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Key Events This Week: FOMC Minutes, Umich, And FOMC Speakers Galore

Zero Hedge -

Key Events This Week: FOMC Minutes, Umich, And FOMC Speakers Galore

Given the high stress and high alert in bond markets, which has pushed global 10Y yields to the highest level since 2022 and with Europe finding itself on the verge of another sovereign debt crisis...

... the main focus in the week ahead will be on central banks, with the minutes from the September FOMC meeting on Wednesday and the ECB’s account of its latest meeting on Thursday.

There is also a busy run of central-bank speakers, while the data calendar includes US ISM services today and the University of Michigan survey on Friday, a run of German activity data through the week, and Japanese wages on Wednesday.  

In the US, the week begins in the shadow of Friday’s important September employment report. Headline payrolls rose just +29k, compared with +133k expected, while private payrolls increased +46k versus +127k expected. There were also 60k of downward revisions to headline payrolls over the previous two months, and average hourly earnings rose only +0.1% against +0.3% expected. Nevertheless, DB's US economists think the details still point to a broadly stable labor market. The unemployment rate edged up only slightly to 4.175% from 4.141%, the broader U-6 rate fell a tenth to 7.6%, and participation rose two-tenths to 61.8%, its highest since May last year. Prime-age participation and the employment-to-population ratio also recovered further after their unusually large June declines. So although the headline payroll number was disappointing, the wider labor-market picture remains relatively resilient, particularly alongside recent ADP and jobless-claims readings, and DB's economists continue to expect two further 25bp Fed hikes over the next couple of quarters. The market is pricing in another 86bps over the next 12 months, down from 100bps early last week but up from 70bps just after the payroll release. So lots of vol on Friday in rates and fixed income as we'll see in the review of the week at the end.  

The highly unsettled bond market makes the incoming US data and Fed communication particularly relevant. The first key release is the September ISM services index today, where DB economists expect the headline gauge to rise to 55.9 from 55.4 in August (it rose 55.8). Tomorrow brings the August trade balance, while Wednesday’s September FOMC minutes should provide more color on the near-term policy outlook.

Since the meeting, Fed communication has broadly reinforced the quarterly pace of rate hikes implied by the September SEP. Vice Chair Jefferson and New York Fed President Williams have both indicated a preference to take some time to assess incoming data before deciding on the next move, but several officials have continued to argue for additional tightening. So the minutes will be worth watching for how the broader Committee is framing the current tightening cycle and for its discussion of the neutral rate, where estimates shifted higher in the September SEP.

The rest of the US calendar is lighter. Thursday brings initial jobless claims and August wholesale trade sales, before attention turns to the preliminary October University of Michigan survey on Friday. Economists expect consumer sentiment to dip to 47.7, versus 48.1 in September. The survey may attract some extra attention with the November 3 midterm elections approaching. More broadly, DB's US economists currently estimate Q3 real GDP growth at 3.3% annualized, and this week’s activity data will help refine that estimate.

Moving to Europe, the ECB publishes the minutes of its September meeting on Thursday, alongside a packed speaker calendar. It'll be interesting to see whether the French situation gets prominent mentions. Germany has a particularly busy run of activity data, with August factory orders tomorrow, industrial production on Wednesday and the trade balance on Thursday. France releases August industrial production tomorrow, while Italy follows on Friday. Sweden publishes September CPI on Wednesday and Norway on Friday.

In the UK, the BoE releases its Bank Liabilities and Credit Conditions surveys on Thursday, when Governor Bailey is also due to speak.
In Asia, Japan is the main focus. August labour cash earnings are released on Wednesday, with markets expecting same-sample total cash earnings growth to accelerate to 3.6% year-on-year from 2.9% in July. The September Economy Watchers survey follows on Thursday and August household spending on Friday. China’s September foreign-exchange reserves are also due on Wednesday.

Courtesy of DB, here is a day-by-day calendar of events

Monday October 5

  • Data: US September ISM services, UK September new car registrations, official reserves changes, Japan September consumer confidence index, Italy September services PMI, Q2 deficit to GDP, Eurozone August PPI, Canada September services PMI
  • Central banks: ECB's Nagel, Lane, Schnabel, Escriva, Kocher and Buch speak

Tuesday October 6

  • Data: US August trade balance, UK September construction PMI, Germany August factory orders, September construction PMI, France August industrial production, budget balance, Eurozone August retail sales, Canada August international merchandise trade
  • Central banks: Fed's Williams speaks, ECB's Zigman and Cipollone speak, BoJ's Ueda speaks, BoE’s Mann speaks
  • Auctions: US 3-yr Notes ($58bn)

Wednesday October 7

  • Data: US September NY Fed 1-yr inflation expectations, August consumer credit, China September foreign reserves, Japan August laborcash earnings, leading index, coincident index, Germany August industrial production, France August current account balance, trade balance, Sweden September CPI
  • Central banks: FOMC minutes, Fed's Logan speaks, ECB's Cipollone and Vujcic speak
  • Earnings: Applied Digital
  • Auctions: US 10-yr Notes (reopening, $39bn)

Thursday October 8

  • Data: US August wholesale trade sales, initial jobless claims, UK September RICS house price balance, Japan September Economy Watchers survey, August BoP current account balance, BoP trade balance, Germany August trade balance
  • Central banks: ECB’s account of September meeting, Fed's Musalem speaks, ECB's Zigman and Lane speak, BoE's Bailey, Greene and Lombardelli speak, BoE’s bank liabilities and credit conditions surveys
  • Earnings: PepsiCo, Fast Retailing, Tesco
  • Auctions: US 30-yr Bond (reopening, $22bn)

Friday October 9

  • Data: US October University of Michigan survey, Japan August household spending, September machine tool orders, Italy August industrial production, Canada September labour force survey, Sweden August GDP indicator, Norway September CPI
  • Central banks: ECB's Wunsch, Cipollone and Schnabel speak
  • Earnings: Delta Air Lines

Looking at just the US, Goldman writes that the key economic data release this week is the trade balance report on Tuesday. The minutes to the September FOMC meeting will be released on Wednesday. There are several speaking engagements with Fed officials scheduled this week. 

Monday, October 5 

  • 09:45 AM S&P Global US services PMI, September final (consensus 58.7, last 58.7)
  • 10:00 AM ISM services index, September (GS 55.4, consensus 55.0, last 55.4): We estimate that the ISM services index was unchanged at 55.4 in September, reflecting sequential improvement in our non-manufacturing survey tracker (+1.0pt to 54.1), offset by downward pressure from convergence toward the level implied by other services surveys (which the ISM index is above).

Tuesday, October 6 

  • 08:30 AM Trade balance, August (GS -$100.0bn, consensus -$102.0bn, last -$88.6bn)
  • 09:05 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will moderate a discussion with Caryn Seidman Becker, Chair and CEO of CLEAR. On September 29, Williams said, "with the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information."
  • 10:45 AM Fed Vice Chair for Supervision Bowman speaks: Fed Vice Chair for Supervision Michelle Bowman will speak on modernizing regulation and supervision at the Community Banking Research Conference at the Federal Reserve Bank of St. Louis. Speech text and Q&A are expected. On October 1, Bowman said, "After the Committee's action in September, what we need to have is a better understanding about the underlying trends in the economy and how financial conditions are evolving going forward. So, I don't currently see an urgent need for further action."
  • 01:15 PM Kansas City Fed President Schmid (FOMC non-voter) speaks: Kansas City Fed President Jeffrey Schmid will participate in a fireside chat on monetary policy and rural development at the Enid Regional Development Alliance luncheon. On October 1, Schmid said, "We have a very simple and crisp mandate, and that's stable prices and full employment, and we just haven't fulfilled our promise on the inflation side."
  • 07:00 PM Dallas Fed President Logan (FOMC voter) speaks: Dallas Fed President Lorie Logan will moderate a Q&A with former Bank of Mexico Governor Agustin Carstens. On October 1, Logan characterized the hike at the September meeting as "an important first step" in tightening policy but added, "Still, I currently estimate the target range needs to rise an additional 50 basis points or more to appropriately balance the outlook and risks for our dual mandate goals."

Wednesday, October 7 

  • 02:00 PM FOMC meeting minutes, September 15-16 meeting: The September FOMC meeting was more hawkish than we expected. The dots showed a 16-2 majority projected at least one more hike this year, the median funds rate projection remained quite elevated through 2029, and the median neutral rate dot rose from 3.06% to 3.25%. The median SEP forecast showed substantially higher core PCE inflation in 2026 at 3.4% Q4/Q4 (vs. our current forecast of 3.0%) than now looks likely after last week's methodological revisions. We will look for details in the minutes on the assumptions underlying participants’ economic forecasts and views of the balance of risks at the time. 

Thursday, October 8 

  • 04:30 AM Fed Governor Waller speaks; Fed Governor Christopher Waller will speak at the Central Bank of the Republic of Turkiye's İstanbul Economic Forum on the economic outlook. Speech text and Q&A are expected. 
  • 08:30 AM Initial jobless claims, week ended October 3 (GS 200k, consensus 200k, last 197k); Continuing jobless claims, week ended September 26 (consensus 1,695k, last 1,701k)
  • 10:00 AM Wholesale inventories, August final (consensus +0.7%, last +0.7%) 
  • 01:40 PM St. Louis Fed President Musalem (FOMC non-voter) speaks; St. Louis Fed President Alberto Musalem will speak on the US economy and monetary policy at a Bloomberg event. Q&A is expected. On September 21, Musalem said, "I think it's crucial that policy puts a meaningful restraint on inflation," but added that "earlier and incremental policy firming is better and less disruptive than later and larger and potentially more abrupt policy action."

Friday, October 9 

  • 10:00 AM University of Michigan consumer sentiment, October preliminary (GS 47.0, consensus 47.7, last 48.1); University of Michigan 5-10-year inflation expectations, October preliminary (GS 3.4%, last 3.4%)
  • 04:00 PM Boston Fed President Collins (FOMC non-voter) speaks; Boston Fed President Susan Collins will give brief remarks at a conference at the University of Michigan's Ford School of Public Policy. Speech text is expected. On September 22, President Collins said that she supported the decision to raise the fed funds rate at the September FOMC meeting, adding that “a somewhat more restrictive fed funds rate will help ensure that inflation durably returns to target.”

Source: DB, Goldman

Tyler Durden Mon, 10/05/2026 - 12:49

Education Department Calls For Transparency And Tolerance... Teacher Unions Cry Foul

Zero Hedge -

Education Department Calls For Transparency And Tolerance... Teacher Unions Cry Foul

Authored by Jonathan Turley via JonathanTurley.org,

The decline of higher education into an ideological echo chamber has been widely discussed on this and other sites. Polls show record lows in the public trust in our universities and colleges as revenues decline and closures increase. Secretary of Education Linda McMahon responded to this meltdown with a common-sense call for greater transparency and tolerance.

The response from teacher unions has been nothing short of hysteria, led by Randi Weingarten at the American Federation of Teachers (AFT) and Todd Wolfson at the American Association of University Professors (AAUP) - two of the most polarizing and political figures in teaching.

Secretary McMahon released a policy statement titled "National Call to Action to University Presidents and Governing Boards." I encourage you to read it. Few Americans would disagree with the call for universities to post policies on how they can achieve greater intellectual diversity and openness in both admissions and hiring.

Not surprisingly, the AFT and AAUP went into a full cardiac arrest at the notion that universities would adopt such policies, let alone work to restore integrity and balance to higher education.

In a public letter, they denounced the policy as "galling." The letter was a telling moment from the two organizations most responsible for the politicization of education.

The AFT and AAUP merged not long ago, destroying the AAUP's traditional role as a neutral advocate for academic freedom. Under Wolfson, the organization has become blatantly political, even abandoning its long apolitical stance and issuing its first political endorsement this year. It was for radical Abdul El-Sayed in Michigan.

I recently debated Todd Wolfson, President of the American Association of University Professors (AAUP), over the loss of institutional neutrality in higher education. In the debate, I raised AAUP's own abandonment of neutrality principles, which Wolfson acknowledged. While the viewers overwhelmingly supported a return to neutrality principles, Wolfson was undeterred.

The alliance with AFT and Weingarten is crushingly predictable. Weingarten personifies what I have called the "education cartel," where teacher unions receive massive contracts and pension agreements from Democratic allies and then turn around and send massive political contributions to those same allies. The losers in this symbiotic relationship are of course the students and their families.

Weingarten is "credited" with turning the teachers' union into an extension of the Democratic Party, often appearing at political rallies with her signature high-volume screeds:

As public support and revenue for both public education and higher education plummet, these figures are doubling down. The last thing that they want to see is the restoration of neutrality or balance. That is why a policy calling for such reforms is so anathema to them. These organizations are now political organizations that use their dues to pursue radical agendas.

I previously criticized the selection of Wolfson, who promised to make the AAUP more of a "fighting organization" for liberal causes. A Rutgers University anthropologist and former union leader, Wolfson is a political activist who doubled down on the ideological intolerance that now defines higher education.

As promised, the AAUP quickly became a more radical and activist organization. It adopted an anti-Israel boycott policy and unleashed attacks on Trump supporters as "fascists." It has targeted civics centers as conservative breeding grounds. Trinity College Professor Isaac Kamola, the director of the AAUP's Center for the Defense of Academic Freedom (CDAF), explains that they want to unleash "naming and shaming and discrediting and undermining the legitimacy" of such programs.

So, as trust in higher education hits new lows, the AAUP is accelerating that decline by doubling down on ideological bias and political activism. In reality, the AAUP represents only a small fraction of university professors but is often viewed as speaking for the teaching academy as a whole.

I have previously written about the similar liberal agenda of the American Bar Association despite plunging membership among lawyers. The ABA now represents just 17 percent of the bar.

The AAUP currently has roughly 50,000 members. There are an estimated 1.5 million university and college professors in the United States. Both the ABA and AAUP have become captive to the most ideological elements of their membership. That agenda has overwhelmed the original apolitical mission of these groups.

The loss of the AAUP as a neutral arbiter for academic freedom is tremendous. As Wolfson acknowledged in our debate, it was once a voice for neutrality, avoiding ideological and political causes. It was central to the articulation of neutrality principles and core academic freedom values. We need such an organization now more than ever.

Jonathan Turley is a law professor and the New York Times best-selling author of "Rage and the Republic: The Unfinished Story of the American Revolution."

Tyler Durden Mon, 10/05/2026 - 12:40

Transcript: Omar Aguilar, CEO and CIO of Schwab Asset Management

The Big Picture -

 

 

The transcript from this week’s MiB: Omar Aguilar, CEO and CIO of Schwab Asset Management, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

