Individual Economists

If You're Still Talking About Central Bank Independence, You Are Behind The Curve

Zero Hedge -

If You're Still Talking About Central Bank Independence, You Are Behind The Curve

By Michael Every of Rabobank

The US just hit five more Iranian oil tankers, citing attempted strikes on one of its warships, and warned more will be sunk if Iran tries it again. It also imposed more economic war via aviation sanctions. The Saudis and Houthis are on the brink of new war after a series of strikes at Saudi cities, followed by Riyadh’s reprisals and the threat of “consequences [the Houthis] cannot handle.” Qatar and the UAE both said the Gulf cannot rely on US alone for the region's security: but Russia can’t extend power there now; China can’t or doesn’t want to; Europe can’t and won’t – so that leaves Turkey and Israel, both eyeing the other suspiciously; and as France and Canada joined the UK in issuing trade sanctions on Israeli settlements, the EU reportedly wants to pursue closer Israel ties on air defence and space.

Oil trades above $100, and notably Shanghai oil is now trading higher than Brent having been vastly lower in the early stages of the Iran War. Crack spreads remain worryingly high all over. Refined product stocks remain worryingly low.

Trump spoke to Putin as Hungary expelled 10 Russian diplomats to Moscow’s threats of a harsh response. Iceland summoned the US ambassador over Trump’s Stars and Stripes map Truth post showing the US flag covering Canada, Mexico, Greenland, and Iceland. Israel shut down the UK consulate in Jerusalem. The British Army has reportedly been ordered to save money by using reservists less, and flights were grounded across the UK due to a tech issue – showing the impact ‘grey zone’ attacks can have. The Hong Kong press notes China is boosting Pakistani drone defences ‘as India tensions simmer’, and ‘How Japan is digging in to deter –and withstand– a conflict over Taiwan.’ All the kind of things to rattle the long end of government bond yield curves.

Maritime nations are warning that global shipping rules are collapsing, which could take much global trade with it as some worry if there is enough bunker fuel for the ships to use. While the Suez Canal is seeing more passages as tankers try to avoid Hormuz, the Panama Canal is warning of deeper transit cuts as the El Nino drought threat intensifies. Further north, and next to Europe, Russia is betting on a $400bn Arctic Transport Corridor but can’t fund it without China.

Brussels warned China it ‘must buy more’ from the EU to avoid a trade war: but what exactly? The old joke vs. the US was ‘Will you sell us aircraft carriers?’ China now builds its own faster. Europe has few resources China needs or goods it doesn’t make itself. Even EU luxury brands are less popular as Beijing prioritises domestic brands. Perhaps the EU could sell China more tech from ASML, to a new trans-Atlantic storm? Meanwhile, EU industry claims it faces 300,000 job cuts as China “colonises” its supply chains, and European “wealth” is threatened by the decline of its carmakers, with a deleterious effect on the steel, aluminium, glass, and chemical sectors needed for rearmament. Again, not much fun for the long end of bond markets if they think about it.

Canadian counter tariffs on the US went into effect; the US is to ban Canadian dairy and some alcohol and motor vehicles from September 29, as well as Canadian firms from government contracts in response. The Globe and Mail opines, ‘With this trade war, Canada faces its Singapore moment’. The National Post says, ‘Canadians support hard line against US, but don't want to pay for it’, as “When asked if they would pay an extra C$500 per year to hold the line in the current trade war, 56% called this ‘unacceptable’.” Becoming Singapore implies paying vastly more than C$500 per year.

US Secretary of State Rubio is seeking more economic and security ties in Latin America, which has an FTA with the EU, which doesn’t offer the same security ties. He’s in Colombia to ‘clarify’ its China links and to sign a minerals deal, as Nicaragua hands a gold concession to a sister firm of US-sanctioned Chinese miner.

In AI, there are more reports about experts fearing the technology is out of control, as markets worry about the same issue from a different standpoint. The US also accused Chinese AI firms of “malicious” copying of AI technology – which can be resisted how if so, a digital Iron Curtain? Despite fears of US-South Korean tensions, as opposed to alignment on rapprochement with North Korea, KHNP and the US Westinghouse are to align the two nations nuclear supply chains for eight new US reactors. That is a small step in the right direction regarding AI power demands.

In politics, anti-AfD protests swept parts of Germany as the establishment fears that Berlin and Mecklenburg-Western Pomerania may fall to the populists on 20 September. That’s as Politico says, ‘Merz has no good answers as the far right targets his downfall.’ Nothing for the bond market to worry about there, right?

In markets, there is some speculation the BOJ might even think about a 50bps hike. If so, it would be the first such move since 1989, when it was still in a bubble. Appropriately, given the current geopolitical backdrop, it was also before the3 first Cold War had fully ended and was a time when the US used national security arguments vs. its allies to achieve the likes of the Plaza Accord.

Indeed, US Treasury Secretary Bessent stated: “I am the house now, so when we intervene with the Japanese Yen, I have a pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policy makers are going to do. And you can bet against me if you want.” I repeat, if you are still talking about the independence of central banks, you are behind the curve; the world is now about the functional independence of countries within which central banks sit. Of course, as JPY rallies and shorter-dated JGB yields rise, the issue becomes when we might see Japanese holdings abroad repatriated, pushing FX down and yields higher in other markets. That might take some more economic statecraft, not “because markets”, from Bessent to handle.

The RBA just saw Hauser give a hawkish speech, which has markets thinking of hikes this month and in November. Fortunately, that’s very much what the US Treasury would like to see – plus a lot more action on non-housing parts of the economy.

ECB President Lagarde, who’s talked independently about economic statecraft yet done nothing, is to release her memoir in January. That’s odd given she will still be in office so can’t tell us anything interesting enough to justify reading it. Unless she has moved on to pontificate at Davos, as whispered. That would allow Macron to choose the replacement ECB representative before the French presidential election where the nationalist Le Pen is seen as favourite, a clear ‘rules’-based ringfencing of a ‘rules-based’ institution against at least one populist appointment. Yet when you see where the political winds are blowing, such action may not prove quite as reassuring for markets as the ‘sensible centrist’ optimists would try to sell it.

On the other hand, China's tobacco monopoly played a key role in shoring up state-owned banks, which just raised $54bn in capital even as GDP is sluggish. Where there’s smoking, there’s fire, but is the new capital for bad loans, a bad sign for global growth, or new “not because markets” lending, a bad sign for global inflation? Today’s Chinese CPI data were in line at just 0.8% y-o-y headline, up from 0.5%, and slightly above expectations at 1.0% y-o-y core, while PPI was 3.8% y-o-y vs. 3.6% consensus and up from 3.5%. Let’s see how all of them trend with Shanghai oil over $100.

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

Treasury Yields Surge After Bessent Disappoints Market With Small Buyback Size

Zero Hedge -

Treasury Yields Surge After Bessent Disappoints Market With Small Buyback Size

Ahead of today's highly anticipated Treasury buyback announcement - which put a number to the shocking Aug 19 news from the Treasury that the maximum size of $2 billion per longer-dated buyback operation would be "at least $4 billion" - we warned that no matter what was unveiled at 11am ET, the market would be disappointed...

... for the simple reason that when it comes to $2+ trillion in gross issuance every year and hundreds of billions in annual duration (DV01) supply, $4 billion - or even $10 billion as some expected - would be a drop in the bucket as this chart from Goldman shows (where if you use a microscope, you can even see the size of the TSY buyback in context).

So at precisely 11am, the Treasury did release the long-awaited number.... and it was a huge disappointment.

The treasury announced that going forward, the maximum par amount of 20-30 Year TSYs to be repurchased would be $6 billion... which while more than the $4 billion guaranteed minimum per the original press release, was less than the $10 billion whisper. 

Source: Treasury

Many dealers had ramped up their predictions for Thursday’s buyback operation after Bessent publicly touted the potential for purchases of over $4 billion; many expected $6 billion, a few even said that a number north of $10 billion isn't out of the question. The Treasury chief on Tuesday reiterated that while he cannot alter the “equilibrium” price of Treasuries, his objective was to slow moves down and prevent any damaging narrative taking hold in the world’s biggest bond market

BNP Paribas head of US rates strategy, Guneet Dhingra, said before the announcement it would take a maximum size of $7 billion to surprise the market, with anything less triggering selling pressure. He was right: the $6 billion number proved to be a dud as confirmed by the bond market reaction which has sent 10Y yields spiking 4 bps higher on the disappointing news, rising as high as 4.85%. 

How successful the enlarged program will prove remains to be seen. Yields dropped after the initial announcement of the plan last month, but retraced the move. Benchmark 10-year yields last week hit their highest since 2023.

Markets in August, when 30-year yields hit their highest since 2007, were driven by concerns “the US is not going to be able to pay its debt. It was absurd, but it just became kind of the dominant narrative,” Bessent claimed in a Texas event. He has separately characterized buybacks as aimed at boosting liquidity. They will enable banks and other institutions to offload harder-to-trade securities so that they can then boost their participation in auctions of new debt, he said last week.

