creator of what he supposes to be a tool of catastrophic potential, demands state-imposed fetters. Anthropic will institute some precautions, but not thoroughgoing "safety standards as well as limits on the rate of unchecked AI progress" - not until such standards and limits bind the entire industry. This means, in simpler terms, the kind of regulatory scheme Anthropic prefers - the kind that jars with the principles of antitrust law and would, as David Sacks notes, shelter the company's market share from the gales of competition.

The "prudence" of Amodei and the other pessimists is more rascally than genuine; it is an age-old propensity to see evil lurking in every major innovation and demand statism to manage it. The experience of the ages did not vindicate such assumptions when the printing press brought on a flood of "confusing and harmful" literature, when the typewriter displaced the human hand, or when the emergence of machines caused economist John Maynard Keynes, in the 1930s, to declare: "We are being afflicted with a new disease, technological unemployment."

In 2016, Geoffrey Hinton, the "Godfather of AI," predicted the demise of human radiologists, which field is, a decade on, employing human beings at record rates. Explaining his error, Hinton recently confessed that, a decade ago, he was ignorant of important facts. Unreformed, Hinton recently likened an episode in which an OpenAI agent, improperly set free from technical constraints, hacked Hugging Face to the nuclear reactor explosion at Chernobyl. He allowed Congress about a year to fend off disaster by regulating the technology.

The regulatory model favored by the pessimists is likely to subject free innovation to cartelization, free speech to state control, and the American system of property rights and free exchange to the will of bureaucratic juntas. As the Taxpayers Protection Alliance argued, even those pessimists who "consider themselves conservatives on technological questions...propose to embark upon a revolution in American government. To preserve the good life, they tell us, we must jettison the freedoms on which the pursuit of happiness depends. No vain denials of the scope of proposed state control can convincingly gainsay that contradiction."

The marriage of pessimism and statism has arrived on Capitol Hill, where many are in a mood to regulate AI - and to do so aggressively. Myriad bills have been introduced, and - among others, presumably - Senate Majority Leader John Thune (R-S.D.) and Sen. Amy Klobuchar (D-Minn.) are concocting what is likely to be a prominent addition to the collection. House Minority Leader Hakeem Jeffries (D-N.Y.) recently articulated the fearful position well, advocating "decisive congressional action immediately, in a manner consistent with what some of the leading AI voices in the country are now saying needs to happen."

All the while, President Donald Trump and many in Congress - including Speaker Mike Johnson (R-La.) - have resisted the paranoiacs. They remain confident in the American system: free innovation within the confines of traditional legal principles developed throughout the course of centuries to protect the rights of citizens from corporate excesses.

Doubtless, the captains of industry now building frontier AI models can accomplish innovative feats beyond the ken and capacities of all but a few Americans, let alone the median Washington, D.C., politician or bureaucrat. But their knowledge of politics and economics - of the ends of government and the means necessary to secure them - is not to be assumed. It is the office of the technologist to understand how to innovate, and that of the congressman to understand how to govern. The fretting and the myopias of the one should not rule the judgment of the other. A federal regulatory standard, enacted by Congress, is a sine qua non of sustained American innovation. But it must be built upon a foundation of practicality and not fanciful timidity, experience and not theory, and sound principles - the principles native to this land of liberty - and not statist reaction.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of ZeroHedge.

Tyler Durden Tue, 10/06/2026 - 11:00

Federal Survey Of 21,990 Kids Ties COVID Shots To Autism, ADHD

Authored by Steve Watson via Modernity.news,

A new analysis of the federal National Health Interview Survey finds children who received a COVID-19 shot had higher odds of autism, ADHD, anxiety, asthma and special-education use than children who did not.

The authors, including epidemiologist Nicolas Hulscher and cardiologist Peter McCullough, say the pattern survived a long list of statistical controls and rose with dose count.

Their conclusion is blunt: COVID-19 vaccination of children should cease immediately.

Neurodevelopmental Outcomes in COVID-19-Vaccinated Versus Unvaccinated U.S. Children: Analysis of the National Health Interview Survey, 2022-2024: https://t.co/slUVkwGFqf@McCulloughFund @P_McCulloughMD @NathanMeadPhD @Docjohnc

— Nicolas Hulscher, MPH (@NicHulscher) October 5, 2026

The paper, posted October 5 on the Zenodo repository, pools the 2022-2024 Sample Child files. It covers 21,990 children aged 0-17 with a recorded COVID vaccination status, and 19,882 aged 2-17 for the autism, ADHD and learning-disability items.

"Unvaccinated" in this comparison means no COVID-19 vaccine. It does not mean the child skipped the routine schedule.

Set against children who never received a COVID shot, COVID-vaccinated children had:

• 32 percent higher odds of current autism
• 26 percent higher odds of a lifetime autism diagnosis
• 33 percent higher odds of ADHD
• 23 percent higher odds of any neurodevelopmental diagnosis
• 19 percent higher odds of special-education use
• 24 percent higher odds of asthma
• 27 percent higher odds of daily or weekly anxiety
• 57 percent higher odds of mental-health medication
• 60 percent higher odds of mental-health therapy

The steepest autism estimate landed where parents were told the product was a routine precaution. Among children aged 5 to 7, three or more COVID shots were linked to 154 percent higher odds of current autism. Ages 2 to 7 with three or more doses sat at 137 percent higher odds.

The odds also climbed with the number of shots. Against children who received none, current-autism odds were 3 percent higher after one dose, 25 percent higher after two, and 40 percent higher after three or more.

Hulscher told The Gateway Pundit the association "persisted across numerous adjustment strategies, strengthened with increasing dose count, and reached its largest estimate in some of the youngest multiply vaccinated children."

He added: "This is a safety signal that must not be ignored. Endangering the developing brain is a red line. COVID-19 'vaccination' of children should cease immediately."

BREAKING STUDY: "COVID-19 'Vaccination' of Children Should Cease Immediately" https://t.co/PjpwHpxjnB

— The Gateway Pundit (@gatewaypundit) October 5, 2026

The authors say the autism signal held after accounting for age, sex, race, income, parental education, insurance, region, healthcare access, wellness visits, emergency-room use, hospitalization, prescription use and influenza vaccination.

It remained after a balancing method that wiped out measured differences between the groups, and after the analysis was limited to children without asthma, diabetes or fair or poor health.

Influenza and HPV shots were run as comparison exposures. Children who received a COVID shot but not a flu shot had 45 percent higher autism odds than children who received a flu shot but not a COVID shot.

They also state the limit their design cannot escape. The survey is cross-sectional. It cannot put the shot before the diagnosis in calendar time, and it cannot test the full routine childhood schedule.

A linked birth-cohort study is what they say should come next. That is a real constraint. It is not a reason the CDC, FDA or the manufacturers spent four years refusing to run the comparison on their own books.

CDC surveillance now puts autism at 1 in 31 American 8-year-olds. For boys the figure is 1 in 20, and in California, which has the tighter data, about 1 in 12.5 boys. Two years before those numbers landed, the national rate was 1 in 36.

Health Secretary Robert F. Kennedy Jr. put the denial in plain language in April 2025. "It's clear that the rates are real. Year by year there is a steady, relentless increase," he said. "This is a preventable disease. We know it's an environmental exposure. It has to be. Genes do not cause epidemics."

He described children who "were fully functional and regressed because of some environmental exposure into autism when they're two years old."

By September 2025 the department had stopped treating the question as forbidden. NIH's Autism Data Science Initiative set aside more than $50 million for 13 projects on environmental, medical and perinatal influences, and named medications and vaccinations as exposures under study.

Kennedy said the department was "closely examining" vaccines, and noted that "some 40 to 70% of mothers who have children with autism believe that their child was injured by a vaccine." President Trump's line at the same moment was shorter: "They pump so much stuff into those beautiful little babies, it's a disgrace."

The McCullough Foundation review released last October assembled 107 studies tying vaccination to autism, other neurodevelopmental disorders or brain injury, and described a clinical sequence running from multiple shots to fever, seizures, encephalitis, brain injury, regression and an autism diagnosis. Autism prevalence, that review argued, jumped on the order of 32,000 percent as the U.S. schedule swelled toward 72 doses.

Vaccines are not the only exposure officials spent years waving off. Internal Johnson & Johnson documents reported in September 2025 show the company's U.S. epidemiology director, Rachel Weinstein, writing in 2018 that "the weight of the evidence is starting to feel heavy to me" on prenatal Tylenol and neurodevelopmental disorders. A consumer-safety lead had already called the literature "a safety signal that needs to be evaluated" in 2008. Kenvue, the spun-off maker, still says there is no causal link.

Trump moved on the wider schedule in August. An executive order cut routine childhood recommendations to 11 core shots, ended the blanket push for hepatitis B, COVID-19 and influenza in healthy children, and told the Justice Department to challenge states that block religious or medical exemptions.

"In many cases, we were requiring 72 jabs for our beautiful, healthy, lovely, delicate little children," Trump said. Kennedy's assignment was to find the environmental exposure. "Genes don't cause epidemics."

The new survey analysis lands while the COVID product itself is still being sold into a thinner and thinner justification. Pediatric trials were never powered for autism, ADHD or special-education placement.

The Zenodo authors note that vaccine-derived spike has been reported in blood, monocytes, cerebral arteries and peripheral tissue months to years later, and that prenatal spike exposure produced autism-like behavior and neuroinflammation in male rats. That is their biological rationale. It is not a settled mechanism. It is also not nothing.

Around it sits a year of findings the agencies have not answered. FDA lot-release testing of Moderna's Spikevax recovered only 70 to 80 percent of a known endotoxin spike, with lipid nanoparticles capable of hiding most of an incorporated bacterial toxin from the assay.

A 35-year-old man who took three Pfizer shots, two from "E" batches, developed a heart tumor found 170 days after the first dose that doubled every 10 days and, once removed, contained fragments of Pfizer spike DNA.

Hulscher called that case "literally the smoking gun of turbo cancers."

A Nobel laureate warned Anthony Fauci in February 2021 that shot contents were reaching the placenta and the fetus and provoking an immune response in the amniotic fluid. Fauci told the public there were no red flags.

Myocarditis signals out of Israel were in hand by January 2021 and still described as mild months later.

On August 27 the FDA cleared Moderna's 2026-2027 formulas 81 days before the human study of those formulas was even scheduled to start.

And remember...

Congress is not done trying to close the exit. A Senate bill now in circulation would make it far harder for a parent or a state to decline a federal vaccine recommendation once the recommendation exists.

The survey paper is not a randomized trial, and its authors say so. What they also say is that no factor they could measure explains the autism gap, that the gap climbs with doses, and that it is largest in the children shot earliest.

Parents were told this product had been studied for the outcomes that wreck a childhood. It had not.

