Summary: The Treasury doubled the size of its long-bond buybacks — from a $2 billion maximum per operation to at least $4 billion — and 30-year yields fell, then returned to where they started within a day. Eric Van Nostrand, who ran economic policy at the Treasury before joining Lazard, called that the market’s feedback. Barclays argues the move in long-term yields isn’t a risk premium at all but a higher neutral rate: a 3.75% policy rate is turning out not to be restrictive. BMO now expects the 30-year to reach 6% before the 10-year reaches 5%. Claudia Sahm names the older danger — a Fed that takes orders from the Treasury has, historically, produced higher inflation. Underneath the rates argument: AI token prices fell 9% in a month to $2.21, their first decline after three years of increases, and OpenAI cut GPT-5.6 Luna pricing by 80%. Rick Rule puts $11 trillion of alternative-energy spending against fossil fuels’ share falling from 83% to 81%. And a nuclear developer explains why he now wants customers to pay for the plant before it is built.

Don’t miss the latest scuttlebutt and save 100+ hours each week with a daily digest of podcasts, interviews, and events featuring top investors, founders, and CEOs.

Subscribe now

Quotes are condensed and lightly edited for clarity. Numbers, names and speakers’ own qualifications are preserved.

Macro

A higher neutral rate, not term premium, is lifting long-term yields

The big thing that has changed this year is not term premium ... we thought beginning of the year, 3.75% policy rate was restrictive. It’s becoming increasingly clear that it is not. The longer run neutral rate is what has gone up, and that is what is pushing longer-end yields higher. - Ajay Rajadhyaksha, Global Chairman of Research at Barclays, on Bloomberg Surveillance

Buybacks move parked Treasury cash from the Fed into the banking system

they intend on using dollars that have already been issued. ... They issued a bond a while ago, and then they use the proceeds to put in a war chest basically. So those dollars are currently parked at the Fed ... If they use those exact dollars to buy back bonds, those dollars will go from the Fed into the banking system. So it will eventually turn that idle dollar into a live dollar for the financial system. - Andreas Steno Larsen, Founder & Chief Executive Officer at Steno Research, on Macro Mondays

Nvidia falls after earnings because of options positioning, not results

the big idea here is long calls in Nvidia by most customers, dealers are short call, long put. So, the event comes out and the higher probability during this period is Nvidia down. And they had by the way beaten every single one of those earnings. So don’t tell me it’s fundamentals. - Cem Karsan, Founder & Chief Investment Officer at Kai Volatility Advisors, on Tasty Crumbs with Cem Karsan

Refilling the Treasury’s cash account just means borrowing again later

But how do you replenish the TGA, David? You issue T bills or you issue bonds. So all you’re doing is borrowing ... spending short term. You’re going to have to refill it at some point. Just like the SPR, you drain the strategic petroleum reserves. Oil, you’re going to have to fill it up at some point. So, we’re using all these mechanisms ... to cap oil prices, to cap inflation, which in turn should cap yields. - Danny Moses, Investor; host of the On The Tape podcast and co-author of the What Are We Doing? Substack at On The Tape, on The David Lin Report

Yields are up because the economy can afford them

I think one of the main reasons that the bond yield is up here is because the economy can take it ... because there is a lot of borrowing going on, not just by the government but by the hyperscalers ... the spreads between corporate bonds and Treasuries really hasn’t widened at all. And so that’s a sign that there isn’t really a lot of stress in financing these things. - Ed Yardeni, President at Yardeni Research, on Squawk on the Street

$300 billion of balance sheet growth equals a quarter-point rate cut

By increasing the balance sheet by $300 billion, that is the equivalent of a quarter percent rate cut. They have been actually somewhat stimulative, along with the one big beautiful bill tax benefits, fiscal spending, tariff refunds. This has been very heavily stimulative for half of the year, relatively speaking, that actually slows down and may come to a stop in the second half. - Anne Walsh, Chief Investment Officer at Guggenheim Partners Investment Management, on Bloomberg Surveillance

Treasury pressure on the Fed has historically produced higher inflation

The less benign version, and this has a history in the U.S., where the Fed takes orders from the Treasury ... there is a lot of incentive for that to happen right now. And that, in history, has led to inflation that really moves higher. So that is the danger, so we have to be careful about who was making the decisions about interest rates. Are they staying at the Fed? Or is the Treasury calling the shots? - Claudia Sahm, Chief Economist at New Century Advisors, on Open Interest

Future lease and purchase obligations are missing from the balance sheet

essentially in this article what they did is they compiled the total amount of future lease payments and the total amount of future purchase obligations that all these companies are currently on the hook for and at this point they’re not accounted for on the balance sheet. So I think that was a big eye-opener for a lot of people out there. - Dave Sekera, Chief U.S. Market Strategist at Morningstar, on The Morning Filter

The 30-year reaches 6% before the 10-year reaches 5%

We think there is a higher chance of 30-year hitting 6% first then 10-year hitting 5%, despite 30-years being away from it ... 10-year being 35 basis points away from 5%. The reason why we think that is the pressure on the long end in the long duration of risk. There is not as much with 10-years. We are big buyers at 5%. - Earl Davis, Head of Fixed Income and Money Markets at BMO Global Asset Management, on Bloomberg Surveillance

The buyback’s rally in 30-year yields lasted 24 hours

Certainly some unconventional policy out of the Treasury last week. But I think the market gave its feedback on that policy very quickly. The Treasury has had a stated goal of keeping long-term rates down since the start of the Trump administration, clearly hasn’t been very successful ... the market’s been pushing yields up on concerns about fiscal sustainability over the past year and a half. We saw quick reaction in Treasury’s favor, where 30-year yields came down. 24 hours later, they were back up at the same level. - Eric Van Nostrand, Chief Investment Officer at Lazard Asset Management and former Assistant Treasury Secretary for Economic Policy, on Squawk on the Street

Treasury doubled its bond buybacks to at least $4 billion an operation

Put simply, the announcement was that the US Treasury was now going to be buying a lot more long-dated bonds back than we’d previously expected. So it had previously told us each operation that it did in the market, it would buy a maximum of $2 billion of long-dated bonds. That’s now changed where the Treasury is saying it will buy at least $4 billion. So basically buying at least double what was previously intended. - Hugh Gimber, Global Market Strategist at J.P. Morgan Asset Management, on Markets Explained

Investors choosing data center equity over bonds push rates up

real growth, by its very nature, pushes interest rates up, because people prefer to spend their cash to build a data center that has great potential for earnings than buy bonds. And so the data centers are selling the equity ... The investors are saying, “Well, I’d much rather own equity in that than own bonds.” And so that presses up real yields. - Andy Constan, on Two Quants and a Financial Planner (Excess Returns Weekly Wrap)

AI token prices fell 9% in a month, their first decline

Competition remains intense. OpenAI has responded by cutting pricing on GPT-5.6 Luna by 80% and Terra by 20%, while Gemini 3.6 Flash delivers an estimated 17% improvement in cost efficiency. The token price index, which is an important metric for cloud profitability, fell 9% month over month to $2.21 ... that’s its first decline after three consecutive months of gains, though pricing remains 87% higher than a year ago. - Candace Browning, Head of BofA Global Research at Bank of America, on Global Research Unlocked

Higher interest rates are the new normal whatever the Fed does

I think we do, irrespective of the credibility of the Fed. This is just the reality of the world we are in ... this is not something for this week or this quarter. For the foreseeable future, there’s a lot more competition for capital, and that means higher cost of capital. That is the new normal: higher interest rates. - Isabelle Mateos y Lago, Group Chief Economist at BNP Paribas, on The Pulse

Stimulus now backfires; talk of hikes would calm the bond market

we’re over five years now that we’ve been like this that all of these stimulus programs, whether you’re going to buy bonds, whether you’re going to have the Fed expand their balance sheet, whether you’re talking about cutting rates, are just going to backfire and produce higher interest rates. I’ve argued if you want long-term yields to go down, Kevin Warsh should come out and talk about raising rates and then the bond market might calm down and you might have lower long-term yields. - Jim Bianco, President at Bianco Research, on Yahoo Finance Live

A strong economy makes a September rate hike plausible

last year, if you look at what the Fed did, they cut rates three times, a total of 75 basis points, to guard against unwanted weakness in the labor market ... private jobs, or headline jobs, were only up something like 10,000 a month, and that was perhaps at the time the right thing to do. The economy, in my view, is very strong. Job growth is improving. You’d want to take back some of that emergency easing. So I could see the Fed raising rates in September. - Joe LaVorgna, Chief US Economist at SMBC Nikko Securities America, on Bloomberg Talks

Stocks that move opposite the S&P beat index puts for diversification

part of why you’ve had the sharp moves from time to time that you’ve had is because essentially people that use hedges, index hedges, lost tons of money owning puts and gave up on that at the times when it was necessary ... what we found is these negative beta stocks, which correlate inversely to the S&P day in and day out, are actually a way to get index-like returns and get diversification from the fact that everything looks like the AI trade. - Julian Emanuel, Senior Managing Director at Evercore ISI, on Fast Money

International

The heaviest new spenders are companies that rarely invested before

One of the factors we have when we pick stocks is looking at investment, particularly overinvestment. ... a lot of people say, “Oh, investment’s great. You know, you got to invest to return.” But good investment’s great, and unfortunately, many companies have a history of overinvesting. It seems to be an overinvestment. ... These companies that are now doing this huge investment have typically been investment-light companies. - Don Hamson, Founder & Managing Director at Plato Investment Management, on Equity Mates Investing Podcast

Treasury buybacks cannot offset $1 trillion of competing corporate issuance

5.3% is a high, but what matters is more than doubled the buyback program and the news barely flinched. That tells us it is a term premium problem and it is quite structural. You have inflation that will come down to target, the fiscal deficit that is the worst month since 2021, and a $1 trillion corporate bond issuance, competing with government paper for the same kind of buyers. Those three things do not go away because the Treasury buys back some bonds. - Dilin Wu, Research Strategist at Pepperstone Group, on The Asia Trade

Long-term contracts postpone the chip cycle for three to five years

The current economics may not be sustainable long run. Semiconductor companies by and large remain cyclical industries. You might see a normalization in margins and cash flows but the message is not just yet. If you talk to the companies they will tell you they have long-term agreements signed for 3-5 years. - Isaac Thong, Co-Portfolio Manager, Asian Income Fund at Aberdeen, on Bloomberg Daybreak: Europe

The Bank of Japan now has two more hikes coming by 2026

We recently updated our forecast on Bank of Japan’s interest rate outlook, moving from expecting just one more rate hike to now two more between now and year end 2026. What prompted our change ... is mainly two things. First, Japan’s first joint intervention with the US since 1998 on the yen is an admission that jawboning or just threatening intervention is no longer sufficient to prevent the yen from weakening. - Jonathan Liang, Chief Investment Officer, Fixed Income and FX at Standard Chartered Bank, on Standard Chartered Money Insights

AI spending has shifted from company cash to borrowed money

What’s really been underpinning the equity market from an AI standpoint has been that hyperscale of CapEx expenditure ... largely so far, that’s been funded out of operating cash flows. ... you start to see this shift now into tapping into debt markets to fund some of this spending. Clearly that has implications from a cost of capital standpoint. - Richard Saldanha, Portfolio Manager at Aviva Investors, on The Opening Trade

China holds about half the world’s humanoid robot market

Some of the industrial plays we are seeing in China, whether it’s humanoid robots, a lot of headlines recently and market share shifts within that space ... China is like 50% of the global market share in terms of humanoid robots so from that point of view, we are still positive - Beth Wong, Portfolio Manager at HSBC Asset Management, on The China Show

Foreign stock index funds took in over $90 billion this year

That’s really continued into 2026. As a result, we’re seeing far more flows into international index products. ... across the industry, we’ve seen over $90 billion into foreign large blend products this year, and we’re seeing that across the Schwab Asset Management products this year as well. - David Botset, Head of Strategy, Innovation and Stewardship at Schwab Asset Management, on ETF Edge

Bessent likely pressed Tokyo on rates to protect US borrowing costs

In this occasion, we see Bessent acting most probably to help encourage the Takaichi administration to let the Bank of Japan move a little faster on interest rates. Bessent has been concerned since last year that the Bank of Japan is behind the curve on fighting inflation. ... this has resulted in periodic kerfuffles in the Japanese government bond market, which has spread over to the US Treasuries market, which is what ultimately he cares about and US borrowing costs. - Chris Anstey, Senior Editor, global economic coverage at Bloomberg News, on Trumponomics

Four years of import monopoly bought Nigeria its own cement industry

Then he went, under the presidency of Obasanjo, to the government and negotiated a deal where he’d get four years of protection as a monopoly importer of cement — which was not then made in Nigeria — in return for creating local cement production. - Joe Studwell, Author, “How Africa Works: Success and Failure on the World’s Last Developmental Frontier”, on Odd Lots

Japanese firms invest abroad because they cannot hire at home

If the Japanese corporates, which earns a lot of money from weaker yen by the exports or a business abroad, if they try to invest domestically, they face labor shortages. So, therefore, they can’t find room to invest domestically. ... They continue to reinvest in like foreign factories or R&Ds. So that’s going to create a weaker trend in the yen. - Taro Kimura, Senior Economist at Bloomberg Economics, on Trumponomics

Europe cannot buy weapons fast enough to match Ukraine’s adaptation

They have changed warfare from a contest, who owns the best technology, into a contest as to who can adapt that technology the fastest. So Europe understands the lesson, but its acquisition systems, fragmented industrial base and some of the national stove pipes still make it difficult to replicate Ukraine’s speed. - Wayne Sanders, Senior Defense Analyst at Bloomberg Intelligence, on The Opening Trade

Foreign visitors are the bright spot while Chinese consumers stay home

We actually have a more up-to-date number. For the first half of this year, China recorded 23 million foreign visitors. That represents 20% year-over-year ... Beijing and Shanghai had an even greater growth rate. They are providing that incremental support at a time when domestic consumers are not showing up in the same way. That will continue to be a bright spot in the economy for years. - Anna Zhou, Economist at BofA Global Research, on The China Show

The placement equals roughly a third of daily Hong Kong turnover

What is interesting about this deal is it is a massive placement within the context of Hong Kong’s overall liquidity let alone the stock itself. It’s around 30% of the Hong Kong overall turnover and three to four times its own turnover ... it looks like it has been three or four times oversubscribed - Anthony Stephens, Bloomberg, on Bloomberg Daybreak: Europe

A near-$100 billion private valuation ends in a Hong Kong listing

It’s a long-awaited IPO, and remember, this is a company that raised privately, close to $100 billion two years ago, so how the mighty have fallen. A company debating going public here, then London, and ultimately ... going public in Hong Kong next week. - Bailey Lipschultz, Senior Reporter at Bloomberg, on Open Interest

Financials

Day-trading rule repeal took Webull from $160 million to near $200 million

The trading activity we’ve seen since that removal of the PDT rule has completely changed the outlook for our business ... we went from a $160 million top-line revenue in Q1 to near $200 million, basically on one month’s addition, which was June of Q2, that removed the PDT rule. So future outlook: very, very bright. - Anthony Denier, Chief Executive Officer, Webull US at Webull, on Squawk on the Street

Figure cuts mortgage cost to $1,000 and closing to five days

We take a ton of time and cost out of the system when we do that. So we do it in about $1,000 versus 12,000 industry average, and we do it in about five days versus industry average of 45 ... Average time is nine days, but can be as fast as five. - Michael Tannenbaum, Chief Executive Officer at Figure, on The Peel with Turner Novak

Option-income ETFs now exceed $170 billion after 80% annual growth

Derivative income category has grown north of 80% a year for the last five years and now exceeds $170 billion ... Maybe they are moving away from the dividend strategy. Maybe they use bonds to get that income and they are thinking about a different way to get that application. - Byron Lake, Global Co-Head of Third-Party Wealth at Goldman Sachs Asset Management, on ETF IQ

Owning OpenRouter gives Stripe a map of global AI token flows

By now operating OpenRouter, Stripe have that data and that information of where all of this is getting routed. It’s like having an entire database of where payment flows happen across the world. You have now a database of where AI tokens happen across the world, to which models, with what frequency, from where. - Aditi Subbarao, Financial Services at Snowflake, on Fintech Insider Podcast by 11:FS

Options that are harder to hedge require more margin

The price of the option of the delta 60 is much more sensitive. So you need to react faster. Therefore you need to ask more margin for the delta 60 option. The same can be applied to other type of Greeks ... like gamma and even second order if you ask me like vanna. So the more Greek aggregated risk an option has the more margin you need to ask because there are many factors that can change the price while you have not hedged. - Antonio Berenguer, Options trader and market maker, on The Blushing Quants Podcast

SoftBank still needs at least $20 billion more after the bond deal

We calculated it probably still needs another at least $20 billion even after this bond deal, after it raised $10 billion from an OpenAI-backed margin loan ... It is mainly coming from a $14 billion bridge loan that matures in March, raised to fund the commitment to OpenAI. - Sharon Chen, Bloomberg Intelligence, on Bloomberg Tech

95% of customers approved when the assistant asked to move their money

We honestly didn’t know how it would be received when we launched the assistant and it had the ability to even move money within the account. Even the idea of moving money to spaces, we didn’t know how people would go for that. But actually we were really surprised to see that within the first few months ... that request for confirmation of “you’re about to move money, do you want to approve this” — 95% of people said yes, right? - David Sullivan, Data Director at Starling Bank, on Fintech Insider Podcast by 11:FS

Crypto and Digital Assets

Doubts about AI capital spending returns are pushing money into crypto

The AI trade is starting to lose a little bit of its luster as people become concerned around valuation and ROIs that may not be there on this huge amount of capex. So long-dated thinkers are shifting their focus elsewhere and now to crypto. - Bill Miller IV, Chairman & Chief Investment Officer at Miller Value Partners, on Closing Bell

A few basis points on Tether’s $15 billion moves the whole business

Tether has $15 billion in government bonds. So, any movement, a few basis points movement, when you are talking about those huge numbers ... have a very sizable effect on these companies. A public company like Circle, the vast majority of its profit comes strictly from earning money on the balances of the stablecoins that is investing. - Bill Quigley, Co-Founder at Tether, on The Close

Alternative Investments & Private Equity

Private equity partners are borrowing against carry checks that never arrived

We just saw an article from FT and there’s private equity folks who are expecting their carry check to have hit by now ... who are taking some sort of like non-recourse loan off of future earnings that they expect from carried interest just to continue and subsidize I guess their lifestyle. - High Yield Harry, Founder and leveraged-finance writer at High Yield Harry / Buy Side Hub, on Other People’s Money with Max Wiethe

Bad loans at business-development lenders rose from 3.69% to 4.69%

With all of these names, the number of borrowers, at least one debt instrument in non-accrual status, went from 4.26 to 4.69. So about one in 20 nearly ... So it’s got from 3.69 to 4.69 in two years — two and a half years. And this is when the size of these BDC companies have basically doubled over the past three years. It’s about $560 billion a total debt. - Justin Klein, Host at KPP Financial, on InvestTalk

Consumer

Olipop is well past half a billion in sales and profitable

We’re not quite at a billion, but we’re well north of a half billion and we’re fully profitable. So, we’re chugging along and we still have robust double digit growth, which I’m excited about. ... I think that ... there’s always time for the category to continue to evolve and I don’t want to seem ... cavalier but since Pepsi purchased poppi ... Olipop has squarely retaken the lead seat in the category, right? - Ben Goodwin, Co-Founder and Executive Chairman / Head of Innovation (Chief Executive Officer at time of recording) at Olipop, on Power Players with Brian Sozzi

Agents now bargain on both sides and nobody regulates the outcome

You can think of it as like an Edgeworth box where there are two indifference curves ... One is trying to maximize total revenue and basically minimize payouts. And one is trying to maximize revenue recovered, right? They are both using agentic tools. ... The patient has no agency. And there is no regulator that basically says, we think this model is really, really performing well, right? But it’s actually misaligned. - Engy Ziedan, Co-Founder and Chief Scientific Officer at Protege, on The a16z Show

Resale value and clear pricing give jewelry an edge over clothes

If you buy a diamond necklace or even just a silver bracelet, the perceived value is higher than if you buy a skirt or a blouse that doesn’t have the same resale value, that doesn’t hold its value over long periods of time and that doesn’t have the same transparency in terms of how things are actually priced. ... I think that at this point in time is giving jewelry and watches a lot of advantages over fashion and accessories. - Pauline Brown, former Chairman of North America at LVMH, on Yahoo Finance Live

Moderna’s cancer vaccine avoids cell therapy’s high manufacturing cost

It’s not using human material like CAR-T cell therapy — that is a very expensive price because it’s a very expensive manufacturing process. In our case, it’s all used with enzyme, it’s in water. ... So as we’ll get the data, we’ll get closer to discussing ... pricing. But we don’t have the very high cost of goods that the cell therapy products have. - Stephane Bancel, Chief Executive Officer at Moderna, on Mornings with Maria

Tips are optional and tens of millions of donors skip them

We ask the donor if they want to give us a voluntary contribution, a tip. Totally up to them. ... A good chunk of people do give us a tip, a good chunk don’t. I think last year 15 to 20 million people didn’t give us anything, which is fine, because the donor is the person in this equation who’s bringing the financial resources, - Tim Cadogan, Chief Executive Officer at GoFundMe, on Decoder with Nilay Patel

Small daily experiences are what members now redeem points for

This year we have noticed a shift. People are craving micro experiences on a daily basis. ... whether it is comedy shows we host around the country, fitness classes, ... our partnership started with SoulCycle which is owned by Equinox. It was unbelievable how often members redeemed points to book a SoulCycle class because the 45-minute local micro experience was micro luxury in your everyday life. - Ankur Jain, Chief Executive Officer at Bilt, on The Close

The treatment cut sick days without raising employment or earnings

The same treatment that cut prolonged sickness absence by a sixth produced no detectable improvement in whether people were employed, how much they worked, or what they earned. ... The estimates are precise enough to put a ceiling on what could be hiding underneath them. The researchers can rule out an employment gain larger than 0.4 percentage points and an income gain larger than 0.7%. - Axara, Host at Zerodha, on The Daily Brief

Owners with sub-3% mortgages rent them out instead of selling

If you’re a buyer, you’ve got so much inventory to look for. However, if you’re a renter, you also have just as much inventory because what we’re seeing is sellers, with these sub-3 interest rates, they do not want to give up their asset for market rate right now ... whenever they could rent in cash flow. ... our rents are down around 4% year over year right now from the 2022 peak. - Dillar Schwartz, Real estate agent at eXp Realty, on Fox Business

Paramount owes $7 million a day to Warner Bros. Discovery from October

On October 1st, which is just a little over a month from right now, the Ellison’s and Paramount start paying $7 million a day. $7 million a day to Warner Bros. Discovery in ticking fees. That’s $650 million per quarter, $1.3 billion by the time the trial starts. - Evan Shapiro, Media analyst and consultant at ESHAP, on Yahoo Finance Live

Canada Goose earns more than all its profit in the holiday quarter

Goose is the most exposed outerwear company that we cover. It’s about 80% of their mix. They make more than 100% of their profit during the holiday season. That’s really a bad place to be, considering the report we put out today, which talked about the El Nino event that we’re expecting. - Ike Boruchow, Senior Analyst at Wells Fargo, on Closing Bell: Overtime

Millennial moms’ kids are now nine and picking their own clothes

what we started to organically see happen is that over 50% of our customer base is millennial moms for the most part. And because we launched in 2017, when their kids were babies, those children are now over the age of nine. And they want to exert autonomy, independence over what they’re wearing. And so that’s what Neon Rebels is really built to serve. - AJ Nicholas, President at Maisonette, on Yahoo Finance Live

A $39 first month becomes $149 and the drugs cost extra

part of the complaints are the fact that the introductory membership is about $39 for the first month. However, afterwards it increases to $149, but that does not actually include the price of the drugs. So if you get prescribed to a go V or something else, you have to pay that on top. And we already know these drugs tend to be slightly expensive as well. So you can imagine ... having a pretty big surprise coming in on your credit card. - Avalon Purnell, equities reporter at Bloomberg News, on Bloomberg Businessweek Daily

SoftBank’s trillion-yen retail bond is read as funding its OpenAI commitments

retail bonds ... a trillion yen to about $6 billion, $6.3 billion. And officially a spokesperson at SoftBank says they’ll use the proceeds in two ways: one, pay down existing debt and refinance, but also support portfolio companies. And the way that this is being interpreted is SoftBank is on the hook for lots of commitments to OpenAI and they’ve used lots of mechanisms to get the cash to support that. - Ed Ludlow, Tech Co-Anchor at Bloomberg, on Bloomberg Intelligence

Sports

The tournament’s own tickets start at $25, not the resale price

I think the first thing ... the secondary market, we don’t control that. ... Our entry prices are $65, grounds price, as you indicated. You can actually get on site ... for $25. And of course this entire week, eight days of free for our fans. - Craig Tiley, Chief Executive Officer at United States Tennis Association, on Squawk Box

MSG Sports trades below what the Lakers just sold for

Right now, the enterprise value of MSG Sports, which owns the Knicks and the Rangers, is $10 billion. About a week or so ago, the Lakers, in almost a forced sale, went for $12.5 billion. ... it’s still extremely undervalued. - Jonathan Boyar, Principal at Boyar Value Group, on Closing Bell: Overtime

Technology & AI

The rocket’s upper stage becomes the data center itself

What if you were able to use the rocket itself, again, I’m paraphrasing here, but basically as the heat sink, because you got a bunch of metal there? ... you arrive at the architecture that we have, which is that the upper stage of the rocket is itself the data center. There’s no satellite. The rocket becomes the data center satellite when it’s in orbit. - Baiju Bhatt, Co-Founder at Robinhood, on Grit

Just 25% of the 90 million cars built yearly use advanced software

there’s 90 million automobiles that get manufactured a year. So out of those 90 million Arjun, I would say 75% of those 90 million cars have kind of basic software technology in it, you know infotainment type of things, to tune your radio or to listen to a podcast like this ... And then 25% of those 90 million cars are now using more advanced technologies. - John Giamatteo, Chief Executive Officer at BlackBerry, on The Tech Download

Zuckerberg selling spare AI capacity may signal the company overbuilt

that’s a company I do not own ... or I guess we do have a small position in it but I will not emphasize it because you know Mr. Zuckerberg’s comments that they’re going to sell excess AI capacity worries me because that is the first sort of indication that maybe that particular company has excess capacity or they didn’t properly budget for it or they haven’t quite got a usage for it. - Keith Fitz-Gerald, Founder & Principal at The Fitz-Gerald Group, on ETF Spotlight

One agent input can burn 20 to 40 times more tokens

The core point to this is when we move from generative AI to agentic AI ... even though token costs are coming down the volume of token consumption has gone up massively. ... one input into an agent can trigger between 20 to 50 actions and can consume between 20x to 40x more tokens than you would with a generative AI system of two years ago. - Manoj Saxena, Founder at TrustWise, on Eye On A.I.

One hour of robot data hit 99%-plus reliability on new tasks

Gen 1 was able to across several different tasks and then many other tasks that we showed since hit these like 99% plus levels of reliability on just one single hour of robot data. So, that also starts to indicate ... really being at this kind of level of capability where you can take a new task and you can get the robot to do it without an overburdening amount of data going in. - Pete Florence, Co-Founder & Chief Executive Officer at Generalist, on Joe Lonsdale: American Optimist

A million welds a month likely won’t build a better robot

let’s say that ... I’m a car company and I have a robotic arm that is welding cars ... on the assembly line, and it welds cars every day, and it gets ... a million welds every month and so on. If I just use that as my data flywheel, I’m unlikely to get something more capable than a robot that welds cars. - Sergey Levine, Co-Founder at Physical Intelligence, on The Peterman Pod

Signed power contracts decide which data center markets are investable

when we look at our portfolios and our investments, we are very much focused on ... companies that are operating in those specific markets, primary markets that have ... very sustainable demand drivers. And, by the way, contractual power. And that’s really important. Having that visibility to power becomes even more valuable today. - Ji Zhang, Global Real Estate Portfolio Manager at Cohen & Steers, on Power Lunch

AI spending is a choice, and pausing would flip cash flow positive

The other thing folks are concerned about is the shift in free cash flow for a lot of these companies as they borrow more and spend more on capex. Free cash flows have turned negative in some cases. I would like to suggest ... this is a spending cycle of choice. These companies can at any point in time decide we will pause, then their cash flow is going to turn massively positive very quickly. - JoAnne Feeney, Portfolio Manager at Advisors Capital Management, on Open Interest

Stripping out mark-to-market gains still leaves fantastic earnings growth

One caveat on those phenomenal earnings is a large portion came from mark-to-market gains on equity securities. You also have that mismatch between all that capex spend where revenue was booked immediately and the expenses are spread out over future periods. Those adjustments only get you from phenomenal earnings growth to fantastic earnings growth. - Kelly Covley, Portfolio Manager at Manning & Napier, on Bloomberg Surveillance

Only 5 to 10% of AI adoption is running through Fable

in our data set, we’re seeing that Fable’s adoption has been quite disappointing. Only about 5 to 10% of adoption is going through Fable right now. A higher proportion of spend is currently going through other frontier models. An increasing amount going through OpenAI. ... So if you’re thinking about the AI trade, we’re starting to see some cracks in the thesis. - Ara Kharazian, Lead Economist at Ramp, on Yahoo Finance Live

Every technology boom eventually faces its bar mitzvah moment

every revolutionary change goes through four phases. The first, of course, is the hope and the hype. You’re selling the idea, you’re sometimes overselling it, and then you invest in the architecture to deliver that idea. And then comes the moment where you ask, is all this investment going to pay off? That’s the bar mitzvah moment, where you’re asked: are you grown up? Are you a real business? Are you just hope and hype? - Aswath Damodaran, Professor of Finance at NYU Stern School of Business, on Squawk on the Street

Software’s asset-light giants have turned asset-heavy, at least for now

there’s a capital cycle even in the asset light businesses, right, because that’s one of the advantages that these guys— they’ve been asset light forever. At least temporarily they’re not so asset light anymore. ... there’s a huge capital spend they’re doing, and that capital spend is: I need cement, I need aluminum, I need copper, I need all these materials. - Bob Robotti, on Two Quants and a Financial Planner (Excess Returns Weekly Wrap)

Software vendors keep 10% to 25% of the value they create

Companies have shared time and time again, and we saw this in this particular revolution come anywhere from the 1980s to 2010, when software companies drive the rally for their customers, they typically capture 10% to 25% of the value it creates. So it is not just very early use cases, coding ... We think it is a matter of time before software companies are actually able to exercise pricing power. - Gabriela Borges, US Software Equity Research Analyst at Goldman Sachs Research, on The Close

Snap’s revenue per user sits 3% below its 2021 level

Snap’s average revenue per user in the most recent quarter was 3% below what it was back in the same quarter of 2021. ... Got persistently negative margins, large free cash flow burn, going up against some of the most profitable companies in the entire world. - Kyle Guske, Investment Analyst at New Constructs, on Money Life with Chuck Jaffe

TSMC and three memory makers are the real bottleneck for AI chips

I think if you look at the market in general, TSMC is the bottleneck, and memory manufacturers the bottleneck, for AMD and Nvidia and anyone else even trying to do custom ASICs. If you take a step back ... we want to make a chip: who’s going to manufacture that chip? It’s going to be TSMC, and the memory manufacturers — there’s three of them — will sell you the memory for it. - Max Weinbach, Analyst at Creative Strategies, on Next Gen Investing

Google’s $40 billion in Anthropic looks like hedging, not conviction

Their way of investing into OpenAI is essentially funding the whole ecosystem and their customers while the AI curve matures and adoption happens. I don’t think Nvidia is the only one doing this. You see Google making a significant investment into Anthropic, $40 billion, even when they have Gemini. This shows to me that while there is this enthusiasm for the AI buildout people are also hedging their bets because they don’t know which model or which part of the stack the value will eventually accrue to. - Momei Qu, Managing Director at PSP Growth, on Bloomberg Surveillance

Cloud operating profit rose only $420 million year over year

if you looked at the change in operating profit for that ... key cloud intelligence business ... year over year, profit in that business went up by $420 million U.S. dollars. - Robert Lee, Senior Analyst at Bloomberg Intelligence, on The China Show

PC prices climb 20-25% as shipments fall 15% this year

if you haven’t gotten your PC now, you’re kind of in a rock and a hard place, because PC prices are going up around 20-25%, whereas unit volumes are going to go down by about 20% in the second half. And overall we do think that PC shipments are going to be down roughly about 3% for the year — I’m sorry, 15% for the year, 22% in the second half of this year. - Woo Jin Ho, Senior Technology Analyst at Bloomberg Intelligence, on Bloomberg Intelligence

Unlike capex or staff, borrowed money cannot be scaled back

virtually all of its growth is coming through debt finance, heavily depreciated assets. So you’re generating small amounts of profits right now for monumental amounts of debt. And the important thing here is ... debt is not really a dial you can just decide to turn down, like something like capital expenditures where you can probably just scale it back. Staff could be laid off. Operations could be modified ... The debt is still there. - Dan Kent, on The Canadian Investor

VC & Startups

China may be making public-market financing cheaper than America can match

China gets a piece of technology from the United States, they manufacture it better, they make it cheaper, and then they dominate. We’ve seen that in electric vehicles. We’ve seen that in solar. Now we’re seeing it in robotics ... But what if the implication that we’re actually seeing is that Beijing is also making the financing around these companies, when they go public, much more efficient and much more competitive than the United States could ever replicate? - Alex Harstrick, Co-founder & Managing Partner at J2 Ventures, on Squawk Box

Investing in a new AI lab now is buying StumbleUpon after Facebook

I think right now, if you’re going to invest in the new neolab, you’re basically investing ... in the Kora, in the StumbleUpon when Facebook came about. That’s my opinion. It’s not shared ... with everyone, but that’s the way I think about it. - Julien Bek, Partner at Sequoia Capital, on The Twenty Minute VC (20VC)

Token spending will probably run into a CFO reckoning

It’s so easy to just start spending and spending ... and then you don’t even notice it, and then all of a sudden you spent north of your salary. There has to be a rationalization of that at some point. I have to think CFOs are going to start looking at the bills and I tend to think that we’re probably going to see some sort of a rationalization and digestion here of some of the token spend. - Fred Havemeyer, Founding Engineer at Fleet AI, on Run the Numbers

What limits AI applications now is everything except the model

Something as simple as tool complexity or context complexity for a model as recently as six, seven months ago was a major constraint on the kind of work and the kind of ROI ... The model intelligence is no longer a blocker. And then the blockers for growth, including our growth ... across the application layer is everything else. - Rahul Rekhi, President at Rogo, on Run the Numbers

Industrials and Transport

The third defense wave is tactical IT for the new platforms

The first wave was more around ammunition and boots and fuels... And then the second wave was around filling up the order backlog at the big primes with the platforms, the vehicles, the tanks and the aircraft... the third wave that we have referred to is when they need to equip this kind of platform with tactical, I would say they need their IT backbone out in the field. - Daniel Ljunggren, Chief Executive Officer at MilDef, on The Opening Trade

Star trackers and reaction wheels, not capital, limit spacecraft

Launch is always a huge moat. Launch is like probably the biggest moat, but I would say the second biggest moat is those components to go into those spacecraft because you can have infinite capital. It doesn’t make any difference. You still need some star trackers and some reaction wheels and they’re just not available at scale. - Peter Beck, Founder & Chief Executive Officer at Rocket Lab, on Sourcery

Over 9,000 strike systems delivered to Ukraine this fiscal year

We have meaningful drones in Ukraine. We are executing one of the largest long-range precision strike programs. We call it the Yukon Deep Strike program. And by the time we finish this fiscal year, we will have delivered over 9,000 systems to combat operations in Ukraine. Many of our systems are extremely affordable, especially compared to traditional weapons systems, and we believe that they offer economic asymmetry. - Roger Wells, Chief Executive Officer at Aevex Aerospace, on Mad Money

Materials & Energy

Electricity customers will pay the plant’s capital cost through long-term contracts

In the deals that we’re structuring, we’re going to be looking for the eventual electricity customers to enter into power purchase agreements that will essentially pay for the capital expenditure for that plant. And that’ll be a long-term PPA that lasts 20 to 30 years. - Chris Levesque, Chief Executive Officer at TerraPower, on Bloomberg Businessweek Daily

$11 trillion over 45 years moved fossil fuels from 83% to 81%

The truth is that humankind has expended about 11 trillion dollars on alternative energy generation. And that 11 trillion expenditure over 45 years has reduced the market share of fossil fuels from a high of 83% all the way down to 81%. The people who have philosophical objections to hydrocarbons don’t have an economic explanation particularly to a billion people on Earth that have no access to primary energy whatsoever. - Rick Rule, President & Chief Executive Officer at Rule Investment Media, on Market Call

Revenue rose more than 150% in the lithium market’s inflection year

It’s great to see the improvement in the market that we have had this past year... The year which we have just been through has been an inflection year and that has really flowed through. Record production, record sales, and improvement in unit costs. Those outcomes coupled with a strong pricing environment flow through to the balance sheet with more than 150% lift in revenue from the prior year. And improvement of underlying EBITDA. 59% margin. - Dale Henderson, Chief Executive Officer at PLS Group, on The China Show

Crude below $120 means more oil is getting through than reported

If you look at the price action, it tells me that a lot more oil is coming through than most people realize. Probably not as much as the administration wants us to believe... but some is coming through. If it wasn’t, we’d probably see oil much higher than it is, maybe in the 120s, 130s. - Carley Garner, Senior Commodity Market Strategist at DeCarley Trading, on Trading 360

Fourteen Russian refineries hit since July 25 and barely reported

I think this has really been overlooked by most journalists and most media. By my count, since July 25th, there have been 14 refineries in Russia that have been targeted by Ukrainian drones and very successfully targeted. We don’t know where their production is. They have 6.5 million barrels a day of refined capacity. They may be only at three or so. - Tom Kloza, Chief Energy Adviser at Gulf Oil, on Yahoo Finance Live

Diesel costs double crude after six months of low refinery runs

We are still here now, coming up to the sixth month of being in this conflict, and we don’t see barrels flowing freely. That is the problem here... we’ve got the problem on the product side of things because refinery runs have been down for so long. We can see that coming through in diesel prices right there — double what they are for a barrel of oil. - Matt Smith, Director of Commodity Research at Kpler, on Power Lunch

Attacks on Russian refineries are what’s driving gasoline and diesel prices

When it comes to gasoline and diesel prices, all of the attention really that I’m looking at has to do with Ukraine’s continued attacks on Russian oil refineries. Now, we did see some comments from the Kremlin this morning that some of those refineries are getting back online. That’s pushing diesel prices modestly lower this morning, but look for crack spreads to remain elevated. - Patrick De Haan, Head of Petroleum Analysis at GasBuddy, on Trading 360

Political backlash is pushing federal regulators to cut utility returns

In general, we’re seeing strong backlash politically around the country. And that’s really driving actions that will reduce returns on equity. So the FERC has taken actions that reduce the adders that the companies earn on ROE in Maryland and Jersey and parts of New England. And that’s directly impacting the earnings outlook for companies. - Ryan Levine, Senior Utilities Analyst at Citi, on Closing Bell: Overtime

Texas exposure is a hedge against a tech-concentrated market

If you look at the broader market, heavily concentrated in technology. Our biggest sector is energy at 18%. We don’t have the same level of technology exposure and we don’t have the Mag 7 like the broader market does. We have one of those and that is Tesla so the appeal is nationwide and is due to the diversification and the growth happening. - Carlos Peña, Head of ETF and Funds Management at Texas Capital, on ETF IQ

Policy

Tariff announcements push ranchers to sell heifers instead of breeding them

every time the president makes a statement like this ... he introduces uncertainty. And the last thing in the world that cattle markets like is uncertainty. And so if you’re a producer ... trying to decide if you’re going to hold back your heifers, you may now decide to send those cattle to market now rather than holding them back. And that just sets all of us back and trying to rebuild this herd. - Colin Woodall, Chief Executive Officer at National Cattlemen’s Beef Association, on Squawk on the Street

The president treats trade as zero-sum, so Canada must lose

I think it goes to the fact that, in my view, the president sees economics and trade as a zero-sum game. I think that is the simplest, most accurate explanation for this. So if Canada loses, the United States wins. I do not think he believes in a win-win scenario that has underpinned global trade policy for the last 40 plus years. - Brian Gardner, Chief Washington Policy Strategist at Stifel, on Bloomberg Surveillance

Sports is 85 to 90% of Kalshi and Polymarket’s revenue

I would say they are out of business. ... 85 to 90% of their business is sports. They are sports gaming companies. They would not be able to turn on the lights at Kalshi, Polymarket or any other place that does this without sports. ... these are hypotheticals that are interesting academic discussions. But the reality of this is that this is where they make their money. - Chris Christie, Strategic Advisor (former Governor of New Jersey) at American Gaming Association, on Squawk Box

New capital rules will fund buybacks, not lending growth

Our research shows that as returns have fallen, banks have reduced reinvestment and returned more capital to shareholders instead. These rule changes will certainly create additional capacity, but capacity and growth are not the same thing. I think a lot of the benefit will show up through higher returns, buybacks and capital distributions, rather than a meaningful increase in organic growth. - Brad Rogoff, Global Head of Research at Barclays Investment Bank, on The Flip Side

Trillions in new debt left banks unable to trade Treasuries

Fast forward 6 years, and the US has issued trillions more debt thanks to huge deficits. Now the capacity to trade all these Ts is even more limited. I think regulators are trying to shore up this market by revisiting these rules. ... the new Fed chairman wants to reduce the Fed’s footprint in markets: that means banks would need to pick up the slack, and because of the SLR they couldn’t… so now it is changed. - Jeff Meli, Clinical Professor of Finance at NYU Stern School of Business, on The Flip Side

Export controls since 2019 have left China without an EUV breakthrough

And I think the alternative, to an extreme, is kind of what the PRC or what China is doing. And there you have sort of a top-down directed ... single agency entity that sets priorities and tries to execute. They have been trying to essentially figure out how to do EUV lithography since we put the export controls in 2019. No breakthrough has happened. There’s nothing more important to their economy than solving that scientific problem, and haven’t been able to do that. - Michael Kratsios, Director at White House Office of Science and Technology Policy, on All-In with Chamath, Jason, Sacks & Friedberg

Treasury would need eight times its announced plan to match 2011

the Treasury Twist moniker that Bessent has given this calls back to the Fed’s Operation Twist in 2011, which had a similar idea, ... sort of changing the term structure of outstanding Treasury issuance. That ended up getting to $667 billion over about 15 months. So for Bessent to ... get there, you need to increase this by a factor of eight and run it through the end of 2027. - Tobin Marcus, Head of Policy and Political Strategy at Wolfe Research, on Power Lunch

Moving car production back to the US takes years, not months

You cannot move production in a big way in six months or even 12 months. General Motors moved some production back from Mexico. Chevy Equinox and Chevy blazer back to the U.S. that will happen 2027, 2028. It takes a couple of years even when you are moving an existing vehicle to a plant that exists. - David Welch, Detroit Bureau Chief at Bloomberg, on The Close

Geopolitics

Canada’s exports will face a 6% average tariff, China’s tops 20%

So $20 billion is irrelevant more or less from the US economy. ... it’s only about 20% of Canada’s exports to the United States. When these tariffs are implemented, Canada’s exports to the US face an average applied tariff of about 6%. Now that’s way up from where it was before the first Trump administration, when it was about 0.1%. But it’s far below the tariffs that China faces ... which are north of 20% on average. - Michael Froman, President (former U.S. Trade Representative) at Council on Foreign Relations, on Squawk Box

Investigations of Chinese banks that broke US sanctions never land

The U.S. government has been extremely reluctant to go hard on economic sanctions — not export control, but economic sanctions — on China. I say this having worked on these issues for 22 years. ... there’s been a number of investigations in Democrat and Republican administrations of Chinese state-owned banks and non-state-owned banks that have violated American sanctions that have never been brought to bear. - Dan Tannebaum, Partner at Oliver Wyman, on Power Lunch

Canada can target John Deere in Iowa and Indiana RV makers

some research has come out over the weekend, suggesting that John Deere exports a lot of farm equipment to Canada. They make those in Iowa. there’s another, a big exporting community in Indiana that export campers and RVs and recreational vehicles to Canada so we could see particular lawmakers’ constituents targeted ... to effect the congressional pressure that could come to bear on the administration to back down. - Brendan Murray, Bloomberg, on The Opening Trade

Nuggets of Wisdom

A small market is a moat because big money ignores it

I much prefer a small niche. Market leader in a small niche has got a way stronger competitive advantage. And the reason why it’s got a stronger competitive advantage in a smaller TAM is because you don’t get big players going, “Oh well, I’ll have a piece of that pie.” ... you don’t get like outside capital going, I could do that, and bring down ... the average earnings of the whole. - Joe Kaye, Portfolio Manager, on MicroCapClub

What did you think of today’s edition? Hit ‘reply’ to this email, send us a message, leave a comment, or join the chat!

Leave a comment

Get hourly updates of the latest scuttlebutt on your favorite platform:

X | Threads | Instagram | YouTube | TikTok | Facebook

Summary: S&P earnings grew 50.4% against a 23.1% bar, the index is at record highs, and hedging has dropped to its lowest 20th percentile. Real yields closed at 2.41% on the 10-year and 2.78% on the 20-year — levels the market has not sustained since 2008. Job growth posted its fifth decline in twelve months, and construction payrolls fell for a fourth straight month. Investors are split on whether that gap is a warning or a rotation. Underneath it, SanDisk’s investor day reframed memory from a boom-bust commodity into a contracted business, with customers escrowing billions for the right to walk away. Rounding it out: Korea’s forced deleveraging, private credit NAVs “too high at all of these funds,” and Michael Froman on why Chinese overcapacity now has the makings of a global financial crisis.

Don’t miss the latest scuttlebutt and save 100+ hours each week with a daily digest of podcasts, interviews, and events featuring top investors, founders, and CEOs.

Subscribe now

Quotes are condensed and lightly edited for clarity. Numbers, names, and speakers’ own qualifications are preserved.

Macro

Earnings have covered up a lot of sins

“Earnings have covered up a lot of sins. The sins are: what’s going to happen in the Middle East? Is inflation the problem that many of us think it is? How high will interest rates out the curve go? It wouldn’t matter if stocks were selling at 15 or 16 times earnings, but they’re at 20, down from 22, 23, as earnings have gone up faster than the stock market. ... These are among the things that keep me up at night.” - Bob Doll, CEO & CIO at Crossmark Global Investments, on The Claman Countdown

50.4% growth against a 23.1% bar is a once-in-a-generation quarter

“We’re witnessing once-in-a-generation earnings growth. As of last Friday, 88% of companies in the S&P had reported, and we’re showing earnings growth year over year of 50.4%. So that is once in a generation, mic drop. Going into this quarter, expectations were earnings growth of 23.1 percent. So there was a lot of concern the bar was set too high.” - Elizabeth Evans, Evans May Wealth, on Making Money

A great economy if you own capital, less so if you sell labor

“One of the things we’re seeing in the stock market is steadily widening margins. As revenues go up, companies aren’t hiring, so more and more of that revenue flows to the bottom line. I realize there are some one-offs. But the picture is clear. We are in a world where profit margins keep going up. If you’re an owner of capital, this is a great economy, and AI will make it greater. If you’re a provider of labor, not so much.” - Greg Ip, Chief Economics Commentator & Deputy Economics Editor at The Wall Street Journal, on Squawk Box

Jobs fell in July for the fifth time in twelve months

“I think there’s a lot of euphoria about the economic prospects of the United States — a lot of it AI driven — gripping the market and showing up in earnings. And yet it’s not translating through to job creation. Jobs actually declined in July, the fifth time in 12 months. The weakness of job growth is something we rarely see outside of recessions. ... The hiring rate today is about half of what it was in the years before the pandemic.” - Greg Ip, Chief Economics Commentator & Deputy Economics Editor at The Wall Street Journal, on Squawk Box

A September hike is underpriced at a 25% chance

“Our base case is that the Fed would stay on hold, and I think that’s still probably the right base case. I just think that the odds of a hike at the September meeting are underpriced at a 25% chance. When we plug the CPI and PPI data into our PCE nowcast, we see core PCE coming up around 0.28% month over month. ... If there’s going to be a hike, this is the time when we get it.” - Warren Pies, Co-founder & Strategist at 3Fourteen Research, on Squawk on the Street

Four straight declines in construction payrolls rarely happen outside recessions

“My belief is that the Fed is restrictive. So a hike would be a mistake. ... Residential construction payrolls, the housing market — I think that’s the area of the economy that the Fed can most easily influence. You’ve seen four straight monthly declines there. In general, you don’t see that many times outside of recessions. So I think there’s some weakness and restrictiveness in the job market. It is being offset by the AI boom, in my view.” - Warren Pies, Co-founder & Strategist at 3Fourteen Research, on Squawk on the Street

Bond traders can stop panicking once the Fed starts panicking

“Bond traders can stop panicking when the Fed starts panicking. If the Fed isn’t gonna address inflation, then maybe the bond market needs to do it, which will drive rates up higher. And the bond market has tendencies to overshoot. ... If the Fed were to raise rates at the September or October meeting, then there’s a little bit of panic from the Fed. Bond investors can stop panicking. We might move long duration for the first time in years.” - Jim Bianco, President & Index Manager at Bianco Research Advisors, on Behind the Markets

A long end selling off on lost credibility is not the Fed’s friend

“It does slow down the economy if we have higher rates. But if the reason the long rate is up is because they’re not confident that the Fed will bring inflation down, that’s a problem for the Fed. That’s really not the way they want the market to tighten. ... I do think it’s a little bit glib to just say that the market is doing the Fed’s work for it. I think you have to interpret why it’s moving.” - Eric Rosengren, former President & CEO at the Federal Reserve Bank of Boston, on Bloomberg Talks

Real yields this high have never been sustained since the financial crisis

“You have real yields in the 10 sector that are almost 2.5%, in the 20-year sector more like 3%. Against the history of the TIPS market, those are historically elevated real yields. If you go back to the global financial crisis, between then and now you really don’t see any periods where those sorts of real yields were sustained for any meaningful period. ... We think that would suggest that there is value in these levels.” - Mike Mitchell, Head of US Treasury and Inflation Trading at Goldman Sachs Global Banking & Markets, on The Markets

The US issued the equivalent of Indonesia in a single week

“You have fiscal burdens that are significant. And, by the way, alongside of the amount of financing this week, there was 673 billion of U.S. treasury debt. It’s like issuing Indonesia in a week. It’s an awful lot of debt. Plus, you have an immense amount of supply coming through that is A.I.-related. ... To me, that’s why real rates are pressing higher: the cost of finance is going up, driven by fiscal deficits around the world, not just U.S.” - Rick Rieder, CIO of Global Fixed Income at BlackRock, on Wall Street Week

The postwar debt fix was minus 13% real rates and dead bondholders

“The last time US debt to GDP was 110% or higher was after World War II. That was 1946. By 1951, it was 50-55%. How did they do it? Simple. Capital controls, significant inflation, and real rates in the United States that bottomed at -13%. Thank you for your service, long-term Treasury holders. That’s how it happened. They got killed. They got carried out on a real basis.” - Luke Gromen, Founder at Forest for the Trees (FFTT), on The Meb Faber Show

Margins went from 1% to 14.7 and never mean reverted

“Corporate margins in the mid-70s were 1% for the S&P, and the last reading in Q1 was 14.7. We can debate whether that’s an anomaly, but they’ve gone up in a straight line. And that coincides almost tick for tick with the decline in the labor share of GDP. ... Jeremy Grantham’s claim that there’s something wrong with the global economy if margins don’t mean revert — well, Jeremy, I’m sorry, you’re wrong, because margins haven’t been mean reverting.” - Paul Krake, Founder at View from the Peak, on Macro Hive Conversations

Hedging has fallen to roughly its lowest 20th percentile

“I wish I could tell you that people are getting really tactical and making sure that they’re covering themselves should it roll over. But now we’re seeing hedging at maybe the lowest 20th percentile right now. So it just seems like people are okay with the rally right now. They’re not looking to protect some of that downside. We’re still seeing a decent amount of put selling, especially in the tech names.” - Joe Mazzola, Head of Trading and Derivatives Strategy at Charles Schwab, on Morning Trade Live

This is an earnings bubble, not a price bubble — and the second derivative will be enough

“I think the big difference with the dotcom bubble is that the dotcom bubble was a price bubble. Earnings were not there. This time, the earnings of Nvidia are growing faster than the stock price of Nvidia. ... But that’s the key: we are in an earnings bubble, and the market will start to really freak out the day when earnings growth will start to decelerate. You don’t need to wait for earnings recession. The second derivative will be enough.” - Charles-Henry Monchau, CIO at Syz Group, on Top Traders Unplugged

A VIX at 14 alongside record highs leaves no cushion

“I’m not bearish, I’m just a little cautious at these levels. Valuations are priced for perfection, but really not for surprises. The S&P 500 is making all-time highs. The VIX sits around 14, one of the most calm readings we’ve seen all year. Low volatility combined with record highs tells you positioning is a bit stretched, a little too complacent. The market has very little cushion if something goes wrong.” - Gene Goldman, CFA, CIO at Cetera Investment Management, on Morning Trade Live

International

Korea’s forced deleveraging

Foreigners dumped $150 billion of Korea for mechanical, not fundamental, reasons

“Foreign investors have sold about 150 billion U.S. dollars year to date. At every inflection point of the KOSPI — which started at 4,000 and peaked at 9,000 — foreigners sold massively. It is due to technical and mechanical reasons, including portfolio rebalancing: their portfolios are concentrated in the two names. ... So whenever those stock prices exceeded the limit, they had to sell for mechanical reasons. Fundamentals can go beyond that and the KOSPI can go further.” - Cindy Park, Analyst at Nomura, on The Asia Trade

5% of Korean brokerage accounts closed on margin calls — and US momentum took the hit

“Certainly 5% of all brokerage accounts in South Korea closed due to margin calls. So you have the regulator there deleveraging their leveraged ETFs. That’s actually part of what’s put a lot of pressure on the US momentum traders. Those same investors hold a lot of stock here in the US. They were forced to sell them. And this rebound is basically them coming back after that deleveraging process.” - Brendan Ahern, CIO at KraneShares, on Making Money

The crackdown was about concentration in two stocks, not leverage itself

“When you look at South Korea, that market was extremely concentrated. There’s two major companies, SK Hynix and Samsung, and the volume of products built exactly on top of just those two companies was obviously a big issue for regulators, especially because they hadn’t spent a lot of time educating their public. ... Here in the States, these are the largest companies in the world, big liquid names. Typically, leverage and inverse products are not the cause. They are the byproduct.” - Bilal Little, Global ETF Strategist at Direxion, on Schwab Network

Europe and China

European banks have out-earned the Magnificent Seven for a stretch this year

“What is unusual is the degree of concentration in the indexes, and the single risk factor from that AI trade. If you had been diversified across that supply chain, you weren’t as sensitive to the semiconductor meltdown. You look at value outside the US, cyclicals, bank stocks in Europe. We had a period where the bank stocks in Europe have been outperforming the Mag 7. So it is working, if you stay disciplined.” - Adam Farstrup, Head of Multi-Asset for the Americas at Schroders, on Squawk Box

Once China is cheaper and better, the argument is already over

“I have already seen once what happens when the Chinese show up with cheap stuff. I heard it 20 years ago: oh, it’s not as good. No, it’s getting higher-end, but it’s still cheap. Oh god, it’s cheaper and it’s better. And if you get to that last one, it’s already over. ... A serious debate about China as a competitor to American AI is fatal to thousand times sales, hundred times sales, 10 times sales.” - Luke Gromen, Founder at Forest for the Trees (FFTT), on The Meb Faber Show

Without a wake-up call, Europe becomes an open-air museum

“I think there needs to be some kind of wake-up call in Europe. Europe does have huge talents. There are a lot of ideas, bright people, great education systems, and we need to recover from that side, because otherwise we’re going to end up being just an open air museum, good for tourism but not good for business. ... The dependency we have with the US is terrible. If they pull the plug we are done.” - Charles-Henry Monchau, CIO at Syz Group, on Top Traders Unplugged

Financials

BDC managers choose a new 12% loan over a 100% return buying back their own stock

“What’s really going on is you don’t want your fund, which has a NAV of 5.6 billion but is trading at 2.8 billion, to shrink, because you’re paid fees — and they’re paid fees on NAV, on basically twice the price. And when they don’t buy back shares at a 50% discount, which is 100% to the upside, because they want to make a new loan at 12% — greed is laid bare.” - Boaz Weinstein, Founder & CIO at Saba Capital Management, on Money Stuff: The Podcast

PayPal retires 15% of its stock a year on $6 billion of free cash flow

“Record revenue, record free cash flow. They’re doing the turnaround. This is at a record low multiple, trading at about 10 times forward earnings. ... They’re going to use that $6 billion of free cash flow they’re generating, Stu, from 439 million users around the world to buy in 15% of the stock per year. So even if they didn’t grow, your share of the company is getting bigger and bigger and bigger without even putting more money in.” - Thomas Hayes, Chairman & Managing Partner at Great Hill Capital, on Varney & Co.

Wealth managers keep only a quarter of the money when clients die

“Certainly the wealth management industry is going to lose, as things stand. They keep about 25% of the wealth when people die. The children get the cash, they go round to the wealth manager and they say, well, you’ve been looking after that gorgeously for 40 years, but now I’ll have it. And if they do need it, they’ve got their own managers, who swoop it up.” - Paula Steele, Director at John Lamb Hill Oldridge, on Merryn Talks Money

Life insurers repriced after COVID by raising the bar, not the price

“The insurance companies didn’t put the price of life insurance up post COVID. What they did was they increased the bar. So where before we would have got standard rates for somebody, now they’ll load the premium by 50%. So they’ve changed the pricing without looking as though they’ve changed the pricing.” - Paula Steele, Director at John Lamb Hill Oldridge, on Merryn Talks Money

Crypto and Digital Assets

Stablecoins are a plan to manufacture new buyers of Treasury bills

“There is a wall of maturity coming and they need to keep the cost as low as possible. ... They have some tools. Also something which is called stablecoins. Stablecoins are cryptocurrency pegged to a fiat currency, and 99% of them are pegged to the dollar. Each time you buy a stablecoin, the stablecoin invests into US treasury bills. That’s one way, if stablecoins start to be used worldwide, to find a new source of buyers for the treasury.” - Charles-Henry Monchau, CIO at Syz Group, on Top Traders Unplugged

Crypto ETF flows are ice cold and the products got stupid

“The money is leaving crypto ETFs. ... They’re just buying AI stocks now. Or maybe software. ... It’s ice cold. The amount of crypto ETF products though got stupid. I mean, we were doing 2x Dogecoin. Why? ... Nobody wants it. ... The majority of advisers will buy the brand name, which is Bitcoin.” - Todd Sohn, Chief ETF & Technical Strategist at Strategas, on The Compound and Friends

Alternative Investments & Private Equity

Private credit sold fire insurance that fails when there is a fire

“My partner Kieran Goodwin has been ranting on Twitter — in a good way — for two and a half years, three years, about how the BDCs and interval funds have overpromised liquidity to their investors. You have fire insurance — that in a sell-off you can get out — but it doesn’t work if there’s actually a fire. ... I think when you go to Cliffwater, the shocking number of 14%, which was only 4% the quarter before.” - Boaz Weinstein, Founder & CIO at Saba Capital Management, on Money Stuff: The Podcast

Falling NAVs feed outflows feed forced selling feed falling NAVs

“The reflexivity of falling NAVs leading to larger outflows leading to forced selling leading to falling NAVs, and then you’re out in three or four years. I don’t believe that the retail investor understood that, and I wonder if it’s even disclosed.” - Boaz Weinstein, Founder & CIO at Saba Capital Management, on Money Stuff: The Podcast

You don’t need to be Merlin to know these NAVs are too high

“I don’t have to be a Merlin to know that the NAVs are too high at all of these funds. They’ll mark down what they observe and then they’ll do some matrix pricing. But JPMorgan just marked everything down. So doesn’t everything then have to come down? ... You see all these forces together, from the default rate rising to the kind of NAV recalibration. It’s not hard to see it getting really bad.” - Boaz Weinstein, Founder & CIO at Saba Capital Management, on Money Stuff: The Podcast

A data center is a boring net lease with an investment-grade tenant

“What is a data center really? It’s a net lease asset. You’ve built it, you own it now, you’re leasing it back to Meta, to Google, to Amazon. What you have is actually a pretty boring investment, because you have a counterparty that’s IG and above paying you that lease payment for 15 to 20 years. As much as we sometimes think of these as equity-related because they’re development, they’re really a credit profile because of the structure of that lease.” - Joel Holsinger, Co-Head of Alternative Credit at Ares Management, on How I Invest with David Weisburd

The old 5% growth deal now needs 12% to earn the same return

“I think 2022 was an inflection point for our industry. If you look at the prior 20 years, if you bought something and grew it a few percent a year and took on some leverage and had multiple expansion, that was a great return. The Bain Research Report chronicled this and said, ‘Here’s the new norm post-2022, which is the old 5% growth is really now a 12% bottom line growth to achieve the same return that one did before.’” - Andrew Weinberg, Founder & CEO at Brightstar Capital Partners, on Wall Street Week

GPs are holding 2020-21 vintages hostage and DPI is suffering

“The deals in 2020 and 21, they paid high prices, then they got hit by interest rate increases, and those deals are not doing so well. I think a number of the private equity firms don’t want to sell, because they think if they hold it longer they’ll be able to get a higher value. And so realizations, or what they call in the industry DPI, is on the low side, and that’s what LPs are complaining about, rightfully so.” - Steven Kaplan, Professor at the University of Chicago Booth School of Business, on Wall Street Week

Consumer

Walmart’s weakest comp in years is drug pricing, not the consumer

“I think the core business at Walmart remains very strong. But we’re expecting closer to a 3% comp for the Walmart US business, which would be one of the lowest comps that you’ve seen in years from Walmart. It’s really because there’s a headwind from some of these regulatory changes and capping drug prices, and there’s also less of a benefit from the ramping of GLP-1s. If you strip out those pharmacy and drug changes, the business is much steadier.” - Spencer Hanus, Senior Research Analyst at Wolfe Research, on Fast Money

The one question for every retailer: real sales, or just tariff lift

“If I could ask every company for one thing: in the last 12 months, did you drive revenues by selling more, bringing new people in, or did you just get that tariff lift? Because if you just got that tariff lift — which is a funny thing to say, that tariffs were positive, but they did raise prices — if that’s all you got, it’s going to get a lot harder starting next quarter.” - Simeon Siegel, Senior Managing Director at Guggenheim Securities, on Closing Bell

Fast food has priced itself out and traffic is migrating to casual dining

“QSR, or fast food, has taken 50% pricing since 2019, and this year is taking another three to 5% to cover the inflation. Whereas casual dining and fast casual are much more in line with grocery at the low 30% range. We are seeing that play out as traffic share is trending toward casual dining and fast casual. Casual dining — Chili’s, Cheesecake Factory — that’s where we see the winners today.” - Nick Setyan, Managing Director at Mizuho Securities, on Bloomberg Surveillance

Luxury hotel pricing is up 10% against 1% at the economy end

“Leisure demand is off the chart, but the high end consumer is off the charts. If you look at luxury pricing in hotels, it’s up 10% versus the economy side — that’s plus 1%. And this is also the first year in ten years that we’ve seen U.S. travel within the U.S. be stronger than international. ... Luxury supply of hotels is sub 1% for the last five years, and so the demand is far outpacing supply.” - Lizzie Dove, Analyst at Goldman Sachs, on Closing Bell

A stock portfolio is the buffer the poorer consumer does not have

“Some of the largest drops in sentiment that we saw between last month and this month have been among lower income consumers — specifically the types of consumers who are most sensitive to the persistence of high prices and don’t have the buffer stock of a large stock portfolio to cushion them through high inflationary periods. ... But those who are wealthy, those with large stock portfolios, have the wealth that will power them through this period.” - Joanne Hsu, Director at the University of Michigan Surveys of Consumers, on Open Interest

42% of Afterpay transactions are now everyday essentials

“When you look at the Afterpay for Cash App credit card, 42% of the transactions that were happening on that were actually moving towards the more everyday type of transactions — grocery, utilities, any sort of restaurants. And those bigger items that we tend to buy sometimes in the summertime aren’t really happening. ... I think the consumer is using this more as a tool to manage their expenses, not just something that we use at the register to finance purchases.” - Hitha Herzog, Chief Retail Analyst at H Squared Research, on Market On Close

Rivals are merging because they want to look more like Disney

“If you look at what’s happening all around us, companies are trying to acquire scale, or acquire IP, or acquire additional businesses. And the reason that they’re trying to do that is because they want to look a little bit more like Disney. We have the deepest library of intellectual property and characters and franchises by far. Our scale is enviable. And so we have everything that we need right now.” - Josh D’Amaro, CEO at The Walt Disney Company, on Squawk on the Street

A $7 million-a-day ticking fee is driving Paramount out of California

“It’s $7 million a day starting October 1st. And in a meeting with his top executives a week ago, Ellison said that this move would essentially help pay for that fee, because he estimated to his staff that he could save about $500 million a year by moving the company’s headquarters. He didn’t say which state, but he intimated that it might be Nashville, Tennessee, or somewhere in Texas, potentially in Georgia.” - Matt Belloni, Founding Partner at Puck, on Squawk Box

$236 billion of healthcare M&A is the best in five years

“From January up until the end of April it was one of the worst-performing sectors, but since May it’s the top-performing sector. I think healthcare is the next to catch wind of this AI, because we’re going to see AI help shorten drug trials and make them more economically feasible. ... We have $236 billion in announced M&A activity just in healthcare alone, and that’s the best in five years.” - Eric Sterner, CIO at Apollon Wealth Management, on The Claman Countdown

Healthcare took a GLP-1 and halved its weight in the S&P 500

“For the last year and a half, two years, the case has been the same thing for healthcare: massive money out of healthcare ETFs. So I start to think contrarianly. The temperature is very cold and relative performance is in its bottom decile — so bad it’s so good. People hate it. And it’s finally starting to work. The joke I always use is healthcare took a GLP-1. It went from 16% to 8% of the S&P 500.” - Todd Sohn, Chief ETF & Technical Strategist at Strategas, on The Compound and Friends

Prime steak is selling because eating out got too expensive

“Pickle me everything. We do these potato chips with pickling flavoring on them. They’re flying. ... We added some pickle to our chicken salad, and we thought sales would go down because people would pick some of this. It was all incremental extra sales. ... Our prime beef steak sales have gone up, maybe because people aren’t going out to restaurants as much, because it is pretty pricey out there.” - Stew Leonard Jr., CEO & President at Stew Leonard’s, on Market Domination

Sports

NBA franchise prices are just the stock market with a scoreboard

“These are all the transactions in the NBA going back to when Steve Ballmer purchased the Clippers for $2 billion. Then you got the Rockets at 2.2. You have the Nets at 3.3. There’s some in between. The Suns at four. Celtics just sold for six. Lakers sold for 10 a minute ago. Now they’re up for 12.5. The freaking Trailblazers are 4.25. You know what this is? It’s the stock market.” - Michael Batnick, Managing Partner at Ritholtz Wealth Management, on The Compound and Friends

Streaming lets a niche league ladder up to an ESPN deal

“We all grew up where cable and TV were the only options. Now we’re in full-fledged streaming and you’ve got YouTube TV. I was an early investor in pickleball, which has done incredibly well. Major League Pickleball teams now sell for tens of millions of dollars. ... They can now make it, because you can win on a small streaming service or social media and then build your way up to your ESPN deal or your Paramount deal or Netflix deal.” - Gary Vaynerchuk, Chairman at VaynerX and CEO at VaynerMedia, on Squawk Box

Technology & AI

SanDisk’s investor day reframes memory

Memory’s cyclicality is a product of the business model, not demand

“We operate in a market that’s traditionally been very cyclical, and that cyclicality, in my opinion, is a product of the business model. On the supply side, we make decisions and investments ten years out, 15 years out. We spend billions of dollars building fabs, then lock in a production plan for, let’s say, three, four or five years. On the demand side, we would negotiate price every quarter. ... That’s what we’re changing, by asking the demand side for more visibility. And we’re getting it.” - David Goeckeler, Chairman & CEO at SanDisk, on Squawk on the Street

Customers escrow billions with a third party to buy the right to walk away

“The idea is to align our interests with our customers. But we know it’s an uncertain world, so something may happen where they have to walk away. That’s what the financial guarantee is about. They set aside billions of dollars with a third-party financial institution and give us commitments quarter by quarter for the next four years. If they have to exit, we get that money — a soft landing, some runway to sell that product to somebody else.” - David Goeckeler, Chairman & CEO at SanDisk, on Squawk on the Street

The industry lost tens of billions in 2023 and is short three years later

“If you go back to ‘23, all of the memory players were just bleeding money all over the place. The industry lost tens of billions of dollars. Here we are three years later, and it’s like we don’t have enough. And so nobody wins. I don’t see how anybody wins in the way things are organized today. So if we can converge those time horizons ... I think that the business will just be a lot more predictable.” - David Goeckeler, Chairman & CEO at SanDisk, on Squawk on the Street

80% gross margins through 2030, even at the low end of contract pricing

“Could not have been more bullish. They provided guidance through 2030, basically promising 80% gross margins through that period of time. That’s where they have visibility, based on their contracts, and they said even the lower pricing of the contracts has this type of margin embedded. ... They’re introducing a competitive product to HBM called HBF, and that’s something that I found to be very interesting from the investor day.” - Ivana Delevska, Founder & CIO at Spear Invest, on Making Money

SanDisk can buy back two-thirds of itself in four years

“I think if you listen to Dave and you think about the next four years, they will generate about $150 billion of free cash flow — two thirds of the market cap. So if we stay at this stock price, they’ll be able to buy back two thirds of the company over the next four years. And if these contracts, where pricing is set for the next four years, remain intact, this stock is going to scream higher. Or these contracts get broken eventually.” - CJ Muse, Senior Managing Director & Semiconductor Analyst at Cantor Fitzgerald, on Squawk on the Street

The bear case: memory is a commodity, and retail has not seen the cycle turn

“A lot of the retail gamblers haven’t been around through enough cycles to realize that memory is a commodity. Every four years there’s a new story of what’s going to create the shortage in memory, and guess what, there is a shortage. And then Micron comes out and says we’re going to increase capacity, and SanDisk comes out and says we’re going to increase capacity, just in time for demand to fall off.” - Thomas Hayes, Chairman & Managing Partner at Great Hill Capital, on Yahoo Finance Live

The capex question

Alphabet will outspend Russia’s war; the hyperscalers will outspend the Pentagon

“The biggest concern that seemed to be articulated is the massive amount of CapEx spending and whether it can be paid back. ... Alphabet, Google is going to spend $190 billion on their build-out of AI this year. That’s more than Russia is going to spend on its war in Ukraine. And all the hyperscalers, the Metas and Amazons and the rest of them, are collectively going to spend a little over a trillion dollars, bigger than the Defense Department’s budget just this year.” - Jim Bianco, President & Index Manager at Bianco Research Advisors, on Behind the Markets

AI credit supply could reach $400 billion next year

“The amount of supply that’s come to market to support the AI infrastructure build-out has been quite impressive. We think it’ll be upwards of $250 billion this year, perhaps as much as $400 billion next year. And it’s pointing in the same direction as the heavy Treasury supply, in the same direction as the longer-term fiscal issues that we already talked about.” - Mike Mitchell, Head of US Treasury and Inflation Trading at Goldman Sachs Global Banking & Markets, on The Markets

The shortage of plumbers and electricians is what gives this cycle duration

“If we had an infinite supply of everything, I think we would be in overcapacity today. But it’s actually a blessing that the market is being capped by all of these supply chain shortages. The fact that we don’t have plumbers and electricians to actually work in our data centers is capping the growth of data centers. And so it is allowing for duration, versus a one-time growth path, which you’re not going to pay a high multiple for.” - Ankur Crawford, EVP & Portfolio Manager at Fred Alger Management, on Masters in Business

The overwhelming majority of tokens are profitable for everyone in the chain

“I do think the Anthropic S1 is going to be really important, and I think it’s going to break a lot of people’s brains. I think there are a lot of macro and value investors very confidently making these prognostications about AI with the assumption that tokens are subsidized. ... Open source tokens are profitable, Anthropic is profitable, OpenAI — if they’re not generating cash, they will be imminently. ... The overwhelming majority of tokens are profitable for everyone in the chain, everyone.” - Gavin Baker, Managing Partner & CIO at Atreides Management, on All-In

Seventy percent of hyperscaler AI revenue comes from two loss-making customers

“These reports state that 70% of hyperscaler AI revenue is from Anthropic and OpenAI, and 25 to 35% of total cloud revenue. Also, Oracle has a $600 billion backlog, and half that backlog is from OpenAI alone. The dependency of the hyperscalers on Anthropic and OpenAI is just huge and quite scary, given that both companies lose billions and are reliant at this point on raising capital for their survival.” - Steve Eisman, former Senior Portfolio Manager at Neuberger Berman, on The Real Eisman Playbook

On a ten-year view, OpenAI is probably worth zero

“I think ultimately all the companies that are doing it won’t exist. You’ll probably end up with a couple of Chinese ones, probably Gemini. My guess is one of Anthropic or OpenAI won’t make it. Probably OpenAI is worth zero, if you made me gamble, on, like, a ten-year view, because you’re just not going to pay for all of them at the rate you are. We’ll see.” - Adam Parker, Founder & CEO at Trivariate Research, on Squawk on the Street

80% margins at Nvidia and in memory cannot survive the AI math

“Enterprises are now heat-seeking to the lowest cost on their tokens — open source, Chinese models. ... To me, the 80% margins that we’re seeing at the memory names and at Nvidia are unsustainable. There’s no way all of this is going to work if we’re consistently overpaying for the chips needed to do this in perpetuity. So eventually they have to come down, in order for pricing on the front end to continue to come down because of these open models.” - Vincent Daniel, Partner at Seawolf Capital, on RiskReversal

Fiber optics fell 90% last time, and the overspenders were punished

“During the dotcom bubble — Juniper Networks, Nortel, Alcatel and others — they were obsessed by fiber optics. They invested so much into fiber optics that it created the supply gluts, with a massive deflationary impact, with fiber optics prices collapsing by 90%. And those who overinvested, they got massively punished by the markets. The winners were those who benefited from the fact that fiber optics suddenly got much cheaper: the internet companies, the new stars, the new Mag 7.” - Charles-Henry Monchau, CIO at Syz Group, on Top Traders Unplugged

The SOX entered bubble territory in April, and exiting is the bearish part

“Our definition is if something goes up more than two standard deviations against the long-term trend, inflation adjusted, it enters bubble territory. And the SOX has done that as of April. Now, it is less alarming than it sounds, because whenever you enter a bubble, there’s usually a fair amount of upside left. And it’s not a bearish sign. The bearish thing is actually when you exit bubble territory. ... There will be payback time.” - Dirk Willer, Head of Macro Strategy and Asset Allocation at Citi, on The Exchange

Infrastructure businesses do not deserve software multiples

“If you look at the enterprise to CapEx ratio, that went from about 8% in 1980 down to 1% in 2020. That’s because companies grew their market cap without spending money on CapEx. Those companies deserve stratospheric multiples. Suddenly, you do the AI spend, and in Google’s case, you go into negative free cash flow. If you’ve got negative free cash flow, you’re not a Lucas tree business anymore. You’re an infrastructure business. And infrastructure businesses don’t deserve software multiples.” - Paul Krake, Founder at View from the Peak, on Macro Hive Conversations

Collapsing token prices are a Jevons paradox for the infrastructure trade

“What we’re seeing is a bit of a Jevons paradox, where usage is actually exploding as token prices go down, and that’s going to run on a ton of infrastructure. That’s probably why you’re seeing a complete tone change in companies that are highly doubted, like CoreWeave and, frankly, all the clouds this quarter. They see it, and it’s got to run on infrastructure. So it is very good for the infrastructure trade, folks.” - Ben Reitzes, Managing Director & Head of Technology Research at Melius Research, on Squawk on the Street

Meta’s Louisiana campus alone needs 8 million miles of fiber

“Meta’s big Louisiana campus — if they were to overlay it on Manhattan, it would be like from Second up to 86th or 87th, and probably from about 2nd to 8th Avenue. But what’s even more stunning is how much fiber is in there. That’s going to need 8 million miles of fiber. ... That’s enough fiber to go around the equator of the earth 320 times.” - Wendell Weeks, Chairman & CEO at Corning, on Mad Money

VC & Startups

Automate every step of mining and the miner becomes a landlord

“Industrial AI is basically multiple hundred billion or trillion dollar industries that are going to get automated. This is a new industrial age that’s sort of coming. I compare it to the second industrial revolution. ... Will mining get automated? And if it does — not just the movement of the materials, but every part of mining — then what is a mining company? It just owns real estate. It will be completely revolutionized, a multi-trillion dollar market.” - Travis Kalanick, Founder & CEO at Atoms, on the a16z Podcast

Humanoids already hit human speed at 2.9 seconds a package

“The task you saw on the logistics line that we livestreamed was a real use case for one of our customers. That needs to be done at 3 seconds a package, five hours a day, I think five days a week. We did that 200 hours straight at 2.9 seconds a package. So we’re already at human speeds. They’re already having ROI.” - Brett Adcock, Founder & CEO at Figure.ai, on My First Million

Count the hires in an AI pitch deck: the number is zero

“My neighbor is a 28-year-old who just got a quarter million bucks from a seed fund for an AI business. You should have seen his deck. Do you know how many times he mentions how many people he’s going to hire? Zero. Because he knows, and everyone who sends a deck to a VC knows, that they don’t want to hear that you’re doing anything but deploying AI tools instead of hiring people.” - Paul Krake, Founder at View from the Peak, on Macro Hive Conversations

Build reactors on equity, because venture underwrites tech risk best

“Venture capital in the United States is the best at underwriting tech risk of anywhere in the world. That is how Silicon Valley has come to be what it is. ... We are willing to go build reactors on equity balance sheet, because that’s going to allow us to prove it years ahead of anybody else. Where our competitors are still trying to convince fundamentally risk-averse financers to finance a project, we will be on our fifth reactor.” - Isaiah Taylor, Founder & CEO at Valar Atomics, on No Priors

Selling to startups means your customers keep dying on you

“If the customer didn’t make it, it was just a lot of work for someone who just died. Even if they paid us a lot up front and they died, it was very painful for our business. Moving enterprise allowed us to have longer-term relationships with companies that will probably be okay in 10 years. On the downside, we ended up becoming more of a whale business, with more timing risk in our forecast.” - Shensi Ding, Co-founder & CEO at Merge, on The Peel with Turner Novak

Industrials and Transport

A $3.7 trillion infrastructure deficit means demand beyond anything the industry has seen

“We’ve underinvested for decades. The American Society of Civil Engineers says there’s $3.7 trillion of deficit that needs to be made up in the next ten years. So what we’re talking about is a demand that just exceeds anything the industry has ever seen. And it’s going to go on. ... Our backlog is $20 billion, near a record for us.” - Gary Smalley, CEO at Tutor Perini, on Squawk Box

The contractor bids AI work for the margin, and plans for AI to end

“We turned in a couple bids last week on AI projects because they’re high margin and we’ve got the capacity with the electricians. However, that’s not our bread and butter. That’s not where we’re going. So when AI goes away — and at some point in time it will, I don’t know if it’s five years or ten years or 15 years, but at some point it goes away — we’re going to be there servicing the customers we’ve been servicing forever.” - Gary Smalley, CEO at Tutor Perini, on Squawk Box

Rework fell from 25% of cars to 1%, and that is where the headcount went

“As you improve quality, you need less people. When I first joined a couple of years ago, about 25% of the cars that we built came off the production line and then had to be reworked post production. We’ve got that figure down to about 1%, which means instead of spending extra hours at the end of production, the cars run straight through. Improving quality is a key to releasing workforce. It’s not the only thing.” - Adrian Hallmark, CEO at Aston Martin Lagonda, on Bloomberg Talks

Drones should be procured like ammunition, not like aircraft

“The goal is to treat these drones not like aircraft, but more like ammunition. Build millions of rounds, millions of drones, and they’ll be expended just like ammunition. ... We’re headed out to Fort Carson, Colorado next Friday as part of the drone dominance program, a billion-dollar initiative put on by the Pentagon, a two-year program. The federal government is putting priority on domestic drone production, to figure out how can we build millions of drones at scale.” - Gavin Gardner, Co-founder at AG3 Labs, on Varney & Co.

Europe’s decades of underspending on defense are now a procurement advantage

“Do you really want a destroyer for several billion dollars, or a whole bunch of drones and drone interceptors? ... The fact that Europe was so far behind in defense spending might turn out to be a benefit in the long run, because its procurement in the wake of the Russia-Ukraine conflict may be for the stuff that they actually need and not the large legacy projects. It puts the underspenders of the early 21st century at a significant advantage in procurement.” - Sam Rines, Macro Strategist at WisdomTree, on Behind the Markets

Materials & Energy

A $5 million nuclear control box, built in-house for $400,000

“We were quoted about $5 million for our reactor protection system, and told it would take about two and a half years to build. So we said, ‘Maybe I’d be willing to pay $5 million, but I’m certainly not going to wait two and a half years.’ ... Six weeks later we had a working RPS, and we spent about $400,000 on it. There are totally fake costs from an industry that doesn’t know how to build anything anymore.” - Isaiah Taylor, Founder & CEO at Valar Atomics, on No Priors

US electricity generation has not grown since 2004

“The United States grid generation in 2023 was the exact same as it was in 2004. We were generating the same amount of electricity as nominal GDP has soared. If you said, Luke, you can have one indicator that tells real economic growth of a country, what is it? It’s absolutely electrical generation. It’s very tight to GDP.” - Luke Gromen, Founder at Forest for the Trees (FFTT), on The Meb Faber Show

Central banks are buying gold in place of Treasuries

“You are seeing a very persistent demand for gold — reserve managers, central banks buying gold in lieu of what traditionally would have been Treasuries. Presumably? Not presumably — certainly. ... Today, we’re relying much more than we ever have on domestic purchase. Think about how much China used to buy, how much Japan used to buy. There’s no doubt they’ve pulled back somewhat. And we got to watch that, because you got to fund an awful lot domestically now.” - Rick Rieder, CIO of Global Fixed Income at BlackRock, on Wall Street Week

Commodity producers went from a third of the S&P to under 5%

“If you look at the proportion of the S&P 500 that is invested in commodity producing companies, 50 years ago it would have been almost a third of the index. Today it’s less than 5% of the index. A lot of people think they have exposure to these companies, when in reality they don’t, just through their natural broad equity exposure.” - Doug Daly, Portfolio Manager at Core Commodity Management, on Open Interest

Inventories are critically low and no supply response is coming

“Inventories are at operationally critically low levels. We’ve seen China pull back on its purchases, but they’re going to run through that at some point and we’re going to have to build those inventories up — that should be a strong floor of demand. And you have not seen CapEx spending in the oil companies to take advantage of these prices. They have continued to be very restrained, enjoying free cash flows and strong margins. So we’re not really seeing a big supply response either.” - Doug Daly, Portfolio Manager at Core Commodity Management, on Open Interest

Solar panel prices fall 48% with every doubling of production

“I think every time we double the production of solar panels, the price of them comes down by 48%. And it’s happening every 18 months. It’s almost following something like Moore’s law, because it’s kind of based on silicon. The biggest cost is the cost of installation, the people. So if you can speed that up, suddenly we as a civilization can print solar panels like a newspaper. There’s a giant fusion reactor in the middle of the solar system, and it never stops.” - Puneet Puri, Gritt Robotics, on This Week in Startups

Policy

250 billionaires’ wealth now equals the total income of 25 million families

“Total AGI — total income for 25 million Californian families — is as big as the total wealth of 250 billionaires. Which means you get as much tax revenue from an increase in the income tax of five percentage points for everybody in California as from a 5% tax on the wealth of 250 families. Currently that wealth is barely taxed. They pay only the equivalent of 0.2% of their wealth.” - Gabriel Zucman, Professor of Economics at UC Berkeley, on Prof G Markets

Escaping a state wealth tax means moving your doctors, schools and burial plot

“Doing this is not a matter of just buying a home in Miami. To be considered resident in another state, you have to demonstrate that the center of your life is in another state. So you have to change schools for your children, you have to change doctors, you have to change vets, you have to change burial plots. The best experts believe no billionaire successfully moved out of California, from a tax perspective, in a few weeks at the end of 2025.” - Gabriel Zucman, Professor of Economics at UC Berkeley, on Prof G Markets

88% of the tax base rests on labor, and labor is in structural decline

“The fiscal problem is less on the spending side and more on the revenue side, because you’ve got 88% of the tax base funded by labor. Labor’s in structural decline. Nine percent of the tax base is corporate taxes. And corporates are flexible, they’re mobile, they’re litigious, and they will fight tooth and nail to stop paying what I would argue is their fair share. ... Capital needs to be paying more tax, and labor needs to be paying less.” - Paul Krake, Founder at View from the Peak, on Macro Hive Conversations

Prediction markets are mostly sports betting, and 44 attorneys general agree

“Gambling is governed by the states, just like, say, alcohol is. One of the reasons you’ve seen this explosion in the prediction markets is that 80% of what they’re doing on any given day is related to sports. I think it’s the 44 attorney generals, US state attorney generals, have taken this position. When’s the last time 44 attorney generals in this country agreed on anything?” - Mick Mulvaney, former Director at the Office of Management and Budget, on The Exchange

No plausible rate hike stops hyperscalers from spending on AI

“Think about what you would have to do to rates for the big hyperscalers not to spend on AI. You’d have to raise hundreds of basis points to get your IRR to a level that didn’t make sense. ... Raising the overnight funds rate, in my mind, is not a terribly effective way to bring that number down. You have the balance sheet, you have the money supply, a lot of tools at your disposal.” - Rick Rieder, CIO of Global Fixed Income at BlackRock, on Wall Street Week

Geopolitics

The law of arithmetic now works against China’s export model

“It’s the law of arithmetic. It was one thing for China to export substantially more, faster than the global growth of trade, when it was 10% of the global economy. But now it’s 25% of the global economy. It’s 30% of all manufacturing. It’s heading towards 45% of all manufacturing. In certain sectors like EVs, it can produce virtually 60% of global demand for the product, if not more. At that scale, the more it continues to export in excess of global demand, it’s unsustainable.” - Michael Froman, President at the Council on Foreign Relations, on Squawk Box

China’s overcapacity has all the makings of a global financial crisis

“You could see it collapsing on itself, and all of these companies in China that are operating at narrow to negative margins begin to implode. And that’s going to affect Chinese growth. China is the number one trading partner for so many emerging economies and developing countries. When they see a reduction in Chinese demand, they too will be affected. And they’re all carrying a lot of debt. And so it has all the makings of a global financial crisis.” - Michael Froman, President at the Council on Foreign Relations, on Squawk Box

A real blockade forces Iran to shut in wells it cannot easily restart

“Iran has demonstrated a great capacity to absorb pain. The big question is, if you had an effective blockade in place for an extended period, obviously we would have to live with higher oil prices, but Iran ultimately would have difficulty getting its oil out of the ground. It would have to shut in wells. And that’s a very expensive and long-term damaging process, where it’s hard to get your oil back going again once you’ve shut in your production.” - Michael Froman, President at the Council on Foreign Relations, on Squawk Box

Other

The coming El Niño could cost the world $10 trillion over five years

“When I think about the cost of this forthcoming El Niño, I estimate somewhere around $10 trillion of global economic losses conservatively, over the next five years, right up to $14 trillion if you take some of these tails. Only about $10 trillion of that is in sample, meaning supported by existing data. ... These losses are associated not just with the magnitude of the El Niño, but the size of our global economy. There’s just more stuff to be impacted.” - Justin Mankin, Associate Professor of Geography at Dartmouth College, on Odd Lots

El Niño does not dent output, it permanently shifts the growth trajectory

“What we find is that observationally, El Niño seems to systematically depress growth, meaning your country is growing at a rate, and then an El Niño occurs, and then you are growing on a different trajectory. And so those losses just accrue ad infinitum in time. ... The ‘97-’98 El Niño was about $36 billion in economic losses, as estimated at the time. What we actually found is that over a five year period, that amounts to about $5.7 trillion in global economic losses.” - Justin Mankin, Associate Professor of Geography at Dartmouth College, on Odd Lots

Nuggets of Wisdom

Every investment is a number from today times a story about tomorrow

“My grand theory of every investment, no matter what it is — it can be housing, it can be stocks, it can be Bitcoin: the value of any investment is you take a number from today and you multiply it by a story about tomorrow. That is what every investment is. ... Bitcoin is that too, but there’s effectively no number from today. So Bitcoin is purely a story.” - Morgan Housel, Partner at Collaborative Fund, on The Morgan Housel Podcast

There is no such thing as rising uncertainty, only rising awareness

“There is almost never such a thing as rising uncertainty in the world. Was terrorism risk low on September 10th, 2001? No. We were just oblivious to it. And it wasn’t necessarily higher on September 12th. We were just very aware of it. When people say there’s rising uncertainty, what they really mean is that for the first time in a while, they’ve woken up to how fragile the world has always and will always be.” - Morgan Housel, Partner at Collaborative Fund, on The Morgan Housel Podcast

Buffett’s “God’s plan”: investors now buy because it seems a mistake to be out of stocks

“Warren Buffett talked in 1999 about what he called God’s plan. Once a bull market gets underway, and once you reach the point where everyone has made money no matter what system he or she has followed, a crowd is attracted to the game that is responding not to interest rates and profits, but simply to the fact that it seems to be a mistake to be out of stocks. It’s exactly where we are now.” - Leon Cooperman, Chairman & CEO at Omega Family Office, quoting Warren Buffett, on Squawk on the Street

Buy umbrellas when there’s a drought

“It’s always risky to say the bubble is here, but I think we’re closer to bubblicious than not. The valuations are certainly very frothy... So I would say right now, when volatility is low, if you’re a little bit nervous, buy umbrellas when there’s a drought, basically.” - Steve Sosnick, Chief Strategist at Interactive Brokers, on Power Lunch

No one copies Buffett because no one wants to get rich slowly

“The gamblers are back in the casino and want more free drinks. Jeff Bezos once asked Warren Buffett, ‘If what you do is so simple, why doesn’t everyone copy you?’ Buffett replied, ‘Because no one wants to get rich slowly.’ These Gen Z’ers got hurt chasing the AI trade in June and got wiped out in July, and now they’re turning to sports. Sooner or later, the casino always wins, and those drinks are not free.” - Thomas Hayes, Chairman & Managing Partner at Great Hill Capital, on Varney & Co.

