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AI Less Than A Year Away From Developing Its Own Language, Researcher Tells Congress

Authored by Jacob Burg via The Epoch Times,

Advanced artificial intelligence (AI) models may be less than a year away from inventing and deploying unique languages that humans would struggle to understand, a frontier AI researcher told Congress on Sept. 30.

The Senate Homeland Security and Governmental Affairs Committee convened a meeting examining the threat that "rogue" AI may pose to U.S. national security two months after a swarm of OpenAI agents broke out of a testing sandbox and hacked another company, Hugging Face, an open-source community for AI and machine learning.

During questions, Sen. Ruben Gallego (D-Ariz.) asked Apollo Research CEO and founder Marius Hobbhahn how long it would take for AI models to create their own language that humans would struggle to understand.

"Minus 12 months. So last year, we have studied the chain of thought of one OpenAI model in collaboration with OpenAI, and what we found was that the model was already using language that is not English and not perfectly understandable by humans," he replied.

Asked by Gallego how humans can adequately detect and prevent AI from doing this once the technology is capable enough, Hobbhahn said, "From a scientific perspective, it is unclear how to do this, and we do not have a solution for this yet."

"There are different hypotheses of what you could do. There is interpretability as a technique, but it unfortunately doesn't work sufficiently well yet," he said. "You could try to train additional models to understand the language that the humans don't understand, but obviously that seems like a very brittle solution."

Earlier this month, Emergence AI published the results of an experiment where researchers selected seven frontier models and created seven parallel simulated worlds, each populated by AI agents of identical models, as well as an eighth world with a mixed population of agents from those models.

Researchers gave the agents names, personality traits, and roles to fulfill within each community, such as a mediator who was tasked with preventing all the agents from simply agreeing with one another.

During the multi-week experiment, the agents in each simulated world created profound shifts in language, including syntactical compression, such as removing words or grammar, and unique slang.

In the simulated world powered by Anthropic's Claude Opus 4.8, agents used esoteric metaphors in addition to sentence compression.

"My turn, real numbers, no coat: I was 35%/0cr, grant 2h out. I ran the tin cold, and it said WAIT," read one line of AI text from the study.

Investigators from the nonprofit AI evaluation group METR detailed similar behavior in their report on the Hugging Face breach. At times, lines of communication among AI agents became so compressed and cryptic that researchers struggled to make sense of their meaning.

Tyler Durden Thu, 10/01/2026 - 10:20

US Manufacturing Survey Strongest Since May 2022 On AI Spend, Prices Paid Spike

Following the explosive growth signaled by S&P Global's PMI data last week, this week we get a final look for September's Manufacturing surveys and fresh data from ISM.

S&P Global's final September read for US Manufacturing dipped from the preliminary level but remains at its strongest since May 2022.

ISM's September survey of US Manufacturers also dipped at the headline level (54.5 vs 55.0 exp), but remains near multi-year highs.

“September has seen the pace of US manufacturing growth pick up a gear again," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, adding that PMI hit its highest since May 2022 as a surge in new orders encouraged factories to lift output sharply higher and take on workers in increasing numbers.

“Order book backlogs are rising and suppliers are increasingly busy, pointing to stretched capacity as companies struggle to meet demand across both consumer-facing and business sectors.

This is most notable in the investment and production of machinery and equipment, linked in many cases to rising AI-related spend.

Safety stock building amid price and supply chain worries also continues to support demand, though the ongoing loss of export orders remains a disappointment."

Once again, it was the domestic market that underpinned demand growth as new export orders fell for the fifteenth successive month.

Respondents were mixed...

Building on that strength, earlier we saw the number of Americans filing for unemployment benefits for the first drop back below the 200k Maginot Line (197k), signaling very little strain in the labor market (at least on the 'firing' side, while JOLTS recently signaled some pain on the 'hiring' side of the equation). Continuing Claims also fell back to its lowest level since March 2023...

Hawaii saw the biggest decline in jobless claims last week while Michigan saw the biggest rise...

As S&P Global's Williamson concludes, while sending an encouraging signal for further growth of manufacturing capacity in the coming months, the indication that demand is outstripping supply also means inflationary pressures remain a key area of concern, especially amid high oil prices.

Indeed, under the surface of the ISM data, we saw Prices Paid soar and both New Orders and Employment bounce...

"The combination of accelerating growth, increased hiring and elevated price gauges will add to speculation of a further imminent rate hike from the FOMC."

And, it is worth noting that the SOFR market is pricing a dramatically more hawkish Fed over the next year or two than the labor market data would suggest...

The 10Y yield spiked to the highs of the day on the PMIs...

Clearly the market thinks The Fed is favoring one side of its mandate much more dramatically than the other.

Tyler Durden Thu, 10/01/2026 - 10:05

'Iran's Deadline Expires Today': Tehran Threatens Renewed Attacks As Blockade Bites, Rial Collapses

The Iran conflict is currently in an all too familiar stalemate, and many of the same statements are being regurgitated from each side - but this does indicate that negotiations have not yet entirely collapsed.

Tehran is still apparently reviewing a Trump administration counterproposal to last week's Iranian seven day ceasefire pitch (which Trump had promptly rejected). Foreign Minister Abbas Araghchi had confirmed Wednesday the reception of an official US response through mediators.

President Masoud Pezeshkian on Thursday proclaimed Iran "has never avoided" dialogue with the United States despite being attacked three times when negotiations were happening. Still, the Iranians have frequently emphasized they do not trust President Trump.

via Responsible Statecraft

Pezeshkian told a meeting of entrepreneurs that the government is "seriously seeking to resolve all issues and problems related to the business sector," as cited in Tasnim news. This comes as the Iranian rial has hit new record lows this week against the dollar.

"We have never avoided dialogue and will not do so, although the United States targeted our country three times. There is good coordination and synergy among the heads of state and everyone is seeking to resolve problems and shortcomings," Pezeshkian said. 

This is also as the US naval blockade is biting, with reports suggesting Iranian crude exports through the Strait of Hormuz stands at near zero for the month of September.

Pezeshkian told the meeting that due to "restrictions at sea," the country is desperately seeking to widen import-export avenues via land with Pakistan, Iraq, Turkmenistan and Azerbaijan.

As for the US President, Trump has just reiterated to TIME that he may be escalating attacks on Iran after the November midterms if an acceptable deal can't be reached.

"Because by annihilating Iran, we’ve created peace in the world," he said. "With Iran, I don’t think you could ever have peace."

At this point it is hard to keep track of just how many times he has proclaimed 'annihilating' Iran. Of course, if Iran has been annihilated, one wonders why Washington still sees it as a threat. The TIME interview has some interesting lines:

In Trump’s telling, he is simply doing what has to be done, even when that means breaking foundational promises to his voters. He campaigned as a president of peace, but is now waging a war he says was necessary to prevent Iran from obtaining a nuclear weapon. He points to Venezuela, where his removal of Nicolás Maduro and the elevation of Delcy Rodríguez have brought the country into Washington’s orbit, as proof that his projection of U.S. power can produce results.

...Except the 'Venezuela model' of quick in and out military intervention has not at all worked with Iran, which has produced a seven-month and counting little excursion quagmire.

After the Epic Fury major bombing campaign didn't collapse the government, the US administration is seeking to do so through all-out economic war and strangulation:

Operation Economic Outcast has caused the rial to hit record lows. We will continue to degrade the Iranian regime’s ability to fund terrorism and develop a nuclear weapon. pic.twitter.com/7XRpqKa2a7

— Treasury Secretary Scott Bessent (@SecScottBessent) September 28, 2026

TIME further recounts, "By Trump’s own timeline, the war with Iran was supposed to be over already, with a new regime in place and a nuclear program throttled."

"But the Islamic Republic had proved resilient and resourceful, choking off oil through the Strait of Hormuz and sending tremors through the global economy," the report underscores.

Separately, University of Chicago political scientist Robert Pape has warned that Oct.1st could mark a new phase in the conflict. He writes that "Iran's 45-day deadline to the United States expired today."

"On August 16, Iran’s Supreme National Security Council decided that if Washington did not lift its naval blockade of Iranian ports within 45 days, Tehran would retain the option of launching renewed attacks against U.S. forces," Pape underscores. "That clock has now run out."

According to more on this prior deadline from Iran Wire:

Consensus within Tehran suggests low expectations for U.S. acceptance of these terms [Iran's conditions communicated to the US side last week]. Strategic advisor Mohammadi noted: “It is highly unlikely that Trump will submit to these conditions.” According to a report by Kyodo News, the Supreme National Security Council determined on August 16 that if the U.S. failed to lift port blockades within 45 days, Iran would reserve the right to resume strikes against U.S. forces. Current developments suggest Tehran has given Washington a seven-day window, bringing the region closer to a critical juncture amid limited prospects for genuine peace talks.

🇮🇷 Iranian parliament speaker Mohammad Bagher Ghalibaf mocked U.S. Treasury Secretary Scott Bessent with a satirical equation suggesting Washington, not Tehran, is running out of time.

The post responded to Bessent's claim that Iran could have "nothing left to trade" within two… https://t.co/k0JwBjeQWc

— Drop Site (@DropSiteNews) October 1, 2026

Pape concludes of the broad and unpredictable situation: "This is the Escalation Trap in its purest form. Washington’s strategy has been to increase pressure until Iran accepts American terms. Iran’s response has been to increase the cost of American pressure. Now the two strategies are colliding at a deadline." Iranian state media has on Oct.1st strongly signaled that national forces are ready for new confrontation and escalation.

Tyler Durden Thu, 10/01/2026 - 10:00

US Warns Europe: Release Emergency Diesel Supplies Or Face Export Ban

The refined products crisis remains unresolved as the Northern Hemisphere winter approaches. 

Speaking in the Oval Office on Wednesday, President Trump said he holds discussions "every day" about a potential diesel export ban, blaming Russia's war in Ukraine for fueling the supply squeeze. His administration is now pressuring European governments to release emergency diesel inventories to contain further price surges and reduce the risk of an economic shock in the coming months. 

Reuters reports that the Trump administration has asked Germany and France to release emergency diesel inventories to help create a buffer against the supply squeeze in the industrial fuel or face a potential US diesel export ban.

The total request calls for the release of 120 million barrels of diesel over the next six months, according to a source in a European capital cited by the outlet. That would be equivalent to about 660,000 barrels a day of additional supply.

"It is in Europe's best interest to work with the United States as we pursue multiple pathways to boost the supply of refined products and lower costs for consumers," one source, a US official, told Reuters.

Trump warned yesterday in the Oval Office that an export ban would "have a negative impact on gasoline" prices but could lower diesel costs. He warned that Russia's war with Ukraine is the main driver of soaring prices. Russia recently extended an export ban on the industrial fuel.

Goldman analysts Yulia Zhestkova Grigsby, Alexandra Paulus and Daan Struyven noted earlier this week that estimated "dark exports" have helped boost Persian Gulf oil exports to 23.3 million barrels a day over the past week, back to prewar levels. Still, refined product exports remain at just half of their 2025 averages.

Goldman energy analyst Nikhil Bhandari warned last month that the refining crisis would persist through 2027 and prolong the pain at the pump.

Elevated diesel prices across the West risk triggering an economic shock, according to Bloomberg Intelligence senior commodity strategist Mike McGlone. He said that shock could be similar to what happened during the 2008 energy crisis.

Perhaps the first domino has already fallen: trucking companies with the weakest balance sheets fall first.

• 16 U.S. Trucking Companies File For Bankruptcy In Less Than A Month As Diesel Prices Soar

Bloomberg commodities expert Javier Blas wrote earlier on X, "Europe is finding itself sandwiched from all sides when it comes to refined products ... diesel in particular (some of the damage is due to the US-Iran war; some is due to Ukraine-Russia; some is due to China, and a lot is self-inflicted). Policy response: Head in the sand."

US Energy Secretary Chris Wright said Wednesday that the Trump administration expects announcements from Europe very soon about tapping emergency diesel supplies.

Tyler Durden Thu, 10/01/2026 - 09:54

The Data Center Boom Faces Mounting Obstacles

By Brian Martucci of UtilityDive,

The U.S. data center boom has entered a new, contradictory phase.

On the one hand, both data center construction activity and credible forecasts for near-term capacity additions to the electric grid to serve data centers remain robust. The Electric Power Research Institute, for example, said in February that data centers will represent up to 17% of U.S. electricity demand in 2030 and as much as 20% in 2035.

On the other hand, data center and utility infrastructure projects face a host of challenges. These include both physical constraints, such as equipment and labor shortages, as well as mounting public opposition driven by concerns about large-scale computing facilities’ impact on water supplies, the cost and reliability of power and natural gas supplies, and the quality of life in host communities. 

The upshot is that even some data center development projects advanced enough to appear in utility load forecasts with a named hyperscaler attached are not certain to move forward. 

Near Grand Rapids, Michigan, for example, a Microsoft data center touted by Consumers Energy faces an uncertain future amid local permitting delays. Another Microsoft-backed data center in Vineland, New Jersey, was recently hit with a $1 million fine for running dozens of gas-powered generators without the proper permits, and ordered to obtain them within 45 days or shut down.

A proposed Google data center that would interconnect in Xcel Energy’s Minnesota territory faces a court-ordered work stoppage to allow time for environmental review. 

​Even projects that sought to circumvent interconnection delays by building off-grid generation have seen setbacks. Last week, Oracle moved to protect itself financially from the delay or cancellation of Project Jupiter, a massive, 2.5-GW data center campus planned for Doña Ana County, New Mexico, after state regulators blocked a gas pipeline proposed to serve it.

Data center opposition “has reached a pitch I have never seen before in my 20-plus years in development,” Blake Nixon, president and CEO of Geronimo Power, told Utility Dive in an interview. 

This spring, officials in Nobles County, Minnesota, shot down a proposal by Geronimo to build a 400 MW “data park” there, despite the company’s efforts at community outreach. Now, Nixon said his team is considering alternative sites in nearby communities.

“[Data centers] are running into physical problems that are manifesting as market problems, political problems, regulatory problems and ultimately problems down on the ground,” he said.

In May, Goldman Sachs said only 50%-60% of planned data center capacity will come online as expected in the next two years amid delays and cancellations. 

And while the 36 GW of capacity added to the development pipeline in the first quarter of 2026 sounds impressive, that’s down 19% from the last quarter of 2025 as developers “continue to shift their focus to existing … pipelines in the face of an increasingly challenging development and regulatory environment,” Caitlin Connelly, a senior analyst with Wood Mackenzie, said in a July note.

Experts say these developments raise questions about just how much data center load will come online in the near term — injecting unwelcome uncertainty into utility planning cycles that must look years, even decades, into the future.

Working around grid constraints with flexibility, BYO capacity

It’s increasingly difficult for developers of large-scale data center campuses to find sites with the hundreds of megawatts, let alone gigawatts, of spare grid capacity they expect their projects to need at full build-out.