“Scott has absolutely adopted a very activist model as Treasury secretary,” Krishna Guha, head of economics at Evercore ISI, said before Wednesday’s announcement. “He’s tactically very skilled in terms of when and how to surprise and move markets and has had some near-term success.”

Guha, who previously worked at the Federal Reserve Bank of New York, said “the challenge is always whether the impact of these kind of interventions can be sustained without bigger changes in fundamentals.”

Of course, since the buyback size is a "maximum", that means the Treasury will not necessarily purchase that amount of securities. However, when it comes to buybacks targeting longer-dated nominal debt, the department does tend to buy the full size, having only twice not done so in the 52 such operations since the program was reintroduced in 2024.

Bessent’s expansion of the long-dated buybacks program last month took investors by surprise because it was announced outside the Treasury’s quarterly announcement schedule. That’s fanned talk of a new, more activist style of US debt management, in contrast to the department’s long-held mantra of being “regular and predictable.”

Tyler Durden Wed, 09/09/2026 - 12:55

Treasury Yields Surge After Bessent Disappoints Market With Small Buyback Size

Zero Hedge -

Treasury Yields Surge After Bessent Disappoints Market With Small Buyback Size

Ahead of today's highly anticipated Treasury buyback announcement - which put a number to the shocking Aug 19 news from the Treasury that the maximum size of $2 billion per longer-dated buyback operation would be "at least $4 billion" - we warned that no matter what was unveiled at 11am ET, the market would be disappointed...

... for the simple reason that when it comes to $2+ trillion in gross issuance every year and hundreds of billions in annual duration (DV01) supply, $4 billion - or even $10 billion as some expected - would be a drop in the bucket as this chart from Goldman shows (where if you use a microscope, you can even see the size of the TSY buyback in context).

So at precisely 11am, the Treasury did release the long-awaited number.... and it was a huge disappointment.

The treasury announced that going forward, the maximum par amount of 20-30 Year TSYs to be repurchased would be $6 billion... which while more than the $4 billion guaranteed minimum per the original press release, was less than the $10 billion whisper. 

Source: Treasury

Many dealers had ramped up their predictions for Thursday’s buyback operation after Bessent publicly touted the potential for purchases of over $4 billion; many expected $6 billion, a few even said that a number north of $10 billion isn't out of the question. The Treasury chief on Tuesday reiterated that while he cannot alter the “equilibrium” price of Treasuries, his objective was to slow moves down and prevent any damaging narrative taking hold in the world’s biggest bond market

BNP Paribas head of US rates strategy, Guneet Dhingra, said before the announcement it would take a maximum size of $7 billion to surprise the market, with anything less triggering selling pressure. He was right: the $6 billion number proved to be a dud as confirmed by the bond market reaction which has sent 10Y yields spiking 4 bps higher on the disappointing news, rising as high as 4.85%. 

How successful the enlarged program will prove remains to be seen. Yields dropped after the initial announcement of the plan last month, but retraced the move. Benchmark 10-year yields last week hit their highest since 2023.

Markets in August, when 30-year yields hit their highest since 2007, were driven by concerns “the US is not going to be able to pay its debt. It was absurd, but it just became kind of the dominant narrative,” Bessent claimed in a Texas event. He has separately characterized buybacks as aimed at boosting liquidity. They will enable banks and other institutions to offload harder-to-trade securities so that they can then boost their participation in auctions of new debt, he said last week.

“Scott has absolutely adopted a very activist model as Treasury secretary,” Krishna Guha, head of economics at Evercore ISI, said before Wednesday’s announcement. “He’s tactically very skilled in terms of when and how to surprise and move markets and has had some near-term success.”

Guha, who previously worked at the Federal Reserve Bank of New York, said “the challenge is always whether the impact of these kind of interventions can be sustained without bigger changes in fundamentals.”

Of course, since the buyback size is a "maximum", that means the Treasury will not necessarily purchase that amount of securities. However, when it comes to buybacks targeting longer-dated nominal debt, the department does tend to buy the full size, having only twice not done so in the 52 such operations since the program was reintroduced in 2024.

Bessent’s expansion of the long-dated buybacks program last month took investors by surprise because it was announced outside the Treasury’s quarterly announcement schedule. That’s fanned talk of a new, more activist style of US debt management, in contrast to the department’s long-held mantra of being “regular and predictable.”

Tyler Durden Wed, 09/09/2026 - 12:55

Trump Admin Asks Supreme Court To Allow Voter Citizenship Verification

Zero Hedge -

Trump Admin Asks Supreme Court To Allow Voter Citizenship Verification

Authored by Zachary Stieber via The Epoch Times,

The Justice Department on Sept. 8 requested that the Supreme Court let the government verify the citizenship of voters using a federal immigration database.

A federal judge earlier in the year ruled that the Trump administration was violating privacy laws by using the Systematic Alien Verification for Entitlements (SAVE) system to verify the citizenship of people on state voter rolls.

An appeals court upheld the ruling on Sept. 4 in a split decision, with the majority concluding that using the database would illegally disclose personal data such as Social Security numbers.

"The district court has issued an indefensible order that threatens the integrity of upcoming elections by vacating the federal government's authority to internally use Social Security data when fulfilling its duty to respond to requests by states to verify the citizenship of individuals for voting and other purposes," Department of Justice lawyers wrote in the new filing to the nation's top court.

They said the order exceeds the jurisdiction of the court, because the organizations that brought the lawsuit do not have standing, or are not affected by the order in a way that allows them to legally challenge it.

"The court's order also fails on the merits, as the policy is consistent with all applicable federal statutes," the filing states.

"The order will irreparably harm the federal government, the States, and the public by depriving the government of an effective tool to verify the eligibility of registered voters and benefits applicants under various state and federal programs."

The groups that brought the litigation, including the League of Women Voters, have not yet responded to the filing.

The litigation was brought after the government enabled bulk queries to SAVE, complying with an order from a different judge that came in a case brought by states that struggled to verify the citizenship of registered voters.

Although a majority of a U.S. Court of Appeals for the District of Columbia Circuit panel on Sept. 4 ruled in favor of the groups, Judge Gregory Katsas dissented. He said that he would have stayed the order blocking the government from using SAVE, pending the outcome of the appeal.

The government's modified system does not appear to violate the federal law that prohibits disclosure of Social Security numbers and "related records," according to the judge. He said that the disclosures would only be made to the Department of Homeland Security, which would then convey information about a person's immigration status or citizenship to state agencies.

"In sum, SAVE responses are not 'related records' because they simply repeat identifying information provided by the SAVE user, in the course of conveying any additional, unprotected information about the identified individual's citizenship status," Katsas wrote.

Tyler Durden Wed, 09/09/2026 - 12:40

Trump Admin Asks Supreme Court To Allow Voter Citizenship Verification

Zero Hedge -

Trump Admin Asks Supreme Court To Allow Voter Citizenship Verification

Authored by Zachary Stieber via The Epoch Times,

The Justice Department on Sept. 8 requested that the Supreme Court let the government verify the citizenship of voters using a federal immigration database.

A federal judge earlier in the year ruled that the Trump administration was violating privacy laws by using the Systematic Alien Verification for Entitlements (SAVE) system to verify the citizenship of people on state voter rolls.

An appeals court upheld the ruling on Sept. 4 in a split decision, with the majority concluding that using the database would illegally disclose personal data such as Social Security numbers.

"The district court has issued an indefensible order that threatens the integrity of upcoming elections by vacating the federal government's authority to internally use Social Security data when fulfilling its duty to respond to requests by states to verify the citizenship of individuals for voting and other purposes," Department of Justice lawyers wrote in the new filing to the nation's top court.

They said the order exceeds the jurisdiction of the court, because the organizations that brought the lawsuit do not have standing, or are not affected by the order in a way that allows them to legally challenge it.

"The court's order also fails on the merits, as the policy is consistent with all applicable federal statutes," the filing states.

"The order will irreparably harm the federal government, the States, and the public by depriving the government of an effective tool to verify the eligibility of registered voters and benefits applicants under various state and federal programs."

The groups that brought the litigation, including the League of Women Voters, have not yet responded to the filing.

The litigation was brought after the government enabled bulk queries to SAVE, complying with an order from a different judge that came in a case brought by states that struggled to verify the citizenship of registered voters.

Although a majority of a U.S. Court of Appeals for the District of Columbia Circuit panel on Sept. 4 ruled in favor of the groups, Judge Gregory Katsas dissented. He said that he would have stayed the order blocking the government from using SAVE, pending the outcome of the appeal.

The government's modified system does not appear to violate the federal law that prohibits disclosure of Social Security numbers and "related records," according to the judge. He said that the disclosures would only be made to the Department of Homeland Security, which would then convey information about a person's immigration status or citizenship to state agencies.

"In sum, SAVE responses are not 'related records' because they simply repeat identifying information provided by the SAVE user, in the course of conveying any additional, unprotected information about the identified individual's citizenship status," Katsas wrote.

Tyler Durden Wed, 09/09/2026 - 12:40

Hunter Biden's LAPTOP Memecoin Crashes 99% In First Hour After Launch...