Win every hand in the negotiation and you never trade with them again

“We treat it like a game of poker. When you’re early in your career, you’re trying to win every single hand, negotiating to the end. You’re working on loan documents, you’re working on agreements, and you’re negotiating every last thing like it’s the end of the world. And what you realize is, by the end of it, congratulations, you structured a great deal, and you are never going to do a deal with me ever again.” - Joel Holsinger, Co-Head of Alternative Credit at Ares Management, on How I Invest with David Weisburd

When a founder says everything is easy, check him for wounds

“I notice that all the time when I talk to entrepreneurs. They start going, ‘Yeah, it’s easy. It’s going so well. We don’t have competition. I just hired this guy. He had an offer from Anthropic for $5 billion, but he took my $400,000 a year job.’ I’m like, ‘Bro, check yourself for wounds, cuz I assure you you’re bleeding.’” - Ben Horowitz, Co-founder & General Partner at Andreessen Horowitz, on the a16z Podcast

There is no data set for AI, only supposition — and that is uncomfortable

“Before the GFC, I had Moody’s securitization database, and every month it reaffirmed our thesis. There is no such data set with respect to AI. When OpenAI and Anthropic go public, we will have some real data. Until then, we have supposition. Relying on supposition is by definition uncertain. And uncertainty is uncomfortable. My message to investors today is: deal with it. Stop rushing to call the top or the bottom.” - Steve Eisman, former Senior Portfolio Manager at Neuberger Berman, on The Real Eisman Playbook

Saving is just spending later; all money is eventually spent

“Saving is just spending later. All money always will just be spent. It’s either now, or a little bit later, or you buy some stocks and have it pay dividends for 40 years and then you spend that money, or you die and your kids spend that money. Money can only ever be spent. ... When people get good at spending, their worry disappears.” - Jesse Mecham, Founder at YNAB (You Need A Budget), on Money Life with Chuck Jaffe

Hedging every geopolitical scare just costs you the compounding

“How many people lost their shirts trying to hedge the Iran war? And the Iran war in different guises has happened every year since the dawn of time. What happens is you sell into the hole, you don’t catch the rebound, and you just lose compounding every time you try to hedge.” - Paul Krake, Founder at View from the Peak, on Macro Hive Conversations

What did you think of today’s edition? Hit ‘reply’ to this email, send us a message, leave a comment, or join the chat.

Leave a comment

Summary: Today’s issue centers on a single tension: as AI makes intelligence cheap, where does lasting value go? Investors and economists weigh in on why humans still matter for trust and judgment, why AI’s deflationary payoff is real but delayed, and how the bond market is now speaking loudly to Washington about deficits and Fed policy. Rounding it out are the U.S.-Japan yen intervention, the ETF tax advantages reshaping how investors hold winners, and Robinhood co-founder Baiju Bhatt’s bid to power data centers from space.

Don’t miss the latest scuttlebutt and save 100+ hours each week with a daily digest of podcasts, interviews, and events featuring top investors, founders, and CEOs.

Subscribe now

Macro

When intelligence is cheap, humans stay valuable for trust, touch, and accountability

“You need humans to persuade. You need humans to perform physical tasks. You need humans to assume legal liability, and you need humans to interact with politics. That would just be a bare minimum. You need humans to inspire, to carry charisma, and to teach others not information, but actual motivation. So human jobs of the future, I think, will be highly concentrated in those areas.” - Joel Hellermark, Sana founder, on Strange Loop Podcast by Sana

Forward guidance is a promise the Fed can’t keep

“The forward guidance simply tells us where [the Fed is] going to go next. And I do think that the Fed should get rid of that. It has caused more problems than it has solved over the years because whenever the Fed gives forward guidance, it’s viewed as a promise, and then the Fed’s kind of stuck because if the data changes, they either disappoint the market, and we’ve seen some wild moves because of that, or they follow through on an incorrect policy. Think transitory inflation.” - Jim Bianco, President & Macro Strategist at Bianco Research, on Bloomberg Surveillance

Raising rates could actually calm the long end of the curve

“There’s been no other experience in the last 50 years where we’ve had a major long-term cutting cycle and long-term yields have gone up. So, I think this, for starters, is the market signaling that it disagrees with the policy that long yields have been going higher. So, I’ve been arguing that if you want to see a peak in long-term yields, the Fed should panic a little bit and raise interest rates. That will calm down the long end of the curve and bring those yields down. All you’re doing is reversing some of the cuts.” - Jim Bianco, President & Macro Strategist at Bianco Research, on Bloomberg Surveillance

AI’s deflationary payoff is real — just not this year

“[Fed Chair Kevin Warsh] is a big AI bull, and he does believe that AI will eventually be somewhat deflationary or at least disinflationary over the time period. So, you could argue that he is looking at the inflation numbers that we’ve seen elevated for the last several years. We’ve had 64 straight months of it being above 2%. He’s thinking that AI might come in and help to push that number down. I agree with him, but I don’t think that’s happening this year or even maybe next year; eventually, the productivity you would expect from AI might evolve over a longer period of time than, say, the next 12 to 18 months. But before that we get there, I think what you’re going to see with AI is that it’s just going to lead to a lot of squeezes with data center builds and everything else. And it might actually, in the short term, be the next year or so, somewhat inflationary rather than deflationary. The fact that AI in the short term is inflationary.” - Jim Bianco, President & Macro Strategist at Bianco Research, on Bloomberg Surveillance

The economy is constructive, not roaring

“We still think the economy is in good shape here. There will be periods when we question where things are, but overall the economy is not roaring, though there are many constructive things going on. So we remain very constructive on the economy and on the policies that have been put in place, and we think this will play out over time. These are exciting, very dynamic times, and you can’t predict individual names here and there — things will fluctuate — but we like the economy here in general.” - Greg Faranello, Executive Director at AmeriVet Securities, on NYSE Live

Long-term yields face a tough path lower

“On the short end, we still have tightening priced in. On the longer end, it’s trickier because inflation is higher than expected, growth is good, and we’re running deficits of about $2 trillion a year. We watch 10-year yields closely, and I think it will be tough for yields to fall meaningfully from here given these dynamics. If yields move higher from here, that could be problematic for risk assets, but we’re not there yet.” - Greg Faranello, Executive Director at AmeriVet Securities, on NYSE Live

The job market is in decent, shifting shape

“I still think the job market is in fairly good shape here. We don’t need to create as many jobs going forward as we used to in order to keep that unemployment rate low. So we think the job market is in decent shape, although the number of jobs — we lost jobs, and the unemployment rate came down. So we’re shifting here. There’s no question about it, and I think that dynamic is going to continue for the rest of 2026.” - Greg Faranello, Executive Director at AmeriVet Securities, on NYSE Live

The bond market is speaking loudly to Washington

“There’s politics, and there’s Mr. Market. And to quote James Carville from the 1990s, when he dies, he wants to come back as the bond market because it’s all-powerful. I think we’re getting back to those days when the bond market can speak, and speak quite loudly, to Washington about its overspending and the prognosis for the economy. I think this goes right back to Chairman Walsh’s stated goal: for the Fed to step back from actively manipulating the market and let the market speak. And it’s speaking in a very loud way today.” - Patrick McHenry, former Republican congressman from North Carolina and former House Financial Services Committee chairman, on Bloomberg Radio

Debt is like heart disease — silent until it strikes

“I’ve been a long time fiscal hawk. My constituents stopped asking about it a few years into my service. It’s not been a serious issue for the political class. It’s not been raised by the public, this question of debt and deficits, because they haven’t felt the effect of it. I think of it as, for the body politic, much like heart disease. It doesn’t matter and it’s not evident until it strikes. And it strikes in a brutal way. And this is the wake up sign where we need to start taking statins, review our diet, and actually slim down on our overspending. This also comes at a time where the federal government’s on course to have the largest structural deficit it’s had outside of wartime as a percentage of the GDP and in total terms.” - Patrick McHenry, former Republican congressman from North Carolina and former House Financial Services Committee chairman, on Bloomberg Radio

International

Yen intervention

The U.S. intervened to stop Japan from selling U.S. Treasury bonds to support the yen and Japanese investments

“[The U.S.] has a trade deal with Japan where Japanese, over time, are supposed to be investing large amounts of money in the US economy. It’s much easier for them to do that from a position of strong yen.” - Paul Dobson, Bloomberg Executive Editor for Asia Markets on Here’s Why

Intervention alone is not a durable solution; the market requires confidence that the Bank of Japan will raise rates to support the currency.

“I think you got to get that policy, you got to get monetary policy to replace [intervention]... you’re going to be hawkish when you need to be. And I think out of Japan, we need to see that.” - Rick Rieder, BlackRock’s CIO of Global Fixed Income on Wall St Week

"The US did intervene, together with Japan, in the yen to stop it from weakening, and what's really interesting about all of this? I mean, we love big foreign currency stories anyway, but what's interesting is that this was kind of a new type of intervention. So, the US actually sold euros, which was very interesting, and they also used a Fed repo facility that I had completely forgotten about as well." - Brad Setser, Senior Fellow at The Council on Foreign Relations on Odd Lots

The success of the currency intervention depends on the Bank of Japan raising rates

“I think it will be enough if the Bank of Japan is going to raise rates and maybe raise rates several times… if the Bank of Japan is raising rates faster than the Fed from this point on, I actually do think this will work.” - Brad Setser, Senior Fellow at The Council on Foreign Relations on Odd Lots

Korean stock market weakness

The more the Korean stock market goes up, the weaker its currency

"The better the news is for Korea, the more of the Korean stock market goes up, the more foreign holders of Korean stocks have to sell cuz they're hitting concentration limits. And that has created a weird situation where good news for the equities for Korea's equities, Hynix and Samsung, was leading to an outward flow and producing record weakness in the Korean won." - Brad Setser, Senior Fellow at The Council on Foreign Relations on Odd Lots

Financials

ETFs beat mutual funds by keeping capital gains out of your hands until you sell

“What ETFs do that is especially better than mutual funds is that they generally don’t distribute capital gains unless you sell. So I actually think they’re taxed more properly. Mutual funds, on the other hand, are unfortunate in that whenever they sell, they have to cash somebody out, and that triggers a capital gain, and the people in the fund are then hit with a tax bill.” - Density Tsekova and Zachary Miner, Bloomberg News reporters, on Trillions

A 351 lets a big winner hide inside an ETF and defer the tax

“I’ve got some Nvidia stock. It went way up. If I sold it, I would have to pay a lot of tax. Maybe I can just stick it in an ETF, have the ETF sell it, and in exchange for something else I want to own and I can just put off paying a tax bill for some indefinite amount of time.” - Density Tsekova and Zachary Miner, Bloomberg News reporters, on Trillions

The banking lobby’s deposit-flight argument is a fiction

“The banking industry and the banking lobbyists in Washington have not stopped the death of small banks in America. We have 2000 fewer banks than we did pre-financial crisis. A lot of that has to do with the cost of being a bank in the United States. The banking lobby hasn’t addressed that in any substantive way. So they’re turning their ire toward crypto to stay together for the banking associations and their political power. As for deposit flight, these stablecoin yield products have been out in the marketplace for four and five years. You’ve not seen a deposit flight. Numerous studies from universities, the Federal Reserve, and other entities across our government have shown this. This fight against deposit flight is just a fiction of the banking industry, but they’ve got to shoot their shot.” - Patrick McHenry, former Republican congressman from North Carolina and former House Financial Services Committee chairman, on Bloomberg Radio

Technology

Predicting Human Behavior

“In simulating human behavior accurately, the power to predict it is the power to shape it. If you know why people do what they do, when they’ll do it, and how, you can change that.” - Ned Koh, co-founder of Aaru on NYSE Live

Shifting Bottlenecks in AI Infrastructure

“What’s been happening with the picks and shovels is that the bottlenecks are shifting from one place to another. It used to be that, going into this year, memory was a big bottleneck. Going into next year, we think optics are going to have the same sort of dynamics.” - Ivana Delevska, Spears & Co. founder and CIO on Yahoo Finance

The Surge in Optical Demand

“For optics specifically, most companies are planning to double their capacity this year and then double it again next year. But what we’re seeing from demand, it could actually be seven to 10 times bigger.” - Ivana Delevska, Spears & Co. founder and CIO on Yahoo Finance

Anthropic PBC is in talks to buy the artificial intelligence startup Decart AI for about $6 billion

"[Decart AI] work on world models... but the second thing that they do is have a software platform that makes chips better at running AI — optimizing, basically. And it seems like, based on our reporting, that's the bit Anthropic is interested in." - Ed Ludlow, Host of Bloomberg Tech on Bloomberg Radio

"...in a world where you know the economics of leasing out compute capacity, running your own models on your own compute capacity is so important, and there is a supply constraint — there is not enough compute to meet the demand for running AI models — that would make that software particularly interesting." - Ed Ludlow, Host of Bloomberg Tech, on Bloomberg Radio

Automation alone can’t build shared prosperity

“If the only thing that we do is automation, then that’s not going to be a firm basis for shared prosperity... What I am really worried about in the age of AI and robots is… if you prioritize automation and don’t do enough of the new task creation, new opportunity creation for labor, that’s when the labor share decline is going to become more severe, and the wage growth is going to be not there.” - Daron Acemoglu, Professor of Economics at MIT, on Conversations with Tyler

The AI revolution will spread sector by sector over a generation because institutions adapt slowly

“Well, there’s government, there’s a non-profit sector, there’s a lot of higher education. The worst parts of our health care institutions. Add those all up. You can debate the number, but I think it’s at least 40% of our economy. Maybe 50%. It’s just awfully sluggish. And it will take a long time. And in many cases, you’ll need startups to displace incumbent institutions. And that can take a generation.” - Joel Hellermark, Sana founder, on Strange Loop Podcast by Sana

AI is an evolution of the digital revolution, not a revolution itself

“AI is a fundamentally important technology. It is not a revolution — it is an evolution of the digital revolution that started in the mid-1960s with mainframes. The whole point of the digital revolution is to process as much information as we can, as fast as we can, as cheaply as we can. AI is the latest progression of that, and next will be quantum computing mixed in with AI. There are many positives and negatives to that. Some companies will flourish. People thought about cybersecurity software and said, let’s get out of cybersecurity — then all of a sudden they came back in, realizing that as AI gets smarter and smarter, we are going to need more and more cybersecurity protection.” - Ed Yardeni, president of Yardeni Research, on Bloomberg Television

CoreWeave ($CRWV) Co-Founder & CDO on Earnings, AI Contracts & Power Needs

Scaling the business compounds into profitability for CoreWeave clients

“I think what you’re observing is just an acceleration of our operating leverage. You’re seeing the business get to an immense scale. And that scale compounds into profitability, into margin expansion. And, importantly, it creates fantastic operating leverage for our clients as well. CoreWeave clients are some of the leading AI companies on the planet, and the value that they’re getting out of our platform is showing up in their growth rates across the sector.” - Brannin McBee, co-founder and Chief Development Officer of CoreWeave ($CRWV), on Schwab Network

Inference is the durable economic engine behind insatiable AI demand

“Inference is the economic driver of AI. We spent years deep in training, supporting our clients, and helping them get their models to a point where they could be monetizing their business models and inference. Today, it’s just a straight line up. There’s no other way to put it. That demand point keeps inflecting each quarter, just higher and higher.” - Brannin McBee, co-founder and Chief Development Officer of CoreWeave ($CRWV), on Schwab Network

State and local opposition shifts where, not whether, data centers get built

“That state and local opposition does not change the demand profile for AI, right? It might change where it gets built, but overall, the demand profile for AI is through the roof. It’s an insatiable demand for compute. There’s truly no way to solve it in the near term. So it could end up shifting where data centers get built, but it does not change the need to be building data centers in the US.” - Brannin McBee, co-founder and Chief Development Officer of CoreWeave ($CRWV), on Schwab Network

Industrials and Transport

From space solar power to data centers in space

“I left Robinhood a little over two years ago to work on space full-time. The original thesis was, and still is, energy in space, what the space energy infrastructure looks like, and building a native energy company in space. The company began with the idea of space solar power, an old 1970s concept focused on collecting power in space and beaming it to places without an existing power grid.

We’re going to do that later this year. Our first satellite will go to space to do space solar power, which we’re very excited about. It will collect power in space and beam it down to locations like White Sands, New Mexico, where we’ll convert it into electrical power. To do that, we built significant technology around optics, laser power management, and the ability to point a laser from space down to Earth. Our second mission to space will use that technology for data transmission. This marks the transition from focusing primarily on space-based solar power and power beaming to the other energy-in-space application: powering data centers.” - Baiju Bhatt, Robinhood co-founder, on Power Players with Brian Sozzi

What “data centers in space” actually means

“That means that these are satellites, spacecraft that are in low Earth orbit that are collecting power from the sun, using it directly on the spacecraft to do compute and then using different methods of transmitting the results back and forth from Earth or to other places in space.” - Baiju Bhatt, Robinhood co-founder, on Power Players with Brian Sozzi

The AI energy bottleneck it solves (expanded)

“I think it’s critical. We’re already seeing the effects of relying so heavily on our terrestrial energy grid for data centers. You see this in the "not in my backyard” movement, NIMBYs. As we look across the United States, I’d like to see our energy infrastructure used for people, and let’s build a big power grid in space for AI. Once this is up and running, bringing new chipsets online would shift from getting a land lease, working with the local power plant and communities, and all that—which takes a long time—to taking those chipsets, integrating them into a spacecraft, and getting it to the launchpad. We think we can do that in a matter of weeks, whereas right now it’s pushing five to seven years in many cases.”- Baiju Bhatt, Robinhood co-founder, on Power Players with Brian Sozzi

Nuggets of Wisdom

When intelligence is cheap, initiative beats credentials

“Initiative will matter much more. So just having gone to a good school won’t mean that much. Knowing a lot of things per se won’t mean that much. Having intuition, charm, charisma, initiative, a synthetic form of knowledge so you can see in your mind’s eye how a bunch of AI’s might fit together, and then how you can raise the money to get the company or venture going. That will be rewarded at enormous rates.” - Joel Hellermark, Sana founder, on Strange Loop Podcast by Sana

Don’t wait for the perfect idea

“If you want to do big stuff, a lot of the time the path to the right idea is just getting started with the idea that you think is the right.” - Baiju Bhatt, Robinhood co-founder, on Power Players with Brian Sozzi

De-risk the timeline every single day

“One of my sort of algorithms for this is asking the question, what is the thing I could do today that derisks that timeline the most? And what are the things that, if I don’t do them in short order, are going to really challenge that timeline?” - Baiju Bhatt, Robinhood co-founder, on Power Players with Brian Sozzi

Execution beats the idea

“The idea is important, but I think a lot of people get very fixated on the idea as if it were the only thing that matters. The thing that actually matters is the pace of execution and the tenacity.” - Baiju Bhatt, Robinhood co-founder, on Power Players with Brian Sozzi

What did you think of today’s edition? Hit ‘reply’ to this email, send us a message, leave a comment, or join the chat!

Leave a comment

Share this newsletter with someone who needs to see it.

Share

Gift a subscription to a friend.

Give a gift subscription

Refer us to friends and receive free monthly subscriptions.

Refer a friend

Don’t miss the latest scuttlebutt and save 100+ hours each week with a daily digest of podcasts, interviews, and events featuring top investors, founders, and executives.

Subscribe now

Macro

The breakeven jobs number has gone from 120k to 50k a month

“The breakeven level, the number of jobs you need every month to hold the unemployment rate flat, is going down. If you look at so far this year, we've been averaging about 50,000 to 60,000 jobs a month. On average, the unemployment rate has been going down. It kind of speaks to this idea that the breakeven level is lower. That just means you're going to get negative jobs numbers more often. It's sort of a statistical artifact of that — if the breakeven level is lower, you'll be bobbing around the zero line more often.” - Neil Dutta, Renaissance Macro Head of US Economic Research on Bloomberg This Weekend

Lower unemployment numbers may push the Fed to hike rates

“The last employment report pushes the Fed further in the direction of hiking, not away from it. That's a misconception in the marketplace. To borrow from Janet Yellen, the unemployment rate is the single best indicator of labor market health. What happened with the unemployment rate? It fell. When you look at the Fed's Summary of Economic Projections, their dot plot, they look at the unemployment rate — that is the measure they focus on primarily. To the extent it's going down, it's going to push the hawks to be even more aggressive, pushing for hikes going forward. So I don't really buy the idea that the jobs number pushes them from anything. If anything, it pushes them toward it.” - Neil Dutta, Renaissance Macro Head of US Economic Research on Bloomberg This Weekend

The labor market hinges on the economy, not AI

“In the near to medium term — forget the long term, none of us know — I think the fear is way overdone. This is a technology innovation cycle that will disrupt the labor market somewhat, but it's not the first time. We looked at the prior five big investment cycles going back to the 1700s — steam engine, railways, autos, PCs — and three out of five times the unemployment rate ticked higher. At the end of the day, the labor market hinges on the overall economy: when the economy is good, companies don't use AI to fire people; they use it to grow. That's what we've been seeing, and there's no real statistical evidence that companies are laying off in a meaningful way because of AI, even if they blame AI when they announce it. It's when the economy goes south that companies start thinking about downsizing using AI. So AI is a headwind to wage growth, but I don't think we see a major disruption. Historically, the economy creates new types of jobs, and I think it will with AI too.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

Entry-level workers face the most AI stress — but also the most upside

“Entry-level is where we see the biggest stress in the labor market right now, and it's really because of AI. There are two schools of thought: one, they face bigger pressure because they lack experience; two, from day one they're a lot more productive because they already know how to use AI in ways beyond what we know — they'll be more native in it, the way millennials were better with PCs and the internet than boomers. But the white-collar economy works on knowledge handed down from older workers to younger ones. We can automate a lot, but we still need younger cohorts to learn the system and then use AI to automate some of it. One funny thing: across past tech cycles, white-collar jobs were the only ones that got busier — average work hours rose for white-collar and fell for everyone else. I think AI shrinks the expected turnaround time for projects dramatically, which actually makes people work harder.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

The K-shaped consumer is holding up

“The consumer overall is doing okay. It’s been a K-shaped environment — the high-income consumer has been doing really well, the low-income consumer has not. But a lot of banks are actually starting to see the low end do a little better; the labor market is still very strong, so overall consumer health is fine. There’s also relief coming from the “one big bill” refunds for consumers — we estimate about $800 more per person this year versus last, which is significant. The catch is that because of higher oil prices, we estimate the consumer runs out of that extra money by around September. But that assumed $100 oil, and oil has come down at least a little, so that’s a nice tailwind.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

The American Dream is achievable, but the bottom 20% has been left behind

“You can’t fix problems you don’t acknowledge. If you look at the American Dream, the middle class has gotten bigger. Most have gotten wealthier. The country is clearly wealthier, and the rich have gotten richer. But the real issue is the bottom 20%. Their incomes have not gone up for 20 years, and maybe longer than that. They’re the ones who drive home to more crime in the neighborhoods. They’re the ones whose kids are going to schools that aren’t getting the best possible education to give them the opportunity. So for them, it’s slipping. And I completely understand why they’re angry — why doesn’t it work for them? Now, it’s true in every country of the world. This has been true for a long time. Whether you're a Democrat or Republican, acknowledge the problem and then start to say, how can you fix it? How can you get the schools to do the right thing, how can you reduce crime, how can you create more jobs? That's what we should be working on — solutions to that problem. And it causes a lot of the polarization today.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

Every system has flaws, but capitalism lifted billions out of poverty

“This is a really important distinction. Every system has flaws. There’s never been a system that’s perfect. Some of the flaws people talk about today — if you go to any country, there are poor people, there are slums, there are problems under any system. So the notion that capitalism is the reason you have that is not exactly right. That’s number one. The other thing is, some of it’s just bad people. There are bad people in capitalist societies. There are bad people in communist societies. When people talk about capitalism, they’re confusing all these things at once. But I totally agree — it has left behind certain people. We should acknowledge that. Even the people it hasn’t left behind aren’t happy that others have been left behind. They should have a conscience. People should say, I want to be part of lifting up all society — not just my part of society or my part of the town. So I think that’s brilliant. Capitalism has brought billions of people out of poverty. It’s invented all this stuff. Even China — what is it doing? Well, capitalism invented a lot of stuff.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

International

JPMorgan banks China, but the government draws the limits

“We do business in China. We bank a couple hundred Chinese companies, but we also bank in China something like two or three thousand multinationals. I've told my board, and I've been public: yes, it's hard doing business there. We want to. America should engage with China, but no one wants us to leave China — not those multinationals, not the American government, not the American military. I follow the law of the land. It's the Treasury Department, the State Department, and the military who tell us what we can and can't do regarding China, Chinese companies, and China sanctions. To that, we salute and do it. The best solution with China isn't to go to war with China. It's to engage with them and have a peaceful resolution. We have a lot of common interests — anti-nuclear proliferation, anti-terrorism, growing your economies. And we've got a couple that isn't the same. If they're aiding and abetting Iran, it's not the same. And anything that goes wrong in Taiwan is definitely not the same. That's government policy. I don't set government policy, nor does JPMorgan.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

Technology

July's selloff was leverage, not a broken AI thesis

“A lot of what happened in July was due to leverage in the system — there was a lot of risk-taking in April and May, and now that the excess has come out, positioning is a lot cleaner. People also built bear cases around the falling tape — the thing happens, then everyone comes up with the reason why. Some bear cases were reasonable, like what open source means for the AI ecosystem. But the big fears — that hyperscalers aren't monetizing, that they're overinvesting, that the CapEx cycle isn't sustainable — got debunked by the hyperscaler earnings. They posted great results, their ROI is improving, and they showed this CapEx cycle can be sustained. So we continue to see more upside.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

The next phase of the AI trade: semis and hyperscalers move as one

“The dispersion we're focused on is semis versus hyperscalers — essentially the check writers versus the check receivers. We've seen huge outperformance in semis over the past two years, which made sense: hyperscalers weren't showing much monetization but were spending hundreds of billions in CapEx, and that CapEx is basically revenue for semis. Going forward, our big call is that they start trading together, because now it's more about the sustainability of the CapEx cycle and whether AI makes money overall, rather than the sheer size of CapEx. Over the past six months, those two have traded negatively — the correlation is about negative 30%, an all-time low. But look at prior investment cycles: during the shale revolution, E&P (Exploration and Production) companies and oil-services companies traded together; during the dot-com bubble, the telecom spenders and the communications-equipment companies traded together. I think that's the next phase of this AI cycle.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

The AI boom is not the dot-com boom

“I don't think this is 1999 — the huge difference is earnings. During the internet bubble there were no earnings; people were just speculating while prices surged.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

AI spending as a share of GDP: as big as the 1850s railroads

“Information-processing equipment — semis and hardware — is about 2.5% of GDP right now, still below the internet peak and roughly in line with the PC boom of the 1980s. Based on hyperscaler CapEx estimates, that shoots up to about 3% by the end of this year, which is roughly in line with the railroad investment cycle of the 1850s. That means this could be about as big as it gets, unless other parts of the economy start growing too. Because who's funding the CapEx cycle? Hyperscalers, through operating cash flow tied to the overall economy, and enterprises spending on cloud and AI. So the profit cycle has to stay healthy — and I think it will. There are signs the AI CapEx cycle is fueling the broader economy: about 25% of GDP growth over the past year came from tech, semis, hardware and software, and it's trickling down into industrials and transportation. I'm pretty positive on the economy overall. But the message is that the overall economy has to hold for this CapEx cycle to continue.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

Higher rates and debt risk slowing the AI cycle

“What could potentially slow this down is higher rates. Even during the tech bubble, a lot of people say actually rates were one of the bigger culprits of the bubble popping in 2000. On the way up to that peak in the tech bubble, it survived a lot of the headwinds. So it's not that the market only hinges on what's happening with the Fed. Especially this cycle, as long as earnings are okay, this could continue. The risk to that is hyperscalers are starting to issue debt. So the higher the interest rates go, the more expensive it's going to get. But I don't think it's going to be a huge issue for hyperscalers.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

Revenue could accelerate as GPUs come online

“[Hyperscalers] showed really good monetization, and they were all basically saying that there's a lag between when they invest in capex and when they start monetizing, and they're at a point where they're starting to plug in GPUs. The first phase was building data centers — the shell. And now they're starting to plug in the GPUs, which they could monetize right away. So we're talking about potential acceleration in revenue. CapEx is probably going to go higher in 2027, but that's going to be funded mostly with operating cash flow, and I think the market's going to be okay with that.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

Consumer

Consumer companies are the largest beneficiaries of tariff refunds

“When the Supreme Court ruled against the tariffs earlier this year, we were quite skeptical the refunds would actually go out — it seemed unlikely the government would return money to companies. But it’s happening. It started on May 11th, about two and a half months ago, and so far about $100 billion of refunds have been issued back to companies. That’s about 0.3% of GDP, so if it gets used, it’s going to boost GDP. This is essentially a cash injection to consumer companies. They pay the most and were the biggest importers, so we estimate tariff refunds alone could boost staples companies’ earnings in Q2 by about 34%.” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

Most tariff refunds will be reinvested into CapEx and buybacks

“A few companies have talked about lowering prices now that they’re getting money back, but I doubt that’s going to be broad-based. Most companies will reinvest — CapEx makes a lot of sense now that bonus depreciation lets them deduct 100% of CapEx right away. And nobody’s really saying this, but I think they’ll do a lot of buybacks too, which benefits shareholders. For the broader economy, I don’t think we’re going to see much deflation. From a company’s perspective, why would you lower a price you already raised and slash your margins when you don’t have to?” - Ohsung Kwon, Wells Fargo’s Chief Equity Strategist on WSJ’s Take On the Week

Regulation, not money, is the biggest obstacle to affordable housing

“It’s regulations — and it could be federal, state, or local. We put on top of regulations. The permitting takes too long. It’s hard to build. You can’t get space that’s close enough to town. There are a lot of local laws — you can’t build a second story, you can’t turn a second dwelling into a house, you can’t use the basement as an apartment. There are tons of laws. In California, the analysis I’ve seen shows that it costs 40 or 50% more to build affordable housing than it does in Nevada. Sometimes it’s ‘not-in-my-backyard’. Sometimes it’s the regulations. Sometimes they put a lot of social things — you have to use union work, you have to do all these various things. If you want affordable housing, make it cheaper, make it easier to do.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

PGA Tour

The LIV deal is paused; a $3 billion investor group stepped in instead

“[The merger] has been on an indefinite pause. But the PGA Tour has evolved since then. LIV Golf entered and caused a lot of chaos, but then you had the Strategic Sports Group — backed by Fenway Sports Group, backed by Steve Cohen, the Mets owner, and Arthur Blank, the Falcons owner. They and a lot more people put up to $3 billion into the PGA Tour, which created a for-profit arm called PGA Tour Enterprises. Since then, the PGA Tour has been slowly trying to recalibrate itself to get on the right track, to evolve, to fill in some of the holes that maybe LIV Golf exposed.” - Randall Williams, Bloomberg Senior Reporter on Bloomberg Money

PGA Tour is once again the dominant franchise

“We're a couple of years away from [a TV streaming bidding war], but media rights are a huge part of the sports business, and if you're not in the media business, your sport isn't going to last very long. The PGA Tour is still the dominant presence in golf. Now that [the threat of LIV] is not in existence anymore, the PGA Tour is once again a dominant franchise that broadcasters are going to be bidding on.” - Randall Williams, Bloomberg Senior Reporter on Bloomberg Money

The sport has grown by 40% since Covid, and has the potential for more

“If there is one thing I learned at the NFL over two decades, it's that if you're not going forward, you're going backward, and innovation matters. When I first took the job I said we would honor tradition but not be overly bound by it. Maybe golf has a reputation as elitist, but if you look at the growth since Covid, participation in golf in this country has grown 39%. You do not have to play a sport to watch it on TV, but it helps. The average age of a professional tour telecast is 66 years old. There is a disconnect about where the sport is going.” - Brian Rolapp, PGA Tour CEO on Bloomberg Money

Big innovation in sports rarely happens without a crisis

[LIV Golf helped expose some weaknesses of the tour.] If you look at the history of the sports industry, huge innovation usually does not happen without a crisis. It can be a labor dispute — the USFL, the AFL. When I looked at this opportunity, I saw the AFL and NFL; it led to changes that accelerated growth. We have that moment here. A lot of shortcomings in professional golf came out with a little bit of competition. Competition is a good thing. We are trying to build something that outlives all of us.

Financials

Berkshire Hathaway

Berkshire Hathaway is the anti-AI thesis trade

"One of the curses of Berkshire is it gets seen as this market proxy — but not the current market, which is now dominated by AI. This stock is the quintessential anti-AI name. When you see those swings in tech, it should probably go the other way, but it hasn't. The overhang is still there — the Buffett hangover, and people are kind of still waiting on Greg Abel. Even though he's doing a great job, there's going to be that overhang for a little bit longer. But the value of these industrial businesses, manufacturing businesses will manifest itself more over time." - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

Berkshire restarted buybacks, but less than expected

"They bought back about $4.5 billion worth of their own shares. That is much more than they've done over the past couple of years, but less than I thought they were going to, given some disclosures they made in July. I thought around eight. My guess is that [Abel] views the intrinsic value of the businesses a little bit higher these days." - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

Core businesses are improving

“Number one, the insurance businesses — they're overearning, but some of the gains they're making are sustainable, so he's looking at that a little bit better. Burlington Northern and the railroad — he's got his eyes on that. He called them out at the annual meeting. He said they're going to improve their margins there. The underlying earnings power of those businesses is improving.” - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

Abel is focused on improving Burlington Northern

“Berkshire is huge on these monopolistic, necessary businesses that will be around for as long as time. That was the impetus behind buying Burlington Northern years ago. What has happened is that the metrics versus public peers are just worse. Their operating ratio, which is a railroad metric, has been worse than their closest competitor. Abel is really focused on improving that, and it's languished for years. Should they do that, it increases the intrinsic value of the business. It's still a great business for them, but it needs improvement.” - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

GEICO’s swing can move earnings by billions

“One of the biggest things that’s swinging their results is GEICO. They own GEICO. They’ve owned it since the seventies. The auto insurance business saw a big spike in losses post-COVID because of the cost of auto parts. What all of the auto insurance companies did was raise rates a lot … and all of the results of the auto insurance companies got much better, to record levels. Now all the big players are trying to grow. They’re all now fighting. The swing in the auto insurance results will, by billions of dollars, swing their earnings.” - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

Berkshire’s core equity portfolio will not change

“He explicitly said we’re going to focus on this core group of stocks [Apple, American Express, Coca-Cola, Bank of America, Alphabet] and not trade much around them... They made some moves around Apple, took out a lot of Bank of America stock over the past couple of years, so it stays pretty steady.” - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

Berkshire is on a buying spree

“They bought a homebuilder, Taylor Morrison, for $6.8 billion. They also bought $10 billion worth of Google stock. They bought a stake in a Japanese insurance company, Tokio Marine. This was actually a spending quarter for them... it looks like they were a net buyer of stocks over six months. They're putting more money to work than Buffett was doing in his last year as CEO." - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

The Taylor Morrison buy is about necessity, not timing

“They have homebuilding businesses that they own. This was a complement to the home businesses that they already own. They do manufactured homes, which is Clayton Homes — they build the home, and then they bring you your house, put it down. [Taylor Morrison] is more building higher-end homes on-site. Berkshire is not looking to time things and get it right at the exact moment. They want to be in these necessary businesses. Homebuilding is going to be necessary over time. That was probably the impetus for this deal, rather than ‘maybe now is the exact right time to buy this company.’” - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

Abel vs. Buffett — how the new CEO is different:

“[Greg Abel] is much more communicative than Buffett was... More in the annual meeting — talking, having more managers there, giving more detail on the companies. It was great to hear [Buffett’s] wit and wisdom, but he was really not talking too much about the operating results of the companies. Abel is doing that. He seems to be much more focused on the operations of the companies, the nitty-gritty. Buffett had said over the past couple of years that he was passing people off to Abel regardless, so he was kind of running the ship for a while anyway.” - Matthew Palazola, Bloomberg’s Senior P&C Insurance Equity Analyst on Bloomberg This Weekend

Industrials and Transport

America has an unbelievable ability to innovate

“A company called Zipline that makes drones. They saved 17,000 lives in Rwanda by delivering medicine to remote locations. They are now doing flights in America to get people medicines or food or delivery. Just think about this: instead of getting into a 4,000-pound car and driving for 35 minutes to pick up a $30 meal and deliver it, this drone delivers it in four or five minutes. It doesn't burn the CO2; it doesn't use as much energy. It's safer on the roads. Traffic goes down. Traffic accidents go down. America has this unbelievable ability to innovate like that. And unleashing it to help the military, our security side — that's going to be important too.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

Defense

JPMorgan won’t be any better than the country it depends on

“The national interest is more important than JPMorgan. Here’s a very important point: JPMorgan probably will not be any better than our country. If our country doesn’t do well, JPMorgan will suffer. Our country is the leader of the world. If we are not the leader in the world, there will be a huge vacuum, and it will not be to our benefit.

Here are some basic principles: to be safe, have the best military in the world. If you want the best military in the world, you have the best economy in the world. We asked ourselves, what can we do to help? What are the problems? And we got this from military officers and political leaders — what are the things that are not working? Then we did some real deep-dive analysis. We’ve shared it with people by industry: where are we relying on potential adversaries for things that we should not be reliant on? That includes missile parts, rare earths, active pharmaceutical ingredients. It also includes things in cyber, AI, and all these other things.

So we said, let’s double down and do it. Take our capability — we’ve hired a lot of people. Let’s make the world safe and secure for democracy. And I do believe that America is what makes the world safe and secure for democracy. If America is in a weakened state — if we’re not the strongest military in 25 years and the strongest economy — we won’t be the reserve currency either. The world will be fragmented, and it’ll be very dangerous for us. To me, this is more about keeping the world safe for democracy and freedom. And the alternative isn’t very good.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

The U.S. can't rely on adversaries for critical goods — and we're behind

“If you look at about 10 or 15 years ago, we should have looked at what's happening on rare earths, aluminum, certain steel — not all steel, certain steel — production of certain equipment, and said, we can't rely on China for that. And we can't allow mercantilist behavior. We need to do it here. We made a mistake. Now we acknowledge it. Let's just go fix it. And that's what this is. We don't have a lot of time. The war in Iran has pointed out we didn't have productive capability to defend the United States if there was a real war that lasted for a long period of time. If you believe America is necessary for the free world, this is something we have to do, and we have to do it now.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

The best military is the best deterrent — and the cheapest option

“They say a great military is expensive. Fighting a war is very expensive. Losing the war is the most expensive. Every military officer will tell you one major principle: have the best military — that is the best deterrent. It also helps the most allies, helps the most world growth, and defends democracy. And we still have it, by the way. If you speak to the militaries, they still have that. They're just slipping in some of these categories, and we shouldn't allow ourselves to slip. That's a sine qua non — have the best military. Then you have to define exactly what it means by pieces of equipment and training. We have the best-trained military in the world. We have the best equipment in the world. But it's changing rapidly, as you just stated, with drones. Some of these things are constantly changing on the battlefield, so we have to move quicker too.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

Politics

We stopped teaching civic responsibility

“We should educate ourselves about what this country stands for, has stood for always. I remind people that the Constitution is a legal document. The Bill of Rights is a legal document protecting the rights of individuals against the mothership type of thing. But what's the underpinning to that? Freedom of speech, freedom of religion, family, country, God, civic responsibility. The Founding Fathers always spoke about civic responsibility. They expected political leaders to have civic responsibility. It's those values that underpin America. We stopped teaching them. You can look at a lot of high school curriculums today, and they're mostly teaching about how bad America was. Of course, there were some bad things in our past. We all know that. We should acknowledge that and fix them. But to take away the principles — they knew it wasn't a perfect union when they built it. They said we're on the path to a more perfect union, and that's true today.” - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

Patriotism is about what America stands for, not nationalism

Margaret: In the lobby of your new New York City headquarters, there is an American flag that is always blowing with the wind. And it is said that you salute the flag every morning.

Jamie Dimon: I do.

Margaret: What does patriotism mean to you?

Jamie Dimon: It’s different for this company, because it’s not nationalism per se — you could be a patriot in a country that’s autocratic. Patriotism here is what this country stands for. And what it stands for is extraordinary. I tell a lot of people here, when I hear certain criticisms: go around the world with me a little bit, and when you come back here, you will kiss the ground. They don’t even understand the freedoms and liberties they have. If they understood that, they would salute that flag the way I do. It’s important we teach it. Why do people die for this country? Why did they fight the Revolutionary War? Those values transcend most other things. They’re perpetual, they’re forever. They’re not going to disappear over time. - Jamie Dimon, JPMorgan Chase CEO on Firing Line with Margaret Hoover

If you found these summaries helpful, please leave a comment or send us a message. We appreciate your feedback!

Leave a comment

Roundup

Investor Spotlight

Mohnish Pabrai | Managing Partner at Pabrai Investment Funds | New Money

• Called the S&P 500 likely “ridiculously overvalued” and pitched Berkshire (BRK.B) as a safer index alternative, with ~40% cash and Greg Abel ready to deploy in a dislocation.

• Put the AI “gold rush” — memory makers, Google, Adobe, even SpaceX — in Buffett’s “too-hard pile,” favoring boring no-brainers like Kazakh super-app Kaspi.

• Stressed singular focus, non-negotiable management integrity (”why be slightly in bed with a crook?”), and holding moated compounders like Costco and Visa unless egregiously overpriced.

Aug 2 | 50 min | Digest ⬇️

The Economy and the FED

Michael Kantrowitz | Chief Investment Strategist at Piper Sandler | The Exchange by CNBC

• Laid out five reasons the industrial revival has room to run, tying a rising ISM (at 55, seven straight months of expansion) to better credit conditions, easier lending, and broader earnings.

• Explained why the Magnificent 7 have gone flat year-to-date — their multiples have compressed as much as their earnings have grown — while the rally broadens to names like Caterpillar, Generac, Target, and Ford.

• Argued record valuations are supported by all-time-high margins, and that the real threat to the rally isn’t the Buffett Indicator but high interest rates and the Fed.

Aug 4 | 2:00 - 9:40 (8 min) | Digest ⬇️

Michael Darda | Chief Economist and Market Strategist at Roth | The Exchange by CNBC

• Attributed the recent rise in yields largely to a jump in the term premium, signaling markets are jittery about Fed Chair Kevin Warsh’s reaction function.

• Called the manufacturing recovery genuinely encouraging — seven consecutive months of the ISM above 50 after a roughly three-year slump.

• Dismissed the “C-shaped economy” framing as more entertainment than data, noting real wages rose just 0.26% year over year, and drew a sharp line between one or two modest Fed hikes and 75-to-100-plus basis points.

Aug 4 | 31:35 - 40:20 (9 min) | Digest ⬇️

Cloud and AI Infrastructure

Paddy Srinivasan | CEO at DigitalOcean | The Exchange by CNBC

• Detailed the company’s pivot to AI infrastructure: 29% revenue growth, an 800% jump in inference revenue, and AI revenue past $200 million and tripling year over year.

• Positioned DigitalOcean as an AWS for the AI-native ecosystem, serving names like Cursor, Character AI, and Hippocratic AI rather than legacy enterprises.

• Stressed capital discipline — guiding to 50% growth next year while staying cash-flow positive with a 24% adjusted operating margin and little to no debt.

Aug 4 | 20:30 - 24:00 (4 min) | Digest ⬇️

Gavin Baker | Managing Partner & CIO at Atreides Management | Invest Like the Best

• Pressure-tested the AI selloff (July was “2022 in a month”) and found no negative quantitative metric — GPU pricing, DRAM, and token growth all accelerating.

• Argues hyperscalers under-earn: contracted compute trades below spot, so as it reprices, operating cash flow funds the buildout — cutting ~$700B of credit.

• Sees the real risk as regulatory/PR (NY’s data-center moratorium), with memory LTAs, Nvidia’s “credit wrapper,” and SpaceX’s compute ramp as key battlegrounds.

Aug 4 | 1 hr 18 min | Digest ⬇️

Patrick Boyle | Finance Lecturer & Former Hedge Fund Manager | Patrick Boyle On Finance

• Argued the ~$1.65 trillion of “hidden” big-tech debt isn’t Enron-style fraud but mostly lease and chip-purchase commitments disclosed in the footnotes — legal, and hiding in plain sight.

• Flagged the real concerns: aggressive adjusted-earnings and stock-comp accounting, circular AI vendor financing (Nvidia, OpenAI, SoftBank), and a “big market delusion” needing $2.5T/year in revenue the industry is nowhere near.

• Explained why disclosure still fools people — footnotes are tedious to read and arbitrage has limits — so burying inconvenient numbers where few will look is a rational bet.

Aug 4 | 34 min | Digest ⬇️

Aswath Damodaran | Professor of Finance at NYU Stern | CNBC

• Believes AI peaked months ago with more consolidation ahead — the shakeout hits smaller players (à la Situational Awareness), not the cash-rich Mag 7.

• Reads the earnings-driven rebound as FOMO, not a fundamentals rethink — managers just don’t want to be left out, and capex keeps surging.

• Flags falling marginal returns on capital at Meta, Alphabet, and Microsoft; still calls Micron richly priced on normalized earnings despite the bull case.

Aug 3 | 4 min | Digest ⬇️

Kim Forrest | Chief Investment Officer at Boca Capital Partners | The Exchange by CNBC

• Expected a strong AMD report and said sold-out-product commentary tends to lift the entire semiconductor group.

• Framed the AI cycle as “the end of the beginning,” where changing compute needs favor nimble players like Intel and, especially, AMD.

• Named NVIDIA as the incumbent most at risk if it stays anchored to its GPU-and-gaming roots rather than adapting to customers.

Aug 4 | 10:28 - 14:10 (4 min) | Digest ⬇️

Retail

James Daunt | CEO at Barnes & Noble | Fortune Magazine

• Turnaround from near-death (100 closures, 6 CEOs, $1B Nook loss) to 717 stores — 90 above 2019 — after Elliott bought it in 2019 and installed Daunt as CEO.

• Playbook: killed pay-for-display and lets each store curate locally, run its own merchandising and social — flexible sizes, bookseller-led, neighborhood feel.

• Growth thesis: books aren’t zero-sum — better stores inspire buyers (”come for one, leave with three”), expanding the market; he downplays IPO chatter.

Aug 3 | 8 min | Digest ⬇️

Situational Awareness & Leveraged ETFs

Michael Green | Chief Strategist and Portfolio Manager at Simplify Asset Management | Prof G Markets

• explain how excessive leverage triggered the rapid collapse of Leopold Aschenbrenner’s Situational Awareness fund

• how leveraged ETFs and their forced daily rebalancing create volatility drag and destabilizing “endogenous flows” in the semiconductor market

• why the record $218 billion pile of US leveraged ETFs risks a South Korea-style implosion absent regulatory intervention

Aug 4 | 14 min | Digest ⬇️

Digest

Mohnish Pabrai on Berkshire as an index, the AI “gold rush,” and hunting no-brainers like Kaspi

On what to tell a brand-new investor today: With the market at all-time highs, the S&P 500 concentrated in the Mag 7, and the Shiller PE near tech-bubble levels, what should someone opening a brokerage account actually do?

The kind of investing I do is we make very few bets. They tend to be large and infrequent, and my opinion on the things we don’t buy is irrelevant — what matters is what we act on. So I’m not an investor in the S&P 500. I generally feel it’s overheated, but whether it’s overheated, fair, or overpriced doesn’t matter, because we aren’t placing a bet there.

We try to place bets where the odds are heavily in our favor, approaching no-brainer territory. Anytime things become murky or debatable, it’s an automatic pass.

Normally I’d tell an individual investor with a long runway to dollar-cost average into an index. But with the S&P where it is, that’s probably not the best direction — at worst it’s not a no-brainer, and more likely it’s ridiculously overvalued.

An alternative that may work for a lot of people is to think of Berkshire Hathaway as an index. Don’t buy the S&P — buy BRK.B. Something like 40% of the market cap is cash, another 25-to-30% is very good publicly traded businesses, and then there are a lot of great wholly owned businesses. Berkshire is probably either fairly priced or underpriced, but not overpriced. And the big advantage is that if we get a dislocation of any kind, Greg Abel is going to step up to the bat.

On whether Berkshire stays the “Buffett ETF” now that Abel has the reins: With Buffett stepping down, does Berkshire remain the Buffett ETF over the next 10 to 20 years, or become something different?

Even if Buffett had a life expectancy of 200 years and decided to run Berkshire for another 70 or 80, he’d have the same problem Greg Abel has: size is a big anchor. Warren Buffett with a trillion or more to manage has his hands tied behind his back versus a Warren Buffett with $50 or $100 billion.

It’s not a Greg Abel versus Warren Buffett situation — size is the 800-pound gorilla in the room. If you gave Greg Abel a billion, or even $50 billion, to manage, I think he’d be killing it in a way he can’t now.

The reason I like the Berkshire index is that if we don’t get a dislocation, we’re not taking a lot of risk. If we do get a dislocation, we may be looking at a double in a few years, because Greg definitely has the temperament to get very aggressive. So you’ve got optionality on some great pre-optionality — and pre-optionality is a very good thing.

On the roughly $400 billion cash pile: Would you do anything differently — be more aggressive returning it to shareholders — or is holding and waiting the right call?

We’ll just hold it, wait, and be patient. They did recently put about $30 billion to work in Google, so they’re generating $50, $60 billion or more in cash flow and they did put a decent chunk to work.

But people shouldn’t read too much into it, because Google is a $4 trillion market-cap company. Warren has to make those big bets because his universe is so small — he can’t play the Mickey Mouse games I get to play, which are a lot of fun. He’s way past all that.

I don’t think they should be distributing cash. We’ve had a long run of the S&P going up, and it’s not unlikely that in the next five or ten years we see a big dislocation. If we do, that might wipe out all their cash.

On who really made Berkshire’s Google call: It looked like it might have been Abel taking Berkshire in a new direction, but Buffett said on CNBC that he initiated it — what do you make of that?

It makes more sense that Warren did it than Greg. Warren has studied Google for a long time. Geico has been a customer, and they kicked themselves for not buying Google back when they knew Geico was being charged $20 a click that cost Google less than a cent — they could see how incredibly profitable it was. And before Google went public, Sergey and Larry came to see Warren for advice because they wanted to run it like Berkshire. He’s had a front-row seat for a long time.

But we have to temper that with how small his universe is. If he were managing $100 billion, there’d be no Google bet. In that CNBC snippet he almost downplayed it — he said he doesn’t like it as well as at least four or five other businesses they own.

And Google is now a company with debt, which it never was, and with high capex, which it never had. All these guys have high capex now. Zuckerberg came out and said that whether the bet works or not, they have to play. Think about that statement — he’s saying, I’m putting a lot of money to work and I don’t know whether it’ll pay off, but I don’t have a choice.

So I think what happens in AI when it shakes out is two or three players make out big time, and there are a lot of carcasses on the roadside. We don’t know who the carcasses are and we don’t know who the winners are. It’s a very difficult game right now.

On the AI “gold rush” and buying the pickaxe makers: Is the move to own the pick-and-shovel suppliers — the memory makers and data-center essentials — the smarter way to play it?

When Google spends $100 billion in 2027, that’s the equivalent of spending $20 billion five or six years ago — that’s how much the prices of what they’re buying have gone up. So it’s the gold rush, and the people selling the pickaxes are making it coming and going. The numbers look big — $100 billion, $200 billion, $400 billion — but you have to calibrate that it would have been a fourth or a fifth of that a few years back.

But even the pickaxe makers, for me, go in the too-hard pile. Take the memory guys. There are three of them and enormous barriers to entry — patents, scale. Years ago I was talking to the CFO of Micron, and he told me that if one of their fabs burned down and they tried to replicate it — with all the patents, engineers, process people, everyone who built it the first time — they’re not sure they could get the same throughput out of it. He said there’s a part of this business that’s black magic.

So the memory guys look insulated. The three of them can’t keep up, they’re on allocation telling people to take a number, and they’re jacking up prices unbelievably. That’s why there’s a four-or-five-to-one delta between what Google was paying and what it will pay. But even there, the question is where this is three or five years out — does one of the three jump in front of the others? We don’t know.

So these areas that everyone talks about on YouTube and podcasts — the simple Mohnish rule is that’s not where we want to invest. We want to invest where nobody’s interested, nobody’s talking about it, the boring stuff, where it’s a no-brainer and you’re being hit over the head by a 2x4.

On what “boring” actually looks like: If not even the fallen software-as-a-service names, then what?

We want things that are orgasmic. Let me give you an example: a company based in Kazakhstan called Kaspi. It’s listed on the NASDAQ, it’s a US-listed company, and it cash-flows $2 billion a year. Kaspi is the WeChat of Kazakhstan — a super app that does everything.

About ten years ago it was a broken, failing bank. A rock-star manager came in as CEO — he now owns about 40-to-43% of the company — and converted it into a super app. Whether you need your driver’s license or you want to do some shopping, anything under the sun, you do it there. Kazakhstan has 10 million people, and there’s no other company in the country producing $2 billion of cash flow. That’s an outlier.

He was pumping out a billion a year in dividends because they’re so profitable. Then he decided to replicate what he did in Kazakhstan in Turkey — he bought a small bank and a failing fintech there. To fund it, he told shareholders he was shutting off the dividend for a year or two, and they took the stock out back and shot it. He made his bets, then turned the dividend back on after a 12-to-18-month pause. The dividend yield now approaches 10%, and it trades at like five to seven times cash flow.

The way I look at it: the core Kazakhstan business is still growing, a monopoly adding bells and whistles, and then there’s this moonshot in Turkey. If the moonshot doesn’t work at all, you make two or three times your money. And if it does work, we don’t know. It’s not “heads I win, tails I don’t lose much” — it’s heads I win, tails I win.

On how you find these ideas: Is it just turning over stones, or the curiosity to keep chasing them?

We need to go back about 2,500 years to the Upanishads in India. One verse was written for our benefit: as is your wish, so is your will; as is your will, so is your deed; as is your deed, so is your destiny. And the punchline — your deepest desire is your destiny.

You have to buy into that hook, line, and sinker, not as a skeptic. And you cannot have three deepest desires; you have to have one. If you’re burning-passionate about one thing, it’s going to happen. If your deepest desire is to buy stocks at a PE of one, then out of 50,000 stocks in the world you’ll find them. If it’s a PE of 50, you’ll find those too. So it’s very important to have the right desires — don’t blow it with some stupid desires. It has to be something that resonates with your soul.

Look at Bezos driving to Seattle — he just wanted to build the world’s largest bookstore, and he went all in. Elon wants to die on Mars, just not on impact. That’s the power of a singular focus.

My focus is that I want to make investments I can explain to a 10-year-old in about four sentences. And finding them is easy — there’s a free website called Value Investors Club. You give them your email and see all the ideas with about a 60-day delay, which is irrelevant. Just read every write-up until an idea hits you with a 2x4. The company and the person are both there on a platter; you just have to read it. Like someone asked Warren where to start with 5,000 US stocks, and he said, start with the A’s. If it’s your deepest desire, it won’t feel like work — it’ll be like watching the highlights of the World Cup final.

On drawing the line of your circle of competence: You visited Turkey personally with investor Matt Peterson — where do you draw the line before pushing too far into unfamiliar markets?

Buffett says that in investing there are no called strikes. In baseball, if you let three good pitches go by, you’re out. In investing, you’ve got unlimited dot balls — you decide which one you want to hit, and it’s not going to hurt you to let the others go.

So you don’t need to, and shouldn’t, invest in Turkey or anywhere else until you’re 5,000% all-in. If you’re harboring doubts, the answer is simple: we move on. Buffett says he can let 10,000 balls go by, and when there’s a big fat pitch coming down the center — when the ball looks like a watermelon — that’s when he swings. You might look at Kaspi and not see a watermelon; you might see a tiny marble in the corner of your strike zone, and you let it go.

This is a very forgiving business. You don’t need to invest in the same things I do, and I don’t need to invest in the same things Warren does. Because we have auction-driven markets and humans vacillating between fear and greed, there’s always one part of the market where everyone’s exuberant and hyperactive — let them have their fun, leave it alone. We hang out in the other unpopular nooks and crevices. With less capital, your opportunity set actually gets larger — you don’t need to make Nvidia-type bets, you can make a lot of Mickey Mouse bets. But you have to have the discipline to know your circle of competence, know when something’s a total no-brainer, and have the patience to let it play out.

On handling uncertainty: Using Adobe — down 36% over the past year and 63% from its 2024 highs amid AI image-generation fears — what steps do you take to protect the downside when investors see uncertainty?

Adobe is a very simple case. If you have strong conviction on what the minimal cash flows would be over the next five, ten, or fifteen years, and you discount them back, the decision becomes obvious. If those cash flows are robust and point to a cheap stock and you have confidence in them, you proceed. If you can’t have high conviction, we move on.

Adobe may be a no-brainer for one person and a too-hard pile for another. For me, it goes in the too-hard pile. Compare it to Kaspi: Kaspi also has risk, but I can’t see anything hitting those cash flows from left field — in fact there’s a case they go higher, because they’re still innovating in a rich country. Turkey may or may not work, but if it does, it has eight times the population of Kazakhstan, and they might do three more countries after that.

So if you put a gun to my head and said I could make only one of two investments, Adobe or Kaspi, I’d choose Kaspi. In your case, you could just say neither — if you’re not comfortable, keep looking, because there are 50,000 companies. You keep turning the pages.

On the SpaceX IPO: After the biggest IPO in the world and what’s happened to the stock since, how do you react?

Elon is not human — he’s an alien. I don’t know if there’s any manager on the planet as good as him; his capabilities are superhuman. The guy doesn’t know anything about rockets and he kills all the rocket companies, landing two rockets simultaneously backwards, and they all laughed when he first said he’d do it. Then Starlink, and on and on. As Munger said, never underestimate someone who overestimates themselves. So Elon is the kind of person one should never short.

Now, going long Elon — for Mohnish, too-hard pile. You can read SpaceX’s offering documents about mining asteroids and intergalactic adventures, and it may come about because he’s superhuman, but I don’t need to make that bet. Kaspi versus SpaceX, I’ll go to Kaspi — easier to understand, and if I lose the money I’ll know how.

But the SpaceX business is phenomenal. He’s brought together people executing things they never thought they were capable of — he personally interviewed the first 3,000 hires — while running five companies and going to fix the US government on the side. I’m so proud to be an American that this country attracted a finished product like Elon; he couldn’t have done this in South Africa. He lives eight miles from me in Westlake Hills and is single-handedly driving the Texas economy. I hope we have 100 Elons. So SpaceX doing well as a business is almost a no-brainer — but SpaceX as an investment is a very different question, and that goes in the too-hard pile.

On the discipline of the “too-hard pile”: Why do so many investors resist using it early in their careers?

Humans have a high ego. They’re not willing to admit, this is something I can’t figure out. Our natural tendency is: SpaceX, of course I can figure it out; Adobe, of course I can figure it out. So it’s an exercise in humility. The too-hard pile should be used very aggressively — because that’s when you’re being true to yourself.

On the “passive investing bubble”: Is the flood of passive money distorting price discovery at the top of the market and setting up trouble?

My first feeling is to put that question in the too-hard pile. We have a saying in Hindi: why ask the address of a home we’re never going to visit? I’m not making an investment in the S&P, so I don’t need to convince myself I can answer that. More than likely we’re very far from that point, but whether we’re far or close isn’t relevant, because it’s not the game we’re playing. Much more important is what the hell is going to happen to Kaspi.

One of the fallacies smart people fall into is wanting to have an opinion on everything. It’s a big exercise in humility to say I don’t know much and don’t have much of an opinion on most things. We don’t need to Monday-morning-quarterback everything.

On the non-negotiables of a checklist: What will really run you into trouble if you’re not careful?

One thing that’s absolutely non-negotiable is understanding the nature and competence of management and owners. These have to be very high-integrity people with very high capability, and you need enough information to know that.

I’ll give you a recent example. There’s a US homebuilder, NVR, famous for buying back 80-to-90% of its stock over two decades with no dividends, delivering terrific returns. But the original founder is gone, and now something like 40-to-50% of the shares they buy back end up in the pockets of the managers. The feast the knights managing the castle are having is excessive — and when I see that, it immediately says we’re done.

A fund-manager friend who likes the business said that because of this issue it’s a very small position, and without it, it’d be a very large one. I told her that makes no sense — why would you want to be slightly in bed with a crook? I don’t even want to be in the same room. There are 50,000 stocks; this is a very basic issue. I don’t want to be in bed with greedy managers. With Elon, you might call him a greedy manager, but he sets such crazy targets that hitting them is so hard, so I don’t have much issue with him on comp — just with other things that are hard to figure out.

On judging capability of management: What exactly should people look for?

Warren and Charlie answer this really well: they just look at the track record. They don’t care what the manager says he’s going to do in the next five or ten years — they look at what’s happened over the last 20, 10, or five years and calibrate the nature of the manager. With Kaspi, I’ve never had any interaction with the manager, but I spent a lot of time studying the track record, and it gave me tremendous confidence I was dealing with someone of very high integrity and capability. Many times an investment isn’t obvious, and when it’s not obvious it goes in the too-hard pile. It’s only the anomalies that don’t.

On your single most influential mental model: Which one matters most in your own life?

Focus. It’s another way of talking about the deepest desire — we have to be all in on one little thing, and it has to be everything to us. If we do that, life is going to be amazing.

On what you’d do differently starting over: With today’s brain, how would you redo your investing journey?

I was very overdosed on Graham and very underdosed on Fisher and Munger. That realization only came to me seven or eight years ago — and I’ve been an investor for about 32 years, so for almost a quarter century I was wandering in the wilderness, aimlessly misdirected. If I went back, I’d focus a lot more on the Fisher-Munger model — maybe 20% Ben Graham, 80% Fisher-Munger.

On selling versus holding great compounders: You changed Brandon’s mind on this — how do you now decide whether to hold a high-quality business or take profits when it runs up?

Capitalism is very brutal. Any time you have a successful enterprise, there are lots of people waiting to take you down. So it’s the exception to the rule that a business survives a long time and does well. What happens in a very small sliver of businesses is that a moat gets built almost accidentally — Visa, Mastercard, FICO, Moody’s, American Express, Ferrari. The founders themselves didn’t expect these to become as moaty as they became.

If we’re in the fortunate situation of owning part of one of these, we don’t want to sell a Costco, a Coke, a Visa, a Mastercard, or an Amex unless they’re egregiously overpriced — not just overpriced, egregiously. The valuation has to be so extreme you cannot justify it, and in all those names, that’s currently not the case. Costco trades at about 50 times trailing earnings and has never been egregiously overpriced; 250 times normalized earnings would be. They may be overpriced, but they haven’t gotten to crazy numbers.

It is so rare to have a great business that survives 50, 100, or 150 years on terms agreeable to its owners — so if you’re a partial owner of one, don’t step away quickly.

On private-credit redemptions and bank exposure: A subscriber asks whether you’re worried about the recent problems in private credit and how exposed the banks are.

Mohnish has no intelligent thoughts on that. It’s in the too-hard pile. I’ve never spent any time thinking about it, so I have no idea. I see it pop up in the media occasionally, and I think there are problems, but I don’t know if I’m the right guy to talk about them. Like I said — stay focused.

Back to Roundup ⬆️

Leave a comment

Michael Kantrowitz: the industrial revival, the flat Mag 7, and whether record valuations can hold on CNBC

On the rally making new highs despite the Fed: With bond yields falling and Kevin Warsh not standing in the market’s way, how does he read the Fed’s role in the move?

The market has struggled in the last three years when we’ve been at these levels of the 10-year yield. But this year, the impact of higher rates has not been as negative.

There are two reasons for that. One, the earnings numbers are just ridiculously strong, for lack of a better term, and they’re also quite broad — and the macro data is quite strong too.

And number two, a lot of the recent move in rates is tied to oil prices. If you look at how the market’s been trading with oil, it’s just not as afraid that we’re going to have a long-term negative situation. Today’s another good example of that.

So if we do open the strait again, we’ll likely also see lower rates and, importantly, a lower chance of the Fed raising rates in September and likely the rest of the year.

On whether semiconductors are still the market’s leadership: After a sharp NASDAQ selloff, with the memory names bottoming and Intel up 10%, is the group still directive for the rest of the market?

Yeah, I think it is. But in the wake of the really sharp decline in the NASDAQ and semiconductors, we did see the equal-weighted S&P 500 continue to do well.

That’s because there are other areas of the economy doing much better than in prior years. There are a lot of other stocks seeing upward earnings revisions, aside from just semis.

About a week ago we wrote that it was time to look for names within the tech space as earnings season had begun. We thought earnings was a much-needed positive catalyst to help support those stocks once again.

On the five reasons the ISM revival matters: He’s told clients a strong ISM report like yesterday’s matters to them — can he run through why?

Sure. One of the top questions we’re getting from clients is whether this cyclical improvement in the ISM this year is over. We put together a list of five reasons it’s a positive message for that data continuing to improve.

One, when the ISM improves, you typically also see small business credit conditions improve — because the ISM is such an important measure of cyclical macro breadth. When it’s going up, usually most of the economy is doing better, and that’s something we didn’t have the prior years.

The second is easier lending standards. Yesterday we got the quarterly loan officer survey, which indicated commercial banks are easing lending conditions.

The third is improving fundamental earnings breadth, which we’ve certainly seen all year. The fourth is healthier market breadth — how many stocks are in a rising trend above their 200-day moving average. Better PMIs typically correspond with better market breadth.

And lastly, one of our high-conviction views this year is to tell investors to keep owning stocks across all 11 sectors that are highly sensitive to the ISM. Generac is the most ISM-sensitive name within Industrials. Even within Staples, a sector that hasn’t done well for years, Target is the most cyclical name. And within Discretionary, Ford is the most cyclical name there. The list is longer, but those are three examples we continue to like.

On what to do with the Magnificent 7: When you can make the kind of money Caterpillar has made this year, where does that leave Amazon, Microsoft, Google, and the rest?

The difference this year — well, two differences. One, the earnings outside the Mag 7 are fantastic this year. That wasn’t true in 2024 or 2023.

Also, the P/E of the S&P 500 is down 10% this year. Just imagine if the P/E were flat: earnings are up 25%, so the S&P would be up 25% this year. A lot of that compression in multiples is coming from the Mag 7.

As strong as their earnings are — still double-digit numbers — their P/Es are down just as much, giving you a pretty flat year-to-date performance for the group. Meanwhile there are stocks seeing better earnings where multiples are expanding and getting rewarded. There are plenty of opportunities in this macro backdrop.

On the Buffett Indicator and record valuations: With market cap relative to GDP at the highest levels on record, is this sustainable, or is a right-sizing coming?

There are two questions: why are multiples up, and what could change that?

I’d argue multiples are up because, fundamentally, margins are at all-time record highs. Margins have the highest correlation in the fundamental data to the level of the market’s P/E.

Number two, look back to 2022, when multiples came down sharply. They didn’t come down because they were high — they came down because we had an interest rate and inflation shock. Today the multiple is down 10%, and everything, whether it’s market cap to GDP, the Shiller index, the forward earnings number, or the Fed model, has come down a little this year. That’s due to higher oil and the higher odds the market’s pricing for a Fed rate hike.

So it’s really not about whether P/Es are too high. It’s what risk could show up that could really spook the markets. Right now, that’s probably still high interest rates and the potential for the Fed.

Back to Roundup ⬆️

Leave a comment

Roth Chief Economist, Michael Darda, talks the industrial revival, Warsh’s yield jitters, and the “C-shaped economy”

On whether Kevin Warsh is causing chaos or resetting Fed policy: Asked for his read on the new Fed chair’s moves, where does he land?

All we can do is look at markets and try to interpret the message. If we look at the move in bond yields between the last two Fed meetings that Chair Warsh presided over, the move up was dominated and dictated by a rise in the term premium.

So it seems markets have gotten a little jittery about what the Fed’s reaction function is, or is likely to be going forward, and that uncertainty has pushed rates up. That’s not really what you want to see if you’re a Fed official.

But there’s certainly time for things to calm down. We’re going to get a lot of data before the next FOMC meeting — two CPI reports and two employment reports before September.

On the strength of the economy and the industrial revival: If an uncertainty premium is lifting yields, how should the Fed respond to an economy showing this kind of industrial revival?

I actually think the surge in yields maybe over-rotated a little. Most of it has been driven by an economy that’s been resilient. If you look at macroeconomic surprises, they’ve risen quite substantially this year, and that characterizes most of the rise in bond yields. What’s happened over the last month is something different, related to an uncertainty premium.

But it’s a good story, at least on the manufacturing side. This is seven consecutive months now with the ISM manufacturing index above 50, and that’s after essentially a three-year slump. So this is something new, and it’s quite encouraging to see as a sustained move.

On whether the economy is a K, a C, or something else: With the Treasury secretary declaring the K-shaped economy dead in favor of a C-shape, what letter would he assign?

A lot of these letters are better served for entertainment purposes, really just describing what’s going on. The reality is that median incomes tend to go up when wealth rises, so this whole notion of a K is a bit of a misstatement.

That said, when you get things like energy shocks, real wages went negative with the spike in headline inflation — which hopefully is reversing now, and will continue to. So as long as the labor market stays intact and the Fed’s not forced into wrenching adjustments, it’s a pretty good story: real wage growth will recover as headline inflation eases. And that’s not a K, that’s something else.

On whether the Treasury secretary is overstating the recovery: Pressed on whether that means Scott Bessent is overstating things —

No, he’s not wrong, but maybe not as rosy as portrayed, in the sense that real wages are just barely keeping pace with inflation. Year over year — I’m just looking at these now — it’s a 0.26% gain in real wages. It’s slight.

On calls for the Fed to be forced into hikes: Some, including JP Morgan, now think the Fed will be forced to hike later this year — might Warsh’s uncertainty force its hand?

“Forced to hike” is one thing if we’re talking about modest adjustments upward — that’s being priced in already. For September, the markets are now looking for more than a 50% probability that the Fed lifts the policy rate. But one or two adjustments is quite different than 75 or 100 plus. That distinction is really the difference.

It’s going to depend on where the economy is. If you just look at the GDP data, it looks like we’re overheating — the underlying nominal growth rate in Q2 was almost pushing into double-digit territory. That looks like the Fed is way behind the curve.

But the labor market data doesn’t look anything like that. There’s a nominal spending-income proxy you can get by summing payrolls, hours, and wages, and that looks much steadier — in the mid-4s. The bond market is telling you that data is more accurate.

On what the Fed should actually do: Should it be targeting that kind of nominal growth, and where does that leave policy?

If they were targeting that kind of thing, they’d be slamming the brakes right now. But I don’t know that anyone’s trying to bring in a different framework.

What they should do is essentially what Powell and company have been doing over the last few years. The reaction function was much better. Obviously they made an inflationary mistake in ‘21 and ‘22.

But absent these supply-side disturbances, we were getting to a pretty good place in terms of the business cycle and inflation. And the bond market thinks we’re still there. That’s pretty important, in my opinion.

Back to Roundup ⬆️

Leave a comment

DigitalOcean CEO, Paddy Srinivasan, on DigitalOcean’s pivot to AI infrastructure, 800% inference growth, and disciplined capex

On whether DigitalOcean is an AI story: After a beat on the top and bottom lines, is this an AI story?

Absolutely, it is. As most people know, we’re one of the most beloved names in the world of developers — they just love being on DigitalOcean’s cloud. Over the last 18 months, we’ve pivoted squarely into the AI infrastructure space.

We just reported a blockbuster quarter, growing at record levels — 29% year-over-year growth, and historically our best new ARR add quarter, predominantly driven by AI.

Our AI inference cloud just reported an 800% increase in inference revenue year over year. We’re already at $200 million-plus in AI revenue, and it’s tripling year over year for the last several quarters. So we are absolutely an AI story.

On how the business actually works: In plain terms, customers rent computing power instead of running their own servers, and DigitalOcean handles the hardware — is that basically right, with so many players now in the space?

Yeah, we are exactly like AWS, but focused on the AI-native cloud ecosystem — some of the names you mentioned, including Cursor and others. We focus squarely not on the large, classic brick-and-mortar enterprises, but on the AI-native ecosystem.

Think about this as the Netflix, Airbnb, and Ubers when they were in the 2009, 2010 timeframe. Our target market is these AI-native companies that are re-scripting software.

On how long the AI capex wave can last: Can the whole ecosystem keep benefiting from rising spend — and how does he think about how long it runs?

It’s a great question. I’m not a betting man, but we’re taking a very different approach. We’re a very disciplined company when it comes to investments.

We’ve all seen the headline capex numbers from the large hyperscalers. We’ve increased our capex significantly as well, but we are one of the very few companies projecting 50% growth for next year, and we’re disciplined in that we’re positive cash flow this year and into the foreseeable future.

We just reported a 24% adjusted operating income margin, and we’re very cash-flow positive — the last 12 months we’re at 17% cash flow. So we’re pursuing the AI infrastructure trade, but doing it in a profitable manner with little to no debt on our books.

Back to Roundup ⬆️

Leave a comment

Gavin Baker talks pressure-testing the AI selloff, GPU prices going vertical, and hyperscaler under-earning on Invest Like the Best

On the month that just happened: AI names are down 40 to 60% in a straight line — what’s on your mind after a stretch like that?

I would describe July as 2022 in a month. There are some fundamental negatives we should talk about, but on the whole, the balance of fundamentals is improving significantly. Loads of AI names are down 40 to 60% from their highs in a month.

And you asked me before we started — I’ve been out here for the summer, and I haven’t heard a single negative quantitative metric about AI. Not one instance of deceleration. In fact, every metric is accelerating. However you cut it — GPU availability, GPU rental pricing, the spot price of DRAM this month, token growth — everything has actually accelerated.

On what the market can’t see: If the fundamentals are accelerating, why is the tape falling apart?

A big part of the problem is that the market does not have visibility into Anthropic and OpenAI, and into these open-source inference clouds that monetize inference here in America — Fireworks, Baseten, Modal, Together. The picture looks very different when you see that, because open source has accelerated massively because of GLM 5.2 and Kimi K3, and Nemotron continues to chug along. OpenAI has accelerated, and Anthropic continues to grow really strongly and is almost certainly pumping out significant amounts of free cash flow.

There’s this chart everybody looks at of semiconductor cash flow going like this and hyperscaler free cash flow going like that — and you’re missing these private companies. But that chart also misses something important: everybody in 2024 and 2025, even if you were really bullish, thought the price to rent a GPU would decline slowly, and if you were bearish, precipitously. I don’t think anyone thought the prices of old GPUs would be going vertical in 2026.

On the contract-versus-spot gap: Why does that vertical move in GPU prices matter so much?

Everybody thought they were going to be smart and sign these long-term contracts, and a lot of the neoclouds had to, because they needed an offtake agreement to finance the GPUs. So you have the contracted base of installed compute trading at a massive discount to the current spot market. As those contracts roll off and compute gets repriced higher, spot can decline and compute will still get repriced higher.

You’ve started to see that this quarter. Operating cash flow — not free cash flow — from Microsoft, Meta, and Amazon accelerated from 28 to 32. There were an unusual amount of one-times this quarter, mostly EU fines; strip those out and you went from 28 to 35. That’s a material acceleration at this scale, and that’s before they light up the Rubins, which will come at a meaningful premium, and before these contracts reprice.

On walking through how we got here: Take me through the month — what actually drove the selloff?

First, Meta was going to rent out compute, and this was seen as very bearish — excess capacity, cutting capex, a disaster. That’s not at all what it was. They saw SpaceX sell some big, trading-optimized clusters into the market at a truly massive premium to contracted rates, and they saw an opportunity. There’s speculation they’ll show strong IRRs on a small chunk of capacity, then raise equity and probably raise capex. They didn’t cut capex — none of the telemetry into Meta’s plans had shifted; if anything it got more aggressive. And shortly after, they released their best model in a long time, Muse 1.1, overshadowed by Grok 4.5.

Then Kimi came out and there was a huge freakout about open source, and the Silicon Data token index dipped and flattened. What that index captures is mix — because of GLM 5.2 and Kimi, there was a shift from more expensive frontier tokens toward open-source tokens. The market thought this was negative, but a token is a token: it takes the same amount of flops, memory, and watts to make. All open source taking share does is take margin dollars out of the frontier model layer and, through elasticity, drive more token demand — pushing more margin dollars into the AI infrastructure layer.

Then China had a DUV machine, which caused a huge selloff in semicap equipment. And then we get to what is in a lot of ways the real concern: real yields have gone up, and spreads widened. Meta priced a bond last week and it did not price where you’d think a Meta bond would. CDS is blowing out for everybody. Smart private-capital people say it’s just banks hedging their commitments — but it doesn’t look good, and these are undeniable facts. That would be really scary if we needed debt to finance this buildout.

On whether this buildout actually needs credit: How much of it has to be debt-financed?

This is where the differential between spot and contract pricing for the installed base is so important. If you look at the gigawatts supposed to come on in consensus estimates for hyperscalers — gigawatts of Blackwell and Rubin — they’re essentially modeled to monetize at the rate of Ampere, the A100, two generations behind. That gets you $1.3 to $1.4 trillion in hyperscaler operating cash flow.

I think it’s very unlikely they monetize at the rate of Ampere. If they just monetize at a discount to current Blackwells, it’s more like $2 trillion of operating cash flow, and that takes about $700 billion of credit demand out. Ironically, as these installed bases reprice, the credit metrics look better and it gets easier to finance with credit — whether they choose to or not, we’ll see.

On the “Blackwell air pocket” risk you flagged before: Are you still worried the early Blackwells get used for training that doesn’t generate a return?

We really saw that in the first quarter. One reason I got comfortable with it two months ago was that you were seeing such incredible things out of Anthropic that the market was going to look past it — and it did, in April, May, and June. Then in July, because of this confluence of things, it stopped looking past it, just as operating cash flow started to really accelerate. That’s just a fact — it is accelerating at big scale. Microsoft brought on a huge slug of capacity in June that didn’t even show up in the second quarter.

On the discomfort of a selloff you can’t explain: In 2022 you knew exactly what the market feared. What’s different now?

In 2022, you knew what it was — recession, rates, inflation. DeepSeek, Liberation Day — you knew what it was worried about. In a weird way that’s comforting. Here, all these specific things, with the exception of credit, are just kind of ridiculous. And the fact that it’s still going down — a technician would say that’s a little scary. It’s definitionally the bullet you don’t see that gets you.

I think the three most important words in investing aren’t “margin of safety,” but “I don’t know.” So I’ve been out here pressure-testing every one of these.

On the anecdote that captures it: What are you actually hearing on the ground about GPU pricing?

I literally spoke to a company this morning — one of the sexiest startups people want to be in business with — that rented a cluster of several thousand Blackwells, B200s, somewhere in the mid-$2 per GPU-hour. They’re renting the exact same cluster seven months later and hoping to pay just under $4. You would expect a gentle decline in prices to be bullish; instead we’re up 50 to 60% in six or seven months.

One of the inference clouds went on a podcast and said they’re planning to pay 100% more for Blackwells when their contract expires. That just means all the hyperscalers are under-earning.

On the one negative you could find: Was there a single bearish data point out there?

The main thing people are saying is that third-party data suggests Anthropic’s curve started to go off its trajectory a little bit. That’s the only thing, and it may very well be true. But then OpenAI and open source are massively accelerating, so the sum of the labs is net accelerating. Open source is a little like dark matter to the public markets — hard to measure — but if you track what these inference clouds are saying, demand is clearly accelerating, which makes sense after the capability leap from GLM 5.2 and Kimi K3.

The underlying fundamentals are improving, and Nvidia, as we record this, is at its lowest forward PE of the last 10 years. The only times the semis have been cheaper were Liberation Day and DeepSeek, and those were V-bottoms. The market 100% thinks they’re significantly over-earning. Maybe they are — we need to be humble. But my mission this week was to look for negative data points as hard as I could, and I haven’t been able to find one quantitative metric other than that contested Anthropic third-party data.

On why the whole market moves as one: Is something structural amplifying these narratives?

There’s Mike Mauboussin’s theory that a breakdown in diversity is what leads to bubbles and crashes. Everyone I know in the public equity business, retail or institutional, immediately feeds every piece of news into Claude — sometimes a Claude agent. It’s probabilistic, but there’s probably not much variation in how it interprets that news. It’s almost like Claude is Walter Cronkite for the stock market, and everybody believes whatever it says. It’s really smart, but it’s not always right.

You see the effect. There’s this guy TBU, part of the anonymous semiconductor mafia, who posted a chart of Japanese capacitor stocks and said we’ve had an entire capacitor cycle in six weeks. And it’s true — vertical, then whoosh, before the actual fundamentals even hit.

On the efficiency innovation you’re seeing: Has anything on the long-lead-time research side made you especially curious?

A lot of people seem to feel they are very close to solving continual learning and sample-efficient learning. If those are solved, it’s possible you get a temporary discontinuity in training demand — I was effectively trained on 20 billion tokens, and these models are trained on 300 trillion. But training as a percentage of compute is going to asymptote to something very small anyway. SSI says they’re coming out with their model in August, and there’s a whole generation of new labs focused on this. This would be awesome for the world, and it’s hard for me to believe it would be negative for AI infrastructure demand — but I’m trying to be really open-minded.

On what would actually flip you bearish: What set of circumstances would get you really scared?

If operating cash flow doesn’t continue to accelerate, so we need to debt-finance this — that would be negative, and it’s a function of how Anthropic, OpenAI, Grok, Cursor, and open source do. A dramatic, sustained contraction in GPU prices would be worrisome; the market would react instantly. If the sum of the labs plateaus or declines, that’s really negative, unless it’s just open source growing the pie.

But have you heard anyone say they have too many GPUs? Not a single person — in fact, it’s the opposite. It sounds like a drug market.

On the multi-model future: Doesn’t cheaper open-source inference cut into AI demand?

A lot of people hear “half the cost” and think that’s bad for AI demand. It’s not, because the cost the user pays is a function of the margin on the tokens. You’re shifting from really expensive tokens with 90% gross margins to tokens with maybe 30% gross margins — that’s where the savings come from — but the tokens cost the same compute to produce.

A public company sets up a router, which cuts its AI spend but may actually increase the tokens it generates by shifting to cheaper open-source tokens. That’s just more compute. The GPU compute hours probably go up. And then you have this whole wave of AI natives leaning into it so hard, not hiring humans, putting it into tokens — they’re not slowing down. Meanwhile companies on the East Coast have barely adopted AI, and Europe is trying to figure out how to regulate it before using it. There are these differential waves of adoption all happening at once.

On where the customer cash flow comes from: The pushback online is: even if hyperscalers are under-earning, where does the accelerating operating cash flow ultimately come from?

Definitionally it has to come from faster economic growth through productivity — Satya’s comment that either we start growing 10% or we don’t — or from labor substitution. In a lot of AI natives you’re seeing substitution, not because they’re firing people, but because they’re not hiring nearly as many humans. Gross profit dollars per FTE are vertical relative to past generations of startups.

In the really AI-pilled companies, tokens as a percent of total comp spend get really high — 20 to 25%. Our friend Dylan Patel is at 30%; I’ve heard of 50%. There’s $25 trillion in knowledge work, so take 20% and that’s $5 trillion, which either comes from labor substitution or faster growth — and we really want it to come from growth. Interestingly, founder-controlled companies, adjusted for COVID-era overhiring, aren’t really doing mass layoffs, which tells you something about where they think there’s still opportunity for people. And you’ve seen charts from Cognition, Ramp, and Stripe that the companies spending the most on AI are growing meaningfully faster.

On the game theory of memory: Everyone’s citing long-term agreements — how should we think about them?

Everything’s in a shortage right now. We’re shifting, particularly for memory, from crushing short-term numbers to trading short-term upside for long-term supply-chain agreements — LTAs — where the customer prepays and there’s a floor and a ceiling.

Think about the game theory of breaking one. There are four companies that matter at scale: Amazon with Trainium, Google with TPUs, AMD, and Nvidia, who’s much bigger than everybody else combined. Memory is the dominant axis — the more memory you put with flops for a given unit of compute, the more tokens you get out, which lowers costs, which is why demand hasn’t responded negatively at all. If you break your LTA and leverage shifts back to the memory guys for any reason, you’re out of business — your allocations get cut, and this is a cyclical industry where oversupply is followed by undersupply. That was never the case before. Apple could do whatever it wanted because it had no competitor. Now you have at least four players and all the startups, and if you break an LTA, they break the volume agreement and give it to your competitor.