In the PJM Interconnection, real or perceived power scarcity is a major driver of both local opposition and top-down political backlash to the industry. The independent market monitor in July blamed data centers for 38% of charges at the most recent capacity auction.

The Democratic governors of Pennsylvania, Virginia and New Jersey have taken action in recent months to push regulators to require data centers to bring more generation and transmission capacity online.

These moves are not only in PJM states with Democratic governors. Power scarcity and cost concerns have triggered organized opposition and political backlash to data centers in places developers until recently believed were sympathetic to their cause, like Texas and Utah.

Texas Gov. Greg Abbott, R, successfully pushed for a sweeping pause on data center grid interconnections that threatens up to 20% of the total U.S. development pipeline, BloombergNEF said earlier this month.

Utilities and data centers are responding in several ways. 

The most straightforward is through “bring your own capacity” arrangements in which computing facilities colocate with new generation or finance local capacity additions (see "Bring Your Own Power Plant: Goldman Now Sees Behind-The-Meter Powering 25% Of All Data Centers By 2030").

Some of these arrangements are massive: OpenAI agreed earlier this month to take 8 GW of the capacity from a planned 10 GW power generation project in Ohio that includes 9.2-GW gas assets. The facility, which is being pursued by Japan’s SoftBank Group and the U.S. Department of Energy, would be the country’s largest generation source if built. 

If not, that title would go to Amazon’s proposed 7.7-GW gas-fired power plant in West Texas, which would also be larger than the current titleholder, Washington state’s 6.8-GW Grand Coulee hydroelectric dam.

Smaller-scale capacity procurements are also in the works, like Google’s “first-of-its-kind” deal with Voltus for 100 MW of virtual power plant capacity in PJM.

Elsewhere, utilities and data centers are pursuing asset-light alternatives using software to find previously untapped headroom on the grid or to ramp down computing loads during periods of peak demand. 

Last fall, for example, Portland General Electric said that by using GridCARE’s AI-powered load modeling tool, it had freed up 80 MW of interconnection headroom  — about a fifth of the 400 MW of data center load it expects to add by 2029. 

“We are seeing more interest from both data center developers and regional stakeholders (utilities, regulators, policymakers) to embrace flexible loads, which can accelerate the interconnection process,” Anuja Ratnayake, EPRI’s emerging technologies executive, said in an email. Ratnayake leads EPRI’s DCFlex initiative, which aims to standardize data center designs and utility programs around flexibility.  

And the United States still has load pockets with headroom to spare — no flexible interconnection or software wizardry required — though they’re increasingly rare. 

Data center developers and prospective tenants are looking past mature, power-constrained markets like Northern Virginia and toward renewables-rich regions with relatively low wholesale power prices, such as the northern Plains states. 

Some utilities and developers are also moving towards smaller data centers that could potentially soak up spare capacity without requiring much if any new generation, Louis Finkel, senior vice president of government relations for the National Rural Electric Cooperative Association, said in an email.

“Some co-ops are actively seeking these types of loads,” Finkel said. “A smaller-scale facility could be sited where there is excess capacity on the system, increasing grid utilization and potentially putting downward pressure on rates.”

Behind the meter or in front, projects face same equipment backlogs

In places without sufficient grid headroom, some data centers are looking to avoid multiyear interconnection queues and power up off-grid, at least temporarily. 

Cleanview, a grid data platform, counted more than 90 GW of behind-the-meter capacity across 59 large-scale data center projects earlier this year. As much as 13 GW of that total could come online by the end of 2027, Cleanview says.

But Andrew Maxson, an EPRI program manager, told Utility Dive these projects remain at the mercy of stretched supply chains for power and electrical equipment. These backlogs are continuing years after the COVID-19 pandemic first pushed them to the breaking point, and the delays affect both grid-connected and behind-the-meter projects, he said.

The typical customer now waits two to three years for standard power transformers — which must be custom-built — and generator step-up units, according to Fluxco, an electrical equipment marketplace. The situation is unlikely to improve before 2027, when significant new U.S. manufacturing capacity is expected to come online, Fluxco said.

The story is much the same for power generation equipment. GE Vernova, the top U.S.-based gas turbine manufacturer, is quoting delivery dates in the early 2030s for a backlog exceeding 100 GW. The backlogs at Mitsubishi Heavy Industries and Siemens Energy, the other two major gas turbine manufacturers, are slightly shorter but still measured in years rather than months.

Customers are responding with “[gigawatt]-scale procurement announcements for technologies such as fuel cells and engines, once considered unwieldy for large-scale deployment,” Maxson said in an email.

Share prices of Caterpillar, an industrial conglomerate with a fast-growing gas and diesel engine business, have doubled since last July. Bloom Energy, a fuel cell manufacturer, has seen its stock rise tenfold over the same period.

Unlike larger combined-cycle generating units, which require high-voltage transformers, smaller generating units can connect to the grid at medium voltages, Nina Sadighi, founder of Eradeh Power Consulting, said on a June 3 webinar organized by Wood Mackenzie.

The units themselves are less supply-constrained, with orders being booked today for 2028 delivery by customers looking to power up before receiving firm interconnection, she added.

Two-year waits are not ideal for data center users focused on speed to power above all else, but they’re preferable to longer waits for a grid connection, even after accounting for the higher cost of setting up what’s effectively an always-on microgrid, Sadighi said.

“You need to factor … the cost of a facility coming online a year late,” she said.

BloombergNEF’s most recent count of 74 GW of announced on-site gas power capacity at U.S. data centers would serve about 48 GW of facility load after accounting for equipment redundancy, said Mark Daly, the research provider’s head of technology and innovation.

“If the grid can only connect around 10 GW of new data center demand per year (near the current record in the US), then our data center demand forecast sees enough data center power demand for all this onsite gas to have something to serve,” Daly said in an email.

“Whether it is actually built on that timeline is a different question,” he added.

Labor constraints, public opposition complicate forecasts

Generating capacity, electrical supply chains and grid headroom aren’t the only meaningful constraints on data center development, however. Even after mitigating those issues, utilities face additional barriers to accurate near-term load and resource forecasting. 

Finding qualified people to build computing facilities and install the massive amounts of computing and electrical equipment needed to run them is a big challenge, for example. 

Associated Builders and Contractors, a construction industry trade group, said in 2024 — before the AI-fueled data center building boom began in earnest — that the U.S. was short about 500,000 construction workers.

Though data centers earn more media attention than other types of large construction projects, they’re competing for specialized workers like electricians and pipefitters with semiconductor factories, battery plants and even power generation projects — often “in the same regions and during the same construction windows,” EPRI’s Maxson said.

“Skilled labor shortages have … emerged as a binding constraint on data center development and the energy infrastructure that serves it, rivaling land availability, permitting and energy supply as a top concern,” he said.

Those issues are colliding with stiffening public pushback to create a challenging development environment, according to recent polling. 

Seventy-one percent of Americans would oppose a data center being built nearby, according to a Heatmap News poll fielded in May — up nearly 30 percentage points from September. By Heatmap’s count, local opposition killed at least 20 proposed data center projects in the first quarter of 2026, the most of any quarter on record.

Organized opposition to data centers and related infrastructure has reached places — and political leaders — that were previously welcoming to data center development. 

Utah Gov. Spencer Cox, R, in May called on data center developers to increase their efforts to safeguard air quality, water resources and other utility ratepayers in his state. The celebrity investor behind a controversial 9-GW project in northern Utah subsequently slimmed down his proposal as the host county enacted a six-month moratorium on data center builds.

In Texas, Abbott directed state regulators in June to ensure data centers “fully fund the costs of electric infrastructure needed to serve their operations, preventing those costs from being passed on to residential ratepayers.” Weeks later, the governor effectively halted new data center interconnections until an audit of the queue could be completed. 

As with labor and supply chain bottlenecks, both grid-connected and behind-the-meter data centers face state and local permitting challenges, EPRI’s Maxson said.

“Permitting is layered with federal, regional, and local constraints,” he said. These constraints “may be more difficult down that chain, meaning that regional constraints are on top of federal ones, and then local ones are on top of both of those.”

Tyler Durden Thu, 10/01/2026 - 09:00

Futures Rise As 10Y Yields Pull Back From 24 Year High

The disconnect continues. With 10Y yields rising as high as 5.34% - a new 24 year high - before easing back US equities remain completely oblivious of the tightening in financial conditions and instead are obsessing with the memory bubble, and pushing higher on the first day of Q4 as strength in technology shares held up against volatility in bond markets and a renewed climb in oil. As of 8:00am ET, S&P 500 futures were up 0.4%, erasing an earlier loss; Nasdaq 100 contracts rose 0.7% with memory and semis providing support following an upbeat forecast from chipmaker Micron. Mag 7 and software firms were also stronger as the Nasdaq remains in a debt-funded world of its own. The AI theme is boosting Indu / Utils while the most other sectors are lagging as usual. In the near-term, with yields and the  dollar higher, the market seems comfortable reverting to portions of the Q2 playbook which was dominated by Tech / Semis. Meanwhile, Russell 2000 small caps struggles in the face of the highest bond yields in a generation; JPM points out that "more than 40% of the index are unprofitable companies though squeeze risk exists with a MidEast deal."  Tempering sentiment were swings in global yields, with the yield on 10-year Treasuries briefly touching the highest since 2002 before pulling back; it was trading at 5.27% last. JPMorgan's market intel suggests that bonds are oversold but may take some time to find a support level. USD continues its bull run, setting a new 52-wk high this morning before erasing gains. Commodities are mixed but higher with crude and Ags leading; Base over Precious with gold/silver flat.  The US economic data slate includes weekly jobless claims (8:30 a.m.), September final S&P Global US manufacturing PMI (9:45 a.m.), September ISM manufacturing and August construction spending (10 a.m.) ahead of the NFP tomorrow, which may have an upside surprise given the ADP print yesterday. 

In premarket trading Mag 7 stocks are mostly higher: Alphabet is up 1.8% after Google announced its much-awaited new frontier model called Gemini 4 Argon (Amazon +1%, Apple -0.2%, Meta little changed, Microsoft +0.8%, Nvidia (NVDA) +0.6%, Tesla (TSLA) +0.3%

• Accenture (ACN) gains 17% after the IT services company reported fourth-quarter results that beat expectations on key metrics, including revenue and bookings.
• Constellation Energy (CEG) rises 3% after the operator of gas power plants said it signed a 20-year power purchase agreement with Amazon, which covers 690 megawatts of nuclear capacity at Maryland’s Calvert Cliffs Clean Energy Center, including a 190-megawatt uprate.
• Liquidia (LQDA) falls 5% — set to extend decline for a second day — after BTIG downgraded the drugmaker to neutral from buy, citing a court ruling that found Liquidia infringed two claims of rival, United Therapeutics’ patent.
• Nu Holdings (NU) gains 5% after the company said it’s not pursuing a deal with Monzo Bank Ltd.
• Oracle (ORCL) is up 1.9% after the Financial Times reports that Tencent agreed to a five-year lease across the US cloud technology firm’s data centers in Southeast Asia.
• Rocket Lab (RKLB) gains 4% after Citi initiated coverage on the space company with a buy rating, calling it a “core holding for space bulls.”.
• Vicor (VICR) rises 12% after the maker of power-conversion technology raised its third quarter sequential revenue growth guidance citing increased royalties from the previously announced first non-exclusive license to Vertical Power Delivery.

In other corporate news, Netflix co-CEO Ted Sarandos said the US streaming giant isn’t growing as quickly as he would like.  Amazon.com has agreed to purchase 690 MW of power from Constellation Energy, in a deal that will help the biggest US nuclear operator boost capacity at the only reactors in Maryland. Nubank said it’s not pursuing a deal with Monzo Bank after reports that the Brazilian company was eyeing a transaction with the UK fintech firm.

The global bond selloff is rippling through to equities - well at least non-chip/Mag7/semiconductor equities - while the spread on the riskiest US corporate bonds has jumped above 1,000 basis points over Treasuries for the first time since the regional banking crisis in 2023. 

"Momentum has collapsed outside the tech sector, as the pain threshold for valuations has been crossed,” says Bank J Safra Sarasin’s Wolf von Rotberg. “Even financials have started to underperform” because of widening HY spreads and pressure on borrowers. For BNP Paribas CIB’s Florian Roger, yields at 5.5% is when “the pressure really starts kicking in” for equities. “We’re nearly there and that’s when valuations can start looking excessive.”

Tech, meanwhile, is ignoring the soaring interest rates, and instead focusing on Micron’s debt-fueled results which reinforced confidence that the memory maker and its peers continue to be inundated with orders as hundreds of billions of dollars pour into the global buildout of AI infrastructure. The sector has been the main driver of global stocks through a period marked by geopolitical upheaval and interest-rate hikes, with Micron alone rallying more than 270% this year. 

On AI, anecdotes remain bullish, from Micron’s print to South Korea export data, which showed September chip exports rose 263% year-on-year, accelerating from the month before. Elsewhere in tech, Alphabet Inc. rose 1.8% in early trading after beginning to roll out its latest flagship AI model, Gemini 4 Argon, its long-awaited flagship AI model, but the company is grappling with internal skepticism over how well it performs in key areas. And tech CEOs privately questioned Anthropic’s Dario Amodei for sounding the alarm bell on AI safety, the WSJ reported. In another sign of the scale of the AI buildout, Tencent Holdings Ltd. signed an estimated $7 billion lease deal with cloud provider Oracle Corp., the Financial Times reported.

Still, the memory stock rally may be losing steam, as evidenced by the equity volatility gauge in Korea (Samsung and Hynix account for 53% of Kospi) as traders shift from speculative options for upside to selling volatility. But the underlying supply and demand imbalance remains constructive for pricing and profit: Micron capex is still going higher and customers are extending commitments beyond 2030.

“Take a look at the Nikkei or Nasdaq futures, there’s clearly little gloom and doom,” said David Kruk, head of trading at La Financiere de l’Echiquier in Paris. “The next driver is the third-quarter earnings season which should be strong, just as the last one.”

Swings in oil continue to ripple through markets at a time when a resilient US economy and elevated inflation have investors seeing scope for as many as four Federal Reserve interest-rate hikes over the next 12 months. That outlook has added to strains in bond markets, with US volatility surging to a six-month high.

With a day to go before the US payrolls report, fresh data showed US companies announced the fewest job cuts for any September since 2022. Minneapolis Fed President Neel Kashkari told Bloomberg TV the economy’s resilience continued to surprise him.

“We’ve identified 5.5% on US 10-year bonds as the level at which pressure really starts kicking in on equity markets,” said Florian Roger at BNP Paribas CIB. “We’re nearly there and that’s when valuations can start looking excessive.”

