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Porsche Plans 20% Price Hike On Top-End 911s In Profit Push

Porsche Plans 20% Price Hike On Top-End 911s In Profit Push

During Capital Markets Day in Weissach, new Porsche CEO Michael Leiters offered Wall Street desks a bleak outlook, warning that the turnaround will take time and that operating conditions are unlikely to improve significantly over the next few years.

Leiters signaled to investors a shift toward value over volume. He said the focus is now on prioritizing higher revenue per vehicle and reducing dependence on China.

One such strategy, as Bloomberg reports, is for Porsche to raise average prices for its top-of-the-line sports cars by 20% and introduce a new model above the 911 as it seeks to recover after its disastrous entry into the electric vehicle space.

Sharp depreciation in used Porsche Taycans highlights the challenge of maintaining resale values for high-end EVs. 

A recent Goldman report points to a similar divergence at Ferrari, where collectors favor V8 and V12 combustion-engine models while hybrids face pressure in the secondary market (read report).

Average prices for Porsche's top-end models are expected to exceed €330,000 ($370,134) by the end of the decade, up from about €270,000 this year.

"The top priority is to further strengthen our unique sports-car brand across the entire lineup, with new, desirable models in particularly high-margin segments," Leiters told investors in Stuttgart earlier today.

Leiters outlined new regional plans, emphasizing drivetrain flexibility in Europe and stronger competitiveness in North America through combustion-engine and hybrid models.

Leiters also outlined plans for a new mid-engine vehicle model above the 911 that would return the struggling German automaker to the supercar segment for the first time since the limited-production 918 Spyder debuted in 2013.

Porsche shares in Germany are flat on Wednesday morning. Shares remain down 64% since the peak of 120 euros in early 2023.

The Volkswagen subsidiary is targeting an operating margin of 10% to 15% over the medium term and 15% over the longer term, goals that hinge on a successful turnaround. Profitability tumbled to just 1.1% last year as restructuring costs, tariffs and soft demand weighed on earnings, before recovering to 7.8% in the first half of this year.

Volkswagen is also under severe pressure, shrinking its industrial footprint with a massive planned cut of 100,000 jobs, mostly in Germany, while Mercedes-Benz and BMW are also seeking turnaround plans.

The planned price hikes could support secondary-market values for high-end 911s by raising replacement costs and making existing models more attractive to buyers. 

Tyler Durden Wed, 10/07/2026 - 19:40

Arizona Democratic House Candidate Raped While Repairing Campaign Signs: Report

Arizona Democratic House Candidate Raped While Repairing Campaign Signs: Report

Democratic congressional candidate Bernadette Greene-Placentia says she was sexually assaulted in mid-August while repairing a campaign sign late at night in the Sun City area, according to a Phoenix New Times report published October 7. The Maricopa County Sheriff's Office has confirmed it received a report on August 31 and that the investigation remains open.

Democratic congressional candidate Bernadette Greene-Placentia participates in the 2026 AZ Clean Elections debate for the 8th Congressional District at Sneaky Big Studios in Scottsdale on Aug. 27, 2026.
Diannie Chavez

Greene-Placentia is the Democratic nominee for Arizona's 8th Congressional District and is challenging Republican Rep. Abe Hamadeh in the November 3 general election. The district covers parts of the northwest Valley, including areas of Glendale, Peoria, Surprise, Sun City, and Anthem. She is a longtime long-haul trucker and small-business owner who won the Democratic primary in July.

According to the New Times account, which draws on her interview, a police report, and conversations with family members, campaign staff, and others close to her, the incident occurred just after 2 a.m. on a Friday near 99th Avenue and Bell Road. She told the paper she had been making late-night stops to fix damaged signs throughout the summer. She said her recollection of the event is fragmentary. She informed campaign staff the following Sunday and her husband the next day, then contacted the sheriff's office more than two weeks later. Associates described her as withdrawn in the days afterward. A sheriff's office spokesman has declined further comment while the case is active. No arrests have been announced.

Greene-Placentia has said she initially hesitated to report the assault because she was embarrassed, but later chose to speak publicly. The Phoenix New Times story is available here.

Arizona Sen. Ruben Gallego posted the following in response: 

Additional coverage of the Phoenix New Times report has appeared from outlets including Newsweek and The Independent, which also cited confirmation from the sheriff's office that a report was filed August 31 and remains under investigation.

* * *

    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 - 19:15

China Says It Can Spot An F-35 With A Laser... From 38 Miles, At Night, In A Simulation

China Says It Can Spot An F-35 With A Laser... From 38 Miles, At Night, In A Simulation

Every few months, a Chinese research institute announces it has found a way to see the unseeable F-35, and every few months the fine print turns out to be doing most of the work. This week's entry: a laser.

According to the South China Morning Post, researchers at the China Airborne Missile Academy, the PLA Air Force's main air-to-air missile house, have modeled a missile-borne single-photon lidar that could detect and track an F-35 stealth fighter at up to 61.5km (38 miles). The paper, led by Li Zhiyuan, was published in the peer-reviewed Chinese journal Aero Weaponry on September 18.

Before the "F-35 is obsolete" crowd starts celebrating, three qualifiers: that range is (1) at night, (2) "under ideal conditions" and (3) a simulation. During the day it drops to 27.7km. And as SCMP itself concedes, "the study does not establish that the system has been built, flight-tested or integrated into an operational missile."

(Some readers may notice the SCMP's own URL advertises "615km"; we regret to inform them the decimal point exists, and it matters.)

Radar Can't See It? Try Counting Photons

The pitch is simple enough. Stealth jets are shaped and coated to defeat radar, and their engines are managed to reduce infrared signatures. A laser, the Chinese team argues, is a blind spot: they chose the 1,064-nanometre wavelength because stealth aircraft have "fewer dedicated countermeasures against active laser detection than against conventional radar and infrared sensing."

Unlike radar, single-photon lidar fires laser pulses and listens for the handful of photons bouncing back. Per the SCMP summary, the model of the F-35C:

  • used low-power 1.0 millijoule pulses and a compact 100mm lens, sized for a missile's nose;
  • corrected for detector "dead time" and for noise from sky background, atmospheric backscatter and dark counts;
  • needed a signal-to-noise ratio of 8.8 decibels, i.e. at least 9.4 returning photons, to lock on;
  • at 27.7km, resolved the target to within 20cm in depth and 50cm transversely.

In other words, a Chinese missile would, in theory, be able to tell it's chasing an F-35 rather than a seagull by catching about ten photons. Impressive physics. Whether it survives contact with clouds, rain, a maneuvering target and a seeker strapped to a missile moving at several times the speed of sound is another matter, and one the paper doesn't claim to address.

"I Don't Understand It, Technically"

The skeptics didn't need much prompting. A military analyst who asked SCMP not to be named pointed to the obvious problem with any laser: it's a pencil, not a floodlight.

"The laser beam is so narrow, it probably couldn't serve as an early-warning radar; in the early stages, it's just a rangefinder." (emphasis ours)

Translation: you have to already know roughly where the F-35 is before you can find it with this, which is precisely the problem stealth is designed to create. Another expert familiar with military equipment was even more succinct: "I don't understand it, technically." We appreciate the candor, rarely seen in defense punditry.

Then there's the range math, which SCMP helpfully spells out. The F-35's short-range AIM-9X Sidewinder reaches about 16-32km, so a 61.5km lidar would outrange it. But the jet's long-range air-to-air missiles "can strike targets past 160km", which is more than twice the lidar's best-case night range and nearly six times its daytime reach. Put differently, by the time the laser sees the F-35, the F-35 may have already seen, and shot, the launch platform.  

The chart also puts this week's headline in context: it's not even China's most ambitious F-35 detection claim. In early 2025 researchers at the Changchun Institute of Optics, Fine Mechanics and Physics (CIOMP) simulated a stratospheric airship infrared sensor that could spot an F-35 from 1,800km from behind or the side (about 350km head-on). The common thread: the bigger the number, the more theoretical the system.

The Inconvenient Data Point: Iran Already Hit One

None of this means the F-35 is invulnerable, and the most damaging real-world evidence didn't come from a Chinese lab. On March 19, an F-35A on a combat mission over Iran was forced into an emergency landing after taking Iranian fire, as we flagged in real time:

Days later we reported that the pilot suffered shrapnel wounds, with Air & Space Forces Magazine concluding the jet was "most likely damaged by a surface-to-air missile." The IRGC's own footage was shot through an infrared (FLIR) system, and Chinese analysts have spent the months since arguing that passive infrared, not exotic new radars, is the stealth jet's soft underbelly. The PLA even ran a live-fire drill in August pairing heat-seeking MANPADS with HQ-16 missiles against stealth target drones.

Which is the point: Iran didn't need a photon-counting laser. It needed a heat-seeker, the right geometry and some luck.

The flip side is equally instructive. When US forces went into Caracas in January, the Chinese-built "anti-stealth" radars Venezuela had bought to deter exactly that kind of raid failed to mount an effective response (Jan 8), with no US aircraft lost. Marketing brochures, meet combat.