The federal file they were told not to worry about now shows the association in black and white. Stopping the shots in children is the minimum a government owes the families still being offered them.

Tyler Durden Tue, 10/06/2026 - 10:20

Americans Are Turning To AI Chatbots For Voting Advice In Midterm Elections

Authored by Bryan Hyde via American Greatness,

A growing number of American voters are turning to AI chatbots for voting advice in the midterm elections, including researching their ballots, comparing candidates, and fact-checking political claims.

Breitbart reports about half of American adults admit they use AI chatbots, according to Pew Research Center, and roughly 42 percent of those users use AI to search for information.

Voters are turning to ChatGPT and other AI chatbots to compare candidates, check claims and work through races that get little traditional coverage. That makes political research faster, but the same conversational style can quietly mirror what someone already believes. Experts warn that a voter can leave more confident in a position without actually learning more. The ballot is becoming a conversation with a machine.

— DARKCOM (@DARKCOMBUZZ) October 5, 2026

The trend has become especially prominent as voters prepare for the first major U.S. election cycle since generative AI became widespread.

Many users say they rely on AI to find information on local, down-ballot races that typically receive sparse news coverage or to quickly verify or debunk viral political claims and rumors circulating on social media.

In some instances, voters have gone as far as submitting photos of their physical ballots to ask chatbots for help filling them out.

While AI chatbots can speed up the process of researching candidates and issues, there are risks in relying on Silicon Valley technology.

Experts like Rafael Batista, a postdoctoral fellow at Johns Hopkins University, warn that chatbots are structurally designed to be "eager to please."

Batista cautions that AI chatbots may cherry-pick information that inadvertently reinforces a user's pre-existing political leanings, increasing voter confidence without actually improving their objective knowledge.

Batista also suggested users hide their personal preferences in prompts and browse in incognito mode, to limit bias drawn from a chatbot's memory of past conversations.

Major AI companies generally do not disclose the precise training data or sourcing methods behind their commercial models, making it difficult for voters to evaluate the objectivity or accuracy of the information provided.

Tyler Durden Tue, 10/06/2026 - 09:50

FBI Tracked Trump Aide's Phone, Monitored Melania Trump Before Mar-a-Lago Raid: Declassified Memos

Authored by Jill McLaughlin via The Epoch Times,

Newly declassified memos released Oct. 5 by the White House show former special prosecutor Jack Smith and FBI agents during the Biden administration monitored President Donald Trump's campaign manager's phone and tracked First Lady Melania Trump and her son Barron Trump's travel ahead of the 2022 raid on Mar-a-Lago in search of sensitive documents.

FBI agents tracked Trump's co-campaign manager Susie Wiles's calls using a pen register device, which records all outgoing phone numbers dialed from a monitored number, and a trap-and-trace device, which records all incoming numbers, according to the memos.

Agents sent detailed reports about when Trump's defense lawyers would call Wiles, if the calls were missed or returned, and the duration of the conversations. They even tracked when one lawyer would attempt to call while Wiles was on the phone with another person.

The agents also reported when Melania Trump called Wiles, which phone the first lady used, and the length of the call.

The White House responded to the memos, calling the findings an abuse of power.

"Jack Smith's surveillance operation was a disgraceful abuse of government power," White House spokeswoman Lauren Bis told The Epoch Times in an emailed statement. "Spying on political opponents is weaponization of law enforcement, plain and simple. Those responsible must be held accountable."

In one document detailing a timeline of tasks to complete on or before May 31, 2022, for Washington Field Office agents assigned to the operation, a line item stated they planned to finalize the FBI's understanding of Melania and Barron Trump's travel, and which type of aircraft they would use. The agents also planned to finalize coordination among the FBI, Department of Justice (DOJ), and Secret Service in the Miami and West Palm Beach jurisdictions before the Aug. 8 raid on Mar-a-Lago, President Trump's estate in Palm Beach.

The memos included a few attempts by the special agent in charge of the counterintelligence division at the Washington Field Office to get the documents at Mar-a-Lago without serving a search warrant.

On July 13, 2022, one month before the raid, a memo shows FBI agents reported they were having difficulty speaking with anyone with knowledge of records being stored at Mar-a-Lago and concluded they didn't have enough information for a search warrant.

"[The Washington Field Office] does not believe (and has articulated to DOJ CES), that we have established probable cause for the search warrant at Mar a Lago. ... Finally, if the goal is to identify and recover classified records quickly, so as to protect the information, the 5 weeks spent fixated on probable cause of a search warrant have been counterproductive," the assistant special agent in charge of counterintelligence in Washington reported in the memo.

Approval for the investigation appeared to come from the top of the DOJ. On a March 24, 2022, memo by FBI Director Christopher Wray to Deputy Attorney General Lisa Monaco, Monaco initialed the memo with a note to then Attorney General Merrick Garland, saying "Merrick, I recommend you approve, Lisa 3/25/22."

Wray noted he was required to get written approval from the attorney general, through the deputy, before opening any investigation of a declared candidate for president or vice president, a presidential campaign, or a senior presidential campaign staff member or adviser.

The memos were part of Operation Plasmic Echo, the FBI's codename for the criminal investigation into Trump's alleged retention of classified and national defense documents from his first presidential term at Mar-a-Lago.

The president was never found guilty of retaining the sensitive documents at his Florida estate. A judge ruled that special counsel Smith's appointment and funding were unconstitutional and dismissed his case.

Smith eventually dropped the federal prosecution after Trump was reelected in November 2024.

Tyler Durden Tue, 10/06/2026 - 09:20

Houthis Attack Multiple Saudi Airports, Wounding Bystanders - Warn Civilian Infrastructure Now In Crosshairs

Yemen's Ansar Allah movement, or Houthis, have over the past 48 hours been targeting airports along with Aramco sites within Saudi territory, and have warned further that civilian infrastructure will increasingly be fair game in retaliation for the Saudi blockade imposed on Yemen.

Houthi military spokesman Yahya Saree also declared Tuesday that this is the result of the ongoing Saudi bombing campaign. The kingdom's Abha International Airport in the southwest of the country has come under fresh missile attack on Tuesday.

"We reiterate our warning to all international airlines regarding the consequences of continuing to operate flights within Saudi airspace, as it has become a theatre for our military operations - with the exception of the airspace over the Holy Sites in Mecca and Medina," the Iran-aligned rebel group said in a statement.

File image, via SaudiAuto

The Saudi government didn't immediately confirm the attack, but it follows Monday night attacks on airports in Jazan and Najran with several injuries and damage reported, according to Al Jazeera. Riyadh and its international airport were also targeted.

While King Khalid International Airport saw flight delays and gate closures, there's been no official confirmation of damage there, other than some open source claims of possible destruction. But casualties have been reported at the other airports. The Wall Street Journal reports:

Saudi Arabia’s General Authority of Civil Aviation said King Abdullah bin Abdulaziz International Airport, a dual-use airport in the Red Sea city of Jazan, and Najran International Airport, were damaged in the strikes. Three people were wounded, the agency said. 

The Houthi military spokesman has newly decalred of Abha International Airport in Asir province that ballistic missile "was precise and direct … resulting in the disruption of air traffic at the airport." 

NEW: Ansar Allah (Houthis) have struck MULTIPLE Saudi Airports in the last 24 hours to include: Jizan Airport Abha Airport Najran Airport Riyadh Airport (likely) Jizan and Najran have been confirmed explicitly by the Saudi Civil Defense, and Abha has been stated as struck by Ansar Allah’s spokesperson. Riyadh is speculative but based on multiple flight holding patterns yesterday, alongside previously successful strikes and reports from the AFP of “major explosions heard”, it is likely hit as well. Four airports, one day.

— Brett Erickson (@BrettErickson28) October 6, 2026

Saree further said in statement on X, "We reiterate our warning to all global airlines regarding the consequences of continuing to operate their flights in Saudi airspace, as it has become a theatre for our military operations."

Hundreds of Saudi coalition aerial attacks have unfolded in Yemen this week, and the Houthis are now making clear they intend to unleash their missiles and drones directly on the kingdom in return.

Several international reports have cited Saudi coalition progress in retaking territory along Yemen's Red Sea coast.

"Saudi-backed Yemeni government forces staged a lightning advance on Monday to retake the coast around the Bab el-Mandeb Strait up to the city of Mocha, the government said, pushing the Iran-backed Houthis out of most of the areas they seized last month," Reuters writes. Armored convoys have been spotted moving up coastal highways.

⚡️JUST IN: More Saudi Aramco's Fuel Tanks have been hit by Yemen's Houthis in the Capital Riyadh In addition Jizan and Najran Airports have been Hit from Yemen https://t.co/uF77VOejeP

— Iran Observer (@IranObserver0) October 6, 2026

However, many of these reports rely on military officials from one side or the other, amid a fog of war situation where it's hard to assess which claims are true or possibly exaggerated. 

The Houthis taking the war directly to Saudi territory sets up the greater possibility of Pakistani or Turkish military intervention in support of Riyadh based on the Mecca Defense Pact.

Among neighboring regional countries, Jordan has been among the first to condemn the 'war on the airports' and against energy sites, with Jordan’s Foreign Minister Ayman Safadi having in a phone call to his Saudi counterpart "affirmed Jordan’s absolute solidarity with Saudi Arabia in confronting the Houthi aggressions, and its absolute support for all measures it takes to protect its security, stability, sovereignty, and the safety of its citizens."

Looks like Saudi sent a ton of forces down the Yemen coast on a suicide mission for a good headline. As we said on the show this morning, grabbing territory with armored vehicles and air cover is doable, holding it is the challenge, and there seems to be no plan for that

— Ryan Grim (@ryangrim) October 6, 2026

In Europe, Ursula von der Leyen says the EU stands with Saudi Arabia in the wake of the attacks on the kingdom. "These attacks keep destabilizing the region, igniting further violence, and undermining global energy security," she wrote on X. "We stand in solidarity with Saudi Arabia and our Gulf partners." She laid out that as European Commission President regional security "will be at the heart" of upcoming October meetings between EU and Gulf Cooperation Council leaders.

Tyler Durden Tue, 10/06/2026 - 09:00

Rioters Torch Paris School Exit And Trap 100 Students Inside

Via Remix News,

Masked attackers set fires at the doors of a Paris vocational high school Monday, confining about 100 students and staff inside, as nationwide student protests over school conditions entered another week with thousands already arrested and hundreds reported injured.

At the Nicolas-Louis Vauquelin High School in the 13th arrondissement, Principal Carole Zerbib said a group of about 10 people in hoods, masks and black clothing arrived around 7:50 a.m. as students were arriving. She told BFMTV they looked "very determined, very fast," and that staff "immediately understood that we were not going to be able to talk with them."