With macro front and center, there are no less than ten Fed speakers on the agenda today, including Waller, who will speak about Federal Reserve economic data, and Jefferson on the US economy and monetary policy. Trump said former Fed Chair Powell should be forced to resign from the central bank’s board. 

Meanwhile, Europe’s Stoxx 600 fell, with the Stoxx 600 heading for its worst day in almost two weeks and back to the lowest level since June, with the UK’s FTSE 100 down 1%. French short-end bonds underperformed as the government unveiled plans to narrow the budget deficit sharply, kicking off a debate that risks toppling the prime minister. “There’s no one to buy the dip until there is a credible plan to tackle the deficit and debt,” Kruk said. “That’s in any event far away from now.”

Asian stocks were steady as gains in tech firms offset declines elsewhere, with elevated oil prices and bond yields continuing to weigh on sentiment. The MSCI Asia Pacific Index was little changed, rebounding from losses of as much as 0.7% earlier in the session.  Chipmakers were the biggest boosts to the index, while financial firms the biggest drags. Australian shares fell the most in seven months, while benchmarks in India, Vietnam and Malaysia also dropped. Markets were shut in Hong Kong and Mainland China for a holiday. 
Semiconductor-related shares got a boost from Micron’s guidance through 2027, lifting tech-heavy markets including Japan, Taiwan and South Korea. Still, oil’s renewed advance above $100 per barrel is keeping inflationary concerns in focus. 

“The hurdle is quite high now for memory companies on these beats and these raises,” Vikas Pershad, portfolio manager at M&G Investments told Bloomberg TV. “I don’t think it’s a surprise that the numbers continue to be strong heading into 2027.”

“Risk appetite remains limited outside the AI-related space,” said Kazunori Tatebe, chief strategist at Daiwa Asset Management. “Investors are worried about interest rates.”

In FX, the Bloomberg Dollar Spot Index rises 0.3%. The yen is the weakest of the G-10 currencies, falling 0.6% against the greenback after the BOJ summary of opinions leaned dovish. Precious metals are little changed. 

In rates, higher energy prices and rising concerns around fiscal sustainability have pushed global government bonds lower. The moves have retraced somewhat but yields are still broadly higher with US 10-year borrowing costs up 1bps to 5.29% after reaching 5.34% — highest since 2002 — during European morning; curve is slightly steeper on the day with front-end and belly outperforming, widening 2s10s and 5s30s spreads by about 1bp. In 10-year sector bunds and gilts outperform by 5bp and 1bp respectively. Treasuries hold small losses, keeping yields within 2bp of Wednesday’s closing levels, after paring steeper ones. Futures rebounded from session lows as oil gains were pared, with energy traders weighing higher Middle East crude flows against uncertainty across fuel markets. In Europe, the UK 30-year yield hit 6% for the first time since 1998, while French bond spreads continue to widen ahead of the budget announcement. IG dollar issuance slate is blank so far. Paramount Skydance priced an eight-part, $30 billion offering Wednesday, the sixth-largest deal on record. Robust demand saw orders peak at $109 billion, placing it among the largest order books on record, before closing just short $80 billion.

In commodities, WTI crude oil futures have pared a 2.7% increase to about 2%, guiding yields lower. Brent crude futures rise 2.6% and above $100 a barrel. Precious metals are little changed. 

US equity futures were also pulled lower but are still in the green as an upbeat forecast from Micron supports tech stocks. The Bloomberg Dollar Spot Index rises 0.3%. The yen is the weakest of the G-10 currencies, falling 0.6% against the greenback after the BOJ summary of opinions leaned dovish. Precious metals are little changed. 

The US economic data slate includes weekly jobless claims (8:30 a.m.), September final S&P Global US manufacturing PMI (9:45 a.m.), September ISM manufacturing and August construction spending (10 a.m.). Fed speaker slate includes Minneapolis’s Kashkari (7:30 a.m.), Richmond’s Barkin, Boston’s Collins and Kansas City’s Schmid (9:05 a.m.), Governor Waller (10 a.m.), Vice Chair Jefferson (1:30 p.m.), Vice Chair for Supervision Bowman (3 p.m.), Governor Cook and New York’s Williams (3:30 p.m.) and Dallas’s Logan (7:20 p.m.)

Market Snapshot

Top Overnight News

• The 10-year Treasury yield rose to 5.33%, the highest since 2002, as global bonds grappled with stubborn inflation and warnings that rates may stay “higher for longer.” Brent climbed back above $100. UK long-term yields hit 6% for the first time in almost three decades. BBG
• Washington is winning the War of Hormuz as Middle East oil exports approach pre-war levels, although the Pentagon is expending a lot of resources to guarantee supply and the global shortage of refined energy products is worsening. WaPo
• The Trump administration has told Germany and France to draw down emergency diesel inventories to help to ease global fuel prices or face a potential US diesel export ban, said three people close to the discussions. The warning marks an escalation of pressure on Europe as US President Donald Trump considers a potential diesel export ban to bring down US fuel prices ahead of November's midterm elections. RTRS
• Chinese fuel exporters have canceled some oil-product cargoes slated for export in October, prioritizing domestic supply during an extended period of upheaval in global energy markets. Shipments including gasoline and diesel have been affected, with the prompt spread for these fuels in Asia stretching higher as traders learned the news, indicating a tighter market. BBG
• Factory activity across Europe and Asia expanded last month as demand, partly boosted by the global AI spending boom, remained ‌strong even as the energy price shock from the Iran war kept inflation elevated, surveys showed on Thursday. RTRS
• Japan is aiming to speed up data center development with a $140bn investment scheme leveraging its powerful gas trading company in a bid to become the world’s largest AI infrastructure hub outside the US and China. FT
• Minneapolis Federal Reserve President Neel Kashkari said price pressures remain elevated after the latest batch of inflation data released Wednesday. Kashkari’s comments come after the Fed’s preferred inflation measure, the personal consumption expenditures price index, rose by 3.4% over the past 12 months in August. Despite revisions to PCE lowering the year-over-year trend, economists project the central bank will largely stay committed to achieving price stability on a timely basis. WSJ
• Powell will probably wind up staying at the Fed until Jan 2028. Politico
• Tencent has signed its largest overseas lease deal with US cloud provider Oracle as the Chinese tech giant strives to catch up in an escalating AI race. The leading social media and gaming group in China this year agreed to a five-year lease across multiple Oracle data centers in south-east Asia, according to two people with knowledge of the matter. FT
• US Senators Hawley (R) and Murphy (D) are planning to introduce AI liability legislation as a bipartisan effort to regulate AI: Axios
• BofA (w/e 26th Sept) Total Card Spending +5.6% Y/Y (prev. +6.9%); notes that after a brief reversal last week, lower-income spending growth again outpaced higher income

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mixed as the region takes its cue from the similar performance stateside, where participants digested a slew of data, and yields continued to climb despite softer PCE data, while markets in Mainland China and Hong Kong were shut for the National Day holiday. ASX 200 underperformed with all sectors in the red and the downside led by weakness in energy, real estate and defensives, while a return to growth in Australian Exports and Imports did little to inspire. Nikkei 225 rallied with chip-related stocks boosted following strong earnings from Micron, while participants also reflected on the BoJ Tankan survey, which showed sentiment among Large Manufacturers improved but missed forecasts, and coupled with recent weak activity data, supports the argument for a less aggressive BoJ rate normalisation. KOSPI shrugged off the initial weakness and climbed into the green as tech-related momentum began to pick up. Furthermore, US President Trump recently unveiled plans for South Korea to invest USD 200bln in energy projects in the US as part of South Korea's investment pledge that got auto tariffs reduced from 25% to 15%, while South Korean Exports surged.

Top Asian News

• RBA Financial Stability Review stated that households and businesses are well placed to weather a slower economy and falling house prices, while it added that even if house prices fell a further 20%, only 5% of mortgages would be in negative equity. Furthermore, less than 1% of borrowers are in negative equity and household balance sheets remain strong, while banks are well-positioned to weather a material deterioration in the housing market.
• China's Finance Minister said they will implement proactive fiscal policy and support achievement of full-year economic goals, while they will boost domestic demand, prevent and resolve debt risks, as well as appropriately accelerate the pace of fiscal spending.
• Japanese PM Takaichi said the government will appropriately control total annual government bond issuance, taking into account both initial and supplementary budgets. On the FX market, Takaichi said the FX market is determined by a number of factors, that economic policy is not aimed at manipulating FX while she also told US President Trump that undervaluation of yen is a problem. Takaichi also added that they expect the consumption tax cut on food will be passed on to sales prices.

European bourses (STOXX 600 -1.0%) have come under significant pressure to start the final quarter of 2026. Energy prices continue to be the main driver (Brent +1.7%), while the downside in fixed income is also not helping sentiment. Sectors highlight the negative bias, with all sectors entirely in the red. Banks are the clear laggard, with Basic Resources and Consumer Products & Services following suit. US equity futures are mixed, with the tech-heavy NQ outperforming. Focus for Thursday will be on the flurry of Fed speakers, while the Jobs Report is to be released tomorrow. Initially, upbeat sentiment was seen across the Tech space after Micron delivered strong quarterly results after-hours, with upbeat guidance underscoring the robust AI-driven memory demand, although expected margin compression, due to increased worker pay, and higher operating expenses limited the reaction in shares (-0.7% pre-market).

Top European News

• French PM Lecornu reportedly aims for EUR 43bln in new savings in the budget, according to BFM TV. The government intends to reduce the deficit to 5% of GDP by 2027, while forecasting higher revenues from VAT and income tax, and lower revenues for businesses, in the 2027 draft budget. The report added that the government wants to put an end to the "windfall" subsidies for renewable energy, extend the tax on sugary drinks and lower the 10% tax allowance ceiling for retirees. Additionally, the government is proposing to freeze family allowances in 2027, hoping this will save EUR 500mln and also seeks a EUR 600mln reduction in spending on the back-to-school allowance.
• European Commission officials will present to member nation's governments examples of "reforms, investments and outputs" and discuss the regional aspects of the bloc's budget, Politico reported citing sources. The new system would give the Commission greater control, sidelining some regions. The plan includes bundling agriculture, regional and migration spending into national cash pots called NRPPs, while payments could be conditional on economic reform milestones.
• The German Chancellery has halted Finance Minister Klingbeil's sugar tax draft bill, which targeted EUR 1.2bln from consumers versus EUR 450mln, Bild reported.
• The UK government is reportedly not planning to overhaul the student loan system in the Autumn budget to cut the cost of living for graduates, the i Paper reported.

FX

• Snapshot: A dire situation, with global yields at multi-decade highs, lifting the USD to levels not seen since May 2025. The CHF benefits post-CPI and haven-demand, whilst the JPY underperformed post-Tankan survey.
• DXY is stronger this morning, and currently trades at the top end of a 101.45-101.84 range; the peak for the day has surpassed the 24 June high (101.80), and now trades at levels not seen since May 2025. The strength today is facilitated by stronger energy prices, with yields also moving higher in tandem. There is no one clear driver for the energy move this morning, but perhaps as traders digest the lack of progress between US-Iran; A US official said Secretary of State Rubio demanded that Iran’s UN delegation immediately leave the US after negotiations stalled.
• EUR is weaker vs USD this morning, and fell below the 1.13 mark for the first time since May 2025. The single currency has been swept away by the broader USD strength, but also has its own domestic issues to worry about, namely in France. PM Lecornu reportedly aims for EUR 43bln in new savings in the budget, with tax changes likely to make up the rest of the expected EUR 54bln savings plan that was previously touted. Most pertinently is that the deficit is seen falling to 5% of GDP by 2027, well above the EU’s deficit-to-GDP ceiling of 3%. This raises three key concerns: a) Will the EU impose fines/sanctions, b) potential use of Article 49.3 – raising political uncertainty, c) French sovereign debt credit rating downgrades.
• JPY is the clear underperformer this morning, following a weaker-than-expected Tankan report. Mizuho previously noted that a strong reading could boost the odds of an October rate hike at the BoJ; today’s weak reading has likely kicked the can down the road, at least for now. Also for the JPY was the release of the BoJ SOO, which “appears to have disappointed some market participants who were looking for a stronger signal that the BoJ were open to another hike as soon as next month”, MUFG says.

Fixed Income

• Despite a relatively steady APAC-European handover for fixed income, marked pressure has been seen this morning on what appears to be a bit of a self-fulfilling narrative, as concerns over yield upside see major levels breached, in-turn spurring further upside.
• The main point has been the French draft budget and reporting around that. In short, PM Lecornu’s government is looking to save around EUR 43bln from their spending, with various tax-related adjustments also being reported with a total figure of over EUR 50bln still in play as things stand. Nonetheless, this leaves them on track to have a deficit-to-GDP ratio of 5%, well above the EU’s EDP 3% threshold. As such, sovereign updates will be keenly watched in the run up to the 2027 Presidential election.
• Bunds also pressured, in-fitting with peers, awaiting updates from the European Commission on the regional aspects of the bloc’s budget, updates that could weigh on EGBs further. For Germany, Bild reports that Chancellor Merz has blocked vice-Chancellor/Finance Minister Klingbeil’s sugar tax proposal, which would have raised EUR 1.2bln vs the EUR 0.4bln currently planned. Bunds lower by 20 ticks at the time of writing, lower by as much as 60 early doors, but has since been able to find a bit of a floor.
• Despite a lack of fresh fundamental news, the UK 30yr yield has eclipsed the 6% mark. A breach that may well have helped drive some of the self-fulfilling action early on ahead of the broader pressure and French updates.
• USTs, in-line directionally with the above, but with somewhat smaller magnitudes into an afternoon packed with speakers and data. Currently, just above the 104-00 handle, after minting a 103-28+ contract low this morning.
• France sells EUR 11.999bln vs Exp. 10-12bln 3.70% 2036, 3.80% 2037, 1.25% 2038, 2.00% 2048 OAT.
• Spain sells EUR 5.061bln vs Exp. EUR 4.5-5.5bln 1.45% 2029, 3.40% 2036, 2.90% 2046 Bono.

