Schumer & The Democrats' "Alinsky-Grade Cloud Of Gaslight"

Authored by James Howard Kunstler via Clusterfuck Nation,

The Ancient Parable

"I will throw you in prison. I want Chinese style communism to happen inside of the democratic party right now. I want to do cultural revolution shit."

- Hasan Piker, DSA Spox

Translation: Chuck Schumer knows that the Democrats have already been thwarted from rigging the election, from flooding the polls with illegal immigrant voters, with dead voters, with voters who moved out of state but still got mail-in ballots sent to their old addresses, with voters registered as living in Walmart parking lots, and so on. Chuck Schumer knows that the Civil Rights Division of DOJ is sending hundreds of lawyers to observe the action in swing state polling places. ICE might even be on hand to see who turns up.

So, Chuck Schumer is pretending that the Republicans will try to do what the Democrats actually did in several previous elections (including the last midterm, 2022, viz., AZ, GA, NV), and would have liked to do in this midterm, but can't. The Democrats will holler like crazy about it before the election to plant this idea in credulous minds. They will jump up and down going woo-woo-woo on Election Day itself to water the idea. And after the election they will blitz every critical precinct with lawsuits to prevent the vote from being certified, using select "activist" judges to issue TROs and writs to delay election results and de-legitimize the vote.

And if none of that avails - which it won't - they'll call out their ground troops, Antifa, BLM, Free Palestine, LGBTQ2S+, the furious transsexuals, the hysterical cat ladies, and suchlike to make a giant ruckus so as to provoke the president to invoke emergency powers to quell the mayhem. And then they'll point at Mr. Trump shrieking, "See! Tyrant!"

Chuck Schumer is such a shithead. Everybody knows that he intends for the Democratic Party to inflict lawfare and commit warfare on the midterm election (in that order), and hence on the American people, behind an Alinsky-grade cloud of gaslight claiming the other side is doing it.

Of course, it's the president's constitutional duty (Article II, Section 3) to take care that the laws be faithfully executed. You have seen that Mr. Trump is taking a good deal of care vis-à-vis this midterm election to avoid any hint of interference. You can infer that's at least one reason we have seen no indictments of the Deep State sedition artists operating so brazenly since 2016.

By the way, doing what's possible to make sure that only citizens can vote is taking care to faithfully execute the law, in case there's any question about that. A September 25 SCOTUS decision in Department of Homeland Security v. League of Women Voters (No. 26A308), a 6-3 majority (usual suspects dissenting) paused by lower-court judge Sparkle Sooknanan that had blocked the Dept. of Homeland Security's Systematic Alien Verification for Entitlements system - further proof that the Lefty-left won't abide any restrictions on who can vote.

The SCOTUS stay allows state and local officials to match their voter rolls against federal Social Security records, to sort out who can legally vote. AI could do this with novel efficiency. The catch is, states' participation is voluntary. Only twenty-seven states have moved to participate in this record-sharing. Another catch is that SCOTUS waited, for unknown reasons, before issuing their ruling until well into the "90-day rule window" (in the National Voter Registration Act) that doesn't allow actual changes in the voter rolls during this period, only identification of problems. We'll see if any of that dissuades non-citizens from attempting to cast a vote.

You have to wonder why the Democratic Party is acting like they've already won the midterms. After ten years of narrative control through their allies in the network media and what's left of the major newspapers, the Democrats apparently believe that if you assert an outcome often enough, Oprah Winfrey style, it will come true.

It's just another gaslighting op. Look at the Democratic Party's marquee candidates, a ragtag and bobtail of avowed jihadis, communists, neo-Jacobins, and plain old creeps such as Abdul El-Sayed in Michigan, Melat Kiros in Colorado, Darializa Avila Chevalier and Claire Valdez in New York, Angie Nixon in Florida, James Talarico in Texas, and Troy Jackson up in Maine. The old Chuck Schumer / Hakeem Jeffries wing of the party pretends to support this rabble, who have declared they are merely running under the party's banner for convenience and aim to deep-six the likes of Schumer and Jeffries at the first opportunity.

Will the Democrats still try to cheat their way through the midterms despite the obstacles and disincentives piling up around them? Probably, yes, because that will trigger conflict between the states and the Feds, and post-election chaos is what the party needs to keep hope alive, as they like to say. They want the results to remain in limbo as long as possible, with maximum lawfare around it to further confuse and confound the outcome.

It's in their nature. They are the scorpion riding the frog across the river in the ancient parable.

Tyler Durden Fri, 10/02/2026 - 16:20

The post New York Times Pushes Trumpian Lies on the Economy appeared first on CEPR.

Seagate, Western Digital Crater After Toshiba Breaks Hard-Drive "Supply Discipline" Pact

For most of 2026, the bull case for the HDD duopoly could be summarized in one sentence: nobody is building new factories. On Friday, someone did.

Shares of Seagate (STX) and Western Digital (WDC) tumbled more than 10% on Friday, standing out like a sore thumb on a day when the Nasdaq hit all-time highs, after Nikkei reported that Toshiba plans to double its hard disk drive production capacity to grab a bigger slice of the AI data center storage boom.

This is how Goldman's TMT desk summarized the Nikkei story first thing in the morning (full note available to pro subs):

Japanese technology group Toshiba plans to double production capacity for hard disk drives used in artificial intelligence data centers within fiscal 2027 as the AI boom propels data storage demand. The company will invest roughly 60 billion yen ($380 million) to expand facilities in the Philippines... The Japanese player's share by storage capacity stands at just over 10%, but it aims to reach 30% in the medium term. The Philippine expansion marks the company's first major HDD investment in around five years. Along with adding production lines at the plant, Toshiba will handle new products that increase per-unit memory capacity by as much as 40%.

By midday, Goldman's US equities desk flagged the "memory names, WDC (-10.9%) and STX (-11.6%)" as the "standout laggards" in an otherwise green tape, where AI winners were up 1.4% and NDX and NVDA had just printed all-time highs.

To be sure, a 10% drop is just a flesh wound for stocks that have tripled. Even after Friday's puke, STX is still up some 208% YTD and WDC is up 141%, compared to a "mere" 22% for the Nasdaq 100.

But when you're priced for perfection, it's not the size of the hit that matters, it's where it lands.

The One Thing That Wasn't Supposed To Happen

Recall that the entire HDD up-cycle (as well as memory, chips, etc., pretty much everything in the semiconductor commodity chain) has been built on the premise of supply discipline, i.e., that none of the three remaining hard drive makers would add unit capacity, and that all exabyte growth would come from cramming more terabytes into each drive. Here is how Bernstein put it after hosting Seagate management on a non-deal roadshow in August (emphasis ours):

None of STX, WDC, or Toshiba are adding drive unit capacity, keeping industry-wide HDD supply structurally disciplined. Seagate management explained that its factories are effectively full, and rather than expanding units, management is targeting roughly 25% CAGR in nearline exabyte shipments purely by increasing capacity per drive via HAMR... building a new factory would take at least two years, which management has no plans to do.

Bernstein then went on to make STX its top pick precisely because "the broader industry's inability to scale supply keeps supply disciplined."

Well, oops: as of this morning, a third of "the broader industry" just announced it is scaling supply.

Regular readers will recall that we have seen this movie before. Back in May, in "China Begins Flooding The Market With DRAM And NAND Chips", we noted that Seagate's CEO had told JPMorgan that building new factories would "take too long," and warned that once someone else steps in to fill the supply gap, the supply tightness that justified the memory ETF rally would collapse. That time it was CXMT and YMTC on the memory side, which is only getting started with the old Chinese "capture market share by dumping products at below market prices" trick. This time it's an old friend in spinning rust, and it happens to be in the Philippines rather than Hefei.

And yes, the timing is apt for another reason. Rosenblatt points out that hyperscalers are now negotiating long-term agreements (LTAs) extending into 2029-2031, and Toshiba's expansion "introduces a credible medium-term supply risk, giving customers incremental negotiating leverage." Evercore adds that while Seagate "has allocated the majority of its nearline exabytes into calendar year 2028," Western Digital is still "negotiating long-term agreements extending to calendar year 2031." Put differently: 2027-28 pricing is largely locked in. What the market is repricing is the back end of the curve, which, for stocks trading on out-year earnings power, is the part that matters.

"Overdone"... Says Everyone With A Buy Rating

Predictably, the sell-side, which is unanimously bullish - and very wrong today - on both names, rushed to defend the duopoly. The best arguments:

• Citi (Buy, WDC PT $740, STX PT $1,300) argues the bottleneck isn't Toshiba's factory but its suppliers: "Unlike STX and WDC, Toshiba does not internally source their own media and heads," so "in order to double their current EB capacity they would also need their external component suppliers to also significantly raise capacity – which we believe could limit the impact of total EB supplied to the market."
• Morgan Stanley (Overweight, buying the dip) says "the gap between HDD supply and demand through calendar 2028 still looks wider than Toshiba's planned addition," and notes Toshiba lacks leading-edge capacity and heat-assisted magnetic recording (HAMR) technology.
• Rosenblatt (Buy, WDC PT $800, STX PT $1,400) reads the news as "more about Toshiba reclaiming lost market share rather than the stated 30% market share ambitions," and continues "to see support for sustained pricing power from a worsening supply demand imbalance due to AI."
• Bloomberg Intelligence says the plan "looks more like validation of stronger AI and data-center storage demand than a near-term supply threat."

