The non-interventionist D.C.-based think tank Quincy Institute for Responsible Statecraft has published an interview with the one Republican who has been most outspoken against Trump’s Iran war.

Trump had in turn starting last spring launched a political war of his own against Kentucky Rep. Thomas Massie, who has been in the hot seat, with his political future in question. But Massie has been unrelenting, even after being defeated for another term by the largely unkown Ed Gallrein, a Republican candidate backed by President Trump and the American Israel Public Affairs Committee (AIPAC), and groups like the Republican Jewish Coalition.

Massie, who has unveiled eight articles of impeachment against Secretary of War Pete Hegseth, spoke to Responsible Statecraft about why he’s gong after Trump’s Pentagon chief – which appears focused on the his launching ‘unauthorized’ military actions in Iran, without Congressional approval. The argument as laid out below hinges on whether Hegseth was following ‘lawful orders’ from the Commander-in-Chief. Massie says no.

As it turns out, that potentially ‘awkard’ (for Republicans) impeachment vote has been entirely avoided for now with an early House election recess.

“A vote to impeach Secretary of Defense Pete Hegseth that could have happened in the U.S. House as early as Thursday will now be avoided, at least until after this year’s midterm election. Republican leaders announced Wednesday they would leave Washington a day earlier than scheduled,” CNBC reports.

“House Speaker Mike Johnson’s decision cuts short by a day an already light congressional work period, in a month that will see the House in session for just six days,” the report adds. “The chamber is not due back in Washington until after the Nov. 3 election, as lawmakers will now fan out to campaign.”

Mike Johnson sent lawmakers home Wednesday, avoiding a Hegseth impeachment vote as well as a bipartisan effort to release additional Jeffrey Epstein files.

🇺🇸 House recesses early to avoid vote on Hegseth impeachment

Speaker of the House Mike Johnson sent lawmakers home Wednesday, avoiding a vote on a resolution by Rep. Thomas Massie of Kentucky to impeach War Secretary Pete Hegseth as well as a bipartisan effort to release… pic.twitter.com/qZCBWrMnnF

— Drop Site (@DropSiteNews) September 17, 2026

Below is the Kelley Vlahos interview with Massie transcript produced by Responsible Statecraft [emphasis ZH].

*  *  *

Responsible Statecraft: Why are you bringing this about right now?

Rep. Thomas Massie: Because we have exhausted every other legislative remedy to make things right. We are at the point now where Hegseth is just ignoring the law. He’s ignored the concurrent (War Powers) resolution. He ignored the 60-day limit. They never reached the threshold required under section 2-C under the War Powers resolution of 1973. He’s severely degraded the DoD’s ability to winnow out civilian targets from their target list.

There is an active and ongoing war that should be stopped immediately, and I think this is an effective way to do it. It’s literally the only legislative remedy that I could think of that might work.

RS: I would imagine the timing is important because the House is leaving until after the midterm elections in November.

Massie: Yeah, and the Speaker has to schedule a vote within 48 hours.

I suspect there will be a motion to table; that’s usually what these resolve to, if they’re not supported.

RS: So what happens then?

Massie: Well, I would encourage people who are even unsure about the bill to vote against the motion to table, and hear the debate.

RS: Let’s get back to the merits of the case here. This is pretty wide-ranging, so you hit the constitutionality of the war, the civilian deaths, the kidnapping of (former Venezuelan President Nicolas) Maduro, the airstrikes on so-called narco boats, even your freedom of speech where Senator Mark Kelly is concerned. You’re really going at him with both barrels here.

Massie: There’s two categories of articles here. One category, which covers six of the articles, is that he basically followed illegal orders from the president. And these are illegal orders that were issued by the president, but Hegseth is under obligation not to follow them since they were illegal. And there’s a category of impeachment articles here that are solely attributable to Hegseth himself where he degraded the infrastructure of the DoD which is supposed to minimize the civilian casualties. That’s his. I don’t think Trump was involved in that. And then the attack on Mark Kelly, where he weaponized the DoD to squelch the speech of a senator and a veteran. That’s solely Secretary Hegseth’s doing. So there are things in here which are top-level issues with the administration all the way to Trump, but then there are some that are uniquely Peter Hegseth’s high crimes or misdemeanors.

Peter Hegseth wins the award for most crimes committed. And he just committed one too many; I couldn’t take it anymore.

RS: That begs a question, why didn’t you just go after Trump?

Massie: Well, I kind of already answered that question. Some of these things, like the civilian targeting, are Hegseth’s alone, and some of it, Trump would probably ascribe to Hegseth and not himself to save his own skin. I just don’t think it’s politically feasible or viable or even advisable to try to impeach Trump.