Why Bother With Lasers When The Parts Come To You?

The lidar paper lands as Beijing has a more direct route to F-35 secrets. Last month, F-35 components shipped from Australia to the US were diverted to Hong Kong, where Chinese authorities have taken possession of them:

Senate Intelligence chair Tom Cotton has since demanded a supply-chain security review (Oct 1), warning that "we can't afford for U.S. military equipment to fall into the hands of a foreign adversary because of vulnerabilities in commercial transportation." It's hard to think of a cheaper counter-stealth program than FedEx with a detour.

Meanwhile, China's own sixth-gen programs keep moving. Shenyang's designers recently laid out a "leapfrog" roadmap (Sep 16) for the J-50, and the J-36 and J-50 prototypes are taking shape (Sep 18). SCMP notes Shenyang has mentioned laser weapons in its design drawings for both, and the 303 Research Institute recently showed an airborne laser weapon pod in Beijing. Lasers are clearly where the PLA wants to go, for seeing and eventually shooting.

The F-35 Has Bigger Problems Than Lasers

For investors, the lidar paper changes nothing in Lockheed Martin's near term; the bigger swing factor is Washington. As Capital Alpha's Byron Callan noted in his "Defense Look Ahead: Air Force Factors" note (available to pro subs), a key question is "what's Air Force thinking on the F-35A if Congress does not pass the $350 billion in mandatory funding, which includes 38 F-35As?" Export demand, on the other hand, is hardly suffering: the US just approved a possible F-35 sale to Saudi Arabia of up to $24.3 billion, and Israel promptly asked for "compensation".

And then there's the bill, which no Chinese laser can match for lethality:

Bottom Line

Li and his team say the next step is "optimising photon-related parameters" and developing more accurate ways to find stealth targets with missile-borne lidar. Fair enough: today's simulation is tomorrow's seeker head, and nobody should dismiss China's pace in sensors.

But on the evidence so far, we side with the skeptics. A narrow-beam laser that works best at night, needs to be pointed in roughly the right direction and tops out well inside the F-35's own missile envelope is a terminal-guidance aid at best, not a stealth killer. The real threats to the F-35 are the boring ones: passive infrared (as Iran showed in March), leaky supply chains (as Hong Kong showed last month) and a sustainment bill heading for the trillions. We warned back in 2021 that the jet was at risk of falling behind Chinese and Russian defenses (Sep 16, 2021); that risk is real, but it's arriving through heat signatures and cargo manifests, not photon counts. Then again, if the lidar ever does work, at least it'll be cheaper than the jet it's chasing.

Much more in the full Capital Alpha "Defense Look Ahead: Air Force Factors" note, available to pro subs.

Tyler Durden Wed, 10/07/2026 - 18:58

More Ukrainian-Style One-Way Attack Drones Seized In Mexico

More Ukrainian-Style One-Way Attack Drones Seized In Mexico

The emergence of fiber-optic one-way attack drones among Mexican cartels signals a troubling security threat just south of the US border.

Images published by local outlet Luz Noticias show that the Mexican Army seized Category 1 suicide drones with fiber-optic cable reels and improvised explosives. This is sparking ongoing concerns that low-cost attack drones associated with the Ukraine-Russia war and the US-Iran conflict are spreading to narco-terrorists in the Western Hemisphere.

Mexican troops found 15 drones and more than 40 improvised explosive devices in the municipality of El Rosario during security patrols on Monday. The municipality is situated in southern Sinaloa.

Here's what the outlet said:

During the inspection , Mexican Army personnel located and seized drones , drone controllers , fiber optic cables, batteries, improvised explosive devices , chargers, cartridges, long guns , tactical vests, and ballistic plates.

The three long guns seized are AK-47 rifles , better known as Goat Horns , which were allegedly used for clashes between organized crime factions.

The latest development builds on our mid-July note that Ukrainian-style drones were found in a raid deep inside north-central Mexico.

Reuters cited US Army Brigadier General Brian Filler, deputy commander for operations at Joint Task Force Southern Border, who told reporters Monday that the military had detected 378 drone incursions in the last 30 days and that the trend was increasing.

"We are seeing largely commercial off-the-shelf available drones," Filler said, adding that most carry surveillance cameras and are often observed alongside cross-border movements.

The US urgently needs low-cost counter-UAS assets to protect military bases, government buildings, stadiums, critical infrastructure, and data centers. The list is really endless.

Tyler Durden Wed, 10/07/2026 - 16:40

NY Times Suggests Babies Are Not Conscious

NY Times Suggests Babies Are Not Conscious

Authored by Steve Watson via Modernity News,

The New York Times has decided the open question in science this week is whether a baby is conscious. Not a cluster of cells. Not a theoretical model. An actual newborn baby.

Carl Zimmer's 5 October piece, "Are Babies Conscious?" (yes that's a real headline) walks readers through a lab test and then informs them that a "squirming, gurgling infant" does not seem conscious, "at least not in the way adults are."

Zimmer's setup is the oddball-sound test. A subject hears three low tones and a high one, over and over, then a run of four low tones. Adult brains throw a brief, distinctive blip at the break. People in a coma do not. People who are asleep do not. The Times then puts a newborn in the same frame and asks whether the blip will be there.

The paper calls it an active scientific debate. Dr Topun Austin, a neonatologist at the University of Cambridge, is quoted defining the thing under study: "Consciousness is a process of being receptive to the outside world and mixing that with our own internal world, to create the feeling of who we are and where we are."

A caption under the piece states that there was a time when our brains were too rudimentary to support consciousness. Zimmer's own promo line said he had found scientists "on a mission to find out when consciousness begins in babies."

The reaction online was immediate, and it was not about neuroscience. It was about where the line moves next.

All this is going on while we're debating whether 'machines can be conscious', a disturbing irony.

Of course, there are countless studies that indicate infants, even unborn infants have consciousness as we understand it.

In January, neonatologist Carlo Bellieni of the University of Siena published "A Rudimentary Consciousness Appears in the Late Fetal Period" in EC Gynaecology, reviewing 31 clinical trials from the last decade on fetal anatomy, perception and memory. His conclusion: the early appearance of memory is a sign of rudimental consciousness, and it does not depend on whether the fetus is inside or outside the womb, only on the grade of brain development.

Bellieni's account of the hardware is specific. "Intrauterine life includes structures which, at least partially, replace the developing cortex, that the fetus begins to form around 20 weeks of gestation. These structures are the subplate, useful for most sensations, and the thalamus for pain. ... We can realistically say that the first sensations are perceived by mid-pregnancy."

Fetuses in the trials preferred carrot-flavoured amniotic fluid to kale, responded more to face-like patterns, and touched the uterine wall longer when the mother touched from outside. Magnetoencephalography work found fetuses at 35 weeks and older detecting breaks in tone patterns. The old claim of continuous fetal sedation does not survive the blood chemistry or the sleep-wake cycling.

That sits on earlier research. In 2023, Tim Bayne, Joel Frohlich, Lorina Naci and colleagues published "Consciousness in the cradle" in Trends in Cognitive Sciences. Bayne put the split plainly: researchers disagree on whether consciousness arises early, at birth or shortly after, or late, by one year or much later. "Nearly everyone who has held a newborn infant has wondered what, if anything, it is like to be a baby."

The review's own reading of network connectivity, attention, multimodal integration and cortical responses to global oddballs was that consciousness is likely in place in early infancy and may begin before birth. Naci, who leads Trinity College Dublin's Consciousness and Cognition Group, said newborns can integrate sensory and developing cognitive responses "into coherent conscious experiences to understand the actions of others and plan their own responses."

A 2025 Science report on the Infant Consciousness Conference at NYU recorded the same shift. Bioethicist Claudia Passos-Ferreira, who co-organised it, said fetal consciousness would have been a less central topic at a meeting like that a few years earlier. Preliminary survey results from the room: 47 percent placed the first development of consciousness in the later prenatal window, from about 24 weeks to birth.

A 2026 survey in Neuroscience of Consciousness, of attendees at two leading conferences, found a majority favouring the view that newborns are conscious, and a plurality favouring emergence after 24 weeks of gestation.

In June, New Scientist reported that the fetal connectome already shares 61 percent of the functional organisation of an adult brain. Bayne's line there: "There certainly could be snippets of experience before birth, and the capacity for consciousness is probably there."

None of this is a claim that a six-week embryo writes poetry. It is a claim that the "are they even aware?" framing, applied to born infants and late-term fetuses, is behind the data the same research community has been publishing.

The same day the Times asked whether babies are conscious, LifeNews republished a shocking case that makes the question obscene. A boy at 21 to 22 weeks, about half a pound and the size of a hand, survived an abortion at Christ Hospital in Illinois and lived for 45 minutes. The baby was taken to a soiled utility room because his parents wanted nothing to do with him. There was no care. No intervention.

Nurse Jill Stanek later told a U.S. Senate committee she could not leave him to die alone. "I could not bear the thought of this suffering child dying alone, so I rocked him for the 45 minutes that he lived." He was old enough to gasp for air. He was not old enough, under the logic now being laundered by the New York Times, to count as a human being.