Translation: Street targets now sit 50% to 90% above Friday's price, which is either a screaming buy signal, or more correctly, a reminder that price targets tend to follow price, not the other way around.

Goldman, for its part, didn't need to rush out a defense because it already had one on file. At last month's Communacopia conference, Goldman's James Schneider came away from Seagate CFO Gianluca Romano's presentation with three takeaways:

1. Seagate sees strong demand trends as continuing to support pricing uplift and margins through FY27;
2. HAMR volumes well on track to cross over PMR by the end of calendar 2026;
3. The company expects to continue high-yield debt retirement and pivot to share repurchases.

And just this week, Goldman's Korea memory team, reading across from Micron's results, said it expects "2027 and 2028 memory S/D to be much tighter than 2026," with customers "requesting longer duration and larger supply" agreements. Not exactly the backdrop for a glut.

The HAMR Moat

The real question is whether Toshiba's doubling matters as much as the stock reaction suggests. Some napkin math: going from "just over 10%" of industry exabytes to roughly double that by FY27 adds something like 10% to total industry exabyte supply, spread over two years. Meanwhile, Seagate alone is targeting ~25% nearline exabyte growth per year through HAMR. In other words, Toshiba's plan sounds big in a headline, but in exabyte terms it's a rounding error relative to what the HAMR transition is already adding, if, that is, Toshiba's head and media suppliers cooperate (see Citi above).

Which brings us to the part of the story the market may be glossing over: this isn't a level playing field. Seagate is the only player shipping HAMR at scale, and as Bernstein showed, its areal density lead already translates into faster exabyte growth than WDC...

... and, per Bernstein's forecasts, a gross margin that crosses above WDC's in FY27 and keeps climbing toward the mid-60s.

Which is also why Bernstein, back in August, said that while "a rising tide is lifting all boats," STX's HAMR lead "is why it is our top pick." If the tide is now going to recede a bit as Toshiba adds supply, the boat with the weakest areal density roadmap is the one most exposed. Hint: it's not Seagate, which may explain why WDC is now down more from its June peak than STX.

Meanwhile, The Picks And Shovels Rally

One more thing: equipment names catching a bid on the news included Veeco (+11%), whose data storage business sells ion beam deposition and etch tools used to make HDD read/write heads, i.e., a direct beneficiary of anyone (Toshiba or its suppliers) adding head capacity. Aixtron (+7%) also rallied, although its MOCVD tools are mostly used for compound semiconductors (GaN, SiC, optoelectronics), so the HDD link there is tenuous at best.

Bottom Line

The analysts are probably right that Toshiba's ¥60 billion won't put a dent in HDD pricing through 2028: the volumes are sold, the LTAs are signed, and Toshiba still needs someone to sell it heads and platters. But the market wasn't pricing the next two years; it was pricing a decade of monopoly-like discipline in an oligopoly of three.

The lesson from today is one which the rest of the world (and especially European car makers) are painfully familiar with: in commodity hardware, the cure for high prices is high prices, and sooner or later somebody in Asia builds a factory.

Whether this is the start of that cycle or just another buyable dip in an AI super-cycle (the sell-side which stands to make a killing the longer the AI bubble rolls on unanimously votes for the latter, understandably) will depend on one thing: whether Seagate and WDC respond with capacity plans of their own. If they do, the "supply discipline" thesis is over. If they don't, Toshiba just bought itself some market share at the top of the cycle.

Tyler Durden Fri, 10/02/2026 - 15:47

"Told You To F--k Yourself": GOP Senator Tells Trump Off In Profanity-Laced Leaked Texts

Sen. Thom Tillis (R-NC) unloaded on President Donald Trump in a series of profanity-laced private text messages that are now spilling into public view as the retiring Republican prepares to release a tell-all book about his battles with the president and MAGA world.

The fiery exchanges, revealed in reporting on Tillis' forthcoming memoir, How to Lose Friends and Antagonize Presidents, show the North Carolina senator speaking to Trump in remarkably confrontational terms.

"I still want to help but I don't take this bullshit from anyone, including you Mr. President," Tillis wrote in a May 22 message, according to the texts published by POLITICO.

"Save that shit for the cowards who don't care if you fail," the retiring senator continued. "I care if you fail and right now we are failing."

In a June 6 message, the senator pushed back against the suggestion that Trump had threatened him with a Republican primary challenge.

"If you had ever threatened me directly with a primary, I would have immediately told you to fuck yourself, and I would have announced my retirement immediately," Tillis wrote in another stunning text.

"Save those threats and head games for cowards and fools," the outgoing lawmaker added.

Notably, POLITICO did not publish Trump's replies or the preceding messages that prompted Tillis' angry responses.

Tillis announced in June 2025 that he would not seek reelection after opposing Trump's sweeping reconciliation legislation. The president blasted the senator in a Truth Social post as a "talker and complainer, NOT A DOER!" and publicly floated supporting a primary challenger.

Tillis raised eyebrows when he held up Trump's nomination of Kevin Warsh to lead the Federal Reserve, refusing to support him until the Department of Justice ended its investigation into then-Fed Chair Jerome Powell. Tillis dropped his blockade after the probe was closed in April.

Republican Michael Whatley, the former Republican National Committee chairman endorsed by Trump, is running to replace Tillis in North Carolina's open Senate seat against former Gov. Roy Cooper (D).

    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 Fri, 10/02/2026 - 15:25

Iran's Disappearing Oil Is Becoming Everyone's Problem

Authored by Natalia Katona via OilPrice.com,

Iranian oil is disappearing from the market just as its biggest buyer returns for more. China's recovering crude demand is colliding with the loss of a supplier that sustained its independent refiners through the crisis, forcing them to compete for increasingly expensive alternatives. The consequences reach beyond China: every replacement barrel tightens supplies for other buyers, while Tehran faces a growing incentive to disrupt the Strait of Hormuz, which is now carrying an unexpectedly strong 13 million barrels a day (just 5 million below pre-crisis level), while its own oil remains trapped.

Iranian crude has long been an underestimated part of the global oil balance. After Bashar al-Assad's government fell in December 2024, breaking the political relationship that sustained Iranian shipments to Syria, China became Iran's only crude buyer - in 2025, it received an average of 1.4 million b/d. The war initiated by the US and Israel in late February initially made Iran even more important to Chinese buyers: while Tehran blocked other tankers from crossing Hormuz, its own cargoes passed freely, lifting Chinese intake of Iranian oil to around 1.76 million b/d in April.

That competitive edge ended with the US blockade announced on April 13. Loaded tankers could no longer leave the Gulf, while empty vessels could not enter. Loadings at Kharg Island, Iran's main export terminal, collapsed from 1.8 million b/d in March to 260,000 b/d in May. A June 17 memorandum allowing Iranian cargoes to pass for 60 days offered temporary relief: loadings recovered to 740,000 b/d in June and 890,000 b/d in July. But the reprieve expired in August, shipments slumped again to 250,000 b/d, and no Iranian loadings were observed in the Gulf in September.

The more important part of the story, however, was unfolding outside the Strait. Iran had accumulated a vast floating stockpile that allowed deliveries to China to continue even when fresh cargoes could not leave the Gulf. In mid-April, that cushion stood at about 160 million barrels, spread across waters around South, Southeast and East Asia. Drawing on those stocks, China still imported 1.37 million b/d of Iranian oil in May, just 10% below February's level. But the buffer was shrinking; floating storage fell to 106 million barrels by mid-June before the temporary reopening replenished it to 128 million by mid-July.

That replenishment of available floaters has since stopped. China still received 980,000 b/d of Iranian crude in August, but only 475,000 b/d in September, with arrivals ceasing from September 26 (all of the last arriving cargoes had been loaded in June).

Iran still has around 86 million barrels on the water, the lowest volume since January 2025. Yet 23 million barrels (more than a quarter) are trapped inside the Gulf. The total has barely changed since Chinese arrivals have wound down to an almost complete halt over the past two weeks, with evident loadings in the Kharg island stopping completely. With onshore storage gradually filling up (Kpler data suggests Iranian storage tanks are now 60% full, storing around 70 million barrels), Iran will face the inevitable choice of cutting production. Whilst roughly 2.2 million b/d of production is relatively safe due to demand from its refineries, Tehran's pre-war crude output of 3.2 million b/d seems to be no longer achievable.

For China's 'teapots' (the smaller independent refineries concentrated in Shandong province), this removes a cornerstone of their crude supply. Accounting for roughly a fifth of Chinese crude imports, these refiners have built their purchasing strategies around discounted sanctioned barrels, particularly from Iran and Russia. Now they must search for barrels farther away, from the Middle East, West Africa and South America. In mid-September, ten Chinese independent refiners reportedly sent traders to Singapore to secure available supplies from the mentioned regions.

The shift is visible at Shandong's ports. Qingdao, connected by pipeline to 12 independent refineries, relied on Iran for 40% of its 690,000 b/d incoming flows in 2025. In recent months, it has increased purchases of Brazil's Tupi and Buzios grades and even started receiving Guyana's Golden Arrow in July, while still relying on Saudi and Russian supplies. Nevertheless, intake has fallen to a record low of around 150,000 b/d over the past three months.