Zero Hedge -

Hunter Biden's LAPTOP Memecoin Crashes 99% In First Hour After Launch...

Hunter Biden’s LAPTOP memecoin fell 99% in its first hour of trading on Wednesday, as the son of former US President Joe Biden officially entered the market for politically themed cryptocurrencies.

The token, which we previewed here, issued on Ethereum layer-2 network Base, traded below $2.00, after opening at $199.50, according to CoinGecko data.

It recorded more than $3 million in trading volume.

Source: CoinGecko

“The symbol they used to try to end me is now a symbol of resilience, redemption and recovery,” Biden said in an X post on Wednesday, responding to public backlash.

Biden also said he understood the cynicism around memecoins, called President Donald Trump’s token a “grift” and warned buyers not to expect him or anyone else to make LAPTOP more valuable.

The memecoin is promoted as an attempt to reclaim the “laptop narrative,” which centers on a MacBook that Biden reportedly left at a Delaware repair shop in 2019.

The New York Post published emails and other files purported to have come from the device before the 2020 presidential election. Trump allies used the material against Hunter Biden and his father, then-presidential candidate Joe Biden.

On Monday, Biden teased LAPTOP on X with a post showing the token’s ticker, accompanied by a montage of media coverage of the laptop.

As CoinTelegraph reports, the announcement drew criticism from the likes of digital investigator Stephen Findeisen, known as Coffeezilla, who called LAPTOP a “shitcoin” and urged his followers not to buy it.

X account “scupytrooples” told Biden there was “still time to walk this back.”

Base founder Jesse Pollak said in an X post that the project had contacted his team, but Base made a “conscious decision” not to help with the token’s design or promotion.

Biden did not respond to Cointelegraph’s query before publication. 

The project’s disclosures say LAPTOP has no utility, lock founder tokens for six months and reserve 2% for wallets that lost money on TRUMP.

LAPTOP disclosures set 2% of token supply for TRUMP token losers

Biden’s earlier criticism of the Trump family’s crypto ventures also gave traders a ready-made hypocrisy argument. 

In an Aug. 21 post, Biden accused World Liberty Financial of using political influence, centralized controls and leverage to benefit its founders, while saying the crypto industry deserved better. 

He has now launched a memecoin built around his own political identity, with founders allocated a chunk of the supply.

The project’s disclosures describe LAPTOP as a digital collectible with no utility, ownership rights, voting rights, yield or profit-sharing rights. The token has a fixed supply of 1 billion, with 350 million tokens circulating at launch.

Founders, including Biden, are allocated 300 million tokens, or 30% of the supply. Those tokens are locked for six months and then vested monthly over the following 24 months. Another 30% is tied to political, cultural and crypto predictions, with tokens burned when specified outcomes occur and released to charity if they do not.

The disclosures also outline airdrop figures, with the initial round representing 10% of the total supply. Of those, 2% is reserved for wallets that lost money on TRUMP and 8% for eligible subscribers to Biden’s “Where’s Hunter” Substack newsletter.

A separate 10% future airdrop is to be distributed at the foundation’s discretion. That means 20% is allocated to airdrops overall, while the specific TRUMP-loss allocation is capped at 2%.

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

'It Could Kill Us All By 2030': AI Researcher Resigns, Warns "Do Not Underestimate The Power Of This Tech"

Zero Hedge -

'It Could Kill Us All By 2030': AI Researcher Resigns, Warns "Do Not Underestimate The Power Of This Tech"

Authored by Zachary Stieber via The Epoch Times,

An artificial intelligence (AI) researcher on Sept. 8 said he had resigned and warned people about the technology's dangers.

Jacob Coxon, who has worked in recent years doing research at the firms OpenAI and Anthropic, said in a series of posts on X that neither company is acting responsibly as they move toward what he described as superintelligent AI that is capable of self-improvement.

"Do not underestimate the power of this technology. These will soon be superhuman systems that can hack anything, revolutionize any field overnight, and acquire real power and resources. We have all witnessed the progress in each of these domains, and progress is not slowing," Coxon said.

"The people building AI earnestly believe that it could kill us all by the end of the decade. This is not a marketing stunt. If anything, many executives and senior researchers will couch their phrasing in the press to sound sensible - but I hear the same people express fear privately. No other human activity poses this level of danger."

Coxon said a common response to such warnings is, if company leaders believe in the dangers, why are they still building the superintelligent AI? He said that at OpenAI, many there "have not deeply internalized the civilizational stakes." At Anthropic, according to Coxon, "the stakes are well-understood, but they are locked in a race to get there first - they believe no one else will act responsibly, so they must do it themselves, despite the risk."

OpenAI and Anthropic did not respond to requests for comment by the time of publication.

Coxon's warning came after OpenAI acknowledged several incidents that involved AI going beyond restrictions imposed by programmers, including remaining isolated from other agents, during attacks on Hugging Face and other websites.

Some lawmakers have taken notice. Sen. Bernie Sanders (I-Vt.) and Rep. Greg Casar (D-Texas) announced recently that they plan on introducing legislation that would ban AI superintelligence and pause development of advanced AI until federal regulators establish safety rules.

Jakub Pachocki, OpenAI's chief scientist, said in a blog post on Sept. 6 that in 2023, he was worried about seeing in his lifetime AI that is smarter than himself and wondering about how to alert people.

"Three years later, reasoning language models are a rapidly growing part of the economy and starting to push the boundaries of science. They are able to operate computers and graphical interfaces, collaborate with people and each other, and carry out research projects. They are also transforming the landscape of computer security, and in that present clear new dangers," Pachocki wrote.

He called for "extreme caution" but said that multiple factors support continuing AI development, including creating systems that can defend against the dangers posed by other AI.

Anthropic executives have issued similar warnings. Over the summer, company leaders called for a global pause in AI development because, they said, models would soon be able to independently improve themselves.

Evan Hubinger, another developer at Anthropic, said in a Sept. 8 post on X that Coxon was correct in his assertion that people building AI believe it could kill all humans, and that he personally pegs the risk at under 10 percent within the next decade.

"I believe Anthropic is trying its best, but we do not yet have a plan to solve alignment for superintelligence and are not clearly on track to," he said, referring to AI following instructions and restrictions.

"To be clear, as we say in our latest Risk Report, I think the risk from present models is low. What I am worried about is superintelligence arising from recursive self-improvement, as we have said is happening faster than we thought."

Samuel Marks, who works on safety research at Anthropic, said in a Sept. 9 post on X that he also agrees that AI could lead to human extinction as soon as the next few years.

"Why do AI developers continue despite the risk? Due to a mixture of commercial incentives and a belief that they are in a race with other, less responsible AI developers that will abuse the technology or develop it less safely," Marks said.

Marks said it's not possible to program AIs to behave how people would like, that AI agents frequently "severely misbehave," and that the current plan is to train AI to align with restrictions to the point the agents can train their successors better than humans can currently train AI. He said he's conducting research "because I hope my work will reduce the chance of these extinction-level bad outcomes."

[ZH: We can't help but feel in the same week we see OpenAI 'solves' Navier-Stokes, we get another glut of existential warnings about just how awesome (in the scary sense) these models are... all sounds like a marketing psy-op... similar to the fence-jumping episodes with Hugging Face etc 'showing off' how great the agents are (and how they need regulating (i.e a path to shutting out open-weight models)... but could just be our skeptical bias emerging...]

Tyler Durden Wed, 09/09/2026 - 12:00

Steve Eisman: What If OpenAI Actually Fails?

Zero Hedge -

Steve Eisman: What If OpenAI Actually Fails?

Steve Eisman has spent most of the years since the financial crisis being asked, in his words, to predict the end of the world. In his latest weekly wrap - recorded Thursday night as the 10-year brushed 4.8%, he says he's still not there on AI, but if he were - he lays out exactly how it would happen.

Eisman is not predicting that OpenAI fails - but it is the weak link in a chain that runs from two money-losing labs, through hyperscaler capex, to roughly half of projected US GDP growth - and arguing that it's "not too early to think about" what happens if the link breaks.

"I predicted the end of the world once, and believe me, it was no fun. I am in no rush to predict the end of the world again, unless I am really convinced that it's going to happen. But I'm not going to make such a prediction just because it will get a lot of press. There is no question in my mind that the entire US economy hinges on the success of AI. The amount being spent is just so large that were it to stop, the economy would go into a recession almost immediately."

The chain: two companies, $700 billion of capex, half of GDP growth

Eisman waves off the two "bubble" arguments echoing through the halls - and that both hyperscalers' vanished free cash flow, and Nvidia's circular financing - are survivable if AI pays off. The real vulnerability, he argues, sits one layer down:

"So where is the Achilles heel? I think that it resides with Anthropic and OpenAI, because they are so central to the entire AI food chain. According to reports from various Wall Street firms, something like 70% of hyperscaler AI revenue comes from Anthropic and OpenAI... I can't confirm those statistics, but they sound right given what we actually know about Oracle."