RS: A reporter just asked newly confirmed Attorney General Todd Blanche about your articles of impeachment and you. Aside from him saying he thinks Hegseth is doing “a phenomenal job,” he said he disagreed with the characterization that we are in a war, and that a majority of Congress would disagree as well. What do you make of these continuing assertions by the White House, the administration, even members of Congress, that we can’t call it a war?

Massie: Well, somebody better give the president that memo. He calls it a war every week.

It’s beyond playing with semantics. It’s beyond trying to be cute legally. There’s no way you can say this is not a war. Even the raid in Venezuela was an act of war. We overturned the government and put boots on the ground. But at least it seems to be over with now that we have their oil and control of their government.

He’s wrong about a majority of Congress not thinking it’s a war. A majority of Congress passed a concurrent resolution in the House and in the Senate telling them to stop under the War Powers Act.

So with semantics or not, they’ve been told to stop. They’ve claimed to stop the war by day 60, and now they say that every time they strike Iran it’s an unconnected military action to the others.

If you want a little something in the weeds here, I read every communication from the White House to Congress. They are sending us notices every time they do a strike pursuant to the War Powers Resolution of 1973. Now they’re obligated to do that, and I noticed at least three of these they said were motivated by a strike on a neutrally-flagged vessel. They’re claiming the authority to engage in hostilities on behalf of neutrally flagged vessels. And the War Powers Resolution says that it has to be an attack on U.S. soil or soldiers or infrastructure. They’re admitting right there in three of these communications to Congress that their predicate was an attack on something that wasn’t American.

RS: Did those (War Powers) communications end when they declared the so-called ceasefire, or do they keep coming?

Massie: They keep coming. In fact they refer to the ceasefire in two of these communications after the ceasefire.

RS: That flies in the face of what they’re saying publicly

Massie: Yeah, if it’s not a war, how is Trump gonna end it after the election like he told everybody in Texas last week?

Via Remix News,

A leaked video of a French military chaplain addressing paratroopers in a cathedral has circulated widely on social media. In the clip, the chaplain makes disparaging remarks about leftists, tells soldiers to keep fighting for their national heritage, and warns of the risk that French values and culture could be displaced.

The clip, recorded during a Saint-Michel Mass on Oct. 7, 2025, shows Father Romain Ghandour speaking to soldiers of the 3rd Marine Infantry Parachute Regiment (3e RPIMa) at Carcassonne’s Saint-Michel Cathedral.

Soldiers can be heard laughing and applauding as he delivers his pointed remarks.

The clip was leaked and published by Le Canard Enchaîne news outlet.

🇫🇷🔴 JUST IN: A video has been leaked of a French military chaplain roasting leftists and warning of the Great Replacement in front of French paratroopers in the city of Carcassonne.

“Calm down, lefties! Quiet! Breathe through your nose!”

Remarkably, the massive audience of… pic.twitter.com/kkteRaaTu0

— Remix News & Views (@RMXnews) September 18, 2026

The video was released in mid-September 2026, nearly a year after the Mass.

Saint-Michel is the patron saint of paratroopers and airborne troops in the French army, which explains why the regiment was gathered in the cathedral.

Christophe Barthès, then a municipal election candidate and later elected mayor of Carcassonne for the right-wing National Rally, was among those present.

Ghandour begins by invoking the names and dates of men and women who died so that France would remain “a beautiful country,” one in which architects could continue building “basilicas, cathedrals, housing, and fortified castles.”

He contrasts that heritage with the present: instead of knights, he says, “we put incompetent people. We put people who eat seeds, people who lecture everyone, ideologues.”

The phrase “people who eat seeds” is widely understood as a jab at what he presents as weak or overly ideological leftists.

The line that has drawn the most attention comes next: “Calm down, lefties! Quiet! Breathe through your nose!” The assembled soldiers respond with laughter and applause.

He then warns that if they lose courage and conviction, “we will be ridiculed” and “this beautiful country that is France will be mocked, and others will take our place.”

He continues:

“In fact, after a while, when you’re thirsty, when you’re hungry, it’s the law of the strongest that reigns. And others will take the place of our values, of this freedom of speech, of action, of this equality between men, and of this fraternity, of this culture, of this society. Nature abhors a vacuum.”

While he never directly mentions the “Great Replacement,” many commentators have taken this remark to be a direct reference to the phenomenon, which is not only a reference to mass immigration, but also relates to the constant replacement of technology, culture, society, and peoples through all spheres of modern life at an ever accelerating pace. Ghandour closes by telling the soldiers to “keep fighting” and “continue to have the courage of your convictions, as I am trying to do at this Mass.”

As of the video’s release, there has been no detailed public statement from the army’s Catholic chaplaincy or the Ministry of the Armed Forces on whether the remarks violate rules on political neutrality for military clergy.

French military chaplains of all recognized faiths operate under a framework that is supposed to respect both freedom of conscience and the state’s neutrality. The 3e RPIMa, based in Carcassonne since 1962 and part of the 11th Parachute Brigade, is an elite unit within the French military.

