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US Reiterates "Do Not Travel" Warning For Russia After Lab Worker's Death Raises Plague Fears

The Trump administration formally asked Russia for details about the reported death of a laboratory worker at a facility studying pneumonic plague in Siberia's Irkutsk region. Russian authorities said they found no plague in the deceased worker or contacts.

*US PREPARING FORMAL REQUEST TO RUSSIA ON PLAGUE DEATH: WAPO

— zerohedge (@zerohedge) October 6, 2026

Overnight, the U.S. Embassy reiterated its "Do Not Travel" warning for Russia and urged Americans already in the country to leave immediately.

"The U.S. Embassy is aware of press reports from the Irkutsk region of suspected pneumonic plague resulting in the death of an individual and of associated quarantine measures in, and closures of, hospitals in Irkutsk," the U.S. Embassy in Moscow wrote in an advisory overnight. 

Irkutsk, Russia: The U.S. Embassy is aware of press reports from the Irkutsk region of suspected pneumonic plague resulting in the death of an individual and of associated quarantine measures in, and closures of, hospitals in Irkutsk. We continue to track the situation closely. The U.S. government has limited ability to help U.S. citizens in Russia, especially outside of Moscow. The State Department’s Level 4 Travel Advisory (Do Not Travel) for Russia remains in place and states U.S. citizens currently in Russia should depart immediately. U.S. citizens planning travel to Russia are again strongly advised not to travel to Russia due to risk of wrongful detention and security concerns. More at: https://t.co/rgpoFm6YhH

— TravelGov (@TravelGov) October 6, 2026

The embassy continued, "We continue to track the situation closely. The U.S. government has limited ability to help U.S. citizens in Russia, especially outside of Moscow. U.S. government personnel may face additional restrictions for personal and official travel to specific regions due to health and security concerns." 

Latest reporting:

• Kremlin Says Russians Should Ignore "Rumors" On Possible Plague Outbreak In Siberia
• Russian Lab Worker's Abrupt Death Sparks Plague Crisis Concerns; Trump Team "Monitoring Outbreak"
• Siberian Plague-Lab Death Draws FSB Escort For Ambulances

Russia's health watchdog, Rospotrebnadzor, said Tuesday that 60% of the lab worker's identified contacts had been tested. Officials reported no plague detected among those screened, but testing identified two Covid-19 cases and two rhinovirus infections.

"No other infectious disease pathogens were detected among the contacts," Rospotrebnadzor said in a statement that did not explicitly mention plague.

President Trump said Tuesday he had a call scheduled with Russian President Putin to discuss the health crisis matter. 

Separately, a State Department official told NBC News on Tuesday that the U.S. government spoke with Moscow health officials as early as Friday. 

The Centers for Disease Control and Prevention wrote on X yesterday that it was "working across the U.S. government to assess developments as additional information becomes available."

Dr. Peter McCullough, a Texas cardiologist, who created a "multi-drug protocol" aimed at early treatment of Covid-19, wrote on X: 

More Than 21 Plague Vaccines Are Already in Development: mRNA, saRNA, DNA, Viral Vector, Bacterial Vector, Subunit, and Live-Attenuated. 

Why were governments and military biodefense programs already investing so heavily in plague vaccines before the current plague hysteria erupted? by Nicolas Hulscher, MPH URL TheFocalPoints. 

More Than 21 Plague Vaccines Are Already in Development: mRNA, saRNA, DNA, Viral Vector, Bacterial Vector, Subunit, and Live-Attenuated Why were governments and military biodefense programs already investing so heavily in plague vaccines before the current plague hysteria erupted? by Nicolas Hulscher, MPH URL TheFocalPoints. @NicHulscher @McCulloughFund

— Peter A. McCullough, MD, MPH® (@P_McCulloughMD) October 7, 2026

More from Nicolas Hulscher: 

Israel has already developed an experimental mRNA PLAGUE vaccine. I will NOT be taking it. I’d rather take my chances with doxycycline and its 97% SURVIVAL RATE. https://t.co/UK4ErTyaTJ

— Nicolas Hulscher, MPH (@NicHulscher) October 6, 2026

A Wall Street Journal report on Tuesday evening said the U.S. warned Moscow that its failure to disclose details about the lab worker death violates international health obligations. 

Tyler Durden Wed, 10/07/2026 - 09:05

Blanche Says DOJ Is Using Fraud Laws To Combat Birth Tourism

Authored by Tom Gantert via The Epoch Times,

Despite a Supreme Court setback in June, the Justice Department (DOJ) is working with federal immigration agencies to combat birth tourism by using existing laws, U.S. Attorney General Todd Blanche said.

Attorney General Todd Blanche speaks during an interview in Washington on Oct. 5, 2026.Madalina Kilroy/The Epoch Times

Birth tourism remains a problem, but officials are taking steps to prevent people coming to this country just to have a baby for American citizenship, Blanche told Epoch Times senior editor Jan Jekielek in an interview airing at 9 p.m. ET on Oct. 6.

DOJ is also working with the Department of Homeland Security to strengthen questions asked of travelers about their reasons for entering the country, Blanche said in the interview.

On June 30, the Supreme Court struck down President Donald Trump's broad birthright citizenship order issued in January 2025, which excluded children of illegal immigrants and legal temporary visitors from automatic U.S. citizenship.

Blanche said the ruling still left room for the administration to act. He said he would use existing enforcement tools rather than wait for Congress to pass laws.

"Those cases can be difficult to prove, but it's not slowing us down," Blanche said.

Federal prosecutors have been told to prioritize investigations into birth tourism schemes.

Colin McDonald, the Justice Department's assistant attorney general for fraud, wrote a June 30 memo stating the U.S. immigration system is being exploited by foreign nationals who travel to the United States "under false pretenses" to give birth and secure U.S. citizenship for their children.

On Aug. 6, Trump signed two executive orders, one identifying categories of children the administration considers ineligible for birthright citizenship and another directing the State Department and Department of Homeland Security to halt birth tourism.

One of the measures banned birth tourism. Another barred citizenship for children whose parents fell under several categories, including being a foreign government employee and member of a designated foreign terrorist organization.

A federal judge blocked that order in September and suggested it conflicted with the Supreme Court's decision. "The 2026 Executive Order is almost certainly unconstitutional as applied to the certified class for the simple reason that the Supreme Court in Barbara already decided that the children in the class are citizens at birth," U.S. District Judge Deborah Boardman said in an opinion on Sept. 2.

The Justice Department has asked Boardman to dissolve the injunction, stating that the plaintiffs involved lacked standing or a legal basis to sue. More specifically, it said that the executive branch clarified Trump's order was prospective and therefore only applied to babies born after the order was signed. The babies of the plaintiff mothers were born before the order.

In September, the United States said it would deny visas to people who are involved in the practice.

The new policy targeted commercial network operators, visa "fixers" who coach applicants to commit fraud, and foreign medical providers who help arrange such travel and fraudulent Medicaid use, according to a State Department statement.

"The Trump Administration is using every tool at our disposal to defend the integrity of U.S. citizenship, protect American public benefits and U.S. taxpayers from exploitation, and safeguard our national security," Secretary of State Marco Rubio said in a Sept. 23 statement. "By restricting visa issuance of those who both engage in and profit from this fraud, we are sending a clear message: The United States will not allow foreigners to exploit our immigration system and violate the sanctity of U.S. citizenship."

The ACLU has fought Trump on restricting birthright citizenship.

"The 14th Amendment ensures that no politician can ever decide who among those born in our country is worthy of citizenship," the ACLU stated in a 2025 post. "In the face of the Trump administration's threats, the 14th Amendment's protections continue to safeguard the rights of every person born in this country."

Tyler Durden Wed, 10/07/2026 - 08:45

Isaias Forecast To Become Season's First Atlantic Hurricane, Threatening Gulf Coast Rigs, Major Refineries

Tropical Storm Isaias is forecast to strengthen into a Category 2 hurricane, with the northern US Gulf Coast in its crosshairs later this week. The cone of uncertainty includes critical energy assets, such as offshore oil rigs and major refineries.

Isaias was about 285 miles west of Progreso, Mexico, with maximum sustained winds of 40 miles per hour, the National Hurricane Center wrote in its latest advisory. It is expected to become a hurricane Thursday.

Dozens of offshore oil and natural gas rigs are in the storm's path. Chevron is evacuating nonessential personnel from its Gulf platforms as a precaution.

Isaias' projected landfall area currently spans Louisiana, Alabama, Mississippi, and the Florida Panhandle.

One notable refinery in thestorm'ss path is Chevron's Pascagoula refinery, located on Mississippi's Gulf Coast, which can process 369,000 barrels of crude a day. The refinery produces gasoline, diesel, jet fuel, and premium base oils.

List of major US refineries in the storm's path:

September ended without a hurricane for the first time in 32 years, as strong wind shear associated with El Niño disrupted tropical development. Isaias is expected to become the first Atlantic hurricane of the season.

Tyler Durden Wed, 10/07/2026 - 08:25

Futures Slide From Record As Oil Jumps On Hormuz Tanker Attacks, 30Y Yield Hits 2002 High

US equity futures are sliding from Tuesday's record close as oil climbs back above $100, global bond yields resume their ascent and the AI bubble debate makes an unwelcome comeback. As of 8:00am ET, S&P futures are 0.4% lower, trading around 7,844, while Nasdaq 100 and Dow futures drop 0.6%; small caps are also under pressure with Russell 2000 futures down 0.3-0.4% as usual. On Tuesday the S&P 500 rose 0.6% to close at a record high for the first time since August 13, its fourth consecutive advance and longest winning streak in about two months, with the Nasdaq 100 also closing at an all-time high. Premarket, the Mag 7 are mixed (Apple +0.4%, Tesla -0.8%) while Memory, Semis and Software are all lower as the AI theme sees some profit-taking following a slide in Korea's Kospi; Constellation Brands slides 4.7% after the Corona brewer reaffirmed guidance, Neogen jumps 11% on an earnings beat, and SpaceX falls 2% on a report it is seeking to raise $40 billion in a chip-backed SPV to buy Nvidia chips. The day's driver is once again oil: Iran has increased the pace of attacks on tankers in the Strait of Hormuz just as shipments through the chokepoint approach prewar levels, sending Brent up 1.4% to $101.94 and WTI up 0.7% to $90.02. That has pushed Treasuries lower, with the long end leading: the 30-year yield climbed 5bps to 5.70%, the highest since 2002, while the 10Y trades around 5.335%, up 5bps, and 2s10s is 4bps steeper. The Bloomberg Dollar Spot Index rose 0.3%, approaching its highest levels since June, as the euro slid to a 16-month low against the pound amid renewed French fiscal angst, with the OAT-Bund spread back out to 138bps. Gold dropped 1% to around $4,121 and silver fell 1.9% to $60.21, while copper is flat with Chinese buyers still away for Golden Week. Bitcoin is down 2.4% near $83,600. US economic data slate includes MBA mortgage applications (7am, -4.2%), September NY Fed 1-year inflation expectations (11am), FOMC minutes from the September 16 meeting (2pm) and August consumer credit (3pm). The Treasury sells $39 billion of 10-year notes in a reopening at 1pm.

In premarket trading, Magnificent Seven stocks are mixed: Apple (AAPL) +0.6%, Meta Platforms (META) -0.1%, Alphabet (GOOGL) -0.5%, Nvidia (NVDA) -0.6%, Amazon (AMZN) -0.6%, Microsoft (MSFT) -0.7%, Tesla (TSLA) -0.8%

• Constellation Brands (STZ) is down 3.6% after the maker of Modelo Especial and Corona Extra reaffirmed its comparable earnings per share forecast for the full year. The company also announced the acquisition of SpikedAde, a vodka-based drink brand.
• Enphase Energy Inc. (ENPH) and SolarEdge Technologies Inc. (SEDG) shares fall 3% and 3.4%, respectively, after Deutsche Bank issued sell catalyst calls on the solar stocks on expected lower growth.
• Flutter Entertainment shares (FLUT) rise 3% after Citi upgraded it to buy from neutral, saying recent share-price weakness on concerns over Brazil and September US sports results is overdone.
• Neogen shares (NEOG) climb 13% after the life sciences firm reported adjusted earnings per share for the first quarter that exceeded Wall Street’s expectations.
• NetApp Inc. shares (NTAP) are up 2.4% after Evercore ISI upgraded the computer hardware and storage company to outperform from inline, seeing a strong growth outlook.
• Penguin Solutions shares (PENG) are up 4.2% after the semiconductor device company reported fourth-quarter results that beat expectations and gave an outlook that is seen as strong.
• SailPoint Inc. shares (SAIL) are up 0.9% after Oppenheimer & Co. started coverage on the software company with an outperform rating and $30 price target, seeing strong growth potential related to AI.
• Sigma Lithium shares (SGML) gain 5.8% as the company said it has resumed operations after a Brazilian court of appeals upheld its environmental licenses.
• SpaceX (SPCX) shares fall 1.9% as it is in talks with banks and investors to raise $40 billion to buy chips from Nvidia Corp., people familiar with the matter said, in what would be among the biggest-ever debt financings for the AI buildout.
• Taiwan Semiconductor Manufacturing Co. ADRs (TSMC) fall 2.2% as Elon Musk said his business empire will build and operate Terafab independently, quashing speculation about industry TSMC swooping in to run his ambitious chipmaking venture.
• Vylor Inc. (VYLR -0.9%) was initiated with a sector weight rating, while Corteva Inc. (CTVA +0.7%) was upgraded to overweight as KeyBanc Capital Markets looks to earnings growth potential.
• Webull Corp. shares (BULL) fall 30% after CNBC reported that the US House Select Committee on China is set to release a report on Wednesday that Webull is tied structurally to the government in China, raising national security concerns.
• Zscaler shares (ZS) are up 0.5% with analysts positive on the security software company in the wake of an investor day event that increased confidence about its growth potential.

In other corporate news, Apple’s upcoming smart home devices will include a doorbell, thermostat, and other accessories developed through a partnership with LG Electronics. Shell expects to report strong results from oil trading in the third quarter as a squeeze on global fuel supplies drives refining margins to a record. HSBC is planning sweeping job cuts across its UK wealth management business as part of a broader push to use AI to serve affluent clients more efficiently, the FT reported. Frasers Group acquired an 8.8% stake in Under Armour. Affiliates of Energy Capital Partners are selling about $891 million of shares in Constellation Energy in an unregistered block trade, while Oaktree sold its remaining 6.2% stake in Torm. Black Hills will invest $1.8 billion serving a Google data center, CRH is buying aggregates operations in Denmark and Finland, and Porsche plans to raise prices of its top-end sports cars by an average of 20%.

