Trump Announces Federal Support To Keep Local Energy Provider Online In Ohio

President Donald Trump said at an Oct. 12 rally in Youngstown, Ohio, that the departments of Energy and Commerce will help keep SOBE Thermal Energy Systems, a troubled downtown steam utility, running as cold weather approaches. "You're going to stay nice and warm during the winter," Trump said at the Covelli Centre rally for local Republicans ahead of the midterms.

President Donald Trump takes the stage during a rally at the Covelli Centre in Youngstown, Ohio, on Oct. 12, 2026. Travis Gillmore/The Epoch Times

Details were thin. The Epoch Times said it had asked the departments for comment on what federal support would look like.

SOBE has been in trouble for a year. A Mahoning County judge appointed a receiver last fall at the request of the Public Utilities Commission of Ohio, and its rented boiler was repossessed days later over unpaid bills, the Vindicator reported. A January waterline rupture left 28 downtown customers without heat and hot water in below-zero temperatures, the paper said.

As the Epoch Times notes further, Trump also celebrated the Department of War choosing Cleveland for its 46,000 square-foot submarine component manufacturing facility, which will see to maintenance, production, and repair.

Although he is not on the ballot, the president is on a fast-paced campaign tour, having already addressed crowds in Tennessee, New York, and Nebraska, among other states, with the stop in Ohio's Mahoning Valley to boost GOP voter turnout in the November election.

He last visited the Buckeye State on Oct. 3 when he headlined a rally in Vandalia.

The incumbent party has historically faced an uphill battle in the midterms, which Trump has vowed to turn around.

On Nov. 3, voters will determine control of the House of Representatives and Senate, with close races nationwide and Ohio potentially holding the key to victory.

"One vote can steer Congress in a direction that you're not going to be happy with, and it's not Ohio values," Trump said, urging voters to back the state's Republican candidates.

Several speakers, including Trump, also recognized Columbus Day, and the vandalism of statues in an attempt to erase the memory of the Italian explorer in recent years.

"The radical left maniacs, they took the name Columbus, Christopher Columbus, away," Trump said. "We have to win, we have to keep winning, because they'll do it again."

Rep. Michael Rulli (R-Ohio), heavily favored in his reelection race against Democrat Elizabeth Kirtley, chatted with constituents on the floor of the arena before taking the stage.

"This is the blue-collar, Bruce Springsteen, Archie Bunker way of living right here. This is the populist movement," Rulli told The Epoch Times. "So with Trump coming here, he has to wake up our voters. They have to show up. Whoever carries Ohio will be the party that shows up to vote."

Sen. Jon Husted (R-Ohio), who was appointed to the Senate to fill Vice President JD Vance's seat, is facing former Sen. Sherrod Brown (D-Ohio) in a consequential battle.

"We have a sense of pride, a sense of humor around here, and ... we're blessed," Husted said during the rally.

His opponent lost to Sen. Bernie Moreno (R-Ohio) in 2024.

"So you fired him two years ago. And now, he wants his job back, and he's making all kinds of promises," Moreno told supporters, while emphasizing the voting records of Democratic senators.

"Three times in a row, the Democrats in the United States Senate shut down our government, refused to pay American citizens who showed up to work a paycheck - not for a day or two, for months."

Recent polls show a close race, with Brown slightly ahead in several results.

Biotech entrepreneur Vivek Ramaswamy, a Republican, is facing former Ohio health director Dr. Amy Acton, a Democrat, in the race to replace term-limited Republican Gov. Mike DeWine.

Ramaswamy said his plan is to lead with conservative values, guided by the nation's founding principles.

"We will always defend the greatness of this country without apologizing for who we are," he said.

"That is who we are as Americans.

"It means we, the people, create a government that is accountable to us ... that we believe in liberty and freedom and success over communism, success over socialism."

The gubernatorial candidate called on audience members to reach out to their family and friends to help Republicans secure victories across the state.

"We're counting on you. That is on your shoulders," Ramaswamy said. "This is probably the most important election for governor that our state has ever seen in our history."

Native Ohioan Jon Gruden, 2003 Super Bowl-winning NFL coach with the Tampa Bay Buccaneers and Husted's teammate at the University of Dayton, introduced the president.

"To maximize our true potential, we've got to believe in our leadership," Gruden said. "We've got to do it together. And if we can get this group elected, great days are ahead."

Thousands of supporters from across Eastern Ohio and Western Pennsylvania cheered and waved signs throughout the nearly four-hour program.

At least three protesters were removed from the arena, with one incident turning physical before the individual was forcibly evicted.

The president is scheduled to speak at GOP campaign rallies in Wasilla, Alaska; Bullhead City, Arizona; Kalispell, Montana; and Dalton, Georgia in the coming days, with more stops expected over the next three weeks before Election Day.

Tyler Durden Tue, 10/13/2026 - 21:20

"We Have Guns Too": Totally Drunk Indiana Democrat Goes On Live TV, Makes Ass

A Democratic candidate for local office in deep-red rural Indiana delivered a rambling, apparently intoxicated performance during a televised candidate forum, responding to a standard policy question by declaring she would fire Republicans, calling MAGA supporters racist and unintelligent, and closing with the line "We have guns too."

Jaime West, the Democratic nominee for Fayette County Council District 4, appeared on LocalTV3's October 9 candidate forum, hosted by Connersville News-Examiner managing editor Amy Graham-McCarty. When asked what one decision she would make that might be unpopular with some voters but in the county's best interest, West paused, asked the moderator to repeat the question, and then answered: "Firing all Republicans. I wouldn't let them... I don't even talk to them. I don't like them."

She continued that the county's own state representative had voted against her own party, then shifted to blaming local voters for "this ICE coming into our communities, stealing people's jobs." West distinguished between "good Republicans" and "these MAGAs," describing the latter as "just racist and aren't very intelligent at all." She also claimed she had been "threatened so many times to my face by MAGA," including an allegation that "the sheriff's nephew threatened to blow my head off."

The Fayette County sheriff says he has "5 nieces and 0 nephews." Sheriff Zac Jones told Fox News Digital he doesn't know West, and Fox noted it wasn't immediately clear which sheriff she meant.

When given a final opportunity for closing remarks to voters, West said, "We have guns too."

The clip, amplified on X by journalist Ryan Grim with the caption noting it was what happens "when you're at happy hour and are reminded you agreed to do an interview about your race," has circulated widely. Viewers and local online commenters have widely described West as appearing intoxicated during the forum. Fayette County, Indiana, is heavily Republican; Donald Trump received roughly 77-78% of the vote there in 2024. West faces Republican Gary Keener Jr. in the November 3 general election. Early voting is already underway.

Watch this to the end, you won't regret it. This is what happens when you're at happy hour and are reminded you agreed to do an interview about your race.

— Ryan Grim (@ryangrim) October 13, 2026

County council seats typically focus on budgets, taxes, and basic local services rather than national immigration or partisan purges. West's on-air answer treated the position as an opportunity to exclude the majority of her potential constituents from consideration.

The full segment remains available on LocalTV3. Neither West nor the Indiana Democratic Party immediately responded to requests for comment from Blaze News, and Fox reported West could not be reached.

Tyler Durden Tue, 10/13/2026 - 20:30

Military's Top Archbishop Tells Catholic Troops To Seek Exemption From Hasan Firing Squad, Likens Livestream To Terrorists

Archbishop Timothy Broglio, the Catholic Church's archbishop for the U.S. armed forces, told Catholic service members assigned to Nidal Hasan's firing squad to request to be excused, in a statement Monday that also condemned War Secretary Pete Hegseth's plan to livestream the Dec. 3 execution of the Fort Hood shooter.

Archbishop Timothy P. Broglio of the U.S. Archdiocese for the Military Services  (CNS photo/Lola Gomez)

Broglio, who led the U.S. bishops' conference from 2022 to 2025, wrote that he wanted to "express my disapproval of what is proposed regarding the execution of the terrorist Hasan." "Do we really want to imitate the terrorists of this world and make a public spectacle of barbarically killing our adversaries?" he asked, according to CBS News. He also questioned broadcasting to the world the execution of "a man in a wheel chair." Hasan has been paralyzed from the chest down since military police shot him during the 2009 attack.

The statement cites the Catechism and Pope Francis on the Church's opposition to capital punishment, then lists the costs Broglio sees in a public killing: "moral injury" to the soldiers who carry it out, the exposure of young viewers during the nation's 250th anniversary year, and the effect on the military's reputation. He asked people of goodwill to push for the decision to be reconsidered, or at least to keep children from watching. The Pentagon did not immediately respond to CBS's request for comment.

A specific unit has already been picked to carry out the execution, and officials are weighing the psychological toll as they choose which soldiers will fire, CNN reported Saturday, citing sources. Because the execution is being carried out under a legal order, it is unclear whether those soldiers can decline. One source noted that while many soldiers have killed in combat, this would be different: the prisoner would be immobile and positioned as a target.

Hegseth's announcement caught people across the Pentagon and the Army off guard, three sources told CNN; for many, his interview last week with Jack Posobiec aboard the USS Abraham Lincoln was the first they heard of a public execution. Hegseth said it would be public "because people need to understand that there's serious consequences for these types of things."

Army regulations limit the witnesses at a military execution to a short list that includes the prisoner's family, the victims' families, the press and a chaplain. One source said Hegseth, acting Army Secretary Adam Telle and Pentagon spokesman Sean Parnell's team settled on a livestream as what "public" would mean, and the Pentagon confirmed the livestream on Thursday, saying details would follow.

President Trump told reporters Saturday he hasn't made a final call on the livestream, a day after saying he "absolutely" approved it. "There are two thoughts: don't show it and show it," Trump said at the White House, adding that he knows "what the military would like to do" but "I'll make a decision," according to NBC News. He also reposted on Truth Social a Dallas News piece in which pastor Robert Jeffress, a longtime ally, backed a public execution.

Broglio's statement follows Archbishop Paul Coakley, president of the U.S. Conference of Catholic Bishops, who called the livestream "a barbaric promotion of a culture of death" on Friday. Pope Leo XIV, the first American pope, marked the World Day Against the Death Penalty with a post on X saying "the requirements of justice can be met without recourse to capital punishment," without mentioning Hasan. Broglio's opposition predates the livestream: when Hasan was sentenced in 2013, he said "the church teaches that unjustified killing is wrong in all circumstances. That includes the death penalty."

In October 2021, as the Pentagon threatened to punish troops who refused the COVID-19 vaccine without an approved exemption, Broglio wrote: "No one should be forced to receive a COVID-19 vaccine if it would violate the sanctity of his or her conscience." Hegseth hailed the troops discharged for refusing that vaccine as "warriors of conscience" last year, after the Trump administration ordered them reinstated with back pay.

The livestream has drawn objections from both parties. Sen. Lisa Murkowski (R-Alaska) said she "would expect this from terrorists and dictators, but not here in America," and Sen. Kevin Cramer (R-N.D.) said the "death penalty is not entertainment," per CBS. House Speaker Mike Johnson told CBS that some House Republicans have "concerns" he plans to raise with the White House, warning the video could become "a recruiting tool for future terrorists." Sen. Thom Tillis (R-N.C.) called the plan "beyond disgusting," and Sen. Chris Murphy (D-Conn.) called public executions "medieval." Vice President JD Vance, a Catholic, said he didn't know whether the livestream would actually happen and that he wouldn't watch it, as we reported.

Trump signed off on execution by firing squad, on Hegseth's recommendation, earlier this month, and the Army has set it for 1 p.m. Dec. 3 at Fort Hood, as we noted last week. Hasan, a former Army major and psychiatrist, killed 13 people - 12 soldiers and a retired soldier working as a civilian - and wounded more than 30 at a soldier readiness center at Fort Hood on Nov. 5, 2009, as troops prepared to deploy. A court-martial convicted him in 2013, and the Supreme Court declined to review his case last year, Stars and Stripes reported. Alonzo Lunsford, a retired staff sergeant who survived the attack, told CNN that broadcasting the execution "is not acceptable."

If it goes ahead, it will be the first military execution since the Army hanged Pvt. John A. Bennett at Fort Leavenworth in 1961, and the Army's first by firing squad since Pvt. Eddie Slovik was shot for desertion in France in 1945. The Death Penalty Information Center says it has no record of any U.S. execution being livestreamed. The last known large-scale public execution in the country was the 1936 hanging of Rainey Bethea before roughly 20,000 people in Kentucky.

Tyler Durden Tue, 10/13/2026 - 20:05

Trump Hints At Possible Meeting With North Korean Leader

Authored by Aldgra Fredly via The Epoch Times,

U.S. President Donald Trump said on Oct. 12 that he might meet with North Korean leader Kim Jong Un during his planned visit to Asia next month.

U.S. President Donald Trump meets with North Korean leader Kim Jong Un at the North Korean side of the border at the village of Panmunjom in Demilitarized Zone, on June 30, 2019. Susan Walsh/AP Photo

Asked by a reporter whether he expects to meet Kim during the trip, Trump said: "I may. That will be exciting, won't it? But I get along with him."

The president is expected to attend the Asia-Pacific Economic Cooperation summit in Shenzhen, China, scheduled for Nov. 18-19.

The Epoch Times reached out to the White House for further details but did not receive a response by the time of publication.

Trump said in August he planned to meet Kim later this year but gave no details.

"He has 57 very powerful nuclear weapons," Trump told reporters on Aug. 19. "We should have never have allowed it to happen. If I were president, I wouldn't have let it happen, but he's got them."

Trump met with Kim three times in 2018 and 2019 during his first term. Negotiations over Pyongyang's nuclear program collapsed in 2019 due to disagreements over North Korea's denuclearization efforts and the easing of U.S.-led sanctions.

