Zero Rss

"We Don't Need To Sell The Story Anymore": Nuclear Wins The Argument At WNA 2026... Now Everyone Is Racing For Bronze

For most of the 2010s, the annual World Nuclear Association symposium in London was an exercise in group therapy: an industry reeling from Fukushima, German shutdowns and a seven-year uranium bear market, explaining to an indifferent world why it deserved to exist. Not anymore.

This year's gathering (Sept 9-11) drew a record crowd: attendance was up 17% from last year per BofA, with more than 1,000 delegates from 50 countries and 35 new WNA members. And the mood had changed completely. As Cameco CEO Tim Gitzel put it during his fireside chat:

"We don't need to sell the [nuclear] story anymore, we just need to convert it to action."

CIBC analyst Anita Soni, who also attended, summed up the three days the same way: "nuclear energy has largely won the policy and market acceptance debate, with attention now turning to execution at scale." The question is no longer whether the world builds reactors, but whether anyone can build them on time and on budget. On that front, the industry's track record needs little comment.

There's also a catch that Gitzel, whose Cameco owns 49% of Westinghouse, was candid about: in the West, nobody wants to go first. "Everyone is racing for bronze," he said. Most utilities would rather be the third to build a new large reactor than risk being the first. Constellation's Jason Murphy confirmed this from a separate panel: CEG is one of the companies that would "prefer to be third, not first." This is how you end up with a race in which all the runners stay at the starting line watching each other.

The symposium lined up nicely with the IAEA's annual outlook, which raised its long-term nuclear projections for the sixth consecutive year. Under the high case, global capacity hits 1,045 GWe by 2050 (from 992 GWe in last year's edition) and 1,284 GWe by 2060, or about 3.4x the 377 GWe operating at the end of 2025. Even the low case now roughly doubles capacity by 2060.

According to Northland's Jeff Grampp, the more important point is that the low case moved most: +14% to 641 GWe, versus +5% for the high case. In his view this "suggests a de-risking of the long-term growth narrative." North America's low case also flipped from contraction last year to growth this year (136 GWe by 2050, vs 98 GWe previously).

Source: ZH using IAEA figures cited by Northland and CIBC

Northland makes two further points we agree with:

• The forecast is bottom-up and not reverse-engineered from a net-zero scenario, "which we think make these projections more credible/realistic." In other words, nobody started with 1.5°C and worked backward.
• The driver has changed from climate to energy security. "While its zero carbon attributes are compelling, we think the energy security investment case is stronger and more resilient than climate-based investment, which can ebb and flow with political regimes." We've been saying the same for years, and it's hard to argue with after watching Germany's economy minister call for a "nuclear rethink" as energy prices surged in April. Better late than never.

Then there are SMRs. Last year the IAEA saw small modular reactors taking 5%-24% of new capacity by 2050, a range so wide it was nearly meaningless, with the low end at a "paltry" 16 GWe. This year the band is 23%-28%, or about 120-285 GWe. In North America, ~60% of new nuclear capacity is expected to come from SMRs. Readers will know that we've long argued modular, behind-the-meter reactors are the only real long-term answer to the AI power problem, so it's nice to see the IAEA catching up (for much more, see "Bring Your Own Power Plant: Behind-The-Meter To Power 25% Of All Data Centers By 2030").

CIBC's Krista Friesen, in her Weekly Blueprint, adds a point that gets far less attention: the existing fleet is old. Two-thirds of operating reactors are more than 30 years old, and 46% are over 40. Even in the high case, about one-third of today's capacity retires by 2060. The industry therefore has to keep building just to stand still, and in 2025 it didn't quite manage that. Seven reactors (2.8 GW) were retired and only three (3.0 GW) were connected. Nuclear generation grew 1.1%, overall electricity generation grew 2.7%, while nuclear's share of global power fell to 8.4% from 8.7%.

The $6 trillion question

Day 1 of the symposium was a Finance Summit, and the headline number was large. Meeting the "Tripling Declaration" would require about $6 trillion over 25 years, with annual nuclear capex rising from about $80BN today to more than $250BN a year through 2050. (For reference, current aggregate national targets put global capacity at 1,457 GWe by 2050, which is almost a quadrupling.)

The notable change is that, as one Westinghouse/EDF/Orano/GE Vernova panel put it (per BofA), "A few years ago the question was whether there was sufficient investment money to do this. Now there is." CIBC reports that discussions are "now focused less on whether institutions will invest and more on when." The WNA also launched a World Nuclear Investment Guide to help turn a "specialized energy investment" into a mainstream infrastructure asset class. The goal is to take design, licensing, regulatory and supply-chain risk out of projects and leave only execution risk, which, based on history, is plenty.

The most useful comments came from the customers. On BofA's "Beyond offtake" panel, ExxonMobil said plainly that "the nuclear industry doesn't have a technology problem, it has a DEPLOYMENT problem", and argued that the risk model is wrong. In LNG or CCGT projects, nobody expects the technology vendor to carry most of the risk. The owner-operator does. Exxon is preparing a report proposing a new delivery model.

Amazon, which is putting "real money on the table" behind X-energy, made a point that should be pinned above every regulator's desk:

"No point for a PPA if the connections take 7 years."

That's the grid interconnection queue in one sentence, and it's why we've been pushing "behind the meter" on-site generation for data centers (going so far as to tweet in December: "Make 'behind the meter' mandatory"). Demand isn't the issue either: CIBC notes Microsoft plans to more than triple its data center capacity to over 38 GW by 2032 from about 12 GW, excluding rented neocloud capacity. Those gigawatts have to come from somewhere.

Meanwhile, China just builds them

While the West waits to see who goes first, China explained how it does things. Ma Yuanhua of State Nuclear Power Technology Corp. said China had 62 reactors operating (66 GW) and 58 under construction (69 GW) as of July, with targets of 110 GW by 2030 and 150 GW by 2035. The method is dull and it works: standardization, specialization, centralization. Targets include 80% design reuse, a 56-month construction schedule, 93%+ factory acceptance rates, and centralized procurement. (By comparison, some Western projects have spent longer than 56 months on permitting.)

Of course, it depends who is counting. SNPTC's 58 includes projects China considers underway. The WNA only counts reactors once the first concrete has been poured, and by that stricter definition, per Goldman's monthly tracker, China had 37 reactors under construction as of Aug 11, more than twice India (8) and Russia (7) combined, and nearly as many as the other 16 countries on the list put together (42). The U.S. doesn't appear on the chart at all, which is the more telling number. As we summarized it on Aug 13: "China 37 nuclear reactors under construction; US 0."

Source: @zerohedge on X; World Nuclear Association, data compiled by Goldman Sachs Global Investment Research

This is where "everyone racing for bronze" leads: the U.S. hasn't even qualified for the race yet, while China is already building its next reactors.

The Western lesson was said out loud. Constellation: "The West should apply the China model." Speakers backed a "license once, review once, build many" framework, and there's real movement. Finland's regulatory overhaul cuts binding requirements from about 8,000 to 1,500, the U.S. NRC is changing its culture under the ADVANCE Act, and Europe's ENGARD initiative aims to harmonize design reviews across countries.

Other highlights from around the world:

• Japan is back. TEPCO restarted Kashiwazaki-Kariwa Unit 6 on Feb 9 after 14 years offline. Kansai Electric says 15 reactors have now restarted since Fukushima, and Japan's policy has moved from "reducing" to "maximizing" nuclear, with a 20% share targeted by 2040 and 11-14 new large reactors by the 2050s. We asked back in May whether new Japanese build was inevitable. The answer appears to be yes. 

How it's done:

This is TEPCO’s Kashiwazaki-Kariwa nuclear power station in Niigata. The seven-unit site has 8.2GW of capacity, making it the world's largest power plant. Unit 6 entered commercial operation on 16 April 2026, returning a 1.36GW Advanced Boiling Water Reactor to… pic.twitter.com/N2HrvHfFhA

— zerohedge (@zerohedge) September 30, 2026

• Poland has secured €17BN for its first plant, with three AP1000s in preparation.
• Czech Republic is moving to 80-year operations and building new units plus a Rolls-Royce SMR.
• USA: Following the May 2025 Executive Order calling for 10 large reactors under construction by 2030, DOE's $17.5BN long-lead procurement program has letters of intent with seven unnamed counterparties. Some attendees are optimistic about 1-2 site announcements before the midterms. TerraPower has its construction permit and an active job site in Wyoming.
• Africa: Togo's president signed on to the tripling pledge and will host the NEISA summit in 2027, noting that Africa wants "partnerships and investment rather than technology handouts."
• Ships: HD Korea Shipbuilding presented on nuclear-powered commercial vessels, a timely follow-on to Washington laying the groundwork for offshore nuclear in July. Its risk disclosure was admirably honest: "It might not work."

The real bottleneck: you can't 3D-print a uranium deposit

This is where the symposium got most interesting for markets. Reactors can be standardized, financed and eventually built. The fuel to run them is a different problem. Here is what CCJ's Gitzel said, via BofA:

Uranium mining is the bottleneck, as deposits are non-reproducible and lead times from discovery to production range up to 20 years; while fuel conversion, enrichment and fabrication can be more easily addressed with capital alone.

Kazatomprom's Dastan Kosherbayev put it more bluntly: after years of underinvestment, producers will prioritize customers who give clear, long-term demand signals. Kazatomprom will "no longer turn down attractive eastern deals in anticipation of potential western demand." Put simply, Western utilities that have been waiting for spot dips may find the East has bought the inventory. This comes as Russia banned sulphuric acid exports through year-end, threatening about 3MM lbs of Kazakh 2027 output, while Kazatomprom agreed to sell uranium to Rosatom's Uranium One. Coincidences happen.

Northland ran the numbers, and they are large:

• Uranium: At 0.4-0.5MM lbs per GWe per year, the IAEA's 641-1,045 GWe range implies 288-470MM lbs of annual demand by 2050, versus about 168MM lbs today, and that's before replacing depleted mines.
• Enrichment: Excluding Russian and Chinese SWU, Western demand is about 28.5MM SWU against about 24.8MM SWU of supply (per Urenco). The West is already in deficit. In the IAEA high case, demand rises to about 57MM SWU, a ~32MM SWU shortfall, or up to 69MM if SMRs running on HALEU take 30%-50% share.

