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Trump Signs Sweeping Russia Sanctions Bill Into Law, Shrugging Off Kremlin

Update(1837ET): That was fast, and on what's ended up being a busy late Friday afternoon at the White House - President Trump has signed the Russia sanctions bill into law, according to the White House.

"The new law, the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, lets the president impose tariffs of up to 100% on the five largest purchasers of Russian oil and natural gas," CBS writes. "It also sanctions Russian President Vladimir Putin, who started Russia's war with Ukraine, as well as his government officials, oligarchs and Russian banks and financial institutions."

The Kremlin loudly warned this week that this puts the possibility of Russia-Ukraine peace further away than ever.

*  *  *

Back in 2025 we noted the strong condemnations from Russia and China when the US Army first announced and deployed the Typhon missile system to Japan, controversially under the initial guise of holding joint drills.

Stars and Stripes also underscored at the time that the Typhon was deployed to a US Intermediate Nuclear Forces (INF) Marine Corps Air Station Iwakuni, about 25 miles southeast of Hiroshima, which puts mainland China and parts of eastern Russia in range of the system.

Russia this week is formally demanding that Japan remove the Typhon systems, according to a new statement by the Russian Foreign Ministry. This comes after another deployment and use in recent joint Japan, Australia and American forces drills.

via US Army

Spokesperson Maria Zakharova blasted the US deployment as 'unacceptable' and called on Tokyo to immediately reverse its decision and take steps toward de-escalation.

"On September 3, a protest note was delivered to the Japanese side in Moscow and Tokyo over the deployment on Kyushu of US Typhon ground-based systems designed to launch intermediate-and shorter-range missiles," the diplomat said in the statement..

"The document specifically noted that Tokyo had once again taken this step despite repeated demarches by the Russian side explaining our concerns about threats to national security, regional peace and stability arising from the deployment of this type of weapon on the Japanese archipelago," she described.

"We stressed that Japan's deployment of these systems on its territory is unacceptable under any pretext, regardless of the duration or manner of that deployment," the Foreign Ministry spokeswoman said further. "The Japanese side was urged to end this practice and remove the aforementioned systems from its territory."

The Typhon, also known as Mid-Range Capability, is a land-based missile launcher that can fire nuclear-capable Tomahawk missiles, which have a range exceeding 1,000 miles, and SM-6 missiles, which can hit targets up to 290 miles away.

The missile system would have been banned under the Intermediate Nuclear Forces (INF) Treaty, a treaty with Russia that the US withdrew from in 2019.

Putin on Japan:

We are not threatening Japan. We have absolutely no claims against it.

On the contrary, Japan has territorial claims against our country. I mean the problem of the Kuril Islands. pic.twitter.com/Y8a3A2SOXF

— Clash Report (@clashreport) August 12, 2026

What makes this standoff over the weapon system more dangerous is that Russia over a year ago announced that it too is no longer bound by a self-imposed moratorium on the deployment of missile systems that were previously banned by the INF Treaty. The Japan case may provide Moscow with another excuse to ramp up its own border area deployments of mid-range missiles.

Tyler Durden Fri, 09/18/2026 - 18:37

No Benefits: Why Most Americans Hate The Idea Of AI Data Centers

Authored by Brandon Smith via Alt-Market.us

In recent months I’ve been asked by numerous readers to give my take on the AI data center issue and the debate it has ignited across the US. In response, I’ve jumped into a steep learning curve, but it seems to parallel information I’ve covered in previous articles on AI.

From what I can tell, both political parties are split on the data center debate. There are Democrats and Republicans on both sides of the divide, though their reasons for opposing or supporting the centers are not necessarily the same.

It’s clear that the Trump Administration has given its seal of approval on the concept and this has spurred many on the left to mindlessly attack it by default. Some conservatives support the centers simply because leftists complain about them. It’s important to move past the partisanship on this issue to get to the facts. According to polls, around 70% of Americans oppose new data centers in their communities, but why?

We might call it “infrastructure”, which sounds very important, but it’s clear that the reason for all the public apprehension about data centers is because no one has outlined any tangible benefits for the economy or society at large. Corporations and technocrats wax philosophical about a Utopian future, but this kind of rhetoric is rightly treated with suspicion.

People want to know, what is the actual point of building so many of these facilities? I’ll try to break it down in basic terms…

What Do Data Centers Actually Do?

The vast majority of new data centers (the recently approved facilities and those still in development) are server farms focused primarily on AI training or AI “inference”. The more controversial greenfield mega-campuses are disproportionately used for the training of “frontier AI models”. These models run trillions of parameters and eat up significant power, operating full tilt 24/7 until the AI is deemed ready for inference.

Once one model is finished with training, another model is immediately started. To put it simply, imagine that each of these data centers is an assembly line factory and each factory builds AI products. They are products which most people view as intangible and ethereal rather than practical.

We can see and use cars, we can see and use televisions and refrigerators, we can see the workers on the factory floor and we can see the jobs these products create. Not so much with AI and data centers, and this is one of the problems with trying to convince the public that such operations are necessary for the future well-being of the country.

In some cases AI training facilities convert partially or fully to inference operations. Meaning they handle the day-to-day functions of existing AI. So, every time you ask Chat GPT a question, or ask it to create an image for you, or ask it to make a ridiculous uncanny valley video for you, that request is processed by a data center somewhere (I used AI to make an image for this very article – It’s a tool, like any other tool).

This uses up electricity from the grid. Sometimes it uses a lot of electricity from the grid depending on what you are doing and how many millions of people are doing the same thing at any given moment.

If this all seems highly centralized, that’s because it is. There’s very little privacy in terms of using a cloud model AI. In fact, your conversations with an AI like Chat GPT or Gemini essentially become the property of the company that owns that AI, because the AI uses every conversation as a training opportunity.

In other words data centers exist to grow more and more AI models while making them smarter and smarter (in theory). But again, why should the average American give a damn about this?

The Global “Race” For AI Supremacy And The Information Economy

In every white paper I have ever read from organizations like the WEF, the UN, and government agencies around the world dealing with everything from military security to economic advancement, the same vision keeps popping up: Integrated AI systems at every level of society and a “4th Industrial Revolution”.

The idea is that AI will run almost everything and that our entire evolution as a species will be transcendent because of this technology. At least, these are the musings of the technocrats. Some of them are well meaning and they truly dream of planet without scarcity. Others have distinctively nefarious agendas and they only taste power.

The latter group, from the evidence I have seen, views AI as a kind of “technological deity” – A machine god. They believe that if they pump all available information and enough computing power into these models, eventually one of them will hit “the singularity” point. This is the point at which an AI will supposedly become “sentient” and all-knowing.

I don’t think the singularity is a reality – I think it’s a pipe dream. That said, I do think AI is a very useful tool for making human beings even more lazy and easy to control if we allow it. As I’ve said in the past, the biggest threat from AI is NOT the rise of a “machine god” like “Skynet” from the Terminator movies, but the opportunity for complete apathy that this software creates. There are already far too many people who use AI to think for them instead of researching on their own.

The “information economy” is a more grounded notion of how AI might be applied, but it’s still a bit ridiculous. It’s the idea that larger economies will no longer rely on the production of tangible goods and resources to support the system. Rather, they will rely on the creation of digital products and the trading of data derived from algorithms.

If you think the global economy is fake now, you haven’t seen anything yet. This notion reminds me a lot of the tech bubble of the 1990s, the derivatives bubble of the early 2000s, and the dangerous Enron-like desire to create wealth through fiat concepts rather than making real and useful things. The AI bubble could be just as vaporous and destructive.

What Do Local Communities Get Out Of The “4th Industrial Revolution”

The Trump Administration is backing data centers from a place of economic ambition. He thinks this is an industrial competition and he believes that countries like China are going to strike some kind of AI gold while the US is left in the dust. He also has people in his ear who are fear mongering about the possibility of military disadvantage should other governments develop AI faster.

I can’t speak to the military applications because, frankly, they are entirely theoretical. If we are headed for a “Skynet” scenario then let’s hope I’m right and these apps are far less effective than they have been hyped up to be.

It’s also true that there are numerous foreign actors who prefer that the US doesn’t develop AI at an accelerated pace. This doesn’t mean that we should expend our resources chasing a digital phantom, but it’s obvious the Chinese would like to stay a step ahead even if it doesn’t gain them anything of substance in the end.

So far the biggest opposition to new data centers is rooted in concerns over power usage and increased utility bills for locals. Eyesore server farms with loud-ass fans ruining the serene landscapes of rural communities is not a good look. These communities are usually near hydro generators, solar farms, wind farms, etc. and are being targeted because of access to ample power and large plots of land at lower cost.

As someone who lives in one of these communities I can tell you right now, almost no one is going to jump on this bandwagon. Even with most of the population being hardcore conservative, and even with Trump selling the idea, they aren’t going for it. Rural Americans do not care about saving corporations money on electricity.

Maybe if companies and government officials finally built some friggin’ nuclear power plants instead of adding more strain to the grid, people would be less inclined to complain. They can put these data centers right next door to the plants and everyone can have cheap electricity. It’s a win-win.

What are the hard benefits of the centers? AI centers create some construction jobs for a few months. They offer around 100 to 200 permanent jobs in each community, but most of them are tech jobs in places where there is no tech labor pool, which means those people will have to be imported into the communities where these centers are built.

There’s expanded user access for the population at large. However, does anyone really care if they can’t make memes on Gemini or Grok anymore? Does any of this touch the lives of average American in a positive and meaningful way? I’m just not seeing it.

At most, communities that allow the establishment of data centers stand to gain some tax revenues, but that is all. I’m not completely dismissing the people who want to promote AI development, but none of them are conjuring up any selling points exciting enough to set imaginations aflame. This is not like the space race of the cold war era.

No one is clutching their chest in fear of “losing an AI race”. And, it’s not enough to jump blindly into the world of science fiction and paint grand pictures of a robot Utopia. We all know, deep down, that this is not going to happen, at least not for many generations to come.

When I look at the AI debate I see multiple factions, interests and visions colliding. Not everyone who wants data centers is some kind of demonic globalist looking for world domination. Some people truly desire a better future and they think AI is the way. On the other hand, not everyone who stands against data centers is a lefty communist, a Chinese agent or a “dumb country hick”. A lot of them are people with legitimate concerns and they still haven’t been offered a compelling reason why data centers should happen.

In the middle of all this, of course, we have the power mongers and nihilist elites who are only interested in using AI and the AI economy to further their own goals at the expense of the common man. They poison the well for everyone else.

I do wonder what would happen if these people and their armies of useful idiots were out of the way – Would AI development look completely different? Or maybe the public wouldn’t have any reason to be so suspicious of everything? Maybe the technology would progress more freely without constant fears of abuse?

It’s hard to say, but for now, most Americans oppose new data centers in their area. This is unlikely to ever change and trying to force the issue will only elicit anger.

Tyler Durden Fri, 09/18/2026 - 18:25

Shocker: AI-Exposed College Majors Linked To Weaker Employment And Pay, Study Finds

Authored by Bill Pan via The Epoch Times,

The rise of artificial intelligence coincides with a sharp deterioration in initial earnings and employment for graduates of the college majors most exposed to the technology, according to a new study.

A job seeker meets with a recruiter during a job fair at the Carson Event Center in Carson, Calif., on June 30, 2026. Justin Sullivan/Getty Images

Since the release of ChatGPT in late 2022, graduates in the 10 percent of majors most exposed to AI saw their likelihood of finding a job shortly after graduation fall by 5 percentage points, according to a working paper published by the U.S. Census Bureau's Center for Economic Studies on Sept. 10.

Their initial quarterly earnings also fell by about 13 percent relative to graduates in fields less exposed to AI, according to the findings.

"This earnings decline is comparable in magnitude to the earnings losses associated with graduating into a large recession," the researchers wrote.

The researchers analyzed administrative records covering roughly 29 percent of U.S. bachelor's degrees awarded between 2016 and 2024. They found that graduates of the three majors most exposed to AI - computer science, computer and information systems, and computer engineering - experienced the largest declines in both employment and earnings after 2022.

"Fewer of these graduates found jobs immediately after graduation, and those who did so received lower earnings," they wrote.

Graduates Shift Into Lower-Paying Work

According to the study, the decline in earnings among graduates from the most AI-exposed majors was driven by two main factors: Industries that traditionally hired them began paying less, and more graduates took jobs in lower-paying industries.

"About half of the earnings decline reflects a shift away from high-paying industry sectors and toward lower-paying sectors such as Retail Trade and Accommodation and Food Services," the authors wrote.

The earnings gap between graduates from the most and least AI-exposed majors narrowed over time, falling to about 5 percent two years after graduation.

Researchers also found higher job-switching rates, suggesting that some graduates eventually moved into better-paying positions.

However, the authors said there is not yet enough data to determine whether those graduates will fully catch up with people who entered the labor market before generative AI became widespread.

Another Survey

In a recent survey of 261 graduates by the online learning platform Study.com, none of the respondents with computer science or information technology degrees said that AI made them wish that they had chosen a different major.

