Authored by Jack Phillips via The Epoch Times,

The Trump administration is proposing a new rule that would strip private colleges and schools of their tax-exempt status if those institutions engaged in racial discrimination through policies such as diversity, equity, and inclusion (DEI).

The U.S. Treasury Department and the Internal Revenue Service said on Thursday that a proposed rule would bar a private school from obtaining tax-exempt status under section 501(c)(3) of the U.S. tax code if the school “adopts, maintains, or enforces a policy or practice that discriminates on the basis of race, color, or national or ethnic origin.”

Under the new regulation, which would take effect in May 2027, a broad range of programs administered by schools would be affected. They include admissions, policies, loans, scholarships, and athletics, said the Treasury Department in a news release.

The proposal may impact as many as 18,000 private educational institutions across the United States, the IRS and Treasury estimated.

“This administration is standing up for America’s students by ensuring racial discrimination has no place in American education,” said Treasury Secretary Scott Bessent in a statement.

“Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature.”

The proposal, he added, would “establish a clear standard” for private schools to follow, warning that any institution that continues to “use discriminatory practices will no longer receive the benefits of federal tax-exempt status.”

The move by the Treasury is another attempt to put pressure on schools and colleges to drop DEI policies that had become common before President Donald Trump returned to the White House. Trump officials have said the policies discriminate against white and Asian American students.

On his first day in office in his second term last year, Trump signed an order ending a number of DEI-related policies implemented under the Biden administration.

Last year, the Trump administration threatened to revoke Harvard University’s tax-exempt status during a battle with the nation’s oldest college. In a response, Harvard officials said there was no legal basis for doing so and argued it would force cuts to financial aid and crucial medical research.

To maintain nonprofit status, which allows donations to be tax-deductible, organizations must follow IRS rules on lobbying, political campaign activity, and annual reporting requirements, as well as other obligations.

The IRS says on its website that 501(c)(3) organizations also cannot be operated or organized for the benefit of private interests and that their net earnings cannot “inure to the benefit of any private shareholder or individual.”

IRS Chief Executive Officer Frank J. Bisignano said private schools that promote discriminatory practices will no longer be exempt from taxes.

“Today’s proposed regulations put institutions on notice and schools that continue to engage in racial discrimination should expect to lose that status,” he said in a statement on Thursday.

Religious private schools will still be able to maintain a “religious mission, curriculum, or program of religious observance” under the latest proposal, the Treasury Department said.

It added that those schools can continue to select students based on religious affiliation or membership, provided they follow guidelines consistent with federal law.

Argentina’s President Milei has announced plans to sign a decree sanctioning companies working on oil exploration of the Falkland Islands, coming a mere days after President Trump indicated that the US position on the archipelago was “under review”.

The Libertarian-Right firebrand leader proclaimed quite provocatively that “The Falkland Islands are Argentinian, historically and legally. There is no debate” and added that the “winds of change” have more lately favored Argentina’s claim.

Milei characterized the Falkland’s Sea Lion Project, which is based out of what firmly remains a British territory, as essentially a resource-grab which undermines Argentinian sovereignty. 

The area to be tapped lies some 140 miles north of the Falkland Islands and is widely estimated to hold a whopping 1.7 billion barrels of oil.

The ambitious project involves Israeli and British firms, creating rare tensions between staunchly pro-Israeli Milei and what are primarily Tel Aviv-based investors.

He further warned that given the project has proceeded without Argentina’s permission, it marks a “concrete and urgent danger,” given that “If we fail to act, within a few months, they will possess the physical capacity to take the oil reserves that lie beneath our waters.”

According to more on ownership details via Reuters:

The project’s two owners have strong Israeli ties. Sea Lion is operated by Tel Aviv-listed Navitas Petroleum (NVPTp.TA), which ​holds a 65% stake.

Gideon Tadmor, a prominent figure in Israel’s energy sector and also the company’s chair, holds about 9% of shares in the company, ​according to LSEG data.

The remaining 35% of Sea Lion is owned by London-listed Rockhopper Exploration (RKH.L), with Israel-based Noked Capital, Brosh Funds ⁠and ION Fund Management among its top five investors, owning between 4.6% and 9.2% each.