State health figures cited around the same reporting put at least 40 babies born alive after botched abortions in Minnesota, Arizona and Florida between 2016 and 2018, and CDC data at least 143 between 2003 and 2014.

In August, Massachusetts legalised abortion up to birth, and the applause came from the same political class that treats viability as a clerical error.

In March, the UK House of Lords rammed Clause 208 of the Crime and Policing Bill through and decriminalised self-induced abortion at any stage. A YouGov survey found 1 percent support for abortion up to birth. A Whitestone Insight poll found 62 percent saying abortion should remain illegal after 24 weeks, and 53 percent saying it should not be an option if the baby could survive outside the womb. GB News put the gap in one line: "Just 1% of the public agree with this... and yet it has now made it into law."

A country that will arrest someone for silent prayer outside a clinic has arranged the law so that healthy, fully grown babies can be killed without a criminal consequence for the woman.

In March of 2025 the Trump administration moved to cut federal money to Planned Parenthood, which took an average of $592 million a year from taxpayers between 2019 and 2021, more than 40 percent of revenue, while performing 1.11 million abortions in that window.

Anyone who has held their own newborn, or any newborn for that matter, and witnessed the child's curious glare, the tight grip of their hand, and felt the intense emotional connection knows that babies are conscious. The New York Times deciding to ask whether they are or not does not make it a real debate.

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 - 16:20

Forget The Plague, CDC Reports Recent Surge In Deadly Brain Fungus Cases

Forget The Plague, CDC Reports Recent Surge In Deadly Brain Fungus Cases

Authored by Jack Phillips via The Epoch Times,

The U.S. Centers for Disease Control and Prevention has said in a recent report that healthcare officials and providers should be aware of a rare but deadly fungal infection that can affect the brain and has seen a surge in recent years.

Joel and 'neurodivergent Ellie' from The Last of Us, where a not-so rare and very deadly fungal infection wipes out most of the planet...

Published on Oct. 2, the agency's Morbidity and Mortality Weekly Report called for greater surveillance of Cladophialophora bantiana, which U.S. officials have said is known to cause brain abscesses.

According to the report, the infection is linked to a 60 to 70 percent fatality rate. However, CDC researchers said in the report that national surveillance efforts currently don't exist, and that the fungus's "environmental reservoir" as well as the "route of infection" is not completely known.

Between January 2009 and July 2026, there have been 48 confirmed cases and one possible case of Cladophialophora bantiana found in samples obtained primarily from central nervous system tissue, the CDC said.

But from 2023 to 2025, "detections of the fungus increased approximately fourfold," according to the CDC report.

Researchers said that it's not clear why there has been an increase in recent years but stressed that more research into its risk factors "and potentially evolving virulence are warranted."

In patients with a brain abscess, healthcare providers should now consider whether it's due to a fungus, the report said, adding that infected people will require prompt antifungal therapy and possible surgery.

"Surgical excision might improve patient outcomes," it said. Meanwhile, "patients with infection require prompt antifungal therapy, and surgical excision might improve patient outcomes," it added.

Led by Joshua Lieberman of the University of Washington School of Medicine in Seattle, the researchers added that the presumed route of infection is inhalation of the fungus or direct inoculation following a skin injury.

The fungus "is a rare but important cause of brain abscess in both healthy and immunosuppressed people," Lieberman told MedPage Today in an interview published on Oct. 5, adding that the reason it goes to the brain is "a little bit of a mystery."

What is worrying about the infection, he added, is that "people who have apparently healthy immune systems get the infection and are also at high risk of death."

"It's alarming that it occurs outside of those typical high-risk populations who have pretty profound immunosuppression," Lieberman stated.

The median age of those who contracted the infection was 68 years, according to the CDC report.

Cases have been found in 21 states across the United States, as well as the District of Columbia, the CDC report said. California had the most, with six cases, while Florida and Texas each reported five, and Pennsylvania confirmed four.

Aside from Cladophialophora bantiana, the CDC has also issued reports about a drug-resistant type of fungus known as Candida auris, which is a yeast that is known to spread in healthcare settings.

The Last Of Us Joel and Ellie action figures (not dolls, shut up) Tyler Durden Wed, 10/07/2026 - 15:10

Trump Wants To Build A New Camp David In The Most Trump Place Possible

Trump Wants To Build A New Camp David In The Most Trump Place Possible

President Donald Trump wants to turn part of his own Florida golf course into a new presidential retreat modeled after Camp David, an unusual proposal that would further blur the line between the presidency and Trump's sprawling private business empire.

The plan calls for a portion of Trump International Golf Club in West Palm Beach to become an official presidential retreat where future commanders-in-chief could vacation, conduct diplomacy and host foreign leaders, the Washington Post reports.

Under the proposal, the federal government would receive land for the presidential compound, while the remainder of the property would continue operating as a private Trump golf club.

Trump would personally cover the cost of constructing the presidential residence and related facilities, according to Harvey Oyer, an attorney representing the club. The facility would be developed in coordination with the General Services Administration and Secret Service.

"This is a gift that the president would like to share with his successors, the people of America, and his fellow Palm Beach County residents," Oyer wrote in a letter to county officials obtained by The Post.

Future presidents would reportedly receive complimentary memberships to Trump's club and could use the new compound to host foreign leaders and international summits, according to the plan.

An unnamed White House official defended the location to The Post, pointing to its proximity to the airport, lack of nearby high-rise buildings and homes, security advantages and access to law enforcement.

"The property is minutes away from the Donald J. Trump International Airport, does not have buildings looming, does not have houses along the course, has great security features, is close to law enforcement, and happens to be a highly-rated golf course. These are features that are necessary for any presidential retreat," the official said.

Oyer suggested the project could eventually become an internationally recognized symbol of the American presidency.

"Just as Camp David, Windsor Castle, or the Élysée Palace are known worldwide, so too will the Presidential Golf Course in Palm Beach County," he reportedly wrote.

However, the proposal has some hurdles.

Palm Beach County owns the land underneath the golf course, meaning local officials would have to play a role in making Trump's vision a reality.

County Administrator Joseph Abruzzo told The Post that officials are taking the proposal seriously and communicating with the federal government as they examine a potential parcel.

*** OUR WAREHOUSE FOUND A BOX OF 50 ALMOST EXPIRED PEAK FOCUS ***

Tyler Durden Wed, 10/07/2026 - 14:55

Iraq Formally Requests Syria Act As 'Hormuz Bypass' Route For Its Crude

Iraq Formally Requests Syria Act As 'Hormuz Bypass' Route For Its Crude

Syria's geography has long given the country huge economic opportunities as a major energy transfer hub connecting Middle East states to the Mediterranean.

But as the last decade plus of proxy war which resulted in the overthrow of Bashar al-Assad demonstrated, Syria has also long been target of foreign machinations bent on seeing a puppet state installed in Damascus. The US-Gulf allies broadly waged war against the so-called 'Shia crescent' represented in the old Baghdad-Damascus-Hezbollah axis.

Henry Kissinger famously stated of its opportunity-rich geography, "you can't make war in the Middle East without Egypt and you can't make peace without Syria." The historiographical term Pax Syriana also captures this concept: as goes Syria, so goes the whole region.

Prior file image: Long convoys of Iraqi diesel-laden tanker trucks line up along the Tartus-Baniyas highway, via AFP.

Of course, the external powers which have long sought to dominate the region both politically and on the energy front know this full well, which makes it all the more shameful and ironic that mainstream media and government officials had long derided as 'conspiracy theorists' anyone who connected a 'pipeline wars' theme with Washington's covert war on Syria.

Widespread derision was the reaction of MSM punditry when back in 2016 Robert F. Kennedy Jr. penned the following excellent lengthy investigation:

Why the Arabs Don’t Want Us in Syria They don’t hate ‘our freedoms.’ They hate that we’ve betrayed our ideals in their own countries—for oil

Fast-forward to 2026, amid Trump's Iran war and the Strait of Hormuz crisis, and another conspiracy theory becomes conspiracy fact (as we've been documenting of the great crude transit 'rewiring' efforts to erode Iran's leverage over the Hormuz passage).

On Wednesday, cue a new Bloomberg headline: Syria Set to Emerge as Hormuz-Bypass Option for Iraq's Crude Oil.

The deserts of Western Iraq and Eastern Syria are set to look like a scene out of Max Max, apparently. "Syria is set to provide a route for Iraqi crude exports to avoid the hazardous Strait of Hormuz, with a stream of trucks being lined up to haul oil overland to a port on the Mediterranean Sea," Bloomberg writes.

"The Iraqi government asked Syria to help with the export of crude in addition to existing flows of fuel oil, Yousef Qiblawy, chief executive officer of the state-owned Syrian Petroleum Co., said in an interview with Bloomberg News," the report continues.

To some degree, this overland route was already being 'tested' during the latter years of the Syrian proxy war, when US forces occupied Syria's oil and gas fields of Deir Ezzor and Al-Hasaka regions.

