Month: October 2024

Just in time for the election, President Joe Biden’s student loan forgiveness plan is back on the table after a federal judge allowed  a temporary restraining order blocking the program to expire, and transferred the case to a different court.

The decision, handed down by U.S. District Judge J. Randal Hall in Georgia, clears a major obstacle for the Biden administration as Vice President Kamala Harris scrambles to persuade voters affected by “Bidenomics” that she can make life better for average Americans – by bailing out voluntary debt that’s unable to be discharged in bankruptcy.

The expiration of the restraining order marks a rare win for Biden, who has faced a series of legal roadblocks as conservatives continue their fight to dismantle the debt relief plan. Conservatives have argued that the program unfairly burdens taxpayers and exceeds the administration’s legal authority, but Wednesday’s ruling gives the administration a green light – for now.

The case, brought by seven Republican-led states, originally sought to prevent Biden from moving forward with his student loan forgiveness initiative. Missouri, Georgia, and others argued that the plan would slash state tax revenue and hit state agencies, like the Missouri Higher Education Loan Authority (Mohela), where it hurts. Mohela, which services federal student loans, claims it stands to lose a chunk of its revenue once loans are forgiven or reduced.

While Judge Hall had previously sided with these arguments, he dismissed Georgia from the case, ruling that the state failed to prove it would suffer significant harm. The lawsuit will now move to the Eastern District of Missouri, where the plaintiffs will continue their fight.

Missouri Attorney General Andrew Bailey has been at the forefront of the legal battle, arguing that the loss of revenue from servicing student loans would impact state scholarships. This echoes the same legal strategy that struck down Biden’s earlier student loan forgiveness attempt, which the Supreme Court shot down in 2023.

Under the Biden relief plan, four distinct groups would receive assistance;

• Borrowers who first entered repayment at least 20 or 25 years ago.
• Those who owe more on their student loans today than what they originally borrowed due to the impacts of interest accrual and capitalization.
• People who attended institutions that lost access to federal financial aid programs because of a failure to meet federal standards.
• Borrowers who qualify for student loan forgiveness under other programs but have not enrolled or applied.

Of course, nothing for taxpaying plumbers and electricians who will help foot the bill…

Authored by Debra Heine via American Greatness,

A coalition of 19 Republican state attorneys general have launched a criminal investigation into the Democrat fundraising platform ActBlue over allegations of money laundering.

As American Greatness reported in April, multiple independent investigative journalists, including O’Keefe Media Group (OMG) and Election Watch have uncovered what appears to be illegal activity involving millions of dollars in campaign donations to Act Blue that have been laundered through unwitting small donors.

The process of breaking up large donations and submitting them under the names of small donors to cover up illegal contributions has been dubbed “smurfing.” Suspicions that ActBlue routinely engages in this type of illicit fundraising have dogged the outfit since at least Joe Biden’s presidential campaign in 2020.

The Committee on House Administration, chaired by Congressman Bryan Steil (R-Wisc.), launched an investigation into Act Blue in November of 2023 to look into reports that the fundraising giant was skirting campaign donation laws and allowing rampant fraud on the site. The committee widened its probe in August 2024.

In a letter sent to top officials on the Federal Election Commission (FEC) on August 5, Steil urged them to “immediately initiate an emergency rulemaking to require political campaigns to verify the card verification value (‘CVV’) of donors who contribute online using a credit or debit card, and to prohibit political campaigns from accepting online contributions from a gift card or other prepaid credit cards.”

In September, Steil sent letters to five states, urging them to launch criminal investigations into ActBlue’s alleged illicit activities, citing three specific areas of concern:

– Donations significantly disproportionate to an individual’s net worth or previous giving history.

– Uncharacteristic donations from party-affiliated registered voters suddenly contributing to candidates of the opposing party.

– Unusually frequent donations from elderly individuals or first-time donors.

The number of GOP AGs involved in the effort has since swelled to 19.

On Tuesday, the 19 Republican Attorney’s General sent a letter to ActBlue CEO and President Regina Wallace-Jones demanding information and explanations regarding the suspicious donations.

Recent reporting suggests that that there may be donors across the country who are identified in filings with the Federal Election Commission as having donated to candidates through ActBlue (and other affiliated entities), but who did not actually make those donations. That raises a host of concerns about whether ActBlue’s platform is being used to facilitate “smurfing”––a type of money laundering in which donors break up large donations and submit them under different names to disguise who the money comes from and thereby skirt contribution limits in violation of state and federal law.

As one former FEC commissioner recently explained, wealthy donors—some of whom are foreign nationals and therefore barred from donating to federal candidates at all—can employ complicated schemes like this to make donations in others’ names. This concern is not hypothetical. Indeed, in an indictment filed last week in federal court, the U.S. Department of Justice alleged that a major U.S. political figure knowingly participated in such a scheme in a recent election cycle to receive contributions from a foreign national through straw donors. Further, the apparent irregularities in FEC filings also raise concerns about whether ActBlue’s fundraising methods are deceptive and properly safeguard donor’s data privacy.

Some of us and our colleagues have raised these concerns with you directly, and at least one senator has raised these concerns with the FEC. Independent investigations have shown that there are donors across the country who show up on FEC filings as having donated to candidates through ActBlue (and other affiliated entities) but deny having made those donations. Given the prominent role it plays in our elections, it is incumbent on ActBlue to address the serious questions created by apparent irregularities in ActBlue’s FEC filings.

ActBlue is one of the largest fundraising platforms for election-related donations. Already during the 2024 election cycle ActBlue has raised billions of dollars. But there are concerns about where those dollars came from. It is essential that we know whether political donations—particularly in such large volumes—are being solicited, made, and processed consistent with campaign finance, consumer protection, and other state and federal laws. We, the chief legal officers of Iowa, Indiana, Alabama, Arkansas, Florida, Idaho, Kansas, Mississippi, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, Virginia, West Virginia, and Wyoming ask that you explain what measures you have in place to ensure that donations made through your platform follow State and federal law.

Just as important, we ask for clarification as to what measures you take to make sure that the donors identified as donating via the ActBlue platform are who they claim. If individuals are inadvertently donating to political campaigns, are misled into making repeat donations, or are having donations made in their name that they do not wish to make, that could violate election-related disclosures or state consumer fraud statutes. Our States’ citizens deserve to know that those facilitating election-related financing are following State and federal laws. Thus we appreciate the assurances that you will provide in answering our questions promptly before the upcoming elections in November.

The AGs demanded a response to the the following requests for information no later than October 23, 2024:

1. Confirmation that ActBlue requires CVV numbers for all donations made via credit card.

2. A description of when and under what circumstances ActBlue first decided to require donors to submit CVV numbers.

3. Confirmation that ActBlue requires a legitimate address that is tied to the credit or debit card that a donor uses to make a contribution.

4. An explanation of how ActBlue ensures that all donors are persons legally allowed to make donations in the election to which they are donating.

5. An explanation of whether and how ActBlue’s operations are consistent with industry standards for securely processing credit card or other payment transactions.

6. A description of any measures ActBlue utilizes to ensure compliance with 52 U.S.C. § 30121, including whether ActBlue follows the guidance provided by the FEC in FEC Advisory Opinion (AO) 1998-14 on how to identify the nationality of donors.

7. A description of how ActBlue’s platform facilitates automatic, recurring donations from donors and what safeguards ActBlue has in place to ensure that donors do not inadvertently contribute more than they intend.