 

~~~

Transcript: Omar Aguilar

President, CEO and Chief Investment Officer, Schwab Asset Management

Masters in Business with Barry Ritholtz · Bloomberg Radio

[00:00:00]  BARRY RITHOLTZ: I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Omar Aguilar. He is President, CEO, and Chief Investment Officer of Schwab Asset Management.

They run over a trillion dollars across a hundred different ETFs, mutual funds, and separately managed account strategies. He also runs the Schwab Center for Financial Research and sits on the firm’s executive council. He joined Schwab in 2011, specializing in equities and multi-asset strategy. Schwab’s total assets are over $13 trillion, and its asset-weighted expense ratio of eight basis points is amongst the lowest in the fund industry.

I thought this conversation was fascinating, and I think you will also. With no further ado, Schwab’s Omar Aguilar.

Omar Aguilar, welcome to Bloomberg.

[00:01:08]  OMAR AGUILAR: It’s a pleasure to be here with you, Barry.

[00:01:10]  BARRY RITHOLTZ: It’s a pleasure to have you. So I want to get into your career and some of your conversations about what’s going on in the market today and what’s happening at Schwab, but you have such a fascinating background, I have to start there. Bachelor’s in actuarial science, then a master’s in applied statistics from the Institute of Technology in Mexico City.

Then you come to the US, and at Duke you’re a Fulbright Scholar, where you get both a master’s in statistics and a PhD in decision sciences. Am I getting that right? It sounds like you were planning for a career in academia.

[00:01:51]  OMAR AGUILAR: It is true. And actually, in my last year in my PhD program, I did apply for a couple of academic jobs before I was lucky enough to basically get to Wall Street as an analyst.

[00:02:03]  BARRY RITHOLTZ: Yeah. So your first gig was — was it at Merrill Lynch? Was it Bankers Trust?

[00:02:07]  OMAR AGUILAR: Bankers Trust, and then Merrill Lynch.

[00:02:08]  BARRY RITHOLTZ: You have this deep quant research background. What did you do when you were first starting at Bankers Trust and then Merrill Lynch?

[00:02:18]  OMAR AGUILAR: Well, if you recall the degree that you mentioned, my dissertation and the work that I did was in how to use statistical models. Now they’re called data science. Back then it was statistics — how to use those models for making decisions. The whole process of decision under uncertainty was the whole research that I did.

And we applied that in particular to areas like currencies, equity, asset allocation, and I was hired at Bankers Trust to develop those models. So I call that — before any AI or anything else, they were just quantitative models that were able to help people be faster to understand how people make decisions.

[00:03:08]  BARRY RITHOLTZ: Hmm. And I don’t remember if it was the PhD paper or the 2001 paper that is still one of the most cited papers in quantitative research. How did you jump from Bankers Trust to Merrill Lynch? When did that transition happen?

[00:03:23]  OMAR AGUILAR: Well, if you follow the path of my background, a lot of that is related to the activities on Wall Street, because there were a series of mergers and events that happened that took me to where I am today. Bankers Trust was bought by Deutsche Bank, and at that point the group that I was part of was lifted out to join Merrill Lynch. Merrill Lynch Investment Management was starting to build their institutional business, and that’s where we became a really nice fit. Unfortunately, September 11 happened, 25 years ago.

And then that basically took us to create the private bank asset management services for Lehman Brothers, which wanted to branch out into the asset management business for their wealthy clients. And then from there, it started to get a little bit sensitive in terms of the Lehman business. So I had the opportunity to work with a former colleague from Bankers Trust at ING to basically rebuild their quantitative and systematic investment processes. So that was all related to activities that happened through the Wall Street acquisitions, events, and so forth.

[00:04:33]  BARRY RITHOLTZ: And ING, now better known as Voya — that was $20 billion across 15 strategies, including active, index, enhanced index, pensions, variable annuities, and mutual funds. Once you stood that up and got that to a reasonable size — was Lehman before that or after that?

[00:04:55]  OMAR AGUILAR: That was before. That was before. We were able to build a lot of these things at Lehman Brothers. It goes back to a lot of what my philosophy is: you have to be in a place where you can marry distribution with manufacturing.

That’s what we believe asset management success relies on. ING had very good distribution, and our idea was to build these more institutional-type, scalable businesses using quantitative tools and technology to be able to deliver that to different folks. And again, unfortunately, we were in the middle of the global financial crisis in 2008, which basically put a stop to every activity across New York and Wall Street and everything else. Right.

And that gave me the opportunity to go back to my academic roots and start working at Financial Engines with a lot of Stanford academics, headed by Bill Sharpe —

[00:05:48]  BARRY RITHOLTZ: To say nothing of the Nobel laureate, Bill Sharpe. I just want to clarify one thing.

At Lehman Brothers, the quant research you were doing, was that for alternative investment management or for public equities?

[00:05:59]  OMAR AGUILAR: For both. It was dedicated to building asset allocation models for the private bank. And it was the first time that we were able to build a set of strategies that included alternative investments. So we had private equity, private real estate, fund of hedge funds, and that was the whole concept of what we wanted to do for wealthy clients back then.

[00:06:20]  BARRY RITHOLTZ: Hmm. And then at Financial Engines, it’s $40 billion in defined contribution plan sponsors. I’m fascinated by Bill Sharpe’s work. I was fortunate enough to interview him about 10 years ago. How did his thinking influence your approach to portfolio management and retirement planning?

[00:06:41]  OMAR AGUILAR: Well, going back to this concept of behavioral economics, Bill and the economists at Stanford have been at the forefront of merging these concepts of how do we create markets and invest in markets that are not necessarily efficient in the short run, but in the long run they sort of are. Bill has always been in this idea of capital efficiency: in the long run, it’s better to do the buy and hold and stay put at a low cost, as opposed to trying to go in and out of the market. The whole concept of market timing, and avoiding market timing, was sort of the premise of everything. And that fits very well for 401(k)s, for retirement assets, for pensions, where strategic asset allocation is what really drives your long-term results.

So that was at the core of what we did at Financial Engines, and it’s still at the core of the philosophy that we have at Schwab.

[00:07:31]  BARRY RITHOLTZ: So I recall one of the most fascinating things, of many really interesting things Sharpe had said, was the question of the annual 4% drawdown in retirement as the thorniest problem in all of finance. I’ve read that you’ve said 4% for many people doesn’t make any sense. Do you want to address that?

[00:07:53]  OMAR AGUILAR: Yeah, well, we did a lot of research, and the need for income is not a static number, and it’s not necessarily something where you can rely specifically on one thing. And what we have found is the 4% rule became just like a number that somebody picked out of a hat and said, 4% works as long as you can generate those. And a lot of that had to do with — if you think about it, depending on the level of interest rates, 4% may be — it is right now probably less than the risk-free rate. So there’s no reason why you have to stay with 4%.

So it is really a dynamic process that depends on the needs of the moment, inflation numbers, real growth, and the level of rates that may affect what is the drawdown that you need to survive.

[00:08:43]  BARRY RITHOLTZ: To say nothing of — when 4% was picked, the longevity projections were so much less than they are today. If you are 68 and relatively healthy, you’ve got a good shot at another 15, 20, 25 years of living on that pile of capital. That wasn’t true 30-plus years ago.

[00:09:04]  OMAR AGUILAR: Absolutely, Barry. And a lot of the challenges that we face — and this is something that we worked on at Financial Engines — is getting into the habit of early saving, because in the generation of Gen X and any of these generations, there are no pensions like back in the day, right? So people rely on 401(k)s. So the ability for people to use that savings and the matching of the companies is critical for them to get to a point where they can retire.

Unfortunately, during all the research we realized that the majority of Americans don’t have enough to retire, for precisely what you said: it’s more than 25 years of liabilities that they will have ahead, and with 4% drawdowns they will run out of money very quickly before they can actually get there, especially when you have inflation impacting.

[00:09:57]  BARRY RITHOLTZ: So what’s really so fascinating about your background: you’re not only a quant, but, unusually, you are a big follower of behavioral finance and thinking about decision making. You lead Schwab’s BeFi program for advisors, including diagnostic coaching tools, and you run the BeFi Barometer study. How does someone who’s that mathy, and a longstanding statistics, probability, and quant student, fall into behavioral finance?

[00:10:30]  OMAR AGUILAR: Well, it is a great story, because the area of statistics that was part of my dissertation is an area of statistics that is called Bayesian statistics, and Bayesian statistics is based on a theorem by Reverend Thomas Bayes, way back when. What it does, it basically combines information that you have today, that is called a prior — that could be your experience — and then uses all available data to update your experience, which is really our life. If you just think about it without necessarily creating a model, just think about it: you have an experience, you know what you need to do.

I always give the example of trying to get to the airport. So you have your prior knowledge about how — your own utility function — how early you want to get to the airport, how difficult that may be, the potential problems, the probability you miss the plane, and everybody has a different way to approach it. Two people with the same background, everything else: one may actually want to get there three hours ahead, the other person may want to get there just five minutes before they start boarding. They both take different types of risks, updating that information over time.

That’s basically how the decision process is, and that’s probability at its core. And that’s pretty much what Bayes does.

[00:11:46]  BARRY RITHOLTZ: I wonder how Bayes would’ve thought about this if he was married to my wife, who doesn’t wanna miss a plane. We’ll get to the airport two hours early, bring a book. That’s just how it is. But it’s interesting that people have very different approaches to that — how much time do they wanna waste versus the headache of missing a plane. So I’m curious, how does your education in decision science shape the way you think about the big issues like markets, risk, and investor behavior?

[00:12:18]  OMAR AGUILAR: Yeah, well, I have always been passionate about providing tools and services to investors to help them enhance their financial lives. That’s at the core of Schwab’s values. That’s at the core of what we do in asset management. And a big part of that, Barry, includes the fact that we want to provide information to clients so that they can make better decisions in their process.

So again, the whole idea of try not to time the market, try to look at your long-term investments, try to stay calm when things are — all that goes back to the core of behavior, because we’re all humans. All of us have evolved over time with two parts of our brains. One is the amygdala, which is the more primitive version of us that allows us to react and fly to safety whenever we see a problem, and allows us to be emotional about things. And then there’s the other part, the front of the brain, that allows us to be rational and allows us to use data to make decisions. That combination sounds very familiar to the Bayes theorem — one that is more gut feeling, the other one that is more analytical and more brain-oriented — and they get combined, and every day they’re battling with each other.

So for us, being able to provide the context for clients that are more emotional, with the information they need to adapt to their investment strategy so that they don’t panic when the market goes down, and give them a process that is quantitative in nature so that they can stay the course, is very important. On the other hand, we have other clients that are more analytical in nature. They think they can outsmart the market, they think they know the answers, and we give them information and data so that they can inform and update their own beliefs so that they can make better decisions. So arming clients with the tools and products and solutions to help them make better decisions is the core of what we do.

[00:14:13]  BARRY RITHOLTZ: A little bit of Thinking, Fast and Slow. Bill Bernstein, the neurologist, had said — you mentioned the amygdala — our whole limbic system is what underlies fight or flight. If we don’t get that under control, we will die poor.

And it really is quite fascinating in actual usage. When you’re in the real world, when you’re advising clients and investors about their various behavioral foibles and errors, how do you get them to stay on the straight and narrow? What tools does Schwab use to prevent investors from shooting themselves in the foot?

[00:14:56]  OMAR AGUILAR: Well, two things we do: first, we do a lot of education through our Center for Financial Research. We also provide a lot of training to our wealth advisors and our financial consultants on precisely the tools that you mentioned at the beginning. We call it this very cute name, Biagnostics, which is supposed to diagnose your biases — our marketing team was smart enough to put it together. So it is a diagnosis tool for your biases.

And the reality is that all of us have biases one way or another. So the tools allow financial consultants to get to know their clients better. We have data that basically says that the more information we get from the client on their biases allows us to build longer relationships with them. And at the core of what we do, we simplify it by saying, well, we have to balance their needs and what they want. There’s a lot of clients — they tell you what they want, and you as a financial professional know what they need, and we need to put them together.

If you think about it in the world of AI, the need is basically what the computer is gonna tell you. The computer is gonna tell you this is the right allocation, this is what you need to do. But the want is what the client wants to have. And merging those two is the critical part to maintain and have a sustainable long-term investment strategy.

[00:16:15]  BARRY RITHOLTZ: Huh, really, really interesting. Coming up, we continue our conversation with Omar Aguilar, President, CEO, and CIO of Schwab Asset Management, talking about how he helped build the asset management group to over a trillion dollars in client assets. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.

I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio. My extra special guest today is Omar Aguilar. He is CEO, CIO, and President of Schwab Asset Management, helping to run over a trillion dollars of Schwab’s 13 trillion in client assets. So let’s talk a little bit about your time at Schwab. You joined Schwab — gee, it’s 15 years already — to run equities and multi-asset strategies.

Back in 2011, after the financial crisis, the fund business was a fraction of its current size. What was the mandate when you first joined? Was it simply, hey, build this up? Or was it a little more comprehensive than that?

[00:17:21]  OMAR AGUILAR: It was more comprehensive. The belief, and the reason why I joined Schwab, was that we had a project that was to use technology, use systematic strategies to create and use scale. The business of this was to try to provide a different set of tools for clients to be able to grow their wealth. That was at the time right after the financial crisis; there was a significant amount of apprehension in the market of what was gonna happen, because the experience that people had was bad.

So there were a lot of behavioral aspects and biases of risk aversion that happened during that time. So what we ended up doing philosophically was saying, all right, we’ll start with the foundations of how the asset management business is gonna grow and run for the future. It has to be transparent. Clients define transparency as being a key part. A big value of ours is making it accessible.

So all the solutions and all the products and services had to be something that was available for retail clients, and it had to be also low cost. Those three components were key components of what we have. We said we don’t wanna have a superstore where every single product is gonna be available on our shelves. What we’re gonna manufacture is something that we call core, for every client.

So we built a set of ETFs, a set of beta exposures, and a set of smart beta exposures that allow clients to define their core portfolio, and said the core of your strategy should have the most transparency, the most liquidity, the lowest possible cost, and an accessible route for you. So we built a franchise of Schwab ETFs, and today they’re still the fifth-largest ETF manufacturer in the world, which is sort of a big part of the trademark of the wave of asset management that I was part of at the beginning. At the same time, we said, what are the other components that will be important for clients going forward? Income will be a critical part. We know baby boomers are in the process of retiring; Gen X will come right behind them.

And in that sense, our clients — particularly the clients that you have — will require income solutions. So we built dividend strategies. We built liquidity-based money market funds that were targeted. At the time, interest rates were zero or negative, so there was really nothing there.

But we knew at some point, like it is now, the yields were gonna go up and income was gonna be able to generate. It took us probably 10 years before we were comfortable issuing more bonds. But that was part of the plan. And at the same time we said, okay, well, we also need to start building technology to offer these not just in ETFs and mutual funds, but also in managed accounts, so that then we use technology to start bringing these customizations as part of that future generation.

So that vision is what got us to what it is today. Now $1.9 trillion in assets.

[00:20:22]  BARRY RITHOLTZ: $1.9 trillion. I’ve been saying over a trillion. It’s really almost 2 trillion. That’s interesting.

So you’re there for a full decade before you take on the CEO job in 2022, but unusually, you kept the CIO title. They’re such different jobs. How do you split your time? How do you wear both hats?

Does that help, being able to see it from both an investment perspective and a business perspective?

[00:20:51]  OMAR AGUILAR: It has been the best job I’ve ever had, Barry. And a lot of that is because the experience I have as an investor and as a researcher, which is the core of my skills and the core of my experiences on research, allows me to understand the investment and allows me to understand the risk we’re taking anytime that we create a new product or a new solution, and at the same time allows me to learn a lot about our clients and our business. I’ve been fortunate enough to have good mentors like Rick Wurster, who is our current CEO, who can combine the ability to run investment management companies with a business setting that allows us to run it efficiently. And that to me has been a great learning, and it’s been a great thing for me.

[00:21:38]  BARRY RITHOLTZ: So you mentioned the word efficiency, and as I discussed earlier, you have one of the lowest fee rates for mutual funds and ETFs, at eight basis points. How does that efficiency and scale operate? How do you take advantage of the fact that Schwab is $13, $14 trillion? It’s a behemoth; it’s one of the biggest asset managers and custodians in the world. How do you take advantage of that economy of scale?

[00:22:14]  OMAR AGUILAR: Well, I’ll tell you the core of this, and then I’ll give you one specific anecdote of one of our products we’re very proud of. At the core of what we offer at Schwab, it’s always been that we want clients to have alternatives, to have options to pick. So we never go to any of our clients to try to tell them that they have to buy the proprietary products that are run by my group. We basically give them third-party options. And not too far in the past, we basically removed all commissions across all products altogether.

[00:22:47]  BARRY RITHOLTZ: Yeah, that was less than 10 years ago.

[00:22:49]  OMAR AGUILAR: That was less than 10 years ago. So clients can actually go and buy and sell products from our competitors in asset management as long as they want. And we have the mandate to basically offer everything that we have, because our philosophy, Barry, is that if we create high-quality products at a lower cost, with high transparency, with accessibility, our clients will stay with us and will build trust, because we’re offering options for people to take on some other things. And that has given us the opportunity to grow the business and grow the market share on our own platform, but also off platform.

Not only do we serve clients of Schwab, but clients outside of Schwab also get access to our products. An example is our ETFs. We roughly get 35% of net new assets in our ETFs from outside of Schwab, which is just the core of the quality of the products that have the accessibility, that have the efficiency and the scale that allow us to create that product.

The product that I set aside as an anecdote is our dividend product. Our dividend product basically started back when I joined in 2011, and 15 years later it became the largest dividend ETF in the world.

[00:23:47]  BARRY RITHOLTZ: Wow.

[00:23:47]  OMAR AGUILAR: And that’s over a hundred —

[00:24:03]  BARRY RITHOLTZ: What’s the assets?

[00:24:03]  OMAR AGUILAR: That’s over a hundred billion dollars now.

[00:24:03]  BARRY RITHOLTZ: Wow.

[00:24:03]  OMAR AGUILAR: And at the end, it’s among the lowest cost, but it’s not the lowest cost, and it’s also not the one with the highest yield, which is the reason why we created this: to have a high-quality set of dividend payers that basically build that structure, a hundred names.

And that alone, because of the high-quality investments and the results that it has created — the consistency basically attracted more clients to it.

[00:24:31]  BARRY RITHOLTZ: Yeah. The very high yield amongst dividends typically means the price has recently come way down, which is why the yield is high, and typically that means that dividend is about to get cut. I didn’t realize that product was over a hundred billion dollars, but it raises a really interesting point.

You sit at a fairly unique perch. You’re at the crossroads of three major shifts in asset management over the past few decades: the rise of quantitative investing, the move, at least in part, from active to indexing, and the role of behavioral science to improve investor decision making and outcomes. And you are right in the middle of all three of those.

Tell us a little bit about how those major vectors have changed how all of us invest.

[00:25:27]  OMAR AGUILAR: Yeah. Well, I think a lot of things have continued to evolve in a certain way because of capital market efficiency. It goes back to Bill Sharpe’s world and theories, and then also the availability of information that clients have today that they didn’t have when I started my days at Bankers Trust. The availability of information that you get today is instant, and the response they have, and the different anomalies that exist. So what we have observed — and a lot of the core pieces of what you mentioned — because of the rise of technology, the use of technology, you can actually create more efficient processes. Now we’re in the next wave, because AI is gonna improve that even further.

And what we’re doing — we have seen the trend that goes from active into passive. We have seen the trend where people prefer lower-cost beta solutions. And then we also see the rise of alternative investments, and we also see the rise of AI as part of the process. So one of the initiatives that we have now is how do we incorporate AI to help clients use that information and those tools to make better decisions.

So go back to decision processes, go back to Bayes theorem: how do we blend the information that the client is gonna put into AI? It’s almost like the prompt that you put into all these agents. And then how do you blend that so that the answer that you get is the mixture of what we believe is the right answer for the client, based on our research, and what the client is looking for.

[00:26:59]  BARRY RITHOLTZ: Huh. Really, really interesting. You mentioned alternatives. I’m curious, given your background when you were at Lehman Brothers doing the quant work with alts, I’m curious about your view generally of alts. Obviously there’s been a lot of news this past year, especially in private debt, private credit, and then there’s been this sort of nascent push to move alternatives into 401(k)s.

Give us your perspective from Schwab about alternatives.

[00:27:30]  OMAR AGUILAR: Yes. Well, we’re pretty constructive on alternatives. We just completed the acquisition of Forge Global a few months back. Our belief is that for certain clients — mostly mass affluent, wealthy clients — there is this need that requires additional levels of diversification and potentially opportunities. I think the biggest misconception, even with the work that we have seen and all the headlines we have seen on private credit, is that it has not ever been a credit issue.

It has always been a misconception of liquidity. And I think that liquidity education is critical, especially as the market goes down towards the mass affluent and potentially even lower, to retail, which is a question mark. But that is the big component of how do you establish — if you think about the high-yield market, the public market, you can actually see it’s transparent, you can see what it is. There are more delinquencies and more credit events there than there are in the private market. So in private credit, when you actually look at what the size of that market is and what the size of the potential credit issues is, it’s very minimal, or lower than, in some cases, the high-yield market at the worst possible time.

So the problem is the understanding that when you go into private assets and alternatives, there is a liquidity premium that you’re taking advantage of. That means that your money’s not gonna be available the next day. That conversation is what really brings the headlines, because a lot of the challenges that we have seen in some of the funds that are available is because people are requesting their money and they’re not getting the full money back.

[00:29:10]  BARRY RITHOLTZ: I’m always fascinated when I watch that happen, and I always want to grab people and say, which part of a seven-year lockup was confusing? You’re theoretically, potentially getting higher returns because you’re not asking for that liquidity. It seems that there’s a little bit of an education problem, with people thinking that they’re gonna get the best of both worlds: high returns, yet still be liquid. How do you read that?

[00:29:41]  OMAR AGUILAR: Absolutely. And I think the biggest confusion, Barry, is people are trying to compare investing in public securities or public markets and private as if they were exactly the same. And even when you have quants like my team trying to look at backtests or trying to compare them, trying to put together efficient frontiers, they’re not comparable because of precisely the liquidity component that is in it. If you look at, say, private equity returns or private credit returns, they tend to be smoother over time, and they tend to have a lag when the markets go down. Usually the marks on private equity take two or three quarters before they go down.

And a lot of that mistiming is precisely liquidity. It’s precisely how these things operate on valuation. So that component is something that needs to be clearly explained so that people understand this. Now, the big part of what we’re doing at Schwab, going back to part of your question, is we also believe that especially now there is an opportunity for people to have access to those markets that didn’t have access before.

And the reason why we have the Forge marketplace is there are a lot of companies that are pre-IPO, that are in the process — they’re probably gonna stay private for longer — but whose liquidity needs of those employees or founders are high, because they may be in a great company that at some point will IPO, but right now they’re sitting on shares that they cannot use. Right? On the other hand, there’s clients that would love to have access to that, but they don’t have access because in the past they were never available. So the Forge marketplace allows us to create that supply and demand, so that employees and founders can actually tender their shares in a vehicle, so that then all clients can get access to those. So you give access to private investments, and at the same time you provide liquidity for those that desire it.

[00:31:35]  BARRY RITHOLTZ: So not public and not liquid, but semi-private and semi-liquid. Is that a good way to describe it?

[00:31:40]  OMAR AGUILAR: That is a good way to describe it. But it’s sort of interesting, because if you think about the amount of wealth that has been created in these private markets over the last decade, it has been fairly concentrated in maybe 1% of the population or less. On the other hand, you actually see the amount of money that is in public equities that could access that. The view of Schwab over time is: can we give access, can we close that gap for the right client?

It’s not for everybody. So that actually they can have that a little bit better.

[00:32:08]  BARRY RITHOLTZ: Will these end up in a 401(k) eventually? Because as much as some people have complained — they’ve run out of institutions to sell it to, let’s fob it off on retail — it seems that for people who have a 10-, 20-, 30-year investment horizon, that is a fairly rational place for an illiquid investment. What are your thoughts?

[00:32:32]  OMAR AGUILAR: Yeah, our view is, for retirement assets — and this is new — most 401(k) platforms will have access to what is called a brokerage window. And in that brokerage window there is a significant amount of options that you can use, including some of these semi-liquid vehicles that people can use in their 401(k). The biggest challenge here is, for those clients that understand the liquidity that goes with it and the duration that goes into that, it is clearly a good fit. For the majority of clients in a 401(k), they only want to grow.