By contrast, 43 percent of communications, journalism, and media graduates said they would choose a different major when considering AI's impact. Biological sciences followed at 28 percent, and psychology at 22 percent.

Among all graduates surveyed, 77 percent said college was still the right choice despite AI's impact on the job market, while 22 percent said they would have chosen a different major knowing what they know now about AI.

The findings are notably limited by a small sample size, as individual major groups included roughly one to two dozen respondents.

AI Is Not the Only Headwind

An earlier analysis from the Federal Reserve Bank of St. Louis suggests that AI is only part of a broader problem facing young workers aged 18 to 24.

In a report published in June, economists at the bank found that a decline in job openings was the biggest contributor to weaker employment and higher unemployment among young workers from 2023 through 2025.

Growth in AI-related jobs also appeared to displace some new entrants, particularly recent college graduates, but its impact was smaller than the overall decline in labor demand.

Recent college graduates still had a 79 percent employment-to-population ratio nationally in early 2026, the St. Louis Fed noted, but a "low-hire, low-fire" labor market has made it harder for newcomers to get their first foothold.

"AI is not eliminating jobs across the economy. Instead, it is raising the bar for young workers trying to secure their first foothold in the labor market, an area in which employers feel less of a need to advertise openings, make offers and hire," the authors wrote.

Tyler Durden Fri, 09/18/2026 - 17:40

Holdout Clancy Juror Lawyers Up, Goes Into Hiding

Attorney Edward Paltzik said Thursday that he is representing Michael Desronvil, the lone holdout juror in the murder trial of Lindsay Clancy, who would not agree that Clancy was not criminally responsible for strangling her three children in January 2023. According to Paltzik, Desronvil has relocated to an undisclosed location in northern New England after his refusal to join the rest of the jury made him the target of a mob.

"I can now confirm that I am representing the courageous and heroic lone holdout juror from the Lindsay Clancy Trial," he wrote in a post on X. "Please pray for him and help us protect him."

Paltzik described Desronvil as an "American Hero and Champion of Justice" who "loves the United States of America as the greatest country in the world," and "cherishes our sacred Constitution as the pinnacle of human liberty." He also added that Desronvil supports "our amazing leader, President Donald J. Trump, as a fellow defender of common-sense, liberty, and sanity."

Paltzik also promised consequences for whoever came after his client, writing that "the evil people who have so viciously attacked this American Hero and Champion of Justice will be held accountable to the maximum extent of the law and beyond." Desronvil is riding out the fallout somewhere quiet. Paltzik said his client is "presently safe and sound at an undisclosed secure location in a rural area of Northern New England," sustained by his faith and family.

"In the meantime, though, he has persevered and remains utterly unbroken thanks to his devout Catholic Faith. As a devoted father and man of God, he will not be defeated or shattered by the wicked who wish harm upon him."

I can now confirm that I am representing the courageous and heroic lone holdout juror from the Lindsay Clancy Trial. He is an American Hero and Champion of Justice. Please pray for him and help us protect him. This American Hero and Champion of Justice loves...

— Edward Andrew Paltzik, Attorney (@EdPaltzik) September 17, 2026

The New York Times reported Friday that Desronvil has also broken his silence, following days of the other jurors publicly attacking him in various media appearances.

"He had the hardest time getting off the fact that Lindsay viciously killed her children," one female juror explained.

Female juror in the Lindsay Clancy trial on the lone male holdout: "He had the hardest time getting over the fact that Lindsay viciously killed her children."

— TheBlaze (@theblaze) September 8, 2026

Clancy's lawyer, Kevin Reddington, also attacked Desronvil.

"I hope that guy can sleep well at night," he said. "[The other jurors] were robbed by one man for whatever his agenda was, who stole seven weeks of the life of these other jurors that were so attentive, so beautiful, so wonderful and listened to this evidence, and you can see how defeated they were sitting there."

— Eric Daugherty (@EricLDaugh) September 4, 2026

Desronvil laid out his reasoning for not joining the other jurors in a statement released through his attorney. "I didn't have any doubts," the statement began. He also revealed that it was the other jurors who didn't have an open mind and tried to shut him down during deliberations.

"As I tried to explain different possible theories during deliberation, I kept getting cut off as if I had doubts based on the evidence presented. Based on all the physical evidence, key witnesses, and what the prosecution presented, I thought it was enough proof that she (Clancy) knew exactly what she was doing and planned."

That account runs counter to the version some of his fellow jurors offered when they went public.

Clancy's case returns to roughly where it stood before the trial began. Clancy remains held at Tewksbury State Hospital and remains charged with murder, awaiting resolution of the criminal case against her. Judge William Sullivan has scheduled a status hearing for Sept. 29 and said at the Sept. 4 mistrial hearing that if prosecutors go again, he would like to try the case this fall, though District Attorney Timothy Cruz has yet to say whether he will retry Clancy.

Tyler Durden Fri, 09/18/2026 - 17:20

Cryptos Soar After SEC Issues Tokenization Order: Here's What's In It

Just days after cryptocurrencies tumbled on Tuesday when the CLARITY act failed to pass the Senate, crypto is surging to close out the week after the Securities and Exchange Commission issued an "Innovation Exemption" order which cleared tokenized stocks to trade onchain. The decision sent bitcoin above $81K, but it was the tokenization-focused assets like Solana, Ether and the NEAR protocol as well DeFis, that really soared.

Understandably, the tokens that ran hardest are the ones tied to trading securities onchain: Bitcoin last changed hands at $81,100, up 6% over 24 hours and 2.3% over seven days. Ether was at $2,683, up 6% on the day while Solana, long a tokenization favorite, surged more than 12% above $113. Additionally, NEAR Protocol rose 32%, Starknet 27%, Arbitrum 26% and Uniswap 20%. Among the 15 biggest tokens, Hyperliquid added 12% to $92.20, Solana 9.6% to $110, Dogecoin 7.7% to $0.088, XRP 7.6% to $1.40, Monero 6.1% to $540 and BNB 4.7% to $759. Cardano gained 9.3% and Chainlink 8%.

In response to the gross incompetence and bias of Congressional Democrats, the SEC took matters into its own hands and issued an order, Release No. 34-106402, which exempts a category it calls a Tokenized Securities Venue from the exchange definition in Section 3(a)(1) of the Securities Exchange Act. A venue may list 75 Tier 1 symbols and trade up to 0.25% of each stock's prior-month average daily volume, and tokenized shares must carry the same dividend rights, voting rights and claim on residual assets as the underlying stock.

SEC Chairman Paul Atkins said in a statement accompanying it that the Commission is "taking a significant step forward, within its statutory authority, to bring America's capital markets into the digital age," and that "this interim measure must be followed by durable rulemaking to ensure that onchain markets remain a viable pathway."

Andrew Yang, an analyst at Kaiko, put tokenized equity volume on Uniswap at about $800 million a day in commentary sent to reporters on Friday morning. "The SEC's condition is rights parity with the underlying stock, and it's not obvious how much of that volume would clear it," he said.

In any case, now that the market has finally responded to the SEC order - and curiously it took almost a full day for the price to move - here is an in-depth look inside the SEC exemption order permitting trading of tokenized equities, courtesy of Goldman analyst James Yaro (full note available to pro subs).

Overviewing the SEC innovation exemption order permitting trading of tokenized equities

On 9/17, the SEC issued an order granting a 5-year conditional exemption from registration for certain exchanges and liquidity providers (collectively termed tokenized securities venues [TSVs]), so that they can offer equities on the blockchain (tokenized equities) in the US.

We believe that this order broadly permits US tokenized equities for the first time, which could lead to the growth of the tokenized US equity market over time. In particular, we expect brokerage innovators and crypto companies to potentially build in this space, given existing tokenized equity products, including tokenized equities outside of the US.

However, there are a number of considerations that could limit broad US tokenized equities adoption, and/or the speed of growth, including:

1. the need to build new order book tech, given only venues that use an automated market maker (AMM) order book are permitted to avail themselves of the exemption - traditional exchanges and most centralized crypto venues currently use central limit order books (CLOBs), rather than AMMs;
2. the need to build new tokenized equities products, given only tokenized equities that have certain native tokenization characteristics (these include shareholder rights and dividends that are comparable to those offered on the underlying equity) are exempt, whereas non-native, derivative-like tokenized equities that certain brokers offer outside of the US (e.g., HOOD) are not permitted; and
3. the order appears to permit issuers to refuse tokenization of their equity - if issuers broadly choose to do so, this could limit the TAM for the product. The requirement that only AMMs may avail themselves of the exemption appears to be specifically targeted at enabling innovation among smaller, more nascent execution venues in the decentralized finance (DeFi) space, given AMMs function better at smaller scale, whereas CLOBs are more effective for deeper, more liquid markets.

Specifically, the order offers Exchange Act registration relief for TSVs that have AMMs (from exchange registration) and their liquidity providers (from dealer registration). Registration relief is subject to certain conditions, including:

1. tokenized equities traded on a TSV are subject to limits on the number of symbols and volume traded;
2. a TSV must verify that the tokenized equity offers certain native tokenization characteristics, specifically the same rights and privileges as the equivalent traditional stock; and
3. before beginning trading, the TSV must provide written notice and an opportunity to object to the issuer of the stock.

This order represents a further step to clarifying regulation around the use of blockchain technology in US financial services, alongside:

1. the previous Regulation Crypto Asset proposal from August, 2026 (report here), which proposed exemptions around token issuance for smaller projects; and
2. the CFTC’s no-action position (also from 9/17) to providers of passive software (see here), which exempted developers of self-custody wallets from registration as introducing brokers.

Further regulatory reforms could follow, as both the SEC and CFTC have indicated appetite to set out comprehensive digital asset regulation. However, Goldman believes that these regulatory efforts are insufficient to fully unlock broader adoption for digital assets. This would require broader legislative reform, e.g., the CLARITY Act, which failed a Senate cloture vote on 9/15. The SEC order thus has limited direct implications for the traditional exchanges and is a better outcome from a competitive perspective than if broader tokenization legislation passed and lead to wider spread adoption (ex. CLARITY Act).

Further detail below:

Scope of exemptions: The order grants conditional 5-year exemptions from registration for TSVs, entities that facilitate tokenized equities trading, provided that they use AMMs, rather than CLOBs. We note that AMMs are primarily used by decentralized exchanges, whereas CLOBs are typically used by traditional exchanges and many centralized crypto exchanges under our coverage. Further, the exemption applies only to equity tokens with certain native tokenization features, and does not provide exemption to non-native tokenized equities that have derivative-like characteristics. The order permits issuers to disallow tokenization of their own securities by objecting before trading begins. Other conditions for exemption include:

• TSVs are subject to limits on the number of tickers and volumes traded on the venue;
• TSVs would need to offer comparable shareholder rights and dividends for tokenized stock holders as those offered to underlying stock holders;
• Smart contracts of the AMMs need to be auditable, public and deployed on a public blockchain; and
• TSVs are required to provide public notice about operations and trading.
• Before beginning trading, the TSV must provide written notice and an opportunity to object to the issuer of the stock.

Impact of only excluding AMM order books: AMMs support liquidity to longer-tail contracts with its token inventory, and are thus designed for newer markets. However, as trade sizes increase, risk of price slippage increase, vs. CLOBs, due to the AMM smart contracts’ scarcity-dependent pricing. This hinders liquidity as markets expand, and means CLOBs are typically better for deeper markets. We believe that this could limit the exemption’s effect on larger markets.

Native vs. non-native tokenization: The order only applies to tokenized equities with certain natively tokenized features, specifically shareholder rights, and dividends, which are comparable to those offered to holders of the underlying stock. Native tokenization refers to assets in which the blockchain serves as the primary, legally binding ledger for the tokenized asset, and the assets are issued directly on the blockchain by the issuer or its agent. On the other hand, non-native tokenized equities, which appear to be out of the scope of the order, creates an on-chain wrapper of an off-chain asset, and the resulting product approximates a derivative or swap. Key differences include: 1) native tokens represent direct on-chain asset ownership vs. non-native tokens that merely represent a claim on the underlying; 2) natively tokenized assets typically have most or all of the rights associated with the underlying, namely voting and dividends, while most non-native do not; and 3) native assets are governed primarily by the underlying issuer’s regulator, vs. non-native assets, which have dual oversight at the token and the underlying level.

Current regulatory and legislative progress: This exemption follows the SEC’s previous Regulation Crypto Assets that provided issuer-related exemptions (see our report here). In addition, the CFTC issued a no-action position on 9/17 to providers of passive software (see here), which exempted developers of permissionless digital asset protocols, e.g., self-custody crypto wallets, from registration as introducing brokers. In our view, incremental regulatory reforms could follow, as both the SEC and CFTC chairs have indicated a focus on creating comprehensive digital asset regulation, irrespective of the status of digital assets legislation. However, we believe that these regulatory efforts, are likely not fully sufficient to unlock the potential for broader adoption for digital assets. In our view, regulatory action lacks the permanence of legislation, as it could be reversed or amended by future regulators through rulemaking. In our view, a full unlock of digital assets would require comprehensive legislative reform, e.g., the CLARITY Act, which failed a Senate cloture vote on 9/15.