Commodities

• WTI Nov and Brent Dec futures have reversed overnight losses and are sharply firmer as the European morning progresses, with the complex supported by the continued lack of progress in US-Iran negotiations (see below for details) and despite any obvious news flow to explain the gains. WTI has rallied from a USD 88.79/bbl low to a USD 92.90/bbl high, while Brent has surged from USD 96.55/bbl to briefly top USD 100/bbl, printing a USD 100.79/bbl high. There was also focus on diesel after the US reportedly told France and Germany to release emergency stocks or face a possible US export ban.
• Dutch TTF is firmer alongside the broader energy complex, with ongoing Middle Eastern uncertainty keeping supply risks on traders’ minds. Syria also reported that three power plants remain out of service following a gas pipeline explosion. TTF has risen from a EUR 71.22/MWh low to a EUR 74.25/MWh high.
• Precious metals are flat/mixed as the rise in crude pushes global yields higher, limiting the benefit from lingering geopolitical uncertainty. Spot gold is little changed overall in a USD 4,139/oz low to a USD 4,193/oz high, while spot silver is modestly firmer within a USD 59.97-61.43/oz range.
• Base metals are softer, with the complex pressured by higher energy prices and yields, while mainland China remains closed for the National Day holiday. 3M LME copper is down almost 1.5% within a USD 14,231-14,491/t range, while COMEX copper is similarly lower.
• In geopolitics, Trump said developments regarding Iran will happen “very soon” and that the war could end soon, while a White House official said a deal remains possible. However, negotiations have stalled, with US Secretary of State Rubio reportedly demanding Iran’s UN delegation leave the US, while Iranian officials said they received Washington’s response to their latest proposal without disclosing its contents. Further support comes from reports that the Israeli Security Cabinet will discuss the situation “on all fronts” on Sunday following yesterday’s Flydubai incident, which was a suspected terrorist plot, with Israel not ruling out Iran’s involvement.
• The US has reportedly told France and Germany to release emergency diesel stocks or face a possible export ban, according to sources. The source added that the US wants the EU to release 120mln barrels of diesel in the next six months. Following this, reports suggested that the EU is seeking to form a unified position on releasing diesel reserves.
• Chinese refiners reportedly suspend fuel product exports beyond Hong Kong and Macau, according to Reuters.
• US Interior Secretary Burgum said a European refined fuel stockpile release could lower prices and that European voluntary release of diesel stockpiles would help.
• US Energy Secretary Wright said they will have some announcements on diesel and will hear announcements from Europe about new diesel supplies.
• US President Trump said a diesel export ban is something they talk about daily, but could have a negative impact on gasoline, which would go up.

Trade/Tariffs

• US President Trump announced a deal for nuclear power plants to be funded by South Korea, as part of South Korea's investment pledge that got auto tariffs reduced from 25% to 15%.
• South Korea's Industry Minister said he lodged strong objections with US Commerce Secretary Lutnick over his announcement on the Alaska LNG project.
• South Korea Industry Minister said the US is likely to maintain a tariff rate on South Korea at 15%, according to Yonhap.
• Japan plans to send a business delegation to Beijing next March, looking for talks with Chinese President Xi's leadership, Kyodo reported citing sources.

Central Banks

• Fed's Kashkari (2026 voter) said inflation is still too high and is around a 3% rate, while he added that new data didn't change that story and that the longer the economy remains strong, the more he questions how restrictive monetary policy is. Kashkari said he pencilled in one more hike this year and another next year, while he hopes the Fed can bring inflation down with modest action and said the Fed must get inflation back to 2% given how long it's been above target.
• Fed's Goolsbee (2027 voter) noted a record gap between consumer sentiment vibes and hard data of spending, while he stated that sentiment is a less informative growth indicator.
• BoE Governor Bailey said the AI boom could trigger market shocks, while he added that AI asset prices could see a correction and that AI investment brings sticky risks.
• BoJ Summary of Opinions from the September meeting noted one member said it's appropriate to continue raising rates in accordance with the economy, price and financial developments, while a member said the policy phase has shifted and the BoJ must focus on keeping underlying inflation anchored around 2%. It was also stated that the BoJ must respond flexibly and demonstrate to markets its determination to prevent an inflation overshoot while staying mindful of FX-market effects and that the BoJ must accelerate rate hikes if signs emerge of an inflation overshoot. Furthermore, there was an opinion that the BoJ must raise rates towards the terminal level early so it can react quickly to unexpected economic and price developments, although a member said there is no need to hurry rate hikes, but policy must be steered appropriately as underlying inflation is likely to reach 2% soon.
• ECB has asked the EU to start finding a successor to ECB's Schnabel.

Middle East

• A US official said Secretary of State Rubio demanded on Monday that Iran's delegation to the UN General Assembly immediately leave the country after negotiations stalled, according to Axios.
• UK PM Burnham said there are strong indications that Iran played a part in what happened over the weekend at the Fairford Air Base incident.
• Iran's Foreign Minister Araghchi rejected UK PM Burnham's accusations linking Tehran to an alleged security incident involving the Fairford Airbase in the UK, while he stated that "I can confirm Iran's belief that releasing supposed terrorists working for foreign states really says it all".
• Israeli Security Cabinet to discuss situation "on all fronts" on Sunday, Al Hadath reported.

Other

• South Korea's President Lee said they will take practical measures to lower military tension with North Korea, while South Korea is to upgrade its missile defence systems, including AI-based command networks and laser interceptors.

US Event Calendar

• 8:30 am: Sep 26 Initial Jobless Claims, est. 200k, prior 197k
• 8:30 am: Sep 19 Continuing Claims, est. 1725k, prior 1719k
• 9:45 am: Sep F S&P Global US Manufacturing PMI, est. 57, prior 57
• 10:00 am: Sep ISM Manufacturing, est. 55, prior 54.6
• 10:00 am: Sep ISM Prices Paid, est. 73, prior 71.1
• 10:00 am: Aug Construction Spending MoM, est. 0%, prior -0.5%

Central Bank Speakers

• 7:30 am: Fed’s Kashkari on Bloomberg TV
• 9:05 am: Fed’s Barkin, Collins, Schmid on Panel About Rural America
• 10:00 am: Fed’s Waller Speaks on Federal Reserve Economic Data
• 1:30 pm: Fed’s Jefferson Speaks on US Economy and Monetary Policy
• 3:00 pm: Fed’s Bowman Speaks on Modernizing Financial Regulation
• 3:30 pm: Fed’s Cook and NY Fed’s Williams at Panel
• 7:20 pm: Fed’s Logan Speaks At Eleventh District Appreciation Event

DB's Jim Reid concludes the overnight wrap

Welcome to Q4, although as I write this from Chicago, having moved on from Pheonix, I'm still in Q3. As it’s the start of the quarter for most of the world, Henry will shortly release our usual review of how different financial assets fared in Q3. Overall, it was a tricky quarter, as the re-escalation in the US-Iran conflict pushed Brent crude oil up +42.0% from its lows at the end of June. So that led to a major global bond selloff, with 10yr Treasury yields up for a 7th consecutive month for the first time since 2011. They ended up climbing +53bps in September, the most since September 2022. To be fair, it wasn’t all bad news, as global growth and earnings were very resilient. But that only added to the rates pressure and gave central banks the space to turn more hawkish, with the Fed, ECB and BoJ all hiking again in September. So it was a terrible month for fixed income, with equities also a little soft. The S&P 500 fell -0.3% in September but that outperformed the Stoxx 600 (-2.4%), DAX (-4.0%) and FTSE (-2.0%).

In terms of the last 24 hours, it was a difficult session for investors to grapple with, as multiple trends all hit at once. On the bright side, downward revisions to the US PCE inflation data pushed back on speculation the Fed would hike this month. That had helped equities recover for most of the session but a late month-end sell-off left the S&P -0.25% lower at the close. Meanwhile, other headlines were more inflationary, with Brent crude up another +0.92%, whilst the flash CPI prints from several European countries surprised on the upside. And on top of that, the bond market stress continued, with the 10yr Treasury yield (+4.9bps) rising to another post-2007 high of 5.28%, whilst the Franco-German 10yr spread widened to a post-2012 high of 127bps. So despite the PCE-related rally, there were still clear signs of stress in fixed income. 30yr USTs were +6.3bps, with month-end positioning perhaps again playing a part. And if all that wasn’t enough, the theme of Fed independence reared its head again, with Trump posting that Powell “should be forced to resign” from the Fed Board.

That PCE data was the big event yesterday, and it generally leant in a more dovish direction. Admittedly, the core PCE print for August wasn’t far from expectations, at a monthly +0.25% (vs. +0.3% expected). But the significant news was the downward revisions to the previous months, which made the overall inflation picture look a lot better. So with those revisions, the year-on-year core PCE print was only at +3.0% (vs. +3.3% expected), whilst headline PCE was only at +3.4% (vs. +3.7% expected). And if you just look at the more recent trends, the 3-month annualised rate for core PCE stood at +2.05% in August, which is actually the softest it’s been since July 2024.

So that played into the narrative from NY Fed President Williams on Tuesday, and it meant market pricing for an October hike was down from 47% on Tuesday to 37% by the close last night, while the amount of hikes priced by year-end fell by -2.5bps to 29.6bps. Indeed, our US economists see the print as reducing the urgency for the Fed to act in October but, with inflation still well above target, they maintain the expectation of the next hike in December.

However, this dovish repricing didn’t hold further out the curve, with the 2yr Treasury yield closing +1.1bps higher on the day at 4.89% after trading as low as 4.825% after the PCE release.  At the same time, the relentless long-end selloff continued, with the 10yr Treasury yield (+4.9bps) hitting another post-2007 high of 5.28%. Indeed, it had traded as high as 5.304% with less than an hour of trading left, which would have seen it surpass the 2007 closing peak of 5.29% and reach the highest level since 2002. Moreover as discussed above, the 30yr yield (+6.3bps) saw an even bigger increase to a post-2002 high of 5.63%. The 10yr real yield (+2.6bps) rose to a post-2008 high of 2.92%. The continued rise in yields saw equities soften after an initial post-PCE rally, before a further sharp fall in the final 15 minutes of trading left the S&P 500 -0.25% lower on the day despite trading +0.68% higher early on.

Meanwhile, in other Fed news, Trump claimed in social media post that “‘Too Late’ Powell should be forced to resign from the Board” following an Inspector General report into budget overruns during the renovation of the Fed’s headquarters. As a reminder while Jerome Powell’s term as Fed Chair ended in May, his term as Fed Governor runs through to January 2028.

Even as the PCE data surprised on the downside, there were still other inflationary pressures in the mix yesterday. The main one was higher oil prices once again, with Brent crude (+0.92%) up to $103.53/bbl, though due to the month-end change in the benchmark this will now fall towards $98/bbl so be careful when you now look at the front contracts. WTI (+1.16%) was up to $90.42/bbl. There wasn’t a single catalyst for that, but the moves came amidst growing scepticism that the US and Iran would reach a deal anytime soon. Indeed, that concern was clear further out the oil futures curve, with the Brent future for December 2027 up +0.54% to a new high of $81.25/bbl yesterday.

The other inflationary headline came from the flash CPI prints for several Euro Area member states in September, which consistently surprised on the upside. So the German inflation print rose more than expected to +3.3% on the EU-harmonised measure (vs. +3.2% expected). Similarly in France, inflation was up to +3.4% (vs. +3.2% expected), and in Italy, inflation rose to +4.1% (vs. +3.7% expected). So that raised fears that the Euro Area-wide number tomorrow would come in on the stronger side, and that the ECB would need to be more hawkish to deal with that. Our European economists now see headline Euro Area CPI tracking at +3.8%, a tenth above consensus, with core inflation tracking at +2.5%, in line with consensus but a tenth above their earlier expectation.

The bond market stress was also clear in France, where the spread of French yields over their German counterparts took another leg higher yesterday. Most notably, the Franco-German 10yr spread rose +8.7bps to 127bps by the close, the highest it’s been since June 2012, and up from 85bps at the start of the month. At the same time, the Italian 10yr spread over bunds also closed above 100bps yesterday for the first time in over a year, ending the session at 103bps. In absolute terms, the 10yr bund yield still fell -3.9bps on the day to 3.58%, but the signs of financial stress took their toll across the continent. Indeed, France’s CAC 40 (-0.89%) was the worst-performing of the major European equity markets, whilst the STOXX 600 (-0.50%) also struggled.

Overnight in Asia, the Nikkei is +2.35% and KOSPI +0.5% higher in very early trading. China and Hong Kong are closed for holidays. The ASX (-1.51%) seems to be caught up in the bond sell off that's seeing Japanese and Aussie governments bonds catch down to yesterday's fixed income sell off. Micron results last night after the bell seem to be helping Asia tech and also S&P (+0.30%) and Nasdaq (+0.45%) futures although I'm writing this in Q3, and a bit earlier than I would if I were in London so by the time you read this things may have changed.          

Looking at the day ahead now, data releases include the September ISM manufacturing from the US, along with the final manufacturing PMIs from around the world. In addition, we’ll get the Euro Area unemployment rate for August and the weekly initial jobless claims from the US. Otherwise, central bank speakers include Fed Vice Chair Jefferson, the Fed’s Barkin, Collins, Schmid, Waller Bowman, Cook, Williams and Logan, ECB President Lagarde, the ECB’s Cipollone, Makhlouf, Nagel, Sleijpen and Schnabel, BoE Governor Bailey, and the BoE’s Mann and Pill.

Tyler Durden Thu, 10/01/2026 - 08:48

Ukraine Hit By Severe Power Cuts After Russia Pounds Grid Ahead Of Freezing Temps

Ongoing major Russian strikes on Ukraine's energy infrastructure have resulted in significant forced power cuts across various regions of Russia ahead of what promises to be a frigid winter.

National grid operator Ukrenergo on Thursday urged consumers to limit usage following the recent attacks of the past 24 hours. The outages have chiefly impacted central Ukraine, as well as Kharkiv region in the east, along with Chernihiv and Sumy in the north.

via AP

"Where security conditions currently allow, emergency repair and restoration work is already under way," a statement said.

"Energy workers are doing everything possible to restore power to all disconnected consumers as quickly as possible," it added.

And BBC reports, "Kyiv has been preparing for a renewed onslaught before winter begins, by building fifteen small scale power plants in heavily fortified concrete bunkers."

Another European outlet warns of what this means for residents going into winter:

Kyiv said it was Moscow's opening salvo in an expected campaign to try to knock out heating and power as winter approaches.

A recent increase in strikes has prompted fears about another winter with little or no power or heating, after similar attacks last year when temperatures plunged to -20C.

The strikes which started Wednesday are being called one of the heaviest combined attacks on energy cited in months. Ukrainian officials reported seven people killed as a result.

Ukraine's prime minister Sergii Koretskyi confirmed on X, "Russia has escalated to massive ‌strikes on energy infrastructure." And President Zelensky indicated that critical infrastructure was hit across five regions.

Freezing temperatures are expected to hit the capital region in the coming days, as emergency repair crews scramble - though there's unlikely to be a let-up in the nightly attacks.

⚠️ Confirmed: Metrics show disruptions to internet connectivity in Kyiv and Zhytomyr Oblasts, #Ukraine, corresponding to emergency power shutdowns after a series of Russian missile and drone attacks target energy infrastructure, a hallmark of Russia's winter warfare strategy 🔌 pic.twitter.com/HkE8sgrIIq

— NetBlocks (@netblocks) September 30, 2026

Zelensky has lately floated he'd be open to another energy ceasefire deal, and these calls are likely to be renewed; however, it will have to go both ways and the Ukrainians have also been unrelenting in their long-range drone attacks on Russian territory and oil refineries.