At Dongying, on Shandong's northern Bohai coast, situated near 32 independent refineries, Russia and Iran supplied virtually all of last year's 330,000 b/d intake, accounting for two-thirds and one-third respectively. Iranian deliveries started to decrease in summer months, with just two cargoes arriving in August and just one in September. Total intake fell to a mere 220,000 b/d in September as crude-deprived refiners were compelled to cut refinery throughputs.

These refiners are being left with less oil and more expensive alternatives. Guyanese crude is particularly costly when long voyages coincide with an unprecedented shortage of very large crude carriers and record freight rates. To encourage independent refiners to increase runs, the Chinese government issued an additional 28.05 million tonnes of crude import quotas in late September, taking the annual allocation for non-state imports to a record high of 257 million tonnes. These quotas determine how much crude refiners are authorized to import, so the increase gives them room to buy more, but does little to make barrels available or more affordable.

Competition for Russian oil is intensifying, too. Chinese buying has reportedly pushed ESPO differentials to an all-time high premium of $28/bbl vs ICE Brent, while Urals is also trading $7-8/bbl above the same benchmark. Independents must also compete with state-owned buyers, which currently account for roughly half of China's seaborne crude imports, compared with 45% in February.

China's recovery is still at an early stage. Seaborne crude imports rose from 7.24 million b/d in August to 7.5 million b/d in September, but remain far below February's 11.5 million b/d. During April-July, imports had fallen to roughly half that pre-crisis level, depressed by the Beijing-mandated refinery product export ban, lower refinery runs and a gradual shift towards SPRs usage. China's strategic reserves (both state- and private-owned) remain at 1.12 billion barrels, down from 1.25 billion in April, but rebuilding imports while Iranian supplies disappear will put greater pressure on barrels available elsewhere.

For Tehran, the imbalance is becoming harder to tolerate. Peace negotiations continue without a breakthrough, its crude remains blocked, and its export revenues are squeezed. Meanwhile, oil from neighboring producers is moving through Hormuz at a surprisingly strong 13 million b/d. That recovery is both a relief for buyers and a vulnerability. As long as Iran cannot export, it has little economic incentive to preserve the arrangement allowing its neighbors' barrels through. Mounting financial pressure could eventually push Tehran to disrupt those flows, even more than it did ever before.

The market therefore faces two connected risks: China must replace Iranian oil as its demand recovers, and Iran may lose patience with a Strait that is reopening for everyone else. The disappearance of Iranian barrels is already tightening supply. A renewed disruption to Hormuz would make the cost of replacing them much higher.

Tyler Durden Fri, 10/02/2026 - 15:05

California, 6 Other States Sue Trump Admin Over Funding Cuts To Immigration, Race Projects

Authored by Rachel Roberts via The Epoch Times,

California and six other states filed a lawsuit against the Trump administration on Wednesday after it moved to cut federal funding for programs involving immigration, race, and gender ideology.

California Attorney General Rob Bonta speaks in Los Angeles on April 15, 2024. John Fredricks/The Epoch Times

The White House said the programs are not in the national interest.

The states accuse the administration of withholding federal funds approved by Congress, including about $810 million the White House moved to cancel before the fiscal year ended.

The lawsuit is the latest move in a battle between President Donald Trump and Congress over control of the nation's spending.

Funding 'Does Not Benefit Americans'

"President Trump is committed to utilizing all possible tools to cut wasteful and harmful government spending that does not benefit American citizens," the White House said in a Sept. 25. statement announcing the steps.

Trump last year utilized what the White House said were "long-neglected presidential authorities provided to him under the Impoundment Control Act" to deploy the first pocket rescission in almost 50 years.

President Jimmy Carter used the tactic in 1977.

"This year, he is continuing his commitment to the American taxpayer by utilizing a pocket rescission for another nearly $1 billion of the most harmful government spending," the White House said.

'Open Borders NGO'

Some $567 million of the withdrawn funds previously went to nongovernmental organizations (NGOs) and what the White House termed "pro-illegal immigration programs" that provided services to refugees, those granted asylum, and other noncitizens.

The statement said some of these programs "put unaccompanied children in harm's way."

Of this $567 million, some $2.1 million went to Lutheran Immigration and Refugee Service Inc (DBA Global Refuge), which the White House described as "an open-borders NGO" run by Michelle Obama's former policy director, Krish O'Mara Vignarajah.

The statement said the organization's budget "more than quadrupled under the Biden administration, nearly all from government grants."

The administration intends to cut $40 million in funding to Southwest Key Programs, which faced a civil lawsuit from the Department of Justice alleging that it had, through its employees, subjected unaccompanied migrant children in its care to sexual harassment and abuse.

The lawsuit by the seven states sets up a fresh legal clash over the limits of presidential spending power, with the pocket rescission tactic drawing criticism from Democrats and some Republicans.

The states argue that the administration's efforts to withhold federal funds undermine Congress's exclusive power to control federal spending.

Filed in the U.S. District Court for the Northern District of California and led by California Attorney General Rob Bonta, the suit argues that the administration's refusal to spend appropriated money violates the Constitution's separation of powers, appropriations, and presentment clauses.

'Blatant Disregard'

"I continue to be appalled by President Trump's blatant disregard for the basic Constitutional framework of our government. Just because the president doesn't like a program doesn't mean he can defund it," Bonta said in a statement.

The White House sought last week to unilaterally withhold the funds using a pocket rescission - sending Congress a request to cancel funds so close to the end of a fiscal year that they expire before lawmakers can act.

In August 2025, Trump used the same maneuver to cancel $4.9 billion in appropriated funds for foreign aid spending.

While the Constitution gives Congress control of the public purse, the White House said in last week's statement the programs were being used to support illegal immigration, stoke racial tensions, and promote climate alarmism, including through international funding.

One of the programs cut, a $15 million Community Relations initiative funded through the Department of Justice, promoted "radical critical race theory and gender ideology," according to the White House.

Another $70 million is set to be cut from what the administration termed "Woke International Education," referring to various initiatives that "support wasteful and divisive projects, including doctoral dissertations on queer and trans community building in foreign countries," the statement said.

California is joined by Maine, Maryland, Michigan, Nevada, New Mexico, and Oregon in filing the lawsuit.

President Donald Trump speaks in the Oval Office on Sept. 30, 2026. Alex Brandon/AP Photo Tyler Durden Fri, 10/02/2026 - 14:35

Trump Says Inflation Will Pay Off The $40 Trillion Debt "Very Rapidly"

President Trump thinks 'certain levels' of inflation could take care of the $40 trillion national debt. 

President Donald Trump appears at the United Nations General Assembly in New York. (Photo by Chip Somodevilla/Getty Images)

"You know, inflation. Certain levels of inflation will also pay off that debt very rapidly. Very rapidly," he told TIME in an interview published Thursday, after the outlet pointed out has grown by about $11 trillion over his five years in office. In response, Trump first blamed Joe Biden, then the Fed, then hinted at a plan he wouldn't share.

"I know I'm the best in the world," Trump said. "The best - I don't want to tell you what those means are, but you can pay off the debt through other means. But the one thing that you can do is pay it off through growth, and we've never had growth like this."

Later he circled back, saying "the growth is going to pay off the debt" and that the Fed's hikes were "hurting our country more than inflation is hurting our country."

He didn't say what level of inflation he had in mind, or whether he wants the Fed to tolerate more of it. Earlier in the same interview, though, he blamed Biden for "the biggest inflation in history" and said he "inherited the greatest inflation in history," adding that "the only thing I have to get down now is the gas."

Headline CPI rose 3.4% in the 12 months through August, with core at 2.4%, according to the BLS. On Sept. 16 the Fed raised rates for the first time since July 2023 - a unanimous quarter-point hike to 3.75%-4% that included Trump's own pick for chair, Kevin Warsh - and penciled in another before year-end. Trump told TIME he "probably would have voted against the board" if he were Warsh, and has called for rates of 1% "or less."

On Thursday, the day TIME published the interview, the 10-year Treasury yield touched 5.34%, its highest since 2002. It closed at 5.24%.

He's Floated This Before

None of this is new for the self-described "king of debt." In May 2016 he told CNBC the US could buy back its own bonds at a discount if rates went up. That was widely read as a default threat, so a few days later he went on CNN to walk it back. "You never have to default because you print the money, I hate to tell you, OK?" he said.

A month before that, he told the Washington Post he could wipe out what was then a $19 trillion debt "over a period of eight years" - a debt that has since more than doubled.

Buybacks are back, too. After the debt crossed $40 trillion and long-dated yields kept climbing, Treasury Secretary Scott Bessent tripled the cap on the first expanded buyback to $6 billion. As we noted at the time, yields surged anyway, since $6 billion barely registers against more than $2 trillion in gross issuance a year.

Bessent, for his part, prefers to talk about growth. In June 2025 he told CBS's Margaret Brennan that "everything has been alarmist" on inflation and that the US would never default. And the day after Treasury reported the $40 trillion milestone, he went on CNBC to say there was "nothing magic" about the number and "we can grow our way out of that."

The Part He Left Out

Last year we ran a piece arguing Bessent was effectively putting the national debt on an adjustable-rate mortgage by leaning on floating-rate financing, which also projected the debt would top $40 trillion by the end of fiscal 2026 - it got there in mid-August, about six weeks ahead of schedule.