Tensions on the Korean Peninsula have been rising over the years because of North Korea's repeated missile tests.

The United States, South Korea, and Japan, in response, have enhanced their deterrence strategies and expanded their joint military drills, which the North Korean leader portrays as invasion rehearsals.

The North Korean leader said earlier this year that relations with the United States could improve if Washington abandoned what he called a hostile policy against Pyongyang, state media KCNA reported on Feb. 26.

Kim said the country would never give up its nuclear weapons and ruled out the possibility of engaging in talks with South Korea.

North Korea unveiled a new defense industry museum featuring various weapons, including the Hwasong-20 intercontinental ballistic missile, on Oct. 11.

A display in front of the Hwasong-20 launcher appeared to show a world map depicting ranges extending beyond the U.S. mainland to the Middle East, Australia, and South America, said Shin Jong-woo, secretary general of the Korea Defense and Security Forum.

"The exhibition appears intended to highlight the achievements of Kim's defense science development program," Shin said. "It gave the impression of propaganda aimed at gaining a strategic advantage ahead of a potential North Korea - US summit."

Kim attended the opening ceremony alongside his wife and daughter, according to state media.

North Korea fired several missiles toward the sea off its eastern coast on Oct. 12, with one projectile traveling more than 559 miles, according to South Korea's Joint Chiefs of Staff.

The South Korean military said it has strengthened surveillance to prepare for additional launches and remained on an all-out readiness posture, adding that it would share relevant information with the United States and Japan.

The Japanese Ministry of Defense also detected the launch, saying that the projectiles landed near North Korea's east coast or in the Sea of Japan. The ministry said it was assessing whether the missiles had violated Japan's territorial waters or exclusive economic zone.

North Korea's missile launches came just days after South Korea launched its first hypersonic glide vehicle on Oct. 8. South Korean presidential spokesperson Kang Yu-jung said the launch was successful and that it marked a major milestone in securing a new deterrent.

Jill McLaughlin, Evgenia Filimianova, Guy Birchall, and Reuters contributed to this report.

Tyler Durden Tue, 10/13/2026 - 19:45

Selma Blair Hit With FBI Summons And State Assault Counts After Allegedly Biting Flight Attendant On Delta Flight

Actress Selma Blair was arrested after a Delta Air Lines flight from Los Angeles landed at New York's JFK Airport on Sunday night, following an alleged assault on the crew, CBS New York reported. She was arraigned in Queens the next evening and pleaded not guilty to two counts of second-degree assault, and the FBI separately issued her a federal summons. Everything described below is alleged; she has been charged, not convicted.

Actress Selma Blair arraigned after alleged Delta flight altercation

Delta Flight 938 got to the gate ahead of schedule, according to ABC7 New York, and Delta said there was no operational impact. Two flight attendants were hurt and one went to the hospital, the Port Authority Police Department said. A law enforcement source told CBS that one was bitten and the other suffered a laceration, and that the crew had to restrain Blair for the rest of the flight. TMZ, citing its own sources, put it differently: that she punched one attendant and bit another.

Before landing, the pilot asked air traffic control for medical personnel at the gate. "A bloody nose as well as some bite marks," he said, according to audio captured on ATC.com, adding that the passenger "also bashed her head on the bulkhead or something like that." The pilot did not say whose nose was bloodied or who was bitten. CBS also reported, citing law enforcement sources, that Blair tried to open a cabin door. Neither ABC7 nor TMZ repeated that claim.

The two state charges cover only what allegedly happened after she left the plane, not the flight itself. Prosecutors say Blair kicked a Port Authority police officer while being moved from JFK into an ambulance, and then kicked a nurse at Jamaica Hospital. ABC7 reported that the officer, Maria Suarez, was allegedly kicked repeatedly in the face, neck and chest and reported swelling to the jaw, and that the nurse reported substantial chest pain. Both counts are charged under New York Penal Law 120.05(3), and the criminal complaint was filed in Queens.

A judge set bail at $20,000 cash, a $60,000 bond or a $60,000 partially secured bond, and scheduled the next state court date for Jan. 19, 2027.

The in-flight conduct itself has so far produced only a federal violation notice with no court date. A federal law enforcement source told CBS the FBI summons covers assault within the special maritime and territorial jurisdiction of the United States. ABC7 reported that it is answerable in the petty offenses court in Brooklyn federal court, that no appearance date has been set, and that the FBI and the FAA are both investigating.

Blair's side says the cause was medical. In a statement quoted by ABC7, her representative said "Selma experienced a medical emergency that led to the alleged conduct" and that she "is currently in stable condition." Her attorney told CBS the same without giving specifics. Blair, who was diagnosed with multiple sclerosis in 2018 and announced remission in 2021, was traveling with her service dog, a Labrador named Scout, which TMZ said her lawyer collected at JFK. Delta said it has "zero tolerance for unruly or unlawful behavior, as the safety of our customers and crew always comes first."

It is not the first time Blair's behavior on a Delta flight has made news. On June 20, 2016, she was taken off a Cancun-to-Los Angeles flight on a stretcher. The next day she told Vanity Fair that she had mixed alcohol with medication, which "caused me to black out and led me to say and do things that I deeply regret," and apologized "to all of the passengers and crew that I disturbed," as UPI reported at the time. CBS noted that her 2022 memoir includes a chapter, "Bite Me," about past occasions when she bit other celebrities while drinking.

Blair's film credits include "Cruel Intentions," "Legally Blonde" and "Hellboy," and she was a contestant on "Dancing with the Stars" in 2022.

Tyler Durden Tue, 10/13/2026 - 19:20

Bank Of America Fined $1.2 Billion For Failing To Report $5 Billion In Suspicious Transactions, Including Chinese Money-Laundering Networks

Most banks spend the night before their earnings call polishing the NII slide and fudging the reserve release calculations. Bank of America will be spending it reading a Treasury press release about itself.

Just after the close on Tuesday, Treasury announced more than $1.21 billion in penalties against BofA for violating anti-money-laundering and sanctions laws. Treasury calls it the third-largest penalty in its history, and the OCC calls its piece the largest it has ever handed out. The bank admitted it willfully violated the Bank Secrecy Act. It did not report more than $5 billion in suspicious transactions on time, and more than $1 billion of that was tied to what Treasury calls "priority" national-security risks, including Chinese money-laundering networks and illicit finance along the southwest border.

Here is how the money breaks down, per Treasury's press release:

The Financial Crimes Enforcement Network (FinCEN) assessed a $1.2 billion penalty for the Bank's failure to mitigate and report priority national security risks, including Chinese Money Laundering Networks and illicit finance along the southwest border.

The OCC assessed a $750 million civil money penalty for the Bank's deficient and ineffective BSA/AML (anti-money laundering) compliance program.

The Office of Foreign Assets Control (OFAC) announced an $11.6 million settlement agreement with the Bank over apparent violations of numerous sanctions programs, including on Iran, Russia, narcotics, and global terrorism.

The penalties don't simply add up. Per CNBC, the OCC's $750 million is credited toward FinCEN's $1.2 billion, which gets you to about $1.21 billion once OFAC's change is added. In other words, it is a $1.2 billion fine with a record attached.

"Prioritized Its Revenues"

The details are where it gets awkward. Treasury did not say BofA was simply overwhelmed. It said this:

As these issues arose, Bank of America prioritized its revenues and minimized the impact on its required compliance resources. The nature and extent of the Bank's resulting reliance on law enforcement inquiries, requests by other financial institutions, and similar interventions over its own internal, automated controls... meant that the Bank effectively outsourced to third parties a substantial portion of its proactive detection and reporting obligations.

Translation: BofA's money-laundering detection system often amounted to waiting for a subpoena.

Treasury also says the bank "allowed suspicious activity to accumulate uninvestigated for extended periods." That meant SARs arrived too late to help law enforcement much. Its customer due diligence also "failed to account for customers' extensive reliance on payments from unknown third parties," and the bank didn't act on red flags that included "potential ties to narcotics trafficking proceeds," even after its own compliance staff raised concerns about trade-based money laundering and fraud.

The OCC's language was harsher. Its release says the bank's transaction monitoring "resulted in the Bank failing to properly monitor trillions of dollars in transactions," that "the Bank knew for years" it was failing to escalate potentially suspicious activity, and that its BSA Officer and staff "lacked sufficient skills and expertise." Comptroller Jonathan Gould said:

"The second largest bank's egregious and continued BSA violations warrant the OCC imposing its largest [civil money penalty] ever assessed against a bank."

https://t.co/f5Z7atptce

— Comptroller Jonathan Gould (@USComptroller) October 13, 2026

OFAC, for its part, found 475 apparent sanctions violations. They included payments routed through blocked banks and designated individuals who were allowed to withdraw funds "due to poor sanctions alert calibration." OFAC called the violations "non-egregious," which is the regulatory version of "could have been worse."

About That 2024 Order

None of this came out of nowhere. On December 23, 2024, the OCC issued a cease-and-desist order against BofA for BSA and sanctions deficiencies, "including a failure to timely file suspicious activity reports and failure to correct a previously identified deficiency related to its Customer Due Diligence processes." The order itself described a "systemic failure" to set proper transaction-monitoring thresholds. That order came with no fine, a point American Banker noted at the time. As we reported back in October 2024 (Oct 30, 2024), barely two weeks after TD's guilty plea, BofA disclosed in a filing that it was in talks with several federal regulators over its

Bank Secrecy Act/anti-money laundering and sanctions compliance programs... including transaction monitoring, training, governance, and customer due diligence... resolution of these discussions may include one or more public orders by the regulators.

At the time we wondered which of the big US banks would be "named next" after TD. It took two years and an extra cease-and-desist, but we can now cross that question off the list.

(The same filing also disclosed a separate CFPB inquiry into payments on the Zelle network, which BofA said it might fight in court. Nothing in today's Treasury, OCC or OFAC releases mentions Zelle. That was a different matter with a different regulator.)

This time there is a fine, and the reason is what happened afterward. Per Treasury:

After agreeing to the 2024 Order, the Bank still failed to prioritize BSA/AML compliance... For example, more than a year after the 2024 Order, the Bank still failed to escalate potentially suspicious activities to investigators for review.

Put differently, the first notice was free. The follow-up came with a bill.

The TD Comparison

The obvious benchmark is TD Bank. In October 2024 TD pleaded guilty to BSA and money-laundering conspiracy charges and agreed to roughly $3 billion in total penalties across agencies, according to the DOJ. That included a $1.8 billion criminal resolution, a $450 million OCC penalty, and an asset cap on its US operations. We flagged back in May 2024 that the AML mess risked sending TD into a "lost decade."

BofA's settlement differs in a few important ways:

• About 40% of TD's total: $1.2 billion versus about $3 billion.
• Admission, not a plea: BofA admitted willful BSA violations to FinCEN. No source we've seen mentions criminal charges or a DOJ resolution. 
• No asset cap: Instead of a growth restriction, BofA gets a third-party lookback and independent reviews of its monitoring, CDD and correspondent-banking due diligence. Those reviews focus on the southwest border and cartels, Iran and Russia.
• OCC records: BofA's $750 million beats TD's $450 million OCC penalty by a wide margin.

In other words, a record fine, but nothing like TD's sentence.

Some Napkin Math

BofA told CNBC the penalties mean a $1.2 billion non-tax-deductible charge in Q3 results (perfect timing for tomorrow's Adjusted EPS to miss net of "one time almost criminal items", cutting net income by about 17 cents per share. Against the roughly $1.11 consensus EPS, that is about 15% of the quarter's expected earnings gone before the call starts.

Another way to measure it: $1.2 billion against "over $5 billion" in suspicious transactions not reported on time works out to about 24 cents per unreported dollar. As compliance budgets go, the cheaper option was always going to be the compliance budget.

The bank says remediation costs are "already reflected in its current expense base," so the hit should be one-time, at least on paper.

The Stock

The timing was unusual. BAC closed Tuesday at $53.94, down 1.2% in concert with a broader bank selloff (after what were good, if not great earnings by JPM, Citi and Goldman) but the news came out around 4:09pm ET, right after the bell. In other words, regular-session weakness came alongside a soft tape for financials and can't be pinned on the fine, and sure enough BofA sold off another 2% after hours once the news hit. That leaves BAC down about 3.6% YTD, and well below its 52-week high of $65.22.

TL/DR: the $1.2 billion is not the story. BofA can cover it with about a week of NII (6 days when the 10Y hits 6%); the story is that Treasury, the OCC and Bessent all used the same phrase about the second-largest US bank: it "prioritized its revenues" over compliance. And BofA kept doing so for more than a year after signing a cease-and-desist. For a CEO who has built his tenure on "responsible growth," that phrase will be hard to escape. The independent reviews and lookback will likely produce more late SARs, and possibly more findings, over the coming quarters.

Next catalysts:

1. Q3 results, Wednesday before the open; call at 8:30am ET. Consensus is about $1.11 EPS on about $30.6–30.7 billion revenue, with FTE NII of about $16.55 billion (Zacks). BofA guided 2026 NII growth to the upper end of 6–8% in July. A Q3 NII print of $16.3 billion or more keeps that credible, per one preview.
2. On the call, listen for whether management reports results excluding the 17-cent charge (it will). Also listen for any change to remediation spending or the expense outlook, whether more regulatory or DOJ exposure remains (a "no comment" will say a lot), whether buybacks are affected, and NII guidance after the September Fed move.
3. Moynihan on CNBC at 10:20am ET, where "responsible growth" is likely to come up more than he'd like.

Going into the quarter, Goldman's desk said it wanted BofA to show "any NII upside updated for the rate curve and can this flow into operating leverage?" Operating leverage is easier to show without a $1.2 billion penalty line item.