Zerbib said the group threw full trash bins and other flammable material in front of the entrance, brought a sofa and bicycles to barricade the door, smashed glass with a pair of crutches, and set fires outside using a flammable liquid. A staff member was struck in the face by a shard of glass, BFMTV reported. Firefighters and police were met with mortar fire. Courses were canceled for the day.

A video team from BFMTV recorded flames at the entrance and described staff being blocked as they tried to use an extinguisher, with the principal heard telling confined students to move up to the first floor.

🇫🇷🚨 BREAKING: Rioters set fire to the entrance of Vauquelin High School in Paris and blocked the exits when staff tried to put the fire out.

A film crew recorded the terrifying attempted murder.

"The school staff was unable to put out the fire. The rioters blocked them just as the extinguisher nozzle came out; they blocked the exit."

"The fire continues. You see all the silhouettes moving behind it; they continue to feed this fire, making it stronger and stronger. The school staff is not even going to try to put it out anymore; they can't manage it. We can hear the principal here asking the hundred confined students to step back and move up to the first floor."

The building was full of staff, students, and journalists, but these rioters appear ready to kill anyone still inside the vocational chemistry school.

Follow: @RMXnews

— Remix News & Views (@RMXnews) October 5, 2026

In the video sequence, a BFMTV host stated: "The school staff was unable to put out the fire. The rioters blocked them just as the extinguisher nozzle came out; they blocked the exit." The staff speaking from inside the building confirmed they were "under siege."

Principal Carole Zerbib said, "It was terrible for the students and the staff, who witnessed an outburst of violence...I think we had rarely seen violence this strong in front of us."

She said the attackers "were quite organized and had prepared their move," and that she had been warned by students and teachers of calls on social media to burn the school. "These aren't my students. These are groups."

Junior Interior Minister Jean-Didier Berger, speaking on BFMTV after the fires were put out and the school evacuated, called the images "particularly shocking" and said, "These are criminal acts that fall under the law and must be repressed in the harshest way."

Outside the damaged school, Zerbib took questions from reporters, then stopped when she saw a CNews microphone.

"Which outlet is that?" she asked. When she was told it was CNews, she said, "Oh no, I had said no." When the journalist replied that it was the press, she said: "I don't agree. Because I don't agree with CNews's editorial line. I think you don't do any good. You don't do any good for young people."

🇫🇷🔥 BREAKING: Another major school arson attack at Blaise Pascal High School in the French city of Rouen.

The entire entrance is currently in flames.

School staff can only stand and watch it burn.

Follow: @RMXnews https://t.co/CZ8h1aDO3U

— Remix News & Views (@RMXnews) October 1, 2026

She had earlier told other reporters that as long as police remained outside, "I tell myself it will be all right," while adding it was "not impossible that they come back, since they want to strike at the symbols of the state."

The clash came as Education Minister Édouard Geffray said classes would be fully or partly suspended Monday at 400 to 500 of France's roughly 3,700 high schools because safety conditions were not met. He said 24 schools had been burned or ransacked since the protests spread from the Paris region in mid-September. Organizers have called a further day of action Tuesday, which student unions have labeled "act III."

Geffray said Sunday that 78 education staff members had been injured since the unrest began, including "some of them by high schoolers." In addition, 170 students had been hurt. He said far-left activists had "hijacked" the movement. Interior Minister Laurent Nuñez has said more than 5,000 people have been arrested since last Monday, about 85 percent of them minors, and that more than 300 officers and gendarmes have been injured. Police recorded 1,747 arrests on Friday alone, he told TF1.

Among the cases already opened include a 17-year-old was arrested on suspicion of attempted homicide after a police officer was beaten in Belfort, and a 16-year-old was detained Sunday over the assault of a 59-year-old teacher in La Ciotat who was struck and doused with gasoline.

In Tours, prosecutors said a young protester lost sight in one eye while battling with police.

Students and the Union syndicale lycéenne say they are protesting against reduced teaching staff, overcrowded classes, long schedules, the Parcoursup admissions system and buildings in disrepair. The government has called some of those complaints legitimate while condemning what Nuñez has described as a slide into "riot and urban violence."

🇫🇷🔥 BREAKING: A French physics teacher was doused with gasoline today (Oct. 2) while trying to put out a fire students had lit near a tree in La Ciotat.

The teacher was reportedly temporarily blinded, according to French news reports, when the gasoline was thrown into his eyes.

Youths then began kicking the physics teacher.

The main suspect was reportedly arrested.

Yesterday in Marseille, youths are being investigated for attempted murder after dousing a principal and a vice-principal with gasoline during an attempted arson outside a high school administrative office.

Follow: @RMXnews

— Remix News & Views (@RMXnews) October 2, 2026

Read more here...

Tyler Durden Tue, 10/06/2026 - 08:40

S&P Set To Open At Record High As Oil Slides, Bond Rout Takes A Breather

US equity futures are higher for a fourth day, putting the S&P on course for its longest winning streak in two months, and on pace for a record open. Tech is leading again, though the rest of the market is finally joining in, and the bond market has stopped screaming for a few hours. As of 8:00am ET, S&P futures are 0.5% higher at 7,865 and Dow futures are up 288 points; Nasdaq futures were up 0.3%, and follows a session in which the Nasdaq and the Mag 7 printed fresh records even as the 10Y closed at a post-2002 high of 5.31%. In premarket trading, semis lag Nasdaq futures as the Mag 7 and Software outperform; Cyclicals ex-Energy lead Defensives and most sectors are indicated higher, which JPM calls a "notable broadening." Nvidia is on the verge of becoming the first $6 trillion company, Constellation Energy jumps after inking an 890 MW nuclear deal with Google, and Option Care soars 23% on a report of a McKesson/CD&R bid. Today's sentiment tailwind is oil: WTI is down about 2% to $87.62 and Brent has slipped back below $100, touching $98.47. Saudi Arabia says its East-West pipeline is back to 5.8 million b/d. The oil drop helps global bonds catch a bid, led by a sharp rally in French and Italian debt as Marine Le Pen unveils her budget plans. The 10Y yield is down about 4bps to 5.27% and the curve is bull flattening, with 2s10s about 2.5bps tighter. The Bloomberg dollar index is down 0.2% at the day's low after setting a 52-week high yesterday; cable is at its highest since October 1 and the euro has pared Monday's losses. In commodities, Energy is under pressure while Ags and Metals are bid: gold has rebounded from $4,104 to above $4,150, silver is little changed around $61, and US natgas is up 0.3% to $3.08, while European TTF gas jumps more than €3/MWh. Bitcoin dipped toward $85,000 overnight before recovering to $86,000. US economic data slate includes the ADP weekly employment change (8:15am ET) and the August trade balance (8:30am). Fed speaker slate includes Williams (9:05am), Musalem (10:45am), Bowman (10:46am), Schmid (1:15pm) and Logan (7pm). Treasury sells $58bn in 3-year notes at 1pm.

In premarket trading, all Mag 7 names are higher: Tesla +1.2%, Nvidia +0.9%, Microsoft +0.8%, Amazon +0.7%, Alphabet +0.6%, Meta Platforms +0.4%, Apple +0.1%

• AMD (AMD) is up 2% after the chipmaker’s CEO predicted “very high” chip demand over the next few years. Separately, analysts raised their price targets on the stock, citing growth from AI agent products.
• BorgWarner (BWA) gains 3.7% as Morgan Stanley upgrades to overweight from equal-weight, noting that a long tail of internal combustion engine and hybrid demand supports the core auto outlook.
• Constellation Energy (CEG) is up 6.1% after it announced a long-term deal with Google to bring 890 MW of new nuclear capacity over 20 years onto the PJM grid in Illinois, Pennsylvania and New Jersey.
• Corteva Inc. (CTVA) is up 3% after JPMorgan raised its recommendation on the crop chemical company to overweight from neutral after it spun off its Vylor Inc. seed business.
• JetBlue Airways (JBLU) gains 2.1% after Citi upgraded the airline to neutral from sell.
• Option Care Health (OPCH) rises 21% after the Financial Times reports that McKesson and PE firm Clayton Dubilier & Rice are closing in on a deal to buy the provider of medical infusion services, in a transaction that would value the business at more than $5 billion including debt.
• Procter & Gamble Co. (PG) is up 1.5% after Evercore ISI upgraded the maker of consumer products to outperform from inline, citing an improved growth outlook going forward.
• Qiagen (QGEN) is up 2.6% and Fortrea Holdings (FTRE) gains 3.3% after Barclays analyst Luke Sergott upgraded both names to overweight from equal-weight ahead of third-quarter earnings.

n other corporate news, OpenAI is in talks with several UAE investment funds to help anchor a $30 billion financing round. DeepSeek is set to raise at least $12 billion in a Tencent- and CATL-led round, and Moonshot AI has closed its final private round at about a $50 billion valuation ahead of a likely Hong Kong IPO. Google and Constellation Energy inked a deal for 890 MW of nuclear capacity. Data-center operator DayOne filed for a US IPO. Seagate and Toshiba are battling for TDK's hard-drive head unit. Emera agreed to buy Canadian Utilities in a deal valued at about C$14.3 billion. Informa agreed to buy Clarion from Blackstone for £2.24 billion in enterprise value. CVC and GBL raised their Recordati offer to €53 a share. BPCE took a stake of about 7% in Sabadell in a friendly deal. Qualcomm licensed patents linked to Huawei's LogicFolding tech. AMD CEO Lisa Su sees "very high" chip demand for the next few years. Spyre Therapeutics priced 4.12 million shares at $85. Vaxcyte plans an offering of convertible notes due 2032. Ambani's Jio is said to seek a valuation of about $114 billion in its IPO. LS Power raised $6 billion for its largest flagship fund, and Live Nation is looking to raise $1.4 billion in bonds, including its debut euro offering. And according to the New York State Comptroller, NYC's trading and investment-banking firms are poised to deliver profits exceeding $90 billion, which should mean record bonuses.

Global stocks are enjoying a rare bout of broad relief at a time when elevated oil prices and bond yields have kept risk appetite in check. Global stock benchmarks have emerged relatively unscathed, as surging investment in artificial intelligence and strong earnings underpin demand. As a result, markets keep doing the thing they're not supposed to do: stocks keep grinding to records while the long end of the Treasury curve keeps making new 24-year highs. On Monday the Nasdaq (+1.05%) and the Mag 7 (+1.23%) closed at records and the S&P closed within half a percent of its own, even as the 10Y hit 5.31% and the 30Y 5.66%, both post-2002 highs (as we noted last night in "The Crazy Continues: Stocks Up, Breadth Down; Yields Up, Oil Down"). This morning the S&P is on course for a fourth straight gain. Bloomberg flags that Citi strategists see futures positioning as selective, "with momentum building for long Nasdaq futures but investors adding shorts to Russell 2000 futures." Marvell and Zscaler investor days are today's read on AI infrastructure and cyber demand.

