FREE MONEY?

Trump promises $5,000 for every adult if Republicans win the midterms—but he may not be able to deliver

President Donald Trump promised to give every adult American citizen a “dividend” of $5,000 if the Republicans retain control of Congress in the upcoming midterm elections, he said at a campaign rally last night.

“If the Republicans win the House of Representatives and the United States Senate, both of them, because of our tremendous economic success … I will issue a dividend to every adult citizen in the United States of America for $5,000,” he said. “Very much like a successful company will do a cash distribution to its shareholders.”

The promise (which would cost more than $1 trillion) immediately raised questions. A cash payout would require congressional approval—and that’s not guaranteed. In 2020, Congress blocked Trump’s request for $2,000 COVID-19 stimulus checks, reducing the sum to $600. Biden approved an additional $1,400 in 2021, and Republicans claimed it drove record-high inflation.

“The (presumably deficit-financed) stimulus would be larger than occurred during the pandemic. If bond markets believe the president, the deficit, and inflation consequences would be meaningful. The initial reaction suggests bond investors are not taking this seriously,” UBS economist Paul Donovan said in an email this morning.

The 30-year Treasury was back above 5.3% this morning and the 10-year rose to 4.9%, suggesting investors are again demanding extra risk premiums for holding American debt.

Also, it is illegal to give people money in exchange for their votes.

And then there is the question of whether Trump will actually keep his word and what he meant when he used the term “dividend.” Voters who are mentally buying jet skis today might be disappointed if Trump delivered the $5,000 in the form of lower inflation or long-dated bond buybacks that decrease the cost of U.S. debt.

MORE FROM FORTUNE

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GM CEO Mary Barra wants you to buy self-driving cars and drive EVs in the AI future - Fortune Editors

‘My boss is the Chinese customer’: Walmart China CEO Christina Zhu on how the Fortune 500 company is thriving in a tough retail market - Angelica Ang

Billionaire Coinbase CEO Brian Armstrong says most charities are ‘net negative’—and that he has no plans to make his own foundation - Sydney Lake

CEO of an automation platform explains how he wrote a 168-page book with AI: ‘It was like a Socratic dialogue’ - Diane Brady

Europe can still be an industrial powerhouse—but it needs investment - Can Dinçer

Trump’s ‘America First’ national park fees for foreign tourists have raised a quarter of what was promised - Catherina Gioino

Bayer COO: We stopped assigning sales targets. Our teams aimed higher - Sebastian Guth

Wealthy parents are buying their kids $75,000 AI schooling with guardrails as schools grapple with a literacy crisis - Mia Osmonbekov

Ayala, one of Asia’s oldest conglomerates, wants to keep itself together. Its CEO explains why - Angelica Ang

IRAN

The price of oil is at $101—and it may not be high enough

The price of Brent crude oil sat at $101 per barrel this morning after an Iranian official told Bloomberg it was prepared to escalate its attacks on U.S. forces in the Gulf. The Iran-backed Houthis also made gains in coastal Yemen, opening the prospect that Iran may end up controlling both the Strait of Hormuz and the Bab el-Mandeb strait in the Red Sea on the other side of the Arabian Peninsula. About 20% of the world’s oil was historically exported through Hormuz; a further 9-12% goes through the Bab el-Mandeb.

$101 may not be high enough, according to analysts who spoke to Fortune’s Jordan Blum. “The conflict has entered a new stage,” according to Susan Bell, senior vice president for the Rystad Energy research firm. “Global stocks of diesel, gasoline, and jet fuel have drawn down an awful lot; they are now at critical low levels. They’ve breached levels we last saw after Russia first invaded Ukraine.”

The only solution is that prices rise more to force further “demand destruction” of oil and fuels, she said. “I hate to say it, but we need prices at the pump to go up higher to encourage consumers to make choices on their energy consumption. We need more (global) austerity measures,” Bell said.

President Trump told reporters on Wednesday, “This war will end immediately after our election.”

INTEREST-ING

The two signals that will forecast a rate increase from the Fed

On Friday, we will get the U.S. consumer price index (CPI) number for August, and Wall Street suspects it will be the icing on the interest-rate-hike cake. Fed Chair Kevin Warsh has already hinted that he thinks persistent price inflation is more worrying than the labor market, setting the stage for the central bank to move rates from the 3.5% level to 3.75%. 

