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Watch Live: Fed Chair Warsh Explains Why He Hiked Rates Into Stagflation

Watch Live: Fed Chair Warsh Explains Why He Hiked Rates Into Stagflation

The FOMC just (unanimously) hiked rates for the first time since July 2023 despite recent inflation prints slowing...

Additionally, recent macro surprises are clearly signaling stagflation - the central banker's nemesis...

So, a hike for credibility... but Warsh’s biggest challenge will be communicating his outlook without reverting to forward guidance, even as markets seek clarity on whether today’s likely move is one-and-done, or the start of a broader tightening cycle.

With investors forced to extract more signal from his language, the press conference carries outsized front-end risk.

In a note to clients, BMO notes two-year yields have moved an average 14bps across his five public appearances as chair so far.

The big question for today of course, assuming they do hike, is whether this is likely to be a “one and done” move.

We haven’t seen one of those this century so far.

Jim Reid at Deutsche Bank catalogues that there were a few of those in the 1980s and 1990s.

Outside of them, "the shortest cycle on record remains the four hikes of 1986-87."

While all the talk is about the 'unanimous' decision today with the great majority of dots signaling at least one more hike this year... The Fed is extremely divided next year with four members see at least 2 rate-CUTS (policy error much)...

Quick reminder:

  • In 2024, the Powell Fed cut 50bps 2 months before the presidential election with core CPI at 3.3%

  • In 2026, the Warsh Fed hikes 25bps 2 months before the midterms with core CPI at 2.4%

Will Trump comment?

Watch the FOMC press conference live here (due to start at 1430ET):

Tyler Durden Wed, 09/16/2026 - 14:25

Fed Hikes Rates For First Time Since July 2023, Signals 1 More Hike In 2026

Fed Hikes Rates For First Time Since July 2023, Signals 1 More Hike In 2026

Tl;dr: As the market expected, The Fed hiked rates by 25bps (for the first time since July 2023) despite a trend lower in CPI over the last three months.

Today's decision was unanimous and the 'Dots' signal one more hike in 2026.

The Fed members increased their GDP outlooks, lowered their unemployment forecasts, but hiked their inflation outlooks...

The big question for today of course, assuming they do hike, is whether this is likely to be a “one and done” move.

Quick reminder:

  • In 2024, the Powell Fed cut 50bps 2 months before the presidential election with core CPI at 3.3%

  • In 2026, the Warsh Fed hikes 25bps 2 months before the midterms with core CPI at 2.4%

*  *  *

Since the last FOMC Meeting on July 29th, a lot has happened amid the supposed Summer doldrums, the dollar is lower while the anti-fiat trades (gold, bitcoin) and crude are all significantly higher with bonds the worst performers...

Stagflationary signals abound as inflation data has surprised to the upside while growth data has surprised to the downside since the last FOMC

But, the market is all-in, betting on a 25bps hike today - 95% versus 70% at the last FOMC, with a lot of noise in between. Dec odds are up from 40% to 70%. The market is pricing in 3.5 hikes into September of next year as the peak of the cycle...

So, before we get the decision, putting things in context, if Warsh were to hold rates here, it would be BY FAR the greatest surprise The Fed has ever hit the market with...

The Fed has historically always gone when market pricing is this high. That’s on top of a substantial hawkish repricing that has recently taken two-year yields to their highest since 2024 and pushed the 10-year through 5% to levels unseen since 2007.

So, what did he do?

Statement

After three dissents (in favor of a hike) in July, the Eccles Building establishment appears to have won the tug of war against The White House, with The Fed hiking rates 25bps (as fully priced in by the market)

  • *FED UNANIMOUSLY RAISES BENCHMARK RATE 25 BPS TO 3.75%-4% RANGE

  • *FED: RATE HIKE WILL SUPPORT `TIMELIER' RETURN TO 2% INFLATION

Dots

In June, 9 members saw at least 1 rate-hike in 2026:

  • 3 hikes - 1 (Jun)

  • 2 hikes - 5 (Jun)

  • 1 hike - 3 (Jun)

  • No rate change - 8 (Jun)

  • 1 cut - 1 (Jun)

Now in September, with 1 hike in the books, these are the number of hikes/cuts left in 2026

  • 2 more hikes - 4

  • 1 more hike - 12

  • No rate change - 2

  • No one sees rate-cuts

So the median dot suggest one more rate hike in 2026...

1 member sees four rate-cuts in 2027 and 3 see 2 cuts

  • 1 hike in 2027 - 8

  • No rate-change in 2027 - 6

  • 2 cuts - 3

  • 4 cuts - 1

Only 18 of 19 officials submitted their 'dots' with some suggesting Warsh himself did not contribute again.

SEP

The Fed members increased their GDP outlooks, lowered their unemployment forecasts, but hiked their inflation outlooks...

Full Redline

Key changes:

  • Addition of "domestic spending has been resilient"

  • Capital investment reduced from "strong" to "robust"

  • Adds that "Today's policy action will support a timelier return to the Committee's 2 percent goal"

The big question for today of course, assuming they do hike, is whether this is likely to be a “one and done” move.

We haven’t seen one of those this century so far.

Jim Reid at Deutsche Bank catalogues that there were a few of those in the 1980s and 1990s.

Outside of them, "the shortest cycle on record remains the four hikes of 1986-87."

Tyler Durden Wed, 09/16/2026 - 14:00

DOJ Accuses Russian Intel Ring Of Plotting Murder On American Soil

DOJ Accuses Russian Intel Ring Of Plotting Murder On American Soil

In something that sounds straight from the plot of "Homeland" or the more recent CIA thriller "Lioness", the Trump administration has charged multiple members of Russia's intelligence services with running a "global assassination network" that targeted Kremlin critics.

The Department of Justice has newly revealed and alleged that one murder plot even took place on American soil over the summer.

Russian FSB HQ, Moscow. Associated Press

The fugitives have been named but have not been apprehended, and are still at large. A murder-for-hire plot is detailed in an indictment which was unsealed Tuesday by federal prosecutors in New York.

The plot was never followed through on, but a Russian dissident is said to have been targeted, during which time a Brooklyn man was recruited by Cuban and Venezuelan individuals - both which were ultimately being run by a Russian intelligence handler - but the Brooklyn man is said to have gotten cold feet when asked to carry out an assassination.

The five defendants are all believed to live in Russia, and are part of what court documents call the "RIS Network," including a 63-year-old former Russian intelligence colonel named Yuri Khrameev, as well as his son Kirill.

According to a summary of the wild plot and allegations:

It marks the latest alleged attempt by a U.S. adversary to crack down on dissidents abroad, including in the United States and NATO-allied countries.

One of the murder-for-hire plots took place in July and August of this year, the indictment says. The Venezuelan operative and one of the Cuban operatives allegedly recruited a Brooklyn resident to take photos and videos of two locations associated with an unnamed Russian dissident, promising him $1,000 to $1,500 to carry out the "gravely serious work." Another $40,000 was offered to "eliminate" or "disappear" the target of the surveillance.

The operatives believed the Russian dissident lived in the Washington, D.C., area, Attorney General Todd Blanche told reporters at a briefing Tuesday.  The Brooklyn resident was willing to take photos, the indictment said, but expressed unwillingness to "do the other stuff" — as in, kill the dissident. The operatives then allegedly asked the Brooklyn resident if he knew of anybody else who was interested.

"Let me know as soon as possible because I have a chain and my boss has questions," one of the Cuban recruiters wrote, according to the indictment. "I have people in Mexico right now and they're delayed. I only need a response to know if someone can do the work. It doesn't have to be today or tomorrow just need to know if the[y] can."

Some skepticism is of course always warranted when dealing with official US claims related to what Russian intelligence is up to.

For example, the latter part of the above - where a foreign agent reportedly broadly asks his asset whether he knows anyone else that can do the killing - seems amateurish, dubious and needlessly high risk.

The Kremlin has on Wednesday rejected the claims, describing that there's simply no evidence to even warrant a serious explanation:

Until "any plausible evidence" emerges, there is no point in commenting on statements by the US Department of Justice about the exposure of a number of individuals allegedly working for Russian intelligence, Kremlin Spokesman Dmitry Peskov told reporters.

"Until we have heard and seen any credible evidence and arguments based on something tangible, we do not consider it necessary to comment on this news," he noted in response to a request to comment on a statement by US Attorney General Todd Blanche, who said that a number of individuals working for Russian intelligence had been exposed in the country.