Back in April 2025, Bloomberg's Simon White made the case that higher inflation and a weaker dollar - where US policy seemed to be headed - were consistent with a falling debt burden. But he warned that unlike Britain's post-WWII "beautiful deleveraging," erratic policymaking could wreck trust in the dollar system, spark capital flight and end up adding to the debt.

Nick Giambruno spelled out the mechanics in July: financial repression, where the government keeps interest rates below inflation and the difference quietly moves wealth from savers to the Treasury. With 9% inflation and 4% rates, he noted, that's a 5% transfer every year, and it compounds.

It has worked before. A 2011 BIS paper estimated negative real rates wiped out debt worth 2-3% of GDP a year in the US and UK between the late 1940s and the 1970s. But that was under Bretton Woods, with interest-rate caps, captive domestic buyers and capital controls - and the paper found financial repression works best "when accompanied by a steady dose of inflation."

The catch is that it only works if the Treasury can borrow below the inflation rate. Right now it can't: the 10-year yields nearly two points more than headline CPI, interest on the debt already runs over $1 trillion a year, and everything that matures gets rolled at today's rates.

Getting real yields back below zero would take a Fed willing to cut into rising prices - the 1% "or less" Trump keeps asking for - or something like the rate caps and captive buyers of the 1940s. Trump didn't say whether either one is among the "other means" he wouldn't name.

 

Tyler Durden Fri, 10/02/2026 - 14:15

Airlines Plan 'Rescue Flights' For Stranded Israelis In UAE After FlyDubai Incident

Via The Cradle

Israeli national airline El Al announced on Friday that it had canceled flights scheduled to bring Israelis home from Dubai after the UAE withdrew landing permits for Israeli carriers.

"Due to the cancellation of approval for Israeli companies to land in Dubai, as was reported by the authorities in Israel, we are forced to cancel, at this stage, our rescue flights," the airline said in a statement posted on social media.

AFP/Getty Images

El Al said it remains prepared to operate charter flights to Dubai to bring Israeli citizens home as soon as it receives official approval.

The Israeli airline did not explain why the landing permits had been withdrawn. Emirati authorities have not provided an explanation.

Israeli passengers were stranded in the UAE after an incident on a FlyDubai flight from Dubai to Tel Aviv. The plane’s copilot allegedly stabbed the captain and tried to crash the aircraft before passengers and crew managed to enter the cockpit to restrain him.

Other FlyDubai pilots who happened to be passengers on the flight made an emergency landing in the Saudi city of Tabuk.

Emirati authorities ordered an investigation to establish the circumstances and motives behind the incident. Israeli authorities quickly claimed the incident was a terror attack.

Israeli Prime Minister Benjamin Netanyahu claimed in a Fox News interview that the copilot had undergone "Islamist radical indoctrination" and that the man was suicidal. Netanyahu gave no evidence for the claim.

Israeli Defense Minister Israel Katz went further, calling the incident an “attempted jihadist terrorist attack” and saying the copilot intended to crash the aircraft with everyone aboard.

One of the passengers, 50-year-old Yaniv Hayun, claimed that he ran to the cockpit after the stabbing and stabilized the plane after it plunged 20,000 feet toward the ground. 

Hayun, the owner of a plumbing company in Israel, has no background in aviation. He claimed​ he knew how to pull the plane out of its nose-dive, saving more than 170 people, after watching an aircraft crash TV show.

A pilot interviewed by CNN said that aspects of the plane's fall “did not make sense” and that, had the plane plunged so fast, it would have “disintegrated completely.”

The pilot in the CNN OutFront clip is Aaron Murphy, a commercial pilot and flight instructor. He is sitting in a flight simulator recreating the Flydubai FZ1073 incident so viewers can see what the cockpit and the aircraft itself would have looked like during the sudden… https://t.co/SV6zmXfCCa pic.twitter.com/JOZiSn9nwv

— xpos (@blame_d_cat) October 1, 2026

One day before the incident took place, Netanyahu held a security establishment assessment and talks with opposition leader Yair Lapid over an alleged, pre-Israeli election “security threat” that the premier had announced earlier on Tuesday. 

The FlyDubai incident has proven politically useful for Netanyahu, who met with Hayun in front of the media, hailing him as a hero. Netanyahu is seeking a seventh term as prime minister in Israel’s upcoming Knesset elections, scheduled for October 27.

Tyler Durden Fri, 10/02/2026 - 13:55

Putin: Ready To Use 'All Weapons' Including Nuclear, If Kaliningrad Attacked

Now it's no longer just high-ranking Kremlin officials saying it, but Russian President Vladimir Putin has now directly weighed in amid the ongoing nuclear threat tit-for-tat involving European officials.

Speaking at the Valdai Discussion Club in Moscow on Thursday, he warned the Western allies to cease their escalation in Ukraine, stressing he's willing to use "all weapons" in the Russian arsenal in the scenario that Russia's exclave of Kaliningrad comes under attack.

"The drills in the Baltic Sea, following one another… Then the attempts to arrest our ships and vessels. All this is an escalation. And then we began to hear statements regarding the Kaliningrad region," Putin said.

Kremlin file image/via Fox

"If it comes to direct attack against the Russian Federation, in this case on Kaliningrad and possibly some other territories, of course the issue of using all weapons in our country’s arsenal will inevitably and unavoidably emerge on the agenda. This is unavoidable," he asserted in a warning that includes nuclear weapons.

NATO held recent military drills near Kaliningrad which were broadly described as deterrence operations, which Putin referenced in the remarks.

Rhetoric has been running particularly hot over the exclave which is sandwiched between NATO members Poland and Lithuania all week, as Associated Press earlier described:

The warning sent to NATO echoed statements issued by several Russian embassies in Europe this week which said that Moscow has "information that NATO is preparing (an) air and naval blockade of Kaliningrad and Kaliningrad region."

The embassies in the U.K. and Ireland posted their statements on their Telegram channels, and the embassy in Belgium released it to the Tass news agency.

The ratcheting accusations from the European side have also centered on charges of a Russian sabotage campaign targeting the Baltics as well as Germany.

Moscow at the start of the week took the rare step of submitting a formal letter to NATO leadership in Brussels.

The letter accused NATO of an "unprecedented escalation of the military-political situation around Russia's region of Kaliningrad accompanied by highly provocative public statements by NATO Allies' officials."

"This dangerous and reckless course entails high risk of the outbreak of a direct armed conflict with the possibility of Russian strikes against decision-making centers of the alliance's member states right from the outset of the conflict," the letter said.

NATO was especially incensed and alarmed at this key line of Moscow's letter:

"Russia will be ready to use the entire arsenal of forces and capabilities at its disposal, including nuclear weapons, in order to defend its territory, should NATO countries undertake any attempt aimed at isolating the Kaliningrad region from the rest of the country."

Apparently this most recent tense back-and-forth over Kaliningrad was initially triggered by a television show which recently aired in the UK this month.

Preview of the provocative UK series The WarGame which started airing this month. The Kremlin has vehemently condemned it, and sees in it some clear messaging and an ominous threat:

Michael ‘The Gover’ Gove and ‘Bad Penny’ Mordaunt are loving their scripted roles in WarGames - just like the scripted parts they played for years in our Parliament.
This drama - documentary simulates an attack on the UK by Russia and was filmed 3 years ago.
Why do you think… pic.twitter.com/JYE8u5U8jH

— Andrew Bridgen (@ABridgen) September 22, 2026

Newsweek described, "The statement follows a miniseries aired by British broadcaster Sky News last week, The Wargame, which traces a hypothetical Russian attack on the U.K. and how the country might respond—including by authorizing operations against the Baltic territory of Kaliningrad."

    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 Fri, 10/02/2026 - 13:30

CNN Concedes Republicans Will Keep The Senate If The Polls Miss Like They Have Before

CNN chief data analyst Harry Enten said Wednesday that Republicans have beaten their September polling in Ohio, Iowa and Michigan by wide margins in recent election cycles. If that pattern repeats in November, the GOP could keep control of the Senate despite current Democratic leads in all three states.

With just over a month before the midterms, Democrats have spent weeks enjoying a Senate map that looked impossible a year ago. Democrats need to net just four seats to win the majority. Republicans started the second half of President Donald Trump's term with what looked like a firm hold on the upper chamber. The Democrats' original plan was to defend Michigan, Georgia, and New Hampshire, then take Republican seats in Alaska, Maine, North Carolina, and Ohio. Then the map got bigger for the Democrats. Trump's falling approval numbers and voters' frustration with the economy gave Democrats openings in states the party had long given up on. Senate Democratic Leader Chuck Schumer took a victory lap almost immediately.

"We now have multiple paths for the majority," Schumer said. "We found new states - Iowa, Texas - which people a year ago weren't even paying attention to."

However, Michigan and Maine, two races Democrats once treated as near-certain wins, have become real contests. That forces the party to win more of its new territory just to stay even. Every "reach" state Schumer adds to the list has to make up for a seat that was supposed to be in the bag.

If Democrats win a majority in the Senate, they'll be able to block presidential nominees, including judges. A Democratic majority would turn every confirmation vote into a two-year war of attrition. However, some of the races Democrats are banking on going their way have a history of being wrong.

"But here's the question, what if the polls are wrong?" CNN anchor John Berman asked the network's chief data analyst Harry Enten.

"We've had really good Democratic polls coming out from Ohio, Michigan, Iowa," Enten told CNN. "And, you know, fool me once, shame on you. Fool me four times, I just have to ask the question, could it happen again?"