The left has often been skeptical, and even hostile to, the French military, which has been seen as a bastion of support for the right in the country.

Authored by Sasha Gong via American Greatness,

America’s latest argument over artificial intelligence has suddenly become apocalyptic. Former Anthropic researcher Jacob Coxon accused AI companies of “gambling with our lives.” Anthropic CEO Dario Amodei urged the industry to slow the development of frontier models, an idea supported by OpenAI CEO Sam Altman and Elon Musk. At the same time, opposition to the data centers needed to power AI is spreading across the United States.

China has noticed. X recently uncovered a suspected Chinese influence network of roughly 200,000 fake accounts; about 200 of them were directly involved in amplifying claims that American data centers were raising electricity prices and overwhelming the power grid.

This does not mean that criticism of AI or data centers is manufactured in Beijing. Concerns about electricity costs, water use, pollution, cyberattacks, job losses, and mass surveillance are real. But China does not need to invent American divisions. It needs only to identify, amplify, and exploit them.

Modern democracies periodically succumb to predictions that a new technology will destroy humanity. The fear may be legitimate, but its political consequences are not evenly distributed. Democracies permit protest, litigation, regulation, and obstruction. They may even abandon a technology out of fear.

Dictatorships suppress debate, concentrate resources, and use their rivals’ hesitation to catch up.

The first great technological apocalypse began with the atomic bomb.

As the Manhattan Project approached completion in 1945, scientists considered whether an atomic explosion might ignite nitrogen in the atmosphere or trigger an uncontrollable reaction in the oceans. Edward Teller raised the possibility; Hans Bethe and others calculated that the risk was physically negligible. The Trinity test proceeded.

The question nevertheless haunted Robert Oppenheimer. After Hiroshima and Nagasaki, he feared that scientists had opened a Pandora’s box. When Washington decided to develop the hydrogen bomb after the Soviet atomic test, he opposed it on moral and strategic grounds.

Oppenheimer’s Communist associations then turned a policy dispute into a political scandal. His wife and brother were members of the Communist Party USA (CPUSA), and he had many pro-Soviet acquaintances. Meanwhile, actual Soviet spies inside the Manhattan Project – including Klaus Fuchs and Theodore Hall – passed crucial nuclear information to Moscow.

The Soviet Union tested an atomic bomb in 1949 and a thermonuclear device in 1953. China tested its first atomic bomb in 1964, shortly after emerging from a famine that killed 40 million people. Neither Communist regime permitted a genuine public debate over the wisdom of nuclear competition.

The West did. Scientists, churches, students, and citizens organized enormous anti-nuclear movements. Their pressure contributed to test-ban treaties and arms control negotiations. Yet Americans still understood that the danger came not only from nuclear weapons but also from the regimes possessing them. After Sputnik in 1957, few believed the United States could safely withdraw from technological competition while the Soviet Union continued advancing.

After the Cold War, climate change became the next vehicle for apocalyptic politics.

Al Gore’s An Inconvenient Truth turned complex climate models into images of approaching catastrophe. Greta Thunberg transformed policy disagreements into moral indictments. Claims that humanity had only “12 years” remaining circulated widely.

Fear of climate change converted a scientific problem into an ideological commandment. Energy restrictions, endless permitting, penalties on traditional industries, and costly transitions were presented as the only acceptable path. These policies greatly contributed to and accelerated Western deindustrialization.

China followed a different course. Unrestrained by voters, environmental groups, or local governments, Beijing concentrated subsidies, land, energy, and credit to build complete industrial supply chains. The West congratulated itself for reducing domestic emissions while transferring production to China. It then discovered that it depended on China for pharmaceuticals, rare earths, batteries, solar panels, and electronics.

The pattern is now repeating with AI.

While Americans debate moratoriums, China is treating artificial intelligence, robotics, and computing infrastructure as pillars of national power. Its “Eastern Data, Western Computing” strategy is creating an integrated national computing network, moving the eastern seaboard’s data-processing demands to western provinces with abundant land and energy. Beijing intends to control not only AI models but also the electricity, chips, servers, communications systems, and data centers that sustain them.

China is also competing to write the rules. In 2026, 29 countries signed an agreement in Shanghai establishing the World Artificial Intelligence Cooperation Organization, which Beijing describes as the first intergovernmental organization devoted to AI. China does not plan to pause while America debates whether the future is too dangerous to build.

AI requires serious safeguards: independent testing, cybersecurity standards, protection against biological misuse, transparent energy pricing, and accountability for harms. But regulation should make development safer, not make development impossible. Data-center projects should bear their actual costs, but local objections cannot become a nationwide veto over the infrastructure of the next industrial age.