“The narrative appears to be that everything now hinges on a single data point: Friday’s CPI print for August. We tend to agree, and certainly a hot number here could embolden some of the doves to shift allegiance in favor of a hike next week,” Matthew Ryan, head of market strategy at financial services firm Ebury, told Fortune in an email. 

The key will be to watch what the CME FedWatch futures index does. Right now, it is showing a 64% probability of a hike on Sept. 16. But that probability will become a certainty if it goes above 69%, according to Ohsung Kwon and his team at Wells Fargo. “We believe CPI will determine whether the Fed hikes or not,” they said in an email to Fortune. “Since 2015, … the Fed always made a move when over 69% was priced-in to meetings.”

• So if CPI comes in higher and FedWatch goes over 69%, you can all but guarantee the Fed will hike a week from now.

AI is pushing Warsh toward a rate increase

One factor driving inflation is AI: Within personal consumption expenditures (PCE), the price index most closely watched by the Fed, AI has pushed up prices for software and accessories, per Deutsche Bank’s Jim Reid:

THE MARKETS

Oil rises and stocks decline as traders lock in for sustained war with Iran

U.S. futures were marginally up this morning before the opening bell in New York, suggesting some traders felt the overnight selloff in Asia and Europe was overdone. Yields on U.S. bonds ticked up and the price of oil continued to climb after both Iran and President Trump signaled they were nowhere close to a peace deal. 

• S&P 500 futures were up 0.11% this morning. The index lost 0.48% yesterday. 
• In Europe, the Stoxx 600 was down 0.18% in early trading and the U.K.’s FTSE 100 was down 0.41% before lunch.
• Asia: South Korea’s KOSPI was down 0.25%. Japan’s Nikkei 225 was up 0.2%. India’s Nifty 50 was down 0.17%. China’s CSI 300 was down 0.53%. 
• Brent crude was $101 per barrel this morning.
• Bitcoin was $78,078.

Chart via TradingEconomics.com

CHART OF THE DAY

Global warming is harming food production in Europe

This map from Deutsche Bank shows how much hotter Europe was in July of this year compared to the same period 10 years ago. The red areas indicate temperatures that are two standard deviations above the norm.

The heat, the lack of rain, and reduced soil moisture are likely to hurt agricultural production and jack up food prices, Maui Brennan and his colleagues said in a note: “Across Europe, the ingredients for tighter agricultural supply are visible. Temperatures across Europe sit 2 degrees Celsius [about 4.5 degrees Fahrenheit] above normal in the last two months. Rain levels have slipped meaningfully over the same period. Soil moisture levels have also fallen below normal levels.”

NUMBER OF THE DAY: The OnlyFans era

55% 

The percentage of social media creators of any kind on Linktree who also include OnlyFans as one of their linked accounts. The survey of 4,827 creator pages, by Giggster (a shoot location provider), suggests that OF is a more dominant platform for creators than previously thought.

THE FRONT PAGES TODAY

How Would AI Actually Kill Us All? What to Know About the AI Doomsday Debate - WSJ

City of London set to drop century-old rule against logos on buildings - FT

World’s largest contract chipmaker TSMC sees August revenue surge over 53% to record high - CNBC

Anthropic whistleblower gave up his equity to leave the company - Axios

Bessent’s Upsized Buybacks Get Hit by Bond Market Reality - Bloomberg

Elon Musk threatens to sue over Alex Gibney’s controversial documentary as lawyer says flick reeks of bias - NY Post

ONE MORE THING

Who is behind the tiny non-profit buying a $2 million ad campaign for Bitcoin in the Wall Street Journal?

Over the past three weeks, a pro-Bitcoin group called the Nakamoto Project has been using a decidedly old-school form of outreach to promote the digital currency: A series of print ads in The Wall Street Journal. Photos of the ads have appeared prominently on social media—perhaps proving the campaign to be effective—but they have also given rise to a mystery: Who is picking up the tab for placing ads in a national newspaper whose circulation is estimated to be more than half a million copies?

The Nakamoto Project’s ads could carry a standard, pre-discount price of about $2.17 million. This price tag raises the question of how the Nakamoto Project, a little-known nonprofit founded in 2023 with three board members, was able to finance an initiative of this scale. Fortune’s Camila Grigera Naón asked them a few questions.

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