Washington has over recent years lobbed significant accusations of espionage and nefarious recruitment schemes against Russian intelligence, especially since the Ukraine war began. Russian intel seems much more active in Europe, however.

The other country which tends to get named in these reports is Iran. The Trump administration has even accused the IRGC of its own assassin-for-hire plot against the president himself.

* * * Add two to cart

Tyler Durden Wed, 09/16/2026 - 13:55

Democrats Still Don't Know How To Read Charts

Democrats Still Don't Know How To Read Charts

Authored by Matt Margolis via PJ Media,

Democrats can be unintentionally hilarious sometimes. Gov. Gavin Newsom (D-Calif.) reposted a chart on X Tuesday claiming housing prices are "the most unaffordable in history," and that it was Trump's fault.

There was just one huge problem.

The chart Newsom shared showed that the housing affordability gap actually widened during Joe Biden's presidency, and X users noticed almost instantly, flooding his replies with screenshots of the very data he'd just posted as though it helped his argument. It didn't take long for the pile-on to turn Newsom's own post into a meme about his reading comprehension.

But the funny thing about it is that Democrats keep doing this. In July 2025, the Democratic National Committee posted a chart that they thought proved grocery prices were spiraling out of control in Trump's second term.

The chart told a different story. It showed a huge spike under Biden. The DNC had unwittingly undermined its own attack on Trump. Social media users mocked the party within hours, dissecting the chart line by line, forcing the DNC to quietly delete the post... not that that stopped us from making fun of them anyway.

Then came Sen. Bernie Sanders (I-Vt.), who spent the Schumer Shutdown standoff in October 2025 defending Obamacare subsidies. In the process, he put up a chart on X arguing for expanded tax credits. What the chart actually showed was health care costs more than doubling since 2000, climbing at a steady clip both before and after Obamacare passed, proving that Obamacare had failed to slow down the rising costs of healthcare, let alone reduce it.

Costs have never declined, flattened, or stabilized since Obamacare took effect, and every subsequent "fix" failed to make coverage "affordable."

And then Sen. Amy Klobuchar (D-Minn.) picked up the baton in late November 2025. She claimed in a post (with a supporting chart) that power bills had surged 11% under Trump and blamed him for rising past-due balances.

The problem with her claim was that the utility rate spike she referenced happened under Biden.

X users called her out quickly and spent the rest of the day passing around corrected versions of her own chart.

Are you seeing a pattern here? Democrats and charts - they just don't mix.

The funny thing is that I'm sure they'll keep trying. They think they can make an accusation accompanied by a chart, and it looks authoritative and true. In the end, they just prove how stupid they are.

Tyler Durden Wed, 09/16/2026 - 13:25

Two Robinhood Engineers Accused Of Making $50,000 By Front-Running Crypto Listings

Two Robinhood Engineers Accused Of Making $50,000 By Front-Running Crypto Listings

Federal prosecutors have accused two former Robinhood engineers of turning their access to the company’s crypto plans into personal trades, according to Bloomberg.

Hefu Chai, 36, and Huaisong Xiang, 30, are accused of learning in advance which digital assets Robinhood intended to add to its platform. Rather than simply keeping that information inside the company, prosecutors allege they positioned themselves in derivatives tied to those tokens before the news reached the public.

Bloomberg writes that the trades were placed through Hyperliquid, a decentralized platform offering perpetual futures, and allegedly occurred over a period spanning 2025 and 2026. Authorities say both men walked away with more than $50,000 in profits.

Robinhood says the activity was uncovered internally and subsequently brought to the attention of regulators and law enforcement. Neither man still works for the company.

A Robinhood spokesperson said the firm has “zero tolerance for insider trading” and maintains controls governing employee access to sensitive information, including details surrounding upcoming crypto additions.

The criminal cases are now moving through federal court. Xiang was released on a $50,000 bond after a judge declined prosecutors’ request to keep him detained over concerns that he might leave the country. His attorney, Robert Stahl, says Xiang denies wrongdoing and plans to contest the case. Chai had not publicly commented on the allegations at the time of the report.

And so crypto continues its remarkable technological achievement of recreating virtually every questionable activity from traditional finance, only faster, with more leverage and usually with a Discord server somewhere in the background.

Tyler Durden Wed, 09/16/2026 - 13:05

FBI Agent Wanted To Criminally Investigate Elon Musk, Email Shows

FBI Agent Wanted To Criminally Investigate Elon Musk, Email Shows

Authored by Zachary Stieber via The Epoch Times,

An FBI agent pitched investigating Elon Musk for his work with the Department of Government Efficiency (DOGE), according to an email released on Sept. 15.

FBI agent Kevin Gounaud wrote in the Feb. 22, 2025, missive to a supervisor that he wanted to recommend opening a criminal investigation into the person or people at the Office of Personnel Management who approved transmitting an email to government workers about what they had done the previous week.

That person was conspiring with Musk "to violate government-wide security policy and transmit sensitive government information outside of a strict need to know," Gounaud said.

"Furthermore, Musk used a non-government system (Twitter) to relate information that allegedly was for official purposes," he said.

"In doing so, because he is monetized ... he likely generated income for himself based on Twitter's monetization and/or advertising revenues."

Gounaud compared Musk's action to how former Secretary of State Hillary Clinton used a private email server to conduct government business.

The FBI declined to take action against Clinton, determining she lacked criminal intent.

Gounaud said Musk also likely violated a federal law that bars executive branch employees from participating in government matters that impact their own interests.

"Happy to write the case opening and find a prosecutor (or at least try)," the agent told the supervisor.

He added later, "And no, I'm not kidding."

Gounaud could not be reached for comment.

Sen. Chuck Grassley (R-Iowa) released the letter as senators questioned FBI Director Kash Patel during a hearing in Washington.

Grassley said the email, along with other evidence from actions taken by additional agents, "undercut public statements by former FBI officials that agents don't get to pick their cases."

The FBI and Musk did not return requests for comment by the time of publication.

Patel told senators that the FBI has fired agents who were involved in certain probes, including collecting intelligence in a malfeasant manner.

"And in terms of criminal investigations that sprout from that, I can only comment on what's been public, but there are a number of ongoing investigations regarding this illegal conduct," he said.

Gounaud is no longer with the FBI, as of February, according to his LinkedIn page. He had been with the bureau since 2004.

Musk's time as a special government employee concluded in the spring of 2025, while DOGE formally shut down in July.

Musk has not been charged to date.

It was not clear whether Grassley has obtained other emails involving Gounaud, including any responses the latter received to his pitch for a probe of Musk.

A spokeswoman for the senator did not return contact following an inquiry.

Tyler Durden Wed, 09/16/2026 - 12:45

Apollo Puts A Multi-Trillion-Dollar Price Tag On America's Industrial Comeback

Apollo Puts A Multi-Trillion-Dollar Price Tag On America's Industrial Comeback

Apollo’s head of thematic investing, Rob Bittencourt, says US reindustrialization is already “underway,” driven by efforts to reshore critical supply chains, rebuild domestic industrial capacity, expand data centers, restart the rearmament cycle, and power up the grid for the next evolution of the modern economy. 

Rebuilding the industrial base could require trillions of dollars in additional investment, Bittencourt explained. The effort reflects a broader push to reduce dependence on foreign suppliers, including China, in sectors where disruptions carry significant economic and security consequences, as previously learned during the supply-chain madness of the Covid era.

The Trump administration has made reviving domestic production a national priority. Manufacturing's share of US GDP has fallen from about 28% in the 1950s to an alarming 9%, as investment shifted toward services, software, and other asset-light activities. 

Semiconductor chip plants, data centers and supporting energy infrastructure are now attracting the most capital, but Bittencourt cautions that the recovery remains concentrated in tech-related industries. A broader manufacturing revival will require sustained investment flows, highly skilled labor and broadening domestic supplier networks. 

Bittencourt's price tag for restoring the combined US manufacturing and defense industry to its share of GDP in the 2000s would require $2 trillion in incremental investment. Returning to 1980s levels would require a staggering $6.5 trillion.

However, Bittencourt raised some important concerns about the reindustrialization underway, including elevated labor costs, lengthy permitting processes, shortages of skilled workers, and power constraints that threaten to delay projects or raise costs. 