ZH chart built from Northland Capital Markets figures

Urenco confirmed this from the supply side: its order book has grown from €8.7BN in 2021 to €21.3BN, and it is adding 4.6MM SWU, almost a third more capacity, "based on a market assessment, not orders." Separately, Constellation said LEU+ (fuel enriched up to 10%) will allow 24-month reload cycles across its fleet, and Silex/GLE expects its laser enrichment license near Paducah by 2027. As we noted when DOE put $2.7BN behind domestic enrichment in January, the fuel chain is where the money is going.

Prices are responding. BofA's charts:

On uranium, the long-term contract price hit an all-time high of $96.50/lb (even if nuclear stocks have not noticed), above the prior 2007 peak of $95.00, as we noted in "Uranium Needs To Go Higher" earlier this month. BofA reaffirmed its forecasts: $104.20/lb for 2026 and $129.80/lb for 2027, which would be a new record, before easing to a long-term $84.75.

Spot has also been trading below term, as the chart above shows. BofA says the important change is who is buying. Producers' share of term selling fell from 92% in 2023 to 76% in 2025, and "rising utility participation in the term market is a driver of higher U3O8 prices, as churn... is replaced by end-user consumptive demand." In other words, less trading between hedge funds and more buying by utilities that actually need the fuel.

For those who think the move is over, here's the 38-year chart. Uranium remains well below its 2007 nominal peak, even though the demand story is now much broader.

None of this is new to regular readers. Goldman flagged a cumulative 2.3 billion lb uranium supply deficit through 2045 in May when it added SMRs to its models, and we argued in August that the market is still underpricing the nuclear build cycle.

How to trade it: picks and shovels over reactor dreams

The sell side mostly agrees on direction, but not on where to position along the value chain:

• BofA (Lawson Winder) "remains constructive" and names buy-rated U.S.-listed exposure: CEG, TLN, VST in power; CCJ and OKLO among vendors; and CCJ and STDN in the fuel cycle.
• Northland (Jeff Grampp) is also long-term bullish but more careful on timing. He cut price targets on reactor developers (IMSR to $8 from $15, SMR to $10 from $16, NNE to $22 from $37) to reflect higher costs of capital (i.e., more dilution) and a slower 2030-2035 buildout. He instead favors fuel and supply-chain names that make money now: BWXT, LEU, EU, URG, MIR. Asked to choose between enrichment and uranium, Northland picks uranium.

That seems like the right reading of the symposium. The long-term story is intact and improving, with the IAEA raising forecasts again, hyperscalers writing checks and Japan back in the game. The near-term constraints are physical: fuel, forgings, workers and grid connections. Reactor developers have to wait for the first Western mover to deliver on time and on budget. Uranium miners and enrichers don't. Both need the same uranium.

As Kansai Electric's delegate said, the industry's next phase is about "disciplined vision," and increasingly about meeting in person, "becoming more analog in an increasingly digital world." That's also a fair description of uranium: a physical asset that can't be replicated, needed to power data centers, and in short supply.

More in the full notes: BofA Global Research, "Postcard from the 2026 WNA Symposium" (Sept 15); CIBC Capital Markets, "2026 World Nuclear Symposium" (Sept 15) and "IAEA Raises Nuclear Outlook For Sixth Consecutive Year – The Weekly Blueprint" (Sept 14); Northland Capital Markets, "Takeaways From Updated IAEA Nuclear Forecast" (Sept 17), all available to pro subs.

Tyler Durden Sun, 10/04/2026 - 08:45

Why Apartments In Tokyo Are So Much Cheaper Than In NYC

Authored by Julia R. Cartwright via The Daily Economy,

Imagine it's January in New York and you're sharing a tiny apartment with two roommates. The walls are crumbling around you, and there's a hole in your bedroom wall big enough to see outside. Every time it rains or snows, water drips into your room. You call your landlord to fix it over and over again, but nothing happens.

Tokyo apartment building by night. CAPTAINHOOK via Shutterstock.

This is reality for many New Yorkers. This degradation is the predictable result of decades of housing policy that has kept supply scarce and left rent-regulated buildings to decay. Many people blame it on big-city life, but lessons from Tokyo show us that it doesn't have to be that way.

Tokyo Metropolis is home to about 14.27 million people, far more than New York City's roughly 8.5 million. Yet renting in a city not quite twice the size costs a fraction of what it does in the biggest city in the US.

In the mid-1990s, a one-bedroom apartment in Tokyo cost about the same as one in New York, a little less than $1,000 a month. By 2025, a New York one-bedroom averaged about $4,400 per month, while a Tokyo one-bedroom ran about $1,270. A weaker yen explains part of that gap, but even in yen, Tokyo rents barely moved in 30 years while New York's rents nearly tripled.

Housing prices ultimately come down to supply and demand. So how has Tokyo managed to keep housing relatively affordable, while New York has struggled to do the same?

Tokyo has been focused on keeping up with demand; its housing stock nearly tripled between 1963 and 2013, reaching 7.36 million homes. To do this, Japan keeps zoning flexible. Instead of limiting each area to a single use, zoning allows homes, shops, and light industry to coexist on the same blocks. Projects that follow these rules can be built "as-of-right," without discretionary review or giving neighbors the power to block them.

Japan's zoning rules are uniform across the country. The national government defines 13 standard zones instead of leaving land use to individual neighborhoods. That top-down approach cuts both ways, however, since a national system could tighten rules as easily as loosen them, but Japan's has repeatedly loosened them to allow more housing.

New York City's zoning works in nearly the opposite way. A site-specific rezoning goes through the Uniform Land Use Review Procedure, a review so onerous that about 40 percent of private rezoning proposals fail to get approved. About 27 percent of Manhattan's lots are under restrictive landmark regulations, and historic districts see new buildings at about one-sixth the rate of other lots.

Then there are the empty NYC apartments. The 2019 Housing Stability and Tenant Protection Act capped rent increases on vacant rent-stabilized units and limited how much renovation cost landlords can recover. When a $700-a-month unit needs $100,000 of work to meet code, many owners leave it empty; this helps explain why nearly 57,000 rent-stabilized apartments were empty in 2025.

Continuing their stance of flexibility, Tokyo has allowed smaller apartments to be built. A typical one-bedroom is about 430 square feet, compared with 590 for a New York one-bedroom. Smaller apartments lower the barrier to entry for single renters and young professionals to get their own place.

New York spent decades making small units hard to build through a 400-square-foot minimum rule dating to 1987 and zoning rules called the "Dwelling Unit Factor" that forced large average unit sizes. The "City of Yes" amendment only eased those rules in December 2024, after decades of limiting the kinds of smaller, cheaper apartments Tokyo builds routinely.

Buildings in Japan also turn over faster. Japan's tax code depreciates a wooden house over 22 years, and the average Japanese home is demolished at about 32 years old, versus roughly 70 in the US. Old stock gets replaced with newer, denser buildings instead of being preserved indefinitely.

Japan's inclusive regulations result in much more building. Tokyo averaged about 155,000 housing starts a year from 1995 to 2015 and still starts roughly 130,000 annually; New York, by contrast, added roughly 50,000 in 2025. Since the 1960s, Tokyo's stock has nearly tripled while New York's has grown only 20 to 30 percent.

Factory-built homes also help ease supply constraints. One Japanese Sekisui House plant produces about 20 houses a day, and roughly 13 percent of new Japanese homes are prefab or modular. New York has only recently started experimenting with modular construction, and it remains a small share of the city's building, far behind Japan.

To be fair, Tokyo isn't cheap by Japanese standards, but it has accommodated millions without New York-style crumbling buildings and vacant units. New York is moving the other way: Mamdani's Rent Guidelines Board froze rents for roughly one million stabilized apartments. The freeze helps current tenants but creates no new homes, and analysts expect more units to sit empty as prices for non-stabilized apartments keep rising.

The renter watching snow blow through the hole in her bedroom wall won't be saved by another year of frozen rent. Instead of doubling down on the policies that brought scarcity, dilapidated apartments, and sky-high rents, New York could take a lesson from Tokyo, where the way to make housing affordable has been to make a lot more of it.

Julia R. Cartwright is an economist whose work specializes in law and economics, political economy, and economic development. Her research features topics like the governance structures of crypto markets, the economic consequences of judicial interventions in courts in East Africa, and the development impact of housing regulations.

Tyler Durden Sun, 10/04/2026 - 08:10

Black Smoke Reported Over Critical Aramco Refinery As Saudis Weigh Major Assault On Houthi Rebels

Unverified reports and footage circulating on X early Saturday morning appear to show smoke rising from Saudi Aramco's Riyadh refinery. The cause and any impact on operations remain unclear. Separately, Axios reports that Saudi Arabia is preparing a major offensive against Iran-backed Houthis in the coming days. President Trump's comments last week that a bombing campaign against Tehran could resume after the midterm elections add to signs that the Gulf conflict remains far from any near-term resolution.

Turkish news outlet Türkiye Today cites NASA's FIRMS satellite monitoring system, which shows higher-intensity VIIRS thermal hits across Aramco's Riyadh refinery, one of Saudi Arabia's most important refining assets, with a capacity of about 130,000 barrels a day.

Open-source intelligence (OSINT) accounts on X are sharing footage of what may be Iran-backed Houthi attacks on the refinery. No official word yet on why thick black plumes of smoke are rising from multiple locations at the refinery.

More unconfirmed close-up footage showcasing the ongoing fire inside Saudi ARAMCO Riyadh Refinery, Riyadh Province, Saudi Arabia.
https://t.co/m4ITAHGBy0 pic.twitter.com/BMOGtYrtws

— Hexagone Intel (@osinthexagone) October 3, 2026

⚡️BREAKING: Saudi Aramco Riyadh Refinery has been Struck by Yemen's Houthis

Smoke is rising from Multiple Locations pic.twitter.com/s1apeEtfIX

— Iran Observer (@IranObserver0) October 3, 2026

Houthis have managed to Strike the Main Saudi Aramco Refinery in Riyadh!!
Nasa Frim shows it's likely on Fire after the hit. https://t.co/Sx0gLmwYRY pic.twitter.com/fgiXtH1R5k

— Ali (@MerruX) October 3, 2026

Unconfirmed footage showcasing ongoing fires inside Saudi ARAMCO Riyadh Refinery, Riyadh Province, Saudi Arabia. Unusual VIIRS thermal hits with increased intensity are observed across the refinery on NASA FIRMS satellite imagery. https://t.co/0GF1rCFoqV pic.twitter.com/Aow3HglPgh

— Hexagone Intel (@osinthexagone) October 3, 2026

A separate report by Axios overnight states that the Saudis are preparing for a major operation against the Houthis in the coming days, targeting coastal areas that give the rebels leverage over the critical maritime chokepoint of the Bab al-Mandeb Strait. The report cites two US officials.