Open debate is one of democracy’s moral strengths. The power to suppress debate is one of authoritarianism’s strategic advantages. When democratic caution becomes paralysis, freedom itself becomes vulnerable to exploitation.

America can decide how it develops artificial intelligence. It cannot decide whether artificial intelligence will continue to develop. If the United States stops because it fears the future, China will not stop with it.

Newly public military records are offering another look at unexplained objects encountered by U.S. forces, including a cluster reportedly moving through Middle Eastern airspace at extraordinary speed, according to the NY Post.

According to a CENTCOM account from 2025, military personnel tracked six round objects traveling together at about 480 mph. Their flight path was unusual enough to draw attention, with the objects repeatedly altering course. Military video from the encounter shows several small objects crossing the sky above an arid landscape.

The Post wrote:

A 2025 report from US Central Command (CENTCOM) details a sighting of “six small spherical objects, grouped together” and “frequently changing direction” at 480 mph. Accompanying the report was one minute of video footage showing the objects as they flew over what appeared to be a desert region.

Another video, from 2023, captured circular objects flying over the Yellow Sea that were spotted by an infrared sensor aboard a US military platform.

In a separate case that year, a Colorado police officer spent about 15 minutes recording a stationary, silent object displaying several different colored lights.

The Post writes that some of the material reaches much further back. In 1952, Navy warrant officer Delbert Newhouse filmed a formation of bright objects while traveling through Utah. The case eventually became part of Project Blue Book, the Air Force’s long-running investigation into reports of unidentified objects in American skies.

Officials explored mundane explanations for the Utah footage, ranging from balloons to birds. One Air Force review ultimately attributed the objects to seagulls circling in rising air, although another examination found aspects of their brightness difficult to reconcile with ordinary birds.

The records are part of the government’s continuing release of historical and more recent UAP material, providing additional documentation of sightings that military personnel and investigators have examined over decades.

Authored by Kane McGukin via Bombthrower,

What the G20, Werner, and Warsh tell us about America’s new monetary playbook

In every transition, there are road signs along the way. Matt Dines has been one of the more accurate minds of late on the monetary and geopolitical transition we are living through.

His and Camron Otsuka’s commentary earlier this month on Mine Print Hash, post the G20 meeting in North Carolina, sheds a lot of light on major sticking points that will pave the way for both future policy and monetary frameworks. This will not happen overnight, but at the same time we’ll likely look back and say, “man, the world changed fast.”

A few highlights that matter:

1. The Financial Stability Board (FSB). Just as Great Depression meetings brought new entities for the next cycle, G20 meetings post-GFC brought the FSB for the same reason. New rules to pave the way for stability in a new economic era (2009 Pittsburgh summit). According to Dines FSB brings AI into the mix, plugging it into the Basel Accords, the last of which, Basel III, an update required because of the financial behaviors and shortcomings that caused the GFC.

As Dines points out, all we need now is a final agreement so all parties can play nice around the new rails, i.e. stablecoin/Bitcoin/SOFR rails. Global stablecoin arrangements will take final shape after the announcement of a Bretton Woods 2.0. Something I’ve discussed many times over, and something that feels nearer and nearer by the day. The most important point? Bessent has basically championed this from day one.

As Werner’s model suggests (see point four), Bessent opposes the state picking winners directly, but supports guiding private capital toward strategic ends. Video referenced in Samson’s post.

2. Bringing forward the private sector as a way to grow our way out of this. What’s critical to understand here is that during the GFC, entities and individuals were overleveraged. To combat this, the central bank expanded its balance sheet to take on all the underwater debt. Today, the script is flipped. The private sector is relatively unlevered, and the central bank is overlevered. This is important because the only way to grow an economy is to guide credit towards productive use cases. Regardless of opinion, this has been the underlying basis of the early-stage beginnings of all successful economies and empires for centuries (see Werner). For those keeping score at home, these are the breadcrumbs we’ve been given to better understand where monetary and fiscal policy are going (Office of Strategic Capital).

3. G20 is bringing in banks and private institutions, which is a paradigm shift in how credit allocation works. This is the announcement. We are going to run a different playbook for our monetary framework from now on. This is the only way out. The only way back to some state of “normal”. This is exactly what Werner lays out in the Princes of the Yen. An in-depth study of Japan and other great banking empires. Our “new approach” will be one that has succeeded many times in the past. Including during the creation of America. Why? Because this style best achieves rebuilding the US’ industrial capacity – think modernization of infrastructure. Today’s infrastructure and infrastructure for the 21st-century is inherently digital. That’s why capital formation is being directed and pointed at all things AI and digital. This is why all these related industries are points of “national security”. This is what is meant by “Hamiltonian policy”, a notion we’ve discussed before.