Still, the main lesson for anyone thinking of skimping on AML: it costs about 24 cents on the dollar to make your (allegedly criminal) clients extra happy, and the bill eventually arrives.

Much more in the full Goldman Desk Bank/Fins EPS Preview note, available to pro subs.

Tyler Durden Tue, 10/13/2026 - 19:00

Jon Stewart Tells Democrats To Skip 'Performative' Impeachment Hearings If They Win Congress

Comedian Jon Stewart told Democrats last week that a House majority should go to the economy and not to a new round of Trump impeachment hearings. Answering fan questions at the end of Wednesday's episode of his podcast, The Weekly Show, Stewart was asked whether impeaching Trump would be a strategic mistake given that a conviction is unlikely, Mediaite reported.

Stewart said he did not want to see a "five-act performative play of House hearings," and he said Trump and his allies know how to "run out the clock." He described the country as being in a "triage" situation and said what he wants is "a full government effort on rebalancing this economy," with real ideas on labor versus capital.

Stewart pointed to the two earlier impeachments and the Jan. 6 inquiry as proof that hearings do not produce accountability. Per Mediaite, he asked what reason there was to expect Democrats could succeed now if they could not bring accountability for Jan. 6 in two years.

He did not rule out oversight altogether. Fox News quoted him saying Democrats could investigate if they want, but that he did not want "everybody having the opportunity to pantomime accountability," and that they should "govern."

Trump addressed the subject Wednesday in the Oval Office, Mediaite reported, dismissing the chance that Democrats would impeach him and saying, "I can do whatever I want, if I want."

Stewart is not the only Democratic-aligned voice urging restraint. Fox said James Carville and Al Hunt cautioned against impeachment on their podcast Tuesday, with Hunt saying Democrats should "Investigate, investigate, investigate." Fox also quoted Rahm Emanuel, in a Sunday interview, saying, "You're never going to get an impeachment." House Minority Leader Hakeem Jeffries has declined to say whether he would support impeachment proceedings, Fox noted.

Tyler Durden Tue, 10/13/2026 - 18:40

Iran Rebuilding Missile Stockpile For Possible Renewed Fighting, Israeli Officials Say

Authored by Tom Ozimek via The Epoch Times,

Iran has rebuilt a significant portion of its ballistic missile stockpile and is working to expand it as it prepares for possible renewed fighting with the United States and Israel in the coming weeks, senior Israeli security officials told Epoch Magazine Israel.

Missiles produced by Iran’s armed forces are displayed near a row of Iranian flags in Tehran, Iran, on Feb. 11, 2026. Majid Saeedi/Getty Images

Israeli officials assessed that the buildup reflects Tehran's efforts to strengthen its deterrence capabilities and improve its position should diplomacy fail. They said Iran's moves do not necessarily indicate that the leadership in Tehran has decided to go to war.

Israel has raised its alert level as it prepares for possible renewed fighting, security officials said, warning that mounting economic pressure could push Tehran toward an offensive against U.S. targets and Persian Gulf energy facilities, potentially also targeting strategic sites in Israel.

The assessments come as Iran's security chief threatened to strike U.S.-linked technology infrastructure across the region if Washington resumes attacks.

U.S. President Donald Trump has ruled out new U.S. strikes before the Nov. 3 midterm elections, citing ongoing negotiations, while maintaining a naval blockade of Iranian ports and expanding sanctions on Tehran's oil trade.

Israeli Officials Assess Risk of First Strike

The Israeli officials said Iran's worsening economic crisis, declining state revenues, and continued U.S. naval blockade could deepen fears among Iranian leaders about domestic instability and the survival of the regime.

Under those circumstances, they said, Tehran could consider an offensive intended to break the blockade and increase pressure on the United States and its allies.

In one scenario, Iran could conclude that Trump intends to attack immediately after the elections and that negotiations offer no further prospect of an agreement. In that case, the officials said, Tehran could attempt to strike first with a large-scale attack on regional targets.

Such an offensive could bring a severe military response and deepen the crisis facing Iran's leadership, they said.

A senior Israeli security official said Israel's political leadership could order an offensive operation if intelligence detects imminent preparations for an attack on Israel.

Iran Threatens Technology Assets

Mohsen Rezaei, secretary of Iran's Supreme National Security Council, told state-run Press TV that U.S.-linked technology infrastructure worth more than $2 trillion could be targeted if Washington attacks again.

"We have not yet included these assets among our targets. But if war breaks out, many of these cables, data centers, artificial intelligence facilities, and numerous other sites will be destroyed," he said in the interview, conducted on Oct. 10 and reported on Oct. 12.

Rezaei said Iran had held back some military capabilities during earlier phases of the conflict and was ready to deploy additional capabilities.

"Today, we are fully prepared to introduce new capabilities if the war starts again," Rezaei said, without specifying what those would include.

He also said Tehran remains determined to exert control over the Strait of Hormuz, the strategic oil shipping route where Iran has attacked tankers it says refuse to adhere to its traffic management scheme.

"We will not back down on this issue," Rezaei said.

On diplomacy, Rezaei said Washington had accepted some of Iran's seven proposed conditions for a settlement but left others unclear.

Blockade Remains as Talks Continue

Trump said on Oct. 8 that the two countries were having "productive conversations" and that the United States would not attack Iran before the midterm elections.

The U.S. naval blockade of Iranian ports and shipping would remain "in full force and effect" as talks continue, Trump said. He also said that he expects oil prices to drop after the election.

Crude oil prices have been elevated because of disruptions to tanker traffic in the Strait of Hormuz, despite U.S. military efforts to facilitate transit.

The U.S. Central Command, the military command responsible for Iran operations, said on Oct. 8 that 1.25 billion barrels of oil had passed through the strait in recent months, while Iran had shipped none because of the "ironclad blockade."

Brent crude, the global benchmark, traded at more than $105.7 per barrel on Oct. 12, the highest price in more than two weeks, as ongoing Middle East tensions fueled concerns about further disruptions to energy supplies.

"In order to see a more meaningful move lower in refined product prices, we will need to see normalization in the Middle East," ING analysts wrote in a note on Oct. 12, commenting on an earlier dip in crude prices after Trump announced an "energy ceasefire" between Russia and Ukraine.

Tyler Durden Tue, 10/13/2026 - 18:20

Can Elon Musk Rescue Republicans In November?

Elon Musk has given more than $276 million to Republican groups and his own America PAC since July, making him the largest known donor of the 2026 midterm elections, according to figures provided to The New York Times ahead of Thursday's federal filing deadline.

The spending marks a reversal from May 2025, when Musk said, "In terms of political spending, I'm going to do a lot less in the future."

The money has helped Republicans build a financial advantage in a cycle with difficult political conditions for the party. Republican outside groups, including President Trump's super PAC, are buying heavy late-campaign advertising, while Democrats have voiced concern about their own finances and have no billionaire donor operating at Musk's scale, the Times reported.

The largest single check went to the Senate Leadership Fund, the main super PAC backing Republican Senate candidates. Musk gave the group $158 million over the summer, a quarterly record for one donor at the organization and more than its Democratic counterpart raised from all sources in the same quarter.

America PAC, which Musk founded in 2024, received more than $76 million from him over the same period. His federal committee contributions for the 2025-26 cycle now total about $366 million, including $90 million given before July. Musk previously gave roughly $290 million during the 2023-24 cycle. People briefed on his giving told the Times he also made undisclosed donations in both cycles, including seven-figure contributions this year through groups that keep their donors private.

From July through September, Musk also gave $20 million to the Congressional Leadership Fund, $10 million to the Republican Governors Association, and $2 million to the Republican Attorneys General Association.

Texas has drawn more of Musk's money than any other state, and the Senate race there accounts for more than a third of America PAC's disclosed spending. He gave $10 million to Lone Star Liberty PAC, which supports Republican Senate nominee Ken Paxton, at a point when Democrats were heavily outspending Paxton.

Musk's contributions to the Senate Leadership Fund came before the group's late-August decision to launch what became a $149 million advertising campaign for Paxton. The fund, run by allies of Senate Majority Leader John Thune of South Dakota, had not invested heavily in the race before then.

America PAC spends most of its midterm budget on door-to-door canvassing. PAC officials said nearly 3,000 paid canvassers worked across the country last week, and the group says it has knocked on about 6.5 million doors in seven Senate battlegrounds and nearly three dozen House races. The operation focuses on registering and turning out conservative voters, especially those who vote irregularly, a harder task in a midterm year without Trump at the top of the ballot. Trump's advisers asked Musk this spring to rebuild his 2024 field program, according to a person familiar with the conversation.

The PAC's messaging centers on socialism and transgender policy. Its mailers repeatedly link Democratic candidates to New York Mayor Zohran Mamdani and Rep. Alexandria Ocasio-Cortez, according to the mail-tracking firm Mintt, while its leading Texas advertisement features James Talarico's past claim that "God is nonbinary," according to the ad tracker AdImpact. "Radical Democrat socialists are winning elections all across America. Could Texas be next?" reads a door hanger the group distributes in Texas.

Despite his donations, according to the New York Times, Musk has taken a less visible personal role this cycle and has stopped personally handing out the $1 million sweepstakes checks that drew legal challenges. People who have spoken with him recently said he rarely discusses the midterms in private and has concentrated on his companies.

America PAC has also confirmed for the first time that it plans to remain active in the 2028 presidential election.

"If Democrats take control of Washington and win key gubernatorial and attorney general races this November, then America risks becoming a socialist, woke and borderless country," America PAC spokesman Andrew Romeo said. "These robust investments have allowed the G.O.P. apparatus to get its message out so Republicans can have a fighting chance to defy history."

Tyler Durden Tue, 10/13/2026 - 17:40

Israel Imposes 'Muslim Ban' For Pilots & Crew In Wake Of FlyDubai Hijacking

After the Sept.30th FlyDubai attempted terror hijacking, Israel is enforcing what's effectively a 'Muslim ban' on all pilots and cabin crew flying passengers to Israel. While the order does not specifically invoke religion, it targets and forbids pilots and crew who have nationalities of countries that don't have formal diplomatic relations with Israel.

Middle East Eye observes that "The directive targets nationality rather than explicitly naming religion, but effectively excludes Muslim pilots from those countries, alongside other affected crew members."

via AP

"The restrictions cover 31 nationalities, including Algerian, Tunisian, Iranian and Pakistani citizens. They also affect French citizens who hold one of the listed nationalities," the same report says.

This policy is already in effect, and some reports say that major carriers like Air France is complying - but at the same time it's clear that some aren't getting the memo:

Israel turned away an Ethiopian Airlines flight bound for Tel Aviv because of the nationality of one of its pilots.

In what appears to be a more rigorous enforcement of existing rules, a cargo jet was forced to turn around in mid-air on Monday, after being denied permission to land because one pilot was Indonesian.

One of the pilots was Indonesian and the cargo plane operator only submitted its personnel list to Israeli authorities after the plane took off, bound for Israel.

All of this comes after Israel's Transport Ministry is under fire in the wake of the FlyDubai incident. It stands accused of lax enforcement of security procedures and laws on the books.

Air France agrees to enforce Israeli ban on French pilots with citizenship from mostly Arab or Muslim countries. https://t.co/wOOgszmwvQ

— شنشون (@humanprovince) October 11, 2026

The FlyDubai attacker should have been flagged, given he had already been banned from flying by the country of Oman over his extremist Islamist views.

He's currently being interrogated in Dubai, and it is believed that he intended to crash hijacked Flydubai flight into the main terminal building at Israel's Ben Gurion airport, in an effort to cause as many casualties as he could.

Tyler Durden Tue, 10/13/2026 - 15:40

Big Tech Pushes Back On Paying For A Grid That Was Crumbling Long Before AI

When Big Tech signed President Trump's Ratepayer Protection Pledge in March, promising to pay for all the new grid infrastructure upgrades required to service their data centers, we cautioned that "voluntary pledges from trillion-dollar tech giants have a habit of evolving."

Seven months later, the hyperscalers are pushing back on how much of the grid's bill is theirs to pay.

The past week brought a Democratic Senate report and a North Carolina utility settlement, and FERC is expected to rule on whether new data centers must bring their own power.

But before anyone grabs a pitchfork, ask the question none of them answers: how much of this bill is really AI's, and how much is the cost of decades of grid neglect?

On Friday, Senators Elizabeth Warren, Chris Van Hollen and Richard Blumenthal released Power and Profits, the result of a nearly yearlong investigation into seven data center operators including Amazon, Google, Meta and Microsoft. The headline finding is as you would expect: the companies' promises to cover their full costs apply to infrastructure serving only their own facilities, not the full cost of shared grid upgrades their arrival triggers.

The companies broadly opposed the "but-for" standard consumer advocates are pushing, under which a data center pays for any shared upgrade that "would not have been built but for the data center." One hyperscaler told Senate staff that such upgrades often provide a "system benefit which should be shared among all ratepayers."

They also balked at minimum bills, which advocates want set at 80% to 90% of contracted demand whether the power gets used or not. One Big Tech firm called a 90% floor "insanely high." Another called 85% to 90% "unreasonably high," since facilities often don't use all of their projected demand.

Two days earlier, Duke Energy announced a settlement, signed by Amazon, Google, Meta, Microsoft and North Carolina's utility consumer advocate, that it says ensures data centers "will pay upfront for all costs to connect to the grid."

The settlement itself is more nuanced. Data centers prepay the full cost of equipment that serves only them, such as a dedicated substation. For shared transmission upgrades, they post a letter of credit covering the estimated cost, collateral that starts shrinking once the facility consistently draws 75% of its contracted demand.

Whether data centers get directly charged for any slice of those shared costs is punted to a Duke study due a year after approval, and would apply only to future contracts.