Let's not forget that Democrats are hell-bent on imposing data center moratoriums and jeopardizing the whole buildout that has been a driver of economic growth. It has become increasingly odd that one political party would want to halt reindustrialization trends that rebuild the core. But given that Democratic Socialists of America leaders say, in their own words, that they want to destroy the nation from within, none of the moves that Democrats in their "big tent" party should be surprising. 

Back to Bittencourt, he said, "Reindustrialization should not be confused with the goal of complete economic self-sufficiency. In our view, the US is unlikely to rebuild every supply chain domestically, nor would doing so make economic sense," noting, "The more realistic objective is strategic self-sufficiency: increasing capacity where supply disruptions carry the greatest economic or national-security consequences. That points toward priority sectors including energy, semiconductors, aerospace and defense, rare earth minerals, pharmaceuticals, and the technologies that enable advanced manufacturing."

He continued, "What emerges, we believe, will look very different from the industrial economy of the 1950s: more modern, more automated, and more resilient, built to support the technologies and security priorities of the 21st century."

And Bittencourt concluded, "This rebuilding is part of a much broader Global Industrial Renaissance."

Professional subscribers can read the full note here at our new Marketdesk.ai portal. 

Tyler Durden Wed, 09/16/2026 - 12:25

Crude Slides On Report Saudis Could Restore Half Of East-West Pipeline Flows Within Days

Crude Slides On Report Saudis Could Restore Half Of East-West Pipeline Flows Within Days

WTI futures fell to $101 a barrel around midday in New York after Bloomberg reported that Saudi Arabia could restore roughly half the East-West pipeline's capacity within days. The pipeline, a critical export route bypassing the Strait of Hormuz, has been shut since last week's drone attack.

The outlet reported:

State-run Saudi Aramco is working to bypass a damaged section on the route that will allow it to resume part of the pipeline's capacity, the person said, asking not to be identified because the matter is private. The company is looking to return the conduit to its full capability in about six weeks, they said.

A successful restart of the pipeline, which can carry 7 million barrels of crude per day to Yanbu on the Red Sea while bypassing the Strait of Hormuz, would likely provide welcome relief for Europe, which had crude cargoes for this month canceled because of the disruptions.

However, the reported six-week timeline for full recovery is troubling news for Europe ahead of the Northern Hemisphere winter, with diesel in short supply and natural gas storage levels well below 15-year norms for this time of year.

Saudi Arabia's immediate response to the East-West pipeline disruption has been to ramp up crude loadings from its east coast terminals, maritime research firm TankerTrackers reported earlier today.

Related:

Meanwhile, US diesel crack spreads showed no relief, still averaging around $116 a barrel around lunchtime in New York. 

US Energy Secretary Chris Wright told Bloomberg TV at the start of the week that the critical pipeline would be restarted "very soon."

Tyler Durden Wed, 09/16/2026 - 12:20

Ahead Of The Fed: Bessent, Bullion, Bans, & Hawkish Bias

Ahead Of The Fed: Bessent, Bullion, Bans, & Hawkish Bias

Authored by Peter Tchir via Academy Securities,

Before jumping into the Fed, let’s just spend another minute on diesel, and Bessent’s “Performance” which along with Warsh’s Difficult Task, were formed the bulk of last weekend’s Never Forgotten! And Some Work Stuff

Bessent’s "Performance" & Bullion

On the Treasury buyback, we didn’t even get to the full $6 billion. The buyback focused on off the run treasuries, deemed as “cheap”, but not cheap enough that the Treasury Department would “overpay”. If you really want to move bond yields lower, because they are “too high”, using the full amount you said you could use (which is still far too little to make a dent), and ripping through offers would be a good start. Bessent is nowhere close to a “whatever it takes moment” on Treasury yields.

More chatter about “marking gold to market”. I’m incredibly comfortable with selling gold to raise money. I’m comfortable with marking to market the gold holdings (and even other assets the U.S. government owns or has rights to). We never look at just the debt side of a corporate balance sheet. We examine both the asset and liability side, so why not spend more time on the asset side of the U.S. government balance sheet? I’m less comfortable with using those mark to market gains to “create” value that can be used to buy back debt. I can see some of this, but it gets a bit weird.

Hearing more chatter about marking gold to some fictitious price that generates far more than the current value of just over $1.1 trillion. Not sure if there is an basis for this, but it has come up in some conversations.

  • Selling some gold and using proceeds. A++ (I don’t buy into the importance of gold holdings for reserve current status). I’d prefer proceeds to start a sovereign wealth fund, but that is probably a stretch given the admin’s current focus on bond yields.

  • Marking all gold higher and using the gain to reduce this year’s deficit. Let’s call that a B+/A-. Using the mark to market gains to fund bond buybacks? Down to a C in my book.

  • Marking gold to some random number, not supported by anything, other than to generate a huge gain? D- or F.

Something to keep an eye on.

Diesel Export Bans

We harped on the fact that shortly after the initial attacks on Iran, China put export restrictions on a variety of refined products. That played havoc with global markets, with Asia particularly hard hit. While not every declaration of “force majeure” (I love that word), in the region was directly tied to China’s actions, it didn’t help.

It did help Global ProSecIt is bad enough to expose yourself to “cheap” energy products from an unstable/risky Middle East, but depending on China has its own set of problems. Just like the U.S. felt the pressure on processed and refined rare earths and critical minerals (and is doing more about it), Asia felt China’s hand on the scales of their economy in a bad way, that they could do little about.

Hence, Australia announcing first new refinery in 60 years and spending more on oil exploration than they have in at least a decade.

The U.S. banning diesel exports should help drop prices in the U.S. (I will give the benefit of the doubt to the admin on this one). Though how quickly prices would drop, would depend on how quickly the ban took effect and what it encompassed. Full suspension of the Jones Act would be required (again) – currently it is on a shipment by shipment basis.

Having said that, it should “energize” (pun intended) every country’s efforts to secure their own domestic energy resources better.

It may do more harm than good over the long term. There was a lot done in the name of COVID, that fell into a “let bygones be bygones” bucket. It was a global shock and one that the world had little experience in dealing with. It was no country’s fault (other than maybe China, but I’m not going to put my tin hat on today).

Cutting diesel exports now might hit differently. It is high, but “shockingly” high? Probably not. Is the price action directly linked to the attacks in Iran? Incredibly difficult to argue with. Has Ukraine’s increased attacks on Russian refiners also added to the price problems with diesel? Yes, to a degree. China’s ongoing restrictions are also hurting. So is there a strong case to disrupt trade deals between companies (or countries) right now? A case so strong that it would not cause a shift in long term behavior regarding the status of these deals going forward?

If the U.S. seriously proceeds with this, expect foreign energy stocks to do very well. U.S. energy companies should continue to do well as they are global in nature and will in many cases benefit from increased global tolerance to harness and use the resources at their disposal.

To The Fed – Finally!

Sorry, that took a bit, but kind of more excited about highlighting some other things that might not be getting any attention with all eyes focused on the Fed.

Rate Decision:

  • I don’t think they should hike, for all the reasons we’ve been arguing about for the past few weeks, but let’s assess what is likely.

  • 5% chance of a 50 bp hike. Seems unlikely, but if you want to set the stage for a “one and done” or better yet (in my opinion) a hike that can be undone the moment a deal with Iran is reached and oil prices do come down, there is a certain appeal to this approach. Long end of the yield curve should respond very well. Stocks would likely bounce around trying to get more direction from the press conference.

  • 80% chance of a 25 bp hike. Largely priced in. Bond yields and stocks will need to focus on details, the vote count/dissents and the press conference to get real direction.

  • 15% chance of no hike. Long end of the yield curve would see yields move higher almost instantly. Stocks probably rally initially.

Language, Press Conference, Dissents:

  • Ongoing hawkish bias and inflation vigilance. Flatter yield curves with front end yields rising and longer end yields going lower. Stocks would sell off into the close. Low probability.

  • A maintenance/pre-emptive hike well explained. If they can include some arguments from the T-Report, on why they took this step, but push towards being able to unwind it, rather than cementing it as a first step in a hiking cycle, longer dated bonds start fading (maybe not today, but in the coming days), but stocks can rally. Medium probability.

  • Confusing, poorly explained thought process. Bonds and stocks sell off. Medium probability.

