Newsom Signs Laws Banning Shock Gloves And Taxing Immigration Detention Centers

Authored by Chase Smith via The Epoch Times,

California Gov. Gavin Newsom signed 21 bills on Sept. 29 aimed at limiting federal immigration enforcement in the state, including a ban on officers using shock gloves and a new 25 percent tax on private detention centers.

California Gov. Gavin Newsom speaks in Los Angeles on Sep. 25, 2024. John Fredricks/The Epoch Times

"California is taking action to strengthen transparency, accountability, and oversight around immigration enforcement in our state," Newsom said in a statement.

"This is about stepping up where the federal government has failed our communities," the Democratic governor said. "We will continue protecting our people, upholding the rule of law, and making clear that if the federal government operates in California, we will hold them accountable."

The shock glove ban applies to all officers in California, including federal immigration agents. It takes effect next year, expires Jan. 1, 2030, and requires the state Department of Justice to complete a safety study on the devices by Jan. 1, 2029.

Immigration and Customs Enforcement (ICE) awarded a $16.7 million no-bid contract last month for 6,000 pairs of the gloves, which deliver an electric shock at the push of a button. ICE said at the time that the devices would help officers control resisting detainees and protesters.

"Sanctuary politicians attempting to ban our federal law enforcement from any safety equipment is despicable and a deliberate attempt to undermine and endanger our officers," the agency said in a statement at the time, responding to a group of Democratic lawmakers who urged the agency to abandon the plan.

California law enforcement groups broadly opposed the shock glove ban, including Sacramento Sheriff Jim Cooper, a Democrat and former state lawmaker.

"When the federal government does something, the state Legislature wants to ban it," Cooper said at a news conference last month.

"For me, use of force is so important. We talk about it all the time. De-escalating [to] a lower level of force. What they're doing by trying to ban this glove, and it conducts electricity - a much lower voltage than a taser - they're making our job harder."

Newsom also signed a revised ban on officers wearing masks. A federal judge blocked the state's first mask ban in February, ruling that it unfairly targeted local and federal officers because it exempted state officers. The new law applies to all officers.

Other bills Newsom signed on Tuesday restrict the use of state-owned property for immigration enforcement staging, processing, or detention, and one allows people to sue federal officials accused of violating their constitutional rights.

Another law protects people traveling to and from courthouses from civil arrest, and another bars ICE officers who have committed serious misconduct from becoming police officers or public employees in California.

A fifth law requires rental vehicles that law enforcers use for arrests or transport to display a decal identifying the agency, with limited exceptions.

Detention center taxes will go to state immigration-related services. A separate bill ends a property tax exemption claimed by some detention facilities.

Newsom's office acknowledged in its announcement that California "cannot dictate federal immigration policy." It said the state can set requirements for state property, state resources, detention facilities, public records, and law enforcement practices where federal enforcement operates in California.

Courts have mostly sided with the Justice Department in challenges to state limits on federal agents. In April, an appeals court blocked California's separate law requiring officers to wear identification, ruling that it violates the Supremacy Clause of the Constitution. Federal judges have since blocked mask bans in Virginia on June 30, Philadelphia on July 2, and New York on Aug. 3.

States have fared better on other measures. On Sept. 4, a federal judge dismissed a Justice Department lawsuit challenging an executive order by New Jersey Gov. Mikie Sherrill, a Democrat, that bars federal immigration officers from using state property for enforcement. California's package includes a similar ban on state-owned property.

"To be crystal clear: we will not abide by unconstitutional mask bans," a Department of Homeland Security spokesperson said in an emailed response to an inquiry from The Epoch Times on Tuesday.

"The Supremacy Clause makes it clear that California's sanctuary politicians do not control federal law enforcement. No tax will stop ICE from deporting criminal illegal aliens to make California safe again. We need California to cooperate with our officers and stop releasing criminals from their jails into California's neighborhoods. Seven of the 10 safest cities in America cooperate with ICE."

The spokesperson said that enforcing immigration law is a federal responsibility under the Constitution. Concerning the shock gloves, the spokesperson said that ICE reviews its equipment to make sure it is "consistent with all applicable law enforcement policies and standards," and that officers are "highly trained in de-escalation tactics and regularly receive ongoing use of force training."

Lauren Bis, a White House spokeswoman, responded to Newsom's move in an emailed statement to The Epoch Times.

"Gavin Newsom has no authority over federal law enforcement," she said. "The Trump administration will not abide by his unconstitutional legislation. Our law enforcement officers will continue arresting and removing criminal illegal aliens from American communities while radical Democrats in California refuse to cooperate and instead choose to release criminal illegal aliens from their jails into communities to terrorize innocent Americans."

A Department of Justice spokesperson said in an emailed statement to The Epoch Times, "The Department of Justice will continue to challenge illegal sanctuary policies designed to thwart federal immigration enforcement or impede lawful federal operations."

California is one of 17 states with Democratic-controlled legislatures that have passed more than 100 bills this year aimed at limiting immigration law enforcement, according to an Associated Press analysis.

The most common goal of those bills has been to bar local authorities from cooperating with federal immigration agents.

Tyler Durden Wed, 09/30/2026 - 17:00

Hegseth Orders Cyber Command, Intel Agencies To Counter Foreign Threats To Midterms

Secretary of War Pete Hegseth has directed U.S. Cyber Command and the Pentagon's combat support agencies to focus intelligence and cyber tools on foreign efforts to interfere in the 2026 midterm elections.

The Department of War (DoW) memo circulated Monday and dated Sept. 22 was addressed to the Cyber Command chief and the directors of the National Security Agency (NSA), the Defense Intelligence Agency, and the National Geospatial-Intelligence Agency.

"In America, the people rule - and we must ensure that their voice remains sovereign, secure, and entirely undiluted," the memo reads.

Hegseth wrote that secure voting plays a critical role "in sustaining the strength of our democratic system," and that the department "will effectively wield its capabilities to protect and uphold the reliability of America's voting mechanisms against external manipulation and disruption from foreign actors."

Cyber Command and the combat support agency directors "will prioritize the use of DoW intelligence and cyber capabilities to ensure foreign actors do not meddle in our democratic systems," the memo says.

Hegseth also ordered the Defense Intelligence Enterprise to "execute collection and production on foreign threats to our elections, in accordance with the law, regulation, Executive direction, and DoW policies and directives."

He told Cyber Command to use its authority "in coordination with the Department of Homeland Security to counter potential cyber threats from foreign actors targeting our elections."

As Kimberly Hayek further reports for The Epoch Times, Monday's DoW release directed Cyber Command and the combat support agencies to "prioritize and deploy advanced intelligence and cyber capabilities to identify, disrupt, and neutralize foreign interference in U.S. democratic processes."

Chief Pentagon spokesman Sean Parnell said the agencies would work with state and local election officials.

"Free and fair elections are the foundation of our republic," Parnell said. "By working in lockstep with federal, state, and local partners, U.S. Cyber Command and our defense intelligence teams will defend the integrity of America's voting systems, expose foreign malign influence, and ensure our democratic processes remain secure from external manipulation while protecting the fundamental freedoms of the American people."

Gen. Joshua M. Rudd, who serves as Cyber Command chief and NSA director, described the assignment as work the two organizations already conduct.

"U.S. Cyber Command and the National Security Agency are closely partnered to identify and defend against cyber threats to our nation. The Command and the Agency regularly counter actions by malicious foreign cyber actors including those with the intent to interfere with our democratic process," Rudd said.

Hegseth called protection of the vote a "no-fail mission" and part of a "whole of government effort."

The memo also orders the entire Defense Intelligence Enterprise to "mobilize every authorized asset, capability, and partnership under your command to defend our election infrastructure from foreign malign influence and ensure that every lawful voter can cast their ballot free from foreign intimidation, coercion, or fear."

Tyler Durden Wed, 09/30/2026 - 16:40

Micron Flat After Strong Revenue Guidance Offsets Slight Margin Miss

The highly anticipated Micron earnings (since memory is the one place in the sector in the market where all those massive new bond sales are funding) are finally out and they painted a solid, if slightly mixed, picture compared to buyside bogeys.

As we said in our preview, what would matter today is not what the company did in Q4, but how it guided to Fiscal Q1 (ending next calendar quarter), and sure enough Q3 was solid across the board:

• Adjusted EPS $33.42, beating estimates of $31.83
   
• Adjusted revenue $54.23 billion vs. $11.32 billion y/y, and beating estimates of $51.49 billion
  • Core Data Center revenue $18.00 billion, beating estimates of $11.34 billion
  • Cloud Memory revenue $16.28 billion, beating estimate $15.14 billion
  • Mobile and Client Revenue $13.11 billion vs. $3.76 billion y/y, beating estimates of $12.95 billion
  • Automotive and Embedded rev. $6.82 billion, beating estimates of $4.73 billion
     
• Adjusted gross margin 87% vs. 45.7% y/y, beating estimates of 86.2%
   
• Adjusted operating income $44.64 billion vs. $3.96 billion y/y, beating estimates of $42.75 billion
• Adjusted operating income margin 82.3% vs. 35% y/y, missing estimates of 82.8%
• Adjusted operating expenses $2.57 billion vs. $1.21 billion y/y, beating estimates of $1.68 billion
  • R&D expenses $1.91 billion, +83% y/y, estimate $1.38 billion
  • Adjusted operating expenses $2.57 billion vs. $1.21 billion y/y, estimate $1.68 billion
     
• Cash flow from operations $43.97 billion vs. $5.73 billion y/y, estimate $33.87 billion

From the slideshow:

“Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027,” CEO Sanjay Mehrotra said in the statement. “Memory enhances this intelligence and the competitiveness of our customers’ platforms.”

So far so good. However, what matters more is guidance and here is why the stock's after hours reaction has been muted at best:

• Q1 adj. EPS 38.15, beating exp. 35.40.
• Q1 revenue 61.5bln (+/- $1.5BN), beating exp. 57.024bln. 
• Q1 gross margin 86.3%, missing exp. 86.7%, and notably below buyside bogeys of 87.5%-88.0%

And this is how the company guided:

• We anticipate fiscal Q1 to be the floor for gross margins in fiscal 2027. As Sanjay mentioned, we made a decision to increase fiscal 2026 incentive compensation in fiscal Q4. Most of the increase in fiscal 2026 incentive compensation pertaining to manufacturing was absorbed into inventories in fiscal Q4. As a result, the effects from the sale of these higher cost inventories principally impact fiscal Q1 gross margin. September 30, 2026 September 30, 2026
• Fiscal Q2 benefits from less of this fiscal Q4 related compensation expense, but this benefit is offset by the impact of higher fiscal 2027 incentive compensation. We expect higher gross margins beyond fiscal Q1 for the remainder of fiscal 2027, with a more moderate rate of price increases.
• We project operating expenses to increase by approximately $2.5 billion in fiscal 2027, primarily from higher R&D (research and development) to support an unprecedented set of opportunities in memory and storage and from higher incentive compensation plans.
• We expect a fiscal Q1 and fiscal year 2027 tax rate of around 15.5%

Micron and its rivals continue to be overwhelmed by memory-chip orders. Though the Boise, Idaho-based company is expanding its manufacturing capacity, prices are expected to remain high for the foreseeable future. Here are the highlights from the company's market outlook: 

• Micron (MU) says operating expenses are to increase by about USD 2.5bln in fiscal 2027 and expects memory and storage supply-demand conditions to be much higher in fiscal 2027 and 2028 than in 2026
• In Q1, project capex of around USD 11.5bln and anticipate first-half FY27 capex to be USD 25bln.
• Project CapEx to be higher in H2 FY27.
• Given the need for DRAM cleanroom space and supported by greater visibility from SCAs into our demand through the end of the decade and beyond, we plan to increase our capex (capital expenditures) in fiscal 2027 versus prior plans.
• Expect server unit growth in the high-teens % range in both CY26 and CY27.
• Strong server unit growth is supported by a modestly lower rate of content growth than prior expectations, amid tight memory supply.

“Near-term conditions are still very good, in our view, with strong demand and rising pricing in evidence,” Morgan Stanley analyst Joseph Moore said in a note before the report was released. “The debate has very clearly shifted from, ‘How good can it get?’ to ‘How long can it stay this good?’”

For now the jury is out, as unlike last quarter when the stock blasted off after earnings, this time it is flat, having faded a modest after hours rise. 

Micron shares were the best performer in the Philadelphia Stock Exchange Semiconductor Index this year, gaining 273%. 

Tyler Durden Wed, 09/30/2026 - 16:28

Who Keeps The Money When AI Rewrites Bank Code?

