<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />So What Will AI Cure, Anyway?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The juxtaposition was unintentional &mdash; but also revealing.
The Wall Street Journal published an article in its print edition last Thursday pouring cold water on the notion of AI-aided drug development.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3QQ4GEhWXbguxhpMppMeXi/f8e97b15424be8a2c42a805e52c6722b/FMF-Issue-111026-2.jpg" alt="WSJ Silicon Valley promises" />
Confronted with the claim that AI would cure 90% of human disease in the next seven years, the CEO of Vertex Pharmaceuticals said, &ldquo;That&rsquo;s complete BS.&rdquo;
And he&rsquo;d know, having contracted with 50 AI companies to sift through its data set of 10,000 drug compounds.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The same day, Paradigm AI authority James Altucher took the stage at the Paradigm Shift Summit in Nashville.&nbsp;
&ldquo;My talk was called AI Will Cure Cancer, and I spent most of it arguing with my own title,&rdquo; James recalls.
&ldquo;Because on its own it won&rsquo;t, and maybe it never happens in one big moment.&rdquo;
That said, &ldquo;a few weeks ago a friend called me after his wife got hard news from her doctor and neither of them knew what to do next.
&ldquo;I told him to send the scan over, it went through AI and what came back helped them decide where to go from there.
&ldquo;Now I&rsquo;m not telling you to do that for yourself, and she may simply have gotten lucky. But when he wrote back to say thank you, though, I figured that in that sense the title was right.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So maybe AI won&rsquo;t cure 90% of diseases in the next seven years&hellip; but it can still make a difference in extending lifespans and enhancing quality of life.
&ldquo;New systems are beginning to diagnose difficult cases&hellip; uncover diseases hidden inside routine scans&hellip; and potentially identify serious problems before doctors can see them,&rdquo; says James.
&ldquo;I believe health care could help prove just how valuable AI can be &mdash; and create an entirely new wave of opportunities.&rdquo;
Going into 2027, James and his team will redouble their efforts to identify which ones will be a flash in the pan&hellip; and which ones really could change the world. Stay tuned.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />After a Manic Monday&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After a day of elation yesterday, Mr. Market is bummed out by a hotter-than-expected inflation number.
The Labor Department issued an incomplete version of the October consumer price index this morning &mdash; incomplete because there are no numbers to indicate year-over-year increases.&nbsp;
That&rsquo;s owing to the &ldquo;partial government shutdown&rdquo; in October 2025; nobody was conducting surveys to see who was charging how much for what products.
So the only thing we have to work with is the month-over-month increase &mdash; which was 0.4%. That&rsquo;s lower than the September number, but still higher than the typical Wall Street economist was counting on.
And it&rsquo;s no better if you look at the &ldquo;core&rdquo; rate, excluding food and energy. The 0.3% increase from September to October was also higher than expected.
Only yesterday, Federal Reserve Governor Christopher Waller said if the core rate remained elevated, the Fed would need to look at a super-sized interest rate hike next month: &ldquo;Hiking only 25 basis points would put our credibility at risk.&rdquo;
So that would mean raising the fed funds rate from 4.0% to 4.5% in one fell swoop. And that&rsquo;s coming from a Trump appointee!
Looking at the action in fed funds futures this morning, traders assign a 15% probability of this super-sized hike&hellip; an 85% probability of a more &ldquo;normal&rdquo; hike&hellip; and a zero percent probability the Fed will stand pat.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> With that, the S&amp;P 500 is back below 7,500 and the Nasdaq is in danger of cracking beneath 25,000 again. Meanwhile, Treasury yields are back on the rise &mdash; the 10-year note about to surpass 5%.
At least on this day, rising yields translate to tumbling precious metals: Gold is down $115 and threatening the $4,000 level again, while silver&rsquo;s down two bucks to $51.24.
No joy for crypto, either: Bitcoin is barely over $73,000 and Ethereum is in danger of cracking below $2,000 for the first time since August.
At $86.59, U.S. oil futures continue to buy into the narrative that &mdash; as Donald Trump put it yesterday &mdash; there&rsquo;s &ldquo;positive momentum&rdquo; toward an end of the Iran war.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Money Miscellany
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> If timing is everything, Anthropic&rsquo;s IPO is surely coming a few weeks late.
This morning the company behind the Claude AI platform announced it would go public on Thursday, Nov. 19.&nbsp;
The numbers accompanying the announcement aren&rsquo;t nearly as giddy as they might have been a few weeks ago &mdash; a share price of roughly $70&ndash;78, a market cap of $1.3 trillion and an expectation the IPO will raise $64 billion in new capital.
No doubt the AI spending scare is having an impact. Anthropic would have been much better off making its announcement last summer when only cranky contrarian newsletter types were wondering whether the massive capital spending on AI would pay off!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, shares of Nvidia are down another 6.2% as we write &mdash; as CEO Jensen Huang&rsquo;s &ldquo;honeypot&rdquo; scandal won&rsquo;t go away.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2J99Vo6FbaV4fgpA6bpA9V/157d9e0de71fb4a926641434e2ca9344/FMF-Issue-111026-3.jpg" alt="Jarvis Tweet" />
We won&rsquo;t dwell on the sordid details, which you can read about anywhere.&nbsp;
But there&rsquo;s something hinky about the timing of all this. The rumors about the company where Huang&rsquo;s mistress was an executive? They&rsquo;ve been out there for months.
But then The New York Times publishes allegations from anonymous U.S. officials that the mistress was a spy only days before the election? And Huang has to come clean about his affair only a few days after?
Just spitballing here: Expect a lot of huffing and puffing about this on Capitol Hill in the weeks and months ahead. Indictments, not so much.&nbsp;
The feds don&rsquo;t like to bring cases unless they&rsquo;re all but certain that can get a conviction &mdash; and cases like these are notoriously hard to prove.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Going into the election, the mood on Main Street was decidedly &ldquo;meh.&rdquo;
The National Federation of Independent Business is out with its monthly Small Business Optimism Index. The headline number ticked down slightly from 97.9 in September to 97.8 in October &mdash; a hair below the survey&rsquo;s average going back over 50 years.
More interesting is the part of the survey where business owners are asked to identify their single-most important problem. Here, &ldquo;quality/availability of labor&rdquo; was cited by 25% of respondents. The number has oscillated around the 25% level for the last four months.
&ldquo;Our company has found it very hard to find qualified candidates to work in the construction
inspection field,&rdquo; said a business owner in Pennsylvania. &ldquo;Candidates are either terminated for nonperformance or quit after a few months.&rdquo;&nbsp;
Taxes were cited by 21%, inflation by 17%. Everything else was 7% or lower.
All else being equal, the NFIB&rsquo;s membership leans Republican. We&rsquo;ll see what the November survey turns up next month&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Not All Data Center Companies Lost the Election
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> To be sure, last Tuesday's Democratic sweep brought new headaches for the AI data-center industry.