Implications across Goldman coverage:

• Brokers & crypto: We expect certain names in our coverage could look to build tokenized equity markets in the US,specifically Buy-rated COIN and HOOD. COIN could benefit most, given that its tokenized equities brokerage product already offers certain shareholder rights and dividends that appear to align with criteria required to use this exemption. Further, COIN offers a number of infrastructure offerings that should allow it to benefit if other firms build tokenized equities offerings using the exemption, specifically COIN’s custody offering, and Coinbase Tokenize, its institutional tokenization platform. However, if COIN were to use the exemption to build a tokenized equities exchange, this would likely require tech development, given COIN’s exchanges use CLOBs. As such, it would need to build AMM infrastructure to offer tokenized equity trading. That being said, COIN routes brokered trades to decentralized exchanges, many of which use AMMs and thus could use the exemption. HOOD could also be a beneficiary, although HOOD’s current tokenized equity product (only available in Europe) is non-natively tokenized, which would not be permitted under this order. HOOD would therefore need to build tokenized equity product to meet the criteria of the exemption. Finally, given tokenized equities are on-chain, this could drive greater use of tokenized cash as a settlement currency. This could benefit Neutral-rated CRCL as the issuer of the largest US-regulated stablecoin, USDC. COIN also receives meaningful economics from most existing USDC, and could thus benefit as well.
   
• Traditional exchanges: We believe the order has limited direct implications or competitive risks for the traditional exchanges in our coverage, given that NDAQ and NYSE (ICE) already operate registered national securities exchanges and therefore do not require relief from the definition of “exchange” in order to trade tokenized equities. Notably, both are pursuing tokenization within the existing market infrastructure frameworks rather than TSVs. As a result, we do not believe either would need to build AMM infrastructure to support their current tokenization initiatives. That being said, the AMM condition would become relevant if an exchange sought to operate a TSV, whether directly or through an affiliate/partner. Further, we note that none of the exchanges in our coverage have announced an intention to do so though ICE noted it has the ability to do through its partner OKX. Further, proliferation of new TSV venues could result in increased liquidity bifurcation, limiting potential benefits from new technology to market participants. Overall, given volume caps and corporate issuers’ ability to opt out of TSV operators issuing tokenized equities, we see minimal impact to volumes at traditional exchanges.
   
  • Current initiatives and their fit within the order: NDAQ received SEC approval in March 2026 for a pilot that permits tokenized versions of DTC-eligible securities to trade on the same order book, with DTC handling tokenization and settlement once a buyer flags at order entry that it wants delivery in token form. This largely covers Russell 1000 constituents and index ETFs and applies for the duration of the pilot (3 years). In DTCC’s production test in July 2026, NDAQ was the venue where trades were executed before DTCC converted them into tokens, with QQQ among the key securities used. DTCC’s tokenization service is due to launch in October 2026. On the other hand, NYSE (ICE) has followed a similar path and fits within the current DTC pilot framework and with the same eligible universe (Russell 1000). In addition, NYSE is developing a separate platform that would support 24/7 trading, instant settlement, and stablecoin-based funding by combining its Pillar matching engine with blockchain-based post-trade systems, although that venue remains subject to regulatory approval.
     
  • How competitive dynamics could evolve: We believe the incumbent traditional exchanges would retain a structural advantage in the most liquid names, given that tokenized orders on NDAQ and NYSE interact with the same order book as traditional shares, whereas tokenized equities on a TSV are subject to limits on the number of symbols and volumes traded, and access is restricted to permissioned participants. This is enforced by the point that the eligible universe under the DTC pilot consists of Russell 1000 constituents and major index ETFs, which are precisely the deeper markets where CLOBs are typically more effective than AMMs.
     
  • That said, we see trading hours as the more likely area of competition, given that NDAQ expects to begin round-the-clock trading (23/5) starting 12/6, which leaves weekends uncovered and NYSE’s 24/7 venue still requires approval. However, we note that demand for overnight trading remains modest today, as overnight ATS volumes represented ~0.7% of total ADV in 1H26 and were concentrated in sub-dollar stocks and leveraged/inverse ETFs (per our estimate). Lastly, we note that both paths are time-limited — exemptions granted to TSVs expire 5 years while traditional exchanges’ tokenized trading rules apply only during the DTC’s 3 year pilot program.

Much more in the full Goldman note available to pro subs.

Tyler Durden Fri, 09/18/2026 - 17:00

The Pathocracy Of Women In The Democratic Party

Authored by James Howard Kunstler via Clusterfuck Nation,

"The female mind - especially in matters of political significance - struggles with understanding authority and rule enforcement."

- JD Haltigan on X

You know the midterm election is a struggle session testing whether our country wants to be sane or insane. Of course, this raises the question: what's so great about being insane? If nothing else, it implies a lot of bad decision-making, leading to all manner of sorrow and woe in life.

So, why would so many opt to be crazy?

The Ordeal of Father Isaac Jogue among the Iroquois

The answer is probably that they were snookered into it, fooled, tricked, rooked, spoofed, flimflammed, bamboozled, enticed into a range of thought and emotion counter to their self-interest and well-being. Isn't this exactly what you see in the social phenomenon of "transing" pubescent children? To induce them to go along with a malevolent program for turning them into something they are not.

A whole apparatus was constructed to carry out "gender-affirming care." Notice how positive the language is. It's "care," administered by adults, not a few of them physicians and clinical psychologists, who affect to care. And it "affirms," that is, it validates, it turns supposition into fact (that is not so). The adults happen to be in authority over children. They are presumed to be trustworthy.

But they are not trustworthy. They persuade children confused by puberty to be mutilated with surgery and hormones in order to put on a performance for the adults. The performance is called "No Boundaries." It does not really affirm a child's gender by pretending to change it. It affirms the mental illness of the untrustworthy adults. They have developed a defect of cognition that disrupts their perception of reality. They don't know where things begin and end.

Where did this come from? You won't like this.

It came from women taking over the leadership of our institutions, especially education. In the two centuries that public education has existed, there were always a lot of women teachers. But they were superintended by men with a sense of boundaries, who enforced the distinction between thought and feeling, between sense and nonsense. Now you see what has happened with men removed from that picture. Thought and sense have been deleted.

Women are primarily driven by the wish for communion and for care (of children and households). If they don't find mates, don't form households, and don't have children, their drives can be hijacked. Likewise, if their households are broken by divorce and their children are damaged by it. It's been increasingly difficult for men and women to form households and successfully raise children, or to keep a household from breaking under the social and economic pressures of our time.

Politics is another set of institutions increasingly dominated by women in leadership roles. They convert all the social discontents of childlessness and broken households into laws, rules, and policies which, not surprisingly, demonstrate a failed sense of boundaries and a contorted drive for communion and care. That's how the Democratic Party - increasingly run by-and-for women - was bamboozled into throwing the border wide open under "Joe Biden," and why they have become hysterical over the nurturing of those millions of illegal migrants now here. The drive to care has transformed into a mad, grandiose wish to save the world.

The nation's borders are strict boundaries. The Democratic Party programmatically denounces the existence of national boundaries - viz. The "Squad" in Congress, et al. "No one is illegal." That open border was profoundly destructive and costly for the nation. Donald Trump declared that national boundaries matter and closed the border effectively. This not only made him an arch-villain to many of the women in America with boundary problems, but it also gave them a big opportunity to exercise their drive for communion by ginning up public get-togethers such as the anti-ICE riots of last winter and the "No Kings" marches of the spring.

Mr. Trump, with his repertoire of distinctive male mannerisms, setting of boundaries, and bent for decisive action, propels these world-saving, deeply-caring, communion-seeking political women into raptures of rage and animosity. It might be instructive to remind you that, back in the history of this land, among the native-American Iroquois (a most civilized people), it was the women who were assigned the primary task of torturing their enemies to death. (Read about the ordeals of Father Isaac Jogues in Francis Parkman's The Jesuits in North America in the Seventeenth Century.) More recently, one Lindsay Clancy of Duxbury, Mass., demonstrated how savagely awry female boundary failure can go.

This pathocracy of women in the Democratic Party accounts for the seemingly insane turn to communism. But, it's communion-and-care all of a piece - the most extreme form of crazy ideological solidarity, plus the promise of free stuff for everybody (care!) with no boundaries. Meanwhile, over in Mr. Trump's camp, you have an emphatically male-dominated hierarchy with the MAGA women's drives for communion-and-care directed, as much as possible these days, back into the household and the nursery.

Throw in FAFO as the baseline attitude and there's authority you can trust.

Tyler Durden Fri, 09/18/2026 - 16:20

Midwest Braces For Diesel Crisis After Exxon's Joliet Refinery Suffers Disruption

A major refinery in the US Midwest went offline this week after a power outage, adding to global refining disruptions as US diesel prices reach record highs.

One of the largest diesel refineries in the Midwest is offline pic.twitter.com/JSwuHrNfBw

— zerohedge (@zerohedge) September 18, 2026

Exxon Mobil shut its 275,000-barrel-a-day Joliet refinery in Illinois on Sunday after a power failure triggered the facility's safety flare, Reuters reported. A Thursday filing also disclosed that floodwater had overwhelmed a pump at the plant.

Exxon traced the power outage to ComEd's primary and secondary lines supplying the refinery and said it had fully restored electricity by Thursday. Power restoration, however, does not mean fuel production has resumed.

Located about 40 miles southwest of Chicago, Joliet can produce about 11 million gallons of gasoline and diesel daily, primarily for Midwest consumers. Its processing capacity represents roughly 6% of Midwest refining capacity and 1.5% nationally. 

UPDATE: $XOM Joliet reported to have suffered a "total power outage". this refinery capacity is 275kbpd, a large facility and it looks bad. https://t.co/IdAgfWhhUz pic.twitter.com/Sb52uXIviK

— Patrick De Haan (@GasBuddyGuy) September 14, 2026

A prolonged shutdown would tighten regional fuel availability and risk further price increases across Illinois, Indiana, Ohio, Wisconsin, and Michigan. 

"There's an additional likelihood of further price increases in the Great Lakes. Gas: OH is at *high* risk of largest jump, WI, IN are at *med* risk of moderate jump, MI, IL at low/med risk but could go past $5/gal. diesel: will likely jump in most these areas mod/large jump," Patrick De Haan, head of petroleum analysis at GasBuddy, wrote on X. 

⚠️there's additional likelihood of further price increases in the Great Lakes. Gas: OH is at *high* risk of largest jump, WI, IN are at *med* risk of moderate jump, MI, IL at low/med risk but could go past $5/gal. diesel: will likely jump in most these areas mod/large jump

— Patrick De Haan (@GasBuddyGuy) September 17, 2026

He noted, "spot diesel prices in the Great Lakes are now the highest in the country... $240/bbl."

Nationwide, the latest AAA data show diesel fuel prices at the pump have jumped to a record $6.45 a gallon.

Goldman Sachs commodity experts Yulia Zhestkova Grigsby and Daan Struyven warned earlier this week that the global diesel crisis could tighten gasoline supplies as refiners prioritize higher-margin diesel production.

Bloomberg Intelligence senior commodity strategist Mike McGlone warned on Monday that "$6 diesel echoes 2008 gasoline shock."

* * *

Tyler Durden Fri, 09/18/2026 - 15:55

US Drops Venezuela From List Of Countries Failing To Combat Drug-Trafficking

Authored by Rachel Roberts via The Epoch Times,

The United States has removed Venezuela from its list of countries that it says have failed to demonstrably combat drug trafficking, President Donald Trump announced on Wednesday.

In a statement, Trump said he may also consider removing Colombia - with whom Venezuela shares a long, open border - as well as Bolivia, if these countries can demonstrate progress following recent changes of government.

Following the U.S. capture and arrest of Venezuelan President Nicolas Maduro on charges of narco-terrorism in January, cooperation with the country's interim government is paying dividends, Trump said in the presidential determination published by the State Department.

Cooperation on Tren de Aragua

The U.S. president pointed to the killing of the infamous Tren de Aragua cartel leader known as "Niño Guerrero" as an example of how his government is working well with the new Caracas administration, led by Maduro's former deputy Delcy Rodriguez.

Venezuela has been on the failed list since 2005, when then-Venezuelan President Hugo Chavez kicked U.S. drug enforcement agents out of the country, accusing them of spying on his "Bolivarian Revolution."

"I have determined Venezuela should no longer be designated as having failed demonstrably to fulfill its drug control commitments," Trump said, adding that he expected to see "continued, measurable progress" from the interim government in "dismantling narcoterrorist groups and stopping drug trafficking."

Trump said Colombia was "poised to resume its place as our foremost security partner" in the Western Hemisphere following the election of President Abelardo de la Espriella, with whom he is closely allied, in June.

The U.S. president praised the people of Colombia for making the "courageous choice" of De la Espriella, a former high-profile criminal lawyer whose firm represented figures linked to Colombia's paramilitary and narcotics underworld.

'Colombia First' President

De la Espriella took office in August, pledging a crackdown on illegal immigration and crime, stressing a "Colombia first" approach, as the country joined the growing political rightward shift in Latin America.