Bring Your Own Power... Or Else

Then there's PJM, which wants new data centers of 50 MW or more, starting in June 2027, to bring their own new capacity or be first in line to be cut off when the grid is strained.

PJM asked FERC to sign off by October 12. The Data Center Coalition urged FERC to reject the plan, and Google, which just contracted for 890 MW of new nuclear uprates from Constellation, has warned it would "chill investment."

With Goldman now expecting behind-the-meter power to supply a quarter of all data centers by 2030, more of them may decide that building their own plants beats arguing over the grid's bill.

"But For" What, Exactly?

The but-for test only works if everyone agrees on what the grid would have needed anyway, and the senators' own report suggests that is quite a lot. Tucked into its opening pages is an admission that roughly a third of US transmission and half of distribution infrastructure is operating "near or beyond its useful life." Nowhere does it estimate how much of that needed replacing with or without AI.

No case makes the point better than Three Mile Island. As we reported in March, Constellation's restart of Unit 1, a reactor that fed this same grid until 2019, ran into a "four-year-tall roadblock" when PJM said full deliverability could take until 2031.

Full output hinges on 765-kV and 500-kV transmission upgrades not expected until December 2030, and Constellation needed a FERC waiver to shift 760 MW of interconnection rights from its Eddystone plant just to try to work around them.

A reactor that can't fully reconnect to a grid it was plugged into seven years ago is a grid problem, not a data center problem. 

None of this means the hyperscalers deserve a free ride. They signed the pledge, and they should honor it. But "but for the data center" is doing a lot of heavy lifting for a grid that, by the senators' own account, was already wearing out.

Then again, sending Big Tech the bill is a lot easier than explaining why the grid was falling apart before anyone had heard of ChatGPT.
 

Tyler Durden Tue, 10/13/2026 - 15:25

How Long To Rebuild The Gulf? Paul Sankey And Arjun Murti Debate Oil's Future Tonight At 730pm ET

https://t.co/ELMgqGJK9L

— zerohedge (@zerohedge) October 13, 2026

With Brent crude trading above $100 per barrel and the Iran war continuing to disrupt global energy supplies, a troubling question remains: if the fighting ends tomorrow, how long will it take to repair the damage already inflicted on the Middle East's energy infrastructure?

Tonight at 7:30pm ET, ZeroHedge brings together two of Wall Street's most accomplished energy analysts, Paul Sankey and Arjun Murti, to debate the future of oil markets, with MacroVoices founder Erik Townsend moderating.

The debate comes amid renewed attacks on shipping through the Strait of Hormuz, where 24 vessels were struck during the two weeks ending October 11, according to the Financial Times. And while crude exports from the Gulf have recovered considerably, the region's refining industry remains severely impaired. According to Reuters, Gulf crude and condensate exports recovered to 91% of prewar levels in September, while refined fuel exports remained at just 60%.

"The Saudis always tell the truth about the oil market," says @crudegusher, highlighting global oil inventories. "These guys have been saying, 'We've got a major problem here.'" https://t.co/apDZVa2Ng6 https://t.co/rlLsaJhkYz

— Squawk Box (@SquawkCNBC) October 13, 2026

Energy analytics firm Kpler estimates that regional refinery throughput fell from 9.9 million barrels per day before the war to roughly 7.3 million in August, with a full recovery unlikely before the second quarter of 2027.

Elsewhere, damage could prove considerably more enduring. QatarEnergy estimates that repairing two LNG production trains damaged by Iranian strikes will take three to five years. Its chief executive, Saad al-Kaabi, said in March that the strikes had set the region back 10 to 20 years.

Few analysts are better positioned to judge how long the rebuild will take.

Arjun Murti, a former Goldman Sachs partner and co-director of Americas Equity Research, famously predicted an oil "super-spike" in 2005, warning that crude could reach $105 per barrel when it was trading near $55. The prediction was vindicated in 2008, when oil surged to nearly $150.

Murti, now a partner at Veriten and author of the Super-Spiked newsletter, also serves on the boards of ConocoPhillips and Liberty Energy.

Paul Sankey, founder of Sankey Research and a former Deutsche Bank energy analyst, has spent more than three decades covering global oil markets, beginning at the International Energy Agency during the first Gulf War.

Sankey has been ranked the No. 1 energy analyst by Institutional Investor multiple times, and his independent firm earned a top ranking in the publication's 2023 Independent Oil & Gas Research category. He also warned that oil prices could go negative a month before WTI crashed below zero in April 2020.

Erik Townsend is a longtime energy futures trader, former hedge fund manager and founder of the widely followed MacroVoices financial podcast.

The three will examine the damage to Middle Eastern refining capacity, the outlook for crude and refined products, the potential for further escalation in the Iran war, and whether today's elevated energy prices represent a temporary geopolitical shock or the beginning of a much longer structural shortage.

Tune in tonight at 7:30pm ET here on the ZH homepage, X feed, and YouTube channel to see how to position in energy markets and what to expect at the pump in coming months.

Tyler Durden Tue, 10/13/2026 - 13:10

Judge Blocks Further Tree Removal At DC Golf Course Trump Seeks To Renovate

Authored by Jackson Richman via The Epoch Times,

A federal judge issued a restraining order blocking further tree removal at a historic golf course the president plans to remake in Washington, after the Trump administration waited until nearly 5 p.m. on Friday to notify the court before removing hundreds of trees over the weekend.

In an emergency hearing on Oct. 12, Judge Ana C. Reyes of the U.S. District Court for the District of Columbia said she was "furious" at the Justice Department, which she said "lost all credibility" by not notifying her of the removal sooner. The order prevents further tree removal until Oct. 13 at 2 p.m. ET.

The hearing was part of an ongoing legal battle between the Trump administration, which seeks to renovate the East Potomac Golf Links course, and the D.C. Preservation League, which argues that President Donald Trump's planned changes violate the National Environmental Policy Act. That law requires federal agencies to assess the environmental effects of their proposed actions before making final decisions.

The plaintiffs - the league and golfers Alex Dickson and Dave Roberts - told the court that 529 trees were cut down at the public golf course on Oct. 10. The administration said it removed 430 trees.

Reyes specified in May that the administration should notify her if more than 10 trees were to be removed. The Justice Department notified the court on Oct. 9 at 4:55 p.m. ET, shortly before government offices closed for the holiday weekend.

Justice Department lawyer Marissa Piropato said the department was made aware on Oct. 8 that the tree cutting might happen but did not solidly learn about the plan until late on Oct. 8 or early Oct. 9.

Asked about the delay, Piropato said the Justice Department was getting details and wanted to make a filing. Reyes said it should have called the court.

When Piropato said the department did its best to inform the court and plaintiffs, Reyes responded, "You did not do your best; you did your absolute worst."

During the hearing, Reyes extended an initial temporary restraining order - which was to last until 7 a.m. ET on Oct. 13 - until 2 p.m. ET on Oct. 13. By that time, Reyes said, the order will either be extended or lifted.

    OCTOBER ONLY.$10 OFFYOUR NEXT ORDER.$30 min. Ends Oct 31. One per customer.GET MY $10 OFF →Signs you up for ZeroHedge Store emails. Can't be combined. Every order helps support ZeroHedge.

She indicated that she would require the government to give advance notice of three business days before cutting down trees at the course.

Reyes threatened contempt proceedings if the Trump administration violates her temporary order.

The Epoch Times has reached out to the Department of the Interior and the National Park Service for comment on the order.

White House Deputy Chief of Staff for Policy Stephen Miller criticized Reyes for her reaction.

"I missed the part of the Constitutional Convention that put federal judges in charge of golf course maintenance. The Left is endlessly enraged that, after allowing DC to decay for decades, the Trump Administration is making it safe, clean and beautiful," he posted on X.

The plaintiffs on Oct. 11 requested a 14-day temporary halt of the maintenance at East Potomac Golf Links. They called removal of the trees "irreversible damage."

Without halting the cutting down of trees, the Trump administration "will further alter permanently the land, landscape, trees, setting, and other elements of the human environment in both visible and unseeable ways," the plaintiffs wrote.

Kevin Griess, superintendent of National Mall and Memorial Parks, testified that authorization for the tree chopping was sent on Oct. 6, three days before the plaintiffs and court were notified.

Griess acknowledged that conversations about tree removal began in late September. He also said that the tree removal is part of a 2019 plan, which precedes Trump's plans for the course.

According to the lawsuit, soil and debris from the White House East Wing demolition - including wires, pipes, bricks, and other materials - were dumped on portions of East Potomac Golf Links course without the required environmental review.

Tyler Durden Tue, 10/13/2026 - 12:55

491 Fugitives Hiding In Public Housing Arrested In Nationwide Sweep

Authored by Naveen Athrappully via The Epoch Times,

A multi-month law enforcement operation has led to the arrests of 491 criminal fugitives living in government-assisted housing.

The Department of Housing and Urban Development in Alexandria, Va., on May 29, 2026. Madalina Kilroy/The Epoch Times

The multi-agency initiative, Operation Clean House, was carried out by the Department of Housing and Urban Development's (HUD's) Office of Inspector General (OIG) along with the U.S. Marshals Service and other state and local law enforcement partners across 12 cities, including Memphis, New York, Chicago, Los Angeles, Columbus, and Minneapolis, HUD said in an Oct. 8 statement.

"We will not allow criminal predators and fraudsters to use HUD housing as a haven or live freely on the taxpayer's dime," HUD Secretary Scott Turner said in the statement.

"Operation Clean House removed dangerous drug traffickers, rapists, and sex offenders and delivered real accountability. President Trump promised to restore once-great American cities, and we are fulfilling that promise by making our communities safer."

The arrested individuals include those wanted for serious criminal offenses such as rape, murder, aggravated assault, sex offenses against children, drug trafficking, manufacturing incendiary devices, and weapons offenses, HUD - OIG said in an Oct. 5 statement. Authorities seized 10 firearms as part of the operation.

The operation was part of a wider effort to ensure safe and secure HUD-assisted housing.

In a Sept. 28 statement, the OIG had announced the arrests of 41 fugitives living in the Philadelphia region in federally subsidized properties. The violent offenders included those linked to offenses against children, arson, armed robbery, and shooting.

Stopping HUD Fraud

As part of efforts to tackle fraud plaguing housing programs, a grand jury indicted four individuals last month in a $7.3 million mortgage fraud scheme targeting Federal Housing Administration (FHA) and Veterans Affairs (VA) programs, the OIG said in a Sept. 21 statement.

The indictment alleges that defendants conspired to qualify ineligible borrowers for FHA, VA, and conventional mortgage loans by falsifying employment, income, and bank records, as well as other financial documents.

"Stopping fraud in the VA Home Loan Program is not just about protecting resources - it's about safeguarding the benefits that our veterans have earned," Inspector General Cheryl L. Mason of the Department of Veterans Affairs said in the statement.

Moreover, HUD - OIG has conducted audits on the use of taxpayer funds in housing programs and identified instances of improper payments.

On Sept. 22, the federal watchdog announced the results of two major audits that found more than $2.7 billion in projected improper payments annually across two rental assistance programs.

The OIG identified $1.29 billion in improper payments in a multifamily rental assistance program and $1.43 billion in improper payments in the Public and Indian Housing Tenant-Based Rental Assistance program.

The watchdog highlighted that these improper payments reflect funds that did not reach seniors, low-income families, and disabled individuals. Errors in the programs included incorrect rent and income calculations, outdated documentation, and missing eligibility documentation.

For nine straight years, HUD failed to produce the required improper payment estimates for these programs, as mandated by the Payment Integrity Information Act, OIG said.

"These audits reinforce the critical role oversight plays in protecting taxpayer dollars," Assistant Inspector General for Audit Kilah S. White said in the statement.

"Improper payments at this scale are not just accounting issues; they are missed opportunities to support American families. Our work ensures that federal housing resources are spent properly, efficiently, and with integrity."

The OIG called on HUD leadership to strengthen oversight of public housing agencies, implement quality control measures to ensure the collection of accurate tenant information, simplify burdensome requirements, and modernize processes.

OIG said that improved payment accuracy in such programs is critical because it would result in more rental assistance available to qualifying families.

Tyler Durden Tue, 10/13/2026 - 12:25

"More Pain To Come": Global Smartphone Shipments Plunge As Memory Crisis Crushes Budget Models

Global smartphone shipments tumbled 22% in the third quarter as soaring memory chip costs forced handset manufacturers to scrap lower-priced models and focus on premium models, delaying purchases for working-class consumers, according to a new note by Loop Capital Markets.

Loop Capital analyst John Donovan wrote early Tuesday that handset shipments totaled 251 million units in the quarter, down from 320 million a year earlier. The decline accelerated from 3% in the first quarter and 7% in the second.

Donovan added more color:

The smartphone market endured its most precipitous drop in unit shipments in CQ3 2026 by posting unit shipments worse than consensus estimates, but right in line with the morose outlook provided by Loop's TMT Smartphone squad these past 2-3 quarters.

All indications point to further declines in the coming quarters, perhaps a mild reprieve in CQ4 2026, but 2027 is shaping up to be another challenging year for the Smartphone suppliers.

In what cannot be a surprise to anyone by this time, skyrocketing costs particularly (but not limited to) the memory has decimated the ability to supply low-end solutions, and frankly we see little evidence of any relief soon.

In anticipation of the mushrooming memory costs, suppliers front-end loaded/pulled ahead shipments which certainly propelled 1H 2026 results. Not only are memory prices rising, but supply chain issues as well as trade flow disruptions will hamstring future results.

Loop's smartphone team breaks down the quarterly numbers:

"Entry-level and even mid-tier options have precious little margin to begin with," Donovan said, adding that manufacturers also have limited pricing power to absorb rising component costs.