Navitas and Rockhopper said the Sea Lion project had valid licenses and that ​they did not expect Milei’s comments to have a material effect on the project’s development.

Navitas is charging ahead, indicating in its statement that it won’t bow to Argentine pressure and that it’s done everything correctly and legally.

“The Partnership operates pursuant to valid petroleum licences lawfully granted to it by the ​Government of the Falkland Islands, a self-governing UK Overseas Territory, and with the full and ongoing support of the UK Government,” Navitas said.

The Falklands remain a unique pressure point for Britain, which fought a war over the islands in the early 1980s. The United Kingdom has controlled it going all the way back to 1833.

However, Trump’s recent signaling that he’ll reconsider the US’ position on the Falklands appears to be a big lever over London, and of course there’s the reality that Trump’s alignment with Milei is tighter than ever. 

‘If we allow it, we create incentive for British govt to DEEPEN its occupation’ — Argentina’s Milei opposes Falkland Islands ‘Sea Lion’ oil project pic.twitter.com/M8JmqMr5H4

— RT Intl (@RT_on_X) September 4, 2026

Recent reporting in The Telegraph said the Trump administration is using Britain’s sovereignty over the Falkland Islands ultimately as leverage to pressure the European ally into meeting NATO’s new defense-spending target. 

Back in April, Milei proclaimed on X in Spanish that “The Malvinas were, are, and always will be Argentine” – using the Argentine name for the islands. He also told media outlets at the time that his government is doing “everything humanly possible” to return the Falklands to Argentina. 

Authored by AG News Staff via American Greatness,

The Trump administration is investigating whether COVID-19 vaccines contributed to the deaths of U.S. service members following the Biden administration’s military vaccine mandate, according to testimony from an Army doctor assigned to the effort.

Army physician Theresa Long said in an Aug. 14 federal court deposition that Defense Secretary Pete Hegseth detailed her to serve as Health Secretary Robert F. Kennedy Jr.’s senior medical military adviser.

Long said she is examining 2,544 unverified reports of deaths among service members submitted to the federal Vaccine Adverse Event Reporting System, or VAERS, following COVID vaccination.

VAERS is an early-warning surveillance system that accepts reports of health problems occurring after vaccination. A report does not establish that a vaccine caused the medical event or death.

Long, who is board certified in aerospace medicine and holds a master’s degree in public health, said she hopes to complete her investigation within a year.

She also testified that she knows of 28 people who died because of COVID vaccines but said she was not permitted to provide additional information supporting that assertion.

The investigation comes as the Trump administration reexamines the military’s handling of the COVID pandemic and the Biden administration’s 2021 vaccine mandate.

Nearly 9,000 service members were discharged for refusing COVID vaccinations before Congress ordered the Pentagon to rescind the mandate in 2022. The Defense Department has since established a COVID-19 Reinstatement and Reconciliation Task Force to assist troops who left the military over the requirement and want to return.

“The Department continues to right the wrongs of the past and to restore confidence in, and honor to, our fighting force,” the Pentagon said in announcing the task force.

Long is also reviewing military health surveillance systems and two medical databases from the pandemic period.

A 2026 Pentagon report found an increase in myocarditis and pericarditis among active-duty service members shortly after COVID vaccination, but said the increase was not sustained over one year. The report did not identify vaccine-related deaths.

The FDA has also required updated warnings for mRNA COVID vaccines concerning myocarditis and pericarditis. The agency reported a higher incidence among young men, with 27 cases per million vaccinations compared with 8 per million in the general population for the period it analyzed.

Long’s previously undisclosed assignment indicates that the Trump administration’s review of the Biden-era military vaccine mandate now extends beyond reinstating discharged troops to examining whether the vaccines themselves caused serious injuries or deaths among service members.

U.S. auto sales came in stronger than expected in August, offering another sign that consumer demand for new vehicles remains relatively resilient despite elevated borrowing costs and broader questions about the economy.

According to Deutsche Bank’s auto team, led by Edison Yu, August sales ran at a seasonally adjusted annual rate of roughly 16.9 million vehicles. That was comfortably ahead of the bank’s 16.4 million estimate and also above the roughly 16.4 million pace recorded a year earlier.