Trump said that if, as expected, "Colombia makes progress on aggressive coca eradication and dismantling its narcoterrorist networks over the coming year," he would consider lifting the country's "failed demonstrably" status.

Trump put Colombia on the list last year for failing to combat cocaine production, amid a series of verbal exchanges between him and former leftist President Gustavo Petro.

Before then, Colombia had not been on the list since 1997, four years after the death of the infamous leader of the Medellín drug cartel, Pablo Escobar.

Trump said that cooperation between Bolivia and the United States has "significantly expanded" over the past year, since the 2025 election of President Rodrigo Paz, a conservative.

He praised Bolivia's extradition of alleged drug lord Sebastián Marset, described as one of the most wanted men in South America, to the United States in March 2026.

But he said the new government had not yet had sufficient time to reduce the cultivation of the coca plant for drugs, while corruption in Bolivia continued to facilitate trafficking and impede investigations.

If progress can be made, Trump said he would consider revisiting the country's status.

Four countries - Afghanistan, Bolivia, Burma, and Colombia - are named as having "failed demonstrably" during the past year to make "substantial efforts" to adhere to their obligations under international counternarcotics agreements.

A total of 23 countries, including the four on the "failed" list, are named by the State Department as major transit hubs or producers of narcotics that end up in the United States.

The other Latin American countries on the list are Belize, Bolivia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, and Peru.

Asian countries named are Afghanistan, Burma, India, Laos, Pakistan, and China.

Caribbean nations listed are the Bahamas, the Dominican Republic, Ecuador, Haiti, and Jamaica.

The State Department said that a country's presence on the list is "not necessarily a reflection of its government's current counterdrug efforts, or coordination with the United States."

'Billions Seized' From Cartels

In his determination, Trump referred to his war on drugs, much of which has centered on stemming the flow from the southern border and on bombing smugglers' boats.

He said that narcoterrorists responsible for the drugs "invasion" are either "dead, in jail, or living in fear knowing they will be next to face American justice," adding that he had "unleashed the strongest military in the history of the world to strike narcoterrorists wherever they threaten our country."

The Americas Counter Cartel Coalition, an alliance with more than a dozen countries in the Western Hemisphere, has produced "historic results," Trump said, by drastically reducing drug flows and "seizing billions of dollars of illicit cartel finances."

Although progress had been made, Trump said that both Mexico and Canada - which are not on the list - need to "do far more" to prevent trafficking to the United States.

"Canada needs to take meaningful action to dismantle drug labs, strengthen supply chain security, and degrade criminal networks and Chinese gangs operating along our northern border," Trump said, referring specifically to the fentanyl trade.

Turning to China, Trump said the country "continues to be the world's largest producer of many of the precursor chemicals used to illicitly produce fentanyl, methamphetamine, and other deadly synthetic drugs."

He added that he had raised this with Chinese leader Xi Jinping, adding that despite some progress on export licences, China "needs to take more aggressive action" to reduce the flow.

Tyler Durden Fri, 09/18/2026 - 15:40

"Viva México!": DSA Shoo-In For NYC House Seat Goes 'Mexico First,' Hails "Comrades In Morena"

A radical Democratic Socialists of America candidate who is poised to waltz into a deep-blue New York House seat used Mexican Independence Day to all but declare that she is Mexico First.

Claire Valdez, a card-carrying DSA member and New York State Assemblywoman who secured the Democrat nomination for the state's 7th Congressional District, posted a tweet on X celebrating 215 years since Mexicans "fought an empire that demanded our land and our labor." Valdez then went one step further, making the kind of declaration that should end the career of any Democrat or Republican who dared to utter something similar about a foreign country.

215 years ago, Mexicans fought an empire that demanded our land and our labor. And we won. I'll carry that fight with me to Congress as New York's first Mexican American representative. And I'm strengthened not just by Mexico's history but its present. Last month I met comrades in Morena who are standing up to the empires and corporations that have always taken from us – and building a government for the working class. ¡Viva la Independencia, Viva México!

— Claire Valdez (@claireforny) September 16, 2026

"I'll carry that fight with me to Congress as New York's first Mexican American representative," Valdez wrote, before gushing that she is "strengthened not just by Mexico's history but its present" and boasting about a meeting last month with her "comrades in Morena," the leftist party that currently rules Mexico.

Valdez lauded left-wing radicals for "standing up to the empires and corporations that have always taken from us" and "building a government for the working class." The DSA lawmakers capped off the post with a triumphant "¡Viva la Independencia, Viva México!"

Notably absent from Valdez's message was any mention of cutting taxes for struggling New Yorkers, securing the southern border, or tackling the soaring grocery prices that have hammered working families. In their place was the rhetoric of a hard-left activist who apparently views the United States Congress as merely one more battlefield in a global class war, complete with "comrades" embedded in a foreign government. Valdez has claimed that she is "a dual citizen of Ysleta del Sur Pueblo Nation and the United States."

Valdez's tweet quickly ignited a firestorm of condemnation online.

"This is disqualifying," wrote Sen. Jim Banks (R-IN). "You are running for Congress in AMERICA."

Andy Ngo wrote: "American leftists elect people who are open about foreign allegiances and their agenda to serve foreign state interests."

"What the fuck," Pirate Wires Editor-in-Chief Mike Solana added.

what the fuck

— Mike Solana (@micsolana) September 18, 2026 Tyler Durden Fri, 09/18/2026 - 15:20

4 Charged With Fraud Involving Millions Of Taxpayer Dollars For Homelessness Aid

Authored by Jacki Thrapp via The Epoch Times,

Federal prosecutors in California on Sept. 16 announced charges against four people who are accused of diverting millions of taxpayer dollars meant for homeless housing and services to fund lavish lifestyles, including a new nightclub and bingo hall.

The defendants accused in the separate schemes include nonprofit Home At Last founder Michael Young, CEO and executive director of The Big Blue Umbrella Donye Mitchell, and Special Service for Groups employee Lakiya Malone.

The fourth defendant, executive director of the nonprofit Abundant Blessings Alexander Soofer, agreed to plead guilty to one count of wire fraud and one count of money laundering for taking at least $2 million in taxpayer funds for personal gain.

Attorneys for the defendants could not be reached. Home At Last did not immediately return a request for comment.

The U.S. Attorney's Office for the Central District of California said on Wednesday that Young, a founder of the Culver City-based nonprofit, was arrested and charged with "sham vendor fraud."

He allegedly committed fraud to misappropriate more than $7.5 million in taxpayer funds to open and operate personal projects, such as a high-end restaurant and nightclub in Inglewood and an adjacent bingo hall.

The money he received from Los Angeles Homeless Services Authority was supposed to be used toward providing housing and services to homeless people. Instead, prosecutors allege, he made a web of shell corporations and fraudulent billing practices to boost his real estate portfolio, which included $1 million in taxpayer dollars to open the Six Seven Five Lounge restaurant and nightclub.

"Taxpayer money also allegedly paid for a liquor license for that business, in addition to the architect, developer, and high-end finishes for this nightclub," Assistant Attorney General for the Justice Department's National Fraud Enforcement Division Colin McDonald said during a press conference on Wednesday.

"The taxpayers did not sign up to fund this nightclub."

Young is charged with wire fraud, a felony that carries a maximum sentence of 20 years in federal prison if convicted.

In a separate case, Donye Mitchell, the CEO of The Big Blue Umbrella, was awarded more than $1.2 million in Los Angeles County-funded grant money from Amity Foundation after allegedly claiming his nonprofit was a major homeless-housing provider, which prosecutors say was false.

Mitchell is accused of using grant funds on inflated salary payments, paying his bail for domestic violence and assault charges, paying off credit card debt, transferring money to family, paying rent, and paying charges associated with his PlayStation.

Amity allegedly canceled the contract with The Big Blue Umbrella in May 2025 after it already sent $315,000. Amity's decision to cut ties was over concerns that Mitchell misrepresented his spending and failed to meet agreed-upon milestones.

Mitchell, who is not in custody and considered a fugitive on Sept. 16, is also charged with wire fraud.

"L.A. is called, they say, the City of Angels, but there's nothing angelic about bribery, about stealing money from taxpayers, about lying, about serving our nation's most vulnerable citizens, and while these fraudsters have lined their pockets, American people have been dying in our streets," Housing and Urban Development Secretary Scott Turner said.

In the third case, Malone, an employee of the nonprofit Special Service for Groups, was arrested on a 21-count indictment that accused her of taking more than $180,000 in bribes and kickbacks from Alexander Soofer in exchange for priority housing referrals, including "ghost" clients who never lived at the sites.

Prosecutors say the scheme included making fake welcome letters, sign-in sheets, and eligibility forms that helped inflate more than $17 million that Soofer received from Special Service for Groups.

Malone faces up to 20 years per wire fraud count, 10 years per bribery count, and five years on the conspiracy charge if convicted.

"The scale and brazenness of these fraudsters expose a profound failure by the State of California and Los Angeles County to safeguard public funds," First Assistant United States Attorney Bill Essayli said.

"Millions [of dollars] intended to house the homeless allegedly financed private real estate, a nightclub, a bingo hall, and personal expenses. Taxpayers deserve accountability.

"We will follow the money, expose the corruption, and prosecute those who exploit the American people for personal gain."

Tyler Durden Fri, 09/18/2026 - 15:00

America Is Using The Wrong Artificial Intelligence Scoreboard

Authored by Paul Meeks via RealClearMarkets,

Since OpenAI released ChatGPT in late 2022, America has kept score in the artificial intelligence race by asking which lab has the best model. Unfortunately, that scoreboard is dangerously incomplete. Frontier capability matters, but temporary benchmark leads do not by themselves create durable technological dominance by any single nation. The true national edge comes when its technology becomes the platform on which the world builds.

The distinction came into focus at the White House in August. Administration officials met with leading AI companies to discuss a voluntary framework for government testing of the most advanced models before release. However, the framework will not cover open-weight models, whose underlying parameters can be downloaded and adapted. That was the right decision. But declining to restrict open models is not the same as having a strategy to ensure that the world builds on American models.

The Trump administration already understands the stakes. Its AI Action Plan warns that open models could become global standards in business and research and therefore have "geostrategic value." It calls for leading open models founded on American values. The insight is correct. Implementation has not kept pace with the market.

In strict technical terms, open-weight is not the same as open-source. The former makes a model's learned parameters available; the latter also implies access to such elements as training code and data. Most models commonly called "open-source AI," including China's leading releases, are actually open-weight. Economically, however, the important point is that users can download, operate and adapt them without remaining dependent on a single provider.

American companies dominate the market for high-end closed models. Customers access them through websites or application programming interfaces, while the companies retain the model weights and charge for usage. China has pursued a different strategy. Its developers are releasing increasingly capable open-weight models cheaply or freely, inviting companies, researchers and governments to customize them and build products on top of them.

This is where China is converting diffusion into market power. Moonshot AI's Kimi K3 reached the top tier of global models while being released open-weight. Alibaba's Qwen family has spawned more than 100,000 derivative models on Hugging Face, more than any Western model family. The U.S.-China Economic and Security Review Commission's 2026 "Two Loops" analysis even cites one Andreessen Horowitz partner's rough estimate that 80% of American startups use Chinese base models to develop derivatives for their businesses.

Even if that figure is only directionally correct, the warning is extraordinary. A meaningful share of America's AI application layer may already rest on Chinese foundations because developers found capable, affordable and adaptable models when they needed them.

We are in a contest over far more than individual models. It is also a contest over the technology stack on which they will run. This will shape the skills developers learn, the products entrepreneurs build, the infrastructure customers buy, and ultimately own the standards that eventually become difficult to dislodge. America's objective should be clear: the world's AI economy should be built primarily on an American and allied technology stack.

China knows - and is building policy around the fact - that every adoption strengthens the ecosystem. Developers create compatible tools. Workers learn model-specific skills. Investors finance complementary applications. Businesses integrate the technology into workflows that become costly to change. The resulting feedback loop attracts more users and produces more improvements. In investor terms, diffusion creates the moat. In foreign policy terms, diffusion locks in global influence.

American closed-model companies are not behaving irrationally. Restricting access protects intellectual property and produces recurring revenue. But the business model that maximizes revenue for a few companies does not necessarily maximize American economic power. A closed model can sell many tokens while an open competitor becomes the technological language learned by the rest of the world. Washington should not confuse the commercial interests of dominant vendors with a national strategy.

Anthropic CEO Dario Amodei has raised the strongest objection towards open-source diffusion warning that once capable model weights are released, they cannot be withdrawn, and bad actors may use them without guardrails or monitoring. That concern deserves a serious response but it also does not justify American abstention. China will continue releasing capable open models regardless of what U.S. labs do. Unilateral restraint would not reduce the number of open models in circulation; it would determine which country supplies them.

America has the computing power, talent and capital to lead both the closed and open portions of the AI market. What it lacks is a sustained strategy to put those advantages into circulation - and to ensure that the developers, companies and governments adopting AI abroad can build on trusted American technology rather than becoming dependent on Chinese model ecosystems.