Authored by Tom Ozimek via The Epoch Times,

Jen Easterly, director of the Cybersecurity and Infrastructure Security Agency (CISA), said that America’s election systems are so secure that foreign adversaries will be unable to manipulate the outcome of the 2024 presidential election in a “material” way.

Easterly made the remarks in an Oct. 2 interview with The Associated Press, in which she said that foreign powers are actively seeking to influence U.S. voters and sow discord but that they lack the ability to interfere with core election infrastructure such as vote casting and ballot counting.

“Malicious actors, even if they tried, could not have an impact at scale such that there would be a material effect on the outcome of the election,” Easterly told the outlet.

U.S. intelligence agencies continue to raise concerns about disinformation and influence operations by foreign powers ahead of the Nov. 5 election. A recent update from the Office of the Director of National Intelligence (ODNI) warned that countries such as Russia, Iran, and China are ramping up the use of artificial intelligence (AI) to shape public opinion in the United States.

According to the ODNI report, AI has accelerated foreign influence operations. Russia’s efforts include the use of AI to produce misleading election-related content, from fake audio and videos to fabricated narratives. Iran has focused on generating fake news articles and social media posts to stoke divisions among U.S. voters. China’s efforts have been more indirect, aiming to shape global perceptions of its own policies while amplifying U.S. domestic issues such as illegal immigration and drug policy.

Easterly acknowledged these attempts to influence public opinion in the United States, noting that China is “very interested” in swaying the 2024 election. However, she stressed that no cyber activities targeting America’s voting systems had been detected thus far.

“We have not seen specific cyber activity designed to interfere with actual election infrastructure or processes,” Easterly said.

Several surveys have pointed to concerns over the integrity of U.S. elections, including doubts about their honesty and openness and the potential impacts of AI or foreign interference.

One survey, carried out by the Public Affairs Council found that just 37 percent of Americans believe the 2024 election will be “honest and open.”

Another survey from the University of South Florida found that a majority of U.S. voters think the federal government hasn’t done enough to deter foreign actors from interfering with this year’s presidential election.

And a survey published in May by the Imagining the Digital Future Center at Elon University found that 78 percent of Americans think the upcoming election will be influenced by “abuses” related to AI-generated content that spreads on social media.

“Many aren’t sure they can sort through the garbage they know will be polluting campaign-related content,” Lee Rainie, director of the Digital Future Center, said in a statement.

In March, The Epoch Times reported on the rising influence of political memes on election discourse. At the time, Pamela Rutledge, director of the Media Psychology Research Center, told The Epoch Times that deep fakes—which are realistic images, videos, and audio typically created by generative AI software—can and do effectively fool people.

Rutledge said that even if the content is obviously fake or of low quality, the messages can still be persuasive if they confirm people’s political biases.

With the world on edge over the shape of Israel’s retaliation to Iran for recent ballistic missile assault, which just like in April was performative as it damaged absolutely nothing and killed just one person, a Palestinian, earlier we learned that Biden – who may or may not still be president – is opposing an attack on Iran’s nuclear weapons sites, while also informing Iran not to attack its mid-east bases. And yet, Israel has to do something, which is why moments ago oil surged news, that when Biden was asked by reporters outside the White House if he would support Israel striking Iran’s oil facilities, he said “we’re discussing that.”

Crude oil prices spiked on the news, having already jumped about 5% in the past three days.

As reported previously, until now, the market has been largely unaffected by escalating tensions in the region as shipments of physical oil barrels haven’t been interrupted, and Goldman noted that oil prices do not incorporate any geopolitical risk premium. However, any disruption to supplies from the region would drive oil much higher, a major risk for the US with elections just about a month away.

While it’s still unclear how Israel will respond to Iran, what we do know is that the Persian Gulf country is the third-largest oil producer in OPEC. Crude supplies amounting to about a fifth of global demand and a large amount of liquefied natural gas pass through the Strait of Hormuz along the Iranian coast. Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Qatar send shipments through the key waterway.

Here’s a map showing Iran’s major energy installations, including oil and gas fields, pipelines, refineries and storage terminals:

In his discussion of how Israel may retaliate, Rabobank’s Michael Every said yesterday that “the list of Israeli targets proportionate to their escalation vs. Hamas, Hezbollah, and the Houthis is short” with oil infrastructure the most likely target.

Military radar systems would leave Iran open for IDF air attacks. Iran’s nuclear program would require US assistance. The simplest target is oil infrastructure to remove the earnings paying for its and its proxies’ weapons, and to destabilise the regime. Yet Iranian state Telegram chatgroups, and an Iranian professor of literature(!) interviewed by the BBC, say if their oil is hit, they will burn Saudi, Kuwaiti, UAE, Bahraini, and Azerbaijani oil – an escalation threat we have been flagging as a fat tail risk since immediately after October 7. (Note Qatar, a key supplier of LNG to the EU, is absent from this list despite ostensibly being a major US ally…) As such, the US might also oppose this move: but that doesn’t mean it won’t happen. Of course, Israel hitting Iran too hard could mean war, dragging others in; even so, it likely sees more risk in doing too little with its next strike than doing too much.

In other words, while the US backs a “proportionate” Israeli strike on Iran for its recent missile attack to avoid escalation, this is not Israel’s strategic doctrine, and it’s determined to cause Iran political and economic pain, implying nuclear or oil targets. The US wants military ones which won’t stop escalation and logically still end up with nuclear and oil, with a less propitious backdrop for Israel. Note: Jerusalem ignored US prohibitions when acting against nuclear programs in Osirak in Iraq in 1981 and Deir-ez-Zor in Syria in 2007 and deliberately didn’t inform the White House of its recent attacks vs. Hamas and Hezbollah in advance. In other words, a US “Don’t” carries little weight in proportion to what it once did, and markets might want to bear that in mind.

Guess Iran wasn’t scared by Kamala saying “don’t.”

Who could’ve guessed? pic.twitter.com/HQobJsGApD

— John Hasson (@SonofHas) October 1, 2024

Summary: Biden is now boxed in. Either he puts taxpayer money where his diplomatic mouth is, and sides with Israel in attacking Iran, sending the price of oil and gas soaring and crushing Kamala’s election odds, or confirm he is a puppet of the Iran regime, which should remain untouchable until the elections to keep oil prices lower, rising a unilateral attack by Israel anyway, demonstrating to the world just how irrelevant he has become.

Following the news of the Three Mile Island restart plans to power Microsoft’s AI data centers and the revival of Holtec’s Palisades nuclear plant in Michigan, Google CEO Sundar Pichai revealed in an interview with Nikkei Asia in Tokyo on Thursday that the tech giant is exploring the use of nuclear energy as a potential ‘green’ source to power its data centers. 

“For the first time in our history, we have this one piece of underlying technology which cuts across everything we do today,” Pichai said of generative AI. He said, “I think the opportunity to do well here is something we are leaning into.”

Three years ago, Google released plans to achieve net-zero emissions by 2030. However, the proliferation of AI data centers has led to a surge in the big tech’s power consumption, which, in return, its greenhouse gas emissions in 2023 jumped 48% more than in 2019 on a carbon-dioxide equivalent basis. 

Behind the scenes, Google is likely scrambling to secure green energy and curb emissions as 2030 quickly approaches.

“It was a very ambitious target,” Pichai said of the net-zero emissions targets, “and we will still be working very ambitiously towards it. Obviously, the trajectory of AI investments has added to the scale of the task needed.” 

He continued, “We are now looking at additional investments, such as solar, and evaluating technologies like small modular nuclear reactors, etc.”