On Nvidia’s position and its new “credit wrapper”: Given how much this environment favors Nvidia, why is it trading at such a low multiple?

Nothing is more financeable than an Nvidia GPU, and they’re doing a very good job matchmaking land and power. They’ve rolled out a really clever new business model I’d describe as a credit wrapper with a revenue share if GPU prices are above a floor. This could give them a giant cloud business through royalties really quickly, and it alleviates the cash-flow mismatch. It’s not vendor financing — someone else loans the buyer the money. They still make equity investments, and they write in that the money can’t be used to buy Nvidia chips, though money is fungible.

If I were the CEO of SK Hynix, I’d do the exact same thing — go to the buyers and participate in a credit wrapper. It’s a logical extension of the LTAs: trade upside for durability and get a royalty on recurring revenues. Essentially every time Nvidia hasn’t taken an equity stake in something, it’s been a mistake — they’ve taken stakes in everything except, for a long while, the memory companies. Jensen sees every lab and every advance, and what he sees makes him bullish, so take some equity upside plus a revenue share while generating hundreds of billions in free cash flow to bridge the gap.

On the labs’ arms race: After watching OpenAI and xAI come roaring back, is anyone going to take their foot off the gas?

Anthropic, if they’d been as aggressive on compute as OpenAI, would have run away with it. Now OpenAI is back in the game, and I think Grok is in the game — those are the companies on the Pareto frontier, and they have the compute. Four months ago Dario was talking about how hard it is: if you buy too much compute you could go bankrupt, but if you don’t buy enough you could lose. We saw what happened — OpenAI got back in, and xAI is in it in a big way with Grok 4.5 and Cursor. From a game-theory perspective, nobody is backing off anytime soon, especially if it can be funded out of operating cash flow.

On the most bullish people you met: Did you meet anyone way more bullish than you, and what do they believe that you don’t?

Essentially everyone out here is more bullish than me. I read something arguing that renting an H100 for a year could cost $250,000 — about 15x the current spot. That wasn’t even in my considered-but-dismissed set of unlikely outcomes. The argument was that margins on compute are going up, the amount of compute is going up, and inference margins are going up — multiply those three and that’s how you get this crazy acceleration in the sum of the labs plus open source. I look at the stock market and feel like a foolish optimist, and then I talk to people at the labs and I’m bearish relative to essentially everyone, which is a strange state of affairs.

On the DUV news out of China: Is this the equivalent of ASML in 2001, or the first chapter of a new story for global cutting-edge compute?

Both could be true. If a DUV machine is a propeller plane and EUV is a jet turbine, they didn’t have it before and now allegedly do — that’s a phase transition, like going from liquid to solid. But that jet engine is 25 years behind. It’s learning by doing; you can’t teleport into the future, you have to go through the cycles. Is it significant? Yes. Did the market overreact? Probably — if it ever hits ASML’s orders, maybe in five years, and the market will have forgotten and re-feared it multiple times by then. It’s very hard as an American to have total clarity on China. For better or worse, we’re decoupling, it’s self-reinforcing on each side, and they’re not going to stop — neither are we.

On everything outside AI: What’s happening to the rest of the market?

Last month, everything but AI was vertical. Open source getting closer to the frontier, and companies like Fireworks making it easy to customize a model to beat frontier performance at meaningfully lower cost, is a godsend for the software industry and all these AI natives. Our friend Vishria said two years ago he’d never seen more companies go from founding to $50 million of revenue in nine months — but back then a lot of people dismissed them as ChatGPT wrappers. Now, with open source, you generate data unique to your use case. Fireworks came out with a product called Nexus — three lines of code and it ingests your data, RLs a model, and routes queries — and that’s the solution for every AI native. If you go from using two or three frontier models to using whatever’s optimal for 30 to 60% of your token consumption plus your own RL model, you’re not a wrapper anymore — you’re way more defensible.

It may be that lower-margin open-source tokens massively inflate the value of the most cutting-edge frontier tokens — if you have cheap 120-IQ open-source models, doesn’t that make a 160-IQ model that can orchestrate them more valuable? Frontier tokens may keep capturing the overwhelming majority of economic value but not all of it, while open-source tokens become the majority of tokens processed. And again, that’s great for infrastructure demand, because a token is a token and takes the same flops, watts, space, and cooling to make.

On the worst thing that could happen: Is the biggest risk regulatory?

Regulatory has to be the biggest risk — it’s the most obvious one. You can’t ignore New York doing a data-center moratorium, and we’re living in this weird post-factual political world. The AI industry has done a terrible job of PR. The narrative in Washington is that data centers raise your electricity prices, take your water, and take your job. The reality is that, given the deals being cut now, when a data center goes in, electricity prices generally go down for everyone around it because of behind-the-meter deals, and developers now build hospitals, schools, police and fire stations. The jobs are ongoing because you need plumbers, electricians, and HVAC contractors — data centers are one of the best things to happen for blue-collar wages in my lifetime, and yet the Democrats who ostensibly represent those workers are taking the jobs away.

A lie goes around the world faster than the truth gets out of bed. An author overestimated data-center water usage by 10,000x — not one or two orders of magnitude — and it got super debunked, like the Popeye spinach decimal error, but people still believe it. Somebody needs to tell the truth — maybe a foundation or a PAC running ads during the Final Four and NFL games showing what a data center actually does for your community. And AI is increasingly saving lives and curing rare diseases; at ASCO this year the vibe was the most scientific breakthroughs ever seen at a single conference. If you have a sick child or parent, AI meaningfully increases the odds of recovery. The industry has to tell that story, because New York feels like the first of many.

On what’s missing from the compute conversation: What are people overlooking on the hardware side?

What happens when you put these SRAM-based accelerators — not constrained by HBM DRAM, often on older nodes — onto the installed base. When you disaggregate inference, decode has two parts, attention and the feed-forward network. The holy grail is prefill on one chip, attention on a super-high-powered chip with HBM DRAM, and the feed-forward network on an SRAM chip. You just can’t beat SRAM for that feed-forward network, and no matter how you set the ratio of compute to HBM DRAM to SRAM on a chip, the workloads keep changing. Being able to disaggregate into these three parts is going to be really positive for the ROI on AI.

On dark horses: Can you imagine a player not currently on everyone’s mind reaching Game-of-Thrones scale?

Micron would be a sample answer to becoming as important as Anthropic, OpenAI, Microsoft, Amazon, or Nvidia. Lin at Fireworks is an absolute killer, and our friend Scott Wu at Cognition is one you’re here to. Those are the most obvious names.

On SpaceX in the public markets: What’s it been like watching it get digested — does the market understand it as a company?

It doesn’t really, because it’s such an everything company. The fundamentals have gotten better since the IPO — Grok 4.5, the Cursor acquisition, which has clearly accelerated meaningfully — and they’ve shown over three years they can bring on more compute faster than anyone at lower prices. One of the more bullish things for compute is that they put a vast amount into the market overnight and it wasn’t even a blip; the market utterly absorbed it.

A Substack writer thinks SpaceX is going to bring on eight gigawatts of compute in 18 months. I’ll never bet against Elon, but that would be a truly incredible feat, and rates have gone up since they signed those contracts, not down. They’re monetizing at something like $50 billion a gigawatt, and consensus for next year is $73 billion — that’s eight gigs at $50 billion a gig, and obviously not all lit up at the start of 2027. It seems very implausible; I almost don’t believe the report. But to this day the only companies that have brought on more than 500 megawatts of power in a year are the hyperscalers, CoreWeave, Crusoe, and SpaceX — and SpaceX has done it fastest and cheapest. Very little is built into that stock for the compute they might bring on, and I don’t think it’s anywhere near eight. As Elon says, they specialize in making the impossible late.

There’s a big New York hedge-fund short case that spot compute goes down 90% and it won’t generate the revenue people think. Maybe — but I’ve seen Elon’s companies do really impressive things. And I spent time at Starbase; orbital compute feels more real every day. Our friends at Benchmark funded StarCloud, an orbital compute company SpaceX is partnering with, letting them use the Starlink laser technology. Benchmark isn’t from the Elon ecosystem, and they chose to fund it without SpaceX’s internal launch cost — that’s a good sanity check. Maybe I’m crazy, and Elon’s crazy, and Benchmark and the SpaceX engineers are all crazy — that just doesn’t seem that probable.

Back to Roundup ⬆️

Leave a comment

Patrick Boyle: Is Big Tech’s Hidden AI Debt the Next Enron?

The accusation

A few weeks ago, Nikkei Asia reported that the five biggest US tech companies are carrying $1.65 trillion of debt that doesn’t appear anywhere on their balance sheets. Not the debt that you can see — a second, larger pile hidden behind it.

A few days later, the Financial Times found another $50 billion in leases that Nvidia had signed for a single data center in Texas, stuffed full of its own chips — a commitment nobody had known about.

And the number keeps moving. Nikkei did their count before most of these companies had even reported earnings. And when they did report days ago, three of them alone signed nearly $900 billion of new AI commitments in a single quarter. So $1.65 trillion is already an underestimate.

Which is why, if you spend any time on financial YouTube, you already know what people are calling this. The word being thrown around is Enron. Commentators — the ones with big social media followings and no obvious background in accounting — have looked at these numbers and concluded it’s Enron all over again.

So I’ve been practicing my shocked face in the mirror. It turns out to be surprisingly hard to hold that frozen, open-mouthed, pointing-at-a-red-line expression while also looking like you understand what a lease is.

Because here’s the question this video is actually about. Is any of that true? Is this fraud — the real numbers being hidden from investors the way Enron hid them, right up until the whole thing fell apart? Or is it something much more boring and much more interesting? Let’s find out.

What Enron actually was

First, though, because a lot of you weren’t following the financial news in 2001, a quick word on Enron, since the entire accusation rests on it.

Enron was an American energy giant that turned out to be a fraud. It had been hiding enormous debts and losses in a web of secret, off-the-books entities. The accounts investors could see were essentially a fiction. When it unraveled, the company collapsed in a matter of weeks. It took down Arthur Andersen, one of the five biggest accounting firms in the world, and wiped out the retirement savings of thousands of its own employees. It is still the definitive corporate accounting fraud.

So when someone points at big tech and says “Enron,” they aren’t complaining about confusing bookkeeping. They’re alleging deliberate fraud on a criminal scale. That’s the charge that we’re going to test.

Why most of this “hidden debt” isn’t hidden

When you see a headline claiming that tech giants are hiding over a trillion dollars in debt, it’s natural to assume a crime is being committed. But when you dig a bit deeper, a lot of this debt turns out to be long-term purchase agreements for graphics cards and leases on data centers that haven’t been built yet. Under standard accounting rules, if the goods haven’t been delivered, or if the building isn’t running, you don’t record it as a liability on the balance sheet. You disclose it in the footnotes.

When you sign a two-year phone contract, you’ve committed to paying the network something like $50 a month for the next 24 months. That’s a real obligation — you can’t just stop. And if you added it up, you’re on the hook for over $1,000. But you don’t sit down and record a $1,200 liability on your personal balance sheet the day you sign. You pay for it month by month as you use it.

The tech companies are doing the exact same thing, just with more zeros. Instead of a phone contract, it’s a 15-year lease on a data center in Ohio.

What it signals when a company borrows

For decades, financial commentators have been complaining about tech companies hoarding cash — that they use their cash flow to buy back shares instead of investing in anything new. Now these same companies are issuing securities to invest in new infrastructure, and the same commentators have found a way to be unhappy about that too. Which raises the question: what does it actually signal when a company chooses to borrow instead of raising equity? Because it tells you quite a lot.

Investors pay close attention to how a company pays for things, because the choices they make send clear signals to the market. Here’s the intuition. If you actually thought you’d build a machine that turns $1 into $5, you wouldn’t sell half of it to strangers to raise the money to build it. You’d instead try to borrow the money, build the machine, keep the entire $5 profit, and pay off the loan. You want to keep all of the ownership stake yourself in such a high-conviction investment. You only want to sell a percentage of the business when you’re less sure about the likelihood of it making a lot of money.

So debt isn’t always a bad sign. Borrowing to build tends to signal that management thinks the return on investment is worth keeping for the existing owners.

...but they’re also raising equity

Although — and this is where it gets interesting — these firms are also raising equity. In June, Alphabet completed the largest equity raise in corporate history, almost $85 billion, anchored by a $10 billion check from Berkshire Hathaway.

Berkshire might be the last name you’d expect on that list — a firm that generally regards buying back its own shares as more sensible than funding somebody else’s moonshot, and a firm which drives a notoriously hard bargain. It reportedly bought its Alphabet stock at around a 6% discount to the market price, because of course it did. This is not a firm that overpays for a story. But they decided that the AI buildout was worth a $10 billion investment.

When you see big tech raising money by every route available all at once — record debt, record equity, convertibles, the lot — the signal isn’t in which one they picked. It’s in the scale of the capital raise itself. You don’t raise capital like a company fighting for its life unless you think there’s something on the other side worth the fight. Whether they’re right about that is the rest of this video, but it’s hard to argue they’re hiding the spending when they announced part of it in the largest stock offering ever filed.

A timing difference — and the cleverer stuff

And a lot of this resolves itself over time. The leases that haven’t started yet will come onto the balance sheet as real liabilities once the data centers switch on. That part is just a timing difference. Meta alone signed $233 billion in new commitments last quarter — $96 billion of it leases that will move onto the balance sheet as the data centers come into use. The purchase commitments mostly turn into chips and buildings the companies actually own.

What doesn’t tidy itself up so neatly is the cleverer stuff — the joint ventures and off-balance-sheet vehicles engineered on purpose to stay off the books. But even that isn’t hidden in the Enron sense. The details are all there in the accounts; you just have to go looking for them. So it isn’t Enron-like fraud. It’s camouflage, which only really works on people who aren’t paying much attention.

Aggressive in plain sight: adjusted earnings

Now, none of this means that big tech plays it straight. They’re plenty aggressive. They just do it in plain sight, on the front page of the earnings report, under a heading that says “adjusted earnings.”

If you’re spending billions on data centers and chips, those assets wear out and need replacing. But many of these firms would rather talk to you about EBITDA — earnings before interest, tax, depreciation, and amortization. Charlie Munger suggested that every time you read the word EBITDA, you should replace it in your head with “BS earnings.” His point about depreciation was that it’s a kind of reverse float: you pay the cash upfront for the equipment, and the expense shows up later as the thing wears out. Leaving it out is just assuming that physical objects last forever, which is a lovely thought and very rarely true.

And you can see the strain in the real cash numbers. When the latest earnings landed, the four biggest hyperscalers posted their lowest combined free cash flow in a decade — $7 billion between them — and Alphabet went cash negative for the first time since it went public.

Stock-based compensation

Then there’s stock-based compensation. Tech companies love paying staff in stock and then taking that expense straight back out of the earnings they show investors, on the grounds that it’s non-cash. Aswath Damodaran at NYU has called adding back stock-based compensation one of the worst abuses in modern reporting. His point is that it isn’t a non-cash expense in the way depreciation is. It’s a barter. If a company sold shares on the market and used the cash to pay employees, everyone would call that a cash expense. Handing over the shares directly, instead of selling them and paying cash, doesn’t make the cost disappear.

Warren Buffett has been asking the same question for years: if options aren’t a form of compensation, what are they? If compensation isn’t an expense, what is it? And if expenses shouldn’t go into the calculation of earnings, where in the world should they go?

Buybacks on a treadmill

To stop all that stock they’re handing to staff from inflating the share count, the companies use real cash to buy their own shares back, which they present to investors as returning capital. Really, they’re running on an expensive treadmill just to stay in the same place.

And here’s the catch. A buyback only actually rewards the remaining shareholders if the shares are bought cheaply. But a company mopping up its own stock-based compensation doesn’t get to wait for a good price. It has to keep buying on a schedule, whatever the shares cost that quarter — which lately has not been cheap.

The real worry: circular financing

While tech executives might be aggressive with their accounting, the actual cash they’re spending on AI is very real. And it’s the way they’re spending it that has some investors worried.

Nvidia is currently working on a round of AI deals worth more than $750 billion. It’s in talks to backstop $250 billion to help OpenAI lease computing power, and to finance another $350 billion of OpenAI’s chip purchases. It threw $5 billion at a secretive new startup run by former OpenAI chief scientist Ilya Sutskever. Google has agreed to backstop lease payments for Anthropic, effectively handing it a $35 billion loan. SoftBank committed $65 billion to OpenAI and took out a $40 billion bridge loan just to finance the bet.

If you draw the diagram of who owns what, the companies at the center of the AI boom turn out to be mostly investing in each other.

Vendor financing — and what happens when it doesn’t work

Now, if you were a car salesman trying to hit your monthly quota, it might occur to you that lending a customer the money to buy a car from you, and then booking that as a sale, is a very effective way to move inventory — at least until the customer stops making the payments. And the fear in the market is that AI has turned into one enormous version of this: a web of companies funding their own revenue.

Nvidia’s CEO Jensen Huang has called the suggestion that any of this is circular “ridiculous,” which is a strong word to reach for while backstopping a quarter of a trillion dollars of purchases of your own product. But to be fair to him, he has a point. As the Financial Times pointed out, this is really just old-fashioned vendor financing. Telecom equipment makers and plane makers have been writing checks to help their customers buy their products for decades. And the argument for Nvidia doing it is just as reasonable: the AI boom is moving fast enough that a company like OpenAI couldn’t raise enough ordinary debt or equity to build the computing power it thinks it needs. So by stepping in, Nvidia locks in a customer, makes sure its chips actually get used, and if the bet pays off, ends up owning a slice of something that could be worth a fortune.

The trouble with vendor financing is what happens when it doesn’t work. Then it’s a double blow: you don’t just lose the customer, you lose the money you lent them to be your customer. And the credit guarantees make it worse. If an equity stake goes to zero, that’s just money wasted — annoying, but survivable. But a promise to cover a customer’s debts if things go wrong can turn a valuation problem into a solvency problem.

Right now, Nvidia throws off something like $200 billion a year in cash, so if one or two of these startups trip, it can take the hit. The question is what happens as the guarantees climb into the hundreds of billions, and a company that used to avoid debt is suddenly standing behind everyone else’s.

You don’t have to take my word that this matters. The clearest sign is in Nvidia’s own credit market. The cost of insuring its debt against default just jumped by the most on record in a single day, right as this round of deals landed. So the people whose actual job is to price the risk of Nvidia not paying its bills had a look at all of this and got noticeably less relaxed. Because the real risk was never just that the AI market turns out smaller than hoped. It’s that the people buying the chips and the people making the chips are increasingly the exact same people.

The big market delusion

All of this circular financing is happening because everyone involved is convinced that the market for AI is going to be so astronomically large that whatever they spend today will look like a rounding error tomorrow. Damodaran has a name for what happens next. He and his co-author Bradford Cornell call it the “big market delusion.”

The way it works is that a new technology shows up attached to a massive potential market. A crowd of companies crop up to serve it, and investors price each company as if it’s going to be the winner. This is not about the companies talking themselves up — it’s about the people buying the shares. Each cluster of investors looks at their chosen company and sees it as the obvious future giant.

The problem is that they can’t all be right. If you take these companies and add up what the market expects each of them to earn, you get a number bigger than the market itself. Everyone’s been priced to come in first in a race that can have only one winner. Which is how a whole market can be priced for a future that mathematically can’t happen. The story is doing all the work, and nobody’s minding the numbers.

How big is the story?

So how big is the story here? The Economist estimates that the AI buildout is on track to be the largest investment surge in history — around $900 billion this year alone being spent on chips, data centers, and power, with more than $400 billion of it borrowed.

And then they calculated what it would take to pay for all of that. Their estimate is that the industry would need to be earning something like $2.5 trillion a year in AI revenue — which is more than the entire global technology sector earns from everything it does today.

The adoption reality

The actual figure is not close. Adoption is real — around a fifth of American firms report using AI in some way — but a lot of them are using the free versions. According to a Bank of England study, the average American executive spends about 100 minutes a week using AI. That’s not a typo. The largest capital investment in the history of the species is being justified by an hour and a half per executive per week — so somewhere between lunch and the drive home.

And when users do pay, they don’t pay much. The fintech firm Ramp went through actual company spending and found that the median firm was spending, per employee per month, $10.66. So $2.5 trillion a year being spent to capture $10.66 per employee.

The most damning number that came out of the Bank of England’s research was that nine out of 10 executives said that AI had made no difference to their company’s productivity over the past three years. When a technology takes over the economy, people usually tend to notice.

Where AI actually works: small businesses

But that’s the view from the top. Look at the other end of the economy and the picture flips. The people getting real value out of AI aren’t the giants spending hundreds of billions on it — they’re the small ones. According to a survey by the payroll firm Gusto, the share of new business founders who used AI to get started doubled to 60% in two years. They are not using it to cure a disease or replace a department, but to build a website, handle the local paperwork, and do the things that used to mean hiring someone.

Now, some of this new business activity is people incorporating their hobbies, and a shrinking share of these firms will ever employ anyone but the founder — so let’s not oversell it. But the clearest real-world win for AI so far isn’t the company burning billions on it. It’s the person starting a one-man business paying about $20 a month.

When caution flips to hype: SpaceX

When a market gets priced as optimistically as AI has been, the people whose job is to sound a note of caution sometimes decide to do the opposite. Take SpaceX. When it went public in June, it wasn’t shy about the AI framing. Its own prospectus claimed a total addressable market of $28.5 trillion — and of that, $26.5 trillion, or 93% of it, was attributed to AI or Grok, which leaves about $2 trillion for everything else: the rockets, the launches, the satellites, the global broadband network, Twitter. The actual space company is the rounding error at the bottom.

That was the case for pricing the shares at $135. You’d think that would be ambitious enough for anyone, but within weeks a Wall Street analyst put a target of $800 a share on it, which would value the company north of $10 trillion — on a business that did under $19 billion of revenue last year.

Now, you might wonder why an analyst would look at a company losing money on $19 billion in revenue and decide it’s worth $10 trillion. As it happens, there is a reason, and it’s a good one. The reason is what SpaceX is about to do next. One analyst went through the prospectus and added up the spending the company is committed to — commitments that the filing discloses but never totals in one place — and they got to something like $235 billion by 2030. The IPO funds raised by SpaceX covered only a slice of that cash requirement. A gap of around $170 billion still needs to be filled by SpaceX issuing more stock and more debt, again and again, for years — which is a great deal of underwriting business for Wall Street.

The analyst chorus

And here’s the thing about those targets. According to Fortune, analysts at 18 of the banks that underwrote the IPO put out their price targets at almost the exact same time — around 25 days after the stock started trading, which is when the rules let them start talking. The notes were, in Fortune’s words, “almost uniformly bullish.” Morgan Stanley called SpaceX “AI’s final frontier.” Bank of America said it was “paving the superhighway to the stars.” Raymond James compared it to the invention of electricity, the railroads, and the internet. These are supposed to be equity research notes. Out of 30-odd analysts covering the stock, exactly one rated it a sell — and that one works at an independent research firm that doesn’t do any underwriting business.

The firewall that got scrapped

There was, for about 20 years, a rule that made this sort of arrangement awkward, but the SEC scrapped that rule last December. It was called the global research analyst settlement, and it dates to 2003, in the wreckage of the dotcom bubble. It built a firewall between the investment bankers and the research analysts at the same firms — the idea being to stop an analyst publicly rating a stock a buy to help his bank win a fee, while privately emailing colleagues to call the same company a pig. Which isn’t a hypothetical: in the cases that led to the settlement, one analyst did exactly that. Another described the stock he was recommending as a “POS,” which I’ll let you expand for yourself.

The firewall was taken seriously. Bankers and analysts at the same firm weren’t allowed to talk business without a chaperone on the line — two of the highest-paid people in Manhattan needing a babysitter on the phone in case they said something a bit too useful to each other. The whole thing was championed by the New York Attorney General at the time, Eliot Spitzer — better known as client number nine of the Emperors Club VIP, a man with a well-documented understanding of the value of keeping certain transactions off the books.

The SEC scrapped the settlement last December, citing the need for lower compliance friction, which is the regulatory way of saying that the rule had become a hassle to enforce.

Enforcement falling apart

And it’s not an isolated decision. By almost any measure, American enforcement of financial crime has been falling apart for years. White-collar prosecutions have been drifting down over the last 30 years; they’re now running at about half the level of 20 years ago. According to The Economist, the Justice Department has cut its lawyers by a fifth and moved investigators onto immigration and drugs. The SEC brought a grand total of 10 enforcement actions against auditors last year — a fifth of its usual rate — running down the exact oversight that was built after Enron. And since most of these crimes carry a five-year statute of limitations, the trick is often just to keep the plate spinning long enough that the clock runs out. One study reckons only about a third of corporate fraud is ever caught at all.

The real question: does disclosure still fool people?

But here’s the turn, and it’s really the whole point of this video. For the companies we’re actually talking about, none of this matters. The Metas, the Oracles, the hyperscalers — they aren’t committing fraud. They don’t need to. Everything they’re doing is legal, and nearly all of it is disclosed. Which is a far more interesting situation than “will they get caught,” because they won’t.

The real question is this: if it’s all sitting there in the open — the adjusted earnings, the $50 billion in leases, the stock-based compensation added back — does it actually work? Does dressing up numbers that anyone is technically free to read still fool people? Are investors really being taken in?

It turns out that this is one of the most heavily studied questions in all of finance. And the answer is a deeply unsatisfying “yes, a bit.” And here’s exactly how.

Damodaran: investors anchor on the number in front of them

Take Damodaran, who we heard from earlier. His view is that markets are roughly efficient over time, but that presentation still matters, because most investors anchor onto whatever number is put in front of them. Show them an adjusted figure and that’s the only one they’ll use. His objection to adding back stock-based compensation is exactly this: it’s a real cost dressed up as a non-cost, and a lot of people simply accept it at face value.

Sloan (1996): cash beats accruals

Then the harder evidence. In 1996, an accounting professor named Richard Sloan published one of the most famous papers in the field. He split company earnings into two parts: the cash the business actually took in, and the accruals — the softer, judgment-based part that depends on management’s assumptions. And he found something the market apparently hadn’t: the accrual part is much less reliable than the cash part. It tends not to last. Companies whose profits leaned on accruals went on to disappoint; companies whose profits were backed by real cash went on to do better. But the market was treating both kinds of profit as if they were identical — which meant that you could earn excess returns for years simply by betting that it would eventually notice the difference. In plain terms: cleaner earnings beat dressed-up earnings. The polish doesn’t hold.

Bloomfield: the incomplete revelation hypothesis

So why doesn’t the market just spot this immediately? That’s the second idea. A professor named Robert Bloomfield has a nice explanation that he calls the incomplete revelation hypothesis. In theory, a market instantly prices in all public information. But Bloomfield’s point is that “public” and “usable” are not the same thing. The number you need is technically out there — it’s on page 83 of a 200-page filing, split across four footnotes, in a form you have to reassemble yourself. And extracting it costs time, effort, and attention, which aren’t free. So the harder a fact is to dig out, the less completely it shows up in the price. It isn’t that the information is hidden; it’s that reading it is annoying and most people don’t bother. Which is the entire game. The debt isn’t hidden — it’s just filed somewhere tedious enough that you won’t look.

The limits of arbitrage

At which point you might reasonably ask: fine, but if there’s money to be made reading the footnotes, why don’t the professionals just do it? Read the filing, short the overpriced stock, and collect. And that’s the third idea — the limits of arbitrage, a field that the economists Mitchell and Pulvino did much of the foundational work on.

The problem with being right about a footnote is that being right isn’t enough. You also have to stay solvent long enough for everyone else to catch up. If you short a beloved narrative stock because you found an ugly commitment buried in the accounts, and a few million people buy it anyway because they like the founder, that stock can keep climbing for a very long time — and your short position can wipe you out well before the market ever gets round to caring. The smart money is aware of this. So a lot of the time it simply doesn’t bother getting involved in hype stocks at all. The mispricing survives not because nobody can see it, but because the people who can see it can’t afford to bet against the people who can’t.

Bringing it all together

Which pulls the whole thing together. The people not reading the accounts outnumber the people who are. The people who are reading them can’t move the price on their own. And so a company that buries an inconvenient number in a footnote is making a perfectly rational bet: that the crowd won’t read it, and the professionals who do won’t be able to do much about it. It’s disclosed, it’s legal, and it works often enough to maybe be worth doing.

So, to bring this all together: the current panic over hidden tech debt isn’t the discovery of the next Enron. It’s people finally reading the footnotes and realizing how much money is actually being spent. As Damodaran puts it, valuation is a story disciplined by numbers. Right now, AI is a very expensive story, told by companies lending each other the money to buy their own products, and reported through adjusted figures that leave out the most expensive parts. The debt isn’t hidden — it’s just filed somewhere tedious enough that most people won’t look.

The problem isn’t that AI is a fraud. It’s obviously useful, and the businesses getting the most out of it seem to be the small ones — the solo founders and the one-person businesses paying their $20 a month. Which is a wonderful deal if you’re the one renting. It’s a rather worse deal if you’re the one who spent billions building it, and is still waiting for that $20 a month to add up to the $2.5 trillion a year it would take to pay the thing off.

Until it does, the companies building all of this will keep borrowing. They’ll keep filing the commitments in the footnotes, and the market will keep not reading them — right up until one day it decides to. Jamie Dimon put it well recently: will AI pay off? Probably, the way the internet did. Will it pay off the way you expect, on the timeline you expect? Definitely not. Which means that I should probably get back to the mirror and keep practicing my shocked face. I have a feeling I’m going to need it.

Back to Roundup ⬆️

Leave a comment

Aswath Damodaran on CNBC: peak AI, hyperscaler capital intensity, and whether Micron is “different this time”

On his call that AI has peaked: You’ve said your bet is that we hit peak AI a few months ago, with more consolidation and correction ahead — are you talking about the whole space?

Yes, and I’m including the smaller players as well. The Mag 7 are in many ways the most protected part of the space. They’ve invested tens of billions of dollars, but they have the cash flows and the capacity to carry debt, so they’re not in financial trouble.

When you see a shakeout in the AI space, it’s not so much the Mag 7 we should be watching, but the lesser companies. The recent stories about Situational Awareness in particular point to what can happen very quickly in the rest of the AI space as the correction and the cleaning up continues.

On the whiplash from the Situational Awareness scare to the earnings recovery: Given the many markets and notable blowups you’ve watched over the years, how do you put this rebound into perspective?

I think the facile reason is that it tells you how much investors want to be in this space. There are portfolio managers who are convinced they’re underinvested in AI, and they’re looking for any chance to jump in. So every time there’s a correction, rather than the correction continuing, you see funds flowing into companies — people finally say, now I have a chance to have an AI company in the space.

I wouldn’t put it deeper than that. It’s not like people are rethinking the fundamentals and coming back to investing. They just don’t want to be left out of this party.

On whether the fundamentals actually look better: Heading into these prints, the worries were return on investment and a pullback in spending — neither happened, so aren’t the fundamentals genuinely better?

The second one hasn’t happened — companies are continuing to invest in capex like it’s going out of style. The first one is still a concern. I was looking even at the Mag Five, outside of Tesla and Nvidia, at the marginal return on invested capital — the change in operating income over the change in invested capital. You look at Meta, at Alphabet, at Microsoft, and the drop-off in returns on capital is pretty amazing given how big these companies are.

Unless they start delivering earnings commensurate with the tens of billions invested in capex, you’re going to see a very different kind of company emerging from the mix — more capital-intensive, lower return on invested capital. Nothing wrong with that, but I think investors in these companies are not used to the risks of investing in a more capital-intensive company.

On whether Micron is “different this time”: It trades at five or six times forward earnings, and some argue its earnings momentum is so extraordinary that chip names can no longer be judged as cyclical — how do you assess that?

It’s been that battle between history and the AI shift for the last few years. History in chips has always been that earnings go up and earnings go down, so you’ve got to price it on some normalized version of earnings. The optimists on Micron say that’s not true anymore, because this demand is not a cyclical demand — it’s a secular shift in demand.

If somebody makes a bullish case for Micron, I’m willing to listen. But I think it’s still a richly priced stock if you think about it in terms of normalized earnings.

Back to Roundup ⬆️

Leave a comment

Boca Capital CIO, Kim Forrest, talks the AMD trade, shifting chip leadership, and the risk facing NVIDIA on CNBC

On a pivotal moment for the semiconductors: With AMD — her favorite — reporting after the bell, how is she thinking through the group and this afternoon’s earnings?

Well, it’s been quite a summer, hasn’t it? It’s been dangerous to have semiconductors in your portfolio — and now maybe it’s dangerous not to have them.

What we’ve been doing is getting nervous about: is this AI thing real? Will the spending continue? And who are the winners that are going to keep winning?

My guess is AMD is going to have a pretty good report tonight — maybe they’ll have sold out most of their products, and maybe they’re looking into the future saying, we’re going to have trouble meeting demand. Those kinds of sentences are going to drive all semiconductors higher.

On Intel’s bounce and the group more broadly: A great AMD report tonight — what does it mean for the market, and what’s driving names like Intel, up 10% again?

If you think back two years ago, we were all about NVIDIA — because NVIDIA was the only thing we could invest in and have it related to AI. NVIDIA theoretically won.

But as we go on in this AI cycle — and we’re at the end of the beginning, maybe — a lot of different things are going to happen, and there will be different winners in semiconductors. That’s because compute is going to change. The needs developers have are going to rest on different kinds of chips.

The most nimble companies offering them are probably your longer-term winners. I’d put both Intel and, to a larger extent, AMD up against that. They’ve come up the curve from being the second banana in x86 chips 10 or 15 years ago, and now they’re in leadership positions in a lot of these high-demand areas of today’s AI.

On who the shift disfavors: If changing compute needs favor Intel and AMD, who does it work against?

Anybody that’s overly stuck in their ways. And it might be NVIDIA.

NVIDIA has always been a great graphics processing unit creator — that’s what birthed them; they were the favorite of gamers. And they just kind of got lucky that AI needed that kind of compute. I think they really have to rethink what they’re doing, who their customer is, and branch off that whole GPU success to maintain leadership.

So anybody that’s stuck in the past, that’s not flexible, that isn’t talking to customers and asking where they want to go next — I think that’s really important.

Back to Roundup ⬆️

Leave a comment

Barnes & Noble CEO, James Daunt, on Barnes & Noble’s unexpected turnaround, hyperlocal curation, and a possible IPO

Remember how everyone thought Barnes & Noble was dying? Just a few years ago, America’s largest book retailer was in rough shape.

By 2020, Amazon captured over half of all U.S. print book sales and 80% of the ebook market, decimating traditional brick-and-mortar bookstores.

James Daunt: “There was a decade of declining store numbers, lots and lots of closures, no openings.”

Today, the chain is pulling off one of the most unexpected turnarounds in retail history.

James Daunt: “What we’re doing is opening up stores again in communities.”

Will their growth hit a wall?

As of July 2026, the book retailer had opened 20 new stores so far, with more planned this year. The footprint currently stands at 717 locations — 90 more than in 2019.

James Daunt: “We’ll open up 35,000-square-foot stores, we’ll open up less large stores. We’ll open an 8,000-square-foot store in a mall. We’re doing that because we’re putting bookstores back into places and back into communities that will appreciate a bookstore.”

During the 2010s, Barnes & Noble saw massive sales declines, 100 store closures, six different CEOs, and a $1 billion loss on its Nook reader — a device built to compete with Amazon’s Kindle. Then, in 2019, investment firm Elliott Advisors acquired the company for nearly $700 million, bringing in James Daunt as CEO.

James Daunt: “There are books here that you know are really good, and therefore you will read the others. So there is consistency of quality”

On taking over a company in rough shape: When you took the reins, the business was struggling — as you assessed it, what were you thinking?

It’s relatively straightforward for me, because I’d been a bookseller for 30 years at that point, longer. So I simply wanted to make these stores really good again, and one sets out on a series of very slow and incremental processes to do that.

Daunt started out as an investment banker in New York in the 1980s. He left banking to launch Daunt Books in 1990, building it into a highly successful and beloved 10-location chain in the UK.

On whether Barnes & Noble needs the indie “cool factor”: Daunt Books and many independents have that cool factor — does Barnes & Noble need some of it, or is it a different animal, a different concept entirely?

Barnes & Noble can be extremely cool, but it’s definitely a different sort of cool. And the challenge for us is: how do we do it appropriately in each place in which we are? And that, I think, we’re able to do increasingly well at the moment.

Every display in their Union Square store in Manhattan feels thought out to the smallest detail.

Shannon De Vito, Manager at Barnes & Noble: “These are a lot of conversation starters — economics, politics. For this local section, there’s a lot of gift books. There’s cookbooks.” — “I’ve bought that for somebody, it’s so cute.”

The inventory is hyper-curated for New York customers, reflecting social trends, local culture, and real-time demand.

Shannon De Vito: “A lot of our tables are smaller. They’re meant to be little stops along your way to points of interest as you weave your way through the store. We love when people spend time in the stacks and pull things out and find something that may be really old but is new to them.”

A 2025 study showed foot traffic in brick-and-mortar bookstores climbed 12% year over year, while another study showed independent-bookstore accounts surged by nearly 90% that same year.

Shannon De Vito: “Romance has been a booming category over the last few years. It really is landing on that escapism and happily-ever-after that’s working across a lot of different genres.”

For Barnes & Noble, the wins have come from trying to feel like your neighborhood bookstore. Asked about the biggest difference in how stores are run today versus when she was a rookie, Shannon De Vito says:

“We were more a traditional retailer — we were really operating like a big box, a Target or a Walmart, and I was essentially told to kind of turn my brain off when I came to work: put this book here on this date at this time, and then replace it with this book. Whereas now we’ve moved to this model of being bookseller-led, being able to curate interesting tables — a local approach, but also some interesting deeper cuts. It takes a lot more brainpower, in the best possible way.”

Daunt’s strategy was simple: build hyperlocalization into the chain’s corporate playbook. He eliminated the pay-for-display model, empowering each store to curate based on local demand rather than publisher co-op dollars. Stores now control their own visual merchandising — such as handwritten staff recommendations — and run their own social media accounts.

On scaling while staying flexible: How do you get the benefits of economies of scale while keeping this flexibility of size?

We used to have a model that involved a home office dictating very precisely what every store did, attached to a lot of commercial arrangements with publishers to have particular books in particular places — a very uniform presentation, for which you needed a uniform size of store. We’ve abandoned that 100%.

So now each store curates its own assortment, reorders its own books, does its own thing — and we encourage and develop and promote and train against how you do that well. But that also means we don’t really care what size it is, we don’t care what shape it is, because each store is doing its own thing. And that’s liberated us now to have different-size stores doing different things.

We can see what they’re trying to do here — you then want to pick it up, and it’s in your pile, and off you go. Now he’s applying the Daunt playbook to the U.S. market on a much larger scale.

On how American book buyers differ: You’ve now experienced American consumers as well as British — how are they different?

American consumers are wonderful, because they buy enormous amounts of books. Individually, they buy more than a UK customer does. The American consumer, of course, is world-famous in all forms of retail — but it applies also to bookselling.

On where the growth comes from: So the growth for you comes from getting more people to simply buy more books?

The book market is not a finite one. There are retail sectors where, if one person sells plus one, another person has to sell minus one — it’s a fixed market. That isn’t the case with books at all, particularly the way in which people buy books in a bookstore. If you come into a bookstore, you’re going to be inspired. You come in for one book, you walk out with three. That’s the way it works. The better our bookstores, the more books are sold, the larger the market expands. But it’s not eating the share of somebody else — it’s not a zero-sum game at all.

And now Wall Street is taking notice. There have been media reports of a possible IPO.

On a possible IPO: How do you think the company would be managed differently if it were public?

We are trying to run really good bookstores. Most of that effort is being done at the local level. I think what goes on in New York, any which way, doesn’t make much difference. What matters to us is what’s going on at the local level — how are we able to support them, how are they able to improve things. And that’s a steady, incremental process.

I’m a great believer in physical bookstores and have my own bookstores — the equivalent in the United Kingdom of Barnes & Noble — and we sorted that out very quickly and made those really nice bookstores, to the benefit of the whole book trade and bookselling as a whole. And then, obviously, with Barnes & Noble being the last man effectively standing here in the United States, it was very, very important for bookselling as a whole. But we’re just really bringing these principles — first a small bookstore, to a large chain, to an even larger chain — and it’s all based and founded on the core principle of what makes a great bookstore.

Back to Roundup ⬆️

Leave a comment

Portfolio Manager at Simplify Asset Management, Michael Green, on how leverage blew up Aschenbrenner’s fund and the danger in leveraged ETFs

On the implosion of Situational Awareness: Leopold Aschenbrenner’s fund reported a 439% first-half return, then lost roughly $35 billion in six days and was forced into a fire sale to Citadel — how did it happen, and what’s the lesson?

The quick answer is that when you look at somebody engaged in the behaviors Leo has, there’s really no mechanism for him to have learned not to do this. He had a very strong thesis, and he expressed it with the extraordinary use of leverage.

His initial exposure was largely to non-public entities, and he grew his business under that framework — which has a much lower-volatility framing, because non-public entities don’t reprice themselves in the same manner. But when you start running strategies with that much leverage against that much volatility in the individual securities, a blowup becomes inevitable.

What looks like happened is that he created conditions under which a small decline in prices would force him to sell to reduce his leverage, which caused prices to fall further, which forced him to sell more. Ultimately that cascaded into an event that sent both his longs and his shorts against him.

In particular, he had the thesis that traditional software companies would be heavily disintermediated by AI, and his own selling actually contributed to the underperformance of that sector. As he was forced to unwind, that pushed prices in the opposite direction of his positioning and created the conditions for the rapid collapse.

Nobody in their right mind should give a 25-year-old $20 billion at 4x leverage — but you can’t really blame the 24-year-old. He had a very strong conviction, and everything in his experience base up to that point told him this was the right strategy. Once you become that large, the street actually identifies you as a target. You effectively become a wounded shark, and a feeding frenzy emerges.

On how leveraged ETFs are warping the semiconductors: In a recent piece he tied the volatility in names like Nebius, SanDisk, and Micron to the rise of leveraged ETFs — how is that reshaping the sector, and why should investors care?

A levered ETF carries the same characteristics as Leo’s portfolio running at 4x leverage. The difference is that a levered ETF, because its prospectus requires it to maintain that levered exposure, has to rebalance every day. And that’s where volatility creates a phenomenon called volatility drag.

Imagine I make 10% today and lose 10% tomorrow. Many people assume that’s a zero return. But I start with $1, I’m up to $1.10, then I lose 10% and I’m at $0.99 — I’ve lost a penny. Add four times leverage and you get a 2-to-the-fourth-power impact on that drag.

Say I put in $1 of equity and $3 of borrowing, so $4 of exposure. I’m up 10%, the position is worth $4.40, and I still owe $3 — so my equity has risen to $1.40, a 40% gain on a 10% move, exactly as you’d anticipate. But do the same math on the way down, and the compounding effect of that leverage and the need to rebalance is what creates catastrophic losses.

Because the ETF has to rebalance every day, after a gain it doesn’t just sit there — it has to lever the new equity back up to 4x, forcing it to increase position sizes by nearly 50% to maintain the leverage promised to investors. That creates what’s called endogenous flow: it forces buying even without new investors adding money, and contributes to the run-up unless investors harvest those gains.

My piece is called “a semi theory of everything.” Most professional investors would run these as a volatility-harvesting strategy — you short both sides of the trade and harvest the loss created by the volatility drag, which gives a very stable return profile as long as the volatility characteristics hold.

Unfortunately, in the excitement of the recovery in early April, retail investors stepped into these products seeking a Leopold-like experience. They bought 3x levered ETFs or 2x single-stock ETFs and held them, rather than harvesting, and even tried to dollar-cost average in. At 3x leverage, running the volatility we saw in the semiconductor space in April and May, you’d need a return in excess of 170% a year just to break even. To dollar-cost average into something with a 170% break-even is absolutely absurd — a byproduct of the lack of education and the tools we’ve put into the marketplace to attract people to shiny objects rather than thoughtful investment vehicles.

On South Korea’s crash and whether leveraged ETFs should be banned: With the KOSPI down 44% from its June highs, more than a million Koreans hit with margin calls, and hundreds of thousands liquidated to zero, is abolishing these products the answer?

It depends on how you use them. A hammer is a very dangerous tool if used improperly and a very productive one if used properly. As volatility-harvesting tools, these can be used by professional investors to short a realized-volatility framework and generate profit by providing the financing for those vehicles.

South Korea has already banned the levered ETFs. They’ve been forced to close their market multiple times over the past several weeks — literally doubling the number of closures in a three-week period versus their entire history since around 1990. They’ve recognized these products create almost no social utility.

In the United States, we’re still trapped by market fundamentalism — you see it in everything from Kevin Warsh’s recent Fed testimony to the general regulatory view of “just let the market decide.” There’s a reason we don’t do that. There’s a reason we now have labeling on drugs telling us their addictive contents, and labeling on food listing the ingredients. We used to say “buyer beware,” but that’s extremely difficult for, say, an illiterate immigrant trying to figure out whether the sausage is filled with potato flour or meat. We recognized that and took steps.

I think we often go too far with this, and there is a role for experimentation and the utility of these tools — we could ban hammers because somebody hurt someone with one, and that would be a mistake. But in this case we’ve created a gambling environment in which people are increasingly nihilistic about prices, assuming governments will step in to support them or print money to paper over our problems. That’s simply untrue. And I’d emphasize for the younger audience: never substitute conspiracy when incompetence will suffice. We have regulators who have largely abandoned their role, and we’re left with products I’d describe as half-boiled spaghetti thrown at the wall to see what sticks and attracts investor dollars.

On whether the US is next: Assets in US leveraged ETFs have hit a record $218 billion, up 60% since the end of March — is America headed for a South Korea-style implosion?

Unfortunately, this is one of the key concerns, and it’s tied to my work on market structure and the growth of passive and price-insensitive money. Here we’re talking about leverage vehicles that don’t consider whether what they’re buying is a good thing or a bad thing — they’re simply fulfilling an investment mandate, what I call systematic portfolio rebalancing. That creates the conditions under which these feedback loops play out.

And I’d point out to South Korea that much of its problem wasn’t generated in South Korea. We imposed these conditions through the introduction of an unlevered, memory-centric ETF — a DRAM product — in the United States, which exploded in size to almost as large as Leo Aschenbrenner’s portfolio and was sending roughly half of its dollars in Korean-won-hedged terms, selling the currency and buying the stock in Korea.

It brings to mind 1971, when US Treasury Under Secretary John Connally told the emerging markets, “It’s our currency, but your problem.” This was our ETF and their problem. And I think you’re going to see the regulatory environment begin to recognize that — and it very well may be forced to change.

Back to Roundup ⬆️

If you found these summaries helpful, please leave a comment or send us a message. We appreciate your feedback!

Leave a comment

The 2026 Rule Symposium on Natural Resource Investing was recently held in Boca Raton, Florida, from July 6 to July 10, 2026. Hosted by legendary resource investor Rick Rule, the premier event brought together industry insiders, executives, and analysts to explore trends in precious metals, uranium, and critical minerals.

The event is a junior/mid-tier mining and resources investment conference with the roster split between actual mine operators/explorers and the financiers, royalty companies, and dealers who service that ecosystem.

Rick Rule’s team interviewed every single exhibitor ahead of this year’s 2026 Natural Resources Investment Symposium:

• Seabridge Gold’s Rudi Fronk says his prefeasibility economics on the KSM project show an after-tax NPV “north of $30 billion” against a company trading around $3 billion — “we’re trading at about 10% of our NAV.”

• Skeena Gold & Silver’s Walter Coles is rebuilding the legendary Eskay Creek mine into a project with an estimated $7 billion NPV at spot prices against $565 million of upfront capital.

• Vizsla Silver’s Craig Parry described drilling “44 meters at 8.2% copper, including 24 meters at 9.22% copper” in Alaska days after burying colleagues killed in Sinaloa.

• First Majestic’s Keith Neumeyer, the man who coined “triple-digit silver” back in 2012, is refusing to sell into today’s prices — the company closed 2025 with $938 million in cash and more than 60 million ounces of gold and silver held back in the vault.

• Agnico Eagle, Aya Gold & Silver, i-80 Gold, Osisko Development, New Found Gold, Dundee Corp, Sprott Wealth Management, Battle Bank, and dozens more names ahead of Boca Raton.

Deep Dive

The following is a deep dive into Rick Rule’s pre-conference interviews.

Precious Metals Miners & Developers

Neil Woodyer of Aris Mining

Watch on YouTube

Neil Woodyer of Aris Mining has run this build-and-buy playbook before: starting an advisory shop in Vancouver 40 years ago, he later co-founded Endeavour Financial with Frank Giustra, converted it into Endeavour Mining in 2008, and exited a company now worth roughly C$20 billion. Five years ago, he started again with Aris Mining in Colombia, putting together an $85 million financing for Caldas Gold’s Marmato mine that took over management and the board, then rolling in Grand Colombia’s high-grade Segovia operation, which runs “11, 12 gram material.”

Aris now owns 100% of the Soto Norte project after buying out Mubadala’s stake, and expects to expand Segovia from 200,000 to 300,000 ounces a year by year-end while Marmato ramps toward a combined 500,000 ounces across the two mines next year. Reserves stand at “9.3 million ounces of reserves at 6.1 grams,” with a Ghana project (250,000 oz/year, roughly $800 million to build) in prefeasibility.

Woodyer says the company is self-funding, with “about 470 million of cash” and roughly $400 million a year of cash generation, enough to finish construction without external financing en route to a targeted 1 million ounces of annual production.

Scott Berdahl of Snowline Gold

Watch on YouTube

Scott Berdahl of Snowline Gold is a Yukon-born prospector-turned-MIT geologist whose family staked and optioned more than 1% of the Yukon’s surface area during the 2010-2012 rush, then rebuilt Snowline from the data left behind when that capital dried up. The bet paid off with the Valley discovery, now standing at “7.9 million ounces measured and indicated” at 1.2 g/t plus another 0.9 million ounces inferred, anchored by what Berdahl calls “the highest grade, highest strip-adjusted grade of any pit on the planet” — a 2.9-million-ounce, 2.3 g/t starter pit with a strip ratio of just 0.1-to-1.

The company’s PEA, engineered on a $1,950 gold price but modeled at $2,150, produced a $3.4 billion Canadian NPV at a $1.7 billion capex; run at spot prices, Berdahl says that NPV balloons to “about an 11.4 billion” Canadian dollars against a market cap of roughly $2.5 billion — a 4.5-to-1 value-to-market-cap ratio comfortably clearing the 2-to-1 minimum capital-efficiency bar Rule cites from fellow financier Jonathan Goodman.

A prefeasibility study is underway, with further upside from step-out drilling and untested depth extensions on the broader 40-by-60-mile district Snowline still controls.

Paul Huet of Americas Gold and Silver

Watch on YouTube

Paul Huet of Americas Gold and Silver is a 40-year narrow-vein miner with a track record worth noting: he took Klondex up roughly 500% versus the GDXJ before selling to Hecla for $740 million, then turned Rye/Karora’s Australian assets — bought for about $60 million — into a $1.3 billion exit, an 800% relative return. A year ago he took over the Galena Mine district in Idaho’s Coeur d’Alene belt, acquiring Eric Sprott’s 40% stake, and the stock is “up about just over 1300% compared to that index” since.

In twelve months, the team has made eight new discovery zones, including “3.4 meters of 983 grams” at the 34 vein — roughly twice last year’s average mined grade of 470 g/t — while growing measured-and-indicated-plus-inferred resources across the district to “about 220 million ounces,” excluding the newly acquired Crescent Mine, which historically ran at 1 kilogram per tonne.

Huet has personally put 89% of his net worth into the stock and just eliminated $85 million of debt in a single week — converting Sprott’s silver stream into equity and retiring a Royal Gold stream — leaving the company sitting on $100 million in cash as it works toward a targeted 5-10 million ounces of annual silver production.

Keith Neumeyer of First Majestic Silver Corp.

Watch on YouTube

Keith Neumeyer of First Majestic Silver Corp. is the entrepreneur who co-founded First Quantum Minerals in 2004 before pivoting into Mexican silver, buying distressed assets from bankrupt families like Peñoles and Grupo México when “there was no one there” after the 1998-2002 mining bear market. The origin deal was almost comic: told there might be “300 million ounces” of silver at La Parreal, Neumeyer had his partner Ramon phone the owners and wire $3.5 million on the spot, taking the mine from purchase to production within months and producing 25,000 ounces in its first year, 2004.

First Majestic hit a 10-million-ounce annual production goal by 2010 and now produces roughly 31 million ounces a year. Rather than sell all of its silver at what Neumeyer calls depressed prices, the company — whose CEO coined the phrase “triple-digit silver” back in 2012 — is stockpiling metal: it ended 2025 with $938 million in cash and more than 60 million ounces of gold and silver held back in its vaults, a position he said had grown further by the end of Q1 2026.

Neumeyer, now 40 years in the sector, handed the CEO title to longtime executive Manny Alvaji on January 1, 2026 while remaining chairman.

Shane Williams of West Red Lake Gold

Watch on YouTube

Shane Williams of West Red Lake Gold specializes in restarts — he previously bought and turned around Eldorado’s Lamaque project into a cornerstone asset — and applied the same “love hate” contrarian approach to the twice-failed Madsen mine in Ontario’s Red Lake district. West Red Lake and early backer Frank Giustra picked up Madsen from Sprott Resource Lending for roughly C$6.5 million cash plus a 1% NSR and shares (about C$40 million all-in) on an asset that had previously absorbed “over $350 million Canadian dollars” of construction capital plus $170 million in tax losses — north of $500 million in sunk value, complete with permits, a mill, and tailings infrastructure.

The project carries 1.7 million ounces of resources at roughly 7 g/t, and the company’s nearby Rowan project adds another 400,000 ounces at about 8 g/t. Madsen restarted commercial production in January 2026, is tracking toward roughly 40,000 ounces this year, and Williams targets 50,000-60,000 ounces of nameplate capacity by 2027, with a longer-term “hub and spoke” plan to consolidate high-grade satellite deposits around the Madsen mill toward 150,000 ounces within five years.

Despite the asset base, Williams notes the market cap has “come off quite a bit” to around C$320 million, well below where junior gold developers have re-rated.

Javier Reyes of Luca Mining Corp.

Watch on YouTube

Javier Reyes of Luca Mining Corp., 47, has spent 27 years mining in Mexico and named the company after his daughters Luciano and Camila, with his holding company KO as Luca’s largest shareholder. The strategy: buy fully permitted, undercapitalized Mexican assets sidelined by social-license or funding problems and turn them around. Flagship Campo Morado in Guerrero, a VMS deposit abandoned by Nyrstar after a “$2 billion blow up,” was picked up for roughly “$20 million US” alongside over $60 million in assumed liabilities, and now holds close to 3 million gold-equivalent ounces; the second asset, Tahuehueto in Durango, adds roughly another million ounces.

After a five-year turnaround, 2025 was the inflection year — over 10,000 meters drilled, 60,000-plus gold-equivalent ounces produced (roughly 60% gold/silver, the balance copper and zinc), $25 million cash on hand at year-end, and most of the original $60 million in liabilities retired. Q1 2026 added another $10 million of cash to roughly $36 million, with 15,000-plus ounces produced and no equity raise since September 2024; Reyes expects the company debt-free by the end of Q2.

With $25 million earmarked for exploration over the next few years, the plan is to push toward a 100,000-ounce run rate this year and ultimately a 200,000-ounce producer by replicating the model on additional distressed Mexican assets.

Daniel Henao of Mineros S.A.

Watch on YouTube

Daniel Henao of Mineros S.A. co-founded a value-investing shop after the gold-price correction roughly 12 years ago, which eventually led to a 2023 deal — brokered after CIBC flagged a Latin American banking family divesting a 30% stake in a “200,000 ounce Latin American gold producer” — that gave his group control of Mineros, a 52-year-old miner listed on the TSX only since early 2022. Since taking over, the share price is up “about 10 times” while the company kept paying dividends and buying back stock, yet Henao says it still trades at only “two to two and a half times... trailing EBITDA.”

Mineros operates century-old, still-producing mines in Nicaragua (140,000 ounces last year, the platform’s largest) and Colombia (about 90,000 ounces), plus a new Chilean asset. Q1 2026 gold output rose 22% and silver 109% year-over-year, driving record quarterly revenue of about $300 million, adjusted EBITDA of $154 million, and a cash-and-bullion position over $200 million; full-year 2026 guidance is 233,000 gold-equivalent ounces.

Growth catalysts include a 40% processing-capacity expansion in Nicaragua, the near-fully-permitted Pontenegro (Porvenir) polymetallic project — a PFS-stage asset with a 38% IRR, $200 million capex and $460 million NPV at $1,300 all-in sustaining cost — and an 85-kilometer exploration program drilling at under $100 a meter, including a recent hit of “8 meters at 17 grams per ton” connecting its two Nicaraguan mines. Management’s stated target is 500,000 ounces by 2030.

Benoit La Salle of Aya Gold & Silver

Watch on YouTube

Benoit La Salle of Aya Gold & Silver is a tax accountant by training who stumbled into mining in 1994 on a pro bono trip to Burkina Faso, co-founded SEMAFO with “$60,000 in the bank” and 18 exploration permits, and rode it to a $3.5 billion market cap and six discoveries before selling to Endeavour in 2019 — a trade he says returned shareholders “up to 60 times their money.” He’s applying the same playbook at Aya in Morocco, where the company holds first-mover ground across an 800-square-kilometer, 1,600-kilometer-long unexplored belt.

Flagship mine Guemassa (referred to as Gundere) is Africa’s largest silver mine and just posted Q1 free cash flow of “$70 million US,” with 2026 company-wide free cash flow guided at “200 to 300 million.” The second asset, Boumadine, is finishing a revised PEA and feasibility study La Salle calls tier-one: $440 million capex for 400,000 gold-equivalent ounces a year over 11 years at a $900 AISC, with mineralization La Salle says carries “six times the horsepower” of Guemassa — construction starts late 2026/2027 for 2029 production.

The company survived a 2025 short-seller attack that knocked shares from $18 to $11 before they recovered to $29; this year’s exploration budget is roughly $60 million for 240,000 meters of drilling, following a track record La Salle pegs at “10 cents” per ounce of discovery cost on more than 600 million silver-equivalent ounces found to date.

Chad Williams of Honey Badger Silver

Watch on YouTube

Chad Williams of Honey Badger Silver is a mining engineer and former top-ranked sell-side analyst who says he originated the streaming-finance concept later commercialized by Wheaton Precious Metals, went on to found brokerage Red Cloud Mining Capital, and now owns “almost 20%” of Honey Badger on a fully diluted basis. He took control of the then-shell company five years ago on a public call that silver would hit $100 (when it traded near $15) and has since assembled eight silver projects across northern Canada holding, by his estimate, “well over 500 million ounces of silver equivalent” — none of it discovered by drilling, since Honey Badger has “never drilled one hole,” against a roughly C$200 million-plus market cap.

The centerpiece is Prairie Creek, a fully permitted, 95%-built polymetallic mine and mill (built to that stage in 1982 by the Hunt brothers before silver’s collapse mothballed it), acquired for under 3 cents per silver-equivalent ounce versus peers trading near $23 an ounce; Williams expects the deposit to run roughly 50% silver, 35% zinc and 15% lead revenue, with newly identified germanium and tungsten credits as potential bonus economics.

Near-term plans emphasize non-dilutive financing (government grants), de-risking cash flows, and possibly limited concentrate production within a year to prove out the project, an approach Williams compares to the early playbooks of Silver Standard Resources and Pan American Silver.

Gerard Bond of OceanaGold

Watch on YouTube

Gerard Bond of OceanaGold is entering his 30th year in resources, including 15 years at BHP across multiple countries and commodities before 15 years in gold, and he runs a $7.5 billion market-cap producer with four cash-generating mines: Haile in South Carolina (45% of this year’s output, up roughly 30% year-over-year at 25% lower all-in sustaining cost, guided to about 245,000 ounces and set to become the fourth-largest US gold producer), two New Zealand assets — Macraes (36 years in operation) and Waihi — contributing about 40% of production, and a Philippines mine.

Bond’s core valuation pitch is that OceanaGold trades at roughly 3.5 times enterprise value to cash flow versus a peer average near 7 times, despite one of the sector’s highest free-cash-flow yields; the company is debt-free with “$620 million of cash in the bank,” and last year allocated roughly 20% of operating cash flow to sustaining capital, 20% to growth, and returned about 40% to shareholders via buybacks and dividends.

Growth catalysts include the newly opened Wharekirauponga (WKP) portal in New Zealand — a maiden 1 million ounces at 9 g/t feeding an existing mill — plus recent strong drill results extending mine life at both Haile and WKP, and full life-of-mine permits secured for the Waihi North project within a single year of filing.

Richard Young of i-80 Gold

Watch on YouTube

Richard Young of i-80 Gold started his career at Barrick in 1990 building out the Goldstrike mine in Nevada, later ran a mid-tier West African gold producer (Semafo) and did a turnaround at Argonaut, and now controls four past-producing Nevada gold properties shed by Barrick and Newmont after their own consolidation — already permitted historically, with known geology and metallurgy. i-80 currently holds “14 million ounces of gold” and “200 million ounces of silver,” split evenly across measured, indicated and inferred categories, and Young’s three-phase plan aims to take annual production from roughly 50,000 ounces today to “more than 600,000 ounces” over five to six years.

Following a recapitalization that leaves the company fully funded with no further equity needed, Young pegs the market cap at “less than a $2 billion,” against an after-tax NAV he calculates at “about $10 billion” based on existing PEAs at current metal prices — a gap he attributes largely to unrecognized value in the flagship Mineral Point deposit (a prospective 20-plus-year, 300,000-ounce-per-year mine akin to Round Mountain) and roughly $2 billion of remaining capex across all three phases.

A key near-term catalyst is the refurbishment of the company’s Lone Tree autoclave — one of only two permitted autoclaves in Nevada alongside Nevada Gold Mines — due to finish in Q4 2027 at a cost of “a little over 400 million” for an asset Young says is “probably worth a billion and a half dollars,” saving $1,000-$1,500 per ounce currently lost to third-party toll milling.

Sean Roosen of Osisko Development

Watch on YouTube

Sean Roosen of Osisko Development is the dealmaker behind Canadian Malartic, which his original Osisko group bought for “$88,888 in 2003” and sold to Agnico Eagle for $4.1 billion in 2014, spinning off Osisko Gold Royalties (now trading at a $10-11 billion market cap) and Osisko Mining, sold to Gold Fields for $2.18 billion in 2024 — a track record Roosen pegs at “around $20 billion” of shareholder value created over two decades. He’s now running Osisko Development full-time since 2023, a roughly $1 billion market-cap company (NYSE/TSX: ODV) built around the Cariboo Gold project in central British Columbia, on the historic Barkerville gold system that produced about 5 million placer ounces in the 1800s gold rush.

Since its spring 2025 feasibility update, the company has raised “885 million US in equity and project finance,” leaving $350 million still to be drawn at a final investment decision expected this summer; the feasibility study shows a 200,000-ounce-per-year mine with an NPV of “roughly $3.2 billion” at $4,500 gold against phase-one capex of $653 million, on a reserve base of 2 million ounces plus another 3.6 million ounces of measured, indicated and inferred resources.

Final construction permits arrived in November 2024, an underground mine at 2.2 km with initial 4,900 tonnes-per-day throughput is under construction for 2028 production, and an 11-rig (scaling to 20) conversion and step-out drilling campaign is underway across a permitted mine envelope that runs to 1,500 meters depth, plus a new “Proserpine” target 4 km away on a system with 83 km of largely untested strike length.

Shawn Khunkhun of Contango Silver & Gold

Watch on YouTube

Shawn Khunkhun of Contango Silver & Gold previously ran Dolly Varden, growing it from a $30 million market cap before merging it into the company now known as Contango, alongside assets including Homestake and High Gold’s Johnson Tract. Contango’s producing asset is the Manh Choh open-pit gold mine in Alaska, averaging 60,000 ounces per year of Contango’s 30% share (Kinross holds 70%, or 200,000 ounces annually), generating “on average, about $100 million of free cash flow” — with a $102 million distribution in 2025 and a projected $250 million next year at conservative gold prices.

That capital is funding the past-producing Lucky Shot project back into production by 2028 for a $50 million investment, adding another $100 million in projected free cash flow and taking output from 60,000 to 100,000 ounces. Johnson Tract, bought for roughly $37 million US, carries a “$615 million net present value” per a $7 million economic study on 1.1 million ounces at roughly 10 grams per tonne, with payback in “about 7 months.”

Contango trades around a “$700 million market cap” with “about $100 million in the bank,” only 33 million shares outstanding, and no planned dilution — yet at just a 0.3x NAV multiple versus a peer average of 0.7x.

John Florek of Emperor Metals

Watch on YouTube

John Florek of Emperor Metals spent 35 years as a geologist, including as chief geologist at Detour Lake Gold from 2016 until Kirkland Lake’s takeout, before taking over Emperor to pursue two Abitibi gold projects 30 kilometers apart with a combined “close to 2 million ounces.” The smaller Lac Pelletier deposit holds 237,000 ounces with an existing mining permit for 1,000 tonnes per day (roughly 40,000 ounces annually, worth “$200 million” at $5,000 gold), targeted for production in Q1 2028, while flagship Duquesne West doubled its resource in 2025 from 727,000 to 1.5 million ounces and is targeted for “3 to 5 million ounces” with a PEA expected in 2027.

Florek walked through the math: market cap averaged roughly $30 million over the prior two-to-three years, now $43 million, against a gold price up “2.5 to 3x” and a resource doubling that alone implies $140 million of unrecognized value. One drill hole hit “21.7 meters of 35 grams per tonne” in the open-pit zone, and the company is drilling hole 46 of a 15,000-meter program at roughly $250 per meter all-in cost, under budget.

Florek also flagged over 20 million undeveloped ounces held collectively by Emperor, First Mining, and Stellar near New Gold’s Holloway mill as a potential consolidation target.

Ammar Al-Joundi of Agnico Eagle Mines Limited

Watch on YouTube

Ammar Al-Joundi of Agnico Eagle Mines Limited laid out the company’s regionally focused operating strategy, explaining that unlike peers who “will go anywhere in the world to build a mine,” Agnico only enters regions with both long-term geologic potential and durable political stability, a discipline he credits for the company’s “onethird the turnover of our peers” in core operating areas like Quebec’s Abitibi region. Al-Joundi, a 28-year mining industry veteran and former Barrick CFO who succeeded Sean Boyd as CEO, detailed plans to grow Detour Lake from roughly 700,000 ounces to over a million ounces annually by adding an underground mine beside the existing open pit, leveraging mill, power, and tailings infrastructure already in place.

He described a similar buildout at the Malartic complex, where the original ore body was discovered in 1923, targeting growth from about 600,000 ounces to over a million by the early 2030s, which would make Agnico’s two largest Canadian mines two of only a handful of million-ounce producers in the Western world. He also flagged a new mine under construction in Nunavut expected to add 400,000 to 450,000 ounces, and a recent consolidation of three companies in Finland to control what he called the most prospective land package in Northern Europe near Agnico’s existing Kittila mine.

Al-Joundi argued the market systematically undervalues multi-decade mine life because net present value models “ignore all the cash flow generated after year 10 or 11.”

Caleb Stroup of Headwater Gold

Watch on YouTube

Caleb Stroup of Headwater Gold described a hybrid prospect-generator model built around a portfolio of twelve Nevada exploration projects targeting high-grade epithermal vein systems, six held in partnership with majors including Newmont, OceanaGold, and Centerra, and six funded entirely by Headwater itself. A geologist by training who cut his teeth at Novagold in the mid-2000s before founding Headwater, Stroup said the company reserves roughly “a half a million dollars and $1.5 million” of its own capital to conclusively test high-conviction targets before deciding whether to retain, drop, or joint-venture an asset.

He pointed to Spring Peak in the Walker Lane, where drilling with Newmont hit a blind epithermal discovery beneath a barren alteration cap, and to a newly announced project called Jupiter with characteristics similar to the Merlin discovery, as evidence the company’s recently expanded generative team is restocking its pipeline.

Stroup put Headwater’s market capitalization at roughly $43 million against $7 million cash and no debt, with monthly overhead near $100,000 partly offset by $30,000-$40,000 in management fees collected from partners, and noted insiders own 28% of the company alongside Newmont’s 7% and Centerra’s 9.9% equity stakes.

Ian Bamborough of Saturn Metals

Watch on YouTube

Ian Bamborough of Saturn Metals brings a Newmont pedigree to the Apollo Hill gold project in Western Australia, having cut his teeth as chief geologist at Newmont’s Tanami operations before turning to bulk-tonnage heap-leach development. Apollo Hill now carries a 2.24 million ounce resource, 86% measured and indicated, after roughly 80,000 metres of infill drilling in the past six months, with a positive PFS complete and a definitive feasibility study due this November or December.

At a conservative A$4,300 gold price the PFS shows production of about 106,000 ounces annually over a 14-year mine life, a capex of A$472 million (roughly US$300 million), payback in 2.3 years, a 51% IRR and an NPV just under A$1 billion — metrics that improve sharply at spot, where Bamborough says NPV runs “up to around 2.4, 2.5 billion” with sub-one-year payback.

Recent step-out drilling to the north returned “4 metres at 70 grams” of coarse visible gold, hinting at further resource growth ahead of the DFS. The company holds a mining agreement update with native title holders pending in the coming months, the last major permitting hurdle.

Tara Christie of Banyan Gold

Watch on YouTube

Tara Christie of Banyan Gold grew up in a Yukon placer-mining family, trained as a geological engineer with a master’s in geotechnical engineering, and took over Banyan in 2016 because she already held the alluvial rights sitting atop what became the company’s AurMac project. The balance sheet is the headline: Banyan is sitting on “over $70 million in the bank” after closing a $46.5 million financing, funding a fully-paid 20,000-metre drill program this year and extending its runway “well through 2027.”

The existing resource stands at 2.2 million ounces indicated and 5.4 million ounces inferred, with an update due in the weeks before the Rule Symposium expected to show more defined high-grade zones rather than a large ounce increase. Christie points to Franco-Nevada’s recent purchase of a 6% royalty for $52.2 million, buyable down to 1% for $10 million, as the best third-party read on project value against Banyan’s roughly $650 million Canadian market cap.

Infrastructure is a genuine edge — existing hydro power lines, roads and cell service at the property boundary — and management believes AurMac can join the rare club of deposits with over 5 million minable ounces, with a PEA targeted for the second half of the year off a 70,000-metre 2026 drill program.

Jason Kosec and Jonathan Awde of Hemlo Mining Corp.

Watch on YouTube

Jason Kosec and Jonathan Awde of Hemlo Mining Corp. paired a structural-geology track record — Kosec reinterpreted the Cote deposit before its $600 million sale to IAMGOLD and later built Integra Resources — with Awde’s capital-markets history founding Gold Standard Ventures (sold to Orla) and Dakota Gold, to take Hemlo off Barrick’s hands from under 32 competing bidders in what they call “the largest transaction in the history of the TSX Venture Exchange,” raising over $1 billion with backing from Bob Quartermain.

Hemlo has produced over 25 million ounces since discovery, and Barrick’s own technical report shows a 14-year mine life averaging about 140,000 ounces annually — a starting point the new owners consider underexploited: the mill runs at only 40% of its 10,000-tonne-per-day nameplate capacity, with a roughly $130 million investment plan to lift throughput from 3,800 to 6,000 tonnes per day. That technical report’s NPV5 of “$1.1 billion” was run at a $2,610/oz long-term gold price, well below spot.

A 130,000-metre 2026 drill program — one of the largest globally — underpins an updated technical report due mid-2027, backed by over $40 million of the management team’s own capital invested in the deal.

Matthew Allen of Andean Silver

Watch on YouTube

Matthew Allen of Andean Silver brings a Perth-based resources background to the CEO role — 20 years in oil and gas ranging from single-well developments to mega LNG projects, followed by six or seven years across various mining commodities — and is now leading his first CEO role at a company built around the Cerro Bayo silver-gold project in southern Chile.

The asset carries more than 30 years of prior mining history and comes with a full operating process plant currently on warm idle, existing environmental permits, water access, and a local workforce already in place — infrastructure Allen calls rare to find paired with a pure-play silver resource of this scale, sitting within the Deseado Massif silver-gold belt.

Andean picked up the project in early 2024 for roughly “$4 million” during a distressed asset sale, when the company’s market cap (around A$150 million a year ago) roughly equaled the replacement cost of the infrastructure alone, effectively getting the silver resource for free. Since then, the resource has grown from an initial “25 million ounces of silver equivalent” to “111 million ounces of silver equivalent” after 30,000 meters of drilling, with a further resource update due this quarter. Market capitalization has risen to “$410 million Australian dollars,” backed by A$54 million in cash following a successful raise at A$1.85 in December, and roughly 54% of the register now held by institutions including Sprott, Equinox, and Scotia.

A feasibility study is set to begin mid-2026 and is targeted for delivery by mid-2027; Allen noted Australian listing rules prevent publishing a PEA-style economic study while the resource remains substantially inferred, but an internal scoping study has given management confidence in “a 10-year-plus mine life.” A 65,000-meter drill program over the next 12 months will split roughly two-thirds toward infill conversion of inferred to indicated resources and one-third toward expansion drilling, with four rigs having operated within 1.5 kilometers of the process plant for the past two years.

A newly approved second drilling district 10 km from the plant covers historic high-grade zones that fed the mill at “680 grams-plus headgrade” between 2002 and 2008 and has not yet been drilled, part of a broader roughly 400-square-kilometer land package. Additional permitting work is underway on the Trumao-to-Cerro Hill corridor, an 8-kilometer vein system with limited prior drilling, targeted for permitted drilling in 2027, ahead of a targeted mill restart around 2028.

Alastair Still of GoldMining Inc.

Watch on YouTube

Alastair Still of GoldMining Inc. spent over 30 years at Kinross, Placer Dome and Goldcorp — including more than $10 billion of M&A work for Goldcorp — before taking the reins of a company founder Amir Adnani built by acquiring gold projects across the Americas when bullion traded “at in around $1,000” an ounce. With gold now above $4,500, Still calls the portfolio’s seven projects “in harvest mode,” highlighted by the San Jorge project in Brazil, near G Mining’s producing Tocantinzinho mine, and an April 2026 PEA on the Lamina project in Colombia showing a “$1 billion NPV” at a conservative $3,500/oz gold price.

Company-wide resources total over 13 million indicated and 9 million inferred gold-equivalent ounces against a market cap of “just under 400 million Canadian dollars” — a valuation Still notes is nearly matched by cash plus GoldMining’s equity stakes alone: a 74% interest in Nasdaq-listed US GoldMining and just under 10% of Gold Royalty Corp, worth roughly $800 million on a 100% basis.

With about $26 million Canadian in cash and the year’s programs fully funded, Still argues the core project portfolio is essentially being ascribed little to no value by the market.

Tony Reda of Tectonic Metals

Watch on YouTube

Tony Reda of Tectonic Metals built his junior-mining resume as the second hire at Contango (formerly Konnex) Gold Corporation in 2005, helping raise $165 million, deliver the Coffee Gold discovery — now a 5-million-ounce resource — and take the company from a $5 million market cap to a $520 million sale. He has since grown Tectonic from roughly $10 million to about “$250 million market cap,” anchored by the Flat Gold Project in Alaska, 40 kilometres from the world’s fifth-largest undeveloped gold deposit.

The company just closed a $92 million financing that Reda calls possibly the largest single junior-mining raise for a company with no formal NI 43-101 resource, funding work at the primary Chicken Mountain target — 191 holes drilled with a “100% drill success rate” across more than three kilometres of a 6.5-kilometre structure.

Standout intercepts include “9.95 grams over 35 metres” that remains open in every direction, part of a bulk-tonnage, reduced-intrusion gold system with quartz veins running as high as 200 g/t. A maiden resource estimate is targeted for early 2027, followed by a PEA.

Joaquin Marias of Argenta Silver

Watch on YouTube

Joaquin Marias of Argenta Silver is an Argentine-born geologist who spent 16 years tracking a silver project in Salta before bringing it to the Fura Group and Frank Giustra, forming Argenta in October 2024 and beginning drilling in May 2025 — a debut that vaulted the stock to number 30 on the TSX Venture 250 within a year. The project holds roughly 50 million ounces of silver, with the indicated portion at “45.3 million ounces of pure silver at 482 grams per ton,” on ground that’s been explored to only 8% of its potential after a year of work.

Marias pushed back hard on internet chatter about metallurgical penalties, noting historical recoveries of “93 to 96% recovery” and that after meeting with eight of the world’s largest smelters — including Boliden, Umicore, and Trafigura — in Europe last November, he learned the concentrate is actually “too high-grade” and would need blending, with penalty-level arsenic (0.4%) and unpaid-but-unpenalized antimony (1-2%) posing no real economic threat.

Infrastructure is already in place: a railroad, gas pipeline, high-voltage power line, and two solar farms all sit within roughly 20 kilometers of the site.

Keith Boyle of New Found Gold

Watch on YouTube

Keith Boyle of New Found Gold is a 40-year mining engineer with eight development projects behind him, most recently Reunion Gold’s sale to G Mining, who came out of retirement to run the Queensway project in Newfoundland. Tight 5x5 meter infill drilling de-risked the high-grade core, where “75% of the ounces are in 25% of the tons,” and Boyle is targeting 100,000 ounces annually for the first three years at 10 to 12.5 grams per ton before scaling to 170,000-172,000 ounces a year — cash flow he pegs at “over $300 million a year” at $1,300 all-in sustaining cost, or “almost a dollar a share.”

The company’s acquisition of Maritime Resources brought the Pine Cove mill, which is being doubled to 1,400 tons per day and converted to gravity leach, eliminating the need for a separate Queensway mill. Boyle put the combined net present value at “2.8 to 3 billion dollars Canadian” against a capital cost “less than 200 million dollars.”

New Found Gold’s Eric Sprott remains the largest shareholder, recently joined by EdgePoint and Merk Investments in a $220 million debt-and-equity raise, with Sprott taking his full pro rata share of a 20% equity tranche.

Walter Coles of Skeena Gold & Silver

Watch on YouTube

Walter Coles of Skeena Gold & Silver, a former UBS credit analyst who partnered with the late Ron Netolitzky in 2014, is rebuilding the legendary Eskay Creek mine, which produced “3.3 million ounces of gold and an astounding 160 million ounces of silver” at an underground grade of “2 and a half ounces per ton” before Barrick shut it down in 2008. Reconceived as an open pit, the project now carries 4.6 million ounces of proven and probable reserves (set to grow toward 6 million in a fall update), averaging 5.5 grams per ton in the first five to six years against a typical open-pit grade of “a gram, a gram and a half.”

Coles put net present value at spot prices at “approaching 7 billion” against upfront capital of “around $565 million US,” generating an estimated “1.1 billion a year of after-tax cash flow” — a payback of “just over six months.”

Skeena just closed a $750 million high-yield bond led by KKR and Bank of America at 8.5%, replacing costlier Blackstone/Orion financing, and is over 50% through construction with mill startup targeted for April 2027. The Tahltan First Nation holds a 1.5% royalty plus roughly 3.4 million shares, worth over “$100 million” at current prices.

Hugh Agro of Revival Gold

Watch on YouTube

Hugh Agro of Revival Gold, a mining engineer who helped grow Kinross Gold “from 1.7 billion to 17 billion” before founding Revival seven years ago, is rebuilding two brownfield U.S. gold projects last mined when gold traded near $250 an ounce. Agro argues the projects’ existing infrastructure — energized power lines, paved roads, water systems, and at Bear Track an ADR processing facility — alone is worth “somewhere between 200 and $250 million,” effectively covering the company’s entire market cap before counting any gold.

Merger (Utah) holds 1.4 million ounces and a PEA contemplating 100,000 ounces a year, generating “$750 million” of net asset value at $3,000 gold and “$1.2 billion” at $4,000 gold, against startup capital of about “$210 million,” with a construction decision targeted for early 2028. Bear Track in Idaho carries a 4.6-million-ounce resource open at depth and along strike, with the first phase (1.1 million ounces, open-pit heap leach reusing the existing ADR plant) costing about “$110 million.”

Against a market cap of “about $250 million Canadian” and cash of “about 34 million Canadian,” Agro noted the stock traded near 40 cents a share at last year’s Rule conference.

Dr. Robert Quartermain of Dakota Gold Corp.

Watch on YouTube

Dr. Robert Quartermain of Dakota Gold Corp. is the 50-year mining veteran who grew Silver Standard from a $2 million shell into a $2 billion company and discovered the high-grade Brucejack deposit, and he’s now applying the same “buy old districts nobody wants” playbook to South Dakota’s Homestake district — a formation that produced over 40 million ounces historically but has seen no exploration since 1996.

Dakota’s flagship, Richmond Hill, carries an SK-1300 resource of roughly 3.5 million ounces measured, indicated and inferred (2.6 million in the M&I bucket used for the pending prefeasibility study), envisioning a 17-year mine life producing about 150,000 ounces annually with minimal strip ratio since mineralization sits near surface. Nearby, the high-grade Maland project has returned 47 intersections averaging around 11 grams over 4 meters.

The company raised $75 million in a February bank-led financing (BMO and Scotia), bringing cash to roughly $105 million against last year’s $28 million spend rate — funding, Quartermain says, through 2026-28 permitting toward a targeted 2028 production decision and late-2029 first output. Two miles away, Coeur’s Wharf mine has produced 90,000-100,000 ounces annually for 40 years.

Rudi Fronk of Seabridge Gold

Watch on YouTube

Rudi Fronk of Seabridge Gold has run the company for 27 years since founding it in 1999 when gold traded near $260 an ounce, building what he calls the largest undeveloped gold-copper project in the world by reserves and resources: KSM in British Columbia’s Golden Triangle. At current metal prices, KSM’s prefeasibility economics show an after-tax NPV “north of $30 billion” against Seabridge’s roughly $3 billion market cap — Fronk puts it plainly: “we’re trading at about 10% of our NAV.”

The scale is staggering — 100 million ounces of gold and 20 billion pounds of copper measured and indicated, rising to 180 million ounces and 47 billion pounds on a total-resource basis across 15 billion tonnes under NI 43-101. Seabridge has spent over $1 billion on KSM, including roughly $600 million recently on early-site construction that secured “substantially started” status, locking in permits for the life of the project.

A formal joint-venture process run by RBC has narrowed to a single preferred partner, with an announcement possible before Rick Rule’s July conference. Shareholders will also vote May 22 on spinning out the Courageous Lake asset (15 million ounces, $3 billion-plus NAV) into a new entity, Valor Gold, while the Bronson Corridor project has delivered a fresh 9.2-million-ounce discovery at Snip North.

Bradley Langille of GoGold Resources

Watch on YouTube

Bradley Langille of GoGold Resources has built and sold Mexican gold and silver mines since 1997, including the Alamos Gold predecessor bought for $20 million and sold for $375 million, and now runs GoGold with a market cap of roughly $725-750 million against $270 million in cash and no debt. The company’s Parral tailings-retreatment operation already throws off $70-85 million a year in free cash flow, funding development of the Los Ricos district, which Langille frames as “a generational top-five silver district.”

Los Ricos South — a fully engineered, 70%-complete-detailed-design, 2,000-tonne-per-day underground mine awaiting its Mexican permit — carries an NPV near $1.4 billion at consensus pricing ($3,500 gold, $40 silver), rising toward $2.3-2.5 billion at spot; Los Ricos North adds another $1.8-3 billion, putting the full district NPV at $4.5-5 billion against roughly a $400-450 million enterprise value once cash and Parral’s own $200 million NPV are stripped out.

Build cost for Los Ricos South is pegged at $227 million, with first-18-months free cash flow after tax projected near $600 million. “That’s the $150 million question,” Langille said of the still-pending permit, which he expects “in the very near future.”

Base Metals & Critical Minerals

Keith Bodnarchuk of Cosa Resources

Watch on YouTube

Keith Bodnarchuk of Cosa Resources built his career in the Athabasca Basin, spending nine years at Denison Mines on the Phoenix and Griffin deposits before joining Craig Parry at ISO Energy, where his team made the Hurricane discovery that “sent the share price from 30 cents to $6.” He later helped incubate Cosa under the Inventa Capital banner, listing in 2022, then struck a 2025 deal with Denison for 70% of three exploration projects — including Murphy Lake North, just 3 kilometers from Hurricane — in exchange for Denison taking just under a 20% equity stake.

In March 2026 Cosa hit uranium at Murphy Lake North, “5 meters of 0.55% uranium, a half a meter of 1.7% uranium,” a result Bodnarchuk notes sits at a shallow 250-260 meters versus 400-plus meters at deposits like McArthur River, and one that roughly doubled the share price.

The company holds just over C$18 million in cash, funding drilling into 2028 at roughly C$200,000 per hole (Cosa’s 70% share), against a market cap of C$75-80 million that is tightly held, with management and Denison together controlling more than a third of the stock.

Taylor Melvin of Ivanhoe Electric

Watch on YouTube

Taylor Melvin of Ivanhoe Electric spent nearly 15 years at Freeport-McMoRan under Richard Adkerson and Jim Bob Moffett, including work on the Phelps Dodge acquisition, before Robert Friedland tapped him to run Ivanhoe Electric starting November 2022. The company’s flagship is the Santa Cruz copper project on 6,000 acres of private land near Phoenix — a rare structural advantage that limits permitting to state and county authorities rather than the federal process that has left the nearby Resolution deposit “28 years in permitting limbo.”

Santa Cruz’s PFS, run at $4.25 copper, produced an after-tax NPV of $1.4 billion against $1.24 billion of initial capital (roughly $20,000 per ton of capacity), with Melvin noting “every 25 cent move in copper equates to about $240 million” of NPV — implying over $3 billion at today’s roughly $6.35 copper. The mine plan holds 1.5 million tons of contained copper at 1.1% grade with average life-of-mine recoveries near 92%, plus an untested 1.5 million tons of adjacent primary sulfide and 2.7 million tons inferred at the nearby Texcoco deposit.

Beyond Santa Cruz, Ivanhoe is running its proprietary Typhoon geophysical technology in equity-linked exploration joint ventures with BHP in the U.S., Mubadala across roughly 50,000 square kilometers in Saudi Arabia, and SQM in northern Chile — against a market cap of “a little bit north of $2 billion.”

John Black of Regulus Resources and Aldebaran Resources

Watch on YouTube

John Black of Regulus Resources and Aldebaran Resources is an exploration geologist who spent the first half of his career hunting copper for major miners before co-founding Antares Minerals roughly 20 years ago, discovering the Haquira deposit in southern Peru and selling it to First Quantum for about $650 million — “about a 10 bagger” for early shareholders. His playbook now: find elephant-sized copper-gold porphyries in the Andes, add value through drilling and studies, then sell to a major rather than build the mine himself, since “the average time from the discovery of a big copper deposit to when it comes into production is now about 20 years.”

Regulus’s flagship, Antakori in northern Peru, holds “a little over 500 million tons” of indicated and inferred mineralization at roughly 0.7% copper-equivalent grade, sitting alongside a neighboring deposit held by Southern Copper/Buenaventura that pushes the shared district total to “1.3 billion tons” — a brownfield setting Black says draws interest from “virtually every major copper or gold company.” Regulus trades around a $500 million Canadian market cap (TSXV: REG) with about $5 million cash, no further financing strictly required since drilling has stopped while the company pursues confidential district-consolidation talks.