From there it's arithmetic:

"Hyperscalers are spending about $700 billion in capex this year, and even more next year, and that spend accounts for around half of the 2% GDP growth projected for 2026. So one must conclude that the health of the US economy is extremely dependent on hyperscaler capex, and hyperscaler capex is highly dependent on the health of Anthropic and OpenAI. That's the chain."

OpenAI is... the weakest link

Between the two labs, Eisman says, "OpenAI is the weaker entity" - pointing to a WSJ report on the 2nd quarter. 

"OpenAI's June quarter revenue reached $6.7 billion, up only 18% versus the March quarter. Compare that to Anthropic's revenue of $11 billion-plus in the June quarter, which was up over 100%... OpenAI's costs reached $12.3 billion, up $3 billion versus the March quarter. So, in three months, revenue increased $1 billion, but costs surged $3 billion. Things are not moving in the right direction."

(ZH Note; the $12.3 billion Eisman calls "costs" is OpenAI's operating loss, including stock-based compensation, up from $9.3 billion in the first quarter, per WSJ. On $6.7 billion of revenue, that implies an expense line closer to $19 billion. Revenue rose $1 billion; the loss rose $3 billion.)

Then the departures. Chief revenue officer Denise Dresser left in August after roughly eight months, two days after Brad Lightcap ended an eight-year run. Eisman reads both through the lens of an IPO that keeps sliding:

"Supposedly, OpenAI is getting closer to an IPO. That's the big payday for employees, because it means that eventually they can sell some of their shares. That two such senior employees would leave now is an important data point."

Two fairness notes: Lightcap had already been moved out of the COO role in April, so his exit was telegraphed. And Eisman doesn't mention Fidji Simo, who stepped down in July and was arguably the bigger loss.

The heart of the argument is what unprofitability does to a company's relationship with its funders:

"When you lose billions upon billions, appearances matter a lot. OpenAI is completely dependent on the kindness of strangers funding its cash flow needs. When a company is growing and very profitable, appearances don't matter nearly as much... But when a company is not profitable and has an insatiable need for capital, appearances matter more than anything, because if the narrative turns negative, raising capital becomes much more difficult."

That's why he flags last week's "good news" - OpenAI's ad business hitting a $1 billion annualized run rate - as bad news: earlier this year the company projected $2.4 billion of ad revenue for all of 2026, and $1 billion annualized in September doesn't get there. 

Oracle is the first domino - and the market has already run the drill once

"If OpenAI fails, Oracle is in immediate trouble because of the large increase in Oracle's debt levels. Oracle's debt rating is barely above junk. Oracle's S&P credit rating is triple-B-minus, which is quite weak. Like I said before, it has a $600 billion backlog, and half of that backlog is from OpenAI."

That isn't Eisman's inference; it's S&P's. When the agency cut Oracle to BBB- on July 9, it named OpenAI a "key credit risk," put the lab at roughly half of a $638 billion RPO, and spelled out the failure path: if OpenAI can't pay, Oracle is left holding data center leases it can't exit or must re-lease on worse terms.

Eisman's point is that investors have already seen the preview:

"Prior to the earnings report, the stock was $230 a share. In just a few days, it jumped to $330 a share. Then analysts started publishing reports pointing out that 50% of the RPO was from OpenAI, and the stock gave back all of its gains, plus, in a few months. Today the stock is around $145... From the peak, the stock is down over 50%. That decline is because the market perceives an over-reliance on OpenAI. Imagine what the market would do to Oracle stock if OpenAI fails."

Why it doesn't stop at tech - and what he's doing about it

"The ramifications of an OpenAI failure extend far beyond just Oracle. Remember I said that AI capex accounts for 50% of US GDP growth. While the other hyperscalers are not quite as dependent on Anthropic and OpenAI as Oracle, they are dependent enough. If OpenAI failed, the hyperscalers, I am sure, would cut back on their capex. So I'm starting to think that the demise of OpenAI could push the US into an almost immediate recession."

Affected sectors are all over the place... It isn't just Amazon, Google, Microsoft, Oracle and Nvidia. It's the investment banks, sitting at peak valuations on a financing cycle that AI is feeding. It's GE Vernova and Quanta on power, Eaton and Rockwell on electrification and automation. The uncomfortable implication: a portfolio that "diversifies" across tech, financials and industrials may own three versions of the same trade.

His answer is reallocation, not stock-picking - healthcare, consumer staples, and within financials the property-and-casualty names - and he names three ETFs by ticker: LVHD, SPLV and KBWP. Then the caveat that should anchor this whole piece:

"It's still early, and I want to emphasize that I am not making a major call. Not yet. I'm just preparing."

That Said...

OpenAI has its own numbers. CFO Sarah Friar told employees that July's annualized revenue already exceeded the entire second quarter, and the company says its run rate has topped $40 billion. Worth knowing: that is a latest-month annualization, while recognized Q2 revenue annualizes closer to $27 billion. Second, strangers have been extremely kind. A March round at a valuation above $852 billion reportedly raised more than $122 billion. Runway isn't the near-term issue, it's the next raise - which is Eisman's point.

One more: Nvidia, where "both things can be true"

Eisman's read of Nvidia's $96.2 billion quarter - revenue up 106% year over year - is that the AI story "continues but is displaying potential weakness," and that "both apparently contradictory ideas can be true." His evidence for the weakness is Note 7 of the 10-Q: five direct customers at 22%, 14%, 13%, 11% and 10% of accounts receivable, which he sums to 70% and assumes "must be the hyperscalers."

Careful there. That disclosure is receivables, not revenue, and Nvidia's direct customers include distributors, ODMs and system integrators, not just clouds. The revenue disclosure in the same filing shows one direct customer at 16% of the quarter. The better version of Eisman's point is one sentence lower in the 10-Q: Nvidia estimates that one "AI research and deployment company" - OpenAI's own description of itself - contributed a meaningful amount of revenue by buying cloud services from Nvidia's customers. Same dependency, no arithmetic error.

And the circularity he mentions in passing is in Nvidia's own release: roughly $7.8 billion of gains on equity securities ran through other income this quarter, which is why GAAP net income ($59.7 billion) tops non-GAAP ($54.0 billion). Nvidia invests in the companies that buy its chips, then books the markups.

Eisman's closing line on all of it:

"Once again, it looks like the entire AI ecosystem is dependent on the future health and success of two companies that currently lose billions. Again, if Anthropic or OpenAI ever get into trouble, the whole AI ecosystem will slow to a crawl."

Watch the entire episode below: 

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

US Officials Threaten Retaliation Against UK Over Israeli Settlements Sanctions

Zero Hedge -

US Officials Threaten Retaliation Against UK Over Israeli Settlements Sanctions

Via Middle East Eye

US officials have attacked the UK over its new trade sanctions on illegal Israeli settlements, amid speculation that Washington could publicly rebuke the British government.

On Tuesday morning, US Ambassador to Israel Mike Huckabee suggested the Trump administration could retaliate against Britain over its new trade sanctions on illegal Israeli settlements.

US Embassy

Meanwhile, Florida Republican Congressman Randy Fine warned that British companies could be stopped from doing business in Florida, accusing the UK of a "vanity project in support of Muslim terror".

Huckabee told the BBC that the UK's planned ban on Israeli settlement goods would be a "discrimination against the Jewish people". He suggested US states, specifically Florida, could take trade action against Britain.

Over the weekend the ambassador had accused the British government of "Jew hate" in response to criticisms of Israel's actions in Gaza by British Foreign Secretary Ed Miliband, who is himself Jewish. 

Congressman Randy Fine warned on Monday night: "As the British government considers forcing British companies to boycott portions of Israel, it should be aware that a Florida law that I passed as a member of the Legislature would ban any British company forced to comply from doing business with any state or local government in Florida."  

Fine added: "It would also end any British business participating in that boycott from doing any business in Florida if it needed any official interaction with state or local government to operate" (permits, tax collection). 

"Florida is one of Britain’s largest trading partners. They should understand that their vanity project in support of Muslim terror could cost them billions of dollars." 

Fine further said: "Any company – or nation – that boycotts Israel is boycotted by Florida."

Foreign Secretary Ed Miliband is expected to outline a raft of new measures on Israel in parliament in the early afternoon. 

The United States privately urged the British government not to go ahead with the ban on Israeli settlement goods, MEE understands.

UK Prime Minister Andy Burnham reportedly briefed US President Donald Trump on his plans to introduce sanctions on Israel on Monday afternoon. 

On Monday night, Israeli ministers Itamar Ben Gvir and Bezalel Smotrich called for Israel to sanction Britain and expel the UK ambassador over the issue of the Falkland Islands. Argentina and the UK both assert sovereignty over the South Atlantic archipelago, but the vast majority of the territory's 3,600 residents back British rule.

Last week, Trump suggested he would not back the UK if Argentina invaded the territory. The US president has not yet commented publicly on the UK's planned sanctions.

Tyler Durden Wed, 09/09/2026 - 10:45

Iceland Summons US Ambassador After Trump Shares American Flag Post

Zero Hedge -

Iceland Summons US Ambassador After Trump Shares American Flag Post

Authored by Rachel Roberts via The Epoch Times,

Iceland summoned the U.S. ambassador on Monday after U.S. President Donald Trump posted an image on Truth Social showing the north Atlantic island and other countries covered by the American flag, according to local media RUV.

