Authored by Susan Quinn via American Thinker,
Sen. Bill Hagerty, R-Tenn wants to make sure that Special Counsel Jack Smith never practices law again.
It's about time.
Jack Smith tried to lay waste to Donald Trump, his administration, and other Republicans by practicing lawfare, and Sen. Hagerty reported him to the Tennessee Supreme Court's Board of Professional Responsibility. Smith's actions were blatantly partisan, seriously questionable, and dishonest: he not only issued subpoenas to phone companies for phone toll records of GOP officials, but he added non-disclosure agreements to prevent the legislators from being notified of these actions. Not only were Smith's actions illegal, but he lied to Chief Judge James Boasberga in withholding the explanation that the data sought belonged to members of Congress:
Smith violated the Rules of Professional Conduct by seeking and obtaining a nondisclosure order from a federal district court without advising the court of critical facts and law. The impact of his lack of candor was a violation of federal law, and an invasion of the very constitutional privileges that ensure a fully free legislative process.
Sen. Hagerty states that Smith drafted the subpoenas and Judge Boasberg probably never read them and simply rubber-stamped them; he also didn't reference the Speech or Debate Clause that requires notice to the person being subpoenaed when someone seeks Senate information.
Hagerty recommended that Smith be disbarred.
In addition to Hagerty's action, U.S. senators Marsha Blackburn (R-TN) and Bill Lee (R-TN) have filed a lawsuit against Smith. They claim that A.G. Merrick Garland's appointment of Smith was unlawful and hold him accountable for his abuses of the law. They are only seeking $1 in damages:
'Through his Arctic Frost witch hunt that targeted conservatives across America and even the President of the United States, Jack Smith perpetrated one of the worst abuses of government power in our nation's history,' Blackburn stated.
Blackburn said, 'This lawsuit is solely about holding Mr. Smith accountable and ensuring that our nation's justice system can never again be weaponized against the American people.'
Jack Smith's outrage at being called out was - well - outrageous, given the laws he's broken. Two of the most credible members of the Senate Judiciary Committee, respected on both sides of the aisle - Senator Chuck Grassley from Iowa and Senator John Kennedy from Louisiana - condemned Smith without hesitation. Senator Grassley opened the hearing by accusing Smith of breaking the law and lying. In his usual graphic fashion, Senator John Kennedy told Smith, "You make me want to throw up in my mouth," when Smith refused to acknowledge his partisan activities.
For too long, we have tolerated rogue prosecutors like Fani Willis, Alvin Bragg, and Letitia James, along with A.G. Merrick Garland and A.G. Eric Holder. Most of them have only received a slap on the wrist and no serious consequences for their disgraceful behavior. It's about time that we set an example that truth and the rule of law matter, and we are taking back the power of government.
Tyler Durden Mon, 10/05/2026 - 10:15After last weeks impressive moves in Manufacturing survey data (though burdened with the baggage of a surge in Prices Paid), all eyes are on the Services side of the US economy with mixed results expected (S&P up, ISM small down).
S&P Global US Services September slightly better than expected (58.8 vs 58.7 exp/flash vs 56.5 prior) - strongest in five years
ISM US Services slightly worse than expected (54.9 vs 55.0 exp vs 55.4 prior)
Quite a divergence...
“September has seen US business growth surge to its highest for over five years," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, "with rising demand and improved optimism encouraging firms to take on workers at a pace not seen for over four years.
Combined with the encouragingly solid manufacturing PMI, the strong service sector expansion points to economic growth of around 4% in the third quarter and 5% in September alone, the latter hinting at accelerating momentum into the fourth quarter.
This also leaves the US economy by far the strongest in the world...
New orders and backlogs of work are rising at increased rates and growth expectations have recovered to a one-year high, adding to the sense of an economy picking up further pace in the near term.
For the first time in 10 months, output trended higher across all five broad sectors covered by the survey as transport & storage activity returned to growth. By far the sharpest expansion was seen in the information & communication sector, however.
“Tech companies are reporting by far the strongest growth but the rising tide is now lifting all boats as far as the major sectors are concerned, with accelerating growth also reported for consumer-facing businesses as well as industrials and healthcare, alongside sustained solid growth in financial services."
However, concerns that the economy is running too hot will be fueled by the survey’s price gauges, which point to accelerating inflation.
Measured across goods and services, firms’ input costs are now rising at the fastest rate for nearly four years.
"While these increased costs in part reflect higher fuel prices, the worry is that selling price growth has also moved higher again to signal sustained stubbornly high inflation, well above the Fed’s 2% target."
Stronger growth and sticky/soaring inflation are going to counter the dovish message from last week's FedSpeak and weaker payrolls.