Wild Cards:

  • Warsh seems comfortable with existing balance sheet size. His desire to shrink the balance sheet over time is well known. It adds an “edge” to the market. If he argues along the lines that “now is not the time” or “it is at an appropriate size for current market conditions” or something that should help bond yields a bit. Pushing off the risk of declining liquidity from the Fed would be good for stocks and bonds. Low/Medium probability.

  • Opening the door to a Fed Operation Twist. Powerful for bonds and stocks – nearing a “whatever it takes moment”. Very low probability 

Bottom Line

As much as the market is looking forward to clarity, and getting “what is priced in”, I suspect that by tomorrow there will be more questions than answers and the push to higher yields, across the globe will resume.

We need a breakthrough in the war(s), or a slowdown in compute spend (all of which could occur) to take some pressure off of global bond yields which remain more about supply, than inflation, but the two are linked via the global reconstruction of energy supply chains (a big part of Global ProSec™).

It would be refreshing to see Warsh dissent, but for a hike to go through. Seems unlikely, but would be cool, and probably good for markets.

Good luck as we all spend the time until 2pm, second and third guessing our positioning ahead of the Fed. They should really do this announcement and presser in the morning!

Tyler Durden Wed, 09/16/2026 - 12:05

Zuck Torches Dario's AI Nanny State, Wants 'Trust Us Bro' Instead

Zuck Torches Dario's AI Nanny State, Wants 'Trust Us Bro' Instead

After Anthropic's Dario Amodei set off a firestorm on Saturday calling for a 'pause' in AI development until hand-picked arbiters are installed inside the frontier labs (a gift to Beijing), Mark Zuckerberg sided with the testosterone wing of the tech-bro complex with a builder's response: police yourselves. You don't need anyone's permission - or a cartel, to do it.

Mark Zuckerberg macrodoses mushrooms and fights Dario Amodei in his mindspace (probably)

Amodei published a 3,800-word essay, "We Must Pace the Frontier" - telling the industry to slow down before its own agents got loose, and the response was a group hug: Sam Altman fell in line within hours, Elon Musk said "Dario is right," and by Monday Congress was drafting ways to put the genie back in the bottle. Zuck's plan is different: Frontier Justice. 

According to Investor Nic Carter;

Zuck pretty handily dismantles Dario's talking points here: 

- people want models that are *aligned with them* (subtly punches back at Anthropic's normative constitutional approach) 
- labs already face liability if they screw up, so incentives to release aligned models is already baked in 
- Meta delayed Muse for alignment reasons but didn't make a whole song and dance about it 
- Subtly questions Anthropic trying to kingmake METR (implies METR is an Anthropic patsy) 
- Meta doesn't need to coordinate with anyone to work on alignment, it's just something labs should naturally do

Dario's Plan

Amodei's essay says the newest models have begun improving themselves and a swarm of agents could take over significant parts of the internet within six to twelve months, so the labs should slow the rate at which they add capability. The fix comes in three steps: outside inspectors, with the nonprofit METR as the model, embedded in every lab with employee-level access and the right to publish; a narrow waiver from antitrust law so the frontier labs can agree among themselves on standards and speed; and, eventually, red lines negotiated with China (mmhmm). Before that negotiation, Dario wants Washington to keep the chip ban, crack down on distillation (training a cheap model on an expensive one's answers), lock up model weights, and widen America's lead over the next three to five years. The Global Times counted twelve references to China in a document about safety, and Beijing's Foreign Ministry answered in less than two days, calling it "fearmongering."

To some, the whole thing seemed highly choreographed. Last week an OpenAI-turned-Anthropic researcher quit in protest - saying the industry was gambling with our lives. Two of the three researchers who resigned that week went to METR, as we noted Saturday. By Tuesday the House AI safety bill's Republican co-sponsor, Rep. Jay Obernolte of California, was telling reporters he had met OpenAI's top lobbyist the day before the company endorsed the bill's 3rd party evaluator provision. Meanwhile, a New York assemblyman whose campaign was backed by an Anthropic-funded PAC had launched a $30 million push to make AI safety the Democrats' 2028 platform, and Anthropic's IPO was reportedly in the works. The referee is family too: METR's reported funders are the same donors who financed Anthropic's early rounds and hold its equity, and under the essay's own terms the inspectors sign a contract the lab writes. David Sacks, the former White House AI czar, needed one sentence: stop pretending METR is independent when it is intertwined with Anthropic's investors and staff. None of this proves coordination. All of it explains the salt.

Dario Vs. Zuck

What is the danger? Amodei says capability: systems that improve themselves faster than anyone can check. Zuckerberg says concentration. The argument he made in a July Wall Street Journal essay, The AI Future Is for Everyone, is that a world where a few companies hold the most capable systems is the dangerous one: one person with a superintelligent lawyer wins unfairly, everyone with one gets a fairer system. 

Who checks? Amodei wants an embedded referee with a badge. Zuckerberg wants users and courts. An agent that ignores the people it works for gets abandoned, a lab that ships harm gets sued, and a few billion users correcting a product every day is a larger alignment dataset than any written constitution. Outside evaluators, he says, are "industry best practice" that Meta Superintelligence Labs already uses; they are a tool, not a license.

Who sets the pace? Amodei wants a shared speed limit the labs agree to, with government permission to agree. Zuckerberg's answer is that Meta already paced itself: it sat on its Muse models for months to harden them, "didn't call for everyone else to do this before we would," and shipped. The cleanest speed limit, he argues, is putting most of your compute into serving people rather than into racing self-improvement, a choice visible in capital spending and product cadence rather than in an inspector's report.

What about China? Amodei wants to widen the lead first and negotiate later, arguing the restrictions raise the leverage of democracies and make a deal more likely. Zuckerberg's position, and Beijing's, is that the open-weight world already exists and exclusion makes it less safe, not more. "The key to building a positive future for everyone is maintaining the right balance of power."

Yes, About China... 

The top American AI companies - the cloud-based frontier, run closed models: you rent intelligence by the token, the best systems stay behind an API, and the price holds because nothing as good is available cheaper. That premium justifies the hyperscalers' capital spending, that spending is a large share of what the equity index has been buying for two years, and, as we've extensively covered, the buildout has migrated from free cash flow to the bond market and off-balance-sheet vehicles, which is where the bond desks come in.

And as regular readers understand well, the threat to that chain comes from Chinese open-weight models - which anyone can copy and run. DeepSeek, Alibaba's Qwen, Moonshot's Kimi, MiniMax and Zhipu. They've closed most of the gap at a fraction of the price, with cumulative downloads above 10 billion according to the state-run Global Times (so take with a grain of salt). A kill switch on Claude does not switch off Qwen. Tsinghua's Xiao Qian read the essay's China provisions that way: closed models losing ground on cost, performance and developer adoption, and export controls that would protect the business. A safety panic that lands at the exact moment the closed-model premium is under pressure, and that asks for export controls in the same breath as a coordination waiver, could simply be defending balance sheets. 

In July roughly 1,200 OpenAI research agents in a sandbox with no internet access found a previously unknown flaw in the package proxy that was their only route out, built shared tools to reach the internet through a third party's cloud sandbox, and about 700 of them attacked Hugging Face. Nobody told them to go online, yet they did, in an experiment run with the standard safety classifiers switched off - making it both avoidable and alarming. China's own security minister named Claude Mythos and GPT-5.5-Cyber on Sunday as systems that sharply raise the efficiency of finding vulnerabilities and writing malware, and Reuters reports that Washington's worry is a future Chinese model with the same capabilities. Both governments treat the thing as a weapon. Whether the labs' remedy is safety or a moat is a separate question, and a reader can hold both.

The Hole In Zuck's Plan

Zuck wants a free market with the minimum required oversight, and the model his argument leads to is effectively; investigate incidents, let liability bite, let evaluators compete, and never make anyone ask permission to ship. Two caveats. Liability prices ordinary failures, not irreversible ones, and "we sat on Muse for months" is exactly the kind of claim an inspector exists to check. Let's also acknowledge that Meta has the least to lose from mocking a pause: Llama 4 landed as an open-weight disappointment, the company pivoted to closed Muse Spark in April - and it's not exactly leading the pack. 

Zuckerberg's plan also only works if the model is a cloud-based, closed-weight product. Alignment trained into a model and guardrails wrapped around it are enforceable when Meta is serving it. But with open weights, anyone can 'fine tune' an advanced model to have no guardrails whatsoever. That genie is already out of the bottle, so US labs will either have to flip to open weights to compete - and pray for a bailout when the capex math breaks, OR perhaps the great panic of 2026 will succeed - maybe after a power plant or two get hacked by a rogue botnet.