The headline SAAR number was strong, although the underlying monthly figures were somewhat less impressive. Automakers sold approximately 1.388 million vehicles during August, slightly above July’s 1.380 million but below the roughly 1.482 million vehicles sold in August 2025.

Sales among both the Detroit Three and major Japanese automakers were modestly better than Deutsche Bank expected. But Hyundai Group was one of the biggest contributors to the upside surprise, beating the bank’s forecast by approximately 14,000 vehicles. Other brands accounted for the remainder of the beat.

The closely watched large pickup market was more mixed. Daily sales declined for most major truck models, but Ram was a notable exception. Ram sales increased by roughly 105 vehicles per day to around 1,550, with Deutsche Bank attributing much of that strength to aggressive incentive spending.

Higher sales are obviously positive for volumes, but when they are being generated through heavier discounts and incentives, the improvement doesn’t necessarily translate into equally strong profitability for manufacturers.

Inventory remains relatively controlled. Industry-wide inventories slipped to approximately 49 days of supply, compared with 50 days previously, although that remains above the 47-day level seen in 2025. Truck inventories declined by one day to 52 days of supply, while passenger-car inventories dropped by two days to just 34.

Taken together, the August numbers paint a reasonably healthy picture of the U.S. auto market. Sales are running better than expected, inventories aren’t showing signs of a major glut, and the annualized selling rate remains comfortably above 16 million vehicles.

Deutsche Bank isn’t extrapolating August’s 16.9 million pace into a dramatically stronger industry forecast, however. Yu and his team continue to expect a 16.0 million SAAR for full-year 2026, roughly consistent with forecasts from the major automakers themselves. For 2027, Deutsche Bank is forecasting only a modest improvement to 16.1 million.

In other words, August was a good month, but Deutsche Bank isn’t calling it the beginning of an auto boom. The more interesting question from here may be how much manufacturers have to spend on incentives to keep sales around these levels…particularly if consumers remain squeezed by high vehicle prices and financing costs.

Authored by Mathew Di Salvo via BitcoinMagazine.com,

Bitcoin’s correlation with gold is at its highest in six years as investors increasingly look for ways to hedge against currency debasement. 

That’s according to a new report from Bitwise, which this week pointed out that the precious metal and leading cryptocurrency are trading in lockstep because the U.S. government has “materially intervened in the macro picture.” 

Bitcoin started surging last month, after the U.S. Treasury Department said it would more than double the size of its government debt repurchases. The coin had its best run in three years and third best August ever. 

“The last time the bitcoin-gold correlation was that high was in 2020, following the rounds of fiscal and monetary stimulus during the Covid crisis,” Bitwise’s European Head of Research, André Dragosch, wrote. 

JUST IN: Bitcoin’s correlation with gold hit a six-year high, according to Bitwise 👀

“The last time it was this high was 2020, after the Covid stimulus.” 🚀 pic.twitter.com/fHtQUlR9Ol

— Bitcoin Magazine (@BitcoinMagazine) September 3, 2026

He added that bitcoin’s correlation with the stock market dropped to a one-year low, “implying some kind of decoupling between hard assets and the stock market.”

Bitcoin has been pushed as “digital gold” for years but has sometimes traded with tech stocks as a “risk-on” asset. 

But the so-called debasement trade — when investors buy an asset as a way to hedge against a currency losing value — was a much-talked about investment strategy last year and appears to be back. 

The reason is down to the government intervening in markets, Dragosch argued. When the Treasury said it would try to rein in long-term borrowing costs, the dollar’s value slid and sent investors flooding back to gold — and bitcoin. 

The Treasury the same week also said the U.S. public debt exceeded $40 trillion for the first time. Excessive debt also undermines confidence in the dollar. 

“Investors are no longer asking whether to hedge currency debasement with gold or bitcoin. They’re simply hedging with both,” the report added. 

“Bitcoin spent its first fifteen years being priced as a risk asset. If this correlation trend with gold holds, the next fifteen may look very different.”

The leading cryptocurrency again rallied this week, and was recently trading for close to $81,438 after jumping nearly 6% over a 24-hour period. 

