Welcome back to The Deep Dive. Today we are tackling
a single listener stack of sources, and it's
a collection that gives you whiplash, frankly.
It really does. So we're going to perform a kind
of intellectual shortcut. We are jumping from
allegations of war crimes at the very highest
levels of the Pentagon. all the way to a surprisingly
resilient corporate earnings season. Yeah, one
that seems totally determined to just ignore
all the political chaos. It's a real study in
institutional stress tests. Right. Our mission
today is to really pull out the key nuggets from
these very different fields. We have to understand
the systemic breakdown that's implied when powerful
figures just circumvent norms. Whether that's
in military command or, say, judicial appointments.
Exactly. And then we have to contrast that with
the signals corporate America is sending about
economic stability heading into 2026. That's
the core tension. And I mean, we have to start
with the most dramatic and pretty disturbing
headline in the sources. This all centers on
Secretary of Defense Pete Hegseth and a military
operation back in September. OK, let's unpack
this. The Washington Post reported a specific
incident where Hegseth allegedly told Admiral
Frank Bradley to, and this is a quote, kill everybody
during an attack on what were apparently unarmed
boats. And this is where the legal gravity just
hits you immediately. The reporting suggests
the first assault, it left two survivors, and
then following Hegseth's alleged command, Bradley
ordered a second volley. Specifically, targeting
those two people who were then killed. And if
that's true, the sources are. I mean, they couldn't
be clearer. Executing shipwrecked survivors or
anyone who has surrendered is a direct, undeniable
violation of the Geneva Conventions. It's essentially
giving no quarter. And the expert legal commentary
we have in our sources, it gives zero wiggle
room on this. We have former Secretary of Defense
Leon Panetta on the record. What did he say?
He said, I don't think there's any trust in that
that's a war crime if it happened in that way.
And that sentiment is just echoed everywhere.
Ryan Goodman. the former general counsel at the
DOD, he points out that the Pentagon's own law
of war manual. Their own manual? Their own manual,
yeah. It explicitly lists attacking shipwreck
survivors as a textbook example of an illegal
order, an order that, you know, by military procedure,
service members are supposed to refuse. The implication
there is enormous. It is. We're talking about
allegations of an order from the absolute highest
civilian level that is flagrantly illegal. So
what has the administration's response been?
The source material calls it dancing around the
facts. Which is putting it mildly. It's been
chaotic. First, Hegsiff complimented the admiral.
Then he called the whole story fake news. And
now? And now he's trying to throw Bradley under
the bus, as they say, suggesting the second volley
was all the admiral's call, independently. This
attempt to shift blame, it really points to a
systemic problem, right? Yeah. Accountability
is being dodged and the chain of command seems
to be destabilized from the very top. Absolutely.
And when Donald Trump was asked about it, he
admitted he agreed with the first military assault.
Okay. But didn't support the second one that
killed the survivors. So this just confirms that
Hegsif may be acting as a kind of rogue agent,
you know, making his own law. It reminds me of
that... That bizarre pep talk he gave earlier
this year. Exactly. And the political fallout
is growing. This isn't just about Hegseth's legal
fate anymore. It's about the security implications
of his behavior. Right. Senator Mark Kelly from
Arizona, a former astronaut and military guy,
he's been really forceful. He called Hegseth's
conduct embarrassing and said he runs around
like a 12 year old playing army. And the context
for that criticism is so important. Kelly highlighted
that Hegseth is in the national command authority
for nuclear weapons. Which is terrifying. It
is. When you have a figure who allegedly shows
this, this kind of instability, this willingness
to bypass the law, it raises fundamental questions
about his judgment in a real crisis. And that's
why we're seeing investigations now. That's why.
Both the Senate and House Armed Services committees
have launched full investigations. It's a perfect
example of the Streisand effect. OK, so this.
This chaos in the military chain of command,
it leads us right into the second major theme
from the sources. This pattern of operating outside
of, let's call it, normal order. Mm -hmm, in
political and judicial appointments. Exactly.
Let's look at this fascinating and honestly highly
technical saga of Alina Haba. She was just as
qualified as the U .S. attorney in New Jersey.
This is a wild one. It's truly a high stakes
legal shell game. all designed to bypass the
Senate. So set the stage for us. Okay, so Habba
was nominated, but she couldn't get confirmed
because the New Jersey Democrats withheld their
blue slips, which is a custom that lets them
veto nominations. Right. So she served as interim
U .S. attorney. But there's a law, the Federal
Vacancies Reform Act, that says after 120 days
with no confirmation, the job automatically goes
to the top career prosecutor. In this case, Desiree
Grace. So Grace takes over as she's supposed
to. And that's when Attorney General Pam Bondi
attempts this, this incredibly sophisticated
maneuver to get around the law. It was something
else. Bondi first fired Grace. Fired her. Fired
her. Then she yanked Haba's nomination. And then
in this really rapid fire sequence, she installed
Haba as the first assistant U .S. attorney and
then immediately elevated her to acting U .S.
attorney. The goal being to reset the clock and
put HABA back in charge without any Senate approval.