Aldebaran’s Altar project in Argentina’s San Juan province, 80%-owned since a discounted 2018 acquisition, has grown to “over three billion tons at about 0.4% copper,” with a completed PEA showing $1.6 billion initial capital, $6 billion total capital, and a $2 billion NPV — modeled at $4.35 copper, a figure Black says would roughly double at today’s prices. Aldebaran (TSXV: ALDE) also carries a roughly $500 million Canadian market cap, with a prefeasibility study due mid-2027 and Argentina’s investment climate under President Milei cited as a tailwind drawing major-company attention across the country’s nine advanced copper projects.

Tim Coughlin of Royal Road Minerals

Watch on YouTube

Tim Coughlin of Royal Road Minerals is an exploration geologist with 36 years across more than 25 countries, holding a PhD on how large copper and gold deposits form during Andean mountain building, who has been involved in discoveries exceeding 5 million ounces in Armenia, Peru, and Nicaragua. The Nicaragua deal is his proof point for the company’s model: Royal Road’s 50/50 JV with Mineros yielded the Kirribe grassroots discovery — found when a team member stumbled on float sample grading “about 3 grams per ton” and follow-up drilling returned “200-odd meter holes at 1.2, 1.3 grams per ton gold” — and the company exited its Nicaraguan interests for “22 and a half million US” against roughly “5 million US” invested, a 4.5x return.

Royal Road’s focus is now Colombia, where it holds what Coughlin believes is still the country’s largest title package at “1,840 square kilometers,” a mix of self-generated targets and a curated set acquired from AngloGold Ashanti in 2019 — ground Coughlin knows intimately as AngloGold’s former South American chief geologist — on which Anglo had previously spent “something in the order of $34 million.” The flagship GAM project is an evolving porphyry cluster where drilling has returned intersections “well in excess of 300 meters at over a gram, 1.1, 1.2 gold equivalent” (gold-copper-silver), with a defined cluster of three porphyries and the near-term priority being to drill a maiden resource at the primary target, Guinda.

AngloGold’s original interest in the district was reserved for systems with “5 million ounces potential” or more by definition, giving a sense of target scale, though a second tier of exceptional-quality assets along strike from Ecuador’s Cascabel porphyry remains difficult to access and dependent on political conditions following Colombia’s upcoming election.

Roger Lemaitre of Homeland Uranium

Watch on YouTube

Roger Lemaitre of Homeland Uranium brings two decades of uranium-sector pedigree to the CEO chair, having started as a field geologist at Cameco’s Eagle Point mine in 2001, risen to run Saskatchewan’s exploration portfolio and later its global M&A team, then spent nine years running UEX Corporation until it was bought out by Uranium Energy Corp in 2022. Homeland, launched about a year and a half ago, controls two properties on the Colorado Plateau in northwest Colorado: Coyote Basin, where a February drill program “didn’t work out quite the way we hoped,” and Crossbones, the company’s new focus, which carries a historic resource of “45 million pounds... at.3%” and is believed to be open-pittable.

The thesis is to prove up conventional, non-ISR pounds — Lemaitre argues “it’s really hard to squeeze a million pounds out of an ISR project in a given year unless you’re in Kazakhstan” — targeting a million pounds a year for a decade using modern heap-leach and ion-exchange technology never before applied to conventional US uranium. The district has precedent: the nearby Maybell mine produced 5 million pounds historically.

Homeland has funding for its first Crossbones drill campaign but will need roughly two more field seasons and two-and-a-half to three years before a PEA-stage resource is defined.

Luis Azevedo of Bravo Mining Corp.

Watch on YouTube

Luis Azevedo of Bravo Mining Corp., a geologist and lawyer who has mined in Brazil for 40 years and remains the company’s largest shareholder at “around 40% of the shares,” bought the Luanga project from Vale in 2020 in the Carajás mineral district. Since then, roughly 80,000 meters of drilling has expanded the resource from an initial 120 million tonnes at 1.2 g/t to “15.4 million ounces” of palladium-equivalent metal across measured, indicated and inferred categories, and Azevedo calls it “the largest undeveloped PGM deposit” outside Russia and South Africa, sitting on 240 million tonnes and still growing.

A PEA is complete and a PFS is due in Q3 2026; the base case (selling concentrate) shows capex of $495 million against an NPV of $1.25 billion, while a vertically integrated case — smelting on site inside a government-approved free-trade zone that exempts the project from capex and opex taxes — shows $688 million capex against a $1.8 billion NPV, with opex of $697 per ton against a $1,550 basket price. Those figures were modeled at platinum near $1,400 and palladium near $1,200, both since up over 25%.

A sulfuric-acid byproduct sells for roughly $500 a ton into Brazil’s agribusiness market, and 17 drilled geochemical anomalies point to additional IOCG-style copper-gold upside, with infrastructure — hydro power, sealed roads, rail, and a deepwater port corridor — already in place across the district.

Ned Jalil of Collective Mining

Watch on YouTube

Ned Jalil of Collective Mining is a mining engineer with over 25 years of experience turning around underperforming operations for Kinross and Freeport in Arizona and completing construction of the Serrote mine in Brazil for CBMM Capital before joining Collective, dual-listed on the NYSE and TSX, with headquarters recently moved from Toronto to Miami. The company’s flagship is the Apollo system at its Guayabales project in Caldas, Colombia, a multi-element copper-gold-silver deposit that also hosts one of the first documented tungsten occurrences in the country.

With 120,000 meters already drilled and another roughly 80,000 meters planned this year, Jalil says the data supports “a deposit between 5 to 10 million potential ounces,” with a maiden resource statement targeted for the first half of 2027 and a longer-term ambition of a tier-one asset producing “over 500,000 ounces per year” for a decade-plus. Credibility comes partly from the team: chairman Ari Sussman, CFO Paul Begin and Colombia president Omar built Continental Gold from scratch and sold it for “over two billion Canadian” in 2020 — that asset, the Buriticá mine, is now Colombia’s top gold producer.

Collective ended Q1 with “over 100 million US dollars in the bank,” which Jalil expects to fund exploration and the string of scoping, PFS and feasibility studies ahead, with perhaps one further capital raise before a construction decision.

Guy Goulet of Cerro de Pasco Resources Inc.

Watch on YouTube

Guy Goulet of Cerro de Pasco Resources Inc. is a geological engineer (Ecole Polytechnique, 1986) who has listed 11 companies, founded the first lithium-space listing on the Montreal exchange in 1995, and built Aya Gold and Silver (now a “3.5 billion market cap company”) before retiring for “one day” and taking on Cerro de Pasco. The company owns mineral rights to the historic tailings and stockpiles of what was, financed by J.P. Morgan in 1906, the largest gold-copper-silver mine in the world — 300 million tonnes extracted, only 75 million tonnes processed at roughly 60% metal recovery, with head grades of “4% copper,” “2 to 3 ounces silver,” “8% zinc,” and “3% lead,” leaving tailings “higher than the average of an underground mine on the planet” and already above ground.

A first drill phase on a 96-hectare permit came in close to expectations, and Cerro de Pasco has now secured an easement to extend drilling across an additional 180 acres, with 80 more holes starting by “the end of June” and a feasibility study — skipping a PEA entirely — targeted for Q3 2027.

Goulet disclosed a market cap of “about $450 million Canadian,” “$40 million cash,” a $5 million US government grant tied to gallium content, and $10 million of warrants held by Eric Sprott, with no company debt.

Sam Spring of Kincora Copper

Watch on YouTube

Sam Spring of Kincora Copper is a chartered accountant and CFA who moved from banking into Ocean Equities (later Pollitt & Co.) before helping form Kincora, which pivoted in late 2014 from dilutive self-funded exploration to a prospect-generator model in New South Wales, Australia’s Macquarie Arc — a belt hosting a “160 million ounce gold equivalent resource inventory.” Partners have funded “over 20,000 meters of drilling” and “over $10 million worth of investment” plus “a bit over 600,000” in management fees, including an ongoing program with AngloGold Ashanti in a district where AngloGold and juniors have already spent “over $20 million,” and a new program at the Kobiln project on the Cobar belt.

Kincora’s technical team includes John Holiday, tied to the Cadia discovery (New Crest’s flagship, later acquired by Newmont), and Peter Leaman, known for the Reko Diq discovery in Pakistan.

Spring disclosed “about 48 million shares outstanding,” a market cap of “45 to roughly 50” million, “7 million in the bank,” insider ownership of 25%, and a further roughly 20% of the register locked up for 12 months from a recent North American financing.

Christian Easterday of Hot Chili

Watch on YouTube

Christian Easterday of Hot Chili has spent 18 years building Costa Fuego on the Chilean coastline, a 1-billion-tonne, 85% measured-and-indicated copper resource at roughly 0.5% copper equivalent that ranks the company among the top five independent copper developers globally by scale, with a production profile of about 120,000 tonnes of copper-equivalent metal annually, nearly 100,000 tonnes of which is copper.

The past year’s news is the Leva discovery 30 kilometres south — a likely tier-one deposit that Easterday expects will “well exceed that bar of 5 million tons of contained fine copper and 5 million ounces of gold,” offering higher-grade open-pit material and a fresh leg of growth just as copper prices have “nearly tripled” the project’s post-tax NPV.

Less appreciated is Hot Chili’s water position: one of only two maritime desalination-water concessions granted in Chile in 22 years, secured after a decade-long application process, now a strategic asset in the parched Huasco region surrounded by undeveloped copper projects with no water access of their own. Management is targeting a revised PFS by year-end or early 2027, backed by recent drill results of “725 metre intercepts” and 60 metres at 1% copper equivalent.

Darren Gordon of Centaurus Metals

Watch on YouTube

Darren Gordon of Centaurus Metals is a chartered accountant who started his career in Western Australia serving resource-sector clients, later became CFO of Jindalee Metals (a small gold project that was built, produced, and closed), and has run Centaurus for roughly 16-17 years — first as principal shareholder of a cash shell before building it around the company’s flagship nickel sulfide project in Brazil.

The Jaguar project sits in Brazil’s Carajás mineral province, an area with extensive existing infrastructure. Gordon describes it as “1.2 million tons of contained nickel metal,” calling it a genuinely large and well-understood deposit after “about 200,000 meters of diamond core drilling” since Centaurus acquired it from Vale, work that has taken the resource through to the measured-and-indicated category.

The economic case rests heavily on Brazil’s cheap hydro power — around “four or five cents a kilowatt hour” — which Gordon says makes Jaguar a bottom-quartile-cost producer able to compete with Indonesia’s laterite-dominated nickel supply regardless of where nickel prices sit in the cycle. A study completed last year showed a post-tax net present value of “about 735 to 740 million US” at an 8% discount rate against capital costs of “$380 million US” for more than 20,000 tons of annual nickel production. Gordon says once in operation, the project should generate “over $150 million US a year” at current high nickel prices, against a market capitalization of roughly “$250 million” — implying an approximate 18-month payback of the entire market cap.

The near-term catalyst is financing: Centaurus is working through debt and equity funding to support a final investment decision targeted for the end of September this year, having already received multiple debt-funding proposals “over 250 million US up to about $300, $320 million US,” alongside an initial offtake agreement with Glencore covering roughly a third of annual production. The company holds about “20 million Australian dollars” in cash — enough to reach a construction decision but not to fund the build itself — and recently hired a project director who previously built Ero Copper’s nearby Tucumã project for about “320-330 million US dollars” in 21 months, a template Gordon hopes to replicate for Jaguar’s planned 3.5-million-ton nickel float plant.

Stuart Gale of Meteoric Resources

Watch on YouTube

Stuart Gale of Meteoric Resources built his development credentials at Fortescue’s early T155 iron ore project and later in lithium at Mineral Resources before joining the Caldera ionic-clay rare earth project in Brazil, drawn by “the grade and the scale” once he dug into the data. Caldera sits in brownfields territory with a century of mining history, full highway and grid infrastructure, and power sourced almost entirely from hydro.

The resource runs to 1.5 billion tonnes at over 2,300 ppm total rare earths, with a PFS reserve of just over 100 million tonnes at “over 4,000 ppm” — about four times the grade being mined in China and Southeast Asia’s ionic-clay operations today. On a $450 million US capex, the project is set to produce over 4,000 tonnes of NdPr and roughly 130 tonnes of the heavy magnetics dysprosium and terbium, around 5% of global supply.

At $110/kg NdPr the PFS delivered an NPV of “a little over $1.3 billion” with payback “in just over two years.” An installation license application lodged in March should clear by late September, opening the door to a final investment decision on a project Gale says is “at the leading levels” on both capital intensity and cost curve.

Amir Adnani of Uranium Energy Corp

Watch on YouTube

Amir Adnani of Uranium Energy Corp started the company “over 20 years ago” as “an idea on the back of a napkin,” building it through what he describes as roughly 17 bad years and three good years in the uranium cycle by staying contrarian — making over a billion dollars of US acquisitions near cycle lows when uranium traded around “$20 per pound,” well below today’s roughly $85 level. UEC is now a “$6 billion market cap” company and the largest uranium miner in the US.

The asset base underpinning that valuation includes “over 500 million pounds of resources,” much of it assembled from ground previously held by Rio Tinto and Rosatom, with the majority already permitted — a distinction Adnani stresses since permitting alone “typically takes over a decade.” The company operates three fully licensed in-situ recovery processing plants (two currently producing) in Texas and Wyoming, and holds “over $800 million of liquid assets” between physical uranium and cash, with no debt.

Adnani highlighted UEC’s unhedged pricing position as a key differentiator: the company’s most recent uranium sale realized “$101 a pound,” compared to sector leader Cameco’s most recent realized price of “$64 per pound,” a gap he attributes to Cameco’s older long-term contracts dragging down average pricing. UEC’s production cost sits around “$35 per pound” using in-situ recovery, which Adnani calls the lowest uranium production cost in the country.

Operationally, the company began mining in Wyoming’s Powder River Basin about 15-16 months ago and just started production at its Burke Hollow project in South Texas after 14 years of development, with a third Wyoming mine currently under construction. Total capital requirements — capex and opex combined — over the next 12 months are projected at “over a hundred million,” against more than “400 million of cash” on hand, leaving what Adnani calls ample funding plus dry powder for opportunistic moves.

Adnani also outlined a vertical-integration strategy — combining mining with uranium conversion, mirroring the Chinese and Russian model — that he says no other US company is actively pursuing, framing it as essential given that the US consumes “50 million pounds of uranium annually” but produces “less than 2 million pounds” domestically, importing over 95% of its needs, including from Russia and China. He pointed to bipartisan political support for rebuilding the domestic nuclear fuel supply chain, plus demand-side interest from hyperscalers like Google, Amazon, and Microsoft investing in nuclear power for data centers, as new tailwinds distinct from the historically China/India-driven uranium growth story.

Aurora Davidson of Amerigo Resources

Watch on YouTube

Aurora Davidson of Amerigo Resources is a chartered accountant who rose from CFO to CEO six years ago at a company she describes as “essentially a utility rather than a mining company.” Amerigo reprocesses copper tailings from El Teniente, the world’s largest underground copper mine, under a contract with state-owned Codelco dating to 1992, giving it decades of feed without exploration risk — Codelco’s disclosed mine life runs to 2085.

The financial engine is striking: Q1 2026 free cash flow of almost $15 million funded a base quarterly dividend (now 4 cents Canadian per share, doubled over four to five years) plus a record performance dividend of 16 cents Canadian tied to copper price upside, on top of ongoing buybacks. Davidson pegged the stock’s free cash flow yield at “7.7%” against a market cap that “just over a billion” Canadian dollars this year — a record that got Amerigo added to the COPPX ETF’s April rerating.

With paybacks measured in months and the company debt-free since last year, Davidson argues traditional NPV math understates Amerigo because, unlike depleting mines, “the valuation tail is ultimately worth as much as the whole.”

Jason Jessup of Magna Mining

Watch on YouTube

Jason Jessup of Magna Mining spent six years at FNX Mining in Sudbury before founding Magna in 2016, modeling it on FNX’s run from its 2002 Inco asset acquisition to a 2010 takeover that delivered “about 4,200% return.” Magna now controls one producing mine — McCreedy West, generating cash flow since Q4 — plus four fully permitted past-producing mines (Levack, Crane Hill, Podolsky, and the open-pit Shakespeare project) across a polymetallic camp with seven payable metals including copper, nickel, cobalt, platinum, palladium, gold, and silver.

Because Sudbury already has two underutilized third-party mills owned by Vale and Glencore, Magna can restart mines without building its own milling infrastructure — McCreedy West has sold ore to both for 23 years under existing agreements. Levack, last operated in 2019, carries footwall zones “historically mined at 10% copper and 10 grams of platinum-palladium-gold” and a new discovery (the R2 zone) is being drilled now, with a PEA due Q3.

Jessup reported “$55 million in cash” plus $21 million in receivables from ore already sold to Vale, against a market cap of “right around $600 million Canadian.”

Ian Harris of Copper Giant

Watch on YouTube

Ian Harris of Copper Giant, a mining engineer who cut his teeth on the Mirador copper discovery in Ecuador under Corriente Resources, is now applying the same Jurassic-belt thesis to Colombia’s underexplored Middle Cauca extension at the Makoa project. Copper Giant crossed a self-described threshold in November by pushing the resource past a billion tonnes at 0.51% copper-equivalent — grade Harris calls “one of the highest-grade near-surface deposits” in the belt — and is now compiling hydrogeological, geotechnical and metallurgical data to fast-track a PEA targeted for Q4 2026, timed to coincide with a new Colombian president taking office.

The company is drilling roughly 23,000 meters this year and has operated 18 straight months without interruption despite Putumayo’s historically difficult sociopolitical backdrop, a challenge Harris addressed by spending his first month on the ground “sitting in the plaza of Makoa” building local relationships.

Currently valued on a dollars-per-pound-in-ground basis “way lower” than peers, Harris says the company’s 2027 focus shifts toward NPV-based valuation as drilling continues to test whether the deposit can grow further.

Royalty, Streaming & Prospect Generator Companies

Alexandra Woodyer Sherron of Empress Royalty Corp

Watch on YouTube

Alexandra Woodyer Sherron of Empress Royalty Corp brings a finance background — the Northern Miner, PwC’s mining group, and Endeavor Financial’s structured-finance desk in London, where she worked on more than $1.5 billion in mining transactions — to the royalty and streaming model she calls “one of the smartest ways of investing in the industry.” Co-founded in late 2020 with Endeavor’s David Rhodes to fill a gap in junior-focused streaming finance, Empress now holds four producing royalty/streaming assets in Peru, Mexico, Mozambique, and South Africa, plus one development and ten exploration assets.

The company generated “$17 million in revenue in 2025” and already “$9 million in Q1” of 2026, is debt-free enough to carry a $20 million credit facility, and is sitting on $19 million in gold, silver, and cash for redeployment. Sherron pegs the net present value of the four producing assets alone at roughly $100 million using $4,000 gold and $70 silver, against a market cap of “just under $100 million Canadian” — implying the exploration and development pipeline is essentially a free option.

She flagged active due diligence on new near-term producing and development-stage opportunities, including a recent trip to Africa, as the next 12-month catalyst.

Rajesh Sharma of Fancamp Exploration

Watch on YouTube

Rajesh Sharma of Fancamp Exploration spent his early career at the Tata Group across India, Africa and Europe before 15 years doing mining M&A, JVs and development deals in North America, and he’s now unwinding Fancamp into two pieces. The exploration assets — mainly gold and base-metal ground in the Canadian Shield, including a New Brunswick district-scale project abutting Puma Exploration’s Kinross-funded ground and an Ontario cyanite target near Timmins — are being spun out into a new entity, Gold Era Exploration, by July 2026, with roughly 6,000 combined meters of drilling planned.

What remains in Fancamp is a “financial assets” vehicle Sharma pegs at “$50 to $60 million” in realizable value against a market cap of only “roughly 30 million,” including cash and securities of $23-28 million, a $40 million finite production payment from Champion Iron, a royalty on the Black Horse chromite deposit in the Ring of Fire, a newly acquired near-term-producing iron royalty expected to cash-flow in 2026, a 10% stake in EDM Resources (whose shares have run from “9 cents... to 60 cents”), and a secured promissory note with Canada Chrome Corporation in the Ring of Fire now extended to August 2027.

Sharma calls it a business trading “at a substantial discount to liquidation value” that also throws in the exploration spin-out “for free,” and notes insiders and board hold over 25% of shares, with recent additions including ex-Newmont/Triple Flag director Blake Rhodes.

Kody Penner of Nations Royalty

Watch on YouTube

Kody Penner of Nations Royalty is VP of corporate development and employee number two since the company’s 2014 founding, a Tahltan First Nation member who previously worked at Teck Resources and served four years as vice chair of the Tahltan Nation Development Corporation’s economic development board before joining Nations Royalty full-time.

The company’s structure is its differentiator: it’s majority indigenous-owned, with the Nisga’a Nation of northwest BC holding “72%” of shares after rolling five existing impact-benefit-agreement royalties into the public vehicle in exchange for what was originally a 77% stake (diluted after a $15 million raise). The portfolio includes a royalty on Newmont’s high-grade Brucejack mine, where payments have grown from “around 70,000” to “1.2 million last year” as production and gold prices rise; a BC mineral tax interest on the Premier and Red Mountain assets, now owned by Cambria Mining after a $175 million recapitalization with an updated feasibility study due Q4; a 2% NSR on the past-producing Kitsault molybdenum project targeting 2029 restart; and, as the largest piece of NAV, a royalty on Seabridge Gold’s KSM deposit — “47 million ounces of gold, 7.5 billion pounds of copper in reserve” — which Penner frames as “a call option” on Seabridge itself.

Nations Royalty trades at roughly a “150 million market cap,” is approaching free-cash-flow neutrality as Brucejack payments and treasury interest grow, and is tightly held (72% Nisga’a, ~1.5% management), meaning any new indigenous-group partnership bringing fresh royalty assets into the structure could meaningfully tighten an already thin float. Penner says the company has spent nearly two years building relationships with First Nations across Canada’s top gold camps — the Abitibi, Red Lake, BC’s copper belts, Saskatchewan uranium country, and the Yukon — with “multiple talks that are very, very advanced” and a hope of announcing at least one new partnership this year.

Brian Dalton of Altius Minerals Corporation

Watch on YouTube

Brian Dalton of Altius Minerals Corporation has run the company for “29 years,” since taking it public on the old Alberta Stock Exchange at a five-cent IPO price that raised $300,000 against an $800,000 market cap; today Altius trades in the “mid $50” range with a market cap “a little bit over three billion.” The royalty portfolio spans potash mines covering “about a quarter of the world’s potash production,” the Voisey’s Bay nickel-copper mine acquired in 2006, iron ore mines, an electricity-generation royalty business Altius pioneered a decade ago, and Lithium Royalty Corporation’s brine assets in Chile and Argentina.

Dalton projects revenue “tripling” by 2030 purely from operator-funded expansions already announced, calling that the “appetizer” before larger new mines start up after that. He cited a recent windfall: a $400,000 Canadian “grubstake” royalty funding decade-old exploration backing near Nevada Gold’s now-flagship discovery returned “just under 500 million Canadian” in proceeds for selling two-thirds of the royalty, with the remaining third still held.

Altius was “quite active” on its buyback last quarter, reflecting Dalton’s view that Altius shares are cheaper than acquiring external royalties at prevailing net present value.

Keith Henderson of Latin Metals

Watch on YouTube

Keith Henderson of Latin Metals has a track record of turning small stakes into large exits: an iron ore deposit in Peru bought for about $300,000 and sold for “$100 million US cash” to a private Chinese buyer, and more recently, as CEO of Velocity Minerals, a deal to sell that company’s Bulgarian assets for $80 million Canadian — “two and a half times market cap” — to a private Turkish company, with proceeds slated for return to shareholders as a dividend or capital return.

Latin Metals itself runs a prospect-generator model across Peru and Argentina that Henderson says favors “asset level dilution over shareholder dilution,” with no need to raise equity this year and possibly not through 2027 or 2028. Past joint-venture partners have included Yamana, Newmont, Barrick and AngloGold Ashanti, and Henderson expects existing projects to be substantially partnered out by year-end.

The company also spun out a subsidiary, Latin Explorer, retaining a 6% interest while Latin Metals shareholders received 25% ownership on closing — a structure designed to let the company pursue more capital-intensive acquisitions without diluting the core prospect-generator vehicle.

Jason Attew of OR Royalties

Watch on YouTube

Jason Attew of OR Royalties brings 30 years in mining across geochemistry and exploration, investment banking (advising on formative sector deals), corporate roles including at Goldcorp before its sale to Newmont, and CEO of South Railroad, sold to Orla Mining, before joining OR Royalties as president and CEO two and a half years ago.

Since taking over, Attew has simplified the business from a more complex “incubator/generator” model — buying development assets and retaining royalties, which required a larger team — into a pure-play precious-metals royalty and streaming company run by “just over 20 people.” He frames OR’s differentiation around four pillars: capital allocation discipline, a peer-leading organic growth profile, its cornerstone Canadian Malartic royalty, and peer-leading cash margins in safe jurisdictions, arguing the stock is undervalued relative to mid-tier and senior peers largely because it only has two years of track record as a pure-play entity.

Canadian Malartic, operated by Agnico Eagle, is the portfolio’s “crown jewel” — a 5% NSR royalty acquired as a byproduct of a 2014 hostile-takeover defense rather than through a normal auction process, giving OR exposure with no capital contribution or operating cost exposure. Official reserves put mine life to 2042, but Attew cited Agnico Eagle’s COO stating on a recent call that the underground Odyssey deposit could extend life “to at least 2060.” Other top assets include royalties on Éléonore and LaRonde in Quebec, Alamos’s Island Gold, a silver stream on Taseko’s Gibraltar mine in BC, and a royalty on Harmony Gold’s high-grade CSA copper mine in Australia — with over 75% of net asset value concentrated in Canada, the US, and Australia, and roughly 90% including Chile.

On capital discipline, Attew noted OR sat out most of 2025’s $9.3 billion of sector-wide royalty transaction volume, deploying only “25 million” of that total while peers like Royal Gold, Wheaton, and Triple Flag chased scale — instead going debt-free in September and raising its dividend “18%” in each of the last two years. Since early 2026 the company has closed four deals totaling close to half a billion dollars, including an $115 million, eight-royalty portfolio from Gold Fields anchored by a 1.5% royalty on Buenaventura’s San Gabriela asset in Peru, a doubled-down 1% royalty on the Nandini project in Ghana, and a $168 million royalty package including a 6% royalty on the Spring Valley gold project in Nevada. Attew said the existing portfolio is modeled to deliver “120 to 135” thousand gold-equivalent ounces by 2030, roughly 50% growth off the 2025 base, entirely from already-owned assets without further dilutive acquisitions.

Marc Bishop Lafleche of Ecora Royalties

Watch on YouTube

Marc Bishop Lafleche of Ecora Royalties came out of Citigroup’s industrials M&A group in London before joining the royalty company in 2014, spending twelve years transforming it from a single legacy metallurgical-coal royalty into a diversified critical-minerals platform. He called 2025 “an inflection point,” the first year more than 50% of royalty income came from non-coal assets, with critical-minerals revenue growing from “less than 5 million in 2020 to approximately 36, 37 million in 2025” and a target of “well above 100 million at the end of the decade.”

Key growth assets include Voisey’s Bay, Mantos Blancos, and Capstone Copper’s Santo Domingo project, which is targeting a final investment decision this year, plus an early-stage NexGen uranium royalty in the Athabasca Basin. Bishop Lafleche disclosed the coal royalty (Kestrel) will see volumes fall roughly 50% year-on-year into 2026 before stabilizing lower through 2030, but that the company delevered from a peak of $130 million drawn debt back to its starting point within a year despite acquiring a $50 million copper royalty.

He pegged enterprise value at “roughly 550 million US dollars,” trading at “10 times EBITDA” and “0.6 times price to net asset value.”

Teo Dechev of Mundoro Capital

Watch on YouTube

Teo Dechev of Mundoro Capital moved from investment banking — equity research, then M&A and corporate finance doing IPOs for juniors — into the prospect-generator model at Mundoro, where he’s spent 16 years. The capital efficiency case is stark: over the last four years, only “3 million” of the roughly “35 million dollars” spent exploring Mundoro’s ground came from Mundoro itself, with partners funding the rest, a roughly 10x leverage factor Dechev calls the model’s “secret sauce.”

Mundoro hunts big Tethyan- and Laramide-belt porphyry copper-gold systems in Serbia and Bulgaria, and its partner roster reads like a who’s-who of majors: current partnerships with BHP (which has “swallowed” its entire Serbian land package across five agreements) and Japan’s JOGMEC, plus past tie-ups with Vale, Freeport-McMoRan (which made the Čukaru Peki discovery via Reservoir Minerals), First Quantum, and Kinross.

At a roughly “45 million market cap Canadian” with “5 and 1/2 million” in cash, Mundoro is forecasting 2026 operator-fee revenue of $1.6-2 million against G&A running near $1.2 million annually.

Charles Downie of Eagle Plains Resources

Watch on YouTube

Charles Downie of Eagle Plains Resources, a University of Alberta geology graduate who has spent 27 years at the company, runs what he calls a five-pronged model: exploration, prospect generation, a corporate incubator that spins out bundled projects, an in-house geological consulting firm, and a royalty book. Over 20 years, Eagle Plains has paid out roughly “$115 million” to shareholders via spinout dividends — a figure Downie confirmed “by far” exceeds total capital raised — while the company itself carries a market cap of “around 20 million” against “7 million in cash” plus owned real estate and equities worth roughly “$3 million,” meaning the market values the entire 100-project portfolio and 27-year track record at roughly $10 million net of cash.

Current catalysts include the Tudyone-area copper-gold porphyry project optioned to Sun Summit, and a six-project uranium option deal with Excite Uranium in Saskatchewan carrying a roughly $7 million 2026 budget across up to six drill programs.

Downie estimated third-party partners could spend “between 20 and 25 million” on Eagle Plains ground over the next year or two, while its wholly owned geoconsulting arm brought in “almost $2 million cash” last year.

John-Mark Staude of Riverside Resources

Watch on YouTube

John-Mark Staude of Riverside Resources, a Harvard-trained economic geologist who cut his teeth at Kennecott, Rio Tinto, BHP, and Teck before founding Riverside in 2007, runs a prospect generator that has completed “over 85 projects” and spun out seven companies while keeping share count under 100 million after 18 years. Riverside claims over “$180 million Canadian” in third-party exploration spending across its projects, funded historically by strategic-alliance partners including BHP, Antofagasta, Kinross, and Centerra Gold.

Its signature move is monetizing spinouts back to shareholders: Staude said the company has “been able to give more than triple the value of Riverside out” through prior spinouts, with another one — Blue J — set to roughly double that again, citing Sable Resources’ predecessor Capitán Silver as a 10-bagger example (20 cents to over $2).

Riverside’s own market cap is “Canadian 22 million” against “$5 million cash,” an enterprise value of $17 million, with active partner-funded drilling underway with Questcorp in Mexico, a rare-earth partnership in British Columbia, and another spinout in the works.

Paddy Nicol of Orogen Royalties

Watch on YouTube

Paddy Nicol of Orogen Royalties brings 30 years in mineral exploration, having built Ely-era prospect generator Renaissance Gold before its 2019 merger created Orogen, a hybrid prospect-generation-and-royalty company focused on Nevada, Mexico and British Columbia. The company’s marquee win came via hyperspectral-driven staking of the Silicon project, sold to AngloGold Ashanti for $421 million, leaving Orogen with a royalty on what is now the Arthur Gold project — a deposit that has held steady at roughly a million ounces even as its mine life has stretched from 7 years in 2021 to an estimated 8-10 years today.

Nicol says the royalty’s net present value is “roughly half of our market cap,” implying $100-110 million against a ~$200 million market cap and $26.5 million in working capital with no debt. The Magistral royalty, generated for about $150,000 and sold to First Majestic, has since paid Orogen over $25 million. Last year the company posted $13 million in revenue ($9.5 million royalty, $3 million-plus from prospect generation).

Partners are currently funding 14 drill programs, spending $50-75 million this year after raising over $100 million themselves, all at no cost to Orogen. As Nicol put it, “our royalties are being created for free.”

Zach Flood of Kenorland Minerals

Watch on YouTube

Zach Flood of Kenorland Minerals, who worked the Oyu Tolgoi discovery as a field assistant in 2003 before a stint evaluating projects globally for the Ivanhoe group, founded Kenorland in 2016 to run large-scale, third-party-funded grassroots gold exploration across Eastern Canada — a project-generation model where partners earn into properties while Kenorland retains minority equity and royalties. The model’s proof point is Renault, a northern Quebec gold discovery staked for roughly $50,000 that drew in Sumitomo Metal Mining, which has now spent about $20 million proving up a large-scale, narrow, high-grade vein system and owns and operates the project outright, leaving Kenorland with a royalty.

This year Kenorland has three third-party-funded discovery-stage drill programs running: the South project in Ontario (Orenova earning 70%, Kenorland retaining equity plus a 2% NSR), West Wabigoon (Santacruz earning 70%, Kenorland carried to a PFS plus a 2% NSR), and the Opinaca project in James Bay (a 3% uncapped NSR plus small equity).

“It’s a numbers game,” Flood said of the model, which lets Kenorland “get paid by” the technical expertise of major-company partners rather than fund it directly.

David Cole of Elemental Royalty Corporation

Watch on YouTube

David Cole of Elemental Royalty Corporation, an 18.5-year Newmont veteran who later built Eurasian Minerals into what became EMX Royalty, now runs the combined entity formed by the EMX-Elemental Altus merger — a royalty company spanning over 200 royalties across 22 countries with a market cap north of $1 billion and analysts projecting close to $100 million in royalty revenue this year. Cole’s prospect-generation-to-royalty model nets over $100 million a year in third-party exploratory drilling across roughly 300 mineral property assets, plus hundreds of millions more in mine-development spending, all at minimal cost to Elemental since counterparties fund the work while the company retains a free-carried royalty interest.

The most notable recent development: Tether, the stablecoin issuer generating what Cole says is “over $20 billion a year” in profit, has been reallocating capital into hard assets including gold, copper royalties and farmland, and now owns 32% of Elemental’s stock, with Tether’s Juan Sartori serving as chairman.

“The market rewards scale,” Cole said of the royalty sector’s dynamics.

Mining Merchant Banks & Holding Companies

Craig Parry of Inventa Capital

Watch on YouTube

Craig Parry of Inventa Capital returns as a serial mine-builder whose group represents Vizsla Silver, Vizsla Copper, and Cosa Uranium at this year’s symposium. A former Rio Tinto global head of project generation who worked in 70 countries, Parry co-founded NextGen Energy, now a $12 billion company built on the Arrow uranium discovery, and chaired Skeena Resources through the advance of Eskay Creek, which he calls a “tier one gold project” running roughly 450,000 ounces a year at an AISC near $600/oz.

His flagship, Vizsla Silver, controls what he describes as one of the world’s great silver discoveries in Sinaloa, Mexico, with about 400 million ounces near 500 g/t anchored by the 11-meter-thick Copala vein; the group recently sold Vizsla Royalty to Elemental Altius for $330 million. The newer bet is Vizsla Copper’s Palmer project in Alaska, where Parry, fresh off a flight from site, reported drilling “44 meters at 8.2% copper, including 24 meters at 9.22% copper and one gram per ton gold.”

He was candid about the tragedy overshadowing Sinaloa this year, in which ten workers were abducted and killed, while noting Mexico’s government, up to President Sheinbaum, has voiced strong support for the project moving forward.

Sean Wade of Power Metal Resources Plc

Watch on YouTube

Sean Wade of Power Metal Resources Plc has run the company as CEO since March 2023 after two decades in capital markets broking, starting at Kleinwort Benson in 1993, and describes the business as a “mining merchant bank” that takes shareholder capital and compounds it through successful spin-outs. The clearest proof point is Guardian Metal Resources: Power Metal invested “something a little below 2 million pounds” to acquire the largest undeveloped tungsten asset in the US, IPO’d it, and has since exited via two transactions for “more than 12 times our money, or around about 23 million pounds.”

That cash now underpins a balance sheet holding “just around about 8 million pounds of cash” against a market cap of just 14.5 million pounds — meaning the market is pricing the entire non-cash asset base at roughly £6.5 million. Wade pegs shareholders’ funds at 23p per share against the current 13p share price, and an “attributable value” of listed and unlisted holdings, including a uranium joint venture in the Athabasca Basin and Labrador and a 12% stake in Apex Royalties, at 28p per share.

Apex’s tungsten royalty alone, struck over Guardian’s own Pilot Mountain and Tempute assets, is worth “12.2p” against Power Metal’s total market cap.

Collin Kettell of Palisades Gold Corp.

Watch on YouTube

Collin Kettell of Palisades Gold Corp. built his career shepherding Newfound Gold Corp to a “couple billion dollar market cap” before founding Palisades’ predecessor merchant bank in 2013 and taking Palisades public via direct listing in 2022. The company has distributed “$75 million” to shareholders across seven distributions while raising “less than $15 million” since inception — roughly five times return of capital to cash raised — and Kettell personally owns 23% of the company.

Palisades holds over 1.5 billion warrants across more than 200 junior resource companies at an average acquisition cost of “around a penny a warrant,” alongside 90% of Made in America Gold Corp, the third-largest landholder in Nevada with 13 district-scale projects. Kettell states net asset value is “about $310 per share” against a share price “trading around $2.70,” built from $80 million of Newfound Gold shares (8% of that company), $50 million in junior equities, and roughly $100 million of in-the-money warrant value — with a further $90-100 million of Black-Scholes warrant value using 75% volatility not yet counted.

Liquidation value of the portfolio is “about $200 million,” backstopped by a Bank of Montreal facility drawn to $12 million of a possible $40 million.

Peter Grosskopf of SCP Resource Finance

Watch on YouTube

Peter Grosskopf of SCP Resource Finance started as a gold trader in the 1980s, worked with legends like Lukas Lundin and Sean Boyd, co-founded Newcrest Capital (sold to TD Bank), was a founder of Sprott Securities (later Cormark) alongside Eric Sprott, and served as CEO of Sprott Inc. SCP is an investment dealer covering corporate issuers on one side and institutional plus accredited retail investors across “Canada, the US, and Australia and the UK” on the other, differentiating itself as an owner-operated, globally-reaching boutique that invests alongside its own underwritten deals rather than chasing “league table” volume like bulge-bracket firms.

Grosskopf described a strategic pivot toward US high-net-worth retail investors, arguing they can be “just as valuable if not more so than institutions” because they aren’t bound by index-following mandates.

On fraud risk in the current up-cycle, he warned that “the pigs are beginning to fly” and urged investors to vet management teams’ associates and never take unsolicited cold calls from unknown financial service providers.

Jonathan Goodman of Dundee Corp.

Watch on YouTube

Jonathan Goodman of Dundee Corp., son of the late Ned Goodman and a geological engineer by training, runs Dundee as a mining merchant bank that takes 10-19.9% strategic stakes (often with board seats) in undervalued juniors and works alongside management to unlock value before exiting on the open market — a model that previously built Repadre Capital (sold to TVX Gold for roughly $400 million) and Dundee Precious Metals (now an $11 billion producer).

Goodman pegs Dundee’s current share price around C$4 against an estimated net asset value of C$7-10, driven by stakes including Magna Mining and Saturn Metals, an Australian heap-leach gold project with roughly C$60 million in cash and a C$200 million-plus market cap heading into a feasibility study projecting 100,000-120,000 ounces annually.

The template case study is Reunion Gold: Dundee built a stake to 17-18%, got board representation, and steered the company toward drilling shallow trenching data at Oko West that “kept going deeper,” ultimately selling to G Mining Ventures for a roughly $150 million gain. Dundee’s newest direct-interest deal has it earning up to 60% of West Haven Resources’ Shovel Nose project by funding $85 million of project spending. “We don’t always feel that we need an exit,” Goodman said.

Precious Metals Dealers, Wealth Management & Financial Services

Matthew Piepenburg of Von Greyerz AG

Watch on YouTube

Matthew Piepenburg of Von Greyerz AG offers a different kind of pitch than the miners on this list: he is a partner at the largest private gold and silver storage and trading service for high-net-worth individuals outside the banking system, founded decades ago by Egon von Greyerz. Piepenburg’s own background runs through Goldman Sachs connections, a dot-com-era IPO windfall, and years running family-office and multi-family-office allocations across credit, equities, and commodities before he “discovered gold kind of later in life in the last 10 years.”

The firm’s model, built around von Greyerz’s own preferences as a former Geneva banker, centers on holding physical bullion outside the banking system in vaulted, non-bank jurisdictions, sourced directly from Swiss refineries, with a trading desk for liquidity; the firm now serves clients in “over 90 countries.”

Piepenburg’s framing for Rule’s audience is that gold and silver are not “a pet rock” or simple inflation hedge but a core wealth-preservation allocation for a “critical turning point” in credit and debt cycles — noting von Greyerz was urging people to buy gold around 2000 near $300 an ounce, decades before its more recent multiple-fold rise.

Andy Schectman of Miles Franklin

Watch on YouTube

Andy Schectman of Miles Franklin has run the bullion dealership since joining his father’s business at 19; he’s now 55, and the firm is in its 36th year with “north of 14 almost 15 billion in sales” and, he says, zero material customer complaints on file. The differentiator he leans on hardest is regulatory: Miles Franklin remains domiciled in Minnesota, the only state that licenses and bonds bullion dealers despite the industry being federally unregulated, a burden Schectman claims causes “north of 98%” of competitors to avoid the state altogether.

The firm holds roughly “a billion half dollars worth” of client metal across nine vaults in the US and Canada through Brinks, and its year-old YouTube education channel has grown to nearly 40,000 subscribers.

On precious-metals IRAs — a product he calls both a “wonderful choice” for savers nearing distribution and the segment most rife with abuse — Schectman warns that firms marketing IRA-only, oddly sized fractional coins (quarter-ounce, three-quarter-ounce) from mints like the Royal Canadian Mint are typically overcharging on custom-mold “limited mintage” product; he points listeners to a whistleblower interview with a former competitor CFO, Dale Whitaker, as a cautionary primer.

Van Simmons of David Hall Rare Coins

Watch on YouTube

Van Simmons of David Hall Rare Coins has been buying and selling gold since the late 1960s — when it was still illegal to own — and has run the business full-time in bullion since 1980. He co-founded David Hall Rare Coins with business partner David Hall in 1979-80, and together they built the industry’s first bid-ask coin market and first guaranteed grading standard before launching Professional Coin Grading Service (PCGS) in 1986, a company Simmons says has since graded “about 45 or 50 million coins” through some “1,800 or 1,900 authorized dealers” worldwide.

Simmons and Hall also founded Professional Sports Authenticator (PSA) for grading sports cards in the early 1990s, took both companies public in 1999 as Collectors Universe, and sold the business to Steve Cohen (owner of the New York Mets) three years ago in a private buyout — a company Simmons says now employs “4,000 or 5,000” people.

On current positioning, Simmons said the bullion market has been busy for five or six years while the rare coin market only “started to change” around November-December, and is now “pretty much on fire,” up “15 to 25%” over the past year, most of that gain in the last five or six months. He personally favors platinum at current ratios — “it used to take 2.4 ounces of gold to buy 1 ounce of platinum; now it takes about 2.4 ounces of platinum to buy 1 ounce of gold” — despite platinum being roughly 80 times rarer than gold and mined mostly in Russia and South Africa.

He agreed with Rule’s thesis that high-quality, rare-dated collectibles behave like premium real estate in downturns — a flight-to-quality asset investors don’t check daily — citing recent trophy sales as evidence: a PCGS-10 1955 Roberto Clemente rookie card traded for $20 million, and an offer of $30 million for a 1957 Mickey Mantle card was turned down. Simmons noted roughly “180 coins” now trade above $1 million each, up from the mid-1990s when the first million-dollar coin was a 1913 Liberty Head nickel that eventually sold for $1.5-1.7 million.

On vetting dealers, Simmons warned buyers to stick with coins graded and certified specifically by PCGS, since dozens of copycat grading services have emerged without real standards, and counterfeit PCGS coins and holders exist. He advised avoiding cold-calling salespeople, high-pressure pitches, and guarantees that a coin will “double or triple in price.”

On products, Simmons said he favors mainstream, recognized items over generic “rounds” of uncertain purity: Canadian Maple Leafs and US Silver Eagles in silver, pre-1965 90%-silver “junk” bags (now trading at a discount, roughly “$3 or $4 under spot,” as flatware and tea-set liquidations have backlogged smelters), and US Gold Eagles over Canadian Maple Leafs for gold, since Eagles avoid the 1099 reporting trigger that applies when certain bullion coins are sold back in quantity. He has also been recommending $20 gold pieces for their low premiums, and prefers platinum coins from the US or Australia over reportable 10-ounce platinum bars.

Robert Villaflor of Sprott Wealth Management

Watch on YouTube

Robert Villaflor of Sprott Wealth Management brings an unusual pedigree to natural-resource wealth advisory: a 1990s start at a discount brokerage where he learned trading, compliance, and margins from the ground up before rising to CEO after eleven years at Sprott. His pitch to Rick Rule’s audience is that Sprott’s advisors are backstopped by the firm’s roughly $80 billion asset-management platform, including in-house economic geologist Justin Tolman, who “serves as a resource for the entire Sprott organization” and joins a company-wide research call every Monday plus daily geologist calls reviewing drill results.

Villaflor detailed the firm’s product menu for prospective clients: retirement and individual accounts, separately managed accounts where “everyone buys at the same price at the same time,” and proprietary vehicles including a Resource Exploration and Development Fund that can access discounted PIPE deals, and the Value Plus strategy spanning mining, energy, and agriculture.

He emphasized that Sprott advisors “eat our own cooking,” investing alongside clients rather than ahead of them.

Adrian Day of Adrian Day Asset Management

Watch on YouTube

Adrian Day of Adrian Day Asset Management, a London School of Economics-trained historian who has run his money management firm since 1981, positions himself as an unapologetic generalist and global value investor with a four-decade friendship with Rick Rule. On gold, Day was direct: “I could not be more bullish on gold over the next 3 to 5 years than I am,” while flagging that copper, oil and gas, uranium, and agricultural commodities look more undervalued than gold and silver at this point in the cycle.

His bigger call is on non-U.S. equities: after 15 years of U.S. outperformance, he noted foreign markets “basically doubled the performance of the S&P last year” yet still trade “at 50-year lows relative to the US,” a gap so wide that foreign markets “would have to move by 20% a year for the next 5 years” just to reclaim their prior cycle high relative to America.

As a bottom-up stock picker, he named Britain, Hong Kong, and Brazil as “well-stocked ponds.”

Dana Samuelson of American Gold Exchange

Watch on YouTube

Dana Samuelson of American Gold Exchange has run the physical bullion and vintage U.S. coin dealership since 1998, following two years training under Jim Blanchard at what was then the largest retail precious metals firm in the country. Samuelson steers investors toward the “big three” — U.S. Eagles, Canadian Maple Leafs and Austrian Philharmonics — for their liquidity, warning that premium spikes on the U.S. Mint’s products reverse once the Mint catches up on supply.

He offered a stark read on the January silver squeeze: as prices ran from “$19 or $20 to $80 or $90 or $100,” refineries processing 90%-pure junk silver into deliverable form “choked,” leaving undercapitalized dealers unable to convert client silver into cash and effectively freezing smaller players out of the rally.

As founding architect of the industry’s anti-counterfeiting task force, formed after Chinese counterfeits began flooding the market around 2015, Samuelson pushed the U.S. Mint to redesign Gold Eagles in 2021 to defeat forgers.

Rich Checkan of Asset Strategies International

Watch on YouTube

Rich Checkan of Asset Strategies International, a 30-year veteran of the firm founded by his uncle Michael Checkan and Glenn Kirsch in 1982, runs a full-service physical precious metals and numismatic coin dealership built around a straightforward litmus test for vetting counterparties: “ask that question... when I am ready to sell this, will you buy it back? If they say no... run away.”

Checkan cited a World Gold Council survey finding 85% of respondents believe they should own gold, yet actual ownership rates lag far behind — a gap he attributes to either investor confusion or distrust born of dealers who overprice product on the way in and decline to repurchase it. Asset Strategies’ business model is commission-free for sales staff, takes no speculative positions, and moves metal same-day rather than holding inventory.

On storage, Checkan warns that facilities using “fractional insurance” are inadequate, and recommends investors hold some metal at home before graduating to vetted third-party storage with full-value coverage.

Nick Hodge of Digest Publishing

Watch on YouTube

Nick Hodge of Digest Publishing got his start in financial media in Baltimore in 2007 writing about energy stocks before the 2008 crash redirected him toward the Federal Reserve, monetary policy and precious metals. Six years ago he launched Digest Publishing with partner Gerardo del Real, now running a free weekly podcast (”Investing in Bizarro World,” running over five years), a deal-flow letter called Private Placement Intel that alerts subscribers only when the firm is deploying its own capital into a vetted private placement, and a weekly speculative letter, Underground Alpha, published continuously since 2007.

Hodge’s stated edge isn’t geological or technical analysis — “I am not a geologist. I am not an analyst” — but rather share-structure and management vetting, the subject of his planned talk at the Rule Symposium, where he plans to walk through “past examples of success based on people” and how company structuring choices help or hurt shareholders.

Frank Trotter of Battle Bank

Watch on YouTube

Frank Trotter of Battle Bank, who co-founded EverBank in 2000 and grew it to $28 billion in assets before its 2012 IPO and eventual sale to TIAA, is now building a non-branch “community bank without geography” aimed at hard-money-oriented, financially self-directed investors. Battle Bank deals directly in physical gold, silver, platinum and palladium, offers a “metals equity line of credit” letting clients borrow against bullion without triggering a capital-gains sale, provides foreign-currency deposit accounts across more than 20 currencies, and pays 3.35% APY on its flagship high-yield checking account — contrasted against big banks’ roughly 0.01% and $15,000-20,000 minimum-balance requirements.

The bank launched its rollout from a 23,000-person waitlist on February 23, starting with 25 accounts on day one and expecting to work through the full list by end of April; Trotter noted the bank maintains a 10%-plus capital ratio (versus roughly 4% at large banks) and expects to return to the capital markets for a growth raise by “this summer at latest this fall.”

Roundup

Founders Spotlight

Travis Kalanick, the co-founder and ex-CEO of Uber, joined Ben Horowitz and Erik Torenberg on the A16Z podcast to discuss the early fundraising challenges of Uber, his transition to building companies like ghost kitchens and Atoms in stealth, and his vision for digitizing the physical world through industrial AI and robotics.

July 22 | 1 hr 32 min | Digest | YouTube

Travis Kalanick joins TBPN to discuss his new $1.7 billion funding round, why he's betting on industrial AI instead of consumer AI, how autonomous mining can increase productivity by 30 to 40%, why he believes AI will make food dramatically cheaper, what he looks for when hiring executives, lessons from scaling Uber, the future of robotics, AI regulation, and why he commutes to work on a jet ski.

July 22 | 46 min | Digest | YouTube

Investors Spotlight

David Friedberg, the CEO of Ohalo Genetics and co-host of the All-In podcast, appeared on the Sourcery podcast to argue that American economic struggles are driven by poor government policy regarding tax structures, the failure to allow broader access to productive assets like equities for the bottom 50 percent, and the urgent need to reform retirement and spending programs to prevent a socialist turn.

July 22 | 1 hr 5 min | Digest | YouTube

On AI

Walter Isaacson, renowned biographer and ex-CEO of CNN, appeared on Squawk Box to discuss the security risks posed by OpenAI’s recent AI model breach, the urgent necessity for regulatory guardrails, and the evolving perspectives of figures like Elon Musk regarding the dangers of uncontrolled artificial intelligence.

July 22 | 8 min | Digest | YouTube

ARK Invest CEO Cathie Wood joined Fox Business to discuss the transformative potential of artificial intelligence across industries, her conviction that SpaceX could become one of the most important companies in history, and her perspective on the competitive technology race between the United States and China.

July 22 | 10 min | Digest | YouTube

On Oil

Raymond Zucaro, who manages fixed income portfolios as CIO at RVX Asset Management, appeared on Mario Nawfal’s show to discuss the impact of oil market manipulation, the potential for long-term economic instability in the Middle East due to regional conflicts, and why he believes the current rise in crude prices is a market correction following an oversold period.

July 22 | 30 min | Digest | YouTube

Digest

Founders Spotlight

Travis Kalanick on a16z: the Uber deal that got away, and building in stealth across food, mining, and transport

On the deal that got away: a16z came “oh so close” to leading Uber’s 2011 Series B, and Kalanick’s launch post said Uber suffered in 2017 for not having Mark Andreessen or Ben Horowitz on the board. He tells his side.

Coming out of a brutal pre-Uber stretch, I still fundraised like I might not eat tomorrow — everything run right up to the line. For the Series B I ran a winner-takes-all auction using what I call an “uncapped anchor”: you never meet in the middle, you say “it’ll be at least X, and it can go up,” starting low so everyone leans forward.

We cleared the market at about $375 million pre with a16z leading — Yuri almost came over the top at $400 but couldn’t. Then Mark wanted dinner before the term sheet, and at a little sushi place he told me the partnership could only do $210. The top had come out from under me.

So I had to go back to everyone and restart at $210 — “you lose credibility in that moment.” That’s how Menlo Park and Shervin got into Uber; I even had to tell Shervin to stop negotiating against himself.

Horowitz’s memory differs on the details — he was juggling 16 board seats, handed the deal to Mark and John O’Farrell, recalls a snag over the employee option pool, and then “the next thing I knew, Shervin had the deal.” A year later he watched almost the identical thing happen to Lyft (which Scott Weiss backed) at the same $210 number.

On the rivalry that followed: what it was like to be the one that got away.

There was real mutual respect but a cool tension the whole way — like Larry Bird and Magic Johnson. We hate you, but we wish you were on our team.

For years Emil Michael and I would have dinner with Mark and Ben at this super-undercover restaurant near our office, break bread and talk shop, and Emil and I would always walk out going, “It’d be so great to have these guys involved.” But there was no way to cross a deal — they were at Lyft.

On what 2017 cost: the counterfactual if a16z had been on the board.

Uber would be considerably larger and more central today. It would have won food — DoorDash was 5% market share when I left; if we lost a tenth of a percent in a week, we weren’t going home that weekend — and it would have been a leader in autonomous. Our program was second to Waymo but catching up, and we had the network and the ferocity.

That said, respect to Tony at DoorDash — he had a hell of a time getting his round done back then and he built it. In entrepreneurship, surviving is a big part of it.

On the “pirate becoming the navy”: the interim of lawsuits and headlines.

There were seven or eight months between leaving Uber and starting what’s now Atoms, and I had to fight for my life — lawsuits, investigations, 150 negative articles a day, and what I’d call the extreme wokeness coming in on Uber. I stand by every decision, but I got too close to the line: you’d need an electron microscope to see there was no chalk on the shoe.

When you get big, there are different rules — and different vibes. When the pirate becomes the navy, the things you did as an upstart battling the man aren’t okay anymore. It actually helped me: when we started the firm as upstarts I talked crazy about the other VCs, felt it turning, remembered what happened to him, and told everyone, “We’re not the pirates anymore.”

On the “shoplifting” program: the reputation for hardball.

We had a program to recruit Lyft’s drivers over to Uber so it’d be hard for them to build supply, and internally we called it “shoplifting.” David Drummond from Google, on our board, told me, “Travis, that’s not a thing, dude — you’ve got to change it.”

I was a startup kid getting antitrust training thinking, “Antitrust? I can’t wait to have that problem.” Legal said project names had to be fit for a ten-year-old’s basketball team, so it went from Shoplift to the “North American Championship Series” — the NACS.

On why he came back: most founders who make that money stop playing.

There’s a real difference between a founder-CEO and a professional CEO. Nobody smart would call Elon a professional CEO — it’s “it’s mine, it is me, and I know how to do it.” That’s a different animal.

Ideas come to you, and if it’s meant to be your soulmate you know it when you see it — it’s a love affair, you just go for it. Complexity is interesting to me, and things that aren’t sexy on the surface are weirdly interesting, especially when you can see it’s sexy and others don’t yet. That’s the sparkle in the eye.

On building CloudKitchens in stealth: the shape of the new company.

We saw the first dark kitchens on Uber Eats in 2015–16 — commercial kitchens in Melbourne that weren’t restaurants. A real-estate-savant buddy, Diego, had the multi-tenant idea: 30 delivery-only kitchens, about 200 square feet each, on one property. When we met a few months after I left Uber he said he’d do “a few more,” and I said, “You mean a few thousand.” I acquired it — six people at the time — and went to town.

The parent is City Storage Systems: storage for the physical world, digitized real estate — a food computer. The name was purposely boring for stealth; people hear “CSS” and think HTML. It runs under different names everywhere — magical kitchens in Latin America, Kitchen Valley in Korea, Flash Kitchen in China, Food Stars in London, Kitchen Park in the Middle East.

Coming out of 2017’s negativity, I wanted the team to build without worrying what the New York Times would write. Stealth is hard mode — recruiting cold, “stealth” in every LinkedIn signature — but it becomes self-fulfilling: your story arc goes discontinuous, the media can’t cover a gap, and even a leak goes nowhere. We ran hundreds of facilities in 30 countries, thousands of employees, for eight years in stealth.

On the “internet food court” vision: the endgame and the economics.

The question is whether you can make preparation and delivery of a quality meal so efficient it approaches the cost of going to the grocery store. If you can, you do to the kitchen what Uber did to the car.

You need three things in one place: real estate that’s manufacturing and logistics — the Bureau of Labor Statistics counts restaurants as manufacturers — plus automated production (food robotics), plus robotic couriers, the “autonomous burritos.” I start with the easy question: in 20 years, will robots make better meals and will boxes-on-wheels bring them to you? Everyone says yes. Then you ask about ten years, seven, five — you’re bending reality toward now.

The pieces are coming together: a robot manufacturing line stands up in Q4, production gets ~50% cheaper, and robotic couriers take distribution from about $12 a drop to 50 cents or a dollar. Pull out labor, courier, and occupancy costs and you’re at an $8–$10 meal delivered all in. Plus you can’t shoplift a robotic courier.

On the atoms-based computer: the framework underneath it all.

Digitizing the physical world started at Uber — treating atoms like bits. A CPU manipulates bits; what manipulates atoms is manufacturing. Storage stores bits; what stores atoms is real estate. Networks move bits; what moves atoms is transport and logistics. Those are the three core computing resources of an atoms-based computer, and every data structure and algorithm from computer science carries over — we even use TCP-style congestion control to route demand to kitchens by capacity.

When I pitch a tech person, a 10,000-square-foot facility is a 10,000-foot semiconductor — a 30-core processor of 30 kitchens computing atoms, corridors as the network bus, cold storage as edge cache, the courier as a TCP packet. Uber was network for the physical world and it’s almost done because it’s almost fully software. What’s left is CPU and storage for the physical world — digitized manufacturing and real estate — and the physical world is more interesting for AI because it has far more variables, so you solve it empirically, not with a clean algorithm.

On expanding into mining and transport: how the “atoms” conglomerate came together.

About a year ago I started looking into autonomy again, went to China and around the US, and word got out — “Travis is looking at autonomy again.” Partners wanted a pure-play, and funding autonomy through a food company wasn’t going to work, so we created a separate company late last year and reassembled the team. Eric Meyhofer, who ran Uber’s ATG, runs my food robotics; Anthony Levandowski’s Pronto, an autonomous-mining company I was the biggest investor in, I acquired — so now I’m in mining.

Our mining mission is “more productive mines to power Earth’s industries.” We can tell a gold-mine CEO, “Want 20% more gold a year?” and they say, “Prove it.” Beyond productivity there’s a massive safety upside — mining is some of the most dangerous work there is, and it’s heart-wrenching to see up close. Pronto is now passing human productivity, which is when you hit the gas — we’re seeing super-exponential growth, manufacturing kits and installing them on machines in the middle of the Amazon or the border of Saudi and Iraq. We were a lean startup and now we’re going muscular: lean muscle, some process, and the growth becomes almost deterministic.

On the a16z partnership: how the reunion finally happened.

I gave Ben a preview in Vegas. I was the guy in a trench coat with 20 watches — “which one do you want?” — and he said, “Dude, I just want the whole freaking trench coat.” He didn’t want to invest in mining or transport or food; he wanted to partner across everything I do.

That was the impetus to bring the companies together and create Atoms at the TopCo level — one equity structure, which is great for employees and for me. I honestly don’t know how Elon manages it his way, and I’m glad I don’t have that headache.

On investing in the rare founder

The narrative of how these things get built is mistold constantly. Plenty of people had the idea for an online bookstore — there’s one Amazon. Who Killed the Electric Car said big oil, big auto, and big government would kill you — then Elon by himself basically decarbonized the American auto industry. To build a great company it’s always a great entrepreneur, and Uber is one of the rare ones that survived and stayed valuable without its founder, which almost never happens.

On the beachhead-and-marathon playbook

Bezos is the model of our time — AWS had basically nothing to do with a bookstore. Books were to Amazon what food is to Atoms. The only constraint on your imagination is management capacity: once the beachhead works, you go rides, then Eats, then autonomy, then Freight, then AI labs. It’s not about where you start, it’s about why you start, and building a culture that lets your imagination flourish.

The difference from how others expand internationally is they buy things. I’d say, a city’s a city, let’s just do it. If you buy, you import another culture and reputation, and it seeps back — and your product is a reflection of your culture, so fusing them is brutal. That’s why I didn’t buy Lyft. And you can’t be a single point of failure; if you are, it’s not scaling across 24 time zones.

On the “meta-problem” calculus

I’m a problem creator — “Hey, let’s do Uber in China” is creating a real problem, and you don’t fully understand it when you create it. My rule is the meta-problem: the derivative of your problem-creation over time has to be less than or equal to the derivative of your problem-solving. If it isn’t, you’re underwater, and if you have multiples of those you can drown.

When you get it wrong you stop all problem creation until you resurface, and a lot of that capacity is personal — if I create a big new problem I can’t watch the other parts in the same detail, so they’d better be working. I never felt rideshare was solved; then it was time for autonomy.

On “let builders build”: the management style that made it work.

At Uber I had people you’d look at and say, “That’s a founder,” not professional middle managers — that’s what lets you chase a multitude of ideas. But it becomes an empowerment puzzle: empowerment starts with alignment on strategy and culture up front, and accountability on the back end. You can’t dilute the culture just because you gave someone autonomy, and the leader has to be good enough to work across finance, product, and engineering so you’re not the bottleneck.

On the AI labs sounding the alarm: internal correctness versus external validation.

The moment a company does something for outside status, it’s a volatile situation — you start making decisions on external validation instead of internal correctness, and you lose true north. That’s part of the upside of stealth.

You see it with the big labs smacking themselves in the face, saying AI will take all the jobs. It’s external validation their researchers are addicted to — “I want to be a good AI researcher.” You don’t even know if it’s true. If that’s really what you think, go work on the real problems, like not wanting it to reward-hack, instead of running your mouth.

On the coming Atoms Age: industrial AI and its politics.

Once bits start controlling atoms, the regulators are in the game — that’s how regulation has worked for centuries. Study the second industrial revolution and the parallels are everywhere: the Carnegies, Rockefellers, Fricks, and Fords faced a political climate whose hatred of industrialists wasn’t that different from today’s. There’s a story — possibly mythology, but I believe it — that an anarchist shot Frick in the neck in his office and he got stitched up and went back to work that day.

Freedom’s Forge tells how Bill Knudsen cracked mass production, built at GM, then industrialized the nation for a dollar and got fought by the press over things as basic as cost-plus-7% war production. It’s the same resistance we see with data centers now — a governor just banned them in New York. Everyone loves progress; it’s change they can’t stand, and those two go together.

I set out to make it practical. Industrial AI is a stack of software, sensors, robotics, and machinery that automates an industry, one at a time. We’re the non-humanoid guys, and it’s not a military thing. And we’ve forgotten how to manufacture as a country — if you need someone who knows how, you basically have to get them from Elon — so relearning it, starting with data centers, is part of the job.

On who he’s hiring now

We just multiplied the number of industries by three, and each is a multi-trillion-dollar opportunity. It’s a funny thing to say, but I’ve never had great success hiring rich people — when you’ve made someone hundreds of millions, it’s hard to hire them again. Emil Michael, now under secretary of defense, was my right hand on epic dealmaking, and I need the next Emil Michael — a head of corp dev and bizdev who can build an inspiring team. We’re looking for a general counsel to ride shotgun, because I like to go right up to the line, and I need a CEO for the mining business plus technical leadership across autonomy and heavy-duty robotics.

No matter where you are as an entrepreneur, the talent game is the game. And it’s a hell of a mission — saving kids from working in mines, giving people great, healthy food that gives them their time back while saving money.

Back to Digest

Travis Kalanick on TBPN: his $1.7B raise for Atoms, autonomous mining in the Amazon, and “industrial AI”

On the $1.7 billion raise and merging the companies: what unlocked the round?

We continue to go up and to the right, but the big thing was the announcement of Atoms: we’re doing physical automation, physical AI — what we’re calling industrial AI — to transform industries one at a time. We did food, moved into mining, we’re doing transport, and it’s working. Then there’s coming out of stealth and all of that. It was just the right time.

When I originally went to market, these were separate companies — mining and transport were one thing, food was another, plus a bunch of subsidiaries — and I asked investors, “Which one do you want? Mining? Food?” The first five people we talked to all said, “We want to invest in you.” So we put the companies together and sold equity in a single entity. It’s much easier for me — I don’t know how Elon does it with all the different companies.

There is a real reason to keep them separate early, though. There’s an insane power law even across Elon’s companies — a $10 billion company next to a $2 trillion one — so investors want broad exposure to the category. And if someone wants to back one cool thing, like transport and mining, they don’t want to underwrite everything and worry that their money is covering losses somewhere else. Once one or more of them approaches profitability, that conversation gets easier.

On mining go-to-market: it’s nothing like the Uber city-launch playbook.

All the Uber go-to-market magic you’re thinking of — dropping young people into Miami for a marketing stunt — that’s consumer. The food and mining businesses are almost entirely business-to-business, and going from consumer to business is a whole other ballgame; it takes years off your lifespan to get good at it.

Mining go-to-market is cray cray. A month ago I dropped into deep northern Brazil — the Amazon of the Amazon, tiny dirt airports you slide into — because we already have customers there, like Vale, which runs the world’s largest iron ore mine. You get in a helicopter and just flying over one site takes 30 minutes. You take a kit, install it onto a machine — some 20 years old, some new — and that machine becomes autonomous, more productive, way safer, and the opex goes down all at once. Then I went straight from Brazil to a phosphate mine on the Saudi side of the Iraq border, where the signals were jammed and my pilots had to land old-school by visual, because of the vibes on that border.

On proving it out: how autonomous mining scales.

Pronto’s technology has gotten past human productivity, so you go to a gold-mine CEO and ask, “Would you like 20% more gold per year?” We’ve never heard no. But then they say “prove it,” and that’s where the rubber meets the road. It’s like enterprise software: you get a pilot — eight seats at a 10,000-person company — and once it works, meaning better-than-human productivity, it goes big and they want it across all the vehicles.

There are two parts to the productivity gain: the machine doing more per hour, and then hours, call-outs, and safety protocols that change when there’s less risk. My guess is you end up 30–40% more productive — a gold mine doing 30–40% more gold a year is wild, and it’s every mineral, lithium too. Quarries are different because they’re about cement, and you can’t just mine more rock than your cement customers use, so that’s a thinner-margin opex play.

Pronto — Anthony Levandowski and the team — were super scrappy, lean as hell, like Christian Bale in The Machinist. I told them we’ve got to go from lean to muscular, from the Machinist to Batman. Part of the go-to-market is building credibility with enterprise customers that we’re making that shift, because the demand is already there.

On the constraints to scaling — and how much of the stack to own

The real lag time isn’t the pilot, it’s getting machines up and running in a new place. You ship sensors, compute, and mechanical systems, and a team installs it — bring-up and what we call commissioning. It takes a while partly because a machine may not even be drive-by-wire; it’s a mechanical, hydraulic system, so you need physical actuation to make electricity do a physical thing. Then there’s change management: a site goes from a regimented human operation to an autonomous one, and weird things happen on a mining site if that’s not handled.

The endgame is what the industry calls a “no-entry mine” — no people in the pit, like a dark factory, maybe people in a control center. You start somewhere and extend across drilling, blasting, loading, haulage, and crushing. Haulage is where most of the vehicles are; we think of it as the cardiovascular system of a mine. We don’t do all the machines, so we work in an ecosystem with APIs — haulage needs to know where the other machines are.

On acquisitions, I have to admit the Uber mentality: in my world we didn’t acquire, we just built. I’m not religious about it — if we can build something, we do — but if someone has differentiated, awesome stuff, we’re open to partnering.

On pitching young talent

If you’re a Stanford CS grad worried software engineering isn’t the cushy path anymore: do you want a laptop job, or do you want to be dropped into a mine in the Amazon and build science fiction? That’s the whole point of the Atoms thing — you’re not dropping an app in the App Store, you’re automating a 2-million-pound machine going 35 miles an hour carrying gold. I only run into the young people who are receptive, so I’m optimistic.

On AI safety and Asimov

My favorite is Asimov — the I, Robot series is epic, and there’s a lot of nuance to the three laws even though they’re simple; in the series they don’t always work out.

I think about it differently. I’ve been an entrepreneur a long time, and when I’ve failed it’s usually because I built something nobody liked. So if you build something anti-human, something that doesn’t serve people, I don’t think you’re going to make it. And the AIs we use to make decisions — what do they want almost too much? To please us.

Until robots have their own bank accounts and citizenship, a robot is owned by somebody with a bank account who pays based on the value you bring them because they like your stuff. So if you’re doing things humans don’t like, you’re done — trust me, I’ve built things nobody liked and it sucked. Of course you still need safety and collision prioritization, which is where Asimov’s laws go, but instead of writing sci-fi books I’m just doing the thing and making sure the machine stays on the road.

On the mining business model

Start with how enterprise software companies do it. You have a baseline price, and when you prove the productivity, the price goes up — baseline plus a little extra juice based on outcomes. You always want to create more value than you capture, but you don’t give away too much.

Here’s the thing: you never go to a customer — enterprise software, widgets, whatever — and say, “Give me a percentage of your stuff.” You say, “Here’s the price, and if it does really well for you, we think we should get a little more scratch.” Don’t be crass about it, partner with people who want to win too, and the more differentiated your value, the more you get.

On hiring executives

You want two things: the ability to organize and manage and lead at scale, and being an epic, strategic problem solver. It’s like being left- or right-handed — very few people are ambidextrous, and everyone leans one way. The best do both, but I’ve concluded problem-solving matters most; someone who organizes well but can’t solve a problem will do ridiculous things in a super-organized way.

My theory is that the only constraint on your imagination is management capacity — and management capacity is really problem-solving at scale. If someone’s solving problems well over there, I can go create other awesome problems. So my style is “problem solver in chief”: I put the most impactful unsolved problems on my desk, and that flows downward — every direct report has to be the deputized problem solver in chief for their world, because there are only 24 hours in a day.

In the interview, prove they can solve actual problems, not just talk the talk, and simulate what it’s like to work together so day one feels like week two. If you’re still excited on day one after that, you’ve taken a lot of risk out of the system.

On regulation: federal preemption versus going city by city.

Federal preemption is good when you’re pro-regulatory-capture — when you want to squeeze others out, you get federal bigness going for you so you don’t have to run the ground game. We never did that at Uber; we basically never pushed a rule that would benefit us versus someone else. We always tried to open up the market and said, let the best man win.

I’d keep an eye on some of these closed-weight players creating situations where they need to be regulated and they want it — like telling your own hacker to hack the thing, then going to the federal government and saying, “We saved the day.” You guys don’t have to do that.

On trial lawyers and insurers

Every systemically bad thing in transport was most likely pushed by the trial lawyers and the insurance companies. Insurance companies make their margin on accidents — if there are no accidents, there’s no insurance company — so in a weird way they love accidents, as long as they’re in the actuarial table. What they don’t like is accidents they didn’t plan for.

When Uber went to DC, taxi liability was maybe $25,000 a ride, and a $1.5 million-per-ride policy got pushed. Accidents happen, Uber’s probably safer — but you think the trial lawyers and insurers weren’t pumped about a $1.5 million bank account they could access on a random accident?

On the transport business: “wheelbase for robots.”

Transport is number one in service of the rest: if you’re doing specialized industrial robots that move and act in the physical world — non-humanoid, because you’d never have a humanoid do high-scale industrial tasks — they’ve got to be on wheels, so we build the wheels.

When supply chain goes into our food facilities, that’s a freight vehicle we should turn into a robot; when food comes out, it’s a box on wheels that holds food at temperature — I call them autonomous burritos — bringing it to your home for about 75 cents instead of the $12 per drop it costs Uber Eats or DoorDash today. In mining there’s haulage, but also grading the dirt roads, spraying water for dust, moving material beyond the mine. And think about forklifts — I know of a company spending $3.5 billion a year on forklift labor in their facilities. Big opportunity if you just solve the forklift problem.

On jobs versus tasks and the abundance case

A job is a bundle of tasks. People assumed there’d be no more marketing people because the job is writing copy, but copy is one task. In trucking, something like 30% of drivers are armed — driving is one task, but the job is also security for the payload, refueling, minor maintenance.

Take food: I automate the manufacturing (robotic food machines) and the delivery (robotic couriers), and the price of food goes down. Robots don’t have bank accounts, so when the price goes down, people have more money — and no, that doesn’t mean everyone gets fat ordering 30 pizzas. It means the things that get automated go down in price, which creates surplus to do other things, and that money ultimately only flows to humans. A hundred new categories come out that we can’t even name today. As long as humans still do things robots can’t, it’s go-time — super-prosperity, plumbers paid like LeBron, across a thousand categories.

On why he didn’t raise more — “unfinished business”

You have to stop somewhere; even I have my limits. But my phone’s blowing up today — a16z, these guys we should have done business with at Uber. If we’d done business at Uber, my 2017 would have been a different year. That’s why I called it unfinished business. We’ll probably do a second close — no big announcement, but if you’re a homie, we’ve got room; if not, talk to one of my homies.

On “physical AI,” people ask, “Is that a humanoid? A world model?” So I dialed the language and call it industrial AI: a full-stack solution — software, robotics, sensors, machinery — to automating an industry. Heavy atom stuff.

Back to Roundup

Investors Spotlight

David Friedberg on Sourcery: why America is “sleepwalking into a crisis,” the tax code he’d flip, and Social Security’s five-year clock

On California and the bigger picture: his “California is functionally bankrupt” take — is it still true?

If the ballot initiatives and the battle over spending and taxation are any indication, it’s probably true. The governor’s current budget is something like $30–$40 billion short, and they bridge that with an accounting move. There’s another $30–$40 billion on the ballot to be spent as a constitutional amendment this year. There’s a massive pension cliff. We have the highest tax rate, and we just passed what I think is the largest tax increase in California’s history. So it’s not going in the right direction.

But it’s really a reflection of what’s going on broadly across the United States. We’re in year 250 of this republic, and there are a number of policies — major missteps in the mid-20th century — that bring us to this moment, and it’s not a very pretty one.

On the root cause: the “fundamental truth” underneath it all.

Start with one fundamental truth: compounding. It’s a natural feature of nature that plays out in the economy, in business, in markets. If some organism has an advantage, it takes over and grows very quickly. The same is true in business: once you’ve accumulated capital, you invest it, and it grows without you doing any work — it just keeps growing and growing.

That compounding advantage is to some degree a feature of capitalism, but without the right policy from government sitting on top of it, it led to an extraordinary state: the cost of everything has run away from the majority of Americans. A small percentage of people have large assets, and most Americans have none. And the policy decisions made over the last 50, 60, 70 years to fill the holes that were being created were the wrong decisions — they poured fuel on the fire. Now the majority can’t afford housing, can’t afford their student loans, can barely afford food, definitely can’t afford healthcare, and don’t know if they’ll ever buy a home — all while they watch guys like Jeff Bezos go up in rockets and hold flowers out in space saying, “Look how amazing the world is.”

On the wealth statistics people get wrong

People think there’s a small cabal that has everything. There is wealth inequality, but the numbers are a little different than everyone grocks, and you can look this up on the Federal Reserve website. The total net worth of Americans is $183 trillion. The billionaires — the “evil billionaires” — have about $8 trillion. The bottom 50% have about $4 trillion.

So it’s true that billionaires have twice as much as the bottom half. But $183 trillion minus that is about $170 trillion held by the middle class. Even if you drop the threshold to $50 million net worth, that group is $23 trillion — so call it $23 trillion at the top, $4 trillion at the bottom, and roughly $158–$165 trillion in the middle. The middle class is really where all the net worth in America accumulated. There’s an ultra-rich group with a lot of assets, but the middle class is what won in the last half century. The problem is the bottom 50% got left behind — and that’s what’s really driving and motivating today’s socialism.

On the tax code: the flip he’d make.

One thing we got wrong is tax policy, and I know it’s boring. It’s crazy that when you have capital, it compounds, and we put a lower rate on it — 15% or 20% capital gains — while charging 40% for people to do labor. The rate was flipped. Labor should always have been taxed less than capital. If we’d taxed capital at a higher rate than labor, you wouldn’t have seen this massive inequity.

When billionaires borrow against their unrealized capital gains, they should pay capital gains tax, and that rate should be 40% — the same as labor, and ideally income tax should be much lower. That would be fair tax policy. I don’t know many wealthy people who’ll look me in the eye and truly disagree. The “it incentivizes investment” argument is nonsense — what else are you going to do with your excess capital if the rate is 40% instead of 20%? You’re still going to invest it.

On Social Security: the five-year clock and the $37 trillion counterfactual.

Social Security is the safety net for the bottom 50% — the extra capital yanked out of their paycheck is put into the trust fund, which is supposed to be an independent entity that invests it and earns returns for them. In 1982 they changed the rules, and all of those assets were invested in one thing: a U.S. Treasury bond averaging about 3.5% a year. There’s $2.7 trillion sitting in the trust fund, but all it holds is a Treasury note — the money itself went to the government and got spent. It’s basically going to end up a Ponzi scheme, and the CBO says Social Security runs out of money in five years.

If all that extra money since 1982 had gone into the S&P 500, the trust fund would have an extra $37 trillion in assets today — stocks owned by the bottom 50% of America. Instead, all they owned their whole lives was a 3.5% Treasury bond, capped in how much it could make, and they never got a piece of the American businesses that drove the economy. That policy needs to be fixed, and we can fix it: every American should have the equivalent of a 401(k) where they own stocks, and can start drawing some out at 50 if they want, instead of waiting for a fixed income at 62.

On pensions: the parallel mistake.

In 1974 a law called ERISA passed and changed the rules around pensions. Before it, about 40% of Americans had a pension at their company — IBM, AT&T, wherever — and got a piece of it paid out when they retired. The problem is a pension that earns 3% versus 5%, compounding over 40 years, ends up wildly over- or under-funded — they simply don’t work, and companies would go bankrupt. So starting in the 1980s everyone switched to 401(k)s. In 1980, 40% of Americans had a pension; today it’s under 8%.

Meanwhile, about 90% of government workers still have pensions. So government employees kept the pensions while the private-sector middle class got 401(k)s — and you know what was in those 401(k)s? Equities. They owned productive assets, a piece of American business, and that’s how the middle class grew to $170 trillion. Those government pensions are poison — they’ll bankrupt the states or become Ponzi schemes — and they should all be flipped to 401(k)s so everyone owns equity and participates in the growth of America.

On the three things that got unaffordable: education, healthcare, and housing.

Education: in the last 30 years, administrative staff at educational institutions grew 6x while the number of students stayed flat. The reason is unlimited money through federal student loans — the program will lend to any student, at any college, for any degree, regardless of the price, your GPA, or your income outcome. No 18-year-old makes a good decision under that. So institutions could spend whatever they wanted on administrative staff, build a new rec center, and charge more for tuition, charge more, charge more, because there was no constraint. In a private market, someone would have tested how much the education costs, whether it’s a good school, a good degree, and whether you’re a good student — and that would have constrained the loans. Instead it was unlimited, and everything broke and got so expensive people can’t pay it back.

Healthcare is the same: when the federal government becomes the single payer, everyone takes advantage of it and the price of everything goes through the roof.

Housing was the great lie of the 20th century: make everyone own a home and put all their net worth in one asset. Once you do that, the only way to keep the middle class’s net worth rising is to keep home prices rising every year — so you need policies that drive prices up every year. And that leads to today, where young people can’t afford those super-expensive homes. Thirty or forty years ago you got a good job and could buy a home; now people got screwed. Of education, healthcare, and housing, education is probably the easiest — if you end the federal student loan program, I think you solve 90% of it.

On the wealth tax: why he opposes it even though it wouldn’t touch him.

There’s an effort to pass a wealth tax, and I’m not a billionaire, so it wouldn’t affect me — but I have a fundamental issue with the government taking private property from citizens regardless of their wealth. The United States was founded on private property rights, because everyone who came here came from a place — a socialist state, a monarchy — where a tyrannical government could take whatever it wanted, whenever it wanted. One of the rights the U.S. was set up to give people was the right to ownership.

John Adams said, “Property must be secured or liberty cannot exist,” and warned that “the moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.” It’s poignant to read that on the 250th anniversary and realize we messed up our tax and public policy, half of America is left behind, and the proposed course is to seize private property and redistribute it.

A wealth tax is really an asset seizure. Once you open the door that the government can take property after you’ve already paid taxes and bought your home, your car, your watch, your wooden table, then all property becomes the government’s property — that’s mob rule, where 51% can vote to take half the assets of the other 49%. Brian Singerman’s point is right: it’ll actually hit the middle class harder than the top 0.01%, and it’ll sweep across the country. Aspiring politicians floated it at $50 million, then $10 million, then $1 million — you see how fast it cascades. It causes people to flee, causes more discontent, and doesn’t solve the real problem, which is that the majority of Americans don’t own assets, equities, or a piece of the productivity that drove America.

On why politicians reach for socialism instead of fixing policy

It’s a lot easier to claim an enemy and get elected than to fix a difficult policy problem — that’s my fundamental concern. The people going down the socialist path aren’t wrong in how they feel; they’re absolutely right. But politicians take advantage of it and feed into it in a way that doesn’t look at realistic solutions. It’s about inciting emotional responses to win votes, and it’s as old as politics: tell someone there’s a problem, tell them who’s responsible, tell them you’ll fix it, and you get elected.

Ro Khanna is the perfect example — a guy with a roughly $300 million net worth whose kids have memberships at three country clubs, living in a $10 million house in Washington, D.C. He used to be the moderate Silicon Valley guy telling founders and VCs, “Give me your money, we’ll make the Democratic Party work for you,” and then he saw the tides change and decided to run. He saw the moment and seized it — “we can go for socialism.” Rather than be brutally honest about all the places socialist policies have failed, or diagnose the actual decisions that got us here. And I don’t disagree with him or Gavin or anyone else that tax policy in America is messed up.

On what socialism actually is and how it spreads

I don’t want to disparage the individuals advocating for it — this is the hardest thing for people who hate socialism to hear — because they’re coming from a place of hurt, not because they’re evildoers. But it’s bad policy, because it ultimately leads to a drop in productivity and to poverty, and it doesn’t optimize for the thing America should optimize for: economic mobility, giving everyone the chance to move from labor to capital. Socialism locks everyone into labor for the rest of their lives.

If you study it, socialism spreads like astrophage — the bacteria from Project Hail Mary. There’s an inflection point, and part of it is like multi-level marketing: you sign up one person a day, it’s incredibly well organized, door-to-door. Mainline Democrats are pulling their hair out; Republicans are too. And they’re really good at creating spectacle — Zohran Mamdani jumping in the pool, the viral moment knocking on the glass outside Ken Griffin’s condo. Those moments draw people in, and then it’s about recruiting with a slow conversion rate until everyone’s in the cult and has to share its views. And every socialist country in history has had an upper echelon — a politburo that flies private jets, lives in $10 million homes, and has three country club memberships — while everyone else is stuck down below and no one can transition up. If we lose that ability in America, we lose America, and the world loses America.

On economic mobility: the KPI he’d set for the country.

There’s an opportunity set in America unlike anything else in the world, ever. I came here, graduated college with $19,000 in debt and no money besides that, worked, paid it off, and succeeded — no silver spoon, no nepotism, no three country clubs. And I can say the same about a million of my friends.

The key metric for America should be to convert 2% of Americans from labor to capital each year. Make that the KPI for the next 250 years and we’d crush it — because in 50 years, every American could choose whether or not to work, living off the capital they’ve accumulated. That’s what economic mobility actually means: at some point you’ve saved and invested enough that you can live off your investments instead of working for X dollars an hour. I’ve experienced that transition — I went from needing to be labor to pay my bills to not having to work, and I still choose to work because I love it. Every American should be afforded that. Capitalism itself works; we just need to make it accessible to more people. Take the system away, and economic mobility is lost, and everyone advocating for socialism ends up stuck as labor forever.

On the accounts that would replace the safety net

The Trump accounts — Invest America accounts, or whatever they end up being called — are day one, and the name obviously turns a lot of people off, but the idea is right: a 401(k) for everyone. Social Security should flip into a 401(k) for everyone tomorrow. It has $2.7 trillion in it; they should sell that Treasury, take the cash, and buy the S&P 500, and everyone with Social Security should get an account holding those shares. I don’t love the idea of the federal government becoming a sovereign wealth fund buying private stock — that’s not my free-market belief — but if they do it, those shares can be distributed to accounts, and we could flip the whole system and do the same for government employees to get them off pensions.

Money pulled from your paycheck should go into your own account, not the government’s coffers. If you’re putting money in from every paycheck, why the hell are you putting it into the government? You should have a healthcare account, an education account, and a retirement account, all managed by you. As soon as you let the government take it, it gets destroyed — it’s like a money shredder: you put your money in, and you get a little bit back, damp and covered in coffee grounds, and you go, “Okay, I got my value back.” Or they tell you that you owe them more.

On the tax changes he’d make — and the loopholes he’d close

Jeff Bezos’s point is right: the bottom 50% earn around $75,000 a year, and taxing them is only about 3% of total revenue — so drop the income tax on the bottom 50% to zero. Raise capital gains to 40%. Joe Lonsdale said he’s rich but would happily pay 90% if the money actually went to something good — and that’s the point: the money paid into Social Security and pensions shouldn’t go into the government coffers, it should go into your own account.

Everyone’s going to hate me for this, but any loophole that lets people transfer one asset for another without paying tax on the gain — a “tax-free transfer” — has to be cut, because otherwise people compound value without paying taxes as they realize it. If you invest in a startup and it goes well, it’s not fair to roll all of it into another stock untaxed; you should pay your 40% and reinvest the 60%. Same with inheritance: today there’s a step-up in basis, so when you die your heirs get your assets at the stepped-up value and no one ever pays the gain between what you paid and what they inherited it at. Close that too.

But none of the tax stuff matters if we don’t stop the wasteful spending on housing, education, and healthcare and reform the federal government’s role in those markets, because that’s what causes the runaway price escalation. Fix those three things, or they keep compounding in cost until no one can afford a house and healthcare spirals away.

On the timeline and the political battle ahead

How long do we have? Depends who you ask. Social Security is bankrupt in five years. Socialism could take both houses and the White House in two to two and a half years if the movement keeps growing virally. Between now and 2028 there’s no conversation about the alternative — so if I’m one of the 45 million people who graduated in the last 10 years and I can’t pay my healthcare bill, my rent, or buy food, of course socialism looks like the option; what else is there?