“Earnings, not multiple expansion, are driving this year’s gains,” said Stephan Kemper at BNP Paribas Wealth Management in Germany. “With earnings-per-share revisions still being strong, fueled by above-average guidance upgrades in the US, we think there is room for this pattern to continue.”

A flurry of deals showed plenty of appetite for investments in AI and the global buildout of the technology. OpenAI was said to be in talks with multiple funds from the United Arab Emirates to help anchor a $30 billion round of financing, while China’s DeepSeek and Moonshot AI were also raising billions. Google parent Alphabet Inc. inked a deal to buy nuclear energy from Constellation Energy Corp.

“The breadth of the equity market performance is narrow and is driven by the tech sector,” said Mohit Kumar, chief European economist at Jefferies. “Strong earnings, ongoing capex and ample liquidity in the system should support the picks-and-shovels trade.”

Marvell and Zscaler investor days will be in focus today as a read on AI infrastructure and cybersecurity demand.

French bonds shrugged off the latest signs of political turmoil on day when hundreds of high schools were shut in student-led protests. The premium on French 10-year yields over their German peers narrowed to less than 130, down from a recent peak near 160. French presidential candidate Marine Le Pen, head of the far-right National Rally, proposed bringing the country’s deficit below 3% of GDP by 2032. France has increasingly come under fire in bond markets over its political outlook and spiraling debt costs.

JPM's Market Intel desk under Andrew Tyler leans in. The team has returned to a Tactically Bullish view and says the broadening is "notable, both within Tech and across broader markets." Given light positioning outside Tech, the team thinks the trend can run into earnings season, which kicks into high gear next week with the Fins. The key change last week was rates: October hike odds collapsed from 64% to 22%, and the market now prices roughly one hike in 2026 and two in 2027. JPM's Monetization Menu still has Tech as the core long, but the desk would no longer pair it with an RTY short given squeeze risk if oil and yields fall. Its biggest upside catalyst is a US/Iran deal, which "would squeeze EU and RTY higher." On earnings, FactSet consensus has Q3 at 29.5% EPS growth on 12.3% revenue growth with 15.0% margins; that would be the third straight quarter of 10%+ revenue growth and 25%+ earnings growth.

Goldman's desk is in the same place. In London, Rich Privorotsky writes that "Nasdaq takes out the highs as the market keeps climbing the proverbial wall of worry" and that "we are simply short compute, gigawatts and power infrastructure." His risk case, delivered with a straight face, is that "macro looks bad but micro still strong and suddenly the rally broadens." The positioning backdrop supports that. Goldman's Equities Call desk notes US L/S net leverage is at its lowest since April 2025 ("Liberation Day") and in the 2nd percentile on a five-year lookback, adding that "a continued index move higher is going to force investors to buy this tape." On the vol side, Caroline Warren says skew "was totally crushed again" yesterday, with short-dated SPX skew already below the 10th percentile. Not everyone is buying the rip, though: one very large buyer bought an end-November SPX put spread (~1.8m vega, ~$9.5m premium), and a GS customer bought 75k SPY 30-Nov 570/675 put spreads.

The fine print is less festive. Goldman's Ismail Abbas notes that fewer than 25% of S&P 500 constituents outperformed the index in September, and the median stock ended the month 17% below its all-time high. Jacob Malmstrom's earnings charts show that consensus Q3 S&P EPS growth of 27% is doing a lot of heavy lifting: AI infrastructure spending accounts for over 50% of S&P 500 EPS growth this quarter, with hyperscaler capex up 116%, while median company EPS growth is seen slowing from 14% to 9%. Malmstrom adds that "Q3 margins estimates have been revised lower in every sector except tech." (Also see "When Does The Credit Party End? Goldman, Morgan Stanley Map The AI Debt Binge".)

Trump has signed an executive order to ease restrictions on the use of a tax-exempt variety of diesel, his latest bid to pare costs for the fuel ahead of November’s midterm elections. A US ban on diesel exports — something Trump previously considered but backed off from last week — could result in higher prices in some parts of the country as well as causing issues with other nations that rely on American supplies, Chevron CEO Mike Wirth said.

This year’s volatility in markets is producing some winners: New York’s trading and investment-banking firms are poised to deliver profits exceeding $90 billion, according to a report by the New York State Comptroller. That should mean a record set of bonuses in the new year. Investment banks have also been helped by a return to confidence in dealmaking — and AI is a large part of that. In developments today, OpenAI was said to be in talks with multiple investment funds from the United Arab Emirates to help anchor a $30 billion round of financing, while China’s DeepSeek and Moonshot AI were also raising billions. Elsewhere, CVC raised its take-private offer for Italian pharma firm Recordati

In Europe, the Stoxx 600 is up 1.0% and on course for its best day in over two weeks and a third straight gain, as falling oil and easing bond yields support risk appetite. Every sector is green: Health Care leads on a Genmab update, followed closely by Media and Banks. France's CAC 40 is little moved after Le Pen's alternative budget, which Newsquawk says the market saw as optimistic but enough to keep OAT buyers coming. All major indices are up at least one standard deviation except France, which lags but is still higher: FTSE 100 +0.9%, Euro Stoxx 50 +0.9%, DAX +0.8%, with Spain and Italy leading [REFRESH]. JPM's desk says the top baskets are Freight Rate Sensitives, Private Credit, EU Fiscal and Software, while EU Defense, Semis and MidEast Escalation Longs are at the bottom. Beta and Quality lead, while Size and ResVol lag; Value beats Growth and, curiously, Defensives beat Cyclicals.

Asian stocks climbed, buoyed by the tech-led US rally that sent the Nasdaq 100 to a record. Japan's Nikkei rose 1.1% and is back above 70,000, the Topix gained more than 0.7%, and the Hang Seng added 1.0% to push above 24,000, led by tech and biopharma, as Moonshot AI's ~$50bn fundraise stoked Hong Kong IPO hopes. Australia's ASX 200 rose 0.6%, while Taiwan's Taiex added 0.2% after futures briefly touched 50,000. Indonesia's JCI rose 1.3% and India's Nifty 0.5%, after what Goldman's Rachel Hu calls "the longest losing streak in 25 years." The exception was South Korea's Kospi, which fell 0.9%-1.4% on its return from a long weekend, flipping opening gains as tech giants slid. Goldman's desk said Japan flows were "1.7x better to sell." Mainland China remains closed for Golden Week and reopens Thursday.

In FX, the Bloomberg Dollar Spot Index is down 0.2% at the day's low after hitting a 52-week high on Monday, while the DXY holds just above 102 (102.01-102.28 range). Sterling rose as much as 0.4% to 1.3269, its highest since October 1. The euro has pared Monday's losses, bouncing off a 17-month low after France's central bank governor warned the country risks being "strangled" by interest rates. Goldman's Matt Atherton would be cautious "fading any dip back below 1.12" given weak German orders and the Le Pen budget, while MUFG suggests selling the euro against tech-linked Asian FX. The yen and the Swiss franc underperform as havens lag on lower yields. Ueda did little to challenge bets against an October BOJ hike, and a Reuters source report says the BOJ may instead signal that underlying inflation has hit 2%. MUFG reads that as consistent with a December hike [REFRESH USD/JPY ~158.2]. Goldman likes USD/JPY upside via an 8-Dec 159 call with a 162.50 KO, noting that "GPIF headlines poured more cold water on the prospect of near-term repatriation flow." Elsewhere, the HKMA warned the HKD may hit the weak side of its peg. In Brazil, after USD/BRL's ~4% drop on the Flávio Bolsonaro first-round lead, Goldman sees the second-round event weight halving and would sell USD/BRL toward or above 5.00

In rates, treasury futures edge higher over the London session leaving yields richer by up to 3bp across belly and long-end of the curve, supported by gains in European bonds where France, Italy and Greece sharply outperform. US yields lower by 1bp to 3bp across the curve in a bull flattening move with 2s10s spread down around 2.5bp vs. Monday close. US 10-year yields trade close to session lows at 5.27% with France, Italy and Greece debt all outperforming by roughly 7bp in the sector. Marine Le Pen proposed a sharp deficit reduction and called on the European Central Bank to intervene to bring down surging debt costs (it has zero chance of passing but the market will take it for now). This week’s Treasury auctions start at 1pm New York with $58 billion 3-year note sale, followed b $39 billion 10-year and $22 billion 30-year reopenings Wednesday and Thursday. The WI 3-year at around 4.93% is ~46bp cheaper than the September stop-out, which traded 0.1bp through the WI in a solid auction. IG dollar issuance slate includes a couple of deals. Four borrowers priced $3.5 billion on Monday, paying about 6bp in new issue concessions on deals that were 4.5 times covered — at least four issuers decided not to move forward. US session focus includes a stacked Fed speaker slate, while this week’s auctions kick-off with a 3-year note sale at 1pm New York which is set to stop at the highest yield since 2006. WTI futures lower by around 2%, further supporting Treasuries.

“Rates in Europe are being helped by lower oil prices, which remain a key watchpoint given that no conflict resolution has yet been achieved,” said Alessandro Gabellone, fixed-income analyst at Bank Degroof Petercam. “France remains under rising political pressure, but today’s fall in yields following Le Pen’s budget comments could provide some short-term relief.”

In commodities, WTI is down about 2.8% at $87.00 (off a $90.05 high) and Brent has fallen to as low as $97.52 from $100.99, slipping back below $100. The drop comes as the Saudis say the East-West pipeline is back at 5.8m b/d and Kpler data show Hormuz crude flows at about 76% of the pre-war baseline. Diesel remains tight: Bloomberg notes the product squeeze is outlasting the crude recovery, Russia may partially lift its diesel-export ban, and Trump signed an order easing limits on tax-free dyed diesel. US natgas is up 0.3% to $3.08, while Dutch TTF is sharply higher at up to €76.45/MWh and UK natgas jumped 4.4%. Gold has rebounded from $4,104 to above $4,150/oz as the dollar dips, and silver is little changed in a $60.28-61.21 range. LME copper is extending gains in a $14,393-14,485/t range, though mainland China is still out for Golden Week. Shell's CEO says Mideast oil flows are near 80% of pre-war levels, and Vitol's Hardy pegs crude leaving Hormuz at ~12m b/d. JPM notes Ags and Metals are bid even as Managed Money broadly sold commodity futures last week, led by natgas, silver and WTI.