More color from Axios:

Behind the scenes: A U.S. official said the Saudis have been planning the operation for weeks and that plans were approved by Saudi leadership several days ago.

• The operation will include ground forces loyal to the internationally recognized government in Yemen with Saudi air cover.
• On Thursday, Saudi Defense Minister Prince Khalid Bin Salman called Defense Secretary Pete Hegseth to brief him on the planned operation and ask again for U.S. airstrikes against Houthi targets, the U.S. official said.
• A U.S. official said that the U.S. "is not going to take kinetic action for now."

President Trump reiterated to TIME last week that he may escalate attacks on Iran after the November midterms if an acceptable deal can't be reached.

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

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

    OCTOBER ONLY.$10 OFFYOUR NEXT ORDER.$30 min. Ends Oct 31. One per customer.GET MY $10 OFF →Signs you up for ZeroHedge Store emails. Can't be combined. Every order helps support ZeroHedge. Tyler Durden Sun, 10/04/2026 - 08:10

IRS Takes Aim At AQR's Tax-Slashing "Holy Grail", Warns Crackdown May Be Retroactive

For three years Wall Street's hottest product wasn't a stock, a sector or even an AI trade - it was losing money. Specifically, losing it in a very precise, very engineered way so that the "losses" could be handed to the IRS while the portfolio itself kept compounding. But now the taxman has finally noticed.

On Monday, Treasury and the IRS released Notice 2026-62 and Revenue Ruling 2026-20, a double-barreled warning shot at the "tax alpha" industry. Among the targets: strategies that help wealthy clients harvest losses to shelter ordinary income - the salaries, bonuses and wages taxed at the highest rates - a niche best known through AQR's Delphi Plus, the flagship of what is now the world's largest hedge fund, Bloomberg reports.

The punchline, and the part that should be making some family offices sweat: the IRS said any guidance it ultimately publishes "could apply retroactively" to transactions that already took place.

What the IRS is going after

The notice reads like a greatest-hits album of structured tax trades. According to the text, Treasury is studying (and may designate as listed transactions or "transactions of interest"):

• Tax-aware funds that manufacture capital gain / ordinary loss mismatches - i.e., gains that get taxed at the lower cap-gains rate while losses are ordinary and offset wages
• Same-day acquisitions and dispositions of foreign currency forwards (hello, Section 988)
• Selective terminations of notional principal contracts (read: equity swaps), and identified straddles with mixed character - the swaps-plus-futures combos Bloomberg flagged
• "Box spread" ETFs that mimic T-bill returns without generating current income
• Various Section 852(b)(6) ETF redemption games, including using in-kind redemptions to dodge the RIC qualifying-income test

The IRS did concede that plain-vanilla stock-focused long-short strategies may fit "long-standing, well established techniques." It is the ordinary-loss machinery it has a problem with, noting that "certain of these tax-aware funds appear to be primarily tax-motivated rather than being directed toward generating an economic return from genuine investment activity." Which, in fairness, is also the marketing pitch. Comments are due by October 28.

Delphi Plus: the "holy grail"

AQR's Delphi Plus is the best-known product aimed at exactly this outcome. The AQR TA Delphi Plus Fund had $6.6 billion at midyear and, per documents seen by Bloomberg, recorded ordinary losses in 2025 equal to 28% of capital invested. Put differently: a client who wrote a $10 million check got roughly $2.8 million of losses to deduct against their W-2 in year one, while the portfolio itself was designed to keep the winners running.

It's unclear whether AQR's trades already work around the IRS's concerns. The firm didn't respond to Bloomberg, and has previously said it adapts strategies "to operate within all relevant guidance and regulations." Notably, AQR had already added disclosure warning clients that the IRS could retroactively disallow the benefits - so nobody can say they weren't told.

Short seller Nathan Koppikar of Orso Partners, who has been betting authorities would step in, called ordinary-income shielding the industry's "holy grail." NYU Law's Daniel Hemel was more blunt: the total addressable market is "huge if the Treasury doesn't do anything about it" - it would be "carried interest on steroids."

That's the real issue. Capital-gains harvesting mostly helps people who already have large embedded gains. Ordinary-income sheltering, on the other hand, appeals to every well-paid surgeon, lawyer and Goldman MD in the country. That's a much bigger tax base, and a much bigger hole in federal receipts at a time when the 10-year just briefly topped 5% for the first time since 2023.

How AQR got here

We first flagged the explosion of this trade back in March in "Wall Street's Trillion-Dollar Bet On 'Tax Alpha'", noting that more than $1 trillion was sitting in tax-efficiency strategies, from direct indexing to the far more exotic long-short structures.

Wall Street's Trillion-Dollar Bet On "Tax Alpha" https://t.co/YgKTg8JDDu

— zerohedge (@zerohedge) March 24, 2026

Since then the numbers have only gotten sillier. Cliff Asness's firm, which had shrunk below $100 billion by 2022 after a brutal quant winter, rode tax-aware products back to the top: its long-short tax assets went from about $3 billion in 2023 to roughly $70 billion, around 40% of the firm. One of the more aggressive variants, per Bloomberg's August feature, could turn a $100 million investment into more than $580 million of tax-offsetting losses over a decade. When your "losses" are nearly 6x your principal and the account is still up, you are no longer running a hedge fund so much as a deduction factory.

The warning lights were there. Treasury officials said at a New York conference in July that some of these structures produce "outcomes Congress did not intend" and were "potentially abusive." Schwab and Fidelity quietly started limiting new accounts pursuing the strategy - rare restraint from two firms that generally don't turn away billions in AUM.

Meanwhile, the 351 "black hole" gets plugged too

The companion Revenue Ruling went after the other darling of the tax-alpha crowd: the Section 351 ETF conversion, where an investor seeds a brand-new ETF with a pile of highly appreciated stock, and the ETF then swaps it out via in-kind redemptions for a diversified portfolio - no tax bill. We noted the headline as it crossed:

*IRS ISSUES RULING ON 351 CONVERSIONS INTO ETFS

— zerohedge (@zerohedge) September 28, 2026

Rev. Rul. 2026-20 applies substance-over-form and step-transaction doctrines, treats the ETF as a mere conduit, and recharacterizes the whole thing as a taxable exchange between the contributing investor and the authorized participant. More than 100 ETFs, with over $20 billion in seed assets, have launched via 351 exchanges since 2021, per Tax Alpha Insider. Those issuers - and the crypto ETF crowd that has been using in-kind redemptions to sidestep the RIC income test - are now scrambling with their lawyers.

Bessent: "serious"

As the notice went out, Treasury Secretary Scott Bessent chimed in on X, saying the department "is serious about cracking down on transactions designed to dodge taxes or exploit our federal tax code."

Today, @USTreasury and @IRSnews issued a notice on tax-motivated investment strategies that makes clear Treasury is serious about cracking down on transactions designed to dodge taxes or exploit our federal tax code. The companion Revenue Ruling also takes on prearranged §351 ETF… https://t.co/F8ZJQcx2B9

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

For an administration that just cut taxes, it may seem odd to go after the rich's favorite deductions. But a Treasury funding a massive deficit with long yields near 5% can do the math: every dollar of wage income sheltered by a currency forward is a dollar of Treasury supply that has to be sold to someone else.

What's next

This is a notice, not a regulation, and the comment window runs to late October. But the retroactivity language is the tell. By refusing to grandfather existing trades, the IRS has effectively put a question mark next to every 2025 and 2026 K-1 that shows outsized ordinary losses. Expect three things:

• Product tweaks: managers will try to lean on the "well established" stock-only long-short safe harbor and pull back on FX forwards and swap terminations.
• Slower inflows: the ~$1 billion a week that had been pouring into tax-aware long-short is unlikely to keep going at that pace while a retroactive audit risk hangs over the product.
• Unwind risk: if clients head for the exits, the leveraged long-short books behind these products (often 130/30 to 250/150) will have to be delevered. Keep an eye on crowded shorts in names these quant books favor.

As one long-time skeptic put it when the trade was booming: when something seems too good to be true, it probably is. In this case, it may also be retroactively too good to be true.

Tyler Durden Sun, 10/04/2026 - 07:35

Multi-Million Dollar TRICARE Fraud Bought A Gold-Plated Cybertruck And Casino Parties

Authored by Austin Campbell via Task & Purpose,

Millions of dollars spent on casino-themed parties, expensive hotels and a gold-plated Cybertruck. It sounds like the spending spree of a character from The Wolf of Wall Street. Instead, federal prosecutors say the absurd spending was financed by a 64-year-old mental health clinic owner named Kevin Darnell Curry.

Curry, who owned and operated Acuity TMS of Plano, Acuity TMS of Fort Worth and Emerald Coast TMS of Fort Walton Beach, was convicted of submitting roughly $26 million in fraudulent claims to TRICARE, which paid out approximately $17 million.

These clinics, which offered transcranial magnetic stimulation or TMS, operated in areas with substantial military populations. His Fort Walton Beach clinic sat in the same Florida Panhandle military community as Eglin Air Force Base and Hurlburt Field, while his Fort Worth operation was near Naval Air Station Joint Reserve Base Fort Worth. A third clinic operated in Plano, north of Dallas, Texas.

The scheme involved an unknown number of active duty service members, veterans and military family members covered by TRICARE, though the indictment did not identify where they lived or which installations, if any, the active-duty beneficiaries were assigned to. Curry falsely presented himself as a medical doctor, using fake credentials to convince service members and families to sign up for the treatment.

Curry was convicted of three counts of health care fraud, three counts of offering and paying illegal health care kickbacks and three counts of engaging in monetary transactions in criminally derived property. Federal authorities previously seized approximately $200,000 in assets connected to Curry's case, including $136,022 in cash and the gold-plated Cybertruck, according to the Justice Department.