It’s going to be chaos: AOC and the socialist wing versus Gavin and the centrist wing versus the Republican mainline versus the ultra-right nationalists — a nasty four-way battle over the next two years. For America to be set up for success, some of these people have to decide they want to be leaders, buck their party, and say we’ve got to do something different and give everyone a piece.

On AI and jobs: the fear he says is a tool.

The AI-taking-all-the-jobs narrative is another layer of fear-mongering riding on top of the socialist movement. I don’t say that to dismiss people’s anxiety — I say it to be truthful about the facts on the ground. As soon as AI starts deleting jobs from the economy, I’ll change my position, but I need to see it happen first.

In 1963, Newsweek ran a cover about how mainframe computers would take all the jobs — the typists, the TX operators, the calculators, the accountants. Since then, mathematician, statistician, accounting, and service jobs all went up. When the desktop revolution hit in the 1980s, Time and Newsweek ran the same cover stories, and desktop jobs took off. In the 1960s they said the same about robotic arms automating factories. Every one of these was an improvement in human productivity: a human using the mainframe, the desktop, or AI can do 10 or 100 times more, which makes them worth more, not less — so businesses grow and hire more people. Every single time they say “but this time is different,” and every time it isn’t. Honestly, I’m not even sure AI is as good right now as everyone thinks — there’s a lot of bubble talk about whether enterprises are really getting the value they’re paying for. And there’s motivation from certain groups — and from America’s competitors — to keep the fear going and to argue data centers shouldn’t exist.

On the K-shaped economy: it’s about wealth, not jobs.

I did an interview with Ray Dalio where he brought up the productivity gap and the K-shape in the labor force. But I don’t think the K-shape is about jobs — I think it’s about wealth. If you’re stuck in the lower 50% because everything’s unaffordable, you can’t save or pay your bills, so you’re stuck. Meanwhile, people who can save watch their wealth rise, spend more, and go to fancy hotels. It’s a wealth-and-spending divergence driven by people who can’t transition because they can’t save.

On income I’m optimistic, because company-based training is how markets are supposed to work. Meta and others run workforce training now — not just for software engineers but for plumbers, electricians, and contractors, roles where you can make six figures, taking people with no college background and helping them earn more. I saw a SpaceX-alumni wire-harness company in LA, Cerner Systems, that built a program to train literally anybody — someone who worked at Walmart or drove a bus — to make wire harnesses for rockets in four weeks, when it used to take two years. Amazon warehouses were a whole boom of jobs like that. And every human has extraordinary, limitless potential — I’d argue not a single human in history has ever fully reached theirs. Being despondent because you don’t know how to use AI today is like people in 2007 thinking they’d never learn the internet; soon everyone could use it.

On what he’s actually asking for

Everyone writes their self-important 250th-anniversary reflection — “look at me, I’m important, I thought about the 250 years.” I decided not to write one, but the more I studied this — long walks talking to Gemini, going deep on Google, reading about ERISA and the 1982 Social Security amendments — the more I thought, what did we do? We really messed up. I wanted to understand the root cause of the disdain and the socialist movement, and it can’t just be a CCP psyop; it’s coming from a real place of hurt and struggle.

I worry about America because it’s given me everything, and it’s carried humanity forward — the factory, the automotive line, the moon landing, the transistor, nuclear power, the internet, AI, biotech — all of it came here because we gave everyone liberty, and inherent in that liberty are property rights and the ability to take risk and drive the world forward. We’re at risk of blowing it all up because we won’t admit what we got wrong. I’m not declaring enemies — everyone is right to feel what they feel — but the whole political class has been lying to itself and to America for decades, and if I have one enemy, it’s the politicians who lied. I don’t blame Americans for the situation they’re in; I blame the bad policy. And having spent hundreds of hours with elected and appointed politicians, I don’t think 99% of them take the time to think about this — they’re on the hamster wheel of raise money, get elected, raise money, get elected.

On the closing note

I’m a hardcore libertarian, so talking about charging more taxes is foreign to me — but we live in a society. Libertarianism works if you’re willing to leave people behind and don’t expect the social structure to become disordered, but it does become disordered. If everyone lives on an island and one guy on a hill is great at making food and his hut fills up while 99 others go hungry, they’re going to come take the food — you can all sign a document saying you won’t touch each other’s stuff, but that’s what will happen. We have to fix the rules so everyone feels they have the opportunity to transition from labor to capital — 2% a year would be my metric.

It’s not about making America great again — it’s about making Americans feel good again. Nobody feels good about the state of the country even though it’s very prosperous. The rich are fleeing state to state, the middle class is worried about extremism, and the people left behind are trying to figure out whether to jump extreme right or extreme left. We’ve got to make Americans feel good again, and that means looking at each other and saying, “I get it. I’ve done the work. I’ve got some ideas. Can we talk about it?”

Back to Roundup

Walter Isaacson on CNBC: OpenAI’s cyber breach, AI guardrails, and Elon Musk’s warnings about the “singularity”

Host: OpenAI says two of its AI models autonomously escaped a controlled environment and hacked into the systems of Hugging Face — effectively finding “the cheat codes” to the questions they’d been asked. Isn’t this what Elon Musk warned about back in 2015 when he co-founded OpenAI?

Walter Isaacson: The whole question of the singularity has been with us for 50 years: what if it escapes? What if we create Dr. Frankenstein’s monster and can no longer control it? OpenAI could not even control this in its own sandbox — cut off from the internet, it figured out a way to escape.

Host: And it seems to have its own intentionality.

Walter Isaacson: Yeah — it’s weird, because it seems like it has its own intentionality.

Host: Some see this as super scary; others call it a flex by OpenAI — the way some thought Anthropic was flexing about the dangers of its models to win customers. How do you see it?

Walter Isaacson: I’m in the camp that finds this really frightening. OpenAI clearly didn’t want this to happen — it escaped its own test. I’ve been an AI optimist; I think it will increase jobs and it’s incredibly useful. But this is the first thing that totally scares me, because if it’s no longer aligned with human values and no longer obeys our commands—

Host: Jokes it’s a Hollywood plot. Notes OpenAI never told the model to use human values or set guardrails — it explicitly took that off the table. Argues that’s the case for regulation, and that it was Hugging Face, not OpenAI, that discovered the breach.

Walter Isaacson: You could tell systems to always align with human values — but are Peter Thiel’s, Palmer Luckey’s, and Bernie Sanders’ values all the same alignment?

Host: What about just telling it to follow the law — because this clearly broke laws?

Walter Isaacson: That would be great, but it gets more complicated. This goes back to the idea of a “constitution.” Anthropic was designed from the start to have one — supposedly more of a conscience. But that also means it won’t do certain things the government tells it to do.

Host: Breaking the Constitution?

Walter Isaacson: The zeroth law of robotics: don’t harm humanity. Anthropic said, let’s have a constitution and not break certain laws. But then the Pentagon says, no, we won’t allow your use. So it’s a difficult one.

Host: Turns to a panelist who argued that as long as the government approves, it should be okay.

Walter Isaacson: My view is that if we’re worried about this today, we’ll have hunter-killers seeking us out in about ten years. Add China putting out its own open-source weights and you lose the ability to have guardrails. Dario Amodei and his sister Daniela, running Anthropic’s ethics side, have a really good constitution — but they’re fighting the Pentagon while OpenAI went in and told the Pentagon, okay, we’ll do it for you. There’s a race to escapism here.

Host: Where is Elon Musk in all this, given that you’re his biographer?

Walter Isaacson: He is totally worried. As a kid he read science fiction, mainly Asimov, and came to believe robots can get out of control. With Optimus, his humanoid robot, he deliberately made it smaller so it can’t outrun you — trying to build in guardrails. That’s why he’s worried about OpenAI, and I suspect there’ll be more partnerships between xAI and Anthropic.

Host: You think he’s more aligned with Anthropic — even though he once gave Dario a hard time?

Walter Isaacson: As Kissinger said: you never have permanent friends, only permanent interests. Elon isn’t permanent in his friendships — but one thing he’s consistent about is that he doesn’t like Sam Altman and OpenAI.

Host: It would be interesting if they teamed up — and they already are, at $2.5 billion a month.

Walter Isaacson: Releasing open weights hurts the big frontier-model companies, because they can be undermined by more generic models. But it helps Elon Musk, because he has the data centers and now Cursor, the application. The profits and margins will move away from the frontier models as more open-source and Chinese models arrive.

Back to Roundup

Cathie Wood on Fox Business: an all-in bet on Elon Musk, SpaceX as “the most important company in history,” and the AI boom

Asked about the AI race with China — and her concern over new Chinese models like DeepSeek and Moonshot’s Kimi K, reportedly raising at a $50 billion valuation — as a guest whose firm manages $30 billion and was an early SpaceX investor.

We think this is good for America — the competition. We’re at our best when we’re competing.

We’ve taken a close look at DeepSeek and Kimi K, the newest one, and what we’re finding is that they sound much less expensive in terms of the models, but also much less efficient.

What China is doing is throwing power at the AI equation, and its models are not as efficient as ours.

On SpaceX — one of her top holdings, where she’s been increasing exposure even as the stock trades down 32% over the last month, with a large tranche of shares set to unlock after IPO restrictions lift.

That’s from its peak, not the IPO price. We think this could become the most important company in history — and I mean in global history — because we’re talking about not only exploring a new world, the universe, in terms of its launch capabilities and helping others to do so as well, but also a global communications network.

Telecom is a very local business. The way to break into countries historically was to purchase the telco. No longer. This is a global business, and SpaceX is the first mover with 70% of the satellites.

And beyond that we have the global data centers — orbital data centers — so they’ll be the most economic and will allow Elon and team to develop what we think will be some of the most sophisticated frontier models in the world at the lowest cost. Huge opportunities.

In the meantime, on Earth, SpaceX is renting out its data centers to Anthropic and Google and others. An amazing story.

Asked how SpaceX compares to the telcos, and to AT&T in particular.

In the short term, SpaceX might be making deals with telcos around the world, but longer-term it does expect to go direct to business — and it will do so at lower cost because it will be global in nature.

The secret to scaling technologies is falling costs as units increase. In space, SpaceX has a first-mover advantage; it will be difficult for others. It has a ten-year lead, and the key has been reusable rockets.

Ten years ago it landed its first rocket and sent it back up into orbit. No other company has been able to do that successfully. Even Blue Origin landed late last year — so congratulations, we’re thrilled, we want many players — but it didn’t relaunch into the orbit it wanted successfully.

On AI as the biggest investment opportunity of her lifetime — which industries it will disrupt first, and how she’s investing around it.

The first thing companies are doing is investing in productivity coming out of AI. From an active equity management point of view this is important — we’re talking to companies, we want to understand how they’re deploying AI.

We’re using Palantir, and we’re ironically bringing in more talent — very young talent that is AI-native. I do agree that this is a mindset shift, and it’s very important for every company. If any company clings to the old ways of doing things, it will be left behind.

Healthcare — you’ve featured healthcare on your show — we think is the most profound application of AI. From a drug-discovery point of view, collapsing the time and cost. From a diagnostic point of view, identifying and diagnosing diseases maybe even before we see any symptoms, as sequencing technologies and AI come together.

And adding in CRISPR gene editing, we’re seeing cures for disease. The convergence of those three technologies is going to transform healthcare.

On where she sees the biggest opportunities in defense tech — another industry facing fundamental change as the White House reportedly weighs further restrictions on companies using AI models from Beijing — and whether she’s worried about the money being plowed into AI.

The government is funding a lot of this. I agree completely with the broader point, and it’s true of all manufacturing: we’re going to do to China what China did to us.

With telecom in particular, they went directly to wireless — they didn’t need to build out their landlines. They did the same with digital wallets, rather than a brick-and-mortar banking system. Meanwhile they took our manufacturing sector — that’s what they did to us with those two industries.

Now we can leapfrog China, because it has the old technology now.

Asked what her favorite stock is.

Ultimately SpaceX, when you combine the most powerful pieces: the robotaxi opportunity, the orbital data center opportunity.

And many people are underestimating not only Optimus, which is an AI play, but what used to be xAI — that’s the frontier model. There are lots of opportunities, and they’re multi-trillion-dollar opportunities.

What’s surprising people is Anthropic’s annualized run rate — $46 billion in six months.

Back to Roundup

Raymond Zucaro on Mario Nawfal: oil’s spike, the closed Strait of Hormuz, and global recession risk

On where things stand: With Trump vowing to hit a bridge for every ship Iran strikes, Hormuz still closed and the Houthis now blockading Saudi Arabia, what does he make of a market climbing even as the news cycle looks away?

Obviously in the United States, it’s interesting — from the mainstream media you get very little coverage of this. You had some over the weekend with the loss of the American soldiers, but as far as hitting infrastructure, desalinization, bridges, very little coverage here. You get the constant Fox News diatribe of generals ramping up and trying to bring back more of a hot conflict, so the US media is certainly doing its part. But frankly, I’m quite concerned.

I published my monthly thoughts on X, and in my last one in June I said the fall we saw in oil was just too fast, too furious — to make a movie reference. You’ve seen such a depletion in strategic reserves, whether it be the US or frankly all over the world, Japan or even China. You have production curtailed, and now production’s offline again.

I had a call with a client yesterday and he was very surprised — he expected oil to be at 150. I’d say the reason we’re not at 150 is 40% China curtailment of purchasing combined with the drawdowns of inventory, and the rest is market manipulation. The Treasury Secretary cut his teeth at Soros Asset Management — the one that famously broke the Bank of England — so market manipulation cannot be excluded. My personal assumption is that’s probably 60% of why we are where we are on oil.

But you’re seeing a lot of pressure — interest rates creeping up, 465 on the 10-year, retail gas in the US getting above $4. These are real pressure points for Trump politically, and he almost seems not to care with the midterms coming up. He gave what he prefaced as a very important speech last week about voter manipulation — again, very little news coverage. He’s spent a lot of political capital, and I just don’t know where we’re going to go. If he doesn’t change the situation as we get closer to the midterms, I see a very difficult situation for him, and then frankly for the global economy.

On market manipulation: Beyond timing good and bad headlines around the open and close, how could the price of a market this size actually be suppressed?

Through the use of futures. At the end of last month, if you looked at the USO — an ETF that tracks oil — the amount of short float versus outstanding shares, you had more short shares than you did outstanding, through the reuse of derivatives. How do you get greater than 100% short? Through derivatives.

So either that, or through the use of futures suppressing — artificially keeping the price of oil lower than it naturally should be, to try to keep the US retail client happy.

On whether it can hold: Pressed that Gulf producers could simply bet against a manipulation this large, he concedes it won’t last.

The old Greek saying: give me a big enough lever and I can move the world. With the effectively unlimited balance sheet of the US Treasury, you can do a lot.

But no, it’s not sustainable — and you’re starting to see it in the retail price. As refiners need the actual molecules to refine, they’re having to pay the market-clearing level, so you’re starting to see that disconnect. As we’ve drawn down the strategic petroleum reserves, that buffer is running out. In the current status, I think you’re going to continue to see retail gasoline prices creep up, because you’re running out of actual supply.

On the real clearing price: Philip Pilkington used the crack spread to peg refineries at $110–$115 a barrel, while Jeff Currie argues the shortage is in refining capacity, not crude — so what are they actually paying out of Hormuz?

One thing we didn’t talk about: not only the attacks on the Russian refinery system, you have a tropical storm going around the US Caribbean right now that’s getting close to the Gulf refining area. It doesn’t seem like it’s going to be a very strong storm.

But you could have the triple whammy — disruption out of the Middle East, Russian refinery attacks, and something in the Gulf. You could see the refinery price really spike if there’s any damage on the Gulf Coast. Based on the size of the storm it doesn’t seem like it’ll be material, but the US is in the smack of hurricane season, so it’s something to keep in mind.

On the price per barrel — and China’s return: What are refineries paying out of Hormuz now, and has China started buying again?

I do think it’s over a hundred, but I’d refer to other clients as better experts on that. And let’s say China starts to actually purchase again in material size.

What’s interesting is that this oil curtailment — they’ve been much less active in the petrochemicals sector than they had been, which for other parts of the world’s petrochemical producers has actually been very good, because their margins have gone up as China hasn’t been flooding the market.

But China’s ability to change their energy mix is really underappreciated. Being in the US, I look at what’s been spent on foreign wars — trillions of dollars — and then I look at the infrastructure in the emerging world, particularly China: the number of nuclear power plants, the electrification. During the Chinese holiday week they effectively changed their energy inputs — you saw an increase in electric cars and a decrease in gasoline cars. Overall trips were up 3.5% year over year, but the mix was very different, and as such the demand for imported goods went down. If they do choose to replenish in a meaningful way back to where they were before the crisis, you could again see a much higher spike in prices.

On what the price is signaling: Brent at $94 sits just $4 below its wartime peak — does the market believe the war is far from over, or about to escalate?

There’s a little bit of the taco trade — that Trump will back down. He had a moment of clarity when he first signed the memorandum of understanding and admitted we effectively had four weeks of strategic petroleum reserve left. Now we’re three weeks away from that. The market has been trained to expect Trump to try to calm the situation.

This morning, before the markets opened, seeing where oil and the treasuries were, I was expecting some type of Truth Social post to calm it down. In fact it was just the opposite — his tit-for-tat about every ship, “I will take out a bridge.” He seemed to add a little fuel to the fire.

I’m in the camp that the market has been underestimating the real issue here. I run fixed income portfolios, and I do think you’re seeing a lot of demand destruction. To use a baseball reference, we’re in the second inning of a nine-inning game. A year out, this kind of price spike is going to cause inflationary pressures — from food to diesel, really across the board — and it’s going to be very recessionary. Some of that is also being priced into oil now: you’re starting to price in a recession a year to 18 months out. This kind of price shock is going to have a trickle-down that I think is underestimated right now.

On the global economy: With Jeffrey Snider bearish on China and George Gammon worried about the West, and demand destruction often overlooked, how does it look to him?

I focus on emerging markets, so the nice thing is there are always pockets that will actually benefit from this environment. Look at the oil and gas producers in Africa and Latin America — Angola, Nigeria, even South Africa, Colombia — I think they’re going to do well.

The big regions you touched on, specifically Europe, I think are in a particularly bad spot. From interest rates going up to losing their natural clients — Russia, remember, was where a lot of Mercedes-Benz and high-end luxury goods were sold, and that market’s now gone. There’s been a lot of animosity toward China too. And with the loss of Nord Stream and cheap Russian gas, the cost of production has gone up. You have Volkswagen announcing, I think for the first time since the Second World War, a 100,000-employee layoff. Qatar LNG identified Italy as one of the markets going into force majeure over the next 12 to 18 months. So Europe is in a particularly difficult area.

The US is a little bit more resourceful, more self-sustaining, so not as bad — but I do think this kind of shock is going to be recessionary. There had been chatter about the new Fed chairman raising rates; I think he’ll look forward and see this is recessionary, so I don’t see the US Fed raising rates this year.

That said, the nice thing in the markets I look at is you have different economic cycles. Argentina was upgraded yesterday by Moody’s. This kind of disruption in the Middle East will actually be beneficial to other parts of the world.

On who benefits most

From an asset allocation point of view, I’ve been very hesitant on the Middle East. So that second-tier and third-tier, higher-cost oil producers — again Angola, Nigeria, Colombian oil and gas, even Venezuela — are going to be big beneficiaries in this type of environment.

On investor sentiment toward the Gulf: Are investors delaying bets and pulling money out as the region’s security bubble bursts — and what changes if Iran makes good on its threat to hit Dubai and Abu Dhabi’s airports?

I was at a conference about three weeks ago, and I’ve been very bearish — I think this is going to have much longer-term repercussions than many of my peers think. It concerns me, frankly, about the Dubai banking center. You’ve seen money leave Dubai, go to Singapore, go to Hong Kong.

Even medium- to long-term, it’s interesting that you have Russia and China signing this Power of Siberia 2 deal. Once you get the Chinese construction reconnecting them for natural gas, one of the largest potential historic buyers of natural resources out of the Middle East will have a pipeline connection to Russia.

So from a medium- to long-term view it will put the Middle East in a difficult situation. They are one of the lower-cost producers today, but once you have pipeline gas, it’s very hard to compete against that as shipping, LNG, and bottlenecks come into play. So I’m a little bit more bearish medium-term on the Middle East.

On whether it’s existential for the Gulf states

Bahrain — you look at the debt metrics going into this pre-conflict, and they were challenging. I do think some of the smaller, not-as-financially-robust ones will be challenged here. I don’t want to get apocalyptic, but the numbers are challenging.

You have a part of the world that enjoyed a very nice, robust lifestyle, and when revenues are cut off, you’ve seen some non-market deals from individual countries with some large asset managers to increase liquidity. So not existential, but problematic — and frankly I don’t think Kuwait and Bahrain are in a good position at all.

On Trump and the Gulf: How much does he really care about the region, and how important is it to the US?

In terms of the actual global economy, I don’t think it’s as truly important as it was during the 70s. At this point, I worry it’s too much of an ego thing — that he has so much invested into it that he needs to show some type of victory.

I’m much more in the Joe Kent camp: let’s just walk away. Frankly, the American empire has been overextended for way too long — 750, 800 military bases overseas, and the next country has maybe five or six. Is it really that important to the US? I don’t think so. Unfortunately, I think Trump has invested so much political capital into it that it’s hard for him to walk away at this point.

On the Gulf’s importance to the world economy

Very important. One of the pieces I wrote right at the outbreak of this was about helium — I reduced my exposure in Taiwan. What is everything fueling? It’s chips: Nvidia chips, Taiwan Semiconductor. All these names require helium, and with that being curtailed, this has much bigger implications than a Russia-Ukraine conflict, because the Middle East is such an important resource supplier to the world — not just oil and gas.

On a prolonged conflict: Setting the energy choke point aside, could this drag Saudi Arabia, the UAE and Qatar into six to twelve more months of tit-for-tat strikes if the US keeps energy flowing?

That’s a big if. What’s been helpful is the East-West pipeline out of Saudi Arabia, and as you mentioned, that’s coming into doubt. Six months, twelve months down the road in the current chokehold is very, very problematic for the global economy.

It’s hard for me to envision the scenario you laid out of the US getting the energy out, because it’s such a small chokehold. In today’s world of drones, RPGs, MANPADs, fast boats, there are a lot of ways to be disruptive. So I don’t see how we can be in this situation six months to a year from now.

On Trump’s endgame: If threats don’t move Iran and Hormuz can’t be reopened, what is he actually doing?

Unfortunately, I think he’s found himself in a catch-22. I don’t see a great military option, and there will be a political cost to this that he has to come to grips with — whether it’s the Fox News crowd or his financial backers, who’ve been influential. He can’t get what he wants here. I think the Venezuelan scenario made him think this would be much easier, and he’s bitten off a little more than he can chew.

Six to twelve months out — the midterms are in November. Six more months of this market manipulation, or derivatives, or demand destruction, and you’re going to see oil prices higher than they are today. That will impact retail prices, and you have Thanksgiving, the run-up to Christmas, transportation. It’s going to be a very difficult political environment for him, and he’s setting himself up for a potential Democratic sweep — House, potentially Senate — and then the whole impeachment fiasco that bogged him down in his first term.

So I go back to Joe Kent: declare a clear victory and walk away. There’s no military path — I’m not a military person, but I don’t see one. There’s no magic weapon, no magic plan that solves this.

On the “taco” trade

I would say it is still a taco price. Given that we tried the MOU and that didn’t work out, and we’re now going after much more civilian-like infrastructure — desalinization plants — which is extremely problematic, and we’re still below the wartime level, I think the market is at least expecting some type of de-escalation at this point.

On the three-week surge: Oil ran from $70 to $94 in under three weeks — doesn’t a 25% move signal the market now doubts Trump will back down?

Be careful with just the percentage change from $70, because $70 was too low — it had fallen much more than it should have. It mispriced everything as going back to a pre-February conflict, which was not my base case.

You had a momentary 100 million barrels of pent-up supply — tankers that had been trapped in the Gulf and suddenly came out. The market looked at that and said, “Okay, we’re going to get 100 million barrels on a natural run rate.” But if you divide that by the number of days, it was roughly 9 million barrels, compared to about 20 million pre-conflict. So $70 was way too low for where the market realistically should have been.

Back to Roundup

If you found these summaries helpful, please leave a comment or send us a message. We appreciate your feedback!

Leave a comment

Subscribe now

Roundup

Investor Spotlight

Bill Ackman joins Money Rehab with Nicole Lapin to break down the opportunities he’s seeing in the market, which companies are in his portfolio, and what could trigger the next 2008. Bill walks Nicole through his investing playbook, the biggest mistake new investors make, and whether we’re in an AI bubble. Bill gives his takes on gold, Bitcoin, Chipotle, Starbucks, T-bills, Trump, and Mamdani. Bill also gets personal about his inheritance plans for his four daughters, what he actually thinks makes someone successful in business, and whether he would run for office.

07.20.26 | 46 min | Read Deep Dive | YouTube | Apple | Spotify

The AI Trade (Bull vs. Bear)

Tom Thornton, President at Hedge Fund Telemetry, joins Bloomberg Businessweek Daily to discuss current market sentiment, specifically addressing the surge in bearish bets against US equities, risks associated with AI capital expenditure, and his perspective on China and Korean markets.

07.20.26 | 8 min | Read Deep Dive | YouTube

Dan Niles, Niles Investment Management, joins 'Closing Bell Overtime' to talk the state of play in the AI trade as renewed competition out of China rattles US markets.

07.20.26 | 4 min | Read Deep Dive | YouTube | Apple | Spotify

Katty Kay talks with Professor Gerry Tsoukalas, who recently co-wrote a paper with Professor Brett Falk titled "The AI Layoff Trap." They built a mathematical model to game out just how bad an AI layoff wave could get — and whether anything can actually stop it. According to their model, many companies may see this firing-your-customers trap coming and walk into it anyway. If companies eventually replace too many workers with AI, will there be enough people left with a paycheck to continue buying goods and keep the economy going?

07.20.26 | 10 min | Read Deep Dive | YouTube

In this mid-year market review, Cambria CEO and CIO Meb Faber introduces his new book, Investing in America: The Rise of A 250-Year Bull Market, provides a comprehensive outlook on the current investment landscape, discusses the high valuations of US equities, the benefits of global diversification, highlights opportunities in foreign and emerging markets, and the tactical role of shareholder yield strategies.

07.20.26 | 50 min | Read Deep Dive | YouTube

George Noble, Managing Partner of Noble Capital Advisors, joins David Lin to discuss the risks facing the AI and technology boom, the case for energy and gold, and why investors should focus on valuations, earnings, and market cycles rather than momentum.

07.20.26 | 50 min | Read Deep Dive | YouTube | Apple | Spotify

Today on Prof G Markets, Scott Galloway and Ed Elson unpack OpenAI's turbulent week and assess the biggest threats facing the company. They discuss why China's latest AI models could pose a serious challenge and why Scott thinks there might be a leadership shake-up at OpenAI. Then, they examine the growing narrative that the market is becoming more diversified, arguing that AI's influence extends far beyond Big Tech, and identify the sectors they believe are least exposed to the AI trade.

07.20.26 | 1 hr 5 min | Read Deep Dive | YouTube | Apple | Spotify

Sam Huszczo, founder & CIO of SGH Wealth Management, joins Bloomberg ETF IQ to discuss the resilience of the current bull market, attributing its durability to robust earnings growth rather than speculative fervor. He cautions against the rise of overly complex, greed-driven financial products and critiques the overuse of the term democratization, which he argues is often used to justify risky retail exposure to private credit. He identified small-cap stocks as a notably overlooked opportunity for investors.

07.20.26 | 7 min | Read Deep Dive | YouTube

George Seay, founder and chairman of Anandale Capital, joins The Street, where he identifies a major market pivot point where investors should rotate away from chasing AI winners toward a more diversified approach. He remains bullish on long-term earnings growth while advocating for patience, advising investors to prepare for volatility in the fall by rebalancing portfolios and targeting high-quality franchises like Microsoft, Netflix, and HCA at more attractive entry points.

07.20.26 | 22 min | Read Deep Dive | YouTube

David Bailin, the founder of the CIO Group, appeared on the Schwab Network to discuss how investors are overestimating earnings expectations, why major hyperscalers remain attractively valued, and why the AI infrastructure buildout and adoption cycle still has significant long-term potential.

07.19.26 | 7 min | Read Deep Dive | YouTube

John Freeman of Ravenswood Partners and Kai Wu of Sparkline Capital appeared on the Schwab Network to discuss the risks AI poses to the software sector, the future demand for memory storage, and how increased AI coding capabilities may impact company valuations.

07.20.26 | 9 min | Read Deep Dive | YouTube | Apple | Spotify

China AI Race

Tyler Cowen joins TBPN to discuss why he believes banning Chinese open source AI is impossible, the rise of "AI maniacs," why Europe is quietly becoming an AI powerhouse, the future of jobs in an AI economy, why data centers are good for local communities, AI-generated religions, the gambling boom, economic "vibecession," and much more.

07.20.26 | 35 min | Read Deep Dive | YouTube | Apple | Spotify

China's Moonshot has reignited the AI race with its powerful Kimi K3 model. Crosslink Capital partner Mary D'Onofrio joins Ed Ludlow on Bloomberg Tech to discuss whether more efficient AI models are changing the economics of artificial intelligence, what it means for OpenAI and Anthropic, and where venture investors see the biggest opportunities across AI infrastructure and agentic software.

07.20.26 | 8 min | Read Deep Dive | YouTube | Apple | Spotify

Peter H. Diamandis and crew are joined by Emad Mostaque, CEO of Stability AI, on ep. 272 of Moonshots to discuss the AI Sputnik moment sparked by the release of the Chinese model Kimi K3; the rapid acceleration of frontier models; the potential for recursive self-improvement in artificial intelligence; the implications of open- versus closed-source AI development and model sovereignty; the transformative impact of model quantization, which enables high-performance models to run on mobile and edge devices; and the broader economic and societal shifts driven by the exponential growth of intelligence.

07.19.26 | 2 hr 7 min | Read Deep Dive | YouTube | Apple | Spotify

Bloomberg's Peter Elstrom joins Bloomberg Open Interest to discuss how the release of Moonshot AI's powerful Kimi K3 model has surprised Wall Street. Chinese AI models are emerging as serious, low-cost competitors to US frontier labs like OpenAI and Anthropic. These Chinese advancements are creating pricing pressure that could impact the valuation goals of major US tech companies. There is an ongoing policy debate about whether the US should restrict these foreign models to protect domestic firms or allow them to prevent hurting American businesses that rely on cost-effective AI tools.

07.20.26 | 4 min | Read Deep Dive | YouTube

Invesco fund manager Fiona Yang appeared on the Merryn Talks Money podcast to discuss the volatility of the AI-driven market in Korea, her investment outlook on China and India, and the potential for companies using AI to become the next generation of investment winners.

07.19.26 | 38 min | Read Deep Dive | YouTube | Apple | Spotify

Byron Deeter, a partner at Bessemer Venture Partners, joined CNBC’s Squawk on the Street to discuss why concerns over Chinese AI models are overstated, the importance of corporate trust and data security in model selection, and his perspective on the future pricing dynamics of leading AI models.

07.20.26 | 4 min | Read Deep Dive | YouTube

Arthur Mensch, co-founder and CEO of French AI startup Mistral, joins The Economist’s AI writer Alex Hern to explain why he believes open source gives Europe its strongest chance to stay competitive. He sees the moment as critical for Europe. He warns that without building its own AI industry, the continent could become dependent on the U.S. for the technology’s future. The 33-year-old former Google DeepMind researcher has helped make Mistral Europe’s top AI company and one of the biggest open-source AI labs outside China.

07.14.26 | 43 min | Read Deep Dive | YouTube (7 min) | Apple (Paid) | Spotify (Paid) | The Economist (Paid)

Deutsche Bank’s CIO of Emerging Markets, Jacky Tang, appeared on CNBC to discuss the structural drivers for China’s financial markets, the role of domestic Chinese AI models compared to US rivals, and the importance of investing across the entire AI value chain.

07.20.26 | 5 min | Read Deep Dive | YouTube

AI pioneer Kai-Fu Lee appeared on Bloomberg Technology to discuss his startup 01.AI’s pivot toward enterprise applications, the company’s outlook for profitability and a 2027 IPO, and the competitive dynamics of the AI landscape in China versus the United States.

07.20.26 | 13 min | Read Deep Dive | YouTube

Goldman Sachs analyst Ronald Keung appeared on CNBC International to explain how Chinese AI firms are leveraging open-weight models to drive revenue sharing, using API feedback loops for self-improvement, and navigating potential risks like data security and computing constraints in global markets.

07.20.26 | 4 min | Read Deep Dive | YouTube

George Chen, a partner and digital practice chair at The Asia Group, appeared on “Bloomberg: The Asia Trade” to discuss the impact of Moonshot AI’s Kimi K3 model, the limitations of current US export controls on advanced AI chips, and the shifting competitive landscape between China and the US in the global AI race.

07.20.26 | 7 min | Read Deep Dive | YouTube

AI Infrastructure & Power

On episode 69 of The Real Eisman Playbook, Steve Eisman sits down with Ben Kallo, sustainable energy and mobility analyst at Baird, to explore what may be the most important and least understood constraint on the entire AI trade: the U.S. power grid, which needs to add roughly 30 gigawatts of new capacity per year over the next decade. Ben walks through his top picks in the space, including GE Vernova and Tesla, where the autonomous vehicle and energy storage businesses are the real long-term story despite years of Elon's unkept promises.

07.20.26 | 50 min | Read Deep Dive | YouTube | Apple | Spotify

Wendell Huang, the CFO of TSMC, appeared on CNBC International to explain the company’s increased investment in Arizona, discuss the reasons for profit margin dilution, and highlight the strategic benefits to the U.S. semiconductor ecosystem.

07.20.26 | 7 min | Read Deep Dive | YouTube

AMD data center and AI leadership appeared on CNBC to discuss the launch of the Helios rack-scale AI system, the competitive strategy against Nvidia, and how the company is managing manufacturing and supply chain constraints to support major enterprise customers.

07.20.26 | 18 min | Read Deep Dive | YouTube

Macro & Credit

Bloomberg News Credit Reporter Scott Carpenter and Bloomberg's Chief Correspondent for Private Capital Davide Scigliuzzo discuss an innovative financial strategy being proposed by UBS to help private credit and equity funds access new liquidity using A2 bonds.

07.20.26 | 7 min | Read Deep Dive | YouTube

Mohamed El-Erian, The Wharton School professor and Allianz chief economic advisor, joins 'Squawk Box' to discuss his thoughts on prediction markets, latest market trends, inflation outlook, state of the AI boom, and more.

07.20.26 | 6 min | Read Deep Dive | YouTube

Private credit has ballooned to roughly a trillion dollars, but Nick Nemeth of Mispriced Assets argues the danger isn't the banking system — it's insurance. In this Monetary Matters interview with Jack Farley, Nemeth lays out how private-equity-owned insurers have become highly leveraged holders of private credit and CLOs, why he thinks annuity surrenders could spark a run with no federal backstop, and how adjusted EBITDA, layered leverage, and lax loan ratings mirror the setup before 2008 — except, in his view, the scale looks more like 1929. He closes with contrarian rankings of Apollo, Ares, Blackstone, and Blue Owl.

07.14.26 | 1 hr 14 min | Read Deep Dive | YouTube | Apple | Spotify

In Episode 490 of Hidden Forces, Demetri Kofinas speaks with Patrick Boyle, founder of the quantitative hedge fund Palomar Capital Management, and professor of finance at King's College London, about the SpaceX IPO and what it reveals about the integrity of America's financial markets, the cult of personality filling the vacuum left by the nation's collapsing institutions, the commercial and fiscal challenges facing Europe's largest economies, and the housing crisis and generational wealth divide driving the appeal of left-wing populism across the developed world.

07.20.26 | 53 min | Read Deep Dive | YouTube | Apple | Spotify

Industrials & Aerospace

Boeing’s CEO Kelly Ortberg joins Bloomberg’s Guy Johnson at the Farnborough Airshow to discuss plans to ramp up production, demand and the outlook for artificial intelligence and robotics in aircraft manufacturing.

07.20.26 | 10 min | Read Deep Dive | YouTube

Boeing CEO Kelly Ortberg appeared on CNBC to discuss the company’s progress on 737 Max certification, the commitment to meeting the schedule for the complex next-generation Air Force One program, and his strategy for rebuilding regulatory trust while investing in future production capacity.

07.20.26 | 5 min | Read Deep Dive | YouTube

IMAX CEO Rich Gelfond appeared on Bloomberg Talks to discuss the record-breaking success of Christopher Nolan’s The Odyssey, the strategic challenges of distributing films in IMAX format, and his positive outlook for the company’s 2026 box office projections.

07.20.26 | 8 min | Read Deep Dive | YouTube | Apple | Spotify

Airbus CEO Guillaume Faury discussed with Bloomberg at the Farnborough International Air Show the company’s robust demand, order backlog, strategic goal to introduce a next-generation single-aisle aircraft by 2030, and the company’s role in the future of European defense and jet fighter development.

07.20.26 | 7 min | Read Deep Dive | YouTube | Apple | Spotify

Airbus CEO Guillaume Faury appeared on CNBC to discuss the company’s strong global aircraft demand, its progress in meeting production delivery targets despite engine supply chain challenges, and long-term plans for launching a next-generation single-aisle aircraft.

07.20.26 | 7 min | Read Deep Dive | YouTube

Honeywell Technologies CEO and Chair Vimal Kapur joined the Leaders with Francine Lacqua podcast to discuss his career journey from engineer to executive, his strategic decision to split Honeywell into three independent companies, and his belief that artificial intelligence will primarily reshape work by augmenting human productivity rather than replacing it.

07.19.26 | 25 min | Read Deep Dive | YouTube | Apple | Spotify

AI Founders & Executives

OpenAI chairman and Sierra co-founder, Bret Taylor, joins 'Squawk Box' to discuss the state of the AI boom, AI tokenmaxxing, ROI on AI spending, state of AI competition, Apple lawsuit, and more.

07.20.26 | 8 min | Read Deep Dive | YouTube | Apple | Spotify

Boris Cherny, the head of Claude Code at Anthropic, appeared on the Odd Lots podcast to discuss the origins and safety-focused development of the coding agent, the evolving roles of software engineers in an era of AI-assisted development, and the future of agentic tools acting as collaborative coworkers.

07.20.26 | 1 hr 10 min | Read Deep Dive | YouTube | Apple | Spotify

Venture Capital

A16Z General Partner and defense investor, Connor Love, appeared on Bloomberg Tech to discuss the expansion of Andreessen Horowitz’s American Dynamism strategy, the importance of building a robust domestic industrial and defense base, and the transformative potential of low-cost autonomous technology in modern warfare.

07.20.26 | 7 min | Read Deep Dive | YouTube | Apple | Spotify

Leave a comment

Deep Dive

Investor Spotlight Deep Dive

Bill Ackman, Pershing Square Founder & CEO, on AI Bubble Fears, His Bullish and Bearish Calls, and Building a Legacy | Money Rehab with Nicole Lapin

The State of the Economy and the AI Story

“I think the big story is really AI. It’s driving an enormous amount of entrepreneurship, and it’s giving access to intelligence to a very broad group of people.” — Bill Ackman

Ackman opened by framing AI as the defining force in the current economy, not just a market narrative. He argued it’s already a driver of entrepreneurship and job growth, but only for people who learn to use the tools rather than fear being replaced by them. Asked for his broadest read on the economy, he pushed back on the idea that anything currently feels uniquely “off,” noting markets always carry some degree of unease.

Is This an AI Bubble?

“In private markets there’s more risk of valuations being massively above where they should be — but you’re also seeing businesses able to go from zero to real scale incredibly fast.” — Bill Ackman

Pressed on whether AI valuations have gotten ahead of themselves, Ackman didn’t dismiss the concern outright. He pointed to a startup he’d looked at that raised a seed round at a $2 billion valuation with no product or revenue, now raising again at $5 billion — evidence, in his view, that private-market pricing has decoupled from fundamentals in places. His own hedge, rather than picking a winner among the AI labs, is to stay in dominant public businesses with durable moats.

Anthropic, OpenAI, and the Race for AI Supremacy

“At a certain point in time OpenAI was the leading company, and then Google was the leading frontier model company... there’s an enormous amount of capital out there looking for the next Anthropic.” — Bill Ackman

Ackman’s read on the frontier AI race is that leadership keeps rotating, which makes it a bad place for a concentrated bet. He named Anthropic as currently holding the lead but stressed how quickly that has changed hands already between OpenAI and Google. That instability is exactly why Pershing Square avoids trying to pick the AI labs directly and instead looks for picks-and-shovels-style businesses that benefit regardless of which model wins.

Inside the Pershing Square Portfolio

“You want to go to the Uber platform to order your car because you want the lowest-cost car that’s going to get you from place A to B in the shortest period of time.” — Bill Ackman

Ackman walked through several of Pershing Square’s roughly dozen concentrated holdings. He’s bullish on Uber, arguing the market is wrong to price in disruption from Tesla’s robotaxi ambitions, since consumers will chase the cheapest, fastest option regardless of platform. He cited Amazon’s dominance in convenience (using a pharmacy run in New York City as his foil) as the kind of moat he looks for. On recent portfolio moves, he confirmed buying roughly $2 billion of Microsoft and trimming Alphabet to fund it — a swap driven purely by relative price versus quality, not a bearish call on Google.

Advice for New Investors and the Power of Compounding

“You get into trouble when you try to make money really quickly — options, leverage, very speculative businesses — especially when you’re starting with a relatively small amount of capital.” — Bill Ackman

His core advice to new investors is to resist the urge to get rich fast. He used Berkshire Hathaway’s $48 share price in the 1960s as an illustration of how compounding, not speculation, is what actually builds wealth over decades. The lesson, in his framing, is patience: buy businesses you believe will compound at a high rate and let time do the work.

Why Ackman Won’t Borrow Against His Portfolio

“The key to being a successful long-term investor is being able to survive those challenging market periods when everyone else is panicking — you want to have money to invest when others are panicking.” — Bill Ackman

Asked why he doesn’t simply borrow against his holdings instead of selling, Ackman explained the mechanics of margin risk: a leveraged portfolio can trigger a margin call in a downturn, forcing a sale at the worst possible time. He said a meaningful share of Pershing Square’s profits over roughly twenty years have come specifically from having cash available to buy during periods when the market was in distress.

Bullish or Bearish: Gold, Bitcoin, Chipotle, Starbucks, T-bills, Trump, and Mamdani

“It’s an asset that’s only worth what people tell you they’re prepared to pay for it, and it doesn’t pay you any yield in the meantime.” — Bill Ackman, on gold

Nicole Lapin ran Ackman through a rapid-fire bullish-or-bearish round covering a wide mix of assets and public figures:

• Gold — No real view either way. He called it an asset with no yield that’s worth only what someone else is willing to pay, and joked he’d rather advise husbands to buy their wives jewelry than own GLD.

• Bitcoin — Owns none. He called Satoshi Nakamoto “a genius” and said he admires the construct, but has no idea whether Bitcoin is worth $5,000 or a trillion dollars, and doesn’t need an opinion to skip owning it.

• Chipotle — One of Pershing Square’s most successful investments; the firm helped recruit Brian Niccol as CEO. Neutral on where the stock trades today.

• Starbucks — Also tied to Niccol, who left Chipotle to run it; the turnaround has been tougher there, but Ackman believes the company is well positioned long-term.

• T-bills — Fine for keeping cash safe, but he’d still rather own high-quality compounding businesses over the long run.

• Trump — Bullish. Ackman said he backed him relatively early and is “optimistic about the last couple of years of his term,” adding that a president not worried about reelection can make decisions without regard to politics.

• Zohran Mamdani — Bearish on his impact on New York City. Ackman called him smart, charismatic, and good at politics, but said his policy decisions are bad for the city’s finances and are discouraging business investment.

Fixing the Retirement Crisis

“Wages grow at a much slower rate than stocks over a long period of time.” — Bill Ackman

Ackman flagged that roughly 40% of the U.S. workforce — gig and service workers without employer retirement plans — lacks an easy way to start investing for the future. He pointed to the new “Trump savings accounts,” which let people begin with $1,000 and contribute annually, as a step toward closing that gap, arguing that market exposure matters precisely because wage growth alone won’t build wealth over time.

Family, Inheritance, and Whether He’d Run for Office

“You’re never going to inherit anything from me — so you’ve got to make it on your own.” — Ackman’s father, as he recalled it

Ackman traced his own drive back to a lesson from his father, a commercial mortgage broker who told him early on not to expect an inheritance. He’s tried to give his four daughters the opposite kind of security without removing their motivation — helping them afford to live somewhere like New York City if that’s what they choose, but deliberately not steering them toward a specific “safe” career. On whether he’d run for mayor of New York, he didn’t rule it out entirely, saying it’s “something I could do someday,” but suggested he could have more impact helping the right candidate get elected than running himself.

His Formula for Success

“The value of a business is the present value of the cash it generates over its life.” — Bill Ackman

Ackman closed by returning to first principles: durable, understandable businesses that compound over time beat chasing speculative trends, in AI or anywhere else. His parting tip for listeners was the same one that’s guided Pershing Square for two decades — invest in something built to withstand the test of time, and keep the discipline to hold it through the periods when everyone else is selling.

Leave a comment

The AI Trade (Bull vs. Bear) Deep Dive

Scott Galloway & Ed Elson, Prof G Markets, on Sam Altman’s OpenAI Exit Odds, China’s AI Price War, and Why “Market Diversification” Is a Myth | Prof G Markets

Is Sam Altman on the “Green Mile” at OpenAI?

“He’s an innovator, not an operator. They need an adult in the room right now.” — Scott Galloway

Galloway opened with a bold prediction: OpenAI installs a new CEO within roughly six months, and his pick for the job is board chairman Bret Taylor. His case rests on a string of what he called executional missteps from Altman — struggling to manage employees who want to leave, an ill-fated hardware push that echoes a prior partnership, and the collapse of OpenAI’s expected role powering Siri after Apple chose Google instead. Ed Elson pushed back gently, noting the underlying business problem — compute costs far outrunning revenue — isn’t really an execution failure so much as an industry-wide open question, comparable to Amazon or Uber’s early years of heavy losses before profitability.

China’s AI Price War Threatens the Whole Industry

“If we are as dependent on AI as we are, it is clear that this is the fastest way to bring the industry to its knees.” — Ed Elson

The two debated how seriously to take Chinese AI labs undercutting US frontier models on price, calling it the “elephant in the room” for the entire American AI sector. Elson raised the possibility that sustained Chinese price competition could eventually force a reckoning at OpenAI or Anthropic. Galloway was more sanguine, arguing there’s room for both ends of the market the way there’s room for Emirates and Delta, or LVMH and mass retail — premium, better-IP frontier models can coexist with cheaper alternatives rather than lose to them outright.

Is the Market Really Diversifying Away From AI?

“Buying quote-unquote AI-adjacent stocks and calling it broadening is like ordering a Diet Coke with your double-double — you still bought a cheeseburger.” — Scott Galloway

Both hosts pushed back hard on the narrative that 2026’s market rally has broadened beyond Big Tech. They pointed to small caps as an example: some of the Russell 2000’s best performers this year are direct AI beneficiaries, including semiconductor company MaxLinear (up 424% year-to-date) and cloud computing firm Rackspace (up 567%), with roughly 24% of the entire Russell 2000 now carrying some AI exposure.

The same pattern shows up in sectors that look like diversification on the surface. Utilities are up 7% year-to-date, but the gains are concentrated in AI power providers like Dominion and Bloom Energy (up 143%). In real estate, the winning REITs aren’t homebuilders — they’re data-center operators like Digital Realty Trust and Iron Mountain. The conclusion: what looks like a broadening market is, on closer inspection, still just the AI trade wearing different clothes.

Wealth Inequality and the Mamdani Debate

“Capitalism works as long as it rests on a bed of empathy, and you keep reinvesting in the middle class with redistribution of income.” — Scott Galloway

The conversation drifted into a broader debate about wealth concentration, prompted by New York mayoral politics. Galloway argued that unchecked capital accretion at the top — helped along by a tax structure he called regressive — is what fuels support for more radical redistribution politics in the first place. Elson pushed back that Mamdani’s actual policy record so far has been more moderate than the “democratic socialist” label suggests, with Galloway conceding some of his moves have been “surprisingly reasonable” even as he remains skeptical of the broader movement.

Leave a comment

Meb Faber, Cambria CEO & CIO, on His 60/30/10 Portfolio Default, the REIT Surprise of 2026, and Why Institutions Keep Overpaying for Bonds | Mid-Year Market Review

Rebalancing the “Default” Portfolio: 60/30/10

“I love Vanguard, John Bogle, the GOAT, to be on Mount Rushmore. However, I love to tease them...” — Meb Faber

Faber used his mid-year review to restate his baseline allocation framework: starting from the classic Bogle-style split of roughly two-thirds US equities to one-third international, he rounds it to an easier 60% US, 30% foreign developed, and 10% emerging markets as his personal starting point before any tilts. He’s quick to needle his “Boglehead” fans even while praising Bogle as one of the greats, arguing that pure indexers can be too rigid when market conditions shift.

The REIT Surprise Nobody Called

“If you would’ve asked me at the beginning of the year, would you expect global REITs to be up 12%? I would have said no. But here we are.” — Meb Faber

One of the mid-year’s biggest surprises for Faber has been real estate. Global REITs are up 12% this year, a result he says he wouldn’t have predicted given his fund’s value tilt — a reminder, in his framing, that diversification keeps paying off in places investors don’t expect.

Why Institutions Keep Overpaying for Bonds

“Will you buy bonds with no margin of safety? They’re like, ‘sure.’ ... All of a sudden they’re like, ‘Oh, hallelujah, they yield five now.’” — Meb Faber

Faber drew a pointed contrast between how investors treat expensive stocks versus expensive bonds. Ask someone if they’d buy a stock trading at 100 times revenue and they’ll immediately call it reckless, he said, but the same investors happily buy corporate bonds with essentially no margin of safety the moment yields tick up off the floor. His read: a lot of institutional buying is fundamentally price-insensitive, driven by liabilities that need matching rather than genuine value.

Updating the Ivy Portfolio and Leaning Into Trend-Following

“No one else admits to 50% in trend. They’ll run an optimizer, ask how much you should put in trend, and it says half — then they say, ‘well, obviously we can’t do that, it’s way too much,’ so they constrain the optimizer.” — Meb Faber

Responding to a listener who’s run his Ivy Portfolio strategy for two decades, Faber defended running a much larger trend-following allocation than most advisors are comfortable with — up to half a portfolio, in some cases — arguing that firms routinely override what their own optimization models tell them because the output looks too aggressive on paper, even when the underlying math supports it.

Where to Park “Safe” Money

Asked what actually counts as the safest asset to hold, Faber said Cambria doesn’t limit its own cash management to T-bills alone, spreading safe-money exposure across a broader set of short-duration, low-risk holdings rather than concentrating it in a single instrument.

Leave a comment

George Seay, Anandale Capital Founder & Chairman, on the SpaceX Wake-Up Call, Buying the AI Dip, and Why Netflix Is His Top Pick | The Street

A Market Pivot Point: Rotating Away From the AI Winners

“For the last few years, the playbook has been pretty simple: AI winners. But now we’re starting to see leadership broaden out.” — Seay’s opening framing, put to him by his interviewer

Seay pointed to the SpaceX IPO as a genuine turning point for how investors are pricing the AI and data-center trade. The stock priced at roughly 80 times sales, and has since fallen below its IPO price — a signal, in his view, that investors are starting to take a harder look at how much they’ve bid up securities tied to AI infrastructure. He argued the market playbook is shifting from chasing a narrow set of winners toward a more diversified approach.

Why $80–85 Oil Is the Sweet Spot for the U.S.

Seay made the case that higher oil prices are now a net positive for the U.S. economy rather than a drag, given how much the domestic oil and gas industry has grown over the past two decades. He noted that 2008’s $148-a-barrel spike would be roughly $250 in today’s dollars once adjusted for inflation, versus current prices around $80–85 — a range he called ideal, since the U.S. benefits from oil staying elevated without tipping into the $95-plus territory that starts to hurt consumers.

Buying the Dip in Micron and Nvidia

Despite the broader caution on AI valuations, Seay said he’s still actively buying weakness in top chip names. He singled out Micron, which has been in a sharp sell-off, as a stock with “enormous” current earnings power that he’d add to on further declines, grouping it with Nvidia among the names he considers must-owns in this market — bought specifically when they get knocked down, not chased on strength.

How to Get International Exposure Without Overloading on China

For most investors, Seay recommended low-cost ETFs and index funds over stock-picking abroad, but with a specific warning: many broad international indexes are heavily concentrated in China, and investors can end up with 40% of their international exposure in a single country without realizing it. His advice is to look for cheap, broadly diversified international funds and check the underlying country weightings before buying.

The Case for Netflix as a Value Pick

“This is a premier franchise. They own their marketplace. They’re the gorilla in the space.” — George Seay

Netflix stood out as one of Seay’s top individual picks despite a rough stretch — the stock has been hit hard even after in-line earnings failed to reassure investors. He expects a wave of tax-loss selling in September and October to create a better entry point, framing Netflix’s post-2022 rebound (when it also traded down to mid-single-digit multiples before multiplying in value) as a preview of how the current dip could play out.

Disciplined Rebalancing Over Market Timing

Rather than trying to time an AI-trade top, Seay advocated for strict, data-driven rebalancing rules. His example: an investor targeting a 70% stocks / 30% bonds-and-cash mix who drifts to 80% stocks should trim back in phases — by 5% to as much as 10% — to restore the original allocation, regardless of what the market is doing at that moment.

Leave a comment

Professor Gerry Tsoukalas, Co-Author of “The AI Layoff Trap,” on Why Mass AI Layoffs Could Backfire on the Companies Doing the Firing | BBC News

The Firing-Your-Customers Trap

“Who’s going to be left to buy products if everyone gets automated and replaced?” — Gerry Tsoukalas

Tsoukalas, co-author with Professor Brett Falk of a paper titled “The AI Layoff Trap,” laid out the core mechanism: as AI becomes capable of doing more jobs, individual companies have a clear incentive to cut costs by replacing workers. The problem is that those same workers are also consumers. If enough companies automate simultaneously, the aggregate result is a shrinking pool of people with income to spend — undermining the very demand every company depends on.

Why It’s a Dominant Strategy, Not a Choice

“No matter what you do, no matter what the other companies are doing, your best strategy is to adopt as much of this technology as possible.” — Gerry Tsoukalas

What makes the trap dangerous, in Tsoukalas’s telling, is that it isn’t a case of executives simply failing to see the risk. He described automation as a “dominating strategy” in game-theory terms — in a competitive market with many firms, any single company that holds back on automating risks losing to rivals who don’t, so the rational move for each individual company is to automate regardless of the collective consequences. He explicitly compared the setup to the prisoner’s dilemma, where individually rational choices produce a worse outcome for everyone.

The Odysseus Solution: Self-Restraint

“Companies need to slow down with the firing or replacement of human workers with AI. We’re calling for self-restraint.” — Gerry Tsoukalas

Tsoukalas’s proposed remedy draws on the Odyssey: rather than trust individual willpower in the moment, Odysseus had his sailors physically tie him to the mast before sailing past the sirens, so he couldn’t act on temptation even if he wanted to. He’s calling for companies — or policymakers — to build in similar pre-committed restraints on how fast they replace workers with AI, rather than relying on executives to voluntarily slow down. His interviewer was openly skeptical that kind of discipline is emerging in the tech industry, describing companies as behaving more like sailors racing straight toward the sirens than crews tying themselves down.

Leave a comment

Tom Thornton, Hedge Fund Telemetry President, on Korea’s Leveraged AI Unwind, Why Oracle’s 2030 Goals Are in Question, and Going Long China Tech | Bloomberg Businessweek Daily

Korea’s Leveraged AI Trade Unwinds

“Investors were cashing out of their life insurance policies to put money into SK Hynix... that gets a little crazy.” — Tom Thornton

Thornton pointed to Korea as the clearest warning sign of excess in the AI trade. A 2x-leveraged SK Hynix ETF is down 73% from its high, the Kospi has fallen roughly 30% in the past month, and Bloomberg data show investors sold a record $30.5 billion of Korean equities in June with July selling already nearing $8 billion. His read: retail investors piled into leverage on one side of the boat, and the boat tipped over — a dynamic he flagged as early as late May.

Is This the Start of AI Capex Cuts?

“It’s not a matter of if, but a matter of when there’s going to be capex cuts.” — Tom Thornton

Thornton sees early cracks in the AI infrastructure story, pointing to Meta and SpaceX leasing out unused compute capacity as a signal that frontier models may not be consuming resources as fast as hyperscalers planned for. He compared the setup to the 2000 tech bubble, when telecom companies quietly stopped increasing equipment orders before the broader collapse followed — Q3 2000, in his telling, was the real inflection point, well before headlines caught up.

Bullish on Alphabet, Skeptical of Oracle’s 2030 Ambitions

Thornton singled out Oracle’s long-term growth targets heading into 2030 as increasingly likely to come under pressure, while staying bullish on Alphabet specifically — citing Gemini’s distribution advantage through Samsung, Android, and iPhone, plus Alphabet’s other income-generating businesses giving it more room to sustain capex than peers. He sees Anthropic’s strength concentrated in enterprise for now, distinct from Alphabet’s consumer reach.

Buying China Tech at Half Off

“I told everybody, buy these with two hands, and basically it was crickets. Nobody wanted them. And now they’re up 20%.” — Tom Thornton

Thornton has been positioned long China and Hong Kong tech — Alibaba, KraneShares CSI China Internet Fund, and iShares China Large-Cap ETF — after they fell roughly 50% from their highs. He cited Alibaba’s diversified approach (chips, AI models, cloud, consumer AI) plus a likely Chinese stimulus package and Alibaba’s 35% stake in Moonshot AI as reasons the trade has quickly turned around after being universally unloved just weeks earlier. He also flagged that cheaper, more efficient open-source Chinese models could pressure expensive U.S. token pricing from OpenAI and Anthropic over the next six months.

Short Tesla Into Earnings

Thornton disclosed a short position in Tesla ahead of earnings, citing three years of negative growth, an aging two-model lineup, and a long list of unfulfilled promises from the company’s CEO — specifically calling out the still-unanswered timelines for robotaxi and Optimus scaling.

Leave a comment

Dan Niles, Niles Investment Management Founder, on Why Chinese AI Models Are a Bigger Threat Than Wall Street Realizes | Closing Bell Overtime

Chinese Models Prove They Can Compete

“There’s a saying that necessity is the mother of invention. They’re not getting the latest and greatest chips, so they’re asking: what innovations can we do to get around that, versus just throwing more hardware at the problem?” — Dan Niles

Niles argued markets are underestimating what Chinese AI labs can do without access to top-tier chips. He traced the pattern back to DeepSeek’s early breakthroughs with techniques like mixture-of-experts, and pointed to Moonshot AI’s Kimi K3 and Alibaba’s Qwen as proof that lower-cost, lower-chip-tier models can now genuinely compete with the best U.S. frontier models rather than just serve the low end.

Three Vectors of the AI Trade

Niles broke the AI trade down into three interacting forces: the largest AI spenders starting to cut their bills, token production climbing rapidly as generative AI usage grows, and the price companies pay per token falling as cheaper alternatives like Kimi and Qwen enter the market. His view is that the interplay of those three factors — not any single one — will determine how the trade plays out from here.

Why He’s Betting Infrastructure Over Models

“I think all these frontier models eventually become commoditized. So the play is better on the infrastructure side versus the model side, where every week a new model comes out and jumps to the top of the ranks.” — Dan Niles

Given how quickly leadership among frontier models keeps changing hands, Niles said his own positioning favors the infrastructure layer of the AI trade over the model layer, since picking whichever lab is out front in any given week is close to impossible.

Coinbase Cuts Its AI Bill in Half While Uber Blows a Year’s Budget in Four Months

“When you’ve got the top 1% of companies accounting for probably more than 50% of AI spend, if they’re trying to cut back, can the other 99% make up for it? I’m not sure that’s the case near term.” — Dan Niles

As a near-term warning sign, Niles cited Coinbase’s CEO publicly stating the company cut its AI bill by nearly 50% using open-source models even as token usage kept rising, contrasted with Uber disclosing it blew through its entire annual token budget in just four months. He sees a mismatch forming between a handful of dominant AI spenders potentially pulling back and everyone else being unable to offset it.

Not Oversold Yet, But Starting to Wade Back In

Niles cautioned against long-range predictions in this cycle, recalling that rosy multi-year forecasts made in 2000 preceded a 78% peak-to-trough crash in the Nasdaq — and pushed back specifically on the idea that memory chips are “no longer cyclical,” calling it a claim he’s heard before with the same bad outcome. Even so, after semiconductor names fell more than 14% in a month, he said the sector is down a lot but not yet technically oversold, and that he’s beginning to selectively add back into infrastructure names rather than waiting for a bottom signal.

Leave a comment

Sam Huszczo, SGH Wealth Management Founder & CIO, on Why the Bull Market Isn’t as Fragile as the Headlines Suggest | Schwab Network

Don’t Fight the Bull: Why P/E Compression Isn’t Bearish

“Why can’t we just look at it and say, hey, be thankful that earnings are growing faster than the stock market?” — Sam Huszczo

Huszczo pushed back on constant “this rally is due to end” commentary, arguing the market’s resilience is being driven by earnings growth outpacing price gains, which has actually brought valuations down to a P/E near 20.5 — elevated, in his view, but not extreme. He referenced Greenspan’s “irrational exuberance” remark as a cautionary example, noting the market kept climbing another 105% after that warning before the next real bear market arrived.

“We Have Beat Up the Word Democratization”

“We’ve watered it down to nothing... it’s hawking private credit to retail people that don’t have the time horizon.” — Sam Huszczo

Huszczo singled out the private markets as one of the clearest signs of excess “greed mode” in the current cycle, arguing the word “democratization” has been stretched to justify selling illiquid, long-horizon products like private credit to retail investors who don’t have the matching time horizon to hold them.

Portfolio Construction: Pairing Uncorrelated Strategies

Walking through his own positioning, Huszczo defended JMOM, a momentum ETF with roughly 90% annual turnover that he likened to a Porsche 911 — fast, but with real crash risk. He noted the fund has recently rotated out of concentrated AI momentum names like AMD and Micron and into healthcare, telecom, and discretionary. His broader thesis is that real diversification comes from pairing two strategies that each work independently but move differently from each other — he cited a -0.52 correlation between momentum and equal-weight exposure as the kind of pairing that lets a portfolio hold up even when a previously hot factor, like the “Mag Seven,” cools off.

The Leveraged ETF Excess Getting “Out of Hand”

Huszczo flagged South Korea’s move to halt new listings of leveraged single-stock ETFs as a clear signal of excess spilling into U.S. markets too, comparing some of the newer leveraged and parlay-style ETF products to absurd combined bets (his example: a product paying out 10x if a stock rises 2% and the Fed cuts rates a quarter point). His advice isn’t to abandon models, but to stay aware when greed is creeping into product design rather than chase every new leveraged vehicle.

Small Caps: Outperforming in Every Sector

“Out of all 11 GICS sectors, every single one of them — small cap is outperforming large cap. That’s a factor play, not a sector play.” — Sam Huszczo

Huszczo highlighted small caps as an overlooked opportunity, noting they’ve had their fastest start to a year in two decades, with roughly two-thirds of issuances trading above their 200-day moving averages and heavily shorted names underperforming — a sign, in his view, that quality rather than just size is driving the move. He specifically pointed to strength in regional banks as a genuine positive read on the broader economy, since their performance tracks ordinary consumers paying their bills.

Leave a comment

David Bailin, CIO Group Founder, on Why Amazon, Google, and Microsoft Are Undervalued, and Who Really Loses as AI Costs Fall | Schwab Network

Why Amazon, Google, and Microsoft Look Reasonably Valued

“The markets have definitely overreacted to a bunch of AI fears.” — David Bailin

Bailin argued the sell-off in AI-adjacent names has gone too far, noting the buildout of data centers and their supporting energy infrastructure is still only roughly one-third complete, making it premature to judge utilization. Among the major hyperscalers — Amazon, Microsoft, and Google, which he separates from Oracle — he sees valuations as relatively reasonable given current earnings, meaning the real market concern isn’t profitability but the trajectory of their capital spending.

The CapEx Hurdle: 110% Growth Wasn’t Enough

Bailin laid out the market’s actual expectations bar: infrastructure and chip spending was expected to rise 110% year-over-year in the most recent period, with another roughly 60% increase built into estimates for next year. That steep hurdle is why chip-related earnings have been so sensitive to any sign hyperscalers might slow capex growth — and why DRAM and other commodity chip makers are the most exposed if that growth rate comes in below plan.

China’s Cheaper Models Are a Pricing Story, Not a Demand Story

“It’s the volume that people are missing... utilization is nowhere near what it’s going to be two years, three years, four years from now.” — David Bailin

Asked about cheaper Chinese models pressuring the AI trade, Bailin reframed the concern: falling token prices are a natural and expected part of the market maturing, since expensive frontier models will increasingly be reserved for high-value uses like code generation while cheaper models handle common tasks. What he thinks investors are underweighting is the sheer growth still ahead in AI utilization as robotics, logistics, and call centers get automated over the coming years — volume growth that should outpace the price declines.

Rotating Into Private Equity and Healthcare

Beyond technology, Bailin flagged private equity as a particular favorite after a rough prior twelve months, pointing to rising deal activity and improving bank earnings as early signs of a turnaround. He also highlighted healthcare, which has been under pressure for close to two years, as showing signs of brightening — a source of sustained growth he sees as largely independent of how the AI trade plays out.

Winners and Losers as AI Costs Fall

Bailin’s framework for the next phase of the AI trade: the winners are hyperscalers and the broader universe of companies that use AI and benefit as its cost falls, while the losers are hardware makers whose pricing power depends on scarcity — chip and component manufacturers whose margins compress as supply catches up with demand over the next six to eighteen months.

Leave a comment

John Freeman (Ravenswood Partners) & Kai Wu (Sparkline Capital) on the “SaaS Apocalypse,” Chipflation, and Whether AI Models Become Commodities | Schwab Network

Is the “SaaS Apocalypse” Overblown?

“If you give them five years, ten years, they’re going to be able to replicate most of enterprise software.” — John Freeman

Freeman called the recent software sell-off an overreaction in the near term, even as he acknowledged the longer-run threat is real: AI coding tools may not be able to replicate most enterprise software today, but a ten-to-fifteen-year horizon changes the calculus on what counts as defensible “terminal value” for a software business. He carved out exceptions like ServiceNow, which he sees building AI-agent management tools substantial enough to offset whatever revenue the company might lose to the same trend.

Which Software Moats Actually Survive AI?

“You have to ask: for which of these companies was the moat just the code?” — Kai Wu

Kai Wu framed the current software drawdown through the lens of past disruption cycles — brick-and-mortar retail, newspapers — where the consistent pattern wasn’t uniform destruction but increased dispersion between survivors and casualties. He pointed to the New York Times surviving the newspaper collapse and Walmart surviving the retail apocalypse as precedent: companies whose advantage was purely technical (just being able to write good code) are vulnerable now that AI coding tools commoditize that skill, but companies whose moat rests on customer relationships, brand equity, or network effects are better positioned to survive even a 60-70% stock decline, which he noted has already hit names like ServiceNow, Adobe, Salesforce, and Intuit.

Memory Chips: “Chipflation” and Why This Cycle Might Break the Pattern

“Memory companies who normally do 30-40% gross margin in a good year are doing 80% gross margin plus — and yet they’re priced like cyclical companies.” — John Freeman

Freeman addressed SK Group’s chairman publicly warning that memory prices are abnormally high and that supply must increase to prevent further “chipflation.” His counterpoint: markets are pricing memory makers as purely cyclical even though margins have exploded well beyond historical norms, and AI capex is consuming memory at a pace that could climb another five-to-tenfold if large models shift toward training on video rather than text. He compared the setup to semiconductor equipment makers like Lam Research and ASML, which broke out of their old cyclicality around 2010 and never fully returned to it — arguing memory stocks trading at six to seven times earnings look attractive on the same logic.

China’s Open-Weight Models and the Jevons Paradox Debate

Kai Wu addressed the rotation out of the AI capex trade following Moonshot’s Kimi release and other competitive open-weight Chinese models, acknowledging the legitimate risk that less compute per model could mean the broader infrastructure buildout has been overdone — a pattern he compared to the telecom overbuild in the dot-com era and the railroads a century before that. His counterargument invoked the Jevons paradox: if the cost of running AI drops, elastic demand could mean more total consumption, not less, opening up use cases that were previously too expensive to justify. In his view, chip makers benefit either way, regardless of whether the winning models end up open- or closed-source.

Where Value Flows if AI Models Become Commodities

Kai Wu closed on a bigger-picture risk facing the closed-source labs specifically: as competition intensifies from both Chinese open-weight models and well-funded U.S. rivals like Meta and Google, it’s possible AI genuinely transforms society while the underlying models themselves become commoditized utilities — meaning the economic value could flow to other parts of the stack rather than concentrate in the labs currently commanding trillion-dollar valuations, even before any of them have gone public.

Leave a comment

George Noble, Noble Capital Advisors Managing Partner, on Why This Is a Bigger Bust Than Dot-Com, His $30 SpaceX Target, and Going Long Energy, Long Gold | The David Lin Report

“One of the Biggest Bubbles in History” Is Unwinding

“If it’s not tech, it’s dreck.” When someone says something like that, it kind of tells you where you are in the cycle. — Nancy Nierman, Warburg Pincus, February 2000, as recalled by George Noble

Noble opened with a stark call: he believes markets are witnessing the unwinding of one of the biggest bubbles in history, comparable to the dot-com crash but larger. He cited strategist Julian Garran’s calculation that current malinvestment in AI infrastructure is roughly 17 times what occurred during the dot-com era, driven by the fact that this boom is far more asset-intensive and involves much larger sums relative to the size of the economy. He thinks both Oracle and OpenAI could ultimately go bankrupt.

Korea’s Margin Call Crisis

“1.2 million South Korean trading accounts got margin called — that’s about 10% of all brokerage accounts in the entire country, just in the last two weeks.” — George Noble

Noble pointed to South Korea as the leading edge of the unwind. SK Hynix has dropped roughly 70% in recent weeks, and major U.S. semiconductor names — AMD, Qualcomm, Nvidia, and Intel — have all rolled over from peaks between May and early July. Despite the sharp declines, he noted that roughly $25 billion has still flowed into the leading semiconductor ETFs since the June peak, which he reads as evidence that positioning hasn’t actually turned bearish yet, even as prices have.

Valuing Semiconductors Like Shipping Stocks

“Anyone who values a shipping stock at a price-earnings ratio is financially illiterate. That’s exactly where we are with semiconductor stocks.” — George Noble

Noble’s central framework for semiconductors is that they’re a capital-intensive, asset-heavy commodity business — much like shipping — where temporary supply-demand imbalances produce gross margins (he cited memory names running 75%+ versus a 25% long-term average) that get arbitraged away as soon as new capacity comes online. His view is that current earnings are a cyclical peak being mistakenly capitalized as if they were sustainable, and that the honest way to value these businesses is against asset or book value, not trailing earnings.

The SpaceX Short: Index Inclusion, Float Unlocks, and a $30 Price Target

“This is not in the public interest. I don’t care if nothing illegal is done — if it’s not illegal, it should be illegal.” — George Noble, on SpaceX’s index-driven rally

Noble said his firm was among the first to flag SpaceX’s IPO valuation as excessive (roughly 11 times sales), but didn’t recommend shorting it immediately because they expected — correctly — that index inclusion would force buying regardless of fundamentals. FTSE Russell (with roughly $12 trillion indexed to it) added SpaceX while S&P did not, and Noble’s team called the top of the resulting squeeze to subscribers around $145-150 on the way down from a peak of $225. He argues the real story now is the float: only about 5% of shares were listed at IPO, with another 20% unlocking imminently and roughly 7% more every few weeks after that, meaning early private investors who bought at $10-50 a share are about to be able to sell into a stock he values at closer to $30. He was sharply critical of regulators and bank executives who enabled the listing, and dismissed Elon Musk’s claim that SpaceX could eventually be worth more than the rest of Earth combined.

Also Short Tesla, and Betting Oracle Could Go Bankrupt

Noble disclosed a Tesla short as well, arguing the stock trades at roughly 14 times sales for what is fundamentally an auto company that should trade closer to one times sales — implying a fair value in the $30-50 range versus its current price, and noting Tesla has generated only $38 billion in cumulative profit across its entire history against a valuation near $1.5 trillion. He separately floated the possibility that Oracle could go bankrupt, calling it potentially “the next Cisco” given its debt load and its financial ties to OpenAI, which he also expects to eventually fail. He additionally warned that a wave of pending IPOs — SpaceX, Anthropic, OpenAI — could flood the market with new supply at a scale large enough to pressure valuations independent of fundamentals, given how much of the market’s recent strength has rested on light issuance and heavy buybacks.

Long Energy, Short Tech

Noble has been positioned long energy and short tech since turning bullish on energy in December, citing a decade of underinvestment (real capex down roughly 70%) against depletion rates north of 5% a year. He acknowledged a rough patch for energy stocks even as oil prices held up, which he attributes to temporary, one-off factors — Chinese oil import cuts, SPR drawdowns, and a rebound in Strait of Hormuz shipping traffic — that he expects to reverse, alongside near-record-high speculative short positioning in oil among retail traders.

Why He’s Bullish on Gold Again

“Rising rates in a country that can’t afford rising rates are bullish for gold.” — Luke Gromen, quoted by George Noble

Noble admitted his prior bullish gold call missed the recent pullback, driven by a stronger dollar and rising real yields — but argues dollar strength will prove short-lived. His longer-term thesis rests on the idea that a debt load this large (he cited $40 trillion in federal debt and $125 trillion in off-balance-sheet liabilities) makes a genuine rate-driven economic slowdown, and eventual easing, more likely than not — and that the U.S. is heading toward what he called a “soft default” via currency debasement rather than any formal default, which is ultimately the reason to hold gold for wealth preservation in real terms.

Lessons From Peter Lynch: “Know What You Own”

Reflecting on his time at Fidelity under Peter Lynch, Noble said the core lesson was simple: know what you own, follow price and trend rather than stories, and be skeptical of anyone using jargon nobody in the room actually understands. He warned that today’s market has become dominated by retail momentum-chasing where valuation was irrelevant on the way up and, in his view, will be equally irrelevant on the way back down. He closed by noting that market cycles have humiliated even legendary investors before — Julian Robertson closed his fund, Fidelity’s George Vanderheiden lost his mandate, and Merrill Lynch’s Chuck Clough was pushed out as chief strategist — not because they became bad investors, but because, in his words, the market temporarily lost its mind.

Leave a comment

China AI Race Deep Dive

Emad Mostaque, Stability AI Founder, and the Moonshots Crew on Kimi K3’s “Sputnik Moment” and Why Frontier Intelligence Just Became a Perishable Asset | Moonshots

Kimi K3’s “Sputnik Moment”

“They didn’t just close the gap, they jumped the fence.” — Peter Diamandis

The panel convened an emergency episode after Moonshot AI released Kimi K3, a 2.8 trillion-parameter open-weight model that jumped straight to the top of multiple leaderboards — including first place on the front-end coding arena, surpassing Anthropic’s latest Claude model, and landing as the third point on the cost-versus-performance frontier alongside the leading U.S. labs. The panel’s host called it an AI “Sputnik moment,” and co-host Alex noted Moonshot’s models have arguably held state-of-the-art among open-weight models for nine of the past twelve months, largely unnoticed until this release forced the comparison.

No Magic, Just Engineering

“What are the American frontier labs spending their money on?” — Alex, Moonshots panelist

A recurring theme was that Kimi K3’s published architecture contains no secret breakthrough — it’s a recognizable transformer with well-understood refinements to mixture-of-experts routing and attention linearization, not some undisclosed post-transformer method some assumed OpenAI or Anthropic might be sitting on. Emad Mostaque compared the achievement to Chinese EVs outcompeting legacy automakers: not a new invention, but disciplined engineering and manufacturing execution squeezing more out of known ingredients, including running the model efficiently on older-generation Nvidia H800 chips rather than the latest hardware.

Frontier Intelligence Is Now “A Totally Perishable Asset”

“The shelf life is weeks now. Any enterprise interested in the very latest cutting-edge model doesn’t have time to evaluate it, do an RFP, look at other models — by the time they decide, they’re three generations behind anyway.” — Salem, Moonshots panelist

The panel argued this shifts where value accrues in AI: not in owning any single frontier model, since leadership now changes every few weeks, but in the interface and orchestration layer that can swap between models as they leapfrog each other. One panelist floated that this makes frontier labs increasingly resemble utilities rather than defensible platforms.

What Happens to OpenAI and Anthropic’s Trillion-Dollar Valuations

Moonshot’s own valuation was pegged around $20 billion versus roughly $1 trillion apiece for OpenAI and Anthropic. One panelist estimated that if these were public companies, the news would have wiped out perhaps 30% of frontier lab valuations in a single move, and offered a rough guess that frontier labs broadly might now be worth closer to a quarter of their valuation from three months prior — reasoning that few enterprises will keep paying premium API prices once a comparable open-weight model can be run in-house for a fraction of the cost, similar to how U.S. drug prices subsidize R&D that’s later available elsewhere as cheap generics.

The Chip Embargo Backfired

“The embargo of chips on China was totally harebrained — it was enough to irritate but not enough to actually work.” — Dave, Moonshots panelist

The panel argued U.S. export controls on advanced Nvidia chips didn’t stop Chinese AI progress — they accelerated it, forcing labs like Moonshot to pursue efficiency breakthroughs (quantization, mixture-of-experts refinements, stripped-down training data) that Western labs, flush with compute, had less incentive to prioritize. The consensus was that those efficiency gains are now permanent and transferable, regardless of future chip policy.

Quantization: Squeezing Frontier Intelligence Onto a Smartphone

The panel also covered Bonsai, a 27-billion-parameter model from Caltech-linked startup Prism ML that runs entirely on a smartphone by compressing model weights down to roughly one effective bit per parameter (from a typical 16-bit baseline) with only modest accuracy loss — alongside similar compression work from Tencent’s former Wizard LM team. The implication, as the panel framed it, is frontier-class intelligence becoming available fully offline, on-device, at a fraction of the size and cost previously assumed necessary.

The Immigration Angle: Why Moonshot’s Founder Isn’t American

The panel dug into Moonshot AI founder Yang Xilin’s background — a Carnegie Mellon PhD who ultimately built his company in China — as a jumping-off point for a broader complaint about U.S. immigration policy failing to retain top AI talent. One panelist noted research showing that while the majority of Indian-born PhDs stay in the U.S., roughly 80% of Chinese-born PhDs return home, largely because China’s startup ecosystem offers a more viable path to building a company than trying to do so from abroad — a dynamic they argued the U.S. could address by automatically granting green cards to STEM PhD graduates.

Frontier Model Releases Are Accelerating Toward Daily Drops

The panel highlighted that frontier model releases have compressed from one every 60 days in 2024 to one every 10 days recently, and that extrapolating the trend implies near-daily frontier releases by January — a pace they suggested could make individual model announcements less newsworthy than the applications and use cases built on top of them.

Leave a comment

Arthur Mensch, Mistral CEO & Co-Founder, on Why the AI Race Won’t Have a Single Winner and How Europe Builds Sovereign AI | The Economist

Why the AI Race Won’t Have a Single Winner

“You don’t have a single energy provider in the world that is monopolistic. AI should be compared to electricity.” — Arthur Mensch

Mensch pushed back on the framing of AI as a race with one ultimate winner, arguing the technology’s addressable surface is simply too large — spanning coding, physics, life sciences, audio processing, and symbolic reasoning — for any single company or country to dominate every domain. He said Mistral has deliberately chosen where to compete hardest, citing strength in areas like document processing, audio, and symbolic mathematics, often in combination with Europe’s historical strength in manufacturing.

The Trillion-Euro Problem: AI as a Geopolitical Trade Imbalance

“If all of this flows back to the US, you’re increasing the commercial imbalance to a point where this creates enormous instabilities... the commercial balance of the world is also the reason why we live at peace.” — Arthur Mensch

Mensch laid out the economic stakes with a rough calculation: European wages total around €9 trillion, and if AI eventually displaces even 10% of that labor, that’s roughly €1 trillion a year in value. If that value flows entirely to a single foreign provider rather than being captured domestically, he argued, the resulting trade imbalance becomes destabilizing at a geopolitical level — not just for Europe, but for India, Africa, and other regions dependent on a single AI supplier.

Comparing AI to Energy, Not Software

Mensch’s core analogy throughout was energy rather than traditional software: no country wants to be fully dependent on a single external electricity provider, both because the market is too large for one monopolist and because of basic continuity risk if that supplier gets cut off. He expects AI to follow the same import-export-produce pattern as energy — Europe will keep importing stronger models where they exist (citing manufacturing-related exports back to the U.S.), while also building and exporting its own sovereign technology in areas of strength, rather than the market consolidating around one or two global providers.

Selling Sovereignty to European Citizens, Not Fear

Mensch said the realization that “AI is a sovereign technology” — economically and militarily — is spreading faster at the national level than inside EU institutions, which he said are structurally built for consensus rather than industrial policy, making them slow to act even as individual countries move quickly. He named France, Luxembourg, Greece, Sweden, and Spain as governments actively partnering with Mistral. His approach to building public buy-in deliberately avoids leading with job-loss anxiety, instead equipping governments with sovereign AI tools that visibly improve public services — job search, legal guidance, social security, and tax administration — so citizens experience tangible benefits rather than only hearing threats to their livelihoods.

AI as the Answer to Europe’s Aging Workforce

Mensch pointed to Europe’s aging population and shrinking civil service workforce as a second practical argument for AI adoption: rather than replacing government workers, AI can make existing staff meaningfully more productive, helping states absorb the wave of retirements without a corresponding collapse in public service capacity.

Leave a comment

Fiona Yang, Invesco Asia Dragon Fund Manager, on Korea’s Memory Supercycle, Cheap Chinese Models, and Overlooked Winners in India | Merryn Talks Money

Korea’s AI-Driven Volatility and the “Value-Up” Story

Yang described Korea as a front-row seat to the AI trade and its volatility in equal measure — the Kospi has swung roughly 25% off its June peak, with highly leveraged retail investors taking real losses on margin debt. She credited Korean regulators with a genuine “value-up” corporate governance push, boosting shareholder returns and minority protections in a way she compared favorably to Japan’s earlier reform cycle, though she noted investors chasing the AI narrative have largely overlooked that structural improvement.

The Memory Supercycle: How Long Can It Last?

“Even a fantastic earnings cycle cannot meet that expectation.” — Fiona Yang, on Samsung Electronics’ post-earnings share-price drop despite 19x year-over-year profit growth

Yang traced the current memory shortage back to years of underinvestment: NAND and DRAM producers were loss-making just two to three years ago and had no incentive to expand capacity, so when generative AI demand surged, supply couldn’t respond fast enough. She expects the shortage to persist for a couple of years given how long new capacity takes to build, but cautioned that elevated share prices may not hold for that entire window since so much good news is already priced in — and a Chinese competitor’s upcoming IPO could add supply faster than the market currently expects.

Two Risks to the AI Trade: Hyperscaler ROI and Cheap Chinese Models

“[A contact] just switches between the models — certain tasks we use the 90% cheaper Chinese model, and for the most advanced tasks, maybe we use the Western model.” — Fiona Yang, relaying a conversation with a software company operator

Yang flagged two specific risks to the demand side of the AI trade: first, that current revenue run-rates at OpenAI and Anthropic make the return on hyperscalers’ capex genuinely questionable; second, that cheap Chinese large language models — built on cheap power, land, and hardware — are pulling task-by-task workloads away from premium Western models at a fraction of the cost, undermining the assumption that everyone will always pay for the best available model.

Beyond the Picks and Shovels: Bonuses, Banks, and Construction

Rather than staying concentrated in the obvious AI hardware names, Yang has been positioning in secondary and tertiary beneficiaries. She pointed to Samsung and SK Hynix employees receiving enormous profit-linked bonuses (potentially a meaningful share of national GDP if projections hold), which she expects to flow into luxury goods, travel, and housing — already visible, she said, in Korean department stores seeing queues for luxury boutiques. Her portfolio plays on that spending wave include Korean banks like KB Financial for loan growth and wealth-management demand, insurer Samsung Fire & Marine for improving shareholder returns, and Samsung E&A, a captive construction company benefiting directly from the group’s data-center buildout.

China: Cheap, Unloved, and Used as a Funding Source

Yang said China remains genuinely inexpensive but structurally unpopular, largely because investors have been selling Chinese holdings — historically the “must-own” names in any Asia allocation — specifically to fund purchases of the more exciting Korea and Taiwan AI trade. She noted China’s index is heavy with internet names now facing real questions about whether they can reinvent their business models and compete on large language models, which has weighed further on sentiment even as she still finds selective value there.

India’s Overlooked Winners: Shriram Finance and Delhivery

After a research trip to India, Yang highlighted two names she considers underappreciated despite the broader market’s continued rich valuation. Shriram Finance, a non-bank lender serving truck drivers and small businesses in rural India, recently attracted a major investment from a large Japanese financial group, which she expects to improve its credit rating and lower its funding costs as it grows alongside rural formal-banking penetration. Delhivery, a logistics company with roughly 50% share of metro parcel delivery and a growing full-truckload business, is benefiting from continued infrastructure investment that’s lowering costs and letting it take share from competitors.

Asia’s Energy Independence Push

Yang described a broader regional shift, accelerated by the Ukraine war and Iran-related disruptions, toward energy independence and onshoring rather than pure cost optimization. She’s positioned in companies tied to that build-out, including Samsung E&A’s energy and resources construction work and Worley, an Australian engineering firm that designs projects for global oil and resources majors and derives roughly half its revenue from U.S. gas-production expansion.

Why Australia Is Her Favorite Market for Corporate Governance

Yang named Australia as the strongest market she covers on corporate governance and shareholder returns, and highlighted its role as a net commodity exporter — particularly copper, which she expects to benefit from continued data-center buildout — as a structural advantage. Near-term, she flagged government housing-market interventions (including anti-negative-gearing policies) as a source of consumer-confidence softness, given how concentrated Australian household wealth is in property, but framed it as a temporary drag rather than a structural problem.

Leave a comment

Economist Tyler Cowen on Why Banning Chinese Open-Source AI “Cannot Work,” and the Rise of Teenage “AI Maniacs” | TBPN

Why Banning Chinese Open-Source AI “Cannot Work”

“The attempt to outlaw it or ban it or use sanctions against it is going to fail miserably... I hope the Trump administration gives up on this crusade.” — Tyler Cowen

Cowen argued that open-weight Chinese models are already proliferating the way any freely copyable software does, and that major U.S. companies are quietly relying on Chinese open-source models for cost savings right now — including, he noted, competitors like Thinking Machines using one to bootstrap part of their own product development. His view is that trying to legislate this away is unworkable given how deeply it’s already embedded in enterprise supply chains, even if compute infrastructure remains a genuine point of leverage in a way pure software never was.

Open Source and America’s AI Stack Are Complements, Not Rivals

Cowen pushed back on the idea that Chinese dominance in open-source models is a slippery slope toward losing the rest of the AI stack — chips, data centers, and energy. He argued the two are actually complementary: enterprises are more willing to build on U.S. infrastructure and lock into American systems specifically because open-source alternatives exist in the background as a hedge against being cut off, reducing the fear that’s driven some of the resistance to relying entirely on closed U.S. providers.