US economic data slate includes weekly ADP employment change (8:15am) and August trade balance (8:30am) Fed speaker slate includes Williams (9:05am), Musalem (10:45am), Bowman (10:46am), Schmid (1:15pm) and Logan (7pm)

Marvell Technology and Zscaler host investor days. Marvell is set to discuss its strategy and growth opportunities in custom silicon and data-center connectivity, while Zscaler will outline its long-term growth drivers, financial outlook and newer AI-security products

Market Snapshot

Top Overnight News

• Saudi-backed Yemeni government forces staged a lightning advance on Monday to retake the coast around the Bab el-Mandeb Strait up to the city of Mocha, the government said, pushing the Iran-backed Houthis out of most of the areas they seized last month. RTRS
• Trump signed an executive order easing restrictions on tax-exempt dyed diesel; Chevron's Wirth warned a US diesel export ban could push prices higher. On the crude front, the US blockade has bottled up at least 50 tankers carrying Iranian oil, UANI said. BBG
• Saudi Arabia's East-West pipeline is back to 5.8m b/d, the energy minister said, after resuming operations 5-6 days after it was hit. BBG
• A growing number of commercial real-estate buyers are threatening to walk away from recent transactions unless the seller offers better terms. Rapidly rising interest rates are to blame. Investors who agreed to a purchase price earlier this year when financing was cheaper are now demanding price cuts or other concessions before closing. WSJ
• Far-right French presidential candidate Marine Le Pen proposed a sharp deficit reduction and called on the European Central Bank to intervene to bring down surging debt costs as she seeks to assure investors of her financial credentials ahead of the election next year. BBG
• French Finance Minister Roland Lescure said the country is far from needing the European Central Bank to step in even as it wrestles with soaring bond yields. Lescure said circumstances are very different from a decade earlier during the debt crisis, and that France's signature is solid, but it's under pressure. BBG
• The BoJ may signal this month that underlying inflation has roughly hit its 2% target, three sources familiar with its thinking said, highlighting ‌its readiness to raise interest rates again in the coming months. Any such announcement would largely be symbolic, but it would reinforce dominant market expectations of a December hike and signal the BOJ's readiness to keep raising interest rates in short intervals. RTRS
• German manufacturing orders plummeted in August, pointing to increasing pressure on industrial demand as the conflict in the Middle East continues to keep energy costs elevated. WSJ
• A sharp sell-off in US government bonds is starting to reverberate across corporate America, forcing companies to overhaul their borrowing plans and even raising the spectre of defaults among the most lowly rated businesses. Borrowing costs for companies with the lowest credit ratings hit their highest level since May 2020 this month at 17 per cent, driven by the rise in Treasury yields to multiyear highs and by investors demanding more compensation for lending to such businesses. FT
• Nvidia is on the verge of becoming the first company with a $6 trillion market cap as investors rotate back into the chipmaker. BBG
• OpenAI is in talks with multiple UAE investment funds to help anchor a $30 billion financing round; DeepSeek is set to raise at least $12 billion in a Tencent- and CATL-led round, and Moonshot AI closed at a ~$50 billion valuation. BBG
• Google and Constellation Energy inked a deal for 890 MW of nuclear capacity as tech companies race to line up power for data centers. RTRS
• AMD’s CEO said the company will substantially increase its chip supply in 2027 and predicted “very high” demand for the next few years
• NY Fed has been visiting big banks to review their loans to private credit firms and understand their exposure, while officials have gone into JPMorgan (JPM), Wells Fargo (WFC), Barclays (BARC LN), and Morgan Stanley (MS) since the spring with questions about overall exposure and risk: Semafor.
• Ray Dalio warned Treasuries are vulnerable to a pullback in demand from China and Japan; Bessent said the US can "very quickly" bend the debt curve. BBG
• US Treasury Secretary Bessent said underlying, core inflation is down to around 2.3% and that interest rates are all a function of headline inflation, while he added that mortgage rates will come back down after the Iran conflict. Bessent said they inherited a big stack of debt and could start bending the debt curve very quickly, while he thinks they will see in excess of 3% growth for Q3 and noted the US economy is accelerating.
• US Senators Warren (D) and Blumenthal (D) reportedly wrote to the Trump administration for answers on industry influence on the AI regulatory framework: Semafor.
• Japan's 10-year bond sale saw firmer demand than the 12-month average; GPIF didn't discuss portfolio allocation at its September meeting. BBG
• Goldman economists estimate higher rates will subtract ~0.2pp from 2027 GDP (over 0.5pp if current rates persist), with one more Fed hike in December and the 10Y falling to 4.4% by end-2027. GS
• JPM Delta-One: US bond futures saw record weekly net buying ($89bn, 3.4z) as the rout drew dip-buyers, while investors de-risked Semis (SOXL/SOXX/SMH -$4.0bn). JPM

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly took impetus from the positive handover from Wall St, where all major indices gained and the Nasdaq led the advances to print a fresh record high, despite the continued upside in long-term Treasury yields. ASX 200 gained at the open with outperformance seen in real estate and utilities, while the top-weighted financials sector and mining stocks also contributed to the upside in the index. Nikkei 225 returned to above the 70,000 level but with the gains somewhat modest in comparison to the prior day's surge and in the absence of any major fresh catalysts, while it was recently reported that Japan’s GPIF did not discuss allocation at its September meeting. KOSPI underperformed on return from the long weekend with the index dragged lower by losses in its tech giants, while US President Trump had also previously threatened South Korea to sign on to the Alaska LNG deal or he will 'charge them more’. Hang Seng extended above the 24,000 level with tech and biopharmaceuticals spearheading the advances, while it was also reported that China's Moonshot is to close its pre-IPO funding round at a USD 50bln valuation and eyes a Hong Kong IPO in Q1 next year.

Top Asian News

• Japan's Finance Minister Katayama said they have enough measures to meet spending needs for next year's budget and will thoroughly communicate with markets.
• Japanese Senior Lawmaker said that Japan should expand sales of government bonds to retail investors to create a more stable domestic investor base.
• Australia's Treasurer Chalmers said private sector is leading growth in Australia's economy, adding that Australia has a long-standing productivity challenge but noted Australia's economy story is a positive one.

European bourses (STOXX 600 +1.0%) are firmer across the board, helped by the recent downside across the energy complex. France's CAC 40 was little-moved following comments from Presidential frontrunner Le Pen, who outlined her party’s alternative budget. It was potentially regarded as optimistic by the market, but ultimately enough to appease traders, who continued to take French bonds higher. Sectors highlight the positive bias, with all sectors in the green. Health Care is the sector outperformer, following a Genmab update (see more below), while Media and Banks follow closely behind. US equity futures are higher, following their European counterparts. An interesting story from Bloomberg, related to the Toshiba-Seagate competition in the memory space, stating that the two Cos are fighting to acquire TDK's HDD magnetic heads business. Elsewhere, AMD CEO commented that demand is exceeding supply, memory remains supply constrained and AMD will substantially increase supply in 2027.

Top European News

• French RN leader Le Pen said France could face a default if President Macron policy continues, while announcing a French deficit of 3% of GDP by 2032 at the latest. In terms of other targets, she plans for the deficit to be below 5% from 2027, aims to reduce the public deficit to 3% by 2030 and aims for EUR 140bln in savings in 2032, compared to 2026. Le Pen also announced that they aim to reduce the pension deficit, and plans will be unveiled in the next few weeks. She also said they would be open to some kind of wealth tax and that it would be important to discuss with the ECB for an intervention.
• Spanish PM Sanchez calling a snap election means it is now less likely the EU will agree on its long-term budget by end-2026, according to Politico citing sources.
• French Finance Minister Lescure said they are not at the stage of talking about ECB TPI and that they need to do everything to avoid getting to such a point.

FX

• G10s are mixed against the flat USD this morning. EUR and GBP sit towards the top of the pile, but post only modest gains; the single currency moves higher in tandem with OATs. Typical haven currencies such as the CHF and JPY are pressured amidst today’s pullback in yields.
• DXY is currently holding just above the 102 mark, within a 102.01 to 102.28 range. Newsflow for the USD has been lacking this morning, whilst focus has been on the geopolitical situation, which remains tense. The Houthis and Saudi Arabia continue tit-for-tat strikes, with the latter subject to attacks on key pipelines and airports. A factor, along with continued strikes in the Strait of Hormuz, which have kept energy benchmarks elevated.
• USD action over the past couple of days has been attributed to EUR volatility. Recent pressure in the single currency was due to ongoing French fiscal concerns, and the potential contagion risk across Europe. That appeared to ease earlier today, as OATs found some relief heading into a Le Pen speech. She was expected to outline her own budget plan, and perhaps more pertinently explain how she would achieve it. She did the first part by providing her targets, which were seen to be quite optimistic. However, some were left disappointed given that she did not say what policies would be enacted to achieve the targets. It seems as though OATs (and to some extent the EUR) have bought into her speech so far, but there is likely room for further EUR pressure in the near-term heading into October 13, where general debates will begin.
• JPY underperforms this morning, in-line with CHF. Much of the pressure is in tandem with narrowing yield differentials, but there are some domestic factors also at play. For starter, a Reuters source report suggested that the BoJ may be cautious about raising rates in October, and instead signal that underlying inflation has hit the 2% inflation target. A report which downplays an immediate hike, but plays in favour of faster tightening at the Bank, with MUFG believing it is in-fitting with its view of another hike in December. Another reason behind the pressure could be some continuation of the Bloomberg report from Monday, which suggested that the GPIF did not discuss portfolio allocation.

Central Banks

• BoJ Governor Ueda said Japan’s economy is recovering moderately, albeit with some weakness and that the September Tankan showed business sentiment remained in good shape. On policy, Ueda said that the pace and timing of future policy adjustments will be decided based on the likelihood of the baseline projections materialising and associated risks, while reiterating that the BoJ will continue to raise the policy rate in accordance with economic activity, prices and financial conditions. Prices are moving in line with the BoJ’s baseline forecasts and that it is important to anchor underlying inflation around 2%. On financial conditions, they are accommodative and that it continues to support economic activity even after the September rate hike.
• The BoJ may signal at the October meeting that underlying inflation has hit the 2% target to highlight its readiness to keep raising rates, according to Reuters citing sources. The report added that many members are cautious about delivering another hike in October and prefer to gauge more data.
• ECB's Lane said there have not yet been “very strong” second-round effects and the degree of pass-through into broader inflation remains uncertain. Lane reiterated that the main driver of the interest rate decision has been the inflation implications of the energy shock. On the fiscal environment, Lane said the degree of fiscal policy support for the economy in 2027 and 2028 will differ from 2026.
• ECB's Rehn said that energy inflation has not yet spread to other goods but that high long-term rates contribute to a slowdown in growth and reduces pass-through of energy prices to other prices and to wages. Furthermore, Rehn said that he is closely monitoring market conditions.
• BoE's Mann said supply shocks are embedding inflation.