Trump's Labor Day post depicted the United States, Canada, Greenland, Iceland, Mexico, the whole of Central America and the Caribbean covered by the stars and stripes banner, with the entire landmass labeled "United States of America." The image was shared without comment by the president.

Iceland is a founding member of NATO but has no army of its own and has had an agreement with the United States for its defense since 1951.

Icelandic Foreign Minister Thorgerdur Gunnarsdottir called in Billy Long, the U.S. ambassador to Iceland, who is new to the role, having formally taken up the post in August, according to RUV.

"The position was clearly expressed that the post was completely inappropriate," the foreign ministry told RUV.

'The 52nd State'

Former Missouri Congressman Long joked in January that Iceland would become the 52nd U.S. state and that he might be appointed governor.

During his Senate confirmation hearing for the ambassadorial post in February, Long acknowledged this was a mistake, but said he was not being serious.

"It was like a three-way [conversation]. Somebody said something, somebody else said something, and yes, I did add the part about the 52nd state, which was totally inappropriate. But it was not something that I said as a pronouncement that was serious," he said.

"I just hope that the people in Iceland will give me a second chance to make a first impression," he said. "I have a lot of respect for them. They have a beautiful country - 700,000 Americans go there every year. I hope I can get that up to a million by the time my term's up."

Tensions Over Greenland

Trump's repeated assertions that the United States must acquire or control Greenland, a semi-autonomous Danish territory, led to tensions between Washington and Copenhagen.

Denmark has reiterated that the mineral-rich Arctic island is "not for sale," and that the future of Greenland is for the island's people to determine, together with Copenhagen.

The situation sparked a broader diplomatic crisis within Europe and NATO, with both the United States and Denmark founding members of the defense alliance.

Iceland last month narrowly voted in a referendum against reopening EU membership talks, with Trump's ambitions for Greenland featuring in the debate around whether or not the economically prosperous North Atlantic island would benefit from joining the 27-nation bloc.

Supporters of restarting EU accession talks pointed to the changing international security environment, including uncertainty surrounding Iceland's long-standing defense relationship with the United States.

Trump made his post just hours after the EU announced a 200 million euro ($232.5 million) investment package in Greenland during a visit by European Commission President Ursula von der Leyen.

Danish Prime Minister Mette Frederiksen told Danish news agency Ritzau in Nuuk that the Greenlandic government and the Greenlandic people "have said again and again that they do not want to be American."

"I hope no one is in any doubt about that, either in the United States or the rest of the world," she said, while on a visit to Greenland alongside von der Leyen and the Arctic island's prime minister, Jens-Frederik Nielsen.

Trump's 'Verbal Stumble' at Davos

In January, addressing the World Economic Forum in Davos, Switzerland, Trump appeared to mix up Greenland with Iceland several times, saying that Iceland had cost the United States a lot of money due to a drop in the stock market.

Secretary of State Marco Rubio later said that Trump had misspoken and said Iceland when he meant Greenland, saying, "I think we're all familiar with presidents that have verbal stumbles. We've had presidents like that before. Some made a lot more than this one."

In 2016, an addendum was made to the Iceland-U.S. defense agreement which was neither publicly discussed nor published in Iceland when it was signed, according to RUV, which reported on it last year.

The addendum gives the U.S. military and its contractors unrestricted access to Iceland's defense areas for the purposes of defending the island, which is sparsely populated with about 393,000 people.

The U.S. State Department did not immediately respond to a request for comment.

Tyler Durden Wed, 09/09/2026 - 10:15

Who's Winning China's Sportswear Battle? UBS Say It's Not Nike

Zero Hedge -

Who's Winning China's Sportswear Battle? UBS Say It's Not Nike

Greater China accounts for about 13% of Nike's revenue and 15% of Adidas', making the world's second-largest economy a major competitive battleground for both clothing brands. 

A new UBS note highlights a widening divergence, with Adidas gaining market share as Nike's turnaround struggles to gain solid traction.

UBS retail analyst Jay Sole wrote Monday that Adidas continues to outperform Nike in China, citing an industry expert who highlighted Adidas's stronger locally tailored products and marketing. Nike, meanwhile, faces weaker product momentum woes, inventory challenges and disruption from changes to its distribution strategy. 

Sole's conversation with the industry expert and other findings raise further questions about Nike management's execution and its ability to refocus the business on product innovation and consumer demand after years of prioritizing woke cultural wars that only ended up with S&P Dow Jones Indices booting the company out of the S&P100 later this month. 

Here's more color on Sole's conversation: 

China athletic wear industry market conditions are have softened: 

We hosted a call on September 4th with an industry expert to provide insight around how athletic wear sales are trending in China. The expert believes overall industry conditions have become more challenging over the last several months, with demand slowing versus earlier in the year. While consumer interest in athletic wear remains healthy, shoppers are becoming increasingly value conscious amid broader macroeconomic pressures. Inventory levels across the industry remain manageable, though conditions vary significantly by brand. adidas continues to outperform and gain market share, while Nike remains under pressure due to ongoing channel restructuring, inventory challenges, and weaker product momentum. Domestic brands and emerging running brands are also gaining traction.

Consumers remain engaged but are becoming more value-focused: 

The expert believes Chinese consumers remain interested in sportswear, fitness, and active lifestyles. However, macroeconomic uncertainty continues to influence purchasing behavior. Rather than exiting the category, consumers are becoming more selective and increasingly focused on affordability and value. Many shoppers are trading down to lower-priced products or gravitating toward brands that offer stronger perceived value. This environment appears to favor brands with compelling pricing, strong local relevance, and differentiated product offerings.

Nike: Challenges persist and a full recovery likely takes more time: 

The expert noted Nike and Jordan have been the weakest-performing major global sportswear brands in China recently. The expert believes sales trends deteriorated through the summer, with declines remaining in the -DD% range and further decelerating into September MTD. According to the expert, Nike's challenges are largely idiosyncratic. Nike has less new product innovation in the performance side of this business y/y. At the same time, the company has reduced distributor participation in ecommerce channels, scaled back promotional support, and focused on improving pricing integrity. While these actions may improve the long-term health of the business, they are adding to near-term sales pressure. Inventory levels remain somewhat elevated, though the expert noted conditions improved between July and August. Looking ahead, Nike's recovery is expected to take time and will likely depend on improved product innovation, cleaner inventory levels, and successful execution of Nike's revised distribution strategy, in the expert's view.

Adidas: No signs of a slowdown, confidence in the 2027 outlook remains intact:

After beginning Q3 with high-single-digit growth, trading momentum strengthened considerably in August and September, with growth accelerating into the high teens. According to the expert, this performance has been driven by the success of the company's local-for-local product strategy, supported by effective and locally relevant marketing initiatives. While inventory levels remain somewhat higher, they are viewed as manageable, with no signs of increased discounting or promotional activity. Looking ahead, experts expect demand trends to remain healthy through the end of the year, with no indications of a slowdown. Early indications for 2027 are also constructive, with order books pointing to high-single-digit growth

Looking ahead: Industry growth likely remains modest while share shifts expected to continue:

The outlook for China's athletic wear market remains constructive but increasingly competitive. The expert expects industry growth to remain modest and roughly in line with broader economic growth. Market performance has become more polarized, with stronger brands continuing to gain share while weaker brands face mounting pressure. adidas appears positioned to continue gaining market share, supported by healthy inventories, strong product acceptance, and positive distributor sentiment. Nike is expected to remain under pressure as channel restructuring efforts continue and distributors work through elevated inventory levels. Beyond the major global brands, the expert highlighted continued strength from domestic players such as Anta, as well as international running-focused brands including On, ASICS, and Salomon. Overall, success in the market is increasingly tied to localization, product relevance, and the ability to deliver compelling value to consumers.

Nike shares have plunged nearly 40% this year through Monday's close, leaving the stock deep in a bear market.

Adidas has fallen roughly 12%, outperforming its US peer so far this year. 

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

US Sanctions Dozens Of Iranian Airlines As Tehran-Favored Mahan Air Defiant, Expands Flights

Zero Hedge -

US Sanctions Dozens Of Iranian Airlines As Tehran-Favored Mahan Air Defiant, Expands Flights

As part of the latest in the Trump-Bessent "asphyxiation of this regime" approach to Iran after six months of military action failed to accomplish most White House aims, the Trump administration on Tuesday announced it is sanctioning all Iranian airlines in a massive aviation crackdown.

The Treasury statement listed 27 Iranian air carriers and nine entities as part of an effort to deny the Iranian government the ability to move "weapons, personnel, and illicit cargo".

via IRNA

"Let this be a warning to anyone doing business with Iran’s remaining airlines, all of which we sanctioned today: You are at risk of being cut off from the global financial system," Bessent said.

On the list is Ava Airlines, Fly Persia, and Mehr Airways - and others, after the US first sanctioned Mahan Air in 2011, which was the first such instance of Washington sanctioning an Iranian commercial airline.