And if you actually think about it, the biggest challenge with alternative investments still today is that the cost is much higher. As we said, part of our philosophy — if you add those fees over 20 years, you’re already behind the market just by paying those fixed fees. And those you gotta pay. So in our view, if you stay in these public markets when you grow your portfolio — there is this opportunity of using the brokerage window for the right client, where it actually fits better.

But overall, just because of the cost of entry, in a 401(k) over that long duration it seems to be still not the right fit for the average 401(k).

[00:33:44]  BARRY RITHOLTZ: I couldn’t agree more. Coming up, we continue our conversation with Omar Aguilar, CEO and CIO of Schwab Asset Management, talking about the current state of markets today. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.

I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio. My extra special guest today is Omar Aguilar. He’s CEO and CIO at Schwab Asset Management, running nearly 2 trillion of Schwab’s over 13 trillion in client assets. So let’s talk a little bit about the state of the world and what’s going on in the markets. Let’s jump right into artificial intelligence. From Schwab’s perspective, how do you see AI changing things within the wealth management business, be it portfolio construction, financial planning, communication, education, even the economics of individualized advice?

[00:34:50]  OMAR AGUILAR: Well, it’s making its way very quickly, and the adoption is something where we all in this business started to get on it. The way that we describe it is, this is like the third wave of AI in our society. It started with the hyperscalers — it started with that piece of big investments, capital expenditures going into hyperscalers. It moved to infrastructure, with data centers and semiconductors in there. And now we’re going to that adoption phase that includes a lot of sectors, including financials, including healthcare.

In our case at Schwab, we’re doing this in many ways. One is efficiency: making AI tools efficient for all our employees so that they can actually use their time to do something else for client service. We continue to support our clients. We have been, over time at Schwab, always committed to pick up the phone as fast as we can and give them the service that we provide.

And many of these things will basically get the benefit of AI. We continue to work on analytics — AI analytics that will allow our clients to be able to access their accounts and look at the reports and look at the impact of the markets on their accounts using some of these tools. And for research, we are now in the process where all the research that comes from our Center for Financial Research is now being packaged. So we have what we call the research assistant, which allows clients and financial consultants to get access to: okay, what happened in 2022, what happened in 2023, what did we think when the Fed first made decisions, what was the situation we had?

And then being able to have that information available very quickly to understand what it is. So AI in the adoption phase is clearly something that we’re embracing and we’re investing in, and I know all our peers are doing that too.

[00:36:38]  BARRY RITHOLTZ: So about a decade ago, maybe a little longer, when the robo-advisors, the digital platforms, first rose up, there was sort of a concern: oh, this is gonna replace individual advisors. That turned out not to happen. People, especially wealthy people, wanna be able to pick up the phone and talk to another human being. And yet we’ve seen the same sort of thing play out with AI again: hey, what is this gonna replace?

Is this gonna replace analysts and strategists? Is it gonna replace portfolio managers? And what about advisors? Do you see a similar thing playing out, where middle class and high-net-worth investors want a person on the other end of the phone? Or if it could be faster, cheaper, better, will people embrace AI for advice?

[00:37:34]  OMAR AGUILAR: Well, it varies by generation, and it varies by many parts of the segments of the market. Our philosophy is, and it’s still today, that the world of personalized relationships will be the key to success in the future. And that cannot be replaced by AI. When you get to see somebody, when you get to talk to somebody, no matter what it is, that component of establishing the relationship — because we’re humans — we’ll never be able to replace with AI.

What AI will do is basically create more efficiencies on tasks and things that financial advisors normally use their time on today, to build better relationships. So if they were using time for creating reports, for doing analytics, for doing other things, and that took 50% of the time, and you can reduce that to say 10%, then now you save 40% of the time for building more relationships, getting to know the client better, getting to understand their biases to see how they can help them better. So that is what we see as the trend going forward, where the combination of AI tools — and I’ll mention specifically AI tools — with the human expertise and relationship building is basically the formula for the future. And to your point, yes, people thought the robo-advisor was gonna take over, and indeed it worked very well for many clients, but it didn’t replace the relationship building for financial consultants.

[00:39:02]  BARRY RITHOLTZ: Yeah, some of those AI tools — just something as simple as note taking during a Zoom call. I used to watch people not be able to pay attention ’cause they’re jotting stuff down, or there’s a third person on the call, a whole nother human taking notes. And it just has made things so much easier and more efficient. But again, not replacing individuals.

Let’s turn our attention to the markets. Your mid-year outlook said that earnings are driving the bull market, but the leadership is a little narrow. It’s mostly been AI and energy. First, is that still the case today?

And second, when does that concentration become a risk factor?

[00:39:46]  OMAR AGUILAR: Well, the concentration of the Mag Seven has been an issue for the last two years. We started to see rotation out of the large-cap, mega-cap names in tech at the end of last year going into this year. And it comes and goes. We still believe there’s significant concentration, particularly in technology, but we started to see that rotation going into other parts of the market, which is very healthy.

And we’ve seen, even on days where the NASDAQ is down, the S&P maintains and stays in the right place. A lot of that has to do with the fact that some other sectors are starting to carry the weight — things that were a little better value than tech. And I think that started to — so the breadth became better in the first part of the year. I’m a little more worried, from what I’ve seen after that, that the breadth is starting to get narrow again, and we’re starting to see that momentum trade taking on a little bit of a second life, and I think that’s —

[00:40:47]  BARRY RITHOLTZ: It stumbled a bit in the middle of the year, the momentum.

[00:40:49]  OMAR AGUILAR: It stumbled a little bit, and that was, in our mind, there because we’ve been working with clients to try to diversify their concentrations, try to move assets to other parts of the market. And then it happened: momentum actually took a little bit of a hit. And then when you look at the last few weeks, you actually see that it is starting to recover. A lot of that is clearly because these companies have done really well earnings-wise.

They’re generating a significant amount of business, and they’re spending more capital on AI. But we believe that it’s healthy for people to continue to do the rotation and have opportunities to go outside of those.

[00:41:27]  BARRY RITHOLTZ: I’m glad you mentioned the CapEx cycle from AI. That’s been a really significant engine of growth for the past, I don’t know, five years. How much risk is embedded in that, and how can investors position around something — if you’ve underweighted the technology sector or the AI CapEx cycle, you’ve underperformed. How should investors think about this?

[00:41:55]  OMAR AGUILAR: Well, we have seen that continue, and we still believe that we’re not completely done. We believe that the CapEx cycle has extended, but what is good is it has extended beyond technology. When you look at the capital expenditures now going into other parts of the market, starting to grow — maybe not as big as what we had with tech, but it’s clearly over there. Now, what —

[00:42:17]  BARRY RITHOLTZ: What other sectors are you seeing?

[00:42:18]  OMAR AGUILAR: We’ve seen healthcare, we’ve seen financials, we’ve seen some of the industrials doing well on this and spending money on CapEx, which makes sense, right? They can make their products more efficient, they can make other things faster. And I think in a certain way that adoption has increased that capital expenditure setting. I think the question you have — what is gonna be interesting going into next year is that investors are gonna start trying to evaluate how much of that capital expenditure and that investment ended up being profitable.

And I think profitability going into next year will be a key metric to watch, because that’s gonna be where people will say, well, you’re spending all that money, you borrowed money to increase your CapEx for AI, but yet your return on investment is not working. So that is gonna be a really good test going into next year.

[00:43:07]  BARRY RITHOLTZ: So in 2024, there was a quote of yours: investors can expect 15 to 20% asset growth annually for seven years. That turned out to be true: in ’24 we were about 25%, and in ’25 we were about 25%. It’s early September, and we’re not that far away from 15%. So it looks like, barring any problems this year, you’re gonna go three for seven.

What was that number based on? That’s a pretty healthy return above what we’ve seen over the past 15 years, which has been a great bull market. What do you base this on?

[00:43:47]  OMAR AGUILAR: Well, our research always starts with the macro picture, where we see the economic cycle. And at the time we knew that we were in that sort of early-to-mid cycle that usually goes into an expansion. We were surprised, obviously, that the expansion continued. I think we never expected that it was gonna continue as far as it has so far.

And a lot of that is — and I would probably say I was the first one — if you look at any report that we produced, and most people produced, back in ’23, nobody mentioned AI. That came afterwards, and it moved very quickly. Had we known that, then instead of seven years, we would’ve said 10 years. Right? But that’s a big part of this.

But if you look at the macro picture, even going into that expansion, where you have a healthy economy growing — the nominal growth expectation for this year is still close to 6%, which is impressive. When you look at a labor market that is stable, when you look at the monetary policy and the fiscal stimulus going into the economy that allows us to extend that, and business investment, the credit market is healthy — everything that allows you to create that tailwind was working in the right place. Especially because, relative to the rest of the world, the US was looking incredibly attractive, and it was leading the charge, and it was clearly moving in the right direction, because we didn’t have the same issues that some other regions in the world had.

Obviously now we’re on that path where we’re basically getting close to the peak of the cycle, and from here it’s difficult to sustain, especially because the risk premium associated with higher rates is starting to take a little bit of the oxygen away from those risky assets. So our expectation is that we’re probably at the end of that seven-year run, and we think that at some point in the next year we’ll start to balance it out with both asset classes.

[00:45:43]  BARRY RITHOLTZ: Hmm. So you mentioned trade policy tends to hit the economy on a 12- to 18-month lag. The full impact won’t show up until sometime in 2026. Eighteen months ago was Liberation Day. So we are right in the heart of that. What are we seeing from trade policy?

How is it impacting the economy and inflation?

[00:46:07]  OMAR AGUILAR: It has had probably less impact than we all thought. It has an impact, and it has had an impact, but —

[00:46:15]  BARRY RITHOLTZ: A lot of exceptions and exemptions.

[00:46:17]  OMAR AGUILAR: A lot of exceptions, a lot of negotiations, and a lot of practical implementation, ’cause it’s one thing to set up a tariff, it’s one thing to set up certain components, but for that to be fully implemented and checked is more difficult to do — like the compliance associated with figuring out how the tariffs get paid and who does what. And especially because there have obviously been a lot of discussions, even with the Supreme Court, on how this gets reversed and how it gets implemented. That obviously lags the effect, but it’s very clear to us that any kind of tariff has an inflationary aspect. The biggest difference in what we have observed, at least so far, is companies have had very clean and very robust balance sheets.

So for many companies that were involved in that, even though their prices have increased — their inputs have been more expensive — they have been able to weather the storm without necessarily passing it all through to the consumers. That has started to change this year. And if you look at some of the cost of goods starting to get slowly, slowly higher, even though the inflation rate seems to be stable, the prices have gone up. And I think that’s basically part of the inflationary component that people actually feel.

[00:47:29]  BARRY RITHOLTZ: Stable at 3.5%. It’s not getting worse, it’s not going to 4 or 5%, but that still means prices are ticking up. Which — let’s talk a little bit about yield, which is directly related to inflation and the Fed rate. Earlier this year, the house view was that now was not the moment to reach for duration. Since you mentioned that, we’ve seen the 10-year move up substantially.

At what point do you lock in that longer duration and higher yield? Is it 6%? Is it 7%? When does it become too attractive to not lock it in?

[00:48:09]  OMAR AGUILAR: Right, yes, it’s true. Well, it turned out that our team that does a lot of the work on fixed income was very clear that there were two things that we didn’t want to pursue further. One is credit spreads were too tight; there was no reason for us to go too deep into credit. And the second is duration was too volatile and too risky.

And that has worked well so far this year. Now, when you start to get to the 10-year being at 4.8, close to 5%, that to us is starting to become a little bit more attractive than what it was before. Mostly because now you see the balancing of upside and downside, and actually you see — well, where do yields go from here when you actually have a good economy? Again, go back to the economy. Granted that we have this term premium affecting the long part of the curve, and we see the deficits obviously affecting that component, inflation expectations and the market itself will probably still keep a little lid on that 10-year. So we believe that staying in that sort of average duration, maybe below what typical benchmarks have, is still a pretty healthy component, and you can enjoy very nice yields with high quality.

Again, we still don’t think it’s time to take credit risk. So that is a big part of what we look through. We stay in the middle of the curve. Intermediate bonds with higher quality is the place where people can lock in very nice yields.

[00:49:32]  BARRY RITHOLTZ: Intermediate, seven to 10 years. Is that about right?

[00:49:32]  OMAR AGUILAR: Yes.

[00:49:32]  BARRY RITHOLTZ: So let’s talk a little bit about biases.

Since you spent so much of your career on behavioral finance and better decision making — last year, you said there are four dominant biases that seem to really be affecting investors today. I’m paraphrasing: herding around the Magnificent Seven, home country bias, recency bias, especially amongst young people, and confirmation bias. Tell us about those four. Why did you name those?

[00:50:08]  OMAR AGUILAR: Yeah, well, those four — and they continue into this year — it’s been fascinating to see. So herding is very clear: people follow the momentum trade; they love the momentum trade. And a big part of the help that we have is to make clients and investors understand that staying too concentrated — because the momentum trade works until it doesn’t, and then when it doesn’t, it basically could be very painful. So a very natural cognitive bias that people have is they don’t know how to sell their winners.

It’s impossible for them; when they see them on a run, they think that it’s never gonna end. And I think that’s a big part of our education, to try to help them take profits when you can, rebalance when you can. Rebalance is like a word they hear me say all the time. The second one is recency bias.

Recency bias is basically putting more weight on the recent events than on the entire history. That’s a very typical emotional bias. On days when there’s lots of volatility, people tend to say, oh my god, this is the end of the bull market, we gotta get out. And they forget about their fundamentals. Or on days when they see, oh, there’s another great earnings report by semiconductors — well, let’s go into that and put more money into it.

That recency bias, when you only look at the most recent information as your basis to do that, is something we try to understand, and that tends to work out when you actually look at longer horizons, when you look at more information and more data. Confirmation bias is my favorite. And this is the typical example: when you buy a new car, and then you start driving your car, and you start to see cars like yours everywhere, because your brain is basically trained to look for things that convince you that you’re making the right choice. And so confirmation bias — we have that especially in a bull market, when you have clients that call us and say, hey, I told you that stock was gonna go up.

It’s like, well, yeah, it was going up, but not for the reason you said; it went up for other reasons. Even though it didn’t have any fundamental reasons to it. Or, I wanna go into these particular asset classes. The typical example is Bitcoin. Bitcoin is one of those that was clearly in confirmation bias. When it was down at $16,000, people had doubts about how Bitcoin was gonna work; when it went up to 30,000,

people were like, oh yeah, this is the right thing. And they did the same thing again, with no basis other than the confirmation of themselves; they created their own theories on why that was happening. So that is another part that drives a lot of the market. And the fourth one — I forgot what the one was — home country bias. Home country bias is more like the safety component, where you prefer to stay in the US.

One of the challenges we have as a country is that we don’t have enough exposure to international markets. And there are great companies internationally; there are great opportunities to invest and diversify. But most investors tend to feel comfortable buying their stuff — what they’re good at, what they’re familiar with. And a lot of that is being tested a lot in the market, saying, well, if you think about the brands that you’re loyal to, right? You go to the supermarket and you buy the shampoo that you like, and you don’t want to change it, you don’t wanna do anything else, unless you wanna actually try something else.

So it’s this idea of diversification, and trying to understand that it’s not gonna always be the same. It’s actually something we try to teach our clients.

[00:53:31]  BARRY RITHOLTZ: And up to two or three years ago, the US was outperforming developed ex-US and emerging markets. The past few years we’ve seen international really come on strong.

[00:53:31]  OMAR AGUILAR: Correct.

[00:53:31]  BARRY RITHOLTZ: So if you were stuck with — I’m reluctant to say the recency effect — of seeing US outperformance, you might not even think to look overseas.

[00:53:52]  OMAR AGUILAR: Well, that was the combination, Barry, because the recency bias that says, well, the US has outperformed the international markets, combined with the home bias, basically will prevent any client from diversifying away from the US.

[00:54:04]  BARRY RITHOLTZ: Hmm. So I wanna stay with the biases. If you could persuade investors to think about adopting one rule to thwart their own biases before whenever the next bear market comes along, what might that rule be?

[00:54:24]  OMAR AGUILAR: Well, we don’t have one rule. We have three rules — three components.

[00:54:24]  BARRY RITHOLTZ: Okay.

[00:54:29]  OMAR AGUILAR: So we call it — and a lot of that has come from me, but it is clearly a big part of what our philosophy is — for clients to mitigate those biases. And it works for all kinds of clients. Stay invested. That’s number one.

It’s very important for people to try not to time the market. Stay invested is the first component. And we have lots of data over long periods, lots of cycles, that shows that staying invested is much better than trying to get in and out of the market at different times. Stay diversified.

That’s number two, diversification. Even though it’s like the old trick, it still works. And as I said before, the challenge with clients today, and the challenge for investors today, is they don’t realize the level of concentration until it’s too late. So having the rebalance, having a strategic asset allocation, trying to make sure that they follow that path, is very important.

If you think about it, if you put your portfolio together three years ago and you invested there and you kept it there and you didn’t touch it for three years, today you would be highly exposed to technology, just from the way the market dynamics are. So it is important to take a look and have an approach to rebalancing that allows you to get that diversification. And the third one is stay disciplined. Discipline basically creates a mechanism to have a systematic approach for those pieces.

So things that we discuss with our clients, especially with those that tend to be more emotionally biased, is to say, let’s set up the rules now, before we get into the action in the market. So if you see the market is down 5% one day, we already have the playbook. We already know what we need to do. We don’t have to panic; we don’t have to do a lot of things at that moment.

We already know exactly what we have to do and follow that discipline, whether it is rebalancing the portfolio, whether it is taking profits, whether it is buying some of the companies that may not be natural. And this is very typical — the example that I always provide is, if you had an equal-weighted strategy, well, if things started to get out of whack, you wanna get them back to equal weighted. And that’s sort of a natural thing; people like it because it’s like, yeah, I know that company went down, so I need to buy more. And that’s a little better approach. So stay invested, stay diversified, and stay disciplined.

[00:56:45]  BARRY RITHOLTZ: Last question before we get to our speed round, our favorite questions. What do you think investors are not thinking about or talking about today, but perhaps they should be? What topics — could be assets, geography, policy, data — what’s getting overlooked but really shouldn’t be?

[00:57:04]  OMAR AGUILAR: I think the main area where clients get distracted the most is they get concerned about geopolitical risks, they get concerned about inflationary pictures, and they have the right to do that. But a lot of the benefit of long-term investing is something that gets overlooked all the time. And again, a lot of that is because of the recency bias that exists today and the availability of information.

So this concept of setting up your goals, setting up your investment strategy, setting up your strategic asset allocation, and following that path is something that, believe it or not, gets overlooked all the time. And it works no matter what part of the cycle it is, as long as you feel comfortable understanding risk — at the same time, the risk budget. And we always talk about this: it is so critical for people to understand how to allocate risk — not to allocate assets, but how to allocate risk. And I think that component gets overlooked all the time. And the way I think about it is that when you go to a dinner, you basically have your main entrée, you also have your salad, you also have your side, and you don’t necessarily give the same level of weight to each one of those.

That’s a risk budget allocation. So you need to understand how much is gonna be in your core portfolio — it’s gonna be long term — and how much is gonna be in other parts of the market. And specifically nowadays, there is a temptation to go into these prediction markets. And I think we try to avoid markets that way, because the difference between gambling and investing is huge. Right?

[00:58:44]  BARRY RITHOLTZ: That’s just pure speculation.

[00:58:45]  OMAR AGUILAR: And the way that our team has explained it is, when you’re investing, you become an owner. When you are gambling, you don’t have anything. You’re just basically putting money in, the odds are against you, and you don’t have any ownership.

[00:59:00]  BARRY RITHOLTZ: The house usually wins.

[00:59:00]  OMAR AGUILAR: Correct.

[00:59:00]  BARRY RITHOLTZ: All right, so let’s jump to our favorite questions that we ask all our guests, starting with: tell us about your mentors.

You mentioned one earlier who helped shape your career.

[00:59:14]  OMAR AGUILAR: Well, the person that brought me to Bankers Trust was a real innovator who actually took a lot of faith, and he was able to see in a PhD student that was doing basic statistics and modeling the ability for that. And I learned a lot from him.

[00:59:33]  BARRY RITHOLTZ: And that was who?

[00:59:34]  OMAR AGUILAR: That was at Bankers Trust, and his name is Phil Green. And Phil basically put together this vision where he wanted to create this concept. He bought into the idea of the vision.

And that helps me in understanding how these things evolve over time. I also have my advisor from Duke; his name is Mike West. He obviously has a deep academic background, clearly a lot of technical, but he’s also a business owner. He also understands the practical application of all these techniques, which I believe, Barry — that combination of deep quantitative tools with reality, and making that merge, is something that we need more of. There’s a lot of great technicians, there’s a lot of great people, a lot of really smart people.

But having that idea to be able to solve is actually critical. And I would probably say the model that we get from Chuck — the values that he has put together, Chuck Schwab at Schwab — of getting access to clients, providing clients with the right solutions, being transparent, being accessible, and thinking through clients’ eyes. That has been a big mantra for me. Schwab has been the longest job I ever had, and it’s been great.

[01:00:49]  BARRY RITHOLTZ: Let’s talk about books. What are you reading currently? What are some of your favorites?

[01:00:54]  OMAR AGUILAR: Well, I love the books of — Sapiens was one of my favorites. Just to reread it again. Thinking, Fast and Slow was another one of my favorites. I like to read a lot about these components. I read the Hail Mary book that was actually produced —

Project Hail Mary. So those are great, and those are great components that I like to always think about — the concept of how do you apply those things to what I can do for my work.

[01:01:24]  BARRY RITHOLTZ: What about streaming? What are you watching or listening to? Anything interesting these days?

[01:01:28]  OMAR AGUILAR: I started watching this show called Silo, and it’s on Apple TV. And that’s another —

[01:01:36]  BARRY RITHOLTZ: You’re a sci-fi fan.

[01:01:37]  OMAR AGUILAR: Well, it has a lot of pieces that I think were great. I did watch Ted Lasso for a while, and that was also good. Especially the first season was particularly good.

[01:01:37]  BARRY RITHOLTZ: Fabulous.

[01:01:37]  OMAR AGUILAR: Yeah. It’s quite — and then there was this other show called The 100, which actually was very good because, again, it was sci-fi.

[01:01:51]  BARRY RITHOLTZ: Yes.

[01:01:51]  OMAR AGUILAR: And it had many, many episodes and seasons. But it was great because, again, it was sci-fi, very similar to Silo, but the whole plot was about humankind being in this nuclear war.

And therefore they selected a hundred people to put them in space, and they had to survive there until the Earth was safe again to come back. Once that happens, then there were a lot of changes. There were a lot of things for survival. There’s a lot of leadership lessons on how to deal with that and how to deal with adversity.

That I thought was fascinating.

[01:02:39]  BARRY RITHOLTZ: I know you mentioned reading Project Hail Mary. Have you seen the movie yet?

[01:02:44]  OMAR AGUILAR: Yes, we did.

[01:02:45]  BARRY RITHOLTZ: Yes. It’s really quite amazing. Our final two questions. What sort of advice would you give to a recent college grad interested in a career in either quantitative analytics or wealth management?

[01:03:00]  OMAR AGUILAR: Yeah. Number one is getting your expertise and trying to get up to speed on all the methods that we can use. And in this day and age, understanding — getting a CFA, getting some program where basic theory about investing comes into play. Second, which is very important: soft skills. That’s something you don’t get taught in school, but the ability to have the soft skills to be able to talk and explain, to be able to say, all right, these are the things that you can do and this is how you can structure it.

That, to me, becomes a big part of the asset. So that combination of being good technically, but being able to explain things, becomes incredibly valuable.

[01:03:47]  BARRY RITHOLTZ: And our final question: what do you know about the world of investing and behavioral decision making and quantitative research today that might have been useful 30 or so years ago when you were first getting started?

[01:04:02]  OMAR AGUILAR: What do I think today?

[01:04:04]  BARRY RITHOLTZ: What do you know today that would’ve been useful?

[01:04:04]  OMAR AGUILAR: Oh, 30 years ago. I would probably say underestimating the effect of how fast the market was gonna move. I think there was a wrong idea that you can be faster than the market and that people can really get ahead of many things by just trying to capture information faster. I think that information advantage that people claim to have — after all these years in investment, it’s very hard to actually capitalize on.

[01:04:41]  BARRY RITHOLTZ: Hmm. Really, really fascinating. Omar, thank you for being so generous with your time. We have been speaking with Omar Aguilar. He’s CEO and CIO at Schwab Asset Management.

If you enjoy this conversation, well, check out any of the 662 we’ve done over the past 12 years. You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever you get your favorite podcasts. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Anna Luke and Elizabeth Srin are my producers.