Nikkei noted that Pichai wasn’t clear on where Google might start sourcing nuclear power. A bulk of that power could come from reviving older nuclear power plants. This is exactly what Microsoft did when it signed a power agreement contract with dormant Three Mile Island on the Susquehanna River near Harrisburg, Pennsylvania. 

Recall that just last week, we wrote that Sam Altman-backed Nuclear SMR company Oklo announced it had finalized an agreement with the Department of Energy to advance the next phase of the SMR at the Idaho National Lab. And days ago, the Biden administration closed a $1.52 billion loan with Holtec’s Palisades nuclear plant in Michigan to revive it. 

Sachem Cove Partners Chief Investment Officer Michael Alkin told Bloomberg shortly after the Microsoft-Three Mile Island deal, “It’s a wake-up call to those that have not been paying attention,” adding that demand already outstrips the supply of uranium and the restart of Three Mile Island “takes that to a bit of a different level.”

Also, the funding markets are becoming more receptive to nuclear deals as governments and big tech understand the only way to hit ambitious net zero goals is not with solar and wind but with nuclear power. In late December 2020, we outlined to readers that this would happen in a note titled “Buy Uranium: Is This The Beginning Of The Next ESG Craze?”

Furthermore, here’s Goldman’s latest note on uranium prices, which are only expected to “stairstep” higher over time. 

On the heels of a 53.4% YoY rise in job cut announcements (released by Challenger, Gray, & Christmas), initial jobless claims remain in a world of their own, rising very modestly to 225k from 219k…

Source: Bloomberg

Initial claims (SA and NSA) remain rangebound – showing absolutely ZERO indication of labor market stress…

Source: Bloomberg

Continuing claims were flat at 1.826mm Americans

Source: Bloomberg

Additionally, jobless claims are also completely decoupled from the BLS’ official unemployment rate…

Source: Bloomberg

So, JOLTS and Claims are super strong while ‘soft’ survey data (ISM/PMI/UMICH/CONF BOARD) all show labor market indicators tumbling…

Source: Bloomberg

…take your pick to support your political pundit’s choice of how many more rate-cuts we get this year (with stocks and home prices at record highs).

US stock futures are lower, but off session lows, in line with declines seen across Europe and Asia, while yields, the dollar and oil rise as the risk of escalating conflict in the Middle East damps risk appetite. As of 8:00am ET, S&P futures are down 0.1% after closing up 0.01% on Wednesday; Nasdaq futures slide 0.3% with MegaCap Tech mixed: NVDA is up +0.7%, while TSLA extends yesterday selloff and is down -1.6% pre-market. Bloomberg’s dollar index gained for a fourth day, bolstered by a rise in Treasury yields; market snapshot: RTY -70bps // UST10yr +2.5bps @ 3.80bps // WTI +2% @ $71.50 // Bitcoin unch @ $60,900 as global equities trade mixed with escalating geopolitical tensions/ the awaiting of the size/scale Israel’s response to Iran weighs on markets, which has pushed oil prices up another 1.9% this morning; elsewhere in commodities base metals are also higher, while precious metals and ags are lower: Jobless claims, factory orders and the ISM services reading (est 51.7, Last 51.5) are all on the slate as traders prepare for Friday’s jobs report, while the Federal Reserve’s Jeff Schmid, Neel Kashkari and Raphael Bostic are all scheduled to speak.

In premarket trading, Levi Strauss shares plunged 11% after the apparel company lowered its revenue growth outlook for the full year. Here are some other premarket movers:

• EVgo (EVGO) rises 12% after JPMorgan upgraded the EV charging firm on the view that companies like EVgo, which have an owner-operator model, will outperform peers.
• Hims & Hers Health (HIMS) drops 9% as the FDA said Eli Lilly’s weight-loss drugs are no longer considered to be in shortage in the US, a ruling that threatens to upend knockoffs that became popular when patients couldn’t find the brand-name medicines. Hims has been selling compounded semaglutide to treat obesity.
• Wolfspeed (WOLF) declines 5% as Mizuho cut its recommendation of the semiconductor device company to underperform, noting slower global EV sales in second half and next year.

Global equities are on course for their first weekly loss in four as the world awaits Israel’s response to a missile strike by Iran. Israel’s warplanes bombed Beirut overnight, after eight of its soldiers were killed in southern Lebanon in battles against Hezbollah. Amid the geopolitical uncertainty, investors are also bracing for a raft of US data, including jobless claims today, for signals on the health of the economy. In other news, Warren Buffet’s sales of Bank of America shares slowed, fetching some of the lowest prices since he began a spree of liquidations in mid-July. Meanwhile, OpenAI has raised $6.6 billion in a new funding round that gave the company a valuation of almost $160 billion

International conflict has returned as a driver for markets, which have lately been directed mainly by the US economic cycle, said Michael Metcalfe, head of macro strategy at State Street Global Markets. “There might be a pressure to rebalance, because markets are stretched and I don’t see that as being particularly positive for US equities,” he said.

Richmond Fed President Tom Barkin on Wednesday noted progress on inflation and added the labor market is in “good shape,” but cautioned it’s too early for the central bank to declare victory. Stronger-than-expected ADP jobs data on Wednesday led traders to pare bets on aggressive Fed rate cuts. Swaps traders were penciling in some 34 basis points of policy easing at the central bank’s November meeting, down from 44 basis points just last week.

Fed officials will see fresh labor market data Friday. The unemployment rate is forecast to hold steady at 4.2% in September while payrolls are expected to rise by 150,000.

“I am of course nervous heading into tomorrow’s jobs report,” Kallum Pickering, chief economist at Peel Hunt, said on Bloomberg TV. “If the unemployment rate ticks up, I wouldn’t be surprised that markets would shift back toward expecting 50 basis points and then it is a question of how the Fed may react.”

European stocks fall for the third time in four sessions with the Stoxx 600 down 0.9%. Auto, mining and construction shares are underperforming in Europe; utilities was the only sector in the green. The Stoxx 600’s automotive subindex was the biggest underperformer, weighed down by a number of bearish cuts in the sector from Barclays. France’s CAC 40 stock benchmark underperformed, falling as much as 1%, after French President Emmanuel Macron endorsed a temporary tax on the country’s largest companies. German software maker SAP SE dropped after US prosecutors broadened a probe of potential price-fixing. Stellantis NV shares were down more than 3% after the company slashed vehicle production in its key Italian market. Here are the biggest movers Thursday:

• Stora Enso gains as much as 6.0% after the Finnish paper and forest products firm said it will sell about 12% of its total forest assets in Sweden to strengthen its balance sheet and reduce debt
• Tesco shares rise as much as 2.6%, bouncing off a one-month low, after the UK’s largest supermarket chain raised its full-year profit outlook alongside first-half results
• Voltalia shares rise as much as 4.4% after Stifel initiated coverage of the French renewable-energy producer with a recommendation of buy, citing a fast growing market
• Stellantis falls as much as 4.9% and Porsche Automobil Holding as much as 3.2% after the stocks were downgraded alongside Mercedes-Benz at Barclays in a review of European carmakers
• FDJ shares slide as much as 5.9% after CIC Market Solutions analysts downgrade the lottery operator to neutral from buy, citing the potential for incoming tax rises on gambling in France
• Bouygues shares drop as much as 6.1%, the most since November 2022, after the French company said its telecoms business will launch a new brand and product range targeting families
• VP plunges as much as 12% after the equipment rental firm’s profit guidance for the year came in below expectations. Analysts at Peel Hunt warned they expect the stock to remain under pressure

Asian stocks also fell as Hong Kong shares took a breather after a record rally fueled by Beijing’s stimulus blitz. Japanese equities rose boosted by the plunge in the yen. The MSCI Asia Pacific Index dropped as much as 0.9%, weighed down by Chinese tech shares including Alibaba and Tencent. A gauge of Chinese stocks in Hong Kong fell 1.6%, snapping its 13-day winning streak.