The squeeze is most severe among Chinese brands competing on affordability: Xiaomi's shipments plunged to 25 million in 3Q from 44 million in the same quarter one year ago, a staggering 43% decline. Soaring costs made many of its existing models uneconomic, prompting the company to halt production of lower-end models.

Chinese brand Oppo shipped 22 million phones, and Vivo shipped 20 million in the quarter. Oppo dialed back its OnePlus and realme offerings, while Vivo faced mounting pressure from rising costs and supply-chain challenges. Transsion, which focuses on lower-tier devices, shipped 17 million units in 3Q, down from 28 million a year earlier.

South Korea's Samsung retained the top spot, shipping 59 million units in 3Q. Supply-chain management helped shield its midrange lineup, while premium devices, particularly its new foldable, sold well.

Apple's preliminary shipments totaled about 55 million in 3Q, compared with 57 million a year earlier, allowing it to gain market share despite lower volumes. Donovan said the iPhone 18 Pro Max was outselling the Pro and pushed back against reports of order cuts (read here).

Donovan slashed his 2026 forecast for new smartphone shipments to 1.08 billion from a previously announced 1.091 billion, compared with 1.237 billion in 2025. 

He expects shipments to slide even further to 1 billion in 2027 and 980 million in 2028.

Tyler Durden Tue, 10/13/2026 - 12:10

Energy Department Orders PJM To Dispatch Units, Backup Power Through Mid-October

Authored by Kimberly Hayek via The Epoch Times,

The U.S. Department of Energy on Oct. 12 issued an emergency order directing PJM Interconnection, the largest U.S. grid operator, to dispatch specified generating units and order their operation as needed to maintain reliability.

The emergency order, Order No. 202-26-50, also authorizes PJM to direct backup generation resources ahead of declaring an Energy Emergency Alert 3 or during one. PJM may call on its transmission owners and electric distribution companies to carry out the order. The grid operator serves more than 65 million people across 13 states and the District of Columbia.

PJM filed the application on Oct. 11, forecasting demand "at or around 111,500 MW (or higher)" for Oct. 13. The company said the system would sit within 900 MW of its reserve margin on Oct. 14.

Anticipated generation outages were put at 61,591 MW, with the most acute pressure predicted to be in the BGE, PEPCO, and Dominion zones, which primarily serve Maryland, Virginia, North Carolina, and the Washington, D.C. metropolitan area.

Secretary of Energy Chris Wright determined a statutory emergency existed, citing a sudden increase in demand, a shortage of electric energy, or the facilities needed for its generation or transmission. The order lasts from Oct. 13 through Oct. 16, when temperatures are expected to relent.

Similar emergency actions for the same region were issued during a summer heatwave. Wright issued two orders in June authorizing the dispatch of specific units and backup resources ahead of forecasted record demand.

"Maintaining affordable, reliable, and secure power in the PJM service territory is non-negotiable," Wright said in a statement at the time. "The previous administration's energy subtraction policies weakened the grid, leaving Americans more vulnerable during events like this. Thanks to President [Donald] Trump's leadership, we are reversing those failures and using every available tool ensuring Americans in the Mid-Atlantic have continued access to affordable, reliable, and secure energy to power and cool their homes."

Those directives were also in response to PJM applications.

Wright has repeatedly invoked section 202(c) to keep plants online. In May 2025, the department ordered PJM, in coordination with Constellation Energy, to continue operating two oil- and gas-fired units at the Eddystone Generating Station in Pennsylvania past their May 31 retirement date. The 820-megawatt plant's units were kept available because of resource-adequacy concerns amid rising demand.

"Maintaining access to affordable, reliable, and secure power is always our top priority, particularly during the summer months when electricity demand reaches its peak," Wright said. "Americans should never be left wondering whether they will be able to turn on their lights or air conditioning. This emergency order helps keep money in consumers' pockets while keeping their homes and businesses fully powered. Energy shortfalls or unnecessary price increases are not options in this Administration."

Wright said at a White House meeting that the Department of Energy under his leadership would prevent closure of plants before their retirement dates.

In September, a D.C. Circuit panel vacated one order that kept a Michigan coal plant from closing. The court found the department exceeded its authority, describing the statute as "essentially a narrow, last-resort backstop."

Tyler Durden Tue, 10/13/2026 - 11:55

Existing Home Sales Hover Near Record Lows As Affordability Gap Widens

With mortgage rates soaring, expectations were for a fourth straight month of declines in existing home sales. Instead sales rose 1.5% MoM (-0.8% exp) thanks in part to a downward revision for August (from -2.0% to -3.2% MoM)...

At least some of last month’s modest improvement predated the more than half-point climb in mortgage rates since early September to 7.49%. September’s gain also belies the formidable challenges facing the nation’s housing market.

The total existing home sales SAAR remains below the 4.00mm Maginot Line...

Despite the increase, “August and September marked the two slowest months for home sales this year,” NAR Chief Economist Lawrence Yun said in a statement.

“Further increases in mortgage rates in recent weeks mean fewer buyers can qualify to purchase a home.”

Earlier in the year, the country had been making some progress in reducing the so-called “lock-in” effect - the disincentive to move that homeowners face because of their low existing borrowing costs.

However, the recent surge in rates has halted that progress.

It also adds a “$19,000 shock” for would-be buyers with a $2,000 monthly budget, Realtor.com Chief Economist Danielle Hale said earlier this month in a blog post.

“The reset in rates over the last five weeks has shaved a little more than 6% off of the purchasing power of buyers across every budget, which is almost twice the typical price-savings advantage of buying in this less competitive season,” Hale said.

Meantime, the supply of previously owned homes for sale climbed 4.6% from a year ago to 1.6 million, NAR data show. That represents 4.8 months of supply at the current sales pace, staying at the more than decade high it reached in August.

Previously owned home sales in both the South and the West rose 2.8% in September. Sales in the Midwest were flat and activity in the Northeast fell.

“The fourth-quarter outlook for closing activity will clearly be down, maybe even measurably down,” Yun said Tuesday on a call with reporters.

“We are seeing more delays in the contracts with these rising interest rates.”

Finally, with the spread between current mortgage rates and the effective average mortgage rates that American homeowners have back near record wides...

...we don't see any signs of trapped sellers meeting buyers' affordability levels any time soon!!

Tyler Durden Tue, 10/13/2026 - 10:08

Zelensky Indicates Intelligence From Partners Cut Off Amid Overnight Strikes

Ukraine's President Volodymyr Zelensky has not only alleged that Russia has hit six energy sites since President Trump announced Putin signed on to an energy ceasefire, but he's also lashing out at Western allies, saying that for the first time in a long time no intelligence was shared by 'partners' warning of the latest overnight attack.

Zelensky said Tuesday in a post on X that an overnight Russian assault on the capital was "particularly vile" but that no intelligence was shared ahead of time, as has been typical previously.

Q: Has the U.S. stopped sharing intel with Ukraine? White House: I will have to get back to you on that. https://t.co/auu6jtFp27

— Clash Report (@clashreport) October 13, 2026

"There was also a particularly vile ballistic strike on Kyiv—five missiles that hit civilian infrastructure. Regarding this strike, unfortunately, there was no warning from partners," he wrote. "Intelligence data on the launch of Russian ballistic missiles helps save people's lives, and this is one of the most critical issues."

"This is precisely what helps prevent people from being killed — when there is an early warning about ballistic missiles," he wrote, without specifically apportioning blame. But the veiled message blaming the White House comes through loud and clear.

Zelensky/X

Given the timing and context, the clear suggestion is that Washington cut Zelensky and his officials out of the usual intel-sharing, and this has also broadly impacted allied sharing.

President Trump has lately threatened to precisely cut off intelligence as Ukraine has not complied with the US request for its forces to stop hitting Russian refineries, amid a global diesel supply and price crisis.

Zelensky further on Tuesday claimed that Ukraine is for now adhering to a pledge to not strike Russian oil refineries. He says this pause has been on for two days since Trump proclaimed a deal, which however Zelensky said was "news" to hm.

Of the latest Russian attacks, "These are absolutely clear signals that they have no intention of refraining from strikes on Ukraine," Zelensky said.

The Ukrainian leader has further lambasted the Trump deal with Putin for the release of Russian diesel. "We need American pressure on Russia, not sanctions relief, not concessions," Zelensky said earlier.

Trump is meanwhile ultimately blaming Ukraine for rising energy prices, and not the Iran war and Hormuz crisis.

Here's what Ukrainian media says is happening behind the scenes in the meantime:

Two Ukrainian officials said their U.S. counterparts had made clear that Washington would hold Kyiv responsible if Russian energy infrastructure were struck during the recently announced ceasefire.

"They called all the top military officials with threats," one Ukrainian official told the Kyiv Independent. "They're telling everyone that they're going to turn off both the intelligence sharing and PURL."

Zelensky has yet to specifically say that Washington itself has halted intelligence, but if the situation lingers the blame-game is probably coming.

Zelenskyy says Ukraine received no advanced intelligence about the Russian ballistic missile attack against Kyiv last night. But he falls short of saying that this was linked to Trump's threat passed via Kushner and Witkoff in Miami on Friday and via calls to Ukrainian officials over the weekend to pull US intelligence. Kyiv receives intelligence from numerous partners including European services. "There was also a particularly vile ballistic missile strike on Kyiv – five missiles that hit civilian infrastructure," he says. "Unfortunately, we received no early warning from our partners about this strike."

— Christopher Miller (@ChristopherJM) October 13, 2026

The Prioritised Ukraine Requirements List (PURL) is the procurement mechanism and program European allies use to purchase weapons from the US for Ukraine. The US administration has outright said it is ready to halt the program if Zelensky doesn't comply, and Trump has gone so far as to say that maybe Ukrainians should find a new leader.

Tyler Durden Tue, 10/13/2026 - 09:20

Terror Plot At UK Airbase 'Almost Certainly' Directed By Iran, British PM Says

Authored by Jill McLaughlin via The Epoch Times,

Last month's suspected terror plot at RAF Fairford, an airbase shared with the United States in England, was likely coordinated and directed by Iran's ruling regime, British Prime Minister Andy Burnham said on Oct. 12.

"I can confirm our assessment that it is highly likely to have been coordinated in Iran - almost certainly directed by Iran's Islamic Revolutionary Guard [IRGC]," Burnham told lawmakers.

Burnham said investigators were in close contact with the United States about protective security at shared military bases in the UK and were continuing to investigate the case.

Seven suspects, all in their 20s, were arrested on terror and explosives charges for their alleged involvement in the RAF Fairford incident on Sept. 27.

Police responded to local tips about suspicious activity near the facility in Gloucestershire, England. Officers stopped three vans heading toward the airbase used by American forces to launch strikes against Iran.

Police and military explosive disposal teams searched the vehicles and found gasoline inside but no explosives, investigators said.

The Pentagon has since removed its heavy bombers from the base. The men have been released from custody and have not been formally charged.

In another incident, two Latvian men were arrested on espionage charges on Oct. 7 after they allegedly broke into the RAF Molesworth airbase, used by U.S. and NATO intelligence teams, near London.

Burnham didn't say whether the two airbase incidents were linked, but he vowed to investigate any future threats from Iran.

"We will not tolerate these threats on our soil," Burnham said. "We will crack down on Iran's use of criminal networks using our full range of powers to target them and their funding streams. And we will bring further sanctions to restrict the capacity of Iran and the IRGC to do us harm."

The United States and the UK joined 27 other countries to "condemn in the strongest terms Iran's use of violent attacks, including the acts of lethal plotting, arson, sabotage, cyber-attacks, and other hybrid activities" against the countries and their partners.

"We recognize the United Kingdom's attribution of Iran's involvement in the incident at RAF Fairford on 27 September," the countries said in a joint statement after Burnham's announcement. "The UK has also concluded this event demonstrates the IRGC's continued willingness to project hostile activity beyond its borders through covert networks and proxy actors."

The nations vowed to "investigate, disrupt, and prosecute" all attempts to "silence, intimidate, harass, harm, or coerce people through proxies or other means."

"Iran should be in no doubt that we are united and remain committed to safeguarding our sovereignty and strengthening our international coordination, bolstering our national resilience, protecting our communities, and ensuring that those responsible are held to account," the countries stated.

The alleged attempted terror attack comes after recent attacks across Europe targeting Jewish communities, Iranian journalists, and U.S. interests. The pro-Iranian Islamist group Harakat Ashab al-Yamin al-Islamiya (HAYI) claimed to have instigated the attacks, according to state officials.

The incidents included a March 9 attack using a homemade explosive at a synagogue in Liège, Belgium; attacks against Jewish institutions in the Netherlands targeting a synagogue on March 13, 14, and 15; and a foiled bomb plot against a Bank of America branch in Paris on March 28.

The United States and other countries called for the HAYI attacks to end earlier this month, saying the relationship between Iranian security services and international and local criminal groups was long-standing.

"Attempts to kill, kidnap, harass, intimidate, or otherwise attack people on our soil, [undermine] national sovereignty and international norms. These actions must stop immediately," the countries stated on Oct. 6.