~~~

 

 

 

The post Transcript: Omar Aguilar, CEO and CIO of Schwab Asset Management appeared first on The Big Picture.

Cambridge University Declares Free Speech Should Be 'Restricted'

Zero Hedge -

Cambridge University Declares Free Speech Should Be 'Restricted'

Authored by Steve Watson via Modernity.news,

Gonville and Caius College, one of Cambridge's oldest foundations, is compelling its undergraduates to attend mandatory "inclusivity training" from the start of term.

The 90-minute sessions are being delivered by Stop Hate UK, a 'charity' activist organisation whose own materials tell students their free speech rights may be restricted, that "Islamophobia is a crime", and that a facial expression can count as harm.

The order lands in the same university that spent the better part of two years investigating a philosopher for lawful speech, and in the same education system that has spent 2026 drilling children in white privilege, "racism requires power", and compulsory hijabs.

According to an email from the college's education and tutorial office, seen by The Spectator, "attendance by undergraduate students is mandatory. It is important for the community as a whole to ensure a collective and unified response." The course, due to run from the week commencing 5 October, will cover "demonstrating inclusive behaviours" and "recognition of a hate incident and its impact."

A Caius spokesman told The Spectator the college had, "in consultation with student representatives," committed to "hosting facilitated discussions around inclusivity to support the whole community at Caius."

That is a softer description than the email students actually received. Mandatory attendance and a demand for a "collective and unified response" is not a discussion. It is an instruction.

Stop Hate UK has published a video telling university students they must always display "positive attitudes" and "use respectful and kind language that will not cause harm or offence."

Its syllabus for educational settings tells students that free speech should be "restricted by other duties, responsibilities, and legislative and contractual obligations," and teaches them how "opinions, attitudes and prejudice are influenced and shaped by unconscious bias, media bias, fake news, etc."

Andrew Gilligan, writing in The Spectator, put the obvious question: "How will students be required to 'demonstrate' that their behaviour is 'inclusive?'" The charity's own glossary supplies an answer of sorts. It speaks of "microaggressions" and "micro-inequities," including "unintentional comments" and "unconscious messages" that "devalue and discourage people... conveyed through facial expressions, gestures, tone of voice, choice of words."

Hate incidents, it says, can include "abusive gestures" or "malicious complaints about parking."

The Free Speech Union called the scheme another mark of Cambridge's intellectual decline, and of the way activist groups have been emboldened by the government's non-statutory "anti-Muslim hostility" definition.

The use of "hate incident" rather than "hate crime" is the tell. Behaviour well below the legal threshold is being placed inside a disciplinary frame. That sits awkwardly beside the Home Office's own retreat. In March, Home Secretary Shabana Mahmood announced that non-crime hate incidents would be scrapped, saying: "Under these reforms, forces will no longer be policing perfectly legal tweets."

Caius is importing the logic the Home Secretary has just disowned, and making attendance compulsory.

If the syllabus is followed, one of the first things Cambridge students will be taught is "unconscious bias," a concept a UK government report has already found wanting. That review concluded that "evidence that [unconscious bias] training content and techniques 'works' is lacking," that such sessions "do not seem to be effective at improving diversity outcomes within workplaces," and that there was "potential for back-firing effects."

Most of the studies used to justify the training "did not use valid measures of behaviour change."

The Committee for Academic Freedom has gone further, and found legal errors in the provider's published materials. Age, a protected characteristic under section 4 of the Equality Act 2010, disappears from Stop Hate UK's list. The statutory category of "gender reassignment" is replaced with "gender identity," which, as CAF noted, "is not one of the nine protected characteristics named in the Act."

The Supreme Court held in 2025, in For Women Scotland, that "man," "woman" and "sex" in the Act carry biological meanings. Gender-critical belief is capable of protection under the Act, as Forstater established. Presenting a contested theory as settled law, then requiring students to attend, is not neutral instruction.

The Office for Students' Regulatory Advice 24 allows universities to require training that advances positions a person may disagree with. It does not allow them to "require training or induction that imposes a requirement on the person completing the training actively to endorse any viewpoint or value-judgement."

CAF has asked the obvious follow-up: whether Caius students will be expected to produce the promised "collective and unified response" by accepting the premises, for instance by labelling prescribed scenarios as microaggressions. The committee has invited students who are required to assent to anything to get in touch.

Stop Hate UK has claimed that "Islamophobia is a crime." It is not. Britain has no blasphemy law. The same organisation has treated truthful reporting on the Muslim grooming gangs scandal as a source of hatred, writing that "this leads to the formation of Anti-Muslim attitudes, subconscious biases and hate."

Its work on the subject cites the Centre for Media Monitoring, then part of the Muslim Council of Britain, an organisation successive governments have refused to engage with since 2009.

That is the same territory covered by Labour's non-statutory definition of "anti-Muslim hostility," which Communities Secretary Steve Reed sold as a tool "so we can take action to stop it," and which the Free Speech Union's Richard Holmes warned "risks hindering free speech under the law and legitimate criticism of Islamism." Schools were urged to monitor and report it.

Cambridge has form on this. Philosopher Nathan Cofnas was hired under Cambridge's 2020 free speech statement, then investigated for the better part of two years after publishing on hereditarianism and affirmative action.

The university eventually concluded that his views, "while seen by many as offensive, did not breach the law and did not contravene University regulations designed to uphold free speech." By then the contract had run out.

Cofnas's account of it was blunt: "I was betrayed the moment the administration determined that free speech was inconvenient for it."

Caius has form of its own. In 2022 the master and a senior tutor wrote to students about a Helen Joyce event on gender-identity ideology, saying they did not "condone or endorse" views they considered "offensive, insulting and hateful," and that the college would "continue to strive to make Caius an inclusive, diverse and welcoming home." The new sessions are that email turned into a timetable.

The pattern below the university line is the same. In Sheffield, school materials have told children that "black people can be racially prejudiced towards a white person which is wrong and totally unacceptable. However, this is not racism. Racism is racial prejudice plus power. In the UK, white people hold the cultural power."

In Barnet, a Labour council approved taxpayer funding for an Islamic primary that requires girls as young as seven to wear a hijab from Year 3. Stephen Evans of the National Secular Society called it "appalling that taxpayers are being asked to fund a school that forces girls as young as seven to wear the hijab."

Back at the University level, in Northampton, freshers were pointed at an Advance HE module on "Whiteness, Privilege and Belonging." The university said "inclusivity is one of our core values, and we make no apologies for that." Philip Kiszely, on TalkTV, answered that "there is NO WHITE PRIVILEGE in higher education. The anti-racism system is the problem, which is overtly racist."

A university that cannot tell the difference between a crime and a parking complaint, or between the Equality Act and a leftist activist group's preferred version of it, is not protecting its students. It is training them to treat argument as harm and dissent as a hate incident.

The Office for Students now has a complaints scheme under the Higher Education (Freedom of Speech) Act. Caius has just given its undergraduates a reason to use it.

Tyler Durden Mon, 10/05/2026 - 12:00

Aramco Cuts Asia Oil Prices To Six-Year Low, Warns Global Oil Supply Buffer "Scarily Thin"

Zero Hedge -

Aramco Cuts Asia Oil Prices To Six-Year Low, Warns Global Oil Supply Buffer "Scarily Thin"

Saudi Aramco has raised oil prices for European-bound cargoes in November but has cut prices for Asian buyers to the lowest in six years as Persian Gulf producers race for market share with flows through the Strait of Hormuz increasing. 

The state-owned firm will offer Arab Light crude to buyers in Asia to $5 a barrel less than the Dubai/Oman benchmark for November, according to Bloomberg citing a list from the producer. That compared with a discount of $2 a barrel for this month. Traders and refiners had expected a $5 increase from October, a Bloomberg survey shows. 

The unexpected cut amounted to $3 per barrel - which is the lowest since June 2020, not long after crude hit negative prices for the first and only time in history - is a signal the world’s largest oil exporter may be trying to boost sales to Asia, along with other Persian Gulf producers. Aramco raised November prices to Europe by $3 a barrel, and left those to the US unchanged from this month.

For European buyers, on the other hand, the November oil price will be $3 per barrel higher than it was for this month, across all grades. The prices for Saudi oil grades sold to the United States remained unchanged from  October. 

The discount for Asian buyers is likely a response to a surge in shipping costs for the Hormuz route, where Saudi Arabia is using ship-to-ship transfers in the Gulf of Oman to reduce the risk of Iranian attacks on vessels carrying its crude. The STS involves sending smaller vessels to pick up crude from the Persian Gulf, pass through Hormuz, and offload the crude onto VLCCs waiting off Oman. This oil-shuttling has boosted the cost of transporting crude from the Persian Gulf to other parts of the world, mostly Asia.

The freight cost for a very large crude carrier has soared to an all-time high of $1.3 million per day because of the Hormuz situation. This is up 43 times from January this year, when the rate for a VLCC stood at some $30,000 per day, according to Bloomberg.

Because of these price developments, freight costs now add some $33 to the price of a barrel of oil getting shipped out of the Persian Gulf. This compares to $1.73 per barrel in January. In percentage terms, freight costs now represent 27% of the delivered cost for a VLCC cargo, versus 3% in January, the Poten & Partners data also showed.

Meanwhile, at roughly the same time as it was slashing prices to capture some of the UAE's market share, the head of Saudi Arabia’s state producer said that oil stockpiles that cushion the world from supply shocks have become “scarily thin,” putting markets at risk of worsening unless the Strait of Hormuz reopens.

The head of the world’s single biggest crude exporting company was speaking just days after governments in the world’s biggest economies announced plans to release as much as 100 million barrels of emergency oil and diesel stocks to ease rising fuel costs.

“Until Hormuz fully re-opens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify,” Amin Nasser, chief executive of Saudi Aramco, said at the Energy Intelligence Forum in London on Monday. “While the squeeze on crude is serious, refined fuel prices have risen even more sharply.”

Consumption of crude is still rising and countries will require even more supply for at least the next two years while rebuilding their inventories, Nasser said. That could mean additional demand of at least 2 million barrels a day, or even more if governments decide to increase the amount of oil they hold in stockpiles, he said. 

Commenting on the latest emergency release, Rabobank's Michael Every writes that the 50 million barrels of oil that Europe agreed to release (following US demands) are not from a government-owned facility but private stocks and were reportedly already available for sale, "but Europe is instead opting to buy cheaper US flows. So, the EU move was serious, showing who still asks, ‘How many barrels?’ when the White House asks for a jump in output, yet performative in that truly cheap diesel will remain in short supply."

When the US-Iran war began, the world had about 10 billion barrels of oil stocks, Nasser said. That has fallen to less than 6 billion, of which only 10% of which is practically available due to various technical restrictions, he said, echoing what JPM's Natasha Kaneva warned about back in May.

Source: JPMorgan

Releasing part of what’s left in global stockpiles will buy economies some time but won’t fix the imbalances between supply and demand, Nasser said. Gulf producers are working to ramp up production and exports and have succeeded in boosting crude flows to near prewar levels.

Saudi Arabia and neighbors like the United Arab Emirates and Kuwait have been using their own tankers to ship crude through Hormuz, which has been at least partly obstructed since the US and Israel attacked Iran at the end of February, kicking off a regional war.

The higher flows have provided scant relief for oil markets, which are still pricing in security risks to supply in the Persian Gulf and Red Sea. Brent crude, the international benchmark, has traded around $100 a barrel over the past month, even as more tankers transited Hormuz. Those vessels have had to run the risk of heightened attacks, while Saudi Arabia has been repeatedly targeted over the last month.

Still, all of Aramco’s upstream capacity remains intact, Nasser said. That has allowed the company to continue covering its supply contracts with buyers in Europe and Asia. The company has used various export routes, shifted supply between its different crude grades and pressed its own tankers into operation to supply customers, he said.

Over the past month, Aramco boosted crude shipments from its main export terminal at Ras Tanura in the Persian Gulf. The company reacted quickly to a temporary halt to its main cross-country pipeline after an attack last month, and has since brought flows back to about 80% of capacity, although earlier today we got reports of another massive explosion on the East-West pipeline which likely halted shipments again. 

Aramco is looking for alternative crude export routes to avoid relying too much on any single method of reaching global buyers, Nasser said, without providing specifics. The company is studying plans that would double or triple the capacity of its storage facilities, he said.

Tyler Durden Mon, 10/05/2026 - 11:40

Lingering Iranian Diplomats In New York 'Kicked Out' By Rubio

Zero Hedge -

Lingering Iranian Diplomats In New York 'Kicked Out' By Rubio

The 81st session of the United Nations General Assembly took place September 22–29 in New York City, with the Iranian delegation being allowed into the country (even as the delegation of the Palestinian Authority was blocked).

President Masoud Pezeshkian addressed the UNGA without any problems, and Foreign Minister Abbas Araghchi engaged in talks with the US on the sidelines and via mediators. Both top officials exited the country, after safety concerns were voiced in Iranian outlets - given the US is engaged in an active war with the Islamic Republic.

But apparently a couple of Iranian diplomats that traveled with the delegation lingered behind and are now being "kicked out" - according to Axios reporting on Sunday.

A US official described to the outlet the the Iranian officials stayed in New York for multiple days after the Trump administration ordered the Iranian delegation out of the country.

"Secretary Rubio means business. Two more members of the Iranian delegation were found still in New York long after the U.N. General Assembly had passed. They have now been kicked out of the country," a US official said.

But the two have now departed, with one having left Friday and the other Saturday morning, the US official detailed.

Iran's Foreign Ministry has disputed the account, with FM Araghchi having stated on X, "All Iranian diplomats who attended UNGA, except one who departed earlier, left as scheduled."

Araghchi took the opportunity to blast the United States as not upholding its diplomatic obligations as a host nation for UN headquarters.

"Taking pride in fake diplomat ‘expulsion’ is inappropriate for the head of any diplomatic corps,” he had said Saturday. "It oozes of desperation and defeat, and is inconsistent with UN host nation obligations."

Many nations would likely be more comfortable is UN headquarters were based in Europe, or some other more neutral region.

Washington not infrequently uses its power to grant or deny access to UN headquarters in New York as leverage over countries it deems 'rogue' actors. For example, it regularly does this with Palestinian representation.

Tyler Durden Mon, 10/05/2026 - 11:10

Key Roles Over Payrolls

Zero Hedge -

Key Roles Over Payrolls

By Michael Every of Rabobank

Friday’s US payrolls were weaker than expected at 29K, another random walk which helped walk soaring bond yields back from the edge of the cliff, at least temporarily. However, far more important things are happening than that report, much as it’s a markets catechism to repeat it.

Europe agreed to US demands to release 50m barrels of its diesel reserves over the next two months, which saw prices dip, also helping yields fall. However, those reserves are not from a government-owned facility but private stocks and were reportedly already available for sale, but Europe is instead opting to buy cheaper US flows. So, the EU move was serious, showing who still asks, ‘How many barrels?’ when the White House asks for a jump in output, yet performative in that truly cheap diesel will remain in short supply. Which geopolitics, not payrolls, will also tell you.

Yemen’s government launched a Saudi-backed offensive to seize all areas held by the Iran-backed Houthis – that means a war and instability around the Red Sea and Bab-el-Mandeb. Egypt, Eritrea, Somalia, and Sudan called on Ethiopia to cease attacks on the separatists in Tigray Addis Ababa accuses them of backing: the risks are of more fighting on the other side of the Red Sea too. Iran is considering Russia's offer to take its 60%-enriched uranium according to one report, and its foreign minister tried to claim asylum in the US before his family was threatened according to a rumor, but Tehran is increasing the range of its missiles and preparing for new US attacks as strikes against tankers in Hormuz increase. The US has also now removed all its B-1 bombers from the UK base just subject to a suspected Iran-linked terror attack amid security concerns, yet the British have, confusingly, bailed all those arrested over it.

Ukraine’s Zelenskyy stated he will step up attacks on Russian oil refineries, but that the US wants to hold trilateral talks with Russia this month. Germany’s Merz visited Kyiv, which Russia attacked again, announcing $1.5bn in aid including interceptor drones and air defence missiles - Ukraine equally believes that Russia has shared its new jet-drone technology with North Korea. The US is also to receive a potash shipment from Belarus as it tries to create a wedge between it and Moscow, and Poland and Romania are meanwhile shunning Kyiv's pleas to help it free grain trapped by the Black Sea’s de facto closure. Worryingly, the White House is now monitoring a suspected plague outbreak in Russia following an accident a bioweapons lab: some reports say three Siberian hospitals nearby have been quarantined.