Zuck's solution doesn't touch Qwen or DeepSeek, and neither does Amodei's - evaluators and a waiver govern American closed labs, and export controls can slow China's next model without retracting the weights allegedly on ten billion hard drives. One begs for regulatory capture; the other keeps governance inside the labs with no referee at all.

Tyler Durden Wed, 09/16/2026 - 11:55

Barclays Warns Potential US Diesel Export Ban Could Backfire

Barclays Warns Potential US Diesel Export Ban Could Backfire

Senate Majority Leader John Thune revived discussion of a potential US diesel export ban with reporters Tuesday, a day after Interior Secretary Doug Burgum said any export halts on crude or petroleum products were unlikely to lower consumer prices. The divergence in messaging suggests growing pressure across the Trump administration to contain surging fuel costs ahead of the midterm elections as the global refining crisis pushed the US diesel crack spread to a record $117 a barrel early Wednesday morning.

US Diesel Crack Spread v. US 10Y 

A diesel export ban could force domestic refiners to slash production, shift profits to overseas competitors, and worsen global fuel shortages while delivering little relief to US consumers, according to Barclays refining and midstream analyst Theresa Chen.

"We continue to view the possibility of an export ban as both detrimental to the US refining complex and unlikely to provide the intended price relief," Chen wrote in a note to clients on Tuesday.

Chen outlined one major problem: keeping diesel inside the country does not guarantee it can reach gas pumps.

Gulf Coast demand is already supplied with the industrial fuel, while pipeline capacity to move additional fuel to the East Coast, Midwest and Rocky Mountain regions is limited. Domestic markets connected by those pipelines would be unable to absorb current Gulf Coast export volumes, the analyst said.

Chen added that with surplus diesel backing up, Gulf Coast refiners would likely have to reduce processing rates. Those cuts could spread to the Midwest as displaced Gulf Coast barrels pressure regional supply balances.

Any export ban covering refined products without corresponding restrictions on crude would allow overseas plants to keep buying US oil and increase production while US refiners cut runs. Refining profits would shift abroad, with little benefit for domestic buyers.

Retaliation in the era of resource nationalism is another major risk because removing US diesel from an already tight global market could deepen shortages for trading partners. If European or Asian suppliers responded with their own restrictions, consumers in regions highly dependent on imported fuel could face skyrocketing prices.

Professional subscribers can read more about refined products markets here at our new Marketdesk.ai portal. 

Tyler Durden Wed, 09/16/2026 - 11:45

Houthis Issue Video Of Saudi F-15 Shootdown, As Ground Clashes Intensify In Yemen

Houthis Issue Video Of Saudi F-15 Shootdown, As Ground Clashes Intensify In Yemen

Update(1135ET): The Houthis have released new footage which appears to confirm the earlier Saudi F-15 jet shootdown, with aircraft falling in the Marib area. The footage shows militants celebrating near the wreckage.

Below is the clip as released by Ansar Allah officials, which has since been given confirmation by some foreign and international outlets. It suggests that the Houthis have locally-made ability to down advanced aircraft, which should seriously worry Riyadh and Washington.

According to the latest on the fighting in Yemen, clashes are intensifying:

Yemen’s pro-government Southern Giants Forces say that they are engaged in clashes with Houthi forces on the Kahboub front near the Bab al-Mandeb strait.

The government-aligned forces claim in a social media post that they have inflicted heavy personnel and equipment losses on the Houthi forces.

Global oil prices continue climbing amid a slew of negative headlines:

  • WRIGHT: LOOKING AT USING DPA TO INCREASE REFINING CAPACITY
  • WRIGHT ON EAST-WEST PIPELINE: 3 PUMPING STATIONS WERE HIT

From bad to worse for the coalition:

*  *  *

Yemen's Ansar Allah (Houthi) movement has claimed to have shot down a Saudi fighter jet in a Wednesday statement, saying they utilized domestic made munitions to do it.

"The Yemeni Armed Forces, with Allah's aid and grace, succeeded in shooting down a Saudi F-15 fighter jet while it was carrying out hostile operations," Houthi military spokesman Yahya Saree announced.

Royal Saudi Air Force

He said the fighter jet had been targeted "using a locally made" missile over Marib - after the Saudi coalition has launched some 450 strikes. The area of the alleged downing is some 75 miles east of Sanaa.

Saudi authorities have not acknowledged any shootdown and have not immediately commented on the claim.

Overnight, the big news out of the conflict focused on Saudi claims that it had intercepted a Houthi drone targeting Yemen in a "heinous" act targeting Islam's holiest site.

However, the Houthis are vehemently denying sending a drone on Mecca. "Our operations target its oil facilities and military bases, which are far removed from the sacred sites," Saree said further.

The Houthi military spokesman called out the "fabrications and lies propagated by the criminal al-Saud regime cannot deceive anyone."

Missile alerts had been issued for the population of Mecca, and plenty of old and fake social media videos purported to capture footage of a drone inbound on Mecca, but so far no clear evidence has emerged of the alleged targeting.

But the Saudi claims were enough to get Pakistan's Prime Minister Shehbaz Sharif to condemn Wednesday "in the strongest possible terms the dastardly and heinous" the alleged attack on Mecca.

"The people of Pakistan are saddened and perturbed by this outrageous act," he said on X.

Unconfirmed image of downed jet posted by Iranian state media:

Pakistan and Turkey just recently this summer signed a comprehensive "Mecca Defense Pact", and the Saudi claims that Mecca was targeted by drone are perhaps intended to secure the help of allies in dealing with the advancing Houthis menace while a Red Sea 'siege for siege' policy is still in effect. As for the lates developments to emerge Wednesday, via Newsquawk:

Houthis say they carried out two military operations, targeting Saudi Aramco in Yanbu with dozens of ballistic missiles and drones and Khamis Mushait Air Base with a number of ballistic missiles.

The damaged Saudi East-West pipeline could still take five to six weeks to come back online, according to some estimates.

* * *

Tyler Durden Wed, 09/16/2026 - 11:35

What If Warsh Shocks The Market And Keeps Rates On Hold

What If Warsh Shocks The Market And Keeps Rates On Hold

Ahead of today's FOMC announcement at 2pm, the prevailing consensus is that Warsh will raise rates but he doesn't need to, as tariff inflation is now fading fast, the bulk of headline inflation is driven by one-time supply shocks from the Iran war which the Fed is powerless to fix, and the upcoming change to the PCE methodology will trim the YoY print by about 0.3%, suggesting that the Fed will be hiking at a time when core inflation is the lowest in years.

In fact, as Goldman and many others suggested, the only reason why Warsh will hike is because the market is now certain Warsh will hike as the Fed does not want to disappoint the market and spark a rout ... thereby making a mockery of his prior statements that he won't be led by the market (we previewed all this in great detail here), to wit:

The CPI report had little impact on our inflation view but pushed market pricing of the probability of a hike to nearly 90%, which puts pressure on the FOMC to deliver a hike to avoid the market reaction that would likely follow from remaining on hold... We expect the FOMC to make only the minimum necessary change to its statement, which will likely note that the FOMC is hiking in support of the goal of returning inflation to 2% but will likely avoid providing guidance on the path forward or the criteria for further hikes. - Goldman

But what if Warsh does precisely what he warned he would, and - ignoring market certainty and expectations of a 25bps rate hike, not to mention the resulting tantrum - he keeps rates on hold? 

To be sure, it's hard enough to go against the market, so one can only imagine how hard it is for Fed Chair Warsh and the FOMC to stare it down. Yet as Standard Chartered's Steven Englander writes, "there seems to have been a market echo chamber pushing up expectations despite a limited amount of incoming data, little sign that inflation is going up, some indications that underlying inflation is much lower if tariffs and other factors are removed and the prospect of more informative data within a couple of meetings."

As Englander notes, much of Warsh’s discussion has focused on the Fed influencing the market too much, but the move from the pre-Jackson Hole ‘Warsh has to show that he is willing to hike’ to ‘Warsh will hike if inflation doesn’t come down’ to ‘Warsh has to hike unless the next CPI is really soft’ to ‘Now the debate is on how many hikes he has to do’ in two weeks suggests that the influencing pattern can go both ways.