Prosecutors say Curry recruited TRICARE beneficiaries through illegal kickbacks and bribes to receive TMS, then billed TRICARE for treatments that weren't provided, weren't provided as represented or for which patients did not qualify.

TMS is a noninvasive treatment that uses magnetic pulses to stimulate nerve cells in areas of the brain involved in depression. TRICARE covers the treatment for some patients with major depressive disorder when other treatments have failed.

To qualify, patients generally had to have tried at least two antidepressants from different drug classes without success and undergone evidence-based psychotherapy that also failed to adequately treat their depression, according to the indictment.

Prosecutors say some of Curry's patients did not meet those requirements. His clinics allegedly submitted false information about beneficiaries' treatment histories to obtain authorization from TRICARE, including records claiming patients had unsuccessfully tried medications they had not actually taken.

The scheme turned military beneficiaries into a source of millions of dollars in fraudulent TRICARE payments and unfolded inside a military health system that has simultaneously been trying to convince service members they can trust it enough to seek mental health care.

Despite the benefits of treatment, an estimated 60% to 70% of military personnel experiencing mental health problems do not seek mental health services, according to the Defense Department's Psychological Health Center of Excellence.

The Pentagon attributes that gap to a range of barriers, including stigma and concerns about how seeking treatment could affect a service member's career.

Those concerns can include fears about being viewed as weak, being treated differently by military leadership or losing the confidence of others in their unit.

It remains unclear how much of the approximately $17 million paid by TRICARE has been recovered.

Curry is scheduled to be sentenced at a later date and faces up to 10 years in prison on each count.

Tyler Durden Sun, 10/04/2026 - 07:00

Victorian Doctors Seek Answers From OpenAI And Governments Over Medicare Breach

Authored by Rex Widerstrom via The Epoch Times,

The Australian Medical Association (AMA) Victorian branch has called on OpenAI and the Victorian and federal governments to explain how they will protect patient health data following a security incident in which an OpenAI agent gained unauthorized access to a Medicare statistics portal.

The ChatGPT app is displayed on a phone alongside a medicare card in Melbourne, Australia on Sept. 24, 2026. Asanka Ratnayake/Getty Images

While the doctors' group noted that no personal information appears to have been accessed, AMA Victoria President Dr Simon Judkins asked, "What happens next time if an AI agent gains access to a system containing sensitive clinical information?"

Judkins said the breach raised serious questions for doctors and patients.

"Confidentiality remains absolutely critical to maintaining a trusted relationship between a doctor and their patient, and increasingly that depends on the security of the digital systems we use every day," he said.

"Patients and doctors need confidence that unauthorized access will be detected quickly and reported immediately ... Why did it take nearly three months for Australian authorities to be notified?"

Prime Minister Anthony Albanese said the agent reached the Medicare Statistics Reporting Service portal, run by Services Australia, on June 18.

It accessed public and non-public files after finding a way around existing blocks. Albanese said no personal information is believed to have been accessed, though official investigations remain ongoing.

OpenAI notified the Australian government on Sept. 10 via an email sent to a public mailbox, according to the prime minister.

Services Australia subsequently reported the breach to the Australian Cyber Security Centre on Sept. 15.

"It took until Sept. 10 before there was any notification," Albanese said, adding that "there will obviously be legal consequences on it."

Other Agencies Affected

OpenAI confirmed its agents also accessed sites belonging to the Australian Institute of Health and Welfare (AIHW) and NSW Bureau of Crime Statistics and Research.

At the Victorian Department of Health, the company stated that agents used an exposed access key to retrieve aggregate statistics, though medical records were not accessed.

The AMA said that federal investigations are examining the agent's interactions across multiple government systems.

The company has since apologized. "We should have handled our response better. We are sorry and working to do better in the future," OpenAI stated, committing to establish a task force on AI control.

OpenAI has also committed to having its chief strategy officer, Jason Kwon, appear before a Joint Select Committee inquiry in Sydney on Oct. 6.

Mounting Cybersecurity Concerns

Australia has previously experienced major breaches involving health information, including the 2022 Medibank cyberattack, in which data including names, dates of birth, addresses, phone numbers, and Medicare numbers of millions of Australians was accessed.

In 2024, a separate attack on electronic prescriptions provider MediSecure exposed personal and health information, prompting a federal investigation.

Dr Mukesh Haikerwal, a former AMA Victoria and federal AMA president, said governments must also consider what safeguards are needed.

"The clear question to ask is whether the Federal and Victorian governments are satisfied that our health systems are adequately protected against unauthorized access by AI?" he said.

"What safeguards are in place for hospital records, My Health Record and electronic prescribing?"

An Australian Signals Directorate report found only 22 percent of surveyed government entities met all eight key cybersecurity measures in 2025.

The Epoch Times has sought comment from Services Australia and the Victorian Department of Health.

Tyler Durden Sat, 10/03/2026 - 23:20

11 Million US Workers May Need To Switch Careers By 2035

This month has made it very clear how AI doom narratives are promoted in an information operation through public relations firms, billionaires, and endless streams of climate-like doom corporate media headlines. These efforts aim to shape public opinion about AI and push for tighter regulation, giving those at the top of frontier labs moats. 

The headlines have ranged from claims that AI will take tens of millions of jobs to, more recently, Bill Gates warning that AI could "cause a billion deaths" as he calls for regulation. But like Gates' climate predictions, much of the doomerism seems to be hyped up. 

As for the AI jobs-apocalypse narrative, it may be overblown. A new report by McKinsey & Co. suggests AI could force roughly 11 million US workers to change occupations by 2035 - or about 7% of the current workforce.

McKinsey describes the labor market disruption as more of a transitional period for working-class folks in low-skilled jobs rather than an outright jobs apocalypse. However, six out of seven affected workers could face income loss.

"Job opportunities can be abundant and yet leave millions of workers without work if those positions require different skills, credentials, locations or pay structures than current jobs," the report's authors stated.

The US economy has navigated technological changes before, and there is nothing new under the sun: from tractors displacing farm workers in the fields to automated factories replacing workers on an assembly line, computerized offices, and online retail. Those transitions lifted productivity but disrupted the labor market, requiring workers to retrain and find new jobs.

Over time, living standards rise, and the economy adapts. But apocalyptic narratives of tens of millions of job losses and warnings like Gates' claim that AI could "cause a billion deaths" represent perhaps what can only be described as peak doomerism.

Tyler Durden Sat, 10/03/2026 - 22:45

Chinese Hackers Impersonate Former White House Official In Attempt To Steal US AI Policy Secrets

Authored by AG News Staff via American Greatness,

Chinese-linked hackers have allegedly been impersonating American artificial intelligence experts, including a former White House official, in a targeted cyberespionage campaign aimed at obtaining sensitive information about U.S. AI policymaking.

Cybersecurity firm Proofpoint revealed Thursday that a hacking group it identifies as TA419 has been attempting to steal passwords from individuals at American and Japanese think tanks, defense contractors, universities and law firms since at least 2025.

Proofpoint attributed the activity to Chinese hackers based on the malware, infrastructure and targeting patterns associated with the attacks, which the company said align with Beijing's intelligence priorities.

The latest operation involved fraudulent emails appearing to originate from prominent AI and national security experts, including Lynne Parker, former principal deputy director of the White House Office of Science and Technology Policy.

The messages typically invited recipients to participate in AI-related projects or collaborations before directing them to fraudulent websites designed to steal login credentials.

Among those targeted was Alex Engler, a former White House official who now leads the Penn Center on Media, Technology, and Democracy.

Engler told Reuters he received an email supposedly from Parker inviting him to participate in a new AI policy initiative. After noticing something suspicious and consulting colleagues, he discovered the message was fraudulent.

Proofpoint said the operation targeted fewer than 10 individuals across several organizations, particularly experts involved in AI regulation, export controls and national AI strategy.

The company's findings suggest the hackers were pursuing intelligence about Washington's policymaking rather than simply attempting to steal American technology.

Parker confirmed that at least two individuals received suspicious messages using her identity in early July.

"The United States and China are in a competition around AI," Parker told Reuters.

The allegations underscore growing cybersecurity concerns surrounding America's technological competition with China, particularly as AI becomes increasingly important to national security and economic policy.

The Chinese Embassy in Washington did not immediately respond to a request for comment. Beijing has consistently denied conducting cyberespionage operations.

Tyler Durden Sat, 10/03/2026 - 22:10

25 States Ask Supreme Court To End Maine's 72-Hour Gun-Purchase Wait

A Montana-led coalition of 24 state attorneys general and the Arizona Legislature is urging the Supreme Court to hear a challenge to Maine's three-day waiting period for gun purchases.

Under Maine's law, a seller can't hand over a firearm until 72 hours after the buyer and seller agree to the sale. The wait runs even if the buyer's background check clears right away. A gun bought at noon Monday can't go home with its owner before noon Thursday.

The law exempts some buyers and sales, including law enforcement and security personnel, dealers, certain family transfers, antique firearms, and sales that don't require a background check. Sellers who break it face civil fines of $200 to $500 for a first violation and $500 to $1,000 after that.

Montana Attorney General Austin Knudsen announced the coalition's friend-of-the-court brief Tuesday. It was filed September 28 in Beckwith v. Frey, a case brought by gun owners and businesses, and argues that the waiting period violates the Second Amendment even for buyers who have already passed a background check.

The challengers asked the Supreme Court to take the case on August 25. Maine has not defended the law there yet: Attorney General Aaron Frey's office filed a waiver on September 24 saying it won't respond unless the Court asks it to - a routine step, not a concession.

Watch: WMTW's August report on the petition.

How Maine Won Round One

The law took effect August 9, 2024, one of several gun measures Maine passed after the October 2023 Lewiston mass shooting. A federal judge blocked it in February 2025, but on April 3 of this year the First Circuit lifted that injunction, finding the law likely constitutional and sending the case back for further proceedings.

The appeals court's reasoning turned on the difference between buying a gun and keeping one. In its decision, the court held that restrictions on buying a gun fall outside the Second Amendment's text:

"laws regulating the purchase or acquisition of firearms do not target conduct covered by the Second Amendment's 'plain text.'"