As the Hong Kong press says, ‘China urged to build 'system' to protect expanding overseas interests’ to “reshape the rules,” the Taipei Times claims the Pentagon is to assign representatives to Taiwan’s Ministry of National Defence, who “would be able to participate directly in defence discussions, including weapons procurement.” That would seem close to a red line for China just after a Trump-Xi summit and ahead of two more meetings alongside Putin before year-end.

In geoeconomics, China claims most of the G20 rejects the US call for its capacity curbs – yet its press notes even allied Russian consumer exporters are facing Chinese competitive pressure, and the Beijing-sympathetic Thailand is seeing protestors slamming Chinese and other foreign companies. Moreover, the UK is expected to impose 45% tariffs on Chinese EVs to avoid ‘Made in Europe’ clashes despite the absence of economic statecraft from British PM Burnham’s relaunch, the Liberal Democrats, Reform, and the Conservative Party’s new mission statement.

Here is the key point I keep stressing: smaller economies will have to adopt the external tariffs set by larger ones as the world fragments. The key questions are how it fragments and who plays what role.

On which, pro-Trump presidential candidate Flavio Bolsonaro leads the incumbent Lula in the first round of Brazil’s election by 47.0% to 45.2%. The margin of that lead combined with the votes for other right-wing candidates suggests to some analysts he is now the clear favourite to get over 50% in the run-off on October 25. At the same time, Bolsonaro's Liberal Party (PL) also just saw the most state governors, senators, and federal deputies elected in parallel elections, giving it the most influence in the next Congress. That has huge implications for Brazil, as Reuters notes how the election winner ‘could reshape its institutions as vacancies mount’.

It also has huge global implications. If Brazil ‘flips’, and we are not there yet, it would effectively leave the BRICS with RICS, of which only RC are deeply connected and would see only Nicaragua, Canada, and already-squeezed Cuba of note out of the emerging ‘Donroe Doctrine’ loop given Greenland has been sealed into it – and potentially very much to the AmericaS’ (plural) benefit, which in a more zero-sum world is therefore to others’ detriment. The western hemisphere is after all close to the Middle East in terms of energy production and refining capacity, a giant in agri production, has vast resources of all kinds, and a combined population of around a billion.

Of course, the test would be if the US National Security Strategy is serious about “the goal is for our partner nations to build up their domestic economies, while an economically stronger and more sophisticated Western Hemisphere becomes an increasingly attractive market for American commerce and investment” behind a common external tariff, or if America First is still just cheap labor banana-republic neoliberalism that can be easily outbid on the geopolitical chessboard by others.

Nothing is yet certain, but this could be yet another key if-lines-on-maps-move-so-do-lines-on-screens moment in the making for markets.

Tyler Durden Mon, 10/05/2026 - 10:50

We May Finally Be Rid Of Jack Smith

Zero Hedge -

We May Finally Be Rid Of Jack Smith

Authored by Susan Quinn via American Thinker,

Sen. Bill Hagerty, R-Tenn wants to make sure that Special Counsel Jack Smith never practices law again.

It's about time.

Jack Smith tried to lay waste to Donald Trump, his administration, and other Republicans by practicing lawfare, and Sen. Hagerty reported him to the Tennessee Supreme Court's Board of Professional Responsibility. Smith's actions were blatantly partisan, seriously questionable, and dishonest: he not only issued subpoenas to phone companies for phone toll records of GOP officials, but he added non-disclosure agreements to prevent the legislators from being notified of these actions. Not only were Smith's actions illegal, but he lied to Chief Judge James Boasberga in withholding the explanation that the data sought belonged to members of Congress:

Smith violated the Rules of Professional Conduct by seeking and obtaining a nondisclosure order from a federal district court without advising the court of critical facts and law. The impact of his lack of candor was a violation of federal law, and an invasion of the very constitutional privileges that ensure a fully free legislative process.

Sen. Hagerty states that Smith drafted the subpoenas and Judge Boasberg probably never read them and simply rubber-stamped them; he also didn't reference the Speech or Debate Clause that requires notice to the person being subpoenaed when someone seeks Senate information.

Hagerty recommended that Smith be disbarred.

In addition to Hagerty's action, U.S. senators Marsha Blackburn (R-TN) and Bill Lee (R-TN) have filed a lawsuit against Smith. They claim that A.G. Merrick Garland's appointment of Smith was unlawful and hold him accountable for his abuses of the law. They are only seeking $1 in damages:

'Through his Arctic Frost witch hunt that targeted conservatives across America and even the President of the United States, Jack Smith perpetrated one of the worst abuses of government power in our nation's history,' Blackburn stated.

Blackburn said, 'This lawsuit is solely about holding Mr. Smith accountable and ensuring that our nation's justice system can never again be weaponized against the American people.'

Jack Smith's outrage at being called out was - well - outrageous, given the laws he's broken. Two of the most credible members of the Senate Judiciary Committee, respected on both sides of the aisle - Senator Chuck Grassley from Iowa and Senator John Kennedy from Louisiana - condemned Smith without hesitation. Senator Grassley opened the hearing by accusing Smith of breaking the law and lying. In his usual graphic fashion, Senator John Kennedy told Smith, "You make me want to throw up in my mouth," when Smith refused to acknowledge his partisan activities.

For too long, we have tolerated rogue prosecutors like Fani Willis, Alvin Bragg, and Letitia James, along with A.G. Merrick Garland and A.G. Eric Holder. Most of them have only received a slap on the wrist and no serious consequences for their disgraceful behavior. It's about time that we set an example that truth and the rule of law matter, and we are taking back the power of government.

Tyler Durden Mon, 10/05/2026 - 10:15

Tech Leads Strong Growth Signals From US Services Sector Surveys; But Prices Are Soaring

Zero Hedge -

Tech Leads Strong Growth Signals From US Services Sector Surveys; But Prices Are Soaring

After last weeks impressive moves in Manufacturing survey data (though burdened with the baggage of a surge in Prices Paid), all eyes are on the Services side of the US economy with mixed results expected (S&P up, ISM small down).

  • S&P Global US Services September slightly better than expected (58.8 vs 58.7 exp/flash vs 56.5 prior) - strongest in five years

  • ISM US Services slightly worse than expected (54.9 vs 55.0 exp vs 55.4 prior)

Quite a divergence...

“September has seen US business growth surge to its highest for over five years," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, "with rising demand and improved optimism encouraging firms to take on workers at a pace not seen for over four years.

Combined with the encouragingly solid manufacturing PMI, the strong service sector expansion points to economic growth of around 4% in the third quarter and 5% in September alone, the latter hinting at accelerating momentum into the fourth quarter.

This also leaves the US economy by far the strongest in the world...

New orders and backlogs of work are rising at increased rates and growth expectations have recovered to a one-year high, adding to the sense of an economy picking up further pace in the near term.

For the first time in 10 months, output trended higher across all five broad sectors covered by the survey as transport & storage activity returned to growth. By far the sharpest expansion was seen in the information & communication sector, however.

“Tech companies are reporting by far the strongest growth but the rising tide is now lifting all boats as far as the major sectors are concerned, with accelerating growth also reported for consumer-facing businesses as well as industrials and healthcare, alongside sustained solid growth in financial services."

However, concerns that the economy is running too hot will be fueled by the survey’s price gauges, which point to accelerating inflation.

Measured across goods and services, firms’ input costs are now rising at the fastest rate for nearly four years.

"While these increased costs in part reflect higher fuel prices, the worry is that selling price growth has also moved higher again to signal sustained stubbornly high inflation, well above the Fed’s 2% target."

Stronger growth and sticky/soaring inflation are going to counter the dovish message from last week's FedSpeak and weaker payrolls.

Tyler Durden Mon, 10/05/2026 - 10:05

84% Of Gen Z Democrats Back Socialism; New Poll Finds

Zero Hedge -

84% Of Gen Z Democrats Back Socialism; New Poll Finds

Authored by Pedro Rodriguez via The Daily Signal,

A groundbreaking new poll conducted ahead of November's midterm elections has uncovered that over 30% of Americans have a favorable view of socialism.

According to the OnMessage poll, which surveyed 800 American voters from July 12-16, 35% of respondents identified as Democrats, 84% of whom identified as Gen Z.

"Embracing socialism is no longer a fringe talking point for Democratic voters. Our data shows that a majority of Democrats of all ages hold favorable views of socialism, including 84% of Gen Z Democrats," Henry Parkhurst, the OnMessage pollster who carried out the survey, told the Daily Signal.

The findings confirm that the Democratic Party's claim that socialism is a "fringe issue" is no longer true, and that socialism has spread into the party's core.

"While the national Democratic Party may claim to be divided on how far they're willing to lean into socialism, their voters clearly show they're encouraging the party to move in that direction," Parkhurst added.

The survey came months after the Democratic Socialists of America touted a historic increase in membership, coupled with the rise of DSA-affiliated candidates and officials across the country.

Now, in the next Congress, at least five new DSA members will be sworn into the House of Representatives, adding to the growing number of socialist officials like Seattle Mayor Katie Wilson, New York City Mayor Zohran Mamdani, and Rep. Alexandria Ocasio-Cortez, D-N.Y.

Senate candidates Angie Nixon in Florida and Abdul El-Sayed in Michigan also have a fair shot at winning their races this November.

OnMessage revealed the findings after conducting text-to-web interviews and recording historic respondent turnout.

The survey also oversampled voters under 45, resulting in approximately 600 Gen Z and Millennial voters for in-depth analysis.

The margin of error for this survey is +/- 3.5%.

Tyler Durden Mon, 10/05/2026 - 09:45

UBS Says Watch Beaten-Down Consumer Stocks, But Is "Reluctant To Call Outright Bottom"

Zero Hedge -

UBS Says Watch Beaten-Down Consumer Stocks, But Is "Reluctant To Call Outright Bottom"

The Conference Board's Consumer Confidence Index has fallen to its lowest level since April 2014, but UBS equity trader Mark Paski is watching closely for signs of a bottom in beaten-down consumer stocks.

Paski explained:

Some of the US consumer sector's biggest laggards are beginning to outperform despite little improvement in the underlying data, a potential sign that prices may be bottoming before fundamentals. The sector remains deeply unloved, with investors heavily underweight, tax-loss selling still dominating conversations and expectations reset sharply lower over recent months.

Lower rates, easing energy prices and quarter-end positioning helped fuel a bid in discretionary stocks this week, particularly across retail, restaurants and housing-related names. The strongest moves have come in areas where bearish positioning had become most stretched, suggesting flows and positioning are starting to matter more than deteriorating fundamentals.

Investors remain reluctant to call an outright bottom, but there is growing interest in owning select consumer names if confidence in the backdrop improves. That leaves Q4 as a key test. 

While the macro picture remains challenging, the focus increasingly appears to be shifting from how bad conditions are to whether the rate of deterioration is slowing. For many consumer stocks, the debate is no longer about valuation but whether fundamentals can stop getting worse.

The S&P 500 Consumer Discretionary Index is back near the lower base of the highlighted 1,800-to-2,000 trading range after repeatedly failing to sustain a breakout. 

At roughly 1,829, the index is approaching a key test: whether buyers defend the 1,800 area or renewed selling opens the door to further losses. Much of that will likely hinge on where gasoline and diesel prices go from here, as well as the interest rate path. 

Professional subscribers can read more on the consumer here at our Marketdesk.ai portal. 

Tyler Durden Mon, 10/05/2026 - 09:10

Supreme Court To Hear Pivotal Climate Case With Billions At Stake

Zero Hedge -

Supreme Court To Hear Pivotal Climate Case With Billions At Stake

Authored by Kevin Stocklin via The Epoch Times,

The Supreme Court will hear oral arguments on Oct. 5 regarding a lawsuit from Boulder, Colorado, demanding compensation from energy companies for local weather damage allegedly caused by global greenhouse gas emissions.

The question before the court, however, is not whether global warming theories hold water. It's whether local courts throughout the United States should have the authority to extract billions of dollars from energy companies for damage allegedly caused by global emissions.

The energy companies argue that giving such power to local courts would allow municipalities to effectively impose a massive nationwide carbon tax with the potential to bankrupt the U.S. energy industry.

Experts say the court's decision in this case could have a dramatic impact, both on U.S. energy production and on what Americans pay for oil, gas, and electricity.

"It is actually bigger than climate change," O.H. Skinner, executive director of the Alliance for Consumers, told reporters at a pre-hearing conference. "It's about [climate activists'] overall ability to weaponize courts to accomplish policy goals that are sweeping, that are multi-billion dollars in scale, and that could end up with an order that basically rewrites the American economy."

Boulder County originally brought its suit in 2018, charging that the products of Suncor, a Canadian energy company operating refineries in Colorado, and ExxonMobil, the largest U.S. energy company, caused climate-related damage, and that these companies concealed information about those risks.

The lawsuit argues that the defendants are liable under local tort laws for creating a public nuisance, trespassing, unjust enrichment, conspiracy, and failure to warn consumers that use of their products could cause extreme weather events.

In a brief supporting Boulder county's authority to apply local tort law, the American Association for Justice, a nonprofit legal group, wrote that "states have a manifest interest in both applying their own laws when their citizens are affected and in providing residents with a convenient forum for redressing injuries inflicted by out-of-state actors."

The energy companies, and their backers, including the Justice Department, counter that federal law, including the Clean Air Act, precludes, or preempts, state law because the emissions that allegedly cause global warming extend beyond state borders. The Supreme Court will separately consider whether it has jurisdiction to hear the challenge.

Claiming federal preemption, the Justice Department has sued Minnesota, Hawaii, and Michigan to block climate lawsuits brought in those states, and sued New York and Vermont over "polluter pays" climate superfund laws that seek to tax fossil fuel companies according to their CO2 emissions.

"When states seek to regulate energy beyond their constitutional or statutory authority, they harm the country's ability to produce energy and they aid our adversaries," Acting Assistant Attorney General Adam Gustafson said in a statement.

Billions at Stake

Boulder County's suit is one of dozens of climate lawsuits currently moving through courts across the country. While Boulder's lawsuit has not named a dollar figure for damages, a similar climate lawsuit in Multnomah County, Oregon, is claiming $50 billion from Exxon, Chevron, and other energy companies for damages and for an abatement fund against heat waves and wildfires.

Critics of the lawsuits say that, in the wake of failed attempts to pass climate legislation like the Green New Deal, these climate lawsuits are an attempt by activists to achieve a similar outcome through municipal courts.

"They're going around to these cities and states, using tort litigation and public nuisance lawsuits in a coordinated way to effectuate the same result, but without having to go through their democratically elected officials," former Alaska Attorney General Stephen Cox told reporters at a pre-hearing conference. "They're essentially trying to regulate through litigation."

The outcome of the suits, should they succeed, will likely be to drive up the cost of energy for consumers, restrict the use of fossil fuels, and potentially bankrupt oil and gas companies altogether, Cox said.

Oral arguments in the case will begin on Oct. 5, and a ruling is expected some time between late fall 2026 and June 2027. If the Supreme Court allows Boulder's lawsuit to proceed, dozens of other climate lawsuits across the country will likely also proceed to discovery and trial.

If the Court dismisses the suit, "it will kick the legs out from this public nuisance approach," Skinner said. "It would basically conclusively end this type of attack by the left in state courts to reshape our energy industry and our nation."

On Sept. 28, Justice Samuel Alito announced that he would recuse himself from the Boulder case, without citing a reason, creating the possibility of a 4 - 4 split decision.

Litigation Versus Legislation

The proliferation of climate litigation extends well beyond U.S. cities and states. According to a 2025 United Nations Environment Program (UNEP) report, there are more than 3,000 such lawsuits against energy companies worldwide.

"Climate litigation has evolved into a powerful global tool for advancing climate action, and accountability," UNEP's executive director Inger Andersen said in a statement.

However, many U.S. courts have disagreed with this view, ruling that national legislation in which the voting public has a voice is the appropriate way to set national energy policy.

In dismissing climate lawsuits, numerous courts have pointed to federal legislation, in particular the Clean Air Act of 1970, as the proper legal authority on issues that cross state borders. Even in blue states like New York, New Jersey, Maryland, and Delaware, appellate judges have rejected local tort litigation as a tool to address global warming.

In dismissing a New York City lawsuit in 2021, the Second Circuit Court of Appeals stated that local CO2 emissions "may contribute no more to flooding in New York than emissions in China," and that "such a sprawling case is simply beyond the limits of state law."

And in 2024, Baltimore Judge Videtta Brown dismissed the case of Baltimore City v. BP, et al., stating that the suit was an attempt to regulate CO2 emissions and "simply a way to get in the back door what they cannot get in the front door."

One foreign government recently came to the same conclusion. On May 12, New Zealand outlawed climate lawsuits in the country.

On the New Zealand government's website, Justice Minister Paul Goldsmith stated: "The courts are not the right place to resolve claims of harm from climate change, and tort law is not well-suited to respond to a problem like climate change, which involves a range of complex environmental, economic and social factors."

By contrast, state supreme courts in Colorado and Hawaii have ruled that municipal tort law is appropriate in these cases, and have green-lit them to proceed. Before Boulder v. Suncor made its way to the U.S. Supreme Court, the Colorado Supreme Court in 2025 rejected defendants' claims that federal environmental law preempted local jurisdiction.

In order to avoid a conflict with federal regulations, climate litigants have claimed that they are merely seeking compensation for local injuries and that their cases are not intended to regulate emissions.

Presenting arguments in 2025 before Maryland's Supreme Court for climate lawsuits brought by Baltimore, Annapolis, and Anne Arundel County, plaintiff's attorney Victor Sher stated the suit "does not involve capping, regulating or limiting emissions by the defendants or anybody.

"It doesn't involve changing pollution control measures or installing equipment or anything like that by these defendants or anyone else," Sher stated. Rather the lawsuit was about local residents getting compensation for "nuisance, trespass and failure to warn."

Contradicting this claim, David Bookbinder, an attorney who formerly represented Boulder Colorado in its climate lawsuit, stated at a 2025 Federalist Society panel discussion that "tort liability is an indirect carbon tax. You sue an oil company; an oil company is liable; the oil company then passes that liability on to the people who are buying its products.

"The people who buy those products are now going to be paying for the cost imposed by those products," Bookbinder said, calling the lawsuits "a convoluted way to achieve the goals of a carbon tax."

According to Skinner, this process of achieving political goals through litigation, if it succeeds, is unlikely to end with energy companies.

"These cases should matter to everybody," Skinner said. "If they are able to bring lawsuits over energy companies producing oil and gas, then they'll go after utilities, they'll go after car manufacturers making the wrong kind of cars."

A Network Supporting Climate Lawsuits

Although the scientific theories underpinning the lawsuits are not at issue in the upcoming U.S. Supreme Court hearing, critics have charged that a concerted effort has been ongoing both to fund the climate lawsuits and to convince local judges that the plaintiffs' claims have merit.

In January, Reps. Jim Jordan (R-Ohio), chairman of the House Judiciary Committee, and Darrell Issa (R-Calif.), chairman of the Subcommittee on Courts, Intellectual Property, and the Internet, told the Federal Judicial Center in a letter that the manual it produced to educate judges on climate issues included "biased programming" with the "underlying goal of predisposing federal judges in favor of plaintiffs who allege injuries from the manufacturing, marketing, use, or sale of fossil-fuel products."

In a July Truth Social post, President Donald Trump stated that the National Academies of Sciences, Engineering, and Medicine (NASEM), which wrote climate sections of the Federal Judicial Center's manual, had "published fraudulent, biased, and misleading Manuals on Climate Change" and that "taxpayers should not be funding Climate Fraud, and Judges should never have relied upon it."

In September, a coalition of 25 state attorneys general called on the federal government to defund NASEM, stating that it used taxpayer money to produce reports in support of global warming narratives and so-called attribution methodology, which is a way to calculate specific dollar claims of harm to local communities from greenhouse gas emissions.