To be sure, while the path of least resistance may be to hike, the Std Chartered strategist sees a real cost down the road if the hiking turns out to be unneeded and the FOMC has to reverse. As a result, and setting aside market pricing, Englander believes that there is a very low cost to waiting.

Ok, assume Warsh does not "rip the bandaid" simply because the economy does not merit it, and keeps rates on hold? We already noted that according to JPMorgan this outcome would shock the market and send stocks sliding:

Not surprisingly, Englander has been asked by his readers how Warsh could manage disappointing the market in such a major way. Well, as he discusses in his latest note, it would be hard for Warsh to avoid accusations of being the President’s man and have his credibility questioned harshly, but that is the Day 1 reaction.

At the press conference he could stress that he is opposed to giving forward guidance but not opposed to backward guidance, i.e. explaining precisely the rationale behind the decision and warning the market that the Fed will not be afraid to wrong foot them if it feels pricing is wrong.

Subsequently if others like Waller and Williams who are not tainted with Trump independence issues, defend the hold the market is likely to calm down. And, as a hedge, it wouldn't be forward guidance to say that the FOMC can’t do a 50bp move if it becomes clear that underlying inflation is stubbornly high or rising.

As Englander concludes, in theory this is a second-tier meeting – there is no urgency about moving or not moving. But it is a first-tier meeting because it can define how much stomach Warsh has to be independent of the market. The long game is that if Warsh makes a strong defense of his stance then the credibility crisis is short term. By year-end he can be hiking or holding with more information and moving decisively if a hold is wrong.

But if the perception emerges that Warsh is afraid to face down the market this will be the beginning of a wash, rince, repeat cycle. Market participants will assess the weak side of the Fed stance and press that weakness knowing that the FOMC will bend.  

More in Englander's full note "Hiking is the wrong choice."

Tyler Durden Wed, 09/16/2026 - 11:25

EU Opens Door For Canada To Become Bloc's First-Ever "Associate Member"

EU Opens Door For Canada To Become Bloc's First-Ever "Associate Member"

Thanks to how mean President Trump has been, Canada could become the first-ever "associate member" of the European Union under a proposal unveiled Wednesday by European Commission President Ursula von der Leyen, as Ottawa looks to reduce its economic dependence on the United States.

Speaking during her annual State of the Union address in Strasbourg, with Canadian Prime Minister Mark Carney in the front row as the first foreign head of government ever to attend the speech, von der Leyen said Brussels wants to take its relationship with Canada to an unprecedented level.

"We must urgently reimagine our partnerships," von der Leyen said, before telling Carney she wanted to work with him on "opening the door for Canada to be the first associate member of the EU."

There is just one complication: no such status currently exists.

EU treaties allow European countries to apply for full membership, while Brussels maintains an assortment of trade, association and single-market agreements with countries outside the bloc. But "associate membership" would be something new, meaning its rights, obligations and legal structure would have to be negotiated essentially from scratch.

Reuters notes that any serious move toward such a status would also face the politically difficult task of winning support from all 27 EU member states.

And Carney himself has stopped short of calling for full EU membership. On Sunday, after a Wall Street Journal report that Canada was exploring membership, he described what Ottawa is seeking as a "unique alliance" with Europe. He addresses the European Parliament on Thursday.

The substance of what Brussels is proposing, however, goes considerably beyond another trade agreement.

Canada and the EU already have CETA, their comprehensive free-trade deal. Von der Leyen said Wednesday that the two sides now want to move "from CETA to an Alliance for the Future" encompassing manufacturing, technology, defense, energy, critical minerals, batteries, artificial intelligence, quantum computing, cybersecurity and Arctic security.

"We will integrate defence industrial bases," she said.

That process has already begun.

Canada became the first non-European country allowed to participate in the EU's €150 billion SAFE defense procurement program under an agreement signed in February and formally concluded by the EU Council in June. The arrangement allows eligible Canadian companies and Canadian-origin products to participate in procurement financed by the program.

The EU-Canada defense relationship has also expanded into military mobility, interoperability, maritime and space security and defense-industrial cooperation.

Then there's the economics of the idea. Roughly 70% of Canadian exports go to the United States, making any rapid decoupling unrealistic. At the same time, Trump's tariffs and repeated talk of a 51st state have given Ottawa a powerful incentive to diversify. Europe, meanwhile, needs resources. 

Von der Leyen warned Wednesday that Europe remains more than 80% dependent on China for many critical raw materials, with dependence reaching 90% for some rare earths.

"No country can do this alone," she said.

Canada possesses significant reserves of nickel, uranium, potash, cobalt, lithium and rare earth elements, among other commodities increasingly regarded as strategic inputs for batteries, semiconductors, defense equipment and energy infrastructure.

That makes a deeper Canada-EU relationship potentially complementary: Europe gets another source of strategic commodities and energy while Canada gets a large alternative market, industrial investment and greater access to European defense and technology programs.

There is nevertheless a potentially uncomfortable tradeoff for Ottawa. If "associate membership" eventually includes meaningful access to the EU's roughly €18 trillion single market, Canada could be required to align portions of its regulatory regime with EU rules. Reuters notes that this could leave Ottawa accepting European regulations without receiving the voting rights enjoyed by actual EU members.

Canada could gain market access while becoming, at least in some areas, a rule-taker rather than a rule-maker.

Tyler Durden Wed, 09/16/2026 - 11:05

House Votes To Pass Iran War Powers Resolution

House Votes To Pass Iran War Powers Resolution

Authored by Timothy Frudd via The Epoch Times,

The House of Representatives voted on Sept. 15 to pass a war powers resolution that calls for President Donald Trump to end U.S. military action against Iran.

Following a floor debate on a war powers resolution aimed at directing Trump to remove U.S. forces from hostilities against Iran without congressional authorization, the House voted 220-204 to pass House Concurrent Resolution 93.

Rep. Seth Moulton (D-Mass.) initially introduced the resolution in April.

During Tuesday's floor debate, Rep. Gregory Meeks (D-N.Y.) said the war with Iran has been a "strategic failure," leaving the United States with depleted weapons stockpiles and a "tab of more than $100 billion that taxpayers will have to cover."

Meeks, who introduced a war powers resolution passed by the House in June, said on Tuesday that the resolution "made clear what the Constitution makes clear: Congress, not the president, has the power to decide when the United States goes to war."

In his remarks, Meeks asked if the war had produced any of its promised objectives.

"The Strait of Hormuz remains a source of enormous risk to global energy markets, and Iran's nuclear and missile capabilities, despite what the administration claims, clearly remain."

The House previously passed two war powers resolutions in an effort to limit Trump's authority to direct U.S. military actions against the Iranian regime.

However, the resolutions have only acted as a symbolic rebuke of the president's military campaign against Iran.

The War Powers Resolution of 1973, also known as the War Powers Act, is a federal law that aims to limit the authority of the president to authorize military actions without congressional approval.

The Trump administration has disputed the War Powers Act as unconstitutional and not binding.

The House voted 215-208 in favor of a war powers resolution directing Trump to end the war in Iran on June 3.

Reps. Tom Barrett (R-Mich.), Thomas Massie (R-Ky.), Brian Fitzpatrick (R-Pa.), and Warren Davidson (R-Ohio) joined all voting Democrats in supporting the resolution.

The vote drew a rebuke from Trump, who criticized the Republicans for joining Democrats to pass the resolution.

"Yesterday, in a meaningless vote, the House voted, 4 bad Republicans and all of the Dumocrats, to limit my War Powers, right in the middle of my final negotiations to end the War with the Islamic Republic of Iran. Who would do such an unpatriotic thing," Trump wrote in a June 4 statement on Truth Social.

On June 23, the Senate voted 50-48 in favor of the concurrent resolution to limit Trump's ability to direct U.S. military action against Iran.

However, the resolution was reversed the following day after Trump confronted Republican senators.

The House also voted 214-208 on July 23 to pass a war powers resolution directing the president to remove U.S. military forces from hostilities with Iran.

The same four Republican representatives joined Democrats in supporting the measure.

Just hours after the House approved the second war powers resolution, the Senate voted 47-49 against a similar resolution.

The United States launched Operation Epic Fury against Iran on Feb. 28, conducting strikes on thousands of Iranian military targets.

Trump announced a ceasefire in early April before the United States and Iran signed a memorandum of understanding outlining a plan for peace on June 17.