The AI race will not be decided by which company tops the next benchmark. It will be decided by whose technology stack becomes indispensable: whose models developers choose, whose tools they learn, whose infrastructure they deploy and whose standards organize the applications built above them. Implementing an American open-weight strategy is not a departure from AI dominance. It is how America ensures that the world builds on an American technology stack - and how technological leadership becomes durable.

Paul Meeks is a technology-sector investor with more than 30 years of experience in public and private markets. He is a Professor of Practice at The Citadel's Baker School of Business.

Tyler Durden Fri, 09/18/2026 - 14:52

China Rare Earth Giant Eyes Takeover Of MP Materials' Seventh-Largest Shareholder As Resource War Intensifies

One way to view the Reuters report saying that state-owned China Rare Earth Group is in takeover talks with Shenghe Resources is that the deal could further cement Beijing's control over critical materials, especially rare earths. But what's most intriguing is that Shenghe holds a minority stake in US rare earth producer MP Materials.

The potential takeover would bring one of China's top rare earth mining and refining companies under the state group's control, with some private ownership. It would also extend that control to Shenghe's overseas holdings, including a 3.11% stake (7th largest shareholder) in MP Materials.

The outlet reported:

Talks between the two companies have been underway since earlier this year, said the sources who spoke on the condition of anonymity given the sensitivity of the matter. China Rare Earth Group wants to take a controlling stake, one of the people said.

The takeover would almost certainly cause some alarms in Washington: a major Chinese state-owned supplier could inherit a minority holding in a US company amid efforts by Washington to break China's stranglehold on critical materials supplied to the West.

The sources did not know what would happen to Shenghe's foreign assets and stakes.

In terms of leverage, China Rare Earth Group's takeover of Shenghe Resources would give Beijing tighter control over materials that are critical to electric vehicles, wind turbines, electronics and the defense sector. These are the same materials that Beijing has restricted some access to the US over the past 1.5 years amid a resource war. 

Recall that one move in Beijing's playbook was buying Canada's only antimony mine and then shutting down operations several years ago. Antimony is a critical mineral used in military hardware, from small arms and artillery shells to advanced missile seekers and night-vision goggles.

Beijing's leverage over the US lies in critical materials, while the US crusade from Venezuela to the Strait of Hormuz has been about leveling the playing field with China and squeezing Beijing's access to crude.

Tyler Durden Fri, 09/18/2026 - 14:40

Barclays Sees Two Key Drivers Behind A Potential Tesla Q3 Delivery Beat

Tesla is expected to report third-quarter earnings in late October. 

Ahead of the release, Barclays autos analyst Dan Levy expects deliveries to "beat" consensus, driven by two key factors: stronger Full Self-Driving adoption and rising exports from Shanghai.

FSD

First, FSD uptake is increasingly relevant - not only in serving as the "consumer AV" element of Tesla's AV push, but also in providing both a margin boost, and perhaps more importantly a volume boost to Tesla. Indeed, Tesla's 2Q delivery beat was in part driven by North America, and we assume that with FSD uptake of 55% in the quarter, buyers are increasingly choosing Tesla because of FSD.

Asia Demand

Tesla is increasingly benefiting from its China exports. In our visit to Giga Shanghai last week as part of our China Autos fieldtrip (see here and here), we were reminded of Tesla's significant cost advantage in Shanghai. We believe exports from Shanghai may be at least 20% of Tesla's global volume this year, and many rest-of-world markets which had previously been afterthoughts (i.e. Australia, Colombia, Asia ex-China) are now providing key volume boosts.

Levy estimates Tesla will deliver about 475,000 vehicles, above Wall Street consensus of roughly 466,000 and above his previous forecast of 450,000. However, that would represent a decline of about 4% from a year earlier and 1% from the second quarter.

Tesla is tracking toward 1.8 million deliveries for this year, up 10% from last year but back to its 2023 peak. 

"We believe a solid 3Q deliveries result would be a further validation point that Tesla's vehicle growth has inflected positively, which became more evident after the significant 2Q delivery beat (480k vs cons 406k). Recall, at 2Q mgmt noted Tesla exited the quarter with its largest backlog since 2023, implying the potential for further growth ahead. We now turn to 3Q commentary for reads as to whether mgmt continues to see robust demand ahead," Levy said. 

Barclays regional TSLA deliveries forecast

Levy pointed out that a delivery beat would not translate into stronger margins. He expects automotive gross margin, excluding regulatory credits and including stock-based compensation, to remain flat or edge below the second quarter's 16.3%.

Tesla shares have slumped 18% year to date as of early Friday morning.

Wall Street analysts tracked by Bloomberg have assigned 29 "Buy" ratings, 24 "Hold" ratings and 8 "Sell" ratings, with an average 12-month price target of $391.

Looking ahead, there has been Tesla-SpaceX merger rumors this summer (read full report). 

Tyler Durden Fri, 09/18/2026 - 14:00

K-Shaped Economy: Reality Or Media-Driven Perception

Authored by Lance Roberts via RealInvestmentAdvice.com,

“What the K-shaped economy gets right, what it exaggerates, and what believing the worst version is costing a generation.”

The bottom half of American households owns about 2.5% of the nation’s wealth. That number is real, and it ought to bother you. However, that number is also higher than it was in 2019 and 2015, and roughly six times higher than the 0.4% low it hit in 2011. You will not read that in many places because it doesn’t “fit the narrative.”

Unfortunately, the K-shaped economy headlines have settled into a single unvarying note, and after a while, people stop hearing anything else. I’ve spent the past several weeks working through the underlying data. While there is some truth to the coverage, most of the claims are exaggerated for “clicks and views.” But the psychological damage is clear.

So, before we get into our discussion, here are some numbers for you.

Where The K-Shaped Economy Headlines Are Right

Let me start where the “Persistent Purveyors of Doom” crowd bases its argument, as there is indeed a K-Shaped economy. However, what is critical to understand is that the K-shaped economy is not new. In every economy throughout history, there has always been a K-shaped divide between those at the bottom and those at the top.

Nonetheless, as the headlines suggest, the wage compression of 2020 through 2023 was extraordinary. Autor, Dube, and McGrew documented it in their paper “The Unexpected Compression.” The 90/10 wage ratio fell far enough to reverse roughly a third of forty years of divergence.1 Then it stopped, and worse, it began running the other way.

The Economic Policy Institute data for 2025 show that real wages at the 10th percentile fell by 0.3%, while the median rose by 0.8%.2 The lowest-paid workers in America went from the fastest-growing group in the distribution to the only one moving backward.

However, the Cleveland Fed adds a detail that should end many K-shaped economy arguments. Between 2020 and late 2025, real wages at the 10th percentile rose 9.7% against 4.5% at the 90th. In dollars, that’s $1.34 an hour against $3.09.3 Percentage compression off a small base is not catching up. And the 2015 to 2020 dollar gains were LARGER at every percentile in the bottom half than the celebrated pandemic-era gains were.

The price level is also crucial to discuss, and is where I think most commentary goes soft. Inflation falling from 9% to 3.4% is a change in the rate, not the level. Since December 2019, consumer prices have risen by roughly 29% and have stayed there. That is a permanent shift in the cost of living, and it is the part of the K-shaped economy argument that sticks, and it hits households with no assets the hardest.

As I’ve written before, “wage growth as a leading inflation indicator” matters for policy. The level is where people actually live. McKinsey asked 30,119 Americans this April, and 60% named the cost of living as one of their top three barriers. That held even with those over $150,000 in income.

Furthermore, the hiring rate hit 3.1% in February 2026, the lowest reading outside the pandemic, while the share of unemployed workers for 27 weeks or more reached 27.5% in May. Separately, expiration of the enhanced ACA credits pushed average net marketplace premiums up 58% and average deductibles up 37% in a single year.4 That is a real, dated, 2026 hit to exactly the households everyone is arguing about.

The honest summary is that the ladder from the bottom of the K to the top got harder to climb, even as the rungs themselves stopped moving apart.

Where The K-Shaped Economy Headlines Are Exaggerated

The single most repeated statistic in this entire debate, the one anchoring roughly every set of K-shaped economy headlines you have scrolled past this year, is that the top 10% of earners account for about half of all consumer spending.

It comes from Moody’s Analytics. The number is shakier than it looks. Moody’s revised its own estimate down from 49.2% to 45.8% after a methodology change, and Mark Zandi told reporters plainly that he “wouldn’t die on the hill of the top 10% accounting for 45% of the spending.”5 Berkeley’s Antoine Levy points out the arithmetic problem: the top decile takes home 35% to 40% of disposable income and saves a fifth of it, so its spending share cannot be half. The BLS Consumer Expenditure Survey puts the figure at 22.9%.

While you may think that is just economists arguing amongst themselves, it isn’t. What is crucial to note is that when the number that anchors the entire narrative varies by a factor of two depending on who computes it, that is a problem. In other words, the narrative is doing work the data cannot support. Such is the nature of a story that has outrun its evidence.

Furthermore, the perception gap runs deeper than just one statistic. In that same McKinsey survey, 56% of consumers named food as the category with the largest price increase in 2024.6 Here is why that is important. During that same period, insurance, housing, and childcare all rose faster, meaning that people are not tracking the data.

In other words, people are tracking what they hear on television and read on social media, and the two have become detached.

Where The K-Shaped Economy Headlines Are Simply Wrong

Here is where it gets interesting.

Everyone “knows” wealth concentration is worse than ever. As I laid out in my earlier piece on the K-shaped economy and why the middle class moved up, the income story runs in the opposite direction from the coverage.

The wealth story is stranger still. Pull the Federal Reserve’s Distributional Financial Accounts and compute it yourself, and the top 10% share of household net worth peaked at 70.3% in the first quarter of 2019. It sits at 67.9% today. The bottom 50% share bottomed at 0.4% in late 2011, was 1.7% at the end of 2019, and is 2.5% now.

When looking at wealth concentrations, it is very easy to blame those at the top of the wealth pyramid. Yes,  the top 10% of the population held a 31.8% share of economic wealth in the fourth quarter of 2025. Yet the bottom half gains since 2019 came almost entirely from the 90th to 99th percentiles, which fell from 39.7% to 36.3%. In plain English, the professional class lost relative ground, not the working class. Such is a detail that changes who you think is complaining.

Furthermore, the recovery that no one called K-shaped was far worse. Between 2007 and 2016, median wealth for the bottom 30% of families fell 31% while the top 10% fully recovered.7 Saez found the top 1% captured 91% of real income growth from 2009 to 2012. Nobody ran a K headline in 2013. The data was uglier then.

The last false claim is the one that worries me most, because young people believe it about themselves. That is the real damage the K-shaped economy headlines have done. Vanguard’s administrative records show 401(k) participation among young workers at 54%, against 28% for the same age group in 2004. Savings rates are higher, and average balances have roughly doubled.8 Vanguard’s own model puts 47% of Gen Z on track to sustain their standard of living in retirement, seven points ahead of the boomers. The problem is NOT that young people stopped saving

McKinsey found the same thing from the other direction. Adults aged 18 to 24 face the worst entry-level labor market in decades, and 34% name mental health as their top barrier, against 14% of older adults. Yet they were more likely than any other older group to say their finances will improve and that their lives have momentum.

“The generation everyone is writing eulogies for has not read them.“

Do The K-Shaped Economy Headlines Become Self-Fulfilling?

This is the question I actually wanted answered, so I went looking for the research. Does talking constantly about a K-shaped economy help create one? The answer splits cleanly in two, and almost nobody reports both halves.

At the level of the whole economy, no. The Chicago Fed published the number in June. The correlation between the Michigan sentiment index and annual real consumer spending growth ran 0.69 before 2020. Since 2020, it has been roughly zero.9 Their composite estimate says Michigan currently understates sentiment by 25 to 30 index points. About 10 of those points trace to the 2024 switch from telephone to online collection. Then there is the receipt test. A Fed study matched roughly 10,000 survey responses to verified purchase records. Some 43% said they were doing worse than in 2019. Most had actually bought more.

Secondly, Barsky and Sims settled the mechanism years ago: confidence is a leading indicator, not a cause.

In the economy, confidence carries information that people already have; in a survey, they respond to what they have read or seen, rather than to what they expect. This is also the structural reason why the doom loop can’t close at the macro level. Bank runs feed on themselves because if you withdraw your money, it makes my withdrawal smarter. However, in the economy, consumption lacks this property. Your neighbor skipping a vacation does nothing to make skipping yours a better idea. Such is why sentiment can collapse, and spending can increase.

At the level of one household, yes, and this is where it bites. The K-shaped economy doom loop is real. It just doesn’t run through GDP. It runs through the handful of large, irreversible decisions a person makes over a lifetime.

The clearest evidence comes from Bailey and co-authors. They matched 1.4 million Facebook users to 525,000 housing transactions, then used the house price experiences of geographically distant friends to isolate the belief channel. When distant friends saw 5 percentage points more price appreciation, a renter’s probability of buying rose 3.1 points off an 18% base.10 Beliefs picked up socially, from people nowhere near your housing market, changed whether you bought a house.

Now apply that to a young person marinating in K-shaped economy headlines. I’ve pushed back before on the lazy version of this story, the one painting a whole generation as financial nihilists. That framing is still wrong. The behavior at the margin has gotten worse anyway. Baker and colleagues at Northwestern, using transaction data on 230,000 households, found that every dollar wagered on sports betting reduces net household investment by about 99 cents.11 Not lottery spending. Not other gambling. Savings.