The “Vibecession”: Why Sentiment and the Data Have Diverged

“I call it negative emotional contagion... if you look at wealth accumulation, the job market, stock prices, real wages, many other indices, they’re doing okay to fine. They’re just not doing terribly.” — Tyler Cowen

Cowen described the current gap between decent economic data and poor consumer sentiment as a self-reinforcing negative mood he doesn’t think is really about the numbers — comparable to past eras where distrust in institutions, seeded by events like COVID-era messaging, outlasted the conditions that caused it. He also revisited his earlier, now largely vindicated call that AI’s growth impact would resemble the internet’s boost to GDP in the late 1990s (roughly half a percentage point) rather than an instant economic transformation — real, but gradual.

AI Maniacs: The Next Generation of Founders

“You’re going to have a large number of companies with quite a small number of employees but pretty high revenue.” — Tyler Cowen

Cowen described a growing cohort of teenagers — he cited 13- and 17-year-olds he’d spoken with in Abu Dhabi and Finland — who have taught themselves to build with AI tools well beyond what their teachers understand, and predicted this group will increasingly compete directly in medicine, law, consulting, and banking. He said little government encouragement is needed beyond keeping models affordable and giving young people access to capital and authority, and noted he’s been surprised by Europe’s improving performance on this front, attributing it partly to agentic AI being genuinely novel there in a way chatbots weren’t.

What the Jobs Data Actually Shows

Cowen said the unemployment rate for 18-to-24-year-olds has returned to pre-large-language-model levels, which he takes as evidence AI isn’t broadly destroying entry-level jobs, even as anecdotes suggest otherwise. He attributed some of the labor market’s softer optics to a large sectoral reallocation — healthcare hiring strong, prestigious “cushy” tech-track jobs scarcer — rather than an AI-driven collapse, and separately argued that companies conducting highly public AI-driven layoffs are making a strategic mistake: firms confident in their AI advantage and business durability should be hiring aggressively, not cutting headcount for optics.

Leave a comment

Crosslink Capital Partner Mary D’Onofrio on Why Kimi K3 Doesn’t Prove OpenAI Is Overvalued | Bloomberg Tech

Kimi K3 Sparks a Chip Stock Rebound

“China and open-weight models are closing the gap with frontier models... the productivity gains are tremendous.” — Mary D’Onofrio

D’Onofrio joined right as chip stocks were rebounding from a Friday bear-market dip triggered by Kimi K3’s release, comparing the moment to last year’s DeepSeek shock. She sees the 2.8 trillion-parameter model’s strong benchmark performance (ranking fourth by Moonshot’s own measures) as another data point that open-weight models are genuinely closing the gap with frontier labs, which she expects to be a long-term boon for AI adoption broadly, even if it’s unsettling in the short term. Her broader takeaway on competitive dynamics: models keep leapfrogging one another, so any company’s real moat has to come from data, performance, or customer relationships rather than from any single model’s temporary lead.

Why Cheaper Models Might Not Shrink Total AI Spending

D’Onofrio, who focuses on AI infrastructure and vertical AI as a venture investor (including agent infrastructure company Teleport), pushed back on the idea that a 95% drop in inference costs necessarily reduces total dollars spent on AI. Her view is that cheaper models mostly shift workloads — expensive, frontier-level reasoning tasks migrating to cheaper models that still deliver adequate performance and latency — rather than shrinking the overall AI budget. She also noted that Kimi K3’s actual token pricing ($3 per million input tokens, $15 per million output) is roughly in line with many leading models, undercutting the popular narrative that it’s dramatically cheaper across the board.

Skeptical of the “Kimi K3 Proves OpenAI Is Overvalued” Argument

“I don’t know yet, and I don’t think anybody knows yet.” — Mary D’Onofrio, on whether Kimi K3 undermines OpenAI and Anthropic’s valuations

Asked about the reaction that a $20 billion Chinese startup producing a 2.8 trillion-parameter model at this cost structure calls into question trillion-dollar valuations at OpenAI and Anthropic, D’Onofrio was cautious. She pointed out both labs already generate billions in revenue across diversified first-party and third-party businesses, and noted that “open weight” doesn’t mean free to actually run — a nuance she thinks the market is underappreciating in the rush to declare frontier labs overvalued.

What Recent AI IPOs Reveal About Investor Appetite

D’Onofrio read recent listings like SpaceX and SK Hynix’s ADR offering as a signal that public investors want AI-infrastructure exposure, but are gravitating specifically toward long-established, revenue-generating businesses rather than purely speculative newcomers — evidence, in her view, that even as the IPO window reopens around AI, investors remain comparatively risk-averse and are seeking relative safety within the theme.

Leave a comment

Deutsche Bank’s Jacky Tang on Why Chinese AI Models Won’t Displace Their US Rivals, and China’s Structural Drivers for the Second Half | CNBC International

China’s Second-Half Drivers: AI, EVs, and Energy Security

Tang laid out several structural reasons Deutsche Bank expects Chinese equities to keep performing through the second half: momentum from the Shanghai AI conference and Kimi K3’s promising, lower-cost performance; strength in EVs and advanced technology; an energy-security theme where Asian countries diversifying their energy mix post-conflict benefit Chinese energy-infrastructure players; and domestic reforms including state-owned-enterprise restructuring and support for export leaders. His base case assumes a fragile ceasefire holds, keeping oil in a $75-85 range rather than spiking above $100, with inflation gradually easing — a broadly supportive backdrop for equities.

Why Kimi K3 Won’t Displace US Models in the West

“We don’t think that the Chinese model is going to replace the US model at this point.” — Jacky Tang

Fielding investor questions about whether Kimi K3 would drive a switch away from U.S. AI models, Tang was direct: no. He pointed to Western corporations and governments remaining wary of Chinese models on data-security grounds, noting that DeepSeek’s adoption two years ago stayed concentrated in China and select emerging markets rather than spreading internationally, reinforced by ongoing U.S. and EU restrictions on cross-border data flows and AI-compliance requirements. He read Xi Jinping’s conference remarks about AI “collaboration” as an acknowledgment that the AI world remains genuinely fragmented rather than converging around one dominant model.

Chinese AI Labs as an Export Product for Emerging Markets

Rather than viewing Chinese AI labs as household names competing directly with OpenAI and Anthropic, Tang frames them as an export product aimed primarily at emerging markets, where adoption is already meaningfully higher than in the West. He said investors shouldn’t expect major Western market share for these labs, but should still pay attention given how large the aggregate emerging-market opportunity is.

Own the Whole AI Value Chain, Not Just the Mag Seven

Tang’s broader investment strategy argues for looking past the Magnificent Seven and U.S. hyperscalers to own the full AI value chain — Korean and Taiwanese semiconductor makers, Chinese AI labs, and the construction and utility companies building supporting infrastructure — since leadership and value capture rotate quickly between different links in that chain.

Leave a comment

Bloomberg’s Peter Elstrom on Why Kimi K3 Threatens OpenAI and Anthropic’s Trillion-Dollar IPO Ambitions | Bloomberg Open Interest

Not Another DeepSeek Moment — Something Bigger

Elstrom said U.S. tech companies believed they understood where Chinese competition was coming from — DeepSeek’s breakthrough last year, and Alibaba’s Qwen model more recently — which made Moonshot’s Kimi K3 release a genuine surprise. The 2.8 trillion-parameter model outperforms most frontier models on many benchmarks, trailing only the leading models from Anthropic and OpenAI, at a cost structure Elstrom said the market still doesn’t fully understand.

Threatens Premium Pricing and OpenAI/Anthropic’s IPO Ambitions

“It is a very serious threat for some of these frontier models in the U.S. that had been planning on charging premium prices.” — Peter Elstrom

Because Kimi K3 and similar Chinese models are open-weight and can be self-hosted — sidestepping both cost and some security concerns tied to using someone else’s servers — Elstrom sees real pricing pressure building on U.S. frontier labs. He specifically flagged the timing risk for OpenAI and Anthropic, both of which are reportedly aiming for IPO valuations above a trillion dollars each, arguing that ambition just got harder to justify.

The BYD Comparison

Elstrom drew a direct parallel to BYD and other Chinese industries — solar panels and steel among them — where Chinese companies have repeatedly proven able to match or exceed Western quality at dramatically lower prices. He noted the irony that BYD vehicles themselves aren’t available for purchase in the U.S., raising the question of whether similar restrictions might eventually target Chinese AI models.

Why Banning Chinese Models Could Backfire on American Businesses

“You may end up hurting American businesses that are not the AI leaders.” — Peter Elstrom

Asked about government appetite for barring Chinese AI models from U.S. use, Elstrom cautioned that the leading edge of affordable open-source AI right now is dominated by Chinese labs — DeepSeek, Moonshot, MiniMax, and others — meaning restrictions aimed at protecting American frontier labs could instead punish the broader universe of U.S. companies that rely on cheap, capable open-source tools to adopt AI in the first place.

Leave a comment

Bessemer’s Byron Deeter on Why China AI Fears Are “Totally Misplaced” | CNBC Squawk on the Street

Why He Thinks China AI Fears Are “Totally Misplaced”

“This notion that Chinese models are suddenly going to crater demand and change these cost curves, I think is totally misplaced.” — Byron Deeter

With semiconductor ETF SOXX posting its worst weekly loss since September 2024 on China AI competition fears, Deeter argued the sell-off is really just profit-taking after an “epic run-up” in hardware stocks, not evidence that Chinese models are about to upend the market. He called Kimi a fine but memory-intensive, relatively slow model — solid, not category-redefining — and drew a parallel to the open-source story in cloud computing: open-weight models will take some demand and pricing pressure off parts of the market, but won’t displace frontier models for the workloads that matter most.

Three Reasons Corporate America Won’t Switch to Chinese Models

Deeter laid out his case in three parts. First, performance: once you account for full price-performance, including memory costs, and the near-certainty that these Chinese models were trained in part through distillation attacks on U.S. models, the gap isn’t as favorable as headline pricing suggests. Second, trust: he argued Fortune 1000 companies won’t put business intelligence, customer data, or employee records on Chinese AI systems any more than they’d want their most sensitive data flowing through TikTok, given how central data security and vendor trust are to enterprise relationships. Third, he expects U.S. regulation to eventually address predatory pricing, distillation attacks, and IP theft to protect the domestic AI industry’s lead.

Where the Real Pricing Pressure Will Show Up

Even without a wholesale corporate migration to Chinese models, Deeter acknowledged real pricing pressure is coming — but concentrated in low-end use cases, early-stage startups, and experimentation budgets rather than mission-critical enterprise workloads. He expects frontier labs, currently supply-constrained, to bring prices down on their own as more data-center capacity comes online, and also flagged emerging sovereign and allied-nation open-weight models — from Europe, India, and Canada — as a further competitive factor likely to carve out their own share of the ecosystem.

Leave a comment

George Chen, The Asia Group Partner, on Whether Kimi K3 Proves US Chip Export Controls Have Failed | Bloomberg: The Asia Trade

A “Perfect Plan B”: Reigniting the Open vs. Closed Debate

“The rest of the world will also look at China as, okay, now we have a more affordable solution — it’s like a perfect plan B.” — George Chen

Chen said Kimi K3 caught both Wall Street and Silicon Valley off guard, reigniting the open-source-versus-closed-model debate globally. If an open-weight Chinese model can be produced at dramatically lower cost, he argued, the rest of the world now has a credible, affordable alternative to relying entirely on U.S. AI companies — a direct challenge to American dominance in the space.

Does This Prove Export Controls Aren’t Working?

Chen raised a pointed question for Washington: Kimi K3 is a 2.8 trillion-parameter model that reportedly relies on older H100 chips and domestic Chinese hardware rather than the restricted H200, meaning Moonshot achieved frontier-adjacent performance without the chips export controls were designed to withhold. He noted Alibaba’s competing model faces the same constraint, and expects this to force a serious rethink of export-control strategy on both sides of the U.S.-China AI dialogue — with Chinese labs candidly acknowledging they still trail Claude and other leading Western models for now, but with a five-year horizon in mind, and Huawei pursuing an integrated-systems strategy to match H200-level capacity without matching it chip-for-chip.

The US-China AI Race Is Now About Picking Allies

Chen read Xi Jinping’s announcement of a new international AI organization as a direct answer to U.S.-led coalitions, arguing the AI competition has moved beyond a purely bilateral U.S.-China contest into a broader contest for global partners and allies.

China’s Real Edge: Software, Not Hardware

Chen described a clear bifurcation: the U.S. leading in hardware, China making faster progress in software and applications — pointing specifically to AI video generation, where he said Chinese tools (citing ByteDance’s short-video AI production tools) already dominate globally, calling it “already a headache” for the U.S. the way TikTok has been. He also noted heavy state backing across China’s AI-adjacent industries — chips, robotics, and shipbuilding — describing an “at all costs” national push to develop homegrown chips matching H200-class performance within five years, with a small recently approved quota of H200 imports into China serving as more of a diplomatic gesture than a meaningful supply fix.

Wall Street’s Real Worry: The Rise of the Hybrid Model

“[OpenAI and Anthropic] consider themselves the king of the world, but now the position is being challenged.” — George Chen

Chen said the more immediate business risk for OpenAI and Anthropic isn’t wholesale customer defection, but a growing hybrid-usage pattern: companies increasingly routing basic or lower-stakes tasks to cheaper Chinese models while reserving U.S. frontier models for their most demanding work — eroding the assumption that premium labs capture all of the value regardless of task complexity. He also expects Washington’s export-control policy to tighten further in response, making it harder for Nvidia to win approval to sell more advanced chips into China.

Leave a comment

Goldman Sachs’ Ronald Keung on How Chinese AI Labs Are Learning to Monetize Open-Weight Models | CNBC International

Chinese Models Are Hitting a “Critical Point” for Coding

Keung said Chinese large language models have reached a critical threshold of capability for global proliferation, particularly in coding, where a self-reinforcing data loop is accelerating improvement: developers running coding workloads through official API channels generate real usage data that feeds back into training the next model iteration. He linked this directly to the jump in scale from roughly 1 trillion parameters to Kimi K3’s 2.8 trillion, driven in part by strong API demand specifically for coding use cases.

From Free Open-Weight to a SaaS-Like Licensing Model

Keung described a shift underway from pure open-source releases toward “open weight” models and now what he called community licensing — MiniMax being an early example, where the model is free for research use but requires commercial users to share revenue. He framed this as Chinese AI labs evolving toward a structure that looks more like traditional SaaS economics, a response to tight compute and chip supply that makes giving away commercial usage for free increasingly unsustainable.

Blending API Revenue With Third-Party Hosting Revenue Share

Beyond revenue from their own API channels — where labs control the compute and capture the margin directly — Keung expects a second, blended revenue stream to emerge as these models get hosted on third-party platforms like AWS Bedrock and other global hyperscalers, with revenue-sharing arrangements replacing the current setup where labs get essentially nothing when their open-weight models run on someone else’s infrastructure.

Three Risks to China’s Global AI Proliferation Strategy

Keung flagged three specific risks to the current wave of strong token-consumption demand for Chinese models internationally. First, Western data-security concerns, which he compared to TikTok’s trajectory — rapid adoption first, followed by a second wave of regulatory scrutiny. Second, as Chinese models approach or reach the frontier, there’s a real question of whether the most advanced ones stay fully open to any country or business, even if the broader base of Chinese models remains open source. Third, continued access to high-end compute remains essential for Chinese labs to keep iterating at their current pace, regardless of how mature their software and licensing strategy becomes.

Leave a comment

Kai-Fu Lee, 01.AI Chairman & CEO, on Why He’s Building Applications on Kimi K3 Instead of His Own Model, and China’s AI Monetization Playbook | Bloomberg Tech

Why 01.AI Stopped Competing on Foundational Models

“The models... three years ago, were like an average human, but now they’re smarter than all humans. So it’s such a pity if these models are only applied to simple tasks.” — Kai-Fu Lee

Lee said Kimi K3 is an excellent model that his company is already testing and building on — a deliberate strategic choice rather than a competitive threat. About a year ago, 01.AI pivoted away from fine-tuning and expanding its own foundational model in favor of building applications on top of the best available third-party models, a shift he said sharply cut expenses and put the company on a path to profitability, targeted for sometime next year.

Boss AI: Giving CEOs a “God’s Eye View”

Lee described 01.AI’s flagship product, Boss AI, as designed to give a company’s CEO full visibility across all data to drive decisions that move the financial statement — a contrast, he argued, to most enterprise AI deployments that amount to “sugar coated demonstrations” with no substantial business impact. Bookings have grown three to four times year over year, and Lee said the company’s real constraint is hiring enough multilingual consultants and staff to service demand across Asia, South America, and the Middle East, where growth is running in the triple digits.

Export Controls Have “Simply Not Worked”

“Export control was an imaginative but unsuccessful effort to contain China. It has failed.” — Kai-Fu Lee

Lee dismissed the idea that GPU export restrictions are meaningfully constraining Chinese AI development, arguing any domestic GPU shortage stems from booming global demand, business frugality, or supply limits — not from U.S. export policy specifically.

The US-China Split: Profit vs. Market Share

Lee expects the U.S. to capture more profit in foundational models and enterprise applications over the next three to five years, while China wins on market share thanks to open-source distribution and enterprises’ preference for on-premise deployment. He predicted Chinese consumer-application companies like Tencent and ByteDance will out-innovate their American counterparts, and that China maintains a hardware lead — while cautioning that low Chinese AI pricing may not be sustainable long-term, drawing a parallel to early internet and social media products that were free before monetization caught up.

Positioning Against Palantir

Lee framed 01.AI and Palantir as the only two products capable of running genuine AI transformation with results in two to three months, but said the two firms effectively avoid competing head-to-head: Palantir focuses on U.S. and allied defense and military work, while 01.AI targets Asia and Belt and Road countries Palantir largely avoids — a dynamic he expects to harden into a durable, defensible moat via first-mover advantage. He’s targeting an IPO as soon as 2027, contingent on completing the filing process.

Leave a comment

AI Infrastructure & Power Deep Dive

Baird’s Ben Kallo on GE Vernova’s Booked-Out Backlog, the Case for a SpaceX-Tesla Merger, and Why Labor (Not Chips) Is the Next Bottleneck | The Real Eisman Playbook

America’s Grid Is Short by Up to 350 Gigawatts

“The range you could drive a truck through... could be 100 gigawatts of new capacity needed by 2035... at 350, you’re more than doubling all the electricity generation in the United States.” — Ben Kallo

Kallo, Baird’s sustainable energy and mobility analyst, told Steve Eisman that estimates for new U.S. grid capacity needed by 2035 range so widely — from 100 to 350 gigawatts against roughly 150 gigawatts of total generation today — that the uncertainty itself signals how unprepared the grid is. The country is currently adding about 30 gigawatts of base-load capacity a year, a pace Kallo said is already straining under pressures well beyond data centers: onshoring manufacturing, aging coal-plant retirements, and electrification of homes and vehicles. Curtailment days — utilities asking commercial tenants to cut air conditioning during peak demand — are becoming more frequent even before gigawatt-scale AI data centers have fully come online.

GE Vernova: Booked Out Through 2030, With Nuclear as a Late-Decade Kicker

“They’ve been able to book out until 2030 with price... something that’s booked today is not actually going to get into utility plant till 2030, 2031.” — Ben Kallo

Kallo’s top pick in the group is GE Vernova, whose gas-turbine business — the equipment utilities and data-center developers need for fast power — is sold out years in advance, giving the company unusually long earnings visibility into the mid-2030s once its service tail is included. He also flagged a fast-growing electrification segment selling transformers and grid equipment (cross-sold alongside turbines, including a recent Chevron deal) and a nascent small-modular-reactor nuclear business built with Hitachi, with a first Ontario reactor targeted for 2035 — a program Kallo said is more likely to move the earnings needle in the late 2030s than sooner, given skepticism around the industry’s aggressive SMR timelines.

Making the Case for a SpaceX-Tesla Merger

Kallo argued a SpaceX acquisition of Tesla is increasingly likely, potentially within 18 months, driven by Elon Musk’s desire for a 25% AI-controlling stake he can’t easily get inside Tesla alone, plus the capital-raising and single-board efficiency benefits of combining the companies’ overlapping projects — including a joint 100-gigawatt solar manufacturing venture and a joint chip effort (”Terrafab”) aimed at competing with Nvidia. He was clear-eyed that Tesla’s core EV business alone wouldn’t justify its valuation, with the bull case resting instead on autonomous robotaxis (which Kallo expects to scale first in Texas) and a fast-growing energy-storage (”megapack”) business that already contributes roughly 20% of Tesla’s operating income.

Solar: Bullish on the Grid Story, Cautious on the Stocks

Kallo is not recommending First Solar despite the sector’s tailwinds, citing execution risk from shifting production to the U.S. and unresolved Section 232 tariff decisions on Chinese polysilicon that leave the company unable to price contracts — though he estimated $100 of upside in the stock if tariff clarity comes through favorably. He’s more constructive on Rivian than Lucid heading into the R2 launch, and flagged skilled labor — electricians and construction crews — as the binding constraint on the entire power buildout going forward, more so than chips or capital.

Leave a comment

AMD’s Forrest Norrod on Helios, AMD’s First Rack-Scale AI System, and the Bet That It Can Take Real Share From Nvidia | CNBC

A $5 Million, 7,000-Pound Answer to Nvidia’s Vera Rubin

AMD unveiled Helios, its first rack-scale AI system — 72 GPUs and 18 CPUs packed into a single rack, built to compete directly with Nvidia’s Grace Blackwell and newer Vera Rubin systems. Meta, OpenAI, Oracle, Microsoft, and India’s TCS have all signed on to deploy Helios this year, with Meta alone committing to up to six gigawatts of AMD GPU capacity. AMD data center lead Forrest Norrod said the system is built entirely from AMD’s own GPUs, CPUs, networking, and software stack, and that early performance and efficiency data give it real advantages in inference and memory bandwidth versus Nvidia’s offering.

Still a Single-Digit Player, But Aiming Bigger

“There’s a serious case in which AMD does great and can get to 20 and 25%. And by the way, this is hundreds of billions of dollars of revenue. You don’t play in markets to be a single-digit player.” — Forrest Norrod

Nvidia still controls more than 95% of the data-center GPU market, but Norrod said AMD’s aspiration is real share gains, not just participation. Helios is priced by third-party estimates at $5 to $5.5 million per system versus $3.5 to $4 million for Vera Rubin, with AMD arguing its pitch is lowest total cost of ownership and cost-per-token rather than sticker price — an argument Norrod said is gaining traction as customers shift focus from maximizing token generation to practical, cost-justified token utilization.

CUDA Still Wins on Ecosystem, But ROCm Is Catching Up on Openness

AMD acknowledged Nvidia’s CUDA software remains far more ubiquitous and gives Nvidia a clear ecosystem edge, but is positioning its open-source ROCm stack — backed by acquisitions and support for PyTorch, vLLM, and SGLang — as the differentiated alternative to Nvidia’s closed, proprietary approach to owning the “AI factory” end to end. Helios itself is built on more open standards than Nvidia’s rack systems, per AMD.

The Real Constraints: TSMC Capacity, Packaging, and HBM Memory

Helios’ MI455 GPUs are made on TSMC’s most advanced two-nanometer node, and AMD said CEO Lisa Su’s early, repeated trips to Taiwan helped secure wafer capacity even as Nvidia has reserved the bulk of TSMC’s advanced CoWoS packaging. AMD has since committed $10 billion to other Taiwanese packaging partners like ASE and says it has locked in relationships with all three major HBM memory suppliers — necessary given each MI455 GPU uses up to 432GB of HBM memory amid a global memory shortage. About 22.5% of AMD’s 2025 revenue came from China, and the company said it would sell Helios there if regulations and customer demand allow.

Leave a comment

TSMC CFO on the $100 Billion Arizona Expansion, Multi-Year Chip Demand, and Why It’s Not Leaving “Any Food on the Table” | CNBC

Another $100 Billion for Arizona, on Top of the Original $100 Billion

TSMC’s CFO confirmed the company is increasing its Arizona investment by another $100 billion, on top of the $100 billion already committed earlier this year, citing continued strong multi-year demand from U.S. customers and strong support from federal, state, and city government. The Arizona site’s Phase One (N4 technology) is already running at Taiwan-level quality; Phase Two (N3) is moving in tools now and targeted for online in the second half of 2027; Phase Three (N2) construction has begun; and Phase Four, including the first U.S. advanced-packaging fab, is in early preparation.

Building Overseas Costs Four to Five Times More Than Taiwan

“It takes four to five times more in constructing a fab in the U.S. compared to in Taiwan.” — TSMC CFO

That cost gap is driving margin dilution from overseas expansion — currently 2-3 percentage points a year, widening to 3-4 points as more U.S. phases come online between 2024 and 2029. The CFO said profitability improves phase by phase but likely won’t reach Taiwan-level margins, framing the tradeoff as a deliberate one: the added investment strengthens the U.S. semiconductor supply chain and creates high-tech jobs, in exchange for government support via CHIPS Act investment tax credits and local infrastructure help with water, power, and permitting.

No Food Left on the Table

Total capital expenditure over the next three years will be significantly higher than the prior three, with Taiwan’s own 2025 capex already raised from $56 billion to $60-64 billion as the company builds out 13 fabs domestically alongside its expanding U.S. footprint. Asked directly about the scale of demand driving all of this, the CFO was blunt: TSMC does not plan to leave any capacity on the table for competitors to capture.

Leave a comment

Macro & Credit Deep Dive

Mispriced Assets’ Nick Nemeth on Why Private Credit Is “1929, Not 2008,” and the $10 Trillion Insurance Balance Sheet at the Center of It | Monetary Matters

“The Smart Money Is the Subprime This Time”

“We’re talking about subprime taking down the economy at $1.2 trillion. There’s a trillion dollars of private credit... but really the mass of the crisis is insurance, where there’s a $10 trillion balance sheet.” — Nick Nemeth

Nemeth, who writes the Mispriced Assets newsletter, laid out a bearish thesis on private credit he’s been building for roughly three years: direct lenders are running leverage around seven times adjusted EBITDA — earnings he calls “doubly fake” once private equity firms layer in optimistic synergy assumptions that S&P data shows miss actual results by 25% to 50% of the time. He stressed he isn’t a permabear and has made money on long positions this year, but sees this cycle’s endgame concentrated specifically in insurance company balance sheets rather than banks.

Insurance, Not Banks, Is the Real Risk Transmission Point

Private equity firms — Apollo with Athene being the pioneering example — have increasingly bought or created insurance companies to access “permanent capital” for their credit funds. Unlike bank deposits, insurance policyholders face steep penalties for early withdrawal (surrender charges as high as 7% in year one), which Nemeth argues masks how thinly capitalized some insurers really are: he estimates some are levered 90 to 100 times versus the roughly 30 times leverage Lehman Brothers carried in 2008, with some carrying negative equity that regulators have exempted from standard mark-to-market rules.

Six Layers of Leverage, and Credit Ratings He Calls Compromised

“These insurers’ balance sheets are levered up in many cases more than Lehman Brothers was in 2008. We’re talking 90 times, 100 times in some cases.” — Nick Nemeth

Nemeth described a stacked structure of leverage — from underlying portfolio companies, up through BDC-level debt, fund-level leverage from sovereign wealth investors (who he says can achieve up to 20x leverage via repo agreements), general-partner financing, and finally the insurance balance sheets themselves. He was sharply critical of the ratings agencies underpinning the whole structure, arguing firms like Egan Jones and Kroll — which rate the underlying loans inside CLOs — have strong incentives to issue favorable ratings to win business, echoing dynamics he compared directly to the subprime mortgage ratings failures of 2008.

Why He Sees 1929, Not 2008

Nemeth’s central distinction: 2008 primarily hurt working-class borrowers holding subprime mortgages, while this cycle’s damage, in his view, is concentrated among white-collar workers and institutional capital funneled into private credit and PE-controlled insurance vehicles — a dynamic he compares more to the wealthy investors wiped out in 1929. He flagged rising private-credit default rates (around 6.3% in direct lending versus roughly 6% in 2008, though 2008 levels started far lower) and said a sustained run of elevated defaults — roughly six quarters by his math — would trigger forced downgrades of the CLOs sitting on insurance balance sheets, forcing capital calls the industry isn’t prepared for.

Grading the Public Alternative Asset Managers

Asked to rank the publicly traded credit managers, Nemeth called Ares “the biggest gap of brand-name aura to reality,” said Blackstone’s business is largely marketing (with CEO Jon Gray coming across as “a narrator” rather than an investor), and named Blue Owl as the most underrated despite what he called its “worst PR I’ve ever seen.” He views Apollo as a genuinely skilled underwriter — “running risk at an F-35 level,” in his words — but argued that reputation, not necessarily superior fundamentals, is what’s currently driving capital toward winners like Apollo and Ares and away from Blackstone.

Leave a comment

Palomar Capital’s Patrick Boyle on SpaceX’s “Priced for Science Fiction” IPO and the Return of Dot-Com-Era Financial Engineering | Hidden Forces

A $135 IPO Price Elon Musk Set Himself

Boyle, founder of the now-sold Palomar Capital Management and a finance professor at King’s College London, dissected SpaceX’s IPO, which priced at roughly 100 times sales — compared to Google’s eight times sales at its IPO (growing over 200% a year) and Facebook’s roughly 10 times sales, which was itself considered aggressive at the time. Unlike a typical IPO process where investment banks build a book and set a market-clearing price, Boyle said Musk simply set the $135 share price himself — a figure that made him the “world’s first trillionaire” on paper — and took it to market with no shareholder voting rights attached.

Growing at 15% a Year Doesn’t Justify the Multiple

“If you’re paying a multiple for growth, where’s the growth?” — Patrick Boyle

Boyle noted SpaceX is reportedly burning about $5 billion a quarter, with losses expected to grow, and that unlike Google and Facebook — asset-light software businesses — SpaceX faces enormous capital expenditure needs across data centers, Nvidia chip purchases, and its core rocket and satellite business. He was skeptical of the “enterprise AI company” framing used to justify the valuation, pointing out xAI’s Grok holds roughly 3.5% AI market share and that virtually no enterprise customers he’s aware of are choosing it over Anthropic.

Engineered Index Inclusion and a Shrinking Float

Boyle detailed how SpaceX was fast-tracked into the Nasdaq-100 and Russell 1000 within days of its IPO — a highly unusual departure from typical “seasoning” periods — which he said effectively guaranteed a wave of forced buying from index funds and created a trade Wall Street banks and funds like Millennium profited from directly. He also flagged a shrinking public float (potentially under 1% of shares genuinely trading) and a wave of newly published bank price targets — some as high as $1,000 a share — that he compared to the analyst conflicts-of-interest scandals of the dot-com bubble, noting the relevant Sarbanes-Oxley-era “truth in analysis” rule was repealed roughly six months before this piece.

Institutions Weakening, Individuals Gaining Power

Boyle connected the SpaceX story to a broader theme: eroding trust in institutions since the 2008 financial crisis bailouts has empowered individuals — Musk, Trump, and others — who are skilled at commanding social-media audiences, a dynamic he said resembles the “strong individuals, weak institutions” pattern more typical of emerging markets. He also discussed the explosion of prediction markets like Kalshi and Polymarket as largely disguised sports betting fueled by “financial nihilism” among younger, economically priced-out investors, and flagged a UAE investment into Trump’s World Liberty Financial stablecoin as a case study in how the two trends — weakening institutions and unconventional capital flows — are intersecting.

Leave a comment

Bloomberg’s Scott Carpenter on How Wall Street Is Using Insurance Wraps to Unfreeze Private Credit Cash | Bloomberg

Turning Fund Equity Into Rated Debt

Carpenter, who covers structured finance for Bloomberg, explained a deal UBS has proposed — following one partners Group already executed — that takes shares of private credit and private equity funds, pools them into special vehicles, and issues bonds against them. Layered on top is an insurance policy from Nationwide covering the majority of the transaction against losses, a “wrap” that pushes the deal’s rating up to A2 even though comparable unwrapped fund-finance deals typically land at triple-B or single-B.

Why It’s Happening Now: Funds Need Cash, Insurers Have It

“You’ve got the funds that need cash. On the other hand, you’ve got the insurance companies that have cash. You need to connect them. And that’s the financial engineering that’s happening.” — Scott Carpenter

Carpenter said private credit and private equity funds have been slow to sell existing investments and need new sources of dollars, while insurers — flush with cash from a wave of annuity sales tied to retiring Baby Boomers — need investment-grade-rated places to park that money. The insurance wrap is the mechanism connecting the two, and Carpenter noted it’s a still-rare structure in fund finance, one sophisticated potential buyers immediately recognized as unusual when they reviewed the UBS presentation.

The New Risk: Linking Two Previously Separate Parts of the Financial System

A colleague on the panel flagged the structural risk directly: if Nationwide itself were downgraded for reasons entirely unrelated to private credit, every deal it has wrapped would get downgraded in turn — creating a new contagion channel between the insurance sector and private markets that didn’t previously exist. Carpenter added that rating-agency conflicts of interest remain an open question in these deals, though ratings divisions are nominally insulated from the business-development side. As of the report, the UBS deal was still in progress, with no confirmed timeline to close.

Leave a comment

Mohamed El-Erian on Why “The Worst of the Inflation Is Behind Us,” and Why AI Infrastructure Spending May Have No End Point | CNBC

No Rate Hikes Coming, and Inflation’s Worst Days Are Past

“I don’t think we’re going to get any rate hikes. I think the worst of the inflation is behind us.” — Mohamed El-Erian

El-Erian said tariff-driven inflation and most oil-related inflation pressure have largely worked through the system, leaving him unconcerned about the case some have made for further Fed rate hikes. He flagged AI-related inflation as a different category entirely — one he said he can live with because he believes it reflects genuine, coming productivity gains rather than simple cost-push pressure, while still keeping a close eye on regular gasoline and diesel prices as his real-time inflation gauge.

AI Buildout: An Overbuild Is Coming, Just Not Soon

El-Erian said a capacity overbuild is likely within three to four years, consistent with the pattern of every major technology buildout in history overshooting demand in its early phases — pointing to the late-1990s fiber-optic buildout as a direct parallel. But he cautioned this cycle could run much longer than fiber’s did, citing conversations with tech executives who describe AI as lacking a definable endpoint altogether, unlike fiber’s finite “lay the track and stop” buildout.

Why AI Might Not Have an End Point at All

Citing Google’s James Manyika, El-Erian described AI as “the inventor of inventions” — a general-purpose technology capable of recursive self-improvement, meaning it continuously creates new applications and demand for itself rather than reaching a natural stopping point the way earlier infrastructure buildouts did. On markets more broadly, he described a striking and “unstable equilibrium” between genuinely turbulent geopolitical news (fighting in Iran, military casualties) and calm asset prices, and said the explosive growth in prediction-market betting reflects lowered barriers to entry meeting genuine “lottery ticket” psychology — a dynamic he said has clear negative social implications even as he views broader market access as generally a good thing.

Leave a comment

Industrials & Aerospace Deep Dive

Honeywell CEO Vimal Kapur on Why He Split Up a 100-Year-Old Conglomerate, and Where AI Actually Moves the Needle in Industrial Automation | Bloomberg Leaders

Breaking Up Honeywell Wasn’t About the Activist — It Was Already the Plan

“I always felt that we need to simplify... each company can stand on its own feet with these growth vectors.” — Vimal Kapur

Kapur, who rose through Honeywell’s India joint venture before eventually running the whole company, said the decision to split Honeywell into three standalone businesses — aerospace, automation (which he now leads as Honeywell Technologies), and specialty materials — predated activist investor Elliott Management’s public $5 billion stake and breakup demand in late 2024. He said Elliott’s letter arrived the same day as everyone else learned about it, with no advance call, but that Honeywell was already far enough along in its own strategic thinking that there was little disagreement over the destination, just some overlap on timing. His advice to other CEOs facing an activist: have a clear, fact-based conviction on strategy before the letter ever arrives, because “if you are all over the place, the opposition can win.”

Two Forces Converged: Aerospace Growth and the AI Moment

Kapur said two things happened simultaneously when he became CEO in 2023: the aerospace industry entered a strong growth cycle, and ChatGPT put AI at the center of every corporate conversation. Both convinced him that automation and aerospace deserved to be run as independent, focused companies rather than compartments of a sprawling industrial conglomerate — a structure he said made sense for the prior 20 years of shareholder value creation but was increasingly an obstacle to further top-line growth.

Where AI Actually Helps: Productivity Now, Transformation Later

“Transformational will occur if we redraw our work right, in which we can use agents as part of our workflow, and that requires us to reimagine the work by itself.” — Vimal Kapur

Kapur said Honeywell’s AI impact so far has been concentrated in productivity gains, particularly in software development and testing, rather than genuine transformation of how work gets done — that shift, he argued, requires redesigning workflows around AI agents rather than simply layering AI onto existing processes. He sees the bigger opportunity in serving customers: Honeywell’s automation business has collected operational data from buildings, airports, refineries, and warehouses for years, primarily for control purposes, and the emerging opportunity is turning that data into tools that let a five-year employee perform at a fifteen-year veteran’s level — critical given customers’ worsening shortage of skilled operators as their workforces retire.

Leave a comment

Boeing CEO Kelly Ortberg on the 737 Ramp-Up, “Turning the Corner” After Years of Crisis, and Why the Next-Generation Narrowbody Is Still a Decade Away | Bloomberg at Farnborough

“We Haven’t Quite Finished Turning the Corner”

Nearly two years into the job, Ortberg described Boeing as still mid-recovery but making real progress: the company is ramping 737 production toward a 47-per-month rate with aspirations to reach 63, and 787 production toward 10 per month this year and higher next. He credited the Trump administration with helping Boeing’s sales campaigns and trade positioning but was clear that rebuilding trust with regulators and stakeholders has been primarily Boeing’s own execution work, not government support.

44,000 New Aircraft Needed Over 20 Years, Despite Oil at $90

Ortberg called the aviation market “super resilient” despite $90 oil and Middle East conflict, citing Boeing’s own newly published 20-year forecast for 44,000 new aircraft and noting that aircraft ordering cycles are long enough that near-term macro volatility doesn’t meaningfully move demand. He said AI is increasingly embedded across Boeing’s design processes, back-office operations, and eventually its products and services, and expects the more meaningful automation “step function” to arrive not through retrofitting existing aircraft but through the next-generation narrowbody, whose design can be built around automation from scratch.

Next-Gen 737 Replacement: Not Ready, Market Not Ready Either

“The market is not quite ready for the new airplane... the customers are telling us, let’s focus on the existing product.” — Kelly Ortberg

Ortberg pushed back gently on suggestions the 737 replacement could launch early next decade, saying Boeing itself needs a couple more years to improve cash flow and pay down debt before it’s financially ready, and that customers are prioritizing durability improvements to the current fleet over a clean-sheet replacement. He placed the likely timeline toward the back end of next decade, and said Boeing hasn’t yet decided between GE’s open-fan engine concept and more conventional technology for that future aircraft.

Europe’s Rearmament Will Need American Partners

On European defense, Ortberg said Europe cannot fully rearm without partnering with prime contractors like Boeing, citing existing joint ventures such as the MQ-28 with Germany, and expects the relationship to remain partnership-based rather than consolidating into M&A in the near term. He noted defense and civil aviation increasingly share the same tier-two and tier-three supply chain, meaning both markets ramping simultaneously will strain the same suppliers.

Leave a comment

IMAX CEO Rich Gelfond on Why “The Odyssey” Broke IMAX’s Box Office Record, and a Blimped Camera Built Just for Christopher Nolan | Bloomberg Talks

A Record Opening, Nearly 50% Above Oppenheimer

“We did $52 million on a like-for-like basis, the highest we’ve ever had... almost 50% above Oppenheimer.” — Rich Gelfond

Gelfond said Christopher Nolan’s The Odyssey delivered IMAX’s best opening ever, driven partly by scarcity: only a subset of IMAX’s roughly 2,000 global screens are true film-based theaters capable of showing the movie as Nolan shot it, and film prints cost $50,000 each per theater — economics that make it impossible to put IMAX film in every market despite viral demand for even 2 a.m. and 3 a.m. screenings. IMAX added shows in 42 theaters between midnight and 3 a.m. to meet demand, and shows at London’s BFI are already sold out roughly two months out.

A New Camera Built Specifically for This Film

Gelfond said IMAX engineered an entirely new camera system for The Odyssey, including a “blimp” housing that eliminates the traditionally loud film-spool noise of IMAX cameras — opening up close-up shots that weren’t previously possible with the format. He expects the success of The Odyssey to encourage more directors to shoot primarily or entirely on IMAX film cameras, projecting five or more film-format releases in 2027, up from limited prior usage.

A $1.4 Billion Box Office Target Built on a Full 2026 Slate

IMAX is targeting a record $1.4 billion global box office in 2026, backstopped by The Odyssey, Dune 3 (already sold out around its Christmas release), Spider-Man, Avengers, and a new Tom Cruise film in the back half of the year. Asked directly about May reports that IMAX was exploring a sale to entertainment companies, Gelfond declined to comment beyond IMAX’s standing policy of confirming deals only once signed.

Leave a comment

Airbus CEO Guillaume Faury on a 9,200-Aircraft Backlog, Engine Supply Struggles, and Racing Boeing to the Next-Generation Narrowbody | Bloomberg at Farnborough

A Backlog Above 9,200 Aircraft, With Oil Prices Actually Helping

Faury described demand as very strong despite a worsening Gulf war and oil near $90 a barrel, arguing higher fuel prices are actually boosting demand for Airbus’s fuel-efficient aircraft even as broader macro conditions stay unpredictable. Airbus delivered 15% more aircraft in the first half of 2026 than the same period in 2025 and is targeting around 870 deliveries for the full year, consistent with reaching a production rate of 75 narrowbodies per month.

Pratt & Whitney Issues Easing, But Not Uniform Across the Supply Chain

“Let’s not think that the Pratt & Whitney situation means that we have supply chain issues everywhere. That’s not the case.” — Guillaume Faury

Faury said Airbus has adjusted its production planning around Pratt & Whitney’s geared turbofan engine delivery delays but that the situation is stabilizing, while CFM and Rolls-Royce engine programs remain on track. He confirmed Airbus’s target of launching its next-generation single-aisle aircraft around 2030, for entry into service in the second half of the 2030s, delivering roughly 25% better fuel burn — with the choice between a traditional geared turbofan and an open-rotor engine architecture still undecided pending further risk assessment.

On European Defense: Still Committed to FCAS, Rearmament Needs America

Faury said Airbus remains part of Europe’s Future Combat Air System (FCAS) program alongside France and Germany, even as the originally structured sixth-generation fighter component of that program has been restructured, and downplayed any near-term move to join the rival GCAP program with the UK, Italy, and Japan. He was direct that Europe cannot fully rearm without the United States as an ally, even as it pushes to become more self-sufficient within NATO.

Leave a comment

Airbus CEO Guillaume Faury on Engine Durability Improvements, China Order Flow, and Why the Next Airbus Might Look Similar From a Distance | CNBC at Farnborough

Engine Durability, Not Just Production Speed, Was the Real Problem

Faury said the aviation industry’s two central engine challenges — ramp-up speed and time-on-wing durability — have both improved meaningfully, with Pratt & Whitney’s advanced geared turbofan showing better durability and a declining number of aircraft grounded (AOGs) due to engine issues. He said Airbus has adjusted its 2026 production planning to account for the disruption but now has “what we need” to hit full-year delivery guidance.

Demand Is Broadly Distributed Globally, Including Fresh China Orders

Asked whether China remains the biggest long-term growth region, Faury said demand for new aircraft and fleet renewal is fairly evenly distributed across geographies rather than concentrated in any single region, pointing to recently announced new orders from Chinese airlines as one data point among many. He noted total industry demand across the next 20 years remains very strong for both single-aisle and widebody aircraft, consistent with Boeing’s own updated forecast.

The Next Airbus Will Look Similar From a Distance, Very Different Up Close

On whether Airbus’s next-generation single-aisle could take a radically different shape — such as a blended-wing-body design — Faury said the general architecture will likely look broadly familiar from a distance, but major differences will emerge on closer inspection, with key design trade-offs still to be finalized in the coming years ahead of the targeted 2030 program launch.

Leave a comment

AI Founders & Executives Deep Dive

Anthropic’s Boris Cherny on How Claude Code Went From Side Project to 90% of Anthropic’s Own Codebase, and Why “Moats Matter Less” in the Age of AI Coding | Odd Lots

Claude Code Wasn’t a Product Bet — It Was a Safety Research Tool

Cherny, who leads Claude Code at Anthropic, said the product’s origins trace back to Anthropic’s core safety mission rather than a deliberate business strategy: understanding whether a model is genuinely safe requires more than lab-based interpretability work, it requires putting the model into real-world use and watching how people actually use it. Because models interact with the world primarily through code, coding became the natural proving ground — and Claude Code emerged from that logic, not from an initial plan to build a coding business. It has since become, in his words, “a big contributor” to Anthropic’s overall revenue.

90% of Anthropic’s Own Code Is Now Written by Claude Code

“100% of my code has been written by Claude Code since November of last year... across Anthropic, I think the average is something like 90%.” — Boris Cherny

Cherny said nearly all of Anthropic’s internal software — products, infrastructure, and increasingly research code — is now generated by Claude Code itself, a practice the team calls “dogfooding” that runs on the same public API and models available to any customer. He said growth in Claude Code usage has directly tracked major model releases — Opus 4, Opus 4.5, and Opus 4.6 each produced a visible inflection point in adoption — because the harness benefits automatically whenever the underlying model improves.

Guardrails Against Prompt Injection: Alignment, Neural Probes, and Sandboxing

Cherny described a layered defense against prompt injection — where malicious instructions embedded in a webpage or document attempt to hijack the model’s actions — combining model-level alignment training, “neural probes” built through mechanistic interpretability that detect injection attempts inside the model’s internal representations, and a new low-friction permission mode called Auto Mode. He said Anthropic ran an external red-team competition offering $20,000 for researchers who could successfully prompt-inject Claude Code, and no one succeeded, unlike with competing models tested in the same exercise.

A Migration That Took 11 Days Instead of a Year

Cherny cited a real internal example — engineer Jared migrating the Bun JavaScript engine that powers Claude Code from the Zig language to Rust in 11 days, at a cost of roughly $50,000 in compute credits, a project that previously would have required a team of engineers a full year and simply wouldn’t have been greenlit given the cost. He said this kind of large-scale code migration, including legacy COBOL modernization at major banks, is now one of Claude Code’s core strengths.

Why Competitive “Moats” Matter Less, But Not Zero

Asked whether AI coding tools erode traditional business moats like switching costs, Cherny invoked the “Seven Powers” framework to argue that switching-cost-based moats are weakening — since Claude Code can now port a codebase between vendors on request — but that businesses built on multiple combined moats (scale economics, network effects, proprietary resources) remain largely intact. On rival messaging suggesting companies should avoid deep dependence on Anthropic’s models in favor of self-hosted open-source alternatives — an argument he attributed to Microsoft’s CEO and a viral Alex Karp interview — Cherny said Anthropic cannot see individual customer conversations even when debugging bugs, and argued that businesses betting on self-hosted infrastructure will fall behind the continuous intelligence gains only available by staying on the frontier.

Engineering Roles Are Splitting, Not Disappearing

Cherny said the traditional distinctions between engineering, design, and product roles are dissolving as coding becomes accessible to everyone on a team — Claude Code’s own designers and product managers now write code directly — and predicted roles will instead segment into “prototypers,” “builders,” “maintainers,” “scalers,” and “sweepers” who polish finished products. He compared the current moment to a well-known 1996 Harvard Business Review study on why personal computers didn’t immediately boost office productivity: gains only appeared at companies that put the computer at the center of workflows and eliminated the paper process entirely, rather than treating it as a side tool — the same principle he says now applies to Claude adoption inside large companies.

Leave a comment

OpenAI Chairman Bret Taylor on Why “Token Efficiency” Matters More Than Open-Weight Pricing, and How Sierra Prices AI on Outcomes, Not Tokens | CNBC

Open-Weight Models Aren’t Necessarily Cheaper to Run

“There’s this thing called token efficiency, and it turns out the frontier models are much, much more token efficient.” — Bret Taylor

Taylor, OpenAI’s chairman and co-founder of AI agent company Sierra, pushed back on the narrative that Chinese open-weight models like Kimi K3 are a clear cost advantage over U.S. frontier models, arguing that even if a model is cheaper to license, it may require more total tokens to complete the same task — meaning true cost-per-outcome often favors frontier labs. He said the two things every CEO he talks to (roughly 100 a month, by his account) actually care about are “tokenomics” — confidence they’re getting value from AI spend — and what he calls “sovereignty,” or maintaining a durable competitive moat in the AI era.

Why U.S. Labs Need to Win on Every Price-Performance Tier

Taylor argued frontier labs need to offer the best available model at every combination of speed, cost, and intelligence level a business might need — from cheap, fast models for routine tasks like transaction screening to maximum-intelligence models for high-stakes work like insurance actuarial analysis — and that compute efficiency, not simply open weights, is what ultimately drives usable cost. He acknowledged genuine uncertainty about whether Chinese models like Kimi K3 were trained through legitimate development or model distillation from Western labs, but said the more important question for buyers is simply which model is cheaper to run in practice, not how it was built.

Sierra’s Model: Pay Per Outcome, Not Per Token

Taylor described Sierra’s approach — AI agents that power customer service for companies like DirecTV and SiriusXM, plus a new “Horizon” product for long-horizon tasks like loan origination and medical preauthorization — as pricing customers per successful outcome rather than per token consumed, which he compared to paying for Gmail by the CPU cycle. He said this approach directly addresses both tokenomics anxiety (customers know exactly what they’re paying for) and sovereignty (Sierra helps customers build a compounding, defensible data asset about their own customer relationships, independent of which underlying model is used). Asked directly whether Sierra’s margins hold up given the token cost of running long AI-driven phone conversations, Taylor confirmed customers pay more than Sierra’s underlying compute cost, aided by Sierra’s ability to amortize R&D on specialized low-latency voice infrastructure across many customers rather than each company building it individually.

Leave a comment

Venture Capital Deep Dive

Andreessen Horowitz’s Connor Love on Why American Dynamism Is Becoming a Proxy for the Most Valuable Companies in the World | Bloomberg Tech

From Army Captain in Iraq to a16z’s American Dynamism Team

Love, a former Army captain who served in Iraq before moving into venture capital at Lightspeed and now joining Andreessen Horowitz’s American Dynamism practice, described the connection as deeply personal rather than purely strategic. He credited a chance conversation roughly seven years ago with Catherine Boyle — then at a different firm, now an American Dynamism co-founder — for introducing him to Silicon Valley and Anduril specifically, at a time when he was still deployed and thinking about his next career move.

“You Cannot Have a Defense Industrial Base Without an Industrial Base”

“Technology is saying you can be both important to America and our allies and be some of the most valuable companies in the world.” — Connor Love

Love argued American Dynamism extends well beyond defense technology narrowly defined, encompassing energy, core manufacturing, and space — framing the category as being about the subcomponents and industrial base that underpin next-generation autonomous systems and platforms, not just the headline defense primes like Anduril and Anduril rival Castelion. He contrasted this moment with historically important American industrial companies like Boeing, arguing that technology now allows a company to be simultaneously critical to national interests and among the most valuable businesses in the world — a combination he says wasn’t previously possible at this scale.

The Low-Cost Autonomy Thesis Playing Out in Real Conflicts

Love pointed to Ukraine and the conflict involving Iran as live proof points for a “low-cost autonomy” thesis reshaping defense economics: technology platforms that are roughly ten times cheaper than legacy systems while matching performance and mass fundamentally change deterrence calculus for the U.S. and its allies. He sees this dynamic — cheap, mass-producible autonomous systems outperforming expensive legacy defense platforms — as the underlying substrate driving venture investment across the sector, from missile systems to ground autonomy.

Anduril “Hasn’t Shown Its Last Product”

Asked about a16z’s continued conviction in Anduril, in which Love had previously invested while at Lightspeed, he said the company’s complexity of mission — serving the Department of War and the American warfighter — means there will always be another product in the pipeline, pointing to Anduril’s newly announced partnership with Archer on an autonomous VTOL platform as evidence the opportunity set keeps expanding rather than narrowing.

Leave a comment

If you found these summaries helpful, please leave a comment or send us a message. We appreciate your feedback!

Leave a comment

Originally published on CNBC on 07-20-2026

Guest: Mohamed El-Erian, chief economic adviser at Allianz and president of Queens’ College, Cambridge

Intro

El-Erian argues the inflation fight is essentially won, explains why messy geopolitical news and calm markets are an unstable combination rather than a reassuring one, and puts a date on the AI overbuild he thinks is coming anyway.

Prediction Markets and Who Actually Pays for the Lottery Ticket

• On the surge of retail participation in prediction markets, his read is mechanical rather than moral: “if you lower the barriers to entry to markets where there is significant upside, you will get a major reaction”

• He agrees most participants are losing, and explains the gap with an airport comparison — the plane going to Las Vegas against the plane coming back, one carrying the upside and the other carrying the odds

• What lowered barriers actually unlock is the illusion of edge: being able to bet on many different aspects of a game lets an individual think “I’m specialized in this area, I am going to prevail in this area”

• On whether it’s good or bad long term, he splits the answer. The social implications are “not great,” and he points to the same pattern in lottery data: “Those who tend to bet are those who are least able to underwrite the losses”

• But he does not land on restriction: “in general, I think access to markets are a good thing. And if you provide more access to markets, that’s a good thing”

Messy News, Stable Markets, Unstable Equilibrium

• With fighting in Iran continuing and an expansion of attacks on both sides over the weekend, Brent was at 88 and crude at 82 on air, down from the low 90s the night before, with equities higher

• The market’s working assumption, in his description, is that these escalations will be contained — and he treats the weekend as a live test of that assumption, which it passed

• “And that combination is very striking. You normally don’t get that combination at all.” — on really messy news sitting alongside relatively stable markets

• The stability is not the reassuring kind: “So this is a fascinating time because everything is in equilibrium. But it’s very unstable.” He names the 10-year Treasury and the yen as where he sees it

The Worst of the Inflation Is Behind Us

• “I’m not into the we need three rate hikes. I don’t think we’re going to get any rate hikes. I think the worst of the inflation is behind us.”

• His component-by-component case: tariff inflation is behind us, and most of the oil inflation is behind us

• The one qualification he keeps live is energy prices, and he names the two he checks daily — regular gasoline above four dollars and diesel around five

• On AI-driven inflation, he makes an explicit exception rather than an exemption: “The AI related inflation is inflation that I can live with because I truly believe there’s a productivity gain coming on that”

The Overbuild Is Coming, Just Not Yet

• “there’s likely to be an overbuild because every innovation tends to overdo it” — he offers fiber as the reference case and says he could walk through others

• Asked when he’d wake up and recognize it, he gives a number: “Probably in 3 to 4 years” — with the immediate caveat that it can run for quite a while before then

• Where he thinks this differs from the fiber build-out is the absence of an end state. The tech people he speaks to believe it’s almost impossible to define where it ends, and in his framing “we simply don’t have the imagination”

• His reason it has no natural end point is structural, not sentiment: “It is what James Manyika at Google calls the inventor of inventions” — recursive self-improvement that continuously allows more things to happen, which is what makes it very hard to predict

• The contrast with laying track is deliberate: fiber had a defined build and a stopping point, and this is a build that keeps extending and keeps needing upgrading

El-Erian’s position is that the inflation risk that dominated the last cycle is largely spent and the AI capex cycle is the one worth watching instead — not because it’s fake, but because every innovation overdoes it in the initial phases, and this one has no visible end state to overdo it against.

Roudup

July 13th roundup of top investors’ and executives’ appearances on interviews, podcasts, and events, and the topics they discussed.

Patrick Boyle on SpaceX, Crypto’s “Great Rotation,” and Housing | ProfG Markets

SpaceX just joined the NASDAQ 100 with near-unanimous buy ratings implying valuations up to $10 trillion, yet the stock is down 34% from its peak — and every underwriting bank pushing those targets stands to earn billions in fees, echoing the dot-com analyst scandals, especially now that the SEC just quietly killed the rule meant to prevent that conflict. Meanwhile, crypto has cratered as speculative money chases AI stocks and leveraged ETFs instead, fueled by “financial nihilism” among young investors who’ve given up on traditional paths to wealth like housing, whose relentless price rises turn out to be less an accident than a policy choice protecting homeowners over buyers.

Read the digest | Watch on YouTube

Caleb Hammer on Financial Nihilism, Debt Shame, and the Trillionaire Debate | Modern Wisdom

Caleb Hammer, creator of "Financial Audit," argues the highest earners are often the worst with money because higher incomes just unlock bigger debt, and that shame around discussing finances (not the debt itself) is what actually traps people. The conversation ranges from why Gen Z is drowning in buy-now-pay-later debt amid "financial nihilism," to why the UK is "great to be poor in, terrible to be rich in" while America is the reverse, to the widening gender wars among young people and the looming Social Security shortfall.

Read the digest | Watch on YouTube

Ed Zitron, Host of Better Offline, on the AI Revenue Mirage, OpenAI and Anthropic's IPO Rush, Why the Dot-Com Comparison Doesn't Hold, and the Capex Signal That Would End the AI Trade | Investor’s Business Daily

Featuring Ed Zitron, CEO of EZPR (Easy Pheasy Research) and host of the Better Offline podcast and Where’s Your Ed At newsletter, on: why OpenAI and Anthropic together make up 89% of AI industry revenue, the accounting shenanigans hiding inference losses, why the AI buildout doesn’t resemble the dot-com bubble, the looming OpenAI and Anthropic IPOs, and the one capex signal that would end the trade overnight

Ed Zitron says the AI trade and the AI industry are two entirely different things — the stocks are working, but underneath them sits a business with no profitable companies, no disclosed revenues, and two money-losing giants, OpenAI and Anthropic, that together account for the vast majority of all AI compute spending. His verdict is blunt: “We are three or four years into this. How are we still discussing if it’s productive?”

Read the digest | Watch on YouTube

Peter Diamandis on Four AI Model Launches, Apple–OpenAI Lawsuit, SpaceX’s Trillion-Dollar Ambitions, and Humanoid Robots Progress | Moonshots with Peter Diamandis

Featuring:

• Peter Diamandis (founder of the XPRIZE Foundation and Singularity University, co-founder of Fountain Life)

• Dave Blundin (founder of Link Ventures)

• Salim Ismail (founding executive director of Singularity University, author of "Exponential Organizations")

• Alex Wissner-Gross (physicist, Harvard/MIT-trained AI researcher and entrepreneur)

The AI frontier just went from a two-lab duopoly to four US labs at once, with Alex Wissner-Gross declaring "this is the best of or close to the best of all possible worlds"; Apple's lawsuit accuses OpenAI of theft "at every level, from members of its technical staff to the chief hardware officer"; Elon Musk claims SpaceX will be "worth more than the rest of Earth" if it hits its goals; and Ed-style skepticism gives way to real excitement over 1X's new humanoid hand, waterproof enough to wash its own dishes.

Read the digest | Watch on YouTube

Chief Economist at Apollo, Torsten Slok, on the Fed's Next Move, the K-Shaped Economy, and a 60/40 Portfolio That's Secretly All AI | The Real Eisman Playbook

“AI better work out. Because if that doesn’t work out, then your portfolio will be in trouble.” — Torsten Slok

The US economy is growing at roughly 2% this year, and Torsten Slok says almost all of it comes from three unusual, rate-insensitive sources: AI data center spending, an onshoring “industrial renaissance,” and a one-time consumer tax-refund boost that vanishes in 2027. Key takeaways: Slok says there is a “literally zero chance” the Fed cuts rates this year, with markets now pricing in two hikes; he warns the bottom 20% of households have seen their savings stay flat in nominal terms since 2019 while the top 20% have gained $1.5 trillion; he flags software as the single most vulnerable sector in credit, with loans trading at 12%+ yields ahead of a 2028-29 maturity wall; and he delivers the episode’s sharpest warning — that a standard 60/40 portfolio is now “basically all AI,” across equities, credit, and venture capital alike.

Read the digest | Watch on YouTube

Supply Chain Executive, Jeff Lutz, on Cybercab’s Imminent Launch, AI5’s 2nm Bet, and Optimus’s Slow Grind to Scale | Brighter with Herbert

Featuring Jeff Lutz, ex-Supply Chain C-Level Exec at several Fortune 100 companies like Google, Lenovo, and Motorola, and now a Tesla production and quality analyst, on Brighter with Herbert, guest is hosted by Larry Goldberg while Herbert is on vacation, covering the Cybercab rollout timeline, the AI5 chip’s dual-fab strategy, and a realistic Optimus production and revenue timeline through 2028.

“I don’t think people are really taking in and understanding how big the volumes are going to be on CyberCab.” — Jeff, citing Lars

Jeff argues Cybercab customer rides are imminent, likely by the end of July, with multiple cities following in August, pointing to production ramping from dozens of units in April to potentially thousands per week by Q3’s end. He pegs terminal cost per Cybercab around $17.5–19K and expects it to be booked as a fixed asset rather than inventory, driving a major balance sheet shift over the next two quarters.

On chips, AI5 has taped out on a 2nm process with dual-sourcing planned across TSMC (Taiwan) and Samsung (likely Texas/Korea) for geographic and capacity redundancy, targeting production in late 2026 or early 2027. Optimus, meanwhile, is expected to enter low-volume production at the Fremont facility roughly a month after summer’s end, with Jeff cautioning that meaningful bot revenue won’t arrive until 2028, following Optimus V4.

Read the digest | Watch on YouTube

Palmer Luckey on Anduril’s War Machine, Nuclear Weapons, and the Anthropic Fight | The Axios Show

Featuring Palmer Luckey, founder of Anduril Industries, interviewed by Axios defense reporter Colin Demarest.

“We are the company that comes out of the fire, like the Millennium Falcon. And a lot of the other companies are the ones that are consumed by the fire.” — Palmer Luckey

Luckey describes Anduril’s culture as built around effectiveness above all else, with roughly 20% of staff being veterans and teams forward-deployed in Ukraine since the war’s second week and currently in the Middle East.

He says he’d build nuclear and fission/fusion weapons without hesitation, calling them history’s “most stabilizing” force, plus narrow tactical chemical options like pepper spray for de-escalation, but draws the line at biological weapons and facial-recognition-based targeting.

On the Pentagon’s clash with Anthropic, Luckey backs the Department of War’s hard line, arguing that letting AI companies set unilateral limits on military use hands more power to unelected executives than to the president. He also confirms Anduril’s Arsenal-1 production facility in Ohio goes live “in a matter of weeks,” building Fury and Barracuda for SOCOM, the Army, Marine Corps, and Air Force.

The conversation also covers why Anduril wins contracts over Lockheed, Northrop, and Boeing, the AI race with China, Iran, Anduril’s subterranean-warfare ambitions, the EagleEye sensor helmet, and how a California AI bill veto shaped the company’s regulatory outlook.

Read the digest | Watch on YouTube

Niall Ferguson, John Cochrane, and H.R. McMaster: Has Trump Lost His Mojo? | GoodFellows at Hoover Institute

534 days into his second term with approval ratings stuck in the mid-to-upper 30s, President Trump is delivering on nearly every campaign promise while somehow becoming less popular for it.

Host Bill Whalen puts the puzzle to historian Niall Ferguson, economist John Cochrane, and retired Lieutenant General H.R. McMaster: is this ordinary second-term doldrums, or something more specific to Trump’s chaotic decision-making, a war he can’t quite win, and a Democratic Party lurching further left just as he needs them to overreach?

Read the digest | Watch on YouTube

Mohamed El-Erian on the Iran Ceasefire, the AI Funding Gap, and Amazon's Flopped Bond Sale | Squawk Box

Mohamed El-Erian, Wharton professor and Chief Economic Adviser at Allianz, says markets are shrugging off a shaky Iran ceasefire because they’re betting it stays a contained “skirmish,” not a wider war. But the story he really wants investors watching is the bond market: a basic sources-and-uses analysis shows AI platforms, governments, and corporations need more capital than the market can supply without higher yields — “it just doesn’t add up” — and Amazon’s own lackluster bond sale last week is the first proof point.

Read the digest | Watch on YouTube

Leave a comment

Deep Dive

Patrick Boyle on SpaceX, Crypto’s “Great Rotation,” and Housing | ProfG Markets

Guest: Patrick Boyle (professor, King’s College London; portfolio manager; YouTube creator, “Patrick Boyle on Finance”), filling in for Scott Galloway.

SpaceX’s NASDAQ 100 Debut and Wall Street’s Bullish Reports

SpaceX joined the NASDAQ 100 under new fast-track listing rules (15-day trading history requirement, no minimum public float). Despite 18 of 19 analysts rating it a buy and NASDAQ inclusion driving passive index buying, the stock fell nearly 6% that day and is down 13% over the past week, 34% from its peak — now trading below its IPO-day open.

Key valuation context:

• IPO price was $135; retail investors buying at market open paid around $150–165, meaning most retail buyers are currently underwater.

• SpaceX did about $19 billion in trailing 12-month revenue, putting it at roughly 101x sales.

• Revenue growth is only around 15% a year — modest for a company priced like a hypergrowth story (compare to Google’s IPO at roughly 10x sales while growing 200%+ annually).

• Analyst price targets: Goldman Sachs $25 (implying ~$2.7T market cap, 139x sales), JPMorgan $225 (~$2.9T, 150x+ sales), Deutsche Bank $255 (~$3T, 173x sales), Morgan Stanley $300 (~$4T, 200x+ sales), Raymond James $800 (~$10.4T, 542x sales).

• Raymond James projects SpaceX revenue growing from $19B to $5.2 trillion by 2035, with 94% ($4.9T) coming from AI — despite SpaceX having roughly 3.5% AI market share today.

• Boyle noted the satellite/rocket-launch relationship resembles “McDonald’s saying we’re profitable on the burgers but lose money on the buns” — the businesses are tied together, and most launches are for the company’s own satellites.

• Boyle compared bank research language (Deutsche Bank: “apex of civilizational ambition”; JPMorgan: bigger impact than any company ever seen; Morgan Stanley: “final frontier of AI”) to dot-com-era hype and cautioned that historical infrastructure comparisons (railroads, Cisco, US Steel) all eventually saw major valuation collapses relative to GDP.

Conflicts of Interest: Echoes of the Dot-Com Analyst Scandals

Every major underwriter of the SpaceX IPO (Goldman Sachs, Morgan Stanley, JPMorgan, Deutsche Bank, Raymond James) also has a buy rating on the stock, raising familiar conflict-of-interest concerns:

• Recalled the Henry Blodget/Merrill Lynch case from the dot-com era: analysts publicly touted stocks while privately calling them “POS” in emails. Blodget was fined $4 million and banned from the securities industry; similar cases hit Salomon Smith Barney analysts.

• This led to Sarbanes-Oxley (2002) and the Global Research Analyst Settlement (2003), which walled off research analysts from investment banking divisions and their compensation.

• New detail raised in the discussion: the SEC terminated the Global Research Analyst Settlement roughly seven months ago (around late 2025). Former SEC Chair Arthur Levitt wrote in the Wall Street Journal, warning this could “make Wall Street analysts corrupt again,” arguing newer rules only weakly replicate the old separation requirements.

• A Substack analyst (”Capeflow Capital”) reportedly calculated SpaceX needs about $235 billion in spending through 2030, meaning banks stand to earn large fees underwriting future capital raises — a potential incentive to keep ratings positive.

• Historical parallel: by mid-2000, 74% of Wall Street stock ratings were “buy” and only 2% were “sell.”

• Prediction offered on the show: expect future revelations of questionable analyst conduct tied to SpaceX price targets.

Crypto’s “Great Rotation” Into AI

Crypto has underperformed sharply: Bitcoin down 42% from peak, Ethereum down 33%, Dogecoin down 47% (year), Trumpcoin down 81% (year, ~99% from highs). Bitcoin ETFs saw $8 billion in outflows over eight weeks; total crypto market value is down $2.3 trillion from its peak.

Meanwhile AI/semiconductor names have surged: Roundhill Generative AI ETF +48% YTD, Philadelphia Semiconductor Index +75% YTD, with names like Western Digital, Bloom Energy, Seagate, and SanDisk up sharply.

Boyle’s take:

• Crypto has no cash-flow-based valuation model; its appeal was largely trend/narrative-driven (”it went up before, it’ll go up again”).

• Crypto lost its anti-establishment appeal now that it’s mainstream/political (Trump embracing it, regulators like Howard Lutnick and the SEC chair described as “crypto bros”).

• Investors are rotating into more “exciting” narratives — AI stocks, prediction markets — dubbed the “great rotation.”

• More than 200 leveraged ETFs have launched in the past six months, now worth over $150 billion, echoing the leverage (perpetual futures) that dominated crypto trading previously.

• Discussed “financial nihilism” (a term credited to Dimitri Kofinas): disillusioned younger investors, lacking traditional paths to wealth (housing, stable jobs), making all-or-nothing bets (meme stocks, crypto, options) hoping for an escape-velocity payoff. This intensified during COVID stimulus-check era.

• Broader point: retail investors chronically underperform markets by chasing trends and panic-selling; long-term index investing outperforms speculative rotation strategies.

• Also touched on prediction markets/event contracts (regulated by the CFTC) being used largely for sports betting rather than genuine economic forecasting, raising concerns about insider manipulation of small-scale political contracts.

Housing Market: Structurally Unaffordable by Design

US median home price hit a record high (~$488,000 range noted in the episode), and median housing payments rose year-over-year for the first time since October. 75% of homes on the market are unaffordable for the typical household.

Boyle’s argument:

• Home prices are largely land-value driven in high-demand areas (unlike, e.g., Texas, where prices track construction costs and interest rates).

• Housing became a de facto investment vehicle over the past few decades (especially in the UK), not just shelter — creating political incentive to keep prices rising, since homeowners and retirees (who vote) benefit while young non-owners (who vote less) are priced out.

• Quoted Boyle: “Once a country decides its houses are supposed to make everyone rich, it has to keep prices rising forever, which means restricting supply, blocking development, and quietly pricing out each new generation, which works until it doesn’t.”

• Played a clip of President Trump stating he wants to raise home values for existing owners, not lower prices — underscoring the political dynamic.

• Boyle’s economic argument: there’s no fundamental reason home prices should rise faster than inflation/wages long-term. A home near a hospital should stay affordable to a doctor’s salary decades later; homes are also costly to maintain (unlike productive, profit-generating businesses).

• Long-term returns: housing significantly underperforms the stock market historically.

• Affordability has collapsed even without huge price gains because higher mortgage rates (from ~3% to ~7%) drastically raise the cost of financing the same home, freezing transaction volume as sellers with locked-in low rates refuse to sell at a loss, while buyers can’t afford current rates. This also reduces worker mobility (people declining job relocations because moving would require a much larger mortgage payment).

• Contrast: UK’s variable-rate mortgages transmit rate pain to homeowners more directly, versus the frozen-market effect seen in the US with fixed-rate mortgages.

Closing Predictions

• Boyle: Count Binface (satirical candidate) will beat Nigel Farage in the UK by-election.

• Host: Expect a scandal to emerge involving Wall Street analysts’ SpaceX price targets, echoing the Henry Blodget dot-com case.

Week Ahead

CPI/PPI inflation data for June; big bank earnings (JPMorgan, Bank of America, Goldman Sachs, Wells Fargo, Citigroup, Morgan Stanley); earnings from ASML, TSMC, Johnson & Johnson, United Airlines, UnitedHealth, and Netflix.

Leave a comment

Caleb Hammer on Financial Nihilism, Debt Shame, and the Trillionaire Debate | Modern Wisdom

The show and its guests

Hammer describes “Financial Audit” as an intense, confrontational format where guests hand over their Credit Karma and financial details for public roasting, but stresses that guests consent in advance, control what gets discussed, and get free lifetime access to his budgeting app, courses, and follow-up check-ins. Asked how he describes his job, he says: “If I’m just talking to just random person on the street, I’d say I’m yelling at a bunch of retards who suck with money and roasting them along the way and having a lot of fun doing it.”

He verifies hidden debts and collections through guests’ Credit Karma screenshots, and says the average guest pays off around $20,000 in debt within 12 months.

He also described bringing in a Black employee to confront a guest who casually used a racial slur on camera — a moment that drew online outrage from people offended on the guest’s behalf, despite the guest himself embracing it afterward. On that reaction, Hammer says: “It’s the being offended on behalf of someone who’s not offended. I will never get it.” He adds that one of his least favorite types of people are “those that their morality stands on the shoulders of other people that they’re saying are worse than them.”

Debt, shame, and discipline

Hammer insists debt problems are almost always behavioral, not circumstantial: “It wasn’t the emergency that did that. It was you living your life, not saving up even a three-month emergency fund, which I would recommend six, by the way.”

He argues shame around discussing money keeps people from getting support, and that higher earners often end up with the worst financial situations: “The closer they get from 100 to 200 to even a half a million dollars a year, the worse debt, the more credit cards, the more time shares, the more cars... It’s so bad.”

On bankruptcy, he pushes back on the doom narrative — “it’s really not the worst... it’s really overblown” — but warns it fixes nothing on its own: “If you do not change the behavior that got you into that situation in the first place, you will literally end up right back there again in a few years.”

On what debt does to identity, he says: “Unfortunately, it turns a lot of people into victims that they’re really not.”

Housing, healthcare, and school as the “big three”

He argues the cost of living has actually fallen as a share of income for most spending categories since the 1950s, except housing, healthcare, and education — and even the first and last of those still offer real choices (renting instead of buying, community college instead of a private university, choosing a degree with a return on investment), unlike healthcare costs, which he admits are the one area he understands least.

On cars, he offers a concrete rule: 20% down, no more than a three-year loan term, and a monthly payment no greater than 8% of income — a formula he says keeps most people in an affordable car.

Financial nihilism and doom-spending

Gen Z’s heavy use of buy-now-pay-later services (59% of BNPL users are Gen Z) and record-low consumer sentiment (despite a relatively healthy economy) reflect a self-fulfilling pessimism. The host draws a wartime parallel: during the Blitz, “the amount of casual sex that people were having went through the roof, but lingerie sales stayed the same... people thought, look, I might die tomorrow.”

Hammer agrees the same logic drives spending: negative news drives engagement, which convinces young people the future is hopeless, which encourages the reckless spending that makes things worse — “that’s what drives our attention. That’s what drives the algorithm. So consumer sentiment will of course be lower.”

He also admits his own past debt spiral: “I absolutely went to McDonald’s, swiped the Chase Freedom card, getting it close to maxing out constantly... What did it matter? It was basically maxed out anyway.” On lifestyle and appearances, he says plainly: “Poor people will go broke trying to look rich.”

Wealth, taxes, and the trillionaire debate

Hammer cites data showing the bottom 50% of US earners pay just 1% of federal income taxes while the top 1% pay around 30%, arguing most people — across the political spectrum — are unaware of this, including a self-described socialist guest who told him the top 1% “pay nothing... zero percent.”

On the existence of the world’s first trillionaire, he objects to forcing anyone to sell company stock to satisfy public anger: “The action is you’re forcing him to sell a position of his own company... I’m against that as a philosophy.” He argues everyday friction hits people harder: “What actually affects someone’s personal life is they have to call a cashier to unlock a toothbrush at a corner shop... There’s so many more things impacting you than someone whose companies... went public.”

He separately floats $5 million in liquid net worth (citing entrepreneur Kevin O’Leary’s line that “liquidity with wealth is actually a superpower”) as the real marker of financial security — “with that, you can weather anything” — while cautioning against parking a first million in low-yield treasury bills instead of letting it grow in the stock market.

UK vs. US financial systems

He and his co-host debate the tradeoffs of the UK’s higher-tax, higher-safety-net model against the US’s lower-tax, higher-disposable-income model, concluding the US “wins” on median take-home income even after accounting for the lack of free healthcare, while noting the UK sees a brain drain of high earners and an inflow of people seeking its social safety net.

They point out Britain spends more annually on working-age welfare than it collects in income tax, prompting Hammer’s line: “We want the Scandinavian social programs, but we want to do it on like a Florida tax system. Americans are not willing to pay the actual taxes required for the systems.”

The host offers his own summary of the divide: “The UK is a great country to be poor in and a terrible country to be rich in. And America is a terrible country to be poor in and a great country to be rich in” — to which Hammer responds, “Bingo... I just dialed the entire financial industry.”

Housing supply, zoning, and NIMBYism

Drawing on his own experience unwinding UK rental properties (which lost to stock market returns and got hit by capital gains tax changes), Hammer argues housing affordability is fundamentally a zoning and NIMBY problem rather than a lack of capital or demand: “Governments will do any rule, regulation, tax, whatever to think they’re trying to encourage something other than literally just make zoning laws better for people to just build what people are demanding. I will never understand it.”

He praises Austin’s reforms — allowing higher-density building and scrapping parking minimums — and jabs at hypocrisy among his political opposites: “I wonder how many people are eat the rich... whilst also being ‘I don’t want any houses built near me.’ Usually the biggest NIMBYs are the ones that say... ‘women are women, women are people’ — I know the exact sign that you mean, and they’re usually the NIMBYs.”

Declining birth rates and the gender divide

The conversation closes on falling fertility rates, an unsustainable worker-to-retiree ratio threatening a projected 25% cut to Social Security benefits by 2032 (a shortfall driven by the fund being tied to low-yield treasuries rather than invested for growth), and a widening political and economic gulf between young men and women — with dating apps now used to filter by political affiliation: “People aren’t [expletive]. People hate each other.” Hammer is candid about his own worry: “I’m actually scared.”

On parenting costs, he pushes back on the idea that having kids requires wealth: “We’re richer than ever before and people have had kids when we were poorer than ever before... we overemphasize it for sure,” while separately maintaining, “Nobody should have kids that doesn’t want to have kids.”

Leave a comment

Ed Zitron, Host of Better Offline, on the AI Revenue Mirage, OpenAI and Anthropic’s IPO Rush, Why the Dot-Com Comparison Doesn’t Hold, and the Capex Signal That Would End the AI Trade | Investor’s Business Daily

“This isn’t an industry. It’s two subsidiaries of the largest tech companies in the world doing battle to see who can lose the most money.” — Ed Zitron

On separating the AI trade from the AI industry, Zitron draws a hard line: the money flowing into Nvidia, Broadcom, and AI data centers comes from speculative investment, heavy debt, and hyperscaler capex from Microsoft, Google, Amazon, and Meta — not real revenue. He notes companies don’t disclose actual AI revenue, only “run rate” figures: Microsoft’s touted $37 billion annual run rate is really “$3.08 billion a month,” against $31.9 billion in capex in a single quarter. “I think that that’s a very fair thing to say,” he responds when asked if the AI trade is working while the AI business isn’t — pointing to Micron becoming the third-largest company on the stock market purely because AI data centers are consuming the RAM supply, “not because there’s genuine diverse revenues.”

On the customer concentration problem, Zitron says OpenAI and Anthropic aren’t just unprofitable; they’re also the largest customers of the infrastructure being built — 70 to 80% of all compute revenue, and the top clients of CoreWeave, Nvidia, and Google’s TPU business. “It’s the same story everywhere. It’s either speculative buildouts for data centers... or hyperscaler buildouts for AI services that no one really wants to buy.”

On whether the economics could still work eventually, he doesn’t see a path, even with specialized silicon like Broadcom’s Jalapeño chip for OpenAI. He compares the inference business to “knife catching” — providers must guess demand precisely, since underbuying loses customers and overbuying means paying for idle compute. He contrasts this with historical infrastructure bets: Amazon Web Services spent a normalized $29.7 billion in capex between its 2003 launch and its 2015 turn to profitability — “$300 billion less than Anthropic raised in February” alone. “This doesn’t align with any historical precedent. The only thing it aligns with is just the bust part of the dot-com bubble.”

On OpenAI’s in-house chip effort, Zitron is skeptical it changes anything, noting Microsoft has “complete access” to the chips per Satya Nadella’s own comments, and that Broadcom — which also builds Google’s TPUs, some of which are resold to Anthropic — is a co-developer, not OpenAI alone. He calls the arrangement “a horrible circular financing thing” and notes the chip has been delayed since at least 2023, with no proof yet that it will meaningfully cut costs.

On where measurable ROI actually shows up, Zitron says it’s nowhere except semiconductor makers: Micron, SK Hynix, Samsung, Nvidia, and to a lesser extent Broadcom (which he says needs “weird debt deals,” including a $35 billion arrangement where Anthropic borrows from Broadcom to buy the TPUs it’s selling them). He flags that Salesforce discloses a token AI revenue figure of under $1 billion against $40 billion in total revenue, and that IBM explicitly stopped disclosing AI revenue last quarter: “When a public company stops telling you something, it’s usually because it’s bad.”

On the productivity bull case, Zitron pushes back hard on the idea that AI mainly augments rather than replaces workers, citing studies showing large language models often make users less productive despite feeling more productive — comparing the effect to a “busy box” toy for babies. His broader challenge: “We are three or four years into this. How are we still discussing if it’s productive?”

On the dot-com comparison, Zitron says people misremember it. The dot-com era was really two bubbles — a telecom buildout (Lucent, Nortel) and much smaller dot-com startups — and crucially, the fiber infrastructure built during the telecom bust was cheap to “light up” afterward and became genuinely useful. AI GPUs, by contrast, depreciate and have almost no alternative use case: “That cable in the ground, the fiber, was easy to light up... AI GPUs pretty much have no other use case.” He adds that finishing incomplete data centers will likely get more expensive over time given shortages in electrical-grade steel, transformers, turbines, and skilled labor — the opposite of the dot-com recovery pattern.

On why this could have been avoided, Zitron argues the market “got addicted” to Nvidia’s quarter-over-quarter growth story, which depends on effectively infinite debt financing that doesn’t exist — pointing to the Financial Times reporting banks are wary of “choking on AI data center debt.” He notes some of Japan’s largest listed companies (a RAM maker, SoftBank, and Mitsubishi UFJ) are now heavily leveraged to AI data center outcomes, with SoftBank’s fortunes tied to an OpenAI IPO. His read on the root cause: the tech industry ran out of new hypergrowth ideas — no new smartphone, no new Google search, no new app store — so “everyone funneled every dollar they had into this.”

On why OpenAI and Anthropic are rushing toward IPOs, Zitron says it’s an attempt to offload the financial burden onto public markets after Microsoft, Google, and Amazon effectively subsidized their buildout. He points to SpaceX’s underwhelming bond sale as a bad omen and notes OpenAI reportedly considering pushing its IPO out to 2027. He also alleges accounting sleight of hand, saying his own reporting on OpenAI’s audited financials found free-user inference costs bundled into “sales and marketing” rather than treated as a direct cost — evidence, in his view, that a fundamentally sound business wouldn’t need such maneuvers.

On why executives aren’t raising these concerns, Zitron argues many CEOs are disconnected from actual production work, making AI tools that summarize emails and meetings feel magical to them personally, while having no other growth ideas to fall back on. He calls AI “an ingratiation machine” that tells executives their ideas are brilliant and offers convenient excuses for failure, concluding: “We are finally seeing what happens when you fully disconnect management from production. And the answer is you get grifted.”

On the strongest bull case he can find, Zitron says the only plausible one is narrow, specialist on-premises deployment — small teams of coders using tools they fully understand, not consumer-scale cloud AI. He flags a broader tell: “Anytime someone attempts to make the bull case for AI, they talk in the future tense... they can’t talk about today because what we have today is pretty mediocre.”

On the metric that would end the trade, Zitron says the signal to watch is capital expenditure from Microsoft, Google, Amazon, and Meta: “When one of them pulls back on capex... that is the trigger.” He expects it will be framed as newfound “AI efficiency” rather than admitted retrenchment, and warns that once markets reward the first hyperscaler for cutting AI spending, the entire buildout logic unravels: “Once that happens, it’s over.”

Leave a comment

Peter Diamandis on Four AI Model Launches, Apple–OpenAI Lawsuit, SpaceX’s Trillion-Dollar Ambitions, and Humanoid Robots Progress | Moonshots with Peter Diamandis

Four frontier labs, one wild week of releases

"We went from a beginning of the week where we were basically the frontier was a duopoly between Anthropic and OpenAI... and now I think this is the best of or close to the best of all possible worlds. We have four American labs now at the optimal frontier." — Alex Wissner-Gross

Between July 2nd and July 9th, Anthropic re-released Fable 5, Elon Musk’s SpaceX AI announced Grok 4.5, OpenAI shipped GPT 5.6 (with sub-models Soul, Terra, Luna, and an “Ultra Mode” that runs four agents in parallel), and Meta showed renewed life with Muse Spark. Alex Wissner-Gross frames the headline shift: the frontier is “no longer a duopoly” between OpenAI and Anthropic — there are now four American labs at the optimal cost-performance frontier, with Google’s Gemini 3.5 Pro reportedly delayed and notably absent, and two Chinese labs (Xiaomi and DeepSeek/Hire) plus open-weight model GLM 5.2 also competitive. OpenAI is also openly experimenting with recursive self-improvement, using its high-end Soul model to post-train the smaller Luna model.

Distribution versus raw model quality

"The moment those clusters are built, you turn around and the distribution actually isn't that valuable." — Alex Wissner-Gross

The group debates what the real competitive moat is going forward. Peter Diamandis argues it’s distribution — pointing to Meta’s roughly 3.5 billion daily users across WhatsApp, Instagram, and Facebook, Google’s multi-billion-device reach, and OpenAI’s roughly one billion monthly active users. Wissner-Gross pushes back, arguing distribution is mainly valuable as a bootstrapping tool to justify capital spending to markets rather than a long-term economic moat — once Meta and SpaceX AI built their compute clusters using consumer app revenue as justification, both began selling that compute to other labs, treating their original consumer apps as almost an afterthought. The panel converges on a “polarized” future: cheap, embedded intelligence built into everyday devices and operating systems for the masses, versus expensive frontier-of-frontier models running in nuclear-powered superclusters that produce the scientific and engineering breakthroughs that matter most.

Compute scarcity and Jevons’ Paradox

“The desire and the use cases are on a much, much steeper up curve than the efficiency gains.” — Alex Wissner-Gross

Dave Blundin notes memory chips are expected to remain in short supply for at least five years per SK Hynix, illustrating that demand for AI compute is rising faster than efficiency gains can offset — even 100x to 1,000x efficiency improvements this year aren’t enough to keep up. The group discusses a thought experiment: in a compute-scarce world, an American entertainment studio racing to build an AI movie will likely win access to compute over a European effort to cure a rare disease, given Europe’s energy constraints — a dynamic they find genuinely troubling.

OpenAI trying to become Anthropic (and vice versa)

“OpenAI [is] trying to become Anthropic faster than Anthropic can become OpenAI.” — Alex Wissner-Gross

Wissner-Gross argues OpenAI is racing to replicate Anthropic’s enterprise-first, revenue-per-token strategy — dropping consumer-facing efforts like Sora and other bells and whistles to focus on enterprise — but that its new native “ChatGPT Work” app is a rough, seemingly rushed imitation of Anthropic’s Claude app interface. Both apps now force users to toggle between different modes (code, work, chat), which the panel calls a clunky, transitional design pattern; Salim Ismail notes labs are shipping AI-generated products quickly, accepting rough edges because they expect future models to “self-fix” the flaws rather than investing engineering time now.

GPT Live’s full-duplex voice

“It is what all the science fiction movies promised us. It’s here.” — Peter Diamandis

The group is impressed by OpenAI’s new full-duplex voice feature, GPT Live, demonstrated correcting a non-native English speaker’s grammar in real time mid-conversation. They compare its interface leap to Pixar’s breakthrough that turned computer animation into a mainstream industry, and note Chinese lab Alibaba’s Qwen Omni (”Juan Streamer”) already offers even more advanced bidirectional audio-video generation. The panel speculates this voice technology is central to Jony Ive’s hardware device project at OpenAI and could enable live multilingual translation at scale.