The scenario we viewed as inevitable appears to be materializing, validating our decision to intensify coverage of the US-China decoupling theme and the Western-aligned miners positioned to supply the West if Beijing further weaponizes critical material exports, as it has throughout the Trump 2.0 era.

A Reuters report on Friday morning revealed that some Chinese rare-earth suppliers are refusing to ship material to US customers, citing fear of retaliation from Beijing.

The report continued:

A handful of Chinese suppliers have refused to ship rare earths to U.S. companies since early August when China imposed sanctions on the Responsible Business Alliance (RBA), a U.S. supply chain monitor, a separate source with direct knowledge of the situation said.

With China deploying its own trade compliance weapons, the companies were wary of punishment from Beijing for complying with the due diligence framework of the Responsible Minerals Initiative (RMI), a global mineral supply chain audit programme connected with the RBA, the source said.

Other Chinese rare earths companies had already stopped shipments to the U.S. to avoid entanglement in geopolitics in recent months, two other sources familiar with the trade said.

One cited four instances where Chinese firms declined to send material for fear it could be resold to banned users.

The exact number of blocked suppliers and shipments remains unknown, and that ambiguity is itself part of Beijing’s asymmetric leverage campaign against the US.

China does not need to announce a formal trade embargo to choke critical material flows. Export controls, licensing delays, and the threat of regulatory retaliation can halt shipments to US importers almost overnight.

Really, Beijing retains a kill switch inside US defense, aerospace, semiconductor, and energy supply chains, forcing companies to scramble for substitutes only after supplies have collapsed.

That’s why we’ve sounded the alarm in recent weeks that the decoupling theme should be top of mind for Wall Street desks, with our coverage focused on tungsten and germanium, both of which have been restricted from export to the US and are colliding with a rearmament cycle in the West.

Here’s what we’ve reported over the last few weeks leading up to the Reuters headline this morning:

1. The AI Boom Runs On Tungsten, But Global Supplies Are “Running On Empty”
2. US Tungsten Scrap Export Ban Takes Effect As Global Supply Crisis Deepens
3. What Happens When A Metal The West Can’t Live Without Runs Short
4. The West’s Answer To Break China’s Tungsten Stranglehold Before Historic Rearmament Cycle Ramps
5. China’s Tungsten Chokehold Turns Almonty Into a Critical-Metal Lifeline
6. China’s Record Ship Swarm Around Taiwan Sends Decoupling Alarm To Wall Street

China’s tungsten export restrictions have sent European prices soaring…

Late last month, the US Commerce Department halted exports of tungsten scrap and shredded battery material in a defensive move to retain scarce supplies inside the country. The move merely shows how rapidly Washington is shifting from the free-trade status quo toward resource security as domestic supplies dwindle and an urgent race emerges across the West to procure new ex-China supplies.

The Sino-US bilateral relationship deteriorated yet again this week after Beijing derailed the G20 joint communiqué over a single phrase, “non-market,” only weeks after the Trump administration sanctioned Chinese entities linked to Iran.

All eyes now turn to the Trump-Xi meeting in Washington later this month.

The decoupling theme should be top of mind on Wall Street as China restricts critical-material flows to the West. These materials are essential building blocks not only for next year’s rearmament supercycle but also for AI, reindustrialization trends, efforts to power up America, and even physical AI.

Update (1226ET): After the jury remained deadlocked following 36 hours of deliberations over seven days, Judge William Sullivan declared a mistrial in the Lindsay Clancy murder case – however he’s given the defense one hour to seek a stay from the Massachusetts Supreme Judicial Court.

Judge says he will give Reddington one hour to get a stay from the Supreme Judicial Court.
MISTRIAL ON HOLD in Lindsay Clancy case.

— Brian Entin (@BrianEntin) September 4, 2026

Why would the defense want a stay of a mistrial? Because if they can instead force the holdout juror to be removed, they avoid a brand new trial and Clancy will go free. 

“This is really intense. Reddington asked for emergency Supreme Judicial Court intervention moments before the jury walked back in,” reports NewsNation’s Brian Entin.

Developing…

* * *

Update (1135ET): A mistrial was declared in the Lindsay Clancy case on Friday, after a holdout juror refused to bend the knee and let her off, Fox News‘ Bill Melugin reports.

BREAKING: Judge declares mistrial in Lindsay Clancy murder case after hung jury.