A rally in stocks came to a halt and global bonds fell as mounting attacks on tankers in the Middle East pushed oil prices higher. "Stocks are taking a breather after closing at new record highs," Bloomberg's Neil Campling writes, noting that volumes, volatility and single stock dispersion remain low, with AI and earnings continuing to dominate the narrative. Meanwhile, the debate around an AI bubble is back: Temasek’s CIO said the unwinding of the AI trade is the biggest risk facing global markets along with inflation, Ray Dalio warned once more that AI is a “classic bubble” near bursting point, and the IMF sees the world facing risks from AI, a prolonged energy shock and record debt piles. Not that the market seems to care much: as we noted last night, stocks hit fresh record highs even as the 10Y hovers near its highest since 2002, and earnings concentration is getting absurd, with Micron and Nvidia alone set to deliver a third of Q3 earnings growth.

“Bond markets really worry about the outlook for fiscal policy, but the political reality is that the people on the ground are not ready to accept that,” she said.

“Extraordinary” AI-related earnings growth should keep certain major indexes relatively resilient despite rising yields, says Mark Cudmore of Bloomberg’s MLIV. Earnings growth expectations for the upcoming season have been ticking higher and are currently sitting at 24.5%. Barclays strategists agree that the AI boom remains a key earnings driver, but note that rising debt issuance and capital intensity are putting returns under greater scrutiny.

In other AI news, SpaceX is said to be in talks with banks and investors to raise $40 billion to buy chips from Nvidia (we covered the Apollo-led SPV debt here). Given that SpaceX is currently sitting on $100 billion of cash, the financing isn’t out of necessity, but speaks to the ongoing appetite for AI deals in credit markets. AMD is working with customers to optimize memory footprints as tight supplies persist, and Intel said it will continue to work with Elon Musk on Terafab.

For traders getting more nervous about AI names, BofA strategists recommend tapping equity derivatives both to benefit from the record rally and hedge against the fallout from a potential bubble. Traders are also looking to the upcoming earnings season to see whether profits can support valuations despite macro headwinds and whether the artificial-intelligence boom still has plenty of legs.

“It’s the period before earnings when there’s a bit of a lull, so markets can be pushed around easily,” said Guy Miller at Zurich Insurance. “The focus point is still around bond yields. There was relief yesterday but let’s be clear, nothing fundamental has changed.”

JPM's Market Intel desk under Andrew Tyler remains Tactically Bullish and thinks the market "may not be BULLISH enough into earnings": FactSet reports 26Q3 set a record for the largest number of positive pre-announcements, all 11 sectors are expected to show positive revenue and earnings growth, and consensus sees 12.3% revenue growth and 29.5% earnings growth with 15.0% margins (vs 52.3% EPS growth in Q2). The desk sees a broadening, but given where yields are, prefers a barbell with large-caps over small-caps and AI/Tech as the core. JPM also notes the bond market now prices a ~22% chance of an October hike and ~80% for December, down from 70% and 84% at the start of last week. JPM's Manish Sinha is less sanguine, flagging that the Equity Risk Premium is negative, which "effectively requires a meaningful earnings re-rating higher to justify taking equity risk," and that Momentum looks vulnerable either way.

Goldman's desk is turning more cautious. US derivatives MD Shawn Tuteja writes that "the Tech / AI asymmetry has shifted. The macro is unequivocally more difficult, and the positioning within AI and large-cap tech no longer seem to be tailwinds." Since Aug 27, the SPX is +1.28% while the S&P ex-AI names is down 5.19%, and Mag 7 net exposure on GS Prime is near 22% of total US exposure, the highest since the start of 2022. His left-tail scenario: one where "the Fed must hike an excessive number of times to maintain credibility in the backend of the bond curve." In London, Goldman Delta One head Rich Privorotsky says today's tape "feels less like generic risk off and more like higher oil + higher real rates increasingly biting the duration sensitive parts of the tape," adding that "more leverage in the AI ecosystem is not exactly what the market wants to hear right now." Meanwhile, the GS cash desk notes hedge fund nets are approaching a 5-year low with market breadth at the lowest level since 2000 (no wonder traders keep paying up for protection).

On the macro front, FOMC minutes come later but may offer less insight into current thinking given Warsh’s desire to trust the data and with PCE revisions and jobs data having been released since the Sept. meeting. Speaking of inflation, oil is ticking higher as traders weigh increased flows through the Strait of Hormuz against a pickup in Iranian attacks against vessels. Elsewhere, the EU is preparing safeguard measures to limit imports of Chinese hybrid vehicles into the bloc.

France is back on the tape: the spread between French and German 10-year yields widened as much as 10bps to 138bps, unwinding Tuesday's Le Pen relief rally, as investors continue to price in heightened fiscal pressure around budget negotiations (and as Goldman warned, the "Le Pen bounce" was not to be trusted). ECB's Moulin said the situation on France’s bond market is complicated and serious, but doesn’t warrant intervention from Frankfurt. Not everyone is panicking:

“Unlike previous episodes of severe sovereign stress in the euro area, we do not see evidence of broader financial contagion,” ABN Amro senior rates strategist Larissa de Barros Fritz wrote. “We do not expect OAT-Bund spreads to reach the 200bp+ levels seen during past Italian stress episodes.”

In Europe, the Stoxx 600 is down 0.4% at 633.64, ending a three-day run of gains as oil prices climbed and bond yields resumed their rise, with 351 members down and 233 up; Euro Stoxx 50 is down 1.1% and the DAX 0.9%. Telecoms, autos and retail lead, with carmakers rising as much as 1.75% on the EU's planned cap on Chinese hybrid imports, while banks, tech and utilities lag, with French lenders among the worst performers. Pennon plunged as much as 20% to the lowest since 2004 after a larger-than-expected £550m rights issue. Here are the biggest European movers:

• Remy Cointreau shares advance as much as 7.5%, the most since June, after the French beverages maker held a pre-earnings call that analysts said offered reassurance on the sales outlook and US trends.
• Europe’s carmakers advance as the European Union prepares a limit on imports of Chinese hybrid vehicles into the bloc. The Stoxx 600 Auto & Parts Index gained as much as 1.75%, leading gains among sectors.
• NCC shares gain as much as 7.7%, the most since Feb. 6, after the Swedish construction company agreed to sell its Industry business at an enterprise value of SEK8.2b.
• ALK-Abello shares gain as much as 3.4% as Nordea upgrades the Danish pharmaceutical firm to buy, arguing it has the potential to return to substantial sales growth from 2028 onward, following an expected dip in 2027 due to German medication rebate reform.
• Forvia climbs as much as 11% following a double-upgrade to buy at BofA, which removes the stock’s only negative analyst rating, with room seen for the auto-tech supplier to re-rate after weak performance in the shares year to date.
• Pennon shares fall as much as 20% to the lowest level since October 2004 after a £550m rights issue that was larger than analysts expected. Analysts also flag the rebased dividend and uncertainty over returns as limiting the potential for a re-rating of the South West Water owner.
• BE Semiconductor shares drop as much as 8.4% after UBS downgraded the stock to sell from buy, citing a slower adoption of hybrid bonding among memory chipmakers due to a supply crunch.

Asian stocks fell for the first time in three days, led by tech, as the earnings optimism that drove US stocks to records failed to carry over to the region. The MSCI Asia Pacific Index dropped as much as 0.9% with SK Hynix, TSMC and Alibaba among the biggest losers; SK Hynix slumped ahead of the expiry of a lockup in its ADRs on Oct. 8. South Korea's Kospi led declines, closing down 2.0% at 6,803.90, with Goldman's Korea desk noting foreigners sold $1.94 billion (net sellers for an 8th session) while retail bought $1.91 billion, and Samsung's preliminary results due tomorrow. Japan's Nikkei fell 0.9% to 70,035.71, just about holding the 70,000 level as investors booked profits, with beer makers lower after the Fair Trade Commission started investigating them over suspected price fixing; the Topix fell 0.5%. The Hang Seng slid 0.6%, Taiwan's Taiex fell 0.1% and Australia's ASX 200 was flat. Mainland China remains closed for Golden Week and reopens Thursday. Southeast Asian banks sold off after JPMorgan warned surging long bond yields will hurt third-quarter earnings, while India's RBI hiked rates by 25bps to 5.50%, its first hike in nearly four years.

“There’s a sense that Asian markets are starting to lose some of the relative momentum they enjoyed earlier,” said Tim Waterer, chief market analyst at KCM Trade. “After a period of outperformance, the lack of fresh catalysts combined with still-elevated oil and bond yields is leaving the region looking a little tired.”

In FX, the Bloomberg Dollar Spot Index rose 0.3%, approaching its highest since June, with the dollar stronger against all G10 peers and the DXY trading in a 101.88-102.32 range. EUR/USD fell to 1.1180, closing in on the 1.1161 low hit earlier in the week (the lowest since May 2025), as French fiscal angst pushed the euro to a 16-month low against the pound. USD/JPY edged up to around 158.5 after a report that Japan may be considering another supplementary budget, though PM Takaichi said the government will review policies, revenue and spending if rate moves diverge from expectations. GBP/USD slipped 0.2% to 1.3247 as gilts sold off.

“Markets are unlikely to welcome the prospect of a second supplementary budget, regardless of its size, given earlier guidance that they are no longer planned,” said Wei Liang Chang, macro strategist at DBS Bank. “The yen and JGBs may trade slightly weaker as investors await details.”

In rates, Treasuries' long end leads the selloff into the early US session, with 30-year yields cheaper by 5bps on the day at 5.70%, the highest since 2002, and peeking through Monday's highs. Yields are 1bp to 5bps higher across the curve, with 2s10s and 5s30s steeper by 4bps and 2bps; the 10-year trades around 5.325%. Gilts lag by an additional 4bps in the 10-year sector, with UK 30-year yields up 10bps to 6% (round number, nobody panic), while bunds slightly outperform and OATs give back all of Tuesday's gains; a new 2033 Bund auction drew a dire 1.42x cover with 52% retained. Duration supply is a factor: the $39 billion 10-year reopening at 1pm follows Tuesday's solid $58 billion 3-year sale, which stopped 0.2bp through, and the 10-year WI around 5.33% is ~50bps cheaper than the September reopening, which stopped 1.5bps through. The IG dollar issuance slate includes a couple of deals after four borrowers priced $4.25 billion on Tuesday. FOMC minutes from the September 16 hike land at 2pm.

“Instead of blaming bond vigilantes, deficits, Japan, fiscal dominance, erosion of central bank independence, the driver of higher rates is central banks delivering rate hikes,” wrote Bank of America rates strategist Ralf Preusser, adding that “term premium explains the entirety of the 10y yield move in US, UK, Japan, Australia and Canada” since the September central bank meetings.

In commodities, WTI for November delivery gained 0.7% to $90.02 and Brent for December rose 1.4% to $101.94 as of 6:52am, in choppy trading (WTI ranged $89.33-90.61, Brent $100.72-102.06) as traders weigh a pickup in Iranian attacks on vessels in Hormuz against resilient Middle East flows; UK maritime authorities logged nine attacks in the strait this month, already half of September's count. Vitol's CEO says the crisis has entered a new phase as buyers struggle to secure tankers (as we discussed here, every crude freight index is at a record), while EU states expect the G7 emergency release of up to 100 million barrels to merely enact prior commitments; the IEA holds an informal meeting on releasing oil and diesel reserves. Shell is evacuating non-essential workers from several US Gulf assets ahead of Tropical Storm Isaias. Dutch TTF rose to €77.37/MWh. Spot gold fell from $4,170 to a $4,117 low and silver from $61.50 to $60.34 as the dollar firmed, while 3M LME copper is stuck in a $14,339.60-14,445.85 range.

US economic data slate includes MBA mortgage applications (7am, -4.2%, 30-year rate 7.49%), September NY Fed 1-year inflation expectations (11am), FOMC minutes (2pm) and August consumer credit (3pm). Fed speaker slate: The Treasury sells $75 billion of 17-week bills (11:30am) and $39 billion of 10-year notes (1pm).

No significant earnings are expected before the open; Costco reports September sales later in the day and Levi Strauss and Applied Digital report after the close.

Market Snapshot

Top Overnight News

• Japan’s Sanae Takaichi said the government may review spending and revenue plans if bond yields move unexpectedly. BBG
• The EU’s preparing measures to limit imports of Chinese hybrid vehicles into the bloc, people familiar said. One option is to impose a levy on imports above a certain volume. BBG
• India’s central bank raised interest rates for the first time in more than three years as the Middle East conflict kept energy prices high, hurting the rupee and fueling inflation fears. The Reserve Bank of India’s monetary policy committee voted unanimously to raise its benchmark repo rate by 25 basis points to 5.50%, ending a pause spanning four consecutive meetings. WSJ
• According to the Saudi aviation authority, Saudi Arabia’s airports in Jazan and Najran were targeted in two attacks, as hostilities between Yemen’s Iran-backed Houthis and the kingdom grow. CNBC
• Leading oil executives warned that the world is running out of stopgaps to manage the impact of the Iran war as the conflict extends into an eighth month. Producers and consumers have pulled virtually every lever available to adjust to the diminished flows, including reductions in demand and large releases from strategic petroleum reserves. BBG
• The global energy crisis triggered by the Middle East conflict has entered a new phase because of a shortage of tankers to move crude around the world, according to the head of the world’s largest independent oil trader. Vitol chief executive Russell Hardy said that while more oil was now flowing out of the Gulf, there was a fresh bottleneck as buyers struggled to secure ships. FT
• The US is gearing up for another quarter of bumper corporate earnings spurred by lavish spending on the AI build-out. The robust growth should help Wall Street shrug off worries about the durability of the AI trade against the backdrop of rising borrowing costs but may do little to allay concerns about how reliant the record-high stock market has become on a small group of technology names. FT
• The French government desperately needs a return to strong growth if it is to contain its rapidly rising debts. But uncertainty about whether the country can fix its finances has itself started to weigh on economic activity. France only narrowly avoided a recession in the second quarter, as activity stagnated after extreme heat hit agricultural output and the energy price shock from the war in Iran continued to squeeze households and businesses. WSJ
• SpaceX is in talks to raise $40 billion to buy Nvidia chips, people familiar said, in one of the biggest-ever debt financings for AI buildout as the borrowing binge accelerates. BBG
• Iran has increased the pace of attacks on tankers in the Strait of Hormuz in recent days, just as oil shipments through the world’s most important energy chokepoint approach prewar levels. BBG
• US 30-year yields rose 5bps to 5.7%, the highest since 2002, while 10-year yields climbed 4bps to 5.3%; traders extended their short bets against US government bonds. BBG
• Germany’s industrial production for Aug came in ahead of expectations at +2% M/M (vs. the Street +0.5%). BBG
• Taiwan’s CPI overshoots the consensus at +2.73% headline (vs. the Street +2.4%) and +2.52% core (vs. the Street +2.45%). BBG
• Iraq devalued its currency by about 13% versus the dollar as Hormuz disruption hits oil exports. BBG
• The Dutch government plans to cut its stake in ABN Amro to 10.5% from 20.7%. BBG
• US VP Vance said that Iran must make a "meaningful" reduction in its nuclear enrichment capacity to satisfy US demands and end the war. RTRS
• US officials have formally requested additional information from Russia and are coordinating with governments around the world: State Department spokesperson
• France's government is willing to bypass parliament to pass billions in cuts. WSJ
• US equities have decoupled from the ex-AI market: since Aug 27, the SPX is +1.28% while SPX ex-AI is -5.19%, with the rolling 30-day gap near its widest since January 2023. GS
• FactSet reports 26Q3 set a record for the largest number of positive pre-announcements, led by Tech, Industrials and Healthcare. JPM

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly negative, with the region failing to take inspiration from the gains on Wall St, where the S&P 500 and Nasdaq printed fresh all-time highs, while the sentiment soured overnight amid a rebound in oil and yields. ASX 200 struggled for direction and was flat for the session in the absence of any major catalysts and tier-1 data. Nikkei 225 retreated with investors booking profits following the recent rally in the index, which just about held on to the 70,000 status, with participants also reflecting on Labour Cash Earnings data, which decelerated but still topped forecasts. Elsewhere, there was pressure seen in brewers including Asahi on reports that Japan's FTC is probing Japan's four major breweries over suspected price fixing. KOSPI underperformed in choppy trade with the index weighed on by weakness in SK Hynix, while Samsung Electronics was indecisive ahead of its preliminary earnings results tomorrow. Hang Seng conformed to the downbeat mood amid tech-related weakness and continued absence of mainland participants, who will be returning from the week-long holiday closure tomorrow.