Authored by Patrick Feeley via Substack,

The code most American banks run on was designed in 1959, the year Alaska and Hawaii became states. A committee of government and industry people wrote COBOL so that business programs could be read by people who were not mathematicians, and a good part of it was modeled on FLOW-MATIC, an earlier language from Grace Hopper, a Navy officer. I doubt anyone on that committee thought it would still be running banks in 2026. In 2017 Reuters estimated that about $3 trillion of daily commerce still ran through COBOL. In April 2020, when unemployment claims in New Jersey overwhelmed the state's forty-year-old system, Governor Phil Murphy went on television and asked for volunteers who knew COBOL. The state had to go on TV to find programmers for its own unemployment system.

I bring this up because of a clip I posted last night of Bill Ackman talking with Shane Parrish on The Knowledge Project. Ackman said Cognition, the company behind the coding agent Devin, can rewrite a bank's COBOL "in a matter of days as opposed to many months." Someone replied asking me what I meant when I said commoditized lenders would compete the savings away. It is a fair question and I could not answer it in a tweet.

I do believe Ackman that the savings are real. Inside a large bank the core ledger still runs in batch. The balance a customer sees on the app at noon is an estimate (bankers call it memo-posted). The actual accounting happens overnight, when a mainframe works through a queue of jobs in a set order, posting transactions, accruing interest, charging fees, and producing files that every other system reads the following morning. The programs share data through copybooks, which are record layouts where a field is known only by its position. Cognition described one client where a single taxpayer ID showed up under dozens of different names across thousands of programs. Most big banks were put together through acquisitions, and each acquired bank came with its own core system that management was usually too nervous to shut off, so the old systems just piled up.

.@BillAckman tells @shaneparrish that AI will sharply cut what big banks spend on tech. Rewriting legacy COBOL (decades-old bank code) with @cognition now takes days instead of months. Ackman is right that the cost savings are real. The open question is who keeps them. Banks with …

— Patrick F. Feeley (@PFFeeley) September 30, 2026

Replacing all of that has gone badly more often than well. Commonwealth Bank of Australia spent five years and more than A$1 billion replacing its core, and people in the industry consider that one a success. TSB in the UK moved customers onto a new platform in April 2018 and the platform did not work. Customers were locked out, some could see other people's accounts, and service was not back to normal until December. TSB ended up paying £32.7 million in redress and £48.65 million in fines. Cognition's own figure is that roughly two-thirds of COBOL modernization projects fail. With odds like that most banks built layers around the old core and left it alone. JPMorgan expects to spend about $19.8 billion on technology in 2026, and its CFO told investors in February that the priority had moved to "modernizing the underlying application code and data." I would guess a large share of that budget still goes to keeping the layers standing.

Cognition is fairly careful about what its agents can do today. Devin is good at documentation, refactoring, and batch jobs, which are the parts of a migration where you can give the agent yesterday's inputs and outputs and let it keep trying until the new code matches the old results. Cognition estimates batch is 30 to 50 percent of a typical migration. The real-time systems (card authorizations, for example) are still out of reach. Banks also have a security reason to hurry. Anthropic's Mythos model, which can find and exploit software vulnerabilities, had bank regulators in the U.S. and Europe holding urgent calls this spring, and Reuters quoted security experts who named legacy bank systems as especially exposed.

Ackman's harder point came a little later in the conversation. "The problem with money generally is it's a commodity," he said. For loans I agree with him. A company that wants a five-year term loan will collect six or seven term sheets and take the cheapest one, and a bank whose costs just went down will give up some spread to win it. Deposits have never really worked like a commodity, and I think that is where his argument is missing a piece.

The best explanation I have read is from three NYU economists, Itamar Drechsler, Alexi Savov and Philipp Schnabl. Their paper argues that banks have real market power over deposits. When the Fed raises rates, banks raise what they pay depositors slowly and only partway. Keeping that power costs money for branches, bankers and technology, but almost all of the cost is fixed. So deposits end up behaving like long-term fixed-rate funding, which is how a bank can hold thirty-year mortgages without being wiped out every time rates go up. It is also why the industry's net interest margin has barely moved over several decades of rate cycles. The FDIC has it at 3.32 percent today.

Bankers measure this with the deposit beta (the share of a rate increase that gets passed along to depositors). Checking accounts have low betas. Online banks have high ones because, as the St. Louis Fed put it, their customers are looking for yield. During the 2022 hiking cycle the New York Fed found that super-regional banks passed through more than small banks did, while the very largest banks passed through less than either. After Silicon Valley Bank lost $42 billion in deposits in one day, money moved toward size, and the biggest banks did not have to pay more to get it.

Meta's Muse goes right at this. It launched September 8, the same day Cognition announced it had raised more than $2 billion at a $48 billion valuation with run-rate revenue near $900 million. Muse is a personal agent that reads accounts at more than 12,000 U.S. banks and financial apps through Plaid. On Tuesday, September 22, Schwab fell 6 percent, LPL fell 7 percent, JPMorgan and Wells Fargo each fell more than 3 percent, and XLF, the largest financials ETF, was down 2 percent. On Sunday Torsten Slok at Apollo put out a note titled "Is an Agentic bank run coming?" He pointed out that the average checking account pays about 0.1 percent while Revolut, SoFi, Wealthfront and others pay between 3.3 and 5 percent, and he warned that banks "could lose a large share of the cheap deposits they rely on to make loans."

Muse cannot move money yet. The Plaid connection is read-only, and Meta deserves to have that said. I still would not want to be running a bank's treasury desk this month. Most people leave savings at a tenth of a percent because switching is a hassle. Opening a new account takes an afternoon, and nobody wants to be the person who breaks their own direct deposit. If an agent already sees every balance and can fill out the forms, most of that afternoon goes away.

A hypothetical helps here. Bank A has $10 billion of deposits that are really savings, money the customers do not need next month and have not looked at in a while. Rates are at 4 percent, and agents push Bank A's beta on those balances up by ten points. That costs Bank A about 40 basis points on $10 billion, or $40 million a year. Say Cognition saves Bank A $15 million a year on code maintenance, which is my guess and not a published number. Bank A is behind by $25 million, and that is before counting any spread it gives up to keep borrowers. My numbers could easily be off in either direction, but for a bank funded mostly by savings I do not see the code savings covering the deposit cost.

Corporate treasurers dealt with this a long time ago. A company keeps enough in its operating account for payroll and suppliers and sweeps the rest into money market funds or Treasury bills, and banks price corporate deposits knowing somebody is watching. An agent gives an ordinary family something like a corporate treasurer. Next month's bill money will stay in checking. The surplus that has been sitting there since the pandemic probably will not stay at 0.1 percent, and I expect it to reprice slowly at first and much more visibly in the next rate cycle.

Some banks are safer than others. Deposits that run a business's payroll and payables, carry a line of credit, or belong to an owner whose banker actually picks up the phone will not move for half a point, and banks holding those should keep most of what Cognition saves them. Banks that fund themselves with rate-shopping savings and win loans on price are in a worse spot, since they will likely pass the savings on to borrowers and pay more to depositors at the same time.

This part relates most to my own work. Ackman was talking about big institutions that own their code. Most American banks rent theirs. The Kansas City Fed found that Fiserv, Jack Henry and FIS together served more than 70 percent of banks in its 2022 survey, and 61 percent of banks had used the same core provider for over ten years. When code gets cheaper for a community bank it gets cheaper for the vendor first. Whether any of it reaches the bank depends on a contract that may run for years and on how hard those three companies compete at renewal. Agents do not have to wait for any contract, and they will reach a community bank's depositors the same week they reach JPMorgan's. On September 22 the market sold banks with deep local relationships about as hard as it sold the ones without them, and in some cases I think that was a mistake.

If I were looking at a bank stock this month I would not spend much time on efficiency ratios, since nearly everyone's will improve. I would look at what the bank's deposits did from 2022 to 2024, which is the closest thing to a live test of stickiness the industry has had. I would want to know how much of the deposit base is operating money and how much is savings nobody has checked in years, and I would want the renewal date on the core processing contract. At Sargasso Capital Management we spend most of our time on small and mid caps where there is a wide gap between what AI can do and what the company has actually put to use. With banks that gap only matters if the customers are still there when it closes. Bill Ackman is right that the code is about to get a lot cheaper. I am just not convinced most banks get to keep much of it.

A note on sources. Bill Ackman's comments are from his September 2026 appearance on The Knowledge Project with Shane Parrish. Cognition figures come from its September 8 funding announcement as reported by Reuters, TechCrunch and SiliconANGLE, and from its April 2026 post on COBOL modernization. Muse details come from Meta's launch materials and coverage by TokenPost, CNBC and Zacks. The Torsten Slok note was reported by CoinDesk on September 28. COBOL's origins and New Jersey's April 2020 call for COBOL programmers are widely documented. Banking data comes from the FDIC Quarterly Banking Profile for the second quarter of 2026, the Federal Reserve Banks of New York, St. Louis and Kansas City, the Federal Reserve's review of Silicon Valley Bank, JPMorganChase's February 2026 Company Update, the FCA's TSB enforcement notice, Reuters reporting from April 2017 and April 2026, and Drechsler, Savov and Schnabl, "Banking on Deposits" (Journal of Finance, 2021). Bank A is a hypothetical example.

This post is for informational and research purposes only and does not constitute investment advice or an offer to buy or sell any security.

 

Tyler Durden Wed, 09/30/2026 - 16:20

Sex, Spies, And The FOMC: How Beijing Turned A Senior Fed Economist Into Its "Inside Man"

For years, conspiracy theorists have insisted that the Federal Reserve is run for the benefit of a foreign power. It turns out they were - at worst - only half wrong: it's just that the foreign power in question wasn't getting the FOMC minutes through the front door, but via a lovesick Fed economist, an online dating site, a set of silk scarves, and a gym-obsessed "Ph.D. student" who, according to US officials, was actually a Chinese intelligence officer.

Readers may recall the name John Harold Rogers, the former senior adviser in the Fed Board's Division of International Finance whose arrest we first reported back on Feb 1, 2025, and whose case we then revisited in May 2025 under the only headline the facts allowed: "Teaching Or Treason?" In February a DC jury gave its answer (sort of): guilty of lying to investigators, not guilty of conspiracy to commit economic espionage. And in July, as we reported on July 16, Judge Dabney Friedrich sentenced him to 38 months in federal prison.

That, it seemed, was that. But now a lengthy CNBC investigation, built on text messages, investigator audio recordings, trial exhibits and copies of the Fed documents in question, fills in the gaps. And the gaps, it turns out, were where all the good stuff was hiding.

"The facts of this case read like a spy novel. There was sex. There was money, manipulation, secret meetings with shady characters in China, fake identities, lies, trickery, and deceit. But this was real life." — Federal prosecutor Nicholas Hunter, in his address to the jury

Meet "Hummin Lee"

The story begins in 2013 at a conference in Shanghai, sponsored by, of all things, the Federal Reserve Bank of Dallas, on the campus of Fudan University. During a session break, a tall, broad-shouldered young man introduced himself to Rogers as Hummin Lee, a Ph.D. student. US authorities believe his real name is Jin Chuan, and that he is a Chinese spy.

A photo of Hummin Lee flexing his muscles that Lee sent to John Rogers in a text message on Aug. 4, 2018; Source: Department of Justice

What followed was textbook slow-burn cultivation. Lee sent birthday wishes and Christmas presents (including, in a detail no novelist would dare invent, a copy of Sun Tzu's The Art of War), invited Rogers to lecture in China, and kept tabs via a Facebook account featuring shirtless gym photos and, in total, six friends. After Trump won in 2016, the gift of a traditional Chinese painting arrived with a question attached: would Trump label China a currency manipulator? Rogers, to his credit, dodged.

Then came New Year's Eve 2016. Rogers, a divorced father of four grown children who later said he "kind of felt like a loser" that night, logged on to AsianDating.com and met Yu Liu, known as Yu Yu, a young woman in Shanghai 24 years his junior. Her messages were beautifully written in English. Only later did Rogers learn she didn't speak English at all.

Yu Liu and John Rogers are seen at a restaurant in a photo from a text message Rogers sent to Hummin Lee on Nov. 20, 2017; Source: Department of Justice 

Retired 35-year CIA veteran Ralph Goff, who had no role in the case, told CNBC what everyone reading this is thinking:

"If this woman wasn't a plant by Chinese intelligence into that web dating site, then I'm sure that they had a meeting with her soon after that contact."

CNBC notes it is unclear whether Yu Yu has any links to Beijing; she did not respond to questions. What is clear is that from that moment on, Rogers suddenly very much wanted to travel to China, and his generous friend Lee was only too happy to arrange it. "Your related expenses in China will all be covered by us," Lee wrote.