Tyler Durden Mon, 10/05/2026 - 10:05Authored by Pedro Rodriguez via The Daily Signal,
A groundbreaking new poll conducted ahead of November's midterm elections has uncovered that over 30% of Americans have a favorable view of socialism.
According to the OnMessage poll, which surveyed 800 American voters from July 12-16, 35% of respondents identified as Democrats, 84% of whom identified as Gen Z.
"Embracing socialism is no longer a fringe talking point for Democratic voters. Our data shows that a majority of Democrats of all ages hold favorable views of socialism, including 84% of Gen Z Democrats," Henry Parkhurst, the OnMessage pollster who carried out the survey, told the Daily Signal.
The findings confirm that the Democratic Party's claim that socialism is a "fringe issue" is no longer true, and that socialism has spread into the party's core.
Marxist Utopia Debunked by Survivors of Communism
The Daily Signal's Journalism Fellow, Pedro Boccalato Rodriguez, and the Manhattan Institute's Policy Fellow, Daniel Di Martino, draw on their experiences under Marxist rule to debunk the communist talking points pushed by… pic.twitter.com/FdIJJmDb1e
"While the national Democratic Party may claim to be divided on how far they're willing to lean into socialism, their voters clearly show they're encouraging the party to move in that direction," Parkhurst added.
The survey came months after the Democratic Socialists of America touted a historic increase in membership, coupled with the rise of DSA-affiliated candidates and officials across the country.
Now, in the next Congress, at least five new DSA members will be sworn into the House of Representatives, adding to the growing number of socialist officials like Seattle Mayor Katie Wilson, New York City Mayor Zohran Mamdani, and Rep. Alexandria Ocasio-Cortez, D-N.Y.
Senate candidates Angie Nixon in Florida and Abdul El-Sayed in Michigan also have a fair shot at winning their races this November.
OnMessage revealed the findings after conducting text-to-web interviews and recording historic respondent turnout.
The survey also oversampled voters under 45, resulting in approximately 600 Gen Z and Millennial voters for in-depth analysis.
The margin of error for this survey is +/- 3.5%.
Tyler Durden Mon, 10/05/2026 - 09:45For the past week, the only question that mattered in European fixed income was whether France's fiscal meltdown would stay French. On Monday morning, Madrid volunteered an answer, or at least a new variable.
Spanish Prime Minister Pedro Sánchez called a snap general election for November 29, roughly eight months before his term was due to expire, after a fragmented parliament killed his emergency housing decrees on Friday. It's a high-stakes gamble for a Socialist leader who trails in nearly every poll, and it lands in a eurozone where the OAT-Bund spread just touched levels last seen in the 2011 debt crisis and EURUSD is sliding to a 17-month low.
Goldman trader Rich Privorotsky summed up the Street's first read in his morning note (available to pro subs):
"EUR getting hit. Potential Spain snap election risk is another political wobble, but France is still the bigger issue. OAT/Bund spread acceleration and fiscal anxiety is clearly bleeding into the currency. Spain itself isn't a huge tail, but it adds to the broader sense of political instability."In other words, Spain isn't the fire, it's more dry kindling next to one.
Below we break down why Sánchez pulled the trigger, how markets (barely) reacted, and why Goldman thinks Spain is precisely the kind of country the ECB would rush to protect... as long as nobody confuses it with France.
The Gamble: Housing Fails, Sánchez Folds... ForwardThe proximate cause for the Sanchez announcement was housing. As Bloomberg reports, Sánchez's emergency package sought to freeze rents, make rental contracts indefinite, ban evictions of vulnerable tenants and regulate short-term tourist apartments. Nationwide protests boiled over after an 87-year-old disabled woman was evicted from her apartment. Then on Friday the package died in parliament, with Catalan separatists Junts, the same party that put Sánchez back in office in 2023, arguing that more intervention in the housing market would only make the problem worse.
"We need to renew people's support," Sánchez said in a televised address, per Reuters, while conceding he had "made mistakes" and fallen short of campaign promises. Translation: the minority government that hasn't passed a budget since 2023 has run out of road, and would rather fight now on housing (a rare issue where the left can mobilize) than in 2027, when the migrant crisis in Ceuta and the corruption cases swirling around his party and his family return to centre stage. As Freemarket's Lorenzo Bernaldo de Quiros told Reuters: "If he does not call elections fast, (those topics) will return to center stage."
Regular readers are familiar with those topics, from the 500,000-person migrant amnesty (Feb 7) to the chaos in Ceuta, where roughly 80,000 undocumented migrants arrived this summer ("Spain Gasses Its Own People; Police Probe Migrant/Soros NGO Acid Buys In Ceuta", Sep 4). And as we discussed earlier today in "Left Under Pressure", Sánchez is hardly the only left-wing incumbent having a rough Monday.