Top Asian News

• Japanese PM Takaichi said the government will review policies, revenue and spending if interest rate shifts diverge from expectations.

European bourses (STOXX 600 -0.6%) are broadly lower, giving back the gains seen earlier in the week, but have rebounded slightly in recent trade amid the recent downside in energy benchmarks. No clear driver has been seen to explain this reversal. Sectors lack a clear bias. Telecoms top the sector pile, with Autos and Retail rounding out the sector gainers. Banks reside at the bottom of the sector pile, with Tech and Utilities rounding out the sector laggards. European autos are finding some support this morning, after Bloomberg reported that the EU is preparing a temporary import cap on Chinese hybrid cars. The safeguards by the EU will be welcomed by domestic manufacturers, as Chinese hybrid sales make up 25% of total sales in the bloc. Further in the report, the source added that the Commission plans to use hybrids as a test case, and if successful, would replicate it in other sectors. US equity futures are lower, with the ES outperforming as it hovers around the unchanged mark. Constellation Brands, the Corona owner, fell after hours despite upbeat Q2 metrics as they highlight softer underlying beer demand and a reduced operating margin outlook.

Top European News

• UK Chancellor Healey held a scheduled meeting with economists from primary dealer firms in the Gilt market, with the purpose of the meeting being to share views on global and UK economic prospects.
• UK Chancellor Healey is considering a major intervention to cut energy bills for poorer households at this month’s budget, according to The Guardian.
• UK Labour Party is to shelve GBP 800mln of planned military housing repairs until at least 2029, according to The Times.
• France's government is willing to bypass parliament to pass billions in cuts, according to the WSJ.
• ECB's Moulin said the situation in the bond market is "complicated", but stated that France is not in an economic crisis yet. The French economic situation is serious but "we can act", while adding that the ECB is not there to respond to nations' budgetary problems.
• Germany’s foreign trade association raised its 2026 export growth forecast to 1%.

FX

• USD is stronger against most G10 peers this morning, with strength facilitated by higher energy prices and elevated yields. JPY holds towards the top of the pile, whilst the EUR underperforms.
• DXY is firmer this morning and trades within a 101.88 to 102.32 range; strength has been facilitated by higher energy prices and continued pressure in the EUR. US-specific news flow has been lacking, but attention later will be on the FOMC Minutes. It will be eyed to see how members view the future path of tightening. Elsewhere, geopolitical updates remain light. The usual rhetoric from Trump on continued oil flows through the Strait, and ongoing strikes between Saudi Arabia and the Houthis remain the key drivers.
• EUR is once again on the backfoot this morning, after finding some reprieve in the prior session. To remind, French fiscal woes appeared to ease as Le Pen provided markets with a friendly alternative budget, but failed at expressing how she would achieve it. Therefore, it was mentioned in yesterday’s FX “Market Analysis” that the EUR pressure would likely return – and it has come alongside a bout of USD strength. French fiscal concerns have re-emerged; for reference, OATs are underperforming today, and the OAT-Bund spread has widened back towards 138bps (vs yesterday’s close at 130bps).
• JPY outperforms vs peers, but still resides flat/slightly lower. Strength which comes despite widening yield differentials, and after Yomiuri reported that Japan is considering a second supplementary budget. Sticking with the fiscal side of things, PM Takaichi said that she would review policies and spending amidst elevated yields – which could help ease debt concerns within the region. Nonetheless, JGBs remained fairly unchanged overnight, which means that the JPY action may be subject to other factors. That could potentially be the region’s Labour Cash Earnings data, which showed a deceleration but still printed firmer-than-expected. Overall, a report which keeps BoJ hikes on the table by year-end.

Central Banks

• RBI hiked the Repurchase Rate by 25bps to 5.50% via unanimous decision, and adjusted its policy stance to calibrated tightening from neutral with four out of six MPC members in favour of stance change, with the RBI Governor saying it implies a "milder form" of a hiking cycle. The RBI said its FY27 inflation forecast while also lifting its real GDP growth.
• BoJ Board Member Sato said she agrees on the need for a gradual adjustment to interest rates and does not think there should be a pre-set pace of rate hikes, while she added the BoJ must decide monetary policy independently in a way that is consistent with the administration's proactive fiscal policy. Sato also noted risks to the price outlook are skewed to the upside due to rising oil costs from the Middle East conflict, according to Kyodo.
• ECB's Dolenc said that the current ECB rate level ensures flexibility for the central bank's upcoming rate decisions.

Fixed Income

• A bearish start to the day, as renewed energy upside lifted fixed income overnight. Magnitudes are in-fitting with Tuesday’s action, in the sense that OATs outperformed yesterday and currently underperform today.
• Within Europe, for today, the focus is more on Germany into the CDU/CSU-SPD coalition meeting at around 15:30BST today. A meeting that is in focus after Bild reported that the Grand Coalition is looking to get agreement from SPD to outline a deadline for pension reform.
• In general, EGBs are under pressure given the energy move. Bunds lower by about 10 ticks in 120.45-90 parameters, while OATs underperform at a 108.86 low, down by essentially a full point. A move for OATs that has unwound all of yesterday’s upside, and thus the OAT-Bund 10yr yield spread is wider today, at 138bps currently.
• It is worth noting that a new 2033 Bund auction was met with dire demand, with b/c at 1.42x; more pertinently was a massive retention of 52%, indicating a high amount of caution for EGBs.
• Ex-OATs, Gilts are underperforming. Hit by the mentioned energy move and the usual somewhat outsized reaction seen in Gilts to this. Additionally, fresh budget speculation regarding energy relief is factoring; while welcome for consumers, it adds to the funding pressure that Chancellor Healey is already under. Lower by 55 ticks at the time of writing.
• Finally, USTs conform to the energy-driven move, with US yields extending as energy picks up across the morning, to the benefit of the USD and detriment of the general risk tone. At the lower-end of 104-07+ to 104-15+ parameters, with the yield curve bear-steepening. Ahead, FOMC Minutes and a 10yr auction dominate the docket.
• Germany sells EUR 1.912bln vs Exp. 4bln 2033 Bund: b/c 1.42x, average yield 3.36%, retention 52.2%.
• UK sells GBP 1.0bln 0.25% 2031 Gilt via tender; b/c 4.39x (prev. 2.65x), average yield 4.842% (prev. 1.144%).
• Australia sells AUD 1.0bln 4.25% October 2026 bonds: b/c 4.51x, avg. yield 5.3802%.

Commodities

• WTI Nov and Brent Dec futures are mixed after paring overnight gains, with the complex caught between ongoing geopolitical risks and signs of improving supply. Overnight upside was driven by continued Saudi-Houthi attacks, reports of a vessel being attacked off Oman’s Musandam coast and missiles launched towards the Strait of Hormuz. However, gains were capped by yesterday’s Saudi Energy Minister supply comments, while Trump reiterated that millions of barrels have recently moved through Hormuz and expects oil prices to fall once the Iran war ends. US VP Vance also highlighted terms to end the Iran war, stating that Iran must cut its enrichment meaningfully. More recently, modest brief upside was seen after EU states said they expect no new oil-release obligations following the G7 agreement, alongside Zelensky saying Ukraine struck four targets supporting Russia’s war effort, including two oil facilities. WTI resides within a USD 89.33-90.61/bbl range, while Brent trades within a USD 100.72-102.06/bbl range.
• Dutch TTF is firmer, extending from a EUR 75.52/MWh low to EUR 77.37/MWh at the time of writing, as European energy-security concerns remain elevated amid continued Middle East disruption. Attention is also on the IEA’s informal meeting at 12:00 BST, where proposals to release oil and diesel reserves will be discussed.
• Precious metals are softer as the USD firms and yields rebound alongside energy prices. Spot gold has fallen from USD 4,170/oz to a USD 4,117/oz low, while spot silver has declined from USD 61.50/oz to USD 60.34/oz. The FOMC Minutes later today could provide impetus. As a reminder, The Fed unanimously hiked rates by 25bps in September, with the median participant projecting one more hike in 2026 and rates on hold through 2027. Since then, Williams and Jefferson have signalled no rush for further hikes, and Bowman sees none, while softer PCE data and a soft jobs report, with unemployment rising to 4.2%, may leave the minutes stale.
• Base metals are flat/mixed amid the firmer USD, higher yields and a generally lacklustre risk tone, with Chinese buyers still absent ahead of their return from the week-long holiday tomorrow. Copper remains capped, with the return of Chinese participation overall providing little support to the complex. 3M LME copper resides in a USD 14,339.60-14,445.85/t range.
• US Weekly Private Inventory Data (bbls): Crude -2.1mln (prev. +1.0mln), Gasoline -1.4mln (prev. +3.0mln), Distillate +0.5mln (prev. -0.3mln), Cushing +0.9mln.
• Shell (SHEL LN) is evacuating non-essential workers from Stones, Mars, Olympus, Ursa, Vito and Appomattox assets in the US Gulf, while Chevron (CVX) does not expect the approaching storm to affect offshore operations.
• EU diplomats said the IEA will hold an informal meeting at 12:00 BST to discuss proposals to release oil and diesel reserves.
• EU states expect no new oil release obligations following the G7 agreement.
• US Secretary of State Rubio said the current situation in the Strait of Hormuz and the Red Sea makes a strong partnership with Greece essential.

Trade/Tariffs

• Talks between the EU and China will focus in on autos, as the EU looks for a commitment from China on stemming exports of hybrid vehicles, Politico reported citing sources. Bloomberg earlier reported that the EU is preparing a temporary import cap on Chinese hybrid cars.

Geopolitics: Middle East

• US President Trump said they have to finish up regarding Iran and that the question is how, while he added that we will soon find out how they will finish up Iran and stated that Iran's drone-making capacity will soon be gone.
• US VP Vance told Reuters that Iran must make a "meaningful" reduction in its nuclear enrichment capacity to satisfy US demands and end the war. Vance added that the US remained open to an agreement but would require concrete Iranian nuclear concessions. Furthermore, the VP questioned who makes decisions in Tehran, following on from earlier comments by US President Trump saying that his biggest problem is that no one knows who is running Iran.
• US Secretary of State Rubio reiterated Iran cannot be allowed to have a nuclear programme.
• Yemen's Houthi forces said they used drones to attack King Khalid International Airport in Riyadh, while they targeted Abha Airport and Khamis Mushait using missiles and drones.
• Satellite imagery, cited by Sabereen, confirmed that there is still a fire at Saudi's Khurais oilfield.
• An Asharq reporter posted that Syria may join the war in Yemen, with the idea said to be under discussion, citing multiple sources, although no final decision has been made; it follows Syria's President visiting Saudi Arabia.

Geopolitics: Ukraine

• US President Trump said the Russia-Ukraine war is getting closer to ending, while he had a call scheduled with Russian President Putin regarding the plague and said he will probably be able to report on the pneumonic plague incident in Russia on Wednesday.
• Ukrainian President Zelensky said Russia launched one of the largest attacks on Ukraine, directly targeting the country’s energy sector. Zelensky added that Ukrainian forces struck four targets supporting Russia’s war effort, including two oil facilities and a training ground in the Perm, Samara and Astrakhan regions.

Geopolitics: Other

• North Korea warned South Korea not to cross the border by even a millimetre. It was separately reported that North Korea said the US should think twice before opposing China regarding Taiwan, according to KCNA.

Crypto

• Bitcoin slumped early in the Asian session before stabilising around the USD 84k mark.

US Event Calendar

• 7:00am: Oct 2 MBA Mortgage Applications -4.2%, prior -6.0%
• 11:00am: Sept. NY Fed 1-Yr Inflation Expectations, est. 3.64%, prior 3.58%
• 11:30am: US to sell $75bn 17-week bills
• 1:00pm: US to sell $39bn 10-year notes (reopening)
• 2:00pm: FOMC Meeting Minutes (Sept. 16 meeting)
• 3:00pm: Aug. Consumer Credit, est. $15.000b, prior $18.062b

DB's Jim Reid concludes the overnight wrap

Although we said on Monday that the French government bond sell-off looked overdone — likely driven largely by the unwinding of carry trades amid an aggressive repricing of ECB rates — there is also a longer-term fundamental story to tell about France. Last night, Henry and I published a chartbook on the Deutsche Bank Research Institute (link here), with a series of long-term charts on France, in some cases using data going back a couple of hundred years. One standout is an old favourite of ours: France hasn't run a budget surplus since 1974. One of the longest consecutive runs in the world. Italy hasn't had one since 1925, but it has mostly run primary surpluses over the last three decades or so, so there is an important difference. See the pack here for plenty more charts putting the current situation in French debt into a longer-term perspective. Also a reminder that our Q3 survey results can be found here.

For now the stress in France continues to ease with OATs staging a strong recovery yesterday, which came as RN leader Marine Le Pen vowed to continue cutting the French deficit in the years ahead, which offered some reassurance on the country’s fiscal risks. So that helped a big rebound for French OATs and we’ve now seen the biggest 2-day decline in the Franco-German 10yr spread (-13.7bps) since the initial pandemic turmoil in March 2020, so these aren’t everyday moves. The optimism also translated into a global cross-asset rally, as US Treasury yields also pulled back from their multi-year highs while the S&P 500 (+0.58%) reached its first record high since mid-August. Although US equity futures are flat overnight, the mood in Asia is weaker amid a rise in oil and bond yields.

