The U.S. Investment Boom Arrives GDP growth comes in strong at 3.4% and would be stronger without tariffs and deportation.

The WSJ Editorial Board:

It’s hard to recall a time with such a large disconnect between how Americans feel about the economy and the data. The Commerce Department on Thursday reported that GDP grew 3.4% in the third quarter thanks to surging business investment and buoyant consumer spending. So why are Americans so glum?

By objective measures, the economy is firing on most cylinders. Consumer spending remains healthy and contributed 2.52 percentage points to the third-quarter GDP increase. Even if consumers fume about higher prices, they aren’t tightening their belts. Spending on motor vehicles, household furnishings, restaurants and travel increased.

Business investment accounted for 1.78 percentage points of third-quarter GDP and grew at the fastest rate in 15 years, aside from the Covid lockdown bounceback in 2020’s third quarter. The AI boom is the main driver, but deregulation and the 2025 tax reforms, especially 100% business expensing, have also provided a lift.

Information processing equipment made up roughly half of the investment increase, while intellectual property (IP) chipped in 0.47 percentage points. (…)

Net exports subtracted 3.32 percentage points from top-line GDP growth owing to increased imports. But this is a deceptive artifact of the national accounts, since imports flow into consumer spending and investment. Imports of computer chips, gas turbines, copper and more help fuel the investment boom. (…)

Tariffs are a drag on growth. Investment in manufacturing plants declined 4% in the third quarter and has fallen 36% in his second term. Border taxes have increased uncertainty and business costs, which make it harder for manufacturers to invest. (…)

U.S. steel prices have increased 52% over the past year and are about two-thirds higher than in Europe. That’s a killer for U.S. makers of appliances, machinery and electric power equipment.

The other major drag on growth is housing, which subtracted 0.12 percentage points from third-quarter GDP. Higher interest rates are the main culprit, but the silver lining is that the housing slowdown has freed up workers for other projects like data centers. Construction firms say they struggle to find workers because of an aging workforce and deportations.

Nearly two-thirds of builders said immigration enforcement is affecting their workforce, compared to 13% a year ago, according to a John Burns Research and Consulting survey. Immigration raids have forced beef processing plants to reduce production. One result: Higher beef prices. (…)

Therein lies the main source of voter unhappiness: Inflation. (…)

The U.S. economy in Mr. Trump’s second term is in many ways a story of what might have been. Deregulation, AI and tax cuts have led to an investment and productivity boom, but inflation and antigrowth tariffs and mass deportation are diminishing what could be a broader prosperity. The GOP may pay a political price next week.

Another reading might be that even with deregulation and tax cuts “Investment in manufacturing plants declined 4% in the third quarter and has fallen 36% in his second term” and “Net exports subtracted 3.32 percentage points from top-line GDP growth”.

The US economy is essentially AI spending and AI-sponsored consumer spending from the wealthiest.

(Bloomberg)

S&P Global Ratings estimates that high-tech business investment in things like IT equipment, software and research and design accounted for more than a third of GDP growth over the past year, even after accounting for the fact that chip imports are a drag on GDP. That’s up from less than a quarter in the first half of the year.

Massive data-center spending has been fueling economic growth all year. Goldman Sachs recently projected that artificial-intelligence investment in the U.S. will hit a staggering 1.9% of GDP. While much of that money is spent on imported chips, the boom is also creating plenty of construction jobs in the U.S. as developers race to build server farms. The rise in construction spending has helped compensate for a decline in home-building.

A measure of underlying demand that carves out more volatile government, inventory and international trade numbers also strengthened. Called final sales to private domestic purchasers, this measure rose at a 4.9% rate in the third quarter. That was the fastest pace since the second quarter of 2021, when the economy was bouncing back from the pandemic.