In short, exactly as Dines pointed out, you’re going to have to pick sides – US or China. This is what is meant by the new multi-polar world. Believe it or not, for the first time in more than two decades, “we’re actually trying to accomplish something”.

4. Credit expansion is the only way to get growth (PofY), which is why Main Street over Wall Street matters. See the Foundry School to better understand the government’s refocus on centralizing and deploying capital into productive use cases. Centralize the steering of credit, decentralize who receives it.

The key to the entire process is Matt’s highlighting of Richard Werner’s work. Richard wrote the Princes of the Yen, which outlines not only the rise and fall of the great Japanese financial system, but more importantly, the foundations of how dominant banking and financial systems work. A means by which the US economic system has drifted far away from over the last thirty to fifty years.

In simple terms, the keys are state-directed capital and credit allocation to productive uses. That’s all that matters for a budding or dominant economic system. Without it, one dies. Without it, one meanders toward financial engineering practices that eventually kill the entire system. Proper credit allocation (capital formation) is representative of early-stage and highly successful/functioning economic systems. Financialization is the sign of an aging or failing financial system. If you strip out all the complexity and jargon, it’s as simple as this.

As Werner points out, the Quantity Theory of Credit is the origin of all successful banking models that have worked for thousands of years. It started in early Asia before moving through Europe, Germany, Japan, the US, and now back to China. It was the basis of China’s rise as they’ve built out the Belt and Road system over the last decade-plus. It has allowed them to pull economic power and global sway away from the US by way of state-directed capital aimed at globally and systemically important supply chains. By doing so, China created a vast decentralized product and manufacturing hub for the world; for anything and everything at a low price. On the contrary, the US chose the more deadly path. Centralization, consolidation, and a reduction in the number of banking entities. All the while increasing the amount of financialization, leverage, and risk in the fewer and fewer nodes within the system.

WOW. The # of banks in the US, by era, as presented by @MaxfieldOnBanks. I had never thought of it this way. Once you see it you can’t unsee it… pic.twitter.com/CJQJdIZEYv

— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) September 15, 2026

The core thesis, unlike what we’ve seen in the US over the last two decades, is decentralization. In short, you have the combination of centralized capital flows towards a decentralized private sector, which forms the basis of growth. You conquer, so to speak, in numbers.

This is a major paradigm shift from what we’ve become, but it is what we are finally seeing the US wake up to and begin to move back towards.

That’s why it feels so chaotic and out of sync. It’s different than anything we’ve seen in the last 70 to 100 years or more. It is what Hamilton implemented in the US to found our great and successful American experiment. It is what we reimplemented in the 30s to 50s to extend US dominance. But it is what we moved away from post-1971 with the creation of petrodollars and a heavy reliance on financialization and incentivization of lack of productivity (service). It is what stablecoin dollars, Bitcoin, and a SOFR based system are meant to hopefully replace. The brokenness of petrodollar and eurodollars. These steps are an attempt to revert back to something that works – productivity.

Instead of growth, for decades, we’ve implemented policies that promote fewer and fewer entities in industry and banking. The exact steps that choke off growth and kill economic systems. It also leads, as we’ve seen, to a vicious cycle of bad policy design that encourages less competition. All of which only exacerbate the problem.

Eventually, you end up right where we are. In an unproductive and overly financialized economy without the ability to provide because you’ve outsourced everything for the sake of profits, quarterly numbers, and inflated margins for analysts to bicker over. At some point, you wake up and realize the amount of power you’ve given away to others by centralizing your resources and profits into fewer and fewer hands. That’s when you realize those providing to you have decentralized their resources, profits, and state-directed capital into real economic power that eventually unseats you from number one.

For a financial system to work, the entire system must depend on the quantity of credit, as Werner lays out, and if you follow the Japanese story, which I believe we are only 25-30 years behind, then Kevin Warsh is no different than the last Central Bank prince whose specific role was to change the regime. Unfortunately, if we choose to extend, the only option is to become the carry trade for others to piggyback off of. As we see, that game can unproductively go on for decades.

As Dines notes, the QE period is over. The only move to sustain is to provide credit to those who have capacity (Main Street) and guide it into productive use cases (21st-century infrastructure).

Sign up for the Bombthrower mailing list here. Follow Kane McGukin on Substack here.

Brazil’s tightening presidential race could drive a sharp repricing of local equities.

A new Goldman Sachs survey of 70 global investors found that half see at least 20% upside in EWZ, the US-listed Brazil equity ETF, by year-end if right-wing challenger Flávio Bolsonaro defeats socialist President Luiz Inácio Lula da Silva. The first round is scheduled for Oct. 4, with a potential runoff on Oct. 25.

Goldman Sachs Managing Director Nelson Armbrust provided clients color on the upcoming elections in South America, which could cement a historic, once-in-a-generation rightward shift across the continent.