While there’s growing optimism that the current rally may be different from previous short-lived rebounds, some skepticism remains over the effectiveness of the government’s stimulus measures. The mainland Chinese market is closed through Oct. 7 for the Golden Week holiday.

“The stimulus momentum has stalled with China away on holiday,” said Charu Chanana, global markets strategist at Saxo Markets. “While undervaluation has helped, markets still remain uncertain about the impact of the announcements to address China’s structural headwinds.”

In FX, the pound tumbled over 1% against the dollar, on course for its worst day against the euro since 2022 after the Guardian reported Bank of England Governor Andrew Bailey saying the central bank could be a “bit more aggressive” with interest-rate cuts. Money markets fully priced in a quarter-point cut by the BOE in November and assigned a 70% probability to a reduction in December, an increase from about 40% Wednesday. The Bloomberg Dollar Spot Index rises 0.3%. The yen falls 0.4% to near 147 as PM Ishiba’s unexpected warning against raising rates is pushing back bets of another hike this year.

In rates, treasuries are under modest pressure as the US trading day begins, amid steeper declines for most euro-zone bond markets and rising oil prices. US yields are higher by 2bp-3bp, with intermediate sectors leading losses and curve spreads narrowly mixed; 10-year at 3.81% is about 2.7bp higher on the day vs increases of at least 5bp for most euro-zone 10-year yields. UK bonds outperform led by the short-end after BOE Governor hinted at more aggressive rate cuts; UK two-year yields dropping 5 bps to 3.96%. US session includes weekly jobless claims and September ISM services index (factory index released Tuesday showed notable weakness in employment and prices paid).

In commodities, oil prices rise for a third day as traders await Israel’s response against Iran. Brent crude climbed near $75 a barrel, on course for the longest run of daily gains since August, while West Texas Intermediate was above $71. Investors are concerned that, should Israel strike key Iranian assets, the Islamic Republic will lash out and escalate their conflict, dragging in more countries and potentially disrupting global energy shipments. Spot gold falls $13 to around $2,645/oz.

Looking at today’s calendar, US economic data calendar includes September Challenger job cuts (7:30am), weekly jobless claims (8:30am), September final S&P Global US services PMI (9:45am), August factory orders and September ISM services index (10am). Fed speakers scheduled include Kansas City’s Schmid (10am) and Minneapolis’s Kashkari and Atlanta’s Bostic (together at 10:40am)

Market Snapshot

• S&P 500 futures down 0.4% to 5,735.75
• STOXX Europe 600 down 0.9% to 516.57
• MXAP down 0.5% to 194.77
• MXAPJ down 1.2% to 622.17
• Nikkei up 2.0% to 38,552.06
• Topix up 1.2% to 2,683.71
• Hang Seng Index down 1.5% to 22,113.51
• Shanghai Composite up 8.1% to 3,336.50
• Sensex down 2.1% to 82,503.93
• Australia S&P/ASX 200 little changed at 8,205.19
• Kospi down 1.2% to 2,561.69
• German 10Y yield little changed at 2.14%
• Euro little changed at $1.1045
• Brent Futures up 1.1% to $74.73/bbl
• Gold spot down 0.6% to $2,644.02
• US Dollar Index up 0.15% to 101.83

Top Overnight News

• A leading economist in China said the country has room to ramp up fiscal support for the economy by issuing as much as 10 trillion yuan ($1.4 trillion) in special debt, reflecting rising expectations for Beijing to expand public spending as part of its stimulus package: BBG
• BOJ board member Asahi Noguchi sees a need for the central bank to maintain an accommodative monetary policy stance given Japan’s long history of deflation, he said Thursday, echoing remarks from the country’s new prime minister. WSJ
• Softbank’s Son says artificial general intelligence will be achieved within 2-3 years, with artificial super intelligence occurring within 10 years. WSJ
• The pound tumbled after Governor Andrew Bailey told the Guardian that the BOE may become a “bit more aggressive” in cutting rates if news on inflation remains good. Money markets fully priced a quarter-point reduction in November and assigned a 70% chance of a consecutive move in December, up from about 40% yesterday. BBG
• Swiss inflation weakened to the slowest pace in more than three years, pointing to further monetary easing by the country’s central bank. Consumer prices rose 0.8% from a year ago in September, Switzerland’s statistics office said Thursday. That’s much lower than the 1% median estimate in a Bloomberg survey and compares with 1.1% in August. BBG
• France, Greece, Italy and Poland will vote on Friday in favor of tariffs of up to 45% on imports of electric vehicles (EVs) made in China, sources said, enough to push through the European Union’s highest profile trade measures, risking potential retaliation from Beijing. RTRS
• OPEC has enough spare oil capacity to compensate for a full loss of Iranian supply if Israel knocks out that country’s facilities but the producer group would struggle if Iran retaliates by hitting installations of its Gulf neighbors. RTRS
• Iran would require not weeks but many months, and possibly as long as a year, to construct a nuclear weapon. NYT
• After Israel invaded Lebanon to confront Iran’s strongest ally, Hezbollah, and Iran’s second massive missile attack on Israel in less than six months, Israel seems ready to strike Iran directly, in a much more forceful and public way than it ever has, and Iran has warned of massive retaliation if it does. NYT
• Israel’s warplanes bombed Beirut overnight, after eight of its soldiers were killed in southern Lebanon in ongoing ground battles against Hezbollah: RTRS
• Long lines of container ships queued up outside major U.S. ports on Thursday as the biggest dockworker strike in nearly half a century entered its third day preventing unloading and threatening shortages of everything from bananas to auto parts. No negotiations were scheduled between the International Longshoremen’s Association and employers, but the port owners, under pressure from the White House to hike their pay offer to land a deal, signaled late on Wednesday they were open to new talks. RTRS

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed amid the backdrop of several holiday closures and ongoing geopolitical tensions, while Hong Kong participants booked profits. ASX 200 lacked direction alongside varied data releases including downward PMI revisions and mixed trade figures. Nikkei 225 outperformed on the back of a weaker currency after yesterday’s dovish-leaning remarks from Japanese PM Ishiba who said they are not in an environment for an additional rate hike following a meeting with BoJ Governor Ueda, while Ueda said the BoJ will adjust the degree of monetary easing if the outlook is realised, but will take careful steps to determine that as it takes time. Hang Seng suffered heavy losses amid profit taking and in a possible sign that the China stimulus euphoria has finally worn out.