The opposition was, to put it mildly, ready. The People's Party posted "AT LAST" on X, and leader Alberto Núñez Feijóo said: "Finally! What's at stake is no longer merely a change of government, but the urgent need to undertake a process of national reconstruction." The math explains the enthusiasm: the latest 40dB poll (Sept 25-28) has the PP at 31.6%, Vox at 18.4% and Sánchez's PSOE at 27.4%. Feijóo has signalled he could govern with Vox, which would put a far-right party in Spain's central government for the first time since Franco.
That said, Vox leader Santiago Abascal is wisely not counting chickens: "Surveys said the same thing in 2023 and Sanchez managed to form a majority with all his accomplices." Sánchez has spent eight years assembling coalitions that weren't supposed to exist, so we wouldn't write the obituary just yet.
"Spain Itself Isn't A Huge Tail"... But The Timing IsSpanish assets, for their part, took it in stride. The IBEX was flat after the announcement, benchmark 10Y Bonos were little changed at 4.08%, and the spread over Bunds widened a modest 3bps to 65bps, per Bloomberg. JPMorgan's Andrew Tyler even noted that among major European markets, "Spain [is] leading and France lagging" this morning, while Goldman's Spain Domestics basket (GSXEESDO) was up 40bps.
The reason for the shrug: the Street has been pricing a change of government for months. Goldman's EMEA execution desk wrote that "feedback on Friday was supportive on elections given PP leading in the poll," before adding a dose of humility courtesy of Sunday's Brazil shock: "perhaps what we have learned from Brazil is the fact that polls are not always accurate. So perhaps it creates a bit of volatility in Spain to start with."
The problem isn't Spain, it's the calendar. Here is Goldman's FX desk (Matt Atherton) on why the euro broke below 1.12:
"Speculation that Spanish government officials were preparing for an early election – now confirmed. This development follows the defeat of two emergency housing bills in Parliament last week – a core issue for their supporters. Our view is that both of these issues independently would not be a cause for concern nor trigger any real EUR depreciation, but the timing is much more the issue amid broader European stress."Goldman's Jonathan Lightowler listed the full rap sheet behind EURUSD's slide from 1.1260 to a 1.1161 low overnight: "talk of EUR selling from Asia investors selling European FI Friday; plus ongoing French fiscal focus; plus headlines around a snap election in Spain which has now been called; plus Italy's Friday fiscal revisions."
So four separate catalysts, and all in one direction. Diversification at its finest.
Patient Zero Is In ParisFor context on just how "broad" the broader European stress is: last week the Franco-German 10Y spread widened 32bps to 141bps, which Deutsche Bank's Jim Reid called "the biggest weekly widening in available Bloomberg data back to 1990, the year of German reunification." At one point on Friday it hit 160bps, "so we were on the edge of a mini panic." Italy's 10Y spread widened 23bps to 114bps, the biggest weekly jump since April 2020.
Regular readers saw it coming in real time. As we wrote on Thursday in "Debt Crisis Back? European Bond Markets Crash, CDS Explode Amid France Budget Panic Contagion" (Oct 1), "It's starting to smell awful sovereigny crisisy in Europe all over again." Or, as we put it on X that afternoon:
it's been a while since we had a European sovereign debt crisis *FRANCE-GERMANY 10-YEAR YIELD SPREAD WIDENS 8BPS TO 135BPS France CDS widest in 13 years https://t.co/9opJUmD2uS
— zerohedge (@zerohedge) October 1, 2026The key question for Spain is whether French stress stays French. Goldman's FX strategist Mike Cahill says it rarely does, and that's exactly when the euro starts to care. In his framework, "contagion is the trigger - idiosyncratic stress, especially in smaller member states, barely moves FX until it infects regional risk sentiment (best proxied by GDP- or market-weighted spreads...)." His second principle is the one to tape to the screen:
"Second, the beta jumps when credit is in focus: the Euro depreciates roughly 4-5% per 100bp of spread widening on average, but in practice the response is near zero most of the time and spikes only in acute stress - spreads don't matter for the currency until they're the only thing that matters."And the GDP-weighted spread is now moving. Goldman's chart below shows the broad EGB-Bund spread, which drifted lower for most of 2025-26, finally turning higher alongside the OAT vertical:
Zoom into the front end and you see the spillover more clearly: Spain's 2Y spread to Germany, which spent August and September hugging single digits, has jumped to roughly 20bps alongside Portugal, while France and Italy lead the charge. Spain is no longer immune, it's just less sick.