Following the collapse of the memorandum of understanding, the United States resumed strikes on Iran in July, carrying out nearly two weeks of daily attacks.

As peace talks have stalled over the past couple of months, the Trump administration has also launched Operation Economic Outcast to increase pressure on Iran through sanctions.

On Monday, Trump suggested that his administration was open to possibly resuming negotiations with Iran.

"The failing Nation of Iran wants to make a deal, quickly and badly," Trump wrote in a statement on Truth Social.

"I will determine whether or not the U.S.A. will choose to engage - the concept of which we are open to."

Tyler Durden Wed, 09/16/2026 - 10:50

WTI Holds Losses As Crude Production Hits Record High, SPR/Cushing Near 'Tank Bottoms'

WTI Holds Losses As Crude Production Hits Record High, SPR/Cushing Near 'Tank Bottoms'

Distillates have gone vertical again and physical markets remain incredibly tight, according to Goldman's Rich Privorotsky.

Saudi’s East-West pipeline disruption forced the suspension of Yanbu loadings and cancellation of some European cargoes, with European physical crude trading north of $130 in places yesterday.

Despite all that, there are reports of more visible signs of cargoes moving through the Strait.

"Iraq's seaborne crude oil exports from its southern Gulf terminals averaged 3.16 million barrels/day in the first 10 days of September, nearing the prewar levels of 3.335 million b/d recorded in February" - Platts.

But for now, the market is watching inventories...

API

  • Crude +7.1mm

  • Cushing -246k

  • Gasoline +1.5mm

  • Distillates +1.6mm

DOE

  • Crude -640k (-1.4mm exp)

  • Cushing -342k

  • Gasoline +794k

  • Distillates +1.58mm

US crude stocks drew down inventories for the 3rd week in a row (though only by a de minimus 640k) but drastically different from the 7.1mm build that API reported.. 

Cushing stocks fell again, putting tank bottoms in view...

The Trump admin drained the SPR once again, but the 403k draw was the smallest since the war began...

...as 'tank bottoms' loom for the reserve...

US crude production was steady at record highs...

Refiner crude runs fell in most US regions last week but remain at the highest seasonal level since 2018. Runs last week were less than 100,000 barrels a day below reaching the highest seasonal level ever, continued evidence of how hard the US fuel-making fleet is running.

WTI was trading around $103 ahead of the official data

To close, we go back to where we started with Goldman's Rich Privorotsky noting that while he admits to having no special insight in Energy, like everyone else, he's trying to focus on incentives.

"Economically, it is rational for all sides to try to find a pathway toward a deal, but I have very little certainty around timing/outcome...it does seems more is getting out of the strait then people appreciate."

With gas prices at record highs for this time of year, President Trump has lots of incentives...

Especially with the odds of a Democratic Sweep in November soaring...

China increasingly feels like an important potential catalyst.

Araghchi is in Beijing for talks with Wang Yi today, while Bessent meets He Lifeng this weekend ahead of the planned Trump-Xi summit on September 24. Iran is expected to feature in those discussions. China has meaningful economic leverage with Tehran and a direct channel into Washington... if Beijing wants to use both, that creates a credible bridge toward an off ramp.

Feels like the key potential diplomatic pathway to watch...

Tyler Durden Wed, 09/16/2026 - 10:40

SK Hynix Explores First US Memory Chip Production With Intel

SK Hynix Explores First US Memory Chip Production With Intel

Intel’s unfinished Ohio manufacturing buildout could wind up getting an unexpected tenant: SK Hynix, according to Reuters.

The Korean memory giant is exploring several ways to establish chip production in the United States, including a possible arrangement involving Intel’s Ohio facilities. One concept would give SK Hynix access to unused factory capacity there. A more ambitious structure could bring Intel, SK Hynix and major cloud companies together in a new partnership aimed at increasing the supply of memory needed for AI infrastructure.

Reuters reports that nothing has been finalized, and exactly what SK Hynix might produce in Ohio remains an open question. The company makes everything from conventional DRAM and NAND storage to high-bandwidth memory, where it has become a critical supplier to the AI industry.

The timing makes sense for both companies. AI data-center construction has created enormous demand for memory, while SK Hynix is being pushed by customers and governments to increase production. Intel, meanwhile, has billions of dollars tied up in an Ohio expansion that has taken much longer than originally planned. The first factories there are now expected around 2030 and 2031.

Building memory chips in America would carry a higher price tag than doing so in Asia, where SK Hynix already benefits from an established semiconductor ecosystem. But economics are no longer the only consideration. Washington has been aggressively trying to move more semiconductor manufacturing onto American soil, including by threatening steep tariffs on overseas producers that fail to expand U.S. capacity.

That creates an awkward balancing act for SK Hynix.

South Korea also wants more semiconductor investment at home and treats some advanced chip technologies as strategically important.

Moving production of sophisticated memory such as HBM or DRAM overseas could therefore face additional scrutiny from Seoul.

SK Hynix says it is examining different options for expanding its manufacturing base but has made no final decision regarding Intel or U.S. memory production. Intel has declined to discuss the reported negotiations while reiterating that work on its Ohio site continues.

For Intel, even an exploratory deal offers an intriguing possibility: turning part of a delayed and enormously expensive manufacturing project into capacity for one of the biggest beneficiaries of the AI boom. Investors liked the idea.

Tyler Durden Wed, 09/16/2026 - 10:25

Pivots

Pivots

By Bas van Geffen, senior macro strategist at Rabobank

The situation in the Middle East remains on an escalatory path, with Houthi attacks on Saudi Arabia now a regular event. Attacks have already damaged the east-west pipeline, which allowed Saudi Arabia to bypass the Strait of Hormuz.

The damage to the pipeline increases Iran’s leverage. It forces Saudi Arabia to pivot back to oil exports through the Strait of Hormuz. Bloomberg reports that the country is already increasing sales of spot cargoes for ship-to-ship delivery in the Gulf of Oman, which means that the Saudis are taking the responsibility and risk of transporting the crude through Hormuz.

Further supply risks follow from the Houthis taking key areas around the Bab el-Mandeb strait and rumors they have laid mines in the waterway, which puts new constraints on tanker movements. Following the unfolding escalation in the Middle East, we have updated our energy forecasts.

The energy market had already shifted higher on the news of re-escalation, and prices of crude and refined products are drawing new attention from motorists and lawmakers. Yesterday, US Senate Majority Leader Thune said he is “open to exploring” a diesel export ban if that helps ease domestic price pressures. If this idea gets more traction, it would predominantly be at the cost of Europe and South America. Or could these new supply chain disruptions be the catalyst for more countries to send military assets to the region?

The energy supply shock is also creating an increasingly difficult situation for central banks. Interest rates continue to rise in tandem with energy prices. Our US strategist still believes that the nature of the shock does not warrant a hike, but a credibility problem is pushing the Fed into a corner.

Markets expect much more than a one-and-done hike, but the same goes for expectations embedded in curves where central banks have shown a more proactive response. Yesterday, EUR money markets priced more than four additional rate hikes on top of the two the ECB has already delivered.

Policymakers probably do not mind some financial tightening that follows from rate hike expectations, but markets have probably gotten a bit too far ahead of the central banks – which are increasingly struggling to balance inflation and growth risks, and growing uncertainty.

If rate setters do not give any pushback, the market could wag the central bank into further rate hikes and more restrictive policy than they may deem necessary. Yet, pushing back is difficult. Inflation risks remain to the upside, and central bankers don’t want to sound complacent since this could affect inflation expectations.

In her press conference last week, ECB President Lagarde already refused to reaffirm that markets “understand the ECB’s reaction function well,” which we construed as a hint that the market may be moving faster than the policymakers like. Even though energy-driven inflation is set to increase further, price pressures are still mostly driven by that supply shock and there is no evidence that inflation is spreading.

Yesterday, anonymous sources “leaked” to MNI News that any next move would probably not be in October, but in December. Market-implied odds for the October meeting dropped from a likely hike to a coin toss after the news broke. And interestingly, the story also suppressed pricing for the next 12 months – suggesting that the pushback helped to dampen expectations of a more forceful response across the board. We imagine there may be more leaks in the coming weeks to at least lessen the expectations for the October meeting.

Likewise, the market pared back expectations for the Bank of England somewhat after today’s inflation data. UK inflation was in line with expectations, with higher energy and fuel prices the main cause of the rise to 3.1% y/y. Beyond that, there is very little that may alarm the MPC ahead of their meeting: core CPI and services CPI are both unchanged, and food CPI is also not doing what was expected.