Top Asian News

• BoJ Board Member Noguchi said they must patiently maintain loose monetary conditions and it will take a considerable time for the public to shift to a mindset where inflation can sustainably hit 2%, while he believes the consumption uptrend is likely to become clearer and noted the cost pressure from wage hikes is gradually being reflected in service price rises. Furthermore, he said the BoJ will likely gradually adjust the degree of monetary support while cautiously examining whether inflation stably hits 2%, accompanied by wage gains, as well as noted that the BoJ can spend time and move cautiously, in reducing its balance sheet. Does not comment of PM Ishiba’s remarks on monetary policy; expects BoJ to adjust degree of monetary policy if economy moves in line with forecast, even at a very slow pace. “personally feel we need to proceed very carefully in adjusting degree of monetary support”. “Need to scrutinise whether consumers’ sentiment will shift to one where they can swallow price hikes.”. “As Governor Ueda has said, we have time to scrutinise economic developments, before contemplating rate hike.”. “The current financial environment is sufficiently easy.” “Japan’s economy can withstand if the JPY becomes stronger gradually.”. “Will not deny there is room to adjust the degree of monetary support further.”. “Given it is hard to come up with a concrete estimate on the neutral rate, the BoJ must check the impact of the past rate hike before carefully proceeding with the next one.”. “The one-sided, sharp JPY fall seen in July has subsided.”. “The upside inflation risk from a weak JPY has subsided.”
• Japanese PM Kishida is to direct a compilation of economic package on Friday, according to Kyodo.
• Japan’s Finance Minister Kato has affirmed the government, BoJ will continue to coordinate closely; also said he wants to watch the FX market with a sense of urgency including speculative moves. “We will communicate thoroughly with markets”. Will aim to exit deflation soon, working closely with BoJ.
• Japan’s Economy Minister Akazawa said in broad terms, policy rate of 0.25% is an accommodative state. “We are moving towards monetary policy normalisation but existing deflation is a top priority”. “We must not cool down the economy”.

European bourses, Stoxx 600 (-0.7%), opened modestly in negative territory and continued to edge lower as the morning progressed, with indices now generally just off lows. The FTSE 100 (+0.2%) remains in positive territory after BoE Governor Bailey’s dovishly-received comments. European sectors are negative across the board with Energy also turning red following a positive open. There is no clear theme or bias across European sectors. Autos and Parts once again lag. Basic Resources also resides as one of the losers amid the pullback in base metal prices. US Equity Futures (ES -0.4%, NQ -0.5%, RTY -0.7%) are softer across the board amid the broader risk-averse mood despite the lack of any fresh drivers during the session, but ahead of risk events including the weekly jobless claims and ISM Services PMI ahead of tomorrow’s US jobs report. Barclays has upgraded the EU Autos & Parts sector to neutral from negative

Top European News

• BoE Governor Bailey said the bank could be a “bit more aggressive” in cutting rates provided the news that inflation continues to be good, in an interview with The Guardian.
• UK PM Starmer conceded during his first visit to Brussels that his “reset” with the EU won’t be easy, according to AFP.
• Riksbank’s Jansson said the bank is not too worried about a consumption driven uptick in inflation as a result of rate cuts. Need to see an economic recovery if inflation is not undershoot. Would be good for the economy if fundamental factors were reflected in the value of the crown.
• BoE Monthly Decision Maker Panel data (September 2024). Expectations for CPI inflation a year ahead declined by 0.1 percentage point to 2.6% in the three months to September. The corresponding measure for three-year ahead CPI inflation expectations was also 2.6% in the three months to September, and 0.1 percentage points lower than in the three months to August. Expected year-ahead wage growth remained unchanged at 4.1% on a three-month moving-average basis in September.

FX

• USD is broadly stronger vs. peers with DXY up for a fourth consecutive session in a week that has been characterised by geopolitical tensions and comments from Fed Chair Powell guiding markets towards a step down to a 25bps rate cut next month. DXY is currently eyeing the 102.00 mark, and may take impetus from today’s US busy data docket, with ISM Services likely the highlight.
• EUR is softer vs. the USD but to a lesser extent than most peers. ECB officials seemingly endorsing a rate cut later this month has definitely acted as a drag on the pair, with attention now on if the pair can hold above the 1.10 mark.
• GBP is the standout laggard across the majors following dovishly-received comments from BoE Governor Bailey; he said in an interview with The Guardian, the bank could be a “bit more aggressive” in cutting rates provided the news that inflation continues to be good.
• JPY is softer vs. the USD after breaching the September peak for USD/JPY at 147.21 overnight. As a reminder, on Wednesday, PM Ishiba downplayed the likelihood of another immediate BoJ rate hike. USD/JPY currently stands at around 146.83.
• Both antipodes are struggling vs. the broadly firmer USD. After an indecisive session yesterday, AUD/USD has extended its move lower on a 0.68 handle.

Fixed Income

• USTs are extending on yesterday’s downside that was triggered in part by Wednesday’s strong ADP release in the run-up to Friday’s NFP print. Today’s US data docket is a busy one with ISM Services PMI the likely highlight. US 10yr yield is currently just above the 3.8% mark but below Wednesday’s 3.817% peak.
• Bunds are lower in an extension of Wednesday’s US-led price action, but it remains to be seen how long the downside can continue given the increasingly dovish tones seen out of the ECB with comments from hawk Schnabel helping to cement expectations of an increasingly dovish ECB. The German 10yr yield is back above the 2.1% after delving as low as 2.01% earlier in the week.
• Gilts the standout outlier across the fixed income space on account of dovish comments from BoE Governor Bailey who said the bank could be a “bit more aggressive” in cutting rates provided the news that inflation continues to be “good”. The UK 10yr yield is currently holding just above the 4% mark.
• Spain sells EUR 4.54bln vs exp. EUR 4-5bln 2.50% 2027, 1.45% 2029 and 4.70% 2041 Bono and EUR 0.512bln vs exp. EUR 0.25-0.75bln 2.05% 2039 I/L.
• France sells EUR 11.98bln vs exp. EUR 10-12bln 1.25% 2034, 3.00% 2034, 3.00% 2049, and 3.25% 2055 OAT.

Commodities

• Crude is firmer intraday in a continuation of the upside seen since the recent geopolitical escalation. Updates from the region has been light thus far, as markets still await Israel’s response which will reportedly be “harsh”. Brent Dec briefly rose above USD 75/bbl to trade in a current USD 74.46-75.11/bbl parameter.
• Softer trade across precious metals as the firmer Dollar and lack of fresh geopolitical escalations (as we await Israel’s response) allow traders to book some profits before scheduled risk events such as the US jobless claims and ISM Services PMIs.
• Base metals are softer across the board against the backdrop of a risk-averse mood across the market. Newsflow has been light this morning but the angst surrounding a wider geopolitical escalation in the Middle East remains. As a reminder, Chinese markets were closed overnight as they observe their Golden Week Holiday.
• Kinder Morgan (KMI) reports a mechanical failure on gasoline pipeline repaired at Sacramento County, California; pipeline is shutdown, personnel is on route to the site to get eyes on assessment.
• Kazakhstan’s 400k BPD Kashagan repairs reportedly postponed, now due to start on Oct 7th, according to Ifax.