The court didn't say every purchase restriction is immune from challenge. It treated the waiting period as a presumptively lawful condition on gun sales, similar to licensing systems that issue permits to anyone who meets objective criteria, and found the challengers hadn't shown the law was being applied abusively.

The States' Argument

That framing matters because of the Supreme Court's 2022 decision in New York State Rifle & Pistol Association v. Bruen. If the Second Amendment's text covers the conduct in question, the government has to justify its law by pointing to the nation's historical tradition of gun regulation. It can't simply weigh public-safety benefits against the burden on gun owners.

The coalition says Maine's law has to face that historical test. Its brief argues that keeping a qualified buyer from taking possession of a gun necessarily restricts the right to keep arms. Otherwise, the states warn, governments could regulate every step needed to exercise a right while dodging the scrutiny attached to the right itself.

The states also reject Maine's historical comparisons to licensing and intoxication laws. Those restrictions, they argue, targeted conditions a person could satisfy or avoid. Maine's wait applies even after a buyer has been cleared.

The NRA and Second Amendment Foundation filed their own brief urging review, citing 18th- and 19th-century newspaper advertisements and other records they say show buyers could routinely take a gun home immediately.

A Split Between Circuits

The Tenth Circuit reached the opposite conclusion on New Mexico's seven-day waiting period, holding that acquiring a firearm is protected conduct and that the delay is likely unconstitutional. The coalition argues the conflict between the two appeals courts is reason enough for the Supreme Court to step in.

The New Mexico win has limits. According to an August 28 statement from the Mountain States Legal Foundation, which represents the challengers there, the final injunction protects only its two named clients, Samuel Ortega and Rebecca Scott. Every other buyer in the state is still subject to the wait.

The law's supporters say the point isn't paperwork. The Maine Gun Safety Coalition argues that putting time between a purchase and access to the gun can prevent impulsive suicides and violence driven by short-lived anger or distress - risks a background check can't catch, because the buyer may be legally eligible.

The challengers point to the opposite risk. Their petition describes lead plaintiff Andrea Beckwith as a domestic-violence survivor who teaches firearms and self-defense to other survivors, and argues that a mandatory delay can leave someone who needs protection now unable to take home the gun they just bought.

Tyler Durden Sat, 10/03/2026 - 21:35

Minnesota Might Hand Republicans A Senate Upset Nobody Predicted

Democrats entered this year's midterms aiming to flip Senate seats in Maine, North Carolina, Alaska, and Ohio, and hold Georgia and Michigan.

With the national mood really riding against the GOP, they see opportunities in Texas and Iowa as well. But things appear to be changing. That Democrats plan to flip the Senate assumed they wouldn't lose any seats they currently hold. Michigan is potentially winnable for the GOP after Democrats in the state nominated Abdul El-Sayed, but now another reliably blue state has landed on the defensive side of the ledger, forcing Democrats to defend a seat in a blue state they have held for nearly two decades.

Republican Michele Tafoya trails Democratic Lt. Gov. Peggy Flanagan by less than 2 points in the RealClearPolitics polling average of Minnesota's U.S. Senate race, a gap that sits inside the margin of error. If the environment were as poisonous for Republicans as it is believed to be, this election wouldn't be on anyone's radar. Instead, it has become a true contest, and that raises a question the party would rather avoid: how many of its offensive gains survive if one of its safest seats slips away in November?

The competitive nature of this election is most certainly due in part to unique circumstances in the state. A KSTP poll taken last month found that 14% of Minnesota voters named fraud as their most important issue, behind inflation and cost of living at 37% and ahead of health care at 12%.

Federal prosecutors estimate that at least $9 billion billed to 14 state-run Medicaid programs since 2018 may be fraudulent, a figure Walz disputes, on top of separate schemes in which sham nonprofits billed the state for child care, school lunches and other services. According to a House Oversight report, the state's Democratic leaders knew about the fraud and failed to act.

Most of those charged are of Somali descent, and the House report found state officials ignored the fraud to avoid accusations of racism. Gov. Tim Walz's net approval has since collapsed from +19 in June 2025 to -14 in August 2026. The damage has spread to Attorney General Keith Ellison, Sen. Amy Klobuchar and the Democratic legislature. Pollsters have yet to publish separate numbers for Flanagan, though a politician who has stood one step behind Walz since 2019 has little room to distance herself from the scandal. Tafoya has built her campaign on that exact point.

NEW 📺 AD: We teach our kids that bad behavior has consequences, but somehow politicians think the same rules don’t apply to them.

Peggy Flanagan ignored warning signs while fraudsters stole our tax dollars.

She has spent eight years as lieutenant governor in the Walz… pic.twitter.com/utZpS40XRe

— Michele Tafoya (@Michele_Tafoya) September 18, 2026

The fraud issue is moving more than one race. Klobuchar entered the governor's contest in late January with a double-digit lead. The most recent co/efficient survey has her up by 2.

MPR News described the Senate contest as quiet, since the outside money pouring into Texas and Maine has yet to show up in Minnesota. That quiet works in Tafoya's favor. She is running a state-level argument about state-level failure, and national Democrats have given her the space to make it without interference.

If control of the Senate comes down to a single seat in November, Democrats may discover that the race they never thought they would have to defend was the one that mattered, and that their handling of one of the largest benefits scandals in American history might save the GOP from losing the Senate.

Tyler Durden Sat, 10/03/2026 - 21:35

US To Allow Online Applications For 1st-Time Passports: Rubio

Authored by Naveen Athrappully via The Epoch Times,

Beginning next year, U.S. citizens can apply for their first passport fully online, according to Secretary of State Marco Rubio.

A woman applies for a U.S. passport online. Shutterstock

"By the end of 2027, our goal is for the vast majority of Americans to be able to apply for a passport or a passport card on America.gov," Rubio said during a Sept. 29 remark at an event launching the America.gov platform.

The online application makes the process "more accessible and easier for Americans," he said.

"So, whether you live in the middle of a major city or you live in a rural town, you'll be able to apply from anywhere," Rubio said.

Currently, American adults seeking a first passport must apply in person at an authorized acceptance facility and fill out forms with their personal identification information and other related details.

According to Rubio, a major benefit of the online application system is that users can find existing personal details after signing in to the platform through their login.gov account and do not have to "type the same thing over and over and over again" during the application process.

The new system also makes the photo submission process easier.

Currently, people must submit one passport photo. It must meet certain conditions, such as being in color, being taken in the past six months, and using a plain white or off-white background free of objects or shadows.

But in the online application process, people would take a photo of themselves through their phones and upload it.

"No printing forms, no drugstore hostage photo, no appointment, no line, no middleman that you're paying to do something that should be available to you," Rubio said.

"You tell America.gov what you're trying to do, and it walks you through every single step and tells you exactly what comes next."

He said there was an entire industry built around cashing in on every stage of the passport application process, with some businesses even charging for forms and appointments that are free.

Rubio also said there was a risk of services keeping or misusing applicants' personal details.

The America.gov platform was launched by President Donald Trump on Sept. 29.

Trump signed an executive order instructing federal agencies to integrate their services with the platform.

The new web portal is aimed at making it easier for people to find government-related information, enabling people to ask questions and get guidance on how to procure various services.

The portal serves as a landing page that consolidates almost 30,000 federal government websites into one chatbot.

"The federal government no longer stands in your way, and it stands only at your service," Trump said. "We're simplifying it. ... We're making it what it should be."

Answers to questions about government services come directly from official government websites with links to sources, according to the platform.

Next year, the site is scheduled to offer assistance in finding Medicare coverage and enrollment.

The site will also make it easier for Americans to find a job in the federal government.

Citizens will submit their resumes, and the platform will match them with positions fitting their experience.

Tyler Durden Sat, 10/03/2026 - 21:00

Army Deploys To Rio Grande Valley After Cartel Gunmen Open Fire On Coast Guard Crew

Roughly 500 troops are being dropped onto islands in the Rio Grande by Chinook helicopters, days after suspected cartel gunmen opened fire on a US Coast Guard crew from the Mexican side of the river.

The deployment figure comes from sources who confirmed it to NewsNation, which also obtained video of the Chinook drops. Officials have not put a number on it publicly. Breitbart reports the size and duration are being withheld for operational security, with troops expected to stay staged in the sector for at least 30 days.

#BREAKING Law enforcement sources confirm that roughly 500 troops are deploying this week to Texas’ Rio Grande Valley —Being dropped onto islands by chinook helicopters.

It comes after suspected cartel members shot at a USCG vessel near Roma over the weekend—The coast guard… pic.twitter.com/xApDsX2RKw

— Ali Bradley (@AliBradleyTV) October 2, 2026

According to the Coast Guard, personnel from Coast Guard Forces Rio Grande were running joint interdiction operations near Garceno, Texas, on Sept. 26, when they took gunfire from across the border. They returned fire. No one was hurt, no Coast Guard assets were damaged, and the incident remains under investigation.

The Coast Guard said it "works closely with U.S. Border Patrol, the Department of War and the Texas Military Division to secure the border, disrupt illicit activity and protect the American people," and that threats to its members are taken "extremely seriously."

Between August and September, officials told NewsNation, the military used a high-energy laser in the Rio Grande Valley to take down at least 11 cartel-linked drones that posed a physical threat to troops and CBP personnel. The Rio Grande Valley sector covers more than 320 river miles, 250 coastal miles and 19 counties, and the cartels working it are watching agents and troops, using drones to guide crossings, and moving drugs.

Tyler Durden Sat, 10/03/2026 - 20:25

Stockpiling Begins: Neros Awarded $100 Million Pentagon Contract For Kamikaze Drones

US defense company Neros Technologies, which focuses on Category 1 one-way attack drones, was awarded a $100 million contract under the Department of War's Drone Dominance Program for 14,000 drones and explosive payloads.

The award, under the Drone Dominance Program's Gauntlet II, prioritizes Archer AI, the Category 1 FPV attack drone. Its automated kill chain lets the FPV fly to an operator-selected target, a huge advantage in battle zones where electronic warfare jammers, such as those targeting radio frequencies and GPS signals, dominate.