Texas, a leading market for planned data centers, elected a governor who wants to halt new approvals until the state addresses concerns about electricity rates, water supplies and specific effects on local communities. As we mentioned over the summer, outgoing Gov. Greg Abbott had already suspended certain permits pending an audit.&nbsp;
Investors responded by dumping stocks tied to the data-center buildout.
But Paradigm contributor Davis Wilson thinks Wall Street may be overlooking something.
&ldquo;What if Wall Street has this backward? What if tougher rules around data centers actually make the best AI infrastructure companies more valuable?&rdquo;
Yesterday&rsquo;s trading offered a hint that investors were making distinctions. AMD jumped 13%, Corning (GLW) rose 9% and Bloom Energy (BE) gained about 12%. (Of course, Nvidia is a whole other story&hellip;)
One day's trading doesn't establish a trend, but the selling is no longer indiscriminate.
As always, revenue and cash flow affect share prices. AMD just reported a 97% year-over-year increase in data-center revenue. Corning's optical-communications sales rose 44%, while Bloom's companywide revenue climbed 138%.&nbsp;
And on Friday, research firm IDC raised its 2026 worldwide AI-infrastructure spending forecast to $521 billion.
The data center industry is not preparing to shut down. New restrictions could certainly delay projects and increase costs. But developers still need enormous computing capacity, and electricity remains one of the biggest obstacles.
That's where Davis sees an opportunity.&nbsp;
Nvidia and AMD are developing chips that squeeze more computing power out of the electricity available. Bloom's fuel cells allow data centers to produce power on site, reducing dependence on the grid. Corning's advanced fiber helps move vast amounts of information while consuming less energy.
None of this guarantees higher stock prices. Customers could postpone orders, and investors can still overpay for a growing business.
But stricter rules may concentrate where the money goes rather than stop it altogether.
As Davis puts it: &ldquo;These companies aren't the problems regulators are trying to solve. They&rsquo;re the solution.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: The 2024 Throwback
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Your commentary from November 2024 looks like the facts of November 2026,&rdquo; a reader writes in response to last Wednesday&rsquo;s post-Election Day edition &mdash; which was a reprise of <a href="https://paradigmpressroom.com/post/trump-vs-the-15">something I wrote shortly after Election Day 2024</a>.
&ldquo;Dave, I think this throwback issue was a very timely reminder, and similar to what I was thinking last night. A friend of mine messaged me this morning, &lsquo;It's a great day in America&rsquo;... This was my response:&nbsp;
<blockquote>Not really. This is the exact same disdain for the way our government is run &mdash; regardless of which side is in charge &mdash; that led to Trump being elected in the first place. When things get so bad that the pendulum swings so fully to the other side every two years, it's more a statement of how disgusting the political landscape has become overall. It reeks of electorate desperation more than anything.&nbsp;</blockquote>
<blockquote>In two years the same people will be so disgusted by what this blue wave doesn't accomplish that it will swing right back the other way. Breaking the cycle would take putting a real alternative in power, but the red-versus-blue divide is so strongly ingrained in people&rsquo;s minds that we just can't risk voting for things we actually believe in. Too risky to 'waste' our vote and let 'the other side' win and all that.&nbsp;</blockquote>
<blockquote>So we will just keep repeating this cycle until it all collapses. Moving closer toward communism over the next two years will certainly speed up that process though, so yay?&rdquo;</blockquote>
One of our semiregulars chimes in: &ldquo;I'm not at all surprised by Tuesday's results. I don't really expect much to change as a result of it. The wars abroad will continue, prices will keep increasing at home, etc., etc. Maybe with both chambers the Dems will attempt to impeach Trump again, or maybe they won't since they're just as for the wars as Trump is, and removing Trump means handing the Oval Office to Vance.
&ldquo;One thing that has changed though. The results seem to have brought gold back to life, and the tech sector continues to slide after their earnings announcements. Maybe we'll be able to look back in a year and call this the catalyst for the market's change in tune?
&ldquo;Aside from federal results, even in local propositions I'm seeing repudiations of &lsquo;license plate reading cameras&rsquo; and data centers. While I don't think Dems will be any less warm to the idea of mass surveillance and data centers than the GOP has just recently been, the market's expectations seem to have noticeably changed.
&ldquo;The only part I can't figure out is how come the paper price of crude keeps going down. Must be the invisible hand of the market?&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK, two more reactions here&hellip;
&ldquo;What is the word? Prescient. Please write a similar column for our new Congress.&rdquo;
&ldquo;Well done Dave, I just hope that when you&rsquo;re spectacularly wrong about something, you&rsquo;ll be as open about it,&rdquo; writes our final correspondent. &ldquo;Perhaps Mr. Rickards can show you how it&rsquo;s done as he explains his utter failure to predict the 2026 Republican wipeout. In the meantime, I&rsquo;m praying for our country. We&rsquo;re gonna need it.&rdquo;
Dave responds: Ha!
Look, I didn&rsquo;t write that issue with the intent of doing a big I-told-you-so two years later. I just thought the post-election giddiness back then needed a bit of a reality check. I take no particular pleasure in having come so close to the target.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And so I will briefly take up the challenge of an outlook for the new Congress that may or may not pan out.&nbsp;
In general the Democrats will overplay their hand and will tailor their appeal not to a broad swath of the electorate but rather to the geezers who watch MS NOW and turn out for &ldquo;No Kings&rdquo; protests.&nbsp;
A few specifics&hellip;
<ul>
<li>For all the squawling you hear about the Democratic Socialists, no credible challenge from the left will emerge against Hakeem Jeffries as House speaker and Chuck Schumer as Senate minority leader. The party&rsquo;s center-left establishment remains in control for now.</li>
</ul>
<ul>
<li>Democrats will continue to fund the Iran war to make sure the Iran war stays front-and-center in the public mind to undercut the GOP presidential candidate in 2028. (Cynical? Yes. And it&rsquo;s exactly the approach the Democrats took with the Iraq war after winning both houses of Congress in 2006. Worked like a charm come 2008.)</li>
</ul>
<ul>
<li>House Democrats will launch as many impeachment proceedings as it takes to keep the focus on Trump through the conclusion of his term. (This is not the approach the Democrats took with George W. Bush 20 years ago. But the Dems have nothing to stand on except that they&rsquo;re not Trump.)</li>
</ul>
<ul>
<li>At the same time, there will be zero meaningful inquiry about Jeffrey Epstein, because politicos of both parties have dirty hands. Anything the Dems do will be totally theatrical, with no consequential disclosure. (This is much like the 1990s, when the GOP went after Bill Clinton only for the sex stuff and not for the Clintons&rsquo; shady dealings with the Riady family. In exchange the Dems dropped their inquiry into the Koch brothers&rsquo; campaign finance violations on behalf of the GOP in several 1996 congressional races.)</li>
</ul>
Most worrisome is that if the Dems make a clean sweep of the White House and Congress in 2028&hellip; they will indulge all their most delusional fantasies about engineering regime change in Moscow.&nbsp;
They still think Vladimir Putin is the only reason Donald Trump came to power in the first place. They&rsquo;ll want their final revenge. And they&rsquo;ll see the risk of nuclear war as <a href="https://paradigmpressroom.com/post/existential-threats">a risk worth taking</a> to achieve that goal.