Related:

• Brazil At A Historical Crossroads

He focused on positioning:

Flávio Bolsonaro (right-leaning candidate) is gaining momentum; polls show him tied or closing the gap in the second round. 

As a reminder, pools don’t adjust for the likely voter (aka: the people that actually turn up on the day to cast a vote, no mail ballot votes in Brazil), and historically there has been higher absence from Lula’s voters. 

We just did a survey with 70 global investors about their cross-asset views in Brazil, the bottom line:

• Equities is the least owned asset class (60% are either “very light” or “light”) and it is the vehicle this group sees the most upside (half see EWZ at least +20% by year end if Flavio wins) From my convos, local Equity investor positioning is a 6/10 while local Macro accounts are small in equities (3/10). 

Foreign capital is starting to come back to Brazil as we near the event:

We have seen massive buying of upside from investors, EWZ Call Open Interest at ALL TIME HIGHS:

Implementation: I like EWZ Call Spreads for November (runoff is October 25th) and going long our Rate Sensitive basket (GSBZRATE Index).

Implied 2 month vols have risen from ~30v to ~45v and past election cycles (noted on the graph below) show that vols could keep moving higher.

But the cost of the 30% delta call vs the 10% delta call has been stable lately and is historically cheap (21st percentile).

EWZ Nov 42 50 call spread = $1.00 offer 8x max payout, ref 37.20, ~45v ATMF, 23% delta, max loss is premium paid. 

Another way to implement is going long GSBZRATE Index, they are the 30 stocks in Ibovespa most correlated to 5y rates. It is composed of Fins (38%), Real Estate (17%), Industrials (17%), Utilities (12%), Cons Disc (9%) and Materials (6%). You can trade U$75mn a day at 10% volume. 

Brazil has the highest real rate in the WORLD (~10%) and is the most correlated EM Equity with local Rates. If rates come down, the move in Equities could be meaningful.

Below is a chart of the basket’s P/E vs local short-term rates (Jan29 rates) inverted. As flagged by Louis Miller, one could expect a ~30%+ re-rating in GSBZRATE (P/E going from 9x to 12x) if the local rates price in 200bps of cuts – from my investors discussions, 200-300bps is where most expect to see short term rates by year end if Flavio wins.

Historically when the market prices cuts, our Brazil Rate Sensitive Basket delivered ~3x the Ibovespa’s return (table below). The basket struggles if rates are cut due to recession risk or if there is a commodity boom (1/3 of Ibovespa is commods). Quick explanation below on periods the basket did not outperform Ibovespa (and I don’t expect any of these scenarios to play out):

• Jan2010-Aug2010: economy and inflation were strong, CB started hiking and we had a bull flattening of the curve so the ongoing 5y came down.
• Jan2014-Aug2014: CB finished a hiking cycle on April 2014, economy started to decelerate sharply, mkt read it as “CB wont be able to keep rate high for long” so the 5y came down. Also, 2014 was an election year with Dilma x Aecio Neves (mkt thought Aecio, a right-leaning candidate, would win… but he lost and Ibovespa finished flat on that year.)
• Dec2015-Apr2018: huge commodities boom from China expanding, so Vale and Petrobras led the rally. Also in Aug2016 Dilma was impeached and Temer ran the country. During this time, markets rallied.

Earlier this month, Polymarket showed Bolsonaro overtaking Lula for the first time, and that lead has held through Saturday morning. Bolsonaro’s odds of winning currently stand at 57%, while Lula’s are around 42%.

Brazilian stocks have rebounded alongside rising Polymarket bets on a Bolsonaro victory.

A Bolsonaro win would cement a rightward shift after socialists spent years destroying the continent with nation-killing progressive experiments.

Also, across the pond in Europe, Nomura analysts expect an 18-month election cycle that sees the continent “lurching right.”

Authored by Jeremy Portnoy via RealClearInvestigations,

The Small Business Administration potentially made $11.5 million in improper payments to banks after overruling its own employees who had recommended reducing or denying government guarantees on 16 failed small-business loans.

For another 13 failed loans, SBA took so long to review them that the six-year statute of limitations expired, wasting another $5.4 million, according to an Aug. 27 inspector general report.

Key facts: SBA’s 7(a) program helps startups with a risky business model get loans, but it does not generally lend taxpayer money directly. Private banks make loans of up to $5 million, and the government promises to cover as much as 85% of the loss if the borrower defaults.

But taxpayers only have to honor that guarantee when the bank follows SBA rules. If a bank failed to properly determine whether a borrower could repay the loan, verify required investments or follow other safeguards, SBA can reduce or deny the payout to the bank.

Auditors reviewed 32 failed loans where SBA employees recommended reducing or denying the payouts to banks, but higher-level reviewers later overturned those decisions.