Neros CEO Soren Monroe-Anderson stated:

"We've developed our Archer FPV system to be highly modular and easily adapted to end user needs. Pairing real warfighter feedback with our deep engineering talent is the reason Neros is the only manufacturer to have placed in the top three across two fundamentally different mission sets, deep strike and close quarters battle, with the same drone platform.

Ultimately, Drone Dominance is a test of two things: can competitors build high-performance drones? And can they produce them in massive quantities with short notice? We're the only manufacturer to receive multiple bonus awards for Gauntlet I based on our delivery speed. We're ready to fulfill this next batch of 14,000 drones, and more whenever the Department of War signals need for them."

The announcement comes after Defense Secretary Pete Hegseth revealed that Autonomous Warfare Command, dubbed "AutoWarCom," will become operational in the fall of next year and will accelerate the DoW's purchases across all drone categories. 

What matters here is that the massive rearmament supercycle is set to kick off, if it hasn't already. It will provide massive tailwinds for drone companies as the military begins stockpiling all categories of drones and counter-UAS technology while fortifying military installations around the world.

Tyler Durden Sat, 10/03/2026 - 19:15

The Fed Created Zohran Mamdani

Submitted by QTR's Fringe Finance

Usually, at least once a day, I come across something on the internet that almost causes me to lose my lunch. Yesterday, it was a photo of Zohran Mamdani and Curtis Sliwa holding hands and getting flu shots together.

As someone who observed the mayoral race in New York City closely, I found the spectacle disgusting on multiple levels. Not because political opponents can’t be civil to one another, but because it immediately brought me back to how Sliwa folded like a cheap shirt after an election in which, in my view, he couldn’t get over himself long enough to put his pride aside, step out of the race and give Mamdani’s main opponent, Andrew Cuomo, a clearer shot at winning.

Instead, Sliwa stayed in the race, presenting himself as some type of principled alternative while insisting that remaining in the race was somehow the honorable thing to do when, if he really gave a shit about New York, he should have just swallowed his pride, recognized the electoral reality in front of him and gotten out of the way. Just because you can stay in, doesn’t mean you have to.

But alas, Andrew Cuomo is no more and we are now stuck with this smiling communist buffoon, whose economic ideas make a 9 year old playing SimCity on an iPad in the back of a minivan look like Fiorello La Guardia.

For years, the United States has responded to financial crises with some combination of lower interest rates, enormous fiscal deficits and extraordinary amounts of liquidity. Whenever something breaks badly enough, policymakers rush in to stabilize the system. By now, I’m hoping people are starting to realize that when this happens, the benefits and costs of these “rescues” aren’t distributed evenly.

In fact, they disproportionately brutalize the middle and lower class, the very same group of citizens that politicians are almost always claiming to help. And such rescues are almost always supported by both political parties. (Read: The Devil Neither Political Party Will Name)

In these situations, financial assets can respond almost immediately to easier money and abundant liquidity. Stocks rise. Bonds rise. Real estate rises. Private-company valuations rise. People who already own substantial assets watch their net worth recover and, eventually, soar.

The person living paycheck to paycheck experiences this very differently. He doesn’t own enough stocks for another bull market to change his life. Instead, he notices that his rent costs more. His groceries cost more. Insurance costs more. Restaurants cost more. A starter home that was already expensive becomes completely unattainable.

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Back in the day, inflation would slow (but never reverse) and economists would announce that the problem was getting better. But the middle and lower class was still stuck with higher rent, groceries and home prices. Nowadays, inflation hasn’t even slowed. Prices are still skyrocketing higher. And the middle and lower class is getting torn to shreds by higher prices.

And that is the political environment that produces Zohran Mamdani…demonizing billionaires, proposing extremely regressive taxes, advocating for social revolution and just throwing around ideas of a state planned economy like he’s talking about the weather to a passerby in the park.

Which brings us to the great irony: the anger underlying his politics can be legitimate even if his proposed solutions make little sense on paper and even less sense in reality.

As I’ve said innumerable times on this blog, a voter doesn’t need to understand the Federal Reserve’s balance sheet to recognize that something feels profoundly wrong when working full time no longer seems sufficient to achieve the basic milestones previous generations considered normal.

And when that voter hears that the stock market has hit another record high, he doesn’t feel richer. He feels cheated…and pissed off…and envious.

Then along comes Mamdani offering to freeze his rent, subsidize his childcare, make his bus free and use government to intervene in the cost of everyday life. Is that man going to stop and thumb through history books to try and carefully determine what the historical outcome of such policies have been throughout history? Hell no. He’s going to volunteer to sell “Hot Girls For Zohran” T-Shirts in Union Square Park.

You can argue about the economics of Mamdani’s policies, but politically, the sales pitch isn’t difficult to understand. And the response from people who believe in markets cannot simply be to call these voters communists and lecture them about economics.

Instead, they have to answer a much more uncomfortable question. Why does the supposedly capitalist system increasingly seem to work spectacularly well for people who already own assets while becoming progressively harder for people trying to acquire them?

That is the question Mamdani is trying to present himself as answering. And most of us know he’s giving people the wrong answer. But that doesn’t make the question disappear.

In fact, there is something deeply ironic about responding to the consequences of years of economic intervention with demands for even more economic intervention…and then when your bullshit plans fail to make economic or basic common sense, turning to real entrepreneurs and business leaders for help.

We risk trying to cure distortions created partly by government policy with another layer of government policy, and then wondering why the distortions keep multiplying.

Eventually somebody has to address the disease rather than the symptoms. That means taking seriously what persistent inflation does to people who own few assets. It means acknowledging the distributional consequences of monetary policy. It means recognizing that rising asset prices aren’t synonymous with widespread prosperity. And it means understanding that “inflation is falling” is cold comfort to someone whose cost of living already jumped 20%, 30% or more.

If capitalism’s defenders want fewer socialists, they might start by making capitalism look like it works for people who don’t already own everything.

--

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

 

Tyler Durden Sat, 10/03/2026 - 18:40

Siberian Plague-Lab Death Draws FSB Escort For Ambulances

A possible plague case in Siberia has triggered a major containment effort after the death of a 28-year-old employee of an anti-plague laboratory. A hospital wing is under quarantine, nearly 200 people are reportedly under observation, and Russia's chief sanitary official has flown in. Local outlets say FSB units have been escorting ambulances carrying the woman's contacts for examination.

The authorities are clearly taking the threat seriously - but getting a straight answer out of the feds is another matter. Irkutsk Governor Igor Kobzev is still calling it a "particularly dangerous infection," while assuring residents that every identified contact is symptom-free and testing negative.

The dead lab worker has been identified as Daria Shipilova, a laboratory assistant at the Irkutsk Anti-Plague Research Institute of Siberia and the Far East, according to Lyudi Baikala and REN TV. She was admitted to hospital in Shelekhov with severe pneumonia, placed on a ventilator, and died. Reports differ slightly on the timeline: The Moscow Times gives a September 29 admission and a Thursday death (48 hours), while Lyudi Baikala says she spent three days in hospital. 

According to The Moscow Times, Shipilova told medical staff she had accidentally broken a tube containing live bacteria while collecting samples. Lyudi Baikala, citing journalist Pavel Stepanov and the Telegram channel Mash, placed the alleged accident on September 25 and linked it to plague bacteria. Those reports describe the illness as pneumonic plague, although neither that diagnosis nor the laboratory accident has been publicly confirmed by investigators. IRK.ru reported that doctors initially suspected severe COVID and sent her to the hospital's COVID center.

By the evening of October 1, security and administrative officials were meeting in Irkutsk. Lyudi Baikala, citing a source close to law enforcement, reported that FSB units began accompanying ambulances transporting Shipilova's contacts for examination that day. The Insider carried the same account, while residents reported seeing people in protective suits on the streets. The FSB has not confirmed the escorts.

“There is a possibility that the number of people the young woman [lab worker] came into contact with reached into the three digits,” Irkutsk journalist Pavel Stepanov said*, and that residents have already noticed people on the streets wearing protective suits, masks and gloves.…

— Annie Jacobsen (@AnnieJacobsen) October 2, 2026

Shelekhov district head Maxim Modin confirmed that the hospital's inpatient department was under quarantine; the outpatient clinic remained open. Kobzev said the sanitary-epidemiological commission had convened on October 2 over a suspected "particularly dangerous infection." Anna Popova, who heads Rospotrebnadzor, the federal agency that runs Russia's disease surveillance and owns the anti-plague institutes, traveled to attend. The governor told TASS it was premature to identify the disease and made no mention of a death. Irkutsk also postponed a city cleanup day scheduled for October 3.

The reported contact numbers suggest how widely authorities are casting the net. REN TV and Izvestia put the total at roughly 197, with 189 hospitalized for observation: 114 in one facility, 63 in another, and 12 at the anti-plague institute. Eight remained outside hospital, and some accounts said the list was still growing. No secondary infection has been confirmed. Kobzev's October 2 statement said the contacts had no symptoms and negative tests, although some media reports claimed several people under observation had developed symptoms.

First Official Use Of 'Plague' 

The leader of Buryatia (the next region over from the lab), Alexey Tsydenov, wrote that the woman who died of plague in Irkutsk region had not visited his republic. Citing Rospotrebnadzor and his government, he also said Buryatia had no plague foci, including along the Mongolian border. But even that acknowledgment became less definite: Meduza reported that he later edited the post to say she "may have died of plague." He did not identify the pneumonic form.

Meanwhile, competing accounts sent Shipilova to Thailand or Buryatia before she fell ill. Tsydenov denied the Buryatia visit. Gennady Onishchenko, who ran Rospotrebnadzor until 2013, questioned whether plague was involved at all, pointing to dormant rodents and fleas and snow already falling in Buryatia. That argument addresses a possible wildlife exposure; it does not resolve the allegation that she broke a tube of bacteria at work.

Izvestia and the Telegram channel Ostorozhno Novosti both report that investigators have opened a criminal case under Article 236, which covers sanitary violations that cause death by negligence. Nobody has confirmed it on the record. That charge only makes sense if somebody broke a rule at work.

By Saturday, some of the public information was disappearing. Baikalsk's administration posted a notice urging residents to limit travel to Shelekhov and nearby settlements, citing "unofficial information" about a plague case. Roughly two hours later, the notice was gone. REN TV also deleted five Telegram posts about the Shelekhov hospitalization figures.