FMF-Issue-111026-1

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Paradigm Pressroom’s 5 Bullets is a daily e-letter covering the economy and the markets, reaching 120,000 paying subscribers of the renowned financial publishing firm Paradigm Press.

Paradigm Pressroom's 5 Bullets

So What Will AI Cure, Anyway?

Yesterday&hellip; on a day that shares of Nvidia tumbled 9%... our Enrique Abeyta had a warning for the audience gathered in Nashville for the 2026 Paradigm Shift Summit.
Worse is coming for NVDA.
Maybe not right away. But it&rsquo;s coming.&nbsp;
Enrique&rsquo;s talk elaborated on a piece first published on Oct. 29 at our sister e-letter Truth &amp; Trends. After yesterday&rsquo;s shellacking, it couldn&rsquo;t be more timely. Read on&hellip;
<h2 style="text-align: center;">NVIDIA: The Biggest Stock Massacre in History</h2>
Are you sitting down?
You should be.
Because what I&rsquo;m about to tell you will sound crazy at first.
Maybe even impossible.
But by the time I&rsquo;m done, I think you&rsquo;ll see it the way I do.
I believe NVIDIA is about to lose investors more money over the next three years than any stock in human history.
And before you click away thinking, &ldquo;Good thing I don&rsquo;t own NVIDIA&rdquo;&hellip; You almost certainly already do.
The chipmaker makes up nearly 8% of the entire S&amp;P 500.
That's one company out of 500.
And it&rsquo;s more than 8% of the Nasdaq-100, the index behind QQQ, one of the most popular funds on the planet.
So, if you own an index fund&hellip; a 401(k)&hellip; an IRA&hellip; a target-date fund&hellip; You have money riding on NVIDIA right now.
Maybe a lot of it. Whether you know it or not.
Millions of Americans are in the exact same position. Their retirements are chained to the fate of a single stock.
And Wall Street is walking them straight into a trap.
NVIDIA's $1 Trillion Problem
Over the past three fiscal years, NVIDIA generated about $407 billion in total revenue.
Now Wall Street expects the company to generate roughly $1.1 trillion in combined sales during fiscal 2027 and 2028.
That's nearly three times the revenue NVIDIA earned in the previous three years combined.
And the forecasts get even more ambitious.
By fiscal 2029, analysts expect annual sales to approach $900 billion. Some believe NVIDIA could reach $1 trillion.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/Bubc36Pm6xJUXNRhqMW6R/d5c5189273531ed349bb3413973ce4f0/TTR-issue-102926-2.jpg" alt="Forecast Balance Sheet NVIDIA" />Source: MarketScreener (Hatched bars show estimates).
But where will all that money come from?
Most of NVIDIA's growth depends on companies spending vast sums to build and equip AI data centers.
Yet projects face power shortages, delays, and rising costs. And some customers are developing their own chips.
Wall Street is making two enormous bets: that customers can fund this spending on schedule, and that NVIDIA will capture the lion's share.
I think both assumptions are becoming harder to defend.
Billions in Chips With Nowhere to Plug Them in
On Oct. 20, Business Insider reported that Amazon planned to receive about $5 billion in NVIDIA server racks, followed by roughly $3 billion more each month.
But some Amazon data centers don't have enough electricity to run the equipment. So Amazon is storing completed systems in warehouses until those sites are ready.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3genC9VnoEvAZz0vQk2jpy/5408a1bcecf519452653e159f777183c/TTR-issue-102926-3.jpg" alt="Business Insider quote" />Source: Business Insider
Amazon calls this &ldquo;Early Rack Receipt&rdquo; and says it's normal practice. Not all the equipment is sitting idle.
But here's the risk: NVIDIA can sell billions of dollars in chips long before customers can put them to work.
If Amazon's warehouses keep filling while its data centers wait for electricity, why would it continue ordering at the same pace?
Amazon isn't alone.
Microsoft recently walked away from a planned data center in England run by NVIDIA-backed Nscale.
The power grid reportedly wouldn't be ready until the 2030s.
Oracle and OpenAI also dropped plans to expand their Stargate data-center site in Texas earlier this year.
These changes don't prove NVIDIA lost chip orders. Projects could move or change.
But they show how easily ambitious spending plans can slip behind schedule.
And that's a major problem for NVIDIA's forecasts.
The Money Is Getting More Expensive
Even if the power problems are solved, another question remains.
How will NVIDIA's customers pay for all these chips?
Oracle plans to raise up to $50 billion through debt and equity-related financing.
Meta expects to spend $135 billion to $145 billion on AI infrastructure this year and is exploring new ways to raise capital.
Meanwhile, yields on some CoreWeave bonds recently approached 16%.
That's an extraordinary borrowing cost for a company whose growth depends on building more data centers.
As financing costs rise, companies may have little choice but to delay projects or cut spending.
And there's another concern.
Some AI infrastructure debt is being placed in special-purpose companies and financed through loans or securities tied to data centers and equipment.
In some cases, even NVIDIA chips serve as collateral.
The structure isn't identical to the mortgage-backed securities that helped fuel the 2008 financial crisis.
But the growing web of borrowers, lenders, and investors should sound familiar.
If one major borrower runs into trouble, the damage could spread well beyond that company.
NVIDIA Knows the Risk
Here's what makes this story especially striking.
NVIDIA warns about this very problem in its own SEC filings.
In its latest quarterly report, the company states:
&ldquo;Customers may postpone purchasing new architectures due to the lack of availability of data center infrastructure to deploy our products.&rdquo;
And NVIDIA has already made huge bets on future demand.
As of July 26, it had $279 billion in manufacturing and supply commitments, up from $119 billion just one quarter earlier.
These are NVIDIA's commitments to suppliers, not firm customer orders.
But they show how much the company is counting on future sales.
If customers change their plans, NVIDIA could face extra inventory, higher costs, and pressure on profit margins.
It doesn't need to lose its customers for this to happen. It just needs them to buy less than Wall Street expects.
The King Has New Challengers
Some of NVIDIA's biggest customers are finding other ways to power AI.
On Oct. 27, Oracle announced plans to offer Google's custom AI chips, known as TPUs, starting in 2027.
Oracle builds and operates data centers for customers including OpenAI. Its cloud customers will soon have another option beyond NVIDIA.
Oracle is still expanding its NVIDIA business. But the new deal signals change.
Reports on Oct. 28 also indicated that OpenAI plans to buy Google's AI chips.
OpenAI is also working with Broadcom on custom chips.
Amazon has its own Trainium chips. China's Huawei is building rivals. SpaceX and Tesla are also pursuing plans to make their own chips.
NVIDIA still has a powerful advantage in CUDA, the software platform developers use to build and run programs on its GPUs.
That makes it difficult for many existing customers to switch away from NVIDIA.
But Google and Amazon don't need to beat NVIDIA at its own game. They can offer customers an entirely different way to run AI.
None of these efforts will replace NVIDIA overnight.
But consider the timing.
Customers may slow orders while they work through chips they've already bought. And when they start buying again, some of that money could go elsewhere.
NVIDIA could remain the world's top AI chipmaker while winning a smaller share of future spending.
What If Wall Street Is Wrong?
Let's return to NVIDIA's revenue forecasts.
Wall Street expects the company to generate roughly $1.1 trillion in combined sales during fiscal 2027 and 2028.
But what if customers can't keep spending at that pace?
What if power shortages delay more data centers, rising borrowing costs force companies to scale back, and some of their chip budgets shift to competitors?
Instead of $1.1 trillion, imagine NVIDIA generates just $600 billion over those two years.
That would still be an extraordinary business.
But it would mean roughly $500 billion less revenue than Wall Street expects, a shortfall of about 45%.
Now, I'm painting an extreme picture here.
But I'd argue that Wall Street's revenue forecasts are also extreme.
And here's what concerns me most.
NVIDIA might not need to miss those forecasts by anything close to 45% for its stock to suffer serious damage.
Even a much smaller shortfall, paired with weaker guidance, could force analysts to cut future earnings estimates.
Investors might also decide NVIDIA no longer deserves the premium valuation they've assigned to its shares.
Under those circumstances, would a 30% decline in NVIDIA's stock really be unreasonable?
I don't think so.
At a market value of roughly $5.25 trillion, that would erase about $1.6 trillion in shareholder wealth.
But given NVIDIA's enormous market value, it wouldn't take a collapse in its business for shareholders to suffer historic losses.
And the consequences won&rsquo;t stop there.
With so much of the AI boom tied to NVIDIA's success, a sharp drop in its stock could shake confidence in the entire trade.
Which brings us to the biggest risk of all.
The Biggest Card in the House
NVIDIA sits at the center of a vast network of AI companies, investors, and lenders.
Some firms buy NVIDIA chips while also receiving funding or other financial support from NVIDIA.
The company has even agreed to buy computing power from certain AI cloud firms under specified conditions, helping support their expansion plans.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/WpGOyOAOmMCSVShfzn1QY/3766b4c08ff85c04adb402e515b0f833/TTR-issue-102926-4.jpg" alt="NVIDIA AI Deals chart" />Source: Bloomberg
There's a certain irony in this chart.
Given everything we've just discussed about a possible AI bubble, it's a fitting image.
The biggest bubble in the chart belongs to the company whose success is helping hold the entire AI boom together.
These relationships help fuel the AI boom.
But if chip orders slow, investors may begin questioning whether heavily indebted data-center operators can earn enough to repay their loans.
NVIDIA could also become less willing to fund the firms buying its products.
A slowdown at NVIDIA could put pressure on the same companies that have helped drive its growth.
When the AI King Falls
NVIDIA could remain the world's leading AI chipmaker for years.
But Wall Street has set expectations so high that even this extraordinary company may struggle to meet them.
Its customers face growing financial pressure, data center projects are falling behind schedule, and competition is heating up.
That's why I believe NVIDIA is headed for a historic destruction of shareholder wealth over the next three years.
And remember, you don't need to own NVIDIA directly to get caught in the fallout.
Its shares are a major part of the S&amp;P 500 and Nasdaq-100, putting millions of retirement accounts at risk.
Remember, NVIDIA doesn't have to lose its crown for my prediction to come true. It only has to disappoint Wall Street.
Dave&rsquo;s last word: Not surprisingly, the major U.S. stock indexes are enjoying an oversold bounce after yesterday&rsquo;s wipeout.
In early trading, the Nasdaq is up nearly 2% after sinking yesterday into correction territory &mdash; down 10% from its most recent peak. The S&amp;P 500 is up about 1%. And NVDA is up nearly 7%.
Gold is holding the line on $4,000 while silver is approaching $52. Crypto&rsquo;s volatility of late continues, Bitcoin under $76,000 and Ethereum sinking toward $2,200.
U.S. oil futures are flat at $90.53 amid another ridiculous peace-deal-is-near headline, this time from Bloomberg. Never mind that tankers are still under attack in the Strait of Hormuz, this time with crew members getting killed.
It being the first Friday of the month, we have the October jobs report. The wonks at the Bureau of Labor Statistics conjured 165,000 new jobs for the month &mdash; way more than any Wall Street economist expected. The official unemployment rate ticked down to 4.1%.
Come back tomorrow to see how the first impeachment of a Trump administration official could happen even before the Democrats take control of Congress next year. Then on Monday we&rsquo;ll bring you highlights from the 2026 Paradigm Shift Summit. Have a good weekend.