Starting with Le Pen’s speech, markets were reassured by her pledge to cut the French deficit. She said that they’d get the deficit below 3% over the first 18 months if elected next spring, so in 2028. In addition, she also pledged to eliminate the primary deficit before end-2028, and called for spending as a share of GDP to fall beneath 50% by the end of her presidential term. Given Le Pen is currently leading in opinion polls, her fiscal plans are ones that markets are paying attention to. There are plenty of questions over both the feasibility of her radical headline fiscal target, which would far outpace any fiscal tightening France has delivered in recent history, as well as the credibility of some of the details in Le Pen’s proposals. Still, her public focus on delivering fiscal consolidation helped to ease the recent spike in investor concerns.

To be fair, much of the rally in OATs had also already played out before Le Pen’s speech, with a likely unwinding of some of the distortions that had emerged in the recent sell-off. Notably, at the front-end of the curve the 2yr Franco-German spread tightened by -15.4bps to 45bps. In absolute terms, there was also a sharp decline in French yields across the curve, with the 10yr yield (-10.9bps) falling to 4.74%, in contrast to the modest decline for 10yr bund yields (-1.4bps).

That recovery in French bonds also supported a relief rally across much of Europe, as it eased fears about contagion spreading to other countries. So the sovereign bonds of other countries with high debt levels also outperformed, with Italy’s 10yr BTP yields (-9.8bps) seeing a decent pullback to 4.53%. Moreover, several assets that struggled last week also stabilised, with the Euro (+0.32%) picking up from its recent low on Monday, whilst the STOXX Banks Index (+1.34%) was up for a second day running. That extended to credit as well, with European HY spreads (-15bps) seeing their biggest daily tightening since April.

Outside of Europe, the other big headline yesterday was that the S&P 500 (+0.58%) closed at a new record high for the first time since August 13, ahead of the Q3 earnings season. The move was a broad-based one, with the equal-weighted S&P 500 (+0.58%) rising by the same amount. And there were also new highs for the Mag 7 (+0.45%) and the NASDAQ (+0.45%). The moves were also part of a global equity rally, with Europe’s STOXX 600 (+0.48%) and France’s CAC 40 (+0.40%) also rising.

US Treasuries also rallied. The 10yr yield (-2.6bps) fell back from its post-2002 high on Monday to 5.28%, and the 2yr yield (-1.4bps) also fell to 4.80%. The move lower was led by real yields, with the 10yr real yield (-2.6bps) falling back from its post-2008 high to 2.91%.

All that came as yesterday saw a sizeable round trip in oil prices. Brent crude fell towards $97/bbl early in the US session amid optimism on oil flows coming out of the Middle East. However, this gave way to caution later on news of increased Iranian strikes against tankers passing through the Strait of Hormuz and as Iran’s IRNA reported that a blast was heard off Qeshm island near Hormuz. This brought Brent crude back up to $100.58/bbl by the close (+0.26% on the day), and it is another +1.01% higher this morning. Meanwhile, European natural gas prices rose yesterday, with front-month TTF rising +2.96% to €75.70/MWh, its highest level since mid-September.

With bonds selling off and oil rallying, the mood in Asia is softer this morning. 10yr US yields are +2.8bps, reversing yesterday's rally so far. In equities, the KOSPI (-1.18%) is leading declines, weighed down by losses in index heavyweight SK Hynix. The Nikkei (-0.81%) and the Hang Seng (-0.53%) are also trading lower, while the S&P/ASX 200 (-0.05%) is fairly flat. Mainland Chinese markets remain closed for the National Day holiday and will reopen tomorrow. European Stoxx futures are -0.64% lower, underperforming their flat US equivalents.

Elsewhere, the Japanese yen (-0.20%) is weakening for a third straight session, trading around 158.40 against the dollar, after newly appointed BOJ board member Ayano Sato signalled support for a gradual, multi-stage approach to further interest-rate hikes. In terms of data, real wages rose by 1.5% last month matching estimates with nominal up +3.8% and the seventh month above 3%, the longest run since 1992.

To the day ahead now, data releases include the NY Fed’s Survey of Consumer Expectations for September, US August consumer credit, Germany’s August industrial production, France’s August current account balance, and Sweden September CPI. We’ll also get the FOMC minutes and hear from the Fed's Logan, along with the ECB’s Cipollone and Vujcic.

Tyler Durden Wed, 10/07/2026 - 08:23

World Bank Warns Asia Is Running Out Of Money To Fight Energy Shock

Authored by Irina Slav via OilPrice.com,

Asian countries have responded more aggressively than others to the energy supply crunch caused by the U.S. and Israeli war on Iran and now they are running out of resources to continue their response, the World Bank warned in a new report.

The report actually focuses on the potential of artificial intelligence to help Asian economies grow but names energy import vulnerability as one major headwind to that growth.

"Subsidies have been by far the most common policy response [to the crisis] among emerging and developing economies," the World Bank said, adding that "Countries with substantial subsidies in place generally have had smaller increases in retail gasoline prices than non-subsidizers, but this relationship weakened considerably for headline inflation."

Energy remains a spot of weakness for Asian countries due to their overwhelming dependence on imports but, according to the World Bank, AI can change that by motivating a shift towards greater domestic electricity generation, which would in turn lead to lower demand for imported energy commodities.

Meanwhile, Asian countries' response to the energy crunch has led to lower prices at the cost of lower foreign exchange reserves, the lender also said. The longer the crisis continues, the greater the effect on their fiscal health would be, the World Bank warned, noting as examples Indonesia, Thailand, and Vietnam, which saw their dollar reserves decline by between 15% and 40% since the start of the war because of their crisis response actions.

These response actions, however, have had no effect on inflation anywhere in the world, and "headline inflation has sharply increased in many countries, even as core inflation has remained more subdued."

For Asia, however, there is hope for a reversal, driven by information technology generally and AI specifically, according to the World Bank.

"The region's dependence on AI-related industrial activity has been a source of strength, but it could become a weakness if global AI activity slows or reverses," the institution said in its report.

Tyler Durden Wed, 10/07/2026 - 08:05

Standard Chartered Says Hormuz Oil Flows Are Far From Normal

Authored by Alex Kimani via OilPrice.com,

• Gulf oil exports rebounded to roughly 16.5 million bpd in September, near pre-war levels, despite only 60% of those barrels crossing Hormuz versus 83% before the war.

• Exporters have adapted through pipelines, bypass ports and extensive ship-to-ship transfers, but the system is more expensive, inefficient and increasingly stretched, with elevated freight and security costs.

• Iran’s ability to choke off regional oil exports has weakened, while its own seaborne crude exports have fallen from around 1.7 million bpd to near zero.

Oil flows through the Middle East have staged an impressive rebound, with export volumes recovering to near pre-war levels even as traffic through the Strait of Hormuz remains well below normal. Standard Chartered estimates crude and condensate exports from the Gulf, excluding Iran and including bypass routes such as Fujairah and the Red Sea, reached roughly 16.5 million barrels per day (bpd) in September, broadly back to pre-war volumes. But only 60% of those barrels crossed the Strait of Hormuz, compared with 83% before the war. Standard Chartered says the numbers show resilience rather than normalization: exporters have found ways to move the oil, but they are doing it less efficiently and at considerably higher cost.

The system has been forced to use more complex workarounds, particularly a vessel-intensive chain of ship-to-ship (STS) transfers. Shuttle tankers are increasingly moving crude through Hormuz before transferring it to larger vessels in the Gulf of Oman, while exporters are also making greater use of pipelines and ports that bypass the strait. The southern route along the Omani coast has become an important route for shuttle vessels moving through Hormuz. Standard Chartered says STS capacity appears saturated, vessel utilization remains inefficient, voyage times have lengthened and both freight and security costs remain elevated.

Saudi Arabia perhaps best illustrates both the success and limits of this adaptation. Following the early-September damage to the East-West pipeline, exports shifted sharply to the east coast. Standard Chartered estimates total Saudi exports rebounded to roughly 6.9 million bpd in September from 2.45 million bpd in August, with 19 VLCCs transiting Hormuz in one week alone. The restart of the East-West pipeline and Yanbu loadings has restored another route to market and reduced the immediate risk of shutting in production, although pipeline throughput remains below nameplate capacity and exposed to further attacks. The workarounds are also expensive, with reports of discounts of up to $9 per barrel on cargoes loaded offshore Oman to compensate for the added logistical costs.

The recovery in physical flows has reduced the probability of the most extreme shortage scenarios and should gradually remove some of the scarcity premium in oil prices. But those barrels are moving at higher cost, with longer voyage times, heavier use of tankers and less spare capacity in the logistics system. Standard Chartered says the improvement is bearish compared with a market pricing a prolonged physical supply loss, but does not justify a return to pre-war risk premiums. Exporters have shown they can move far more crude than many expected, but the system has less room to absorb another major disruption.

The tactical success of Gulf exporters has also altered regional dynamics. Seaborne crude exports from Iran fell to near zero in September, down from roughly 1.7 million bpd before the war, after the U.S. naval blockade sharply curtailed Tehran's ability to move crude through Hormuz. Consequently, Iran's ability to weaponize its chokehold on the Strait of Hormuz is breaking down, though this increases the risk of unpredictable military escalation.

Iran remains defiant and reiterated Sunday that the Strait of Hormuz will remain closed until the United States fulfills seven conditions contained in the June interim agreement. Foreign Minister Abbas Araghchi said separately that Tehran's latest proposal could lead to the strait reopening within seven days if Washington accepts Iran's terms.

Tehran has denied reports that it offered international nuclear inspections in exchange for sanctions relief. Araghchi has said Iran hopes Washington will pursue diplomacy, but warned that the country is better prepared than before to respond if the U.S. opts for further military action.

Tyler Durden Wed, 10/07/2026 - 07:20

Germany's Former Spy Chief Arrested In Biggest Espionage Scandal Of The Century

August Hanning, former head of the German BND foreign intelligence agency, which is Germany's equivalent of the CIA, has been arrested on espionage charges in a shocking and unprecedented situation in which a country's top intelligence officer and head of a national spy agency was caught spying for another state.

The 80-year-old faces formal charges including "treasonous espionage, spying out state secrets, attempted treason, and espionage" - according to German media. While an official statement from the prosecutor's office has not yet identified the foreign service he's suspected of working for, Israel has been widely named, also given this past well-documented associations and links.

August Hanning, via Associated Press

Curiously, Hanning's arrest at his home in Nordwalde in western Germany comes a full two decades after he left the top intelligence post. He served as BND chief from December 1998 to November 2005 before moving to the Federal Interior Ministry.

In short, it appeared he not only illegally held on to thousands of classified documents, but used them over the years to peddle influence - including preparing a presentation for a foreign intelligence service based on the internal government docs. What's more is he was covertly obtaining new documents even many years out of office.

Israeli media itself is highlighting that the way Hanning was caught actually involves shady Israeli operatives:

The affair rocking Germany involves thousands of classified documents, suspected payments, contacts with foreign intelligence officials and a surprising connection to Israel: The investigation that led to its exposure actually began with the case involving the abduction of millionaire heiress Christina Block’s children, in which Israelis were also implicated.

International reports at the time: "According to prosecutors, August Hanning, who once headed Germany’s domestic intelligence service, allegedly approached Peri [ex-Shin Bet head], now owner of the Israeli consulting firm CGI Group, to organize a team of Israeli operatives for the abduction. The team allegedly assaulted Hänsel, kidnapped the children, smuggled them into Germany, and handed them over to Block. A Danish court later ordered her to return the children to their father."

According to a summary of the plot coming to light through the high profile Christina Block case via Channel 7 Israel National News:

Hanning had already come under scrutiny by authorities as part of an entirely separate case - the case of Christina Block, heiress to a German restaurant empire, who is standing trial over the abduction of two of her children from Denmark to Germany amid a bitter custody dispute with her former husband.

That case also attracted attention in Israel. The investigation implicated Israelis, including security personnel, and reports about the affair also mentioned former members of Israel’s security establishment.

Hanning’s name was linked to allegations concerning an earlier attempt to return the children to Germany, claims that he denied. As part of that investigation, investigators searched his home and office in September of last year and seized equipment for examination.

That, according to the German investigation, is where the case took a dramatic turn. Secret BND documents were discovered on an electronic storage device seized from Hanning. The problem was obvious: Hanning had left the intelligence service in November 2005 and therefore should not have had access to current intelligence material.

More insane details from the Block case and kidnapping plot via The Guardian:

A second former high-ranking BND official has also been arrested, and the person's home also searched. That official is accused of handing over to Hanning additional secret documents in exchange for payment.

Some of the alleged details of the Block case are wild. It was Hanning that set up Block with the brutal Israeli contractors who dragged the children into the forest and bound them up:

Ex BND chief August Hanning has more Israeli ties than a Tel Aviv haberdashery Hanning introduced German heiress Christina Block to the Israeli private spying firm CGI Group Block used the Israelis to abduct her own children from her ex and plant fake images of child abuse on his phone Hanning, who served on the board of another Israeli spying firm, arranged the operation through former Shin Bet chief Yaakov Peri

— Max Blumenthal (@MaxBlumenthal) October 6, 2026

That official has been identified only as Manfred D. - Hanning's own former chief of staff when he had been BND chief. Manfred D., who had continued on as chief of staff for Hanning's successors, was apparently from 2012 to March 2026 continuing to hand over a wealth of classified files to Hanning, despite his long having been out of government. Manfred D. is charged with "aiding and abetting attempted treason and espionage against the state."

German media is widely describing the espionage case as the "biggest espionage scandal of the century." Marc Henrichmann, who chairs the German parliament's intelligence oversight committee, declared in the wake of the high level arrests that "whoever allies themselves with the enemies of our liberal democracy will be found 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 Wed, 10/07/2026 - 07:15

$240 Million Triton Spy Drone Stops Feet From Disaster After Apparent Florida Runway Overrun

A roughly $240 million MQ-4C Triton surveillance drone built by Northrop Grumman apparently overran a runway at Naval Station Mayport near Jacksonville, Florida, last week, stopping just dozens of feet from plunging into the water. 

Footage circulating on X appears to show the drone perched on shoreline riprap beyond the departure end of the base's 8,001-foot Runway 05, narrowly avoiding a plunge into the St. Johns River.

A US Navy MQ-4C TRITON got stuck trying to take a drink from the St. Johns River at the end of Runway 5 at Naval Station Mayport, FL. pic.twitter.com/eFAZNbCVGO

— TheIntelFrog (@TheIntelFrog) October 3, 2026

The US Navy operates the Triton for maritime intelligence, surveillance, and reconnaissance, using the high-altitude, long-endurance drone to monitor vast stretches of ocean.

