On the eve of a shutdown, Defense Secretary Pete Hegseth summoned generals and admirals home, while President Trump suggested to them that U.S. cities could be the next training ground. Chicago. Memphis. Portland. The “enemy within.”
Coincidence? Maybe. But history rarely moves exclusively by accident. The “warrior ethos” Hegseth was trying to drill into the brass at Quantico yesterday is ostensibly about readiness— and identifying threats both abroad and at home.
For a civilian, Hegseth is definitely cringe-y, to use a term my kids taught me a decade ago. Trump sounded like he was drunk. Did you hear the part where he was describing naval ships as “ugly” and wanted them to be “beautiful” again?
You really can’t make this stuff up.
Welcome to Wednesday, October 1, 2025. Let’s see, now that the government is shut down, where are we?
Pretty much where we left off: Markets surging higher, backed by the weight of AI capex and gorging on debt; A Congress unable to pay for promises forged in the 20th century’s welfare bureaucracy; A currency bleeding purchasing power with each deficit skirmish; A nation where even butter, coffee, and bandwidth become weapons of policy.
“The world doesn’t end when a bloated, inefficient bureaucracy takes a breather,” writes our friend James Hickman. “The government has shut down, and now the CDC has suspended “nonessential” functions, like providing guidance on HIV prevention.
“Yesterday, America understood that condoms prevent STDs. Today— who could say? The government is shut down. We are all lost.”
Heh.
For the investor, especially those wondering when the AI bubble will burst, it’ll be comforting to note that government shutdowns have rarely had much of an impact on the stock market.
Red lines show periods of time when Congress can’t get out of its own way and the rest of the country has to abide by its foolishness. The white line is the S&P 500 (Source: Shutdnus & WSL Politics)
Let’s dig in…
On The Shutdown Front
At 12:01 a.m., Washington entered its 22nd shutdown since 1976. This isn’t a pause; it’s a siege.
The Senate fought to a standstill — Republicans pushing a seven-week extension, Democrats demanding more than a trillion in health care spending. Neither side yielded.
Trump told reporters, “A lot of good might come from this shutdown. We can get rid of a lot of things we didn’t want.” To the warrior, every obstacle is also an opportunity.
For Trump, the bureaucracy itself is a battlefield. Reduction in Force memos now read like orders of battle.
Shutdowns rarely dent markets. The Nasdaq and S&P even closed their best third quarters since 2020, as “window dressing” trades for the end of the third quarter sent stocks higher ahead of the shutdown. For investors, this is a battle of nerves, not numbers.
Data Fog of War
With the government closed, their statistical maps go dark. No jobless claims, no payrolls, no CPI or PPI, no trade reports. The vital intelligence of the economy — embargoed.
What remains? Private scouts: ADP jobs, ISM surveys, Redbook retail, Fed releases. Not the whole picture, but enough for commanders to make do. Like soldiers navigating by stars when the compass is gone.
Employment Data Weakens
In the private economy, ADP’s revisions turned modest gains into outright losses: –32,000 jobs in September, –3,000 in August.
An ominous trend in private sector employment as private industry also takes
a breather when policy is uncertain. (Source: ADP)
A correction, but also a reminder: the labor market is not an endless reserve of optimism. Morale matters.
Pfizer’s Truce
Pfizer struck terms with the White House: $70 billion in U.S. manufacturing, lower drug prices, and, in return, a three-year exemption from tariffs. A truce, not a victory. Like buying peace with tribute, Pfizer’s stock rose 7%.
Industrial policy is combat by other means. The tariff is the sword. The exemption, the shield.
Zillow’s Siege
The FTC filed to block Zillow’s $100 million pact with Redfin, calling it a payoff to lay down arms. “Paying off a competitor to stop competing is a violation,” said regulators. Zillow insists it’s pro-consumer.
Monopolies creep like invaders laying siege. The question is whether the walls hold — or whether the city falls from within.
Amazon’s Arsenal
At its New York event, Amazon rolled out new Kindles, Fire TVs, Ring cameras — and four new AI-enabled Echo devices. Each integrates Alexa+, now a paid service.
Hardware is the spear, AI the supply chain behind it. In this war, voice itself becomes the battlefield.
CoreWeave soared after announcing a $14 billion deal with Meta. AI infrastructure is the new arms race.
Debt-funded, momentum-driven, it recalls past buildups where arsenals grew faster than strategy. Investors keep marching, hoping not to be cannon fodder.
Troops in the Streets
At Quantico, Trump said plainly: “That’s a war too. It’s a war from within.”
Governors like Louisiana’s Jeff Landry are already calling for Guard deployments. History whispers — Katrina’s aftermath, quintuple murders, troops in New Orleans in 2006.
The warrior ethos, applied domestically, blurs the line between citizen and combatant. Between policing and warfighting.
Closing with Coffee
On Monday, Neil Howe reminded us it was National Coffee Day.
Fitting, since beans may soon be ration cards. Prices are up +20.9% year-on-year — with tariffs and droughts driving the surge. Brazil and Vietnam, top producers, are both hit.
Boo!
Congress may yet exempt coffee from tariffs. For once, both parties understand: caffeine is nonpartisan. Until then, the policy battlefield remains in your kitchen.
Alas, small comfort is the new French press we ordered yesterday from Amazon that arrived today, manufactured in Portugal, with which we will brew with beans grown in Colombia, packaged and branded in Mexico… for only $15.
~Addison
P.S. Trump is about to commit the single greatest act of creative destruction ever.
We call it the Dollar 2.0. And again, history repeats…
1971: By flooding the system with an endless trove of physical dollars, Nixon’s actions led directly to the boom in gold prices… thus hatching an entire generation of gold millionaires.
And now…
Due to the (official) arrival of government-mandated stablecoins — by way of the newly-passed GENIUS Act — the price of the “Dollar 2.0” could double over 20 times.
To prepare, Mark Jeftovic is joining us tomorrow on Grey Swan Live! Mark has been watching this all unfold for years. And he’s going to show how you can position your portfolio, even if you’ve never bought an individual cryptocurrency or token.
See you tomorrow at 2 p.m. ET. Sign up now if you’re not a member yet.
If you have any questions for us about the market, send them our way now to: Feedback@GreySwanFraternity.