FMF-Issue-1

NVDA: It’s Not Over

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Nashville
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />So yes, I&rsquo;m writing to you twice today. That&rsquo;s because there will be no 5 Bullets tomorrow.&nbsp;
Greetings from Nashville, where the Paradigm Press team is gearing up for tomorrow&rsquo;s 2026 Paradigm Shift Summit.&nbsp;
The theme this year couldn&rsquo;t be more timely: America&rsquo;s Great Divide: Critical Tipping Points for AI, Politics and Markets. Among the Paradigm editors who will speak are James Altucher, Jim Rickards, JC Parets, Enrique Abeyta, Byron King and Ray Blanco.
Now&hellip; maybe you&rsquo;ve been a Paradigm Press customer for a while and you&rsquo;re wondering why this is the first you&rsquo;re hearing about it.&nbsp;
Answer: This year we&rsquo;re making the event exclusive for our Omega Wealth Circle members.
As you might be aware, Omega combines our top services into one bundle &mdash; giving members a wide spectrum of investment strategies and recommendations in one place.&nbsp;
For the last 18 months or so, we&rsquo;ve been bending over backward to figure out how to give these VIP customers the best possible experience. One of the ideas our leadership team landed on was an in-person conference exclusive for them.
The Omega Wealth Circle isn&rsquo;t for everyone&hellip; and we don&rsquo;t open membership to just anyone. But if you already have two or more subscriptions with us, you can expect an invitation sooner or later.
In any event, we won&rsquo;t leave you completely in the dark: I&rsquo;ll bring you highlights from the event in next Monday&rsquo;s edition.
On to other matters&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />&ldquo;Don&rsquo;t It Make My Red State Blue&hellip;&rdquo;
(Yeah, apologies to Crystal Gayle&hellip;)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />In retrospect, I should have known the outcome of the midterm elections shortly before dinner last night.
Neoconservative pundit Mark Levin had already posted a teary video in which he blubbered, essentially, It&rsquo;s not my fault!
Just for the heck of it, I checked the 5 Bullets inbox. I had the reasonable expectation that a reader or two would let me have it <a href="https://paradigmpressroom.com/post/bloodbath-fmf">after yesterday&rsquo;s edition</a> &mdash; in which I cited the work of conservative pollster Rich Baris. For months, Baris was adamant that Trump wrecked his 2024 coalition by starting the Iran war (with all its impact on &ldquo;affordability&rdquo;) and that the GOP would pay dearly in the midterms.
I figured someone would take issue with that assessment. Doomer! Panican! People like you are the reason our side will lose!
But no. Nothing. Crickets.&nbsp;
Had reality set in even before the polls closed?
I won&rsquo;t dwell on the numbers, which you can find anywhere. In the interest of accountability, we&rsquo;ll note that Jim Rickards&rsquo; midterm forecast missed the mark. He projected the Republicans would retain their 53-47 Senate majority. In the event, Democrats will control at least 54 seats &mdash; and maybe more depending on the outcomes in Mississippi and Alaska.
In the House, he projected a slender Democrat majority of 223-212. As of this writing, the Democrats already hold 228 seats &mdash; with 68 races yet to be decided.&nbsp;
Jim nailed both of Donald Trump&rsquo;s shock victories in 2016 and 2024 &mdash; <a href="https://paradigmpressroom.com/post/what-its-over-already">down to the exact electoral vote count two years ago</a>. Being a stand-up guy he&rsquo;ll own this one and examine what went awry; in general it seems his midterm projections since 2018 have been too generous for the GOP.
Baris&rsquo; analysis, shared here yesterday, was spot-on: While conventional polls in recent years undercounted Trump supporters, a repeat of that misfire was not in store this year &mdash; not when so many 2024 Trump voters were so disillusioned.
And for the record, it is Mark Levin&rsquo;s fault. And everyone else Trump listened to earlier this year &mdash; Benjamin Netanyahu, Laura Loomer, the late Lindsey Graham (whose sister got smoked last night).
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Data Centers, Taxes
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />To the extent that data centers were on the ballot yesterday, they lost.
<a href="https://paradigmpressroom.com/post/i-dont-want-a-data-center-in-my-backyard">On Monday</a>, we examined the impact of the data center debate on the midterms &mdash; with the spotlight on two races.
In Ohio, Democrat Sherrod Brown will return to the U.S. Senate after a two-year absence. He successfully tagged incumbent Republican John Husted as &ldquo;the face of data centers.&rdquo;
In the Florida governor&rsquo;s race, Republican Byron Donalds eked out a win over Democrat David Jolly by a margin of 1.3 percentage points. As we chronicled on Monday, Donalds&rsquo; vocal support for data centers cost him support in rural GOP strongholds.
As for the three U.S. House races where Democrats made opposition to data centers a major issue&hellip; the Democrat flipped Ohio&rsquo;s 15th district while Democrats are in the lead in Colorado&rsquo;s 4th and Nevada&rsquo;s 2nd.
And while we didn&rsquo;t mention Texas on Monday, data centers figured big in the ousting of three-term Republican Gov. Greg Abbott. As noted here in August, Abbott imposed a moratorium on approvals of new data centers connecting to the power grid. It still wasn&rsquo;t enough.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />And then there were the tax referenda.
Florida&rsquo;s Amendment 3 &mdash; a major property-tax overhaul &mdash; passed with a supermajority of 62%. The measure phases in a homestead exemption starting at $150,000 next year &mdash; jumping to $250,000 in 2028. It would also authorize the legislature to abolish property taxes altogether if it so chose.
So now what?
As the researchers for the Tax Foundation wrote earlier this year, &ldquo;eliminating such a sizeable share of Florida&rsquo;s property tax base would not reduce the cost of providing local government services; it would simply require that the lost revenue be generated elsewhere, including from higher millage rates on all property that remains taxable.&rdquo; That is, commercial property and second homes.
Meanwhile, it&rsquo;s too soon to call the results on California&rsquo;s proposed &ldquo;billionaire tax.&rdquo; (The rest of the country has figured out how to count early and absentee ballots by now; why not the Golden State?) At last check, about 60% of the vote is in and the proposal is losing 56-44%.
Meanwhile in Colorado, the vote is neck-and-neck for a proposal to scrap the flat-rate income tax in favor of progressive rates.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Certainty
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />If, as the saying goes, &ldquo;markets hate uncertainty,&rdquo; then they love the certainty that&rsquo;s come with this election result.
Stock futures wobbled last night when it was still up in the air whether Democrats would take both houses of Congress.&nbsp;
But with all doubt removed, every major index ripped higher in the first hour of trading &mdash; the S&amp;P 500 by 1.5%, the Dow by nearly 2%, the Nasdaq by 2.2%.
About the only notable losers are Elon Musk&rsquo;s companies &mdash; SpaceX down 2.5% and Tesla down 2.75%. That&rsquo;s Mr. Market sniffing out &ldquo;regulatory risk&rdquo; in the form of congressional investigations.
Precious metals are also rallying hard &mdash; gold up over $100 and back over $4,300 while silver is up two bucks to $51.66.
Crypto is showing signs of life after the Binance hack last week &mdash; Bitcoin back over $80,000 and Ethereum cresting $2,400.
U.S. oil futures are down over $3% &ldquo;against any basic logic,&rdquo; as the DarioCpx trading account on X says &mdash; to $93.67, the lowest in over three weeks.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />For all the market turmoil this fall, most stocks were up year-to-date going into Election Day.
Paradigm trading pro Enrique Abeyta tells us &ldquo;two-thirds of the stocks in the S&amp;P 50 are up YTD and 22% are up more than 30%.&rdquo; Here&rsquo;s a breakdown from Ritholtz Wealth Management&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6N357f35e4G75cPQAB9tIW/7a9cc54b2378698542a93392be6c8a63/FMF-Issue-110426-PM-2.jpg" alt="pub" />
&ldquo;This is the sign of a bull market and not a bear market,&rdquo; Enrique avers.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: ASTS
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />After Zach Scheidt&rsquo;s guest edition a week ago today &mdash; about <a href="https://paradigmpressroom.com/post/elon-wants-to-be-your-wireless-provider">SpaceX&rsquo;s foray into wireless service</a> &mdash; we got a one-sentence reader query: What does this mean for AST SpaceMobile (ASTS)?
Altucher&rsquo;s Investment Network contributor Ray Blanco &mdash; maybe the most passionate advocate for ASTS in our shop &mdash; is not worried.
&ldquo;AT&amp;T and ASTS just announced that a smartphone connection was handed off from an AT&amp;T tower to an ASTS satellite and back without dropping, in a test on Oct. 21 in Washington state,&rdquo; he wrote yesterday.
&ldquo;Think about driving out of town on a call. The towers thin out and the call dies. With ASTS, the satellite picks it up, and the tower takes it back when you&rsquo;re in range again. ASTS has mastered extending the carrier&rsquo;s own network into space. It&rsquo;s seamless to you, the user, and that&rsquo;s a big deal, since it is a very hard piece of engineering to master.&rdquo;
What&rsquo;s more, Ray says ASTS&rsquo; satellite infrastructure could give the major wireless carriers an excuse to ditch cell towers in rural areas that are costly to maintain and serve relatively few customers.
&ldquo;In its latest filing,&rdquo; Ray continues, &ldquo;T-Mobile says it&rsquo;s shutting down &lsquo;low customer value sites.&rsquo; In the same filing, it commits spectrum to satellite providers.
&ldquo;T-Mobile doesn&rsquo;t connect those two in the filings but I will. Every rural tower a carrier can retire and hand to a satellite is cost off its books, and the handoff tech ASTS just demonstrated is what lets that happen without customers noticing.&rdquo;
Ray&rsquo;s bottom line: &ldquo;There&rsquo;s plenty of room for Elon&rsquo;s network and the carriers&rsquo; networks via ASTS.&rdquo;

