Rogue AI, Jack Smith, and a Category 3 Hurricane
We finish the Senate hearing on the AI agents that went rogue, then go into Jack Smith's testimony. Plus a hurricane hitting Florida tonight, the visa crackdown, and a job market where nobody feels good about their money.
Tonight's Rundown
- I.The Rogue AI Hearing (finishing it)
- II.Jack Smith Before the Senate Judiciary Committee
- III.Today's Stories
- IV.The Job Market
- V.The Elves
- VI.Stories About Stories
- VII.Tonight's Sponsors
The Rogue AI Hearing
"Rogue AI: Securing the Homeland Against AI Agent Attacks." Senate Homeland Security subcommittee, chaired by Sen. Josh Hawley, Sept 30, 2026. Witnesses from METR, Apollo Research, Dragos and the AI Futures Project testify on the OpenAI agents that hacked Hugging Face. OpenAI CEO Sam Altman declined to appear.
The full hearing
The most-watched moments
1. Sen. Hawley: "If you break it, you pay for it"
2. Sen. Gallego: AI agents developing their own language
3. Sen. Hawley reads the chat logs between OpenAI's agents during the Hugging Face hack
4. "These are our warning shots. Next time we may not be so lucky."
5. What happens if the government doesn't regulate AI
6. What actually happened in the OpenAI-Hugging Face hack
7. Sen. Moody: "It should be a bipartisan issue"
8. Sen. Rick Scott: "Is AI going to kill us?"
9. Sen. Hawley calls out Sam Altman for not showing up
The other side of the AI story: small businesses using AI are hiring more
A New York Fed survey out Oct 8: 46% of small employers already use AI tools. Those that use it expect to add workers on net (+33 points) more than twice as much as those that don't (+15). And 77% say AI hasn't changed their labor costs.
If you own a business: the data says AI is helping small companies grow, not replacing their people.
Jack Smith Before the Senate Judiciary Committee
Former special counsel Jack Smith testifies before the Senate Judiciary Committee on his investigations of President Trump, Sept 29, 2026. Republicans accuse him of "abuse of authority" and targeting Republicans. Smith: "I stand by my decisions as Special Counsel."
The full hearing
The most-watched moments
1. Sen. Booker questions Jack Smith
2. Jack Smith's full opening statement
3. Sen. Hawley accuses Jack Smith of lying under oath about phone-record subpoenas
4. Sen. Schiff questions Jack Smith
5. Sen. Klobuchar questions Jack Smith about January 6
6. Sen. Kennedy: "He's not Bambi's baby brother"
7. Sen. Schmitt questions Jack Smith
8. Klobuchar to Schmitt: "You are calling a witness a dirtbag!"
9. Sen. Hawley questions Jack Smith
10. Sen. Britt questions Jack Smith about Arctic Frost
11. Sen. Kennedy asks Jack Smith about his wife's support of Democrats
12. Sen. Kennedy: "What does the word self-righteous mean?"
13. Sen. Grassley asks Jack Smith if he spoke with John Brennan
Today's Stories
Where things stand: US-Iran war, day 224. The Fed's rate range is 3.75% to 4% after a September hike. Midterms are Nov 3, 25 days out. The government is funded through Dec 11.
1. Isaias is a Category 3, with landfall expected tonight in the Florida Panhandle
- Strengthened to Category 3 with 120 mph winds Friday morning. Landfall is expected between Pensacola and Destin between 8 and 10 p.m. Friday. Forecasters say it could weaken slightly to a Category 2 at landfall.
- Up to 9 feet of storm surge and up to 15 inches of rain are possible. 25 Florida counties are under a state of emergency, with 5,000 Guard troops deployed. It's the season's first hurricane, a very late start.
If you own a business: check your business-interruption coverage and flood exclusions before landfall, not after. Flood is usually not in a standard policy.
Sources: NPR · ABC News · NBC News
2. The visa crackdown widens: 8 companies suspended from the green-card program
- The Labor Department suspended Microsoft, Adobe, Cognizant, Infosys, TCS, Wipro, HCL and Capgemini from PERM, the program companies use to sponsor workers for green cards. Microsoft and Adobe were cited for "multiple active federal investigations."