— Bill Melugin (@BillMelugin_) September 4, 2026

* * *

Lindsay Clancy’s defense team is absolutely melting down after Judge William Sullivan refused to remove a holdout juror in Clancy’s triple-murder trial, in which the jury must decide whether Clancy is criminally responsible for strangling her three children, Cora, 5; Dawson, 3; and Callan, 8 months. Her defense claims that she was suffering from hallucinations amid postpartum psychosis. The prosecution claims she was not in psychosis when she sent her husband out of the house on long errands, before she murdered her children and then tried to make it appear as though she attempted suicide. 

On Thursday, the jury foreperson sent a note indicating one juror was refusing to apply the judge’s instructions on reasonable doubt. Judge William Sullivan questioned each juror individually at sidebar, then gave the full panel what defense attorney Kevin Reddington later called a “soft” reminder of the law and sent them back to deliberate.

“They’ve said at this point that they can,” Sullivan said. “That was specifically addressed towards the specific question, and that’s what I’m doing.”

Reddington demanded that the holdout to be removed, and requested a more pointed inquiry – which Sullivan declined. 

JUST IN: Lindsay Clancy stares at the jury as Judge William Sullivan sends them home for the day.

The moment came shortly after Clancy’s attorney, Kevin Reddington, fumed and called on Sullivan to remove one of the jurors. https://t.co/r7g6JPmXyM pic.twitter.com/32z5efMIKP

— Collin Rugg (@CollinRugg) September 3, 2026

According to Clancy’s defense team, the holdout juror is a man. 

“Clearly, we have a person who, under their oath, stood in front of you yesterday … under oath looked you in the eye and lied,” said Reddington. “That juror told you that he would be able to apply the law to the facts as you asked him.”

When court resumed Friday, Reddington hammered Sullivan, arguing that the prior instruction was inadequate, and pressed again for removal or further questioning of the juror (whom he accused of having lied under oath). Sullivan refused additional inquiry, stating he had considered the issue at length and would not remove the juror. Redding responded by calling Sullivan ‘soft’ – to which Sullivan replied: “What do you want me to do?! Get a brass band? I read the instruction as written by the Massachusetts Supreme Court. The fact I perhaps did not give it my full inflection, I’m sorry about that, I’m not an actor – I’m giving instruction.

🚨 BREAKING: Lindsay Clancy’s defense attorney is MELTING DOWN in court and DIRECTLY SPARRING with the judge, calling the judge “SOFT”

DEFENSE: Stop being soft with jury instructions!

JUDGE: What do you want me to do?! Get a BRASS BAND?! I read the instruction as written by the… pic.twitter.com/dijDZAdqzG

— Nick Sortor (@nicksortor) September 4, 2026

No More Sidebars!

Following the spat, Clancy’s defense team filed a motion to Sullivan asking that there be no more sidebars for the remainder of the trial – and that all further proceedings be handled in open court. The prosecution, meanwhile, suggested that there be no further questioning of the jury, and asked that Sullivan send them to continue deliberations, arguing that the holdout juror has “no indication of lack of impartiality or bias or extraneous influence, and no indication of inability to deliberate.”

Reddington disagreed – arguing that the juror appears to have a personal issue getting in the way of him being able to deliberate fairly, and demanded that he be replaced with an alternate. 

According to Massachusetts law, a judge can only send a jury back for deliberations twice before declaring a mistrial – which looks like where we’re headed.

The Kremlin has long previewed that its next escalation step against Ukraine would be to start attacking ‘decision-making centers’, or headquarters and government buildings. That moment has clearly begun and is now in an active phase, also as strikes ramp up on the key southern port of Odesa, as well as on Ukraine-linked cargo and other shipping. On Friday a Russian drone slammed into the headquarters of Ukraine’s Security Service (SBU) in central Kyiv.

The SBU is the country’s top domestic security and intelligence service – somewhat akin to the FBI in America. It primarily oversees counterintelligence, counterterrorism, espionage investigations, as well as engages in some law-enforcement functions, especially concerning top level crime including among government officials. It has been the mastermind behind multiple high-level deadly and destructive attacks on Russia.