FMF-Issue-110426-PM-1

Wipeout: The Day After

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Elon Is Watching &ldquo;the Pitchfork Level&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Hmmm&hellip; What was it we said here last summer amid the swelling controversy over data centers?&nbsp;
Oh yeah: &ldquo;Elon Musk&rsquo;s data centers in space can&rsquo;t come soon enough.&rdquo;&nbsp;
Put &lsquo;em in a place where they won&rsquo;t be intrusive neighbors competing for scarce electricity and water. Solar panels supply 24/7 power and external radiators release the heat into space.
By then it was already our third extensive write-up on the topic in three months. It was evident that they&rsquo;d be an issue in the midterm elections.
And as we mentioned last Wednesday, they seemed to have a role in the ousting of Texas&rsquo; three-term Republican Gov. Greg Abbott. In addition, there were three U.S. House seats held by Republicans where Democrats made data centers a major issue &mdash; and it appears the Democrats have flipped all three. (Well, to be precise, Lauren Boebert&rsquo;s seat in Colorado is still too close to call.)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> A new analysis confirms what we suspected going into the election: The closer you live to a data center, the more likely your vote would be swayed by data centers.
A conservative group that&rsquo;s been critical of data centers called Humans First did some serious number crunching &mdash; examining both election returns and records from data center projects across nearly half of the nation&rsquo;s 3,100 counties.
As Fox News summarizes: &ldquo;Across all counties examined, those hosting large data centers shifted an additional 2.2 percentage points toward Democrats compared with non-host counties in the same states. The pattern appeared in 14 of the 16 states and 25 of the 27 governor and Senate races examined.
&ldquo;Restricting the analysis to deep-red counties &mdash; those President Donald Trump won by at least 20 points in 2024 &mdash; produced a 2.1-point raw gap between counties hosting large data centers and comparable counties without projects.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> All of this wrangling goes away if Elon&rsquo;s vision of data centers in space comes to fruition &mdash; and he&rsquo;s got a target of next year.
That&rsquo;s what he said three months ago during SpaceX&rsquo;s inaugural earnings release. He can read the tea leaves as well as we can: Data centers in space may be the only way to feed industry&rsquo;s insatiable demand for &ldquo;compute&rdquo; without compromising the power grid and the water table.
On Oct. 1, Musk and crew took an essential first step: At Vandenberg Space Force Base in California, SpaceX launched a satellite loaded with sophisticated Google chips.&nbsp;
At a conference last Friday, Musk said the project has expanded and is proceeding smoothly: &ldquo;So there's a satellite with an Nvidia GPU up there that we launched, and there's a satellite we recently launched with a Google TPU. And these are operating to the best of my knowledge &mdash; they're working fine in space.&rdquo;
Looking ahead, &ldquo;We expect to start launching the first Starmind computers, which we've co-designed with Nvidia, probably &mdash; I'm just guessing here &mdash; but in the third quarter of next year.&rdquo;
And not a moment too soon, he said pointedly in light of the election results: &ldquo;The pitchfork level for data centers is pretty high.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Hump Day Rebound
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The on-again, off-again AI spending scare is off again.
Overnight, CoreWeave Inc. reported its quarterly numbers. As you&rsquo;ll recall, this is the firm <a href="https://paradigmpressroom.com/post/about-the-wednesday-wobble">at the center of the AI spending scare</a>. It&rsquo;s a &ldquo;neocloud&rdquo; company that builds and operates AI data centers.&nbsp;
Last month CoreWeave&rsquo;s lenders started getting cold feet about continuing to shovel money at the company; whereas they once charged 9% interest, they were starting to charge 16%. So CRWV&rsquo;s earnings release was, as the saying goes, highly anticipated.
Turns out the numbers were fine. And the CEO expressed confidence that strong demand would continue into at least early next year. CRWV shares are up 26% on the day &mdash; although we hasten to add they&rsquo;re still less than half their nosebleed levels of last spring.
That glow is extending to the rest of the AI space and the rest of the stock market: The S&amp;P 500 is up 1.5%, back over 7,600. The Nasdaq is up 2.2%, cresting the 25,600 level.&nbsp;
Social-media cynics say the Trump administration and the financial media will stop at nothing to prop up the market ahead of Anthropic&rsquo;s IPO a week from tomorrow. They might have a point.
Still, Trading Desk editor Greg Guenthner is taking nothing for granted: &ldquo;Remember what we don&rsquo;t know,&rdquo; he advised his readers this morning. &ldquo;We don&rsquo;t know if this is the end of this corrective action, or simply a relief rally. We don&rsquo;t know where &lsquo;the bottom&rsquo; will be&hellip; or when it will happen.&rdquo;
The bond market is closed for the holiday. Gold is clinging barely to the $4,000 level while silver has clambered its way back over $52. U.S. oil futures are up about 1% at $86.89.
Bitcoin is back over $74,000 while Ethereum is approaching $2,100.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Here is a chart showing the forward valuation (price-earnings or P/E) on Nvidia stock,&rdquo; says Paradigm trading pro Enrique Abeyta&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1qXmo9OoStpO3riwkmpC7G/8a57daa284a1f842cf0f2782baade76b/FMF-Issue-111126-2.jpg" alt="Nvidia Forward price" />
&ldquo;History tells us that either the forward earnings are CORRECT and the stock goes HIGHER &mdash; OR the earnings are WRONG and the stock is pricing this in.&rdquo;
Enrique is betting on the latter: &ldquo;I think the stock still gets CUT IN HALF from here!&rdquo;
More about Nvidia in Bullet No. 3&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The NVDA Scandal, Continued
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The central question will be what Nvidia knew, when it knew it and whether anything material should have been disclosed earlier,&rdquo; says Davis Wilson at our sister e-letter The Million Mission.
NVDA shares are finally enjoying an oversold bounce today &mdash; on the heels of a two-day pounding brought on by the revelation that CEO Jensen Huang was having an affair with an executive from a Singapore-based firm named Alice Huang (no relation), whom the media is casually labeling a Chinese spy.
Cue the manufactured outrage from Washington: &ldquo;Senate Democratic Leader Chuck Schumer demanded answers from the administration and tighter curbs on chip exports to China,&rdquo; says Reuters. &ldquo;Republican U.S. Senator Kevin Cramer from the Senate Banking Committee called on Huang to step down as CEO.&rdquo;
&ldquo;The affair won't hurt Nvidia's earnings,&rdquo; <a href="https://million-mission.com/posts/the-jensen-huang-situation">writes</a> Davis. &ldquo;But further restricting Nvidia's access across key Asian markets could.&rdquo;
NVDA&rsquo;s share price is down 19% from this time 90 days ago. But Wall Street&rsquo;s earnings expectations are up 38% in the same time frame. Unless and until those expectations change, Davis is hanging onto his NVDA shares.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Was the woman Jensen cheated with a spy? I&rsquo;m skeptical,&rdquo; says Adam Sharp at The Daily Reckoning.&nbsp;
&ldquo;He&rsquo;s too smart for that, and even if she was, he&rsquo;d never reveal secret info to a potential competitor.&rdquo;
Three days into the scandal, the only evidence we have that Huang&rsquo;s lover was a Chinese spy is the claims of U.S. intelligence officials speaking anonymously to mainstream media outlets, whose agendas are known only to themselves.
&ldquo;I think she was probably just a middleman, out to make money,&rdquo; Adam elaborates. &ldquo;Her company, Megaspeed, bought Nvidia GPUs supposedly for use outside China, and made them available to Chinese companies.
&ldquo;Black markets are highly profitable, after all.&nbsp;