For 16 of the 32 loans, auditors found insufficient evidence to justify the reversal, resulting in $11.5 million worth of potential improper payments. That included almost $4.9 million loaned to borrowers who never showed evidence they could repay the money.

One small business defaulted within 18 months. The bank argued that the small business had a sound strategy, but it failed due to the unforeseen loss of a major customer. The bank provided no evidence for its claim, but the SBA paid the guarantee anyway.

The SBA is also taking far too long to review high-risk loans, the audit found. The agency has only six years to sue a bank for violating the loan terms, but auditors found 13 loans where impropriety was not discovered until that deadline had passed. Two of them were not reviewed for more than 20 years after the loan guarantee was paid.

The SBA legally could have withheld other federal payments to the banks even after the six-year time limit expired, but the SBA has no process for doing so, the audit found.

SBA guaranteed $37 billion through 77,600 new 7(a) loans in fiscal year 2025.

Summary: A government loan guarantee is supposed to protect lenders from legitimate business failures, not protect them from following the rules. Taking 20 years to decide which is which leaves taxpayers holding the bag.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com

About a month after JPMorgan analysts toured Tesla’s Fremont factory and confirmed a “targeted four-month transition following the end of S/X production in May” to humanoid production lines, a new report on Friday says that Tesla engineers arrived in China to inspect robotics component suppliers, as Elon Musk appears to be moving closer and closer toward the commercialization of humanoid robots.

Bloomberg first reported this development as Tesla engineers arrived in Ningbo, a major port and manufacturing city in Zhejiang province on China’s eastern coast, just south of Shanghai. The engineers inspected parts and component factories for the humanoid robot called “Optimus.”

“Tesla’s reported supplier audits are a positive commercialization signal for China’s humanoid supply chain, pointing to progress toward repeatable Optimus production,” Bloomberg Intelligence analyst Ian Ma wrote in a note, adding, “Near-term sentiment could stay supported if audits lead to confirmed supplier nominations and larger orders.”

Tesla is reportedly targeting the second half of 2027 for commercial sales of Optimus. Production is likely to begin much earlier, as JPM analyst Rajat Gupta said the “Optimus Academy” will be operating later this year, with robots collecting real-world training data before being deployed in factories.

News of this development sent the Solactive China Humanoid Robotics Index slightly higher on Friday, up about 1.4%, amid a tumultuous year that has left it down about 30%.

The market’s appetite for physical AI, specifically humanoids, was hyped in mid-August by China’s blockbuster Unitree IPO, but the momentum failed to follow through.

Bernstein analyst Eunice Lee recently pointed out that the adoption curve for humanoids will be much steeper than that of automobiles over a century ago.

Goldman analysts last month raised their global humanoid robot delivery base case to 75,000 shipments in 2026, 890,000 in 2030, and 6.5 million in 2035, versus previous estimates of 51,000, 256,000, and 1.4 million, respectively.

The invasion of physical AI is just around the corner.

Authored by Naveen Athrappully via The Epoch Times,

The U.S. Department of Agriculture (USDA) has ended environmental, social, and governance (ESG) initiatives in a dairy program that is funded by dairy farmers.

The update applies to the National Dairy Promotion and Research Program, also known as the Dairy Checkoff Program.

The program funds research, promotion, and nutrition activities aimed at strengthening markets for American dairy.

However, the Innovation Center for U.S. Dairy, set up through the program, has pursued “extensive ESG initiatives, including greenhouse-gas and net-zero targets,” the USDA said in a Sept. 17 statement.

“USDA’s action ends checkoff support for those ESG-related projects while allowing necessary administrative functions that do not advance such agendas,” the department said.

American dairy farmers pay 15 cents per hundredweight on their milk to fund the checkoff program. Importers pay 7.5 cents per hundredweight on dairy products brought into the country.

The checkoff program is partly managed by Dairy Management Inc. (DMI), created by the National Dairy Promotion and Research Board (NDB) and another entity.

In a Sept. 17 letter to NDB Chair Lolly Lesher, USDA Secretary Brooke Rollins cited several DMI initiatives deemed to support ESG activities.

This includes the U.S. Dairy Net Zero Initiative, Greener Cattle Initiative, Pathways to Dairy Net Zero, and the mandatory participation of dairy producers in the Farmers Assuring Responsible Management Environmental Stewardship program.

Rollins asked Lesher to submit a list of all projects, both current and planned, that support ESG.

In its recent statement, USDA said the decision to end dairy checkoff funding for ESG initiatives aligns research and promotional activities with the original mission of the checkoffs.

“American dairy producers, cattle ranchers, and farmers pay checkoff assessments so those dollars can build demand for their products – not bankroll radical climate agendas that raise costs and constrain production,” Rollins said in the statement.

“Today’s action returns the Dairy Checkoff and all research and promotion programs to their core mission: expanding markets and supporting the hardworking men and women who feed this country.