Tyler Durden Tue, 10/13/2026 - 09:05

Nasdaq Futures Slide As AI "Casino" Hangover Crushes Kospi; S&P Flat After JPM FICC Miss

US futures are mixed with the Nasdaq lagging as the AI rout that started on Wall Street on Monday ricocheted through Asia, where the Kospi crashed as much as 7% after Broadcom's Hock Tan likened AI investing to a casino and China's CXMT touted a denser memory chip design, while Q3 bank earnings kicked off with a FICC trading miss at JPMorgan; as a result, a flight to safety sent 10Y yields 5bps lower to 5.19% as cash Treasuries reopened after the holiday, while Brent slid back toward $105. As of 8:00am ET, S&P futures are down 0.1% around 7,850 while Nasdaq futures slide 0.7%, Dow futures are up 0.7% and Russell 2000 futures rise 0.3%. That follows a session in which the S&P dipped 0.1% and the Nasdaq 100 fell 0.7% on what was the lowest volume session in 23 years, with the SOX down 2.7% for its fourth straight decline even as two-thirds of S&P members rose. In premarket trading, memory names are getting hammered again (Western Digital -4.5%, Seagate -4.1%, Sandisk -3.7%, Micron -2.8%) and Nvidia is the worst of the Mag 7, down 0.9%, while JPMorgan is flat after FICC revenue of $5.37BN missed the $6BN estimate but the company guided NII higher; UnitedHealth rises 2.8% after raising its guidance. The day's driver is AI angst (again): Hock Tan's warning that financing the buildout, not chip supply, is the problem (as we discussed yesterday) was the spark, while CXMT's progress on new DRAM architecture did the rest in Seoul, where Samsung and SK Hynix lost around 8% and 10%. Treasuries rallied, with yields down 2-5bps led by the 10Y, after Fed Governor Waller said the surge in long-term yields is doing some of the work of tighter policy, while bunds and gilts gained as lower energy prices eased inflation worries. The BBG dollar index is down 0.2%, snapping a four-session winning streak, and the yen leads G10 after a report that the BOJ is leaning against a back-to-back hike in October. In commodities, WTI is down about 1.5% near $92.3 and Brent is 1.7% lower to $104.6; gold rises 0.3% to around $4,190, silver is up 0.4% near $60.5 and copper is flat. Bitcoin regains $83,000. US economic data slate includes September NFIB small business optimism (already out: 97.9 vs est. 98.2), ADP weekly employment change (8:15am), September existing home sales (10am) and the September federal budget balance (2pm). Fed speaker slate includes Goolsbee (7am and 10am), Barkin (1pm) and Collins (4pm). The Treasury sells $95BN of 13-week and $82BN of 26-week bills at 11:30am and $95BN of 6-week bills at 1pm.

In premarket trading, Magnificent Seven stocks are mixed: Apple (AAPL) +0.7%, Microsoft (MSFT) +0.4%, Alphabet (GOOGL) +0.2%, Amazon (AMZN) -0.4%, Meta Platforms (META) -1.2%, Tesla (TSLA) -0.8%, Nvidia (NVDA) -0.7%

• Chemours Co. (CC) slips 1.6% after RBC Capital Markets cut its recommendation on the chemicals company to sector perform on lower demand.
• Domino’s Pizza (DPZ) drops 1.5% after the restaurant chain reported total domestic stores comp sales growth for the third quarter that missed the average analyst estimate.
• Enerflex’s US-listed shares (EFXT) rises 7% after the natural gas and petroleum producer said it received a contract award to design and assemble over one gigawatt of low emission behind-the-meter natural gas-fired power generation units for a large-scale North American data center.
• Johnson & Johnson (JNJ) slips 2% after the maker of pharmaceuticals and medical devices posted mixed sales for the third quarter. Revenue from the firm’s MedTech unit for the quarter fell short of the average analyst estimate.
• JPMorgan Chase (JPM) gains 1%, erasing an earlier loss, after the bank boosted its net interest income forecast for the full year. It also reported FICC sales & trading revenue that missed expectations.
• Syndax Pharmaceuticals (SNDX) plunges 10% after the biotech said a phase 2 trial of axatilimab failed to meet its primary endpoint of annualized rate of decline in forced vital capacity in a rare lung disease.
• UnitedHealth (UNH) rises 2% after the health insurer boosted its adjusted profit for the full year, following third-quarter results that were ahead of the average analyst estimate. Analysts view results as better than expected and are on watch for commentary on 2027 growth outlook during the earnings call.
• VF Corp. (VFC) is up 3% after Piper Sandler and Truist Securities upgrade the retailer to buy-equivalent ratings, noting the company’s Vans brand is at an inflection point.
• Viking Holdings (VIK) gains 3% as Barclays upgrades to overweight, noting that European river levels are back in recovery mode.

In other corporate news, JPMorgan kicked off bank earnings season with a miss where it hurts most in a volatile quarter: third-quarter FICC sales & trading revenue came in at $5.37 billion versus the $6 billion estimate, though the bank now sees full-year net interest income of about $106.2 billion, above the $105.28 billion estimate. JPMorgan and Goldman Sachs have taken a rare move to limit exposure on a $5 billion loan sale for AI startup Volta Infrastructure as investors demand higher yields for risky debt tied to the AI boom (good thing nobody is worried about AI financing). UnitedHealth raised its full-year adjusted EPS forecast to at least $20.50. Meta Platforms released its long-awaited Muse Wonder AI model, which its leadership says is on a par with OpenAI’s ChatGPT and Anthropic’s Claude on some functions. Microsoft is gearing up to install the latest version of its own chips in data centers, and Applied Materials expects to double revenue over the next few years without a commensurate rise in hiring. SentinelOne plans to offer $1.25 billion in convertible senior notes due 2031. Jio Platforms is said to have drawn more than $20 billion in bids for its IPO. In Europe, LVMH's fashion and leather goods sales fell 5% organically, Crédit Agricole agreed to buy IKB Deutsche Industriebank from Lone Star, Nokia agreed to sell its Enterprise Campus Edge business to Aurelius, Monte Paschi rejected Intesa Sanpaolo's improved takeover offer as not financially satisfactory, and UBS transferred £1.7 billion of UK pension assets to Legal & General.

The AI trade is unwinding again from the Nasdaq 100 to Seoul: a global slide in semiconductor stocks deepened overnight, sending the Kospi down more than 7% at one point as concerns about AI overheating and Chinese competition intensified. The trigger was Broadcom chief Hock Tan likening AI investing to a casino and warning that financing the buildout, not chip supply, is the problem, just days after Nvidia-backed Firmus’s offering collapsed; a report of progress at China’s CXMT on a new memory architecture did the rest. The AI trade is splitting into model makers and the capex chain: Meta rose after releasing Muse Wonder even as the Philly semi index fell for a fourth straight session. US futures are attempting to shrug it off — S&P contracts recovered to roughly flat by 5:45am — and the next inflection point comes via the busy slate of pre-market bank earnings, with the KBW bank index down around 12% from its August peak (we previewed the big bank prints here).

“Memory names are under pressure from a rise in Chinese competition and an increasing number of voices in the industry warning of a bubble,” said Bank J Safra Sarasin’s von Rotberg. “The volatility in the tech trade makes a confirmation of hyperscaler capex guidance ever more important.”

Still, markets keep doing what they're not supposed to: the S&P sits within a whisker of its record high on the lowest volume in 23 years, while underneath the surface Goldman finds an extraordinary flight to quality not seen since Covid, and the median S&P stock trades 15% below its 52-week high. And while the AI financing angst grows (Oracle is now trucking natural gas to its data centers), JPMorgan and Goldman are capping their exposure on a $5 billion AI infrastructure loan.

Goldman's Bobby Molavi writes that the past two to three months have felt like “everyone has been sprinting to standstill.” Deals are being pulled, and with more than $500 billion of debt issued this year for the infrastructure buildout, “we are seeing a lot of future AI revenue being spent up front,” per Bloomberg.

The rotation remains the story for Goldman's Rich Privorotsky, who argues “the market got itself incredibly long one corner and effectively short everything else,” listing four AI stories that hit at once: CXMT, Microsoft's Maia 300 moving to TSMC 2nm, Hock Tan's comments (“taken wildly out of context”) and Meta's Muse Wonder. In Japan, he notes, five stocks effectively account for the entire Nikkei decline while the TOPIX is up. On energy: “So much for the Russia/Ukraine energy ceasefire… couldn’t survive a news cycle,” and “If energy takes out the highs with velocity, markets will struggle in a much more correlated fashion.” His silver lining: “Financials could reinforce the rotation, with the bar relatively low given de-rating ahead of numbers.”

Over on the GS TMT desk, Sean Johnstone sees “a lot of nervousness ahead of an Anthropic S1,” notes Meta's Muse Wonder reportedly ranks behind only Claude Opus 5.5 on Artificial Analysis’ Intelligence Index, and concludes that “Capital (and the cost of capital) is becoming the bigger constraint.” Tony Pasquariello, meanwhile, points out that net exposure across GS's global PB book sits in just the 10th percentile of the past year, with the US market net sold for three straight weeks: “I’m not sure that I can remember a time when a market that was on the highs was attracting so little chase.” Yesterday's floor was a 2 on a 1-10 activity scale, per the GS US desk, which thinks S&P upside is cheap into month-end, with the next one-week implied move at ~96bps, one of the lowest in about six years.

JPM's Market Intel desk stays Tactically Bullish heading into earnings, noting breadth was supportive yesterday with over 60% of S&P stocks higher and the rotation/broadening continuing premarket. Tech specialist Joshua Meyers says the most proximate trigger was Hock Tan's DBS conference panel, where he warned financing could become a bigger bottleneck than component shortages and compared "many investors" to casino gamblers, while a weekend sell-side note re-ignited power concerns (powered-shell shortages of as much as 19GW next year), all of which hit on a low-liquidity holiday as investors sit on their hands ahead of an expected private frontier lab investor meeting on Wednesday. JPM's Manish flags meaningful risk of a Quality reversal around the CPI release and the Fed meeting if the Fed turns dovish, noting semiconductor sentiment is above the 99th percentile. On earnings, FactSet consensus has Q3 at 29.6% EPS growth on 12.4% revenue growth, with all 11 sectors expected to post positive revenue and earnings growth for only the second time in history.

Big US bank stocks, meanwhile, are in correction territory as the latest earnings from Wall Street roll in. The KBW Bank Index has dropped around 12% from an August peak, exceeding the 10% threshold for a technical correction.

“Loan book quality, capital markets activity and trading will be very much in focus, as all three may have weakened,” said Wolf von Rotberg at Bank J Safra Sarasin. “They need to show that lending growth remains strong and net interest income continues to rise.”

On the geopolitical front, President Trump’s Russian diesel deal has opened a rift with Republican senators, European leaders and Ukraine, while running into a 2022 law barring most Russian energy purchases. Even if it goes ahead, it will deliver a first release of 2.25 million barrels in October, less than a single day of US consumption. Brent is still more than 50% higher than when the Iran war began, with Houthi strikes on Saudi Arabia’s main airport keeping the supply risk alive; Goldman estimates the Brent risk premium at $24/bbl.

In Europe, the Franco-German 10Y spread closed Monday at a post-2012 high of 142bps, per DB, albeit with less fanfare than when those levels were first breached ten days ago; Blackstone's Jon Gray warned that fiscal strains in France, the UK and elsewhere in Europe pose a more pressing risk than in the US, and the IMF told UK Chancellor Healey to use cost-of-living support “sparingly” ahead of his Oct. 28 budget.

Turning to European stocks, the Stoxx 600 rises 0.6% to 639.73 with 471 members up, as positive earnings news counters renewed concerns about the AI trade, which prompted investors to rotate out of semiconductor and AI-linked names globally. Chemicals and healthcare are the best performers, with real estate helped by the pullback in Brent sending yields lower across European curves; tech, consumer products and basic resources lag. JPM's desk notes defensives and rate-sensitive baskets are outperforming while semis and luxury lag, with LVMH a clear drag after its worse-than-expected numbers on weak Chinese demand — the stock is already down more than 40% this year. Here are the biggest European movers:

• BP shares gain as much as 1.6% after the British oil major’s 3Q trading statement guided for a fall in net debt to $13.5b-$14.5b, compared to $22.3b in the previous quarter.
• Whitbread shares gain as much as 3.6% after the hotel operator reported strong first-half results, including a beat on profit before tax.
• Givaudan shares rise as much as 8.1% after the maker of fragrances and flavors reported like-for-like growth that was well ahead of expectations in the third quarter.
• Greencore shares rise as much as 6.8% after the food manufacturer said annual adjusted operating profit will come in higher than previously expected, following a strong finish to the year.
• Ypsomed shares rise as much as 3.1% after Berenberg initiates coverage of the stock with a buy rating, citing the growing market for self-injection systems for drugs, resilient margins and a supportive valuation.
• Oxford Instruments gains as much as 4.9% as JPMorgan says the scientific instruments specialist’s first-half trading update was strong “on all fronts.”
• Sulzer rises as much as 5.4% after the Swiss pump maker positively surprises on orders in the third quarter.
• Bellway shares rise as much as 3.9% after analysts at Jefferies said the downbeat outlook for FY27 does not look as bad as feared, as the company warned of lower completions and tighter margins.
• LVMH shares fall as much as 2.3% after the French luxury-goods giant reported third-quarter organic revenue that missed estimates, with its biggest division — fashion and leather-goods — posting a slump in sales.
• European semiconductor stocks slide, tracking a selloff across Asia and US peers, after Broadcom CEO Hock Tan warned of overheating market sentiment.
• Schaeffler shares fall as much as 5.4% after the German car parts maker posted disappointing preliminary third-quarter results.
• Befesa shares slip as much as 4.9% after Jefferies reduced its full-year earnings estimates for the waste recycling services firm and trimmed its price target in anticipation of softer third-quarter results.