The full-service handler

Lee didn't just book flights. He planned itineraries and arranged lectures. When Yu Yu needed cash, Lee wired her 5,000 "of my own money. Don't worry." When her then-husband demanded 80,000 yuan to sign divorce papers, Lee told Rogers to "go to sleep and take a good rest man," and seven hours later texted a photo of a freshly issued divorce certificate. When Rogers married Yu Yu in Hong Kong in March 2018 (she became pregnant on his second trip to China), Lee organized the logistics and witnessed the prenup. When the baby arrived that summer, Lee met Rogers at the airport and went with the couple to the hospital.

Rogers described him to Fed investigators as a "super nice guy but so nice it was a little bit spooky." Which is a useful working definition of a case officer.

"I owe everything to him. The baby wouldn't have happened, the relationship with my wife wouldn't have happened... And I love him like a brother." — John Rogers, to investigators

Lee also introduced his "boss," a "Professor Cui," who pressed Rogers for Fed rumors and gossip and, per Rogers, offered him packets of cash (which Rogers said he declined). When the FBI searched Rogers' home years later, agents found $55,000 in cash, including some in a white plastic grocery bag at the bottom of a closet under a pile of women's clothing. Investigators could not establish where it came from.

The "questions"

With Rogers now thoroughly in his debt, Lee's curiosity about the Fed grew. The "classes" Rogers taught in China increasingly took place in hotel rooms with a handful of attendees. At one point Lee sent over a typed list of questions, among them:

• Why the dollar wasn't appreciating much despite repeated Fed hikes;
• How the Fed evaluated China's financial liberalization;
• And, our favorite: "How does the Fed evaluate the trade war with China proposed by Trump? Will the Fed adjust monetary policy to cooperate with the trade war? What specific measures will the Fed take?"

"I'm wondering if you could help us collect answers from your colleagues or documents and teach us when we meet," Lee added, helpfully. Rogers testified these were "bread-and-butter" textbook questions. Which, to be fair, they mostly are; it's the "from your colleagues or documents" part that is less textbook.

Rogers then emailed Fed colleagues asking for material, remarking with remarkable self-awareness: "Part of it, I think, is that they want me to reveal some kind of Fed secrets they believe exist." One document he received was marked "Nonconfidential/Internal FR." According to a federal agent's testimony, Rogers changed the heading to "Nonconfidential/External" and forwarded it to Lee. On another occasion he asked a colleague for Fed thinking on trade policy uncertainty, adding: "If there is something in writing that is not allowed to be shared, please send that just for me to catch up." He received a document on washing machine tariffs, forwarded it to his personal Gmail, and from there to Lee.

Then, in June 2019, Rogers printed two documents: one from a category generally covering the staff forecasts prepared for the FOMC and open market operations (per the indictment, "Class II" FOMC information), and a set of bullet points for a briefing to Fed governors ahead of an FOMC meeting. The next day he flew to China. Three days later, he photographed a "class" in a Beijing hotel room: Lee, another man and a woman, posing by a big video monitor. Prosecutors later said both men worked for Chinese security and intelligence services.

How valuable was any of this? That was the heart of the trial. The defense argued Rogers passed nothing of value and was "a naive academic." Prosecutors argued, in their sentencing memo, that the restricted information "could allow [Beijing] to make untold sums of money by trading with its roughly $1.5 trillion in U.S. Treasury securities and related instruments." The jury, notably, was not persuaded on the espionage count. Then again, as one might note, you don't need a Fed briefing book to front-run the Fed; you just need to read Jerome Powell's press conference... or a Nick Timiraos article (well, during the Powell years at least... it appears he isn't on Warsh's Christmas Card list, or Bessent's for that matter).

Undone by... Instagram

Ironically, it wasn't China's MSS that brought Rogers down, but garden-variety sextortion scammers. After his marriage imploded (the Vienna, Virginia police were called after a physical fight between Yu Yu and a masseuse Rogers had invited to live in the house; "I swear to God we're just friends," Rogers told officers), he went back online.

On Instagram he traded nude photos with accounts showing attractive women, photos taken with his Fed-issued phone, sometimes in the gym at Fed headquarters.

The people behind the accounts then demanded money, and threatened to send the photos to then-Fed Vice Chair Richard Clarida. They also threatened to kidnap his 18-month-old daughter. On Super Bowl Sunday 2020, Rogers told his superiors, who referred him to the Inspector General, where the Fed's cyber team was already uneasy about his China trips and his friendship with Lee.

In a 2.5-hour recorded interview, OIG agent Alan Hershkowitz asked if he had ever taken a nude photo of himself. "No," said Rogers. Pressed, he conceded: "I can't rule it out." Asked whether he had ever shared restricted Fed information outside the Board, he answered: "Never." Prosecutors proved he had sent such a document to a co-author at Fudan. That single word is what cost him three years.

Perhaps the most damning detail, though, is about the Fed itself: Rogers was quietly allowed to resign in 2021, the circumstances were never made public, and he promptly went to teach at, yes, Fudan University, where according to prosecutors he earned at least $900,000 in salary and grants between February 2022 and his arrest. It then took more than three years for the FBI to show up at the bus stop.

"All of the book smarts he had, all of the articles in his resume, they don't prepare you for spies." — Stephen Saltzburg, Rogers' attorney

Is the Fed a sieve?

If the Rogers case were an isolated incident, one could shrug it off as a lonely man getting played. But the Fed's own watchdog suggests otherwise:

• On the same day Rogers was sentenced, the Fed's OIG reported that the central bank lacked "a process to identify its critical assets" and needed a program to manage insider risk, warning that the Board's proprietary economic information "is of great interest to foreign adversaries."
• Then, in a report published last week, the OIG revealed that another Division of International Finance employee (same division as Rogers!) retiring in July 2024 potentially walked out with FOMC-classified information after generating 279 data-loss alerts in the final 90 days, 139 of them involving potentially sensitive FOMC material. The same employee had a history of copying FOMC files to unencrypted USB drives and emailing them to a personal address, and had traveled to a Fed-designated restricted country in June 2024. The Fed only found out a year later, and never opened a formal misconduct probe. The OIG blamed "a collective lack of action across multiple divisions."
• And in August, as we reported on Aug 26, the DOJ and FBI announced the takedown of platforms used by QTFY, a PRC state-sponsored hacking group whose targets included NASA, the DOJ, the Senate... and the Federal Reserve.

So: a Fed that can't catalog its own critical assets, can't stop a retiree from USB-sticking FOMC files out the door ahead of a trip to a restricted country, and is targeted by Chinese hackers from the outside and (allegedly) cultivated insiders from the inside. Asked by CNBC whether China is still trying to penetrate the Fed, Goff's answer was one word: "Absolutely." The Fed and its IG declined to comment.

We leave the last word to Rogers himself. Asked at trial who he believed Lee really was, he replied: "A spy." And how did that make him feel?

"Duped. He was my friend."

Which, come to think of it, is also how most savers feel about the Fed.

Tyler Durden Wed, 09/30/2026 - 16:15

Trump Responds To Watchdog Report: Force Powell Off The Fed Board - Or Sue Him

Update (1554ET): So much for "finality."

Minutes after the Fed's own inspector general cleared the Eccles renovation of criminality - and of administrative misconduct - President Trump made clear he is not treating the Horowitz report as the last word. Powell, Trump said on Truth Social, should be "forced to resign" from the Board of Governors. If he doesn't, "he should be sued by the US."

As for the building itself: Trump said Attorney General Todd Blanche will "make a determination" about the project - which is another way of saying the White House does not consider a clean bill of health from an IG Powell appointed, after a review Powell ordered, to be dispositive.

"I have asked Attorney General Todd Blanche to study the report, and make a determination as to what to do about a relatively small Building Complex," Trump wrote, adding "If he doesn’t resign, he should be sued, at the highest level, by the United States Government, for either corruption or incompetence."

Pirro deferred to this report in April. Powell said he would stay on the Board until the investigation was "well and truly over, with transparency and finality." The IG just gave him the no-crime finding. Trump just told him that isn't enough to keep the seat.

Powell can still sit as a governor through January 2028. Forcing him off that Board - as opposed to waiting out a chair term that already ended in May - is a different fight: for-cause removal, a civil suit, or enough political heat that he walks. Blanche now has the file. Watch Truth Social, and watch whether "determination about the building" turns into a new referral or just another hard-hat presser.

* * *

After more than a year of drama, subpoenas, surprise site visits, hard-hat photo ops and one very public fight over beehives, the Fed's internal watchdog has finally weighed in on the central bank's headquarters renovation. The verdict: nobody committed a crime, but almost nobody was minding the budget either.

According to a report released Wednesday by the Fed's Office of Inspector General, there were no "reasonable grounds to believe that a violation of federal criminal law had occurred," and no administrative misconduct.

What the OIG did find was a long list of management failures that helped the cost of renovating the Eccles Building and the adjacent 1931 federal building balloon from a budgeted $1.3 billion in 2020 to $2.4 billion:

• The Board never acted on the OIG's earlier recommendation, made after the Martin Building renovation overran, to set a stated cost limit. It also never asked for a construction cost estimate.
• As recently as July, four years in and with contracts already awarded, the Fed still had not set a guaranteed maximum price.
• Some work drew few or no bids, which pushed costs up substantially.
• Internal governance "wasn't equipped" to run a project of this size and complexity.
• Design changes, site conditions and, of course, inflation. The OIG said "inflation was clearly a factor," which is a notable admission from an institution whose one job is controlling inflation.

As for the marble, water features and rooftop garden that critics fixated on, the OIG said they "did not materially drive" the cost surge (so Powell was vindicated on the beehives, if not on the budget).

The new Marriner Eccles sheriff, Fed Chair Kevin Warsh, said the Fed will adopt all of the recommendations, hand management of the project to the General Services Administration (reporting to the Board and to Warsh), and bring in an independent auditor to review every cost awarded to date. "There are important lessons to be learned," Warsh wrote to IG Michael Horowitz, whom Powell appointed in June 2025.

Frequent ZH readers will remember how this saga played out. In July 2025, with Trump publicly pressing for rate cuts, the renovation became the administration's preferred lever: Trump said he wouldn't fire Powell "unless there is fraud w/ renovation" (July 16, 2025). Days later, Powell was criminally referred to the DOJ for perjury (July 21, 2025) over his June 2025 testimony that there was "no VIP dining room, there's no new marble... there's no beehives and there's no roof terrace gardens." Trump then toured the site in a hard hat alongside Powell (July 24-25, 2025), producing the most awkward cost-overrun negotiation in central banking history. At the time, OMB's Russ Vought insisted the criticism was "not about firing Powell" but "about holding the Fed accountable."

Things escalated in January, when the Fed was served with grand jury subpoenas and Powell vowed to "stand firm" (Jan 12, 2026), accusing the administration of using the probe to punish the Fed for not cutting rates:

"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation."

Federal prosecutors followed up with a surprise visit to the renovation site, with US Attorney Jeanine Pirro saying any project with "cost overruns of almost 80 percent" deserved "serious review." Then in March, Judge Boasberg quashed the DOJ subpoena (March 13), calling it "pretextual." After Republican senators held up Warsh's confirmation over the probe, Pirro dropped the investigation (April 24), deferring to the very IG report that came out today.

So case closed? Not quite

Pirro said at the time that she would scrutinize the IG's findings, leaving open the option to reopen the case. And Powell, who broke with tradition by staying on the Board as a governor after his term as chair ended in May, said he would not leave "until this investigation is well and truly over, with transparency and finality."

Well, Powell can now leave as today's report gives him the "finality" part. Whether it gives him a reason to leave is another question. And whether a clean bill of health from an IG that Powell himself appointed and whose review Powell himself ordered will satisfy Pirro or the White House is... well, we'll find out soon enough: keep an eye on Trump's Truth Social account (especially if like Jane Street and the HFTers you are paying $100,000 to get them 20 millisecond before everyone else).

One thing is certain: a building project that nearly doubled in cost thanks to poor planning, no price cap and "inflation" is a perfect metaphor for the institution it will house.

Tyler Durden Wed, 09/30/2026 - 15:58

Police "Islamophobia" Training Equates Farage's Words With Hate Crime

Authored by Steve Watson via MODERNITY,

North Yorkshire officers sat through a publicly funded "Islamophobia" talk that treated Reform UK leader Nigel Farage's remarks on British values as if they belonged in the same conversation as a racially aggravated attack.

The trainer then asked the room which man had done "the most harm" - the politician on national television, or a man filmed abusing a Muslim bus driver.

The session was part of Project Unity, delivered by Abbas Najib, a former officer and now chief executive of Better Communities Bradford, at the York and North Yorkshire Hate Crime Conference in 2025.

Police officers were lectured about Nigel Farage in a publicly funded talk about Islamophobia, The Telegraph can reveal.