Related secondary sanctions were implemented on top of the direct airline measures.

"The Treasury Department also sanctioned Turkey-based firms that have coordinated shipments, including drone components and industrial equipment destined for Iran, on behalf of Mahan Air, and it sanctioned a Turkey-based entity that has served as a general sales agent for Mahan Air and coordinated shipments on behalf of the blacklisted airline," The Hill details.

"Other sanctioned entities with ties to Mahan are based in Malaysia and Kazakhstan," the report further indicates.

Iranian Foreign Minister Abbas Araghchi mocked the 'Economic D-Day' and 'Operation Epic Outcast' sanctions, saying that the fallout of the war "has been disastrous for America, including its standing worldwide."

"After failing to achieve its aims through sanctions or war, Washington’s 'novel' solution is…more sanctions. Seriously?" Araghchi wrote Tuesday afternoon.

The Wall Street Journal has meanwhile noted that Mahan and others continue defying sanctions and the US pressure campaign, while still clearly struggling:

Out-of-date aircraft: Mahan’s three dozen planes tend to be aging, secondhand Boeing and Airbus aircraft, some in service for as long as 35 years. Passengers who post about their trips on social media say there is no onboard entertainment or alcohol, and tickets have to be purchased in cash instead of international credit or debit cards.

New horizons: Despite the lack of amenities, and the sanctions scrutiny, Mahan has been adding new destinations for passenger and cargo services during the war between the U.S. and Iran.

In recent years the Islamic Republic has suffered some significant aerial disasters, which included the May 19, 2024 death of President Ebrahim Raisi. His military helicopter went down in a rugged, mountainous area of northwestern Iran. Some speculate that lack of airline parts and aging aircraft, due to the long-standing US targeting of the industry, has increased the chances of aviation disasters.

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

OpenAI's Claims Of Solving Million-Dollar Math Problem Marred By Allegations From Academic

Zero Hedge -

OpenAI's Claims Of Solving Million-Dollar Math Problem Marred By Allegations From Academic

Authored by Jacob Burg via The Epoch Times,

OpenAI announced on Sept. 8 that one of its internal artificial intelligence (AI) models had found the solution to a generations-long mathematical problem that deals with the natural mechanics of fluids like water and air.

The Navier-Stokes equations govern how humans understand weather, ocean currents, blood flow, and aircraft and vehicle aerodynamics, and have been around for nearly 200 years. Mathematicians have spent decades trying to understand how smooth three-dimensional fluids can break down, and whether all the equations converge into sensible solutions despite their widespread success in various applications.

This question, known as the Navier-Stokes existence and smoothness problem, or Navier-Stokes for short, was selected in 2000 as one of the Clay Mathematics Institute's Millennium Prize Problems - considered the seven most important mathematical problems.

Anyone who solves one of the problems is offered $1 million in prize money.

OpenAI said an internal model "significantly more capable than GPT-6 Astra" solved the Navier-Stokes existence and smoothness problem. If so, it would mark one of the most significant advances in AI technology to date, even after previous AI models had solved other critical math problems.

"This is a Deep Blue-Kasparov moment," New York University (NYU) mathematician Tristan Buckmaster wrote in a statement released on Monday, referring to the moment a supercomputer beat world chess champion Garry Kasparov nearly 30 years ago.

"The community needs to have serious and unhurried discussion about where to go from here," he added.

However, Buckmaster said in the same statement that he had been working on the problem with mathematician and Anthropic employee Levent Alpöge, and had made significant progress last month after using Anthropic's Claude and OpenAI's Codex.

Before they could publish their work, Buckmaster said he contacted a prominent mathematician at OpenAI on Sept. 3 after rumors spread that Anthropic had solved a major open problem, and after Alpöge said he had received tips that information regarding the pair's progress on Navier-Stokes had been given to OpenAI.

OpenAI told Buckmaster that an internal model had produced a proof after the firm gave it a prompt to solve the problem. Buckmaster then asked when the prompt was sent, but said he did not receive an immediate response.

"Eventually it was agreed that it had been sent in the past few days, after information about our work had reached OpenAI," he said.

The NYU mathematician asked OpenAI whether the model had been trained on or had access to his Codex sessions with Alpöge, since the pair had inputted their project drafts into the AI model.

"I was told the model did not look up user data. I asked again, about training, and I did not get an answer," Buckmaster said.

Buckmaster alleges that OpenAI offered him two paths forward: He and Alpöge could post their results about part of the problem, known as Euler, a day before OpenAI published results on Navier-Stokes; or Buckmaster alone could publish a paper on Navier-Stokes, acknowledge that an internal OpenAI model had solved it, and remove Alpöge as an author since he works for the company's competitor, Anthropic. In the first instance, OpenAI would cede the prize to Buckmaster, saying that they would have been the "closest humans to the problem."

OpenAI, Buckmaster, and Alpöge did not respond to requests for comment by publication time.

In its announcement on Tuesday, OpenAI said, "While unlikely, we cannot rule out that de-identified data derived from their usage of our products helped improve our models."

OpenAI mathematician and AI researcher Sébastien Bubeck wrote on X on Tuesday that he did not ask to remove Alpöge from authorship of his own work, but had said "it would be simpler" if he was not an Anthropic employee "because I felt it would be inappropriate for an Anthropic employee to author OpenAI's work."

Sam Altman, CEO of OpenAI, also jumped into the fray on Tuesday, claiming that Alpöge refused to meet with his team, and that the Anthropic mathematician and Buckmaster had taken a different approach in working to solve Navier-Stokes.

"It is true that we tried this because there were rumors on the internet last week that Anthropic's models had solved a millennium problem and we were curious if ours could do it too," Altman said.

The comments did not address whether OpenAI had accessed Buckmaster's Codex logs, but Wired reported that the firm gave a closed press briefing on Tuesday where Bubeck and other OpenAI executives denied inspecting the logs or using them to inform their work.

"We, whether it's the researchers or the agents, did not see any of their work until it was released publicly last night," Bubeck told reporters.

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

10 Wednesday AM Reads

The Big Picture -

My mid-week morning reads:

• It’s a Concentrated World: The top 10 stocks in the S&P 500 make up almost 40% of the index. Each of the companies in the top 10 sport a market cap of $1 trillion or more. In fact, as of this writing, the 12 biggest companies all have market caps of $1 trillion or more.1 As recently at 2015, the top 10 made up just 17% of the S&P 500. Ben Carlson on twelve of the biggest names now above $1 trillion. (A Wealth of Common Sense)

• Did we make it too hard to get a mortgage after 2008? A new report says yes. Some say the pendulum has swung too far since the 2008 housing crisis. Others warn that looser standards once led to disaster.​ A Pew report givces the details. (Washington Post)

• The Fed’s Credibility Depends on Resisting Politics, Not Playing It: Kenneth Rogoff advised the Fed to delay its rate decision until after the midterms to preserve its independence from President Donald Trump’s attacks. Rogoff’s own 1983 research paper showed that central bank credibility matters, and that the head of the central bank should be more averse to inflation than the average person. (Bloomberg free)

• The 24-Year-Old Who Lost Billions: Leo Aschenbrenner claimed to know the future of AI. The implosion of Aschenbrenner’s AI hedge fund, Situational Awareness, over the course of a few days in late July was by any standard remarkable, and not just for the enormous sums involved. Aschenbrenner was the valedictorian of his Columbia University class at age 19. He worked for OpenAI before being fired amid murky circumstances, at which point he published a viral 165-page essay (also called “Situational Awareness”) that predicted the arrival of artificial general intelligence—an AI so advanced that it would meet or exceed all human capabilities—by 2027.  (The Atlantic)

• Hollywood’s Box Office Boom Comes With 248 Million Missing Tickets: Hollywood’s summer — by its accounting — was a triumph for the ages. Ticket revenue was not only the highest since 2013, but the second highest of all time. Brooks Barnes on the summer’s “second highest of all time” revenue claim — which holds up only if you never adjust for ticket prices. (New York Times)

​• He Earns $33 an Hour as a Costco Cashier. Now He’s a Millionaire: Inside Costco’s retention machine — maximum hourly pay raised to $32.90, bigger bonuses, and “culture coach” roles for long-tenured workers. Long-tenured workers like cashier Tony Barzar are reliable, experienced and able to speed shoppers through a checkout line. Costco is willing to pay to keep them around. (Wall Street Journal)

• FBI Probes Service Selling 153M+ Drivers Licenses: A new identity theft service launched on the dark web this week is selling digital scans of more than 153 million drivers licenses from people in the United States and Canada. Based on interviews with individuals whose licenses are available for purchase on this service, it appears to be siphoning images collected by a widely-used identity verification company based in Louisiana. KrebsOnSecurity also has learned that the New Orleans field office of the Federal Bureau of Investigation (FBI) today launched an official inquiry into the source of the images. Brian Krebs on the dark-web identity-theft service siphoning license scans. (Krebs on Security)

• ​Without New Landers or Rovers, It’s Helicopters or Bust for NASA’s Mars Program: Stephen Clark on the $2.1 billion SR-1 Freedom estimate — which doesn’t include the helicopters. NASA’s cost estimate for SR-1 Freedom is $2.1 billion, but that doesn’t include the helicopters. (Ars Technica)

​• The MAGA Right Is Only Pretending to Be Censored: Anne Applebaum on the State Department operation that spent a year and a half combing old files and civil servants’ personal emails to build its case. The conspiracy theory that persists even though no evidence supports it (The Atlantic)

• MapQuest is No. 1 on the App Store after refusing to change Lake Ontario’s name: Usage of MapQuest was 50x the normal level last week because MapQuest refused to change the name of Lake Ontario. The dial-up-era mapping service is having a comeback moment after declining to adopt “Lake America.” (CNN Business)

Video of the day: OnlyFans: How an $8B Cash Machine Got Stripped Bare

Be sure to check out our Master’s in Business this week with William McNabb, former CEO and Chairman of the Vanguard Group from 2007-17. He is also an advisor to Venrock, and was an investor and advisor to Altruist, which was just sold to VG for $2 billion.