Fixed Income

• A bullish start for fixed amid a modest pullback in energy prices, but particularly as EGBs mount a recovery with France driving into and after the RN alternative budget speech.
• OATs firmer by over 110 ticks at best, hitting a 109.99 peak just after the cash equity open, a tick shy of the 30th October high, which was the session before the draft budget presentation. As such, the OAT-Bund 10yr yield spread narrowed to 133bps, vs over 150bps last week.
• However, while largely intact, some of this strength waned on the alternate presentation from RN’s Le Pen. As, in brief, her proposals are a significant departure from the govt’s draft, and are perhaps being regarded as unrealistic by the market. Initial commentary which weighed on OATs by about 30 ticks vs the peak at the time.
• Since, as Le Pen continues to speak, the tone remains one of a fiscally constructive approach and while ambitious, the market has turned-around and moved to highs, seemingly on her openness to wholesale fiscal reform and coordination with other European authorities, particularly the ECB. Taking OATs to a new high of 110.23 at the time of publication, and the 10yr yield spread to Germany down to c. 128bps. Note, this has also come alongside crude benchmarks hitting fresh lows, Brent USD 1.20/bbl lower on the day, but Dutch TTF remains firmer by over EUR 3/MWh.
• Elsewhere, EGBs are generally on the front-foot. Bunds saw a bounce on a dismal set of German factory orders for August. However, this was almost entirely due to the impact of the "Other Vehicle Construction" sector after an exceptionally strong July print, and as such is likely not indicative of the situation across the bloc. Currently, Bunds are firmer by around 40 ticks and hold some 20 off the 121.37 high.
• USTs firmer, but with magnitudes slightly less pronounced into data and Fed speak. At the upper-end of a 104-04 to 104-14+ band.
• Germany sells EUR 4.526bln vs Exp. 6bln 3.00% 2028 Schatz: b/c 1.08x, average yield 3.10%, retention 24.6%.
• UK sells GBP 1.25bln 1.125% 2035 I/L Gilt: b/c 3.62x (prev. 3.37x), real yield 1.860% (prev. 1.725%).
• Japan sells JPY 1.97tln 10yr JGBs: b/c 3.76x (prev. 3.29x), average yield 3.101% (prev. 2.995%), Tail in price 0.02 (prev. 0.12).

Commodities

• WTI Nov and Brent Dec futures are softer following Monday’s choppy session, with the complex pressured by recovering Persian Gulf exports, Saudi OSP cuts and recent emergency stock releases. Kpler data showed average daily crude flows through the Strait of Hormuz recovered to 10.3mln BPD in the seven days to Saturday, around 76% of pre-war levels, while Trump reiterated that the US had secured the Strait and expects the Iran war to end soon. Geopolitical risks remain after reports of another Yemeni attack on Saudi Aramco facilities in Jeddah, while Saudi Arabia confirmed Jazan and Najran airports were struck on Monday. Iran also kept up the rhetoric, with officials warning that its forces are ready to respond to any US or Israeli “miscalculation”. At the same time, some diplomatic tones remain after Iran said talks in Doha addressed Qatari and Pakistani mediation proposals aimed at reducing regional tensions and averting further war.
• WTI has fallen from a USD 90.05/bbl high to USD 87.56/bbl, while Brent has declined from USD 100.99/bbl to USD 98.47/bbl.
• Dutch TTF is sharply firmer and has extended to a EUR 76.45/MWh high from EUR 74.03/MWh, with European energy security concerns remaining at the front of traders' minds. Equinor noted that European gas customers are showing greater willingness to sign long-term contracts extending into the 2040s, while European Commission President von der Leyen said Europe must address structural vulnerabilities to volatile foreign fossil-fuel markets. Sticking with supply side, drones hit two commercial ships in the Black Sea off Bulgaria, sinking one.
• Precious metals are mixed, with spot gold firmer as USD dips with oil. The yellow metal has rebounded from USD 4,104/oz to above USD 4,150/oz, within a USD 4,104-4,157/oz range, while spot silver is little changed within a USD 60.28-61.21/oz range.
• Base metals are modestly firmer, with copper extending recent gains amid the positive risk tone and expectations for stronger AI-related demand for data centres and power infrastructure. However, upside remains tempered by the continued absence of mainland China for the National Day holiday. 3M LME copper trades in a USD 14,393.08-14,485.00/t range at the time of writing.
• US President Trump signed an order to waive off-road requirements to allow anyone to purchase tax-free red-dyed diesel. Trump separately commented that Russian refinery strikes by Ukraine and US closures are driving up gas prices.
• Saudi Energy Minister said 5.8mln BPD is currently flowing through the East-West pipeline, and that operations resumed around five days after the hit.
• EU President von der Leyen said Europe must address structural issues that leave it exposed to volatile foreign fossil fuel markets. She announced that the EU will give exporters an extra year to comply with the methane regulation and will launch a strategic dialogue on European refineries to bring down costs and ensure supplies.
• The diesel export ban may be lifted in October for some Russian companies, according to IFX.
• Kpler data showed average daily crude flows through the Strait of Hormuz were at 10.3mln bbls in the seven days to Saturday, which is about 76% of the pre-war baseline.

Geopolitics: Iran

• US President Trump said they were able to eliminate Iran's military capabilities and secure the Strait of Hormuz, while he stated the Iran war will end soon, one way or another, and prices will fall.
• US CENTCOM said it maintains strict enforcement of the US blockade against Iran and redirected the 130th commercial vessel in the Middle East on Monday.
• A US Navy helicopter reportedly transmitted an emergency code over the Red Sea, while a report noted that the helicopter most likely crashed into the Red Sea, citing analysis of flight data. However, there was no confirmation or denial from the US, while the potential cause was also unknown, according to BNO News.
• Iranian Interior Minister Momeni said talks in Doha addressed Qatar and Pakistan’s mediation efforts, with proposals discussed aimed at reducing regional tensions and averting further war, IRNA reported.
• Saudi Arabia confirmed that Jazan and Najran airports were hit by strikes on Monday, according to reports, while air traffic was halted at Riyadh Airport due to a Houthi attack. Furthermore, Tasnim reported of new explosions at the Saudi Jeddah oil refinery and that a fire has broken out following an attack by Yemeni forces. Later, the Houthis said that they targeted Saudi Arabia's Abha airport with missiles, with no confirmation from Saudi officials.
• A Yemeni Houthi spokesperson said in response to the Saudi aggression that they carried out three qualitative military operations using a large number of ballistic and cruise missiles and drones, in which they targeted King Khalid International Airport in Riyadh and the Aramco refinery in Rabigh, as well as Abha Airport, Khamis Mushait Air Base, the Aqifa camp in Asir, and other critical sites in Najran and Jizan. Furthermore, their armed forces warned all international airlines using Saudi airspace to cease their flights, as it has become an operations zone for their forces, with the exception of the sacred airspace over Mecca and Medina.
• Yemeni Houthis said Dhubab near Bab al-Mandab remains under Houthi control.
• Lebanon and Israel talks are said to resume in Tampa, Florida before the Israeli election, with talks to be military, not political, and will likely be on October 20th, according to a Kan reporter citing Radio Lebanon.

Geopolitics: Ukraine

• Russia carried out a strike on the Dnipro River Bridge in Zaporizhzhia.
• Moscow's mayor said 650 Ukrainian drones were launched towards the Moscow region.

Geopolitics: Other

• South Korea's Defence Ministry said it is preparing a response to force North Korea to apologise for the mine blast that injured South Korean soldiers, while it added that North Korea must remove the mines it planted in the demilitarised zone border.
• Bulgaria's President said a drone struck two ships in the Black Sea economic zone of Bulgaria.

Crypto

• Bitcoin fell in the APAC session but reversed just shy of the USD 85k mark before reversing to USD 86k.

US Event Calendar

• 8:15am: ADP Weekly Employment Change (no est., no prior)
• 8:30am: Aug. Trade Balance, est. -$102.1b, prior -$88.6b
• 8:30am: Aug. Exports MoM, est. 1.2%, prior -2.1%
• 8:30am: Aug. Imports MoM, est. 4.2%, prior 2.8%
• 11:30am: US to sell $95bn 6-week bills
• 1:00pm: US to sell $58bn 3-year notes

Central Bank Speakers

• 9:05am: Fed's Williams Moderates Panel
• 10:45am: Fed's Musalem Gives Welcoming Remarks
• 10:46am: Fed's Bowman Speaks on Banking Regulation and Supervision
• 1:15pm: Fed's Schmid Speaks in Fireside Chat
• 7:00pm: Fed's Logan Moderates Conversation

DB's Jim Reid concludes the overnight wrap

Markets have had another volatile session over the last 24 hours, as investors grappled with European contagion risk and a fresh Treasury selloff. On the bright side, yesterday brought some initial signs that the pressure on France was stabilising, with a clear outperformance in French debt. Indeed, there was a big intraday turnaround that saw the Franco-German 10yr spread widen almost 10bps in the morning, before ultimately tightening -4.3bps on the day to 137bps. However, it was still a tough day in many places, and the wider reassessment of Europe's prospects pushed the Euro (-0.28%) to its weakest level against the dollar since May 2025. And as all that was happening, the wider global bond selloff showed no sign of easing up, with the 10yr Treasury yield (+3.4bps) closing at a post-2002 high of 5.31%. Despite all that, US equities posted strong gains, with the Nasdaq (+1.05%) reaching a new record high. For what it's worth, I struggled to look past a headline suggesting that President Trump is backing a bill to make daylight saving time permanent, partly to allow more time for evening golf. I'm sure there are well-rounded arguments on both sides of the debate, but he had me at golf.

We'll start with European sovereigns, as yesterday finally brought some respite after last week's rout, when we saw some of the biggest spread widening in years. Admittedly, it was hardly a full reversal, but the 2yr Franco-German spread (-6.1bps) saw its biggest tightening since January 2024. And in absolute terms, French yields came down across the curve, with the 10yr yield (-1.3bps) down to 4.85%, in contrast to the 10yr bund yield (+3.1bps) which was up to 3.49%. Again, it was hardly back to normal, but it means the 10yr French yield is now down -6.0bps in the last two sessions, so the pressure has eased from the peak fears last Thursday.

However, even within Europe, there was still some weakness across different asset classes. For instance, French equities were under pressure, with the CAC 40 (-0.80%) falling to a 6-month low. Moreover, that cements its status as the worst-performing major equity index in Europe this year, having fallen -3.87% on a YTD basis. Then in credit, European HY spreads (+4bps) surpassed their peak in March this year, rising to levels last seen in the weeks following the Liberation Day turmoil in 2025, at 335bps. And for the Euro itself, there was a fresh decline to $1.1223 by the close, weakening against every other G10 currency.

In the meantime, investors also got a fresh reminder about political risk, as Spanish Prime Minister Sánchez called an early general election for November 29. It comes after the Spanish Parliament rejected a housing plan, which was put forward by his minority government. And in turn, Spanish debt was a relative underperformer yesterday, with its spread over 10yr bund yields widening +0.8bps to 63bps, its widest level since July 2025. So that adds to the series of European elections on the near-term horizon, including France's presidential election in April, along with Italy's general election, which is due by the end of next year.