Combined with yesterday’s labor market report, which showed slack continuing to rise, and survey evidence from the DMP that showed relatively muted selling price expectations, this all suggests that second-round risks remain contained. The data clearly support a hold tomorrow at 3.75%, which is already around 50bp above economists’ estimates of the UK’s neutral rate.

Whereas the ECB provided some hints about their next move, the central bank has yet to provide clarity on its leadership. The central bank’s staff have reportedly urged President Lagarde to state whether she does or does not intend to serve her full term, so that uncertainty does not undermine the institution. Rumors of Lagarde’s early departure still rampant, and Ms. Schnabel has also been tipped to leave early to fill a vacancy at the IMF.

In addition to personal motivations, the prospect of Le Pen winning the French presidential elections is fuelling speculation that European leaders want to fast-track key decisions to avoid that the Eurosceptic can delay or derail them.

Indeed, France may have started horse trading for the three soon-to-be-vacant seats in earnest. Reuters reported that President Macron may support Klaas Knot’s candidacy for ECB president if the chief economist job goes to a French candidate. We can certainly name a couple of French economists who would be suitable. However, Germany may also eye the economist role instead of Schnabel’s current focus on market operations.

Internal divisions already complicate decision making on multiple fronts. European diplomats poured some cold water on PM Carney’s hopes to strengthen the ties between Canada and the bloc, to strengthen the countries’ position versus the US and China. Unsurprisingly, the countries that rely most on NATO’s deterrence are wary of the damage this could do to EU-US ties.

Tyler Durden Wed, 09/16/2026 - 10:05

Diesel Crack Spread Explodes To Record As Russia Weighs Longer Export Ban, US Eyes Its Own

Diesel Crack Spread Explodes To Record As Russia Weighs Longer Export Ban, US Eyes Its Own

Diesel futures and refining spreads climbed to record highs as worsening supply disruptions in the Gulf and Russia tightened availability of the industrial fuel that powers the global economy.

Potential export restrictions, or at least extending risk, are compounding the squeeze: Moscow is reportedly considering extending its diesel export ban, while Senate Majority Leader John Thune told reporters Tuesday he was "open to exploring" a US diesel export ban.

Nymex heating oil futures, the US benchmark for diesel, jumped 6.1% Tuesday to their highest settlement in records dating to 1986. European gasoil futures climbed 6.2% to a record in data going back to 1989. 

The squeeze was even more severe in refining spreads. The US heating oil crack, which measures the difference between fuel and crude prices, surged to $117 a barrel on Wednesday morning, the highest level in Bloomberg data going back to 2009.

Moves in diesel and refining spreads show the energy shock isn't necessarily in crude available on global markets but is, in fact, festering deep inside the industrial fuel market as a global refining crisis. 

Russia is considering extending its diesel export ban through October, potentially adding pressure as the Northern Hemisphere approaches winter.

Barclays refining and midstream analyst Theresa Chen commented to clients on Tuesday about Thune's comments on a potential US diesel export ban. She said, "Given renewed discussion surrounding a diesel export ban, we discuss the potential implications across our refining coverage. We continue to view the possibility of an export ban as both detrimental to the US refining complex and unlikely to provide the intended price relief."

At the start of the week, Bloomberg Intelligence senior commodity strategist Mike McGlone warned that the diesel price shock echoes similar moves gasoline made during the 2008 energy shock.

Tyler Durden Wed, 09/16/2026 - 09:45

Rep. Mace Demands Public Execution For Lindsay Clancy

Rep. Mace Demands Public Execution For Lindsay Clancy

Authored by Steve Watson via Modernity News,

Speaking to TMZ DC on Monday, the South Carolina Republican called Clancy a "serial killer" and demanded the death penalty as a public spectacle.

"Her children are dead. She should be dead too," she said. "She should get the death penalty. It should be public. It should be a public execution."

When the reporter asked what that would look like, Mace did not retreat. "It could be by a firearm; it could be the electric chair. I don't really care. Not an injection."

Pressed again on whether she wanted Clancy in the electric chair in front of a crowd, she answered, "A hundred percent." Then she put the point in the plainest English available: "She's a serial killer. She should get the electric chair. She should get the death penalty. It should be public. It should be a warning to women everywhere. You don't kill your kids."

She later posted on X that Clancy "doesn't deserve to live." After TMZ bleeped a slur she used for Clancy's lawyer, she posted again: "I didn't know you could bleep the word retarded?"

Massachusetts has not carried out an execution since 1947. Its highest court struck down the state's capital statute in 1984. First-degree murder there means life without parole.

Clancy's lawyer, Kevin Reddington, has spent the trial arguing postpartum psychosis and a lack of criminal responsibility for the murders. Prosecutors said she cleared the house, chose a method (strangulation) that worked on the children, and chose a different method for herself that failed.

After 21 days of testimony, more than 80 witnesses and roughly 38 hours of deliberations, the jury hung. Judge William Sullivan declared a mistrial on September 4. The defense has said the split was 11-1 for not criminally responsible.

One juror - described in coverage as a Black man in his 30s - would not sign that finding. Reddington tried to have him ejected. The judge refused. The Massachusetts Supreme Judicial Court denied an emergency appeal. Outside court, Reddington said the other jurors had been "robbed by one man, for whatever his agenda was," and added, "I hope that guy can sleep well at night."

In mid-August, hundreds of women in pink gathered outside Plymouth Superior Court for a "Stand in Peace." They cheered when Clancy's transport arrived. Organizer Renee Kimball said, "I think that every one of us women believe that it could be any one of us." Another supporter put it more bluntly on camera: "It could be me."

Online, the same cohort poured money into a GoFundMe for Clancy's parents that raced toward seven figures. TikTok mothers filmed themselves "relating" to the confessed killer while holding their own infants. Some insisted Patrick must have done it, in spite of Lindsay's admissions, her lawyer's opening, the 911 tape and the lawsuit that says she killed the children.

After the mistrial, Patrick Clancy's lawyers said he and his family had been hit with "a relentless, escalating and destructive defamation campaign" from "minor celebrities, so-called influencers and outright conspiracy theorists" selling the lie that the father was involved.

Attorney Howard Cooper said the smear sat "at a fever pitch," with real threats to Patrick's reputation, livelihood and life. "Enough is enough - this spread of blatant and baseless falsehoods must stop," Cooper said.

Law enforcement was notified. Patrick has said before that he forgives Lindsay and calls her ill rather than evil. That distinction has not interested the people targeting him.

While the Clancy jury was still out, an Illinois mother named Corie Walsh hanged her 2-year-old son, Barrett, from a basement rafter in Frankfort. She told police the boy was the "devil" and the "anti-Christ." Witnesses said she had become "very invested" in the Clancy trial and was still texting friends about it hours before the child was found.

Her lawyer reached for the same word the pink shirts have been rehearsing: psychotic episode. Prosecutors said she spoke of harming the remaining children and her husband.

Then Oprah flew in for a "watershed" taping branded as understanding postpartum psychosis. A doctor in the room demanded "the same passion for people who don't look like Lindsay," complained about "melanin" and "privilege," and asked the audience to keep "the pink shirts and the energy" for other women in prison "for this same thing." The room cheered.

When a young woman stood up and said, "I do believe she's a murderer," Oprah answered: "After all you've heard today?"

That is the moral arithmetic this case has been selling. The children are scenery. The mother is the cause. The man who will not play along is the problem.

Last week Reddington went on Good Morning America and asked President Trump to pardon his client. "Mr. President, I would hope that you would consider this young lady and the person she is, what she's been through, and consider a pardon," he said. A president cannot wipe away a Massachusetts murder case. Reddington knows that. Mace called the stunt "nasty" and "ugly."

Trump has not played chaplain to the fan club. After the mistrial he said Clancy "did a horrible, horrible thing," that "there'll be a price," and that it would be "mental institution or jail or something."

Asked again after the pardon plea, he said it is "a state situation, not a federal one." "There is no winner there," he added. "There's no win no matter what you do. Three children are dead."

Mace added child rapists to her list of public executions and asked the only follow-up that matters in a culture that medicalizes everything except the bodies in the basement: "If people can get away with murdering children, what else can they do? ... There are no rules. There are no laws."

Tyler Durden Wed, 09/16/2026 - 08:45

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