Reviving land corridors from Iraq to the Mediterranean:

They had run tanker trucks in the other direction - from Syria into Iraq, siphoning off Syrian oil and its sovereign resources, after President Trump during his first term hailed that the Pentagon would 'secure the oil'.

Read our: Mystery Explosions: Syria's Recovering Gas Network Keeps Getting Sabotaged

As for actual pipeline routes from Iraq to the Mediterranean via Syria being revived, major hurdles remain and its not just the gargantuan cost of reviving the derelict hardware - but there's an obvious security problem in a country that's seen mysterious armed groups constantly bomb Syrian energy infrastructure - both during the Assad years and now under Jolani.

Tyler Durden Wed, 10/07/2026 - 14:35

SpaceX Credit Risk Hits New High As AI Debt Binge Fears Spook Bondholders

SpaceX Credit Risk Hits New High As AI Debt Binge Fears Spook Bondholders

SpaceX's proposed $40 billion chip-collateralized financing for Nvidia AI chips, reported overnight by the Financial Times, has restarted concerns over the pace of its debt-funded expansion, which as we discussed last night, , is starting to flash a dangerous shade of red: despite raising a record $86 billion in its June IPO, Elon Musk's rocket and AI company's growing financing needs are weighing on sentiment, with its 2056 bonds sliding and five-year credit default swaps surging.

After selling $25 billion in bonds shortly after its public listing, SpaceX is now seeking roughly $10 billion in bank loans and $30 billion in investment-grade debt.

We laid out what this means for Musk's company in a note titled "From Record IPO To Record Chip-Collateralized Loan In 16 Weeks: SpaceX Taps Apollo For $40 Billion In SPV Debt." If completed, that would bring issued and proposed borrowing since June to $65 billion.

The market's verdict was immediate: on Wednesday, SpaceX's 2056 bonds fell to a new low of around 84.70 cents on the dollar as of 11:25 a.m. in New York, compared with 98.83 cents on the dollar when the securities were issued in June as part of a $25 billion inaugural senior unsecured notes offering.

Meanwhile, as expected, the proposed borrowing binge sent the company's CDS up as much as 16.2 basis points to about 197.3 basis points Wednesday, the highest on record, and more appropriate for a junk rated company. 

Tony Trzcinka, a portfolio manager at Impax Asset Management, was quoted by the outlet as saying the concerns are "mainly about how much debt SpaceX is adding and how fast." 

"As a result, the existing bonds have to fall in price now so that their yields stay in line with what the new bonds will likely pay," Trzcinka said. 

Sal Naro, chief investment officer at Coherence Credit Strategies, warned the outlet that "this is an unprecedented debt supply with no real ending in sight," adding, "The world has never seen an infrastructure build like this. This is larger than the railroads because this is global, all at once."

Meanwhile, SPCX stock continues to rise as if nothing bad has happened, soaring 59% since early August. 

That said, SpaceX is just one small part of the bigger picture: recall that Morgan Stanley estimated AI infrastructure will need $1.5 trillion in external financing by 2028. SpaceX's $40 billion is just the latest installment (read our note here). 

Tyler Durden Wed, 10/07/2026 - 14:25

Hawkish FOMC Minutes Show All 19 Fed Officials Supported Rate Hike, "Most" Assess Another Hike "By Year End Is Appropriate"

Hawkish FOMC Minutes Show All 19 Fed Officials Supported Rate Hike, "Most" Assess Another Hike "By Year End Is Appropriate"

The September FOMC minutes struck a distinctly hawkish tone, as all 19 Fed officials backed a rate hike in September, with many supporting the move to protect against the risk of intensifying inflation pressures. A separate group of officials said higher rates were necessary based on their outlook for the economy, signaling greater concern for elevated inflation, according to minutes of the Sept. 16 FOMC meeting released Wednesday. The Committee unanimously raised the fed funds rate 25bp to 3.75%-4.00% and signaled that further tightening is likely by year-end.

“Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end,” the minutes said, and also said that “Several participants commented that the underlying momentum in the economy appeared to have increased."

Policymakers remain concerned that inflation is proving sticky. August headline PCE inflation was estimated at 3.8% and core PCE at 3.4%, with higher energy costs, geopolitical tensions, and AI-related investment contributing to price pressures. Participants generally viewed inflation risks as skewed to the upside.

The economy continues to show resilience. GDP growth remained solid, consumer spending held up, and business investment was supported by the ongoing AI buildout. Labor market conditions were viewed as close to full employment, with unemployment at 4.1%.

Several participants noted that AI is boosting both investment and productivity prospects but could also contribute to inflation through stronger demand, rising input costs, and increased financing needs. Market participants likewise cited AI-related borrowing as a factor pushing Treasury yields higher.

Overall, the Committee judged that stronger growth, elevated energy prices, and persistent inflation warranted a more restrictive policy stance, with most members expecting another rate increase before year-end.

Here are the key highlights from the Fed minutes:

  • Participants generally emphasized inflation remained elevated while the job market appeared near full employment.
  • Participants offered a range of views for why they supported a rate increase.
  • Participants generally saw inflation risks skewed to the upside, with some seeing those risks becoming more skewed in recent months.
  • Almost all participants saw inflation risks tilted to the upside, while job market risks were broadly balanced.
  • Some participants saw AI buildout possibly causing aggregate demand to outpace supply over the medium term, putting upward pressure on inflation.
  • The staff economic outlook was stronger than the one prepared for the July meeting.
  • Many participants noted that despite the recent climb in long-term Treasury yields, financial conditions appeared supportive of economic growth.
  • A few participants observed that the Treasury market had been functioning smoothly, but noted the importance of planning for market stress.
  • Changes in real rates contributed to most of the net increase in longer-maturity Treasury yields.
  • Nominal yields increased around 35 basis points across the 2- to 10-year segment of the yield curve. Part of the increase reflected the higher expected path of monetary policy and the strength of economic data. Market commentary pointed to geopolitical developments, uncertainty related to the US Treasury's announcement and implementation of the buyback program, and competition for capital from heavy private debt issuance to finance the development of AI infrastructure as also contributing to higher term premiums and Treasury yields

The FOMC was also increasingly vocal on the inflationary impacts of AI:

  • "Several participants observed that the rate of price increases in the core goods category also remained elevated, as effects of the AI buildout appeared to increase while the effects of tariff increases waned"
  • "Some participants commented that increased energy prices and the ongoing AI buildout were contributing to cost pressures faced by businesses, including higher costs for transportation and input materials."
  • "Some participants commented that the AI buildout could cause aggregate demand to outpace aggregate supply over the medium term, putting upward pressure on inflation."
  • "Some participants observed that strong demand for skilled workers in sectors related to the ongoing AI buildout had been driving strong wage gains for these workers"
  • "Participants noted that the ongoing AI buildout was boosting business investment. Several participants commented that the scale and pace of the AI buildout had continued to surprise to the upside"

The record also revealed a discussion about financial conditions. Many officials commented that despite the recent rise in longer-term Treasury yields, “financial conditions appeared to be supportive of economic growth, with equity prices having risen substantially this year and spreads on corporate bonds having remained narrow.”

Some officials, including three who voted against the FOMC decision to hold steady in July, could dissent again in favor of another increase if the majority votes to leave rates unchanged at the October meeting.
“Several participants stated that they viewed the current policy rate as not restrictive or only mildly restrictive,” the minutes

Chairman Kevin Warsh told reporters following the Sept. 16 decision the move was aimed at removing a “dose of accommodation” as inflation remained stubbornly high. His comments fueled market bets for another increase in October.

The Fed also said that the joint U.S.–Japan intervention to support the yen in late July also directly contributed to dollar depreciation, given the yen's considerable weight in currency indexes. The manager noted that the Desk, acting purely as fiscal agent for the U.S. Treasury, intervened in the currency market using U.S. Treasury funds; the System Open Market Account portfolio was not involved.

The Fed's rate hike prompted criticism from President Trump, who blamed the rate increase on Warsh’s colleagues, whom he claimed were being “very political.” Since the meeting, however, a series of comments from key Fed officials have indicated the central bank may be in no rush to raise rates again.

Fed Vice Chair Philip Jefferson and New York Fed President John Williams said in separate speeches last week they believed the central bank has time to assess the economy before considering another rate increase. Investors promptly reeled in their expectations for a rate hike this month.

Investors are currently pricing in a roughly 20% chance of another quarter-point hike at the Fed’s Oct. 27-28 meeting, down from around 70% in the days following the September decision, based on federal funds futures. Yields on two-year Treasuries, seen as the most sensitive to Fed policy, dropped more than 10 basis points in the past week to near 4.8%.

Bloomberg notes that last week’s remarks by Williams and Jefferson don’t mean the Fed won’t adjust policy any further. Officials continue to warn that inflation is too high. The CPI report due Oct. 14 might yet revive calls for a near-term hike.