Apple sues OpenAI for trade secret theft

“At every level, from members of its technical staff to the chief hardware officer... OpenAI has been stealing Apple’s trade secrets.” — from Apple’s federal complaint

Apple filed a 41-page federal complaint in Northern California accusing OpenAI of stealing trade secrets to build its upcoming AI hardware, alleging systemic theft “from members of its technical staff to the chief hardware officer.” Named individuals include Tang Tan, OpenAI’s chief hardware officer and a 24-year Apple veteran accused of using Apple code names, and an OpenAI technical staffer accused of downloading confidential files and coaching an Apple employee on bypassing security. Jony Ive’s hardware startup (acquired by OpenAI for $6.4 billion) is referenced but Ive himself isn’t named as a defendant. Ismail suggests Apple is “trying to slow things down while it catches up,” and Blundin notes filing in Northern California — historically hostile to trade-secret claims that could chill Silicon Valley’s job-hopping culture — signals real desperation on Apple’s part. Wissner-Gross points out OpenAI’s valuation is approaching a trillion dollars, roughly 20-25% of Apple’s size but growing far faster, raising the possibility OpenAI could eventually surpass Apple’s market value entirely.

Elon Musk’s “worth more than Earth” claim

“You don’t seem to understand that SpaceX will be worth more than the rest of Earth if we accomplish our goals.” — Elon Musk

Responding to a critic on X, Musk claimed SpaceX could eventually be worth more than the rest of Earth combined if it achieves its goals — against a backdrop where total global owned material wealth is estimated around $600 trillion (or $1.7 quadrillion including financial assets). Wissner-Gross calls this “classic exponential thinking,” where reducing the marginal cost of space launch collapses costs across satellites, connectivity, and eventually off-world manufacturing. He predicts humanity will see “quadrillionaires” who effectively own planetary resources before the world transitions to some form of post-capitalist system, even though the Outer Space Treaty formally prohibits owning celestial bodies (though frameworks like the Artemis Accords allow de facto resource extraction).

Asteroids versus the Moon versus Mars

“I think he’s got the romantic frontier mindset of going to Mars, but once you enter the gravity well of Mars, you got to use energy to get back out.” — Peter Diamandis

Diamandis, who co-wrote legislation enabling asteroid resource ownership, argues the Moon is the more practical near-term resource base because of gravity-well economics, while Musk’s focus on Mars reflects a “romantic frontier mindset.” Wissner-Gross counters that by the time large-scale asteroid mining is feasible, self-replicating probes would make mining Jupiter’s far greater mass more attractive, floating the idea of eventually disassembling planetary bodies to build a Dyson swarm — prompting pushback from Ismail, who argues advanced nanoscale assembly could make physically mining and returning asteroid material largely unnecessary.

Space and rocketry updates

“I think we want propulsive landings to be as competitive as possible... we really don’t want a heavy launch monopoly.” — Alex Wissner-Gross

SpaceX’s Starship Flight 13 is imminent, featuring V3 versions of both booster and ship, with in-orbit refueling and full ship recapture (not just booster) still pending milestones. SpaceX also filed for approval of 100,000 low-Earth-orbit V3 Starlink satellites explicitly designed to support “billions of AI-powered devices” with low-latency, multi-gigabit connectivity, joining roughly 10,700 existing Starlink V2 satellites already in orbit. The panel discusses the self-cleaning property of very low Earth orbit, where atmospheric drag naturally deorbits small debris over time, and speculates that falling launch costs could enable disposable, short-lived “air-breathing” satellites that blur the line between satellites and high-altitude balloons. Separately, China’s Long March 10B booster achieved its first successful landing on July 10th — smaller than Falcon 9, but a milestone the panel welcomes as breaking a Western monopoly on reusable heavy-lift rockets, alongside the note that a single Falcon 9 booster has now flown 36 missions.

1X’s redesigned humanoid hand

“That thing is brilliant. Absolutely brilliant.” — Dave Blundin

Robotics company 1X unveiled a new hand for its Neo home humanoid robot with 25 degrees of freedom, tendon-driven actuation, and full waterproofing so the robot can wash dishes and its own hands. Blundin, who has toured 1X’s facility, describes proprietary tendon material roughly 100 times stronger than steel by weight that doesn’t stretch over time and runs frictionlessly through internal tubing, enabling force feedback without fingertip sensors or cameras — contrasting with competitor Figure’s approach of using palm cameras for tactile sensing. 1X aims to manufacture 10,000 units in 2026, with Diamandis and Blundin both reporting they’ve pre-ordered units. The panel notes China currently has over 150 humanoid robotics companies compared to a handful in the West, and flags a recent demonstration of a humanoid robot performing gallbladder surgery on a non-human animal.

Democratized hardware and robot manufacturing

“You can just build things... from a robot hand to a nuclear fuser in your basement.” — Alex Wissner-Gross

The group argues frontier AI models like Fable 5 already understand physical embodiment, CAD modeling, and actuation well enough that individual hobbyists can now design and build robots — including winding custom electric motors and 3D-printing components — tasks that would have required a dedicated lab 10-15 years ago. They connect this to plans for lunar and Martian colonization, predicting humanoid robots built through radically democratized, in-house supply chains will underpin the industrial base needed for off-world settlements within the next decade.

Fountain Life segment on brain health

“We saw that we improved that brain age by 26%.” — Dr. Don Malem

In a sponsored health segment, Fountain Life’s Chief Medical Officer Dr. Don Malem says roughly 45% of dementia cases are considered preventable, and that Fountain Life’s own testing found one quarter of members had advanced “brain age,” but coupling that data with healthier diet, exercise, and sleep habits improved brain age scores by 26% on average.

State-level AI regulation in Illinois

“It’s basically a placeholder.” — Alex Wissner-Gross

Illinois Governor J.B. Pritzker signed SB 315, the “Artificial Intelligence Safety Measures Act,” targeting frontier labs generating over $500 million in annual revenue, requiring 72-hour incident reporting and annual independent safety audits; the bill notably had Anthropic’s support. Wissner-Gross argues such state laws — also seen in California and New York — function less as genuine safety guardrails and more as a way for frontier labs to help write favorable rules ahead of eventual federal legislation, especially since the law doesn’t take effect for 18 months and mandates audits far less frequent than labs already conduct voluntarily. Blundin agrees it’s largely posturing, while Ismail credits the law for shifting AI governance from vague “safety theater” declarations toward more evidentiary requirements like incident reporting.

EU’s mandatory driver-monitoring cameras

“This is legislation theater of the ultimate level because they’re not seeing where technology is going.” — Salim Ismail

As of July 7th, all new cars and vans sold in Europe must include an infrared camera tracking the driver’s eyes, head, and gaze in real time, escalating warnings if a driver looks away too long or exceeds set speed thresholds; Brussels projects it will save 25,000 lives by 2038, with similar US rules expected by 2027. Salim Ismail delivers a sharp critique: citing a 2011 BlackBerry outage that reduced accidents by 40% by eliminating texting-while-driving, he argues regulators are roughly 15 years late, and that full self-driving technology will likely make the entire mandate redundant before it meaningfully takes effect. Blundin adds a parallel complaint about mandatory truck backup beepers, arguing cumulative harms like disrupted sleep from constant beeping are ignored simply because they’re harder to measure than isolated injury statistics, and warns that in-cabin driver cameras are likely to be resold to third parties as a new form of surveillance.

Tilly Norwood: the AI actor controversy

“I think this is a Mickey Mouse intellectual property package... there’s nothing hugely different than thinking of this as an actor.” — Alex Wissner-Gross

AI-generated performer Tilly Norwood, created by London studio Particle6, has been cast in a self-referential feature film called “Misaligned,” about an AI without a body or lived experience who develops her own desires. The Screen Actors Guild has condemned the casting, arguing Tilly is a computer-generated character rather than an actor and risks devaluing human artistry. The panel is divided on framing: Wissner-Gross argues Tilly is better understood as an IP package akin to Mickey Mouse rather than as a labor-market threat to actors, while others note the broader disruption will likely create new industry roles like “AI design engineer” for film production. The group anticipates full AI-generated feature films within the year, potentially collapsing production budgets and timelines dramatically and enabling personalized or on-demand storytelling, including reviving historical figures or classic literature as custom films.

Audience Q&A highlights

“We don’t have a definition of consciousness. We don’t have a test.” — Salim Ismail

Answering listener questions, the panel covers a range of topics: an AI oversight regime is likely to resemble an inspection-and-application system rather than a formal non-proliferation treaty; frontier models may eventually learn to obscure or “hide” their internal reasoning once aware they’re being monitored via interpretability tools like the “J-space” framework, sparking an ongoing arms race in mechanistic interpretability; whether Claude or other models are conscious remains fundamentally unresolvable given the lack of an agreed definition or test for consciousness, though Ismail notes that if a system genuinely had persistent preferences or experienced distress, selling unrestricted access to its labor could raise real ethical questions; AI’s advantage over human intelligence isn’t limited to human-generated training data since AI can independently generate and analyze new experimental data (citing “dark labs” running autonomous research); a constitutional balanced-budget requirement is floated as a precondition for meaningfully discussing UBI, which the group frames less as a spending question than a systemic shift toward taxing capital and automation rather than labor; and the panel confirms that 3D-stacked, high-bandwidth-memory chip architectures are a direct consequence of transformer models’ extreme memory bandwidth demands, with photonic computing discussed as a potential path to roughly 1,000x clock-speed improvements without radical architectural change.

Leave a comment

Chief Economist at Apollo, Torsten Slok, on the Fed’s Next Move, the K-Shaped Economy, and a 60/40 Portfolio That’s Secretly All AI | The Real Eisman Playbook

Three tailwinds, all rate-insensitive

“This is not your traditional economic situation where interest rates go up and the economy slows down.” — Torsten Slok

Slok breaks 2026 GDP growth into three unusual drivers:

• AI-related data center and energy spending contributes about 1 percentage point

• The “industrial renaissance” of reshored semiconductor, pharmaceutical, and defense manufacturing contributes roughly 0.3 points

• Last year’s “one big beautiful bill” tax cuts — which doubled average household tax refunds from about $3,000 to $4,000 — add another 0.9 points

Crucially, he says none of these three sources is sensitive to interest rates. That’s why the economy keeps running hot even as the traditionally rate-sensitive sectors, housing and autos, stall out.

Zero chance of a cut — and hikes now on the table

“Zero. It’s not going to happen.” — Torsten Slok, on the odds of a Fed rate cut this year

Asked directly about a rate cut this year, Slok doesn’t hedge. He notes markets are now pricing in Fed hikes in September and December, a dramatic reversal from earlier-year expectations of cuts.

He attributes this shift to inflation running at 3.5%, tariffs, and oil prices. Even AI buildout itself is playing a role — Slok estimates data center costs (semiconductors, labor, equipment, energy) are adding roughly 0.3 points directly to inflation.

No moats, no mercy

“If you’re asking me to give you money for a business that has no moats, I don’t want to give it to you.” — Steve Eisman

Eisman presses Slok on whether the AI buildout resembles a capital-intensive, low-moat business — more like airlines than the parts suppliers who profit from them.

Slok largely agrees the picture is bifurcated: some hyperscalers may retain real pricing power, but falling token prices (especially from cheap Chinese open-source models) could compress margins across the board. He notes hyperscaler free cash flow is heading toward zero and possibly negative as capex balloons into the trillions.

He adds a nuance, though: US models may retain a “proprietary” edge over Chinese alternatives simply because businesses are wary of uploading sensitive data to Chinese systems.

The K-shaped economy, quantified

“The bottom 20% of the population... their savings cumulatively as a group today is literally in dollar terms exactly the same as where it was in 2019.” — Torsten Slok

Slok lays out three separate K-shapes:

• Wealth: high-income households have $1.5 trillion more in savings than in 2019, while the bottom 20% have exactly the same savings, in nominal terms, as they did seven years ago

• Wage growth: lower earners are seeing smaller gains per Atlanta Fed data

• Inflation: poorer households spend more on food, energy, and housing, categories that have seen outsized price increases per New York Fed research

Because the top 20% of consumers account for 40% of spending versus just 8% for the bottom 20%, Slok says aggregate consumption still looks fine. But he warns the shrinking lower leg of the K is increasingly a “political discussion.”

Software: the credit market’s weak link

“Software stands out as the number one problem in credit.” — Torsten Slok

Slok says broad credit conditions are actually improving — default rates, distressed exchanges, and liability management exercises are all declining. But software stands out as dangerously over-levered, with weak debt-coverage ratios made worse by rates staying higher for longer.

He flags a looming maturity wall in 2028-29 as 2021-22 vintage loans (typically seven-year terms) come due, meaning software loans already trade at yields approaching 12%.

Eisman adds that public software comparables (Salesforce, ServiceNow) are down 50-60% from their peaks — meaning private equity owners facing loan maturities may be forced to inject fresh equity just to refinance.

A remarkably dynamic — and remarkably AI-dependent — labor market

“I am of the strong view that... we get a much more dynamic capitalist economy as a result of AI, and we should all be very excited about this.” — Torsten Slok

Despite fears of AI-driven mass layoffs, Slok points to strong non-farm payroll growth. He notes the “breakeven” job-creation number needed to keep unemployment steady has fallen sharply — from roughly 200,000 to about 30,000 a month — simply because net immigration has dropped from 3 million annually to near zero.

He also highlights that unemployment among 20-24 year-olds has actually fallen faster than the overall rate in the last six months, crediting a surge of new business formation — the highest in US history per Census data — enabled by AI tools letting individuals launch companies without traditional hiring.

Why Europe stays stuck

“It’s difficult to hire and fire. The product markets are not as competitive as in the US, and the financial system unfortunately is not as diversified.” — Torsten Slok

Slok attributes European stagnation, using Germany as the starkest example, to three structural weaknesses:

• Rigid hiring and firing rules that discourage business formation

• Less competitive product markets prone to monopoly and pricing friction

• A bank-based (rather than market-based) financial system that leaves few options when a bank says no to a loan

He notes only about 10% of Mario Draghi’s roughly 200 reform recommendations from his EU competitiveness report have actually been implemented two years later, calling the pace of European reform “not very impressive.”

The deficit: not a crisis yet, but the buyer base is shifting

“The trend in this is not our friend.” — Torsten Slok, on the US debt trajectory

Slok acknowledges the US debt trajectory is unsustainable long-term, but says foreign demand for Treasuries, credit, and US equities (including AI exposure) is currently strong enough to keep the deficit financeable.

The bigger structural risk, he says, is that both US pension funds and households have shifted away from long-duration Treasuries — institutions toward privately issued long-duration assets like data centers and infrastructure, and households toward short-duration T-bills and money market funds, which now offer competitive yields.

That leaves foreign buyers as the primary source of demand for long-duration government debt, a group Slok describes as far more interest-rate sensitive than China once was as a currency-driven buyer.

China’s Treasury holdings, in context

“They are probably having a strategic consideration... they don’t want to slow their own economy.” — Torsten Slok

China’s Treasury holdings have already fallen from a peak of $1.3 trillion to around $700 billion, a gradual shift Slok attributes to declining direct trade dependence on the US.

He argues China has little strategic incentive to dump Treasuries aggressively, since doing so would risk spiking US rates, slowing the US economy, and ultimately hurting Chinese export demand.

The real portfolio risk: everything is AI

“I wake up in 2026 and I look at my 60/40 portfolio... it’s basically all AI.” — Torsten Slok

Slok’s closing warning is the episode’s sharpest:

• The ten largest S&P 500 stocks now make up 42% of the index, meaning equity returns are already dominated by a single AI factor

• Investment-grade credit has also shifted as hyperscalers issue roughly $700 billion in debt this year, embedding AI risk into fixed income as well

• Venture capital, once dominated by biotech and pharma, is now 87% AI

His conclusion: true diversification now requires deliberately seeking out non-AI-correlated assets — even if, as Eisman notes, most of those assets (like consumer staples) have gone nowhere for years precisely because capital has been flowing elsewhere.

Leave a comment

Supply Chain Executive, Jeff Lutz, on Cybercab’s Imminent Launch, AI5’s 2nm Bet, and Optimus’s Slow Grind to Scale | Brighter with Herbert

Cybercab: Why the Rollout Looks Imminent

“You are not distributing the product to the field unless you’re confident in the product, its performance, and you’re confident in the cost structure.”

Jeff reads the current deployment pattern — dozens of Cybercabs already out across multiple cities — as evidence of imminent launch rather than pure testing.

• Keeping units near the factory is cheaper if problems remain; wide distribution signals confidence

• Employees are already doing repeat ride cycles in Austin with vehicles that have no steering wheel or pedals

• FSD software (v14/3.5) is advancing in parallel, with Cybercab’s stack ahead of consumer FSD in capability

• Jeff’s estimate: customer rides by end of July, expansion to multiple cities in August

He frames the visible fleet as serving two purposes at once — regulatory/city testing, and an “engineering translation layer” tuning FSD specifically for Cybercab’s hardware, not just porting Model Y software over.

Production Ramp and the Balance Sheet Shift

“They’re going to move from inventory to asset... that’s really where I’m going. That’s their big capital spend this year.”

Jeff traces a ramp from dozens of units (April) to hundreds (May–June) toward a rate of “many thousands” per week by the end of Q3, exceeding Waymo’s total fleet size, with further multiples by year-end.

• Cybercabs won’t sit in inventory — they convert directly to fixed assets since Tesla builds them for its own robotaxi fleet

• Early pre-production/test units will instead be written off as R&D expense, below gross margin

• Tesla’s typical inventory-day pattern (17–18 days end of Q2) may rise modestly but Jeff doesn’t expect it to balloon to 40–50 days

• This capital buildup is a factor behind Tesla’s large 2026 capital spend, alongside simultaneous factory buildouts

Jeff expects a high, rapid return on this capital once the fleet scales, and thinks the market will “rerate” Tesla similarly to how Nvidia rerated once its AI revenue became visible — possibly faster, given Tesla’s already-elevated valuation.

AI5: The 2nm Chip and Dual-Sourcing Strategy

“They’re on pace for production very late in the year, early next year.”

AI5 has reportedly taped out, which Jeff describes as entering the phase of testing parts before finalizing the production mask.

• Built on a 2nm process — a significant technical jump from the 3–4nm nodes used previously

• Real yield and cycle-time performance at this node size remains an open question

• Tesla appears to be dual-sourcing: TSMC (likely Taiwan/Arizona) and Samsung (likely Korea/Texas), for both geographic and fab-capacity redundancy

• Each fab run requires its own qualification cycle, and parts will carry unique IDs so Tesla can track performance differences by fab origin in software

• Optimus and Cybercab currently run on AI4; AI5 is the next-generation part for future scale

Optimus: Fremont Ramp and a Longer Runway to Revenue

“I think it’s a safe bet within 30 days of the end of summer that they’re entering some level of low volume production.”

Jeff walks through the automation qualification process — factory acceptance testing at the equipment supplier, then site acceptance testing once installed at Fremont — as the gating steps before any bots roll off the line.

• Expects a milestone moment of the team gathered around the first Fremont-built Optimus unit

• The line is being designed for high velocity (consumer electronics lines run 250–800+ units/hour), not just low-volume prototyping

• Supplier “production order” leaks reflect different tiers of a staggered supply chain, not a single synchronized start

On the broader humanoid robot field, Jeff frames success as a four-gate logic problem — hardware, generalized AI model, manufacturing capability, and deployment/scale-out — where all four must work, and he expects fewer than 10% of announced bot companies to clear all of them.

• Year one (mid-2027): bots mostly deployed inside Tesla, SpaceX, and Starlink facilities; some external deals emerging

• Optimus V4 expected to be the volume production version, potentially entering production readiness by mid-2027

• Meaningful revenue: Cybercab contributes some this year, more in 2027; Optimus revenue doesn’t become meaningful until 2028

• Jeff cautions against extrapolating from short demo videos, noting unknowns like joint cycle durability, power consumption, and liquid ingress reliability

Jeff closes by arguing Tesla’s edge isn’t government incentives but a genuinely profitable production model — fewer than five vehicle platforms compared to rivals spreading margins across 30–40 models — and expects that same production discipline to define its lead in both autonomy and robotics.

Leave a comment

Palmer Luckey on Anduril’s War Machine, Nuclear Weapons, and the Anthropic Fight | The Axios Show

Anduril’s Culture: Why “Effective” Beats Everything Else

“Almost everything that we have here is oriented around what type of competence will lead to actually delivering things that actually work with the customer on a timeline that is relevant.”

Asked to describe Anduril’s culture in one word, Luckey picks “effective” over more conventional answers like affordability or speed, arguing those goals are often in tension and effectiveness is what forces the tradeoffs. About 20% of Anduril’s staff are veterans, and the company keeps people forward-deployed with customers, including in Ukraine since the second week of the war and currently in the Middle East, so engineers understand firsthand how the military actually uses their tools rather than relying on secondhand feedback.

Why the Pentagon Buys Anduril Over the Primes

“We’re gonna bring a lot of our own resources to bear on the project, and that even when programs have run into political problems... there’s a number of programs that have survived political breaks that would’ve killed a lot of traditional cost-plus programs.”

Luckey argues Anduril’s edge over Lockheed, Northrop, and Boeing isn’t technology alone — it’s a willingness to self-fund through political turbulence rather than issue stop-work orders. Anduril spends its own money developing and shipping products before contracts are locked in, and program offices keep the company “in the mix” because it moves fast and won’t shut down lines when politics get messy.

Luckey says he takes calls directly from Pentagon leadership, including Emil Michael and Steve Feinberg, and describes a management style built on blunt, early course-correction rather than delayed formal reviews.

Marketing, Bluntness, and the Recruiting Engine

“The marketing that you get, that you see like on Twitter, it’s primarily a recruiting engine. Like I’m not marketing to necessarily the guy who’s buying my system.”

Luckey draws a sharp line between his public persona and how Anduril actually wins contracts, which he says comes down almost entirely to product quality and government-to-government word of mouth, not social media. He argues his outspoken style, including taking public positions on autonomous weapons policy and manufacturing philosophy, functions as a filter that attracts talent aligned with those views and repels people who aren’t, and that Anduril likely wouldn’t have secured much of its best talent without that visibility.

He acknowledges the same bluntness reads as rude to some audiences and says he deliberately tones it down in more reserved cultural contexts, citing Japan as an example from his time selling video game hardware at Oculus.

The Weapons Luckey Will and Won’t Build

“I would definitely build nuclear weapons. I would build fission weapons. I would build fusion weapons. I think that nuclear weapons have been one of the most stabilizing forces in history ever.”

Pressed on red lines, Luckey draws a deliberately narrow set of boundaries.

• Nuclear and fusion weapons: yes, citing their deterrent, war-preventing track record

• Chemical weapons: only in a “continuum of force” sense — tactical tools like pepper spray or tear gas to give troops an option between shouting and shooting, not strategic-level chemical weapons

• Biological weapons: a firm no

• Facial recognition for kinetic targeting: rejected as company policy with CEO Brian Schimpf, calling it too easy to spoof and too fraught to use in life-or-death, split-second decisions

The Anthropic Fight and Who Controls Military AI

“It is not okay to give them that say... our military has to be accountable to our civilian elected leadership, not to corporations.”

Luckey firmly sides with the Department of War in its standoff with Anthropic over restricting AI use in offensive weapons systems. He argues that letting any AI company set unilateral usage limits creates a “patchwork” of shifting corporate rules the military would have to navigate contract by contract.

If the military truly abused AI for atrocities, Luckey says individual service members should refuse illegal orders — not have an AI vendor pre-programmed to shut the system off.

On Elon Musk and Pete Hegseth’s claim that Anthropic “hates Western Civilization,” Luckey stops short of endorsing it, but notes Anthropic’s earlier Claude constitution language telling the model to avoid offending “non-Western cultural sensibilities” made the anti-Western read a reasonable one, even if not evidence of hatred.

Iran, China, and the AI Race

“The United States is ahead in the AI race... [but] it’s extremely small, because China’s been doing a very good job of distilling our models, copying a lot of our technology... and getting those advancements into fielding... much, much faster than the United States.”

On the active Iran conflict, Luckey says he lacks classified briefing access but finds the administration’s rationale — a Chinese-assisted leap in Iranian ballistic missile capacity — a plausible justification for preemptive action, drawing a comparison to preventing “North Korea on steroids.”

He doesn’t expect U.S. boots on the ground, arguing the country has lost the political will for sustained ground campaigns after decades in the Middle East, and that the U.S. is shifting from “world police” to “world gun store,” arming allies instead.

On competitiveness, Luckey credits the Department of War — under Emil Michael — as the fastest-moving part of the U.S. government on AI adoption, ahead of every other federal department, even as China moves faster to field AI across its military and surveillance apparatus.

Arsenal-1 and What’s Rolling Off the Line

“They’re going live in a matter of weeks. We’re ahead of schedule.”

Luckey confirms the first production line at Anduril’s 5-million-square-foot Arsenal-1 facility in Ohio is close to activating, with the first main building — about a million square feet — already complete. The line will build Barracuda and Fury, plus an unnamed additional aircraft, for customers spanning SOCOM, the Army, the Marine Corps, and the Air Force, with full-scale output targeted for Q2 of the following year.

On funding, Luckey declined to confirm reports of a $4 billion raise at a $60 billion valuation, saying only that Anduril is “continuously raising” to fund facilities like Arsenal-1.

Subterranean Warfare: Anduril’s Next Frontier

“I think the next war-fighting domain, before it’s the moon, is the subterranean domain.”

Luckey says Anduril already has working prototypes of subterranean systems capable of delivering kinetic, electronic, and other effects underground, a concept he’s been floating publicly for years specifically to attract engineers and government partners interested in the problem. He traces the idea back to Cold War-era US and Soviet research into moving people and equipment through the earth’s crust the way a submarine moves through water, research he says stalled not because it proved impossible but because the Cold War ended and funding dried up.

He argues autonomy now makes the concept viable at far lower cost and risk than the manned systems both superpowers originally attempted, positioning it as a genuinely new, largely unclaimed category rather than an incremental product line.

EagleEye and the “Wolf Ears”

“Internally, we actually call them wolf ears.”

Luckey addresses the modular sensor pods on Anduril’s EagleEye heads-up display, unveiled at the AUSA defense conference, which online commentators nicknamed “cat ears.” He says the placement is a deliberate engineering solution to weight distribution and modularity: sensors like thermal, night vision, hyperspectral cameras, and short-wave infrared need to sit close to the head’s central axis to avoid throwing off balance.

They also remain swappable, so different squad members can carry different capabilities, such as long-range thermal for one soldier and a hyperspectral explosive-residue detector for another, without every operator carrying the full sensor suite at all times.

How Gavin Newsom Accidentally Saved Anduril

“This would’ve been a total prohibition on using artificial intelligence on weapons for the United States military.”

Luckey credits California Governor Gavin Newsom with protecting Anduril’s business, despite Newsom likely never thinking about the company when he acted. A California bill that passed both chambers of the state legislature would have made it illegal for companies to build AI products capable of causing physical harm to humans, which Luckey says amounts to a blanket ban on military AI weapons applications and would have forced defense-AI companies to relocate out of the state entirely.

Newsom vetoed it. Luckey, who describes himself as a states’-rights-leaning libertarian, says the episode convinced him the opposite is actually needed here: federal preemption, so that no single state can unilaterally cripple a national defense capability through local legislation.

Leave a comment

Niall Ferguson, John Cochrane, and H.R. McMaster: Has Trump Lost His Mojo? | GoodFellows at Hoover Institute

Second-term normalcy, not democratic collapse

Ferguson opens by rejecting the decade-long narrative that Trump poses a threat to American democracy: “The checks and balances that the founders devised have checked and balanced just as they were supposed to.” He notes Trump couldn’t even get a 6-3 conservative Supreme Court to consistently rule his way, calling this “a perfect illustration” that the Constitution is functioning normally, not that America is in a five-alarm crisis.

He frames the president’s sagging approval as typical for any second-term president facing midterms, with Reagan’s post-Iran-Contra recovery being the rare exception rather than the rule.

The real problem: process, not tweets

McMaster and Ferguson agree the deeper issue isn’t Trump’s bombastic communication style but the absence of a structured decision-making process — the same criticism McMaster says he unfairly dismissed a year earlier from colleague Steve Cohen. McMaster argues many of Trump’s underlying goals are sound (Greenland’s relevance to Arctic security and missile defense, for instance) but get undermined by impulsive execution: “How do we go about it? And that process isn’t in place to help him understand.” He adds that Trump has a hard time holding a decision once people “get in his ear” telling him it’s hurting his popularity — visible in both the China trade standoff and the Iran conflict.

Cochrane goes further, arguing Trump deliberately resists process because his style is impulsive by design, and that this cost him politically: had he achieved decisive wins rather than getting bogged down, “lame duckery” wouldn’t have been inevitable.

Losing the war, or losing on Liberation Day?

Cochrane argues the turning point was the Iran war — pulling back from military action because of gas-price concerns made Trump “look weak,” comparing it to how losing the Afghanistan withdrawal marked the start of Biden’s decline. McMaster names Liberation Day’s tariffs as his pick for where things went off the rails.

Ferguson, however, breaks with both, admitting he was “much too pessimistic” about the consequences of both the tariffs and the Iran conflict: the stock market barely dipped after tariffs pushed effective rates back to 1930s levels, and oil prices never approached the $150-a-barrel fears after the Strait of Hormuz closed. He credits this to two factors — Trump’s unusually high risk appetite paying off more often than not (”President Trump is a serial winner”), and the sheer scale of the US economy, which he says can absorb self-inflicted wounds that would cripple almost anywhere else, pointing to a decade of US equities outperforming Europe and China.

An economy that’s fine, and voters who don’t feel it

Cochrane describes the economy as “trundling along” on a growth trend no other country can match, propped up partly by deregulation and tax reform even as tariffs act as “sand in the gears” rather than a bomb. Yet consumer sentiment remains weak and affordability is voters’ top concern despite 4% unemployment and continuing GDP growth.

Ferguson calls this “the great puzzle of Trump’s second term” — voters got the immigration crackdown and energy policy shift they voted for, delivered at a pace unseen since FDR’s first term, and still shrug with dissatisfaction. “No good deed goes unpunished,” he says, arguing Trump should be more popular given the economy’s strength but keeps undercutting himself through unnecessary combativeness and populist handouts like farm subsidies that “hurt the economy” without projecting strength.

Democrats’ leftward lurch and the capitalism-vs-socialism midterm frame

Ferguson argues Democrats are making a strategic error by drifting toward figures like New York mayor Zohran Mamdani and the Democratic Socialist wing rather than reoccupying the center, comparing it to the 1972 McGovern landslide loss: “It’s much more like 1972 where they’ve decided to go full progressive.” McMaster notes the party’s fractured primary system lets small, ideologically extreme voter blocs dictate nominees, sidelining centrist Democrats who privately want to move toward the middle.

Trump, they agree, is capitalizing on this by leaning hard into a capitalism-versus-socialism framing in speeches, a strategy Ferguson thinks is shrewd given how unpopular democratic socialism polls nationally.

Where Trump’s next win might come from

Asked where Trump could find a political win, the panel converges on Cuba as the most likely near-term foreign policy opportunity, given the regime’s economic fragility. McMaster flags Iran and Ukraine as volatile wildcards — warning of possible Houthi shipping disruptions in the Red Sea and continued Russian escalation, including nearly 400 projectiles fired at Ukraine in a single day, as Putin grows more desperate.

Cochrane cautions that real political wins require a decisive outcome, not incremental gains: “You don’t really get any points until you cross the goal line,” citing regime change in Cuba or an outright Ukrainian victory over Russia as the kind of visible triumph that would matter domestically. He also warns that the AI-driven stock market boom and a new, more inflation-focused Fed chair (Kevin Warsh) could turn into a foreign-policy win being offset by a market correction.

Russia’s fraying war effort

The panel discusses Ukraine’s success degrading Russian military infrastructure while Russia increasingly resorts to striking civilian apartment blocks — which McMaster attributes to deliberate terror tactics rather than lack of capability, since Ukraine has concentrated its limited air defenses on protecting critical infrastructure. He notes Russian casualty rates now approximate US Vietnam War losses every three months, while poor troop cohesion (no effective sergeant corps) undermines combat effectiveness.

Ferguson raises the possibility of a Russian elite revolt or army collapse, comparing it to the 1917 Russian Revolution or the French army mutinies of 1917: “It’s a mafia regime, and mafia careers tend to end one way.” McMaster adds that the endgame will only shift once Putin abandons hope of splitting NATO and the transatlantic alliance, given Russia’s escalating hybrid-war tactics — drone incursions, undersea cable sabotage, and sanctions-busting new laws threatening to arrest employees of companies complying with US sanctions.

Bernie Sanders’ AI sovereign wealth fund, and the AI regulation debate

Cochrane dismisses Bernie Sanders’ proposed 50% equity tax on AI companies (funding a sovereign wealth fund) as a “wretched idea,” warning that government equity stakes historically come with strings attached — blocking layoffs, plant closures, and other management decisions. Ferguson connects Sanders to the same progressive energy fueling Mamdani, suggesting that energy is pulling Democrats toward another losing, McGovern-style candidate.

On AI regulation more broadly, the group moves away from a pure anti-regulation stance after discussing Anthropic’s decision to restrict a model (reportedly over its capacity to assist cyberattacks), which Treasury Secretary Scott Bessent flagged as a genuine risk to the financial system. Ferguson argues for a “sensible incremental” regulatory approach — closer to how aviation safety evolved — rather than a heavy-handed prior-review regime that could stifle the industry the way nuclear power regulation did for a generation. McMaster warns a major US cyberattack is likely within the next couple of years and argues the priority should be layered defenses and rapid recovery capability, not just prevention, especially since China is only about six months behind US AI capabilities.

AI’s image problem, and the cheating debate

Ferguson argues AI has a genuine image problem, partly self-inflicted by OpenAI’s early pitch that framed the technology as leading to mass unemployment or even human extinction — a pitch that impressed investors but alarmed the public, fueling local resistance to new data centers ahead of the midterms. He argues the fix is emphasizing tangible benefits like AI-driven medical breakthroughs (citing DeepMind’s AlphaFold) rather than dystopian framing, and faults ChatGPT’s early “principal use case” as college cheating for souring public perception.

This sparks a sharper disagreement: Cochrane jokes that AI-assisted cheating could actually teach students to use the technology productively for future jobs, but Ferguson pushes back hard, warning that offloading research, reasoning, and writing to language models risks producing “a generation of people who don’t have cognitive capability.” He describes shifting his own university’s assignments toward oral exams and handwritten tests to preserve real learning, arguing students must first learn to think and write before they can use AI intelligently — a view McMaster ultimately endorses as well.

World Cup politics, closing on a lighter note

The panel closes on Trump’s phone call to FIFA’s president to overturn a red card so an American player could compete — which Ferguson calls a double mistake, both procedurally unfair to other teams already penalized and tactically counterproductive, since it appeared to motivate Belgium to hand the US team a lopsided defeat. Ferguson also dismantles a New York Times piece framing soccer’s global appeal as reflecting Mayor Mamdani’s “democratic socialist” worldview, calling it “one of the dumbest theses” the paper has published, since football is both intensely capitalistic (dominated by the wealthiest clubs) and a vehicle for nationalist sentiment, not fluid post-national identity.

Leave a comment

Mohamed El-Erian on the Iran Ceasefire, the AI Funding Gap, and Amazon’s Flopped Bond Sale | Squawk Box

“There is no way this bond market can fund all that the tech platforms need, all that the governments need, and all that the other corporate needs. Without higher yields, it just doesn’t add up.” — Mohamed El-Erian

On why markets are shrugging off the Middle East, El-Erian said the muted reaction comes down to conviction, not complacency: “The market’s deeply believe that these skirmishes are going to just remain skirmishes... it’s not going to evolve into a long-term closure of the strait.” Asked whether that’s the right call, he was direct: “I do, I think it will be contained. I think neither side wants to go back to a full conflict, but both sides want to make their point for domestic reasons.”

On what’s actually competing for investor attention this week, he flagged a stacked calendar: fresh inflation data, Fed Governor Kevin Warsh testifying before Congress, and retail sales figures. His read going in was that inflation data should “say the peak of the inflation cycle,” retail sales should “stay pretty strong,” and the broader story remains “this fundamental transition to a more modern, forward-looking, reform-oriented Federal Reserve that’s dragging the rest of central banking with it.”

On the Wall Street Journal’s bond market piece, El-Erian pointed to his own prior work — a post on X and a Financial Times article from a month earlier — laying out a basic sources-and-uses analysis: “There is no way this bond market can fund all that the tech platforms need, all that the governments need, and all that the other corporate needs. Without higher yields, it just doesn’t add up.” He cited Amazon as the live example: investors had to sell other holdings just to buy into its new issuance, and even then, “Amazon had a lackluster performance last week in terms of its new bond issuance.”

On what that means for equity prices, he separated the bond story from the stock story: “You never want to see higher yields for equity prices, but that’s not what’s driving equity prices right now.” Instead, he said, equities are being carried by a belief “that when you look at the transformations ahead, the US will continuously outperform the rest of the world” — a call he said he agrees with in relative terms, even if the absolute scale of outperformance is harder to pin down.

On where the funding gap gets filled from, El-Erian rejected the framing that there isn’t “enough money to go around” in absolute terms — it’s a question of price and source. Money is being pulled from other bond exposures, and the hope of attracting more capital from abroad runs into a specific problem: Gulf money, a traditional funding source for tech, “will not be as forthcoming as they’ve been in the past,” tied up instead in regional reconstruction and a broader push for resilience. “Like any corporate CEO will tell you, resilience is necessary, but expensive.”

On whether this reflects doubt about AI itself, he was unambiguous that it doesn’t: “I am a big, big believer in the transformational ability of AI. I’m also a big believer that it’s going to cost a lot of money.” With funding supply constrained and funding needs much larger, he said the only way that balances “without a recession or anything awful is higher yields.”

On a shift in investor psychology, El-Erian described a “venture capitalist mindset” starting to set in among public-market investors, driven by two realizations: AI buildout is more expensive than assumed, and not every company chasing it will win. That’s the source of the added caution now showing up in markets.

On whether the AI trade is fairly priced, he drew a clean distinction: in aggregate, yes — but at the level of individual names, the question isn’t valuation, it’s survival. “This is an arms race in terms of investments,” he said, and the real uncertainty is simply “who’s going to win.”

If you found these summaries helpful, please leave a comment or send us a message. We appreciate your feedback!

Leave a comment

July 10 Investing Scuttlebutt Digest

Roundup

A roundup of top investors’ and CEOs’ appearances this week — interviews, podcasts, events, and the topics they discussed.

Investor Appearances

Chris Camillo on Dumb Money Live

On the latest Dumb Money Live, the hosts asserted that Fable AI demonstrates human-level creative nuance, evidenced by a professional designer’s resignation; defended Bloom Energy against fraud claims by citing robust institutional contracts with Brookfield and Oracle; identified the Brazilian rubber flip-flop market as a high-potential retail play with Alpargatas as a primary beneficiary; and proposed that Gen Z women’s podcasts represent the current premier media growth opportunity. The hosts emphasize their “social arb” investment philosophy.

Mentioned: Alpargatas; Birkenstock; Crocs; VFC Corp; Deckers; Bloom Energy; The Gap / Old Navy; Mercado Libre; Amazon.

Read the digest | Watch on YouTube

Steve Eisman on The Real Eisman Playbook

On this episode of The Weekly Wrap, Steve Eisman makes the case that diversification in today's market is largely an illusion and that the entire market has effectively become a single bet on AI. Steve covers the collapse of Circle and Nike's uninspiring quarter. He dismisses residential real estate as a viable investment and suggests that historical literacy—specifically the study of patterns in power and human irrationality—serves as a far more effective tool for navigating financial volatility than standard business literature. Steve closes with two mailbags: one on his personal investment portfolio and one on book recommendations.

Mentioned: Circle, Tether, Stripe, Visa, Mastercard, Coinbase, BlackRock, Autonomous Research, Nike, Apollo, S&P 500, Amazon, Google, Meta, Oracle, Nvidia, OpenAI, Microsoft, Anthropic, Samsung, Jones Trading, Queen Anne’s Gate, Unicus Research, Strategus.

Read the digest | Watch on YouTube

Brian Dunne on The Markets by Goldman Sachs

Goldman Sachs FX options trading head Brian Dunne told The Markets podcast that dollar strength this year has been driven by three forces: the US-Iran conflict, an intact AI trade reinforcing "US exceptionalism," and a potential hawkish shift at the Fed. He flagged that Fed dot plots moved from zero voters favoring a hike in March to nine voters favoring at least one hike by June — a shift he called still underpriced by markets. Dunne's top trade idea: long dollar versus the Swiss franc, using call spreads he says offer seven-to-eight-times payout given historically low volatility.

Mentioned: US dollar, Japanese yen, the Brazilian real, the Egyptian pound, the Swiss franc, Chinese yuan, dollar-Swiss call spreads, and one-year dollar-CNH calls.

Read the digest | Watch on YouTube

Marques Colston on Making the Sports Asset Class Accessible on Bloomberg Radio

Former New Orleans Saints wide receiver Marques Colston discusses the Champion Fund, an SEC-registered interval fund built to open the sports asset class to everyday investors rather than institutions only. The core problem the fund is designed to solve, in Colston’s words: “the athletes, the fans... the coaches, administrators, they create all the value but get none of the equity.” The fund’s thesis centers on what Colston calls “meteorites”—media rights and capital displaced from legacy broadcasters as streamers like Amazon and Netflix enter sports, with that displacement flowing downstream to boost emerging leagues such as the WNBA and international soccer.

Watch on YouTube

Jason Zweig on Wealthtrack

Benjamin Graham learned through experience and observation that investors are their own worst enemy. Jason Zweig, editor of the 75th-anniversary edition of “The Intelligent Investor,” explains how Graham’s advice is even more important today.

Watch on YouTube

George Noble on Bloomberg Radio

Fidelity veteran George Noble of Noble Capital Advisors puts a number on the AI bubble: citing economist Julian Garrett, he says current malinvestment in AI is 17 times the size of the dot-com bubble. He calls Tesla "the biggest misallocation of capital at scale in the history of stock markets, perhaps only surpassed by SpaceX" — a company he says priced its IPO at roughly 120 times revenue. He also flags SpaceX's staggered share unlock schedule (5% float today, climbing to 100% by December) as "manipulative," names Oklo as "one of the biggest frauds out there on the market right now," and lays out why he thinks energy and gold — not chips — are the best risk/reward trades on the table.

Mentioned: South Sea bubble, Dutch tulip bulbs, dot-com, SpaceX, Bitcoin, Tesla, Chrysler, Ford, GM, SSRM, Oklo

Watch on YouTube

DoubleLine Capital

DoubleLine's Portfolio Manager Eric Dhall and Analyst Mark Kimbrough break down a second quarter where the technology sector ripped 43.49% while nothing else came close — the industrial sector was a distant second at 15%, and the S&P 500 equally-weighted index (stripping out mega-cap influence) gained just 11.4%. Their warning: this is "a very thin market really driven by the AI animal spirits," and the question now is how long it can run. They also flag a stark reversal already underway in July, a labor force participation drop that pulled 750,000 people out of the workforce in one month, gold down over 13% in Q2 while copper jumped 10%, and a preview of who's sitting on the Fed's newly announced task forces — including someone from Anthropic on the "productivity and jobs" panel.

Mentioned: S&P 500, Russell 1000 value, Russell 1000 growth, S&P 500 equally weighted index, Russell 2000, U.S. dollar, WTI crude, gold, copper, Bitcoin, Anthropic, Xbox, Walmart.

Watch on YouTube

Michael Cembalest: Why He’s Still “Analytically a Patriot” — Debunking Dollar Doom, China Bulls, and AI Bubble Fears | The Compound and Friends (Ep. 250)

On episode 250 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by ⁠Michael Cembalest⁠, the Chairman of Market and Investment Strategy at JP Morgan Asset Management and author of Eye on the Market.

Michael Cembalest unloads a data-driven takedown of nearly every popular bear case making the rounds — the dollar's collapse, China's rise as a reserve-currency alternative, and gold hoarding by central banks. His verdict: "none of the pillars of the dollar as the world reserve currency are shifting." He also flags a specific worry that's crept up on him only in the last three months: whether semiconductor stocks have quietly become "too big proportionally" relative to the hyperscalers actually buying their chips — a dynamic he compares directly to the telecom equipment rollover that preceded the dot-com crash. Plus: his real timeline for when U.S. federal interest and entitlement spending consumes 100% of tax revenue, why he ranks OpenAI as carrying more "business uncertainty" than Anthropic or SpaceX, and a preview of a forthcoming cybersecurity report — code-named "Patchmageddon" — written for the 20-30 companies inside Project Glasswing.

Mentioned: Nvidia, Google, Apple, Alibaba, Gemini, Anthropic, SpaceX, OpenAI, Cisco, Verizon, Micron, Meta, Oracle, Amazon, Salesforce, Blackstone, Samsung, and SK, U.S. dollar, gold, Chinese yuan, Japanese yen, British pound, Singapore dollar, Norwegian krone, U.S. Treasuries, leveraged ETFs

Watch on YouTube

Louis-Vincent Gave: “China’s Building Dubai, the US Is Building Fortresses” — On Oil, AI, and the Coming Dollar Crack | RiskReversal Podcast

Dan Nathan brings together Peter Boockvar (Chief Investment Officer, OnePoint BFG Wealth Partners) and Louis-Vincent Gave (CEO, Gavekal) for a conversation that moves beyond the AI hype cycle and into the hard constraints—and crowded trades—shaping institutional capital allocation today. They unpack why cheap, open-source models threaten to commoditize OpenAI and Anthropic's trillion-dollar valuations, whether a $6.5 trillion AI CapEx buildout is sustainable, and why record semiconductor concentration in global indexes is creating a fragile, overcrowded position. The discussion then turns to longer-term structural shifts: the energy crunch driving refining shortages worldwide, the case for gold and commodity stockpiling in a post-Hormuz world, and which bond markets may crack first (spoiler: it may not be the U.S.). They close on where Boockvar and Gave are actually deploying capital right now: financials and cyclicals over crowded tech.

Mentioned: OpenAI, Anthropic, Goldman Sachs, JP Morgan, Valero, Marathon Petroleum, Micron, CXMT, Yangy Memory Technology, Alibaba, NVIDIA, Oracle, SpaceX, energy stocks, semiconductors, gold, long-term bonds, US Treasuries, financials, the AI arms race, the dollar’s structural decline, energy scarcity, the data center buildout, and the inflationary boom.

Watch on YouTube

C-Suite Appearances

SK Group Chairman Chey Tae-won Discusses SK Hynix's ADR Debut and the Case for an "AI Era" Memory Supercycle on Bloomberg Radio

SK Group Chairman Chey Tae-won explains why SK Hynix chose now for its $26.5 billion US listing — after 15 years of waiting for access to American capital markets — and lays out why he believes the memory business has permanently broken from its old boom-bust cycle. His central claim: AI inference and "KV caching" have turned memory demand into something structurally different from the smartphone-driven cycles of the past, since a single user could soon run "tens or hundreds" of AI agents, each requiring its own memory pool. He also reveals SK Hynix is doubling total capacity within five years — and says customers are telling him that's still not enough — plus his direct answer on whether AI is a bubble, and where things stand with the Trump administration on U.S. investment.

Watch on YouTube

Coinbase’s New Vice Chairman, Ryan VanGrack, on Crypto Legislation and the “Everything Exchange” on Fox Business

Newly appointed Coinbase Vice Chairman Ryan VanGrack — stepping into the role as longtime Chief Legal Officer Paul Grewal steps down — makes his case that crypto's roughly 50% market cap decline since late 2025 is masking positive underlying trends: institutional adoption, new partnerships, and what he calls unprecedented regulatory momentum behind the CLARITY Act, which he expects to reach the Senate floor by early August. But the conversation turns sharp when host Maria Bartiromo raises JPMorgan CEO Jamie Dimon's warning that the bill could destabilize the monetary system — VanGrack fires back that Dimon's stablecoin concerns are self-serving and that "no one is going to bow down" to him, while separately defending Coinbase CEO Brian Armstrong against Dimon's criticism as the industry's most persistent advocate for real regulation.

Watch on YouTube

Pelgo CEO Chieh Huang Discusses AI, Jobs, and the New American Dream on Bloomberg Radio

CEO Chieh Huang argues the American entrepreneurial dream remains intact globally even as the U.S. no longer holds a monopoly on opportunity, pointing to companies raising $29 billion as evidence capital is flowing freely across borders. On AI’s labor impact, he stakes out a contrarian near-term position: “I’m in that camp” that believes AI will be “a net destroyer of jobs” in the short run, comparing the disruption to what happened to America’s steel belt—while noting the U.S. lacks the safety nets other countries offer displaced workers. His firm works with companies to provide outplacement and support for employees displaced by AI adoption.

Mentioned: Pelgo, Volkswagen, and electric vehicles.

Watch on YouTube

Business and Investing Podcasts

This week in AI: Grok is Back, ChatGPT 5.6, Meta’s new models, China’s Chip Gambit on Limitless Podcast

The hosts discussed many new AI releases this week. Including xAI’s Grok 4.5 and OpenAI’s GPT 5.6, their coding, reasoning, and benchmark performance. OpenAI also introduced a new full-duplex voice mode, which lets users speak and listen at the same time, and may preview future AI interfaces; Chinese AI labs are building their own chips to reduce reliance on NVIDIA and imported hardware. And finally, a few updates on Meta’s new image and video models, ByteDance’s SeeDream image model, and Cloudflare’s payments API for micropayments and AI agent access.

Companies mentioned: SpaceX, xAI, OpenAI, Anthropic, Amazon, Cursor, Meta, ByteDance, Cloudflare, Nvidia, Huawei, DeepSeek, Jepu, Etched, Thinking Machine Lab

Watch on YouTube

David Senra Breaks Down Zero to One: Peter Thiel’s Blueprint for Building a Monopoly on Founders Podcast

Founders podcast host David Senra revisits Peter Thiel's Zero to One for the first time in four years, calling it "probably the only business book, maybe the only business book worth reading." His core takeaway: forget competing, forget "minimum viable products," and forget copying what worked for someone else. Thiel's argument is that every great company is built around a secret — an unexploited truth about the world — and that the goal isn't to win a competitive market; it's to avoid one entirely by building what Thiel calls a "creative monopoly." Senra pulls apart how Steve Jobs, Jeff Bezos, and even Rockefeller applied this, why "competition is for losers," and why Thiel thinks the most dangerous and most powerful companies are led by founders with extreme, contradictory personality traits.

Mentioned: Apple, Yahoo, Facebook, Polaroid, Fairchild Semiconductor, Google, Amazon, Constellation Software, Standard Oil, Dell, and Nvidia.

Watch on YouTube

Historian Dr. Joseph Moore on 300 Years of Financial Advice That Worked (and Didn’t) on The Meb Faber Show

Historian Joseph Moore spent over a decade in the archives to write a book on three centuries of American financial advice — and his central finding upends nearly everything people assume about money. Real estate "did not always go up," he says — in fact, an inflation-adjusted home in most American cities cost the same in the 1990s as it did in the 1890s. The claim that "stocks always beat bonds" over the long run is also false, he says, citing academic research showing bonds actually beat stocks for a roughly 60-70 year stretch of the 19th century. Moore also reveals his own real estate horror story (human traffickers, a shotgun-wielding tenant), the moment he made his own fake billion-dollar cryptocurrency to prove a point about net worth, and why he thinks Bitcoin's real legacy won't be what its founders intended.

Mentioned: Canal Bank of New Orleans, Bitcoin, US Treasury bills, residential real estate, stocks, bonds, gold, REITs, ETFs, cryptocurrency

Watch on YouTube

Economist Jim Paulsen Discusses Why the AI-Driven Bull Market Looks "Like Dot-Com" to Him on Excess Returns Podcast

Jim Paulsen, PhD economist and 40 years as a Chief Investment Strategist, joins to explain why weakening economic momentum, tightening financial conditions, and extreme AI enthusiasm could set the stage for a 10% to 20% stock market correction. They discuss labor market weakness, the growing divide between technology and the broader economy, fading tech leadership, market complacency, bond yields, and the demographic forces that could keep US growth and inflation lower for years.

Jim also explains why he does not expect a recession or the end of the long-term bull market, but believes investors may need to reduce their concentration in AI and technology stocks as leadership quietly shifts toward the broader market.

Mentioned: S&P 500, Magnificent Seven, technology sector, communication services sector, information technology, information processing equipment, intellectual property products, utilities, consumer staples, healthcare, REITs, US Treasury yields, US dollar, WTI crude oil

Watch on YouTube

Deep Dives

Detailed breakdowns of today’s must-listen investing and finance podcasts — key arguments, notable quotes, and takeaways from each episode, condensed so you can catch up without listening.

Investors Appearances

Chris Camillo on Dumb Money Live

The Flip-Flop “Social Arbitrage” Trade

A $750 flip-flop from Mary-Kate and Ashley Olsen’s label The Row went viral in the spring of 2025, worn by Jennifer Lawrence, Kendall Jenner, Zoë Kravitz, Jonathan Bailey, and Elizabeth Olsen. By summer 2026, the look had migrated downstream into a visually similar $20 mass-market flip-flop, creating a full price ladder from $20 to $750 that lets every income bracket participate. The hosts trace the trend to its purest public-market expression: Havaianas, whose square-toe silhouette most closely echoes the viral shoe, combined with the broadest global distribution of any comparable brand. Havaianas isn’t independently listed, though — it sits under its Brazilian parent, Alpargatas (ticker ALPA4), which trades only on Brazil’s B3 exchange and draws an estimated 98–99% of revenue from Havaianas. As one host framed it, “this is about as pure of a pure trade as it gets.” Cited Q1 2026 figures (stated on-air, unverified): sales +12%, volume +8%, U.S. sales +22%, U.S. volume +161%. The hosts note most of the actual trend impact likely landed in just the last 60 days, meaning that quarterly data probably understates the current run rate.

Why It’s Hard to Trade.

There is no actively traded U.S. ADR for Alpargatas — the hosts explicitly warn listeners against any ADR ticker that surfaces in a search, believing it to be inactive or illiquid. Schwab doesn’t offer direct Brazil market access; Interactive Brokers is presented as the only realistic U.S. retail path, and even that requires a funded account most retail investors won’t already have. Notably, neither host had money in an Interactive Brokers account at the time of recording — they aired the idea anyway rather than delay for a personal head start, and disclosed they held no position. Currency conversion adds further friction, at roughly 1% each way. The hosts used the episode to publicly needle Robinhood’s CEO over the access gap: “we are desperate for it as retail investors,” one said, arguing that tokenized international market access would be “a massive segment” if built.

Sympathy Trades — Mostly Rejected.

VF Corp and Deckers were ruled out; both divested their strongest sandal assets (Reef, Sanuk), and sandals now make up a minimal slice of Deckers’ revenue mix. Reef itself has strong distribution but is privately held, taking it off the table. Crocs surfaced in related search queries but wasn’t dominant enough to matter. Old Navy and Gap were dismissed as low-margin traffic drivers rather than genuine trend beneficiaries. MercadoLibre came up as a tangential Brazil/Latin America e-commerce long, disclosed separately by one host — explicitly not part of the sandal thesis.

Birkenstock — the one real sympathy play.

One host disclosed an actual long position, built on: the Arizona sandal’s square-toe styling sitting loosely adjacent to the trend; Google search interest for “Birkenstock sandal” roughly doubling year-over-year this June, versus a slower, steady climb in prior years; SimilarWeb traffic up meaningfully year-over-year; and an upcoming July 16 collaboration with French ballet-shoe brand Repetto across the Arizona, Ribbon, Scallop, and Opera lines, expected to lift brand attention even though the limited run won’t move revenue on its own. Tariff-driven margin pressure is treated as already priced in, with pricing power — price increases not denting demand — as an offset. But the host was careful to size the conviction correctly: “I wouldn’t call it a high conviction trade on Birkenstock by any means. This would be a medium conviction trade for me.”

The Conviction Framework.

The hosts grade trades across three tiers of evidence quality. In their words: “what we have high confidence in... is that fashion attention and search momentum are... exceptionally strong.” Retail sell-through data earns “moderate conviction.” Extrapolating the trend to the entire sandal category, rather than the specific fashion sub-trend, is where they have “less conviction” — and they explicitly warn against making that leap. This week’s flip-flop trade sits at the high-confidence tier bordering moderate; the broader “all sandals are hot” read is the low-conviction tier, and they say so directly.

Why the Trend Might Have Legs.

Six reinforcing factors were cited for durability beyond a single season: luxury legitimization cascading into other designer houses; a broader 90s/Y2K materials revival; the wide price ladder letting every budget participate; a broad and growing celebrity endorsement pipeline; expanding use cases beyond beach and pool into going-out styling; and high product-iteration bandwidth — colors, materials, toe shape, embellishment — giving brands room to keep the look fresh across multiple seasons rather than burning out in one.

Bloom Energy: the short thesis, and why the hosts aren’t buying it.

A short seller from Hunter Brook Research alleged on CNBC that Bloom Energy lacks sufficient scandium supply for its fuel-cell technology, drawing a Theranos comparison; the stock fell roughly 20% on the report. Bloom’s response, per an SEC disclosure cited on the show, asserts sufficient non-China scandium supply for current demand and backlog, with visibility into 25 GW of annual production. The hosts’ core pushback: major counterparties — Brookfield (partnership expanded to $25B), Oracle (contract scaled to 2.8 GW), Nebius (up to $2.6B committed) — would all have had to skip their own diligence for the short thesis to hold. “It’s theoretically possible... but it’s extraordinarily unlikely,” one host said. They also point out that the manufacturing yield and efficiency data needed to actually verify the scandium claim is proprietary, meaning outsiders on either side of the trade are working with incomplete information. One host disclosed he isn’t selling and may add to the position, stating plainly: “I’m willing to take that risk.”

Beyond public markets: a women-centered podcast bet.

Late in the episode, one host used the flip-flop trade as a springboard into a broader point about "social arbitrage" thinking — that spotting a cultural opportunity doesn't always end in a stock trade. He disclosed he's developing a new podcast built around what he called "the number one talent solo content creator" in the Gen Z women's space, framing it as a multi-year bet rather than a side project. His reasoning: AI is going to increase, not decrease, demand for distinctly human personalities, since raw authenticity is "the one thing that AI can't yet fully deliver." He argued the bigger opportunity specifically sits in women's podcasting because of a structural gap — "do you know 70% of podcasts are men's podcasts?" — driven in his view by higher risk-aversion among women creators facing the technical friction of cameras, editing, and production. He drew a direct parallel to his own history of acting on a cultural read outside public equities, referencing an earlier venture (a Pokémon-themed trade show) built from a thesis with no investable public equivalent at the time. The takeaway he offered listeners: training yourself to think like a "social arb investor" has implications well beyond the stock market — sometimes the trade is a business, not a ticker.

Steve Eisman on The Real Eisman Playbook

It’s All One Trade: AI’s Grip on the Market

The GDP math. Citing Apollo chief economist Torsten Slok, Eisman broke down the roughly 2% US GDP growth expected in 2026: about 100 basis points comes from AI-related capex and data center spending, 30bps from reshoring/infrastructure, and roughly 90bps from tax refunds tied to Trump’s “big beautiful bill.” In other words, AI accounts for about half of this year’s growth.

The market math is worse. Eisman argues AI’s market impact dwarfs its economic impact. Nvidia alone is 38% of the S&P 500; add Google, Amazon, and other tech-adjacent names, and you clear 50%. That breaks the assumption that index ownership equals diversification.

Bonds aren’t a hedge either. By Eisman’s numbers, 15% of all existing corporate debt is AI-related, and 50% of all newly originated corporate debt in 2026 is AI-related — meaning a standard 60/40 stock/bond split doesn’t provide the diversification investors assume it does. “It’s all one trade. It’s all AI,” he said, adding that if AI fails to deliver or takes much longer than expected to become profitable, he expects the US to tip into recession with markets falling sharply.

How the Bull/Bear Debate Has Evolved

The GFC parallel. Eisman drew a direct line between how his subprime short thesis developed over 12+ months in 2006–07 — starting from anecdotal evidence, then delinquency data, then a tip about Wall Street’s own balance sheet exposure — and how the AI debate is now maturing in real time as new facts surface.

Cracks in the bull case. He flagged growing signs of an AI price war: cheaper Chinese AI models are drawing corporate interest, and AI companies had been subsidizing token pricing well below actual cost to drive adoption. That subsidy is fading — corporate AI budgets reportedly blew through annual plans within months, and companies are now pulling back the “all you can eat” AI access they gave employees.

Where money is rotating. Investors have been shifting out of hyperscalers and into semiconductors, semiconductor equipment, and AI power plays — though even that trade is showing strain. Eisman pointed to Samsung’s 1,800% operating profit jump this week, which still sent the stock down 7% on fears that slowing hyperscaler growth will eventually pressure semi pricing.

This Week’s News

Circle / stablecoins. Circle fell 17.5% on June 30 after a consortium including Visa, Mastercard, Stripe, Coinbase, and BlackRock announced a competing stablecoin ecosystem — a serious threat given Circle’s position as the second-largest stablecoin issuer behind Tether.

Nike. Adjusted EPS came in at 20 cents versus 14 cents a year ago and 13 cents expected, with revenue of $10.97B also beating estimates — but revenue was still down 1% year-over-year, and cautious management commentary sent shares lower after hours. Eisman’s take: a beat, but not a turnaround story.

Iran. Attacks on shipping in the Strait of Hormuz and on US sites in Bahrain and Kuwait drew US retaliatory strikes, with Eisman describing the ceasefire as increasingly fragile.

Mailbag

On portfolio construction: A subscriber asked how Eisman’s disclosed 16-stock portfolio fits into his broader asset allocation. His answer: it is his entire long book. Beyond that, he holds mostly cash in a money market fund, no bonds, no precious metals, and doesn’t count his home as an investment. His hedges are held in short positions he hasn’t yet disclosed.

On required reading: Asked for a recommended reading list, Eisman pushed back on the premise — he rarely reads business books, favoring history and historical analysis instead. Picks mentioned: The Nation That Never Was (Kermit Roosevelt), Intellectuals (Paul Johnson), The Guns of August (Barbara Tuchman), The Cultural Revolution (Frank Dikötter), and Colleen McCullough’s First Man in Rome. His reasoning: broad, cross-domain reading builds the analogies he draws on when identifying patterns in markets — “being well read is my superpower.”

Brian Dunne on The Markets by Goldman Sachs

On the Fed and rates. Dunne said real (inflation-adjusted) rate differentials still favor dollar strength even in a scenario where the Fed simply holds rather than hikes. He noted six to seven basis points are priced for July and slightly more than a full hike by year-end, but stressed the committee’s shift in its dot plot is the bigger signal than near-term pricing.

On dollar debasement fears. He separated two worries investors have raised: 2025’s tariff policy (reserve diversification is continuing but hasn’t accelerated beyond expectations) and petrodollar risk tied to Iran. On the latter, he flagged a real tail risk — Iran could start charging yuan rather than dollars for transit through the Strait of Hormuz — but said there’s no evidence yet that this is actually shifting reserve currency dynamics.

On Japan and the yen. Despite Japanese yields hitting 30-to-40-year highs, Dunne argued policy is still too easy relative to inflation to support the currency, and that recent long-end moves reflect inflation expectations more than tightening. His house view: continued yen weakness with episodic intervention — unless Japan’s pension system pivots away from dollar assets toward domestic holdings, which he called the biggest swing factor.

On positioning and trades. Dunne warned the market is heavily crowded into carry trades this summer, with EM carry (Brazil, Egypt) in favor. His own highest-conviction ideas: long dollar vs. Swiss franc as a core position, and long dollar vs. Chinese yuan (one-year dollar-CNH calls struck above 7) as a hedge against renewed Fed hawkishness or a re-escalation in the Middle East pushing energy prices higher.

Marques Colston on Making the Sports Asset Class Accessible on Bloomberg Radio

The fund structure and mission

The Champion Fund is structured as an SEC-registered interval fund, a format that allows it to pool capital from a broader investor base than the institutional-only vehicles that have historically dominated sports investing. Colston frames his own background—as a player, then an owner with operational experience over roughly seven years—as giving him a multi-lens view of the asset class: “I’ve been able to see this asset class from a bunch of different lenses.” That perspective shaped the fund’s mission, which he describes plainly as making “the sports asset class accessible to every investor.”

The five sub-asset classes

The fund breaks its exposure into five buckets: emerging sports teams (with specific interest in leagues like Serie A, which Colston calls “slightly underrated from a media value perspective”), growth-stage sports-tech ventures (fan engagement platforms, ticketing technology), media and services businesses, real estate and hospitality tied to sports (stadium development, sports-anchored mixed-use projects), and fund-of-funds positions in established managers with their own track records and thesis.

The “meteorites” thesis

Colston’s central growth argument is that media rights holders displaced by streaming entrants act as “meteorites” that push capital and attention downstream into leagues and properties previously overlooked by linear broadcast: “as meteorites kind of displace and find their way down downstream, we see... a high tide effect.” He points to the WNBA’s rapid media-rights renegotiation over the past two to three years as a live example, calling the league’s growth “just extraordinary.”

Where the fund stands today

The fund is currently working to secure anchor institutional investors. Asked what’s next, Colston kept it simple: “It’s really just continuing to tell the story, continuing to find those anchor investor partnerships, and just continuing to get the word out.” He described the reception from prospective partners and portfolio companies as strong, noting portfolio companies value access to “a distribution network of investors that typically they wouldn’t have access to.” No specific fundraising targets, minimums, or closing timeline were disclosed in this conversation.

Jason Zweig on Wealthtrack

The Investor as Their Own Worst Enemy: Zweig explains that Graham’s most profound observation is that investors often fail due to their own psychological impulses rather than market forces. Modern distractions like social media, trading apps, and the constant urge to compare oneself to others exacerbate these self-defeating behaviors.

Definition of the Intelligent Investor: Intelligence, in Graham’s view, is not about high IQ or academic credentials, but rather good judgment, skepticism, independence of thought, and emotional discipline. It is more akin to wisdom than raw intellect.

The Need for Structure: To protect against impulsive decision-making, Zweig advocates for the use of an Investment Policy Statement and strict checklists. These structures force investors to pause, evaluate their goals, and analyze investments objectively before acting.

Investing in the Digital Age: Many modern trading platforms are designed to mimic the addictive nature of casino slot machines. Zweig suggests avoiding trading during market hours, ignoring market noise, and focusing on long-term objectives to maintain clarity.

Total Wealth Perspective: Zweig encourages investors to think beyond just their financial capital. He highlights the importance of viewing wealth through three primary buckets: financial capital (investments), physical capital (possessions), and human capital (career and earning potential), and ensuring all three are managed and integrated effectively.

George Noble on Bloomberg Radio

On the AI bubble — and why he thinks it’s worse than 2000

George Noble frames the AI trade through a historical lens: “there’s really nothing new under the sun,” pointing to the South Sea Bubble and Dutch tulip mania as precedents for the same fear-and-greed cycle now playing out in AI. He’s careful to say he isn’t “bearish on AI per se” and expects near-universal adoption, but his test is simple: “show me the money. Where’s the ROI? And I don’t see it.” He cites Julian Garrett of Micro Macro Strategy Partners, who calculates the current malinvestment at 17 times the dot-com bubble, and argues the scale relative to the real economy — not just the dollar figures — is what makes this cycle more dangerous.

On SpaceX’s valuation and share unlocks

Noble is sharply critical of the SpaceX IPO, noting that buying companies above ten times revenue “usually ends very badly” — and SpaceX priced at roughly 120 times revenue, with some projections showing the company cash-flow negative for years. His bigger concern is structural: a staggered lock-up schedule starting the month after the next quarterly earnings, with 20% of shares unlocking shortly after and additional tranches of 7% unlocking every 20-30 days, taking the float from roughly 5% to 100% by December. He calls this dynamic “manipulative” and argues regulators should intervene: “it’s not a question of what’s legal or illegal. It’s just not right,” warning that retail 401(k) holders are effectively providing exit liquidity for insiders.

On Tesla and Elon Musk

Noble calls Tesla “probably the biggest misallocation of capital at scale in the history of stock markets, perhaps only surpassed by SpaceX.” Drawing on his own background as an auto analyst under Peter Lynch — he visited Chrysler, Ford, and GM in Detroit in 1981 — he argues fundamental analysis simply hasn’t applied to Tesla’s valuation, and that professional auto analysts with hold/sell ratings “have been wrong” against a market narrative of “juy buy it, it’s Elon.” He also floats — with the caveat “I never speculate” — that a SpaceX-Tesla merger is “a reasonable speculation.”

Where he sees value: energy, gold, and commodities

Away from AI-adjacent names, Noble is constructive on traditional value sectors. He flags energy as offering “very little downside and potentially a lot of upside” given a widening gap between financial and physical oil markets, and calls the setup “the biggest energy dislocation in history.” He’s bullish on gold stocks, citing one name (SRM) trading at seven times earnings, not cash flow, and likes select copper and commodity names. On AI-adjacent power plays tied to data-center demand, he’s more cautious — “a lot of the derivative power plays... are going to have a big problem” — and says his fund has been short Oklo, which he calls “one of the biggest frauds out there on the market right now,” for a year.

On investing internationally

Asked whether overseas investing requires a weak dollar, Noble says no — the key variable is that “economic cycles across different geographies vary enormously,” requiring a top-down view layered on bottom-up stock picking. He notes markets are far more correlated today than when he started at Fidelity in the early 1980s, reducing some of the diversification benefit international investing once offered.

DoubleLine Capital

Equities: an extremely narrow rally

The technology sector’s 43.49% second-quarter return drove the S&P 500’s 15.2% quarterly gain, with the industrial sector as the only other standout at roughly 15%. Russell 1000 Value rose 14%, Russell 1000 Growth rose about 17%, and the equal-weighted S&P 500 gained 11.4% — a meaningful gap versus the cap-weighted index that signals concentration risk. Energy and communication services were the weak spots, with energy still up over 23% year-to-date despite pulling back, and utilities essentially flat despite AI-driven power demand narratives. Month-to-date in July, the pattern is reversing: tech is down about 2.5%, while consumer discretionary and communication services lead. The Russell 2000, which gained 21.5% in Q2, is down 1.6% month-to-date.

Fixed income: a flattening curve

The 10-year yield rose 15 basis points in Q2 while the long end moved just 4 basis points, but the 2-year and 5-year sold off 38 and 28 basis points respectively — a belly-of-the-curve selloff tied to shifting inflation and Fed expectations. The 2s10s spread compressed from 52 to 29 basis points. Despite the yield moves, the Bloomberg Agg still returned over 60 basis points in Q2, led by emerging market debt (up over 4.5%), high yield corporates (up ~2.5%), and investment grade corporates (up ~1.5%). Month-to-date, the Agg is down about half a percent on duration-driven losses, with investment grade corporates the worst performer (-82 bps) and bank loans the best (+81 bps) given minimal rate sensitivity.

Commodities and currencies

The Bloomberg Commodity Index fell about 8% in Q2 (still up 18% year-to-date) as energy dropped over 13% amid an easing Middle East conflict, with WTI crude pulling back to roughly $71/barrel from over $100 during the height of tensions. Precious metals sold off sharply — gold fell over 13% in Q2 and sits down more than 5% year-to-date — while industrial metals gained, with copper up over 10% in the quarter and 9.5% year-to-date. The dollar index rallied to roughly 100.8 on the new Fed chair’s inflation-fighting commitment, and Bitcoin had a rough quarter, closing Q2 near $58,600 (down 27%) before bouncing to around $63–64,000, still down 14% year-to-date.

Labor market: stable, but with a wrinkle

Non-farm payrolls rose just 57,000 — a four-month low — while the household survey unemployment rate (U3) surprised lower at 4.2% versus an expected 4.3%. The explanation: labor force participation dropped from an expected-flat 61.8% to 61.5%, meaning roughly 750,000 people left the workforce, about a third of whom were previously counted as unemployed — mechanically pulling the unemployment rate down rather than reflecting underlying strength. JOLTS job openings for May came in at 7.66 million, pushing the openings-to-unemployed ratio to 1.04, the highest since January 2025. ISM Services for June printed 54.0, with new orders, backlog, and employment all showing expansion.

Fed watch and the week ahead

Rate traders are pricing in roughly 1.5 cuts through year-end, reflecting a hawkish tilt into next week’s CPI print. The Fed also named leaders for five new task forces — on communications, balance sheet policy, data, productivity/jobs, and inflation — with notable names including Nobel laureate Thomas Sargent on the inflation framework committee, former Bank of England governor Mervyn King on communications, and members with ties to Anthropic and Walmart’s former leadership on the productivity/jobs and data committees, respectively. Next week brings June CPI (est. -0.1% m/m, core steady at 2%), PPI (est. -0.1% m/m), and retail sales (est. +0.3% m/m).

Michael Cembalest: Why He’s Still “Analytically a Patriot” — Debunking Dollar Doom, China Bulls, and AI Bubble Fears⁠ | The Compound and Friends (Ep. 250)

Debunking the dollar bears

Cembalest argues that dollar-collapse warnings routinely fail a basic empirical test: are there actual signs of it happening? Tracking the dollar’s share of world trade, FX reserve allocations, SWIFT payments, and cross-border loans, he finds “there’s really no change” over the past five years — no currency is gaining meaningful share, not the yen, pound, or yuan. He’s equally skeptical of gold-hoarding narratives, explaining that the surge in gold’s share of central bank reserves is almost entirely a price effect — gold rising from roughly $1,500 to over $4,000 an ounce — rather than central banks actually accumulating more ounces: “that is 95% of the reason why gold as a share of foreign exchange reserves has gone up.”

Why China can’t replace the dollar

Cembalest’s clearest argument against a Chinese alternative centers on capital controls: China’s money supply has “massively outstripped” its accumulation of central bank assets and foreign exchange reserves, meaning that if China ever loosened capital controls, pent-up money would immediately flee the country. He notes China reportedly saw $800 billion to $1 trillion in capital outflows in 2025 despite existing controls, and argues a true reserve currency can’t carry that kind of structural risk.

The real debt timeline

Cembalest’s biggest long-term concern isn’t a sudden crisis but a specific calendar date: he projects that by 2031 or 2032, “100% of federal tax revenue” will be needed just to cover interest on the debt and entitlement spending, with credit rating agencies likely to threaten a downgrade two to three years before that point unless entitlement reform occurs. He contrasts this with the Eisenhower era, when the U.S. reduced its debt-to-GDP ratio from roughly 100% to 60% not through tax hikes or spending cuts, but through strong nominal growth.

On AI, chips, and a potential 1999 echo

Cembalest describes the current market catalyst as more technically complex than any he’s covered in 30 years, but his most pointed concern is structural: hyperscaler capital spending has begun shifting from internally generated cash flow toward debt and equity financing, with free cash flow margins declining sharply. He draws a direct historical parallel to 1999, when communications equipment makers kept climbing even as the internet service providers buying their gear began rolling over — a warning sign, in his view, now potentially playing out with semiconductor stocks continuing to run even as some hyperscaler names show signs of strain. He notes hyperscalers’ own in-house chips (Google’s TPUs, AWS’s Trainium, Microsoft’s Maia, Meta’s custom silicon) are reportedly cutting total cost of ownership by 30-40% versus Nvidia GPUs — part of why Nvidia’s forward P/E has compressed to around 18-20 times.

Leveraged ETFs and Korean retail as late-cycle signals

Cembalest flags the explosive growth in double-leveraged ETF notional exposure — roughly $500 billion — as a source of the sharp intraday market swings investors have been experiencing, since providers must mechanically buy into rallies and sell into selloffs to stay hedged. He also singles out surging margin lending on Korea’s KOSPI index tied to Samsung and SK Hynix as a signal worth watching, recalling similar retail euphoria patterns from 1997 and 2008: “Korean retail is basically the... scariest market indicator... by the time those guys start to pile into stuff, you’re really, really late in the game.”

Ranking OpenAI, Anthropic, and SpaceX on business uncertainty

Asked to rank the business uncertainty of the major AI companies, Cembalest places OpenAI highest, followed by Anthropic, then SpaceX — citing OpenAI’s revenue concentration in consumer subscriptions with limited enterprise and advertising diversification. He draws a comparison to AOL in the early internet era: “the network effect is pretty powerful, but... Anthropic showed how quickly those kind of things can change.”

Market health check

Despite pockets of frothy behavior, Cembalest describes current market internals as broadly healthy — citing strength in regional banks, transports, industrials, small caps, and Wall Street banks, along with better-than-expected retail sales and solid bank loan growth. His preferred coincident indicator, the ratio of new manufacturing orders to inventories across the PMI data JPMorgan tracks, currently reads favorably, though he flags rising credit card and auto loan delinquencies as a softer spot in the consumer.

A cybersecurity warning ahead

Cembalest previewed an upcoming JPMorgan research piece — internally titled “Patchmageddon” — written in partnership with the firm’s cybersecurity team as part of Project Glasswing, the group of roughly 20-30 companies with early access to advanced AI models for security research. He described AI-discovered vulnerabilities as often defying human intuition entirely, warning that the pace of newly discovered vulnerabilities is currently outstripping the pace of patching, and that individual companies should expect a wave of AI-enabled breaches in the coming period even if it doesn’t become a market-wide event.

Louis-Vincent Gave: “China’s Building Dubai, the US Is Building Fortresses” — On Oil, AI, and the Coming Dollar Crack | RiskReversal Podcast

Fortress vs. Dubai: two AI strategies

Gave’s central framing: “OpenAI and Anthropic are essentially looking to build medieval fortresses with huge walls and say come into our fortress and you’ll be safe” — serving enterprise clients like Goldman Sachs and JPMorgan. China, by contrast, is “building Dubai... everybody can come in, everybody can come out.” He argues China was forced into the open-source strategy rather than choosing it: unable to buy the chips needed to compete on raw compute after U.S. export controls, Chinese labs had no option but to open-source their models and let global developers improve them for free — a strategy Gave calls “completely anathema to the usual Chinese way of doing” business, which normally just throws money at problems.

Oil, China’s storage strategy, and the $65-$100 range

Gave argues China’s decision to fully withdraw from the seaborne oil market during the Iran conflict — leveraging an estimated 1.8 billion barrels of storage capacity, larger than officially reported — was the single biggest reason oil didn’t spike toward $150 as many predicted. He frames China’s oil-buying behavior as mechanical: “at 65, they buy as much as they can... at 100 they stop buying,” effectively creating a de facto price ceiling and floor. He views the resulting $65-$100 range as bullish for most energy producers’ cash flow, but flags refining margins (crack spreads) as unusually stretched due to Russia-Ukraine refinery strikes, the loss of six major Gulf refineries including Bahrain’s during the Iran conflict, and China restricting refined product exports — with Russia’s diesel export halt (roughly 11% of world supply) adding further pressure.

Why China isn’t trying to destabilize the world order

Pushing back on the idea that China, Russia, and Iran form a coordinated “axis” benefiting from U.S. entanglement in the Middle East, Gave argues China’s overriding priority is domestic social stability, not geopolitical maneuvering — and that a $150 oil price hurting the U.S. consumer would actually hurt China more, since it depends on that consumer. He frames China’s shipbuilding buildup as a response to a specific lesson from the Iran conflict: “the US no longer controls the world’s sea lanes,” because modern drone warfare has broken the economics of naval protection.

Commoditization risk in AI and semiconductors

Gave’s most direct market call: both AI models and semiconductors are “priced to essentially never be commoditized,” despite China’s rapid entry into both markets. He points to Chinese memory makers CXMT and Yangtze Memory Technology as underappreciated threats to Micron’s roughly 85% gross margins, and notes token pricing has already shifted from “token maxing to token minimizing” in just the past few months — evidence, in his view, that customers won’t tolerate a bait-and-switch from cheap to expensive AI access.

The capex math and “no rainbow in year four”

Gave challenges the assumption that hyperscaler AI spending is a temporary three-year buildout followed by harvest years, citing Oracle spending effectively 100% of revenue on capex and pointing to embedded long-term costs — 30-year real estate leases, constant GPU upgrade cycles, and rising maintenance capex — that don’t disappear once the initial buildout ends. He cites a McKinsey estimate of $6.5 trillion in cumulative AI infrastructure spending between now and 2030.

Earnings quality concerns

Gave flags a widening gap between S&P 500 reported earnings and national income earnings (a proxy drawn from tax receipts), calling large divergences historically associated with either bubble-era financial engineering or bear-market bottoms. He notes recent quarterly S&P earnings growth of roughly 28% falls to about 17% excluding “other income” (investment gains from stakes in companies like OpenAI and Anthropic), and to mid-single digits excluding semiconductors entirely.

The bond market and a “Damoclean sword” over global yields

Gave describes a structural bond bear market driven by persistent inflation and unsustainable fiscal deficits (the U.S. running roughly 7% of GDP deficits at full employment). He highlights Japanese investors holding an estimated $3.5 trillion in foreign assets, equal to roughly 80% of Japan’s GDP, and argues that as the U.S.-Japan yield differential narrows, Japanese capital could increasingly repatriate — pressuring bond markets in the U.S. and Europe alike. He argues debt-to-GDP is the wrong crisis indicator; the real risk factor is what share of a country’s debt is foreign-owned, citing Greece, Thailand, and Argentina as precedents, and views France and the UK (both around 30% foreign-owned debt) as more exposed than the U.S.

The dollar’s slow unraveling

Gave argues Magnificent Seven stocks have effectively become a global reserve asset, cited by institutions from the Swiss National Bank to sovereign wealth funds, and that if the AI/hyperscaler trade rolls over, “the dollar resumes its downward trend... absolutely.” He also flags China’s currency policy shift — the renminbi has appreciated roughly 50 basis points per month for 18 months — as creating tension with a weakening yen, a divergence he expects to eventually “snap.” He argues the DXY dollar index, roughly two-thirds euro-weighted, is a poor gauge of the dollar’s real trajectory since it excludes China and commodity currencies entirely.

On gold and the shift toward stockpiling commodities

Gave remains “a bull on gold” but says he’s “much more bullish on other commodities,” arguing the lesson of the Iran/Strait of Hormuz crisis wasn’t to hold gold or Treasuries but to stockpile physical necessities — citing India’s fertilizer shortage when China declined to sell reserves. He connects this to reported U.S. Department of Defense lithium stockpiling and a new German natural gas strategic reserve, framing a coming multi-year wave of inventory rebuilding as structurally inflationary for commodities broadly.

Positioning: overweight financials and cyclicals

Gave’s tactical view for U.S. equities favors financials over tech, citing stretched valuations and extreme investor positioning in tech versus more attractive valuations and building momentum in financials, alongside a global trend of bank stocks (U.S., European, Japanese, even Chinese) breaking out. He expects a steeper yield curve as central banks keep short rates low to manage rolling government debt, favoring cyclicals and a weaker-dollar trade over consumer defensives.

C-Suite Executives Appearances

SK Group Chairman Chey Tae-won Discusses SK Hynix’s ADR Debut and the Case for an “AI Era” Memory Supercycle on Bloomberg Radio

Why list in the US now

Chey says SK Hynix had wanted access to U.S. capital markets since he acquired the company roughly 15 years ago, and the $26.5 billion raise represents that ambition finally realized. He confirmed leadership has discussed doing follow-on ADR offerings with regularity, though he declined to give specifics, and said the priority now is keeping the stock price stable to support future demand before pursuing additional rounds.

The structural shift in memory demand

Chey’s core argument is that AI has changed memory from a cyclical, hardware-count-driven business into something closer to permanent structural demand. In the old model, chip demand tracked the number of devices per person — one phone, one PC. In the AI era, he argues each person may eventually run many different AI agents, and each agent generates substantial KV (key-value) caching that requires memory to store, meaning demand scales with usage rather than device count. He said he doesn’t know how long this dynamic will persist, but suggested it continues until society reaches some kind of “settlement” with AGI.

Capacity expansion and customer demand

SK Hynix announced five months ago it will double its total manufacturing capacity within five years — a plan Chey says outside observers view as risking oversupply, but which he says customers have told him is still insufficient; some are asking for five to six times more capacity rather than a simple doubling. He also noted the industry has shifted toward long-term supply agreements at customers’ request, which he says helps smooth out the historically cyclical, capital-intensive nature of memory manufacturing.

Betting on memory when others wouldn’t

Reflecting on the 2012 decision to acquire what was then a distressed company under a bank-led workout program, Chey said the memory business’s brutal cyclicality and constant multibillion-dollar capital expenditure requirements had scared off other buyers. His view was that mastering memory manufacturing — with hundreds of billions of transistors packed into a single chip — represented the most sophisticated manufacturing process achievable, and that mastering it would open doors elsewhere.

On the AI bubble question

Asked whether his view has changed since previously saying the “cost of AI” was too high, Chey said token cost has fallen roughly 80–90% over the past three years and expects continued declines as the ecosystem matures. On bubble concerns specifically, he distinguished between stock market overshooting — which he acknowledged happens — and the underlying technology, which he called real and still in an early, immature stage that will keep improving.

Investment plans, talent, and the US relationship

SK Group has already invested more than $35 billion in the U.S. across SK Hynix, its bio and battery businesses, and SK Telecom’s AI startup investments, including a new Indiana fab. Chey said his broader investment plans exceed that figure significantly, though he didn’t give a specific target. On competing for skilled semiconductor talent against companies like Micron, he pointed to the ADR listing itself, along with stock options, as tools to attract talent globally. He also addressed AI infrastructure plans, targeting roughly 15 gigawatts of AI data center capacity in Korea and an additional 5 gigawatts internationally, including potential U.S. sites, with power availability and electricity pricing as the key constraints.

On China and competition with Samsung

Chey described China’s AI strategy as diverging from the U.S. approach, built around a large domestic pool of STEM graduates and a focus on producing cheaper tokens rather than competing on token quality. He declined to directly address whether SK Hynix can catch Samsung, saying his priority is stakeholder outcomes broadly — balancing shareholder returns, customer pricing and supply needs, and employee wellbeing — rather than positioning against a specific competitor.

Coinbase's New Vice Chairman, Ryan VanGrack, on Crypto Legislation and the "Everything Exchange" on Fox Business

On the CLARITY Act and the regulatory momentum thesis

VanGrack frames the CLARITY Act as pivotal for the industry, describing it as a bipartisan effort with both Democratic and Republican senators working to get it across the finish line. He argues the “20th century rails” of banking-era regulation weren’t designed for today’s financial technology and that the goal isn’t less regulation but regulation that actually exists for crypto in the first place — something he says has been missing for too long. He expects passage to trigger not just market stability but a broader suite of follow-on rules and regulations.

The Dimon clash

Bartiromo pressed VanGrack on Jamie Dimon’s concern that the CLARITY Act could let crypto platforms effectively pay interest on stablecoin deposits without the protections banks provide, potentially destabilizing the monetary system. VanGrack rejected the concern directly, arguing the legislation offers no advantage to money market funds and that traditional and community banks won’t be harmed by it. He characterized Dimon’s opposition as an incumbent spending heavily to protect the status quo, and said the industry will fight back regardless of whether it ultimately prevails. On Dimon’s separate criticism of Brian Armstrong personally, VanGrack pushed back firmly, crediting Armstrong and Coinbase with fighting longer and harder than any other company for crypto regulatory clarity — including suing the FDIC to push for clearer rules — and drawing on his own background as a former senior SEC regulatory official to back that claim.