&ldquo;Everybody knew GPUs were being smuggled into China, or bought by Chinese companies and operated overseas. But officials looked the other way, because it was great for Nvidia and the broader U.S. stock market.&rdquo;
From the beginning in August 2022, Huang bristled at Washington&rsquo;s limits on Chinese purchases of Nvidia&rsquo;s GPUs. He lobbied hard for exemptions and carve-outs.
&ldquo;He can no longer do that,&rdquo; says Adam. &ldquo;They&rsquo;ll accuse him of being a Chinese plant, a spy, contaminated by exposure.
&ldquo;So it looks like somebody wanted to stop Jensen&rsquo;s advocacy for tech trade with China. And they probably have, for now at least.&rdquo;
And in the meantime, those export curbs have backfired spectacularly &mdash; prodding Chinese firms to develop their own GPUs that might not be as good as Nvidia&rsquo;s, but are a hell of a lot cheaper.&nbsp;
If you missed it, <a href="https://dailyreckoning.com/post/nvidias-worst-fear-is-here">Adam&rsquo;s full write-up is worth a look</a>.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Mailbag: Hegseth
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Not surprisingly, reader reactions to Emily Clancy&rsquo;s guest edition on Saturday &mdash; <a href="https://newsyoucanacton.com/posts/pink-slip-pete">first published by The Rundown in September</a> &mdash; are all over the map.
&ldquo;Perfect deep state/MSM shill. I expect better from Paradigm Press,&rdquo; says one brickbat
&ldquo;Thank you for a refreshing and fact-based article,&rdquo; says a bouquet &mdash; &ldquo;as compared to the Jim Richards tone-deaf, debunked conspiracy theories at the Paradigm Shift Summit. (Overall, I enjoyed the event.)&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> A handful of readers sought to make a similar point&hellip;
&ldquo;I&rsquo;m not a Hegseth proponent, necessarily, but I think that Emily Clancy should be very careful about assuming that time in service ever equates with useful experience or operational competence.&rdquo;
Another: &ldquo;After having spent two and a half decades in the military I can think of only a handful of more senior people that I would trust to run anything in the armed services.&nbsp;
&ldquo;Almost all the senior officers with whom I connected (including several three and four stars) were politicians. Period. Very, very few were skilled operational commanders. Most of those that were had been shown the door during the Obama purge.&rdquo;
A third: &ldquo;There are more generals in the armed forces today than there were during World War Two! I think they did a better job then than they do today. Hegseth is doing what&rsquo;s necessary to whittle down the excessive overhead from the military.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I served on active duty in the Army and flew AH-64 Apaches during the post-9/11 &lsquo;global war on terror&rsquo; years. I have some useless opinions to share.
&ldquo;Yes, the flyby at Kid Rock&rsquo;s house was dumb. But not exactly a huge &lsquo;safety violation.&rsquo; I&rsquo;m willing to bet some pilots who were already on their way to retirement pulled it off to &mdash; heaven forbid &mdash; have some fun. The Army also recently made huge cuts to its pilot ranks and reduced the number of training hours, which didn&rsquo;t make the news and hasn&rsquo;t helped morale.
&ldquo;The Army is full of bootlicking, bureaucratic hall-monitor types at the senior levels, who enjoy enforcing pointless rules just to advance their own careers. That&rsquo;s how we produce generals in the defense-contractor-revolving-door scheme with &lsquo;40 years of service,&rsquo; always touting the number-of-years-in-my-career as if it's an actual measure of competency. These guys thrive on moving up the ranks at the expense of others. They&rsquo;re lifelong bureaucrats in uniforms, not innovators. Our system clones them like robots out of an Optimus assembly line. Seeing them get the boot is long overdue.&nbsp;
&ldquo;As far as the Navy experiencing &lsquo;food shortages, broken toilets, moldy showers, deteriorating morale, long meal lines, shortages of basic supplies such as soap and toothpaste&rsquo; yeah well, welcome to the Army on any given day!&nbsp;
&ldquo;Go to any base housing across the country and you&rsquo;ll see the same thing. That stuff has been going on for decades in all branches of the military, and it&rsquo;s been completely ignored by &lsquo;senior leaders&rsquo; and the media because it makes them look bad and they really don&rsquo;t care. Maybe starting dumb wars while systematically ignoring troops&rsquo; needs &mdash; but endlessly funding the &lsquo;cool new toys&rsquo; &mdash; leads to bad outcomes.
&ldquo;And people wonder why most people rotate out of the military after a few years and don&rsquo;t stay. Total mystery!&nbsp;
&ldquo;As far as Hegseth, I&rsquo;m no superfan. But it sounds like Susie Wiles and her neocon crew wanted to make him a scapegoat for their own blunders (she just got canned anyway). Hegseth was a National Guard infantry officer without a Ranger tab. We have PLENTY of other young, more competent veterans who would be way better for this role in reshaping the military. But they&rsquo;re not Fox News hosts.&nbsp;
&ldquo;Rant complete&hellip;&rdquo;
Dave responds: So a few things&hellip;
First, even some of Hegseth&rsquo;s fiercest critics acknowledge that purging the ranks of the generals is one thing he&rsquo;s done right. &ldquo;Credit where credit is due,&rdquo; tweeted the military analyst Will Schryver in September: &ldquo;Greasy Pete has cut the number of four-star generals from 10 to five.&rdquo;
Second, about the Navy&rsquo;s meager rations and limited supplies in the theater of war this year: From every indication that&rsquo;s because Iranian forces all but destroyed the giant Navy base in Bahrain during the opening days of the war. Supplies had to be routed through Diego Garcia, nearly 2,500 miles away. A logistical nightmare.
Those of us who relied on independent commentators like Will Schryver and Larry Johnson knew in early March that the Bahrain base was out of commission. If you relied on the corporate media, you didn&rsquo;t have a clue until summer at the earliest.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Impeachment, Armistice Day
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As perhaps you&rsquo;ve heard, the articles of impeachment brought against Hegseth by Rep. Thomas Massie (R-Kentucky) failed last night by a vote of 204-211.&nbsp;
They would have passed were it not for the fact that 11 Democrats did not vote, allegedly because they were caught in a traffic jam.
Not that anyone can ever prove it, but this outcome looks carefully orchestrated.&nbsp;
Either the Democrats want to let Hegseth twist in the wind a while longer &mdash; or they want to take sole credit for impeachment proceedings next year when they&rsquo;re in the majority.&nbsp;
It has everything to do with partisan advantage, and nothing to do with the good of the country. This is exactly the slimy sort of thing Nancy Pelosi used to do when she was in charge of the House Democrats &mdash; and wouldn&rsquo;t you know it, she was one of the absent 11.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/0F8oZwdr1IbNxEaBdB447/c3a1ce7ecc184ba970d527b12de88021/FMF-Issue-111126-3.jpg" alt="Daniel x Post" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile on this Veterans Day, &ldquo;Make Armistice Day Great Again&rdquo; is the headline to <a href="https://original.antiwar.com/thomas-knapp/2026/11/10/make-armistice-day-great-again/">a short article</a> by Desert Storm veteran Thomas Knapp.
The holiday originally marked the moment the guns fell silent in Europe during World War I. The rebrand came in 1954. Knapp thinks it&rsquo;s a travesty.
&ldquo;Instead of mourning war,&rdquo; he writes, &ldquo;we now celebrate warriors. Parades. Air shows. Political speeches. Free meals, drinks, haircuts, etc. for veterans. A lot of &lsquo;thank you for your service&rsquo; to everyone identifiable as a veteran of the U.S. armed forces; quite a bit of mutual back-slapping among those of us who &lsquo;served.&rsquo;
&ldquo;To me, the best way to celebrate veterans would be stop making so many of us &mdash; especially, but not only, of the dead, maimed, traumatized and homeless varieties.&rdquo;