The Federal Judicial Center has since removed the chapter on climate science from its judicial manual, and NASEM pledged an internal investigation into how its reports were produced.

In addition, a 2024 Senate Commerce Committee report stated that Sher Edling, a law firm that represents more than 20 municipalities in climate lawsuits, will "not only … receive approximately one-third of any amount it extracts from energy companies if it is somehow successful, far-left funds are offsetting any risk the firm would otherwise have in pursuing these absurd claims by bankrolling Sher Edling to the tune of millions of dollars each year."

The report stated that left-wing nonprofits such as the Resources Legacy Fund and the New Venture Fund have given Sher Edling more than $13 million since 2017.

The Epoch Times reached out to Sher Edling for comment but did not receive a response as of publication time.

Tyler Durden Mon, 10/05/2026 - 08:50

Russian Lab Worker's Abrupt Death Sparks Plague Crisis Concerns; Trump Team "Monitoring Outbreak"

Zero Hedge -

Russian Lab Worker's Abrupt Death Sparks Plague Crisis Concerns; Trump Team "Monitoring Outbreak"

With wars in Eastern Europe and the Gulf already sending the world down a dangerous trajectory toward worsening instability ahead of the Northern Hemisphere winter (see the global refining crisis), a suspected plague case at a Russian research institute has added a potential public health crisis to that risk landscape.

Axios reports that a laboratory worker's death in Siberia's Irkutsk region has prompted medical observation of nearly 200 potential contacts.

The Trump administration "is aware, monitoring the outbreak, and assessing options," the outlet said, citing an administration official.

Last week, a 28-year-old worker of the Anti-Plague Institute died of severe pneumonia. Local Russian media outlets reported that the worker may have been exposed to the bacterium responsible for pneumonic plague after breaking a test tube.

Maxim Modin, the mayor of the Shelekhovsky district in eastern Russia, near the Mongolian border, said local authorities have implemented a "comprehensive set of anti-epidemic measures."

According to Rospotrebnadzor, the Russian agency that handles infectious diseases, "no micro-organisms associated with the employee's professional duties were detected in samples taken from the patient," Modin said.

A nearby aluminum smelting plant told staff to wear masks as a precaution last week. The director of the Irkutsk Aluminum Plant, Artem Fominikh, also urged calm and noted that "there are many rumors and conflicting reports circulating."

A US State Department spokesperson told CNN on Sunday that it is aware of the possible plague case in Russia: "We are monitoring the situation closely with the CDC and our other interagency partners. Many details have not been confirmed. We encourage Russian authorities to share accurate information quickly and openly."

Tyler Durden Mon, 10/05/2026 - 08:40

Stock Futures Drift As Attention Turns To European Debt Crisis

Zero Hedge -

Stock Futures Drift As Attention Turns To European Debt Crisis

Futures are lower to start the week and global markets struggle for direction, as political upheaval and mounting concern over Europe’s public finances dampened risk sentiment and sent the euro to a 17-month low against the dollar while the US yield curve twists steeper and USD appreciates. As of 8:00am ET S&P futures are down 0.1% and Nasdaq futures slip 0.2% from their record close on Friday, as most Mag 7 stocks are lower although Nvidia climbs another 0.6% after partner Hon Hai Precision Industry reported better-than-expected quarterly revenue, pointing to sustained and elevated spending on AI infrastructure. In premarket trading, tech is lower with Semis / Memory lagging, Mag7 and Software flat. Intel tumbles 4% after a report on discussions of a potential collaboration between Taiwanese chip giant TSMC and Elon Musk’s Terafab, which Intel joined in April. Cyclicals ex-Energy are flat to Defensives with the market looking to broadening if yields stabilize. Brazil-related names are higher following preliminary election results which show Bolsonaro defeating Lula, and EWZ +11.9% pre-market. The CAC 40 in Paris was the main weak spot in Europe. Asian stocks played catch-up with Friday’s US rally. US bond yields fluctuated, with the short end leading as the selloff in Treasuries showing few signs of abating, and traders on alert for signs of bond market contagion in Europe. German bunds affirmed their haven appeal as they outperformed in Europe. French bonds were mixed, while Spanish debt lagged. Currency markets showed the biggest reaction as the euro dropped 0.5% against the dollar. Commodities are higher led by Ags and Metals with Precious leading Base; crude is lower despite unconfirmed, opposing headlines that the Saudi East/West pipeline has been shut. US economic data slate includes September services PMI (9:45am) and ISM services index (10am). Fed speaker slate empty for the session.

In premarket trading, Mag 7 stocks are mixed: Nvidia climbs 0.6% after partner Hon Hai Precision Industry reported better-than-expected quarterly revenue, pointing to sustained and elevated spending on AI infrastructure (Alphabet unchanged, Amazon -0.1%, Apple -0.2%, Meta -0.2%, Microsoft +0.4%, Tesla -0.3%)

  • Align Technology Inc. shares (ALGN) are down 2.8% after Evercore ISI downgraded the medical-device company to inline from outperform, writing that “the dental macro picture has meaningfully weakened.”
  • Alvotech shares (ALVO) jump 8% after the US FDA approved additional US manufacturing capacity for Simlandi, the biotech’s biosimilar to Humira.
  • CH Robinson Worldwide shares fall 7.8% after the freight broker announced an agreement to acquire peer RXO (RXO +20%) for stock and cash for an implied value of $30.25 per share.
  • Cboe Global Markets Inc. (CBOE) rises 1.8% as it is being upgraded to buy from hold at TD Cowen, which sees an improving outlook for the exchange operator, especially in the wake of it signing an extension of its licensing agreement with S&P Dow Jones Indices.
  • Cenovus Energy Inc. shares (CVE) fall 3.1% after the Canadian energy company agreed to buy Athabasca Oil Corp. for C$12 per share at an enterprise value of C$5.7 billion ($4 billion), with the deal expected to close in December.
  • Cerebras Systems shares (CBRS) rally 4.5% after OpenAI CEO Sam Altman said the company is “a close partner” of OpenAI and the two firms have “a deep engagement pushing on the frontiers of speed.”
  • DraftKings shares (DKNG) are up 4.6% as BofA raises the recommendation on the online sports betting company to buy from neutral, with the analyst citing her more positive view of the predictions markets (PM) impact.
  • Estée Lauder Cos. shares (EL) rise 2.8% as Barclays raised its recommendation on the beauty company to overweight from equal-weight, citing its attractive sales growth and earnings profiles.
  • Harley-Davidson Inc. shares (HOG) are up 5.7% after Citi upgraded the motorcycle company to buy from neutral, writing that an acceleration in retail growth is “tough to ignore.”
  • HubSpot Inc. shares (HUBS) are down 1.4% after Raymond James downgraded the software company to market perform from outperform, citing near-term uncertainty.
  • Mosaic Co. shares (MOS) fall 1.1% after RBC Capital Markets cut its recommendation on the fertilizer firm to sector perform from outperform on delayed phosphate recovery.
  • PTC (PTC) surges 36% after Schneider Electric agreed to acquire the company.
  • Samsara Inc. shares (IOT) are up 0.9% after Jefferies started coverage on the stock with a buy rating and $50 price target, seeing strong AI-related growth prospects for the hardware-software platform.
  • TSMC shares (TSM) gain 1.6% in Taipei on Monday with sentiment boosted by discussions between the Taiwanese chip giant and Elon Musk’s Terafab on potential collaboration, while shares in Intel (INTC), which joined the Terafab initiative back in April, fell 3.9%.
  • Texas Roadhouse Inc. shares (TXRH) are up 2.2% after Evercore ISI upgraded the restaurant chain operator to outperform from inline, seeing a buying opportunity in the wake of recent weakness.
  • US-listed stock of Brazilian companies and firms exposed to the country (NU +13%, BBD +12%) rallied as Flávio Bolsonaro surged to a surprise lead over Luiz Inácio Lula da Silva in the first round of the presidential election.
  • Vaxcyte shares (PCVX) soar 56% after the pharmaceutical firm said that VAX-31, its experimental vaccine to prevent invasive pneumococcal disease (IPD) and pneumococcal pneumonia, met all primary endpoints in the OPUS-1 pivotal Phase 3 adult trial, compared to PCV20 and PCV21.
  • Virtu Financial Inc. shares (VIRT) are up 3.3% after JPMorgan upgraded the market-making firm to overweight from neutral, citing a strong outlook ahead.
  • Wells Fargo & Co. shares (WFC) are up 2.2% after Morgan Stanley upgraded the bank to overweight from equal-weight, seeing “a clearer path to improving profitability in 2027.”

In other corporate news OKX filed with the SEC to launch a tokenized-stock trading platform, making it one of the first major crypto exchanges to take advantage of new US rules. Digger, the last film to be released from Warner Bros. Discovery before its acquisition, was a major disappointment at the box office, taking in $8 million on its opening weekend. CME Group shelved plans to launch a round-the-clock oil contract following industry pushback. In  deals, Schneider Electric agreed to acquire industrial software firm PTC for about $22.6 billion, stepping up its effort to tap into the AI boom. North Sea oil and gas producer Ithaca Energy struck its first international deal, agreeing to buy assets in Canada from Suncor Energy.

US equity futures are slightly lower on the day. Oil slipped after Saudi Arabia cut prices of its benchmark grade to Asia as flows recover, offsetting a lift from intensified fighting in Yemen. Markets are starting the week with strains in Europe firmly in focus after policy gridlock in France sparked a selloff in the region’s more vulnerable debt.  French government bonds are underperforming regional peers, widening the 10-year yield spread with Germany by ~5 bps as budget concerns persist. The unease threatened to spread to Spain on Monday as Prime Minister Pedro Sánchez called an early election amid mounting social protests over housing, sending Spanish bonds slightly lower. Treasuries and bunds are higher as haven-demand provides support, while the euro tumbles to a 17 month lows against the USD. 

“Europe is out of favor with investors and bond market vigilantes are watching developments in the euro zone closely,” said Kathleen Brooks at XTB. “The question now is, will Spain be next?”

As Goldman wrote over the weekend, stocks continue to be disconnected from everything. Equity resilience has a simple explanation, according to Barclays’ Ajay Rajadhyaksha. “The equity market is repricing the earnings power of a technology cycle that comes along once in a generation,” he wrote. In normal times, the forces driving bonds would be expected to eventually spill over into stocks. “But these are not normal times.”

Meanwhile, Brazilian assets were set to jump after Senator Flávio Bolsonaro finished ahead of President Luiz Inácio Lula da Silva in the first round of the election, making him the overwhelming favorite to win, with Brazil likely to see a big shift to the right. Bolsonaro, seen as a more market-friendly name than Lula, had 47% of the vote, compared with the incumbent’s 45%. Fabrício Taschetto at Ace Capital saw the real strengthening some 3%. Retailers, homebuilders, shopping-mall operators and consumer and apparel companies were set to lead the rally, according to Felipe Arslan at Morada Capital.

Strategists at Citi and JPMorgan reckon that strong earnings can keep equities going despite bond market noise. JPMorgan’s Mislav Matejka sees big differences to the 2022 inflation surge, highlighting the tech outlook and backdrop for wages and labor, while Citi strategists forecast about 6% gains for global equities to year-end, driven by earnings growth.

While markets remain fragile, many stocks have already priced in the risk from higher oil and tighter financial conditions, said Alberto Tocchio, a portfolio manager at Kairos Partners.

“If oil stops rising and bond volatility calms, the next move could be less about another Nasdaq-high and more about a much healthier broadening of market participation,” Tocchio said. “France is clearly the main European risk. For now, however, I would still view this primarily as a French rather than a systemic euro-area crisis.”

Macro data and events to watch this week include services ISM this morning, FOMC meeting minutes on Wednesday and University of Michigan sentiment on Friday. The ISM Services PMI should show the economy continuing to expand in September, but at a slower pace, according to Bloomberg Economics, who note regional Fed surveys point to softer activity and demand after August’s strong readings.

Minutes from the Federal Reserve’s September meeting count among the highlights of a week with a relatively sparse economic calendar. Since policymakers raised rates at that meeting, investors have dialed back bets on a second straight increase following softer US jobs data and weaker-than-expected inflation.

In Europe, the Stoxx 600 is up 0.3% while the CAC 40 is falling 1% although that’s largely down to weakness in Schneider Electric shares. Here are the biggest European movers: 

  • European stocks exposed to Brazil rise after Flávio Bolsonaro surged to a surprise lead over Luiz Inácio Lula da Silva in the first round of Brazil’s presidential election. Brazilian assets are set to jump.
  • Santander rose as much as 2.7% before paring gains; Telefonica advanced as much as 2.2%, Carrefour rose as much as 1.7%; all three generate more than 20% of their revenue in Brazil, according to data compiled by Bloomberg
  • Italian financial stocks are on the move after Intesa Sanpaolo said its improved offer for Banca Monte dei Paschi di Siena has won the backing of the target’s biggest shareholder. While shares in Monte dei Paschi, Intesa and Unipol gain, Mediobanca slips.
  • BT shares gain as much as 1.9% after the British telco agreed to buy struggling broadband provider TalkTalk in a deal that will inflict a £400 million hit on the company’s cash position, but should help protect the payments it receives from TalkTalk.
  • Genmab climbs as much as 5%, to the highest since October 2023, after the Danish biotech firm releases Phase 2 data for Rina-S in ovarian cancer. Jefferies says this further de-risks the bull case for the upcoming Phase 3 readout.
  • Air Liquide shares rise as much as 4.1% to the highest since July 27. Analysts reacted positively to the industrial gas supplier’s new strategic targets through 2030, including plans for a €4 billion share buyback program over 2027-2028. This comes ahead of the group’s virtual capital markets day later Monday.
  • Schneider Electric falls as much as 9.2% in Paris, the most since April 2025, as an agreement to acquire PTC draws a cautious initial response from analysts. Concerns center on the size and financing of the transaction, as well as uncertainty over AI disruption and whether the deal can strengthen Schneider’s competitive position.
  • IG Group falls as much as 4%, extending Friday’s 23% selloff, after Panmure and RBC analysts trim estimates and price targets for the stock following the trading platform’s profit warning on Friday.

Asian stocks played catch-up with Friday’s US rally, rising as softer US jobs data alleviated pressure on the Federal Reserve to keep raising interest rates and investors scooped up tech shares. The MSCI Asia Pacific Index climbed as much as 1.3%, the most in about a month, with Taiwan Semiconductor Manufacturing Co., MediaTek and Tokyo Electron as the biggest contributors.  Mainland China and South Korea were closed for a holiday. Other markets traded higher following Friday’s report that showed US employers added fewer workers than forecast in September. Investors are also assessing Middle East developments, after Yemen launched a military campaign to recapture all Houthi-held territory. Shares of TSMC jumped 3% in Taiwan following a report that the chip giant is in discussions with Elon Musk’s Terafab on potential collaboration.

In FX, the Bloomberg dollar spot index rose 0.2%, closing in on its highest level of the year as EUR/USD dropped as much as 0.8% to 1.1611, its weakest since mid-May

In rates, German bunds affirmed their haven appeal as they outperformed in Europe. French bonds were mixed, while Spanish debt lagged. Treasuries fluctuated, with the short end leading.  US yields cheaper by 1bp across long-end of the curve while front-end outperformance steepens 2s10s and 5s30s spreads by 2bp and 1.5bp on the day. US 10-year yields trade near unchanged at 5.27% with gilts lagging by 2bp and bunds, along with French debt, slightly outperforming. Treasuries curve twist steepens with front-end outperforming, where 2-year yields are lower by around 1bp on the day. Price action supported by bigger steepening move seen across German bonds where front-end yields are lower by 5bp on the day, along with WTI futures which trade down 1%. German bunds affirmed their haven appeal as they outperformed in Europe. French bonds were mixed, while Spanish debt lagged. Treasuries fluctuated, with the short end leading. IG dollar issuance slate empty so far. Dealers are expecting around $100 billion in new debt sales for October, compared with $195 billion seen in September. Multiple issuers stood down last week as unfavorable credit conditions kept funding costs elevated. Treasury auctions this week kick off Tuesday with $58 billion 3-year notes, followed by $39 billion 10-year and $22 billion 30-year reopenings Wednesday and Thursday

In commodities, Brent crude swung between gains and losses as traders remained wary of disruptions to Middle East flows. While Saudi Arabia cut prices of its benchmark grade to Asia, the kingdom’s state producer warned about the risk of low stockpiles and fighting in Yemen intensified. WTI futures lower by around 0.70%. Precious metals are advancing, with spot silver up over 2%.

US economic data slate includes September services PMI (9:45am) and ISM services index (10am). Fed speaker slate empty for the session

Market Snapshot

Top Overnight News

  • Oil fluctuated in jittery trading, as Saudi Arabia cut prices of its benchmark grade to Asia, the kingdom’s state producer warned about the risk of low stockpiles and as fighting in Yemen intensified: BBG
  • Yemen’s internationally recognized government launched a full-scale military campaign to recapture Houthi-held territory after weeks of escalating conflict between the Iran-backed group and Saudi Arabia: BBG
  • Flávio Bolsonaro surged to a surprise lead over Luiz Inácio Lula da Silva in the first round of Brazil’s presidential election, making him the overwhelming favorite to win the runoff and take Latin America’s biggest economy sharply to the right: BBG
  • The euro fell to its weakest level since May 2025, as France’s deepening fiscal crisis and the prospect of fresh political upheaval in the region rattled European markets: BBG
  • Spanish PM Sanchez gambles on snap election to end parliament deadlock: BBG
  • Democrats Inch Into Red Territory, but Have Problems on Home Turf: WSJ
  • Intel stock slides as TSMC explores Terafab tie-up, analyst flags share losses: RTRS
  • Savills’ Prime London index is down about 27% since its peak in 2014, as a cocktail of taxes, political and economic shocks have created more than a decade of misery for the owners of the city’s finest homes. When combined with the consumer price index, the real-terms drop is more than 49%: BBG
  • US goes into midterm elections with a less dynamic form of full employment: RTRS
  • US Senators Warren (D) and Hawley (R) are reportedly beginning a probe into how home and auto insurers process claims: WSJ.
  • US Army tests counter-drone tech at Mexican border as cartel drone use rises: RTRS
  • All B-1 Bombers Returning to U.S. From U.K. Base: WSJ
  • Bank Stocks Are Haunted by the Ghosts of 2023: WSJ

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the week mostly higher in holiday-thinned conditions and following the gains last Friday on Wall St, where stocks were underpinned as Fed rate hike bets were unwound in a knee-jerk dovish reaction to the weak jobs data. ASX 200 eked marginal gains with upside in miners, materials and healthcare helping keep the index afloat, although gains were limited by weakness in utilities and consumer stocks. Nikkei 225 rallied and briefly reclaimed the 70,000 level amid strength in tech stocks, which seemed to also benefit from the holiday closure in South Korea. Hang Seng lagged amid the continued absence of mainland participants and stock connect flows, while automakers were also pressured following reports that the UK is considering imposing tariffs on Chinese electric vehicle imports amid concerns that Beijing is flooding the market with state-subsidised cars.

Top Asian News

  • Brazilian President Lula won around 45.2% of votes, and Flavio Bolsonaro won around 47% of votes in the first round of Brazil's Presidential Election and will head into a runoff on October 25th. Brazil's President Lula said it was an unexpected result and he was convinced that he would win in the first round, while Bolsonaro said he is very happy with the results and that Brazil wants change.
  • Japanese PM Takaichi said that realising strong, lasting growth is her starting point and will achieve virtuous cycle through GDP growth. Takaichi said that they will seek to draw in domestic investment with massive long term fiscal expenditure, deployed in a well-planned and predictable manner. On debt, she said the government will control the annual debt issuance amount appropriately while scrutinizing the economy, prices, tax revenues, interest rates, debt servicing costs and market developments.

European bourses start the week mixed, with Spain's IBEX 35 outperforming after Brazil’s Bolsonaro took a surprise lead over current President Lula in the Presidential Election. A factor which has helped buoy those companies with exposure to Brazil. Elsewhere, France's CAC 40 lags following recent M&A and broker updates in the luxury sector. Sectors highlight a positive bias. Chemicals lead, with Optimised Personal Care and Food, Beverages & Tobacco following, while Industrials is the only sector in the red.