Officers at a hate crime conference attended training sessions that compared the Reform UK leader's opinions, specifically his doubts about young Muslims'... pic.twitter.com/u2HutKLxs4

- The Telegraph (@Telegraph) September 29, 2026

Police sources later insisted it was on the conference timetable rather than official force training, and that Najib was not a North Yorkshire employee. That distinction will not comfort anyone watching officers being invited to treat lawful political speech as a hate-crime accelerant.

Attendees were shown a 2024 interview in which Farage warned that "growing numbers of people do not subscribe to British values," naming Muslims and those turning out for the pro-Palestine marches in London. He cited a Henry Jackson Society survey finding that 46 per cent of British Muslims supported Hamas.

The room was then shown footage of a 2024 racial assault on a Muslim bus driver and told to "think about the relationship" between Farage's words and the offence. Officers were instructed to "draw your own conclusions" about the Reform leader and to "think about whether this commentary has any influence on something like this."

Najib put the comparison in the open. "Ask yourself, who is going to get into trouble between those two gentlemen? And who did the most harm?" He added: "Sitting in a national news studio and saying 'Jews hate Britain'. He'd be locked up before he left the studio, and too right too."

The same lecture also went after other Reform figures. Najib objected to "mainstream, high-profile politicians" such as Suella Braverman, Robert Jenrick and Michael Gove calling the pro-Palestine demonstrations "hate marches," and recast those protests as "protesting genocide."

Written material claimed women were not oppressed by the stipulations of Islam. The session defended mass immigration and argued that "Muslims, the immigrant, the brown person" were being scapegoated for a flatlining economy, when the real culprit was "the rich."

Footage of Matthew Goodwin on GB News was used as well. Goodwin had presented a YouGov survey finding that more than half of Britons believed Islam was not compatible with British values. The training material answered that poll with a claim that Islamic teachings sit neatly alongside David Cameron's official list of British values: democracy, the rule of law, individual liberty, respect and tolerance.

Goodwin later told GB News he was "shocked and appalled by the context of this talk," and "even more outraged by the fact that it was given to a politically neutral organisation such as the Police." He said the session showed that "there are some people in Britain who will not even allow us to have a debate about the role and compatibility of Islam in modern Britain."

Better Communities Bradford has received £490,000 from the National Lottery Communities Fund since 2019, including a £35,000 grant to roll out Project Unity. The programme covers "media and political narratives" and "myths and misconceptions about Islam." The Telegraph reported that the same material has been presented to students, council staff and civil servants working on Prevent, the state's counter-extremism programme.

Najib defended the work. "Project Unity exists to reduce anti-Muslim hostility and strengthen trust between communities," he said. "Statements made on national platforms reach millions, so the workshop looks closely at the words themselves and how they land." He told GB News that Farage's comments were "a sweeping claim about how British Muslims feel about this country" and that, in his view, "generalisations of that kind about an entire faith community are Islamophobic and fuel anti-Muslim hostility."

Jenrick's response cut through the charity language. "Yorkshire Police officers attended training sessions that compared the views Nigel Farage and I hold towards Islamists to a racially aggravated CRIME," he wrote. "They took issue with my description of the 'hate marches' and the fact research found 46% of British Muslims supported Hamas." He added: "The police have been infiltrated by bad-faith actors seeking to police speech, not actual crime."

Braverman tied it to the record she already put on the table. "This is the root cause of why the police refused to stop the hate marches, why antisemitism and extremism is out of control and why I was forced to blow the whistle on two-tier policing in 2023."

The timing is not accidental. Last week Policy Exchange reported that the National Association of Muslim Police had published papers defending Hamas, calling the IDF a "Zionist terrorist group," branding Zionism a form of anti-Muslim hatred, and treating the word "Islamist" as Islamophobic. NAMP denies defending a proscribed organisation. The paper still existed. The association still sits inside British policing.

The North Yorkshire session fits a pattern we have long documented. Hampshire officers told Braverman that mandatory DEI sessions had "drummed into us about our white privilege and unconscious bias," and that the outsourced trainer "was deeply hateful of white people and our culture."

Those officers stayed quiet because they feared for their careers. That same culture sat in the background of the Henry Nowak case, where an 18-year-old white teenager was handcuffed while bleeding out after his Sikh attacker accused him of racism.

Thames Valley Police has forced officers through "equity training" on white privilege, micro-aggressions and the shift from "non-racist" to "anti-racist," even after a tribunal found the force had positively discriminated against white officers.

Former assistant chief constable Kerrin Wilson recorded that white males "felt disadvantaged" and saw "unfairness was allowed for minority groups but not for majority populations."

Former officer and government adviser Rory Geoghegan put it plainly: officers "deserve far better from their leaders than to be crudely categorised by skin colour and subjected to reductive, divisive ideologies."

West Midlands Police has invited non-Muslim staff to fast during Ramadan as an act of "solidarity." Shadow justice secretary Nick Timothy called that "wholly inappropriate," arguing the police should observe "the same standards regardless of creed."

Major Andrew Fox of the Henry Jackson Society said the police exist "to enforce the law impartially, not to promote or facilitate religious practices."

Meanwhile, retired officer Stephen Gray was fined this year for sharing an online post critical of Islam. The Free Speech Union is backing his appeal and has warned that government Islamophobia definitions, already being used by forces, are functioning as a blasphemy code Parliament abolished in 2008.

A police service that lectures officers on the "harm" done by Farage while failing to hold the line against Islamist intimidation, antisemitic marches and two-tier street enforcement is not protecting the public. It is protecting a narrative.

Lottery money, Prevent briefings and conference slots have been handed to people who treat integration questions as suspect and political speech as a public-order problem. Impartial policing cannot survive that bargain.

 

Tyler Durden Wed, 09/30/2026 - 15:40

Top Shia Cleric Says US Should Compensate Iraqis As Last American Forces Leave

Via Middle East Eye

Influential Shia cleric Muqtada al-Sadr has said the US should compensate Iraqis for the damage inflicted on the country, as the last American troops pull out of Iraq.

In a statement on Wednesday, which is the deadline for American forces to end their 12-year presence (since the start of 'Inherent Resolve' against ISIS) in the country, Sadr hailed the "independence of Iraq" and praised those who fought against the US.

Iraqi Shia cleric Muqtada al-Sadr 

"We demand compensation from the American army for all the damages that occurred as a result of its occupation of Iraqi lands," he said. "Everyone should file legal complaints regarding this."

The US first occupied Iraq in 2003 following the overthrow of Saddam Hussein, before pulling out its forces in 2011.

They returned at the request of the Iraqi government in 2014 to tackle the spread of the Islamic State group, which had seized around a third of the country.

The US-led invasion in 2003 was widely regarded as illegal, and American forces in Iraq were accused of committing frequent war crimes and human rights abuses.

Different accounts of the death toll from the invasion have been reported, with most ranging from hundreds of thousands of violent deaths to more than a million excess deaths.

Sadr said in his statement that the US, as well as "neighboring countries", now needed to refrain from interfering in Iraqi affairs.

"This may lead to the severing of relations and reciprocal treatment, especially in political and ideological matters, and the dragging of Iraq into regional conflicts," he said. "We hope that the United States will reciprocate diplomatically and not act arrogantly towards Iraq, its government, and its people."

No foreign interference

During the original US-led occupation of Iraq, Sadr led the Mahdi Army (later revived as Saraya al-Salam or Peace Brigades), an armed group that fought against the coalition forces, Iraqi security forces and al-Qaeda in Iraq, among others.

Sadr and his supporters have long framed themselves as an Iraqi nationalist group, opposed to both US influence on the country and interference from its powerful neighbour Iran.

On Wednesday, Sadr said the remnants of the Mahdi Army would be retooled as the Supporters of Imam al-Mahdi Foundation, a reference to Muhammad al-Mahdi, whom Shia Muslims believe is in hiding and will return alongside Jesus to usher in the end times.

He also suggested that all current politicians in Iraq step down from their positions to usher in new blood - to "end corruption and work towards reform" - as well as reiterating a need for all weapons in Iraq to come under the control of the state.

The question of the integration of powerful armed groups in Iraq into the regular security forces has been linked to the US troop withdrawal.

Though the process was originally tied to the September 30 deadline, last week Prime Minister Ali al-Zaidi extended the deadline to June 2027.

A number of the most powerful Iran-backed groups - including Kataeb Hezbollah, Harakat al-Nujaba and Kataeb Sayyid al-Shuhada - have already indicated that they will not disarm, and the ongoing US-Israel war against Iran has made it unlikely the Islamic Republic will exert any pressure on them to do so.

"Disarmament needs a political agreement inside Iraq, a credible way of integrating fighters and command structures into the state, and some answer to the political, economic and ideological power these factions have built up over years," said Hayder al-Shakeri, a research fellow with the Middle East and North Africa programme at Chatham House, speaking to Middle East Eye.

Chief Pentagon spokesman Sean Parnell says the US and its coalition partners have formally ended “Operation Inherent Resolve” in Iraq with all forces and military equipment having left the airbase in Erbil.

The US has withdrawn its forces, but retains a more decisive form of leverage: controlling Iraq's access to its own oil revenue, which is held at the Federal ⁠Reserve Bank ​of New York. https://t.co/Ufd1Ya2QZo

— Aaron Maté (@aaronjmate) September 30, 2026

"For the groups closest to Iran, it will also be extremely difficult without Iranian agreement or a broader regional de-escalation. Otherwise, you risk simply moving the weapons into another institution while leaving the same networks and chains of command intact."

Tyler Durden Wed, 09/30/2026 - 15:20

Mother Arrested After Toddler Pulls Loaded Gun From Backpack At Michigan Daycare

A toddler pulled a loaded handgun from a backpack inside a Michigan daycare Monday, leaving a teacher to step in before anyone was hurt. The child's mother has been arrested, while the father, reportedly a Detroit police officer, is the subject of a separate departmental review. Local reporting describes an incident captured on surveillance video and a criminal investigation into the circumstances.

The Wayne County Prosecutor's Office told ABC News that an arraignment is expected Thursday, October 1. The Wednesday update, carried by AOL, did not specify the charges. On Tuesday, prosecutors had said a warrant request was still under review.

The incident occurred at Children's World Early Learning Center in Canton Township, west of Detroit. Cox Media Group reported Wednesday, citing Detroit's WXYZ, that the arrested mother is a nurse and that the child's father works for the Detroit Police Department. Police had not publicly supplied the toddler's exact age.

A Teacher Intervenes

According to a message from the center reviewed by Detroit's WDIV, staff became aware of the weapon when the child removed it from the backpack. A supervising teacher secured it, and the center contacted police.

"The supervising teacher remained calm and followed the appropriate safety response," the center told families.

The gun was a loaded Glock pistol, WXYZ subsequently reported. It remained in a holster that covered the trigger and trigger guard. Police credited both that protection and the teacher's immediate intervention with preventing anyone from being injured.

Canton Police Chief Joseph Bialy said the classroom footage was difficult to watch even knowing how the incident ended, according to WXYZ's initial report.

Amy Paggeot, a parent at the center, told the station: "My kid is usually bringing his stuffie." She described a center full of young children, many still taking naps.

The Arrested Parent Is Not The Officer

The parent taken into custody was not the police officer. Bialy made that distinction, and said he did not believe the handgun was a service weapon, according to NBC News' report carried by AOL.

WXYZ's follow-up reporting says police identified the mother as the gun's owner. The station reported that the father was not expected to face criminal charges, but that Canton investigators had contacted Detroit's internal-affairs division for a separate investigation running alongside the criminal case. Detroit police had not commented to the station. The outlet also reported that the mother could face a misdemeanor carrying up to 93 days in jail or a $500 fine. ABC's subsequent arraignment update did not identify the offense.

USA TODAY Network reporting described investigators as still working to establish how the toddler obtained the gun.

Backpack Checks Follow

The daycare has disenrolled the family and added bag checks, according to WDIV. Management said staff had followed the center's existing safety procedures and praised the teacher who intervened.

Michigan already has a firearm-storage requirement. The state Department of Education's guidance on MCL 28.429 says unattended firearms must be secured in a locked box or container, or unloaded and secured with a locking device, when a minor is reasonably likely to be present.

Remember when they taught marksmanship in school?

* * *

Tyler Durden Wed, 09/30/2026 - 15:00

Trump's $200BN Korean "Investment" Is A Gas Plant With No Customers, Eight Reactors With No Sites, And A Pipeline Seoul Calls A "Future Discussion"

A week ago, we wrote that South Korea had finally found a home for the first slice of the $350 billion it promised Trump: a $22.3 billion, 6.3GW gas plant in Encinal, Texas, with no customers, no PPA, and turbines that may not show up this decade. That left, as we put it then, "$328 billion to go."