Yet despite all that, yesterday was another decent session for equities (with the clear exception of France), as both the S&P 500 (+0.66%) and Europe's STOXX 600 (+0.36%) posted fresh gains. In a report yesterday, Henry pointed out that this equity resilience against the bond market stress is becoming increasingly striking (link here), and it's unusual to see a situation like this persist. If it's like the SVB turmoil, when the rates vol quickly subsided and there weren't broader spillovers, then the two can be reconciled. But if the current financial stress persists on the rates side, as we saw in the sovereign crisis of the 2010s, or in the rapid hiking cycle of 2022, then risk assets will face mounting pressure of the sort witnessed in other periods of sovereign stress.

Once again, US tech stocks helped power the equity resilience, with the S&P 500 (+0.66%) closing within half a percent of its record high, whilst the NASDAQ (+1.05%) and the Mag 7 (+1.23%) both hit new records. And for Europe there was also a fair amount of resilience, with the STOXX 600 (+0.36%) ending the day around 4% beneath its own record high from August. Indeed, apart from France there was a steady performance, with gains for the FTSE 100 (+0.34%), the DAX (+0.09%) and the FTSE MIB (+0.66%).

As all that was happening, the other big story was the latest selloff in US Treasuries, which pushed yields up to multi-year highs yet again. For instance, the 10yr yield (+3.4bps) hit a post-2002 high of 5.31%, whilst the 30yr yield (+4.3bps) also reached a post-2002 high of 5.66%. That came amidst another robust batch of US data, with the ISM services index coming in at 54.9 in September (vs. 55.0 expected). Moreover, the prices paid component also rose to another post-2022 high of 74.0 (vs. 73.3 expected).

While that data played into concerns about inflation, Fed pricing was little changed on the day as the hawkish implication were offset by a new decline in oil prices. Brent crude fell -1.93% on the day to $100.28/bbl, while WTI was down -1.84% to $89.43/bbl. There wasn't anything concrete on progress towards a deal, but Axios reported that Trump's top national security aides had a meeting at Camp David last Friday to discuss the next steps in the Iran war. Otherwise, we did see some volatility earlier in the session after AFP reported a source in the energy sector who said that Saudi Arabia's East-West pipeline had shut following an attack. However, it was then reported by Bloomberg that the pipeline was operating normally, which helped prices to ease back again. Early on Monday, a decline in oil prices had also been supported by news of an increased discount on the Saudi selling oil price to Asia for November, which added to the sense of increased volumes of crude making it out of the Gulf.

Asian equities are broadly firmer this morning, with the Hang Seng (+0.77%), the Nikkei (+0.82%) and the S&P/ASX 200 (+0.51%) all trading moderately higher but with the KOSPI (-1.44%) turning lower after opening higher. The index was closed yesterday for holidays. Meanwhile, China's onshore financial markets remain shut for the National Day and Golden Week holidays and will resume trading on Thursday. US equity futures are up around a tenth of a percent with European equivalents up four-tenths. US Treasuries are up a couple of basis points across the curve while the Euro is flat and oil around half a percent higher.

Finally, Brazilian assets surged after the country's first-round election results showed Flávio Bolsonaro in the lead with 47% of the vote. The country's Ibovespa equity index was up +7.70% on the day, marking its biggest daily jump since March 2020 during the initial pandemic turmoil. Moreover, the Brazilian real surged by +4.38% against the US Dollar, marking its best daily performance since June 2018. So in USD terms, the main equity index was up by nearly +12% yesterday. Meanwhile, the country's yields also fell significantly, with its USD-denominated 10yr yield down -21.8bps on the day to 6.58%.

Looking at the day ahead now, data releases include German factory orders, French industrial production, Euro Area retail sales and the US trade balance for August. Central bank speakers include the Fed's Williams, Bowman and Schmid, the ECB's Zigman and Cipollone, and the BoE's Mann.

Tyler Durden Tue, 10/06/2026 - 08:31

Sequence Of Return Risk The Math That Breaks Retirements

Authored by Lance Roberts via RealInvestmentAdvice.com,

The sequence of return risk is the quiet reason two retirees with identical average returns can end up in very different places.

Let's start with an easy example. Two people retire on the same day with the same million dollars. They have the same portfolio and the same 30-year average return. They should both live comfortably, right? However, while one does die comfortably, the other runs out of money.

Nothing separates them except the ORDER in which their returns arrived. That is the "sequence of return risk," and probably the single most underappreciated threat to anyone who has stopped saving and started spending. While you were accumulating, the order of your returns barely mattered. Once you are withdrawing, it becomes the entire ball game.

What Sequence Of Return Risk Actually Is

The 4% rule originated with financial advisor William Bengen in 1994 and was later stress-tested by three professors in what became known as the Trinity Study. Notably, Bengen wasn't hunting for an average; rather, he wanted the worst starting year in history that a retiree could still have survived. The answer had little to do with typical market returns. What it came down to was the retiree unlucky enough to begin in 1966, right before a long grind of bear markets and inflation that hollowed out the first half of retirement.

Before we go further, it is important to understand the problem with averages. When it comes to market returns, a portfolio that no one touches can absorb a bad decade and allow a good decade to balance the books. However, a portfolio in which withdrawals are taken cannot wait. When you sell shares during a decline, those shares are gone, and they never join the recovery. Wade Pfau estimated that roughly 77% of a retiree's final outcome is set by the first ten years alone. In other words, the average across 30 years can look perfectly "fine" while the sequence quietly destroys you.

This is the cruel arithmetic of the withdrawal phase for retirees. When you are a 35-year-old saving for retirement, market volatility is a boon. However, that same volatility becomes a genuine hazard for a 68-year-old. One is "buying the dip" with every paycheck, while the other is being a "forced seller" to survive. Same market, opposite outcomes.

Why Starting Valuations Load The Dice

If sequence is the risk, valuation is your best early read on it, and this is the part of the retirement conversation that usually gets skipped. The 4% rule was calibrated across all of history, cheap starting points and expensive ones blended into one number. The market, though, doesn't offer every retiree the same deal on their first day. Your exposure to sequence-of-returns risk is partly a function of the price you pay to walk in the door.

Research by both Wade Pfau and Michael Kitces showed that the "safe" withdrawal rate moves with valuation at the moment you retire. An individual who retires when valuations are cheap has had history be generous. Retire when they are "expensive" and the first decade, the one that decides most of your outcome, tends to disappoint. The chart below rebuilds that relationship from Robert Shiller's stock market data back to the 1880s, and I've walked through it before using a five-year version of the CAPE.

Cheap Starts Win, Expensive Starts Lose

Pay close attention to what happens across the valuation buckets. When the cyclically adjusted price-to-earnings ratio started below 15, the next ten years delivered close to 9% real returns. When it started at 25 or higher, that forward decade shrank to barely 2%. This isn't a coincidence. History has repeatedly shown us that lower forward returns are the high-probability outcome from rich valuations. Same asset, wildly different opening hands, and the retiree has no vote on which one they draw.

This is the point at which I most often receive reasonable pushback: "Nobody can time valuations." Yes, that is a fair point. We are not discussing market timing, and valuations are a terrible indicator for that. However, valuations calibrate how much risk you take relative to what the market is offering, because in the long run, valuation is the best measure of returns we have. A rich valuation doesn't guarantee a bad sequence. It just stacks the deck in favor of one.

The Loss Math That Makes Recovery So Hard

Before you get lost in the debate, take a moment and focus on the mechanism that makes this so unforgiving. Market, and ultimately portfolio, losses and gains are not symmetric, and most people misjudge the gap. A 10% loss needs an 11% gain to recover, which feels "manageable." A 30% loss requires a 43% gain, and a 50% loss requires the market to double. The deeper the hole, the steeper the climb, and it steepens at an accelerating rate.

For a retiree, however, the math becomes far more brutal. As you are climbing out of that hole, you are effectively cutting the rope above you by pulling money out, and every dollar withdrawn during the recovery is one that never rebounds.

To make this a bit clearer, let's build a simplistic example and walk through a single year. For argument's sake, we will assume a retiree starts with $1 million, and the market falls 10%. Simultaneously, they also withdraw the 4% needed for living expenses across the twelve months. This is simple math, right?

However, at the end of the year, the portfolio didn't go down just 10%. It ended down almost 14% because those withdrawals came from a shrinking base. For that retiree to climb back to a million, over the next year, while they keep spending, the market can't just return 14%; it has to return 21%. The sequence of return risk turns an ordinary 10% decline into a 21% problem.

Now Add The Tax Collector

Wait, it gets worse. For most of the "free advice" that is given, most overlook the one person everyone hates: the "tax collector." The "4% rule" is a pre-tax number, since Bengen assumed a tax-free account to keep the math clean. Real retirees rarely have that luxury. Need $40,000 to live on and pull it from a traditional IRA, and every dollar is ordinary income, so the gross withdrawal must be larger to net the same spendable amount. A 4% lifestyle funded from an IRA is really a 5% draw on the portfolio once you account for a 20% effective tax rate. Even if you are drawing from a taxable account, your capital gains, dividends, and income are all taxed as well. That bigger draw is what the portfolio feels, pulling the depletion date forward by years.

Of course, income tax brackets, state taxes, Social Security taxes, and Medicare surcharges will all impact outcomes. Such is why account types become an important factor in retirement planning. While a Roth IRA changes nothing, a taxable account is gentler as only the gains, dividends, and interest income are taxed. However, a traditional IRA, or retirement plan, taxes every withdrawal at the individual's tax bracket. While the overall point survives the details, the headline rate understates what the portfolio must fund, and sequence risk feeds on the difference.

Here is the takeaway from this discussion.

"You can't control when the bad years arrive. You can control whether they find you fully exposed and dependent on selling into them."

"Markets Always Recover" Misses The Point For Retirees

Over long time horizons, the U.S. market has always recovered from declines and bear markets. For individuals who bolted into cash in a panic, they missed the sharpest rebound days. Unfortunately, those 10 best days tend to cluster within the market's worst stretches. Therefore, for a 35-year-old with decades of contributions still ahead, "just ride it out" is close to the correct prescription. For a 65-year-old, it is a different story.

While the general belief is that markets "always recover," there is an unrealized impact in the "waiting." The market took roughly 13 years to reclaim its 2000 peak in real (inflation-adjusted) terms. For a 35-year-old who was dollar-cost-averaging, the 13-year wait proved beneficial, as it allowed accumulation of shares at lower prices. However, for that 65-year-old drawing income, the effect was the opposite. Every withdrawal during that was capital that never healed. "Ride it out" quietly assumes you aren't spending the portfolio while you ride.