“We will not allow producer dollars to underwrite mandates that put American agriculture at a disadvantage.”

‘Costly and Unconstitutional Practice’

The Wisconsin Institute for Law & Liberty (WILL) welcomed the USDA decision in a Sept. 17 statement, highlighting that the department’s action came after the organization had filed a lawsuit on the matter.

The lawsuit, filed in June against the secretary of agriculture and the NDB, argued that using dairy checkoff funds for ESG initiatives pushed expensive and harmful mandates on the country’s farmers.

The USDA and WILL agreed to stay the case while the department finalized its decision to end ESG initiatives in dairy checkoff programs.

“We are very encouraged by this great news today for America’s dairy farmers. Following our lawsuit, the Trump administration is ending a costly and unconstitutional practice of forcing dairy farmers to fund radical ESG demands with the ‘Dairy Checkoff,'” Rebecca Furdek, WILL deputy counsel, said in the statement.

“This was a clear example of unelected and unaccountable federal bureaucrats in Washington, D.C., pushing an ideological agenda on our hardworking American farmers.”

According to WILL, the update could potentially affect more than 20,000 dairy farms.

Meanwhile, in its recent statement, the USDA said it has also directed the Agricultural Marketing Service to ensure that no promotion and research funds in other commodity checkoffs go to advance ESG mandates.

In addition to dairy, there are similar checkoff programs for a wide range of commodities, such as lamb, egg, mango, pork, beef, peanut, and potato.

“American producers substantially fund these checkoff programs through mandatory assessments. Those funds must serve their statutory purpose of strengthening markets for agriculture – not advance misguided external ESG agendas that can raise costs or potentially constrain production,” the USDA said.

Forget about Somali daycare fraud for a moment – have you heard about toddler fight club?  A daycare in Fort Worth, TX is facing investigations and litigation after evidence showed staff abusing young children and forcing them to fight each other. 

One mother, Heather Harris, knew something was wrong when she picked up her 4-year-old son at the Arka Montessori Academy of Risinger daycare. He was crying uncontrollably and was covered in bruises.  Employees told the mother her son had fought with another child, but their explanations did not add up, according to a lawsuit filed this month by Harris and her husband, Richard Harris.  She insisted on seeing the classroom’s surveillance footage.

The disturbing footage shows staff at the daycare swing a child around like a rag-doll and trying to force him to fight another child. 

Heather and Richard Harris filed the lawsuit September 4th against Arka Risinger Educators LLC, which operates the Fort Worth child care center on West Risinger Road. The case was filed in Tarrant County’s 48th District Court.  The lawsuit accuses the center of negligence, gross negligence and failing to properly hire, train and supervise its employees.

The family is seeking more than $1 million in damages, and for a jury to determine the final amount.  The family and their attorney have described the scene as resembling a “child fight club.” State regulators cited the center for related violations (improper discipline, prohibited punishments such as grabbing/pulling, yelling, and failure to intervene).

The incident is only one of many that the daycare has been investigated for by authorities. 

The Texas Health and Human Services Commission’s Child Care Regulation Division investigated and cited Arka Montessori for 16 violations since 2024.  Inspections found at least 21 safety deficiencies.   Violations included improper discipline; prohibited punishments, grabbing and pulling; yelling at children, etc.  The most recent investigation also uncovered employee accounts alleging Johnson had previously yelled at children or handled them aggressively.  

It is curious, though, that the daycare is still running after these problems were uncovered by officials.

Parents being more involved in the vetting of staff at these facilities is an obvious issue – checking the company’s citation records would be a good start. That said, child care programs have a tendency to limit the vetting of prospective employees in favor of filling positions quickly.  HHS Child Maltreatment counted 2,341 victims of abuse by daycare providers in 2024 alone. 

Be very careful who you leave in charge of your children… but if you do choose the Arka Montessori, here are some ‘rules’

The Rules of Toddler Fight Club

• The first rule of Toddler Fight Club: you do not tell Mommy about Toddler Fight Club.

• The second rule of Toddler Fight Club: you DO NOT tell Mommy about Toddler Fight Club.

• If someone cries, goes limp, or needs a diaper change, the fight is over.

• Only two toddlers to a fight. Sharing is still not a thing.

• One fight at a time, fellas. Then snack.

• No shoes, no shirts. Honestly, we weren’t wearing them anyway.

• Fights go on as long as they have to, or until nap time, whichever comes first.

• If this is your first day at daycare, you have to fight.

And remember:

“You are not your onesie. You are not the contents of your diaper bag. You are not your light-up sneakers.”

“We’re a generation raised by screens. We have no Great War, no Great Depression. Our great war is bedtime. Our great depression is that the banana broke in half.”

And never forget:

“On a long enough timeline, the survival rate for every goldfish cracker drops to zero.”

Sorry, we had to…