Exactly. They thought they'd found a clever little
loophole. But a federal appeals panel, and it's
worth noting, this included two George W. Bush
appointees. They shut it down cold. What was
the ruling? The court basically said the law
isn't that easy to get around. It states that
only the first assistant who was already in the
role when the vacancy happens can be elevated.
Ah, so Habba was shoehorned in after the fact.
Precisely. After the 120 -day limit had already
passed. So the court ruled she was unqualified,
unauthorized, and she lacked the authority to
even initiate cases. And the immediate real -world
cost of this is... It's huge. We saw a similar
thing with Lindsay Halligan in Virginia, right?
We did. And that led to cases being dismissed,
including these major indictments against figures
like James Comey and Letitia James. Wow. The
sources say the administration is thinking about
re -inditing both of them. But this whole pattern
has created what John Day, the president of the
American College of Trial Lawyers, he called
it a procedural morass. It sounds like it. The
uncertainty is just. It's deeply alarming. Because
when the administration chooses to act like,
and this is his quote, toddlers in charge, the
integrity of the whole justice system is undermined.
So if that's the chaos in the judicial and military
worlds, let's turn to how that instability is
playing out on the political map. Gerrymandering.
Specifically, the high stakes push in Indiana.
Trump is focused on turning the state's seven
Republican, two Democrat delegation into a perfect
nine hour delegation. And the map they've unveiled
is just. It's extraordinarily aggressive. They're
taking Indianapolis' bluest district, IN07, which
is currently D plus 21. The very safe Democratic
seat. Very safe. And they're chopping into four
separate districts. The goal isn't just to dilute
the vote. It's to make the bluest district that's
left R plus 10. It's a targeted effort to wipe
out every single Democratic seat. And State House
Speaker Todd Houston, he apparently has the votes
to push it through. But here's the fascinating
part, right? The Republican -dominated state
Senate is pushing back. Yeah, they're resisting
Trump's pressure. Which you have to ask, why
fight a sure thing? So why? It comes down to
local survival instincts. State senators are
worried they'll be thrown out on their ear by
moderate voters if they go along with what they
see as a radical stunt. So it's a fracture line
within the GOP itself. It is. And it's not about
policy. It's about cultural optics and, you know,
political survival. And we have a specific example
of that resistance. State Senator Michael Bochak,
a Republican. He's a firm no vote. Right. And
his reasoning is really revealing. He cited Trump's
recent use of the word retarded as a slur. He
said that specific language was a bridge too
far. So he's not resisting based on the map itself.
Not at all. He's resisting based on the toxicity
of the national brand that's pressuring him to
pass it. The vote is set for a special session
on December 8th. And if the state Senate holds
firm, I mean, it shows that even in these supermajorities,
there are limits. Let's move quickly from that
to another headline that always gets attention.
Donald Trump's health. We have sources talking
about his recent preventative MRI at Walter Reed.
Yeah, and the official results say normal, but
the skepticism from medical experts and the source
material is pretty much universal. Dr. Jonathan
Reiner, who is Dick Cheney's long -time cardiologist,
he said flatly that the letter doesn't pass the
smell test. So why so much skepticism if the
official letter says everything's normal? Because,
as Dr. Reiner and others explain, there really
is no preventative cardiac MRI. It's just not
a standard routine test for an 80 -year -old
man. So it's not like getting a regular checkup.
Yes. Not at all. Advanced imaging like that is
typically only ordered when there's a reason.
A clinical event, a weird symptom, a bad result
on an earlier test. So calling it preventative
just suggests they're hiding the real reason
for the test. The vagueness is the point. The
vagueness is the political shield. OK, let's
shift gears and look ahead. If that's the current
political landscape, what are the stress tests
coming up on the calendar before the full 2026
cycle really heats up? We have a few early House
special elections to watch. TX 18 has a runoff
on January 31st. It's Dem versus Dem, so not
that exciting politically. But it highlights
a problem for Governor Greg Abbott. That seat's
been vacant for almost a year. It's a black mark
on his administration's efficiency. OK, what
else is interesting? NJ 11. The primary is February
5th. It's a D plus five seat. And the Democrats
have 13 candidates fighting for it. 13. Wow.