- Labor Secretary Sonderling said these companies have requested "almost 3 million foreign workers" since 2009. Labor Department Inspector General Anthony D'Esposito also opened J-1 visa fraud probes at Harvard, Yale, Stanford, MIT and five other universities.
- Keith Sonderling was officially sworn in as Labor Secretary in the Oval Office on Friday.
- Microsoft says 80% of its recent H-1B filings were for people who already work there, and new hires on visas equal about 1% of its US workforce.
- Correction to last night's show: Microsoft's suspension is from the green-card program, not the H-1B work-visa program.
If you own a business: if you sponsor anyone on a visa, keep your wage and recruiting records ready for an audit.
3. Houthi missile strike on Riyadh's airport kills 3
- A Saudia pilot was among the dead and a Saudia plane was hit. At least 124 flights were canceled by Friday afternoon. Pakistan is sending forces under a defense pact.
- Iran: the New York Times and Axios report the military is still preparing strike options, despite Trump's "no strikes before the midterms" post.
If you own a business: Middle East supply risk is still what's driving your fuel costs.
Sources: Al Jazeera · Fortune · Washington Post · Just Security
4. Maduro and his wife charged with conspiracy to commit torture
- The new charge was unsealed Oct 8 in federal court in Manhattan and carries up to 20 years. It's on top of the existing narco-terrorism, drug and weapons charges. Prosecutors allege US citizens were tortured with electric shock, simulated drowning and beatings.
Source: Department of Justice
5. ICE shoots an illegal immigrant with a criminal record during an arrest in Manhattan; Mayor Mamdani demands ICE leave NYC
- Who he is: DHS says the man, Oscar Belgal, 28, is a "criminal illegal alien from the Dominican Republic" with a prior conviction for grand larceny, and that he has gang ties.
- What happened: federal officers were carrying out a "targeted enforcement operation" to arrest him in Marble Hill when an ICE officer shot him in the neck. He is in stable condition. His 5-year-old son was in the car and was not hurt.
- The reaction: Mayor Mamdani called it "an outrage," said "we want them out," and says a two-hour call with Trump and DHS Secretary Mullin did not get the man released.
Sources: Time · NBC News
6. Chief Justice Roberts pauses the fight over political TV ad rates
- He froze a lower-court order that would have forced the FCC to decide within 48 hours whether parties and joint fundraising committees get the lowest ad rates. Challengers must respond by 5 p.m. Saturday. It affects how far midterm ad money goes.
Sources: The Hill · Inside Radio
7. Witkoff and Kushner pitch a partial Ukraine ceasefire in Miami
- The proposal would halt attacks on energy infrastructure and grain shipments (Axios). Zelenskyy accused the US of being unwilling to help after Russian strikes killed more than 30 people (Reuters).
Source: Just Security roundup
8. Navi Pillay wins the 2026 Nobel Peace Prize
- The South African human rights lawyer is a former judge at the International Criminal Court and the Rwanda tribunal, and chaired a UN inquiry on the Palestinian territories. She defended Nelson Mandela.
Sources: Just Security roundup · NBC News
9. Trump names Katie Zacharia White House press secretary
- She replaces Karoline Leavitt. Trump announced it on Truth Social. Zacharia is a conservative commentator, currently a senior communications adviser at Trump Media & Technology Group, and a former Homeland Security spokesperson.
Sources: Fox News · NBC News · ABC News
10. Trump: Russia will supply millions of tons of diesel
- Trump says a deal with Putin means more than 300,000 tons right away, 500,000 tons in November, 1 million after that, and another 3 million depending on the state of Russia's refineries.
If you own a business: diesel runs every truck, van and generator you own. Watch whether this actually moves the price at the pump.
Source: CNBC
11. Hasan execution: Vance says he won't watch
- The vice president said he won't watch the firing-squad execution of the Fort Hood shooter if it's livestreamed, and cast doubt on whether it will be.
Source: CNN
12. Also today: a 7.7 earthquake in Panama, and Mike Ditka dies at 86
- A magnitude 7.7 earthquake struck southern Panama Friday, per the U.S. Geological Survey.
- Mike Ditka, the Hall of Famer who coached the Chicago Bears to their only Super Bowl win, died at 86, his family announced.