Northrop Grumman said in June 2025 that it had produced 20 Tritons for the US Navy. A single drone represents 5% of that production total. Any loss of the aircraft would be a significant loss for the fleet. That figure does not represent the current operational fleet, as those figures are unknown. 

The Navy has not publicly explained what caused the drone to end up on the riprap. The footage suggests a possible runway overrun. 

 

 

 

Tyler Durden Wed, 10/07/2026 - 06:55

UK Makes 7th Arrest Over Security Incident Near RAF Fairford Airbase

Authored by Ryan Morgan via The Epoch Times,

Authorities in the United Kingdom have announced the arrest of another suspect in connection with a recent security incident near the RAF Fairford airbase used by U.S. forces.

On Oct. 6, the UK's Office for Counter Terrorism Policing announced the arrest of a 22-year-old male British national in the Westminster borough of London. Authorities detained the man on suspicion of preparing terrorist acts.

The 22-year-old is the seventh to be arrested after authorities were alerted to suspicious activity near the airbase in Gloucestershire on Sept. 27.

U.S. President Donald Trump and British Prime Minister Andy Burnham have both publicly indicated the Sept. 27 incident may be linked to an Iranian plot.

Authorities initially arrested five British nationals on Sept. 27, on suspicion of committing offenses under the UK's Explosives Act. These five men were subsequently released on police bail.

On Oct. 1, authorities announced the arrest of a sixth individual, whom they identified as a 25-year-old British-Iranian national. Authorities have since released this sixth individual on police bail.

"This remains a live investigation, and our specialist teams continue to pursue multiple lines of inquiry into the circumstances surrounding events near RAF Fairford," senior national coordinator for Counter Terrorism Policing Vicki Evans said on Tuesday.

Evans thanked the public for their patience as police continue their work.

"We're acutely aware of the public interest in this investigation, and we are working around the clock, and at pace, to identify the motivation behind events in Gloucestershire," Evans said. "We remain committed to investigating all possible angles."

Over the weekend, the U.S. Air Force withdrew its B-1B Lancer long-range bombers from their forward positions at RAF Fairford.

Addressing the decision to pull U.S. bombers away from the airbase, Trump expressed concerns about a lingering threat.

"We had an idea that there might be a threat," the president told reporters on Oct. 5.

Separately, Vice President JD Vance said the decision to remove the bombers from RAF Fairford was taken out of an abundance of caution.

When asked if Iran-linked actors may have brought armed drones into the UK to carry out attacks, Trump said, "I can't tell you that. But if they did, they'll suffer greatly."

During the initial set of arrests on Sept. 27, authorities searched multiple vehicles deemed suspicious. They said they found no explosive devices, but did recover some quantity of gasoline.

While British and American officials have suggested Iran may be behind the Sept. 27 security scare at RAF Fairford, Iranian officials have denied Tehran's involvement.

"You're barking up the wrong tree," Iranian Foreign Minister Abbas Araghchi said on Sept. 30.

Though Tehran has denied any connection to the recent security alert near RAF Fairford, Iran's Islamic Revolutionary Guard Corps previously said it would treat any bases used to launch strikes on Iranian territory as legitimate targets for retaliation.

The British government has authorized U.S. forces to use some of its bases, including RAF Fairford, to launch strikes on Iranian missile sites that have targeted international shipping.

Last year, Ukrainian forces snuck more than 100 explosive-laden drones deep inside Russia's border to carry out extensive attacks on bases hosting Russian strategic bomber forces.

Tyler Durden Wed, 10/07/2026 - 06:30

Lithuanian Parliament Advances Measure To Reverse Nuclear Weapons Ban

Back in July, Lithuanian President Gitanas Nauseda declared that his country must be part of the NATO alliance's nuclear sharing program: "We would like to be the integral part of this nuclear deterrence," he had said at the time.

He was addressing a big hurdle written into Lithuanian law, namely the existent constitutional ban on nuclear weapons from Lithuanian territory.

But on Tuesday the effort to overturn the ban passed its first big test, with the Lithuanian parliament, the Seimas, having voted 106-18 to advance a constitutional amendment that would reverse the ban.

Source: LRT nuotr.

But there will be more procedural rounds yet to go in the coming months before the change can become a reality:

The change still requires a second vote after a constitutionally mandated three-month waiting period. At least 94 of the Seimas’ 141 members must back it on both occasions. The final vote is expected on January 12.

“This constitutional amendment would enable Lithuania’s armed forces to participate fully in the planning and exercises of all of NATO’s deterrence measures,” said Viktorija Čmilytė-Nielsen, leader of the Liberal Movement parliamentary group.

The effort is obviously hugely provocative to Russia, given the end result could be NATO nukes stationed right on Russia's Baltic doorstep.

But Lithuania's political establishment is looking fully onboard: "Our neighboring countries, such as Latvia, Estonia and Poland, have no such restrictions either," Remigijus Motuzas, chairman of the Seimas Foreign Affairs Committee, has told parliament. "We cannot be less protected than other NATO countries. We must send a signal that Lithuania is a full part of NATO’s nuclear deterrence."

As for the current constitutional prohibition in question: 

Article 137 of Lithuania’s Constitution currently states that weapons of mass destruction and foreign military bases may not be located on Lithuanian territory.

Finland's parliament has already voted on its own reversal this summer, after which Russia moved to secure more border areas with NATO countries.

Since the Ukraine war began, and in context of ratcheting tensions with NATO over its military support to Kiev, Moscow has steadily militarized its border regions with Baltic and Scandinavian states.

The most significant source of NATO's nuclear-sharing program remains the United States. But lately France has expressed a desire to station some of its atomic arsenal in partner countries, and this could include in Finland, Sweden, Denmark and others.

Tyler Durden Wed, 10/07/2026 - 05:45

Ballot Box Jihad: The Non-Violent Conquest Of The West

Authored by Robert Williams via Gatestone Institute,

"This could be the first election in Sweden where the Muslim immigration that we have had is decisive in a parliamentary election," predicted the leader of the Sweden Democrats, Jimmie Åkesson, days before Sweden's election on September 13.

He was right. Sweden's center-right Sweden Democrats government indeed lost the elections by a razor-thin margin - reportedly just 50,000 votes - corresponding to just three seats in parliament.

The next government will almost certainly be a socialist one.

"Voters who, or whose parents, grew up outside Europe overwhelmingly favoured the Left," Brussels Signal wrote in its analysis of an exit poll by SVT, Sweden's national public broadcaster:

"The Social Democrats received 38 per cent of their votes, the Left Party 21 per cent, the Greens 7 per cent and the Centre Party 4 per cent. Together, these parties accounted for 70 per cent, against 27 per cent for the four parties of the outgoing right-wing bloc."

The tiny socialist majority was won through heavy voter mobilization within immigrant communities, which tipped the balance. Turnout rose around 3 points to 67.5% in the almost exclusively urban districts, where mainly Muslim immigrants live.

"This election has in part been about voter mobilisation, which is unusual in Sweden," noted to Gustav Karreskog Rehbinder, founder of AI analysis firm Vera Policy, which broke down the election results for Reuters.

According to Fredrik Karrholm, a member of the Swedish parliament and the author of Gangster Violence:

"A poll by the respected Novus institute before the election found that of Muslim respondents, around 80 per cent intended to vote for either the Social Democrats or the Left party.

"In some districts with large immigrant populations, the results are striking. For example, in Rosengård Centrum in Malmö, the Social Democrats and Left Party together received, according to the preliminary count, 95.2 per cent of the vote...

"This pattern predates the present government...

"During the last parliamentary term, around 200,000 people were given citizenship under rules that imposed very few demands on applicants - not even a requirement to speak or write Swedish. The majority of those granted citizenship were from outside Europe....

"Immigration to Sweden has not only brought crime, social problems and unemployment - now the government that was successfully starting to solve these problems has been voted out because of immigration itself."

For a brief moment, it had seemed as if Sweden was finally beginning to turn things around. In 2022, Sweden voted in a center-right government that ruled with the parliamentary backing of the Sweden Democrats - a first in Swedish politics. This government sought to implement the most restrictive overhauls of Swedish asylum and immigration policies in Swedish history with crackdowns on asylum and migrant flows, while making it harder for immigrants to acquire permanent residence and Swedish citizenship.

After decades of lawlessness, the center-right government, now voted out, had also sought to crack down on crime by finally openly linking migration to gang violence, parallel societies, and integration failures.

The results were dramatic: In December 2025, Reuters reported:

"The number of shootings in Sweden has more than halved since hitting a peak in 2022, reflecting new policing approaches introduced by the right-wing government, which is readying for parliamentary elections next year. Shooting incidents fell to 147 so far this year, a 63% decrease compared to 2022 when there were 390 shootings and a 49% decrease compared to 2024, according to a Reuters analysis of official figures."

The government also began to scrutinize the detrimental effects of Islam in Sweden, including the launch of a government investigation into the Islamist infiltration of Swedish society. This past spring, the government announced that it would be dropping the entire concept of "Islamophobia."

Sweden, in short, had been on the road to becoming Swedish again - but if the election results lead to a new socialist government, that will no longer happen: The Left Party alone is deeply infiltrated by Islamists and terrorist supporters, with several of its politicians caught celebrating the October 7, 2023 Hamas invasion of Israel, with some handing out candy on the streets to mark their joy at the massacres of Israelis. In addition, several candidates were found to have shared content praising or expressing support for designated terrorist organizations, including Hamas, Hezbollah, the PFLP and Al-Qaeda, while multiple candidates shared classic antisemitic tropes, Holocaust denial and homophobia.

These revelations, all dug up by the Swedish press, forced the Left Party to remove at least 33 of its most extremist candidates, an astounding number.

Many other radicals within the party kept their parliamentary seats, including MPs Ilona Szatmári Waldau and Samuel Gonzalez Westling, who sent open letters of support to Palestinian terrorists held in Israeli prisons for serious offenses, such as ordering suicide bombings and torturing and murdering an Israeli soldier. In October 2025, the party's top leadership, including party leader Nooshi Dadgostar, hosted two visiting Palestinians from the Fatah Revolutionary Council inside the Swedish Parliament. The two guests were known for having publicly praised terrorist acts and spreading Jew-hatred.

If you think any of this harmed the party, you would be wrong: The scandals actually served to boost it: they gained the party six new seats in the election.

There is a name for what just happened in Sweden: Ballot box jihad. It is an Islamist tactic, favored by the Muslim Brotherhood.

"In the Middle East, democracy and elections are various means to one end: the establishment of a decidedly undemocratic form of law - Islamic, or Sharia Law," Raymond Ibrahim wrote about the Egyptian elections in 2012, which, for a brief moment, brought the Muslim Brotherhood to power.

"An Egyptian cleric, Dr. Talat Zahran, proclaimed that it is 'obligatory to cheat at elections, a beautiful thing' -- meaning that voting is a tool, an instrument, the only value of which is to empower Sharia. Another cleric, Hazim Shuman... issued a fatwa that likened voting for Islamist candidates to a 'jihad,' or a holy war, adding that paradise awaits whoever is 'martyred' during the electoral campaign."

The same tactic applies to the Islamist project of nonviolent conquest of the West. The late spiritual leader of the Muslim Brotherhood, Yusuf al-Qaradawi, speaking in Qatar in 2007, said that "Islam will conquer Europe without resorting to the sword or fighting. The conquest will be through da'wah [proselytizing] and ideology."

Ballot box jihad is part of achieving this conquest. Sameh Egyptson, an Egyptian-Swedish academic, writer and expert on political Islam, has been warning about Islamist infiltration of the political system for years. He has recently cautioned, among other things, against clan voting as an erosion of democracy. Clan voting is when extended families and even entire ethnic communities vote collectively as a bloc for the same candidate or party. Although clan voting as such is not illegal in Sweden, two newly elected Muslim candidates from the Left Party are already suspected of electoral fraud, including bribing or unduly influencing voters to vote for them and pre-marking their own names on ballots.

This outcome is possibly what many socialists have been planning all along: To stay in power forever by importing new voters from the Third World.

Sweden is a warning, not only to the rest of Europe but to the Western world at large.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of ZeroHedge.

Tyler Durden Wed, 10/07/2026 - 05:00

France's Triple Crisis: Far-Left Riots, A Ticking Debt Bomb, And Mass Migration Collide

France is tearing itself apart as far-left riots, a dire fiscal situation and years of unfettered mass migration collide, while President Emmanuel Macron loses his grip and his approval rating craters, raising the prospect of a victory for right-wing candidate Marine Le Pen in next year's presidential election.

Far-left riots gained momentum in the new week, with Bloomberg reporting Tuesday that 256,000 people "demonstrated" nationwide, including 56,000 in Paris. Nearly 500 people were arrested, taking the total since September 28 to more than 6,500.

Police used tear gas in some locations, and 43 officers were injured earlier today as social unrest intensified:

High-school students in Perpignan, France, convincingly make their case for smaller classes and better arrangements for absent teachers. https://t.co/jkCyH9oGIZ

— Mark Higgie (@MarkHiggie2) October 5, 2026

The high school riots continue today in Lyon. The police are being pelted with rocks and bottles https://t.co/VvJtkKq8JG

— Visegrád 24 (@visegrad24) October 6, 2026

🚨 BREAKING: MASSIVE RIOTS and PALESTINE FLAGS are waving in Paris, riot police are STRUGGLING, foreigners are everywhere and leftists are going berserk THIS IS AMERICA IF THE LEFTISTS WIN. The Islamists are waving the Palestinian flag everywhere...FRANCE IS FALLING TEAR GAS is now being deployed. Hamas movements are "ACTIVELY INVOLVED" in the riots Rioters are being chased everywhere, but I want to see more MASS ARRESTS This is a total free for all! IT LOOKS LIKE A 3RD WORLD NATION.

— Eric Daugherty (@EricLDaugh) October 6, 2026

The official corporate media narrative is that the rioters, many of them kids, are demanding smaller classes, building renovations, and changes to university admissions. Yet that doesn't pass the sniff test when countless videos on social media show rioters burning down schools.