Geopolitics

• IDF orders another 25 villages evacuated in southern Lebanon, according to ELINT News
• “An Israeli infantry group and vehicles retreat beyond the Blue Line after infiltrating towards the town of Maroun al-Ras”, according to Al Jazeera
• “Private sources for Sky News Arabia: A positive atmosphere prevailed in the meeting in Doha between Abbas and Hamas leaders”, according to Sky News Arabia.
• Israeli Military said it assassinated head of Hamas government Rawhi Mushtaha in Gaza strip.
• Hezbollah said it confronted an attempt by Israeli forces to advance at Lebanese border’s Fatima Gate.
• “US sources say Washington is ready to sell F-15s to Ankara”, according to journalist Soylu; “Sources say if Turkey finally returns to F-35 program, Ankara might be involved in production line”, “Turkey’s F-16 deal is still being finalised”.
• Pro-Iranian factions target an international coalition base in north-eastern Syria, via Sky News Arabia.
• Israel conducted raids on 3 sites in the neighbourhoods of Mouawad, Al-Amrikan and Zaghloul in Beirut. It was also reported that an Israeli strike hit central Beirut, while a building targeted by the Israeli raid in Bachoura reportedly housed the office of Beirut’s Hezbollah deputy Amin Sherri.
• Israeli army called on residents of several buildings in Haret Hreik, Burj al-Barajneh and Hadath West in the southern suburbs of Beirut to evacuate and a Sky News Arabia correspondent reported a new series of Israeli raids targeting the suburbs of Beirut.
• Israeli Home Front announced sirens sounded in several areas of the Golan and that sirens sounded in Shlomi in the western Galilee in northern Israel. Furthermore, Israeli media reported that 4 marches launched from Yemen exploded at a low altitude in the airspace of Tel Aviv, according to Asharq News.
• Clashes were reported between Hezbollah and Israeli soldiers on the outskirts of Aitaroun, southern Lebanon, according to an Al-Arabiya correspondent.
• Israeli press cited an official who stated that the response to Iran may include more than one option and not necessarily through airstrikes. The official added it is not certain that Washington will agree with them but it knows that they have to respond, while they should not go too far in our response although it will be much stronger than the response to the April attack.
• Israeli official cited by Yedioth Ahronoth said there are no limits to the response to Iran, according to Al Arabiya.
• Iran’s President vowed a stronger response if Israel retaliates.

US Event Calendar

• 07:30: Sept. Challenger Job Cuts 53.4% YoY, prior 1.0%
• 08:30: Sept. Initial Jobless Claims, est. 221,000, prior 218,000
  • Sept. Continuing Claims, est. 1.83m, prior 1.83m
• 09:45: Sept. S&P Global US Services PMI, est. 55.4, prior 55.4
  • Sept. S&P Global US Composite PMI, est. 54.4, prior 54.4
• 10:00: Aug. Durable Goods Orders, est. 0%, prior 0%
  • Aug. Durables-Less Transportation, est. 0.5%, prior 0.5%
• 10:00: Aug. Factory Orders, est. 0.1%, prior 5.0%
  • Aug. Factory Orders Ex Trans, est. 0.2%, prior 0.4%
  • Aug. Cap Goods Ship Nondef Ex Air, prior 0.1%
  • Aug. Cap Goods Orders Nondef Ex Air, est. 0.2%, prior 0.2%
• 10:00: Sept. ISM Services Index, est. 51.7, prior 51.5

DB’s Jim Reid concludes the overnight wrap

Morning from Amsterdam after a day in The Hague yesterday. Markets remained on edge over the last 24 hours, but better US jobs data than the previous day took the edge off fears of a potential escalation in the Middle East following Iran’s strikes on Tuesday. So far we haven’t seen any fresh escalation since those strikes, but Israeli PM Netanyahu has said they intend to retaliate, warning that Iran “will pay” for its actions. So the big fear is there could be a further ratcheting up of hostilities if you get repeated rounds of retaliation from each side, raising the risks of a broader regional conflict. However late in the day, we heard US President Biden urging Israel to not to attack Iran’s nuclear facilities. So there doesn’t seem to be a desire from the US at the moment for a sizeable escalation.

In terms of the market reaction, that’s already led to a further rise in oil prices, and early in yesterday’s session Brent crude had been on track for its biggest 2-day gain of 2024 so far. Those gains (+3.5% to above $76/bbl at the highs) were mostly pared back into the afternoon, but it rose slightly again late on and is a further +1.03% higher this morning at $74.66/bbl as I type.
Whilst investors awaited any geopolitical news, the other main story yesterday was a substantial bond selloff. That was primarily driven by the ADP’s latest report of private payrolls from the US, which came in at +143k in September (vs. +125k expected). So that was an important sign of strength in the US labour market, particularly ahead of tomorrow’s all-important jobs report, and it also ended a run of 5 consecutive months where the ADP reading had kept slowing down.

The stronger numbers in the ADP report led investors to dial back the chance of aggressive rate cuts over the coming months. For instance, the amount of cuts priced by December 2025 was down -4.4bps on the day to 188bps. This came also amid somewhat cautious comments from Fed’s Barkin, who noted that while progress has been made, “It remains difficult to say that the inflation battle has yet been won”. This backdrop helped to spark a decent selloff for US Treasuries, with the 10yr yield ending the day up +5.1bps at 3.78%.

Those moves were evident in Europe as well, where yields on 10yr bunds (+5.5bps) moved back up to 2.09%, having closed at their lowest level since January in the previous session. That went alongside a fresh round of curve steepening, as investors became increasingly confident that the ECB would cut rates again in a couple of weeks’ time, with overnight index swaps giving that a 96% probability by the close. ECB commentary did little to dissuade October rate cut expectations. Later on in the day, we heard from Schnabel, one of the most prominent hawkish ECB voices in recent years, who said that “we cannot ignore the headwinds to growth” and that “a sustainable fall of inflation back to our 2% target in a timely manner is becoming more likely, despite still elevated services inflation and strong wage growth”. Elsewhere in European rates, there was a slight tightening in the Franco-German 10yr spread, which came down by -1.0bps to 77bps.

Whilst bonds were selling off, for equities it was a pretty subdued session as geopolitical fears came up against the stronger-than-expected data, meaning that the major indices saw little change overall even if sentiment improved as the US session progressed. The S&P 500 (+0.01%) was essentially flat on the day, despite a drag from the Magnificent 7 (-0.66%). The latter came amid a -3.49% decline for Tesla, which posted slower than expected quarterly vehicle sales. More broadly, both the NASDAQ (+0.08%) and the small cap Russell 2000 (-0.09%) saw muted moves. In Europe, the STOXX 600 (+0.05%) was also little changed, with a decline for the DAX (-0.25%) but slight gains for the CAC (+0.05%) and FTSE 100 (+0.17%).

Over in Asia, yesterday brought a clear weakening in the Japanese Yen after new PM Shigeru Ishiba said that “I don’t think the environment is ready for an additional rate hike”. So among investors, that led to a bit more scepticism about the chances of another BoJ hike anytime soon, and it meant that the yen weakened by -1.97% against the US Dollar yesterday and is down another quarter percent this morning. But the weaker yen has also led to a sharp surge in the Nikkei overnight (+2.18%).

In contrast, the Hang Seng is down by -3.20% this morning as the rally from China’s stimulus has finally abated for now, while the S&P/ASX 200 is just below flat, down by -0.08%. Meanwhile, markets in Mainland China and South Korea are closed for holidays. S&P 500 (-0.18%) and NASDAQ (-0.30%) futures are lower even as Nvidia’s CEO has said the demand for their Blackwell chip is “insane”. They were up around +1.6% after hours.

Early morning data showed that Japan’s service sector activity expanded for the third consecutive month, although the pace slowed slightly in September. The final estimate of the au Jibun Bank services PMI fell to 53.1 in September from 53.7 in August. Additionally, Australia’s trade surplus was A$5.64 billion in August, slightly above the expected A$5.50 billion, compared to a downwardly revised A$5.63 billion surplus the previous month.

There wasn’t too much other data yesterday, but we did get the latest weekly data from the Mortgage Bankers Association in the US. That showed the average rate on a 30yr fixed mortgage ticked up to 6.14% in the week ending September 27, up from 6.13% in the previous week, which is significant as that ends a run of continuous weekly declines in mortgages rates throughout August and early September. Over in the Euro Area, we also found out that the unemployment rate remained at 6.4% in August, in line with expectations, and still its joint-lowest since the single currency’s formation.

To the day ahead now, and data releases from the US include the ISM services for September, the weekly initial jobless claims, and August’s factory orders. We’ll also get the final services and composite PMIs from around the world, and Euro Area PPI inflation for August. From central banks, we’ll hear from the Fed’s Schmid, Kashkari and Bostic.