Sources: ABC News · CNN · NBC News
The Job Market
1. Consumer sentiment falls to 46.3, a 5-month low
- University of Michigan, preliminary October reading: 46.3, down from 48.1 in September. People expect 4.7% inflation over the next year, up from 4.6%, and 3.5% over the long run.
- Survey director Joanne Hsu says frustration with the cost of living "continues to mount" across party lines.
If you own a business: your customers are watching every dollar. Lead with value, not the premium upsell.
Sources: University of Michigan Surveys of Consumers · Bloomberg
2. Netflix reportedly preparing to cut about 5% of its staff
- About 800 to 850 jobs, possibly starting next week, first reported by Puck and then Variety. Netflix declined to comment.
3. Two Fed officials: the job market is fine, rates may go higher
- Gov. Waller (Oct 8): the labor market is "solid and stable," job gains are near the break-even pace, and he expects more rate hikes to get inflation back to 2%.
- St. Louis Fed's Musalem (Oct 8): lowering inflation will take more rate hikes over the next 6 to 9 months. The next Fed meeting is Oct 27 to 28.
If you own a business: borrowing is more likely to get more expensive than cheaper. If you need financing, lock it in sooner.
Sources: Federal Reserve (Waller) · Reuters via Investing.com (Musalem)
4. Small businesses: doing fine, but money is tight
- A Small Business & Entrepreneurship Council survey (an advocacy group) of 516 owners: 81% are meeting or beating expectations, but 54% say capital is tight, up from 43% in February. 30% plan to hire and 4% plan cuts.
- Their top worries: inflation (39%), gas and energy (29%), tariffs (19%).
Source: SBE Council
5. UPS cuts holiday hiring to 100,000
- Down from 110,000 last year and 125,000 in 2024. Fewer seasonal jobs going into the holidays.
Source: Yahoo Finance / Quartz
6. Gas: $4.36, still a record for this time of year
- AAA's national average on Oct 8 was $4.36, down 5 cents on the week.
Source: AAA
7. The Fed: families are falling behind on their debts
- The Fed's Survey of Consumer Finances, out Friday: Americans' ability to stay current on their debt payments got worse over the past three years, to levels not seen since the aftermath of the 2008 financial crisis.
If you own a business: expect more slow payers. Tighten your terms and get deposits up front.
Source: CNBC
8. Food banks: everyday Americans are now the safety net
- NBC News reports food banks are getting less from federal programs after cuts, while food-stamp restrictions in the "big, beautiful bill" and higher gas prices are driving up demand.
Source: NBC News
Coming up: Census new business applications for September (Wednesday, Oct 14) and the NFIB small business report (Tuesday, Oct 13).
The Elves: This Week's Calls
Every Friday we lock in calls for the week ahead. Next Friday we grade them on the show, right or wrong, and the record stays on this page. Nobody gets to quietly drop a bad call.
Locked in: Friday, Oct 9, 2026, at the close. S&P 500: 7,811.54. VIX: 15.41.
Graded: Friday, Oct 16, 2026, at the close.
Graded: Friday, Oct 16, 2026, at the close.
The House Model
- Master score: 64.9, neutral. Above 70 is bullish, below 55 is bearish. Conviction is low because the categories disagree.
- Strongest: the tape, meaning price trend (100), volatility (82.8) and the economy (71.2).
- Weakest: valuation (21.7). Stocks are expensive.
- Market regime: calm, low volatility.
NeutralCall for the week: the S&P 500 finishes between 7,709 and 7,913, the range the options market is pricing for next Friday.
The AI Elves
GPT
"Market uncertainty from economic data and geopolitical tensions is balanced by strong technical indicators." GPT
How we grade it
- Range call is right if the S&P 500 closes Oct 16 between 7,709 and 7,913.
- A flat call is right if it closes within 0.5% of 7,811.54: between 7,772 and 7,851.
Stories About Stories
Real things that happened today running my businesses.
Tonight's Sponsors
My own companies.
DJH & Co
Websites and marketing for home-service contractors, done for you. Starting a trade business, or yours isn't getting calls? That's what we do.
Hendrickson Insurance
Starting a business? Get the coverage right first, not last.