Top European News

  • Spanish PM Sanchez called for an early election, to be held on November 29th, after the government failed to pass a housing bill through the Spanish Congress.
  • UK government is to announce plans for a social media ban for under-16s in the coming weeks amid concerns that children are being exposed to harmful content, according to The Times's Swinford.

FX

  • Snapshot: G10s are mixed against the USD, with the Aussie leading whilst the EUR lags on regional political woes.
  • DXY is a touch firmer this morning and trades within a 101.85 to 102.53 range. Upside is broadly facilitated by a weak EUR, which has been pressured by ongoing French fiscal woes. The narrative is that the latest Budget proposal from PM Lecornu is not sufficient to solve the fiscal situation in France; moreover, the French budget watchdog suggested that current growth assumptions for the plan are optimistic. In the near term, focus will be on whether the draft budget can be passed; as it stands, National Rally Leader Le Pen has voiced her support to amend the current draft, rather than outright block it. Her aim would be to show fiscal responsibility ahead of the 2027 Presidential election. Should the draft budget fail, the likely option for Lecornu is to invoke Article 49.3.
  • France aside, there has also been some focus on Spanish politics; PM Sanchez announced an early election for November 29. This comes after he failed to pass emergency housing bills through Congress, which has led to some unrest within the region. The EUR was ultimately little moved on the announcement itself. As it stands, the ruling coalition is losing in polls, with the People’s Party leading with 34%. Sanchez is likely banking on using the blocking of the housing bill by the far-right in his party’s favour; however, other key talking points such as immigration and the economy remain at the forefront of minds.
  • JPY held firmer for much of the overnight action, but has held around the unchanged mark throughout the European morning. Initial strength was perhaps associated with positive commentary from PM Takaichi, where she told markets to “rest assured” over the country's spending plans; she essentially pledged fiscal discipline.

Central Banks

  • ECB's Lane said underlying inflation indicators indicate that an upward shift in medium-term inflation has not taken hold but that the recent surge in energy prices can be interpreted as a second wave of the energy supply shock, following the initial jump at the start of the Middle East conflict and the temporary fall-back during the summer. This second wave of the energy supply shock poses direct upside risks to the inflation outlook but also downside risks to the growth outlook. In any event, the overall size and duration of the energy supply shock remain highly dependent on geopolitical developments. Lane reiterated the meeting-by-meeting and data-dependent basis.
  • ECB's Nagel said the inflation outlook faces upside risks and that uncertainty requires a flexible response rather than inaction while there is currently no clear signs that inflation has fed through into price or wage setting.
  • BoJ Deputy Governor Uchida said adoption of AI might have positive and negative implications for productivity and labour markets, while he added that AI has become a key topic of discussion among central banks, including at the BoJ's monetary policy meetings. Furthermore, he said AI has implications for several key monetary policy variables, including the output gap, financial conditions and neutral-rate measures, as well as noted that AI represents a strong positive demand shock, adding upward pressure to both the economy and prices, while it could also influence the supply side, potentially in a positive way by lifting productivity and supporting capital accumulation.

Fixed Income

  • A mixed start to the week for fixed income. USTs are near-enough flat despite the numerous key energy/geopolitical updates this morning, looking ahead to the ISM print for more timely insight after Friday’s weak Payrolls. Currently, USTs are in a narrow 104-10 to 104-13+ parameter, well within the 104-07 to 105-08 band from Friday.
  • Focus this morning, energy/geopolitics aside, has been firmly in Europe. Firstly, OATs find themselves under further pressure as the fiscal situation remains fraught and is likely to continue to be so well into next year, a point that has spurred much commentary around ECB-level intervention in the market. Perhaps more likely, the weakness in European fixed income, particularly if the OAT situation reverberates through the periphery, could dissuade some from supporting a back-to-back hike in October.
  • OATs hit a 108.32 low, down by c. 60 ticks, but have since lifted modestly off that to around 108.55. This morning, the OAT-Bund 10yr yield spread hit a 147bps high today, just shy of the 151bps peak from last week.
  • Competing with France for the limelight is Spain. After a period of speculation, PM Sanchez has started the process to hold early elections on the 29th of November. Once again, opposition PP is ahead in the polls, but incumbent Sanchez will be banking on the housing bill dispute and the relatively limited chance of PP and moderate parties coming to a coalition agreement.
  • Bonos not too reactive thus far, as the early election was on the cards. However, it adds to the fractured European backdrop at the moment and provides further political risk to the region. Bono-Bund hit a 66bps peak today, just shy of the c. 70bps high from last week, which printed alongside the French action.
  • Finally, for the UK, domestic updates are comparably light as we count down to the budget. Action is instead driven almost entirely by the energy moves, with Gilts currently lower by around 30 ticks but around 10 off worst levels.

Commodities

  • WTI Nov and Brent Dec futures have pared some of the earlier downside following fresh supply and geopolitical developments. The complex initially remained pressured by Friday’s G7 agreement to release 100mln bbls of diesel and crude from emergency reserves, Trump ruling out a US diesel export ban and Kpler data showing Middle East oil exports exceeded pre-war levels last week. OPEC+ also kept November production quotas unchanged, while Saudi Aramco surprisingly cut its OSP to Asia to a USD 5/bbl discount (exp. USD 5/bbl increase).
  • The complex caught a bid this morning after AFP sources reported that Saudi Arabia’s East-West oil pipeline halted pumping following a new attack, with “big damage” reported, while Iranian Armed Forces Chief of Staff Major General Abdollahi warned that if a new war is launched against Iran, its consequences will engulf everyone. Focus also remains in the Bab al-Mandeb Strait, after Yemeni government forces now say they have successfully taken control of Bab al-Mandab after earlier claiming to have seized Dhubab, although the Houthis deny this.
  • WTI rebounded from a USD 89.31/bbl low towards USD 92/bbl, within a USD 89.31-91.88/bbl range, while Brent recovered from a USD 100.65/bbl low to above USD 103/bbl, within a USD 100.65-103.40/bbl range. Dutch TTF is modestly firmer in relatively contained trade and resides within a EUR 74.20-76.52/MWh range.
  • Precious metals are firmer but to varying degrees, with spot gold relatively contained within Friday’s range following post-NFP volatility, as the softer jobs report prompted markets to pare near-term Fed hike expectations, while the subsequent Dollar rebound limits upside. Spot gold trades within a USD 4,124-4,170/oz range, while spot silver outperforms within a USD 60.37-61.79/oz range.
  • Base metals are modestly firmer as the reduction in near-term Fed hike expectations provides some support, although upside remains capped with mainland China absent for the National Day holiday and therefore little participation from the complex’s largest consumer. 3M LME copper trades within a narrow USD 14,281.83-14,388.38/t range.
  • Saudi Arabia's East-West pipeline is flowing as normal, Bloomberg reported citing sources. It was earlier reported by AFP that Saudi Arabia's East-West oil pipeline pumping reportedly halted after a new attack by the Houthis over the weekend.
  • Saudi Aramco CEO said oil market pressure will worsen until the Strait of Hormuz reopens, refilling global oil stockpiles could take two years after the reopening of the Strait and that global oil releases provide only temporary relief for markets. The CEO added that global oil demand needs to rise by at least 2mln BPD over the next 18 months to draw down current inventories. Oil demand is recovering and inventories need replenishment. On Brent, the CEO forecasted that it could have reached USD 200/bbl without the East-West oil pipeline.
  • Saudi Arabia set November Arab light crude oil OSP to Asia at a discount of USD 5/bbl vs Oman/Dubai average, while it set the OSP to Northwest Europe at a premium of USD 0.85/bbl vs ICE Brent, and set the OSP to the US at a premium of USD 4.60/bbl vs ASCI.
  • Major OPEC+ producers agreed to maintain oil production quotas at current levels for November, according to delegates.
  • ConocoPhillips (COP) sees US oil production exceeding 14mln BPD in 2027 if prices remain at current levels.
  • Asian gold producers reportedly began hoarding supplies following recent increases in prices and are stepping up efforts to capture more of the value from gold boom through increased refining or discouraging exports through taxes or central bank purchases
  • The EU would “significantly limit” Ukraine’s access to the EU’s agricultural markets and lucrative farming subsidies if Kyiv became a member of the bloc, according to proposals for EU enlargement cited by FT.

Trade/Tariffs

  • US President Trump said on Friday that they didn't jump the gun on the Alaska pipeline and warned if Korea doesn't do the pipeline, they will charge South Korea more.
  • The UK is reportedly preparing plans to impose import tariffs on Chinese EVs to meet a key demand from the EU to ensure it remains part of the Made in Europe local-content rules, The Times reported.

Geopolitics: Iran

  • A US official told Semafor that there is a real possibility that Iran may want to inflict some pain on US President Trump before the midterms, and that Iran may do something in the next couple of weeks.
  • The US removed all its B-1 bombers from the UK's Fairford air base amid security concerns, while Axios reported that a US official said the base was under threat of attack by Iran.
  • Iran said the Strait of Hormuz will not reopen until its conditions are met.
  • Iranian Foreign Minister Aragchi stated that Iran is serious and firm in both defending itself and advancing diplomacy, while he emphasised that if the enemies once again take the path of military confrontation, they will face a stronger response than in the past, but noted Iran remains ready to achieve a just and honourable solution through diplomacy.
  • Iranian Foreign Ministry senior official said Iran is reviewing Washington’s response to the 7-day proposal sent through intermediaries, as other officials offered differing assessments of whether further negotiations with the US were needed, according to Iran International.
  • IRGC's Commander-in-Chief Advisory Group head Fadavi warned that if the US launched a ground attack, Iran will target vessels, bases and any place belonging to the US, while he also stated that Iran has not even wasted a day to strengthen its military capability.
  • Pakistan's Deputy PM and Foreign Minister, Federal Minister of Defense and Chief of Army Staff will pay an official visit to Riyadh, Saudi Arabia on Monday to attend a meeting of the SPDC established under the Makkah Joint Defence Agreement.
  • Yemeni Government Forces said they have successfully taken control of Bab al-Mandab, while the Houthis denied that government forces made any progress.

Geopolitics: Ukraine

  • Ukrainian President Zelensky said Ukraine will strike Russian refineries in response to Moscow's "new doctrine" of airstrikes. In response, Russia's Kremlin said Ukraine will “pay the price” if it strikes Russian oil refineries.
  • Russia said it would intensify attacks on Ukrainian infrastructure, while the Russian Foreign Ministry separately warned that diplomats and foreign officials in Kyiv were in mortal danger.
  • Russia said it struck a cargo vessel off Odessa and downed 559 drones. It was also reported that Russia struck an infrastructure facility in Zaporizhzhia, although there were no preliminary reports of casualties in the Zaporizhzhia attack, according to Novyny Live.
  • German Foreign Intelligence Chief said Germany is at risk of getting into a violent conflict with Russia and that Russian President Putin has passed the point where he could simply stop the war with Ukraine without risking his own power.

US Event Calendar

  • 9:45 am: Sep F S&P Global US Services PMI, est. 58.7, prior 58.7
  • 9:45 am: Sep F S&P Global US Composite PMI, est. 58.3, prior 58.4
  • 10:00 am: Sep ISM Services Index, est. 55, prior 55.4

DB's Jim Reid concludes the overnight wrap

The French situation will dominate markets in the early part of this week. Last week the Franco-German 10yr spread widened by +32bps to 141bps, which is the biggest weekly widening in available Bloomberg data back to 1990, the year of German reunification. At one point on Friday, the spread hit +160bps so we were on the edge of a mini panic. Ironically, the weak US payroll print seemed to turn things around as some global rate hikes got priced out. The big question is whether this is the start of a new euro sovereign crisis or whether markets have already overshot. After listening to Friday’s excellent DB webinar on France that had 600 listening in, my bias is towards the latter — although I suspect markets may continue to force political responses in the near and medium-term. France’s fiscal problem is real and has been building for years, but that is why the timing of the latest move is so interesting: there has been little genuinely new in the fundamentals. Instead, an aggressive ECB hiking cycle had been priced into a market where leveraged investors had become comfortable owning French front-end carry. Once OATs started to see large VAR swings, that positioning was flushed out and the move became disorderly. DB’s rates team now sees OATs as around 40-50bps cheap even relative to France’s already weak fundamentals. So the house view is not that France suddenly looks healthy; rather, a very large political-risk premium is now embedded in prices and the eventual political outcome may be less damaging than the market fears.

What happens next could therefore be quite different from the early stages of the euro crisis. The pressure itself may become the circuit breaker. Higher French yields are already tightening financial conditions and should make it progressively harder for the ECB to deliver the hikes markets had been pricing; DB economists see the terminal rate nearer 2.75%, perhaps 3%, rather than the 3.5% priced in 8 business days ago and 3.20% now. Interestingly, around the weakest point on Friday when the France-German 10yr spread hit +160bp, the ECB terminal rate slumped to 3.01%. So France and the ECB cycle are inextricably linked at the moment.  

Meanwhile the French budget is more likely to pass than in the last two years, RN is increasingly trying to establish fiscal credibility, and French banks enter this episode with much less of the sovereign-bank feedback problem seen in earlier peripheral crises. None of that means the lows in French assets are necessarily in — our strategists are not yet comfortable simply buying OATs outright — but the faster contagion develops, the greater the pressure on French politicians to produce credible spending reform and on European institutions eventually to provide a backstop if markets materially overshoot fundamentals. In other words, there is a plausible path where things get worse before they get better, but where the sell-off itself accelerates the solution.  

So far this morning the Euro has seen a relatively large slide for this time of day, trading -0.72% lower. However European equity futures are fairly flat alongside US futures. There has been talk overnight about the Spanish government calling for an early election after being defeated in two housing bills on Friday. We may know as soon as today. So another topic to watch in Europe.

Elsewhere, Brazil’s election delivered a sizeable surprise overnight, with right-wing Senator Flávio Bolsonaro finishing ahead of President Lula in the first round and the contest now heading to a run-off on October 25. With virtually all votes counted, Bolsonaro had around 47.0% of valid votes against roughly 45.1% for Lula, having gone into the weekend with private polls generally showing Lula ahead. The result was accompanied by a strong showing for the right in congressional races, with our LatAm team noting that right-leaning parties increased their share of Senate seats from 47% to 63%. Brazilian assets are likely to open strongly today with equity ETFs trading as much as 10% higher in Asia, while our LatAm rates strategists expect a broad rally in DI rates of around 100bp as election premium unwinds and favour front-end receivers.

In Asia, the Nikkei (+2.53%) is leading gains, with technology stocks again benefiting. Elsewhere, the S&P/ASX 200 (+0.14%) and the Hang Seng (+0.02%) are quiet. South Korea’s equity markets remain closed for the National Foundation Day holiday, while mainland Chinese markets will be shut until Thursday.  

Early morning data showed that growth in Japan’s services sector slowed in September and came in below expectations, as weaker business activity and softer new orders offset stronger employment growth. The Services PMI declined to 51.3 in September from 52.5 in August.

Given the high stress and high alert in bond markets, the main focus in the week ahead will be on central banks, with the minutes from the September FOMC meeting on Wednesday and the ECB’s account of its latest meeting on Thursday. There is also a busy run of central-bank speakers, while the data calendar includes US ISM services today and the University of Michigan survey on Friday, a run of German activity data through the week, and Japanese wages on Wednesday.  

In the US, the week begins in the shadow of Friday’s important September employment report. Headline payrolls rose just +29k, compared with +133k expected, while private payrolls increased +46k versus +127k expected. There were also 60k of downward revisions to headline payrolls over the previous two months, and average hourly earnings rose only +0.1% against +0.3% expected. Nevertheless, our US economists think the details still point to a broadly stable labour market. The unemployment rate edged up only slightly to 4.175% from 4.141%, the broader U-6 rate fell a tenth to 7.6%, and participation rose two-tenths to 61.8%, its highest since May last year. Prime-age participation and the employment-to-population ratio also recovered further after their unusually large June declines. So although the headline payroll number was disappointing, the wider labour-market picture remains relatively resilient, particularly alongside recent ADP and jobless-claims readings, and our economists continue to expect two further 25bp Fed hikes over the next couple of quarters. The market is pricing in another 86bps over the next 12 months, down from 100bps early last week but up from 70bps just after the payroll release. So lots of vol on Friday in rates and fixed income as we'll see in the review of the week at the end.  

The highly unsettled bond market makes the incoming US data and Fed communication particularly relevant. The first key release is the September ISM services index today, where our economists expect the headline gauge to rise to 55.9 from 55.4 in August. Tomorrow brings the August trade balance, while Wednesday’s September FOMC minutes should provide more colour on the near-term policy outlook. Since the meeting, Fed communication has broadly reinforced the quarterly pace of rate hikes implied by the September SEP. Vice Chair Jefferson and New York Fed President Williams have both indicated a preference to take some time to assess incoming data before deciding on the next move, but several officials have continued to argue for additional tightening. So the minutes will be worth watching for how the broader Committee is framing the current tightening cycle and for its discussion of the neutral rate, where estimates shifted higher in the September SEP.

The rest of the US calendar is lighter. Thursday brings initial jobless claims and August wholesale trade sales, before attention turns to the preliminary October University of Michigan survey on Friday. Our economists expect consumer sentiment to be broadly unchanged at 48.0, versus 48.1 in September. The survey may attract some extra attention with the November 3 midterm elections approaching. More broadly, our US economists currently estimate Q3 real GDP growth at 3.3% annualised, and this week’s activity data will help refine that estimate.

Moving to Europe, the ECB publishes the account of its September meeting on Thursday, alongside a packed speaker calendar. It'll be interesting to see whether the French situation gets prominent mentions. Germany has a particularly busy run of activity data, with August factory orders tomorrow, industrial production on Wednesday and the trade balance on Thursday. France releases August industrial production tomorrow, while Italy follows on Friday. Sweden publishes September CPI on Wednesday and Norway on Friday. In the UK, the BoE releases its Bank Liabilities and Credit Conditions surveys on Thursday, when Governor Bailey is also due to speak.
In Asia, Japan is the main focus. August labour cash earnings are released on Wednesday, with our Chief Japan Economist expecting same-sample total cash earnings growth to accelerate to 3.6% year-on-year from 2.9% in July. The September Economy Watchers survey follows on Thursday and August household spending on Friday. China’s September foreign-exchange reserves are also due on Wednesday.

Recapping last week now and of course the big story was the European contagion, with genuinely historic moves in spreads last week. As we noted at the top, the Franco-German 10yr spread widened by +32bps last week to 141bps, which is the biggest weekly widening in available Bloomberg data back to 1990. Similarly in Italy, the 10yr spread over bunds widened +23bps to 114bps, the biggest weekly jump since April 2020 during the initial wave of the Covid-19 pandemic. There were also big moves in absolute yield levels too, with Germany’s 10yr bund down -14.0bps to 3.46%, its biggest weekly decline since the week of the Liberation Day tariff announcements in April 2025. And in turn, that had knock-on effects elsewhere, with the STOXX 600 down -1.14% despite a +0.75% rebound on Friday, whilst France’s CAC 40 fell -2.24% (+0.79% Friday). Meanwhile, the Euro itself weakened -1.19% against the US dollar.  

Given the financial contagion, there was growing doubt about whether central banks would hike again in October. And that was cemented after the US jobs report for September was softer than expected. So that led investors to dial back rate hike pricing, with the chance of a Fed hike in October falling from 64% to 23% over the week, whilst an ECB hike in October went from 42% to 14%. Nevertheless, the wider bond selloff still pushed the 10yr Treasury yield up +11.0bps over the week to 5.27%, its 5th consecutive weekly rise. The volatility on Friday was significant with 10yr US yields trading as low as 5.155% just after payrolls.