The "Innocent Bystander" ClauseWhich brings us to what may be the most important line of Goldman research for Bonos holders this week. In their Sunday note, "ECB—Potential Implications of Rising Sovereign Stress" (available to pro subs), Goldman economists Sven Jari Stehn and Alexandre Stott walk through the ECB's likely reaction function and draw an explicit line between Madrid and Paris:
"TPI activation would likely require significantly more intense and broad-based sovereign stress, especially with inflation well above target. That said, the bar for TPI purchases to protect 'innocent bystanders' from contagion (such as Spain) seems much lower than intervention in markets where current fiscal policies are inconsistent with the stabilisation of public debt (such as France). The TPI could possibly be used temporarily under disorderly market conditions to buy time for a policy adjustment (in a parallel to the mini-budget episode in the UK). But addressing fundamental sovereign risk requires a fiscal rather than an ECB solution."Put differently: if Spain gets dragged into France's mess, the ECB's cavalry may show up. If France keeps digging, it's on its own. That's a powerful distinction, and it helps explain why Spain's 10Y spread sits at less than half of France's.
There is a catch, however. Goldman notes the euro area FCI "has tightened by nearly 40bp since the start of July, potentially substituting for one 25bp ECB rate hike," but the bank still keeps its call for a third and final hike in December, with euro area September CPI at 3.8%. Before reaching for anti-fragmentation tools, Goldman sees the balance sheet (slowing QT) as "the more likely first lever," calling TPI "the last resort, not the next step." Translation: the ECB is trying to tighten financial conditions while simultaneously being asked to loosen them for half the periphery. As we tweeted on Friday:
France-Germany 10Y spread less than 40bps away from taking out sovereign debt crisis highs. Europe once again on the verge of the abyss, and desperately in need of QE although soaring inflation means "nein" https://t.co/Nx1OcPcnp8
— zerohedge (@zerohedge) October 2, 2026 Who Gets Hurt: Data Centers And CaixaBankBeyond the macro, the snap vote throws a wrench into some very specific trades. Goldman's real estate team (Jonathan Kownator, Maria Grego Llacer) flagged that Madrid had planned to approve a new data-centre Royal Decree during October, a key swing factor for Merlin Properties (MRL.MC):
"While it is too early to assess the ultimate impact on the legislation, the election introduces additional uncertainty around both timing and final content. This comes against a backdrop of rising opposition to the current proposal with the PP publicly criticising the draft decree, while recent opinion polls point to a potential PP-Vox parliamentary majority."Goldman nonetheless remains Buy rated with c.48% upside to its €17.9 price target, which is either conviction, or a reminder that price targets tend to be the last thing to update.
On the banks, Goldman's EU Financials specialist Gaelle Jarrousse is going the other way, pitching a short in CaixaBank into Q3 on numbers that sit 2% below consensus NII for both Q3 and FY26, adding that "Spanish elections can create a bit of volatility even if the PP is leading the polls and seens as more business friendly." She also flagged hedge funds as sellers of Caixa this morning, while BBVA saw one of the biggest week-over-week increases in short interest on Goldman's stock lending desk.
And for those wondering why any of this matters for the broader European tape, Goldman's Sharon Bell has the rule of thumb: "Each 10bp widening in the average spread of OATs and BTPs to Bunds takes 0.9% from Europe's PE." Spain isn't in that formula... yet.
Bottom LineOn its own, Spain's snap election is a mostly domestic affair. Bloomberg Economics put it bluntly: "The near-term economic impact should be limited. Spain was already mired in policy paralysis." And Spain's economy remains the fastest-growing among Europe's majors, with unemployment at its lowest since the financial crisis. A PP-led government would likely be seen as more market-friendly, which is why Friday's desk feedback was "supportive."
But markets don't trade countries in isolation when spreads are blowing out, and Goldman's own framework says contagion, not fundamentals, is what moves the euro. Spain heads into seven weeks of campaigning just as France debates its budget (RN's counter-budget lands Tuesday, plenary debates start Oct 13), Italy revises its deficit targets higher and the ECB keeps hiking into 3.8% inflation. Goldman thinks Spain qualifies for "innocent bystander" status. We agree it does today. But as anyone who has ever stood next to a sovereign debt crisis knows, bystanders tend to get hit first and rescued last, especially when the rescuer is busy fighting inflation. The far more likely path is that Bonos trade with French headlines, not Spanish polls, for the next seven weeks.
Then again, Sánchez has made a career out of surviving elections everyone said he'd lose. We'll check back after Spain's September PMIs (due today) and France's budget debate kicks off on October 13.
Much more in the full Goldman "ECB—Potential Implications of Rising Sovereign Stress" note and the "Merlin Properties: Spain calls snap elections" note, both available to pro subs.
Tyler Durden Mon, 10/05/2026 - 09:20