Another driver of economic growth has been massive government borrowing. The federal debt hit 100% of GDP for the fiscal year ending in September. That’s the highest level since 1946, when the U.S. was heavily indebted because of the cost of fighting in World War II. (WSJ)

• US Economy Continues To Roar, While The Fed Waits For More

(…) In our view [Ed Yardeni], the [FOMC] decision was puzzling. It reminds us of someone standing in a room with a fire alarm blaring and smoke pouring under the door, yet insisting on more evidence before calling the fire department. Thursday’s economic data only reinforced our conviction that the Fed should have raised rates by 25bps on Wednesday. (…)

Consumer spending and business investment are driving the US economic boom. Federal government spending is too, rising 15.8% last quarter. (…)

Core PCED inflation, excluding food and energy, increased 0.3% m/m and 3.1% y/y. Both remain stubbornly above the Fed’s inflation target. Furthermore, Warsh’s inflation diffusion measure shows that nearly half of PCED components rose more than 3.0% y/y, compared with a pre-pandemic average of just 32%. (…)

Tariff-related price pressures have yet to subside, while the AI investment boom is adding to inflation across the technology sector. Prices for computers and software are rising at record annual rates. Together, these forces suggest goods inflation is unlikely to ease meaningfully soon.

Services PCED inflation rose to 3.5% y/y in September. Supercore services inflation, excluding housing and energy, edged up to 3.6% y/y. It has been trending higher since late 2025, underscoring persistent underlying price pressures.

Services inflation remains broad-based, with most major categories rising around 3.0% y/y or more. Transportation services inflation has been particularly troublesome as higher energy costs feed through to service prices. (…)

September’s saving rate declined to 3.8%, the lowest since 2022. We expect it to fall further as retiring Baby Boomers continue spending their sizeable net worth because they are no longer earning labor income.

This Wolfstreet.com chart illustrates how unusually hot the US economy is:

“So for a moment, forget the jump in government spending, forget imports and exports, forget the confusing inventory adjustment.  This is the private US economy, and it’s hot.”

Real consumer spending rose at a 3.8% annual rate 2 quarters in a row! This growth rate contributed 2.5pp to GDP growth of 3.4% in Q3.

Spending growth stalled in September however. Back-to-school sales are often a good indicator for holiday sales.

The growing problem is that average real hourly earnings have fallen for six straight months. Spending is sustained mainly through dissaving: actual use of savings for the affluent, increased borrowings for others.

Inflation is a growing cancer in the US. Core PCE inflation was +0.32% after an upwardly revised +0.26% in August, that’s +3.5% a.r.. Core PCE inflation increased 3.1% YoY in September after +3.0% in August.

Supercore inflation is accelerating:

(charts by Sethi Associates)

• The initial GDPNow model estimate for real GDP growth in the fourth quarter of 2026 is 3.2 percent.

Even Amazon is suffering:

• Amazon shares slide on lower Christmas sales forecast

(…) Its fourth-quarter outlook points to weaker retail sales during the holidays as American and global consumers face of a rising cost of living alongside higher fuel prices due to the Iran war.

Chief financial officer Brian Olsavsky told investors Amazon expected a bigger hit from high fuel and transportation costs in the fourth quarter, even after it added a 3.5 per cent surcharge in April to the fees it charges third-party sellers.

Recall, however, that Q2 sales were positively impacted by Amazon’s Prime Day shift from Q3 to Q2 this year and by the World Cup. Amazon said third-quarter growth would have been about 400 basis points higher without the shift.

Neil Sethi: “Combining the second and third quarters to wash out the timing, total revenue rose 15.7%: North America 11.0%, International 9.8% and AWS 38.1%. Adjusted for Prime Day, the retail business is growing closer to 11% than 6%.”

BTW, Alphabet also mentioned the Q2 World Cup advertising to partly explain its Q3 slowdown in Search revenues.

