More than 800 generals and admirals sat quietly as President Trump declared a new "war from within" — an American battlefield he claimed to be more dangerous than any foreign war zone.

• Why it matters: In one historic speech at the Quantico Marine Corps Base in Northern Virginia, Trump eviscerated decades of civil-military restraint and proclaimed the armed forces as his weapon of choice against domestic "enemies," Axios' Zachary Basu writes.

🎤 Both the content and setting were unprecedented: The top brass flew in from across the globe to hear the president redefine the military's mission and attack his political enemies in blistering terms.

• "We're under invasion from within," Trump mused during his hour-long address. "No different than a foreign enemy, but more difficult in many ways because they don't wear uniforms."

🌆 Trump already has ordered the National Guard to Los Angeles, D.C., Memphis and Portland — often over the objection of local officials.

• He sees those deployments as a playbook for other deep-blue cities — Chicago, Baltimore, San Francisco — which he said Monday should be used as "training grounds" for the military.

💡 Between the lines: The Posse Comitatus Act of 1878 was designed to prevent presidents from using the armed forces as a domestic police force.

• Trump has sidestepped it with repeated National Guard deployments and by establishing a new "quick reaction force" for quelling domestic unrest.

👊 Zoom in: Opening the Quantico gathering, Secretary of War Pete Hegseth said the military would scrap "overbearing rules of engagement" and "untie the hands of our warfighters to intimidate, demoralize, hunt and kill the enemies of our country."

• Trump then applied that sentiment to the home front, urging troops who are harassed or assaulted by protesters to "get out of that car and do whatever the hell you want to do."

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It's official: The federal government shut down at midnight.

• Republicans are banking that Democrats will blink first and end the shutdown. But just in case, they're going to make it as painful as possible, Axios' Stef W. Kight and Hans Nichols report.

🚫 State of play: Six months of grassroots fury have pushed Democrats to embrace a shutdown as leverage against Republicans. Both sides are dug in.

• Federal workers will go without pay starting today. The Trump administration is threatening to turn those furloughs — estimated at 750,000 a day — into mass firings.

🏛️ There's no obvious way out of this, unless one side makes a major course correction.

• Senate Minority Leader Chuck Schumer (D-N.Y.) is under enormous political pressure not to back down without serious negotiations on extending enhanced subsidies for the Affordable Care Act — at a minimum.
• Senate Majority Leader John Thune (R-S.D.) says he won't negotiate while Democrats keep the government shut down.

🔮 What we're watching: Sens. Jeanne Shaheen (D-N.H.), Maggie Hassan (D-N.H.) and Gary Peters (D-Mich.) are senators to watch on future votes. All voted to keep the government open back in March, but voted no last night.

• Shutdown Q&A.

The seeds of the plan President Trump presented Monday to end the war in Gaza were planted three weeks earlier, when Israel bombed Qatar in a failed attempt to assassinate Hamas leaders, Axios' Barak Ravid reports.

• At first outraged by the strike and Israel's lack of consultation with Washington, Trump's advisers Steve Witkoff and Jared Kushner soon saw the crisis as an opportunity to end the war.

⏱️ How it happened: Several days before the UN General Assembly, the Qataris proposed a summit in New York between Trump and the leaders of eight Arab and Muslim countries to discuss the Israeli strike on Qatar and the war in Gaza.

• During that meeting last Tuesday, the Arab and Muslim leaders took turns slamming Israel. After stressing his desire to end the war in Gaza, Trump turned to Witkoff: "Steve, tell them what you have been working on."

By Wednesday night, the U.S. and the eight countries had reached a preliminary agreement on the text. Witkoff and Kushner sent it on to the Israelis.

• On Friday morning, Netanyahu gave a defiant speech at the UN. He didn't mention the Trump plan at all.
• But the meetings between Trump's team and the Israelis continued all weekend. On Saturday, a rumor spread among Trump's team that Netanyahu was planning to reject the plan, or at least demand sweeping changes.

📞 That led Trump to place a "stern and clear" call to Netanyahu, according to a source briefed on the conversation.

• "Trump told Bibi in no uncertain terms: 'Take it or leave it. And 'leave it' means we walk away from you," a source said, adding that when it comes to Netanyahu, "Donald Trump has had enough, for many reasons."

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For investors, the most wonderful time of the year is now upon us — the fourth quarter, historically the best-performing period of the year for stocks.

Wall Street gets excited about the final quarter of the year for good reason, Axios' Madison Mills writes:

• Since 1950, the final quarter has been positive for stocks 80% of the time, with an average gain of 4.2%.

📈 This year, stocks have kept climbing even as strategists have warned of risks from tariffs, a softening labor market and over-dependence on AI.

• Go deeper ... Get Axios Markets.

Pfizer's decision to make a deal with the Trump administration on drug prices caused an uproar within much of the pharmaceutical industry, which was caught off guard by the announcement, Axios' Caitlin Owens reports.

• Pfizer CEO Albert Bourla's acquiescence to President Trump's demands — broadcast live from the Oval Office as the two men stood side by side — puts much more pressure on other drug companies to fall in line.

🙀 Pharmaceutical lobbyists said the agreement was more far-reaching than they expected.

• "The interesting element to me is how many companies sort of knew something was going on but refused to allow themselves to believe a deal would get cut," said one source familiar with the negotiations between drug companies and the administration.

🧠 Reality check: Pfizer agreed to offer lower prices to Medicaid programs and through a direct-to-consumer TrumpRx website for people paying with cash without insurance.

• It's not focused on the price of existing drugs for people with Medicare or private insurance — the bulk of the U.S. market.
• Price concessions in Medicaid are "immaterial" to Pfizer's bottom line, a Leerink Partners note said.

Bourla said: "By working closely with the Administration, we are lowering costs for patients and enabling greater investment in the U.S. biopharmaceutical ecosystem by ending the days when American families alone carried the global burden of paying for innovation."

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One in six aspiring buyers abandoned their dreams of homeownership in the past six years because they couldn't afford a house that they liked, Axios' Josephine Walker writes from a new Bankrate survey.

• Only 7% of aspiring homeowners are actively attending open houses or searching for homes in their area.
• High prices, high mortgage rates and short supply are all making the dream of homeownership harder to realize.

👀 Zoom in: Millennials are the most likely generation to have given up on their dreams of purchasing a home, while Gen Z — the youngest potential homebuyers — are the most likely to still be on the hunt.

MAGA commentators are lashing out online over Bad Bunny headlining the 2026 Super Bowl halftime show, Axios' Maria Curi and Herb Scribner report.

• Bad Bunny is one of the most popular musical stars on Earth. He holds the record for most-streamed album on Spotify of all time, and his concert ticket prices this year were the second-highest among all artists.
• He recently said he had opted not to tour in the continental U.S. out of fear that ICE would show up at his concerts.

Robby Starbuck, a conservative filmmaker, asked on X: "Does this guy really scream American football to anyone? Be for real."

A Cleveland bakery will compete later this month in the "Olympics" — the first time the U.S. has entered the competition since 2017, Axios Cleveland's Sam Allard reports.

• Brian Evans, a self-taught baker whose bakery is called On the Rise, will represent Team USA at the Mondial du Pain in Nantes, France.
• "We're trying to craft an attainable luxury for people," Evans said. "It's humble bread, but it can be way more than that."

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