His data suggests it might. "In Iowa, where the Democrats have been getting really good polls, Republicans outperformed their September polls by nine points back in 2024. How about Ohio? Six points. How about Michigan? Five points."

He continued, "And I will note that the leads that the Democrats have in all of these races right now are under how much the GOP outperformed back in 2024."

Enten went back to 2018, Trump's first midterm, when Trump wasn't on the ballot, and the trend was the same.

"You can go back to Donald Trump's first midterm election. And it's the same exact story. Look at this, the GOP outperformed September polls in the major 2018 statewide races by six points in Iowa, six points in Ohio and eight points in Michigan."

The miss wasn't just a Trump-on-the-ballot effect. It showed up in every cycle Enten checked except 2022. "The bottom line is this," Enten said. "Over the last few cycles, whether it be 2018, 2016, 2020, 2024, Republicans have outperformed their September polls by at least five points in all these three states where Democrats right now are ahead, but not by a wide enough margin whereby if Republicans outperform their September polls again, it could become very, very interesting."

So, if the trend continues, the Senate map looks really good for Republicans.

"Let's just say that the GOP outperforms their Midwest polls, like they did in 2018 and 2024," Enten said. "Well, what do you get? You get a red Michigan. You get a red Ohio. You get a red Iowa. And all of a sudden, even if Democrats carry states like Texas, Georgia, and North Carolina and Alaska, well, guess what you get? You get a 50/50 Senate with J.D. Vance casting the tie-breaking vote."

The party could pull off a historic upset in Texas, hold Georgia, and flip North Carolina and Alaska, and still end up in the minority because three Midwestern states have behaved the same way in four of the last five cycles.

The prediction markets are less sure than the polls, according to Enten. "Well, the Kalshi prediction market says that Abdul El-Sayed is still a favorite in Michigan, but not an overwhelming one, 73 percent. Sherrod Brown in Ohio, 61 percent. That's basically a toss-up territory. And Josh Turek in Iowa, where he got a really good poll earlier this week, a 42 percent chance."

"In these midwestern Senate races, yes, Democrats have gotten good polls," Enten said. "But I would just say, hold on just a brief second here because history says, you know what, it might not end for them as well as the polls currently suggest it will."

Tyler Durden Fri, 10/02/2026 - 12:20

DOJ Alleges UCLA Law School Discriminated By Race In Admissions

Authored by Aaron Gifford via The Epoch Times,

The University of California - Los Angeles (UCLA) School of Law allegedly denied admission to whites and Asians in favor of lower-performing black and Hispanic applicants, the Department of Justice announced Thursday.

Under federal Civil Rights Laws and a 2023 U.S. Supreme Court decision that ruled against affirmative action practices in university admissions, the public institution could lose federal funding if it doesn't take corrective actions, Assistant Attorney General Harmeet K. Dhillon said in an Oct. 1 news release.

"Like many of its peer institutions, UCLA Law School runs a two-tiered admissions system whose academic bar for acceptance shifts up or down depending on the color of your skin," she said. "The use of race as a thumb on the scale that helps or disadvantages any student is illegal. The Department will continue to enforce equal treatment under the law everywhere - including in our nation's law schools."

The Department of Justice (DOJ) reviewed student application materials for the incoming classes of 2023, 2024, and 2025, which included personal statements and essay prompts that allegedly are designed to "elicit information about race."

Additionally, UCLA Law admissions staff allegedly instructed prospective students how to reveal their race in those sections of the application. This happened during race-based recruitment events, such as the Diversity Admissions Open House, Dhillon said.

Investigators also said they found that the university rejected white and Asian applicants who had the same LSAT scores as admitted black and Hispanic candidates. For 2024 and 2025 combined, half of the admitted black applicants had LSAT scores that were at or below 90 percent of the admitted white applicants, according to the news release.

The DOJ also reviewed internal university documents that Dhillon said showed intent to discriminate. This includes a statement allegedly from an assistant dean: "We are proud of the fact that 58 percent of this year's incoming class are students of color."

Another document from an assistant dean of admissions allegedly said, "If information about your ethnic/racial background would be helpful for law schools to gain a better sense of who you are, include it."

Dhillon said in a letter to UCLA officials disclosing the findings of her investigation that the University of California higher education system doubled down on its commitment to affirmative action practices after the 2023 Supreme Court decision, issuing a memo from the president's office that read, "student diversity remains a top priority for the University of California."

The DOJ examined seven years of UCLA Law applicant data, from 2019 to 2025, and found that the university did not "meaningfully change its admissions practices" in response to the Supreme Court decisions.

The federal agency recently announced similar investigative findings at UCLA Medical School, UC David Medical School, UC San Diego Medical School, George Washington University Medical School, Yale University Medical School, Duke University Law School, and UC Berkeley Law School.

Dhillon said her agency will engage in settlement negotiations with UCLA to bring the university's admissions practices into compliance. If those efforts fail, the DOJ will file a lawsuit.

UCLA Law School issued a statement on Oct. 1, maintaining that its admissions practices are not unlawful or discriminatory.

"UCLA School of Law is committed to making admissions decisions in compliance with all applicable laws, including the California Constitution and Proposition 209, federal statutes, and the U.S. Constitution," the statement said. "Students are admitted through a comprehensive, merit-based review process that considers each applicant's achievements and experiences. We are confident in our process."

Tyler Durden Fri, 10/02/2026 - 12:00

Judge Denies Lawyer's Motion To Find Lindsay Clancy Not Guilty In Murder Of 3 Children

Authored by Jill McLaughlin via The Epoch Times,

The judge in the Lindsay Clancy murder case denied a motion by her lawyer asking to find his client not guilty in the deaths of her three children on Oct. 1.

Judge William Sullivan found county prosecutors had presented enough evidence for any reasonable jury to potentially conclude beyond a reasonable doubt Clancy was responsible for the murders.

"There was evidence introduced, both physical and circumstantial, that would permit a rational trier of fact to find beyond a reasonable doubt the elements of the charge of murder," Sullivan wrote in his ruling.

Attorney Kevin Reddington told the judge in a hearing earlier this week that prosecutors had not provided proof that Clancy killed her young children, despite having previously argued that Clancy was not guilty by reason of insanity. The first trial ended in a deadlocked jury on Sept. 4.

Reddington told the court his client seemed to have false memories of that night and any admissions she made were "uncorroborated." He asked the judge to issue a finding of not guilty and throw the charges out because the state did not prove its case.

Reddington declined to make a statement on the court's motion Thursday, his special adviser Daniel Nardo said in a post on X.

Clancy allegedly admitted guilt several times in January 2023.

Plymouth County District Attorney Timothy Cruz told reporters he has not yet decided whether to pursue a second trial following the mistrial. Cruz's office didn't immediately return a request for comment about the decision.

During the first trial, prosecutors argued that, despite struggling with mental health problems, Clancy knew what she was doing when she strangled her children - ages 5, 3, and 8 months - and then tried to kill herself.

In his ruling Thursday, Sullivan said it was up to the jury, not the judge, to decide whether to believe expert witnesses for the defense who testified that Clancy suffered from postpartum psychosis and was not responsible for her actions.

The judge declared a mistrial after the jury split 11-1 in favor of acquitting Clancy by reason of insanity.

Clancy's case is ongoing and she remains charged with murder. She remains at a psychiatric hospital awaiting the resolution of her case.

If convicted, she faces life in prison. She could also be acquitted and ordered to be confined to a mental health facility for treatment.

The next hearing in Clancy's case is on Nov. 2, when the two sides will meet with the judge for a post-trial mistrial motion hearing to discuss whether prosecutors want to dismiss or retry the case.

Tyler Durden Fri, 10/02/2026 - 11:25

Trump Says "It's Possible" Iran War Could Cost Him November Midterms

Trump in Thursday remarks to the press said he was "ensuring that Iran will be very quickly ended," while claiming the Iranian theocratic government is "ready to fold up".

As far as a timeline, he stressed once again his view that the US will 'win' but it will be "right after the election." Around 9,000 more troops are headed toward the Middle East from San Diego, as the USS Roosevelt strike group newly deploys.

On the election front, Trump conceded something that his Republican party is not going to want to hear:

President Trump on Thursday said “it’s possible” that the Iran war could cost him the November midterm elections by risking Republican control of the House, Senate or both.

“Well, it’s possible. It should help,” Trump told reporters outside the White House before heading to a campaign rally in the Choctaw Nation in Oklahoma. “Because Iran will not have a nuclear weapon. So when you say, ‘Is it OK for Iran to have a nuclear weapon?’ I would say 100 percent of the people say no, including worldwide. So, when you say it that way, it would help. If you don’t say that, it could hurt.”

via AP

Republicans in Congress know this risk or likelihood too, and yet oddly they have overwhelmingly voted down every War Powers resolution.

Trump had earlier this month told GOP voters to act is if it is he that is on the ballot.

"I’m asking you to pretend that I’m on the ballot," he told the Republican National Committee’s midterm convention in Dallas. "Just one more time, because if we lose, you’re going to lose your border, you’re going to lose your tax cuts. You’re going to lose your safety and security. You’re going to lose your wealth."

He has since reiterated it while addressing large crowds of Republican voters...