Asian stocks declined as the global AI trade came under renewed pressure, with the MSCI Asia Pacific Index falling as much as 2.1% to the lowest level since Aug. 4. The Kospi slumped 5.46% after breaking its 200-day moving average — at one point down 7.4% before finding support near 6,000 — and Seoul briefly halted program trading for the first time since August; foreigners sold a net $3.4 billion, $3.2 billion of it in tech, per Goldman, which also notes Samsung's buyback has ended and SK Hynix's is nearly complete. The Nikkei 225 fell 1.82% on its return from a long weekend, but the TOPIX rose 0.14%: TEL (-7.2%), SoftBank (-8.5%), Advantest (-2.9%), Kioxia (-13.3%) and Ibiden (-7.8%) accounted for all of the Nikkei's losses, while Japanese banks rose 2.1% ahead of US bank earnings. Taiwan's Taiex fell 1.95% and the Taiwan dollar posted its biggest drop since June 2025. The ASX 200 outperformed as energy, financials and defensives offset tech and miners. The Hang Seng (+0.31%) and CSI 300 (-0.29%) reversed early weakness, though Chinese automakers fell across the board after the Ministry of Finance cut the VAT export rebate on new-energy vehicles to 9% from 13%. India's Nifty rose 0.76% on IT services. "Rotation into financials, defensives and software cushioned losses elsewhere," Goldman's Asia desk wrote.

In FX, the Bloomberg Dollar Spot Index is down 0.2% after rising 0.6% over the past four sessions, with the DXY in a 102.30-102.57 range as yields and energy ease. The yen outperforms, with USD/JPY down 0.3% around 158.1, after Bloomberg reported BOJ officials are leaning against a rare back-to-back hike this month while still eyeing December; EUR/USD rises 0.3% to 1.1189 and cable edges up to 1.3230. USD/KRW rose 0.5% to 1,341.60 as the Kospi tumbled, while the Taiwan dollar fell as much as 1% to 32.215.

In rates, Treasuries rallied as cash trading reopened after Monday's holiday, with yields down 2-5bps led by the 10Y, which slipped 5bps to 5.19%; USTs are firmer by around 10 ticks, at the upper end of a 104-18 to 104-30+ range. Fed Governor Waller said higher long-term yields could help the Fed cool demand in rate-sensitive sectors such as housing and autos, doing some of the work of tighter policy (finally, a use for the bond rout). Bunds rose as much as 49 ticks and gilts gained more than 50 ticks as energy prices eased, with the UK 10Y opening 7bps lower at 5.37%; Germany's 5-year auction drew a weak 1.1x bid-to-cover. Big investors are snapping up Treasuries to lock in the highest yields in decades, with almost $14 billion injected into US government bond funds since the start of October, per the FT. Positioning may add fuel: CFTC data show speculators have rebuilt sizeable net shorts in 10-year futures while sharply cutting 2-year shorts, leaving the 2s10s curve exposed to an initial bull flattening if Wednesday's CPI is soft. Goldman's Kaplan points out that “bond funds are underweight duration at an extreme that has historically skewed to lower yields over the next 1–2 quarters.” Goldman expects a 0.24% increase in September core CPI (vs. +0.2% consensus) and a 0.59% rise in headline CPI (vs. +0.6% consensus), reflecting higher energy prices; the GS US desk warns “A 10bp downside surprise on core would be meaningful for rates.”

As money markets price in at least one more US rate hike by December, Federal Reserve Governor Christopher Waller said the surge in long-term Treasury yields is helping curb demand in rate-sensitive sectors.

“When yields go up, is that going to impact interest-sensitive sectors like housing and autos and other things? Yeah, of course it is,” Waller said at Bloomberg’s New Economy Forum in New Delhi on Tuesday. While that isn’t the Fed’s intention, higher yields are “doing a little bit of the work,” he said.

In commodities, WTI Nov and Brent Dec futures are softer, extending their pullback from yesterday's gains as Trump reiterated the Iran war will end "very soon": WTI fell to a $91.81 low from a $93.49 peak and Brent to $104.71 from $106.14, though Houthi attacks on Saudi Arabia and US Gulf production shut-ins remain supportive. Goldman estimates the Brent risk premium at $24/bbl and notes its average global crude freight rate is now $30/bbl vs. $4 a year ago. Dutch TTF is firmer, climbing to €86.40/MWh on colder weather and Middle East supply concerns, after European gas hit a post-2022 high on Monday. Spot gold rose from a $4,151 low to $4,201 and silver trades in a $59.58-60.73 range. LME copper is little changed within a $14,549.68-14,667.00/t range.

US economic data slate includes September NFIB small business optimism (97.9 vs est. 98.2, prior 98.7), ADP weekly employment change (8:15am), September existing home sales (10am) and the September federal budget balance (2pm). Fed speaker slate includes Goolsbee (7am, 10am), Barkin (1pm) and Collins (4pm). Corporate events: SEMICON West runs through Thursday; Workday and BGC hold investor days.

Market Snapshot

Top Overnight News

• Iran is fortifying its defenses, rallying loyalists, and hinting that their forces could conduct land incursions into neighboring countries as it threatens a wider, harsher response against the U.S. and its Gulf allies as it prepares for potential American attacks after the midterms and seeks to deter them. WSJ
• Saudi Arabia intercepted ballistic missiles launched by Yemen’s Houthis, targeting Riyadh and Khamis Mushait. Donald Trump dismissed concerns that Russia and China might be helping Iran. Oil slipped after three days of gains. BBG
• A global slide in semiconductor stocks deepened, sending South Korea’s chip-heavy equity benchmark down more than 7% at one point, as concerns about AI overheating and Chinese competition intensified. Investor angst over the AI trade increased after Broadcom Inc.’s chief executive likened market sentiment to a casino and warned that financing the buildout will become a key problem. BBG
• JPMorgan and Goldman Sachs have taken a rare move to limit exposure on a $5 billion loan sale for AI startup Volta Infrastructure as investors demand higher yields for risky debt tied to the AI boom. BBG
• JPMorgan 3Q FICC sales & trading revenue $5.37B, est. $6B; sees FY net interest income about $106.2B, est. $105.28B. BBG
• Nvidia's share of China's market for data-center AI chips fell to 34% in the first half of 2026, as US export controls restricted supplies of its products and domestic rivals led by Huawei gained ground. RTRS
• Volumes in options tied to individual stocks have recently reached levels seen during the meme-stock mania of 2021, about $700 billion of notional volume a day. WSJ
• BoJ officials are leaning against a rare back-to-back interest rate increase this month while still eyeing the possibility of another move as soon as December, according to people familiar with the matter. BBG
• Federal Reserve Governor Christopher Waller said the surge in long-term US Treasury yields is helping to curb demand in interest-rate-sensitive sectors such as housing and automobiles, doing some of the work of tighter monetary policy. BBG
• Big investors are snapping up US Treasuries, seeking to lock in the highest yields in decades as they bet borrowing costs can only climb so much further before a months-long sell-off abates. Investors have injected almost $14bn into US government bond funds since the start of October, after net inflows in the third quarter reached a record $59.3bn. FT
• Russia will be able to return diesel exports to levels above those US President Donald Trump has outlined under a deal with Moscow which has been criticised by Ukraine and some US lawmakers, Deputy Prime Minister Alexander Novak said on Monday. RTRS
• Iran and the US remain divided over the sequencing of a diplomatic agreement: Al-Akhbar. Tehran is demanding an end to the war, removal of the naval blockade and oil sanctions, and release of frozen assets before reopening the Strait of Hormuz and discussing nuclear issues, while Washington is insisting on nuclear concessions first. Newsquawk
• IMF raised 2026 Global Real GDP growth forecast to 3.1% (prev. 3.0%), citing AI investment tempering energy price shock in key economies, while it maintains 2027 global growth view at 3.4%. Maintained US 2026 growth forecast at 2.3% and raises 2027 forecast to 2.3% (prev. 2.2%), lowered China 2026 GDP forecast to 4.5% (prev. 4.6%) and cut 2027 forecast to 4.0% (prev. 4.1%). Newsquawk
• Surging bond yields are the top risk to the financial system, the IMF says. BBG
• US Sept. NFIB small business optimism falls to 97.9, est. 98.2. BBG
• UK Chancellor Healey is reportedly rejecting calls to equalise capital gains tax and income tax rates: FT
• Black Sea strikes threaten Bulgarian refinery supply, the Bulgarian premier says; a merchant ship was sunk off Bulgaria’s Black Sea coast. BBG/Newsquawk
• JPM Market Intel stays Tactically Bullish into earnings but flags meaningful risk of a Quality factor reversal around CPI and the Oct. 28 Fed meeting. JPM

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly declined amid a tech sell-off following the mixed handover from Wall Street, where the Nasdaq underperformed as chip and memory names were pressured by China competition concerns after CXMT announced technological progress on a denser memory chip design. ASX 200 outperformed its regional peers with price action range-bound as the downside in tech and miners was offset by strength in energy, financials and defensive sectors. Nikkei 225 suffered from the tech-related pressure as participants returned from the long weekend. KOSPI slumped alongside the tech sell-off, with a sidecar triggered early on due to heavy losses. Hang Seng and Shanghai Comp conformed to the tech-led declines across the region, with weakness in autonames after reports that China will cut the VAT export tax rebate rate on new energy vehicles to 9% from 13%.

Top Asian News

• China smartphone shipments fell 15.4% in Q3, according to IDC.
• India's PM Modi said today's technology and data and knowledge and innovation are powers, adding that tech should help new opportunities for millions.

European bourses (STOXX 600 +0.6%) have moved higher throughout the session. There was earlier underperformance in the tech–heavy AEX (+0.1%), but it has since climbed into the green. Initial pressure stemmed from the slump in tech behemoths in Asia and throughout the US trading session on Monday. The drivers seem to be two-fold: 1) increased competition after CXMT said they made progress on new memory architecture, as they plan to roll out a new server-memory product by year-end, according to SCMP, 2) Broadcom CEO likens market sentiment to a casino and highlights concerns about AI buildout financing. Tech continues to be in favour for fund managers, with a BofA survey showing that the proportion of managers overweight tech has risen to 37% (prev. 30%). Sectors highlight the positive bias. Chemicals top the sector pile, with Health Care and Real Estate following closely behind. The sector laggards include Tech, Consumer Products & Services and Basic Resources. LVMH (-1.5%) reported Q3 sales after the close on Monday. Headline revenue beat estimates; however, the widely watched Fashion & Leather Goods fell 5% (exp. -1.57%). As expected, struggles in China were highlighted as a major challenge, while the CFO added that short-term cost-cutting will not increase sales. US equity futures are mixed, with underperformance in the NQ. Outside of the tech story, focus will be on banking earnings, with JPM, GS and C set to report.

Top European News

• UK Chancellor Healey is reportedly rejecting calls to equalise capital gains tax and income tax rates, the FT reported citing sources. The report added that the Treasury could still decide to raise CGT by a small amount and also said the Treasury is working on CGT relief to encourage entrepreneurs who sell their business to reinvest back in the UK.
• Retail bosses are to warn UK Chancellor Healey that a tax raid on shops will push up prices and worsen the cost of living crisis, according to Telegraph.
• UK grocery price inflation accelerates to 2.5% in the four weeks to October 4th (vs 2.3% in the 4 weeks to Sep), according to Worldpanel.
• German Chancellor Merz said Germany needs to increase its long-term growth potential. Merz added that he wants a comprehensive pension reform and that there will be temporarily higher contributions paid by workers and employers into the pension system.

FX

• Snapshot: DXY is under pressure this morning, owing to easing yields and a pullback in energy benchmarks. The downside in oil does not have a specific catalyst, and it appears to be more of a pullback from yesterday’s advances. Overall, the geopolitical situation remains tense with Saudi striking Houthi targets overnight; elsewhere, a merchant ship was sunk off Bulgaria’s Black Sea coast. Given the USD pressure, G10s are stronger, albeit to varying degrees; the JPY outperforms, whilst the CAD posts only mild gains.
• DXY holds within a 102.30 to 102.57 range. As mentioned, pressure comes alongside easing yields/energy, with domestic newsflow focused on the Fed’s Waller. He mentioned that recent high yields are somewhat attributed to the AI buildout. Interestingly, he noted that recent yield levels are doing some of the Fed’s work on demand. No reaction was seen on the comments, but remarks are not too dissimilar from those seen in the ECB Minutes.
• JPY outperforms vs peers, following reports in Bloomberg, citing sources, which suggested that the BoJ is leaning back against back-to-back hikes in October. Instead, the Bank may change the language surrounding its 2% target to signal that it is “approximately” at the level, rather than “approaching” it. This essentially corroborates a Reuters source report from earlier in the month, but still managed to spur a hawkish reaction in the JPY. MUFG (following the Reuters piece) suggested that the language change will back its case for a December hike.

Central Banks

• Fed's Waller (Voter, Dovish) said the US remains the dominant country in building AI models and that AI could contribute to widening GDP per capita. If AI investment falls off, it will put a check on prices and that hyperscalers are still planning on spending trillions of dollars over the next three years. On the bond market and yields, Waller said the AI build-out is definitely having an impact on yields and that real yields reflect the impact of real growth. Waller went on to say that higher yields could do some of the Fed's work on demand and that inflation expectations are well anchored.
• Fed's Hammack (2026 voter) reiterated that more restriction is needed, but she is keeping an open mind on pace of rate hikes and noted that policy restriction will need to hit demand, either through capital spending or consumption. Furthermore, she said inflation pressures are broadening out from AI, with other firms all doing well and ready to invest, while she doesn't want to discourage growth but stated that they may need to 'pull it back a little bit'.
• The BoJ is reportedly to lean back against back-to-back hikes in October, Bloomberg reported citing sources. The source added that the BoJ could adjust language on the 2% inflation target from "approaching 2%", to "approximately 2%", while also suggesting that December is still in play.
• BoJ Governor Ueda reiterated the BoJ's stance that market determines long-term interest rates and will continue to closely monitor bond markets, adding that long-term interest rates are determined in the markets and reflecting various factors. Ueda said core inflation is gradually nearing 2% and that it is important to anchor inflation around 2% now.
• RBA Minutes from the September Meeting stated the Board was concerned excess demand in the economy was greater than previously assumed and it saw an increased risk of persistently elevated inflation, while it reiterated it will increase rates further if needed. All board members had agreed that a 25bps rate hike was necessary, and the Board briefly weighed the case for keeping rates unchanged, including a decline in house prices. Furthermore, it discussed upside inflation risks and factors that could sustain higher inflation, as well as noted that some upside inflation risks had already emerged or intensified since August, and the Board highlighted the need to adjust rates in a timely manner to keep inflation expectations anchored.
• BoE's Greene (hawkish dissenter) said a bigger risk is not being proactive enough in tackling inflation than raising rates too soon, while she warned if they wait until second-round effects materialise, it will be too late. Greene noted concern about successive supply shocks and stated they must be proactive in leaning against second-round effects, as well as stated that UK monetary policy is not that restrictive.
• ECB's Elderson said the heatwave in Europe may have imposed costs equivalent to the area's projected 2026 economic output, underscoring a potentially material macroeconomic risk.