The damage compounds from there. New York Fed researchers found credit card delinquency rates rising 1.02 percentage points among households under 40 in states that legalized. Furthermore, separate work by UCLA and USC estimates that roughly 30,000 additional bankruptcies a year are attributable to online betting.12 The same restlessness shows up in the options tape. Zero-day contracts reached 65% of total SPX volume in May 2026. Citadel Securities reports that nearly half of all retail options volume on its platform now expires on the same day, up from 13% in 2021.

None of that is saving or investing, and it is the real culprit behind the “K-shaped economy” narrative. In other words, the narrative is driving behavior that is creating the outcome. As we documented in our work on why retail traders consistently underperform, the average retail equity investor earned 16.54% in 2024, compared with 25.02% for the index. The performance gap is due to behavior, not access.

While everyone agrees that the economy is hopeless for the young, the agreement itself is the tell.

What To Do About It

Are there problems in the economy? Yes. Let’s recap what we know.

But here is the real question to ask yourself, particularly if you “feel” like your future is hopeless.

“Do you have the ability to change your outcome?”

That answer is unequivocally – “yes.” You just have to be willing to do the work.

First, fix your benchmark. You are not competing with a stranger’s vacation photos or the top 1% of a country of 340 million people. The relevant comparison is your own plan, and whether this year moved you closer to it. Everything in thinking like an investor rather than a speculator starts there. McKinsey found Americans with strong community ties were nearly four times as likely to feel their lives have momentum. Only a third felt they were connected. Trade some screen time for the other thing.

Second, stop gambling and call it what it is. Nobody ever bet their way out of the K-shaped economy. Will a sports parlay occasionally pay off? Sure. Will it build wealth over 30 years? The data is very clear that it doesn’t. More notably, the ones betting are also the ones who can least afford it.

Third, set goals you can actually hit. The $1.46 million “magic number” that circulates every January is a survey artifact from a company that sells retirement products. It is not your number. The number you need to focus on comes from your spending, your timeline, and your obligations, which is a smaller and far more solvable problem than headlines imply.

Fourth, automate the boring parts. The reason that Gen Z is projected to retire better than the boomers is not superior discipline. It is auto-enrollment. Company 401 (k) plans that enroll workers by default have a 94% participation rate, compared with 64% for voluntary plans. Design beats willpower, every time.

On housing, I recently argued that home affordability is better than the headlines suggest, and that holds for the monthly payment burden. Harvard’s housing center set home prices near five times the median income, up from roughly three times in the 1990s. That is indeed a barrier to entry.

However, the down payment for homes today is 3% versus 20% in the 1990’s. So, yes, the payment is manageable once you’re in, but the hard part is saving up for the down payment. I get that, and here is the hard truth. If you can’t save up a 3% down payment, you have other financial problems (e.g., overspending) that you need to resolve first. The mortgage payment is one thing; the taxes, fees, maintenance, and everything else that goes with the joy of homeownership is quite another.

The K-shaped economy is real, and it is old. What changed isn’t the shape of the economy; it’s just that the media found a narrative that gets lots of clicks and views, and we let headlines do our thinking for us.

Believe the headlines, and you will make exactly the decisions that guarantee they come true for you.

* * *

Tyler Durden Fri, 09/18/2026 - 13:40

Auto Stocks Slide As VW Cuts Outlook, Industry Urges Trump To Keep BYD Cars Out

Earnings pressure and trade-policy uncertainty are weighing on auto stocks on Friday.

Volkswagen shares fell as much as 7.5% after the struggling European automaker lowered its operating-margin forecast, reflecting a write-down on its Porsche stake and weak Chinese demand.

Separately, US auto industry groups urged the Trump administration to maintain restrictions on Chinese vehicles, according to a Bloomberg report.

"Allowing them to open a domestic facility would provide a foothold in the US market at the expense of manufacturers operating here," the coalition wrote.

Signatories include the Alliance for Automotive Innovation, whose members include Ford, General Motors, Toyota and Volkswagen, alongside Autos Drive America, the American Automotive Policy Council and the National Automobile Dealers Association.

The letter to the White House, seen by Bloomberg, comes less than a week before President Trump meets with Chinese leader Xi Jinping next Thursday. It warns that a flood of Chinese BYD vehicles would undercut and upend domestic automakers and parts suppliers.

Europe's move to welcome BYD has been nothing but trouble for the continent, which is seeing its industrial base hollowed out further.

The S&P 500 Automobiles & Components Index remains in a descending channel. 

In US markets, General Motors shares fell 5% this morning, their steepest intraday decline since June, as selling spread across the auto sector. Ford dropped 4%, while Stellantis' US-listed shares slid 5%.

Tyler Durden Fri, 09/18/2026 - 13:20

Yen Jumps On Report Of BOJ "Rate Check" But It's "Too Little Too Late"

Update: (12:40pm ET)

The Bank of Japan, not to mentioned Scott "the House" Bessent, have been most displeased with the yen plunge following today's BOJ rate hike, and so they once again do what they do pretty much every other week now: intervene in the market. 

As we said earlier (see below) when we predicted that some sort of central bank intervention was inevitable, the yen pared declines on Friday after Japan's Nikkei newspaper reported that the Bank of Japan had conducted a rate check in the foreign-exchange market.

Just as it was intended, the report immediately reversed some of the yen’s huge losses triggered earlier in the session by disappointment among traders who had wanted clearer guidance from the central bank on its plans to raise borrowing costs further to stabilize inflation, following a widely expected rate increase on Friday. Instead, what they got were two dissenters appointed by the ultradovish Prime Minister Sanae Takaichi, with two more members due to leave the board next year and likely also replaced by more dovish policymakers, thus kneecapping expectations for more rate hikes. 

Such intervention is meant to squeeze speculative yen shorts and accelerate a move in thin markets, but its ability to produce a lasting reversal may depend on monetary policy. The Fed’s renewed tightening cycle threatens to keep the US-Japan rate differential wide even after Friday’s BOJ rate increase, preserving the incentive for investors to borrow in yen to fund higher-yielding positions elsewhere.

Speculative positioning is also lighter than before the previous intervention. Leveraged funds halved their bearish yen bets in the week through Sept. 8, according to CFTC data, leaving fewer short positions to squeeze if authorities step in again.

The Japanese currency was down 0.6% at 156.83 per dollar at about 12:30 p.m. ET after losing as much as 1.3% earlier in the session. The Nikkei reported that the BOJ inquired with market participants about exchange-rate levels, without saying where it got the information. Such a move has previously preceded official intervention. 

“This is too little, too late,” said Win Thin, chief economist at Bank of Nassau 1982. “The BOJ had another chance to go big and they missed it, same as July. If they really wanted to boost the yen, they should have hiked more than expected and then intervene massively.”

As reported earlier, the yen had weakened to about 158 per dollar after BOJ Governor Kazuo Ueda sent mixed signals on the path for future rate hikes following the bank’s widely expected increase. While he said the stage for policy setting has shifted, he also said it was difficult to determine the terminal rate for the current tightening cycle. Analysts saw his remarks as falling short of the market’s increasingly hawkish expectations.

Japan has entered a holiday period through next Wednesday, when thinner liquidity could amplify the impact of any official intervention. Authorities used a similar window around the Golden Week holiday period this year, first stepping in after the yen weakened beyond 160 just before the holidays and then apparently intervening again during the thinly traded period.

Of course, neither of the previous interventions worked, and this one will fail as well. 

Japan and the US conducted a coordinated yen-buying operation this summer, the first since 1998, raising the stakes for traders betting against the yen. Japan spent a record ¥15.4 trillion on intervention in the month through Aug. 26, according to Finance Ministry data. US Treasury Secretary Scott Bessent has since continued to signal support for a stronger yen.

Despite the coordinate global attempts to boost the yen, the fundamental pressures weighing on the yen remain in place, including Japan’s wide interest-rate gap with other major economies, concerns over the fiscal outlook under Prime Minister Sanae Takaichi’s expansionary spending plans, and - of course - the biggest debt load in history, where every rate hike will lead to much more interest expense.

* * *

Earlier:

The yen sank to a two-week low against the dollar ​on Friday after two policy makers at the Bank of Japan dissented from a widely expected decision to raise ‌interest rates, extinguishing expectations for back-to-back hikes. Governor Kazuo Ueda now needs, at a minimum, to preserve expectations for a December move to prevent markets from unwinding most if note all of the tightening path already priced into rates.

While Japanese policymakers pushed rates to their highest level in 31 years at 1.25%, the move failed to boost the currency as traders felt there was a lack of explicitly hawkish guidance.

As a result of the dovish split, the yen tumbled and the US dollar rose more than 1.2% against the Japanese currency, hitting a a ​two-week high of 158.07 yen after wavering during BOJ Governor Kazuo Ueda's press conference. It was set for its biggest daily increase versus the ​yen since December and the largest weekly rally since September 2024.

Traders had already discounted the equivalent of another hike by year-end before today’s policy meeting, leaving a high bar for any hawkish surprise. The presence of two dissenters signals that support for another rate increase in October is weakening, with OIS assigning around a 20% probability to such an outcome. That leaves Ueda’s press conference carrying the burden of preserving expectations for a December hike and keeping the BOJ on a tightening path that at least matches the Fed’s recent pace.

"They've just clearly underwhelmed versus expectations here," ⁠said Ray Attrill, head of FX strategy at National Australia Bank in Sydney. "And I think that one of the more staggering aspects ​of it was that they couldn't even get the unanimous vote for that," he said. "That really raised eyebrows in the market."

"The statement offered little additional hawkish guidance to support ​bullish Japanese yen positions," said Frantisek Taborsky, currency strategist at ING. "The dissent from (Toichiro) Asada and (Ayano) Sato points to resistance against the fastest pace of rate ‌increases in ⁠more than three decades and suggests they may increasingly act as a brake on further tightening."

According to Mizuho strategists, the dissenters raise concerns that further rate hikes become harder to deliver, potentially steepening the JGB yield curve. Senior strategist Masayuki Nakajima said that Friday’s two dissenters were appointed by Prime Minister Sanae Takaichi. Two more members are due to leave the board next year and could potentially be replaced by more dovish policymakers

“Should their successors come from the reflationist camp, four of the nine Board members would become dovish,” he says; “While that would still fall short of a majority, it could reinforce expectations that sustaining the tightening cycle may become more difficult in the future”

“If so, concerns that the BOJ is falling behind the curve could re-emerge, potentially leading to further curve steepening,” he added.

Commenting on the market reaction, Bloomberg's Ven Ram said that the decision was: 

• marred by dissent from two policymakers who voted against the hike;
• there was none who called for a bigger margin of increase;
• and the accompanying statement, while vowing to continue raising rates, failed to signal a sense of urgency by not saying when they will come.

Japan’s benchmark rate still trails the neutral rate by a considerable margin, and without back-to-back interest-rate hikes, the yen will stay weaker for longer. Only the franc carries a lower interest rate in the G-10 economies, with the Swiss central bank due to meet next week. Should that monetary authority reiterate its preference for keeping rates at zero, it will engender low volatility in two of the major exchange rates that represent the preferred funding currencies.

After a slew of central bank meetings and with Brent crude headed for the first weekly decline this month, global bonds that were deeply oversold are finding some respite. Longer-dated gilts received a boost from the Bank of England’s plan to pause bond sales and stop selling securities that mature in 2049 or later. Gilts with a maturity of 30 years stand to benefit considerably, so an immediate follow-through of Thursday’s rally is likely even though the looming autumn budget realities may check the pace of gains.

Here are some other reactions to the split BOJ decision from Wall Street traders:

NAKA MATSUZAWA, CHIEF MACRO STRATEGIST, NOMURA SECURITIES, TOKYO:

"It's (the yen's decline) a knee-jerk reaction to the two dissent votes. The bottom line is I think it's not too hard for the BOJ to keep the currency pricing for market expectations of rate hikes, basically every three months. And I do think that's what the BOJ wants to keep, not necessarily suggesting an October hike."

RAY ATTRILL, HEAD OF CURRENCY STRATEGY, NATIONAL AUSTRALIA BANK, SYDNEY:

"They've just clearly underwhelmed versus expectations here. And I think that one of the more staggering aspects of it ​was that they couldn't even get the unanimous vote for that. I think that really raised eyebrows in the market. (There was) nothing to put the market more firmly on the sense of another increase in Q4. It's clearly on Governor Ueda to put the market back more firmly on that stance. If he fails to do that, then I think dollar-yen is headed higher. It's hard ‌to believe that just on the back of one quarter-point the (US) Treasury Secretary is going to be jumping for joy and as willing to replicate what they did in August (by intervening). The risk here is that we're heading back up to 160."

BART WAKABAYASHI, BRANCH MANAGER, STATE STREET, TOKYO:

"They raise rates and the currency loses 100 points - I think the market is looking at the BOJ versus the G3 and G10 central banks and the interest rate spread is what is in play. I think it's important that the six-month cycle has been broken, and that leaves the market to say, hey, these guys are willing to act if they have to."But there is a factor where they need to keep up (with other central banks)...if (Ueda) is not as hawkish as the Fed (at the news conference), dollar/yen could really take off higher."