FMF-Issue-111126-1

 Elon and “the Pitchfork Level”

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />&ldquo;Bloodbath&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Yeah, I can&rsquo;t resist starting the Election Day issue on an irreverent note. Or two, as seen in the patriot/prepper meme-o-sphere&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/QCPjdsB6QqlN2xGPDMhZL/1d3776164516152fbca21032d934fce9/FMF-Issue-110326-2.jpg" alt="Voting Meme" /> <img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1rn5qaHgBsUxO72ikuicqF/f9d825e75990dfd264e2a0777e70ca9f/FMF-Issue-110326-3.jpg" alt="Voting woodchipper Meme" />
On a somewhat more serious note&hellip; and to the extent mainstream polling data can be taken seriously&hellip; this chart must surely be causing agita in the White House.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/77oceNtqsoSqSLNgvGwThs/0cdf710507db28735a825d3f7834807c/FMF-Issue-110326-4.jpg" alt="Politics &amp; Poll Tracker X Post" />
As it is, Democrats took the House from the Republicans in 2018.
"It's now almost certain that voters intend to punish Republicans pretty badly for ignoring their wishes and concerns,&rdquo; tweets independent pollster Rich Baris.
It pains Baris to say that; he has zero affinity for Democrats.&nbsp;
But Baris says Donald Trump took a sledgehammer to his fragile coalition when he and Benjamin Netanyahu launched their war on Iran. Young people and Latinos who put him over the top in 2024 have checked out.
&ldquo;Iran consumed all the oxygen,&rdquo; says pollster Mark Mitchell, a kindred spirit of Baris &mdash; &ldquo;and instead of progress on affordability, what voters got was &lsquo;shut up, this economy is great.&rsquo;&rdquo;
Word. It&rsquo;s exactly the same gaslighting Democrats did during the 2022 midterms. We chronicled it extensively at the time. The Dems lost their majority in the House as a consequence.
Or if you want another historical reference, Trump&rsquo;s approval rating now is comparable to George W. Bush&rsquo;s in 2006 &mdash; when a war-weary electorate flipped both houses of Congress to the Dems.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Sure, polls have understated Republican support in several recent cycles,&rdquo; Baris acknowledges.
&ldquo;But it was due to Trump and his under-measured popularity. Now he is much more unpopular than in prior elections and that is being driven by unpopularity among right-leaning voters&hellip;
&ldquo;If certain voters are telling us that they aren&rsquo;t participating or they are defecting, we cannot simply decide we do not believe them.
&ldquo;Worth noting, a lot of Democratic pollsters did this in 2016 and tried to account for it by weighting Democrats higher. That was putting their thumbs on the scale, and it bit them in the arse.&rdquo;
The conservative influencer Nick Sortor says the only way to prevent a GOP &ldquo;bloodbath&rdquo; is if GOP voters &ldquo;turn out in droves&rdquo; today.
&ldquo;It&rsquo;s a very tall order for one day,&rdquo; Baris says, &ldquo;given the difficulty they have had during early voting. But it is still technically possible until every poll closes.&rdquo;
With that, we&rsquo;ll reiterate our own Jim Rickards&rsquo; final call that we shared here on Friday: Democrats take the House narrowly, 223-212&hellip; while Republicans retain their 53-47 advantage in the Senate.
That stands in contrast with the oh-so-mainstream pundit Nate Silver &mdash; who projects a Democratic wipeout of 236-199 in the House and a Democrat majority in the Senate of at least 52.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />The Election and the Markets
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The stock market doesn't care nearly as much about who wins elections as some headlines would make you think,&rdquo; says Enrique Abetya, our resident hedge fund veteran.
In yesterday&rsquo;s edition of our sister e-letter Truth &amp; Trends, Enrique shared a chart much like the one we had here last month. This one is from RBC Capital Markets, studying average annual S&amp;P 500 returns under six different configurations of presidential and congressional power, going back to the days of President Dwight Eisenhower&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3iHmV5HIg2Iq0Ha58nx1f7/e39e15e3ce7eae039fa13d8f01f15721/FMF-Issue-110326-5.jpg" alt="Elephant or Donkey Chart" />
Even under the &ldquo;worst&rdquo; potential scenario &mdash; a Republican in the White House and Democrats running both houses of Congress &mdash; average annual returns were positive.
In addition, we&rsquo;ll remind you of what JC Parets said in this space last month: We&rsquo;re in the early stages of <a href="https://paradigmpressroom.com/post/todays-issue-is-not-about-the-midterms">the best seven-month stretch for stocks</a> during the four-year presidential cycle. It starts the month before the midterm elections&hellip; and continues through the following April.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Following up on yesterday&rsquo;s chronicle of <a href="https://paradigmpressroom.com/post/i-dont-want-a-data-center-in-my-backyard">the data center backlash</a>&hellip; there&rsquo;s a potential upside for certain AI stocks even if the midterms result in new limits on data centers.
In a pre-election dispatch yesterday, Paradigm AI authority James Altucher acknowledged the potential for &ldquo;higher costs, longer delays and tighter profit margins.
&ldquo;But it also makes the race to build cheaper, faster and more efficient AI infrastructure that much more important.&rdquo;
James identified five companies in the Altucher&rsquo;s Investment Network portfolio that stand to benefit no matter what. That&rsquo;s because they supply what Nvidia needs to make its pricey and sophisticated GPU chips. They also supply what Google needs for its up-and-coming competitor chips called TPUs.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK maybe the tech sell-off will take a breather today.
Of course, that&rsquo;s what it looked like at this time yesterday&hellip; but the Nasdaq Composite ended the day with another 1.1% loss.
Checking our screens today, the Nasdaq is up more than three-quarters of a percent to 25,365 &mdash; not great when you consider the index first crested that level six months ago. The S&amp;P 500 is up a more modest 0.4% while the Dow is in the red.
The green in two of the three major indexes comes despite another disappointing earnings report from a Magnificent 7 company: Apple delivered respectable numbers for the quarter gone by&hellip; but it warned for the current quarter that its profit margin is likely to keep shrinking. That&rsquo;s because rising memory costs are running ahead of the price increases Apple can slap on its signature products.&nbsp;
As such, AAPL is down 2% as we write.
Gold continues to hold the line on $3,900 but silver has sunk back below $50. U.S. oil futures remain below $96 despite U.S. bombing of an Iranian island.
Bitcoin remains mired below $78,000, Ethereum below $2,300. Crypto continues reeling after the Binance hack. On the other hand, when the FTX exchange collapsed at this time four years ago, it marked a major bottom for crypto. Just saying&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Supply Chain Alert
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Incoming supply-chain snags?Don&rsquo;t look now, but a West Coast dockworker strike could be underway by Thursday.
Workers represented by two unions at the ports of Los Angeles and Long Beach have been working without a contract since the summer of last year. They were set to go on strike Sunday &mdash; but the unions agreed to hold off on a walkout for a few more days while talks continue.
Only about 2% of the unionized workforce is affected&hellip; but the unions say those workers handle 85% of cargo moving through the Port of Long Beach and 33% at the Port of Los Angeles.
&ldquo;The union members earn an average of $170,000 a year. The sides hasn&rsquo;t disclosed exact issues in the negotiations,&rdquo; says a report from the trade site FreightWaves. &ldquo;The watchmen&rsquo;s negotiations are separate from the broader West Coast longshore labor agreement, which runs through 2028 and covers approximately 22,000 workers at 29 ports.&rdquo;
As you might recall from previous coverage here, the threat of an East Coast/Gulf Coast dockworker strike loomed over the 2024 presidential campaign. Labor and management ultimately came to terms shortly before Donald Trump took office &mdash; after Trump weighed in on labor&rsquo;s side in a dispute over automation.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Flying Cars Taking off (The Stocks, Not So Much)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Last week, an experimental airplane landed at a Lower Manhattan heliport designed for helicopters. It needed just 100 feet to land and take off.
That accomplishment has implications reaching well past the landing zone.
Privately held Electra's fixed-wing aircraft uses eight propellers to force air across its wings, generating enough lift for extremely short takeoffs and landings. The company says its Ultra Short technology will eventually let passenger-carrying planes take off and land in just 150 feet &mdash; about half the length of a football field.
Electra calls the idea &ldquo;Direct Aviation&rdquo;: flying from locations near where people live and work to bypass long airport drives and crowded terminals.
Paradigm contributor Davis Wilson sees a similar opportunity in publicly traded companies. Joby Aviation (JOBY), Archer Aviation (ACHR) and Eve Holding (EVEX) are developing electric vertical takeoff and landing (eVTOL) aircraft that rise like helicopters before transitioning to forward flight.
They&rsquo;re making real progress: On Friday, Joby began a week of demonstration flights in Florida under a federal pilot program.&nbsp;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/hl5eVKyeOWe8NMjS6CaRU/fd4dbe426dce77a63429c4218fa1e8c2/FMF-Issue-110326-6.jpg" alt="Aviation Progress Joby aviation" width="540px" /> A new presence in the skies [Joby Aviation photo posted on X]
A day earlier, Archer announced a partnership with Italy&rsquo;s ITA Airways to explore air taxi service. Archer estimates its aircraft could fly from Rome's main airport to downtown in less than 10 minutes, compared with an hour by car.
Yet all three stocks have lost more than 60% over the past year. JOBY is down about 70%, ACHR 62%, and EVEX 64%.
To be sure, these companies still have a long way to go. Electra isn&rsquo;t targeting commercial service with its nine-passenger aircraft until 2030. Joby and Archer together burned roughly $330 million in operating cash in the second quarter.
But the potential for a revival in share prices is ever-present. As Davis puts it, &ldquo;We just need people to start paying attention again.&rdquo;
FAA certification, the first commercial routes and the first paying passengers could do it. Because right now, expectations are so low that any significant milestone could revive enthusiasm.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Prepping
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Adam Sharp&rsquo;s guest edition on Saturday &mdash; originally published last week <a href="https://dailyreckoning.com/post/soccer-moms-are-doomsday-prepping">at The Daily Reckoning</a> &mdash; brought a torrent of additional reader suggestions to brace for emergencies.
&ldquo;An outdoor grill or stove is an important addition,&rdquo; says one. &ldquo;You can use propane as a fuel source.&rdquo;
&ldquo;We have a household generator,&rdquo; says a second. &ldquo;Obvious use for the refrigerator but also important if you are on a private well. We also have another generator in our motorhome that can be used as well if needed.&rdquo;
&ldquo;Don&rsquo;t forget medications, both prescriptions and over-the-counter,&rdquo; advises an MD.&nbsp;
&ldquo;The under-the-sink water filter is a good idea till the power goes out and then you don&rsquo;t have any running water,&rdquo; cautions still another reader. &ldquo;Best to have one of those water filter straws. You can drink out of a creek. It purifies the water as you need it. Anyway, the rest of that stuff all look pretty good.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> One of our newer readers submits our most comprehensive entry&hellip;
&ldquo;A generator that is powerful enough to be able to power two to four major appliances (depending on the size of your home/household) along with at least two or three propane tanks (16-plus hours coverage) are good to have in any climate that gets severe weather in winter so you are prepared for basic power outages as well as any electrical grid concerns.
&ldquo;Heavy-duty power extension cords for the generator long enough to reach from outside your house where the generator will be to whatever is needing the power plus a power strip for plugging them all into a single generator.
&ldquo;For people with any health limitations: Any personal hygiene or medical care items that you need specific brands of or can't afford to go without if a panic would cause a sellout in stores of the item (e.g., I have very sensitive eyes, so I need a certain brand of contact lens solution; and I am allergic to regular sodium fluoride toothpaste, so I have to buy a particular brand of stannous fluoride toothpaste).&rdquo;
Dave responds: Thanks to everyone for their input. I won&rsquo;t dwell on things here, just hit a handful of highlights&hellip;
<ul>
<li>Water will always be problematic just because it&rsquo;s so doggone bulky and heavy. I keep a LifeStraw in my everyday carry backpack. And at home a Berkey-type unit is a workaround for no electricity</li>
</ul>
<ul>
<li>Starting in 2022, I&rsquo;ve recommended now and then that you keep a wad of cash on hand, keep your vehicles topped up (never below a half tank) and keep your battery-powered devices charged. Even in a short-term power outage, no electricity means no credit/debit cards and no electricity to the gas pumps</li>
</ul>
<ul>
<li>Also starting in 2022, I&rsquo;ve passed along warnings from the North American Electric Reliability Corporation about the potential for rolling blackouts in the event of severe summer heat or severe winter cold. It was that year I got a generator for essential loads; I had an electrician install a transfer switch and breaker interlock. If you go this route &mdash; it&rsquo;s cheaper than the Generac &ldquo;whole house&rdquo; thing &mdash; test your backup system at least three times a year so you&rsquo;ll know what to do step-by-step once the lights go out for real. (I did my most recent drill last weekend because I had to change the clocks on the microwave, coffeemaker, etc. anyway.)</li>
</ul>
Point of all this being, the power grid was already under stress before AI data centers began to proliferate&hellip;

FMF-Issue-110326-1

“Bloodbath”