Yeah. And if the eventual Democratic winner takes
the general election by a really big margin,
that's going to be an early strong signal of
some serious national headwinds for the GOP.
And then there's Marjorie Taylor Greene's seat.
Then there's GA 14. Her resignation isn't official
until January 5th, which is, you know, just two
days after she qualifies for her lifetime pension
in health care. A detail I'm sure is just a coincidence.
Of course. The district is R plus 19, so it's
safe. But if the Republican candidate only wins
that special election by, say, single digits,
that would be the real harbinger of trouble for
the party. For the real politics junkies, you
have to mark March 3rd on the calendar. Texas
AG Ken Paxton is running for Senate. Yeah, and
he's facing so much legal trouble and internal
party dissent. The analysis suggests that if
he actually gets the nomination, he might be
vulnerable enough to lose that seat. which is
a huge concern for Republicans. But you're saying
the race with the biggest long -term impact is
in Wisconsin. Without a doubt. The state's Supreme
Court election on April 7th, it's an open seat,
technically nonpartisan, but the stakes just
could not be higher. So explain for our listeners
why this one court race is so critical. It's
all about control. If the Democrats win this
seat, they secure a five to two liberal majority
on the court. And with that majority, they could.
What? They could dictate all future legislative
maps in the state, the maps that will govern
politics there for the next decade. Plus, they
control rulings on election rules, abortion laws,
you name it. For a swing state like Wisconsin,
that 5 -2 majority is absolutely critical for
any potential 2028 presidential fight. And the
Republican candidate Maria Lazar is already signaling
how tough this is. She is. She is actively trying
to distance herself from Trump. She said, quote,
I am through and through and all the way a judge,
not a politician. That's not exactly hugging
the standard bearer close. Not even close. It
just shows you how hard it is to win those nonpartisan
races when the national party's brand is so volatile.
OK. We have detailed institutional breakdown,
political chaos, I mean at every level. And now
for our final shift, we dive into the economic
side of things. Right, the Q3 S &P 500 earnings.
The big question is, does any of this political
chaos even register on the corporate level? The
answer, astonishingly, is no. The headline is
that corporate fundamentals are still incredibly
firm, just showing profound resilience. What
are the numbers? The Q3 blended earnings growth
rate is nearly 17 percent year over year. And
what's crucial is that that's more than double
what analysts originally projected. And that's
expected to continue. It is. They're forecasting
strong growth, close to 14 percent, to persist
right into 2026. So let's break that down. Where
is that leadership coming from? Well, predictably,
technology is leading the charge. A lot of that
is the AI loam. But financials and industrials
are also showing some surprising strength. And
what's lagging? The traditionally defensive sector,
so energy and consumer staples. The sources also
talk about these historic beat rates this quarter.
The earnings beat rate is almost 83%. And the
revenue beat rate is over 78%. That level of
outperformance is just, it's tremendous. But
we do need to talk about this earnings hook concept.
Okay, explain that. So in the first half of the
year, Q1 and Q2, the beat rates were high. But
it was partly because analysts had been lowering
their estimates beforehand. So companies were
just clearing a lowered bar. Exactly. But for
Q3 and what we're seeing for Q4, the estimates
were either flat or even rising a little bit
before the reports came out. That means this
current strong beat rate, it's high quality performance,
it's real pricing power, real efficiency. So
solid fundamentals, high quality beats. And yet
the sources note that investors are being, quote,
stingy. They're not rewarding these massive beats.
Right. But they are severely punishing any misses.
So why the hesitation? Why isn't the market fully
celebrating this strength? That is the big disconnect.
I think investors are showing a lot of anxiety.
They're hedging. They see the earnings strength,
but they're also very wary of all the external
factors. Geopolitical instability, interest rates.
And. Frankly, the administrative and political
chaos we spent the last, what, 12 minutes detailing.
The bull case for 2026 really hinges on this
profit growth broadening out across the whole
S &P 500, not just staying in a few big tech
names. We have covered an incredible range today
from, I mean, serious allegations of war crimes
and systemic attempts to get around the law,
through pivotal state elections, and finally
to record high earnings. Our sources clearly
show these administrative structures are being
broken by design across the board. And yet you
have this corporate economic engine that is just
running efficiently, posting resilient results,
almost totally disconnected from the instability
in Washington. So here is the final provocative
thought we want to leave you with. Given that
corporate fundamentals seem so strong and forward
earnings are still rising, does the market's
current resilience represent a calculated rational
hedge against all this chaos? Or is it maybe
a fundamental blind spot, a refusal to see the
widespread instability and this rejection of
normal order that we're seeing everywhere else?
What stands out to you? A lot to think about
there. Thanks for diving deep with us. Until
next time.