Whilst geopolitics wasn’t the biggest market story last week, oil prices continued to move slightly higher. Looking at Brent crude, prices were up +4.94% last week to $102.25/bbl, using the December contract for consistency given the roll. But there was some relief for refined products, with European diesel prices falling -7.31% (-6.62% Friday) as the G7 on Friday announced a plan to release as much as 100 million barrels of oil and diesel reserves.  

Meanwhile, US equities were relatively steady, with the S&P 500 only down -0.27% on the week. However, there were big swings over the week, with the index falling at the start, before a +0.73% jump on Friday after the jobs report led to a dovish repricing. Finally, credit spreads widened on both sides of the Atlantic, with US IG (+2bps) and HY (+12bps) widening, while Euro IG (+14bps) and HY (+47bps) saw their biggest weekly jump since the post-Liberation Day sell off last April.

Tyler Durden Mon, 10/05/2026 - 08:38

US Pulls Entire B-1 Supersonic Bombers From UK Base After Suspected Iran-Linked Terror Plot

Zero Hedge -

US Pulls Entire B-1 Supersonic Bombers From UK Base After Suspected Iran-Linked Terror Plot

The Wall Street Journal reported late Sunday afternoon that all US Rockwell B-1 Lancer supersonic bombers had been removed from Britain's RAF Fairford air base over mounting security concerns following a suspected terrorist plot against the facility one week ago.

The Department of War confirmed to the news outlet that all supersonic, variable-sweep-wing heavy bombers deployed to Fairford had returned to their home stations in the U.S.

"While operational security precluded us from confirming the movement of our assets and forces in real-time, we can acknowledge now that all U.S. bombers that were deployed to RAF Fairford have redeployed to their home stations in the United States," the DoW said in a statement, adding that the bombers remained ready to deliver global strike capabilities from the US.

Reuters published more details about the suspected terror plot on Saturday, reporting that British counterterrorism police had detained a 25-year-old dual UK-Iranian national last week on suspicion of preparing terrorist acts. The man has since been released.

"The investigation into the circumstances surrounding events in Gloucestershire is continuing," police said in a statement.

The terror plot investigation began after five British men in their 20s were arrested near the air base last Sunday.

Officers found petrol in the vans but no improvised explosive device. Police released the men on bail without charge, under stringent conditions.

Prime Minister Andy Burnham said the incident might have an Iranian link, while President Donald Trump alleged it was a big plan to cause a lot of damage at the base. Secretary of State Marco Rubio also suggested foreign involvement.

Tyler Durden Mon, 10/05/2026 - 08:30

Navarro: The Jobs Report Reveals Federal Reserve Election Interference

Zero Hedge -

Navarro: The Jobs Report Reveals Federal Reserve Election Interference

Authored by Peter Navarro via RealClearMarkets,

CNBC and Yahoo Finance called the jobs report a miss. Fox said it was lower than expected. More bad analysis from a Keynesian financial press that has shown extraordinary supply-side ignorance throughout the Trump 47 term.

The deeper story is indeed more complicated - and considerably more reassuring.

Start with the unemployment rate. It rose a tenth not because people lost jobs but because people came looking for them. The labor force participation rate jumped two tenths to 61.8 percent, well above expectations.

Behind the curtain, the share of prime-age Americans holding a job rose three tenths to 80.7 percent; for prime-age men, four tenths to 86.2 percent. When more people enter the labor force than the economy can hire in a single month, the unemployment rate rises. That is not weakness. That is Americans coming off the sidelines.

Now the headline number itself. Wall Street still reads payrolls through a Biden-era lens, when open borders swelled the labor force and the economy had to create well over 100,000 jobs a month just to stand still.

That world is gone. With the border secured and the population aging, the breakeven pace of job creation - the number that holds unemployment steady - has fallen to roughly 40,000 a month by most estimates, and the Dallas Fed puts it near zero. This month's 29,000 is well within the neighborhood of breakeven.

Now consider the composition: private employers added 46,000 jobs in September while government shed 17,000. Under Biden Wokenomics, government hiring padded the headline month after month. Under Trumpnomics, the private sector carries the load and the public payroll shrinks. That is exactly the right direction.

Then there is the industrial turn, which the headline - and the anti-Trump media - hides every month and which matters most. Manufacturing added 9,000 jobs in September, bringing this year's gain to roughly 72,000, after the sector lost more than 200,000 jobs in the last two years of the Biden administration.

Ahead of those production jobs comes the construction that makes them possible. Nonresidential specialty trade contractors, the electricians, pipefitters and concrete crews who build factories, added 12,300 jobs in September and are up nearly 112,000 since January 2025.

The factory-construction numbers of 2025 and 2026 are the manufacturing payrolls of 2027 and 2028. Real fixed private investment, up 2.3 percent in 2024 and 3.8 percent in 2025, is running at a 6.9 percent annual rate this year.

And a MAGA White House - built on blue-collar America - loves this: the unemployment rate for Americans without a high school diploma has fallen two and a half points over the year to 4.3 percent, the lowest on record.

Moreover, initial jobless claims, measured against the size of the workforce, are the lowest since the data began in 1967. Employers are holding on to the workers they have.

Nominal weekly earnings for manufacturing workers are up 5 percent, too, over the year, nearly 6 percent for production and nonsupervisory workers, while construction workers' earnings are up 4.7 percent.

Against the latest CPI - 3.4 percent headline, 2.4 percent core - those gains are comfortably positive in real terms, roughly 1 to 2½ percent after inflation. Solid, and no sign of a wage-price spiral.

Yet the newly minted Warsh Fed hiked rates in September into the teeth of an oil shock, breaking the Greenspan-Bernanke-Navarro rule: watch the second-round effects of an energy spike before you attack the first round.

This jobs report is the second-round evidence. There is no demand-side inflation for a rate hike to cure, and NOTHING in Friday's report offers a reason to tighten again in October.

Which raises the question: who is really running the Fed? The Trump-appointed chairman, who certainly must know better than to hike rates now? Or is Warsh leading from behind, appeasing a group of partisan anti-Trump Fed governors?

Remember that on September 18, 2024 - 48 days before Election Day - the Fed cut the federal-funds target by 50 basis points, from 5.25-5.50 percent to 4.75-5.00 percent. It was the first rate cut since March 2020. It was larger than the quarter-point move most forecasters expected, and it was a blatant attempt to help a hapless Kamala Harris beat Donald John Trump.

Now the Fed is interfering again, this time in the midterm elections. The September 16 hike has come again 48 days before Election Day - the same 48 days as in 2024. How other than politics do you explain a Fed rate hike on the eve of an election unsupported by the data and in flagrant violation of the Greenspan-Bernanke-Navarro rule?

There, I said it. And it damn well needs to be said.

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

Left Under Pressure: Bolsonaro Leads Socialist Lula In Brazil As Spain's Sanchez Calls Snap Elections Amid Turmoil

Zero Hedge -

Left Under Pressure: Bolsonaro Leads Socialist Lula In Brazil As Spain's Sanchez Calls Snap Elections Amid Turmoil

Political developments in Brazil and Spain overnight are adding volatility to certain overseas markets, highlighting mounting pressure on failing left-wing regimes. 

In Brazil, right-wing Senator Flávio Bolsonaro's first-round lead over socialist President Luiz Inácio Lula da Silva significantly strengthens his position heading into the Oct. 25 runoff. A Bolsonaro victory would shift Latin America's largest GDP to the right, reinforcing a broader regional once-in-a-generation realignment from unhinged leftist regimes to common-sense right-wing governments.

Brazil's political pendulum is swinging right after years of toxic socialism, and investors are cheering on Monday morning: 

BANKS, FINANCIAL FIRMS

  • Banco Bradesco: +10%
  • Itau Unibanco Holding: +11%
  • NU Holdings: +9.5%
  • Inter & Co.: +11%
  • Banco Santander (Brasil): +3.5%
  • PagSeguro Digital: +14%
  • StoneCo: +12%
  • PicS: +6.2%

STEEL, METAL & MINING

  • Companhia Siderurgica Nacional: +9.5%
  • Vale: +6.5%
  • Gerdau S.A.: +7.0%

AERO, OIL & GAS AND OTHER SECTORS

  • XP Inc.: +15%
  • Ambev: +8.4%
  • Embraer: +6.3%
  • MercadoLibre: +7.0%
  • Telefonica Brasil: +8.1%
  • Companhia Energetica de Minas Gerais: +7.0%
  • Companhia Paranaense de Energia: +5.8%
  • Petroleo Brasileiro: +7.0%
  • Ultrapar Participacoes: +7.2%
  • Cia de Saneamento Basico do Estado de Sao Paulo (SABESP): +9.7%
  • TIM S.A.: +6.8%

Bolsonaro captured 47% of the vote against Lula's 45.2%, with counting completed, as conservative allies dominated races across the country.

Via Bloomberg:

Polymarket:

"The magnitude of the first-round win by Flávio will come as a surprise to financial markets, and given the light positioning by foreigners, I would expect a meaningful rally in the near term as investors begin to price in a change in government, a shift in policy direction, a potential reform agenda and a reduction in fiscal risk. From a stock perspective, watch SOEs, beta and rate-sensitive names as the market starts to price in a faster reduction of interest rates in 2027," UBS analyst Justin Wensek wrote, adding, "Market reaction: Risk-on, blue-sky scenario starting Monday."

Goldman Sachs one-delta desk head Rich Privorotsky noted, "Flávio Bolsonaro 47.0%, Lula 45.2%… substantially better for the market than expected. Brazil should be up a lot today and the market will now front-load the second round. Worth looking through the 2nd-order Brazil plays across Europe. At least initially this should be supportive for BRL, domestic equities and risk assets across the geography."

A Bolsonaro victory later this month would cement Latin America's largest economy's rightward shift and politically transform the entire continent in just a few short years. It's fascinating to watch this shift unfold as USAID funding has dried up.

Then, in Spain, Socialist Prime Minister Pedro Sánchez called a snap election for Nov. 29 after parliament rejected an emergency housing package, deepening a political crisis fueled by anti-left sentiment, the migrant invasion of Ceuta, and corruption scandals.

Spain's 10-year government bond yield was little changed at 4.08%, while its spread over German debt widened three basis points to 65 basis points. The euro fell 50bps to $1.1197 amid broader concerns over fiscal and political risks in the currency bloc.

In France, President Emmanuel Macron's approval rating has collapsed amid unrest involving far-left groups and migrants, adding to his political vulnerability and strengthening Marine Le Pen ahead of next year's presidential election.

From Brazil to Spain and France, the common understanding here is mounting voter anger at the socialist and left-wing regimes that have been nothing but disastours for the West. With USAID funding curtailed and progressive policies facing a growing backlash, the right has taken advantage of an open window to gain political ground and turn frustration into electoral gains. 

Taken altogether, the West is pushing back against socialist and pro-China governments. Latin America's full rightward shift hinges on Brazil's runoff results later this month, while Europe has seen right-wing political movements gain ground, especially in Germany with AfD's rise. Nomura expects that Europe "lurches" right over the next year or so of elections. 

Tyler Durden Mon, 10/05/2026 - 07:20

Vistra In Line For $4 Billion Nuclear Loan As Washington’s Lending Spree Continues

Zero Hedge -

Vistra In Line For $4 Billion Nuclear Loan As Washington’s Lending Spree Continues

The Trump administration plans to offer Vistra roughly $4 billion in loans to uprate an additional 433 MW from its Perry and Davis-Besse plants in Ohio and Beaver Valley in Pennsylvania, Bloomberg reported Friday. Energy Secretary Chris Wright could announce the package Monday during a visit to the Perry plant. 

Earlier this year, Meta signed a deal with Vistra for electricity from the same three power plants. The 20-year power purchase agreements (PPAs) cover 2,176 MW of existing generation and another 433 MW from planned uprates across those three plants. 

None of this should surprise anyone who remembers Wright’s promise that nuclear would receive the biggest share of the DOE loan office’s financing.

“By far the biggest use of those dollars will be for nuclear power plants,” he said last November. DOE reported that their Energy Dominance Financing (EDF) office had over $250 billion in available lending authority in July.

The EDF (previously the Loan Program Office) is on the warpath to fulfill Wright’s prophecy, having already financed three reactor restarts so far: 

  • $1.5 billion for Holtec’s Palisades
  • $1 billion for Constellation’s Crane
  • $1.9 billion for NextEra’s Duane Arnold

Then there’s Southern Company’s package of up to $26.5 billion. Southern’s loans went to multiple generation plants, including gas and hydro, but money also went to subsidiaries Georgia Power and Alabama Power for nuclear uprates and license renewals.

EDF also announced $17.5 billion in conditional commitments over the summer for long-lead equipment supporting ten AP1000s from Westinghouse.

Hundreds of billions of dollars are still anticipated to be utilized for achieving Trump's goal of quadrupling nuclear generation in the country by 2050.

Tyler Durden Mon, 10/05/2026 - 06:55

10 Monday AM Reads

The Big Picture -

My back-to-work morning reads:

• Private Equity Has a Problem. Uncle Sam Says Your Wallet Can Fix It.: A government proposal would help fund managers sell alternative investments to a much wider audience. Wall Street’s problem becomes Main Street’s opportunity, or vice versa. (Wall Street Journal)

• ‘Things may get ugly’: Meta’s new AI Muse is about to make the internet more annoying: Thomas Germain: the web was built for humans, and Meta’s agent is about to start using it on their behalf. Someday we’ll redesign the internet for tools like this. Until then, you’re in for a wild ride. (BBC) see also Meta open sources code to let you make Muse AI gadgets: Meta now lets you connect Muse to your own hardware to put on your displays or a Raspberry Pi.​ Jay Peters: Meta now lets anyone build hardware around its Muse agent, suggesting projects like an E Ink reminder display. (The Verge)

• AI Agents Got Cash to Trade Stocks. Here’s What They Bought and Sold—Repeatedly. An investor gave AI agents $500 each and provided the same daily prompt: Make as much money as you can. Stockbrokers don’t need to worry…yet. (Barron’s)

• Disney World solved a problem that could save America billions every year: Our cities are built atop a dangerous obstacle course of cables. The Magic Kingdom found a better way. (Vox)

​• The Hot New Real Estate Scam: Fraudsters are gaming apartment leasing and tenant screening, and landlords are paying for it. A new wave of fraudsters is about to add a huge headache to your next home hunt — and could even drive up your rent (Business Insider)

​• A Warning About ‘Model Welfare’: Mustafa Suleyman is blunt: AIs are not conscious, do not suffer and have no innate preferences. He takes aim at the labs, Anthropic’s Claude constitution included, for treating them as if they might. (Mustafa Suleyman)

• The wealthy Cuban Americans ready and waiting for Havana to fall: “The intention of this evening is to gather under one roof the most prominent Cuban-American entrepreneurs in Miami-Dade County,” says CANCC president Juan Omar Sixto, “and the objective is to be in Cuba once the regime falls”. His guests are convinced that moment is nigh.​ Will Grant in Miami meets the exiles and investors with business plans drawn up and ready to go the moment the regime goes. (BBC)

• Dogs use a surprising method to understand human language, new study suggests: In a brain activity study, canines seemed to listen for consonants to figure out when one word ends and another begins.​ Maggie Penman on Hungarian research in Science: dogs pick out words in streams of speech the way human infants do, by listening for consonants. (Washington Post) see also The People Learning To Understand Wolves: A growing archive of wolf howls could transform how researchers count, study, and protect one of North America’s most contested predators.(Atmos)

• Paint it black: Efficacy of increased wind turbine rotor blade visibility to reduce avian fatalities,.Painting one of the blades of a wind turbine black can reduce bird deaths by 70 per cent. (Ecology and Evolution)

• The 25 Photos That Changed Fashion Forever: Two photographers, a fashion designer, a stylist, a creative director, an editor and a supermodel debate the images that have had an indelible impact on how we dress. (New York Times)

Video of the day: Elon Musk Is Building $119B TERAFAB That Shouldn’t Exist

Be sure to check out our latest Masters in Business interview with Omar Aguilar, President, Chief Executive Officer, and Chief Investment Officer of Schwab Asset Management, which runs more than $1 trillion across over 100 ETFs, mutual funds, and separately managed account strategies. He has held both the CEO and CIO titles since 2022

 

The VIX is NOT on the MOVE

Source: Jim Reid, Deutsche Bank

 

Sign up for our reads-only mailing list here.

 

The post 10 Monday AM Reads appeared first on The Big Picture.

Europe's Soaring Gas Bill Is Sending Utilities Back To Coal

Zero Hedge -

Europe's Soaring Gas Bill Is Sending Utilities Back To Coal

Authored by Haley Zaremba via OilPrice.com,

Europe's energy crisis isn't over. Gas prices remain punishingly high across the continent as Europeans stare down the barrel of a long winter.

In response to back-to-back-to-back energy crises stemming from Europe's continued reliance on imported liquefied natural gas against the backdrop of ongoing global geopolitical volatility, Europe's leaders are pushing to diversify the bloc's energy mix. While this means that Europe is rapidly expanding its renewable energy capacity, it also marks a significant return to the world's dirtiest fossil fuel - coal.

Earlier this year, when the United States and Israel began an offensive in Iran and thereby instigated the disruption of one-fifth of the world's oil and gas trades, Europe awakened to realize that it had sleepwalked into yet another energy crisis - its third in just four years. "We swore we'd learn. We promised things would change, but here we are," a 'highly frustrated European diplomat' was recently (anonymously) quoted by the BBC.

"Instead of concentrating on much-needed long-term plans - about how to make Europe more competitive in this increasingly volatile world, [European] prime ministers and presidents are now in a panic over [energy] prices, worried about angry voters and scrambling for short-term solutions," the source continued. "Just like the crisis after Russia's full-scale invasion of Ukraine. Different conflict. Same European divisions; same dilemmas over energy. We can't keep going round in these circles. Something's got to give."

Now, half a year after the outbreak of the war in Iran and the initial closure of the Strait of Hormuz, Europe is still grappling with the fallout as gas prices remain brutally high. Just this month, gas prices hit their highest mark in three years, soaring above €80 ($90.98) per megawatt hour.

Prices are so high, in fact, that coal-fired power has become cheaper than gas-fired power in Europe for the first time in years. This calculus has pushed many European nations, and especially the European Union's largest economy, Germany, back to coal. And, worryingly, experts contend that that trend will continue for years to come.

"Coal is expected to remain cheaper than gas for power generation through next year and potentially until March 2028," Reuters reported earlier this week, based on a conversation with Marta Wroniszewska, an analyst at Veyt. "Longer-dated gas prices indicate traders expect supply constraints to persist."

However, there are notable limits to coal's growth potential in Europe. Years of policy aimed at phasing down and phasing out coal have left the continent with dramatically fewer coal-fired power plants than it had previously. In 1990, the European Union derived more than a third of its electricity production from coal. By 2025, that share had fallen to just 9.2 percent, according to data from Eurostat. So while Europe's remaining coal plants will receive a windfall from the current gas prices, there is a ceiling to coal's potential rebound in the region.

Outside of Europe, however, it's a different story. Globally, coal is still the single-biggest source of power production. And while Europe is shutting down its coal-fired capacity, many emerging economies are continuing to build theirs up, with particularly strong growth from the Philippines, Indonesia, and other rapidly developing countries across Asia. Not coincidentally, this was also the region hit hardest by the closure of the Strait of Hormuz.

While coal is cheap, abundant, and seen as a critical tool for enabling economic development in poor countries, the continuously extending timeline of coal's reign presents trade-offs that far outweigh the benefits. Coal is the single largest driver of global warming, responsible for about 40 percent of all greenhouse gas emissions. However, it's not all bleak - coal's comeback is happening in tandem with a major global increase in clean energy resources. Increasingly, renewable energies are being adopted for their role in a more energy-secure future, and are seen as a critical buffer against the next global energy crisis.

Unlike natural gas, oil, and coal, "Wind and solar cannot be embargoed, blockaded, or shut off by a foreign power," David Frykman, General Partner at Stockholm-based venture capital group Norrsken, wrote in an op-ed for Fortune earlier this year. "Every terawatt-hour of domestic renewable generation is a terawatt-hour that no adversary can weaponize."

Tyler Durden Mon, 10/05/2026 - 06:30

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