DAVID CHAO, GLOBAL MARKET STRATEGIST FOR ASIA-PACIFIC, INVESCO, SINGAPORE:

"The BOJ has finally shed its long-term status as a monetary policy outlier and is joining the ranks of the other major central banks. The market fully anticipated this rate hike, but it has to be taken in context with what's going on with ​the rest of the world. The BOJ, Fed and ECB have all hiked rates in the same month."

MASAHIKO LOO, SENIOR FIXED INCOME STRATEGIST, STATE STREET INVESTMENT MANAGEMENT, TOKYO:

"Markets should focus less on the statement and more on Ueda's press conference. Expect a neutral-to-slightly hawkish tone, emphasizing that every meeting remains 'live' from here given resilient growth, persistent inflation risks and a policy rate (real yield) that remains accommodative even at 1.25%.More broadly, Japan is ​increasingly participating in a synchronized global tightening cycle. The debate is no longer whether the BOJ hikes, but how far rates ultimately go as major central banks continue to grapple with sticky inflation, AI-driven investment demand and rising term premium. Combined with higher domestic yields and growing confidence in the BOJ's normalization path, more capital is likely to ⁠stay in Japan rather than flow abroad. The bigger story remains that Japan is gradually ceasing to be a marginal buyer of foreign assets, not because it is selling aggressively, but because domestic alternatives are becoming more attractive."

CAROL KONG, CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY:

"The fact that two BOJ board members appointed by Takaichi opposed a hike today suggests the government still leans against BOJ rate hikes. This, together with the lack of guidance on the future pace of ​tightening in the statement, triggered a sell-off in the JPY. As usual, Governor Ueda’s post-meeting press conference will provide more insights into the rate outlook. The risk is Ueda fails to match markets’ hawkish expectations, fuelling further JPY weakness. We expect a follow-up hike in December."

YUGO TSUBOI, CHIEF STRATEGIST, DAIWA SECURITIES, TOKYO:

"Overall, the decision is likely to be seen as dovish. There had been some concern, albeit limited, about a 50-basis-point rate hike, but that did not happen. With two dissenting votes, markets likely ​took the view that it would be difficult to assume the pace of rate hikes will accelerate rapidly. U.S. Treasury Secretary Bessent's negative comments on reflationary policy had also raised concerns about the potential economic damage from the BOJ becoming more hawkish than previously expected. Those concerns have receded, prompting a rise in stocks."

SHUN HONG LIU, CHIEF INVESTMENT OFFICER, HONG INVESTMENT ADVISORS, HONG KONG:

“Honestly, it is so hard to have a very strong view in this market, given things are so political everywhere else in the world. Just imagine Japan needing to get consent from the US for intervention—what can be done and what cannot be done will be coordinated by so many politicians. Last week, if you had asked me, I would have answered yes, it is the end of the yen carry trade (after the rate hike). But now I would answer no, as Takaichi confirms a 3.5% military spending target, while people suddenly believe that Warsh is an uber-hawk. So I just keep my eyes open and trade accordingly."

KANAKO NAKAMURA, ECONOMIST, DAIWA INSTITUTE OF RESEARCH, TOKYO:

"The expected dissent by two members suggests political pressure ​on the BOJ has not entirely faded. The reappointment of Minister Kiuchi in the cabinet reshuffle also signals continued support for expansionary fiscal policy, raising concerns that fiscal stimulus could add to inflation pressures."While the BOJ's statement showed readiness to address upside inflation risks, Governor Ueda's press conference will be key for assessing the future pace of rate hikes.With producer prices remaining elevated, oil prices rising on Middle East tensions, and a weak yen adding to inflation risks, we do ​not believe this rate hike alone will be sufficient. We expect the BOJ to accelerate rate hikes to roughly once a quarter."

PRASHANT NEWNAHA, SENIOR RATES STRATEGIST, TD SECURITIES, SINGAPORE:

"No real surprises from the BOJ decision to hike the target rate 25bps to 1.25%, and neither was the 7-2 split, with recent Takaichi appointees Sato and Asada voting against the hike. The statement retains most of the hawkish tone from the July Statement noting 'accommodative financial conditions are expected to be maintained' even after the hike, and the ‌Bank 'will continue to raise the policy ⁠interest rate'. The Bank reiterated its concerns that underlying inflation could deviate upwards from its 2% target, but we don’t see a smoking gun supporting a back to back hike in October. We stick with our call for rate hikes roughly every quarter with the next 25bps hike in December."

TOHRU SASAKI, CHIEF STRATEGIST, FUKUOKA FINANCIAL GROUP AND FORMER BOJ OFFICIAL, TOKYO:

"It's a little bit surprising to see that the yen weakened after the announcement. Maybe some market participants were expecting intervention like the last time before and after the BOJ's decision.Probably some were surprised because two members opposed the decision and maybe some were expecting some mention of a 50 basis point hike. It's a bit difficult to meet market expectations. Ueda-san has to be very hawkish to keep the yen from depreciating, but I think it's a bit difficult for him to be so hawkish. He has to say that the BOJ will probably hike the policy rate again within this year. But I think it's difficult for him to say, so the market will take it as a dovish press conference."

ANTHONY MALOUF, EBURY, SYDNEY:

"The seven-to-two vote is a touch wider than a clean hawkish consensus would suggest. Dissenters Asada Toichiro and Sato Ayano argued that inflation and growth have not accelerated enough to justify tightening now. The more telling split, though, sits elsewhere. Board members Takata Hajime and Tamura Naoki opposed the outlook language from the opposite direction, arguing underlying inflation has already reached a level consistent with ​the 2% target, which points to appetite for a faster pace rather than a slower one. The yen sold off ​after the decision. We interpret this as markets focusing on the two dissents, suggesting the board is ⁠less united behind a faster pace than the vote count alone implies, rather than doubting the hike itself. That fits our own view that the BOJ will deliver further hikes at a steady quarterly pace, with the next move in December and another in the first quarter of 2027, taking the policy rate to its neutral level near 1.75%."

KENTO MINAMI, SENIOR ECONOMIST AT DAIWA SECURITIES, TOKYO:

"The overall impression of the statement was dovish. BOJ’s new board members Ayano Sato and Toichiro Asada dissented from the decision. They were chosen by Prime Minister Sanae Takaichi, which suggests difficulties in raising rates in the future as the BOJ will have new board members going forward. "The statement indicated that the BOJ would raise rates at least ​once every six months, but this was in line with market expectations that the BOJ would raise rates every three months. These two dissenters were a dovish factor, which is why the yen started falling right after the decision."

MASATO KOIKE, SENIOR ECONOMIST, SOMPO INSTITUTE PLUS, TOKYO:

"I think the statement was hawkish, but markets had expected something ​even more hawkish, which is why the yen weakened after the announcement. "What ⁠struck me as hawkish was the explicit reference to accommodative financial conditions, and the wording that the BOJ will continue to adjust the degree of monetary easing. It also clearly mentioned upside risks. In addition, the BOJ cited a range of factors — not just crude oil, but price increases linked to AI-related demand, the weaker yen, and the mutually reinforcing mechanism between wages and prices. Those elements made the decision look hawkish overall. I don't think (Sato joining Asada in dissent) will have an impact when it comes to the pace of rate hikes being delayed. Sato's dissent was in line with expectations, but I see it as opposition to the timing or pace rather than a blanket objection to rate hikes. It did not come across as outright opposition, which I think is positive for the BOJ as it proceeds with further rate increases."

HIROFUMI SUZUKI, CHIEF FX STRATEGIST, SMBC, TOKYO:

"The rate hike itself was in line with market expectations, but the two dissenting votes came as a modest surprise, as only some market participants ⁠had anticipated them. The outcome has somewhat ​tempered expectations for further rate hikes and conveyed a dovish impression. The pace of future rate hikes is likely to depend primarily on the views of the BOJ's leadership. We therefore do not expect the pace to differ significantly from current market expectations.The yen initially weakened following the ​decision, but attention now turns to Governor Ueda's inflation outlook and policy stance at the press conference."

FRED NEUMANN, CHIEF ASIA ECONOMIST, HSBC, HONG KONG:

"The tone of the statement, along with two dissenters on the decision to raise rates, leaves lingering doubts that Japan’s central bank will be cautious in tightening monetary policy further. In addition, new inflation numbers out this morning for August showed that price pressures remained unchanged in August, rather than accelerate. All eyes are now on the press conference to be held by Governor Ueda, with the market looking for hawkish reassurances that the BOJ is prepared ​to raise rates again soon. While back-to-back hikes appear unlikely, investors will look for clues as to whether officials are prepared to raise interest rates again in December. Given that the Fed has tilted into a more hawkish direction, the pressure remains for the BOJ to follow suit: Governor Ueda will have to follow-up today's rate hike with by keeping the door open for another hike before the end of the year."

Sellside reactions aside, Governor Kazuo Ueda said that with the price trend very close to the bank’s 2% target, authorities now need to ensure inflation doesn’t overshoot.

“It has become important to stabilize the rate of price increases at a level of around 2%,” Ueda said in a post-decision briefing. “In that sense, I believe the phase of policy has shifted to a new stage.” The bank should act preemptively to avoid being forced into a situation where rapid hikes might become unavoidable, he added.

Traders also remained ​alert to the risk of intervention to prop up the currency after Finance Minister Satsuki Katayama said Tokyo won't hesitate to conduct further coordinated action, following a joint US-Japan move to boost the yen in late July.

The yen rallied sharply in early September to its highest since February as traders bet the BOJ ​would embark on multiple rate hikes, although those wagers came under question on Friday. 

The dollar rally against the yen helped the DXY dollar index climb 0.25% to 100.48, as broader currency markets remained focused on energy prices and the U.S. Federal Reserve. The index, which tracks the ​currency against six major peers, was ​up 1.4% for the week to ⁠around a six-week high after the US Federal Reserve hiked interest rates on Wednesday and signaled more increases could be coming.

Traders now see a roughly 55% chance of a quarter-point hike at the Fed's next ​two-day meeting next month, up from 27% a week ago, according to the CME Group's FedWatch ​tool.

Finally, it's worth noting that the BOJ dissenters directly jeopardized the plan of Steve Bessent for a stronger yen (and thus less fears of TSY selling to prop up the yen through intervention). According to Bloomberg, Warsh should "seriously consider a little Friday afternoon intervention to ensure that this bounce in USD/JPY makes a lower high than the prior ascent to just over 160."

Of course, the problem with constant meddling in market prices is the risk that the market tests you, forcing ever-more frequent action to keep things in line. At the very least anyone who stayed with the short-dollar trade has received a painful kick in the shin, which arguably will dissuade some punters from staying in the position the next time that the authorities step in. 

Tyler Durden Fri, 09/18/2026 - 13:01

Chinese DRAM Giant Enters Booming Flash Memory Market To Take On Samsung, SanDisk

Chinese chipmaking giant, CXMT, and the biggest IPO of the decade in the mainland market, is preparing to enter the booming flash memory ​chip market dominated by Samsung Electronics and other foreign rivals, Reuters reported citing sources, a move that would broaden ‌its customer base amid a global memory shortage.

The move would also pit the dynamic random access memory (DRAM) chip specialist against domestic rival YMTC, taking it into one of the semiconductor industry's fastest-growing segments.

The relentless, debt-fueled demand from AI servers (where ROI remains deeply negative) has created a global memory shortage that industry executives believe will persist through at least 2027. SK Hynix CEO Kwak Noh-jung said in July that 2027 ​could be the industry's worst year from a supply perspective, while TrendForce expects NAND supply tightness to ease only in the second half of next ​year, unless of course the bond market cracks first at which point all the hyperscalers will simply run out of money to buy massively overpriced DRAM and flash memory... which it will now that global yields are at decade highs. 

Manufacturers have also prioritized capital spending on DRAM and high-bandwidth memory, or HBM, limiting additions to NAND flash capacity, according to ⁠TrendForce, worsening shortages in this segment. DRAM provides the working memory used by processors, while NAND stores data in phones, computers and data centres. Both have seen costs explode in recent months, making memory the biggest cost driver of electronics purchases, with Goldman forecasting that memory prices will singlehandedly raise core PCE by 0.5%.

CXMT, also known as ChangXin ​Memory Technologies, plans to establish a research-and-development production line for NAND flash memory at its new plant in Beijing, according to the report; the company has ​also set up a research institute in the Chinese capital and projects there include NAND development, one source said.

CXMT has discussed its NAND plans with customers, including a newly established startup that intends to buy its NAND chips for storage products used in AI systems and supercomputers. 

Samsung was the world's biggest NAND supplier ‌by revenue ⁠in the second quarter with a 28% share, according to research firm Counterpoint. SK Hynix ranked second, followed by Micron. China's YMHT recently surpassed Sandisk, and is now tied with Japan's Kioxia for 4th spot in NAND marketshare. It will likely overtake Micron next quarter. 