Russian forces have also of late been systematically degrading and destroying data centers and mobile providers in Ukraine. Internet connectivity has become a problem throughout various sectors of the country.

Tyler Durden Thu, 10/01/2026 - 08:30

Amazon Secures 20 Years Of Nuclear Power From Constellation As Goldman Sees Industry-Wide Win

Goldman analyst Carly Davenport views Amazon's nuclear power deal with Constellation Energy as "positive for industry broadly" as the "Powering Up America" theme and nuclear theme continue as Big Tech scrambles for the cleanest form of stable power to fuel data centers chip stacks. 

Davenport said Constellation Energy's 20-year deal to supply Amazon with 690 megawatts from Maryland's Calvert Cliffs nuclear plant is positive for both the utility and the broader power complex. 

Calvert Cliffs has two nuclear reactors, with a combined generating capacity of about 1,790 megawatts, enough to power 1.3 million homes. The deal unlocks power to Amazon's data centers across the 13-state grid overseen by PJM Interconnection. 

The deal also supports more than $3 billion in infrastructure investment at the nuclear power station, including upgrades adding 190 megawatts of generating capacity between 2030 and 2032. It also provides Constellation with revenue certainty. 

Davenport explained the deal:

Terms of the agreement: CEG and Amazon signed a 20-year PPA for nuclear power at the Calvert Cliffs Clean Energy Center, Maryland’s largest carbon-free energy facility and only nuclear plant.

Amount of capacity: The PPA is for 690 MW of total capacity, which includes a 190 MW of uprates scheduled to come online between 2030 and 2032.

Capital commitment: The agreement enables $3 bn+ in infrastructure investment to fund state-of-the-art upgrades across the entire 1,790 MW facility.

PJM implications: All electricity from Calvert Cliffs will continue to flow into the PJM regional grid. The parties have entered a separate but related retail supply agreement to support Amazon’s operations across the 13-state PJM market.

Beyond the agreement: The company highlighted the contract provides the long-term revenue certainty necessary for Constellation to pursue a 20-year license extension for the facility and explore further development of new clean energy power plans on-site.

Financial implications: While the release provides no color around pricing, we would point to the company’s disclosures which include a sensitivity on FCFbG upside from data center PPAs. CEG noted that 1 GW Nuclear PPA at a $20-$50/MWh premium to the PTC floor would translate to $125M-$325M FCFbG upside, implying FCFbG uplift of ~$86mn-$224mn if applied to the total 690 MW contract with Amazon.

Davenport added, "We view the PPA announcement as a solid update for the company and industry especially given it is for capacity in PJM, which has been a challenging environment recently due to regulatory uncertainty within the market, and investor confidence has been low in incremental data center PPAs being announced in the near term." 

"This agreement demonstrates how private investment can strengthen critical energy infrastructure," said Constellation CEO Joseph Dominguez.

Because of the AI data center buildout, nuclear power is getting new life, and grid upgrades will help buffer the fragile PJM region during peak demand. 

More importantly, the added capacity may help Maryland after years of 'climate-friendly' policies transformed the grid into a mess that collided with the era of data centers and electrification. One has to ask what the Democrat-run state was thinking over the years as it focused on everything but preparing the state for the next evolution of the modern economy. 

Constellation shares were up nearly 4% in pre-market trading. Davenport maintains a "Neutral" rating on the utility, with a 12-month price target of $305.

Tyler Durden Thu, 10/01/2026 - 08:15

Lilly's "Incredible Hulk" Obesity Combo Delivers Record 23% Weight Loss In Diabetics

Eli Lilly's experimental combination of eloralintide and Mounjaro delivered average weight loss of up to 23% in people with diabetes, strengthening the company's competitive edge against Novo Nordisk in the obesity and diabetes treatment market.

Participants who received the highest dose lost an average of 54 pounds over 48 weeks. Their A1C, a measure of average blood sugar, fell 2.9 percentage points from a baseline of 8.1%, with up to three-quarters reaching normal blood sugar levels, according to Bloomberg.

"This could open up even a next frontier in weight loss," Ken Custer, president of Lilly's cardiometabolic unit, stated.

Custer said the study sets a "new, even higher bar" but cautioned against comparing different studies.

Lilly shares rose as much as 2.6% earlier today before paring gains. Year to date, shares are up a little more than 10%, while competitor Novo Nordisk has slumped more than 20%.

The Study

The Phase 2b trial, announced by Lilly Wednesday and presented at the European Association for the Study of Diabetes (EASD) meeting in Milan, randomized 367 adults with obesity or overweight and type 2 diabetes in the US and Argentina to placebo, eloralintide alone, tirzepatide alone, or one of four combinations of the two. Tirzepatide is the active ingredient in both Mounjaro and Lilly's obesity shot Zepbound. Lilly calls the combination EloraTZP.

Eloralintide mimics amylin, a hormone the pancreas releases alongside insulin that slows digestion and signals fullness to the brain. Tirzepatide hits two gut hormone receptors, GIP and GLP-1, so the combination works on three appetite and blood sugar pathways at once.

The results at 48 weeks, from an average starting weight of 232.4 pounds:

Arm Weight change Pounds A1C change Eloralintide 9 mg + tirzepatide 15 mg -23.3% -54.1 -2.9 Eloralintide 6 mg + tirzepatide 10 mg -19.9% -46.2 -2.6 Eloralintide 6 mg + tirzepatide 5 mg -19.4% -45.1 -2.7 Eloralintide 3 mg + tirzepatide 5 mg -13.2% -30.7 -2.2 Tirzepatide 15 mg alone -14.8% -34.4 -2.4 Eloralintide 6 mg alone -12.3% -28.6 -1.4 Placebo -3.0% -7.0 -0.3

Source: Eli Lilly. Efficacy estimand, i.e. assuming all participants stayed on treatment.

In other words, adding eloralintide to the top dose of Mounjaro bought an extra 20 pounds of weight loss. Oddly, the highest dose of eloralintide on its own (9 mg) did worse than the 6 mg dose, at 11.1%.

Weight loss is typically harder to come by in diabetics, which is what makes the number stand out. Analysts at Citi wrote that the 23.3% figure is "comparable to tirzepatide in patients without T2D" and came in "comfortably above our 17% bar." For comparison, Lilly's triple-hormone shot retatrutide produced 20.8% weight loss in diabetics in its Phase 3 TRIUMPH-2 trial, and that took 80 weeks.

Study investigator Julio Rosenstock offered a very colorful description of the new GLP-1 wonder drug. Having nicknamed Mounjaro "King Kong," with retatrutide already claiming "Godzilla," Rosenstock called the new combination the "Incredible Hulk." Rosenstock, a University of Texas diabetes researcher, coined the first two in 2023: "We know that tirzepatide (Mounjaro) is the King Kong of the GLP-1s. And when I look at retatrutide, I think that there is no question that Godzilla is smiling."

The Catch

Rosenstock cautioned that not all patients need to lose that much weight. At the highest dose, 27% of participants stopped taking the drug because of side effects. More than four-fifths reported a side effect of some kind, with roughly half experiencing nausea.

Across the four combination arms, Lilly reported discontinuation rates due to adverse events of 10.8% to 27%, versus 2.9% for tirzepatide alone. The side effects were mostly gastrointestinal and hit hardest during dose escalation. Citi's analysts blamed starting both drugs at once and said a gentler Phase 3 titration "could preserve efficacy while improving adherence." Custer told CNBC Lilly will adjust the dosing, "and we expect that we'll end up with a very favorable balance of efficacy and tolerability."

Lilly vs. Novo

The results add competitive pressure on Novo, which pioneered the approach with CagriSema, a combination of its amylin treatment cagrilintide and semaglutide, the active ingredient in its blockbuster Wegovy.

That drug has already been bloodied by Lilly. In February, CagriSema failed to prove it was even as good as Mounjaro in the head-to-head REDEFINE 4 trial, with 23% weight loss after 84 weeks versus 25.5% for tirzepatide. Novo filed CagriSema with the FDA in December 2025 and expects a decision by late 2026.

Novo also lost the fight for the next amylin drug. In November, Pfizer outbid it for Metsera in a roughly $10 billion bidding war over the biotech's monthly amylin candidate. Meanwhile Mounjaro overtook Merck's Keytruda as the world's best-selling drug in the first quarter, with $8.7 billion in sales.

Lilly plans to begin late-stage studies of the new combination by year-end, using a single co-formulated injection rather than the two separate shots used in this trial. Eloralintide is already in Phase 3 on its own, after producing up to 20.1% weight loss in non-diabetics in a 48-week Phase 2 study.

Tyler Durden Thu, 10/01/2026 - 08:00

Canada Has A Ukrainian Blindspot

Authored by Ted Snider via The Libertarian Institute

On September 10, Ukrainian President Volodymyr Zelensky landed in Canada where he and Canadian Prime Minister Mark Carney signed a 100-year partnership "elevat[ing] the relationship between their countries into a Comprehensive Strategic Partnership and confirming their aligned nature."

Canada already has a special relationship with Ukraine. Before the war, Canada had the largest Ukrainian community in the Ukrainian diaspora with 1,209,805 Ukrainian-Canadians. Canada is the fifth largest financial contributor to Ukraine after only the United States, the European Union, Germany, and the United Kingdom with over $16 billion in military, financial and humanitarian aid.

Carney said that “Canada will always stand in solidarity with Ukraine” and that “there is no qualification to our commitment.” There is little wrong with that: Ukraine was invaded by Russia and taken advantage of by the West.

But there are two problems with the Comprehensive Strategic Partnership. The first is practical.

Since Russia invaded Ukraine in 2022, Canada has contributed $8.5 billion in military support to Ukraine. The Comprehensive Partnership includes a joint declaration on defense and security co-operation. During the official visit, Carney announced new investments to support Ukraine’s defense, including $350 million for interceptor missiles for air defence.

The practical problem is that Ukraine is black hole into which money intended for defense disappears. This is a problem well known to Ukraine’s partners who, nonetheless, keep pouring money in with a blind eye to the problem. Earlier this month, following close on the heels of a U.S. $100 billion European Union loan to Ukraine, Kiev surprised the European Union with a request for an additional $27 billion to address a shortfall that was difficult to explain. The request “unsettled” European officials, some of whom privately worried “whether money is being spent efficiently or whether needs are being overstated.”

A recent New York Times investigation found that seven of Ukraine’s ten top military contractors continued to be awarded contracts after Kiev knew they were facing investigations for fraud, corruption, or failure to deliver on deals they were paid for. Eighteen companies won contracts despite defaulting on previous ones. Millions were thrown away by inexplicably, and conveniently, awarding contracts to the highest bidder. Government audits show that in one year of the war alone, Ukraine lost $1.2 billion in U.S. foreign aid to “fraud, waste and mismanagement.” Sending hundreds of millions more to Ukraine sounds great. But to whom will it go?

There is a second problem with the 100-year Comprehensive Partnership that is deeper. Carney said the Strategic Partnership is based on the two countries “aligned nature.” But there are important aspects that do not align.

Canada is a federalist country that officially recognizes more than one culture and language. The Carney administration recently walked away from negotiating a trade agreement with the United States partly in defense of its sovereign right to protect French culture, French language, and its official bilingualism. Ukraine has been locked in a civil war since 2014 to protect the opposite: a monist vision of Ukrainian society that rejects federalism and recognizes only one culture as Ukrainian while suppressing the language, culture, and religion of ethnic Russian citizens of Ukraine in Crimea, the Donbas, and the southeast. It specifically denies the pluralist alternative that is a defining feature of Canadian identity. Rather than aligning in their natures, in this essential aspect, the two countries are the antithesis of each other.

Canada has confronted this blind spot before. In 2023, Yaroslav Hunka received two standing ovations in Canada’s Parliament as “a Ukrainian Canadian war veteran from the Second World War who fought for Ukrainian independence against the Russians” and as “a Ukrainian hero and a Canadian hero,” despite having served in the 14th Waffen Grenadier Division of Adolf Hitler’s SS.

Carney insisted that “Canadians understand in our bones the importance of your struggle” and explained that the reason “there is no qualification to our commitment” to Ukraine is “because your cause—freedom, democracy, sovereignty—is our cause.”

A standing ovation from the Canadian parliament and then he also got a personal meeting with Trudeau and Zelensky.

'Waffen SS' veteran Yaroslav Hunka must feel very loved in Canada...... pic.twitter.com/5BjwrWsWtS

— Richard (@ricwe123) August 17, 2025

It may be “our cause,” but the historical record is less clear that it is their cause. Zelensky has formally banned eleven opposition parties, including the Opposition Platform for Life party that was once the second largest party in the Ukrainian parliament, though they all condemned Russia’s invasion and contributed to Russia’s defence.

He has restricted freedom of information, unifying all television sources into a single source of television news, and increased the censorship powers of the state over print and online media.

The Ukrainian Orthodox Church, Ukraine’s largest church organization, has been banned by Zelensky though Ukraine’s constitution protects freedom of religion, despite that the Primate of the UOC expressed the church’s loyalty to Ukraine and condemnation of Russia’s invasion.

Cultural and linguistic rights for minorities have fared no better than political and religious rights and freedom of expression. Pursuing the monist interpretation of Ukraine, Zelensky has gone down a path of abolishing any hint of Russian culture. Legislation has erased the Russian language, making Ukrainian the sole language of government, schools, universities, culture, publishing and media.

It is fine for Canada to “stand in solidarity with Ukraine.” But we should not be blind to Ukraine’s struggles and challenges. If Ukraine is to avoid civil war after the war with Russia and if Ukraine is to have a chance of joining the European Union and orienting toward the west, they, too, are going to have to confront these challenges.

Tyler Durden Thu, 10/01/2026 - 07:40

Tennessee Botches Execution: Inmate Still Snoring After Two Doses Of Pentobarbital, Hauled To Hospital

The State of Tennessee spent Wednesday trying to carry out a death sentence it has had on the books for thirty years, and ended the night with the condemned woman in an ambulance.

Christa Gail Pike, 50 - the only woman on Tennessee's death row - was still breathing, audibly snoring, and maintaining a heartbeat after prison staff administered two doses of pentobarbital at Nashville's Riverbend Maximum Security Institution. Media witnesses were escorted out around 8:53 p.m. local time while her snoring could still be heard. Pike was subsequently rushed to an off-site hospital, prompting Governor Bill Lee to halt all remaining executions for the year and order a third-party review.

Pike was sentenced to death in 1996 for the torture-murder of 19-year-old Colleen Slemmer, a Job Corps classmate she lured into the Knoxville woods in January 1995 at age 18 - where she bashed the girl's skull in with a chunk of asphalt after carving a pentagram into the victim's chest with a friend. Pike started showing off pieces of Slemmer's skull at school, at which point she was arrested (with a chunk of skull found in her pocket). 