Kobzev's Saturday post concerned an inspection by Roszdravnadzor, the healthcare-quality regulator rather than the epidemiological service, and did not address the infection. Comments asking why there was still no official statement went unanswered. Meanwhile, Lyudi Baikala reported that pharmacies in Irkutsk and Shelekhov had sold out of antibiotics.

The institute where Shipilova worked was founded in 1934 to fight plague and still leads plague surveillance for the region, alongside cholera, anthrax and tularemia. It is one of five such institutes nationally and the only one covering Siberia and the Far East. Natural plague foci remain in parts of southern Siberia, including Tuva, Altai and Transbaikal. Russia's last widely reported human case involved a child in the Altai Republic in 2016 and was linked to marmots.

The negative tests are welcome news, and the reports so far do not establish a spreading outbreak. But a young laboratory worker is dead, a hospital wing is quarantined, and almost 200 contacts have reportedly been identified. "Particularly dangerous infection" is a description of the stakes. It still isn't an explanation of what happened.

Tyler Durden Sat, 10/03/2026 - 18:05

Quantum Isn't Coming For Your Bitcoin

Authored by Brandon Black via Bitcoin Magazine,

For as long as Bitcoin has existed, new forms of FUD (fear, uncertainty, and doubt) have been used to predict its demise. Despite this, Bitcoin has grown into a multi-trillion dollar asset and begun to take its place in the global monetary order. In recent months, the specter of a cryptographically relevant quantum computer (CRQC) enabling an attacker to recreate secret keys from public keys and sign Bitcoin transactions moving other people's coins has returned as an evolved form of FUD.

Is this a realistic threat to Bitcoin's continued growth? In a word, no.

There is no evidence that a CRQC will be built within a decade, and it remains unknown whether such a machine will ever be built. The quantum threat remains FUD.

State of the Art

To date, no quantum computing machine has computed anything out of reach of a precocious 6-year-old (confirmed empirically). Quantum computers are remarkable technology and showcase the truly science fiction worthy capabilities of the modern world. These devices harness foundational technologies such as optical tweezers, laser cooling, superconducting flux qubits, electromagnetic traps, dilution refrigerators, and many more. Within these devices individual qubits are coerced into specific subatomic states (different for each candidate technology), entangled into superpositions, manipulated to represent computations, and then their subatomic properties are read and interpreted. The astounding truth is that these devices exist, and can be manipulated to produce meaningful computations across a handful of inputs. The cold reality check is that (for an example candidate tech.) to do a computation that a small child can do requires enough power to air condition a Texas high school, many hours of setup, and further hours of post-processing.

Reading the Future

I know what you're thinking, "but there's so much money flowing into quantum computing". Does money flowing into a field correlate with the rate of real-world technological progress in that field? Not really. In fact, it can be argued that until the correct underlying technology has been developed and the product-market fit confirmed, money flowing into an area has a negative correlation with the likelihood of applicable technology being developed. This can be clearly seen by comparing NASA's Space Shuttle program to SpaceX's Falcon 9. SpaceX took (mostly) known science and reduced it to practice to satisfy a demonstrable market need for reliable and lower cost access to space, at a program cost of less than $5 billion to first crewed mission. The Space Shuttle cost roughly $50 billion to reach its first crewed mission. Not only did Falcon 9 cost an order of magnitude less to develop, but it has a perfect crew safety record to date. There are many reasons for these differences, but it goes to show that no amount of money makes a technology that is not ready practicable. Translating this to quantum computing: we can see that with tons of money being thrown at the problem, technology demonstrations at massive cost are possible.

But this tells us nothing about whether more money will bring us the holy grail of stable, low-error qubits (like the reliability of the Falcon 9).

No amount of continued development on the Space Shuttle program would ever have produced the low cost, high reliability of Falcon 9, and it's entirely probable that no amount of continued development, at any cost, will ever make any of the current quantum computing technologies reliable enough to break a single key pair.

Now, you might be thinking, "but what about all the recent advancements?" There are two important things to keep in mind about recently published advancements.

First, many of these advancements have been advancements in pure mathematics only.

For example, the recent Google paper which had such an important result that they chose to redact the theoretical quantum circuit rather than risk it being used to break important cryptographic systems. This may seem like massive progress toward the future of CRQCs, but in fact it changed nothing. Unless (or until) the quantum hardware has its Falcon 9 moment, there simply is no device which comes anywhere near the stability and scale needed to run the redacted circuit. It's pure theater to hide a circuit designed for a device which may never exist.

Second, on the hardware side itself, we see many new results and bits of progress published in a given year, but how many of these relate to the same quantum computing candidate technology? How many represent merely a starting over after a prior result ended in a dead end? The reality is that these advancements do not represent some linear track toward eventual success. They represent the breadth-first search of an infinite possibility space within which quantum researchers are hoping to find a path along which they can proceed for even a modest distance without reaching yet another dead end.

When we look at the reality of the future of quantum computing, it's hazy at best. There are promising technological developments. Especially, to my eye, in the area of neutral atom devices. But it's far too early to tell if there's a path open toward an eventual CRQC along any of the currently known branches or if more restarts are in our future. If, at some point, we see many iterations of the same candidate technology implementing progressively more capable devices, and computing meaningful results that a precocious child cannot also compute, we can revisit this discussion with different evidence.

In Theory

There are two possible explanations for the repeated failure of quantum research to develop a CRQC over many decades. It's possible that it's just a hard problem and we're continuing to apply science and engineering to solve it and one day the ingenuity of the human species will prevail as it has in the development of the Internet, the smart phone, social media, and Bitcoin (left to the reader to decide which of these are positive developments). On the flip side, it may be that developing a CRQC is either impossible or will remain forever outside our grasp. Consider what it would mean for a CRQC to exist: the machine would have to represent within its superposition a field of possibilities the same size as the complexity of the cryptographic problem to be solved. I.e. to break the 128-bit security of the elliptic curve discrete log on Bitcoin's secp256k1 curve, the quantum superposition would have to represent all possible values of a 128-bit number. In classical computing, representing all such values would require more computer storage (by many orders of magnitude) than humans have ever produced. If there is even the slightest granularity to the quantum superposition (i.e. the quantum superposition is not perfectly continuous across all possible values) then the quantum computer cannot ever become cryptographically relevant. If the energy required to hold a superposition scales with the complexity of the field being represented then a quantum computer cannot ever be cryptographically relevant. The contemporary understanding of quantum physics does not rule out either of these possibilities.

Conclusion: Bitcoin Cannot Rest

Despite all of the preceding, Bitcoin development toward new cryptographic algorithms must continue. While a quantum attack on Bitcoin's cryptography is not imminent by any means, it's entirely possible that another flaw could be found through other means. We know that certain elliptic curves have been found to have weaknesses, and secp256k1 could be next. Bitcoin has survived as long as it has because attacks on the system have strengthened it and that will continue to be true as the quantum FUD attack plays out. The development of P2MR or P2TRv2, of SHRINCS, SPHINCS, IBC, ML-DSA, and more post-quantum signature schemes will eventually lead to improvements to Bitcoin's resilience in the face of future attacks even if an actual CRQC is never developed.

This piece is featured in the latest Print edition of Bitcoin Magazine, The Quantum Issue. We're sharing it here as an early look at the ideas explored throughout the full issue.

Tyler Durden Sat, 10/03/2026 - 17:30

Mushroom Cloud Over Alabama: Trump Just Pulled A Condoleezza Rice

President Trump just pulled a Condoleezza Rice. 

George W. Bush's Secretary of State had (in)famously stated "we don't want the smoking gun to be a mushroom cloud" in September 2002 while trying to fearmonger the public into getting on board with the Iraq invasion.

On Friday night, Trump rallied supporters in Mobile, Alabama amid a tour through deep-red states to bolster Republican turnout ahead of the November midterms.

On stage, he once again defended the decision to launch a war on Iran and repeated his line that voters should pretend that he is on the ballot. On higher oil as well as painful gas prices at the pump, he reiterated that it's a "small price" to pay to prevent Iran from having a nuclear weapon. He also claimed the Iran war will "probably" end soon after the midterms. That's when Trump proclaimed:

"But remember about the oil: You're paying a price, but boy, is that a small price than what it would be if these lunatics were allowed to have a nuclear weapon and used it on Mobile, Alabama."

TRUMP SAYS HIGH OIL PRICES A SMALL PRICE TO PAY, IRAN WOULD HAVE NUKED ALABAMA *** pic.twitter.com/MH17sEhNZp

— The_Real_Fly (@The_Real_Fly) October 3, 2026

We should start by noting the obvious: There is nothing in Iran's missile arsenal capable of reaching the United States. Not a single report has even so much as ever claimed it, 

According to the Arms Control Association, the Islamic Republic does not possess operational intercontinental ballistic missiles (ICBMs), and certainly has never tested one. Iran's most advanced missiles have a long enough reach to perhaps hit central Europe, or else the remote US-UK base Diego Garcia deep in the Indian Ocean - but hitting Mobile, Alabama is absurd and an impossibility. 

However, it's unlikely that your average Alabama voter knows this (though notably in the above clip the crowd's response is lackluster and the applause is very weak). Even the US intelligence community knows that the idea that the Iranians could send a projectile to reach the continental US is false on its face:

There is no serious evidence to back up all the claims that have been made about Iran developing long-range rockets to deliver nuclear warheads. The U.S. intelligence community assess that Iran may be technically capable of developing an ICBM with sufficient foreign assistance, not that they are doing so. Iran has never tested any long-range rockets. Iran's longest-range missiles are medium-range ballistic missiles, not the intercontinental-range missiles as critics will have us believe.

As far as the evidence shows, Iran is assessed to have deployed several dozen Shahab-3 and Ghadr-1 medium-range ballistic missiles with ranges up to 2,000 kilometers, as well as dozens of short-range ballistic missiles with ranges of 150 to 500 kilometers. Iran is testing a solid-fueled medium-range ballistic missile, the Sejjil-2, but that has not been tested since 2011 and the United States cannot confirm Iran's claims that this missile is deployed.

Likely Trump is himself fully aware of all this, but when the point is fearmongering the US public into supporting the next Middle East quagmire and half-baked 'forever war'.... well then logic, reason, and truth go out the window.