For months, oil traders shrugged off any threat of a supply shock in the Middle East, betting on softening demand from China and the West, along with hopes of increased production from OPEC+. Bearish sentiment dominated the global market in late summer and early fall. But this week, the oil market faced a rude awakening after Iran launched several waves of ballistic and hypersonic missiles against Israel, sending bears scrambling and prices jumping above $75/bbl. 

The broadening war in the Middle East comes as Israel has vowed a “painful” response to Iran’s attack early in the week. Brent prices rose 4.5% in the last three days, with further gains likely ahead as Prime Minister Benjamin Netanyahu could use stealth fighter jets to neutralize the Islamic Republic’s oil infrastructure export capabilities. 

On Tuesday, Helima Croft, head of the global commodity strategy at RBC Capital Markets, joined CNBC’s “The Exchange,” informing hosts and audience, “There has been a lot of complacency about this war,” adding, “We do need to think about a scenario where Iranian oil supplies are at risk.

Citigroup analyst Francesco Martoccia told clients that any  IDF strike on Iran’s export capacity could reduce 1.5 million barrels of crude per day from the global market overnight. He said a minor attack on energy infrastructure, such as downstream assets, could remove 300,000 to 450,000 barrels of daily output. 

For energy research desks, it is unclear how the IDF will respond to Iran. Scenarios include hitting energy infrastructure to high-value military assets and nuclear sites. 

Bloomberg provided readers on Thursday morning with a detailed map showing Iran’s major energy installations, including oil and gas fields, pipelines, refineries and storage terminals: 

We tend to agree with Ross Schaapp, head of research at GeoQuant, who told CNBC’s “Squawk Box” on Wednesday that Israel might try to cripple Iran’s ability to export oil. As the saying goes, ‘follow the money’… and if Israel wants to neutralize Iran, in terms of paralyzing financial networks, start with crude export abilities. 

GeoQuant’s Schaapp noted that any IDF attack on Iranian energy infrastructure would send Brent prices higher “dramatically.” 
This week, Brent’s implied volatility gauge climbed to its highest level in nearly a year. In options markets, a surge in Brent call options shows traders forecasting $100/bbl. 

Bloomberg noted on Wednesday, “The equivalent of almost 27 million barrels of Brent December $100 calls traded by 11:20 am in New York while more than 7 million barrels worth of US crude December calls changed hands.” 

Meanwhile, Bloomberg Intelligence analyst Henik Fung told Terminal users, “Traders unwinding short bets could push crude prices higher on a wider war-risk premium,” adding, “WTI could retest $80 in the short term.”

Scott Shelton, an energy specialist at TP ICAP Group Plc., noted, “The odds are against a material loss in production, but when it comes to geopolitics, it’s always a hard call.” 

Not anymore… 

Goldman Says War Risk Premium Is Missing From Oil Markets https://t.co/IZFKYegBeO

— zerohedge (@zerohedge) September 28, 2024

The world awaits Israel’s response. One top energy research desk emphasized to us on Wednseday that it’s almost guaranteed Israel will make a retaliatory strike against Iran. The big question is, what will IDF stealth jets strike? 

Authored by Tom Klingenstein via RealClearPolitics,

In a very significant development — I am almost prepared to say the most significant development in the current presidential contest — it has recently been revealed that Brian D. Lozenski, an associate professor of urban and multicultural education at Macalester College and a leader in the development of Minnesota’s proposed ethnic studies curriculum, explicitly called for the “overthrow of the United States.” This goal has demonstrably shaped Minnesota’s ethnic studies standards, according to which students are taught as early as kindergarten that America is evil. The video recording of Lozenski was made two years ago but was taken down the day after it was spotted by Stanley Kurtz, senior fellow at the Ethics and Public Policy Center.   

This finding is pertinent to the national electorate because Lozenski is one of many anti-American ideologues contributing the “liberated” ingredient to Democratic vice presidential candidate Tim Walz’s new ethnic studies requirements for public education in Minnesota. These requirements are decisively shaped by Critical Race Theory (CRT), of which ethnic studies is a variant.

As Kurtz aptly puts it, “…Essentially, ethnic studies is a kind of anti-civics in which students are taught to reject and replace America’s system of government.” CRT, of course, is part of the ideology Harris-Walz bring with them from the catastrophes of California and Minnesota straight to every schoolhouse in America. 

Kurtz has provided a good overview of Walz’s education policies and the Lozenski connection. As Kurtz writes:

In a 2020 piece, “The Black Radical Tradition Can Help Us Imagine a More Just World,” Lozenski touts the work of Cedric Robinson and Robin D. G. Kelley — leading thinkers of the radical ethnic-studies movement — as the answer to Minnesota’s education woes. To Lozenski, the George Floyd “uprising” of 2020 presages the “inevitable death” of the current “social order.” Lozenski oozes contempt for “the egoistic pursuits of U.S. society and its desperate cling to individualism.” Educationally, he adds, transforming the social order requires reforms like agitation for defunding the police and an end to all standardized testing.

Shockingly, other than the Center of the American Experiment and Kurtz, this topic has been lightly covered, though the Trump campaign is aware of it. We shall probably know in the upcoming Vance/Walz debate whether the Trump campaign will highlight this issue. If it doesn’t, others must. There is a real danger that this issue will vanish down the memory hole.

To make as explicit an assertion as did Lozenski is extremely rare; indeed, I have never seen or heard such an admission. The destructive intent of ethnic studies or CRT has been very apparent and much commented upon for many years by the conservative commentariat. But Lozenski’s open, cavalier articulation makes the destructive nature of ethnic studies virtually impossible to deny. 

Defenders of ethnic studies may claim that Lozenski is an outlier, but as he is the leading figure in Minnesota’s ethnic studies movement and the prime mover of Minnesota’s ethnic studies initiative, it will not be possible to sustain such an denial. Although Democrats might try to stonewall until the election, the Republicans and the conservative media must not allow it.

Lozenski not only admitted the goal of ethnic studies is American destruction, but also chastised his many fellow travelers for not revealing their purpose. Again, this is no surprise to those who have been paying even the slightest attention.

Lozenski is tethered to Governor Walz. Walz’s Education Department appointed Lozenski to the ethnic studies “implementation framework” committee and ethnic studies is a critical initiative for Walz. In 2021 he introduced what he called his “Due North” education plan, which featured funding for a major ethnic-studies initiative. Speaking about the initiative during his State of the State address, he said: 

This plan would tackle the racial and geographic opportunity gap by dramatically reforming school financing, expanding access to rigorous coursework, and ensuring our curriculum and teacher workforce better reflect our increasingly diverse student body.

To the unsuspecting there is nothing in this anodyne sentence to which to object. But, in fact, it mandates quotas. Unless everyone agrees to quotas and works tirelessly to achieve them, which would be more miraculous than Walz not knowing about the ethnic studies program, quotas would have to be imposed by force. Those who object would called be “racist.” If this did not shut them up, they would be censored, humiliated, intimidated, fired, deprived of financial and other critical services, subject to lawfare, even imprisoned. Tyranny is the inevitable result.

In addition to Walz’s announcement of his Due North program, there has been a very public, high decibel debate about his ethnic studies curriculum that Walz has defended vigorously.

If Walz disavows a desire to overthrow America, which he naturally would, he would have to explain why he appointed a man to lead his ethnic studies program who apparently disagreed.