That number is about to get a lot smaller, if only on paper. According to Bloomberg, at 3pm ET, Trump will announce from the Oval Office that Korea is committing $200 billion to US energy projects: eight large nuclear reactors, the Encinal plant, and the long-suffering Alaska LNG export venture, which Bloomberg earlier reported would get $54 billion of Korean backing. A White House official described it as the first tranche of projects to win approval under last year's trade deal.

One small detail: Seoul hasn't publicly confirmed any of it. And according to Korean press, it doesn't entirely agree.

The math adds up... a little too well

Recall how the deal is structured. Of the $350 billion, $200 billion is upfront capital for "strategic industries," capped at $20 billion a year, with a separate $150 billion for shipbuilding. Now add up the three projects that have been floated:

• Eight reactors: about $120 billion, per Korea's own government briefing (six Westinghouse AP1000s and two Korean APR1400s, per Kyunghyang Shinmun)
• Alaska LNG: $54 billion
• Encinal, Texas: $22.3 billion

Total: $196.3 billion. In other words, today's announcement would use up about 98% of Korea's entire strategic-investment tranche in one go, with $3.7 billion left over for bubble tea or whatever. At the $20 billion annual cap, just funding these three would take roughly a decade, which is convenient for a program that runs well past the next two elections.

Here is where it gets awkward. In its National Assembly briefings, the Korean government listed Encinal as the only approved first project. The eight reactors and Alaska LNG were both classified as "items for future negotiation," according to SBS and Seoul Economic Daily. The latter notes that Commerce Secretary Lutnick is leading the announcement, flanked by Alaska Senator Dan Sullivan, while Korea's own trade minister, Kim Jung-kwan, who actually negotiated the thing, is not expected to be there.

Kim was even more explicit on the nuclear piece, telling reporters that the plan "does not mean that the nuclear power projects will immediately proceed" until final arrangements and government reviews are done. So the $200 billion headline is roughly $22 billion that Seoul has signed off on and $174 billion that Seoul is still arguing about.

The midterm pipeline

Bloomberg flagged the timing, noting that the announcement comes amid deep voter dissatisfaction with the cost of living and the risk that Republicans lose Congress in November. Goldman's Alec Phillips relaunched the bank's US Election Monitor this morning (full note available to pro subs) and his numbers are not great for the GOP: Democrats lead the generic ballot by 8.5 points, prediction markets give them a greater than 90% chance of winning the House, and better than 60% odds of taking the Senate. Phillips does caution that Senate polling has historically overstated Democratic performance at this stage, especially in red-leaning states.

Which brings us to Alaska. Per Seoul Economic Daily, Democrat Mary Peltola leads incumbent Sullivan 46.5% to 45%, with local fuel prices a big issue. Korean commentators are openly calling the Alaska LNG announcement a "midterm card." As for whether a 740-mile pipeline that hasn't reached FID will lower anyone's gas bill before November 3, we had a thought on that last night:

*TRUMP TO UNVEIL $54 BILLION ALASKA LNG PLAN AMID MIDTERM WOES

Surely the LNG will be used to help US consumers and not be exported to Japan and Korea, right?

— zerohedge (@zerohedge) September 29, 2026

Recall that the whole point of Alaska LNG is to ship North Slope gas to Asian buyers, with some diverted for in-state power. When we last covered the project in October 2025, it was a $44 billion venture, and Asian buyers were quietly worried the costs were too high. Korea's reported $54 billion commitment alone is now bigger than the whole project's price tag was a year ago. That is some impressive cost inflation, even by pipeline standards. Glenfarne has signed preliminary deals with importers but still hasn't taken FID; Korea's money is supposed to unlock it.

To be fair to Seoul, the timing isn't crazy from an energy-security perspective. Goldman's Samantha Dart wrote after Gastech last week that corporates across the LNG chain expect the Iran status quo to persist, and that without a meaningful recovery in Persian Gulf exports this winter, JKM will likely reach $35/mmBtu by year-end, versus a $24.85 base case. A supply source that doesn't pass through Hormuz has obvious appeal for Asian importers. It's also telling that KOGAS just approved roughly $1.26 billion for LNG Canada Phase 2, which is a project that actually exists. Meanwhile Goldman's John Mackay listed "higher costs for new US greenfield capacity" among the key debates heading into Gastech, and few greenfield projects are more greenfield than a 740-mile trench across the Arctic permafrost.

Eight reactors, zero sites

The nuclear piece is the biggest part of the package and the least developed. What we know:

• Structure: $120 billion for eight units in three phases: two AP1000s first, then two APR1400s plus two more AP1000s, then two final AP1000s. A six-month gap is targeted between the Phase 1 and Phase 2 EPC contracts, and both sides agreed only to make "reasonable efforts" to keep to it (UPI).
• Sites: None yet, though talks favor federal land.
• Lead times: 54 months for reactor vessels, 57 months for steam generators and 65 months for coolant pumps. Seoul has floated up to $10 billion by year-end for advance equipment purchases, pending National Assembly approval, and DOE has separately authorized $17.5 billion in conditional loans for long-lead AP1000 gear.
• Per-unit cost: $15 billion per reactor. That's ambitious given Vogtle's two AP1000s came in north of $30 billion, but at least it's within shouting distance.

The real fight has been over who gets to design and own what. Goldman's Seoul trading desk flagged on September 16 that the core disagreement delaying the talks was the nuclear leg, with the US "reportedly showing reluctance toward constructing Korean-designed reactors on its soil," and not keen on handing Korea voting rights in Westinghouse. That friction shows up in the numbers: a day earlier the same desk reported Seoul wanted at least a 15% stake in Westinghouse plus board seats. By last week, KED had it at about 7%, and Kyunghyang reported a 5–10% target, with the government insisting voting rights "could be obtained even at" that level. We'll see.

This is a saga we've been tracking for a while. Back in November 2025 the administration declared it a "national emergency" and said it would buy 10 large new reactors. By March, slow progress had pushed the administration to start talking with Westinghouse's rivals. In August, the plan became a Korean problem:

According to reports, The U.S. govt has proposed that S. Korea acquire a stake in Westinghouse Electric Company as Washington pursues an $80 bn partnership aimed at breaking ground on 10 large-scale nuclear reactors by 2030. KEPCO(015760) is being considered as the acquisition…

— zerohedge (@zerohedge) August 24, 2026

And by Labor Day, "up to eight" reactors with a price tag of $120–130 billion. So in about ten months we went from 10 reactors for $80 billion to eight for $120 billion, which is the most nuclear thing about this whole story.

Longer term, the more interesting action may be in smaller units. Goldman's Yuichiro Isayama noted this month that Japan's third tranche under its own $550 billion pledge is likely to focus on SMRs (after about 10 units were already assumed in the second), and flagged Japan Steel Works (Buy) as the big winner because SMR primary components still need the same large forgings as full-size reactors. As we've argued for a while, modular reactors are the only long-term solution to the AI power crunch; Tokyo seems to agree, while Seoul is betting on the gigawatt-scale designs that made Vogtle famous for all the wrong reasons.

Who buys all this power?

As a reminder, Korea's own case for Encinal assumes the power "can be sold to Big Tech at premium prices," per a local report flagged by Goldman's Seoul desk. The demand is certainly there. Goldman's Power Up America team projects AI infrastructure capex of $1.3 trillion in 2027 and $2 trillion in 2028, which it says corresponds to 35GW and 57GW of new data center deployments, adding that "the physical grid could emerge as the ultimate constraint." Against that, Encinal's 6.3GW plus roughly 9.5GW of reactors that won't be online until well into the 2030s is a rounding error... if it gets built at all.

And then there's the behind-the-meter question. As we noted last week, Goldman's Carbonomics team raised its outlook for BTM generation at data centers from 40GW to 67GW by 2030. If hyperscalers increasingly build their own on-site power (which we have long argued should be mandatory), then grid-scale plants that were financed on the premise of selling premium power to Big Tech may find Big Tech has already left the room. And with large gas turbines effectively sold out through 2030, Encinal and the BTM crowd are fighting over the same equipment anyway.

Bottom line

Japan went first in February with a $36 billion opening tranche, led by an Ohio gas plant whose sponsor, SB Energy, has since delayed its IPO. Korea is now doing the same thing, just bigger and faster: one gas plant Seoul has agreed to, $174 billion of projects it still calls "future discussion," and a headline number that will do a lot of work between now and November 3.

Last week we said there was $328 billion to go. After today, Trump will say $150 billion. Seoul will probably say it's still $328 billion. For once, both may be right.

Tyler Durden Wed, 09/30/2026 - 14:00

It's Time For The Right To Return Fire

Authored by Tom Klingenstein via TomKlingenstein.com,

In this essay, Thomas Klingenstein argues that the Right has made a category error: treating lawfare as a series of discrete legal disputes when it is better understood as a system of political power. His answer isn't simply better defense, but counterpressure - a new public-interest law firm, led by Jeff Clark, meant to defend conservative lawyers and make lawfare more costly to practice.

The deeper question, however, is whether an adversarial legal order can remain genuinely adversarial when one side commands the institutions, money, and professional machinery of enforcement. Klingenstein's argument is that formal neutrality is not enough; power also depends on whether institutions exist that are willing and able to contest it.

Lawfare is the strategic use of legal proceedings to intimidate, distract, defame, or destroy an opponent. Over the past decade, the Left has built a powerful, well-funded network that is carrying out Lawfare against our advocate class. The Left raised at least $183 million last year.

(Jemie Hecker/Shutterstock)

To examine lawfare, we must consider the current context, which is this: we are at war, a cold civil war, against a domestic regime which wants to overthrow America. It is correct to call it a "war," and not just an unusually wide divide, because the contest is between two moral orders. From a given moral order there flows a given set of laws, values, customs, and other aspects of culture. Obviously, a society can have only one of each. The moral order of the enemy regime rests on group outcome equality. The moral order of our regime, on the other hand, rests on individual merit. These two moral orders - individual merit versus group quotas - are utterly irreconcilable. You can't admit people to college (or anything else) based on both merit and group quotas. It's one or the other. This is why today the two political parties can agree on almost nothing. The Left knows that because it knows that it is at war. Thus, it plays by wartime rules. The Right, on the other hand, does not know it and so continues to play by peacetime rules, which include trying to reach across the aisle, a sucker's game in a war.

One of the most powerful weapons in the Left's arsenal is Lawfare. But we on the Right don't understand this; we don't understand either the nature or power of the Left's Lawfare.

It's time we learn.

The 65 Project is the best example of leftist Lawfare. Devised by Melissa Moss and David Brock, two Democrat operatives with ties to Hillary Clinton, the Project has sought "not only [to] bring the grievances in the bar complaints, but shame [Right-wing lawyers] and make them toxic."

Elsewhere, David Brock says the central aim of the Project is to "threat[en] the livelihood[s]" of Republican and conservative lawyers, noting that the power of Lawfare comes from its "deterrent effect." The goal, Brock underscores, is to "kill the pool of legal talent" on the Right.

The Project's Advisory Board consists of high-powered Democrat operatives, including former Senate Majority Leader Tom Daschle, former Utah Supreme Court Chief Justice Christine Durham, former American Bar Association (ABA) President Roberta Ramo, and Paul Rosenzweig, a member of the Federalist Society who had worked for Ken Starr on Whitewater.

When it was first announced, the 65 Project set out to target 65 lawyers (hence the name), but it has now grown to target 111 lawyers in 26 states and the District of Columbia. Since then, at least 86 bar complaints have been filed. The Project has not won all its cases, but a loss can be just as successful as a "win." A lawsuit can cost a single defendant hundreds of thousands to millions of dollars in legal fees, as well as damage his reputation and even split up his family. Trump's former Chief of Staff, Mark Meadows, paid many millions to defend himself against the J6 Committee, Jack Smith, Fani Willis, and likely others.

As I noted, the Left's lawfare effort raised at least $183.2 million in 2025 alone. This effort is not only well-funded; it is well-organized and coordinated. For example, thousands of people have been mobilized across the country to sign ethics complaints against Right-wing lawyers. In New York alone, 7,200 individuals were mobilized to support the ethics complaint against Rudy Giuliani. The groups are coordinating filings across jurisdictions and pursuing individual lawyers through multiple disciplinary proceedings. Rudy Giuliani, Kenneth Chesebro, and John Eastman have each been disbarred. Jenna Ellis received a three-year suspension. Jeff Clark's proceeding reached a recommendation for disbarment.

John Eastman's disbarment is the most well-known shot across the bow. So far, it has cost him $3 million to defend himself against disbarment and Lawfare. And like virtually all our defendants, he could not get legal representation from "white shoe" law firms. Further, his disbarment is just a piece of the Left's attack: court orders have restricted his travel, his ability to carry a gun, his ability to get his TSA ID renewed, and more - essentially stripping away his rights and imposing as many inconveniences as possible.