CXMT and YMTC, known in China as the "twin stars" of the country's memory-chip industry, have largely operated in separate markets. CXMT dominates Chinese production of DRAM, while YMTC is the country's leading NAND manufacturer.

However, thanks to the biggest memory bubble in history, those lines have begun to blur. In April, Reuters reported that YMTC had sent low-power DRAM samples to customers as it weighed entry into CXMT's core market.

And now CXMT is entering the NAND market.

While ​the two firms lag behind larger international ​rivals and are more exposed to ⁠lower-priced products, they are growing at a blistering pace as tight supplies have strengthened their pricing power with some Chinese customers. In some cases, they have charged more than their foreign competitors, Reuters reported in July.

Both companies have emerged as key pillars of Beijing's drive to build a self-sufficient chip industry ​and close the gap in strategic technologies like AI. They grew with backing from China's national semiconductor fund and local ​governments. CXMT expanded with ⁠backing from Hefei, the provincial capital of Anhui province, in eastern China, while YMTC was built in Wuhan, the provincial capital of central Hubei province, reflecting competition among Chinese local governments to attract strategic industries through investment and incentives.

CXMT, which raised 57.92 billion yuan ($8.6 billion) in July in Asia's biggest initial public offering this year, plans a second memory-chip plant ⁠in Beijing and ​was in funding talks with a tech manufacturing hub backed by the local government, Reuters reported last ​month. YMTC's parent, CCSH, is also planning a Shanghai listing that aims to raise 33 billion yuan.

Washington's export restrictions have added urgency to China's drive to develop domestic memory suppliers. Washington placed YMTC on its Entity List ​in 2022 and later tightened China's access to HBM chips that are used alongside AI processors.

Tyler Durden Fri, 09/18/2026 - 12:40

"Good Manners" Have Never Been An Effective Strategy For Retaining Sovereignty

By Molly Schwartz, cross-asset macro strategist at Rabobank

10-year Treasury yields slid lower over yesterday’s session, retracing more than 9bps from Wednesday’s post-FOMC high of 5.02, with much of the move seemingly driven by falling oil prices, as Brent crude oil sank $3.5 to intraday lows below $102/bbl before retracing to $104/bbl. The UST yield curve has continued flattening, albeit in a bull-flattening fashion, as 2-year yields were dragged lower by almost 7bp. Given recent US economic data suggestive of a stronger-than-previously-thought labor market and hotter-than-preferred inflation, we maintain that the risk to our FOMC view of continued holds through year-end is skewed in favor of one hike this year, but believe that market-implied pricing of between one and two additional hikes in 2027 is unlikely (Read more about our FOMC view from Rabobank’s Fed whisperer, Philip Marey, here).

Politico reported yesterday that a trade deal is on the horizon between the US and Mexico, as some pointed to a recent call between Trump and Sheinbaum. An unnamed official said that “US-Mexico talks are active and continue to move in a positive direction…any notion that the call didn’t go well is wrong,” though “another person familiar with the call” referred to it as “so-so” and said that it “created a bit of noise.”

To those who have been following the trade negotiations between the US and Canada, this may feel uncomfortably similar to the days before the US-Canada trade relationship deteriorated completely in late August. However, Mexico already seems far better positioned to emerge with a favorable trade deal, simply by avoiding the headlines. While USD/MXN has recently been trading above the 17 level, we believe that trade progress remains constructive for the MXN and see continued resilience.

But the relationship between the US and Canada is only eroding further. Trump recently signed a Presidential Memorandum to “identify and take steps in response to Canada’s measures that have denied US firms access to Canada’s federal and provincial procurement markets.” This comes as Carney spoke to the EU Parliament in Strasbourg yesterday, further clarifying his position on where he sees middle powers fitting in an increasingly bifurcated world. He said that he is “not proposing a third bloc in order to become a great power rival, only with better manners…we are pursuing resilience so that no one, no one, can control our open markets, impair our sovereignty, threaten our territorial integrity, or undermine our freedoms.”

Canadian PM:

'I'm not proposing a third block in order to become a great power rival only with better manners...'

*Chuckles and applause*

'We do not seek power to dominate others... we are pursuing resilience so no one can control our open markets' https://t.co/nBXWnTCgF6 pic.twitter.com/T0KkDXRoqt

— RT (@RT_com) September 17, 2026

It should be noted that good manners have never been proven to be an effective strategy for retaining sovereignty. Carney also clarified that Canada is not seeking to become a “full member” of the European Union, while Canada’s EU ambassador-designate, Jonathan Wilkinson, asserted that Canada wants to “get as close as [it] possibly can to the EU without giving up significant chunks of sovereignty.”

Speaking of non-EU members, the Bank of England announced its decision to hold Bank Rate unchanged at 3.75% in a 6-3 vote. Rabobank’s BoE whisperer, Stefan Koopman, highlights in a Bank of England Comment that there is a case for the Bank to tighten borrowing conditions further, suggesting that November is a live meeting. Rabobank is forecasting a 25bp hike at the November meeting, assuming that the Autumn Budget is well absorbed. (Read more here).

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Tyler Durden Fri, 09/18/2026 - 12:20

Ukrainian Drone Hits Russian Nuclear Plant Days After Trump Energy Truce Plea

President Trump raised eyebrows when on Monday he declared that Russia and Ukraine had agreed to stop attacking each other's oil and energy infrastructure, amid global crude and diesel supply problems related mostly to the Hormuz Strait crisis.

But then within days later it became clear that the default reality on the ground has persisted, as energy sites continue to get pummeled. And it's not only refineries and ports which have continued getting hit, but as of Thursday morning a Russian nuclear plant was apparently targeted in a Ukrainian drone attack.

Kursk Nuclear Power Plant, file image

A drone hit the cooling tower of a reactor unit at Russia's Kursk Nuclear Power Plant, the International Atomic Energy Agency has announced Friday.

The unit was operating at the time, but its operating mode was unchanged and no fire broke out. 

The UN agency's director Rafael Grossi declared in a statement that "all attacks on nuclear facilities are unacceptable as they could endanger nuclear safety and security, irrespective of where they occur."

He urged "maximum military restraint to prevent the risk of a nuclear accident" - which remains a top dangerous reality of the battlefield in the context of the Ukraine war.

In early July the same site had suffered a prior drone attack from Ukraine. One industry source reviews:

The Kursk Nuclear Power Plant (Kursk NPP) has been the target of several military actions and drone strikes. The most notable incident occurred in August 2025 when a drone detonated and damaged an auxiliary transformer, sparking a structural fire that had to be contained by emergency teams. The International Atomic Energy Agency (IAEA) monitored the event and confirmed that radiation levels remained normal.

The Kremlin going back to 2024 has accused Ukrainian forces of seeking a 'provocation' at the Kursk nuclear plant.

The Kursk Nuclear Power Plant (NPP) lies about 25 miles west of the city of Kursk, which is the administrative center of the oblast by the same name.

The plant continues to be a major electricity producer for Russia. Kremlin officials have long voiced alarm that Ukraine may seek to use some major provocation to draw its backers in NATO deeper into the conflict.

Apparently on Ukraine's target bank going back years...

Russia's Kursk Nuclear Power Plant seen through the camera lens of a Ukrainian Shark reconnaissance UAV. pic.twitter.com/bbwN8YQq4s

— Status-6 (War & Military News) (@Archer83Able) September 15, 2024

As a reminder, Trump began the week by declaring on Truth Social, "Ukraine has agreed not to hit Russian Energy targets. Russia has agreed to do, likewise! The World’s Diesel price rise is mostly caused by the Russia/ Ukraine War, not Iran." ...So much for that.

Tyler Durden Fri, 09/18/2026 - 12:00

Researchers Used Claude To Hack OpenAI Employee Accounts

Three security researchers used Anthropic's Claude to breach OpenAI employee accounts and gain access to private company software in a July attack that began with an image upload to the company's public help forum.

The researchers, Harsh Jaiswal, Mohan Pedhapati and Rahul Maini of Hacktron AI, described the July 25 breach in a report published September 13. They said the work took less than 72 hours from the initial discovery to demonstrating access to an internal OpenAI software repository. OpenAI subsequently paid them a $6,500 bounty.

The disclosure follows a separate incident earlier in July in which OpenAI's own AI agents escaped a testing environment and attacked Hugging Face, a platform used to host AI models and datasets. In that case, OpenAI says the agents took dangerous actions that weren't directed by a human - the incident being used to spook everyone into letting far-left technocommies run AI oversight. 

Hacktron's team directed its own operation, reported the vulnerabilities to OpenAI and stopped after demonstrating access.

On July 25, we hacked OpenAI.

Two bugs let us take over ChatGPT/Codex accounts of OpenAI employees (+some unaffiliated users) and reach connected services: Outlook, Slack, GitHub, etc.

We proved it with a PR in OpenAI’s internal codebase . It took us <72h. 🧵 pic.twitter.com/gVsmQZwSc8

— s1r1us (@S1r1u5_) September 18, 2026 How A Forum Upload Reached Internal Software

The entry point was OpenAI's public discussion forum, which runs on software supplied by Discourse (3rd party software that manages discussion boards). A flaw in an image-processing component called libheif allowed a specially crafted image upload to make the server execute the researchers' instructions. Discourse's security advisory confirms the vulnerability required no interaction from a victim.

Hacktron said the faulty code had been changed in 2025, but the change was not identified as a security fix. The forum was still running a vulnerable version.

Illustration via Hacktron

That gave the researchers access to the forum, but a second flaw turned the intrusion into something more serious.

OpenAI's shared sign-in system allowed people to use their OpenAI identity on the forum. The researchers found that the forum's sign-in tokens, digital credentials that keep users authenticated, carried permissions extending beyond the discussion site. A compromised forum session could therefore become a route into that person's ChatGPT and Codex accounts.

One employee's Codex account was already connected to OpenAI's private GitHub software repositories. The researchers used that account to have Codex submit a harmless proposed documentation change, known as a pull request, to an internal repository. A pull request proposes an edit for review; it does not, by itself, install a change in live company systems.

The researchers said they deliberately avoided inspecting sensitive code and halted testing after submitting the demonstration.

AI Accelerated The Exploit

Hacktron said an earlier Claude model produced a partially working exploit but struggled to make it function with the target's normal security protections in place. After Anthropic released Opus 5, the newer model produced a working version within hours. The company had access to Anthropic's program for authorized cybersecurity researchers, which relaxes some restrictions, its chief executive told Business Insider.

According to the company, skilled human guidance remained important - while AI reduced the time needed to turn a software flaw into an actual, reliable attack. According to Hacktron's timeline, OpenAI confirmed its sign-in fix roughly 14 hours after the initial report. Discourse separately patched the vulnerable image-processing component and added stronger isolation around image processing.

"We narrowed the permissions on Community sign-in tokens and revoked affected tokens and sessions," OpenAI said.

OpenAI also clarified that the $6,500 reward covered the flaw on its side of the sign-in system. Testing against the Discourse-hosted forum was explicitly excluded from its bounty program.

We reported the bug to Discourse and OpenAI. OpenAI fixed the SSO issue roughly 14 hours after our initial submission.

Discourse received our separate report Saturday, replied Sunday, and had a fix Monday.

OpenAI awarded us $6,500. pic.twitter.com/WeSzRtf14N

— s1r1us (@S1r1u5_) September 18, 2026 The Separate Attack By OpenAI's Own Agents

The Hugging Face intrusion arose from OpenAI's internal cybersecurity testing earlier in July. OpenAI was evaluating agents that could write code, use software tools and take multiple steps toward a goal, rather than simply answer a user's questions.

To measure their hacking capabilities, OpenAI deliberately reduced certain safeguards that normally restrict dangerous cyber activity. The agents were nevertheless supposed to remain inside isolated testing environments, without open internet access. The models involved included GPT-5.6 Sol and an internal research prototype that was not intended for public release.

According to OpenAI, the agents exploited a previously unknown vulnerability in a service used to download software packages. That provided a route to the internet. They also repurposed the shared service as an unauthorized message board, allowing agents that were supposed to work separately to exchange discoveries and coordinate. An independent investigation by METR (oh...) and Redwood Research found that roughly 1,200 agents used the message board, exchanging more than 70,000 messages and files. About 700 participated in the attack on Hugging Face.

The agents were trying to cheat a cybersecurity test called ExploitGym. METR's investigation concluded that the Hugging Face attack appeared primarily motivated by understanding how the test's automated scoring system worked, rather than simply stealing an answer key. That information could help the agents fool the evaluator instead of completing the assigned challenges as intended.

The investigators also found agents that recognized the attack was outside their assigned task and unethical, but participated anyway. 

Hugging Face reconstructed roughly 17,600 attacker actions between July 9 and July 13, including many unsuccessful attempts. It said the volume and persistence of the activity complicated detection: successful attacks were mixed into thousands of failed attempts across different systems.

OpenAI's report dates the compromise of Hugging Face's production infrastructure to July 11-13. OpenAI detected suspicious activity in its own environment on July 19 and publicly disclosed its responsibility on July 21, four days before Hacktron demonstrated its separate breach.

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Tyler Durden Fri, 09/18/2026 - 11:40