US Consumers Are Disillusioned About the Economy

(…) Views on the economy are deteriorating among every group of Americans except those with considerable stock wealth. America’s wage, income and wealth distribution is more similar today to the 1920s than any other prior period: Aggregate figures that track overall spending could still look good even as numbers that measure personal spending do not. (…)

Just over 40% of Americans believe that their personal financial situation will be worse in a year, a full 10 points higher than the prior record in the series, reached during the early 1980s. Just over 30% believe that their personal financial situation will be worse in five years, double the share that did in the 1980s.

(…) only three times since 1970 have more than half of Americans reported that the government was doing a poor job managing the economy. It’s now at 74%. (…)

The debate over whether the data is painting too rosy a picture of the US economy, or whether US consumers are taking too bleak a view of it, is beside the point.

The conclusion both these surveys are pointing toward is that the dominant conservative policy of the past 50 years — cutting taxes and welfare programs, deregulating, spending generously on defense, avoiding any meaningful action on Social Security — has run its course.

Americans are signaling both a hopelessness about the economy and rejection of how it is managed. That’s the message policymakers in Washington need to hear.

Perhaps it goes beyond the economy or inflation:

• Trump Approval Rating: Net -19 A Week Before Election Day  The latest poll shows voters prefer Democratic congressional candidates over Republicans by double digit margins.

• In February 2025, 46% approved the direction of the country. It’s down 30% now.

• Record Lows Say Congressional Incumbents Deserve Reelection

• What do you think is the most important problem facing this country today?

• Government/Congress: 26%

• High cost of living/Inflation: 17%

• Economy in general: 15%

• Fuel/Oil prices: 7%

• New survey finds more than two-thirds of Americans believe their country is in decline

The 2026 survey data also showed a 15-point jump in the percentage of Americans who agree with the statement: The United States is in decline. The number is at 70% this year, up from 55% in 2025.

That number, 70%, is exactly what it was in 2023, the first year the American Communities Project did a survey. In 2025, the “decline” number dropped to 55%, and that change was largely driven by communities that voted for President Donald Trump in the 2024 presidential election.

It was a measure of hope for the future, and it showed in massive improvements in the general hopefulness in communities such as the evangelical hubs, concentrated heavily in the South, rural middle America and the middle suburbs.

The fact that the “decline” number is back to 70% suggests those same Trump-supporting communities have seen their hopes take a hit – and a deeper analysis of the data on the American Communities Project website shows just that.

At the very least, the data suggests a very disillusioned electorate.

Blockchain intelligence firms link North Korea to $6.3B hack on Binance

U.S.-based blockchain intelligence firm TRM said a North Korea hacking unit was likely behind the theft of more than $6 billion on the world’s biggest cryptocurrency exchange, Binance.

Binance said late on Thursday that approximately $6.3 billion was impacted, which its founder described as “like a hack.” (…)

TRM, in a post on its website Thursday, attributed the attack to TraderTraitor, which it described as North Korea’s elite hacking unit. “We make this judgment with high confidence,” the firm said.

“An attacker moved approximately USD 6.36 billion out of Binance wallets on ten blockchains, most of it in about 20 minutes,” TRM said. That would make the hack the largest cryptocurrency theft on record, it said. (…)

Experts say North Korea has turned to crypto hacking and other illicit cyber activities as a source of badly needed foreign currency to support its troubled economy and fund its nuclear program in the wake of tough U.N. sanctions and other difficulties. (…)

Changpeng Zhao, also known as CZ, founded Binance in 2017. In 2023, he pleaded guilty to a felony linked to failing to prevent money laundering on the platform, and stepped down as the company’s CEO. U.S. President Donald Trump pardoned Zhao in 2025. (…)

Maybe Kim will send another beautiful letter to Trump.

The Fed’s AI Puzzle: Will High Rates Slow the Boom?