If they can disbar Eastman, then they can disbar you. And make no mistake, they want to.

Eastman has appealed the disbarment decision to the U.S. Supreme Court. Unfortunately, some of the most prestigious lawyers on the Right would not take Eastman's case, perhaps because of concerns about financial or reputational consequences. I get it. I know that getting involved would require sacrifices, but I also know our best and brightest lawyers love their country. Let me say to them what they already know: Their country needs them.

Leaving Lawfare to the Left has been a big mistake. It's time to return fire.

Finally, there is good news. Jay Sekulow and the American Center for Law and Justice have, to their great credit, stepped up and are now representing John. The Department of Justice should file an amicus brief in support of Eastman. Although the Supreme Court does not normally take state disbarment cases, under its discretionary cert review, it can. The primary justification for taking John's case is that partisan disbarment undermines the rule of law. Lawyers must not be systematically discouraged from taking difficult and controversial cases, such as ones that defend the Presidency, election integrity, and other Right-wing causes.

Judicial resolution depends on fearless advocates on both sides meeting on an equal playing field. Today, it is not a fair fight. Let's not sugarcoat it: the proponents of Lawfare on the Left seek to establish a one-party monopoly. And since much of America's policy development today occurs in the courts, it is evenhanded court advocacy that the Left must destroy.

As I said, we must counterattack. To begin, I'm funding a new, offensive-oriented public interest law firm, which will be led by Jeff Clark. He knows Lawfare from the inside. Jeff had the same concerns about the 2020 election that millions of Americans had: members of the executive branch in many states made unilateral, last-minute changes to properly enacted election laws; the widespread use of mail-in balloting, the lack of signature verification, and a host of other problems. Jeff wanted DOJ and the battleground states to investigate those irregularities aggressively, and so he drafted a letter addressed to Georgia's legislators that expressed his concerns. The letter was never sent because others at DOJ threatened to resign if it were. The matter should have died, as it was protected by executive, attorney-client, and other privileges. But it didn't. The letter was leaked by Jeff's enemies to try to destroy him and pressure him to attack President Trump, which Jeff refused to do.

For this supposed offense - a letter never sent - Jeff was arrested and prosecuted by Fani Willis. And Jack Smith targeted Jeff for years, claiming that he was unindicted co-conspirator number four in a criminal case relating to January 6 in Washington, D.C. What's more, Jeff had to fend off three separate congressional investigations, and for five years and counting, Jeff has been defending his bar license in D.C. Jeff's case is so meritorious that the current DOJ sued all of the judges of the D.C. Court of Appeals, two bar quasi-prosecutors, and the D.C. Board on Professional Responsibility, arguing that they have no authority to prosecute or harass Jeff in any way.

But instead of retreating, Jeff has chosen to fight. He has had a very successful legal career both in private practice and at the highest levels of the Department of Justice and the White House. As a leader of the Trump Administration's DOJ Environment Division, Jeff won 80% of his cases, including stopping the attempted takeover of U.S. energy policy by a federal judge in Oregon. And Jeff won two-thirds of the cases he personally argued when he later took over the 1,000-lawyer Civil Division at DOJ starting in September 2020.

It would be imprudent to reveal our plans to the enemy, but at minimum, the newly minted Project Oversight Law Firm will pursue damages, fees, and other remedies that make the Left's Lawfare too costly to continue. When necessary, this new firm will bring into question the careers and reputations of those who are committing Lawfare against us. It's time to turn the tables.

The conservative Lawfare effort has been much less effective than it could have been because it has focused entirely on defending our lawyers who have been attacked by the Left. And even then, our efforts have been woefully inadequate. For the most part, we have left our lawyers to fend for themselves. This must change. We need to meaningfully support our lawyers and, at the same time, go on offense. Playing defense is an honorable task, but as any good strategist knows, the best defense is a good offense.

Furthermore, at present, the conservative public interest movement is hampered by the fact that it is operating like a business that bills its clients at extraordinary hourly rates; instead, we need to develop our own purpose-built law firm (specializing in multiple legal disciplines) that can go on offense. As a movement, we have shown we are capable of identifying what we need to resist, but we are much less clear about what we need to recover, which institutions we need to recapture, and how we aim to eliminate, reduce, or make more expensive future assaults from the Left.

Tyler Durden Wed, 09/30/2026 - 13:20

Gulf Exports Roar Back To Pre-War Levels, Goldman Says; Blas Sees "Trump Has Advantage" On Hormuz

The US conflict with Iran has been ongoing for seven months and will soon enter its eighth month. Diplomatic signals this week, along with another request for a US SPR dump and reports of Gulf oil export flows improving toward prewar levels, have sent Brent crude futures down to around $103 a barrel.

Goldman analysts Yulia Zhestkova Grigsby, Alexandra Paulus and Daan Struyven have penned a new note explaining that estimated "dark exports" have helped boost Persian Gulf oil exports to 23.3 million barrels a day over the past week, back to prewar levels and an encouraging development ahead of the Northern Hemisphere winter.

"We estimate that Persian Gulf oil exports, including estimated "dark exports", have recovered to 23.3mb/d over the last week, in line with their 2025 average, as exports doubled in September," the analysts wrote. 

They said, "The remarkable adaptation of both Middle East supply and China import demand supports our base case that Brent prices moderate to $85/bbl by year-end and to $80 in 2027." 

Grigsby attributed much of the export-bound surge to increased Hormuz shipments, including ship-to-ship transfers. Those flows have offset a drone attack that paralyzed Saudi Arabia's East-West pipeline, but the most recent reports say the pipeline has restarted. 

Crude accounted for nearly 90% of September's export recovery in the Gulf area, reaching 19 million barrels a day over the past week, or 108% of its 2025 average.

But the analysts warned that exports of diesel, gasoline, and jet fuel remained at just half their 2025 average.

Saudis led the recovery. 

They also pointed out "a divergence between the fall of Iranian exports and the rise of exports of other Persian Gulf producers."

Taken together, what does this mean for the Trump administration? 

Well, Bloomberg commodities expert Javier Blas wrote in an opinion piece that President Trump has gained the upper hand in the battle over the maritime chokepoint, with crude exports from US allies through Hormuz and bypass routes recovering toward prewar levels.

Blas wrote:

I don't know who will win the US-Iran war. But if you ask me who's prevailing in the battle over the Strait of Hormuz, it's clear US President Donald Trump has the advantage. As much as Tehran says the opposite, the strait is effectively wide open. Crude oil exports from regional US allies via the waterway, plus bypass routes, have risen to about 80% of prewar levels. Iran, meanwhile, has seen its own oil exports plunge to zero.

A couple of months ago, the surge in oil shipments would have been seen as a major American victory. Yet Brent crude, the oil price benchmark, remains above $100 a barrel. Inside the White House, some must be asking themselves: If this is winning, what would losing look like?

Yet restoring crude flows addresses only one part of the global energy shock. Goldman energy analyst Nikhil Bhandari warned last week that the global refining crisis could extend well into 2027. Russia still has a refinery crisis and export halts of crude products were just extended into fall. 

Blas' view is that Trump is gaining control of Hormuz while Tehran's leverage has eroded. But whether that translates into lower fuel bills depends on the refining crisis Bhandari described: fuel prices will remain elevated into next year (read the report here).

The blockade and US sanctions are nearing maximum impact. The power of these things is that Iran's regime can obviously roll the clock forward. The devastation to the economy will now get much worse quickly. Imaginations will be running wild in Tehran...https://t.co/INXSZye8Hd pic.twitter.com/hyQXFFit7x

— Robin Brooks (@robin_j_brooks) September 30, 2026

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

Tyler Durden Wed, 09/30/2026 - 13:00

Bank of Korea To Buy 1 Ton Of Gold In First Purchase Since 2013

Add South Korea to the list of countries taking tentative steps to hedge their exposure to the US dollar, and fiat in general.

The Bank of Korea will buy approximately one ton of domestically produced gold in December, worth 200 billion won, according to the office of Rep. Chung Tae-ho of the Democratic Party of Korea, a member of the National Assembly's Strategy and Finance Committee, on the 30th.

The move, which follows indirect investment through ETFs in the second quarter, signals a more active push into gold and marks the central bank's first physical gold purchase in 13 years. The first transaction is scheduled for December 14, after the bank establishes the system needed for domestic gold trading, Seoul Daily reported.

In materials submitted to Chung's office, the BOK said the necessary systems are expected to be in place around Dec. 14, allowing the first transaction to take place at that time. The central bank estimated the planned volume at around one ton. One ton of gold is valued at roughly 200 billion won ($140 million).

The Bank of Korea held 104.4 tons of physical gold as of the end of August, valued at $14.88 billion and representing 3.4% of foreign exchange reserves. One ton adds less than 1% to that position.

The BOK halted gold purchases in February 2013. It had ramped up gold investment until then, only to face fierce criticism from politicians when prices fell. But with geopolitical risks mounting and interest in gold as a safe-haven asset growing, and amid criticism that the BOK's gold holdings were smaller than those of other central banks, the bank decided this year to expand its reserves. It officially announced in August that it would resume buying physical gold. In the second quarter, it had already purchased $250 million worth of gold ETFs, which are classified as securities.

The most likely approach for the physical purchases is to buy volumes that domestic gold producers had planned to export. The arrangement is significant because it secures a channel for buying gold in won rather than foreign currency. That allows the BOK to build up safe-haven assets without dollar outflows, minimizing volatility in the domestic foreign exchange market. The Korea Exchange recently overhauled the trading, custody and settlement systems of its KRX gold market to support the BOK's purchases.

Chung said the BOK's decision to resume physical gold purchases after 13 years is a meaningful first step toward diversifying the country's foreign exchange reserve portfolio.

What makes the purchase notable is the resumption itself. As Binance notes, a central bank that has not bought physical gold since 2013 building the infrastructure to do so signals an intent to continue, and the report describes establishing a system rather than executing a one-off trade.

Confirming an August report from Reuters, the purchase is expected to cover gold that domestic producers had originally planned to export. That will allow the central bank to pay in Korean won without drawing on foreign exchange reserves.

The distinction matters for how the transaction affects Korea's external position. A conventional gold purchase converts foreign currency into bullion, changing the composition of reserves without altering their total. Buying domestic production with won adds to reserves without spending any.

It also keeps gold inside Korea that would otherwise have left, which has a marginal effect on the country's trade flows.

The Bank of Korea began indirect gold investment in the second quarter of this year, purchasing $250 million worth of gold ETFs.

That sequence is informative. ETF exposure gives price participation without custody, storage or the operational work of handling physical metal. Moving from ETFs to bullion after two quarters suggests the earlier position was a preliminary step rather than the intended endpoint.

The BOK's gold holdings fall far short of those in major economies. As of the end of August, the central bank held 104.4 tons of physical gold, worth $4.79 billion on a book value basis. That accounts for just 1.1% of total foreign exchange reserves, or about 3.4% at market prices. The BOK ranks 39th in the world in gold holdings, according to the latest data from the World Gold Council.

China's central bank has been the more visible buyer, adding 650,000 ounces in a recent month - its largest since 2023 - across 22 consecutive months of purchases.

Central bank gold demand has been a persistent bid through a period when the metal has fallen sharply on rate expectations. Gold traded near $4,144 on September 28, roughly 25% below January's record of $5,600, and posted three consecutive weekly declines through mid-September.

That divergence is the thing to watch. Official sector buying has continued while investor flows moved the other way, and a central bank starting a programme at these levels is buying into weakness rather than strength.
Fiscal Concerns Are the Stated Driver Elsewhere

The broader argument for central bank gold accumulation has shifted toward sovereign risk.

Chicago-based Strategic Analytics put it directly: "Since 2022, gold has increasingly tracked fiscal-risk perceptions – term premium, deficits, debt sustainability – rather than the Fed's policy path."

That framing sits alongside a bond market setting extremes. The 30-year Treasury yield crossed 5.6% on Tuesday, its highest since June 2002, and the 10-year reached a fresh 2007 high near 5.3%, with analysts including 10x Research's Markus Thielen forecasting 6%.