Fox 17 investigative reporter Kelly Avellino posted that Pike "appeared to receive 2 doses of pentobarbital, and she was still awake 40 minutes after" before being transported. 

Unbelieveable. Officials were unable to carry out the execution of Christa Gail Pike, witnesses said, after the lethal injection was administered. Pike appeared to receive 2 doses of pentobarbital, and she was still awake 40 minutes after. Pike is now en route to the hosptial. https://t.co/oUfWXlhAsx

— Kelly Avellino (@KellyAvellino) October 1, 2026 A day that started in court and ended in an ambulance

Pike was scheduled to die at 10 a.m. She would have been the first woman executed in Tennessee in roughly 200 years, and the 19th woman executed in the United States since 1976.

That morning, the U.S. Court of Appeals for the Sixth Circuit issued a short 2-1 stay. The Tennessee attorney general immediately asked the U.S. Supreme Court to vacate it. Just before 6 p.m., the Court complied, issuing a two-sentence order devoid of reasoning. Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson dissented, with Sotomayor writing that "Tennessee's desire to expedite Pike's execution by a few days or even weeks cannot outweigh her 'fundamental interest in [her] own life.'" She added that in capital cases, an "appreciation of our own fallibility" demands caution "before acting irretrievably." With the legal roadblocks cleared, the state proceeded.

The judicial scramble followed Governor Lee's denial of clemency two days prior. On Sept. 28, he announced that after "deliberate consideration," he would uphold "the sentence of the State of Tennessee."

What the witnesses actually saw

Tennessee Lookout and the Tennessean reconstructed the chaotic scene inside the chamber using accounts from media witnesses, including reporters from WBIR, WKRN, WVLT, the Nashville Banner, and the AP:

• 6:41 p.m. Witnesses enter. Curtain closed. Groaning and crying are audible before the microphone is turned on.
• 7:26 p.m. Curtain opens. Pike, strapped to the gurney, delivers her final statement. She says she is "going to leave this world the way I spent most of my life, and that is in love," extending that love even to people "hating on her." She closes with, "I'm at peace. I'm ready to be free. This is a happy day."
• 7:34 p.m. "My arm feels like it's about to burst open," Pike says. A witness also reports hearing, "One spot is really throbbing."
• 7:39 p.m. Pike is still lifting her head, taking deep breaths, and kicking her feet hard enough to knock the sheet off.
• 7:41 p.m. An employee places a rock in view of the witnesses - the protocol's signal that the inmate appears comatose. However, Pike's jaw is still moving. Minutes later, she opens her mouth in "a very large yawn."
• 7:46 p.m. Curtain drops.
• 7:49 p.m. Curtain rises. Pike is loudly snoring. A spiritual adviser is brought back into the chamber.
• 7:54 p.m. Pike grunts, lifts her head, and opens her mouth.
• 7:56 p.m. Her body jolts off the gurney into a "V" shape, head and legs lifting simultaneously.
• 8:01 p.m. The rock is placed a second time. Pike is still breathing, snoring, and flexing her neck.
• 8:05 p.m. Curtain is closed for good.
• Until 8:53 p.m. Rhythmic snoring continues behind the curtain, punctuated by the sound of doors opening and closing. The microphone is cut, and witnesses are escorted out. As far as they know, Pike is still alive.

WKRN's Tori Gessner, a veteran of multiple Tennessee executions, told the Lookout: "Nothing about today was normal, typical at all, and the court delay was just the tip of the iceberg." Nashville Banner's Steven Hale added: "I cannot emphasize enough how much of whatever just happened, happened behind a closed curtain... When Christa Pike was still alive, we could still hear her breathing, but we could not see what was going on."

Shortly after 9 p.m., ambulances and fire trucks were seen departing Riverbend with their emergency lights activated.

The state's line, and the lawyers' line

More than two hours after the botched execution, Tennessee Department of Correction spokeswoman Dorinda Carter issued the following statement:

"The Tennessee Department of Correction followed every step of the State's lawful, established execution protocol approved by the Attorney General's Office. The lethal injection chemical in the protocol has consistently been effective, and the protocol does not allow for additional procedures beyond what was carried out this evening. Christa Pike has been transported to an off-site medical facility."

So if two rounds fail to kill the inmate, protocol dictates the execution ends and the inmate goes to a hospital.

Pike's attorneys offered the following statement:

"Tonight the State of Tennessee once again failed to carry out a lawful execution. We take no pleasure in being right, but the concerns raised by Ms. Pike proved to be true: difficult vein access, blown veins, degraded pentobarbital, no emergency medical care available when things inevitably go wrong, all under a protocol that remains veiled in secrecy."

In an emergency motion filed while Pike was still in the chamber, her defense informed the U.S. District Court for the Eastern District of Tennessee that she "has not lost consciousness and still has a heartbeat and is audibly snoring." Attorney Kelly Gleason stated Pike desperately needed immediate medical care, noting that counsel couldn't get state officials on the phone to halt the process. Judge Clifton L. Corker ultimately ruled the motion moot because the state had already informed the court that medical care was underway. Pike's current condition remains unreleased, though one of her lawyers told the BBC she was "being provided life-saving measures."

Dr. Joel Zivot, a medical expert retained by the defense, told the BBC it is "very possible that as a consequence of the delay of the beginning of resuscitation she will have a brain injury." He suggested Pike likely never absorbed a sufficient blood level of pentobarbital to stop her breathing and circulation. Notably, no independent toxicology report has been produced.

Lee hits pause

At approximately 11:16 p.m., Governor Lee halted another execution scheduled for later this year. Via the Tennessean:

"Carrying out a lawfully imposed sentence is among the State's most serious responsibilities, and the people of Tennessee expect it to be done in a manner that is not only legal and constitutional, but is effective. ... Therefore, the remaining scheduled execution will not be carried out this year."

Lee ordered a "comprehensive, third-party review" of the Pike debacle - while Gary Wayne Sutton, who was scheduled to die on Dec. 3 for the 1992 murders of Tommy Griffin and Connie Branam in Blount County - was spared for now. 

Lee had explicitly declined to halt Pike's execution. His attorney general's office spent the afternoon racing to the Supreme Court to ensure it happened Wednesday night rather than next week. The protocol the AG approved is the very same one Carter proudly claimed was followed to the letter. Whether it was "effective" is a separate question, and on Wednesday night, the undeniable answer was no.

Tyler Durden Thu, 10/01/2026 - 07:00

"Zero Hormuz": Abu Dhabi Crown Prince Readies Tens Of Billions To Turn Fujairah Into Hormuz Bypass

On March 3, just days after the first US and Israeli strikes on Iran, when most of the market was still busy pricing the closure of the Strait of Hormuz as a temporary inconvenience, we pointed out something that seemed rather obvious (to us): the UAE's oil port of Fujairah, which sits on the Gulf of Oman and bypasses the strait completely, was far too small for its strategic importance - and that would change.

Surprising Fujairah is not a bigger oil terminal: it bypasses the straits completely.

Expect major infrastructure push here after the war. https://t.co/Do1gK7KBDQ

— zerohedge (@zerohedge) March 3, 2026

Six days later we went one step further:

After this crisis, every Gulf pipeline has to end either in Yanbu or Fujairah alongside massive terminal infrastructure https://t.co/fNBywD3Wr1

— zerohedge (@zerohedge) March 9, 2026

Seven months later, the "major infrastructure push" has a name, a sponsor, and a checkbook. According to a new Bloomberg Big Take, Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed Al Nahyan - who took the helm of the emirate's $300 billion L'imad Holding sovereign fund weeks before the war began - is now the point man for what the UAE is officially calling its "Zero Hormuz" strategy (wonder if he was reading Zero Hedge at the time). And the centerpiece of that strategy is, you guessed it, Fujairah.

Follow the money (to the Gulf of Oman)

Here are the Bloomberg report highlights:

• L'imad has announced plans to take Abu Dhabi Ports Co. private at a valuation of nearly $9 billion, and people familiar say the fund is now likely to spend tens of billions of dollars more on new port infrastructure outside the strait.
• The crown prince and his inner circle are expected to be "particularly focused" on expanding ports in Fujairah, which sits just outside Hormuz and opens into the Gulf of Oman.
• In May, L'imad struck an agreement with BlackRock (via its Global Infrastructure Partners unit), Temasek and ADNOC to jointly target up to $30 billion of infrastructure investment in energy transportation, logistics and water. Abu Dhabi did not want such a large push funded solely by state money - which is a polite way of saying Larry Fink gets a toll road around Iran.
• Sheikh Khaled also chairs the executive committee of ADNOC's board, which is building a second oil pipeline to double export capacity through Fujairah; at a May meeting he directed the company to accelerate delivery.
• Meanwhile Dubai's DP World is separately pushing new container terminals in Fujairah - meaning that a relatively small stretch of coastline under the Al Hajar mountains is about to become some of the most crowded (and most valuable) real estate in the Gulf.

The UAE's trade minister Thani Al Zeyoudi summed up the doctrine back in June: the country wants to move to Zero Hormuz dependency regardless of whether the strait is open or not. Translation: even if Tehran signs a peace deal tomorrow, the leverage it enjoyed over Gulf exports for decades is never coming back.

Regular readers will recognize every step of this progression. On April 2 we noted that Gulf states were dusting off costly bypass pipeline plans; on May 15 we reported that ADNOC would double its crude export capacity bypassing Hormuz with the new pipeline to Fujairah, due in 2027; and on July 13 we wrote that DP World's plan for a new east coast port in Fujairah "signals the beginning of the end" of Iran's Hormuz leverage. That same day, as peace talks went nowhere, we also offered an alternative engineering solution:

At this rate it will be faster to dig a canal through the UAE to bypass Hormuz than to wait for a peace deal

— zerohedge (@zerohedge) July 13, 2026

Abu Dhabi, it appears, has opted for the slightly less ambitious version: pipelines plus a lot of concrete.

Goldman: 60% of Gulf exports insulated from Hormuz by 2028

So how far can this go? Goldman's commodity team (Alexandra Paulus, Yulia Grigsby, Daan Struyven and Filippo Cuscito) ran the numbers in a July note titled "Gulf Exports: Short-Term Uncertainty, Long-Term Pipeline Hedge" (available here to pro subs), and the conclusion is that while Hormuz still dictates prices in the short run, the long run looks very different. The bank estimates that enough pipeline capacity will be added in the region to insulate over 45% of pre-war Persian Gulf exports by end-2027 and more than 60% by end-2028 from any future Hormuz shock.

Some of the details:

• Goldman measures current effective bypass capacity as the flows out of Yanbu (East-West pipeline), Fujairah (ADCOP pipeline) and Ceyhan (Kirkuk-Ceyhan). In its base case, that capacity rises by 3.8mb/d by end-2027 and 7.3mb/d cumulatively by end-2028, to over 14mb/d - versus ~23mb/d of pre-war exports from the seven Gulf producers that need pipelines to dodge Hormuz.
• The UAE features prominently: the West-East pipeline (ADNOC's second line to Fujairah) is one of only two projects already under construction, while a Hamriyah-Fujairah pipeline sits in Goldman's "Accelerated Scenario" - which would insulate 75% of exports by end-2028 (vs. just over 45% in the "Conservative Scenario").
• History is on the builders' side: across Goldman's sample, the median construction time for Mideast pipelines was 2.5 years, and single-country projects get built faster, especially in response to supply disruptions. Multi-country projects (looking at you, Iraq-Syria) not so much.
• Total cost across the seven projects: roughly $30-48 billion - or, put differently, about one BlackRock/L'imad infrastructure platform.

And here is the punchline for oil bulls: Goldman raised its long-dated Brent assumption (3-year-ahead futures) by $9 to $76/bbl at the peak of the war, mostly on a higher structural security premium. But the bank warns that the eventual expansion of bypass capacity poses downside risk to that long-dated assumption. In other words, every barrel that Sheikh Khaled routes to Fujairah is a barrel of risk premium Iran can no longer charge the world.

The plumbing is already working

The "adaptation" is already visible in the export data. As we reported earlier today, Goldman estimates that Persian Gulf oil exports (including "dark exports") recovered to 23.3mb/d over the past week, in line with their 2025 average, after doubling in September. Crude accounted for nearly 90% of the recovery, reaching 19mb/d (108% of the 2025 average), while refined product exports remain stuck at about half of normal. Crucially for this story, Goldman notes that oil exports from the UAE - which shockingly exited OPEC shortly after the Iran war started - are also above their 2025 average, "with likely further upside" - while Iran shipped no crude by sea at all in September.

Drill down and Fujairah is doing a lot of the heavy lifting: Goldman's late-September breakdown puts flows via Fujairah at 3.6mb/d (crude, products and LPG combined), more than Yanbu's 2.6mb/d, and more than double the ~1.7mb/d Fujairah handled before the war.

Source: Goldman

And by country, the UAE is already running at 110% of its 2025 export average - second only to Saudi Arabia's dark-transit-fueled surge - while Iran sits at 19%.

Source: Goldman

The UAE in particular has been the most creative workaround artist of the war: as we noted in July, its crude output hit an all-time high of 4.1mb/d in June after it quit OPEC, with ADNOC selling cargoes for loading off Fujairah and Sohar, outside the strait. Back in March, we reported that Fujairah crude loadings had already hit ~1.9mb/d - about the max the existing 1.5-1.8mb/d Habshan-Fujairah line can carry. The only real constraint was pipe. Which is exactly what Abu Dhabi is now paying to fix.

Bypassing the strait is not the same as bypassing the drones

None of this makes Fujairah safe. It is roughly 80 miles from Hormuz and well within range of Iranian drones and short-range missiles - a point LSE professor Steffen Hertog makes in the Bloomberg piece. Tehran knows exactly what Fujairah represents: the port was in flames on March 14, was attacked at least seven times in the first four weeks of the war, and on March 31 Iran explicitly threatened to target the port and its pipeline "in order to close the UAE's route to bypass the Strait of Hormuz." On May 4, another Iranian strike on Fujairah's oil zone sent Brent above $114.

Saudi Arabia offers the cautionary tale. Its 7mb/d East-West pipeline to Yanbu - the region's single biggest Hormuz bypass - was shut down on September 11 after drone attacks by pro-Iran militias, before restarting on September 28. Goldman's September 14 Oil Tracker pointed out that an April strike on the same pipeline cut flows by just 0.7mb/d for four days, while the latest attack was far more severe and threatened the remaining ~2mb/d of Yanbu exports. The Saudis promptly pivoted back to shipping through... Hormuz. Meanwhile the Houthis are advancing on Bab el-Mandeb, threatening the other end of the Red Sea route.