For months, a common view of the artificial-intelligence boom has been that it is propping up the U.S. economy and it is too big and too flush with cash to care about interest rates. Federal Reserve Chairman Kevin Warsh said Wednesday he wasn’t so sure about either assumption. (…)

“There was a narrative for quite a while, maybe even in this room over the course of the last several press conferences,” that tighter monetary policy is “not going to have any effect on AI because the returns that investors are expecting are so different,” Warsh said. “I was skeptical of that view. Interest rates get in the cracks. Interest rates affect, directly or indirectly, almost everything.”

And since the Fed raised rates last month, there was evidence investors had become more discriminating about their investments, Warsh said, pointing to how borrowing costs for some riskier companies have jumped. (…)

Warsh’s remarks on AI bear on the question of how high rates ultimately need to go, and the answer may depend on how much the technology sector responds to borrowing costs. The case that it is highly insensitive to modest increases in rates rests on the assumption that firms expect returns large enough to dwarf the cost of money, and they see the contest as winner-take-all. “You want to be one of the winners, and that means you’ve got to get there first,” said William English, a former Fed economist now at the Yale School of Management.

If the boom shrugs off higher borrowing costs, the Fed would have to throttle housing, commercial real estate, small businesses, low- to middle-income consumers and other rate-sensitive sectors that weren’t big sources of inflation to begin with. (…)

“The idea that there’s no interest-rate sensitivity from anything related to AI, to me, is very extreme,” said Marc Giannoni, chief U.S. economist at Barclays. The largest tech companies may not have to borrow to pay for their spending, but for data-center operators and other firms building alongside them that do, “interest rates on their debt is a big factor,” he said.

The Fed’s challenge is that the boom as a whole can look unfazed while strains build at the edges. As more of the build-out is financed with debt, higher rates reach it through credit markets, hitting the weakest borrowers first and the cash-rich giants last. Each increase might seem to do little until financial conditions suddenly crack. (…)

Warsh’s second position cuts the other way. “It is convenient to say that the strength of the economy is all about this new technology wave,” he said. In fact, business investment is “not just strong, but it is broadening.”

Warsh was quick to note that he doesn’t see strong growth as something that would necessarily push up inflation, which would justify higher interest rates.

“He’s basically saying, ‘We need to do more, but it may not be all that much more,’ ” said Reinhart.

Still, Reinhart thinks the risks lean toward the Fed having to do more than it thinks in the short run, in part because energy and commodity prices appear to be settling in at a higher level. “Other prices are going to have to catch up to that, so they may find out that inflation is more durable, in which case, they get impatient in 2027 and have to tighten more,” he said.

Richard Bernstein at Janus Henderson last week built a case suggesting that secular inflation may be what’s in store after 30 years of disinflation.

His 2 main supporting charts:

• The US is now importing inflation: core import prices are rising faster than core CPI.

• Businesses are generally raising prices at a pace even higher than pre-NAFTA and pre-globalization.

This Yardeni chart shows that US businesses are raising prices because cost inflation is very high:

The October Flash PMI confirms September’s:

• US economic growth is broadening and accelerating to “booming conditions”.
• Employment growth is also accelerating, “at the fastest rate since June 2022”.
  The Atlanta Fed composition-adjusted wage tracker pinned the low point in overall wage growth at 3.5% last April. It was 3.9% in August. Wage growth for job switchers also troughed in April at 3.7%. It jumped to 4.7% in August.

• Corporate costs are also surging due to “material shortages, low stock levels, overloaded suppliers, labour shortages, rising back orders and shipping or import delays”.
• Strong demand allows businesses to broadly boost selling prices.

From the Atlanta Fed survey of 1500 senior finance and managerial businesspeople Oct. 12-23:

BTW: General Motors Co. last week said that worsening inflation will add about $400 million in additional expenses this year, citing record copper prices and key steel products at a four-year high. Ford said commodity inflation will be a nearly $2.5 billion headwind in 2026, up from its previous forecast for just above $2 billion. (Bloomberg)

As John Authers observed,

In September, when the Fed raised rates, economic activity was increasing at a “solid” pace. Now, it’s growing at a “strong” pace — so the Fed thinks the economy is accelerating further, despite that hike. (…)

Once Warsh’s press conference — which you can see here — reached its Q&A section, Colby Smith of the New York Times started by asking exactly that: “Why not just raise rates today?”