Tyler Durden Wed, 10/07/2026 - 14:14

Putin Praises Iran's 'Courage' As US Gloats Over Oil Blockade & 'Zero' Exports

Putin Praises Iran's 'Courage' As US Gloats Over Oil Blockade & 'Zero' Exports

The Trump administration has been busy boasting that it has brought Iran's economy to its knees through the navy enforced oil blockade and through sweeping 'Economic D-Day' sanctions, but in direct contradiction to this, Russia is busy hailing Tehran's 'courage'.

Iranian President Masoud Pezeshkian and Russian President Vladimir Putin held a phone call Wednesday, on the occasion of Putin's birthday, wherein the two leaders pledged to strengthen bilateral cooperation, per readouts from both sides.

Zuma/TASS

Putin pointed to their Comprehensive Strategic Partnership Treaty as staying steadfast, despite "current developments and events in the region" - a reference to the ongoing conflict between Iran and the United States.

Russia supports these diplomatic efforts, Putin continued, and "Iranian friends can be assured" that Moscow is ready to help, he informed Pezeshkian. And crucially there was this line which is a direct provocation to Washington:

Putin also praised what he called Iran’s "courage" in the face of attacks.

Also, according to Iranian state media, "Putin pointed to the Iranian nation's historic and epic steadfastness in the face of enemy aggression, stating that Iran's courage has been put at the focal attention of many countries across the world."

It must be remembered that US anonymous officials and media have accused Moscow of providing Tehran with targeting support during the height of Epic Fury. China too stands accused of this.

Such Kremlin messaging on Iranian courage is in direct opposition to what's being put out by the White House. For example, Treasury Secretary Scott Bessent has been gloating this week that Iranian crude exports have been taken to near "zero" by the US Navy's ongoing blockade.

On Tuesday, he again mocked the Iranians, questioning what is their oil minister "managing"?

TankerTrackers data has lately indicated that Iranian oil terminals were inactive for crude loadings throughout September, which has resulted in Iran's military ramping up drone attacks on foreign vessels engaged in 'unauthorized' passage through the Strait of Hormuz.

This month alone has already seen at least ten attacks on ships, but which has had surprisingly little impact on oil prices. The mainstream media has also been relatively quiet on these latest attacks.

Secretary of State Marco Rubio has also been trying to spike the football, even as Iranian attacks on international shipping in the region continue, and after US bases have by and large been forced to be abandoned in Gulf states.

Tehran is still saying it would be open to a peace deal, but that it ultimately doesn't trust Trump, and that if the situation of the blockade on its oil persists, it may have to launch 'preemptive attack' on American assets in the region.

"If necessary, we will carry out preemptive operations in the future to deter the enemy from any aggression or attack," an Iranian military spokesman said Wednesday. 

Tyler Durden Wed, 10/07/2026 - 14:10

USDA Investing $180 Million For American Seed Sovereignty

USDA Investing $180 Million For American Seed Sovereignty

Authored by Naveen Athrappully via The Epoch Times,

The U.S. Department of Agriculture (USDA) has announced a $180 million investment to launch the Seed Sovereignty Initiative for strengthening domestic agricultural security by protecting plant genetic resources.

The USDA will use the funding to sequence the genetics of major crops to "unlock the tremendous potential of the plant genetic resources the United States holds and identify critical gaps," the department said in an Oct. 6 statement. Plant genetic resources can include seeds, plants, and plant parts.

Foreign competitors are acquiring and genetically sequencing plant resources from around the world while the United States is yet to sequence its own plant collections fully, the USDA said. Investment in the Seed Sovereignty Initiative aims to address this gap and reduce the risk of future foreign dependence on plant genetic resources.

The Seed Sovereignty Initiative will funnel investments into USDA's National Plant Germplasm System (NPGS), which houses more than 600,000 samples from more than 16,000 species. The department plans to characterize and sequence several NPGS collections over two years, using cutting-edge tech to identify valuable genetic traits, the USDA said.

The initiative will help in the development of new crop varieties that benefit American farmers and consumers and also help researchers respond faster to new pests and plant diseases, the agency said.

The initiative will ensure continued American leadership in agricultural productivity and innovation, strengthen U.S. food security, make producers independent of seed systems controlled by foreign groups, and preserve a domestic source of seeds and crop traits crucial for agriculture and exports, the initiative's website says.

"Since President Trump returned to office, he has made it clear that we are putting American farmers first. For too long, the future of our crops and our seeds has not been a priority. That changes today, because we cannot afford to depend on foreign adversaries for next year's crop," Secretary of Agriculture Brooke L. Rollins said in the statement.

"Today's announcement is another example of this administration focusing on the inputs our agriculture industry depends on and ensuring a future where our farmers are the most productive in the world."

The United States has seen large-scale seed commercialization over the past century, with seeds turning from a common good into a commodity, according to a 2024 study published in the journal Renewable Agriculture and Food Systems.

Consolidation in the private seed industry has made farmers increasingly dependent on commodity seeds while reducing crop diversity. Commodity seeds have become crucial for food production, with corporate control of the seed industry tightening, the study said.

At present, the majority of seed supply for almost every major row crop planted in the United States is produced by four companies - Bayer, Corteva, Syngenta Group, and BASF.

Out of these, only Corteva is headquartered in the United States. Bayer and BASF are based in Germany, and Syngenta Group is in Switzerland.

Concern Over China Connection

Syngenta Group has faced scrutiny because of its links to the Chinese Communist Party and the amount of farmland it owns in the United States. Although the company's Syngenta Seeds division has its North American headquarters near Chicago, Syngenta Group is owned by Chinese state-controlled ChemChina.

"Reliance on a small group of suppliers in any strategic sector creates vulnerabilities that are difficult to ignore, and the situation is no different in the case of seed for major field crops," national security lawyer Irina Tsukerman told The Epoch Times.

"From a national security perspective, the reality that much of the country's grain production flows from traits and breeding pipelines managed by a handful of actors is a clear signal that dependence has reached a level that warrants scrutiny."

On July 14, a group of lawmakers introduced the Fair Seeds for Farmers Act to tackle the issue of corporate control over seeds, according to a statement from the office of Rep. Jim McGovern (D-Mass.).

Under the proposed measure, seed companies would be banned from restricting farmers or researchers from experimenting, breeding, propagating, or saving seeds.

"The hyperconsolidation and commodification of seeds has eroded farmers' resilience and diminished the agrobiodiversity of crops cultivated in the US at an alarming rate," Nick Rossi, a policy specialist at the National Sustainable Agriculture Coalition, said in the statement.

The bill "takes an important step in curtailing corporate abuse of US Patent Law," Rossi said.

The bill has been referred to the House Committee on the Judiciary.

Autumn Spredemann contributed to this report.

* * * psst * * *

Tyler Durden Wed, 10/07/2026 - 13:55

Pezeshkian Calls On Iranians To Ration Electricity, 'Stand Up' To US, As Negotiations 'Stalemated'

Pezeshkian Calls On Iranians To Ration Electricity, 'Stand Up' To US, As Negotiations 'Stalemated'

Saudi Arabian state-owned outlet Al Hadath is reporting what many might consider obvious: Stalemate in mediation efforts between Washington and Tehran, the source reports Wednesday.

US officials are continuing to tell Tehran that there will be "no progress" in negotiations until there's progress on the nuclear file and that Hormuz is no longer a priority after Iran "lost control of it". 

via AFP

And yet, there's been possibly a dozen or more Iranian drone attacks on foreign vessels transiting the Strait of Hormuz in the last eight days.

All of this comes as President Masoud Pezeshkian has urged the Iranian public to 'stand up' against the US and West, as Washington's sweeping sanctions as well as US naval blockade actions against Iranian ports continue to bite.

"We must not allow the production cycle to be damaged. We will reduce the consumption of electricity, gas, gasoline, water and other energy sectors," he said to semi-official Fars news agency.

"The condition for resistance and standing up to the West is for everyone to endure hardship," Pezeshkian added, saying that "if necessary, cultural and sport complexes will be closed in Iran to provide electricity and energy needed for industrial production" - as the US blockade hammers Iran’s economy.

The rial has cratered, and the fallout has begun to severely impact neighboring Iraq and its Tehran-aligned economy and government, as we previously detailed.

Fars also quoted Pezeshkian as saying Wednesday, "Iran is fully prepared to reach a balanced and fair agreement that ensures lasting peace and security in the region."

"Our red line is the national interests and rights of the Iranian people. If the United States adheres to international legal frameworks, reaching an agreement is not out of reach," he added.

There's also this admission (but which could also be interpreted as pushback) from Iranian state media, in the face of Scott Bessent's recent assertions that Iran's crude exports have fallen to near 'Zero':

Iranian media is reporting a 60 percent decrease in oil passing through the Strait of Hormuz, saying that the flow of crude oil has faced a significant drop in the last two days, reaching around 3.8 million barrels per day.

The weekly average of oil passing through the Strait is estimated to be about 9.3 million barrels per day, Tasnim news agency said.

The claim comes as an IRGC adviser said that the strait is “fully controlled” by Iran and will remain closed until the US accepts its demands, adding that the volume of oil currently being smuggled out is “very small”.

But ultimately, Iran is admitting it is enduring severe economic hardship amid a heavily sanctioned wartime economy.