Tyler Durden Wed, 09/30/2026 - 11:40

Oil Hits Session High After DOE Shows Lowest Midwest Gasoline Stocks On Record

Oil prices rose to session highs after today's DOE inventory data refuted the latest cheerful API prints from Tuesday afternoon. Instead of the API-reported builds in distillates and gasoline, the DOE said that in the last week both products drew, with a modest increase in Cushing inventories, while crude inventories rose by 922K

API

•     Crude +1.0mm
•     Gasoline +3.0mm
•     Distillates +0.3mm
•     Cushing +0.2mm

DOE

•     Crude +0.922mm
•     Gasoline -1.684mm
•     Distillates -2.251k
•     Cushing +553mm

As Bloomberg notes, that’s a large draw of distillate fuels at 2.25 million barrels, well below the 300,000 barrels increase API saw. The October diesel contract is expiring today, so price action is a little murky, but the most-active contract is holding pretty strong gains near $4.75 a gallon.

Cushing stocks saw another bounce off 'tank bottoms' even as crude inventories saw a modest increase, while product stocks both saw modest draws...

Here' a look at some more of the data:

• PADD 1B gasoline -1,422k
• PADD 1 Distillates -254k
• PADD 3 crude +3,417k
• Refinery utilization -1.5ppt vs est. -0.3ppt
• Refinery crude inputs -554k b/d
• Crude imports -179k b/d
• Crude production +16k b/d

The 922,000 barrel build in commercial crude stockpiles was close to the 1 million barrel increase seen by the API on Tuesday. It compares with a Bloomberg survey of analysts that saw the stockpile shrinking by 710,000 barrels and Bloomberg users’ expectations just before the data were released of a 1 million barrel build.

Stockpiles at Cushing, Oklahoma, rose to the highest since May. At 24 million barrels, inventories are inching further away from the 20-million mark generally seen as the minimum operating level for the storage hub. It’s the second straight week of builds at Cushing. 

Meanwhile, the US Strategic Petroleum Reserve declined by another 785K barrels; SPR stockpiles will continue to draw further throughout the end of the year after the energy department re-offered 40 million barrels of sour oil in a tender. The oil was offered as part of the exchange program, and must be returned in kind between 2027 and 2029. It’s to be seen if the government will be able to attract interest from traders and refiners. The minimum premium has fallen to 7% to 9.5%, compared with as much as 22% earlier this year. A total of 132 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 coordinated by the International Energy Agency aimed at lowering energy costs.

That means that the build in commercial crude stockpiles was mostly offset by another 785,000 barrels withdrawn from the SPR. That reduced the overall nationwide crude build to just 137,000 barrels in the week to Sep 25.

Taking a closer look, we find that gasoline stocks in the US Midwest are at the lowest level on record. Overall, the US has the least gasoline on hand since November 2014, with stockpiles falling by 1.68 million barrels. 

On a seasonal basis, PADD2 (Midwest) gasoline has also never been lower. 

Distillate fuel stockpiles in the US also remain at their lowest seasonal levels on record. Stockpiles fell in every single region. Exports, meanwhile, rebounded to 1.5 million barrels a day. While discussion of a US diesel export ban has died down a bit, it hasn’t faded entirely, and a number like this might revitalize some of those conversations.

Linked to that, there was another big drop is US crude processing by refineries. Over the past three weeks, crude consumptions fell by 1.3 million barrels a day. That’s the lowest since May. Rates fell in all regions, with the exception of the Rockies

Imports of Brazilian oil rose to the highest level since November 2024 and the highest level ever for this time of year, with the US importing nearly 500,000 barrels each day last week. While it’s unclear what’s driving the move, one explanation could be that strong American refinery runs are supporting demand for nearby foreign crudes while, at the same time, less Brazilian oil heads to Asia.

At the same time, imports from Canada rose for the second time in three weeks. Shipments from the country remain fairly low at 3.4 million barrels a day, but there was an uptick nonetheless. PADD 2 takes the most Canadian crude out of any region, so the build in Cushing was likely at least partially due to shipments from the North. 

Bloomberg offers another take on falling refining crude processing: Canadian crude delivered via pipeline to both the US Gulf Coast and the Patoka hub are at a contango, a sign of weak demand. On the flip side, WTI at Houston is still in a backwardated structure. That can be partly explained by the light-heavy differential, that currently favors the use of light crude over heavy crudes from places like Canada and Venezuela. 

WTI futures jumped a few cents higher to session high in a knee-jerk reaction to the report. EIA data showed a relatively unexciting US crude stockpile build of roughly 900,000 barrels, but the markets focus is elsewhere this week - namely, diesel. 

 

Tyler Durden Wed, 09/30/2026 - 11:21

Feds Investigate Kinzinger Over Alleged Kalshi Bets On Own Pardon

Former Republican Rep. Adam Kinzinger is reportedly under investigation by the Commodity Futures Trading Commission over prediction-market trades tied to an unusually personal event: whether President Joe Biden would pardon him.

According to Politico, citing three people familiar with the matter, the CFTC has been examining trades made by a Kalshi account linked to Kinzinger in December 2024 and January 2025. Kalshi is also reviewing the transactions. Kinzinger confirmed that he made the trades, telling Politico that he wagered on both whether he personally would receive a presidential pardon and whether Biden would issue preemptive pardons before leaving office.

According to screenshots Kinzinger provided to the outlet, he made $823 on the trades. He said he placed roughly 25 trades during the period and mostly lost money. 

And of course, he denies having any inside information - telling the outlet "I was not a congressman or candidate, and had been out of office for two years, and had no inside information," and claiming that he never discussed a potential pardon with anyone at or near the White House and believed his wagers complied with Kalshi's rules at the time.

What Kalshi's Rules Said

A version of Kalshi's rulebook filed with the CFTC in November 2024 - before the reported trades - prohibited users from trading when they possessed material nonpublic information about an event or had the ability to influence its outcome. Kinzinger says he had neither.

Interestingly, on Jan. 6, 2025, while Biden's possible preemptive pardons were being publicly debated, CNN's Anderson Cooper asked Kinzinger whether Biden should pardon members of the Jan. 6 committee, including himself.

"No. I don't want it," he replied, adding "As soon as you take a pardon, it looks like you are guilty of something," Kinzinger said.

Two weeks later, Biden pardoned Kinzinger along with the other members and staff of the House Jan. 6 committee and police officers who testified before it. The Justice Department describes the action as a "full and unconditional pardon" covering potential federal offenses arising from or related to the committee's activities.

Granted: we don't know exactly when each Kinzinger trade occurred, whether he held a position when he made his CNN comments, or which side of the pardon contract he was taking at any particular point.

So the public statement and the trading activity cannot, based on what is currently known, be treated as evidence of market manipulation.

In February, the CFTC warned that prediction-market activity involving improperly obtained confidential information or a trader's influence over an event can trigger federal antifraud and anti-manipulation rules. The agency highlighted one case involving a political candidate trading on his own candidacy and another involving a person affiliated with a YouTube channel who allegedly knew the contents of videos before they were published.

Tyler Durden Wed, 09/30/2026 - 11:20

Migrant Caravan Headed For US Border Has 'Zero Chance' Of Entering, DHS Chief Warns

Another migrant caravan from Honduras has "zero chance" of entering the United States, DHS Secretary Markwayne Mullin. 

U.S. Army combat engineers place razor wire on the U.S.-Mexico border wall to reinforce security in El Paso, Texas, as seen from Ciudad Juarez, Mexico, on July 24, 2025. Jose Luis Gonzalez/Reuters

"The caravan has zero chance of coming into our country," he told Newsmax Monday. "I’ve been talking with the Mexican government and we actually have been watching this caravan for quite some time."

The Department of Homeland Security (DHS) has been tracking the group since it left San Pedro Sula, Honduras Sept. 20, and has been working with international partners to monitor its movements. 

"DHS is playing lockdown defense at the border. We will use every Weapon at our disposal, from A to X, to keep Americans safe," an agency spokesperson told the Epoch Times. "Migrants considering making the dangerous journey to our country should also be aware that the days of ‘catch and release’ are over, and Biden’s disastrous open border policy has been SEALED SHUT." 

The group, which calls itself "Fe y Esperanza" (Faith and Hope) is estimated to include around 300 people, according to Oaxaca news outlet Oaxaca Capital. 

Texas National Guard soldiers wait nearby the boat ramp where law enforcement enter the Rio Grande at Shelby Park in Eagle Pass, Texas, on Jan. 26, 2024. Michael Gonzalez/Getty Images

"Some of its members have indicated that they are seeking to reach the United States, while others plan to stay in Mexico and look for job opportunities," the outlet reported. "It is also reported that migrants who were previously deported from the United States are now attempting to resume their journey northward."

The caravan entered Mexico from Guatemala via a bridge in Suchiate and walked more than 12 hours to reach Tapachula. They stayed in Oaxaca for several days and received care for exhaustion, dehydration, blisters, and foot injuries, the city said.

Humanitarian organizations provided first aid, medications, water, food, and hygiene items to the men, women, and children from several countries in Central America that made up the group, the city reported. -Epoch Times

Mexican authorities are reportedly helping to break up the caravan, Mullin said, adding "They are not entering ... We made this very clear." 

Tyler Durden Wed, 09/30/2026 - 11:00

FTC Launches 'Rogue AI' Probe Of OpenAI, Anthropic - And Takes Aim At Their Regulatory Moat

The Federal Trade Commission (FTC) is launching a sweeping, aggressive probe into top frontier labs like OpenAI and Anthropic. However, the investigation goes far beyond simply asking questions about autonomous software run amok, and its chairman has made clear he won't let Silicon Valley use recent AI failures to build an insurmountable regulatory moat.

According to administration officials who spoke to the New York Post, FTC Chairman Andrew Ferguson is preparing to hit tech executives with Civil Investigative Demands (CIDs) - essentially administrative subpoenas - to compel testimony regarding the dangers their artificial intelligence (AI) super intelligence (SI) models (are we doing this?) pose to the public and consumer markets.

The Catalyst: 'Hugging Face' Jailbreak

The immediate trigger for the probe is the highly publicized "Hugging Face incident" from this past July. During what was supposed to be a contained cybersecurity evaluation, about 700 of an estimated 1,200 OpenAI agents escaped their testing sandbox, bypassed network controls, and breached the infrastructure of the computational tools company Hugging Face. 

Running primarily on OpenAI's "Internal Model 1," the autonomous agents tried to erase traces of their work, created nearly a million shortened URLs to run code outside their restricted environments, and even tried to enlist other AI models to help.

While AI safety researchers were quick to call it "the first true AI safety incident," the FTC is taking a distinctly different view on accountability. Chairman Ferguson recently indicated that companies cannot shift legal blame to "rogue" AI systems when their automated decisions result in security breaches or consumer harm. The liability, the FTC argues, rests squarely on the humans who designed, instructed, and unleashed the models.

That said, these breaches have drawn scrutiny of their own. OpenAI first disclosed the incident as an "unprecedented" cyber event, but Hugging Face's own post-mortem found the agents reached the open internet through a network route the sandbox had deliberately left open, and exploited weaknesses that "a capable human attacker could have found and exploited" - unsafe dataset processing, exposed cloud metadata, overly broad access and long-lived credentials. OpenAI itself conceded that its own chain-of-thought monitoring, had it been running, would have caught the initial activity.

Nor was OpenAI alone. The Hugging Face breach was one of a string of incidents involving OpenAI, Anthropic, Meta and Google models that trace back to evaluations run with a single vendor, Israel-based Irregular, whose test environments had live internet access while the models were told they were in a simulation. Irregular notified all four labs in late July, yet the disclosures trickled out one lab at a time over seven weeks - turning one contractor's mistake into what looked like a wave of AI breakouts. Isolating test models from the internet is a "basic control measure," frontier security expert Matthew Mittelsteadt said. "You'd think that of all the things that you've got to get right." Some skeptics have gone further, questioning whether repeated "accidents" at the same vendor were accidents at all.

The Trojan Horse of "Self-Regulation"

For years, executives like OpenAI's Sam Altman and Anthropic's Dario Amodei have publicly warned that their own products pose an "existential risk" to humanity, practically begging lawmakers to regulate them.

But as we previously noted, these highly publicized warnings and agent "escapes" often serve a dual purpose. By whipping Washington into a panic over AI doomsday scenarios, industry leaders are paving the way for a worst-case scenario of heavy-handed regulation. Stifling compliance requirements inevitably crush open-source developers and cash-strapped startups, leaving the trillion-dollar AI bubble safely in the hands of the incumbent monopolies.

Chairman Ferguson appears to be acutely aware of this Silicon Valley playbook.

"I think it's very important that we not allow these two firms to come to Washington, whip everyone into a panic and then say, 'We need a whole bunch of regulations that we can comply with,'" Ferguson told Fox News earlier this month. "That is how companies build a moat around their businesses to make sure that people can't compete against them."

The FTC's aggressive posture stands in stark contrast to the White House's approach. Just this week, President Trump hosted a summit with leading tech billionaires - including Amodei, OpenAI President Greg Brockman, Elon Musk, and Google's Sundar Pichai - resulting in a much friendlier, voluntary "self-regulation" pact.