And as Lozenski is tethered to Walz, so too Walz is tethered to Kamala Harris. How is it possible for a presidential candidate to have as a running mate someone who wishes to overthrow America? One scratches one’s head and cries at the same time. The revelation of Walz’s commitment to ethnic studies makes Walz not just “extremely liberal,” “extreme,” or “radical” (the usual descriptors of Walz), but an out-and-out revolutionary. That Walz is a revolutionary at very least suggests that so too is Kamala. And there is plenty of direct evidence to boot. Encouraging the 2020 riots as she did (on video), and freeing rioters, as she also did, are examples.

Reporters, at least honest ones, will now comb Walz’s record thoroughly in search of more evidence of revolutionary intent. Reporters also will, or should, look at the education practices of other states where they will find similarly revolutionary intent.

But there is even more. If the leaders of the Democratic Party are revolutionary then it strongly suggests that so is the entire Democratic Party, which is controlled by the destructive Left. I hope we would look closely at Democratic ideas, policies, and behaviors in light of their intent to destroy America: open borders, transgenderism, CRT, DEI, the claim that America is systemically racist, social justice, 1619 Project, 2020 riots, defunding the police, and many others. Each one of these programs and historical events is revolutionary. The election will remain about the economy, immigration, crime, abortion, education and so on, but Republicans should explain that the Democratic version of each of these policies serves the overall goal of destroying America. Senator Josh Hawley is one of very few politicians, perhaps the only one, who has publicly connected these various strands of the Democratic agenda. 

Most Democrats, and here I leave aside the destructive Left, are decent and patriotic and do not wish to destroy America; but these well-meaning Democrats endorse each element of the destructive Left’s agenda. No individual element will destroy America but the sum of them will. These Democrats, who have no desire to destroy their country, will wake up one day and find they have (mostly) unintentionally done exactly that. I rather doubt Walz wants to overthrow America, at least not consciously. On the other hand, most every step he has made, including the required ethnic studies curricula, and most every step he will end up making, will culminate in the destruction of the American way of life.  

The Lozenski episode, if properly trumpeted, will be the gift that keeps on giving. Lozenski has provided the right narrative for Republicans: America is being attacked by a revolutionary regime, Kamalism, which aims to destroy America. There really is no alternative narrative.  

Here Trump might refer to Kamala as “Destructive Kamala” and the Democratic Party as the “Destructive Party.” Other Republicans must be as vocal. Vikek Ramaswamy is a good candidate to lead on this issue. He has a good handle on Kamalism and is charismatic, someone who can galvanize a movement. Sen. Hawley can also serve this role. He understands that Kamalism wants to destroy America, and he has, in effect, framed his Senate campaign accordingly; as I noted, he understands that the various elements of Democratic agenda are all designed to serve a common end: the destruction of America.

Republicans must make it crystal clear that Walz’s ethnic studies program is emblematic of a future Harris-Walz regime. Republicans must tie this program to Kamala’s campaign and remind her and likely voters that she has chosen a man who wants to destroy America, whether he knows it or not.

Trump’s base is primed to go and with the proper leadership will meet the challenge. I pray that all Republicans and conservatives do the same.

Tom Klingenstein is the chairman of the Claremont Institute, a public speaker, a writer, a philanthropist, and a playwright. This article was first published at TomKlingenstein.com.

The recent missile barrage striking Israel from Iran showcased a security reality that has startled many people in the west – Israel’s “Iron Dome” defense system is not as effective as they believed.  Evidence suggests it was clearly overwhelmed, either by the sheer number of missiles (estimates vary but al least 200 were fired), or by new Iranian hypersonic technology.  Either way, this one attack changed the prevailing perspective on Israeli air defense.

The media and government officials claim the Iranian salvo was “ineffective” and they have so far reported no casualties, but it’s clear from the numerous videos circulating on social media that extensive damage was done from dozens of impacts.  It’s unlikely Israel will admit to any successful strikes as this would only be giving valuable intel to Iran, but using geo-location and the existing footage online it won’t take Iran’s military leadership long to figure out what worked and what didn’t. 

The escalation from Iran was in response to Israel’s carefully planned assassination campaign against Hezbollah’s military leadership in Lebanon, including Hassan Nasrallah.  The attack, using pagers sabotaged with secretly planted explosive charges, then culminated in targeted missile strikes.  The event came only two months after Israel assassinated Hamas leader Ismail Haniyeh while he was on Iranian soil.  

There are two ways to look at Israel’s strategy:  It was an attempt to decapitate enemy leadership and send their forces into disarray so that a larger war could be avoided.  Or, it was intended to enrage Iran and draw them into a larger war.  

If the latter option is the case, then Israel would have to be operating on the assumption that the US will supply military forces to the fight, because Israel will not be able to survive a multi-front war of this scale alone.

In the past Israel relied on its weapons superiority to dissuade potential attacks from neighbors, but that gap is obviously narrowing as we saw with Iran’s missile strikes this week.  Lessons from Ukraine should also be taken into account here – Israeli armor might not have the same battlefield presence it once did if cheap drones are so effective in destroying vastly more expensive tanks.  

In 2006, Israel attempted a ground invasion of Lebanon with disastrous results, which is probably why this time they struck Hezbollah leadership first.  However, Israel seems intent on fighting the whole of the Middle East at once and this changes the situation dramatically.   

The ground game, as we have seen in Ukraine, does not favor maneuver warfare due to drones and other modern intel gathering technology.  The nations with the greatest manpower have a significant advantage when it comes to attrition warfare and that is likely how this war will be fought.  Iran by itself has a considerable manpower edge over Israel.

If we examine basic population, Iran has a massive advantage with over 88 million people vs Israel’s 9.5 million people, and that’s not counting Lebanon, Syria, the Houthis in Yemen, etc.  Iran’s ability to replenish their forces with new recruits through conscription will certainly outmatch Israel’s conscription.  Again, we have seen this with Russia’s military in Ukraine. 

No technology (except perhaps nuclear weapons) would level the playing field and give Israel the ability to win in a ground war on multiple fronts.  This means the Israelis will need an allied effort, and guess which country is the only candidate for the task?

Joe Biden stated after the Iranian strikes:

“Make no mistake, the United States is fully, fully, fully supportive of Israel…”

Asked how he wanted Israel to respond, Biden said this was a matter in “active discussion” and that the consequences for Tehran “remain to be seen.”  Kamala Harris released her own statement backing Biden’s position:

“Iran is not only a threat to Israel, Iran is also a threat to American personnel in the region, American interests and innocent civilians across the region who suffer at the hands of Iran-based and backed terrorist proxies…We will never hesitate to take whatever action is necessary to defend US forces and interests against Iran and Iran-backed terrorists, and we will continue to work with our allies and partners to disrupt Iran’s aggressive behavior and hold them accountable.”

These statements fall in line with a joint military exercise and war game carried out in recent months called “Juniper Oak”.  The program was designed to prepare for inevitable war between Israel and the wider Middle East and requires participation by US forces by air, sea and land.

For those millions of Americans that want to stay out of foreign wars and entanglements, the situation does not look good.  For those wondering what the October surprise would be, war with Iran and most of the Middle East could be the shoe-drop that everyone was waiting for. 

The situation could very well upend the presidential election in November and change the voter landscape yet again.  Even with a Trump win, Biden has plenty of time to embroil the US in a war with Iran before leaving office in 2025.  The Harris camp argues that a change of leadership and policy in the mist of a geopolitical crisis would be damaging to US security.  In other words, they get America involved in a quagmire in the Middle East and then claim the quagmire requires that they stay in office.