Riot police have fired tear gas at protesters in Paris after the demonstrations across the country saw thousands of schools partially or fully closed. Up to 40,000 people are expected to be attending the protest in the French capital. Read the latest 🔗 https://t.co/OO4R2ZBbVu https://t.co/DpFzecxHyf

— Sky News (@SkyNews) October 6, 2026

Intervention de la police contre le cortège de tête près de la Place de la Nation à Paris suite a un départ de feu. #6octobre #BlocusLycées #BlocusUniversités #Paris https://t.co/5POhENK2r3

— Luc Auffret (@LucAuffret) October 6, 2026

Students vs Police in Lyon, France #Paris #France #Riot #Internationalleaks https://t.co/dxfvuMTW9g

— International Leaks (@Internl_Leaks) October 6, 2026

« Vous laissez vos collègues agresser sexuellement des jeunettes » 🚨 ALERTE - Des manifestants accusent les CRS d’agressions sexuelles place de la Nation https://t.co/pAYqz44gww

— Frontières (@Frontieresmedia) October 6, 2026

🚨 La situation NE SA CALME PAS à Paris. Sur ces images, les CRS interpellent un individu. https://t.co/9HvBlTr2YO

— Frontières (@Frontieresmedia) October 6, 2026

🚨 ALERTE - Du mobilier urbain en feu sur les routes lors du rassemblement à Paris. Les flammes sont alimentées par des manifestants. https://t.co/phxQXBZcDl

— Frontières (@Frontieresmedia) October 6, 2026

"What's happening in France is nothing less than out-of-control mass migration. This isn't about schools, this is about Islam wanting to take over a once great Country!" President Trump wrote on Truth Social around lunchtime in New York. 

https://t.co/pvH8XAQ6Bc

— Rapid Response 47 (@RapidResponse47) October 6, 2026

The Federalist senior editor John Daniel Davidson noted on X, "The problem looming over these riots is that France has a large population of young people who are immigrants or the children/grandchildren of immigrants that are simply not employable. They will not work and employers will not risk hiring them." 

"They are not citizens in any meaningful sense, but an unassimilated third world horde, unemployable and ultimately ungovernable," Davidson said. 

As the social unrest spirals, the dire fiscal situation intensifies: Traders have dumped French assets, such as government bonds called OATs (Obligations assimilables du Trésor), amid concerns about political instability and deteriorating public finances. 

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, 2026

Earlier today, Le Pen released her shadow budget that shows she would shrink the deficit to 3.7% of economic output next year, well below the government's 5% target, before bringing it to 2.2% by 2032.

Irina Kurochkina, portfolio manager at Aegon Asset Management, was quoted by Bloomberg as saying that "with centrist parties losing ground, investors are not comfortable with the outcome of the extreme right versus left," adding, "There's a risk they can't make any decisions on the budget front, and so you're left asymmetrically exposed to bad outcomes."

France has run deficits and piled up debt for decades, and traders are now demanding higher yields to assume the risk as the country's current trajectory puts it on what Le Pen has warned is a path towards default. 

The crisis is spreading (read Goldman) to the currency market. The euro hit its weakest level since May 2025 on Monday, signaling concern that France's fiscal and political turmoil could become a much larger issue for the entire European experiment.

Perhaps the rioters are just useful idiots being played by far-left groups furious about a possible Le Pen win that could mean a pathway towards austerity. But the dangerous game here is that, as riots and school burnings intensify, Le Pen's odds of winning the presidential election on Polymarket continue to soar.

Macron has called an emergency meeting for Tuesday night to discuss the widening riots with officials. It appears Europe has tackled neither the far-left radicalization of its youth nor the left-wing groups likely responsible. In the US, meanwhile, the Trump administration has pressured these NGOs and unions, and, as if by magic, there have been no riots this summer or so far this fall.

Tyler Durden Wed, 10/07/2026 - 04:15

Interventionism Created Spain's Housing Crisis And Is A Warning To America

Authored by Daniel Lacalle via dlacalle.com,

Socialist Americans are promising affordable housing through rent controls and government intervention. The evidence shows that these policies deliver the opposite.

Spain's housing crisis is presented by socialists as proof that they must impose tougher rent controls, higher taxes on owners, tighter restrictions on investors, and broader intervention in the rental market. The evidence shows the opposite. Spain's excessive intervention, regulation, and taxation have created a destructive combination of exploding demand, chronically insufficient construction, hostility toward private rental supply, and growing legal uncertainty for owners.

Spain's socialist housing intervention has delivered the exact opposite of what it promised. Rents are up by more than 50% since Pedro Sanchez entered the government and started imposing interventionist policies; around 300,000 homes have vanished from the long-term rental market, and the government's pledge to provide 270,000 public homes became a mirage. This is an indictment of a policy that punishes owners, hurts investment, elevates legal uncertainty, and then acts surprised when scarcity becomes permanent.

The result is not affordable housing. It is fewer homes available to rent, higher prices for the homes that remain, and a widening gap between housing demand and supply.

America should take these issues seriously. If the United States responds to its housing shortage by accelerating migrant demand while discouraging construction, investment, and property rights, it risks reproducing Spain's failure on a much larger scale.

The Spanish housing crisis is entirely supply-driven. Between 2021 and 2025, Spain added approximately 1.2 million households but completed only 474,000 homes, including subsidized housing. That implies a cumulative deficit of at least 734,000 in just four years.

However, the problem has worsened. According to CaixaBank Research, Spain granted permits for 162,200 homes in 2025 with a net household formation of 226,000. The country continued to fall behind by more than 64,000 homes in one year, and completions are expected to remain below 100,000 units in 2026, according to the same report.

The Bank of Spain has estimated that the accumulated national shortage is around 750,000 homes. More concerning, the shortfall could rise above one million homes by 2028 if current policies remain in place. This is not merely a national average problem.

More than half of the gap between homes built and new households is concentrated in six provinces, Madrid, Barcelona, Alicante, Valencia, Murcia, and Málaga, with the largest cities showing the largest gap.

Housing demand does not disappear because governments publish a decree or law with an allegedly social title.

Land-use restrictions, slow approvals, high construction costs, and regulatory limits have made it harder to build. The Bank of Spain has identified land shortages, delays in urban-development projects, and planning-management constraints among the factors limiting construction. No amount of rhetoric against landlords changes that arithmetic.

Instead of concentrating on expanding supply, the socialist government's housing policy has increasingly focused on attacking owners and investors. The 2023 Housing Law created the framework for declaring "stressed" rental zones and imposing restrictions on rents in designated areas. These zones may be declared when housing costs exceed 30% of average household income or when housing prices have risen at least three percentage points more than inflation over the previous five years. Supply of long-term rentals fell between 40% and 50% due to these laws, according to Idealista.

The political trick is evident. When rent is unaffordable, the government promises to limit it. But the price of a rental home is not an arbitrary number created by owner greed. It reflects the shortage of available homes, taxes, financing costs, maintenance, renovation, insurance, expected vacancy, legal risks, and the value of the capital invested in the property.

A cap only limits the advertised price of some existing homes in the short term, but it does not create a single additional apartment. It reduces the incentive to place homes on the long-term rental market, invest in maintenance, or finance new rental developments.

That is the rent-control paradox. It does not control rent. It makes housing scarcer and more expensive for the majority. One tenant may benefit if he or she is already living in a regulated property. However, the availability of homes in the regulated market disappears, and all other prospective tenants, including young workers, students, and new families, face soaring prices and a smaller pool of available homes.

The available evidence from Spain already shows this supply response. The long-term rental market has shrunk sharply. Estimates from the Observatorio del Alquiler indicate that the supply of long-term rental properties fell from about 813,850 homes in 2023 to 660,993 by the second quarter of 2026. That is a decline of 18.8%, or approximately 153,000 homes.

Other studies point to an even larger deterioration, with more than 300,000 homes disappearing from the conventional long-term rental market. Socialist laws have demolished rental supply just when demand is rising.

Owners faced with tighter rent controls, escalating regulatory requirements, risk of delayed eviction, and uncertainty over future rules have a rational incentive to sell, leave units vacant, lease seasonally, or seek more flexible forms of tenancy. The more governments restrict long-term renting, the more they make alternatives comparatively attractive.

Spain's long-term rental listings reportedly fell by around 20% over three years, while seasonal-rental listings more than doubled. Just after the socialist Housing Law was approved, listings fell by 15% between the first quarters of 2023 and 2024. This is what happens when you penalize housing supply.

The left tries to make the housing crisis a conflict between tenants and financial investors. The reality is entirely different.

In Spain, about 92% of market-rate primary rental homes belong to individual owners rather than large institutional funds or wealthy owners of multiple properties. Most are retirees supplementing their pension and households that saved for years to buy an investment property.

When governments impose caps, extend mandatory contracts, shift costs to owners, delay the enforcement of contracts, or make evictions legally and politically difficult, they do not target "speculators." They raise the risk of renting for ordinary people.

The consequences are especially negative for those that the socialists pretend to defend. Those with the weakest bargaining position. A well-paid tenant with a stable employment record may still obtain one of the few available properties. A young person, immigrant, self-employed worker, single parent, student, or low-income household will find it almost impossible to rent.

Rent controls are not pro-tenant. They are anti-tenant. The people who most need mobility and access to housing are left competing for a vanishing supply.

Socialist policies have also demolished legal certainty. Housing supply requires long-term capital. A developer may need years to acquire land, secure permits, finance a project, construct homes, and sell or rent them. A private owner who leases a property is also making a long-term economic decision based on the expectation that contracts will be enforceable and that property can be recovered if legal obligations are not met.

When the state weakens legal security, it raises the cost of housing.

Spain's socialist policy direction has increasingly included extended intervention in rental contracts, rent-increase limitations, stronger barriers to eviction, and additional restrictions on property transactions and institutional purchasers. These measures may be politically popular because they appear to protect tenants in the short term. However, they impose a cost on owners and investors that worsens the situation.

If a household needs protection from eviction or emergency accommodation, the state should fund that protection from the public budget. What it should not do is treat an individual property owner as an unpaid social services department.

The same principle applies to squatters and "ocupación," the unlawful occupation of property. Any society can and should establish proportionate safeguards for vulnerable people, but it cannot normalize the idea that a private owner may face eternal uncertainty, costs, and delayed judicial remedies when someone occupies a property without permission. The more uncertain and expensive recovery becomes, the higher the risk premium embedded in rental decisions. Some owners will demand higher rents. Others will simply decline to rent.

America's housing problem differs from Spain's in scale and institutional structure, but the economic mechanism is the same. In many U.S. metropolitan areas, demand has outpaced supply for years because restrictive zoning, lengthy permitting, inadequate infrastructure, limited buildable land, construction costs, and local opposition have prevented enough homes from being built.

The wrong lesson from rising rents is that private property, investment, and market pricing are the problem. They are signals of a supply shortage created by intervention and regulation.

If the United States follows the socialist Spanish path, increasing population by incentivizing migration without adequate construction, rent caps instead of new homes, hostility toward investors, higher taxes on owners, and weakening legal certainty, it will not make housing more accessible. It will create a smaller and more expensive rental market.

The solution is not to defend unaffordable housing. It is to build enough housing so that affordability does not depend on rationing. That means faster approvals, predictable regulation, more developable land where demand is strongest, lower barriers to construction, better infrastructure, and targeted public support for genuinely vulnerable households.

Spain's experience shows that socialism always hurts those it pretends to defend. Socialism does not create affordable housing; it worsens it. The result is not more housing justice. It is less housing and more scarcity.

Tyler Durden Wed, 10/07/2026 - 03:30

China In Large Russia-Hosted Drills Featuring 'Applied Lessons Of Ukraine War'

Russia has just wrapped up hosting mass military drills involving troops and defense technology from eight countries which state media hailed as applying lessons learned from the Ukraine war.

The Tsentr-2026, or Centre-2026, drills ran throughout all last week into Saturday, located in the central western Chelyabinsk region, which is situated in the southern Ural Mountains - with on Friday President Putin being on hand to observe the exercise.

Dronies deployed during military drills in Chelyabinsk, Russia. Getty Images

Importantly, China's military took part, in addition to Belarus, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan and Tajikistan.

The Russian Ministry of Defense said of what were primarily strategic command-and-staff exercises that they "applied" combat lessons from the Ukraine war to "repel external aggression in the Central Asian direction."

Over 47,000 troops from across the different countries' militaries took part at the Chebarkul training ground, in drills that further featured rehearsal for long-distance deployment and joint operational planning as well as launching operations against an entrenched enemy.

China Central Television (CCTV) indicated that the PLA troops came from the Central Theater Command, including members of the 82nd Group Army and a combined-arms brigade.

Chinese regional sources further noted the PLA rolled out unmanned systems and practiced launching drone swarms:

The PLA Daily said the drills’ operational planning and live-fire manoeuvres helped to “consolidate multilateral traditional friendship and improve joint action capabilities”, while allowing the Chinese military to test its logistical reach, troop deployment capability, and combined arms coordination in unfamiliar terrain.

According to Chinese state broadcaster CCTV, the PLA deployed a combination of Type 99A main battle tanks with drones, uncrewed ground vehicles and helicopters, during the exercise, showcasing its growing integration of crewed and unmanned systems.

The PLA deployed drone swarms to provide precise target data to ground combat groups, with tactical unmanned aerial vehicles, armed helicopters and unmanned ground combat vehicles coordinating strikes against targets, the report said.

Another interesting note: "The report also said that all the troops involved in the exercise were stationed underground to avoid drone strikes."

🚨🌍 China & Russia just performed joint Military Training Exercises with almost 50,000 Troops Almost like they’re preparing for something https://t.co/wbBnWw9cDg

— Concerned Citizen (@BGatesIsaPyscho) October 3, 2026

This has certainly become a reality of life along the front lines in Ukraine, with the battlefield having become transformed and fully automated - or something that looks straight out of Terminator 2 and Skynet - with unmanned aircraft hovering, looking for targets on the surface.

Tyler Durden Wed, 10/07/2026 - 02:45

Cowardly Europe Fears Dissent

Authored by J.B. Shurk via American Thinker,

Orwellian brutes now govern Europe...

Former-banker-turned-tiny-French-President Emmanuel Macron blasted what he called "American free speech" while speaking to reporters last week. Defending the European Union's robust censorship policies, le petit fromage insisted that Europe's speech-policing Digital Services Act should censor information that governments consider false "much more extensively, much faster, and much more forcefully."

Macron then did his Orwellian best to condemn free speech as oppression and praise censorship as liberation: "So-called American 'free speech' - at least as it exists today and has been promoted by some people - is the opposite of free speech." The terribly disliked French leader continued, "My freedom cannot mean that I am free to...insult you or vandalize the public square that belongs to everyone. Yet that is some people's idea of 'free speech.'"

Then the little mouse of a man roared, "Until we hold those who disseminate content on social media accountable, we will not be able to regulate it." Furthermore, if "someone writes something" that is "false," then that person should be "held accountable." Tough talk from an insecure man afraid of words.

What is going on in Europe? Why is the whole continent so scared of public debate and dissent? If the political Establishment is unable to defend its ideas and policies without censoring the opposition, then its ideas and policies are absolute rubbish! The people who have willed their way to power across Europe apparently believe that they cannot win an argument unless they are the only ones permitted to speak!

That's a bit like a puny pugilist demanding that referees tie another boxer's hands behind his back before declaring himself world heavyweight champion!