Trump: We do great when I'm on the ballot. Pretend I'm running please. If we don't win, they'll end up impeaching me pic.twitter.com/HZK4olngJv

— Headquarters (@HQNewsNow) October 2, 2026

In the meantime the White House keeps doubling and tripling down when it comes to the Iran conflict and Hormuz Strait standoff.

For example, despite warnings of dwindling defensive missile stockpiles, Washington has rushed more Patriots to the Gulf, as the region braces for more possible fighting between the US and Iran.

On Thursday Axios reported based on unnamed US officials that two additional Patriot missile batteries to Saudi Arabia and Qatar to help protect oil and gas facilities.

Getty Images

In the case of Saudi Arabia, it is now being hit also by the Houthis of Yemen, having suffered multiple drone attacks on refineries and the crucial East-West pipeline.

But sending more Patriots at a moment of a global shortage strongly suggests the White House plans to resume hostilities, after talks have essentially collapsed and there does not appear to be a deal shaping up anytime soon.

Axios underscored that the "U.S. wanted to reassure both allies that it would protect their key energy facilities in case President Trump decides to resume major combat operations against Iran."

The best part is we’ll be able to find awful takes like this years from now

— Phil Kennedy (@PhillipAKennedy) February 28, 2026

More Iran War Latest

via Newsquawk...

• US President Trump reiterated that Iran will never have a nuclear weapon and has no navy or army, while he stated that Iran has not been able to get one of its vessels through the Strait of Hormuz for months. Trump also said huge quantities of oil have passed through the Strait of Hormuz and the US is taking out millions of barrels of oil, claiming that in some cases, it is more than before the war.
• US President Trump said the Iran war will be ending soon, one way or the other, and that it looks like Iran was involved in the UK base incident. Trump warned that Iran will be hit very hard if it is behind the copilot who tried to crash a flight to Israel, while he separately commented that based on what he heard, Iran was connected to the attempted attack on the plane.
• The Iranian National Security Commission said that Iranian management of the Strait of Hormuz will be applied. Ships to Zionist or hostile regimes will not be able to pass through the Strait, others will have to get permission. Bill is queued for parliament.
• IRGC said three UAE-linked tankers attacked recently in the Strait of Hormuz were on the PGWA's non-compliance list, and had transited the Strait repeatedly over the past two months.
• Saudi‑led coalition intercepted and destroyed ballistic missiles launched by Yemeni Houthis towards Khamis Mushait.

Tyler Durden Fri, 10/02/2026 - 11:05

France Should Grok How To Solve Its Fiscal Crisis, Please Make No Mistakes

By Benjamin Picton, Senior Market Strategist At Rabobank

European equity indices fell sharply yesterday, pacing gains in sovereign yields for France, Italy and Greece. The spread between 10-year OATs and Bunds blew out to more than 140bps as the French government unveiled plans for €43bn worth of spending cuts and higher taxes in an effort to tackle France’s yawning fiscal deficit. The plan contains cuts to France’s social security system, including partial freezes to pensions indexation, trimming of retiree tax benefits, and a slower projected pace of healthcare spending growth.

Nevertheless, the market reaction suggests that investors are not optimistic about the prospects for reform. Firstly, the projected result is not exactly stellar. If all the measures are enacted the fiscal deficit would only fall from 5.4% to 5%. Secondly, social security retrenchment has proven an intractable challenge that has outlasted several governments and the prospects for successfully steering reform through a fractured national parliament a few months out from a contentious Presidential election where the leading candidates on the populist left and right generally oppose pension reform are not strong.

The sense that the French administrative state lacks the capacity to reform itself is reflected in the fact that the sovereign spread to bunds is now substantially worse than is the case for Italy and Greece. Those two were among the ‘PIIGS’ during the European sovereign debt crisis of the early 2010s and were previous viewed as the worst offenders in terms of fiscal responsibility. No longer.

The French government now says that debt interest costs are expected to rise 15% next year to €91bn, which is almost double what the republic plans to spend on core defense this year (i.e. excluding pensions) even as pressures to commit more funding to military are only increasing. Obviously, rising borrowing costs come at an unhelpful time as European leaders issue ever more urgent warnings about Russian hybrid warfare, and as Russia threatened to use nuclear weapons if NATO were to blockade the Kaliningrad. In such an environment European re-armament and sovereign supply chain capacity is surely a necessity rather than a nice to have.

Regarding the latter, Europe is off to a slow start. Politico carried a story yesterday regarding the EU’s rollout of ‘Element Pro’, which it describes as an internal sovereign backup to Microsoft Teams that could be used in the event of a “disruption”. Anonymous EU officials quoted in the story were less than impressed, describing the system in unflattering terms and suggesting that in any tech conflict with the United States the U.S. would “instantly win the war”.

Sovereign capacity over critical supply chains is a theme that we have been banging on about for many years now. The importance of that capacity is now highlighted almost daily. A case in point is reports yesterday that the Trump administration had told European counterparts to release diesel stockpiles or face the risk of a US export ban. Brent crude oil prices were down by almost 1.2% to $102.31/bbl yesterday as markets continued to price in the effects of rising flows out of the Strait of Hormuz, but diesel prices remain one of several political sore points for the Trump administration ahead of the upcoming midterm elections.

The US now has enormous influence over flows of crude and refined products from the Americas and the Middle East. With little oil of its own, and an outsized appetite for diesel, Europe again finds itself bargaining from a position of relative weakness. Several market analysts have noted that a US diesel export ban could prove to be self-defeating, prompting refineries to cut production runs that would raise prices for even more politically sensitive gasoline, while logistics issues conspire to prevent meaningful falls in retail diesel prices.

Mindful of this, European leaders might choose to call the US’s bluff, but differing views regarding the rationality of the US President could create dissent on that score that again exposes the political frailties inherent in the EU’s status as a collection of nations with varying interests, rising nationalistic fervour, and relatively powerful national governments. By contrast, and despite their own challenges with political polarisation, the US, China and Russia are internally coherent nations with much stronger central government.

Reclaiming lost sovereignty was supposed to be one of the rationales for Britain’s 2016 decision to leave the EU, but new PM Burnham has now made it clear that a fresh in-out referendum on EU membership could be a feature of Labour’s next election manifesto. Meanwhile, former PM Truss – who was famously outlasted by a wilting lettuce – noted with some schadenfreude yesterday that 30y gilt yields had breached 6% for the first time since the late 1990s and asked in a not-so-subtle dig whether the Bank of England would “Bailey” the government out again.

Gilt yields hit 6%.

Will the Bank of England Bailey the Government out again? pic.twitter.com/GJ1Lu2WKPx

— Liz Truss (@trussliz) October 1, 2026

Truss has publicly implied that she was effectively deposed in a liberal deep state coup after her government unveiled a mini budget replete with tax and spending cuts that precipitated a disorderly move higher in sovereign yields and her swift replacement with the more politically orthodox figure of Rishi Sunak. The Bank of England holds responsibility for ensuring the stability of the financial system, but in an era of fiscal dominance the lines of demarcation between independent monetary authorities and elected officials are increasingly in dispute. As Treasury yields and US mortgage rates soared to new highs this week Donald Trump’s efforts to exert more control over the Fed again came to the fore via renewed legal threats to Jerome Powell.

Speaking of renewed threats, the US just deployed a third carrier strike group to the Middle East and has reportedly sent new missile defence systems to gulf allies to assist in protecting vital energy infrastructure. That’s as Trump recently threatened that the US may resume bombing of Iran after the midterm elections (which has been our geopolitical base-case), or if it is found that the Omani co-pilot who attempted to hijack a FlyDubai flight to Tel Aviv had links to Iran.

Just as at the start of the war, three carrier groups in the region would be an unusually large concentration of firepower if the US didn’t intend to use it. With that context, it may be the case that President Trump has already decided to resume bombing, or it may not. There are reports circulating today that claim President Trump spent “hours” seeking the counsel of the GrokAI chatbot regarding the likely response of Venezuelans to a US capture of Nicolas Maduro. The chatbot reportedly advised Trump that the Americans would be welcomed as liberators.

Perhaps France could ask Grok how to solve its fiscal woes? Please make no mistakes.

Tyler Durden Fri, 10/02/2026 - 10:45

RTX's Raytheon Awarded $24.4B Missile Contract as Trump Finally Admits Stockpiles "A Little Bit Lower"

The Pentagon on Thursday announced a massive new defense contract at a moment many Congressional members are concerned over America's dwindling arsenal of both defensive and offensive missiles and weapons systems.

Raytheon, an RTX unit, has been awarded a $24.4 billion contract for the accelerated production of SM-6 missiles, amid the scramble to replace them in the wake of Trump's Operation Epic Fury bombing campaign of Iran.

A Pentagon statement described the missiles as "critical anti-air and anti-surface warfare munition" and previewed that "this five-year agreement, with two additional option years, will drive faster production."

SM-6 military file image

The announcement further described that the deal "provides the defense industry with the long-term predictability needed to expand workforce capacity and secure critical supply chains."

Additionally, "The Navy said the multiyear contract is meant to provide a steady and reliable supply of the Standard Missile-6 interceptors, which can carry out both offensive strikes and missile defense missions."

President Trump has stretching back over weeks and months consistently denied that the Pentagon is suffering a weapons shortage due to the Iran war. Instead, he has blamed any shortfall or stockpile concerns on his predecessor Biden and his Ukraine war policies.