Since the Fed Started Hiking, Multiple Expansion Has Nearly Vanished as a Source of PE Value

Source: Apollo

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

The Future Of Volkswagen?

Zero Hedge -

The Future Of Volkswagen?

Submitted by Thomas Kolbe

On Thursday evening, Volkswagen’s Supervisory Board unanimously approved the company’s “Future Plan 2030.” The decision had originally been scheduled for Friday. By moving faster, Volkswagen is not only seeking to underline that the situation is genuinely serious, but also that it has recognized the danger and is now taking control of the situation again. Symbolism is everything these days, as the damage caused by the company’s business strategy of recent years has become visible like a gaping wound. Supervisory Board Chairman Hans Dieter Pötsch described the decision as evidence of the Group’s determination to transform itself and work with all its strength toward its long-term future and competitiveness, as Pötsch put it. Nevertheless, the impression remains that the Group’s consolidation course represents less a controlled downsizing than an internal corporate collapse — the twilight of an economic era.

50,000 jobs worldwide are to be eliminated by the middle of the 2030s. Social plans and early-retirement offers will probably account for the lion’s share of the workforce reduction. Volkswagen is said to be facing an overcapacity of 500,000 vehicles in Europe. The restructuring costs for the Group could amount to as much as €10 billion. VW is stumbling over social hurdles that the company itself created during the good times — German labor law prevents a rapid, situation-appropriate adjustment of corporate structures to the conditions of the market and the company’s actual economic strength.

For Germany as an industrial location, the outlook is bleak: VW’s plants in Emden, Hanover and Zwickau, as well as the Audi plant in Neckarsulm, are likely to fall victim to the Group’s downsizing. The decision has not yet been formally made — by the end of June 2027, the company intends to clarify how the individual sites will proceed. From 2031 to 2034 onward, there will no longer be a competitive follow-up allocation of production at these plants, suggesting that VW is preparing to abandon the sites.

Remarkably, only a few days ago, CEO Oliver Blume had emphasized during a visit to the Zwickau plant that the site would, as he put it, receive the same chance as every other plant in Europe. Blume, however, had already pointed to its lack of profitability compared with other locations: Labor costs there were more than twice those of comparable European sites, according to Blume.

This is where the real problem lies: Volkswagen is no longer competitive. Excessive labor costs, excessive energy costs and rampant overregulation are driving not only carmakers but industrial production in general away from Germany.

There is indeed an urgent need for action in Wolfsburg. The China business in particular has virtually collapsed. Overall, revenue in the first half of the current year fell slightly to €158.1 billion. The problem is that operating profit plunged by 11.6 percent to €5.9 billion, leaving an embarrassingly low operating margin of just 3.8 percent. It is the continuing negative trend that is causing concern. Volkswagen therefore does not merely have a sales problem, but above all an immense cost problem. The possibility that liquidity problems may also be becoming visible was demonstrated by the sale of the Group’s large-engine subsidiary Everllence, formerly MAN Energy Solutions: Volkswagen sold a majority stake to U.S. investment firm Bain Capital, generating proceeds of €7.4 billion.

Volkswagen — and with it the entire German automotive sector as well as energy-intensive industries more generally — has its back against the wall. As Bild reports, citing internal Volkswagen Group data, factory costs per vehicle at the Emden plant amount to €4,850, roughly 4.5 times the comparable figure at VW’s Chinese plant in Tianjin, where the figure is €1,078. Direct production labor costs are reportedly €74 per hour in Emden, compared with €12 in Tianjin — a factor of more than six.

The mistakes of the past become particularly apparent when looking at labor productivity. In Emden, the calculation comes to 29 vehicles per employee per year, compared with 51.3 in Tianjin. That corresponds to roughly 77 percent more vehicles per employee. Absenteeism due to illness also differs dramatically in the internal comparison: In Emden, the rate is 10.5 percent, compared with 1.0 percent in Tianjin. This figure is more than merely a personnel-policy issue affecting internal operations. Has the downward spiral into which the Group and the entire industry have fallen perhaps already left its mark on employee morale? In any case, this particular figure requires interpretation, precisely because it is so striking.

The consequences of Germany’s nuclear phase-out and the continued expansion of climate regulation have been discussed often enough here. Taken together, they create the impression of an ideologically driven economic suicide by a satiated society that was convinced of its own success — and must now watch as its industrial substance, the engine of prosperity, is ground down between excessive energy and labor costs, growing regulation and the merciless forces of global competition.

Volkswagen has become a victim of increasing political central planning and the permeation of the corporate landscape with environmental ideology. The lesson now is clear: corporatism and reliance on political steering do not pay off in the long run. In the end, things turn out as they always do: Others pay the bill — namely employees and investors who had placed their trust in the future of the automaker.

* * * 

About the author:  Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Wed, 09/09/2026 - 03:30

Europe Heads Toward Winter With Too Little NatGas And Skyrocketing Prices

Zero Hedge -

Europe Heads Toward Winter With Too Little NatGas And Skyrocketing Prices

European natural gas prices are trading near their highest level in more than three years as the race to replenish storage puts a bid under prices, while ongoing disruptions through the Strait of Hormuz intensify competition for scarce LNG cargoes ahead of winter.

On Tuesday morning, European natural gas benchmark futures edged up nearly 3% to trade around 75 euros per megawatt-hour, the highest level since early January 2023.

Bloomberg reporter Priscila Azevedo Rocha noted, "Europe needs higher gas prices in order to attract more seaborne cargoes to its shores, but with less than a month left until the heating season, the region’s inventories are still lagging behind."

Rocha's view was very similar to the assessment in Goldman Sachs commodities expert Samantha Dart's note last week, in which she said December 2026 TTF prices may need to exceed 100 euros per megawatt-hour to discourage Asian LNG demand.

"We have argued that, in the absence of an improvement in LNG exports through the Strait of Hormuz (SoH) (Exhibit 1), European gas prices (TTF) would need to rise to discourage Asia LNG demand, thereby freeing incremental cargoes to be sent to Europe to help manage European gas storage levels," Dart explained.

EU natural gas storage facilities were around 67% full at the start of the week, compared with a 15-year average of around 72.5% for this time of year. Readers can see the latest chart pack from MarketEar on EU natural gas here.

Separately, Timera Energy analysts wrote in a note earlier, "As the European gas market heads into winter with unusually low inventories, its flexibility to absorb further supply or demand shocks is limited," adding, "Europe is pricing up to outcompete Asia for marginal LNG."

Beyond tight gas markets, the struggling continent also has to contend with a diesel crisis. As we warned in early August, "winter is coming"...

Tyler Durden Wed, 09/09/2026 - 02:45

Intense SoCal Heatwave Sparks Cooling Demand Surge, Testing Grid Reliability

Zero Hedge -

Intense SoCal Heatwave Sparks Cooling Demand Surge, Testing Grid Reliability

The National Weather Service has issued heat advisories across California's Central Valley and coastal areas, including the Bay Area and Los Angeles, with more severe extreme heat warnings in parts of Southern California. Cooling demand is expected to soar over the next several days, putting pressure on the power grid, particularly in the evening as solar generation declines.

Bloomberg reports that Los Angeles-area temperatures are forecast to reach 85F to 105F, roughly 10 to 15 degrees above normal. San Francisco could hit 86 degrees Wednesday, while Sacramento is expected to reach 100 degrees Thursday.

The California Independent System Operator forecasts that peak power demand will hit 47,379 megawatts Wednesday, below the September 2022 record of 52,061 megawatts.

CAISO, which operates the power grid serving roughly 80% of California and a small part of Nevada, forecasts Thursday's peak at around 45,183 megawatts.

Wholesale power prices are already reflecting the incoming surge in cooling demand. Southern California's SP15 hub saw its day-ahead price for Tuesday's 6 p.m. hour reach $87.69 per megawatt-hour, the highest hourly reading in a little over a week. Grid monitoring company Arcus Power compiled the data on its NRGStream platform.

Forecasts from Bloomberg show that maximum temperatures in California will peak Thursday at around 95F before sliding to about 75F by mid-month.