Personally, I think mini-mouse Macron is just tired of people pointing out that he married his grandmother (or his grandfather, as the case might be). We used to teach our children, "Sticks and stones may break my bones, but words will never hurt me." Now Western leaders are so terrified of words that they'd rather imprison everyone with an opinion than learn to take a joke or hear a contrary point of view.

Here's the truth that Macron and his fellow Euro-weenie censors refuse to understand: Free speech is free only when a speaker can say something offensive or controversial without fear of the State's wrath.

Although Macron wants to criminalize speech that he considers untrue, he spreads endless falsehoods of his own! While beseeching British Prime Minister Andy Burnham to betray the will of voters who chose to leave the European Union ten years ago, the Napoleon-complex-afflicted French president whined, "Brexit is the biggest lie of the last thirty years!" That boast is absurdly false (or what European censors call criminal "misinformation"). The British people did vote to separate themselves from Queen Ursula von der Leyen's European empire.

Even though Brexit fearmongers predicted imminent economic collapse should the British people choose to rule themselves - and despite the best efforts of Brexit saboteurs at home and abroad - the United Kingdom is currently outperforming France and other major European economies, having led the G7 in growth during the first half of 2026. One reason Brexiters voted to leave the E.U. in 2016 was because British citizens did not want their military to be swallowed into a European Army beyond their control - a prospect, ironically enough, which pro-E.U. stalwarts once called "disinformation" but which has proved increasingly prescient.

Queen von der Leyen and her Brussels Eurocrats are working feverishly today to use the Russia-Ukraine War as an excuse to create increasingly centralized European defense structures.

It's also worth remembering that European expansionists originally promoted the Union as an intergovernmental body meant to boost European economic markets and promised that the supranational institution would never directly usurp national sovereignties. That was a clear case of "misinformation" and certainly one of the biggest lies of the last half-century!

Speaking of lies that European leaders have promoted as "truths," the Russia Collusion Hoax against President Trump (which British and Ukrainian intelligence agencies helped to propagate), the "global warming" apocalypse (which was scheduled to kill us all fourteen years ago), and the "Reign of COVID Error" (during which "health experts" lied about the virus arising from nature instead of a Chinese laboratory and then lied about fake "vaccines" being "safe and effective") are three of the biggest mass frauds and information warfare campaigns ever perpetrated by governments against the public.

Macron has never called for these lies to be censored from social media platforms. He just doesn't like it when random Americans point out that the European Union is an undemocratic and totalitarian system of governance that should be burned to the ground. And he really doesn't like it when commoners correctly point out that his old high school teacher - and abusive wife - sometimes slaps him around.

Unfortunately, Macron's inability to understand the importance of free speech is a European-wide learning disability.

In the U.K., a member of the public has filed a Prevent referral against eighty-six-year-old comedy legend John Cleese because he continues to make fun of Islam's love for rape and murder. The complaint argues that Cleese should be considered a "moderate to high risk" for "radicalisation, communal tension, and hate incidents" for writing, among other things, "I personally prefer a culture that does not approve of FGM, Child Marriage and Killing Infidels."

The complaint accuses Cleese of "anti-Muslim hate" and seeks further scrutiny of the cultural icon. In response to news of the referral, the Monty Python alum wrote, "The Islamic male ego becomes so bloated by its lack of restraint that it believes any criticism is blasphemy," and, "I look forward to being arrested." Later, he declared his targeting "One of the proudest moments of my life."

Meanwhile, a retired police officer was recently fined more than £1,000 under the U.K.'s Communications Act for reposting a bacon joke ridiculing Islam. As one free speech advocate rightly observed, "No-one making a similar joke about Jesus would face prosecution."

At the same time that it targets retired cops for having a sense of humor, the British government continues to hand out "skilled worker sponsorship licenses" to Islamic bookstores that sell books on jihad!

An Islamic preacher in London encourages Muslim men to beat their wives if they refuse to obey. The same Islamic cleric describes "acceptable" execution methods for gay men, including throwing them off tall buildings and pummeling their bodies with rocks. These sermons are available on YouTube.

Nevertheless, the mosque still enjoys charitable status in the U.K. Islamic jihadists preach violence and murder, and law enforcement agencies ignore their threats, just as they ignored - for decades - Islamic men raping tens of thousands of young girls across Britain.

However, when a comedian and a retired police officer mock Islam's penchant for violence, the British government scrutinizes their speech as "threats." That should be no surprise when U.K. police forces instruct officers that Nigel Farage's immigration beliefs are "Islamophobic hate crimes" and encourage non-Muslim staff to fast during Ramadan in "solidarity" with their Islamic conquerors.

Two-tiered "free speech" is official government policy. Furthermore, a Home Office-linked unit has been recording social media criticism of the government's Prevent program, including 77 observations concerning people and organizations criticizing Prevent on X and Reddit. Documents show that government-linked officials are monitoring and recording the speech of people who publicly challenge this controversial counter-extremism policy.

Orwellian brutes now govern Europe. Need further proof? The Green Party in the U.K. wants to replace "mother" and "father" with more "inclusive" terms. Meanwhile, the Germans just awarded the Westphalian Peace Prize to NATO's military alliance.

Parents are strangers. War is peace. Free speech is violence. Censorship promotes liberty.

In truth, freedom in Europe is dead.

Tyler Durden Wed, 10/07/2026 - 02:00

The Petrodollar Could Break Soon - And Upend The Global Financial System

Authored by Nick Giambruno via InternationalMan.com,

The Iran war could claim a casualty far more consequential than a missile battery, an air base, or an oil tanker: the petrodollar system.

For more than 50 years, US protection of the Gulf monarchies has helped support global demand for dollars and US government debt. That bargain may now be coming under strain.

The concept is straightforward.

The US provides military protection to countries such as Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain, and Qatar.

In return, these countries price much of their oil in US dollars and recycle large amounts of their oil revenue into US financial assets, including Treasuries.

Call it an alliance.

Call it a strategic partnership.

I prefer to call it a protection racket.

Whatever name you choose, the arrangement has provided enormous support for the dollar since Nixon severed its last link to gold in 1971.

Oil sits at the center of the global economy. Every industrial economy needs it. If countries need dollars to participate in the global oil trade, they have a powerful reason to hold dollars.

That creates demand for the currency that has nothing to do with buying American goods or services.

It also creates demand for US financial assets.

Oil exporters earn dollars. They need somewhere to put them. For decades, a large portion flowed back into US banks and Treasury securities.

That helped deepen the Treasury market, support the dollar, suppress US borrowing costs, and finance deficits that no other country could sustain.

But every protection racket depends on one thing:

The protector must provide protection.

The Iran war threatens that premise.

If the Gulf monarchies conclude that the US cannot protect their oil infrastructure, shipping lanes, cities, and regimes from Iran, why should they continue upholding their side of the bargain?

That question could reshape the international monetary system.

And one man warned almost exactly 20 years ago about the signal that would tell us this shift had begun.

Ron Paul Saw This Coming 20 Years Ago

On February 15, 2006, Congressman Ron Paul delivered a little-known but prophetic speech on the floor of the House of Representatives called "The End of Dollar Hegemony."

He identified the signal investors should watch for:

"The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better."

I discussed this subject with Ron Paul at an investment conference years ago. He stood by that assessment.

His point was simple.

Watch the oil producers.

The day they start moving away from dollars and toward gold - or a monetary system that gives them access to gold - the foundation beneath the dollar-based financial system starts to crack.

We may now be approaching that point.

Why the Gulf States Could Turn East

The Gulf Cooperation Council includes Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and the United Arab Emirates. Together, these countries rank among the most important oil exporters on Earth.

China sits on the other side of that trade.

It is the world's largest oil importer and the GCC's largest trading partner.

That creates a natural relationship: China needs enormous quantities of energy, and the Gulf states need enormous markets for their oil.

For years, China and the Gulf states have discussed ways to conduct more trade outside the dollar system.

But the Gulf monarchies faced a constraint.

They depended on the US security umbrella.

Moving too far toward China risked alienating the country they counted on to protect them.

The Iran war changes that calculation.

If the Gulf states conclude that Washington cannot protect them from Iran - and that the American military presence can turn their countries into targets - the value of that security guarantee falls.

They then have a powerful incentive to reach an accommodation with Iran while deepening economic ties with China.

That would weaken one of the political foundations supporting the petrodollar.

And China has spent years building an alternative.

From the Petrodollar to the Petroyuan - and Gold

China understands the biggest problem with asking an oil producer to accept yuan.

Why would Saudi Arabia, the UAE, or another exporter want to accumulate piles of Chinese currency?

Beijing has spent years developing an answer.

In 2018, the Shanghai International Energy Exchange launched a yuan-denominated crude oil futures contract. That gave oil producers another mechanism for pricing and trading crude outside the dollar.

But China has also built something that makes the yuan far more useful to commodity exporters: a path from yuan into physical gold.

An oil producer can sell crude into the Chinese market, receive yuan, spend those yuan on Chinese goods, or use China's financial and gold-market infrastructure to convert surplus yuan into physical bullion.

That changes the proposition. The exporter does not have to choose between holding dollars and accumulating piles of yuan. It can turn part of its trade surplus into an asset with no issuer, no counterparty, and no foreign government standing between the owner and the wealth.

Think about the difference.

Under the dollar system, an oil exporter sells a finite natural resource and receives financial claims issued by the US government.

Those claims carry political risk.

Washington demonstrated that risk when it froze Russia's reserves after the invasion of Ukraine.

Gold carries no such counterparty risk.

Nobody can print it.

Nobody can default on it.

And once an oil producer takes physical possession, no foreign government can freeze it with a keystroke.

From the perspective of a country trying to reduce its exposure to Washington, that has obvious appeal.

A viable path from oil to yuan to physical gold gives Gulf producers a way to reduce their dependence on the dollar without accumulating large reserves of Chinese currency. If the Iran war weakens confidence in US protection, the financial infrastructure needed to move away from the petrodollar already exists.

The Gulf states have a path from oil to gold that bypasses the dollar. But what happens to your wealth if they take it?

A loss of demand for dollars and US debt could erode your purchasing power and shake your investments. The time to prepare is before that shift gathers force.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of ZeroHedge.

Tyler Durden Tue, 10/06/2026 - 23:25

Skyfall: Fitch Downgrade Sends Legacy Paramount Bonds To Record Low As Merger Closes

Last week, when we documented how Paramount's record bond offering cratered before the ink was dry, we flagged one line from the Bear Traps chat as deserving extra attention: "Paramount's existing unsecured bonds? Primed." Today, with the $110 billion Warner Bros. Discovery takeover officially closed and the combined company (now simply "Skydance", although "Skyfall" is certainly more appropriate) open for business, Fitch made it official.

In a rating action timed to the close, Fitch cut Paramount Skydance and WBD's issuer ratings deeper into junk territory, to BB from BB+, citing "materially higher leverage" and "significant execution and integration risks." But the real damage was further down the stack: Paramount's legacy senior unsecured notes were downgraded to BB- with a Recovery Rating of RR5, which in Fitch-speak means expected recovery of just 11% to 30% in a default. WBD's leftover unsecured notes fared worse still, cut to B+/RR6 (0% to 10%).

The market got the message. The old Paramount 6.875% notes due 2036 (originally Viacom paper) plunged to a record low of 77.7, down from 105 a year ago and roughly 92 as recently as mid-September. That's ~14 points in three weeks, and a yield of roughly 10.6% by our math, on a bond that was trading above par last fall.

Get In Line

The logic is simple enough. Before the deal, legacy Paramount unsecured holders sat near the top of a ~$14 billion capital structure. After it, per Fitch, the combined company carries about $87.5 billion of total debt, including $44.5 billion of first-lien secured debt (rated BBB-/RR1) - still viewed as investment grade but not for long - and $12.4 billion of new second-lien secured paper (BB/RR4), all of which now ranks ahead of the old unsecured notes. Put differently, roughly $57 billion of secured creditors just cut in line.

And here is the delicious irony: at ~10.6%, the legacy unsecured 2036s now yield more than the brand new second-lien junk bonds did at the very worst of last week's puke, when the 8-year 2Ls traded a touch above 95 for a ~9.7% yield. The old bonds now trade like they're junior to the junk, because they are.

Fitch Doesn't Believe The Deleveraging Story Either

Fitch pegs leverage at 7.8x for fiscal 2026 after ~$57 billion of acquisition debt is added, falling to 6.2x in 2027 and 4.5x in 2028 if merger cost savings materialize. The company's target is net leverage of 3x by the end of 2029, which leans heavily on $6 billion of synergies (read: mass layoffs, most likely from CNN) in three years. Fitch was blunt that this won't be enough on its own:

"Execution risk stems from combining operations, realizing synergies and managing a higher debt burden. The transaction also requires integration of content, streaming technology, corporate systems and operating models... Delays or weaker execution could reduce planned cost savings and slow deleveraging."

Translation: to hit the 2028 and 2029 targets, Fitch believes issuing equity or selling assets would be required on top of synergies and free cash flow. That's the same equity we noted last week Paramount is "still looking for." The agency also flagged that linear TV generated about 86% of the combined company's pro forma 2025 EBITDA on just 52% of revenue, which is a polite way of saying the cash engine funding this deleveraging is the one business everyone agrees is in secular decline.

Throw in the commitments from the settlement with 12 state AGs (which Fitch says are "largely achievable" but could "constrain cost actions and operating flexibility") and you have a cost-cutting plan that the regulators have partly pre-empted. Good news for Hollywood's unions. Bondholders might see it differently.

Goldman's Credit Desks: "One Of The Worst First-Day Performances"

The legacy bonds' collapse comes on top of what Goldman's credit desks are now openly calling a historic flop. In his weekend Lev Fin reading (available to pro subs), Goldman's KC O'Connor wrote that the $12.4 billion second-lien deal...

"...had one of the worst first-day performances for a new deal in recent leveraged finance history. The new 5-year, 8-year, and 10-year 2L tranches underperformed what felt like a well-placed 1L deal, finishing the week 2.125 to 4.5pts below their original issue prices after just two full trading sessions, shaking market confidence."

Goldman's IG desk (Brad Shelofsky's IG Credit Week in Review) wasn't more charitable and noted the PSKY 9.125% 2036 2Ls fell as much as 6 points on Thursday before closing the week roughly 4 points below issue, while the first-lien PARA 7.9% 2036 closed around +280, 17bps wider than pricing: "Tough tone setter for the second largest IG deal of the year." Goldman's weekly credit digest summed it up best: SoftBank was absorbed cleanly, "PSKY was not," which "demonstrated that strong order books do not necessarily translate into secondary sponsorship at current valuations." 

Which is exactly what we said the night the bonds broke:

That's odd: the "$109 billion in demand' for PSKY bonds was nowhere to be found after the break today when all tranches (especially HY) dumped and all those who didn't get an allocation could have bought at a big discount. strange how that works.