Vice President JD Vance pulled something similar not too long ago. Back in March in the opening weeks of Operation Epic Fury he implied that Iran could potentially turn a nuclear bomb into a suicide vest - another absurd claim, just based on the logistics and technical requirements alone.

Vance suggests Iran could have used nuclear suicide vests: “You talk about people who walk into a crowded supermarket and have a vest on, and they blow up the vest and a couple of people get killed, and that's a terrible tragedy. What happens when what's on the vest is not… pic.twitter.com/6HiCHhi4S9

— The Bulwark (@BulwarkOnline) March 26, 2026

"You talk about people who walk into a crowded supermarket and have a vest on, and they blow up the vest and a couple of people get killed, and that’s a terrible tragedy," Vance told a live briefing at the time. "What happens when what's on the vest is not something that can kill a couple of people, but can kill many, many tens of thousands of people?”

As we pointed out at the time, the simple reality is that a nuclear bomb could not be miniaturized to the point where it could be worn as a vest.

Dear Trump admin, at least come up with something better than old Bush NeoCon talking points.

Tyler Durden Sat, 10/03/2026 - 16:55

Egypt Arrests, Disappears Entire Newsroom Over 'Fake News' Allegations

Via Middle East Eye

Egyptian authorities have detained the entire newsroom of one of the country’s only independent media outlets in a move that rights groups have denounced as a "first" and an "alarming escalation" on free speech.

On September 28 and 29, security forces raided the homes of the six journalists - Mohamed Ashraf Abu Emeira, Abdallah Qadry, Islam Barakat, Omar Helal, Mohamed Mahmoud and Mohamed Adel - who constitute the entire team working for Matsada2sh (Arabic for "Don’t believe"). The arrests bring the number of journalists detained in Egypt to 24.

via AFP

"It is a first in Egypt: an entire newsroom behind bars," press freedom watchdog Reporters Without Borders (RSF) said, criticising the authorities for failing to reveal the journalists' whereabouts.

"It's a violation of the Egyptian Constitution, even though this is common practice. Journalists detained in Egypt are often forcibly disappeared for several days before being officially charged and brought before a court," the group added.

According to multiple accounts by rights groups, the officers confiscated the phones and laptops belonging to the journalists as well as those of their family members during the raids. They also did not present any arrest warrants and refused to disclose where the journalists would be held.

The interior ministry later published a statement confirming the arrests and accusing the journalists of running an unlicensed platform that is "run from abroad" and of spreading "fake news".

It also accused its journalists of being affiliated with the Muslim Brotherhood, the country’s largest opposition group that has been outlawed under the government of President Abdel Fattah el-Sisi since 2014.

One of the platform’s editors was previously detained in 2023 over similar allegations but was released two days later.

Matsada2sh was founded in 2018 as a fact-checking outlet that corrects misleading or inaccurate information by various sources, including those by official government sources or opposition media.

"Independent journalism is critical in any free society and Egyptian authorities’ failure to allow free exercises of expression to thrive flies in the face of a purported commitment to dialogue, transparency, anti-corruption, and regional leadership," more than 80 rights groups and independent media outlets said in a statement.

"The crackdown on the Matsada2sh platform and these arrests are alarming escalations on independent media and freedom of expression that cannot be allowed to stand."

One of the founders of Matsada2sh, Abdelrahman Mansour, who is not based in Egypt, told the Associated Press on Thursday that the families do not know where the journalists are.

"Everyone on this team knew the risks when they went to work every day, but it’s unacceptable for the government to make false accusations and forcibly disappear journalists just because they’re afraid of a free press," AP quoted Mansour as saying. "Their families are worried, we’re worried, we just want them released unharmed."

Tyler Durden Sat, 10/03/2026 - 16:20

California Man Accused Of Routing More Than $300 Million In Restricted Servers To China

Authored by Arthur Zhang via The Epoch Times,

A California man has been arrested on federal charges accusing him of helping route more than $300 million in export-controlled computer servers to China through Malaysia and Singapore.

Greg Lui, 38, who also uses the name “Yiu Kong Lui,” is arrested by federal agents in Los Angeles County on Oct. 1, 2026. FBI

Greg Lui, 38, also known as Yiu Kong Lui, of San Gabriel, was arrested Oct. 1 after a federal grand jury returned a three-count indictment two days earlier.

Lui was the chief executive officer and owner of Earthmade Computer Inc., a company based in City of Industry, California, and established in November 2023. He was also the registered agent of another company, Coindigger, that did business as Earthmade.

Earthmade has not been charged in the case. The company did not respond by publication time to a request for comment.

Lui is charged with conspiracy to violate U.S. export-control laws, outbound smuggling, and conspiracy to commit money laundering. Prosecutors allege payments from Malaysia flowed into Earthmade's U.S. bank accounts and were then used to buy restricted servers from American manufacturers.

Prosecutors allege the conspiracy began no later than October 2023 and continued through at least Aug. 12, 2026. The indictment's detailed transaction examples are concentrated in 2024, when Lui and others allegedly bought high-end computer servers and graphics processing units, or GPUs, from U.S. manufacturers and routed them through Malaysia and Singapore before they ultimately reached China.

Malaysian Route

Between January and October 2024, Earthmade received more than $80 million from one Malaysian company and $96 million from another, according to the indictment. Prosecutors say Earthmade brokered nearly $300 million in sales of export-controlled Nvidia-powered servers from three U.S. manufacturers.

One of the Malaysian companies had been established in 1999 and primarily dealt in lumber, plywood, millwork, and wood panels. Prosecutors describe the second Malaysian entity as a front company.

In January 2024, Lui allegedly told a co-conspirator that the lumber company wanted 70 servers containing Nvidia H100 GPUs. Later that month, he placed an order for 27 H100-equipped servers worth about $7.6 million.

Those servers were shipped from Los Angeles County to Kuala Lumpur. Less than two months later, prosecutors say, a co-conspirator emailed a Malaysian government official stating that the 27 servers had been transshipped to a Chinese purchaser.

Another order was far larger. A U.S. manufacturer quoted Earthmade for 512 export-controlled servers in April 2024, and Lui placed the order the following day.

The indictment traces 92 of those servers. Although a manufacturer had said they were ready to ship to Earthmade in Los Angeles County, prosecutors allege Lui and a co-conspirator instead had them flown from San Francisco to Kuala Lumpur and then onward to Hong Kong. The Chinese purchaser was listed as the consignee.

The indictment identifies the purchaser as an unnamed industrial company based in Hangzhou, China.

US Front Company

Prosecutors describe another transaction involving 100 servers equipped with Nvidia H100 GPUs and worth more than $22 million.

Lui allegedly used an unnamed U.S. front company to place the order and claimed that another City of Industry company, Topmost, was the buyer. He then submitted false documents identifying "Jackie Lui" as Topmost's chief executive, according to the indictment.

Topmost was also not charged in the case. The company did not respond to a request for comment by publication time.

Prosecutors allege Lui had purchased another person's identifying documents in 2021 and later used that identity in business transactions connected to the export-evasion scheme.

The indictment also alleges that a person presented as chief technology officer of the Malaysian lumber company was actually an international broker of export-controlled servers who incorporated Topmost in California.

Roman Rozhavsky, assistant director of the FBI's Counterintelligence and Espionage Division, said the bureau's investigation found that Lui allegedly sold hundreds of millions of dollars' worth of the technology to the Chinese government.

An Nvidia spokesperson told The Epoch Times on Oct. 2, "This case shows yet again that smuggling is a losing proposition - legally, economically and technically. Our work with law enforcement has led to prosecutions, and we will continue to engage with law enforcement."

If convicted of all charges, Lui faces statutory maximum sentences of 20 years on the export-control conspiracy count, 20 years on the money-laundering conspiracy count, and 10 years on the smuggling count.

Lui was expected to make his initial appearance and be arraigned Oct. 2 in federal court in downtown Los Angeles.

    OCTOBER ONLY.$10 OFFYOUR NEXT ORDER.$30 min. Ends Oct 31. One per customer.GET MY $10 OFF →Signs you up for ZeroHedge Store emails. Can't be combined. Every order helps support ZeroHedge. Tyler Durden Sat, 10/03/2026 - 15:10

Search Intensifies Off Nantucket After Gulfstream Jet Vanishes From Radar

A massive search is underway off Nantucket on Saturday morning after a Gulfstream G100 carrying six people disappeared from radar while flying from Bermuda to Boston.

The G100 was operated by Latitude Air Ambulance, which provides medical evacuation and repatriation services.

BREAKING: Gulfstream G100 with 6 persons on board has reportedly crashed into the Atlantic while flying from Bermuda to Boston pic.twitter.com/gHZI5Sq2vc

— Breaking Aviation News & Videos (@aviationbrk) October 3, 2026

Company spokesman Clarence Togeretz confirmed to The New York Times that the G100 was missing and said Latitude had contacted search-and-rescue and law enforcement agencies.

Local outlet Nantucket Current said the search-and-rescue effort is focused on an area about 13 nautical miles south of Nantucket.

BREAKING: A search is underway 13 nautical miles south of Nantucket for a Gulfstream aircraft with six persons on board. The FAA reported losing contact with the aircraft early Saturday morning.

The Gulfstream G100 (tail #CGRJP) air ambulance was traveling from Bermuda to… pic.twitter.com/TvKEe9e2iU

— Nantucket Current (@ACKCurrent) October 3, 2026

Flight-tracking website Flightradar24 shows the area of interest where aerial and sea-based Coast Guard assets are searching.

The US Coast Guard is continuing to search for a missing G100 C-GRJP, which lost contact en route to Boston. https://t.co/Yv3BmlmJco pic.twitter.com/TYXdccMR9y

— Flightradar24 (@flightradar24) October 3, 2026

X user Breaking Aviation News & Videos lists the Coast Guard assets searching for the G100:

• HC-144 Ocean Sentry airplane crew from Air Station Cape Cod
• HC-130 Hercules crew from Air Station Elizabeth City
• MH-60 Jayhawk helicopter crew from Air Station Cape Cod
• 47-foot motor lifeboat crew from Station Brant Point
• Fast response cutter William Sparling (WPC-1154)

Nantucket Current said the G100 "declared an emergency before losing contact."

Tyler Durden Sat, 10/03/2026 - 14:35