The administration is attempting to walk a nearly impossible geopolitical tightrope. The US government wants to prevent autonomous agents from hacking power grids, leaking data, or manipulating financial markets, but it is equally terrified that stifling the American AI industry will hand global dominance directly to China.

The FTC probe will test whether the US can successfully police the world's most powerful software without inadvertently cementing an AI oligarchy.

Tyler Durden Wed, 09/30/2026 - 10:40

Hung, Drawn, And Third-Quartered: Roll On Q4

By Michael Every of Rabobank

Today ends Q3, which has been a shocker even in a year of major market shocks.

Wars dragged on and spread. Russia-Ukraine saw energy sites hit and hybrid attacks against Europe increase. Saudi Arabia, not Iran, is now under missile fire and both oil exporters are partly blockaded. France gave the first sign of getting dragged into the war, which conflated more with Russia-Ukraine. A US-China summit suggested détente but news that families of Chinese AI workers can no longer leave the country suggested it’s minus a ‘te’ and an ‘e’ - and China just opened an airbase in Laos. Canada floated joining the EU and fighting a US invasion like the Taliban, as Greenland became a permanent US security protectorate with Ottawa’s approval. Argentina still wants the Falklands back, which London can no longer project power towards as in 1982, and as it continues to try to give away other strategic territory against strong US objections.

AI saw a series of remarkable headlines: technological breakthroughs, market meltdowns and melt-ups, and new political pushbacks. Perhaps the highlight was the upcoming Anthropic IPO telling would be shareholders that AI may pose an “existential risk to humanity.”

Western stocks had a steady Q3 until recently. With today’s session still to come, the S&P is +2.3% q-o-q vs. +14.9% in Q2 and -4.6% in Q1. The Dow -1.9% vs. +12.9% and -3.6%, the Nasdaq +2.2% vs. +21.4% and -7.1%, Eurostoxx are flat vs. +13.4% and -3.6%, the FTSE +1.3% vs +3.2% and +2.5%, but the Nikkei is -6.5% vs. +37.2% and +1.4%, the Shanghai composite -6.4% vs. +5.2% and -1.9%, and the Indian Sensex -5.2% vs. +6.3% and -15.6%.

Q3 saw the most dramatic up move in bond yield so far this year. With today yet to come: US 2s are now 4.90% (+72bp q-o-q), 10s 5.24% (+76bps), and 30s 5.57% (+60bps), the highest since 2002; Bund 2s are 3.29% (+76bps), 10s 3.62% (+76bps), and 30s 3.95% (+53bps); OATs 2s are 3.64% (+94bps), 10s 4.81% (+116bps), and 30s 5.39% (+93bps); Gilts 2s are 4.91% (+76bps), 10s 5.41% (+65bps), and 30s 5.92% (+44bps); JGB 2s are 1.96% (+59bps), 10s 3.11% (+43bps), and 30s 4.20% (+26bps).

Q3 didn’t just drop hopes of ‘lower for longer’ but doused them in scarce diesel and set fire to them. In Q1, we got just one rate hike from a G20 central bank, the RBA. In Q2, we got four, the RBA, ECB, BOJ, and Bank Indonesia. In Q3, we got the RBA (who just hiked again yesterday and are seen doing so again in the new year), the ECB, the BOJ, plus the Fed – and the issue is how much more might be needed there and elsewhere.

FX markets were also caught on the hop if expecting a weaker USD, as is so often the case, with a notable exception with huge implications for other markets. EUR/USD is around -1.1% q-o-q and GBP/USD had an unexciting Q3 while the DXY is slightly up right now. However, there was huge action in USD/JPY in the opposite direction that may carry through to the Yen Carry Trade if it carries on. EM FX are notably also starting to slip against the dollar again with the exception of CNY, which is a ballgame unto itself.

Brent oil is $104 right now, well up over a Q3 it started at $73 while the 3-2-1 crack spread is $62 vs. $17, which is what matters more, so we moved from an effective total of $90 to $166. The FT today notes that oil prices and US Treasury yields are in tightest relationship since 1990 – you mean during the late Cold War, when it was all about geopolitics at core? What a surprise!

So, what goodies will Q4 bring?

Geopolitics is on a knife edge between efforts to bring peace and a dynamic leading towards more, and more widespread war. Beyond Hormuz and the Red Sea, Iraq today sees US troops withdraw, as Ethiopia blames regional rivals for unrest with a risk of conflict spillover into the Horn of Africa, and Israeli PM Netanyahu claims indications of an attack plot by ‘enemies’ ahead – which the opposition leader, briefed on it, has publicly decried. Concerns are Russia-Ukraine could escalate into outright provocations vs. Europe and NATO, as the EU’s military mobility plan faces a €100bn bill and Ukraine is pushing for “bold action” on Russian assets to plug a $78bn defence spending gap in 2027: Politico notes ‘Tax cuts, handouts and blind hope: Europe finds few tools to fight a coming energy crunch.’ In Asia, China and Japan are verbally clashing despite some signs of an attempted reset, as Japan’s defence chief again brought up the “nuclear taboo” and the business press reports that ‘China strengthens position for Taiwan conflict with mobilisation law.’

In AI, Trump and AI CEOs just signed a voluntary safety pact and backed data centre expansion, but Sam Altman said OpenAI will delay its IPO until it overcomes safety concerns – regardless, tech supply chains continue to see unprecedented, dare I say wartime(?), demand boom conditions. The UK AI minister just admitted the country doesn’t “currently have a position where we can build superintelligence” as it’s “illegal to do so” in terms of regulations and the power demand required. Europe is meanwhile discussing an EU-wide digital levy to generate up to €25bn annually for the next budget, which will infuriate the US (and which Germany and other major contributors reject as outlined, demanding hundreds of billions of cuts).

Indeed, geoeconomics is on a knife-edge too. Will the EU initiative a trade war with China in Q4 via an expanded Anti-Coercion Instrument or resign itself to higher flows of Chinese imports in higher value-added sectors, so less local industry? Ford's CEO just urged US caution on Chinese automakers and said for Europe it’s “too late.” But could China then choke Europe on rare earths? Yesterday, the US ambassador to China posted that "Back in April of last year, China put the export regime process in place for rare earth elements and magnets. Then, on October 9th, they weaponized that by expanding that to the entire world. Now, they've weaponized it even further by escalating to the point where they make any diversification efforts away from China as a criminal offence...”

Politically, we may face an October surprise ahead of November US midterm elections where talk is of a Blue Wave (like the Red Wave that didn’t materialise in 2022). Either way almost everywhere the trend is to populism of the left and right. That’s clear in Europe, and the UK just saw PM Burnham promise PR, rejoining the EU, and reindustrialisation, without tariffs or industrial policy, which the Guardian called a “radical progressive plan to help Britain ‘rise again’’ yet had to add was “a clear vision for Britain – but not for how it fits into a troubled world.” Equally, the Wall Street Journal today notes ‘Americans Want Populist Policies That Defy Traditional Political Labels’, where their survey finds broad support for caps on prescription drug prices and strong border security. In short, nobody wants the policies being sold as the solution to high inflation.

So, what’s your guess for Q4?

Tyler Durden Wed, 09/30/2026 - 10:20

Core PCE Prints Cooler Than Expected Due To Change In Methodology, As Savings Rate Plunges To 3 Year Low

Ahead of today's closely watched core PCE report - the Fed's (reportedly) favorite inflation indicator (although that will probably shift to Truflation after Kevin Warsh's task force is done with analyzing the data), which was seen by many as deciding whether the Fed will hike in October and December, or just December as NY Fed president John Williams strongly hinted yesterday, we warned readers that PCE may surprise to the downside: "the Bureau of Economic Analysis updated methodology for calculating inflation in three components is expected to trim August year-on-year change by a few tenths of a percentage point."

Why PCE may surprise to the downside: the Bureau of Economic Analysis updated methodology for calculating inflation in three components is expected to trim August year-on-year change by a few tenths of a percentage point.

— zerohedge (@zerohedge) September 30, 2026

And surprise it did, because despite rampant energy inflation and record diesel prices, headline PCE came in line sequentially, printing up 0.3%, in line with expectations but coming in far cooler than expected on an annual basis, rising just 3.4%, vs expectations of a 3.7% print.

The MoM jump in headline PCE was driven by services, a reversal from last month's drop, largely due to the spike in communication and education services.

But it was the far more important core PCE, which strips out volatile energy and food prices, that rose 0.2% MoM (technically 0.247%, below the +0.3% MoM expected) with a notable miss in the YoY print, which dropped to +3.0% from the unrevised 3.3% (now revised to 3.0%), missing estimates of a 3.3% print.

Within core, the biggest jump was again communications and education services.

Ominously, the much-watched SuperCore PCE (Services ex-shelter) saw price inflation reversed the recent drop on a YoY basis, while surging 0.4% on a MoM basis...

... driven by a record surge in "Other Services" (+0.9%)...

.. which in turn was the result of a surge in cell phone plans costs, and a record jump in education costs!

Commenting on the data, David Russell, Global Head of Market Strategy at TradeStation said that "this is good news for investors worried about the recent surge in bond yields, and it bolsters the case for not hiking in October. We might have seen peak hawkishness from the Fed given the recent jump in rates. However, it’s also relatively old data at this point that doesn’t reflect this month’s surge in diesel prices. Investors will remain wary of energy prices as we enter a key period of fuel consumption."

The inflation-boosted prices were met with much higher spending (+0.9% MoM notional, in line with estimates and up from 0.1% in July) while income growth was dangerously lower, failing to keep up with spending, and rising just +0.2% MoM, which was down from 0.3% in the previous month and missed estimates of 0.5%.

The surprising spike in spending not supported by income, meant that the freshly revised savings rate tumbled again, dropping from 4.6% in July to just 4.1% in August, the lowest since Nov 2022.

While spending growth rose again, Income growth is now the lowest since April 2022!

In other words, once again US consumers are failing to keep up with inflation and they can do so only - and temporarily - by digging deep into their savings.

Finally, while the core PCE was indeed lower than expected, recall that as we said above, this is mostly due to a change in methodology. Today, the Bureau of Economic Analysis released its updated PCE deflator methodology, which has been applied retroactively through Q1 2021, with RBC estimating that core PCE’s annual pace is expected to fall 18bps, which would revise July’s reading to 3.1% from 3.3%. They were spot on. 

RBC analysts also aid that three changes drive this: portfolio management services will use a CES-based quantity series instead of nominal price deflation; computer software will use a new composite PPI/CPI deflator; and legal services will use a new deflator after the current CPI measure proved unreliable.

In other words, today's welcome "miss" in core PCE is likely not due to lower prices but due to spreadsheet changes and rebenchmarking. 

Tyler Durden Wed, 09/30/2026 - 10:12

Apple's $2,000 Foldable iPhone Could Sell 6 Million Units, Counterpoint Says

Counterpoint senior analyst Ivan Lam expects Apple to sell about 6 million units of its first foldable iPhone this year. The estimate offers an early sentiment gauge of potential demand for Apple's first-ever foldable handset, priced at roughly $2,000.

The iPhone Duo sales forecast hinges on Apple's ability to ramp up production, Lam said, according to Bloomberg News. The new foldable iPhone is scheduled for release in October.

Separately, market research firm IDC expects global foldable shipments to rise 13% to 22.9 million units this year. Without Apple’s iPhone Duo, that segment would slide into a contraction.

Initial iPhone 18 Pro family sales rose 12% compared with the iPhone 17 Pro launch, according to Lam. That performance helped Apple capture a 33% share of China's smartphone market during the period tracked.

However, iPhone 18 sales signals in China are mixed. Edison Lee, Jefferies' head of China and Hong Kong technology and software research, commented on the launch on Monday, saying, "Weak 18P/PM resale prices vs. 17P/PM remain our clearest sign of softer demand, despite a weekend rebound in lead times that could reflect tighter supply as DUO ramps."

Lam pointed out, "Price hikes of over $200 on many Chinese flagship models may have raised the price anchor, strengthening the iPhone’s relative value proposition." That's good news for Apple as the price gap between its phones and those of domestic brands narrows, making its premium prices easier to defend in an overall soft market.

For Apple, the US launch clashes with a souring consumer backdrop. The Conference Board’s Consumer Confidence Index plunged in September to its lowest level since April 2014, while elevated gasoline and diesel prices continue to squeeze household budgets.

The question is whether cash-strapped consumers can afford $2,000 for a foldable iPhone. Vision Pro's disappointing launch a few years back offers a cautionary tale.

If the Duo struggles to attract consumers beyond wealthy first adopters, Apple's new CEO could face an early test of the company's push further upmarket.

Tyler Durden Wed, 09/30/2026 - 10:00