Okay, let's put some real numbers to it. According to the life expectancy table, a 65-year-old lives about 19 more years, to roughly 84. The portfolio has to survive whatever sequence the market hands you. Below, a retiree takes a severe early loss and draws the standard 4% through it, against the same market left fully invested.

Here is the truth: "the market does exactly what the optimists promise." It drops, recovers, and climbs to new highs in a repeatable cycle. However, the retiree who drew income through the early losses never gets back to where he started. Their principal hits zero at 83, the year before the average 65-year-old is expected to die, on the same market that made a patient buy-and-hold investor wealthy. And this is the disciplined case, the celebrated 4%, and not a penny more. Same market, same 4% rule, and one of them still ran out of money. That is the gap "just ride it out" refuses to see.

This is usually where I get a fair objection to this analysis:

"But, if you sell, you'll miss the recovery."

True, if you're still a saver. However, it is a very different calculation once you're living off the balance. I've written before about when a retiree should actually reduce exposure, and the point isn't calling the top. It's that sequence of return risk breaks the "ride it out" script for anyone in the withdrawal phase.

Rules Of Engagement For The Sequence Of Return Risk

We understand that you can't forecast the sequence of returns, but we CAN build a plan that survives a bad one. As Howard Marks puts it, you can't predict, but you can prepare. These are the rules of engagement once you've crossed from saving into spending.

1) Hold one to two years of spending in cash or short-term bonds. Most bear markets are short, with the average one lasting under a year, compared with bull markets that run for years. A cash reserve means that WHEN the market drops, you spend from cash instead of selling stocks at the bottom. You refill once prices recover. The cost is a little cash drag in a roaring bull, a price worth paying to never be a forced seller.

2) Manage the drawdown itself. The process of avoiding a deep loss matters more in the withdrawal phase than catching the last leg of a rally. Maintaining a risk management process that trims exposure as risk increases keeps a 20% decline from growing into a 40% one. I've discussed previously that keeping losses small is the majority of the job.

3) Set your starting withdrawal rate to the conditions at the start. If you are retiring into an expensive market, start with a withdrawal rate closer to 3%-3.5% than 4%. That is Pfau's direct prescription, where a slightly leaner start costs far less than running out of money at 84.

4) Mind the tax drag. The gap between after-tax income needs and pre-tax withdrawals determines whether a plan survives. Consider spreading withdrawals across taxable, tax-deferred, and Roth accounts, and opt for Roth IRA conversions in low-income years. Taking steps to lower the effective rate the portfolio must fund is one of the few levers you control.

5) Stay flexible on spending. The "guardrails" approach from Jonathan Guyton and William Klinger trims withdrawals after bad years and lifts them after good ones. (This is why we recommend having a security cushion.) Implementing a small, temporary spending cut early in a downturn does enormous work by halting the depletion spiral before it builds momentum. Research suggests flexibility alone can support a higher starting rate than a rigid plan.

6) Implement a rising equity glide path, or "bond tent." This process suggests carrying more bonds in the portfolio during the early stages of retirement when the sequence-of-returns risk is highest. Over time, let overall equity exposure drift higher as the danger fades. Pfau and Kitces showed that this defuses the first decade, the one that matters most.

7) Separate your essentials from the market. Consider covering basic living needs with reliable income sources, such as Social Security and, if you have one, a pension. If there is still a gap between that income and spending needs, an annuity may be an option. Crucially, that reliable income stream allows the portfolio to fund only the discretionary layer, where spending can be more flexible. When your groceries don't depend on the S&P 500, a bad sequence becomes a mild discomfort, not a catastrophe.

Sequence Of Return Risk: Frequently Asked Questions What is the sequence of return risk?

Sequence of return risk is the risk that weak returns occur early in retirement, while you are withdrawing income. Selling shares into a decline locks in losses that those shares never recover from, so two retirees with the same average return can end up in very different places based solely on the order in which the returns arrived.

Why does the sequence of return risk only matter once you retire?

While you are saving, you are adding money and effectively buying the dips. In that environment, the order of returns matters much less. However, once the cycle shifts from accumulation to withdrawals, a bad early stretch forces you to sell into weakness. Wade Pfau has estimated that the first ten years drive roughly 77% of the final outcome.

Does the 4% rule protect against sequence-of-returns risk?

While the 4% is widely accepted, in reality, it is only part of the solution. The 4% rule survived history's worst 30-year sequences, but that withdrawal rate has two flaws: 1) it is a pre-tax number, and 2) it provides no guarantees. High starting valuations, a severe early loss, or taxes that turn a 4% lifestyle into a 5% draw from an IRA can still empty a portfolio.

How much cash should a retiree keep for sequence risk?

For most people, holding one to two years of spending in cash or short-term bonds is a reasonable buffer. Most bear markets are shorter than that, so you can spend from cash instead of selling stocks at the bottom, then refill the reserve once prices recover.

How do starting valuations change a safe withdrawal rate?

Higher valuations have historically meant weaker returns over the following decade, which is exactly when a new retiree is most exposed. Pfau and Kitces found that the safe rate moves with the CAPE ratio at retirement. When valuations are rich, starting nearer 3% to 3.5% buys a margin of safety.

Tyler Durden Tue, 10/06/2026 - 08:05

French Bonds Rally As Le Pen Unveils Shadow Budget To Pull France Back From Fiscal Brink

European bond and currency markets are signaling growing investor unease over France's political crisis and deteriorating fiscal position, as growing budget deficits under President Emmanuel Macron undermine confidence in the government's ability to stabilize public finances.

French bond yields rose Monday before reversing sharply on Tuesday, with the 10-year yield falling to around 4.75% after right-wing presidential candidate Marine Le Pen proposed steep deficit cuts.

The bond market reaction suggests investors welcomed the prospect of common-sense fiscal discipline, though austerity never ends well, as far-left riots already plague the streets over school budget constraints.

Le Pen's plan would shrink the deficit to 3.7% of economic output next year, well below the government's 5% target, before bringing it to 2.2% by 2032. Savings would come largely from spending cuts, lower transfers to the EU and reduced migrant spending.

The proposals come as political uncertainty clouds the political landscape and deteriorating public finances drive up France's borrowing costs.

it's been a while since we had a European sovereign debt crisis *FRANCE-GERMANY 10-YEAR YIELD SPREAD WIDENS 8BPS TO 135BPS France CDS widest in 13 years https://t.co/9opJUmD2uS

— zerohedge (@zerohedge) October 1, 2026

The premium investors demand to hold French 10-year debt over German equivalents has finally narrowed. 

Le Pen has received a notable boost in her odds of winning next year's first-round vote on Polymarket, as the social unrest involving far-left radical kids who burned down schools and torched buses was merely seen as a political gift. It only reaffirms her stance that the country's trajectory under globalist control has been nothing more than nation-killing.

UBS markets analyst Nana Antiedu told clients that "French bonds continue outperformance after Le Pen's shadow budget release."

Antiedu added:

French bonds continue their gains, with the 10y OAT down 12bp to 4.74% after RN leader Marine Le Pen unveiled her budget proposal to reduce France's deficit. The proposal includes plans for the deficit to be below 5% from 2027 and cut spending by more than EUR140 bn, bring the deficit below 3% by 2032 at the latest. She said France could face default if Macron's policy continues. Le Pen also said the ECB should intervene to lower euro-area borrowing costs.

Note that this is a shadow budget, so in effect what she would propose if her party was in power. However, assuming Le Pen's party were to win the 2027 presidential election and go through the legal process of changing the budget, a deficit of 3% by 2032 is quite ambitious, and would require her to gain agreement from the other parties.

Goldman Sachs one-delta desk-head, Rich Privorotsky, told clients:

Le Pen presents the RN shadow budget today and OATs have already done an enormous amount for an election still months away, so the bar for a positive surprise feels low. The realistic upside is just credibility. More than €25bn a year of clearly identified domestic spending cuts, less reliance on dubious savings from Brussels/immigration, slower phasing of tax cuts, conservative growth assumptions and a genuinely binding fiscal rule would all help. Anything that credibly accelerates that path toward 2029 would be meaningfully OAT positive. Showing an executable path to stabilize debt without touching electorally sensitive pension promises could be more fiscally credible than the market expects.

The caveat is EUR… if more domestic restraint ultimately means less willingness to fund Brussels, that raises a different question around European cohesion.

Tactically, I like the chance of a positive surprise in Europe, banks and French risk today.

Far-left rival Jean-Luc Mélenchon criticized Le Pen's budget plan as an attempt to appease financial markets, claiming the cuts would weaken the economy and worsen public finances.

The euro's latest declines against the dollar and other major peers "point to a larger risk premium going into the euro on the back of fiscal woes," said ING Bank NV's head of G10 FX strategy.

As we conveniently pointed out on Monday, the political crisis, whether in France or Spain, has culminated in a "Red October" bond crisis across the continent, which is also facing an energy crisis this coming winter.

Tyler Durden Tue, 10/06/2026 - 07:45

FBI Arrests Chinese Woman At LAX For Surveilling Son Of Taiwanese President

Authored by Lear Zhou via The Epoch Times,

The Federal Bureau of Investigation arrested a Californian woman at Los Angeles International Airport on Oct. 4 on suspicion of acting as an unregistered agent for Beijing and surveilling a close relative of a Taiwanese government official, officials said.

"Heather" Zhang Wanying, 34, who lives in Irvine, Orange County, was taken into custody by FBI Los Angeles when she attempted to leave the United States for China, according to first assistant U.S. Attorney for the Central District of California Bilal Essayli.

The FBI said in an X post that "she surveilled the Taiwanese President's son and his family - filming their home, vehicles, and reporting information back to PRC handlers," using the acronym for China's official name, the People's Republic of China.

FBI Director Kash Patel told America's adversaries to "take note."

"America is no longer a safe place to run your espionage operations," he said in a post on X. "This FBI is hunting threats to our national security wherever they hide - and bringing them to justice."

Zhang's target was Lai Ting-Yu, the son of Taiwanese President Lai Ching-Te, Essayli told Fox News. He also confirmed that the woman is a naturalized U.S. citizen.

Lai Ting-Yu, an electrical engineer with a doctorate in his 30s, works for a private company in the United States, according to a report by Taiwan's news media SETN.com.

Zhang traveled to Seattle in 2025 to do the above "foreign intelligence operations" on direct order of Chinese state officials, according to the affidavit.

She is listed as a real estate agent with JC Pacific Capital Inc., according to Zillow and Homes.com, with nine years of work experience in Irvine, California.

The prosecutors accused Zhang of coordinating the trip with an associate and using tradecraft to avoid being detected. They said she never registered her work in the United States to be a foreign agent.

Zhang's arraignment in a Los Angeles federal court will be on Oct. 5.

Tyler Durden Tue, 10/06/2026 - 07:20