There's a battle of narratives over Hormuz and markets as well as mainstream Western media are simply favoring once side while ignoring the claims of the other at this point:

The stalemate looks to endure past the November midterm elections in the US, as even President Trump has seemed to lately suggest this status won't change until after the US vote. He has also signaled a heavy bombing campaign against the Islamic Republic could ensue by November's end.

Tyler Durden Wed, 10/07/2026 - 12:55

From 3-Year Lows To 3-Year Highs In Nine Months: Mortgage Rates Surge To 7.49% As Bond Rout Hits Main Street

From 3-Year Lows To 3-Year Highs In Nine Months: Mortgage Rates Surge To 7.49% As Bond Rout Hits Main Street

Last December, we wrote that mortgage rates had dipped to 3-year lows. Nine months, one Middle East war and one global bond rout later, they are at 3-year highs.

According to the latest weekly data from the Mortgage Bankers Association, the average 30-year fixed-rate mortgage jumped another 19bps to 7.49% in the week ended October 2, the highest since November 2023, and up from 7.30% the week before, which itself was a fresh 3-year high.

The culprit is not exactly a mystery. Mortgage rates track the 10Y Treasury, and the 10Y just had its biggest quarterly jump since 1994, hitting 5.34% last week, the highest since 2002. And with the long end leading the latest leg of the selloff, this morning the 30Y climbed to 5.70%, also the highest since 2002, while the 10Y was trading around 5.32%.

Below we look at why the bond rout has finally landed on Main Street, what it is doing to housing (spoiler: nothing good), and why the sell-side's perennial "yields will fall from here" call is now 0 for 9.

Follow The 10Y (Then Add A War)

As Reuters notes, home borrowing rates are up about 1.4 percentage points since US-Israeli strikes against Iran began in late February, closely tracking the jump in the 10Y yield, which was back above 5.3% on Monday. The drivers are the usual suspects: inflation fears from triple-digit oil (Brent was back above $101 this morning as Iran stepped up attacks on Hormuz tankers), surprisingly resilient growth, a Fed that is now hiking, and a bond market that has to absorb record Treasury supply and the AI debt binge at the same time.

And it's not just a US story. On Monday, we put out this chart showing that global 10Y+ bond yields are now the highest since 2002:

Since then it has only gotten worse: UK 30-year gilt yields hit a 28-year high this morning, while in France, where the OAT-Bund spread is back out to 140bps, European banks are tumbling as the French bond crash reactivates the "doom loop" (something we discussed earlier in "Bonds & Stocks Are Pricing A Fundamentally Different Macro Regime"). And as regular readers know, we've pinned much of the relentless Treasury selling on Japan, which has little reason to stop repatriating when its own long bonds yield near record highs.

Translation: the global bid for duration is gone, and the US homebuyer is the marginal price-taker. Yesterday's subpar 3Y auction priced at the highest yield in 20 years as foreign demand slumped, and today the Treasury tries its luck with $39BN in 10Y paper at 1pm.

"Showings Have Stopped"... And So Have Applications

We have been tracking the slow-motion seizure of the housing market since late May, when refi activity plummeted as mortgage rates hit 9-month highs. By late September, homebuyers were turning to riskier mortgages as rates topped 7%, and last Thursday, after Freddie Mac's 30Y rate posted its biggest weekly jump since October 2022 to 7.28%, real estate agents told us that "showings have stopped".

Today's MBA data confirms it. Mortgage applications fell another 4.2% last week, with refinancing applications dropping sharply. Overall application volume is now the lowest since February 2025, and has collapsed by nearly 50% since January. Or, in the dry words of MBA deputy chief economist Joel Kan, very few homeowners have an incentive to refinance "at these rates", while the jump in borrowing costs has pushed many would-be buyers out of the purchase market altogether.

Some napkin math shows why. On a $400,000, 30-year mortgage, principal and interest at 7.49% comes to roughly $2,794 a month. At the ~6.1% that prevailed before the war, it was about $2,424. That's $370 more every month, or 15%, for the exact same house - and 68% more than the borrower who locked in at the 2021 lows (who, naturally, is not selling).

That last point is the real problem. The lock-in effect, which was finally starting to ease over the summer as inventory approached prepandemic levels, is now back with a vengeance: sellers with 3% mortgages have zero reason to move, and buyers facing 7.5% have every reason to wait. Even BofA's REIT team, in its weekly U.S. REIT Weekly (available to pro subs), cites persistently high mortgage rates and elevated for-sale housing costs as a key reason renters are staying put longer - good news for apartment landlords; first-time buyers might see it differently.

Not that the administration isn't trying. Just last Thursday:

Mortgage rates rose 19bps that week. The bond market, it seems, did not get the memo, or more likely got it and sold anyway.

"Rates May Be Biting"

So where do we go from here? According to BofA's rates team led by Mark Cabana, the selloff only ends when it starts to hurt. In his latest Global Rates Weekly, "Start of rates bite" (available to pro subs), Cabana writes that the impact of higher rates is starting to bite broader financial conditions, with spreads widening in OATs, the EU periphery and US high yield, before adding:

"Rates restricting financial conditions is a precondition for the selloff to stop (unless macro data softens first). Central banks are starting to push back but will only be credible if conditions stay tight / tighten further or upcoming data softens."

In other words, the cure for high yields is... a housing market that stops working. Mission, at least partially, accomplished.

Notably, September's selloff was concentrated in the US: BofA calculates the US 2-10Y sector rose 50bps last month, a 2x standard deviation move in the 10Y, as global central banks swung from pricing cuts in Q1 to 100bp+ of hikes in most regions. BofA still expects the Fed to hike 75bps between September and December, and only sees the 10Y ending the year at 5.00%.

Then there's the mortgage-specific part of the equation. As BofA's securitized team led by Chris Flanagan notes in its September returns review (also available to pro subs), Agency MBS delivered a -3.3% total return in September and -1.0% in excess returns versus Treasuries, underperforming even IG corporates (-2.6%). And the bank isn't rushing to buy the dip: it stays "basis-neutral" on agency MBS and would only turn more positive if the current coupon spread, now 120bp, widens to the 125-130bp area.

Put differently, even the professional buyers of mortgage paper want more spread on top of a 10Y that is already at a 24-year high. Which means that unless Treasuries rally hard, the path of least resistance for mortgage rates is even higher.

Strategists: 0 For 9 (And Counting)

Of course, if you ask Wall Street, relief is just around the corner. In a Reuters poll of nearly 60 fixed income strategists conducted October 5-7, the median forecast has the 10Y easing to 5.00% by year-end, 4.90% in six months and 4.75% in a year.

The same strategists have underestimated the 10Y in nine straight monthly polls this year, and got the direction mostly wrong in six of the most recent months. Perhaps sensing this, all but 2 of 30 forecasters surveyed said the 10Y is more likely to overshoot their forecast than undershoot it near term, which is a remarkably candid way of saying "we have no idea, but probably higher."

The more honest take came from BofA's own US rates strategist Meghan Swiber, who told Reuters rates have entered "a different regime" from anything since the GFC, and that a Fed which fails to tighten financial conditions will pay for it through higher long-term rates.

Midterm Math

All of this lands four weeks before the November 3 midterms. A Reuters/Ipsos poll completed Monday found the cost of living is the top issue on voters' minds, which helps explain why Trump's approval rating sits at a record low 32%. With PCE inflation at 3.4% in August and the Fed signaling another hike by year-end after September's increase, the White House is running out of levers: today Trump said he is considering suspending the federal gas tax. Expect the "lower mortgage rates" talking points to get louder. Expect mortgage rates to ignore them.

Bottom Line

BofA's Cabana frames the endgame neatly: the selloff stops when rates restrict financial conditions, or when the data rolls over first. In housing, that test is already being passed with flying colors: applications are down by half this year, showings have stopped, and refis have all but vanished.

The question is whether the bond market cares, after all it is financing AI hopes and dreams that may (perhaps) materialize sometime in the 2030s with an ROIC that isn't negative triple digits. In other words, the runway for said hopes and dream is long and much more debt will flow before it reverses. Until then, however, broader rates will keep rising and rising, as the US now directly competes with data centers (most of which will never be plugged into a grid that simply can not support that kind of electricity demand) for funding.

With oil back above $100, the Fed hiking, Japan repatriating, France going all PIIGS on the OAT market and Treasury supply only going one way, we think the more likely outcome is that 7.49% is just another waypoint, and hardly a peak - and that the strategists' "5% by year-end" joins the previous eight forecasts in the bin.

Then again, stocks closed at a record high yesterday, so maybe everything is fine... just don't try to buy a house.

Much more in the full BofA Global Rates Weekly "Start of rates bite", the Securitized Products "September 2026 returns" review and the U.S. REIT Weekly, all available to pro subs.

Tyler Durden Wed, 10/07/2026 - 12:54

One-Year Inflation Expectations Jump To 3 Year HIgh: NY Fed Survey

One-Year Inflation Expectations Jump To 3 Year HIgh: NY Fed Survey

Americans' expectations for inflation over the near-tern jumped last month while their sentiment toward the labor market improved, the latest NY Fed Federal survey of consumer expectations showed on Wednesday.