Warsh said that he’d expected the question. His response lasted three minutes and 16 seconds. He never came close to answering it. Among the lines he offered during his ramble:

• “We’ve doubled down on the 2% target.” [It’s been in place informally since 1996 and formally since 2012.]
• “We’ve laid out our framework in Jackson Hole.” [That’s what central bankers do when they’re in Wyoming.]
• “We didn’t just talk about acting. In September we acted.” [We knew that — the question was why they didn’t act again in October.]
• “The period right in front of us is information-rich.” [More so than other periods? Or is this code for knowing the midterm results by December?]
• “We interrogated reality.” [Good, but it would be alarming if the Fed didn’t do that.]

(…) his last response made perhaps his most interesting statement: “The goal isn’t to throw sand in the the gears of the economy and throw people out of work.” Again, it would have been very big news if he had said the opposite. But many took his emphasis and choice of words as a “tell” that this Fed isn’t prepared to risk forcing a recession. (…)

I think that Ed Yardeni highlighted the most interesting part: “Warsh disputed that robust growth necessarily implies overheating: “That isn’t the judgment of most of my colleagues.” Improving productivity, much of it predating recent AI advances, may have raised potential growth without fueling inflation.”

Ed adds:

We agree that September’s hike “removed a dose of accommodation,” but believe another 50bps is needed to remove the rest. The Fed doesn’t need to throw sand in the economy’s gears. It just needs to take its foot off the accelerator. We wouldn’t rule out a 50bps hike in December.

Goldman: “We continue to expect a second and final hike in December. A third hike in March is also possible if inflation comes in higher than we expect.”

Authers continues:

Overall market reaction was tame, but a rise in market-based inflation expectations, which had been under control, suggest that Fed credibility was coming into question:

The last two spikes in expectations can be attributed to policy own-goals by the administration; this one looks like the Fed’s fault.

As for the stock market, the juxtaposition between the reaction to Warsh’s words and the results from Alphabet Inc. and Microsoft Corp. tended to confirm that these days, hyperscalers are of macroeconomic importance:

Speaking of GM above:

Yesterday, General Motors announced plans to decamp from the venerable bourse after a 115-year stint, shifting its listing to Nasdaq as of Nov. 17.  “GM’s customer-focused, technology-driven strategy is creating value for our stockholders, making Nasdaq a natural home for our listing as we grow,” CFO Paul Jacobson stated. 

Instructively, the press release noted that the move renders GM eligible for inclusion in the Nasdaq 100 Index.

Though the legacy automaker doesn’t exactly look the part, with shares changing hands at six times forward earnings versus 26 times for the tech-centric gauge, and three-year projected earnings growth of only 18% versus 52% for the median NDX member (hat tip to Bloomberg’s Liam Denning), that prospect helped put some spring into GM investors’ step. Shares advanced by nearly 6% on Tuesday, good for their strongest daily showing in an even nine months. (ADG)

That should make every tech investor happy to know that buying NDX shares provides exposure to GM.

BoC Policy Monitor: Up, up and away

(…) Supporting the move was “higher and more persistent” inflation and risk management considerations aimed at preventing the spread of energy prices more broadly. Further, the economy was judged to be on firmer footing and proving more resilient, consistent with earlier comments from the Governor.

While there was an acknowledgement that the economy could slow in Q4 due to tariffs, this doesn’t even dent the GDP growth outlook which was revised up at least two ticks in 2026, 2027 and 2028.

