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"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

One of the best games on Sunday’s slate: the No. 2 team in total DVOA heads to Cincinnati to face the No. 7 team in total DVOA. 

Braelon Allen gets a shot at a vulnerable Bears defense Sunday.

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The wheels appear to be falling off in New England right now. 

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

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Derrick Henry can make the Titans miss him even more Sunday.

One of these teams might not avoid early-season panic after this week.

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

An inside look at Sunday's Giants-Cardinals matchup at MetLife Stadium:

Sports betting writer Dylan Svoboda is in his third season in the Post’s NFL Bettor’s Guide.

Honor them by reminding them what home-field advantage looks and sounds and feels like, and what it means. 

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