But certainly the Pentagon is acting like there's a problem, given it is quickly handing out these large contracts in order to establish "faster production" and greater "long-term predictability". This after a mid-July report from the Pentagon's inspector general did point to a serious and growing problem.

Trump had slammed the report as "mostly fake news" at the time; however, just this week he finally did acknowledge that some munitions "are a little bit lower" in the wake of the seven-month long Iran conflict. Trump's new remark this week is as follows:

"Some forms of ammunition are a little bit lower than other forms," the president said in an interview with TIME magazine published Thursday, adding: "We're stocking up at levels we've never done before."

Some critics among MAGA have underscored that the munitions crisis reveals an abandonment of 'America First' policy, also given the immense amounts of interceptors expected on Israel and Gulf allies of late.

Ultimately the only winners in all of this are Israel and the major defense contractors, who will continue to see huge returns with the help of the US taxpayer.

Tyler Durden Fri, 10/02/2026 - 10:30

40 Percent Error Rate Found In Afghan Refugee Vetting Samples, Inspector General Finds

Authored by Naveen Athrappully via The Epoch Times,

A Department of Homeland Security (DHS) Office of Inspector General review has found errors in 40 percent of sampled asylum files for Afghan nationals who entered the United States under a Biden-era refugee program.

Afghan families walk to a bus that will take them to a refugee processing center at Dulles International Airport in Dulles, Va., on Aug. 24, 2021. Joshua Roberts/Getty Images

The report analyzed data from Operation Allies Welcome, which was initiated in the aftermath of the U.S. withdrawal from Afghanistan in 2021 and aimed to resettle roughly 97,000 Afghan nationals in the United States.

The DHS Office of Inspector General (OIG) analyzed a sample of 678 applications from 13,682 adjudicated applications filed by Afghan nationals resettled in the United States under the program.

The analysis identified a 40 percent error rate in adjudicating asylum files, including 303 missed aliases, 45 unresolved records, 23 missing security checks, and 115 other documentation issues, the OIG said in a Sept. 23 report.

"Most errors resulted from missed aliases or incomplete documentation, including two cases related to potential inadmissibility on terrorism-related grounds," the report states.

One of the terrorism-related errors involved an asylum officer failing to include an applicant's Terrorism-Related Inadmissibility Grounds worksheet in the case file. The second error involved officials failing to indicate whether they approved or disapproved an asylum officer's analysis of an applicant subject to Terrorism-Related Inadmissibility Grounds.

In a Sept. 29 statement, DHS said that Operation Allies Welcome led to many criminal immigrants being released into the United States, including those accused of sexual battery, kidnapping, drug possession, hit-and-runs, and lewd or lascivious acts with a minor.

For instance, in November 2025, DHS assisted the FBI in arresting an Afghan national who was charged with threatening to kill Americans. He was in the United States as part of Operation Allies Welcome.

In December 2025, a member of the ISIS terrorist group's Afghanistan affiliate who entered the United States under the operation was arrested. And in March this year, an Afghan national allowed into the country under the program who previously was convicted of indecent exposure to a minor was arrested.

In a June 2022 statement, U.S. Citizenship and Immigration Services (USCIS), under the Biden administration, had announced that Afghans who have supported and worked with the United States in Afghanistan and have undergone rigorous vetting could qualify for protection and other immigration benefits.

Then-DHS Secretary Alejandro N. Mayorkas said in the statement that this would "allow eligible individuals who pose no national security or public safety risk to receive asylum, refugee status, or other legal immigration status, demonstrating the United States' continued commitment to our Afghan allies and their family members."

Mullin: 'Dangerously Mismanaged'

DHS Secretary Markwayne Mullin said in the recent statement: "Our asylum system should be as strict as possible. If even one dangerous criminal or terrorist slips through and enters our country, it endangers countless American lives."

The Operation Allies Welcome program was "dangerously mismanaged" and disregarded "the thorough and well-established procedures of [the U.S.] asylum system," Mullin said.

OIG said in its report that it initiated the evaluation after receiving complaints that an agreement made by DHS would result in asylum adjudication issues. DHS made the settlement with certain plaintiffs in September 2023, agreeing to adjudicate 90 percent of asylum applications from the Operation Allies Welcome population within 150 days.

This went against standard procedures, in which applications from non-Operation Allies Welcome groups can take up to 180 days.

According to the OIG, USCIS employees complained that the shortened time frame could negatively affect proper review of applications. OIG included a response by USCIS to a redacted draft copy of the latest report.

USCIS Director Joseph B. Edlow said in a letter to DHS OIG that the draft report failed to consider that instances of missing aliases or improper security checks were taking place amid "broader, established, and robust screening, vetting, and security checks safeguards already in place that minimize the impact of these errors."

Edlow said that the agency's security check requirements include biometric and biographical checks of individuals against multiple law enforcement and watchlist databases. The agency also continues to enhance vetting requirements for people who have applied for asylum, according to the letter.

A December 2025 report by the Center for Immigration Studies said that more than 200,000 Afghan nationals had entered the United States under the previous administration's policies after the U.S. withdrawal from Afghanistan.

"Contrary to popular narratives, most Afghans admitted during and after the evacuation had nothing to do with the U.S. government or any of its contractors," senior researcher Nayla Rush said in the report. "They were not U.S. 'allies,' nor were they 'persecuted' individuals in need of refugee resettlement."

Tyler Durden Fri, 10/02/2026 - 10:20

Oil Dips As Europe Folds - G7 Agrees To 100-Million-Barrel Emergency Release

Update (1000ET): French President Macron has just confirmed what we reported earlier, that the G7 has agreed to release as much as 100 million barrels of emergency oil and diesel stocks after pressure from the Trump administration to quell rising fuel prices.

The release, being coordinated by the International Energy Agency, will take place over the next four months, Emmanuel Macron, France’s president told journalists in a briefing on Friday. He is also the current chair of the G7 nations.

The G7 would like to trigger a drop in fuel prices, he said.

Trump was quick to respond too, with no real gloating yet...

Oil prices fell back towards the low of the day on the news...

Both US and EU diesel prices are also lower...

With little oil of its own, and an outsized appetite for diesel, Europe again found itself bargaining from a position of relative weakness... and bending the knee.

*  *  *

As we detailed earlier, Bloomberg's reported that France proposed that other European countries and International Energy Agency members release 100 million barrels of diesel and crude oil from emergency stockpiles would signal that Brussels is caving to President Trump’s demand. 

Europe's dependence on US fuel supplies gives the Trump administration major bargaining power as the continent approaches winter with below-average energy supplies and exposure to higher costs if a cold snap or further supply disruptions materialize.

The report has not been officially confirmed and is based on sources, but it says European countries are considering releasing 50 million barrels of diesel, with International Energy Agency members making another 50 million barrels of crude available.

One day earlier, Reuters reported that the Trump administration asked Germany and France to release emergency diesel inventories to help create a buffer against the supply squeeze in the industrial fuel or face a potential US diesel export ban.

The art of wheeling and dealing is all about leverage, and it appears the US threat of a diesel export ban might be enough to make Europeans come to their senses and dump emergency fuel and crude supplies onto the market.

Bloomberg also mentioned that French President Emmanuel Macron and President Trump spoke overnight and that G7 leaders are set to convene around 0830 ET.

"It is in Europe's best interest to work with the United States as we pursue multiple pathways to boost the supply of refined products and lower costs for consumers," one source, a US official, told Reuters on Thursday.

Tyler Durden Fri, 10/02/2026 - 10:05

Jobs Huge Miss: Sept Payrolls Plunge To 29K, Below All Estimates As July Revised Negative... But Employment Soars

In our jobs preview post, we told readers to "beware a bond squeeze as august seasonals reverse" and boy were we right: yields are tumbling from 5.22% to 5.16%, a new weekly low, as all those record TSY shorts get bigly squeezed following what was a big miss in the September jobs print which tumbled from a downward revised August (as we said it would be) 133K vs 162K originally to just 29K.

It wasn't just August that was revised down by 29,000, from +162,000 to +133,000: July was also revised down by 31,000, from +21,000 to  -10,000.  This means that the original negative print of -23K, and which was revised up to 31K last month, is now once again negative and that had the Fed known this, it most likely would not have hiked last month. With  these revisions, employment in July and August combined is 60,000 lower than previously reported. 

More notably, the 29K job print was below all estimates, which is amusing since August was originally above all estimates, but has since been revised sharply lower and just in line.

While the headline payrolls print was a big miss, the unemployment rate actually rose to 4.2%, from 4.1%, and above estimates of an unchanged print, as the number of unemployed workers rose to 7.109MM from 7.031MM, up 78K, while the labor force rose by 485K to 170.262MM. Among the major worker groups, the unemployment rate for people who are Black (7.0 percent) jumped in September. The jobless rates for adult men (3.9 percent), adult women (3.6 percent),  teenagers (14.5 percent), and people who are White (3.6 percent), Asian (2.9 percent), or Hispanic  (4.7 percent) showed little change over the month.

As for the specific reason why the unemp rate rose despite the drop in payrolls, that's because the Household Survey showed a 406K surge in the number of employed workers, the second highest since Jan 2025 (only August's 569K was higher)...

... which pushed the total number of employed workers to 163.152MM, the highest since January.

It's also why the participation rate has jumped sharply in the past two months after dropping to a 5 year low in July.