But most striking was the Bank’s fundamental rethink on the inflation outlook, underscored by a 1.1%-pt upward revision to their 2027 CPI projection. To be clear, price stability is not expected to be achieved anytime soon. (…) Macklem and Rogers indicated as much when they noted there was a strong consensus around the decision.

With the tightening cycle underway, the attention turns to the next meeting on December 9th. The communique fails to explicitly tee up a follow-on move and even suggests that they would “proceed carefully”. But judging by their updated forecasts and fundamental rethink on inflation, it’s hard to make the case to go slowly.

Ultimately, incoming data and the evolving balance of risks will guide the Bank, but baring a de-escalation in the Middle East and/or a material escalation in the Canada-US trade war, we’d lean toward them hiking again in December.

And as we explored recently, the Bank has a strong tendency to begin tightening cycles with consecutives hikes. (…)

• How Canada is Decoupling From the US

 

 

 

American tariffs on Canada were particularly counterproductive because so many Canadian goods are intermediate inputs for American factories, and Canada is one of the few countries where the US actually ran a surplus in manufactured goods. The damage on the American side of the border has been larger, even if Canada’s situation is more existential because its economy is proportionally smaller.

CAPITAL IS CAPITAL

Wall Street’s AI Debt Machine Is Starting to Choke on Supply

A new anxiety is gripping Wall Street as it bankrolls the vast network of data centers and chips behind the artificial intelligence boom: Early signs suggest that the credit market is approaching the limits of how much more debt it can absorb.

One after another, yields are soaring into the double digits on bonds and loans funding the AI infrastructure buildout. Bankers are finding it more difficult to offload risk to insurers and other investors. Elon Musk himself warned the other day that hundreds of so-called neoclouds risk going under as firms get cut off from fresh financing. (…)

The concern is that, with trillions more in debt needed over the coming years, there appears to be a growing disconnect between what Silicon Valley’s top executives believe can be raised, what financiers say they can deliver, and what money managers are willing to take down.

“When you have such a large quantum of debt coming, at some point the challenge could be less about finding an investment-grade backstop, and more about finding the actual buyers willing to absorb more of the risk coming from the same handful of investment-grade backstop providers,” said Citadel analyst Tucker Roberts.

In conversations with more than 30 bankers, money managers, private equity executives and others involved in recent and current data center financing talks, all acknowledged that raising cash has become significantly more difficult than it was just months ago.

A key reason is the growing concern among investors over cancellation rights and other contractual off-ramps that could leave them exposed if a major customer walks away. (…)

Another major challenge has been offloading risk to free up capacity for new deals.

The head of technology, media and telecom lending at a large European bank said the firm is approaching the limit of what it can lend to the sector given its already sizable exposure. Selling the debt or transferring the risk can take five months, limiting its ability to recycle capital into new financing, the person said, asking not to be identified discussing internal matters.

Some insurers, which often take on a share of the credit risk on such loans, were indicating months ago that they were nearing or had already reached their limits on data center exposure, according to a survey from Willis Towers Watson.

Data center operators are also being hurt by higher interest rates, particularly in the asset-backed securities market, where rental income is often locked in under long-term leases.

“At the beginning of 2026, the highest-rated data center bonds offered yields below 5%. Today similar bonds are yielding closer to 7%, and that increase matters enormously for companies trying to finance multibillion-dollar facilities,” Morgan Stanley ABS strategist Carolyn Campbell said in a podcast earlier this month. “When borrowing costs approach 8%, issuing these bonds becomes significantly more challenging.” (…)

Oaktree Co-Chief Executive Officer Armen Panossian said the firm has become “very, very cautious” about the structure and quality of assets backing data-center deals, citing risks from technological change and construction delays to permitting hurdles and access to power.