President Zelensky soon after the attack announced and confirmed that the SBU’s central building on Volodymyrska Street, in the heart of iconic downtown near St. Sophia Cathedral, was struck. Flames and smoke have been seen billowing high over the high-secure central district.

“I spoke with the Head of the Security Service of Ukraine, Oleksandr Poklad. Unfortunately, a Russian drone struck the central building of the Security Service of Ukraine on Volodymyrska Street in Kyiv, across from St. Sophia Cathedral,” Zelensky said.

“The drone was aimed directly at the office of the Head of the Security Service in that building,” he added. Zelensky has ordered his military to mount a “tangible response and, where possible, one that mirrors this strike, to the Russians once everything is ready. Our military will support this response.”

If accurate, this sends an alarming and resounding message – that not only is Moscow now willing to directly target top headquarters buildings, but that it’s ready to assassinate intelligence directors. 

President Zelensky said the drone had precisely targeted the office of the head of the SBU service, Oleksandr Poklad, but he had survived the attack —The Times

European media reports of the immediate aftermath, “Zelenskyy said emergency services were attending the scene. There was no immediate information on casualties.”

A large explosion was widely heard among bystanders during a mid-afternoon air raid siren in the capital city, after which Mayor Vitali Klitschko initially reported a fire and said emergency crews were headed to the scene. Several drones had been inbound during the attack incident.

According to some of the latest reporting via CNN:

The daytime strike – the first time the SBU building has been hit in the four-and-a-half year conflict – came after days of near continuous aerial assaults by Russia on the Ukrainian capital.

Authorities said 12 people were injured in the attack and that emergency services were at the scene.

⚡️ BREAKING: Attempted assassination of the head of Ukraine’s intelligence service

Russian Shahed drone strikes the Security Service of Ukraine (SBU) building in Kyiv.

President Zelenskyy said the following:

“The drone was directed straight at the office of the head of the SBU… pic.twitter.com/DRax4RI0Kb

— NEXTA (@nexta_tv) September 4, 2026

This comes after more than a week of consecutive nightly drone and missile attacks on the capital, as Russia indicates it is ‘repaying’ Ukraine for its own constant long-range drone attacks which have wreaked havoc on oil refineries and industrial sites this summer.

“At least 53 people have been killed and 134 injured in Kyiv city and the wider Kyiv region since the start of these near non-stop attacks last month,” CNN also notes.

Unprecedented: Downtown SBU headquarters on fire…

A Russian drone hit Ukraine’s SBU headquarters in Kyiv, Zelensky says. pic.twitter.com/ZevaXpLbEV

— Open Source Intel (@Osint613) September 4, 2026

This even could serve as the catalyst that gets Zelensky’s Western backers to rush more anti-air missiles and systems – such as the Patriot – to Ukraine. “It is rare for government buildings in central Kyiv to be reached by Russian strikes, especially in broad daylight,“ The Guardian underscores. “The explosion from the hit on the SBU building could be heard several from several blocks away.”

One thing is clear: the gloves are indeed coming off. And just as Trump may be trying to de-escalate the Iran war ahead of November midterms in the US, the Russia-Ukraine war just massively escalated past a likely point of no return.

Goldman explained this week that Gulf oil exports had recovered to between 15 million and 16 million barrels per day, roughly two-thirds of prewar levels, with the rise of dark tanker transits obscuring some flows from conventional tracking via the Automatic Identification System (AIS). Yet headline crude volumes don’t tell the entire story. As we have repeatedly noted, crude itself does not keep the industrial economy humming. Diesel does.

US RETAIL DIESEL PRICES ADVANCE TO RECORD HIGH, AAA DATA SHOWS https://t.co/LjXZw8fxYR

— zerohedge (@zerohedge) September 4, 2026

Make no mistake: There is a refined-products crisis because of disruptions in the Strait of Hormuz and Ukrainian one-way drone attacks on Russian energy infrastructure. That tightening in physical markets, especially for diesel, was evident on Thursday, when US retail pump prices reached a record high.

US retail diesel prices surged to a record $5.85 per gallon on Thursday, according to new data from AAA, surpassing the previous peak reached in June 2022.