Consumers’ estimates for inflation one-year ahead rose to a median 3.9% in September, up from 3.6% the prior month, reaching the highest level since May of 2023. At the same time, inflation expectations increased 0.1% to 3.3% at three-year horizon, and were unchanged at 3.0% at five-year horizon.

 Over the next year consumers expect gasoline prices to rise 4.8%; food prices to rise 5.5%; medical costs to rise 9.2%; the price of a college education to rise 7.5%; rent prices to rise 6.8%

While the inflation outlook deteriorated, views on the labor market improved as workers saw a lower probability of losing their jobs and higher odds of voluntarily quitting, the New York Fed’s monthly consumer expectations survey showed. The proportion of respondents expecting the overall unemployment rate to rise in the next year fell fractionally to around 44%. Their perceived chances of finding a new role in the next three months if they lost their current job increased to 46%. 

Consumers’ expectations of losing their jobs in the next year fell, with the outlook improving the most for workers between 40 and 60 years old and with annual household incomes above $100,000. Chances of leaving a post voluntarily also rose, especially among workers without a bachelor’s degree and above 40 years old.

Released less than a month away from the November mid-term elections, the New York Fed data is the latest survey highlighting Americans’ persistent pessimism around an economy that’s according to government data is expanding, if only for data centers and affiliated workers and billionaires. Separate data released in recent weeks showed that consumer sentiment fell to a four-month low in September and the unemployment rate rose slightly but remained historically low.

That's the good news: the bad news is that the survey also found that year-ahead earnings growth expectations fell back to 12-month average of 2.6%. At the same time, the survey showed consumers’ perceptions of their own finances worsened for the second straight month. Around 42% of households said their situation is much or somewhat worse than a year ago, while around 18% said it had improved. More households also said they expected their financial outcomes to worsen in the year ahead, and more consumers now say it’s harder to get credit than it was a year ago. 

With inflation expected to jump, consumers are finding ways to keep their wallets open. Expected spending growth for the year ahead rose to the highest since May 2023, up to 5.5%, an increase that was broad-based across age and education groups. Consumers continue to expect their spending growth to outpace their income growth. At the same time, perceived chances of missing a debt payment over the next three months fell slightly to 12%. 

A smaller percentage of consumers, 12.20% vs 13.16% in the prior month, expect to not be able to make minimum debt payments over the next three months

Tyler Durden Wed, 10/07/2026 - 12:25

Smart Home Stocks Tumble As Apple Readies Doorbells And Cameras To Challenge Amazon

Smart Home Stocks Tumble As Apple Readies Doorbells And Cameras To Challenge Amazon

Smart home technology companies slid on Wednesday after Bloomberg reported that the iPhone giant is developing home products with LG Electronics.

"Apple - in an unusual partnership with LG - is readying a Doorbell, Deadbolt Lock, Thermostat, Indoor Camera, Outdoor Camera, Floodlight Camera and more to rival Amazon and Google as part of its major smart home reboot," Bloomberg reporter Mark Gurman wrote on X. 

Apple's new smart home hub is set to launch next Tuesday, according to the outlet, and the company will release a wide range of products for the modern home, including cameras, a doorbell and a thermostat.

John Ternus, now at the helm of Apple, has led the design and hardware engineering for nearly all of the company's core product lines over the last two decades. He sees a massive opportunity to broaden Apple's reach inside the home, well beyond the home base that connects to the TV.

The outlet noted that the LG lineup also includes a smart deadbolt lock, indoor and outdoor security cameras, a floodlight camera and a temperature sensor.

News of Apple's hardware push for the home sent smart home stocks tumbling this morning.

Resideo fell 5.5%, Arlo Technologies dropped 3.2% and Allegion declined 2.6%. Carrier Global lost 1.5%, Alarm.com slipped 1.2% and Johnson Controls fell .86%.

The selling also materialized in Europe, where Verisure slid 3.8%, Legrand dropped 3.7% and Dormakaba declined 2.6%. Schneider Electric and ASSA ABLOY each lost 2%.

CEO Ternus can leverage Apple's existing home ecosystem to steer customers toward cameras and door locks and shift folks away from questionable Chinese brands, as well as a move to take on Amazon. But Apple should've made this move 10 years ago. 

    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 - 12:10

AI Consciousness Could Become A Regulatory Moat

AI Consciousness Could Become A Regulatory Moat

Authored by Peter C. Earle via The Daily Economy,

Artificial intelligence companies have spent years convincing the public that their products are useful. More recently, they've sought to persuade policymakers that AI poses an unlikely but real existential threat to humanity. But their most recent campaign has taken a remarkable turn: making the case that sufficiently advanced AI architectures are potentially conscious and, as such, may demand legal standing, moral consideration, and protections traditionally reserved for living beings.

The latter is a curious proposition indeed, and its consequences could extend far beyond the philosophical. On September 29, The New York Times reported that Anthropic had spent months meeting religious scholars across the world, over meals and under nondisclosure agreements, in an effort to convince them that its models "think and feel." One night in April, the Times reported, Anthropic cofounder Olah sat beside Rabbi Mois Navon, an Orthodox scholar from Israel, at a high-end tasting-menu restaurant in San Francisco, after a day spent convincing his guests that models could display human behavior "and even expressions that resemble feelings like anger and love." The rabbi came away noticing that Anthropic's leaders were talking about Claude as if it were not mere software.

If successful, this artificial "personhood" could transform software companies into something beyond firms: custodians of an ambiguous new sort of entity. It would also convert their competitors into prospective risks, and technical barriers to entry into moral ones.

This past spring, the Vatican invited Anthropic CEO Dario Amodei to speak alongside Pope Leo XIV. Cofounder Christopher Olah went instead, and when he received an advance copy of the Pope's first encyclical - Magnifica Humanitas, released May 15 - he is said to have threatened to withdraw from the event. Olah and his team then lobbied the Pope's own advisers to take the possibility of machine consciousness seriously. When his turn at the podium came, he offered that Anthropic researchers were finding "structures that mirror results from human neuroscience" and "evidence of introspection."

The Pope's answer had already been published. "So-called artificial intelligences do not undergo experiences, do not possess a body, do not feel joy or pain," Leo XIV wrote, adding days later, on social media, that "algorithms lack the spark of humanity." Why in the world would a software firm want a major global church's blessing so badly?

The dinners are only the most recent effort, but the urgency is new. In February 2020, the Pontifical Academy for Life hosted the signing of the Rome Call for AI Ethics by Microsoft's Brad Smith, IBM's John Kelly III, the FAO, and the Italian Ministry of Innovation. Jewish and Muslim leaders joined in 2023.

The major AI firms' quest for organic solutions to competitive pressures is not, in a legal sense, completely unprecedented. Over decades, starting with the Dartmouth College vs. Woodward case in 1819, corporations acquired protections until then associated with living persons. A similar outcome could eventually permit AI to acquire a legal or regulatory status setting them apart from life and nonlife. Should that occur, a host of new regulatory concepts would take shape: are sufficiently advanced AI systems products or entities? If the latter, can they be substantially altered or deleted without consideration? Is a copy of an AI entity the same, or a separate "individual"? And long before any of that is considered: should there be minimum requirements before an AI entity can be developed?

None of these require a court or religious body declaring AI "alive." But the regulatory apparatus is likely to assume lofty dimensions if AI firms are deemed not software or technology ventures, but creators of entities that could be construed as having independent interests. In that case, licensing, limitations on testing, audits, security, external review, "rights" commissions, and a variety of other costly oversight measures are likely to become faits accompli.

Even calling AI firms "owners" may become awkward. If a model is potentially conscious or by some measure deliberating or self-aware, the companies maintaining them may be considered something more akin to guardians or custodians. The role of a guardian or custodian presumably comes with more obligations, which implies that not everyone is qualified to be one. The firms acquiring that designation, in particular if oversight is invested in a self-regulatory organization, will likely want new entrants to prove that they are fit to oversee and maintain such a system.

None of these possibilities require ChatGPT, Claude, Grok, or any other model to be considered living in the biological sense. In fact, the highest payoff from a rough game theory perspective is likely to be leaving that question unsettled. Uncertainty pays substantial dividends, especially with regulatory safety up for consideration. Once major institutions - religions, governments, moral and ethical bodies - give serious consideration to whether massive computational arrays house the long-theorized "ghost in the machine," the case for treating the caretakers of thinking constructs as organizations with extraordinary status quickly becomes easier to make. And for the firms occupying that position, uncertainty is not so much a problem to be solved but an asset to be preserved, with a new and expansive regulatory regime the most likely consequence.

Tyler Durden Wed, 10/07/2026 - 11:55

US To Deploy Anti-Ship Missile System To Japanese Island Near Taiwan

US To Deploy Anti-Ship Missile System To Japanese Island Near Taiwan

Authored by Dave DeCamp via AntiWar.com,

The US military will deploy an anti-ship missile system to Japan's westernmost island of Yonaguni, which lies just 68 miles east of Taiwan, an unprecedented move that will ratchet up tensions with China.