“We’re seeing in the last several weeks a widening of those spreads that indicates that the credit markets are becoming either full, saturated of the loans that are out there, or concerned about some of these factors that are lurking in the background,” Panossian said in a recent client webcast. (…)

At least 18 data-center financings across the junk-bond and leveraged loan markets now carry double-digit yields, according to data compiled by Bloomberg. Even new deals are feeling the strain. JPMorgan Chase & Co. and Goldman Sachs Group Inc. had to offer steeper discounts and higher interest payments to drum up demand for neocloud Volta Infrastructure Holdings Ltd.’s $5 billion syndicated loan, pushing its yield above 11%.

Credit investors are starting to recognize that much of the debt neoclouds still need to raise may ultimately depend on backing from tech giants already burdened with their own massive financing needs, Citadel’s Roberts said. Whether via explicit guarantees, long-term contracts or simply the expectation that they’ll step in if projects run into trouble, chipmakers and hyperscalers could find themselves shouldering an increasing share of the risk, he added. (…)

The pressure is showing up in their borrowing costs, too. The average yield on bonds in the Bloomberg Investment Grade Technology Index has surged to about 6%, about 1.4 percentage points higher than a year ago.

“The banks and companies raising capital have been relatively transparent that they do not care about pricing it wider and marking down paper you’ve bought,” said John Yovanovic, co-head of leveraged finance at MetLife Investment Management. “So you’re being asked to finance a deal that has likelihood of being less than par in the near term, even when it has attractive long returns. Who wants to step in front of that?” (…)

KKR & Co. is steering clear of data centers in remote locations amid concerns that the facilities could be difficult to repurpose once their leases expire, according to a person familiar with the matter, while Carlyle Group Inc. has passed on a number of recent deals as it emphasizes portfolio diversification and selectivity.

“People are just getting more conscious of their concentration risk in the sector,” said Felicity Juckes at TwentyFour Asset Management. Investors “are going to be increasingly picky.”

Washington, we have a problem!

Vance Reaches Out to Iranian Hard-Liner in Bid to Restart Peace Talks

Vance sent a letter to Mohsen Rezaei, the secretary of Iran’s top security body, the Supreme National Security Council, and previously Iran’s longest-serving commander of the Islamic Revolutionary Guard Corps, according to the people. (…)

Vance is testing whether Tehran and Washington could find enough common ground to persuade Trump not to give a final order for a short, intense attack on Iran in the coming weeks. (…)

Vance’s letter and subsequent discussions between U.S. and Iranian officials haven’t included specifics for a peace proposal, but instead focused on a possible framework for negotiations, said a person familiar with the matter. Rezaei said last week that Iran wouldn’t negotiate with Washington until specific core demands were met. (…)

Rezaei, who led the Revolutionary Guard through Iran’s 1980s war with Iraq, has emerged as an influential yet hawkish voice amid looming U.S. threats. Earlier this month, he said Tehran could target the United Arab Emirates, which has largely escaped being attacked since late spring, as well as data centers and internet cables across the region.

On Sunday, Rezaei took the rare step of meeting with security chiefs from Saudi Arabia, Pakistan and Turkey in Tehran, as all sides sought de-escalation. Most previous visits involved diplomats instead. (…)

The U.S. insists upon upfront nuclear concessions by Iran while Tehran demands immediate economic relief. (…)

Axios wrote: “The letter to Mohsen Rezaei, which focused on the possibility of restarting negotiations between the U.S. and Iran, is the most senior-level outreach by the U.S. to Iran in several months.”

The White House said Trump approved the letter. Not sure he read it.

Trump told reporters Wednesday that Vance’s letter was about helping Iran obtain needed medical supplies. “Basically, it’s getting supplies in to help people that are not well,” he said.

So many people are not well.

Yesterday: Pezeshkian: Regional States Can Resolve Challenges Without US – Tasnim (See my yesterday post about that)

Maybe that’s “the other side” Bessent is talking about: “Bessent also reiterated that both he and Trump believe that once the US gets “on the other side” of the Iran conflict, the oil market will be well supplied. He’s argued that that will help alleviate inflation and bring down borrowing costs.”