There was some more relief on the inflation front as average hourly earnings rose just 0.1%, below the 0.3% expected, which pulled the annual wage growth to just 3.0%, down from 3.1% and below estimates of an unchanged print.In September, average hourly earnings of private-sector production and  nonsupervisory employees rose by 7 cents, or 0.2 percent, to $32.60. 

The average workweek for all employees on private nonfarm payrolls remained at 34.4 hours in September. In manufacturing, the average workweek was unchanged at 40.6 hours, and overtime held at  3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours. 

Taking a closer look at the numbers in the report, we find the following:

• The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged  at 1.9 million in September. The long-term unemployed accounted for 27.1 percent of all unemployed  people. 
• Both the labor force participation rate, at 61.8 percent, and the employment-population ratio, at  59.2 percent, changed little in September. These measures showed little net change since January.  
• The number of people employed part time for economic reasons changed little at 4.5 million in  September. These individuals would have preferred full-time employment but were working part time  because their hours had been reduced or they were unable to find full-time jobs. 
• In September, the number of people not in the labor force who currently want a job changed little  at 5.8 million. These individuals were not counted as unemployed because they were not actively  looking for work during the 4 weeks preceding the survey or were unavailable to take a job. 
• Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force decreased by 236,000 to 1.5 million in September. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, changed little over the  month at 414,000. 

Next, looking at the actual industries in today's report, we find the following: 

• Health care employment continued its upward trend in September (+17,000), but at a slower pace than the average monthly gain over the prior 12 months (+33,000). In September, employment continued to trend up in ambulatory health care services (+13,000) and in hospitals (+12,000), while nursing and  residential care facilities lost jobs (-9,000).
• Employment in construction changed little in September (+11,000). The industry had added an average of 10,000 jobs per month over the prior 12 months. In September, employment in nonresidential  specialty trade contractors continued to trend up (+12,000).
• Manufacturing employment was little changed in September (+9,000) but is up by 72,000 since a recent low in December 2025. Over the month, employment increased in plastics and rubber products manufacturing (+5,000) and in machinery manufacturing (+5,000).
• In September, financial activities employment was little changed (-7,000). Employment in financial activities is down by 129,000 since a recent peak in May 2025, with most of the job loss in insurance carriers and related activities (-90,000).
• Employment also showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; wholesale trade; retail trade; transportation and warehousing; information; professional and business services; social assistance; leisure and  hospitality; other services; and government.

And visually:

There were no major surprises below the surface, as part-time jobs rose by 205K to 28.746MM while full-time jobs rose by 88K to 134.376MM.

Finally, looking at the breakdown in native vs foreign-born, there were no surprises here too, as the number of US born workers rose by 298K while foreign-born workers surged by 473K, on other words, back to the old normal.

Overall, this was a mixed report, with the Household Survey painting a much stronger picture than Establishment (hence unemployment rate higher). But since the market - and by extension the Fed - are mostly swayed by the Payrolls part of the equation, it is not surprising that the market reaction today is one where bonds are getting massively short squeezed after the payroll print which missed all estimates.

Tyler Durden Fri, 10/02/2026 - 09:55

"Can We All Just Admit This Is Just Absurd?!"

Thousands and thousands of people staring at screens. Not teenagers checking out TikTok, but highly educated, well trained professionals, staring at screens. Millions, even billions, maybe even trillions of dollars, yen, euro, etc., poised to move around based on the data that comes out at 8:30 am.

Then we get another mishmash of data, so different than expectations, with revisions bigger than the number itself, and are supposed to make something of the data?

As Academy Securities' Peter Tchir writes, "can we all just admit this is absurd!?"

Let’s pretend that data is valid and go through the motions under the assumption that this is anything other than a wild guess, using methods and technologies that should have been updated years ago, if not decades ago.

Only 29k jobs vs expectations of 90k. Ugh.

-60k of downward revisions after last month’s 55k. Ugh.

Only 46k in private payrolls, which also got revised down from the initial guestimate of 127k to 89k. Ugh.

Somehow the 3 month moving average is now 51k this month and last. Hooray??

Hourly earnings dropped, good for wage pressure inflation, bad for anyone trying to make ends meet.

The unemployment rate rose 0.1%, but largely due to an increase in the labor participation rate of 0.2%. I kind of like that, assuming it is remotely accurate, which seems like a silly assumption to make, but one that we are all forced to make. The underemployment rate actually ticked down, which again, if real, is good. All of this is based on the Household Survey which said we added 406,000 jobs in September. One is known to be more wildly inaccurate than the other hugely inaccurate number, but 406k sounds pretty darn good, if it was real, which it probably isn’t.

The birth/death model showed job losses of 190k.That is not seasonally adjusted, and I don’t now how much that subtracted (or possibly added) to the NFP headline number, but again (this time in a different direction), it seems “strange” that a “plug” (or calculation) is in the same order of magnitude of the number it is helping to “true up”.

We will get the obligatory rally in bonds (and the numbers are “tepid” enough) that the bond rally should help equities along, but there is a better chance of me breaking par, than that these numbers are truly useful in judging anything. We will use the numbers because “we have nothing better” but that increasing seems like a giant cop-out!

Seriously, if you were in a class and were told billions of dollars would be made or lost on a number that even the people looking at the number don’t believe, you’d shake your head in incredibility, that this really was going on. Not just for a month or two, but for years and years!

Can’t we use electronic paycheck data to get a pretty accurate number for all those who are getting paychecks? Wouldn’t that cover a big part of the economy. Wouldn’t knowing, with a high degree of exactness, how that part of the workforce (those who receive at least one check in a month) is evolving over time be useful? We could attempt to get the rest, but something that covered a vast swath of the economy, and was reasonably likely to be accurate and real-time, would seem a good goal.

Yes, I continue to hope to somehow land on a data task force committee, because this just seems more and more unbelievable all the time.

It is very good that Warsh in particular keeps telling us not to focus on any one month’s data, nor any one data series. That I’m in full agreement on, which is why I expect this initial reaction to fade.

You’d like to think ADP can capture some of what I’d like to see, and maybe last month’s 36k and this month’s 90k are more accurate? But who knows. But, also a reason not to fully trust today’s data.

Two pieces of data that I think are more difficult to “fake” or (more accurately, get absurdly wrong), are the JOLTS Quit rate which remains low at 1.9%.  People could be so happy with their current jobs they aren’t even thinking about another job (I know I am), but generically, I think it represents a “take this job and shove it” vibe, which increases when the perception is that equal or even better jobs are easy to find. The JOLTS Hires rate came in at 3.3% this month.  It has been stuck right around this level, which is a little lower than the 3.8% or so we typically saw in 2016 through 2019. Consistent with a no hire, no fire employment situation.

Bottom Line

We can examine data that the Fed may use to hike, pause or even cut, but the big drivers remain the same:

• The Iran War.

• The Price of Diesel.

• Compute Spend. Including the threat of Cheap Chinese Compute.

• Whatever is going on with European bond yields. The German 2 year bond yield has declined from 3.31% on Monday to 2.99% as of Friday morning. The French 2 year has moved from 3.62% to 3.77% in that same timespan. From 31 bps to 78 bps in a week is pretty ugly.

• Some real weakness in credit spreads. I cannot remember the last time credit spreads seemed particularly interesting on the macro front, but they are again, with CDX moving from 50 to 60 in 2 weeks. Certainly not alarming but can’t help but look.

With the bond market shaky, and the excitement of this data like to fade as the morning wears on, we will all be back to placing bets on the above issues very soon.

Tyler Durden Fri, 10/02/2026 - 09:45

Tesla Delivers 486,432 Vehicles In Q3, Handily Beating Wall Street Forecasts

Tesla handily beat expectations on deliveries for Q3 this morning, handing the electric vehicle maker a sizable beat against Wall Street forecasts.

The company delivered 486,532 vehicles during the quarter, well above the roughly 461,000 units analysts surveyed by FactSet had been expecting. Tesla’s own compilation of sell-side estimates had put the consensus at 461,974 vehicles, meaning actual deliveries came in roughly 24,500 vehicles, or about 5.3%, above that figure.

Of the 486,532 vehicles delivered, Model 3/Y accounted for 478,237 vehicles.

The better than anticipated result helped Tesla shares rise about 2% Friday morning.

Tesla’s quarterly delivery report remains one of the clearest measures of the health of its core business, even as Elon Musk has increasingly argued that the company’s long-term value will be determined by businesses that have little to do with selling conventional electric vehicles.

Musk has spent much of the past year directing investor attention toward autonomous driving, artificial intelligence and Tesla's Optimus humanoid robot. He has repeatedly described Tesla as an AI and robotics company rather than simply an automaker, while arguing that autonomous vehicles and Optimus could eventually become much larger businesses than vehicle sales.

Musk has also continued to emphasize Tesla’s planned Cybercab network and the expansion of its autonomous driving technology as central pieces of the company’s future.

For the time being, however, automobiles remain Tesla’s primary source of revenue and cash flow. That makes quarterly deliveries an important indicator of consumer demand, pricing conditions and utilization at the company’s factories in the United States, China and Germany. 

The result also arrives as Musk continues to divide his attention among several companies. His other major venture, SpaceX, recently recorded an important success with Starship's first orbital flight, moving the company closer to commercialization. 

Tyler Durden Fri, 10/02/2026 - 09:35