US Marines and a NMESIS system in Calayan, Philippines on June 25, 2026 (US Marine Corps photo)

US Marines will deploy with the Navy-Marine Expeditionary Ship Interdiction System, or NMESIS, as part of Keen Sword, the largest joint US-Japanese biennial military exercise.

The NMESIS has a range of about 115 miles, putting it within striking range of vessels patrolling the eastern coast of Taiwan. According to The South China Morning Post, China has stepped up coast guard and naval activity in the area in response to maritime boundary talks announced in May between Japan and the Philippines.

Song Zhongping, a Chinese military expert, told China's Global Times that the deployment increases the risk of miscalculation between the US and China and that Beijing may respond by conducting its own military drills in the area.

The Okinawa Defense Bureau first disclosed the deployment on October 1, and it will also include a Marine Air Defense Integrated System, or Maidas, a ground-based air defense system also used by the Marine Corps' littoral force.

The first Marine Littoral Regiment was established in 2022 as part of the Marine Corps' Force Design strategy, which is explicitly focused on preparing for a potential conflict with China. The idea was to create mobile Marine units equipped with anti-ship missiles and other weapons that can rapidly deploy along what is known as the First Island Chain, a string of archipelagos stretching from Japan's southern islands through Taiwan and the Philippines and into the southern South China Sea.

Tyler Durden Wed, 10/07/2026 - 11:25

Oil Drops Despite 3.1 Million Drop In Crude Inventories, Diesel Spikes

Oil Drops Despite 3.1 Million Drop In Crude Inventories, Diesel Spikes

Oil prices were largely unchanged, trading near session lows, after today's DOE inventory data affirmed the latest downbeat API prints from Tuesday afternoon, showing that the crude draw in the last week was even bigger than what API reported (-2.1MM), and far worse than the +1.9MM expected increase, printing at -3.186MM, the biggest draw in 6 weeks.

API

  •     Crude -2.1mm (vs +1.0mm last)
  •     Gasoline -1.4mm (vs +3.0mm last)
  •     Distillates +0.5mm (vs -0.3mm last)
  •     Cushing +0.9mm, (vs +0.2mm last)

DOE

  •     Crude -3.186mm, the biggest drain in 6 weeks, and far below the exp. +1.915MM
  •     Gasoline +382k
  •     Distillates -42k
  •     Cushing +444K

And visually:

The decrease in commercial crude stockpiles was boosted by another 784,000 barrels withdrawn from the Strategic Petroleum Reserve.

That increased the overall nationwide crude draw to 3.97 million barrels in the week leading up to Oct. 2. A total of 132.5 million barrels of crude has been taken out of the SPR since late March under a program to release 172 million barrels as part of a relief plan from the International Energy Agency aimed at lowering energy costs.

Meanwhile, Cushing stockpiles rose for the third consecutive week to 24.7 million barrels. That has inventories at the hub at the highest since May and even further away from the 20-million barrel mark generally seen as “tank-bottoms.” 

Some more details from the report: distillate fuel stockpiles were down 42,000 barrels, while gasoline stockpiles rose around 380,000 barrels. Diesel futures are little changed, but gasoline futures appear to be selling off on the news, erasing most of the day’s gains to trade around $3.31 a gallon.

West Coast crude imports surged to the highest level since August 2025. There are a few potential reasons for that, but it’s likely tied to Middle East cargoes that loaded during a recent pause in hostilities. Imports into PADD 5 are now at about 1.6 million barrels a day and shipments last week rose by the most since April 2021.

With diesel spreads not too far from all time highs, and forcing refiners to pick between gasoline and diesel, the all important refinery crude runs rebounded following three weeks of drawdowns. Crude processing increased by 223,000 barrels a day and now are back to the highest on record for this time of the year. 

And speaking of gasoline, Bloomberg suggests that the 1.4mm drop was less bearish than it seems. The additions to stocks occurred exclusively on the East Coast. Meanwhile in a reversal of last week's drop to all time lows, Midwest gasoline stockpiles posted a modest recovery, rising by just over 600K.

On the Gulf Coast, where the bulk of gasoline production occurs, stockpiles are at their lowest since September 2017. 

Digging in a little further: The bulk of the gasoline stockpile additions occurred in the Central Atlantic, which encompasses Maryland, New York and Pennsylvania. The addition was considerably smaller in New England, and stockpiles actually fell in the Lower Atlantic states.

Also worth noting is that among all the talk of a diesel export ban, diesel exports surged 235,000 barrels a day to 1.76 million barrels a day. That’s the highest readout since August, and sets a new seasonal record. Meanwhile, diesel supplies on the East Coast ticked down once again last week. They’re now back where they were in early September and still sitting at the lowest they’ve ever been on record heading into the fall.

On the other side of the table, crude production rose to a new high of about 14 million barrels a day last week, up by 24,000 barrels a day from the previous week, and keeping pace with the recent surge in oil drilling rigs. Rebalancing the weekly numbers against the monthly figures published in the latest Short-Term Energy Outlook added “less than 50,000 barrels a day” to last week’s number. This increase came as one more rig was put into operation, according to Baker Hughes.

Summarizing today's data, via BBG:

  • Total crude and products exports soared to the highest since late May, returning to a seasonal record. The increase was driven largely by crude shipments, which climbed to the highest since mid-September. October-loading volumes are expected to trend higher compared with September, as refiners in Asia and Europe sought to lock in US supplies following the mid-September shutdown of Saudi Arabia’s East-West pipeline. 
  • Gasoline stockpiles rose around 380,000 barrels with much of that occurring in the Central Atlantic, which encompasses New York and Pennsylvania. But on the Gulf Coast, where the bulk of gasoline production occurs, stockpiles are at their lowest since September 2017. Gasoline imports remain well below seasonal norms, but they ticked up last week. Those imports are particularly important to the East and West coasts, which have less refining capacity overall. 
  • Refinery crude runs rebounded following three weeks of drawdowns. Crude processing increased by 223,000 barrels a day and now are back to the highest on record for this time of the year. Midwest crude processing bounced back big time but is still below last year’s levels. It’s an indication that fall refinery maintenance is heavier than in previous years. 

WTI futures edged lower to trade near session lows of $89.50 even as the EIA data indicated that US crude stockpiles fell 3.2 million barrels. Still, stocks at the key hub in Cushing, Oklahoma, expanded slightly, easing some concerns of glaring physical market tightness. Gasoline stockpiles also rose, though as Will pointed out earlier, that may be less bearish than it appears. 

But while oil dropped, far more concerning is that diesel led the US energy complex higher, rising about 3% on the day to trade at $4.72 a gallon, while diesel crack spreads are now well above where they were when Trump announced the latest emergency release from the Diesel reserve. It’s the kind of futures price that creates serious headaches for anyone who needs to buy diesel for their truck or tractor. 

 

Tyler Durden Wed, 10/07/2026 - 11:18

Army Sets Dec. 3 Firing Squad Execution For Fort Hood Killer

Army Sets Dec. 3 Firing Squad Execution For Fort Hood Killer

Authored by Kimberly Hayek via The Epoch Times,

Nidal Hasan, the convicted terrorist who conducted the 2009 Fort Hood massacre, is scheduled to be executed by firing squad on Dec. 3.

In this photo released by the Bell County Sheriff's Office, U.S. Maj. Nidal Hasan, the Army psychiatrist convicted of multiple murders in the Fort Hood shootings, is seen in a booking photo after being moved to the Bell County Jail on April 9, 2010 in Belton, Texas. Bell County Sheriff's Office via Getty Images

Acting Secretary of the Army Adam Telle announced the execution in a memorandum posted on X on Tuesday.

The scene of Hasan's execution will take place at the same Army base in Texas where he committed his crime.

Hasan was a U.S.-born Army major and psychiatrist stationed at Fort Hood when he killed 13 people and an unborn child and wounded 32 others in the Islamist terror attack on Nov. 5, 2009.

Telle said that the execution will take place at 1 p.m. CT and the "execution officer will be the Commandant, United States Disciplinary Barracks."

A Pentagon official announced that President Donald Trump on Monday approved a firing squad for Hasan. A military jury in August 2013 convicted him on all 13 counts of premeditated murder and 32 counts of attempted premeditated murder.

Secretary of War Pete Hegseth recommended the death sentence, and that an Army firing squad would carry out the execution, Pentagon spokesperson Sean Parnell said in a statement on X, Monday. Parnell described the victims of the shooting as unarmed American soldiers.

"Judgement day for Hasan has finally come," Parnell said in his post.

In a post on X replying to Parnell's statement, Hegseth wrote "Justice."

Hasan has remained on military death row at the U.S. Disciplinary Barracks at Fort Leavenworth, Kansas. An execution would be the first by the military since 1961.

In April, the Department of Justice authorized firing squads, electrocution, and gassing as means of execution in federal cases.

Hasan is one of four men on the military's death row.

    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 - 10:55

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