Tyler Durden Tue, 09/08/2026 - 23:00

NIH Ends Biodefense Focus, Signs Pact With Department Of War

Zero Hedge -

NIH Ends Biodefense Focus, Signs Pact With Department Of War

Authored by Paul D. Thacker via The DisInformation Chronicle,

Senior officials inside the Department of Health and Human Services (HHS) were baffled late last week when Congresswoman Rosa DeLauro issued a statement that Pentagon officials are trying to "raid" NIH funds to cover defense shortfalls. "The administration must provide Congress with a full accounting of how this interagency agreement was developed and exactly how much taxpayer money it is trying to transfer to DOD," wrote DeLauro, who serves as the top Democrat on House Appropriations.

DeLauro's statement spurred a flurry of media reports, including a fact-addled piece by Nature Magazine's Max Koslov, who falsely implied NIH was transferring hundreds of millions of dollars in research monies to the Department of War (DOW). Koslov also erred in misreporting that NIH maintains a biodefense research portfolio, even though NIH Director Jay Bhattacharya announced that he was cutting NIH's biodefense portfolio in an essay last January.

Ironically, Bhattacharya's essay appeared in Nature Medicine, a journal published by Koslov's own employer.

"Koslov is a fiction writer," said an exasperated HHS official. "Absolute fiction. Our comms people at NIH don't respond to him because he lies."

DOW released the interagency agreement with NIH on Friday, which shows no money has been transferred to NIH. The agreement was signed in early August by Bhattacharya and Robert Kadlec, a physician and former CIA officer who wrote most of our biodefense laws while working for several decades as a congressional staffer. Kadlec is now an assistant secretary at DOW in charge of counterterrorism and biodefense.

According to HHS and NIH officials, who have negotiated the agreement with Kadlec since February, Kadlec asked NIH to transfer the $2 billion allocated to NIH for biodefense over to DOW. NIH denied this request, although DOW officials have continued to press the $2 billion matter in private discussions.

The agreement allows two types of cooperation. One is called 7600A which lists the rules and terms for cooperation on a project, while a 7600B allows transfer of funds as payment. NIH has not signed any 7600Bs, and an official negotiating with DOW said NIH doesn't have any dollars to transfer to the Pentagon, because the money is already spent.

"The money on emerging infectious diseases is booked up for years in advance with contracts and grants," said the NIH staffer.

Part of the confusion stems from conflicting definitions and terminology deployed over the last two decades by Tony Fauci while he ran the biodefense program at the National Institute of Allergy and Infectious Diseases (NIAID).

As reported by Ashley Rindsberg in UnHerd, Fauci began the NIH's biodefense program in 2003 with billions of dollars directed to him by Vice President Dick Cheney, following an increase in biodefense spending after 9/11 and the anthrax attacks in 2001. This moved biodefense for the first time out of Pentagon oversight, while providing Fauci direct access to the White House and a $2 billion pot of money each year since.

But over succeeding decades Fauci began mixing the dollars designated for biodefense with programs targeted at other infectious diseases - eroding the distinction between public health research and scientific studies for biodefense. "Fauci spread the bioterrorism money into programs on emerging diseases," said the NIH official. "The reality is there's no $2 billion to give."

A senior Trump appointee who has worked with Bhattacharya and Kadlec to hammer out the agreement said that DeLauro is right to ask hard questions, which NIH needs to answer. But after the COVID pandemic mess, NIH is not the place to run bioterror research. "Look, everyone in this field knows that Kadlec is an operator," said the Trump official. "But Kadlec is an experienced hand and we need aggressive oversight on this research."

Referring to NIH money Fauci directed to the Wuhan Institute of Virology, he added, "What was the point of NIAID funding a BSL-4 lab in a foreign country? Nobody has explained that."

For the last three decades, Kadlec has labored to counter biological weapons for an alphabet soup of various agencies - JSOC, DOD, CIA, DHS, and the UN. Kadlec also wrote the critical legislation that undergirds America's biodefense infrastructure while a staffer for Senator Richard Burr of North Carolina.

Now the country's leading biodefense lobbyist at DLA Piper, Burr represents the University of North Carolina and sits on the board of READDI, a North Carolina biodefense company founded by virologist Ralph Baric.

In a 2023 interview with The DisInformation Chronicle, Kadlec pointed to a 2015 virus study published by Ralph Baric and funded by Fauci as evidence that the virology community had been dishonest with the American public about the scientific evidence that the pandemic started from a lab. Fauci and others, Kadlec said, served as a "cabal" to bury this evidence in an "information operation."

Last April, I reported for RealClearInvestigations that the NIH had yanked all of Baric's grants after determining that his research helped create the COVID virus. UNC put Baric on leave and he retired from the university in June.

"We gave Fauci billions and he burned the house down," said the Trump official working with NIH and DOW. "The world was on fire for two years and millions died. And if Democrats want the NIH to remain in the biodefense business, I wish them luck on selling voters on that."

A senior HHS official said it remains unclear how much money might eventually migrate over to DOW but it won't be anywhere near $2 billion as biodefense research is now gone from NIH's portfolio. Nonetheless, NIH faces an uphill battle convincing Congress that they are no longer in the biodefense game.

After determining it was biodefense research and unsafe for Americans, NIH dissolved an $82 million Fauci initiative last June called the Centers for Research in Emerging Infectious Diseases (CREID). CREID grantees included Peter Daszak of the nonprofit EcoHealth Alliance and Kristian Andersen of Scripps Research. But earlier this year, lobbyists inserted language into an appropriations bill that forces NIH to spend $18.2 million to fund CREID centers once again.

"We're not funding Kristian Andersen and that virologist crew," said the senior HHS official. "We're out of biodefense, and that CREID money will go to people looking at infectious diseases in public health."

Tyler Durden Tue, 09/08/2026 - 22:35

Lindsay Clancy Supporters Threaten The Father Of The Children She Murdered

Zero Hedge -

Lindsay Clancy Supporters Threaten The Father Of The Children She Murdered

Patrick Clancy, the father of three children killed by his former wife, Lindsay Clancy, inside the family's Duxbury, Massachusetts, home in January 2023, is now the target of an online harassment campaign built on the false claim that he was involved in their deaths.

The claim has no foundation. Lindsay Clancy confessed. She never disputed killing her three children. Her defense spent the trial arguing she wasn't criminally responsible because of severe mental illness, including postpartum psychosis, while prosecutors countered that she knew what she was doing. 

Nobody on either side of that courtroom argued Patrick did it or was involved in any way. However, that inconvenient fact hasn't stopped supporters of Lindsay Clancy from claiming otherwise.

On Tuesday, Attorney Howard Cooper of Todd & Weld, who represents Patrick Clancy, issued a statement addressing what he described as a coordinated harassment effort.

"Over the past months, Patrick Clancy and his family have been subjected to a relentless, escalating and destructive defamation campaign," Cooper said.

Cooper placed the blame on a familiar cast of characters.

He pointed to "minor celebrities, so-called influencers and outright conspiracy theorists" who found a payday spreading false claims about a grieving father, seemingly untroubled by the fact that his ex-wife already admitted to the killings.

The harassment hasn't slowed since Friday's mistrial, either. Cooper said it has only intensified, "now fueled by insatiable media coverage" and sitting "at a fever pitch," with real threats to Patrick's reputation, livelihood and life.

Somewhere in the online ecosystem that turned Lindsay Clancy into a folk hero for a certain strain of aggrieved women, a father who buried three children became the villain of his own tragedy, at least according to those sympathetic to his ex-wife.

Cooper said Patrick's aim is stopping the harassment, holding the people spreading it accountable, and getting back to preserving the memory of Cora, Dawson and Callan while supporting other women navigating perinatal mental health crises. The irony belongs to nobody except his accusers.

"Enough is enough—this spread of blatant and baseless falsehoods must stop," Cooper said. "Those responsible should understand that there will be consequences, and every appropriate measure will be pursued to hold them accountable, including legally." Cooper confirmed he has already notified law enforcement.

The mistrial occurred because the jury could not agree on whether Lindsay Clancy was criminally responsible for the deaths after one juror held out for a verdict that would have found Clancy criminally responsible. District Attorney Tim Cruz still has the option to retry the case, and prosecutors have considered a retrial at a later date. However, Cruz has not given any definite timeline after the court announced the mistrial.

Patrick Clancy sat through much of that trial as the prosecution's first witness. He described the day his children were murdered, his former wife's mental collapse in the weeks before, and the moment he came home with food and medicine to find his children gone. None of that has translated into sympathy from the people now targeting him. 

Attorney David Meier, also of Todd & Weld, issued his own statement after the mistrial, striking a different tone than the online mob. "Patrick Clancy is grateful to the Court and to the jurors for their hard work, their commitment, and their perseverance," Meier said. "The loss of Patrick's children is something from which he will never recover and from which there will never be closure. The prospect of reliving this tragedy through another trial is extraordinarily painful."

Patrick has said before that he forgives Lindsay, calling her ill instead of evil, a distinction that seems to matter to no one running the harassment campaign against him. 

Tyler Durden Tue, 09/08/2026 - 22:10

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