— zerohedge (@zerohedge) October 1, 2026

Goldman's high-yield desk, for its part, expects "inbound will remain elevated for the newly combined entity" given the price action since new issue. We'll go out on a limb and agree.

Bottom Line

When Paramount won the bidding war for Warner Bros. back in February after Netflix walked because the deal was "no longer financially attractive," the question was always who would end up footing the bill. Last week it was the new-issue buyers who got a full allocation. This week it's the legacy unsecured holders, who never signed up for a 7.8x-levered media conglomerate and now find themselves behind $57 billion of secured debt with an 11%-30% recovery estimate.

The company's CFO called last week's selloff "one-day choppiness." The legacy 2036s are now on their third week of "chop", at a record low, with a fresh downgrade. And with equity issuance or asset sales now effectively a prerequisite for Fitch's deleveraging path, the more likely next leg is more of the same, not a bounce. At least they did get a new name out of it.

Much more in the full Goldman Lev Fin Weekend Reading and "IG Credit Week in Review" notes, both available to pro subs.

Tyler Durden Tue, 10/06/2026 - 22:49

Andrew Huberman Predicts A "Scary" New Way Humans Will Radically Alter Their Brains

Stanford neuroscientist Andrew Huberman is predicting a startling future in which humans could undergo gene therapy and use an AI-powered wearable to literally turn up their own motivation.

Huberman laid out the futuristic scenario during an appearance on the "Invest Like the Best" podcast, describing technology that could allow people to genetically modify specific neurons in their brains and later activate them using light or ultrasound.

"This is where we're going to end up," Huberman told host Patrick O'Shaughnessy. "I know it sounds scary."

.@hubermanlab tells @patrick_oshag on @InvestLikeBest that one day you may be able to turn your own motivation up with a one-time gene therapy and a wearable that switches it on.

"I know it sounds scary... If you're somebody who is suffering from severe motivational issues, or... pic.twitter.com/8JYqjvYsR2

— Patrick F. Feeley (@PFFeeley) October 6, 2026

Huberman claimed that the process could begin with an injection containing an engineered virus. Rather than causing an infection, the virus would act as a "vector" carrying genetic material into the brain.

That genetic material could make specific neurons responsive to outside stimulation.

A person could then put on something resembling a baseball cap or wool hat capable of directing light or ultrasound through the skull, according to Huberman. While the stimulus could hit a broader area of the brain, only the genetically targeted neurons would respond.

"You could flicker the light," he explained. "You're going to work through all the different parameters that allow you to turn those neurons from, you know, inactive to active to more active to hyperactive and dial it down."

The most dystopian part is that humans may not even be the ones controlling the switch.

Huberman predicted that artificial intelligence could eventually determine how much stimulation a person needs, potentially increasing activity in certain neural circuits when someone suffering from severe motivational problems needs a boost.

However, the sci-fi technology might not be limited to treating disorders.

Huberman explained to O'Shaughnessy people with otherwise "healthy levels of motivation" could potentially use the same system if they simply "want to ramp it up."

"I know it sounds scary," he said, "but it's absolutely going to happen for the people that want to do it."

Watch the full conversation below.

Tyler Durden Tue, 10/06/2026 - 22:10

Forest Majeure: Finland Orders Google To Halt Work At Two Data Centers Less Than A Month After €13BN Splash

The data center delay contagion has officially gone global.

Just hours after we laid out how Oracle's 1.3GW Wisconsin campus became the next domino to slip after the indefinite delay of the company's New Mexico-based, Project Jupiter, and on the same day Google locked up 3.6GW of Constellation's nuclear output in PJM, Finland's Supervisory Agency (LVV) ordered a halt to construction work at two planned Google data centers, in Muhos and Kajaani, after more than 300 hectares of forest were cleared without a mandatory environmental impact assessment. The sites are part of the €13 billion ($15 billion) investment Google announced less than a month ago, which it billed as its largest single investment in Europe.

Google’s data center in Hamina, Finland.Source: Google

For those keeping count, that's two of Oracle's flagship Stargate campuses, SoftBank's SB Energy, a statewide halt in Texas, PJM's emergency power auction and now Google's biggest European project, all in the span of about three weeks. Which is why, having flagged the first Oracle data center delays back in December, we can now say with some confidence that the bottleneck in the AI buildout is no longer the chips. It's the permits.

Below we walk through what Finland ordered, why the timing is awkward for Google, and why Morgan Stanley thinks the politics of compute could end up helping the hyperscalers (for now).

420 Football Fields, Zero Assessments

According to the BBC, which first reported the order, the LVV found that work at one of the sites went ahead without the mandatory environmental impact assessment, and ordered Google's project company, Tuike Finland, to suspend all measures that would "significantly alter the environment" by October 23. Tuike has until October 14 to explain itself and lay out how it intends to proceed, failing which the agency says it could start enforcement proceedings. The work in question, per the LVV's head of environment Tommi Muilu, included felling trees, stripping topsoil, building site roads and storage areas, and rerouting ditches. In other words, everything you do before you build a data center.

The Helsinki Times adds that the banned list also covers excavation, blasting and crushing, and that the bulk of the clearing, more than 300 hectares, took place at the Leppiniemi site in Muhos, a town of roughly 8,800. For scale, the AFP pegged it at about 420 football fields. Under Finnish rules, converting more than 200 hectares calls for an environmental assessment before the chainsaws come out, which is the order in which these things are generally supposed to happen.

None of this came out of the blue. The Finnish Association for Nature Conservation first raised the alarm in September, and the LVV opened an investigation on September 19, at which point Google insisted the trees had been felled in "full compliance with the Forest Act." Two and a half weeks later, the message has changed somewhat: Google now says it has "fallen short of our own high standards in this instance" and will follow the agency's guidance, while still maintaining it acted in good faith and promising to replant trees across 130 hectares at Muhos.

That's 130 hectares replanted for 300+ cleared. Net zero, Google-style.

Meanwhile, the public mood isn't helping: a citizens' initiative demanding stricter data center rules reportedly gathered more than 50,000 signatures in three days.

Europe's Biggest Google Bet... Paused

The timing could hardly be worse. When Google unveiled the Finnish plan on September 9, it was a showcase: at least €13 billion over 2027 and 2028 for new data centers in Kajaani, Muhos and Vaala plus an upgrade at its existing Hamina facility, a claimed 37,000 jobs supported during construction and an average €3.6 billion a year added to Finland's economy. The centerpiece was the power: a 22-year purchase agreement for up to half the output of Fortum's Loviisa nuclear plant, which extends the plant's life to 2050 from a previous 2030 shutdown date.

Which, as regular readers know, is exactly the kind of firm, carbon-free, dedicated power we have been pounding the table for. And yet here we are: the power was never the problem in Finland. The forest was.

It's also not the first time the Finnish plan has hit a wall. Back in October 2025, Alphabet put the expansion on hold while the government floated raising the electricity tax on data centers roughly 40-fold, from 0.05 cents to 2.19 cents per kWh. And the day after the €13 billion announcement, Finland's opposition parties told Reuters the country needs a national permitting system for data centers to head off power shortages and soaring prices, with the Centre Party's Antti Kaikkonen complaining that nobody is minding the overall picture. The Social Democrats, who lead the polls ahead of April's election, called electricity availability an internal security issue.

Put differently, the regulatory risk premium on Nordic data centers just got repriced, and the election hasn't even happened yet.

The irony is hard to miss: as we noted in July, Finland has the highest unemployment rate in the OECD at 10.8%, with youth unemployment at 23%. A country in that position just froze part of a project promising 37,000 jobs over two years. Principled, certainly. Whether Finland's jobless see it that way is another matter.

From New Mexico To Old Muhos

The Finnish order lands on top of what has been the worst three weeks for the data center trade since the AI buildout began. Recall that it started on September 21, when the $18 billion of loans backing Oracle's Project Jupiter slid below 90 cents. The next day Texas Governor Abbott ordered a halt to new data centers, and a day later SB Energy delayed the IPO meant to fund the world's largest data center. Then on September 24 Oracle declared force majeure on Jupiter, and its bonds plunged to a record low the next day. Barclays was among the first to spell out the knock-on effect for everyone selling picks and shovels:

Barclays on what is really going on with the Oracle Force Majeure: "the hardware capex should also be delayed (~$30bn; typically spent 2-3 months ahead of the asset going live)." The AI value chain is now directly targeted by the escalating data center fiasco

— zerohedge (@zerohedge) September 25, 2026

Since then, PJM's emergency backstop auction for data center power was suspended by FERC for five months (a power auction for data centers... delayed), and Oracle's Project Lighthouse in Wisconsin saw its grid approval go back to square one, which as we detailed earlier today pushes full power to somewhere between October 2028 and April 2029. That's on a campus Oracle still guides to "customer delivery in the second half of 2027."

Finland is a different flavor of the same disease. In the US, it's grid hookups and local revolt. In Finland, it's environmental permitting. The result is identical: steel in the ground, nothing switched on, and a capex schedule that only goes one way.

"The Politics Of Compute" Goes International

The backlash itself is nothing new: we've covered 142 anti-data center rallies across 42 states this summer and why most Americans hate the idea of AI data centers next door. Last month, Morgan Stanley's Vishwanath Tirupattur put numbers on it in a Sunday Start note that we published in full (available for pro subs): a Gallup poll found seven in ten Americans oppose a data center in their community, roughly 500 US jurisdictions have enacted bans or moratoriums, and an estimated ~$156 billion of projects were cancelled or delayed in 2025, with another ~$130 billion hit in 1Q26. Support has been collapsing for a year:

Why it matters for the macro: Morgan Stanley's economists estimate that AI-related investment added 0.6pp to real US GDP growth in 2025 and 0.8pp in 1H26, roughly a third of all growth, and expect 0.85pp of the 2.6% they forecast for 2027.

But here is the counterintuitive part of the MS view, and it's worth quoting because it's also the bull case:

"Here, the constraints are political and regulatory, not insufficient demand for compute or a shortage of capital to fund it. Demand for compute already far exceeds available supply. A deceleration in capacity additions would intensify and prolong the existing shortfall in compute. For equity markets, this could strengthen the position of the 'merchants of compute' – hyperscalers – by increasing the scarcity value of their installed base and enhancing their pricing power."

Translation: every delayed data center makes the ones already running more valuable. Morgan Stanley even argues credit spreads could tighten if delays mean less AI debt issuance. Maybe so... for those who already own the compute. For those who borrowed against the promise of compute coming online on schedule (hello, Oracle, and most hyperscalers), the scarcity value of someone else's installed base is cold comfort. And Google, which reported yet another capex guidance hike this year, is now in both camps at once.

Bring Your Own Power... And Your Own Paperwork

We have been saying for almost a year that the only way through the grid crunch is to take the grid out of the equation:

Make "behind the meter" mandatory https://t.co/bCBnwx2E5g

— zerohedge (@zerohedge) December 24, 2025

Last week Goldman joined that camp, with Michele Della Vigna's team raising its behind-the-meter forecast to 67GW by 2030 and now expecting on-site gas and fuel cells to supply 25% of global data center power demand by 2030, versus "effectively 0%" in 2025 (in the Carbonomics report, available to pro subs). And Google has done everything right on that front in Finland: a dedicated nuclear plant, plus the 629MW of new wind and 94MW of batteries it lined up alongside.

The Finnish halt is the reminder that power is only one of the permits. You can bring your own reactor and still get stopped by the local park ranger (especially if he doesn't fully share your political and technological views). Behind-the-meter fixes the interconnection queue; it does nothing for environmental reviews, water rights, zoning boards or 50,000 angry signatures. And with every jurisdiction now watching the next one, the playbook for slowing a data center down has never been easier to copy.

Bottom Line

Taken on its own, a Finnish forestry dispute over two sites is fixable: Google files its explanation by October 14, does its assessment, and the 2027-28 timeline may well survive. But it isn't on its own. It's the latest entry in a list that started with one stressed loan in New Mexico three weeks ago and now spans two continents, four flagship AI campuses, a state government and the biggest US grid.

Morgan Stanley's verdict was that the backlash is real, but that it "remains unclear" whether it turns into a sustained capex slowdown. We'll make the call for them: the delays are the new normal, not a series of one-offs, and every 2027 capacity schedule, along with the revenue ramps and debt service built on top of it, is now a 2028 schedule until proven otherwise. The hyperscalers with installed compute may well benefit, as MS argues. Everyone who borrowed trillions in off-balance sheet SPV debt against compute that hasn't been switched on yet... not so much.

Next catalysts to watch: Tuike Finland's reply on October 14, and the October 23 deadline to put down the chainsaws.

Much more in the full Morgan Stanley Sunday Start and Goldman's "Behind-the-meter power solutions for data centers" note, both available to pro subs.

Tyler Durden Tue, 10/06/2026 - 21:42

"Don't Be Evil"? Ex-Google CEO Schmidt's Attack Drones Get Warheads From US Army Bomb Plant

The U.S. Army's McAlester Army Ammunition Plant is a massive munitions plant located in southeastern Oklahoma and will soon be producing warheads for former Google CEO Eric Schmidt's suicide drone arsenal.

Defense Blog reports that McAlester plant officials held a "ribbon-cutting ceremony to open the partnership" with Schmidt's drone company, Perennial Autonomy.

The Oklahoma plant will build, load, and deliver warheads for Perennial drones. Officials didn’t disclose the deal's production volumes, delivery schedule, value, or which drones would carry the munitions.

Earlier this year, the Department of War's counter-drone task force, JIATF-401, awarded Perennial a three-year contract with a $500 million ceiling covering its Merops, Bumblebee, and Hornet systems.

Perennial's Merops interceptor was developed to counter Russian Shahed one-way attack drones and costs about $15,000 per interceptor. The company says the counter-drone system has completed more than 4,000 interceptions in Ukraine.

In late January, Schmidt visited Ukraine as the Azov Brigade showcased its drones, counter-drone systems, ground robots, and maritime drone boats to Western investors. The meeting was held underneath the Mother Ukraine statue in Kiev.

In mid-February, Schmidt wrote a Financial Times opinion piece stating: "Future wars are going to be defined by unmanned weapons."

About 15 days before Schmidt's op-ed, we warned that every data center should be equipped with a kinetic drone interceptor to combat loitering munitions, only to find out 30 days later, during the opening phase of the US-Iran conflict, that Tehran had bombed several data centers in US-allied Gulf countries.

For signals about the drone industry and where it's headed, Defense Secretary Pete Hegseth revealed last week that "AutoWarCom" will lead the initiative to stockpile drones for the US military as part of a massive procurement supercycle. 

As we've said before, follow the government money. This should provide a tailwind for the industry (read here).

Tyler Durden Tue, 10/06/2026 - 21:20