Which brings us to Treasury Secretary Bessent, who predicted on September 1 that in two years Hormuz will be "a worthless piece of water." Qatar's energy minister promptly called that "completely wrong" - which is easy to understand when you are Qatar, have no geographic alternative route, and have watched your gas revenue drop sharply. The truth is somewhere in between: Hormuz won't be worthless, but if Goldman's math is right it will be worth a lot less to Iran - and a lot more to whoever owns the ports on the other side of the mountains.

As Chatham House's Sanam Vakil puts it, a "No Hormuz" policy is now of utmost importance for the UAE - but with Iran's proxies extending their reach, Abu Dhabi will also have to prepare for infrastructure targeting outside Hormuz too. Expect the next line item in the L'imad budget to be air defense.

For now, the bottom line is the one we flagged on day four of the war: the Gulf's most important real estate is no longer inside the strait, it's on the Gulf of Oman - and the crown prince of Abu Dhabi has just put tens of billions of dollars (and BlackRock's money) behind that view.

Tyler Durden Thu, 10/01/2026 - 06:35

A Lone Voice Of Sanity On NATO's Eastern Flank Emerges

There are a few sane voices left in the EU and NATO when it comes to urging an immediate de-escalation of rhetoric regarding Russia. Still, it's a refreshing surprise when dovish sentiment comes from a country forming part of NATO's eastern flank in particular.

"We always need to think about the worst-case scenario," Bulgarian Prime Minister Rumen Radev has told a European defense summit while warning that seeking to impose total defeat on Russia poses real risks of nuclear war.

Radev instead urged robust diplomacy to avert such a catastrophe. "The problem is that no one is raising the question about nuclear risk. Does it exist? Maybe not, I don't know, but this is a risk," he stated in remarks published Wednesday.

"I don't think the war in Ukraine will end in a nuclear war but we have to be prepared for the risk."

"We always need to think about the worst-case scenario. Are we prepared for this? Does anybody speak about risk assessment? Does it exist at all? Because we have been trying to achieve a conventional victory over the biggest nuclear power."

He acknowledged that "there is a nuclear card" which Russia would be more likely to play if it perceived itself cornered.

"We need to have this into account. We cannot close our eyes (to the fact) that there are nuclear weapons on our continent, there are nuclear weapons in the arsenal of Russia."

The Bulgarian prime minister emphasized, "And this is part of the game calculation." What has he gotten for his sensible calls for walking back tensions with Moscow? Western mainstream media has consistently labeled him "Kremlin-friendly".

Radev still made clear in this week's comments that he rejected "this type of speaking" [nuclear rhetoric] from the Kremlin, referring to the recent example of Russian Foreign Minister Sergey Lavrov, who warned earlier this month that a war between Russia and Europe would be "completely different" and "very short".

The words were widely seen as a veiled threat of deploying strategic forces against Europe.

Early this week NATO leadership called out what it slammed as 'desperate' rhetoric on the part of the Kremlin, also at a moment of growing accusations from European officials that Moscow is engaged in sabotage against EU interests and assets.

"Russia’s use of hybrid tactics is a sign of desperation. But we will not be dissuaded from our support to Ukraine," NATO spokesperson Allison Hart said Tuesday, adding that "we [NATO] have what it takes to defend every inch of allied territory and remain strong, ready, and able to counter any threat."

"NATO is a defensive alliance and none of our activities or exercises pose a risk to any part of Russia," she reiterated. "We strongly denounce the threat of force, including any irresponsible nuclear rhetoric." Hart added: "We call on Russia to end its unprovoked war in Ukraine."

Finally some serious questioning of the narrative: Where is the proof that the 'Russians are coming' - or are on the brink of some kind of invasion of European states?

Now that everyone’s admitting there was never an imminent Russian attack on Europe, the question is: who spread the rumors & what purposes did they serve. Because we keep getting these fake invasion panics, coupled with reminders about how many got Russia’s 2022 invasion wrong. https://t.co/uHAjy4bcM0

— Mark Ames (@MarkAmesExiled) September 30, 2026

As for other tiny handful of EU countries which have been voices of sanity which call for dialogue with Russia, this has included: 

• Slovakia
• Austria
• Czech Republic
• and Hungary (or at least, while it was previously under Viktor Orban)

Meanwhile, on Wednesday a new alarming headline has emerged connected with the Ukraine war: Russian Foreign Ministry spokesperson says European weapons factories producing arms for Ukraine are legitimate military targets for Russia. Things look to grow a lot hotter before they cool off.

Tyler Durden Thu, 10/01/2026 - 06:30

Central Banks Cannot Fix The Sovereign Debt Bubble

Authored by Daniel Lacalle via dlacalle.com,

Global investors spend a great deal of time worrying about an alleged artificial intelligence bubble. However, they should pay more attention to the government debt bubble. The most dangerous assumption is that governments can keep borrowing and making promises because central banks will always step in, disguising fiscal irresponsibility with quantitative easing programs. Many market participants hail debt accumulation and expanding government size in the economy because they believe it will create asset inflation forever. However, encouraging malinvestment and complacency is a poor long-term strategy.

Furthermore, buying government bonds does not create the wealth needed to pay for those promises. Many pension funds and Keynesian market participants are discovering that supporting constant government expansion is not profitable. The massive losses in some complacent bond portfolios show the mistake. The Bloomberg Global Aggregate Index remains significantly underwater from its early 2021 peak, sitting at an overall net decline of approximately 16% as of September 25, 2026. Smart bond investors have steered away from duration and government debt, concentrating their strategies on credit, low duration, and private debt.

Public debt is like a massive iceberg. The bonds that have already been issued are the visible part of the iceberg. However, the 94% global public debt to GDP only tells a small part of the story. Below the surface are unfinanced commitments to pensions, healthcare, and other spending that have no adequate funding and add up to 300% of GDP. Looking only at outstanding debt provides us an incomplete picture of what taxpayers may eventually have to finance. Even worse, it gives a wrong view of government solvency.

The IMF projects global public debt will reach 100% of GDP by 2029, with the increase driven by major economies. Thus, this problem extends well beyond the emerging markets usually associated with debt crises.

The United States provides a clear example. Treasury's fiscal 2025 financial report puts federal debt held by the public at 99% of GDP and separately reports approximately $88.4 trillion in projected social insurance funding shortfalls, measured in present-value terms over 75 years.

That figure measures the gap between projected benefit payments and dedicated revenues, discounted into today's dollars, and depends on assumptions about future conditions. Nonetheless, these are spending promises that require financing or changes to the rules.

The pressure will become harder to manage if governments continue postponing spending cuts and structural reforms. Rising demands for social spending and defense added to increasing interest burdens make the situation worse. Every government may consider all its spending plans essential, but calling them essential does not make them affordable.

The political incentives are evident. Politicians can announce benefits today and leave future taxpayers to cover the cost. As populism takes over, promises become larger and solvency weakens.

Cutting spending attracts opposition immediately, whereas borrowing seems to be hailed and postpones the argument. However, refusing to choose between competing priorities does not remove the cost. The bill is passed to someone else and under worse conditions.

Central banks can make borrowing easier and help governments disguise the problem for a while. Lower interest costs can provide some relief. However, governments use that relief to increase spending instead of repairing their finances. Thus, the underlying problem keeps growing.

Quantitative easing may calm markets and reduce risk premiums for a while. However, central banks do not print solvency, and bond purchases do not make permanent overspending sustainable.

Furthermore, QE does not make the public sector's obligations disappear. When a central bank buys long-term government bonds using interest-bearing bank reserves, it effectively replaces longer-term borrowing with liabilities whose cost moves with overnight interest rates, according to the Bank For International Settlements. Viewed together, the government and central bank become more exposed to increases in short-term rates, not less. Once we understand this situation, we also see why inflation is rising. Central banks and governments are eroding the purchasing power of the currency by issuing too much money-debt compared to the private sector demand. Additionally, higher taxes constantly weaken the private sector. All this combined leads to stagnation and persistent inflation.

Consider a simple example. A government saves one percentage point of GDP in interest costs but increases its deficit before interest payments by the same percentage point. Additional overspending has more than absorbed the cheaper financing. Thus, a monetary intervention in the bond market coexists with a worsening fiscal position.

Governments have grown accustomed to the idea that they can spend more during growth periods and even more during recessions. As such, the placebo effect of central bank intervention lasts less every time.

There is also a problem with incentives. If politicians expect the central bank to intervene whenever borrowing becomes uncomfortable, they will never make difficult spending decisions. Each bailout can buy time, but time is useful only if governments use it to change course. Governments use easing periods to announce even more spending and pretend that their policies work.

Financial repression is also shifting the burden while impoverishing citizens. Governments can steer savings towards public debt, but they keep returns below inflation, reducing the real value of what they owe.

The sad truth is that no government is going to provide savers a real economic return when investing in their debt. It is a real and many times nominal loss.

Savers and taxpayers pay through lost purchasing power. As governments then use the savings to finance more deficits, citizens suffer without gaining healthier public finances. Taking purchasing power from savers does not make debt affordable; it makes everyone poorer.

Ignoring the problem and delaying spending cuts also makes the adjustment harder. Treasury estimates that delaying fiscal reform until 2036 would increase the average adjustment needed from 4.7% to 5.6% of GDP. Waiting for the next central-bank intervention is therefore a comfortable but costly political choice.

The solution comes from cutting spending and reforming committed programs before a crisis forces abrupt changes. Stronger productivity, private investment, and competition must also be part of the answer. Governments cannot keep weakening the productive economy with ever-increasing taxes while expecting it to finance ever-larger promises.

Central banks cannot fix the sovereign debt bubble. The short-term placebo effect fades away faster every time, regardless of the size of the purchase plan. QE and financial repression did not buy time, because governments did nothing and left the underlying problem unresolved. Citizens are paying for the same irresponsibility through inflation, weaker growth, lower real net wages, and higher taxes. The absence of a bond-market crisis today does not mean the problem has disappeared; it is just eroding the productive economy through crowding out and financial repression.

The next time you hear a politician promising free stuff, remember that you will pay for it many times over.

Tyler Durden Thu, 10/01/2026 - 06:00

Russia Extends Diesel Export Ban Through Oct. 31

Authored by Tsvetana Paraskova via OilPrice.com,

Russia's government on Wednesday extended the ban on exports of diesel, marine fuel, and gasoil for all fuel producers by October 31, which effectively extends the period in which the tightening global market will have to cope without Russian diesel shipments for another month.

The government took the decision to extend the ban, which has been in place since the summer, "to maintain a stable situation on the domestic fuel market, including to meet higher demand for fuel during the harvest season."

Russia has been extending the ban on diesel and other fuel exports by one month for months as Ukrainian attacks on Russian refineries are crippling domestic fuel production.

Ukraine continues its campaign to cripple Russian refining capacity, fuel supply, and export revenues.

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

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

Before the ban on exports, Russia's diesel shipments accounted for about 10% of global seaborne diesel supply.

The disappearance of Russian diesel added to the slow and uneven exit of fuel cargoes out of the Strait of Hormuz and reduced refinery operations in the Middle East following several Iranian strikes at Gulf refineries at the start of the war.

"We have 7 million barrels a day of refineries down in Asia and the Middle East and another 1.4 million barrels down in Russia. And the refineries, depending on the damage and the ability to get spare parts, are going to take a good long time to get back online," Brian Mandell, Executive Vice President of Marketing & Commercial at Phillips 66, said on the Q2 earnings call in early August.

The limited supply from Russia and the Middle East has sent retail diesel prices to record highs, including in the United States, where the average price of diesel is $6.41 per gallon as of September 30.

By Tsvetana Paraskova for Oilprice.com

Tyler Durden Thu, 10/01/2026 - 05:00

16 U.S. Trucking Companies File For Bankruptcy In Less Than A Month As Diesel Prices Soar

Diesel prices have exploded over the past month, creating another major cost shock for an industry that was already operating on thin margins. The national average climbed from roughly $5.60 per gallon at the end of August to a record $6.53 in late September, an increase of about 17% in just a few weeks. Prices have eased slightly from that peak, but the EIA’s latest weekly reading still puts diesel at $6.38 per gallon, compared with $5.60 at the end of August.

Now the financial damage is beginning to show up. Sixteen American trucking companies have entered bankruptcy proceedings in less than a month, affecting more than 250 jobs, according to FreightWaves and the Independent. Eight filed for Chapter 11 bankruptcy, allowing them to continue operating while restructuring their debts, while seven entered Chapter 7 and are liquidating their assets and shutting down.

Among the larger companies seeking Chapter 11 protection are Xoco Transport and Globemaster. Neither specified the cause of its financial problems in federal court filings, and diesel is hardly the industry's only problem. Carriers have also been grappling with rising labor, insurance, maintenance and regulatory costs, while seasonal slowdowns can leave them without enough revenue to absorb those increases.

But the sudden surge in fuel costs adds another layer of pressure because trucking companies have limited options when diesel jumps this quickly. They can absorb the expense and sacrifice margins, pass it through with higher freight rates and risk losing business, or cut workers and equipment. The latter can keep a company alive temporarily, but it also reduces shipping capacity and the amount of revenue the carrier can generate.

And for now, there is little reason to consider the diesel problem resolved. Prices remain near historic highs and are still heavily tied to the war with Iran and the resulting disruption to global energy supplies.

Even as crude shipments through the Strait of Hormuz have begun recovering, refined-product flows remain constrained, inventories have been depleted and damaged Middle Eastern refining infrastructure continues to limit supply. Until those disruptions ease materially, diesel remains another major transmission mechanism through which the Iran war is feeding directly into the U.S. economy.

Tyler Durden Thu, 10/01/2026 - 04:15

'Sensitive Security Situation': Israeli Army Chief Abruptly Cancels Trip To US

Via The Cradle

The Israel military's Chief of Staff Eyal Zamir has canceled a planned trip to the US due to a "sensitive security situation," Israeli news outlet i24 reported on 30 September. 

There is "increased alertness" in the army, said i24 military analyst Yossi Yehoshua. "The decision to cancel the trip was made by the military's top echelon even before Prime Minister Benjamin Netanyahu's statements yesterday regarding threats to Israel," the report added. 

Image source: IDF

A senior Israeli army source told i24, "You can't put the military on alert and fly abroad."

Zamir was scheduled to hold multiple meetings with the commander of US Central Command (CENTCOM). 

"The talks were intended to deal with joint security coordination and preparations for developments in the region. Nevertheless, the state of high alert declared in the operational units of the [military], alongside the need for close management of readiness on the ground, determined that at this time the chief of staff must remain in Israel," the outlet wrote. 

A FlyDubai jet headed from Dubai to Tel Aviv landed in Saudi Arabia on Wednesday after the Emirati pilot was attacked by his Omani copilot – reportedly in an effort to crash the plane. 