Fixed Income

• The bullish APAC performance remains, but has not extended, in the European morning thus far. Despite a number of potential catalysts occurring, nothing has fundamentally shifted the dial from a FTQ on the tech sell-off and energy downside, as the Middle East backdrop has not escalated.
• USTs firmer by around 10 ticks as things stand, but only a tick or two above the APAC peak. No move at the time to Fed’s Waller, but his comment that higher yields are doing some of their work is notable, though in-fitting with his dovish-bias. At the upper-end of 104-18 to 104-30+ parameters.
• Bunds followed suit overnight, and have extended by a few ticks to a 121.44 peak this morning, higher by 49 ticks at best. Specifics for the space light, no move to the unrevised German final inflation print and weak Bobl auction. Regional focus remains on familiar factors for the bloc and Germany specifically.
• Gilts gapped higher by just over 10 ticks, before climbing to an 84.47 peak in short order, and since then have held just off that but still with gains in excess of 50 ticks. Aside from the above points and the usual, relatively speaking, larger move seen on energy action, Gilts react to a few factors today. A UK court ruling which significantly increases the odds of the Treasury keeping c. GBP 4bln in seized crypto holdings; a windfall for Chancellor Healey. Additionally, a FT source report suggests that CGT will not be equalised to Income Tax, though it could still see an increase; a reported view taken by the, unsurprising, view that such an increase would increase capital outflows from the UK.
• Italy sells EUR 7bln vs Exp. EUR 5.5-7bln 3.00% 2029, 3.35% 2033 and 3.95% 2041 BTP.
• The UK sells GBP 500mln 4.00% 2063 Gilt via Tender: b/c 3.98x (prev. 3.51x), average yield 5.802% (prev. 5.722%).
• Australia sells AUD 300mln 3.00% March 2047 bonds: b/c 3.60x, avg. yield 5.6818%.

Commodities

• WTI Nov and Brent Dec futures are softer, extending their pullback from yesterday's gains as Trump reiterated that the Iran war will end very soon, while talks between Washington and Tehran continue through intermediaries. Nonetheless, diplomatic progress remains limited, with reports this morning suggesting the two sides remain divided over the sequencing of an agreement, although Iranian FM Araghchi reiterated that Tehran is seriously pursuing diplomatic efforts. Meanwhile, Iran continues to insist on its conditions for reopening Hormuz, while Houthi attacks on Saudi Arabia and the US Gulf production shut-ins remain supportive for the complex. WTI has fallen to a USD 91.81/bbl low from a USD 93.49/bbl peak, while Brent has declined to USD 104.71/bbl from USD 106.14/bbl highs.
• Dutch TTF is firmer amid upcoming colder weather in the Western Hemisphere alongside continued Middle Eastern supply concerns. TTF has climbed from a EUR 83.90/MWh low to EUR 86.40/MWh highs.
• Precious metals are firmer, with spot gold benefiting from lower global yields and a softer DXY amid softer oil prices, although expectations of further Fed tightening keep upside capped. Spot gold has risen from a USD 4,151/oz low to USD 4,201/oz while spot silver has gained within a USD 59.58-60.73/oz range.
• Base metals are mixed, with copper flat amid the broader risk-off tone across the tech sector. 3M LME copper has risen within a USD 14,549.68-14,667.00/t range, while COMEX copper is firmer within a USD 6.7030-6.7725/lb range.
• Maersk (MAERSKB DC) and Hapag-Lloyd (HLAG GY) will re-launch the FM1 service on the route between Asia and the Middle East.
• Kuwait lowered November crude prices for November, according to the pricing document.

Trade/Tariffs

• Western auto executives warned the EU’s deal with Beijing to restrict hybrid vehicle imports into the bloc will offer only “temporary” protection, as Chinese rivals push ahead with their ambitions to expand sales across the continent, according to FT.
• China proposes civil aviation dual-use export rules to facilitate compliant exports for aviation enterprises.

Geopolitics: Middle East

• US President Trump said the Houthis are misbehaving very badly and that he spoke with Saudi Crown Prince MBS about attacks, while he also stated that oil will drop when the war with Iran ends very soon and that the Midterm elections will have no impact on his decisions regarding Iran.
• US President Trump said Iran will never get nuclear weapons and that this war will end very soon, with gas prices to go down as soon as the war ends, while Trump said he had to change the course a little bit on Iran because they couldn't let Iran get a nuclear weapon.
• US President Trump posted, "I see so many comments from the Radical Left Morons and Lunatics that China and Russia are helping the “wonderful” Islamic Republic of Iran. If they are, it’s at a very low level, but I don’t believe they are at all. They have too much to lose, and we would know about it, and know about it very fast!"
• Iran's Foreign Minister Araghchi said that the Foreign Ministry is seriously pursuing the use of diplomatic capabilities to secure national interests, IRIB reported.
• IRGC commander-in-chief said no extra-regional power has the right to threaten and maintain a hegemonic presence or interfere in the Strait of Hormuz and the Persian Gulf.
• Iran and the US remain divided over the sequencing of a diplomatic agreement, Al-Akhbar reported citing sources. The source said that Tehran is demanding an end to the war, removal of the naval blockade and oil sanctions, and release of frozen assets before reopening the Strait of Hormuz and discussing nuclear issues while Washington is insisting on nuclear concessions first.
• Iran is fortifying defences, rallying loyalists and threatening a wider, harsher response against the US and its Gulf allies as it prepares for a potential resumption of attacks after the Midterms and seeks to deter them, according to WSJ.
• Yemen's Houthis said they targeted Riyadh Airport with ballistic missiles on Monday, while the group also carried out an operation targeting Khamis Mushait Air Base with a drone. Furthermore, it was reported that air traffic at King Fahd International Airport in Dammam was temporarily halted.

Geopolitics: Ukraine

• US President Trump said Ukrainian President Zelensky and Russian President Putin have to get together and end the war, while he added that they both don't know how to make a deal, but he thinks they support the energy ceasefire. Furthermore, Trump said he thinks Putin wants to make a deal more than Zelensky, and that Zelensky has to focus on making a deal, not talk.

Geopolitics: Other

• North Korea confirmed it test-fired a tactical ballistic missile, while North Korean leader Kim said North Korean weaponry will be developed and completed more strenuously, according to KCNA.
• US President Trump said he may meet with North Korean leader Kim and it would be exciting, while he also said that he is considering firing the US ambassador to Greece.
• Belize's Foreign Ministry rejected China's sanctions and said measures against Belize's Foreign Minister are unwarranted.

Crypto

• Bitcoin rebounds from Monday's losses and has regained the USD 83k handle after falling to a trough of USD 80.93k.

US Event Calendar

• 6:00am: Sept. NFIB Small Business Optimism, est. 98.2, prior 98.7 (actual 97.9)
• 8:15am: Sept. 26 ADP Weekly Employment Change, prior 23.750k
• 10:00am: Sept. Existing Home Sales, est. 3.95m, prior 3.98m
• 10:00am: Sept. Existing Home Sales MoM, est. -0.8%, prior -2.0%
• 11:30am: US to sell $95BN 13-week bills and $82BN 26-week bills
• 1:00pm: US to sell $95BN 6-week bills
• 2:00pm: Sept. Federal Budget Balance, est. -$30.0b, prior $197.9b

Central Bank Speakers

• 7:00am: Fed’s Goolsbee Speaks in Semafor Podcast Interview
• 10:00am: Fed’s Goolsbee Speaks in Kyla’s Newsletter Podcast Interview
• 1:00pm: Fed’s Barkin Speaks in Moderated Discussion
• 4:00pm: Fed’s Collins Speaks at Banking Conference

DB's Jim Reid concludes the overnight wrap

Superintelligence may yet wipe out the Reid family as in celebrating my wife's birthday yesterday I discovered via the card he delivered that one of my 9-year-old twins spells mummy with one "m". Meanwhile, despite being on the planet for 52 years, I still can't wrap presents. Every present I give looks as if I don't care at all about the recipient because of the chaotic state of the wrapping. There is nothing I can do about it. It might explain why it took until my late 30s to get married though.

After a quiet start to the week with US bond markets closed yesterday, this morning we've seen a major Asian tech sell-off and later today we'll see the start of the US Q3 earnings season barrage. JPMorgan, Goldman Sachs, Wells Fargo and Citigroup all report today, followed by Bank of America, Morgan Stanley and BlackRock tomorrow. Financials are actually expected to be one of the sectors with the weakest YoY growth so be aware of that as you digest today's results. Overall, our US equity strategists expect S&P 500 earnings growth to remain at a record 34% YoY in Q3, versus consensus at 27%. Their view is that consensus is again embedding too much of a slowdown, leaving scope for another quarter of above-average beats. See their piece here for more. In Europe, the season really kicks off next week and our equity strategists expect earnings growth to reach 25% in Q3, 5 pp above consensus (their full preview is here). So it should be a very strong earnings season on both sides of the Atlantic and indeed across the globe.

Ahead of the onslaught there has been a big sell-off in tech overnight, seemingly on concerns over Chinese AI competition. The sell-off, which began this time yesterday has continued to weigh on the KOSPI (-6.30%), leaving the tech-heavy index with its largest two-day drop (-9.79%) since July, back when a reassessment of the AI trade was the key theme in equities. The Nikkei 225 has also come back from a long weekend in Japan with a -2.21% loss.

The catalyst for the latest AI-driven sell-off came after the South China Morning Post reported yesterday morning that China’s CXMT memory chipmaker had made good progress on new DRAM architecture that would boost memory density. So that led to a fall in several memory makers, including the likes of Micron (-3.88%) yesterday, and South Korea’s Samsung (-7.98%) and SK Hynix (-8.72%) this morning. In fact, the Philly semiconductor index fell for a 4th consecutive session yesterday, which is the first time that’s happened since July. Nasdaq (-0.79%) futures are lower this morning with both the S&P and Stoxx equivalents down a more measured -0.19%. 10yr US yields are down -4.6bps after being closed yesterday.

Turning to the rest of yesterday’s developments now, it was a relatively different picture, with most equities advancing despite a rise in oil and gas prices. That came as markets digested the weekend news that the Houthi militants had bombed Riyadh’s airport, along with lingering uncertainties around some kind of energy ceasefire between Russia and Ukraine. Yet despite all that, the S&P 500 (-0.06%) ended the session only a little below flat, whilst the STOXX 600 (+0.65%) saw bigger gains. US equity gains were ultimately reversed by the continued selloff in chip stocks, with the Philly semiconductor index down -2.67%. That said, two-thirds of the index were higher with the Mag-7 closing up +0.47%.

In terms of that rise in oil prices, Brent crude (+1.84%) closed up to $106/bbl, whilst European natural gas futures (+3.58%) hit a post-2022 high of €84.24/MWh. The risk-off in Asia has helped Brent fall back -1.12% this morning.

While US bond markets were closed for a holiday, the latest rise in energy prices led to a repricing across European rates yesterday. Indeed, higher inflation expectations were clear, as the Euro 1yr inflation swaps rose +4.7bps to 3.52%, which pushed front-end yields higher across Europe, as it revived fears about more persistent inflation over the months ahead. Indeed, the sense was that things were still deteriorating, particularly with gas prices hitting a new high. All that came as doubt was cast on the energy ceasefire between Russia and Ukraine, with Ukrainian President Zelenskyy saying that Ukraine would respond if Russia didn’t agree to the ceasefire. So that added to energy supply concerns, particularly with investors already nervous about a wider Middle East escalation after the attacks on Saudi Arabia.

So that meant front-end yields moved up across Europe, with the Franco-German 10yr spread (+5.1bps) closing at a post-2012 high of 142bps, albeit with less fanfare and market stress than when 2012 levels were previously breached 10 days ago. The 2yr yield moved higher in Germany (+2.4bps), France (+1.5bps) and Italy (+2.3bps). So it was interesting that French bonds were not the worst performing at the front end, perhaps suggesting that much of the sizeable summer front end carry positions had now been squared.

Before the late US equity dip and the overnight Asia sell-off, all the major European indices ended higher on the day even with gas prices notably higher. That included the Stoxx 600 (+0.65%) and the DAX (+0.76%), whilst France’s CAC 40 (+0.38%) still saw a rise, even though it underperformed.

To the day ahead now, and as discussed near the top, earnings releases include JPMorgan, Wells Fargo, Goldman Sachs and Citigroup. Data releases from the US include the NFIB’s small business optimism index for September, along with existing home sales. Finally, the Fed’s Waller, Barkin and Collins will speak today.

Tyler Durden Tue, 10/13/2026 - 08:38