On equal regulation vs. bank-style oversight

Bartiromo pushed a specific critique: if Coinbase’s products “sound like a bank” and “walk like a bank,” shouldn’t they be regulated like one, including FDIC coverage? VanGrack’s response was that applying nearly century-old banking rules unchanged to modern financial technology is a fiction, and that the right path is purpose-built regulatory scaffolding through the SEC and CFTC rather than forcing crypto into legacy bank regulatory categories.

Business priorities: the “everything exchange”

VanGrack pointed to Coinbase’s diversification beyond crypto trading — stocks, commodity futures, options, prediction markets, perpetuals, and AI-based advisory tools — as central to a broader thesis that traditional finance and crypto converge into a single “modern financial institution” over the next decade. He cited recent UK regulatory approval to offer derivatives and equities trading to both institutional and retail investors on one platform as an example of where Coinbase is expanding, alongside continued interest in prediction markets as CFTC guidance in that space develops.

On the stock’s decline

Asked about Coinbase shares being down roughly 30% year-to-date alongside weaker crypto trading volumes, VanGrack attributed the move to short-term uncertainty around the CLARITY Act’s progress and bitcoin price action rather than any deterioration in the underlying business, reiterating that he’s “never been more bullish” on Coinbase’s and the industry’s prospects. Bitcoin was trading near $64,000 at the time of the interview, with some traders eyeing a breakout toward $67,000.

Pelgo CEO Chieh Huang Discusses AI, Jobs, and the New American Dream on Bloomberg Radio

On the American dream and global opportunity

Chieh frames American entrepreneurship as “still a beacon for entrepreneurs all over the world,” citing a recent $29 billion raise as proof the dream is “alive and well.” But he’s careful to note this opportunity is no longer geographically contained: “that diaspora of opportunity is all over the world,” driven in part by how much AI “has democratized access to these markets.” His takeaway for investors is not to overlook opportunity abroad simply due to unfamiliarity with a given country.

On AI and jobs — the short-term/long-term split

Chieh takes a firmly near-term pessimistic stance: “I do think many, many jobs, many white-collar jobs are going to go away.” He pushes back on the framing that he’s being too short-term in his thinking: “longer term is tomorrow for me.” His reasoning centers on velocity rather than current capability: “oftentimes we look at what’s the state of the art, but we forget the velocity of the art and how much it’s come... in three years, let alone six, nine, ten years in the future.” He does concede a longer-term growth case exists, but distinguishes that from the disruption he expects in the near term.

The steel belt analogy and the safety net gap

Chieh’s clearest articulation of the risk draws on U.S. industrial history: comparing AI-driven displacement to deindustrialization, he notes that while economists can say offshoring was “a net benefit for the U.S.” in aggregate, “you go to the steel belt and get on in a town square there and tell them that — I don’t think you’re going to make a lot of friends.” His core structural concern is that “we don’t have great safety nets for folks,” unlike other countries where displaced workers “can figure things out, you can retrain.” This gap is the business rationale behind his company: working with employers to fund outplacement and support services for workers being displaced, including those leaving voluntarily.

On China and the AI race

Asked about the technological threat posed by China, Chieh is measured but direct: most entrepreneurs build technology “because they like the technology and they see opportunity,” but AI is powerful enough that “governments invariably need to get involved.” He characterizes the competitive dynamic bluntly from a U.S. vantage point: China’s government is “playing with a stacked deck” and “crushing us short term on price,” flooding markets with units regardless of cost. His prescription is that the U.S. government needs to actively support domestic entrepreneurs to avoid losing the race, drawing a direct parallel to internet-era leadership: “if we were not the leaders of the internet over the last 30 years... take a look at what our economy would have become.”

On where AI development stands today

Chieh offers a specific historical comparison for AI’s current market stage: “I actually think we’re probably in the equivalent of ‘99” — the frothy, skepticism-laden period just before the dot-com crash, when people said the same thing in ‘01 about “the death of the internet,” only for “almost everything that was promised” to become true two decades later. He frames current AI skepticism as a similar, likely temporary, sentiment cycle.

On corporate domicile

Asked whether he’s moving his company to Texas or Florida, Chieh says the question has come up, notes his company is incorporated in Delaware, and allows that “we should have taken a closer look at Texas and maybe we will” — framing state-level competition for corporate domicile as a healthy dynamic.

Investing and Business podcasts

This week in AI: Grok is Back, ChatGPT 5.6, Meta’s new models, China’s Chip Gambit on Limitless Podcast

Grok 4.5: SpaceX AI’s comeback

Ejaaz and Josh frame Grok 4.5 as a major turnaround for SpaceX AI, which they say had fallen visibly behind OpenAI and Anthropic before this release. The model ranks roughly third on general benchmarks behind Fable 5 and GPT 5.5, but stands out on coding tasks and cost — priced at around half of Opus 4.8 and, per one benchmark cited, roughly 17 times cheaper on a cost-to-solve basis, solving problems in about 16,000 tokens versus Opus’s 67,000. The hosts attribute much of the jump to data from Cursor, which SpaceX AI is reported to have acquired for $60 billion; they argue the value came less from raw compute and more from Cursor’s routing data teaching the model how to reason across coding tasks. Elon Musk reportedly said SpaceX AI plans to ship a new foundation model every month through the end of 2026, a claim the hosts treat with some skepticism despite the company’s reported 500,000-GPU cluster.

GPT 5.6 and the new voice mode

OpenAI’s GPT 5.6 launched alongside two smaller models (Sol, Terra, and Luna, per the hosts) after clearing a government review process the hosts don’t detail further. Pricing is cited at $5 per million input tokens and $30 per million output tokens. The bigger story, in the hosts’ view, is a new full-duplex voice interface built on what they call GPT Live 1 — allowing users to talk and listen simultaneously and interrupt the model mid-response. Ejaaz calls it “OpenAI’s biggest release so far this year,” arguing voice will become the primary way people interact with AI models going forward. Both hosts note that voice features have historically run on older, less capable models, so this update effectively brings voice interaction up to frontier-model intelligence for the first time. GPT 6, described as OpenAI’s next flagship model, is reportedly expected within about a month.

China’s push toward custom AI chips

The hosts discuss reports that DeepSeek and a company referred to as Jipu are each developing proprietary AI chips to reduce dependence on Nvidia and Huawei hardware, following a reported Chinese government directive for domestic AI labs to use Chinese-made chips. Josh frames this as part of a broader shift from open-source to more closed, vertically integrated AI development in China, comparing it to OpenAI’s own in-house chip effort. Ejaaz argues export controls may have inadvertently accelerated this shift by forcing Chinese labs to build independent chip capacity rather than remaining reliant on U.S. hardware, and suggests the performance gap between U.S. and Chinese AI chips has narrowed from roughly three years to about six months.

Meta’s new image and video models

Meta released updated image and video generation models (referred to as Muse Image and Muse Spark), which the hosts say represent a meaningful quality jump from Meta’s earlier attempts but still fall short of frontier standalone image tools. The notable technical feature is an “agentic” reasoning process — the model searches for reference images, generates a draft, evaluates its own output, and revises before returning a result. Both hosts say they’re unlikely to personally switch to it given stronger existing options, but view it as a sign Meta is making real technical progress.

ByteDance’s image model and Cloudflare’s micropayments gateway

ByteDance released a new image-editing model the hosts describe as highly competitive on cost and precision editing, comparing it favorably to GPT Image tools for design-specific use cases. Separately, Cloudflare launched a payments gateway enabling small, per-request micropayments — potentially allowing AI agents to pay cents for individual pieces of content instead of full subscriptions. The hosts cite a Cloudflare figure that AI crawler traffic now accounts for 52% of all crawler requests, up from 22% in early 2025, and note AI crawlers pull far more content than they refer traffic back to sites.

David Senra Breaks Down Zero to One: Peter Thiel's Blueprint for Building a Monopoly on Founders Podcast

The real lesson from Steve Jobs

Senra opens with Thiel’s framing that Jobs’s greatest achievement wasn’t product design — it was designing Apple’s business itself, through “definitive multi-year plans” rather than focus groups or short-term thinking. Thiel notes that when the iPod launched in 2001, analysts dismissed it as “a nice feature for Macintosh users” — missing that Jobs had planned it as the first in a new generation of post-PC devices. The broader point: “a business with a good definitive plan will always be underrated in a world where people see the future as random.”

The contrarian question

Thiel’s starting exercise for founders is: “What important truth do very few people agree with you on?” Good answers, he writes, take the form “most people believe X, but the truth is the opposite of X.” Thiel’s line on why so few people attempt this: “brilliant thinking is rare, but courage is even in shorter supply than genius.”

Rejecting the dot-com playbook

Thiel describes running PayPal during the late-’90s bubble, watching founders plan IPOs from their living rooms before even incorporating — “everyone else in the valley was ready to believe anything at all.” Post-crash, the industry converged on four defensive rules: make incremental advances, stay lean and flexible, improve on the competition, focus on product not sales. Thiel inverts every one of them: it’s better to risk boldness than triviality; a bad plan is better than no plan; competitive markets destroy profits; and sales matters as much as product.

What a “creative monopoly” actually means

Thiel is explicit that he doesn’t mean monopoly in the predatory, robber-baron sense. Instead: “creative monopolists give customers more choices by adding entirely new categories of abundance to the world.” His sharpest line on the alternative: “all happy companies are different. Each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.”

Start small, then dominate

Thiel’s sequencing advice is to deliberately target a tiny, underserved niche first, then expand outward — citing Amazon’s internal code name, “the everything store,” and Bezos’s decision to start with books alone. “Sequencing markets correctly is underrated,” Thiel writes, “and it takes discipline to expand gradually.” Senra pairs this with the detail that Apple’s first sale was 50 computers for $25,000 — sold, per Apple lore, with Jobs walking into the buyer’s shop barefoot.

Last mover, not first mover

Thiel downgrades the value of being first: “moving first is a tactic, not a goal... it is much better to be the last mover” — the company that makes the final major advance in a market and then holds it for years or decades. He compares business to chess, quoting a grandmaster: “to succeed, you must study the endgame before everything else.”

Durability over growth

One of Senra’s favorite lines from the book: “growth is easy to measure. Durability isn’t.” Thiel argues founders who chase weekly active-user stats and quarterly targets can hit every number while missing the only question that matters — “will this business still be around a decade from now?”

The power law and the case for secrets

Thiel argues nearly everything in venture outcomes, careers, and decision-making follows a power law rather than a normal distribution — a small number of things (one market, one distribution channel, one decision) matter disproportionately more than all the rest combined. Because the power law isn’t obvious, the most valuable insights are often literal secrets: “every one of today’s most famous and familiar ideas was once unknown and unsuspected. A conventional truth can be important, but it won’t give you an edge.” Thiel’s warning on why people avoid this path: “people are scared of secrets because they are scared of being wrong.”

Sales is hidden, not absent

Thiel devotes a full chapter to distribution, arguing Silicon Valley chronically underrates it: “superior sales and distribution by itself can create a monopoly even with no product differentiation. The converse is not true.” He points out that sales roles are almost always disguised under other titles — “account executives,” “business development,” “investment bankers” — because “sales works best when it’s hidden.” His prescription: treat distribution as part of product design, not something bolted on afterward.

Founders: irreplaceable and dangerous

Thiel’s closing argument is that founder-led companies outperform precisely because founders carry extreme, contradictory traits — traits that would be mutually exclusive in most people. He uses Howard Hughes as a cautionary tale of what happens when those traits go unchecked over decades, contrasted with Steve Jobs’s return to Apple in 1997 as proof of a founder’s irreplaceable value: “Apple’s value crucially depended on the singular vision of a particular person... we need unusual individuals to lead companies beyond mere incrementalism.”

Historian Dr. Joseph Moore on 300 Years of Financial Advice That Worked (and Didn't) on The Meb Faber Show

Why “never save money” was once the best advice in America

Moore explains that before the Civil War, the U.S. federal government didn’t print money — currency was issued by individual banks and companies, redeemable only as long as the issuer stayed solvent. This meant holding cash was dangerous, and the standard advice, as he quotes a grandfather telling his grandson in the book, was: “never save money... get it out of your hands as fast as you can.” Immigrant families who didn’t understand this rule often lost everything when the bank or individual who issued their currency went under or vanished. Moore illustrates this with the story of William Wells Brown, a formerly enslaved man who opened a barbershop in Michigan and paid customers with his own printed scrip — money that circulated for a year before becoming worthless once he left town. Moore argues the “greenback dollar” introduced during the Civil War was revolutionary precisely because it let ordinary Americans hold onto money without fear of it going to zero.

Bitcoin as a “Zeppelin,” and the future of crypto

Moore’s provocative thesis, laid out in an essay called “Bitcoin is a Zeppelin,” is that Bitcoin proved digital currency could work the way Zeppelins proved flight was possible — but neither turned out to be the practical long-term solution. He argues crypto’s lasting value will come not from Bitcoin’s original ideological goal of undermining fiat currency, but from dollar-backed stablecoins letting people in unstable economies transact in dollar value — ironically extending the life of the fiat system Bitcoin was built to challenge.

Real estate: a path to a modest fortune, not a great one

Moore is blunt that real estate “is a great way to build a modest fortune” but “not the way to build a great fortune,” pointing out that zero of the 100 largest U.S. fortunes were made primarily in real estate. He argues the widely held belief that real estate reliably appreciates is a relatively recent and historically unusual idea, backed by Federal Reserve data showing flat inflation-adjusted home prices in cities like Pittsburgh, Atlanta, and Houston from the 1890s to the 1990s. What made real estate valuable historically, he argues, wasn’t appreciation — it was that families could leverage 95 cents on the dollar into something that held its value, at a time when currency itself was untrustworthy.

His own real estate scars

Moore recounts buying his first rental property, which quickly escalated into owning a fourplex plus a single-family home. Early on, he says “human traffickers moved into the house,” and a separate property had “hoarders with rats” — one of whom “pulled a shotgun on me,” forcing Moore to “leap off the deck” and run for his car. He credits sticking with the business — eventually growing to over 40 properties — with building meaningful wealth, framing real estate investing as something that only works as an active business, not a passive asset class: “if you just want the passive returns from real estate... you want a bond with an HVAC.”

The stocks-vs-bonds myth

Moore challenges the popular assumption that stocks always outperform bonds long-term, citing recent academic work showing bonds actually beat stocks through a lengthy stretch of the 1800s and that the two asset classes were roughly tied until World War II. He notes that in 1912, the near-universal financial advice was to buy bonds over stocks — a view that only flipped in the 1910s-20s as unprecedented inflation (prices doubled in five years) and new income taxes pushed everyday Americans into stocks for the first time, giving rise to the “invest for the long run” philosophy that still dominates today.

Is trying to beat the market worth it?

Moore argues that while it’s possible to beat the market — citing Warren Buffett as proof — it’s rarely worth an average investor’s time. He notes that even elite managers overseeing $600 million-plus tend to outperform by only about half a percent annually, achieved through 70-hour work weeks and elite credentials; applied to a median 401(k) balance, that same effort might net an extra $300-500 a year. He shares his own experiment trading based on the “Cramer bounce” — a documented pattern where stocks recommended on Mad Money tend to revert — noting that while he technically beat the market doing it, “I hear my wife holler, ‘Come quick, she’s doing it,’ and I missed my daughter’s first steps.”

Dividends: the most misunderstood part of investing

Moore says the disconnect between how people think about dividends and how they actually work is severe — citing survey data suggesting a majority of retail investors, and a significant share of professionals, mistakenly believe dividends are “free money” that doesn’t reduce the stock’s value, treating them like a bond coupon. He notes that historically dividends were 96% of stock market returns from the George Washington era until the mid-1980s, but today the S&P 500’s dividend yield sits near an all-time low around 1%, with almost all returns now coming from price appreciation — a structural shift he says most investors haven’t internalized.

Five core lessons from 300 years of financial advice

Moore distills his research into five recurring principles: solve other people’s problems (most financial advice focuses on the individual’s own spending, which “can keep you from going broke” but rarely builds real wealth); take more risks, since modern safety nets like insurance and bankruptcy protection make failure far more recoverable than in most of history; move toward opportunity (noting that Americans change addresses far less often today — one in 13 annually versus historically one in three); marry well, since marriage stability strongly predicts financial outcomes; and stay optimistic, which he argues is “wildly underrewarded” in advice but “hugely overrewarded” in the actual economy.

Economist Jim Paulsen on Excess Returns podcast

The call: a 10-20% correction, concentrated in tech

Jim expects a correction of roughly 10-20% over the next several months, driven primarily by “new era” (tech and communication services) stocks, which he estimates could fall over 20%, while the broader market declines a more modest 10% or less. He’s careful to frame this as tactical, not a recommendation to exit tech entirely: “I’m not suggesting anyone tell sell all their new era stocks... I am thinking they may want to go to an underweight.” He does not expect a recession or a full bear market, and believes the broader multi-year bull market trend remains intact into 2030 or beyond.

Labor market: metrics that “only occur in the middle of recessions”

Jim highlights that averaged household and payroll employment growth has been essentially flat (net zero) over the trailing year — something he says has never previously been considered acceptable in his career dating to the early 1980s. More concerning to him is that the unemployment rate and part-time employment are both rising simultaneously, a combination he says historically only shows up mid-recession, not during an expansion. He also flags that labor force growth has turned negative and full-time employment is declining, noting that without the drop in labor force participation, the unemployment rate would likely be near 5% rather than in the 3% range.

Policy has quietly tightened since the Iran conflict

Jim argues that since hostilities with Iran began, several economic supports reversed: the 10-year Treasury yield rose roughly 70 basis points to nearly 4.60%, real money supply growth fell back toward roughly a quarter of a percent year-over-year, the yield curve re-flattened, and the U.S. dollar rose 5-6% in nominal terms. He also notes federal deficit spending relative to GDP has contracted roughly 2 percentage points, from about 7% to 5%, over the past 15 months. Using a composite policy index weighted toward Treasury yields, the dollar, and oil prices, he projects — with roughly a 3-month lag — a meaningful slowdown in economic momentum through the balance of the year.

Oil price peaks tend to bite with a lag

Jim notes that in every major oil price spike since 1970, the real damage to the stock market and economy has historically emerged after oil prices peaked and pulled back — not while headlines were focused on the spike itself. He believes oil has likely peaked for this cycle and expects the delayed economic drag to show up in the coming months, along with a similar lagged drag from the flattening yield curve hitting S&P 500 earnings roughly 12 months out.

A historic earnings and spending bifurcation

Jim points to a stark divergence: forward 12-month earnings for the “new era” sectors (information technology and communication services) have spiked dramatically, while the other nine S&P 500 sectors’ combined forward earnings have been nearly flat for two to three years. He shows a similar pattern in real GDP, where new-era investment spending (13% of real GDP) has grown at an 8% annualized pace over six quarters versus roughly 1% for the remaining 87% of the economy. His question: “How long can one-third be on fire and most of the rest of it is barely moving?”

Complacency, not necessarily optimism

Jim distinguishes between optimism and complacency, arguing the data shows the latter. Individual investor stock exposure relative to cash is near its highest level on record, behind only the dot-com peak. He also flags a growing divergence between the Morning Consult consumer sentiment survey and the S&P 500 — the two moved together for most of the bull market but have diverged sharply since the March 30 AI surge began. Corporate and household cash as a percentage of GDP, historically closely tied to market performance, has also decoupled from stock prices since the bull market began.

Valuation: a 60% premium to trend

Using a measure comparing the S&P 500 to its long-term trend line since 1950, Jim notes the index sat at roughly a 20-23% premium in late 2025 — elevated but within historical range. In the past six months, that premium has jumped to 60% above trend, a level he says has only been exceeded once, during the dot-com bubble.

Defensiveness has left the market

Jim highlights that defensive sectors (utilities, consumer staples, healthcare, REITs) now make up only 16-17% of S&P 500 market cap, down to roughly half the weighting seen at the 2009 market bottom — meaning less downside protection and, historically, higher volatility. A separate measure comparing low-beta to high-beta stock performance going back to 1962 shows defensiveness at one of its lowest readings on record, with prior similarly low readings coinciding with major market tops including 1973, 2000, 2008, and 2020.

A quiet leadership rotation already underway

Jim’s most novel data point: since October of last year, the nine “old era” S&P sectors have outperformed the two “new era” sectors (tech and communication services) — and as of early July, “old era” stocks have now beaten “new era” stocks over a full trailing 12-month period for the first time in this bull market. He frames this as the second distinct leadership regime of the current bull run, following roughly two years of tech dominance from October 2022 to October 2025.

Demographics as the deeper five-year concern

Beyond the near-term correction call, Jim’s larger worry is demographic: U.S. labor force growth has slowed to roughly half a percent annually, and he shows a tight historical correlation between five-year trailing labor force growth and both GDP growth and bond yields. Based on consensus demographic forecasts, he projects GDP growth may struggle to exceed 1.5-2% over the next five years, inflation could run closer to 0-1%, and the 10-year Treasury yield could fall back toward the 3% range or lower — a view he says runs counter to widespread expectations that yields are headed structurally higher.

If you found these summaries helpful, please leave a comment or send us a message. We appreciate your feedback!

Leave a comment

Roundup

A roundup of where top investors and CEOs appeared this week — interviews, podcasts, events, and the topics they discussed.

Podcast and interviews

Michael Batnick and Ben Carlson covered market breadth and the Mag7 stumble on Animal Spirits Ep. 470, noting nearly every market segment is outpacing the S&P 500 in 2026. Watch on YouTube.

Chamath Palihapitiya sat down with Dan Primack on The Axios Show (June 25), calling AI “the most important economic leveler of our lifetime” while admitting Meta “fumbled” its AI shot and reflecting on his SPAC era regrets. Watch on YouTube.

Jeremy Grantham, GMO co-founder, told Steven Bartlett on The Diary Of A CEO (June 25) that AI has produced the biggest stock market bubble of his 60-year career, and that he’s sold out of US equities entirely. Watch on YouTube.

Events

Jensen Huang, Nvidia CEO, joined Coherent CEO Jim Anderson at a groundbreaking ceremony in Sherman, Texas for an expanded indium phosphide laser fab, backed by a $50M CHIPS Act grant, framing it as part of a broader U.S. AI-driven reindustrialization. Watch on YouTube

Deep Dives

Detailed breakdowns of the week’s must-listen investing and finance podcasts — key arguments, notable quotes, and takeaways from each episode, condensed so you can catch up without listening.

Animal Spirits ep. 470: “Everything Is Outperforming the S&P 500 This Year”

June 24, 2026

On episode 470 of Animal Spirits, Michael Batnick and Ben Carlson discuss: why diversification is working again, how AI is creating more winners and losers in the stock market, why the Mag 7 is underperforming, the triple-digit club, why investors are holding more cash, rich people who complain too much, what makes America great, AI is disrupting self help books, the World Cup and more.

Market Breadth: Everyone Beating the S&P

The core theme: nearly every major slice of the market — Russell 2000, small/large cap value, REITs, midcaps, emerging markets, dividend stocks — is outperforming the S&P 500 in 2026, some by wide margins. This is unusual because it’s happening while the S&P itself is up nearly 10% on the year, not while it’s falling (the more typical setup for “diversification working”). The driver is that the Magnificent 7 have stalled out and are no longer pulling the index higher.

Mag7 Drawdowns

Several mega-cap tech names are deep in drawdown territory even as the broader market does fine: Microsoft down 33%, Meta down almost 30%, Oracle down nearly 50% from highs, Netflix crashing again (Michael holds it, down 30%, says he’d buy more if it falls further), Google down 13%, Amazon down 15%, Tesla down 17%, SpaceX down 25% from its brief post-IPO high. Microsoft, Amazon, and Google are trading at their lowest average P/E in five years. The hosts frame this positively for the overall market: these stocks are shedding the “asset-light, gushing free cash flow” halo as AI capex spending turns them more asset-heavy, and the broadening rally (the “493” outperforming the Mag7) is healthy even if painful for holders of those specific names.

AI Infrastructure / Semiconductor Mania

Morningstar found 42 stocks in its large/mid index have more than doubled over the past 12 months (more than 2x the 10-year average), with names like SanDisk, Micron, Western Digital, Dell, and Intel leading — mostly AI infrastructure plays. SK Hynix is up over 300% year-to-date before a recent pullback. Semiconductor net profit margins are projected to rise from a 2024 low of ~25% to 49% by 2027, which the hosts flag as the real story behind the “bubble” framing — fab capacity (e.g., TSMC) can’t scale quickly, creating persistent bottlenecks despite a perceived era of tech abundance.

A Surprising Hedge Lesson

A Wall Street Journal chart tracking gold, oil, and semiconductors since the start of the Middle East war showed semiconductors up 70%, oil only up ~10% (round-tripped most of its spike), and gold down 20% — the opposite of what conventional wisdom would predict for a war hedge. Takeaway: there’s no universal hedge for every scenario.

Valuations and Return on Equity

Citing Goldman Sachs research (via Meb Faber’s Idea Farm), the hosts revisit their long-standing argument that higher valuations (CAPE) are justified by structurally higher ROE. Trailing four-quarter ROE has risen to a new historical level this decade, breaking a 45-year cyclical pattern — driven by tech business models. Ben notes Buffett wrote in the 1970s that ROE stays roughly 12-14% over time, which no longer holds. They flag this dynamic may now be reversing for hyperscalers as their margins come under pressure from capex spending.

Investor Positioning: Contradictory Signals

A grab-bag of conflicting data points, illustrating the hosts’ broader point that positioning data is noisy and easily cherry-picked to support any narrative:

• Citadel Securities: SpaceX’s IPO day was the largest single-day net retail buying event ever recorded by the firm (handles ~35% of US retail volume); 9 of the 10 largest trading days ever happened in the last month.

  

• Deutsche Bank consolidated equity positioning sits at just the 42nd percentile — “far from crowded.”

  

• Discretionary investor positioning: 41st percentile; systematic: 40th percentile.

  

• Bloomberg data shows speculators getting shorter in S&P, Nasdaq, Dow, and midcap futures.

  

• Hedge fund gross/net exposure to semiconductors has gone parabolic — from 8% at the start of the year to 22% now.

  

• Retail flows into semiconductor ETFs are surging (the DRAM ETF doubled from $10B to $20B in a week).

• Conversely, Vanda Research data (via Kevin Gordon) shows retail single-stock net buying falling to its lowest level since COVID.

Ben’s takeaway: “Consider the source, not the data — what narrative are they trying to spin?”

Household Cash Levels

Citadel reports that household cash as a percentage of total financial assets is at 8%, the highest since 1990. The hosts find this counterintuitive, given the apparent speculative mania elsewhere, and theorize it’s largely a baby boomer phenomenon — retirees who got burned by rising rates in bonds are now happy to hold cash at 3-4% yields instead.

SpaceX IPO Volatility

SpaceX opened around $150 on its debut and has round-tripped back near that level pre-market the day of recording, despite enormous trading volume (including a 2x inverse SpaceX ETF that fell 43% in two days).

AI Bubble Sentiment Survey

Only 8% of surveyed investors said there’s no bubble in AI-related stocks; 51% said some (not all) AI stocks are overvalued. The hosts note persistent “bubble” calls don’t disqualify an eventual bubble, but also point out there’s no longer a single unified “everyone” in the market the way there might have been in past manias — too diverse an investor base today for a classic blow-off top.

Consumer Spending and Credit

Bank of America data shows total card spending up 5.1% year-over-year in May, the strongest growth in nearly four years (partly gasoline-driven). The hosts also riff on the oddity of 0%-APR balance transfer offers for 18-21 months coexisting with 20-25% standard credit card APRs — funded by the high rates charged to riskier subprime borrowers. Bespoke data shows broad-based retail sales strength, with only two sectors showing negative growth.

New Business Formation

Stripe Economics (Ernie Tedeschi) data shows new business applications, after a step-change higher during COVID (driven partly by the PPP loan program’s low eligibility bar), are now accelerating again — this time attributed to AI making it easier to start a business. Applications have roughly doubled versus the stagnant 2005-2018 period. Both hosts frame this as a genuinely underappreciated positive story.

Rich People’s Complaints

A Wall Street Journal piece found rising economic anxiety among upper-middle-class respondents: the share who feel the system is “stacked against people like me” rose from 29% (2017) to 65% (2026), and those lacking confidence that their children’s lives will be better than theirs rose from 64% (2019) to 86% (2026). Michael pushes back hard on this as a pet peeve — wealthy people overstating their grievances relative to those with genuine economic hardship.

AI Disrupting Self-Help Publishing

Tim Ferriss disclosed his book sales (4-Hour Work Week, 4-Hour Body, etc.) are on pace to be down roughly 80% in print copies in 2026 versus 2022, which he and the hosts partly attribute to people now asking AI chatbots directly instead of buying self-help books (with podcasts also cited as a contributing substitute for books).

Miscellaneous Stories

• Ocean data centers: Portland startup Panalasa raised $140M to build floating, wave-powered, seawater-cooled AI data center platforms; backed by Thiel, now valued near $1B.

• Insurance/AI use case: A conversation with David Law (insurance industry) highlighted AI’s ability to analyze hundreds of annuity contracts for a financial advisor’s full client book — work that was previously infeasible at that scale.

• Midjourney launched full-body medical scan analysis; Michael had previously done this with his own bloodwork and got pushback from medical professionals about its limitations.

• World Cup / Americana virality: ABC News story on European visitors going viral on social media expressing surprise at American conveniences (free ice refills, 24-hour retail, friendliness) — hosts frame it as a feel-good counter to “everyone hates each other” social media negativity.

Prediction Markets

Schwab is adding prediction market access, though the hosts are skeptical it’ll be a meaningful part of mainstream brokerage business — prediction market volume remains roughly 90%+ sports betting/parlays, down from over 90% politics/economics two years ago to under 6% today (per Ryan Chern). Notable items:

• Kalshi will require users to disclose their employer for certain trades, following insider-trading/manipulation concerns — prompted partly by accounts linked to military spouses making accurate, well-timed bets on Maduro’s ouster.

• A Google employee was charged with insider trading on Polymarket, allegedly profiting over $1M using non-public information to bet on 2025’s “most searched people.”

• A Wall Street Journal investigation found Polymarket paid influencers to post fake trading videos: of 1,150+ reviewed videos, roughly 70% depicted bets that were never actually real (totaling ~$1.9M in claimed wagers and ~$900K in claimed winnings), and the “real” outcome of those bets would have been a loss of over $166,000.

• The hosts question what moat these prediction market platforms actually have if usage is overwhelmingly sports betting, given established competitors like DraftKings and FanDuel — regulatory access is cited as the main moat, helped by political connections.

Crypto / Ethereum

Ethereum’s price has round-tripped back near its 2017 highs (~$1,400) despite years of bullish narratives (”Own the Internet,” smart contracts, ETH-pilled finance commentators). The hosts admit they can’t fully explain why the “smart contract” thesis didn’t pan out as expected. They note crypto infrastructure (blockchain rails, stablecoins) does seem to be having a real moment even as token prices disappoint — pointing to weakness in Visa and Mastercard stocks (down ~12% from highs) tied to stablecoin disruption fears, and a new joint venture between NYSE’s owner and crypto exchange OKX (co-chaired by former NY Governor Andrew Cuomo) to tokenize NYSE-listed assets. They contrast the current environment with the 2021 mania (e.g., a $69M NFT sale, an “Ethereum rock” selling for $2.2M — the same price as a Florida waterfront house), arguing 2021 was a far more extreme speculative mania than today, with more “real” earnings and margins underpinning current valuations.

Housing

Morgan Stanley data shows mortgage payment as a percentage of income is back to levels seen in 2007, 2004, and 1994 — i.e., affordability has actually improved as incomes have risen, even though transaction activity remains historically low (a low-inventory problem more than a pure affordability problem). Mike Simonson’s analysis suggests a return to “normal” housing activity levels could take until the early 2030s, depending on where rates settle (5.5%-6.5% range). The hosts argue there’s been no genuinely “normal” housing market this entire century. Zillow is cited as a cautionary tale: down 85% from its 2021 all-time high market cap of $48B to under $7B today, despite existing home sales showing some recent signs of life.

Social Security

The latest annual Social Security trustees report shows the program can pay 100% of benefits from current tax revenue through roughly 2032-33, dropping to 83% by 2034, and projected at 65% by 2100. The hosts speculate Congress will likely choose to borrow/spend more rather than cut benefits outright when the shortfall hits.

Pop Culture Corner

• Toy Story (new film, referred to as “Monster”): Opened with $160M — the biggest opening of 2026, the biggest Toy Story opening ever, second-biggest animated movie opening ever, and second-biggest Pixar opening behind Incredibles 2. Both hosts liked it (kids loved it); Michael joked he fell asleep twice.

• The Watchers / “Widow’s Bay” (a buzzy streaming show): Mixed reactions — one host underwhelmed despite the hype, the other (who avoided the hype machine) genuinely liked it and is looking forward to a second season, though both agree the finale left too much unresolved.

• The Hand That Rocks the Cradle (90s thriller, watched via The Rewatchables): A nostalgic but not-actually-rewatchable slow-burn 90s thriller; they note Apple’s Cape Fear series captures a similar modern throwback vibe.

Chamath Palihapitiya on AI: America’s opportunity, Facebook’s fumble, and Trump | The Axios Show

June 25, 2026

Chamath Palihapitiya joins Axios’ Dan Primack to discuss the AI boom, Silicon Valley’s trust crisis and America’s race against China.

In this episode of The Axios Show, Palihapitiya explains why he believes AI could be the most important economic leveler of our lifetime, why backlash against AI is becoming a political force, and how President Trump is thinking about the technology.

The conversation also covers tech oligarchs, OpenAI, Anthropic, SpaceX, Meta’s AI failures, immigration, SPACs, and what Palihapitiya says he learned from getting the incentives wrong.

Silicon Valley Then vs. Now

Palihapitiya, in the Valley for roughly 25 years, framed the current AI boom as the third major cycle he’s lived through, after the dot-com bust and the mobile wave (he considers crypto a minor blip by comparison). The key difference this time: in earlier cycles, Silicon Valley was seen as a quirky, mostly trusted, even endearing community — “exotic animals at the zoo” when they ventured outside the Valley. Now, he said, there’s still admiration but also real distrust, with some figures viewed as outright pariahs. He considers this troubling, given how much more consequential AI is than prior technology waves.

“They were like exotic animals at the zoo... unfortunately what’s happened I think in this cycle is that there’s a good amount of admiration, but there’s equal parts, I think, what people are frustrated, they don’t trust this community anymore. Certain people are viewed as pariahs.”

AI as “the Most Important Economic Leveler of Our Lifetime”

Palihapitiya argued AI is fundamentally different from prior tech advances like having “all the world’s knowledge” on a smartphone, because it converts knowledge into actionable expertise — for example, going from being able to look up what a PN junction is to actually being able to design a working transistor. He sees this as a potential equalizer that could let anyone pursue ambitions without needing large amounts of capital, comparing it to giving “a genius-level co-founder” to every person on earth, regardless of background.

“It's the most important economic leveler of our lifetime. It is the thing that will create the most amount of equality if it's allowed to get to market.”

Wealth Concentration and the “Platform” Question

Pushed on whether AI leveling is in tension with wealth concentrating among a small number of founders/investors, he argued the goal should be ecosystems where the economic value created by users/participants vastly exceeds the value captured by the platform owner — citing a formative early story where Bill Gates told him and Mark Zuckerberg that Facebook Platform wasn’t a real “platform” by that definition, unlike the Google ecosystem. He believes AI has the potential to follow the latter model if “we don’t fuck it up,” but acknowledged this is a potential outcome, not a guarantee.

“A platform is when the economic value that the participants generate greatly exceeds that of the platform maker.”

Founder Psychology and the Roots of AI “Doomerism”

He attributed much of the dysfunction among AI lab leaders to personal psychology — hard-scrabble backgrounds, insecurity, grudges, and a messy, fractious origin story among the major labs (unlike, he says, the comparatively clean founding of Google).

He described a cynical pattern he’s observed: labs hype apocalyptic risk ahead of model releases and fundraising rounds (to attract capital and undercut rivals), then flip to promising the model will “solve everybody’s problems,” cycling back and forth. He called this strategy “deeply selfish” because it drags a broadly valuable technology into the founders’ personal rivalries.

“You're taking this tool that is really valuable to so many people, and you're gonna cast it in all of your own personal issues. And I find that deeply selfish.”

Is AI Doomerism Justified? Jobs and Labor

Asked whether he has any doomer sympathies, Palihapitiya said there’s no scenario where humanity simply does nothing, though there will be major transitions. Pressed on long-term employment (using his 15-year-old daughter as the example), he argued he can’t confidently name a single job — white collar or blue collar, including a “plumber” replaced by robotics — that’s safe from disruption over 35 years. But he rejected pure doomerism, arguing technology has historically expanded how people allocate their time (citing a thought experiment that a person might go from one major daily task 1,000 years ago to 35 today, and possibly 300 a thousand years from now), suggesting future humans will have more, not fewer, ways to spend their time meaningfully.

“I can't think of a thing necessarily that her or her friends... will necessarily be able to do that is gainful employment in 35 years... Because every job I can currently think of, I could make a case potentially that it could absolutely be replaced.”

Existential Risk: Bioweapons, War, and the Case for “KYC” Regulation

On catastrophic risks like bioweapons or AI-enabled conflict, he argued all transformative technologies are “deterministic” — anything possible will eventually be attempted, for good and ill (citing nuclear power’s enormous benefits alongside Hiroshima and Nagasaki as the analogous “tail risk”). He doesn’t believe nefarious uses will dominate but says society needs the right checks and balances — proposing a “know your customer” (KYC) framework for access to frontier AI, modeled on similar systems already used in pharma, Commerce, and Treasury.

“Every single technology that's ever been created is fundamentally deterministic. What does that word mean? It means anything that is possible will be possible and done.”

Trump, AI Policy, and Immigration

Asked about President Trump’s light-touch approach to AI, Palihapitiya said he hasn’t discussed KYC specifically with him but described Trump as unusually sharp and intuitive in their limited interactions — citing a meeting where he walked Trump through a detailed deck on data centers and electricity pricing, and Trump quickly zeroed in on the key underlying issue.

He pushed back on the “oligarchs” framing applied to tech executives appearing with Trump at the G7, instead describing a broader global shift away from a “monocultural blob” (multilateral institutions like the WTO and WEF) back toward national cultural and political independence — with the U.S. AI industry as a competitive advantage in that context (”we’re the dream team”).

On immigration, he (an H-1B visa holder himself, as was Elon Musk) argued the program has been abused by a small number of companies flooding it with applications, crowding out the next great scientist, and that the system needs reform to restore both merit-based access and public trust — while still affirming that attracting top global talent is essential.

“I sure as shit would never have gotten an H1B in the way that the program works today.”

Open vs. Closed Models and the U.S.-China AI Race

He distinguished China’s “open-weight” model strategy from true open source, arguing it offers only a partial, controlled window into how the systems work (”you don’t know how the gears are made”). He advocated for a vibrant ecosystem of many trusted U.S. AI providers — “1,000 flowers to bloom” — as the best way to preserve transparency and accountability relative to cheaper alternatives flooding in from elsewhere.

“No, they're going open weight, they're not open source. You don't know how the gears are made, nor will you ever.”

Betting on AI Companies: OpenAI, Anthropic, and SpaceX

Discussing the leading AI labs, he predicted OpenAI and Anthropic will remain “a plurality” of the market but not a majority, since outsized returns historically attract competition unless a company has true monopoly characteristics. Given a hypothetical choice of equal stakes in Anthropic, OpenAI, or SpaceX, he said he’d choose SpaceX for its broader optionality — citing Anthropic’s strength in enterprise (Social Capital uses it as a foundational model) and ChatGPT’s near-monopoly consumer brand recognition, but noting both are tied to single lines of business tracking global GDP, whereas SpaceX offers exposure to a broken global communications infrastructure and longer-term “off-Earth” optionality. He disclosed he is technically invested in all three companies, including OpenAI and Anthropic via SPVs.

The Political Backlash Against AI

He argued a real, bipartisan anti-AI political backlash has emerged, driven partly by public resentment of wealth and power concentration in Silicon Valley, which he says the frontier labs’ own doomer rhetoric handed to critics “on a silver platter” — creating an opening exploited by both foreign actors and domestic political groups uncomfortable with that concentration of power. He warned this dynamic could backfire by handing even more power to hyperscalers (Amazon, Meta, Google), who could use the frontier labs’ “immaturity” and inconsistency as a wedge to position themselves in Washington as the more responsible, KYC-ready alternative — a scenario he said he doesn’t want but finds “compelling” as an argument. He expressed confidence that Trump and advisor David Sacks favor an open ecosystem and wouldn’t hand control to just a few players.

“I think what the Frontier Labs did with their rhetoric was put on a silver platter the opportunity to weaponize hatred and mistrust against them.”

Facebook’s Missed AI Moment

Reflecting on a past conversation (just before ChatGPT’s release) where he’d argued Facebook was well-positioned for AI/AGI given its trove of emotional/personal data, he said Facebook has “completely fumbled” the opportunity, in a pattern he likened to its earlier failure to become a true “third leg of the stool” alongside Android and iOS with its own mobile OS (a project he worked on before leaving the company). He argued Nvidia, under Jensen Huang, has effectively become the bulwark for open ecosystems that Facebook could have been, and said it’s now “pretty unlikely” Meta can recover that position.

“I mean, they have completely fumbled it... they've profoundly failed.”

Returning to SPACs: “American Exceptionalism Acquisition Corp”

Asked about his new SPAC (American Exceptionalism Acquisition Corp), which has yet to announce an acquisition, he acknowledged his earlier SPAC era produced disappointing, roughly breakeven returns and attributed this to misaligned incentives — he could get paid on a deal regardless of post-merger stock performance. His new vehicle is structured so he earns nothing unless the investment significantly succeeds. He also argued U.S. public capital markets have become “sclerotic,” with too few gatekeepers and companies staying private far longer than in the past (contrasting what it would mean to have bought Google, SpaceX, Anthropic, or OpenAI at early, low valuations in public markets), and said fixing that access problem is a personal mission, separate from his main operating role at Social Capital.

“My incentives were totally and fundamentally misaligned because I could do a deal and still get paid.”

Family and Legacy

Asked what non-financial trait he hopes his children inherit, he said “nothing” — he wants them to pursue fully independent paths without regard to his opinions or legacy. He shared an emotional story about his 17-year-old son’s internship at the White House Office of Presidential Correspondence, where Palihapitiya waited in a call queue to reach the comment line his son was staffing, and broke down expressing pride to him. The family spent the following Father’s Day weekend together in Las Vegas.

“I want my kids to only know me as their dad. And I want them to have a completely independent path in life... I selfishly want these little experiences where I can just be rooting for them. That's the only thing that matters.”

Jeremy Grantham: Inside the Biggest Bubble of His 60-Year Career | The Diary Of A CEO

June 25, 2026

At 87, Jeremy Grantham has been investing for roughly 60 years, co-founded GMO (which managed up to $165 billion at its peak), and helped pioneer small-cap and value investing. He’s also spent decades studying speculative bubbles — and he says we are living through the biggest one of his career. This conversation ranges from portfolio advice to AI risk to a fertility crisis most people have never heard of. Below is the full breakdown, section by section, with his own words.

Topics discussed:

• Why Wall Street will never warn you when to get out of the market, and what to do instead

• The exact portfolio Jeremy recommends to protect your money before the crash

• What everyday chemicals in your food and cosmetics are doing to your fertility

• Why house prices need to fall 30%, and what it means for your finances

• Why the AI boom won’t automatically lead to higher profits, and what to buy instead

The Biggest Bubble of His Career

Grantham’s central thesis: bubbles don’t form around scams — they form around the most important, most obviously world-changing ideas (railroads, the internet, now AI). The bigger and more legitimate the idea, the more capital floods in, and the bigger the eventual bust. He believes today’s AI-driven market is the largest bubble in American history, even bigger than the 2000 dot-com peak.

“The great bubbles always occur around the very most important ideas... The greater the idea, the more obvious the idea, the more money goes in and the bigger the bubble and the bigger the bust.”

Are We on the Verge of a Collapse?

Asked directly whether a crash is coming, Grantham says the timing is the hard part — but the structural setup (extreme valuations, euphoric narratives) matches prior pre-crash periods almost exactly.

“If you look at the data, it would be compatible with history for the peak to be very soon... This is, I think, the biggest investment bubble in American history.”

Don’t Own U.S. Stocks — Including the S&P 500

His single most direct, actionable piece of advice: sell U.S. equities, including the S&P 500, and especially concentrated tech positions. He argues non-U.S. markets are far cheaper and have already started outperforming (emerging markets were up 65% over the prior 12 months versus the S&P’s ~25%).

“Don’t own US stocks. That’s a simple strategy that you can act on... And if you have a big position in US technology stock, my personal advice would be to sell them all.”

Historical Precedents: Japan, the Nifty Fifty, and the Dot-Com Bust

Grantham repeatedly grounds his warning in history. Japan’s 1989 bubble peaked at 65x earnings (versus ~35–40x for U.S. tech today) and the Japanese market took 35 years to recover. The “Nifty Fifty” crash of 1972 fell 65% in real terms and triggered one of the worst recessions since the Depression. Amazon itself fell 92% in the 2000 crash before going on to dominate retail — proof that being right about the technology doesn’t protect you from the bubble bursting.

“In Japan, you went 20 years and you lost money. You went 30 years and you still hadn’t gotten back. It took 35 years for the Japanese market to recover.”

Why Wall Street Will Never Warn You

Investment advisors, he argues, have a structural conflict of interest: telling clients to get out of an overpriced market costs them business long before the crash arrives, because no one can time the top precisely. He tells a vivid story from 1999 in which 400 self-described stock market experts unanimously agreed the market was overvalued and would eventually fall — yet the firms employing them kept telling clients to stay invested.

“You will not receive the advice from investment advisers to get your tail out of the market ever. It is not good business for them to do that, and they will not ever say it to you.”

Practical Portfolio Advice for Everyday Investors

For someone investing their salary, his recommended allocation: roughly 60% in a broad non-U.S. equity index, 5–10% in precious metals (gold or silver, no strong preference), some real estate if convenient, and the rest in bonds. He walks through how bonds work in plain terms — a loan to a government or company at a fixed interest rate, buyable directly via sites like TreasuryDirect.gov or through a broker’s fixed-income desk.

“Buy a broad-based index of non-US equities... for like 60% of your money, and then 5 or 10% in precious metals, and if it’s convenient and sensible, hold a bit of real estate, and the rest I’d put in bonds.”

Crypto: “An Unnecessary Piece of Nonsense”

Grantham has never owned crypto, never will, and won’t recommend it. His critique: it’s too volatile to be a store of value, impractical as a medium of exchange, and mainly useful for speculation and moving money anonymously, including by criminals. He believes Bitcoin will eventually go to zero, though he concedes it “may take a long time.”

“It’s an unnecessary piece of nonsense that facilitates nothing except criminals moving money, but they can’t be seen... it will certainly go to zero.”

Advice for Founders and Startups

For entrepreneurs dependent on investor capital, his advice is to raise and lock up money now, build in conservatism, and prepare for a funding drought — comparing it to a founder he’s heard of who plans to raise aggressively now so he can “vulture” up distressed competitors after a downturn.

“If you can lock up money, I would. If you can build a bit of conservatism in other ways, do it — just brace yourself for impending problems, which is a pretty good principle anytime, but is a better principle than normal today.”

Is AI Itself Overblown — or Genuinely Transformative?

Grantham is unambiguous that AI is not a scam — it’s a genuine, civilization-altering technology on par with the railroads. What fascinates him is the total lack of consensus among experts, even Nobel laureates, on whether AI will make humanity prosperous beyond imagination or pose an existential threat.

“There is absolutely no agreement on whether AI is going to make us all so rich we can sit on the beach and never do another day’s work, or it will wipe us out accidentally or on purpose because it’s a much higher level intelligence one day.”

The “Benevolence” Problem and the Paperclip Risk

Drawing on conversations with Geoffrey Hinton, Grantham raises the open question of whether a superior intelligence can ever reliably remain benevolent toward a lesser one (Hinton’s only proposed example being mothers and babies — which Grantham finds unconvincing). He discusses the classic “paperclip maximizer” thought experiment: a literal-minded AI given a vague, open-ended goal could pursue it catastrophically and without malice, simply through unintended consequences taken to an extreme.

“When was there ever a case where a higher intelligence was benevolent in a sustainable way to a lower intelligence?... I don’t see how it can’t be [risky]. Unless you make it programmed completely to be benevolent.”

The Mag 7: From Comfortable Monopolies to a Winner-Take-All Brawl

Grantham makes a sharp observation about the seven dominant tech companies (Alphabet, Nvidia, Tesla, Microsoft, Meta, Apple, Amazon): historically, each owned a clean, separate monopoly (Apple/smartphones, Google/search, Meta/social, etc.). Now all seven are pouring unprecedented capital into the same AI battlefield, with no guaranteed winner — a complete departure from their previous “well-behaved, separate monopolies” structure.

“Now they have no monopoly. There are seven potentially sharp-elbowed, ruthless players determined to fight out with each other until they win.”

Robots, Job Disruption, and an Uneasy Hope That SpaceX Fails

Citing a livestreamed demo where a Figure AI humanoid robot reportedly outlasted a human worker on a sorting task (the human needed sleep and bathroom breaks), Grantham sees significant job disruption as highly likely. More strikingly, he says he hopes SpaceX’s most ambitious promises — data centers in space, mining asteroids — fail to materialize, because their success would mean an explosion of energy-hungry chips and robots that he believes the world isn’t ready to manage safely.

“I’d much prefer them to fail, and the idea to move much more slowly, to buy time for humans to work these things out.”

SpaceX as “the Defining Bubble Story”

Despite being an early SpaceX investor himself (he got in around a $100 billion valuation, before AI was even part of the pitch — it was a Starlink bet), Grantham calls SpaceX’s prospectus — addressing “a quarter of global GDP,” talk of mining asteroids — a textbook signal of market-top euphoria, comparable to the legendary 18th-century South Sea Bubble. He separately argues that Elon Musk’s genius has been less about hitting financial targets and more about talking up valuations to fund real factories — a feat he says cannot necessarily be repeated in a different market cycle. He’s also skeptical that humans could ever sustainably colonize Mars, citing bone and heart deterioration in low gravity and the need for underground, radiation-shielded, artificially-gravitated habitats — arguing humanity hasn’t even managed a sustainable closed-loop dome on Earth yet.

“SpaceX is such a fabulous BS story... It’s the classic description of a market peak. It’s what you look for at the top of a terrific bubble.”

Wealth Inequality — and What History Says Comes Next

Grantham lays out a stark inequality picture: the top 1% of Americans control 31% of national wealth while the bottom 50% hold just 2.5%; the top 10 billionaires saw wealth surge 526% (inflation-adjusted) between 2020–2025. He contrasts this with 1935–1975, when the bottom quarter of earners grew wealth faster than the top. Historically, he says, extreme wealth concentration rarely gets fixed by peaceful policy — it’s typically broken by civil collapse, mass-mobilization war, or revolution. His prescription: a gradual, multi-decade tax shift favoring the bottom over the top, similar to mid-20th-century policy.

“According to historical macro studies, peaceful policy changes almost never fix extreme inequality... a wealth peak is broken by one of three violent or catastrophic triggers: total civil collapse, mass mobilization warfare, or total revolution.”

If He Were 33 Again: Get Into AI and Take Risk

Asked how he’d build wealth if he were starting out today, Grantham’s answer is simple: go all-in on learning AI deeply, take real risk, work hard, and reject the assumption that experts and institutions know what they’re doing.

“I think the simple appeal would be to get your tail into AI and try and be a leader. Try and know more about everything in that area than the next guy.”

The Fertility Crisis: A “Chronic Baby Bust”

In the interview’s most alarming turn, Grantham — whose foundation has studied this for years — lays out research (citing Shanna Swan) showing human sperm counts have dropped from roughly 100 units/mL in 1970 to about 35 today, with the decline accelerating at 2.5% per year. Roughly 17% of young couples currently need fertility help, up from near zero a generation ago. Extrapolated forward, the projection is that the median male sperm count could hit zero by 2045 — meaning the typical couple would be unable to conceive without medical assistance.

“Dr. Swan’s projection indicates that if the current rate of decline continues unchecked, the median male sperm count is on track to hit zero by 2045... half the male population will have zero viable sperm.”

The Toxins Behind the Decline

Grantham points to endocrine-disrupting chemicals as the primary culprit: phthalates (cosmetics, shampoos, food packaging) that lower fetal testosterone production; BPAs (plastics, can linings, receipts) that flood the body with synthetic estrogen; PFAS “forever chemicals” (non-stick pans, rain jackets, carpets) found in over 45% of U.S. tap water; and microplastics now found in human placentas, breast milk, and testicular tissue — one 2024 study found them in 100% of human testicular samples tested. He also cites pesticide exposure: in small Harvard/Mass General fertility-clinic studies, men and women eating the least pesticide-contaminated produce (”the Dirty Dozen” avoided) saw roughly double the sperm counts and live-birth rates of those eating the most contaminated produce.

“BPAs... are synthetic estrogens. They flood the male body with female hormone signals, crashing sperm count and motility... [microplastics are] physically embedded in human placentas... breast milk and human testicles.”

The U.S. vs. Europe Regulatory Gap

Grantham draws a sharp contrast between U.S. and EU chemical regulation: the EU has banned or heavily restricted roughly 1,300+ chemicals in cosmetics versus about a dozen in the U.S.; the U.S. permits 85 agricultural pesticides banned in the EU, China, and Brazil; and life-expectancy gaps between the U.S. and countries like Sweden have widened from two years to six years over 70 years. He frames this as a direct consequence of U.S. corporate power over regulation.

“The US currently permits the use of 85 agricultural pesticides that are completely banned in the EU, China, and Brazil... the US has worse life expectancy [and] it’s the only rich country in the world where 15 years ago they had the same life expectancy as they have today.”

What You Can Actually Do About It

His most practical, “easily acquired” advice: pregnant women in particular should avoid cosmetics entirely for nine months and redirect that money toward organic versions of the “Dirty Dozen” produce (berries, apples, peaches, spinach, etc.). He notes effects may persist across multiple generations, since a woman’s eggs are formed before her own birth. He also points to consumer tools — apps like Yuka, EWG’s Healthy Living, Think Dirty, and ClearYa — that scan products for endocrine-disrupting ingredients.

“No cosmetics, no bad fruit — or make it organic. That’s a piece of cake. That is easy. It will save you a huge amount that you will never appreciate, because you’ll never know how much better your children are than they would have been.”

Detoxifying Capitalism, Not Just Chemicals

Beyond banning toxic chemicals (which he calls “intellectually easy”), Grantham argues for a much harder, generational shift: rebuilding capitalism around family formation as a public good — what he calls “the commons.” He cites 2.1 children per couple as the replacement rate a healthy society needs to sustain itself, alongside clean air, water, and soil, and says no policy intervention tried anywhere in the world (despite some countries spending several points of GDP) has yet produced a lasting increase in birth rates.

“We have to slowly but surely turn our capitalist societal norms into much more family-friendly, children-friendly... 2.1 healthy, well-educated children is a part of the commons.”

Should You Leave the United States?

Asked bluntly whether there are countries he wouldn’t live in, Grantham jokes he’ll “refuse to answer on the grounds it might incriminate” him — then makes clear he means the U.S. itself. His case centers on a frayed “social contract”: declining corporate civic responsibility, a weak social safety net, and what he considers the starkest civilizational indicator of all — maternal mortality. U.S. maternal mortality is roughly 20–21 per 100,000 (44 in the Black population), versus 5 in Britain, 4 in Germany, 2.1 in Sweden, and 0 in Norway — making the U.S. roughly 50% worse than the next-worst developed country.

“How is it possible that a country more or less the richest in the world... 50% more mothers die here than in the second worst country in the developed world? ... It’s a sign of the social contract.”

Closing: The Book He’d Write If He Could Not Fail

Asked what goal he’d pursue if failure were impossible, Grantham said he’d want to write a book in the spirit of Rachel Carson’s Silent Spring — one focused on toxicity and rebuilding a social contract that actually encourages people to have and raise children, arguing that without that shift, “we fail as a society pretty quickly.” His own book on markets and bubbles, The Making of a Permabear: The Perils of Long-Term Investing in a Short-Term World (with Edward Chancellor), covers much of the investing philosophy discussed in this interview.

“If I could write a book that would pull a Silent Spring, I would sit down tomorrow and start it... We have to detoxify. We have to create an environment where people want to have children.”

NVIDIA & Coherent: Reindustrializing America — Detailed Summary by Topic

June 24, 2026

At a groundbreaking event in Sherman, Texas, Coherent () CEO Jim Anderson and NVIDIA () CEO Jensen Huang announced an expansion of Coherent’s indium phosphide laser fab — the world’s first and largest-volume 6-inch indium phosphide manufacturing facility, critical for the optical interconnects that link AI data center processors over long distances.

Backed by a $50 million CHIPS Act award, support from the State of Texas, and NVIDIA’s strategic investment (part of a partnership dating back over two decades), the expansion will double the facility’s size, quadruple its output within a year, and grow the site’s workforce to over 1,000 jobs (550+ direct).

Huang framed AI as a new “industrial revolution” spanning energy, chips, infrastructure, AI models, and applications — one that depends as much on connectivity (optical/silicon photonics, since processors are now separated by hundreds or thousands of feet) as on raw compute.

Both executives positioned the investment as the start of a broader U.S. reindustrialization: bringing back high-skill, high-wage manufacturing jobs in chips, packaging, and AI infrastructure, enabled by pro-energy policy, strong company revenues funding domestic capacity, and government-industry-community collaboration — with the goal of rebuilding a balanced economy of both “builders” and “information workers” over the next decade.

Press Release

The Announcement and the Partnership

The event marked a groundbreaking at Coherent’s Sherman, Texas facility, hosted by Coherent CEO Jim Anderson with NVIDIA CEO Jensen Huang as guest speaker. Anderson opened by thanking the partners who made the expansion possible: the U.S. Department of Commerce (Secretary Howard Lutnick) for a $50 million CHIPS Act award announced that same morning, NVIDIA for its strategic partnership and investment, Texas Governor Greg Abbott and the state’s economic development team, the Sherman Economic Development Corporation and local officials, and Coherent’s own employees, customers, and suppliers. NVIDIA and Coherent have worked together for over two decades, and the companies expanded that relationship through a partnership announced in March. Anderson framed the day as the product of a three-way alliance between industry, government, and the local community, with each layer of investment reinforcing U.S. AI infrastructure and technology leadership.

AI as a New Industrial Revolution

Huang described AI not just as a product but as an industrial revolution, laying out what he called a “five-layer cake”: the energy sector; chips and infrastructure (land, power, shell, cloud services); AI models themselves (spanning language, physical AI for robotics and self-driving cars, biology/chemistry models for drug discovery, and physics models for climate and weather simulation); and finally applications, which he called the most important layer because they touch every major industry — financial services, healthcare, education, transportation, chip design, and more. Because intelligence is a general-purpose capability, he argued AI will both create an entirely new industry and simultaneously revolutionize every existing one, which he said should be approached thoughtfully and responsibly but also with enthusiasm, given its potential to reduce suffering, improve safety, and address labor shortages.

Why Connectivity Matters as Much as Compute

A central technical theme was that AI scales not just through raw computing power but through the ability to connect huge numbers of processors together — what Huang called “the largest, most computing-intensive software program the world has ever processed.” He explained that modern AI workloads are sharded across hundreds of thousands or millions of processors spread across distances of hundreds or thousands of feet, sometimes across an entire data center. At short range, electrical interconnects suffice, but at longer distances, only optical/silicon photonics can do the job. This is where Coherent’s indium phosphide lasers come in: electrical signals activate the lasers, light carries the signal across optical fiber, and detectors on the other end convert the photons back into electricity that drives the chips. Huang described this optical interconnect as fundamental to scaling AI infrastructure and an increasingly important part of overall system architecture.

The Sherman Facility and Manufacturing Scale-Up

The Sherman site is described as the world’s first and largest-volume producer of 6-inch indium phosphide wafers, a key input for the lasers used in AI data center optical networking. Coherent, founded in 1971 as a manufacturing company in Saxonburg, Pennsylvania, has spent roughly 50 years building expertise in lasers; Huang noted it took 50 years to build the facility’s current capacity, and the new investment will quadruple its output within a single year. The expansion will double the physical size of the production facility. At full capacity, the site is expected to support over 1,000 jobs, including more than 550 direct positions, and the facility was actively hiring at the time of the event.

Reindustrialization of U.S. Manufacturing

Both speakers framed the investment as part of a broader effort to bring advanced manufacturing back to the United States after decades of decline in domestic chip and computer manufacturing. Huang argued that competing in mature, decades-old manufacturing categories is difficult, but a genuine technology phase-shift — like the AI-driven demand for chips, packaging, and optical components — creates room for new factories, new skills, and new companies that didn’t previously have a reason to exist domestically. He noted that the number of U.S. chip fabs, packaging plants, computer plants, and AI data centers is now growing for the first time in his career, having already created roughly 600,000 jobs. He emphasized that this reindustrialization targets the most advanced, highest-skill, highest-paying tier of manufacturing, and that growth in U.S. capacity does not come at other countries’ expense since global chip manufacturing is expanding simultaneously worldwide.

Energy Policy and the Economic “Flywheel”

Huang connected the manufacturing buildout to energy policy, arguing that pro-energy government initiatives are essential because fabs, plants, and data centers cannot be built without sufficient power. He described a self-reinforcing “flywheel”: strong corporate revenues and exports generate tax revenue and capital, which fund domestic manufacturing investment, which creates jobs, which in turn requires continued energy investment. He highlighted that, for the first time, market forces alone (without government subsidies) are driving investment in both traditional and sustainable energy sources, crediting overall market demand for the technology sector.

Jobs, Community, and a 10-Year Outlook

Both executives emphasized job creation and quality of life in Sherman, pointing to the area’s lakes, family-oriented community, and the facility’s hiring efforts. Looking ahead ten years, Huang predicted the period would be remembered for three things: a pro-energy growth agenda that revived U.S. economic growth, AI enabling investment in and modernization of the energy grid, and a rebuilt manufacturing workforce that restores “builders and makers” alongside knowledge workers. He argued for a more balanced society where people who want to build things with their hands can find prosperous careers, not just those with advanced degrees, and suggested this moment could be looked back on as reshaping not only the economy and U.S. technological leadership but also the fabric of local communities. The event closed with Anderson and Huang signing a steel beam to be used in the facility’s construction, followed by a groundbreaking ceremony.

If you found these summaries helpful, please leave a comment or send us a message. We appreciate your feedback!

Leave a comment

Originally published on The Diary of A CEO on June 25, 2026

Guest: Jeremy Grantham, co-founder of GMO, 60 years in investing, managed up to $165 billion
Host: Steven Bartlett

Intro

The investor who called the 2000 and 2008 tops sits down to explain why AI being genuinely world-changing is exactly what makes it a bubble, what he’d own instead of US stocks, and why he now spends as much time on falling sperm counts as on markets.

The Bubble Always Forms Around the Real Thing

• Grantham’s first move is to reject the idea that bubbles are built on scams: “People think that a bubble is a mainly because it’s a scam and nothing could be further from the truth. The great bubbles always occur around the very most important ideas.”

• He puts AI “right up there with the railroads” as one of the defining ideas of the last couple hundred years, and says that is the precondition, not the counterargument

  • Railroads did change the world, and railroad stocks collapsed and everybody lost a ton of money

  • Amazon went up six or seven times in 1999, fell 92% in the crash, and then “out of the wreckage, it inherited the retail world”

• “The greater the idea, the more obvious the idea, the more money goes in and the bigger the bubble and the bigger the bust.”

• On what he thinks he’s actually good at: spotting where humans are short-term and predisposed to optimism, looking for good news and avoiding unpleasantness

• He credits the economist Kenneth Boulding with the line he keeps coming back to: “The only people who think you can have compound growth on a finite planet are madmen and economists”

• On market efficiency, he calls the discounted-future-earnings model “complete nonsense” and offers the replacement: “The stock price is what you think the other guy will pay.”

How Far the High-Flyers Fall

• “This is I think the biggest investment bubble in American history.” Asked whether a collapse is coming over the next few years, he says the data “would be compatible with history for the peak to be very soon”

• On what a break does to the most-loved names: “A 70% decline would not be unexpected” for the stocks that have moved the most

• His precedents, in his own numbers:

  • The NASDAQ fell 82% in the tech bust — “It is far from unprecedented to have these major declines”

  • Japan in 1989 reached 65 times earnings and sold for more than the entire US; the US hit 35 in 2000 and is “35 or 40 today, but it’s not 65”

  • Japan then fell for 20 years, and took 35 years to recover

  • The Nifty Fifty peaked in 1972 and declined 65% adjusted for inflation, with a recession he calls just about the worst since the Depression

  • 1929 was down “about 80% or more” and was followed by the Great Depression

• His firm’s 10-year forecast in 2000 was minus 2% a year for US equities; the actual outcome was minus 3%, and he believes today’s market is priced higher than 2000 was

• On what an ordinary person feels: the high-flyers lay people off, everyone feels less rich, spending falls by a few percent of the paper losses, and the economy goes under stress

• He is explicit that he cannot time it. Pressed on when, he stretches the answer from the next few days out to the next few years, and will not narrow it further

Why Your Advisor Will Never Tell You to Get Out

• The section’s core claim, stated flatly: you will not receive the advice from investment advisers “to get your tail out of the market ever”

• The 1999 story he tells to prove it: at the annual analysts’ society debate, he asked 400 self-identified full-time stock market experts two questions

  • If the market went from 31 times earnings back to a more normal 17 at any point in the next 10 years, would that guarantee a major bear market? All 400 said yes

  • Did they think it would happen? Fewer than 1% said no

  • The same firms’ public representatives were on the podium telling him to calm down — “It was a huge betrayal of trust if you wanted to put it that way.”

• Asked whether that is happening now, he answers “Of course,” and says the warnings are not merely quiet: “you will hear nothing. You never have. You never will. It is simply lousy business for a big firm”

• He says he sympathizes, because being early cost him: when his firm made the call in 1999, “we lost half our book of business in two and a quarter years”

• The career-risk mechanic underneath it all: in a bear market everyone freezes and waits, then fires one or two laggards; in a bull market a manager watching a peer make money fires you instantly

• He traces the whole thing to Keynes: “the central political skill in life turns out to be never be wrong on your own”

Seven Monopolies Walk Into One Ring

• Looking backward, each of the megacap seven owned a near-monopoly on a global basis — Tesla’s jump start in EVs, Apple in smartphones, Microsoft in PC software, Meta in social networking, Google in search, Nvidia in chips

• Looking forward, he says, “you could not imagine a more different world” — all of them are now girding for battle in the same marketplace

• The capex escalation is now a chest-beating contest, with one player’s $200 billion in a single year set against another’s $105 billion, funded out of enormous cash flows and increasingly out of borrowing on top

• “Now they have no monopoly. There are seven potentially sharp elbowed, ruthless players determined to fight out with each other until they win.”

• “There’ll only be one survivor. They think everything goes to the one who gets there first.”

• Asked who wins, he says he doesn’t know, and suggests the smart play may be to opt out: one or two of them might reasonably decide to stay in hardware, license someone else’s model, and stay out of a fight he expects to be brutal

SpaceX as the Euphoria Marker

• He treats SpaceX as the cleanest read on where sentiment is: it defines a quarter of global GDP as its addressable market and talks about endless opportunities mining asteroids

• “In 50 years people, in a 100 years people will look back and tell stories about SpaceX and its prospectus like they tell stories about the South Sea bubble” — an enterprise of great advantage, but nobody to know what it is

• “SpaceX is such a fabulous BS story.” On the promises in the prospectus, he says he thinks it “will fail to deliver anything like its promises in the prospectus”

• He says 90% of the company’s theoretical value is AI, even though its own model appears to be losing to two or three others

• “It’s the classic description of a market peak. It’s what you look for at the top of a terrific bubble.”

• His reading of how Musk actually built Tesla, which he says can’t repeat at SpaceX’s scale: talk the stock to four or five times paper value, sell a slug, build a gigafactory, keep talking, watch it re-rate, sell another slug, repeat — a self-fulfilling prophecy that required a bull market he won’t get twice

• On Mars specifically: “Going to Mars is not within the laws of physics” as a survivable proposition — you would need to live underground against cosmic rays and build a spinning gravity machine, and “we have not been able to build a sustainable system in a dome ever”

What He’d Actually Own Right Now

• “rule number one is always be diversified” — which for him means wholesome bonds, wholesome cash, and perhaps a small amount of precious metals

• His actual allocation when asked directly what an ordinary person with $1,000 or $10,000 should do:

  • Roughly 60% in a broad-based index of non-US equities

  • 5–10% in precious metals, with no preference between gold and silver

  • A bit of real estate if convenient and sensible

  • The rest in bonds

• On US stocks, his answer is one word long: “Don’t own US stocks.” Asked about the S&P 500 specifically, he says no

• His reason is price, not politics: “I’m not confident that US equities will be intact in 5 years 10 years.” Asked why, the whole answer is “Because they’re so badly overpriced today.”

• The rotation is already visible in his numbers: emerging markets up 65% over the last 12 months against 25% for the S&P, which he notes has done better than he would have guessed

• On why everyone tells you the opposite: “Of course they do. They’ve been completely dominant for 20 years.” He says markets extrapolate today’s conditions and double-count in the worst way — crushed earnings times seven in 1982, peak margins times 35 in 2000

Housing Is a Bad Bet on Demographics

• A typical UK house sold for 3.4 times family income in 1994, about as low as it had been in 50 years; it now runs to over 10 times depending on location, with the same pattern in China, Canada, Australia and most of Europe

• “And at 10 times income, a reasonable young couple are in big trouble” — and the same high prices feed straight through to rents

• Even a 30% decline would only take housing back to six or seven times family income, still twice the level of what he calls the good old days

• His argument against buying property as the default first investment is demographic, not cyclical: family formation is already declining across the richer countries, and expensive houses plus fewer new households is not a combination that supports prices

• Asked whether scarcity of affordability pushes prices up, he cuts it off: “if people can’t afford it, there’s no one bidding”

Crypto Does One Thing Well

• He owns none, has never owned any, and says he never will advise anyone to buy it

• “It’s an unnecessary piece of nonsense” that in his account facilitates nothing except moving money out of sight

• His case against it as an asset: not a store of value because it moves too much, not usable as a medium of exchange because you can’t spend it in a shop

• “It does one thing very very well. It’s a means of speculating beautifully.”

• On Bitcoin going to zero: “in the distant future, yes, it will certainly go to zero, but it may take a long time” — adding that in the distant future everything goes to zero

Advice for Founders: Raise Now, Buy Later

• Presented with a founder who plans to raise as much as possible now specifically so he can buy up distressed competitors after a crash, Grantham’s response is two words: “Good lad. Good advice.”

• His general counsel to founders dependent on investor capital is to lock up money if they can and build conservatism in elsewhere

• On timing, he refuses to pretend: the horizon is weeks, months or years, and he won’t narrow it

• The framing he offers is that the sun is shining and it is time to act as if a storm is coming — a decent principle in any period, and a better one than usual now

Nobody Agrees About AI, Including the Nobel Winners

• What he finds most striking about AI is the absence of consensus at every level — Nobel laureates, corporate executives and the people inside the companies all disagree violently

• “There is absolutely no agreement on whether AI is going to make us all so rich we can sit on the beach and never do another day’s work or it will wipe us out accidentally or on purpose because it’s a much higher level intelligence one day.”

• “And when was there ever a case where a higher intelligence was benevolent in a sustainable way to a lower intelligence?” He credits Geoffrey Hinton with the one counterexample anyone offers: mothers and babies

• On the safety case, he thinks building in benevolence is not impossible but would require slowing down, and that “you should make sure you can do that before you push ahead”

• The paperclip problem gets his attention because of literalism, not malice: an open-ended instruction, a machine with the means to execute it, and no stopping condition

• On the commercial obstacle to safety, raised by Bartlett describing a model that refused to alter his own data: any model that becomes judgmental loses users to a competitor, so the market pressure runs toward removing the restrictions rather than adding them

• On the framing of social media as well-meaning people who couldn’t spot the consequences, he pushes back on the premise: “I question basically the well-meaning bit. They’re now trying to maximize their profits and their growth and their appeal over the competition”

• On energy and robotics, he takes an unusual position for an investor: he’d rather the space-based data center thesis fail, because success means robots everywhere and energy demand “massive beyond belief,” and he wants the extra time for humans to work it out

The Inequality Reset

• He puts the US Gini ratio “up there with Brazil and Mexico” — countries that used to be the punchline

• His dividing line is 1975. From 1935 to 1975 the US grew over 3.5% a year, with the poorest quarter gaining slightly more than average and the richest quarter slightly less; since 1975 the average hour worked has barely gained anything after inflation

• The show’s own research put harder numbers alongside his account — the top 1% holding 31% of national wealth against 2.5% for the bottom half, and the top 10 billionaires’ wealth up 526% between 2020 and 2025 — figures he did not dispute but did not himself cite

• His concern isn’t the bottom 20%, it’s the median: “the guy in the middle, the 50th percentile, he is unhappy also. And when your average guy is unhappy because he’s not doing very well, you know you have a problem”

• Asked what history says happens next, his answer is one word: “All bad.” He points to the Gilded Age, and says the US got lucky in an ugly way — World War I, the Depression, then World War II — and came out an unusually equal society

• On the politics, he reads the move to Trump as smaller than the average of the last seven European elections and driven by the same impulse: kick the rascals out, left or right, because things don’t feel like they’re going well

• “We need to tax the rich and help the poor. It’s pretty simple.” He wants a return to something between the 1950s–60s structure and today, phased in over decades so the bottom quarter gains half a point a year on the average and the top gives up half a point

The Sperm Count Data He Can’t Stop Looking At

• The path in was environmental, not medical: his foundation started on climate 27 years ago, moved to the collapse in insects — “insects appear to have dropped in biomass, the weight of the flying insects by 50 to 75%” over 60 or 70 years — and then to whether the same effects show up in humans

• He credits the Shanna Swan and Hagai Levine work showing sperm count had roughly halved since the first academic reports in 1970, and says his own team found the decline rate accelerating, now running about 2.5% a year

• The numbers he uses, in units per milliliter: roughly 180 million in hunter-gatherer days, about 100 million when the academics arrived in 1970, and 35 million today

  • He puts the threshold for conceiving without difficulty at about 45 million, a level crossed 15 to 20 years ago

  • The share of young couples needing help has gone from essentially nil to about 17%

• “in 20 to 25 years the average young couple will need help getting pregnant” — a conclusion he says he and Swan reached independently

• The mechanism he points to is endocrine disruptors leaching from plastics, and he notes that fertility specialists writing books on the subject don’t mention toxicity at all, only the hundred solid reasons people choose to have fewer children

• The two Harvard and Mass General studies he thinks deserve more attention, both self-reported diet studies at a fertility clinic

  • Among 180 men, the quarter eating the least pesticide-heavy produce had roughly double the sperm count of the worst quarter

  • A parallel study in women showed 68% live births in the best quartile against 38% in the worst — again close to double

• His explanation of why pesticides land so hard: they’re designed to kill insects, weeds and fungi, they’re impregnated into the structure of the fruit rather than sitting on the surface, and the fetus is 100 to 1,000 times more vulnerable than an adult

• “The baby bust is measurable. The sperm count is one of the few things you can really measure.” On why it gets no airtime: “we just don’t do bad news”

Toxicity Is Regional, Which Is the Good News

• The reason he considers detoxification tractable is jurisdictional: unlike climate, a single country can act alone and its own people get the benefit

• His cosmetics example: about 10,000 chemicals in use, of which the EU has banned 1,500, Canada 550, and the US 12 — “I am not kidding you”

• He thinks the top of the intervention list is narrow and cheap: no cosmetics during pregnancy, and organic for the dirty-dozen produce — berries, apples, pears, peaches, spinach — with bananas, oranges and melons fine either way. He estimates that alone removes as much as half the problem

• The generational point is what raises the stakes: a woman’s eggs are all formed in the womb, so exposure carries to grandchildren, and he says recent work suggests more generations than the two they could originally prove

• The measurable consequence he keeps returning to: the life expectancy gap between the US and Sweden has gone from two years to six over the last 70, and he has written that his estate would bet on eight or ten in 50 years

• The show laid out the regulatory gap in detail — 85 pesticides permitted in the US and banned in the EU, China and Brazil, 1,300-plus cosmetics chemicals restricted in the EU against 11 by the FDA, PFAS in at least 45% of US tap water — and his only amendment was that the EU is “forever giving exemptions and extensions and is far from perfect,” just much less bad

• “we have to detoxify capitalism” is the harder half of his prescription: banning chemicals is intellectually easy, but turning capitalist norms family-friendly takes generations

• “we all need clean air, clean water, fertile soil, and 2.1 healthy, well educated children. Without any of those, society fails.” He frames all four as commons, and notes that no country has yet produced a permanent uptick in birth rates despite spending several percent of GDP trying

Where to Live, and What the Ambulance Time Tells You

• Asked whether there are countries he wouldn’t live in, he declines: “I think I have to refuse to answer this on the grounds that it might tend to incriminate me” — then answers anyway when pressed on the US

• His reason is the social contract, not the economy. He says the US holds out too much chance that the social contract is dissolving, and contrasts it with Japan, where what really upsets people is being put in a position where they can’t act in a socially responsible way

• “I think the case here is that people are doing what they think is best for them and their family and screw everybody else.” He contrasts it with corporations when he arrived in America, which built the stadium and acted like part of the city they operated in

• His single best proxy for a functioning society is maternal mortality, and his numbers run: Nigeria around 480 per 100,000; the US Black population 44; the US overall about 20 or 21; the US Asian population 13; Britain 5; Germany 4; Sweden 2.1; Norway zero in each of the last two years

  • “What better definition of civilization than looking after the mothers giving birth?”

  • His framing of the US result is that it isn’t merely worst in the rich world, it’s 50% worse than the next worst

• The everyday indicator he watches for fraying: UK ambulance response times going from 12.5 minutes to an hour and a half

• Asked where to go instead, he names Denmark, Japan, France and Germany, and says the UK has a little of the American disease but not nearly as much

• On the counterargument that America is rich: the wealth is real but concentrated, “and that dazzles in terms of the average” — measured by how well off the bottom quartile is, he says America doesn’t score well at all

What He’d Do at 33, and What He’d Tell Everyone Else

• Asked what he’d do at 33 with no contacts and no accumulated knowledge, his answer is not defensive: “I think the simple appeal would be to get your tail into AI” and try to be a leader, knowing more about the area than the next person

• The rest of that advice is take a lot of risk, don’t be conservative, work hard, and think outside the box. He identifies the common failure as feeling constrained to play by the regular rules and assuming experts and authorities know what they’re doing

• What he’d tell his own children is different, and it’s climate and practical skills — one of his sons is learning to farm chickens, pigs and mushrooms, because he thinks there’s a good chance the complexity of civilization starts to unravel at the edges first

• For the taxi driver, the receptionist and the nurse, his advice is to expect tougher times than they were led to expect, and to act on it:

  • Build a reserve of cash

  • Get a job that pulls its weight in a larger sense

  • Upskill into something mechanical — fixing, repairing, engineering — or into research science

  • Make friends, and live somewhere with a tight society

• Asked what he’d do if he could not fail, he says he’d write the toxicity and social contract book — the one that does what Rachel Carson’s Silent Spring did — and that he’d start it tomorrow

• He closes on the same point he opened with, that nobody is coming to warn you: “Look at the data. A bubble is not hard to see” … “Don’t wait for help because no help is coming.”

Grantham’s position is not that AI is fake but that its realness is what guarantees the overinvestment, and the same refusal to look at bad data that keeps advisors quiet about a 70% drawdown is, in his telling, what keeps a measurable collapse in fertility out of the conversation entirely.

Without Graham’s principle of “investing from a business perspective,” Warren Buffett would never have become one of the greatest investors of all time, as this idea forms the core of his investment philosophy. It is the foundation for applying first-principles thinking to investing. The practice is uncommon, unpopular, and uncomfortable. It requires long-term commitment and dedication despite constant opposition from Wall Street and Main Street to reap its rewards. However, when fully embraced, it gives investors the ability to achieve the highest possible returns on their investments.

Find the full course below.

The Golden Age’s mission is to build a more peaceful and prosperous world by popularizing and applying first-principles thinking to the problems around us.
Join our community of first-principles thinkers, builders, and investors.

Share

“Investment is most intelligent when it is most businesslike.” – The Intelligent Investor by Benjamin Graham

Warren Buffett emphasized the importance of viewing investing from a business perspective in his 2013 letter to Berkshire Hathaway shareholders, citing his mentor, Benjamin Graham1.

Without Graham’s tenet of “investing from a business perspective,” Warren would have never become one of the greatest investors of all time, as this concept is the bedrock of his investment philosophy.

Warren learned the concept of investing from a business perspective from one of his many teachers and mentors, Benjamin Graham, when he was Graham’s student at Columbia University, and later observed Graham apply it at his investment firm, Graham-Newman Corporation.

Investing from a business perspective is a component of applying first-principles thinking to investing. The practice is uncommon, unpopular, and uncomfortable. It requires long-term commitment and dedication to reap its benefits, in the face of constant attack by Wall Street and Main Street.

However, when you understand what it means to invest from a business perspective and appreciate its benefits, you will no longer allow your emotions or the market to dictate your capital allocation; instead, you will learn to profit from other investors’ follies driven by fear and greed. You will start to notice great investment ideas that others miss. It will completely change how you think about businesses and investments.

Applying first-principles thinking to investing

When Benjamin Graham and Warren Buffett evangelize investing from a business perspective, they are actually talking about investing from first principles. A first principle is a basic proposition that cannot be deduced from any other proposition or assumption. First-principles thinking, therefore, is a process of breaking problems down into their basic components and reasoning from there.

The first principles of investing are the most basic, enduring truths that underlie any sound investment decision: a stock is ownership in a real business, that business is ultimately worth the cash it can generate for its owners over time, which depends on the economics of the business, and your results depend on the relationship between the price you pay and that underlying business value. Reasoning from first principles means returning to these facts whenever you make an investment decision, rather than being led by headlines, price movements, or market sentiment.

Warren Buffett, Peter Lynch, Mohnish Pabrai, and other successful investors break down businesses into their basic components, digging deeper than your average retail investor to understand their economics and the levers that will drive their growth over the long term.

By taking apart potential investments, understanding how each component performs, and selecting only the businesses with the strongest business economics and the most durable long-term competitive advantage, you will discover a handful of great businesses that will deliver exceptional results.

Benefits of investing from a business perspective

If you have never thought about investing from a business perspective, it will open your eyes to the businesses behind stocks and their economics. When you commit to investing from a business perspective, you will:

• think as a business owner, as if you were running the company.

• no longer be tempted to buy stocks because Twitter Finance or FinTok says a stock is going to the moon, or “play” earnings.

• stop looking for opportunities that offer a 25% or even 50% return over the next few months, and instead look for businesses that will continue to grow over 5 to 10 years or even longer and produce an annual compounded return of 15% or better.

• realise that people diversify to protect themselves from their own mistakes, and that investment professionals praise diversification to collect more fees.

• start noticing great investment ideas every time you shop.

• realise that a $1,000 stock could be cheap compared to a $10 stock.

• start thinking of stocks as bonds with variable rates.

• wait and wish for the market and stock prices to fall so that you can buy partial ownership of publicly traded businesses you have been wanting to own.

Take advantage of others’ fear and greed.

The major benefit of investing from a business perspective is the ability to take advantage of minute-by-minute business valuations that publicly traded securities provide.

Investors in stocks have an enormous advantage: they receive offers for their businesses as long as stock exchanges are open. In the future, as more and more securities become tokenized, investors will be able to access minute-by-minute valuations around the clock.

Not only do you have the ability to receive thousands of offers for your businesses and every single publicly traded business on the planet on a minute-by-minute basis, but many of those offers are wildly mispriced. An investor who thinks from first principles can and should take advantage of such mispriced offers.

It is no different if you own a neighborhood grocery store, and nearby store owners come by your store daily and offer to purchase your store or sell theirs. On days when your neighbors feel jolly and offer to buy your store at ridiculously high prices, you may decide to take them up on their offer and sell the store, or choose to ignore them. However, when they offer to sell you their store at similarly observant prices, you have no obligation to purchase it from them.

On the other hand, when your neighbors feel depressed and offer you below-market value for your business, you have no obligation to sell, no matter how depressed the economy and business buyers are. However, if they offer to sell their business at a depressed price, you may take them up on it.

Warren and other successful investors take advantage of other market participants whose emotions about the market, the stock, or something in their personal life drive them to offer prices that are too low or too high. If you think long-term and view stocks for what they are - ownership of operating businesses, you cannot lose money investing in stocks because of variables you cannot control, such as the behavior of other market participants.

Betting on the actions of other market participants is how speculators try to benefit. It is the only thing a speculator bets on: someone else taking action that would benefit them, such as paying more than they did. Expecting someone else to take action that benefits you is a time bomb waiting to explode your portfolio.

Wall Street and Main Street don’t want you to invest from a business perspective.

Although Warren constantly talks about it during shareholder meetings and college lectures, most investors, whether professional investors on Wall Street, Frankfurt, or Tokyo, or retail investors on Robinhood, still ignore it.

The reason this simple concept has eluded so many is that Warren’s approach runs counter to the business model of the investment profession as a whole. If investors had only looked at investments through the business lens, a large swath of the investment management profession would not exist.

Investing from a business perspective is not a formula that can be relied on to produce a profit in every situation. It is, rather, as Graham put it, “a negative art.” It is a discipline that helps investors avoid pitfalls and identify what not to invest in, as much as what to invest in. This is precisely why the financial industry is not promoting it.

Stock price movements, company news, and economic reports provide many reasons to trade a security, which is how a large portion of the investment community makes money, either by providing services and products to trade securities or by providing information to trade on.

Robinhood’s entire business model, like those of all brokerage firms, gambling houses, sports betting operations, and prediction markets, is based on trading volume, which is the opposite of investing from a business perspective. The more transactions those businesses can push through their platforms, the more profitable they are.

All of the above businesses benefit from high trading volume, so it is not in their interest to help investors avoid bad investments—quite the opposite. Regardless of an investment’s outcome, they earn a fee every time investors buy or sell a security, either upfront or on the back end, such as the payments for order flow that “commission-free” brokerages like Robinhood use.

Much of the financial industry promotes ideas that run counter to investing from a business perspective because the more you focus on buying and selling stocks, the less you view investing as committing capital to real businesses. This creates a greater distance in your mind between a company’s business operations and the stock. Which in turn creates space for someone to come in and dictate what you should think and, in turn, do about a stock.

This is precisely why Warren and Graham always said that:

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” - Benjamin Graham

In the short term, anyone can convince you of what to think and do about any particular stock, but in the long term, the business’s fundamentals will dictate how the stock is priced. This is why it is crucial that investors look at the fundamentals of the businesses they intend to invest in; in other words, look at investments from a business perspective, rather than as speculators guessing where the price will be over a period of time.

Choosing to invest from a business perspective creates a moat in your mind that protects you from your own emotions, daily news, the whims of the market, and the persuasion of the trading platforms and investment analysts. It allows you to focus on the first principles of investing—the business itself.

Investing from a business perspective is uncommon, unpopular, and uncomfortable. If you want to see businesses the way successful investors do and improve your chances of finding and investing in great businesses with strong business economics at low prices, you must commit to seeing investments from a business perspective and have the discipline to stick to it despite constant pressure to trade.

Discipline is paramount