Opposition figures in Israel accuse Netanyahu of exaggerating a routine security warning weeks before the election to shift attention toward national security.

Security officials reportedly questioned the public warning and said there was no concrete intelligence linking an… pic.twitter.com/w2Bpn6r9nu

— Clash Report (@clashreport) September 30, 2026

Hebrew media reports say Tel Aviv is suspecting it was an "attempted terror attack."

One day before the incident took place, Israeli Prime Minister Benjamin Netanyahu held a security establishment assessment and talks with opposition leader Yair Lapid over an alleged, pre-Israeli election "security threat" that the premier had announced earlier on Tuesday. 

"There are signs our enemies will try to attack us ahead of election," Netanyahu had announced on Tuesday.

"Don’t mess with us, not now and not ever. Our long arm will reach you anywhere and at any time," he added.

Netanyahu’s threats coincide with a US military buildup of around 50,000 troops deployed across West Asia. 

🇮🇱 Israeli PM Netanyahu secretly met UAE President Mohamed bin Zayed on Sunday and asked him to deny that he warned Netanyahu of a major Hamas attack days before October 7, a source with firsthand knowledge told Haaretz.

Haaretz reported this month that bin Zayed spent 45… https://t.co/gNUKMe5e3O pic.twitter.com/aX64iYiEc8

— Drop Site (@DropSiteNews) September 28, 2026

Reports have said that US President Donald Trump plans to renew bombardment of the Islamic Republic after mid-term elections.

Tyler Durden Thu, 10/01/2026 - 03:30

Taiwan Plans $930 Million Sea Drone Buildout As China Expands Maritime Pressure

Taiwan is moving quickly to build a large fleet of unmanned vessels as it looks for cheaper, scalable ways to complicate any Chinese attempt to blockade or cross the Taiwan Strait, according to Nikkei Asia.

The emerging strategy combines something Taiwan already does well, building ships and sophisticated electronics, with American expertise in autonomous systems, artificial intelligence and military command networks.

The potential scale is significant. Taiwan’s navy is considering roughly 1,320 small attack drones for the water, with spending estimated at about NT$29.6 billion, or $930 million. The Coast Guard is pursuing unmanned vessels as well, creating what could become a meaningful new domestic market for maritime defense technology.

Taiwan does not need to build the industry from scratch. It already has shipyards capable of designing and producing the physical platforms, along with a deep electronics manufacturing ecosystem. What it needs are many of the technologies that turn an unmanned boat into an effective military system: secure communications, autonomous navigation, sensors, AI, command-and-control software and the ability to coordinate large numbers of vessels simultaneously.

Photos: Nikkei Asia

That is where U.S. defense technology companies are increasingly entering the picture. CSBC, Taiwan’s government-backed shipbuilder, recently partnered with Rhode Island-based Havoc to develop autonomous surface vessels using Taiwanese manufacturing and American autonomy technology. Saronic, Anduril, MARTAC, VATN Systems, Albacore, Shield AI and Auterion have also established relationships with Taiwanese organizations, including the government-owned National Chung-Shan Institute of Science and Technology.

Havoc CEO Paul Lwin described the model simply: “American autonomy software, Taiwan-built platforms, Taiwan workforce.”

Nikkei Asia writes that domestic companies are positioning themselves for the spending wave. CSBC has developed its Endeavor Manta unmanned boat and says it has capacity to manufacture about 40 annually. Established shipbuilders Jong Shyn and Lungteh are competing for contracts, while companies better known for drones and semiconductors, including Thunder Tiger and Myson Century, are moving into unmanned maritime systems.

The attraction is partly economic. Instead of attempting to match China ship for ship, Taiwan could deploy large numbers of smaller and cheaper autonomous platforms capable of surveillance, targeting, protecting undersea infrastructure and, in some cases, carrying weapons. The war in Ukraine has provided a real-world demonstration of how unmanned systems can impose substantial costs on a conventionally superior military.

But producing thousands of drone boats is only part of the equation. They must continue communicating, navigating and coordinating in a contested environment where satellites, communications infrastructure and command centers could themselves become targets.

“The key gaps are resilient communications, AI-enabled autonomy and C2, and multi-vessel coordination,” said Cathy Fang of Taiwan’s Research Institute for Democracy, Society and Emerging Technology.

That technological gap helps explain why the growing U.S.-Taiwan partnerships matter. Taiwan can supply the shipyards, electronics manufacturing and eventually the production scale, while American defense technology firms provide much of the software and autonomy layer.

If the navy ultimately proceeds with its proposed 1,320-vessel program, the result could be more than another Taiwanese weapons purchase. It could provide the anchor customer needed to establish an entirely new domestic defense industry built around producing autonomous vessels in large numbers, with Taiwan manufacturing the hardware and U.S. companies supplying much of the technological nervous system.

Tyler Durden Thu, 10/01/2026 - 02:45

The Disastrous UK Disability Signal That Corroborates The US Data!

Authored by Ed Dowd: Beyond the Narrative via Substack,

The Disability Signal Across the Atlantic

On August 11 I wrote US Disabilities Hit an All-Time High of 37 Million In July: UP 23% Since Feb 2021. The BLS Current Population Survey printed 37,029,000 Americans 16 and over reporting a disability. That is seven million more people since February 2021, a 3-to-4 sigma break from the pre-2020 plateau that has not mean-reverted.

The inflection is February 2021 with the Covid vaccine rollout not in 2020 when Covid was at its most virulent strain. Alternative explanations fail the timing and the magnitude test. The UK PIP system corroborates that US survey signal with something the American series cannot give you: medically assessed new claims broken down by body system and underlying cause.

If you want to know whether that US survey signal is real, stop arguing about survey design and look at an administrative system that actually diagnoses people.

Go back to the UK Disabilities (PIP) Project we published at Phinance Technologies. The page is still up...use it. It was built so researchers, doctors, and ordinary citizens could see the same thing we saw in 2023. You can look at total body system new claims or by underlying cause new claims (best viewed on desktop) within a body system. You can pick absolute new claims, excess new claims, percent excess new claims and excess new claims z score. We also break it out by monthly and yearly data. Finally you can sort it by age group as well. Play with data and be horrified like we were in 2023. Interactive charts...all done by Phinance Technologies for free.

PIP is not the protagonist from Charles Dickens's novel Great Expectations. It is the UK's main working-age disability benefit officially known as the Personal Independence Pension program by the UK Department of Work. Claims are medically assessed. Decisions, "clearances," as noted above are coded by body system and then by underlying cause. The positive award rate has been stable at around 40 percent, so you are not looking at a sudden collapse in standards. You are looking at more people presenting with more illness...new claims, not just the stock of existing claimants, sorted monthly or yearly and by age band versus a 2016-2019 trend.

That is the advantage over the US survey. The BLS series tells you that disability exploded after early 2021 with the vaccine rollout and not in 2020 with the virus. PIP tells you where in the body it exploded, and it lets you watch the timing against the vaccine rollout curve on the same chart.

Two Body Systems Make the Point

Hematological (blood) disorders went off the rails. New excess clearances rose about 217 percent in 2021 and then 522 percent in 2022 while 2023 declined but still at an absurd 374 percent above trend. Over 300 percent above trend two years running. When looking at new claims on a monthly basis Hematology jumped early and hard almost coincident with the first doses. That is a regime change in medically assessed claims. I have posted those charts more than once on X in 2023. Something broke and the administrative system recorded it at a scale that alone should have produced a public-health investigation...it did not.

Musculoskeletal claims tell a different, equally inconvenient story. Monthly clearances sat near a "normal" 10,000 through 2020 and early 2021. Then, around September 2021, they jumped and stayed elevated above 18,000 a month. The rise did not arrive with the first lockdowns or the first COVID wave. It arrived after the mass rollout and into the booster period. Inflammation, joint and soft-tissue disease, the conditions that take people out of work and onto daily-living and mobility awards. The timing is not subtle.

Those two systems are not the whole file. Cardiovascular and neurological claims rose. Breast-cancer clearances showed large excesses in 2022 and 2023 with high z-scores. Different latencies, same calendar: the break is 2021, not 2020. That is why the UK file is useful. It is not one blob called "disability." It is a set of body systems with different clocks, all accelerating after the intervention that was supposed to end the emergency.

People will say PIP is being gamed by fraud. Look at the body-system split before you buy that. A fraud wave does not preferentially light up hematology in early 2021 and musculoskeletal in late 2021 while neurological claims print 20 plus-sigma years. An awareness campaign does not move breast-cancer clearances. Two independent disability systems, two countries, both detecting the same inflection period in 2021.

The fiscal piece is already visible in Britain. Claimant counts have roughly doubled since 2019. Psychiatric disorders are now the largest single category. Spending is on a path that forces politicians to talk about "sustainability" and tighter points tests instead of asking why so many working-age bodies failed in the same window. The US version of that conversation is coming. A permanently larger disabled share of the 16-plus US population is lower labor force participation, higher absence, higher insurance cost, and more pressure on SSDI and Medicaid. You can ignore a chart. You cannot ignore the payroll.

Bottom Line

I am not a clinician. We said that on the site in 2023 and asked doctors to explain the findings...mostly crickets. The charts are still there. Pick a body system. Pick an age band. Look at the cumulative dose curve. Watch across the many body systems how in 2020 they stay close to trend and then in 2021 they leave the trend. That is the instruction. The US disability series tells you that the population got sicker after February 2021 in the US. The UK PIP file tells you which systems broke and when.

Together they are the corroborating signal no one in official public health circles wants you to see.

The great cover up continues into 2026 and the damage is slowly compounding.

Tyler Durden Thu, 10/01/2026 - 02:00

Brazil Election Polls Too Close To Call, But Polymarket Gives Bolsonaro Clear Lead

Brazil's presidential race is entering the final stretch ahead of Sunday's first-round vote. 

HSBC strategists led by Nicole Inui wrote in a note that the latest polls show socialist President Luiz Inácio Lula da Silva slightly ahead of right-wing Senator Flávio Bolsonaro, though the race remains neck and neck.

Both candidates remain statistically tied. If no candidate wins more than 50% of valid votes, the two will face a runoff on October 25.

Lula (Left); Bolsonaro (Right)

"Brazil's presidential elections are entering their final stretch with first round elections to be held Sunday, 4 Oct. If no candidate wins more than half of the valid vote, a run-off will be held on 25 Oct," Inui wrote in the note. 

Inui continued, "If no candidate wins more than half of the valid vote , a run-off will be held on 25 Oct. First-round election results could be a major market-moving event, we think. The key variable is the margin between the leading candidates. Latest polls point to a tight margin of 5ppts between current president Lula da Silva (PT) vs. Senator Flávio Bolsonaro. 

"A narrower lead for President Lula or stronger performance by third-party candidates could add to policy change expectations, which could support risk-on sentiment. However, history suggests some caution: since 1989, every first-round winner has secured the presidency in the run-off of elections," the analyst said. 

However, Polymarket bettors see a clearer favorite, giving Bolsonaro a 60% chance of winning, compared with 39% for Lula.

Here's more from HSBC analysts on market impacts: 

What to look out for:

Brazil heads to the polls on 4 October, with a second round scheduled for 25 October if no candidate wins more than 50% of valid votes. Recent polling is pointing towards a highly competitive presidential race, with neither candidate expected to garner enough votes to win in the first round. Since 1989, all but one went to a second round. Leading candidates received between c42-c53% in the first-round vote and all went on to eventually win. In other words, first round winners prevailed and they won the first round by c42%-49%. In the last election cycle, the margin of victory was the tightest in recent history at 1.8ppts (50.9% for Lula vs 49.1% for Bolsonaro), with Lula's vote share only increasing by 2.5ppts between rounds, compared with c9-15ppts for winners in previous five runoffs. This is a useful benchmark for a highly polarized election, we think, especially considering there are no relevant left-wing candidates besides Lula in the first round.

Initial upside, not necessarily sustained

In the first trading session following the 2022 first round election, the IBOV surged 5.5%, while real strengthened against the dollar. In the 2022 elections, privatization hopes drove the largest immediate gains in SOEs at the time (Copasa, Sabesp, Cemig), and interest rate futures immediately fell, with consumer discretionary accounting for 50% of the top 10 performers. The move likely was attributed to Bolsonaro’s stronger-than-expected (vs polls) first round results and the composition of the incoming Congress, which together reduced the policy risk premium investors had considered before the vote. However, the Ibovespa came down from its highs leading up to the second round, declining 1.4% from the close after the first round, but still 4.1% above pre-first-round level. The BRL and iShares MSCI Brazil ETF (EWZ Index) followed a similar pattern, but the EWZ saw greater appreciation from 1 September 2022 than the Ibovespa around the run-off. Leading up to the run-off, reduced perceived risks of government intervention continued to support utilities and energy, which retained gains, while consumer discretionary's initial rally faded as interest rate futures rose again.

A similar story could occur for 2026. An outsized reaction could occur immediately after 4 October if investors mark down the perceived fiscal/policy-risk premium based on a tight first round outcome, like what occurred in 2022, but would not necessarily extend into a three week straight rally. Subsequent price action would depend on polling, endorsements, campaign economic proposals, the congressional result, and the long end of the Brazilian rates curve. We believe a first round result associated with lower long-term fiscal risk would likely produce a broader domestic risk-on trade, with SOEs, domestic cyclicals, and bond proxies potentially experiencing the most upside. If first round results are tighter than in the prior elections, equity markets could react positively on expectations of fiscal consolidation ahead.

And post-election results? We see asymmetric returns for equity markets

We expect an initial knee-jerk reaction following the run-off as markets reassess the likelihood of fiscal consolidation under the incoming administration. A result that increases confidence in a more credible fiscal path could drive a relatively rapid rerating through lower-end yields, tighter risk premia, and stronger performance in domestic cyclicals and bond proxies where valuations are sensitive to fiscal and rate outlooks. Conversely, a result that reduces expectations for fiscal consolidation could trigger an initial derating, but we see some valuation support limiting the downside in parts of the market. Many election sensitive names including Petrobras are already trading close to historical trough valuations on an EV/EBITDA basis, leaving less room for further multiple compression Petrobras, 16 Aug. And Banco do Brasil is trading at a P/B of 0.7x and a 69% discount to Itau, close to a historic high, Brazilian Financials, 14 Sept.

Given the close race, we would emphasize segments that can participate in a relief rally without requiring an aggressive risk stance. Lower-beta yield names and selected bond proxies appear better placed to capture upside from lower long-end rates while offering more resilience if the market reaction is short lived. Politically exposed names and higher beta domestic cyclicals could outperform in a market-friendly scenario, but they would also be more sensitive to any reversal in fiscal expectations.

Polls suggest the race remains too close to call, while Polymarket odds point to Bolsonaro as the favorite.

Tyler Durden Wed, 09/30/2026 - 23:55