Unlike crude oil, diesel is the fuel that keeps the industrial economy moving: It powers trucks, construction equipment, tractors, generators, and home-heating systems. The spike threatens to unleash another wave of energy-driven inflation just as global supplies tighten ahead of the Northern Hemisphere’s harvest and heating seasons.

Bloomberg’s NYMEX one-month heating-oil/crude spread, tracked on the Bloomberg Terminal as the HOCL1 Index, breached $100 per barrel early Tuesday before surging to $108 early Wednesday. It was trading at $99 early Friday morning.

President Trump urged US refiners earlier this week to increase production and lower gasoline and diesel prices, but the industry has limited spare capacity. Many facilities are already operating near, or even above, their stated maximum processing rates following a summer production surge.

Despite the recovery in tanker flows through the Strait of Hormuz, TotalEnergies SE head Patrick Pouyanne recently said there wasn’t a “single tanker of products” moving out of the waterway.

Again, the energy crisis is in the refined-products complex.

A four standard deviation beat for non-farm payrolls this morning (good news) is triggering ugly reactions (bad news) across markets with rate-hike odds for September ripping back up near recent highs (despite no signs of inflationary wage growth – in fact it is slowing)…

Audrey Childe-Freeman, Bloomberg Intelligence’s chief FX strategist:

“The strength in the latest NFP report will validate Sept. Fed rate-rise talks and most likely give the dollar a short-term-yield-driven lift.”

“But that’s priced, and unless the Fed signals the beginning of an aggressive tightening cycle, the Fed-driven dollar upside may be contained into 4Q.”

That in turn is hammering the short-end of the yield curve…

And weighing on stocks…

Based on JPMorgan’s matrix, we should see a drop in the S&P of between 0.5% and 1.25%…

Significantly more than the options market implied (+/-0.52%)…

The dollar jumped…

Which in turn dragged gold down…

Christopher Hodge at Natixis reckons the doves will have to prove their case when the Fed meets later this month.

“Most policymakers seemed sanguine about the labor market so inflation will clearly still be the primary driver of near term policy. A softer print today could have given some wiggle room on what was considered to the an acceptable core CPI print, but clearly we didn’t get that. Instead, the onus will continue to be on the doves to get a disinflationary print that justifies another hold – we are putting that bogey at about 20bps. Absent that, the Fed will likely hike in September.”

Jeffrey Rosenberg, a portfolio manager at BlackRock Inc., says on Bloomberg TV that the biggest issue here for the Fed isn’t the job market but the extent of “pass through” of energy prices to broader inflation. 

He still sees the Fed’s Sept. 16 decision as entirely dependent on the CPI report. If that shows continuing progress in inflation coming down, then he sees the Fed holding.

Vail Hartman at BMO Capital Markets reflects what’s emerging as the consensus view on this report:

Today’s data lends support to the hawkish camp, but stops shy of making a definitive case for a rate hike on September 16.

All of which makes us wonder if the knee-jerk response is an over-reaction since we note what Fed Chairman Warsh said last week: “I believe the labor markets are consistent with full employment,” he said, which is why policymakers have largely priced in healthy employment.

The bigger focus remains inflation.

Today’s numbers are still second fiddle to what we get next week – both producer and consumer prices, which will be used to compute the PCE numbers. While today’s strong jobs reading surely supports the case for a hike, wage gains don’t suggest any inflation pressures so it’s not like the labor market is a smoking gun for a hike.

‘Give disinflation a chance’, was the message from Waller yesterday (who basically corroborated Williams). The center of the committee has not shifted – it is still data-dependent.

He might hold in September unless inflation comes in hot, and he made clear that NFP matters less than CPI next week.

Event risk has effectively migrated from payrolls to CPI.

Seema Shah, Chief Global Strategist at Principal Asset Management doesn’t see these numbers having a major impact on the Fed debate:

“For the Fed, there is little here to challenge the view that inflation remains the primary concern. Markets may edge up their expectations for a September hike following today’s release, but next week’s CPI report is still likely to be the key swing factor for policy.”

The news media will run with the “JOB JOBS JOBS” story, but the real news is next week’s inflation print, and a melt-up setup that still has to survive Hormuz (heating oil, diesel record highs).

To summarize, the jobs market appears strong but next week’s data will determine what the Fed does.