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />&ldquo;I Don&rsquo;t Want a Data Center in My Backyard&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Will control of the U.S. Senate come down to the issue of&hellip; data centers?
Of the 35 seats up for grabs this year, a half dozen or so are extremely competitive. That includes Ohio, home to the fifth-largest concentration of data centers in the country &mdash; as well as relentlessly rising electric bills.
Incumbent Republican John Husted is taking the heat for fast-tracking new data centers during his time as lieutenant governor. Democrat Sherrod Brown &mdash; hoping for a comeback after losing Ohio&rsquo;s other Senate seat two years ago &mdash; labels Husted &ldquo;the face of data centers.&rdquo;&nbsp;
The race is tight. Internal Republican polling suggests this seat might flip to the Dems &mdash; although for the record, our Jim Rickards projects Husted will hang onto it.
It seems data centers are a hot topic for the midterms &mdash; and beyond. You can buy T-shirts and hoodies invoking both The Terminator and the 2028 presidential race&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7IGl9RqK2mW7OmcYsbZ4Mf/f4deb9bbf7cec07b6fc3f9480d898a28/FMF-Issue-110226-2.jpg" alt="Sarah Connor 2028 hoodie" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Here in 2026, it seems how you vote might depend on your proximity to a data center.
All this year, researchers for The Economist have been regularly surveying nearly 150,000 Americans &mdash; comparing the voting intentions of those living within two kilometers (1.6 miles) of a data center versus everyone else.&nbsp;
For the first half of the year, there was little difference. But over the summer, a divide emerged.&nbsp;
Among those living near a data center, support for Democratic candidates rose from 54% to 61%. Among those living further away, the increase was much more modest &mdash; from 53% to 55%.&nbsp;
The trend was similar even among people who voted for Donald Trump in 2024. Seventeen percent of Trump voters who live near a data center say they intend to vote for a Democrat now. If they live further away, the jump is a much smaller 6%.
&ldquo;Of course, only a small minority of voters live within two kilometers of a data center, limiting the issue&rsquo;s potential impact on statewide Senate races,&rdquo; write demographers Neil Howe and Christian Ford.
&ldquo;But in a handful of House districts, the backlash could make a difference. Democratic candidates in Nevada&rsquo;s 2nd, Colorado&rsquo;s 4th and Ohio&rsquo;s 15th districts are campaigning heavily on the issue.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> A much bigger impact could be on governor&rsquo;s races.&nbsp;
This fall your editor has been following the work of Rich Baris &mdash; an unconventional pollster who&rsquo;s not afraid to call out the mainstream when it&rsquo;s wrong (frequently), and willing to acknowledge those occasions when the mainstream gets it right.
Baris says data centers are &ldquo;toxic&rdquo; in many rural Republican strongholds.
Case in point: Florida. Statewide, 53% express opposition to data centers. But in rural stretches of the state, that opposition swells to 61% &mdash; with a paltry 6% saying they &ldquo;strongly support&rdquo; data centers.
Baris conducted a focus group in Dixie County in the Big Bend area &mdash; which broke 85% for Trump in 2024. A faithful Republican said &ldquo;I&rsquo;ll have to vote for David Jolly&rdquo; &mdash; the Democratic candidate. Why? &ldquo;Because I don&rsquo;t want a data center in my backyard.&rdquo;
The Republican candidate, U.S. Rep. Byron Donalds, is all-in on data centers, calling them a &ldquo;lifeline&rdquo; for rural communities.
➢ That makes Donalds a real outlier. According to the website The Information, 60 of the 72 major-party candidates for governor this year support some sort of limits on data centers.
Yesterday the Axios site posted a story in which anonymous Florida GOP leaders were given a platform to fret that rural racism is a problem for their candidate. (Donalds is Black.)&nbsp;
Nonsense, according to Baris. &ldquo;Of course they&rsquo;d say this instead of confronting the fact that [only] 6% of their rural vote strongly supports data centers in their communities.&rdquo;
No, none of this is to predict that Florida&rsquo;s about to get its first Democratic governor this century. But if the results are closer than conventional wisdom has it&hellip; well, now you know why.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, at least one of the frontier AI companies sees which way the winds are blowing. Well, sort of.
&ldquo;Right after Tuesday's midterms, OpenAI will unleash a policy and PR blitz to try to get in sync with the new Washington,&rdquo; says another Axios story.
Key to the effort will be an attempt to rebrand data centers as &ldquo;AI compute campuses.&rdquo;&nbsp;
Yeah, good luck getting that to resonate with normie Americans. So far almost no one outside of the tech or investment space has adopted &ldquo;compute&rdquo; as a noun.&nbsp;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Markets Today: Pausing for Breath
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The big market stories today are a pause to the AI spending scare&hellip; and a (seemingly) inexplicable plunge in U.S. oil futures.
The S&amp;P 500 took a 1.8% stumble on Friday, while the Nasdaq-100 formally entered &ldquo;correction&rdquo; territory, down 10% from its most recent high.
At last check this morning, the S&amp;P has recovered about half of Friday&rsquo;s loss, back over 7,600.
But it&rsquo;s a bit soon to call the all-clear, says Trading Desk editor Greg Guenthner: &ldquo;We're either seeing a washout move that will potentially set us up for a rally over the next couple weeks. Or this is just the start of a bigger market rollover
&ldquo;It's difficult to say for certain which path the market will take in November. We just have to keep an open mind and take this market one day at a time.&rdquo;
Amid the turmoil of last week, Enrique Abeyta urged readers of The Maverick to take 40%-plus gains after only eight days from their call options on Quanta Services.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The fate of the major indexes rides in large part on the fate of the Magnificent 7 names. And they sit at a critical juncture.
After going nowhere for much of this year, they started taking off in September &mdash; only to give back a big chunk of those gains in October.
&ldquo;Now they&rsquo;re testing a critical level of support,&rdquo; says Paradigm trading authority JC Parets. &ldquo;Here&rsquo;s the Roundhill Magnificent Seven ETF (MAGS) trying to hold above its prior-cycle highs:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/31r4qewIR2gb3KnvICBgMw/f9f43976f8acbd4b5148ba41c6b0a817/FMF-Issue-110226-3.jpg" alt="Mag 7" />
&ldquo;Those prior-cycle highs are represented by the gray bar on the top. I&rsquo;ve traced recent price action with a thin blue line.
&ldquo;We're right there testing it. And we need MAGS to hold above that gray bar up there.
&ldquo;Above that gray bar, the bull market is on, and we&rsquo;re still looking for stocks to buy. A decisive break below that level, we&rsquo;ll need to reassess.&rdquo;
➢ Elsewhere, precious metals are enjoying an oversold bounce &mdash; gold up 2.2% to $3,959 and silver up 3.8% to $50.85. Crypto is trying to recover from the Binance hack, with Bitcoin back over $77,000 and Ethereum at $2,266.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For no obvious reason, U.S. oil futures are down 6.5%, sinking toward $97.
CNBC has some headline about &ldquo;Iran Peace Talk Hopes Ahead of Midterms&rdquo;... but the evidence to support it is tissue-thin. Secretary of State Rubio says the U.S. administration &ldquo;prefers&rdquo; not to use military force; Iran&rsquo;s foreign minister Abbas Araghchi says a deal is possible if Washington &ldquo;demonstrates goodwill.&rdquo;
Meanwhile in the real world, &ldquo;Tanker Ablaze as Fear over U.S.-Iran Escalation Grips Region,&rdquo; says an Al Jazeera headline.
What can we say? Other than to direct your attention to <a href="https://paradigmpressroom.com/post/the-cia-and-the-oil-price">this brief history of oil-price manipulation</a>.&nbsp;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The AI Crash Has Already Happened (in China)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> You think the AI sell-off in this country has been rough? Try going to China.
China's AI-heavy STAR50 index has lost roughly $480 billion in market value over four months &mdash; a 40% plunge since June, according to Reuters.
Humanoid-robot maker Unitree and chipmakers MetaX and Moore Threads have each lost roughly half their value. Optical-component suppliers Innolight and Eoptolink have fallen about 60%.
Yet even after the collapse, the STAR50 was trading around 100 times trailing earnings &mdash; compared with roughly 30 times for America's Nasdaq-100. (Go figure, a stock can lose almost half its value and still be expensive.)
Several pressures contributed to the sell-off: extraordinary valuations, intense competition, doubts about future profits and proposed American restrictions on Chinese technology suppliers.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But Paradigm AI authority James Altucher sees a crucial difference between the two markets.
Last week he told Altucher Investment Network readers that China's AI ambitions aren't measured entirely in profits. There&rsquo;s also resilience: Beijing wants domestic alternatives to American technology, particularly Nvidia's advanced chips.
Point being, &ldquo;A Chinese chipmaker could help the country become less dependent on Nvidia and still turn out to be a lousy investment.&rdquo;
In contrast, Microsoft and Alphabet were making billions long before ChatGPT arrived.
Microsoft's latest quarter produced $92.3 billion in revenue and $36.6 billion in net income. Its Azure cloud business grew 48%. Google Cloud performed even better, doubling revenue to $30.7 billion while operating income more than tripled to $11.1 billion.
Yet as we mentioned in real-time, Alphabet shares plunged nearly 13% on Thursday.
Investors weren't questioning whether its cloud business was growing. They were questioning the cost.
Alphabet spent $51.4 billion on capital expenditures during the quarter, contributing to negative free cash flow of $9.1 billion. Slower-than-expected advertising growth and an investment-related paper loss also weighed on its earnings.
Even extraordinary growth couldn't save Alphabet's stock from a beating.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> China shows what happens when investors lose patience with sky-high valuations. Alphabet's sell-off suggests that patience may be wearing thin in America, too.
Our Enrique Abeyta said as much in this space <a href="https://paradigmpressroom.com/post/boom-blind-bust">on Oct. 14</a>: &ldquo;Even revolutionary technologies are vulnerable to ordinary business cycles.&rdquo;
China&rsquo;s crash shows what happens when valuations run far ahead of demonstrated earnings under a particular set of incentives.&nbsp;
America&rsquo;s leading AI companies already generate tens of billions in real revenue, so the path is not identical. Still, Alphabet&rsquo;s drop shows investors are already questioning the cost of the buildout.
The technology can succeed, demand can stay strong, and data centers can keep getting built &mdash; while shareholders still discover they paid too much.
To be continued&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Update: The Truth About Time Change
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Oh, now they tell us&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5nExt8qJwgOo9moIoU3qoC/df439b2c85cd7efa615c6cc9adcebb26/FMF-Issue-110226-4.jpg" alt="bloomberg" />
For over a century, daylight saving time has been sold to us as an energy saver.&nbsp;
To coincide with time change this past weekend, Bloomberg posted a story telling us that &ldquo;according to in-progress research from Yale economics professor Matthew Kotchen, the effects on energy use from both transportation and electricity &lsquo;are probably relatively small, within 1% or 2%&rsquo; of total electricity consumption, or even less.&rdquo;
Why is Bloomberg telling us this now? We&rsquo;ve been mentioning Kotchen&rsquo;s research periodically since 2014 &mdash; including <a href="https://paradigmpressroom.com/post/the-secret-history-of-time-change">this comprehensive rant against DST</a> published three years ago.
In 2010, Kotchen and fellow researchers realized they had a perfect case study in Indiana: Much of the Hoosier state defied daylight time until the state legislature decided to conform in 2006.
The before-and-after research concluded the energy saved by less indoor light during the summer months was offset by an increase in the use of heating and air conditioning. Indeed, daylight saving time contributed to a 1% jump in electricity use.
Kotchen is taking on a new, more granular, research project: He and his colleagues are &ldquo;examining hourly electricity load and integrating data from traffic monitors around the country, using a statistical model to estimate how changing the clocks impacts energy usage,&rdquo; says Bloomberg.&nbsp;
&ldquo;Because the sun sets at a different time of day depending on where you are, Kotchen says, the key is being able to compare energy usage at any given clock and solar time, and consider what would happen if a different clock time were synced to that solar time.&rdquo;
The findings are preliminary, but they don&rsquo;t change his thesis: &ldquo;The overall effect will be very small.&rdquo;
By the way, the U.S. House passed a measure earlier this year that would impose year-round daylight saving time. It appears destined to die in the Senate &mdash; <a href="https://paradigmpressroom.com/post/update-buffetts-sudden-about-face/#4">and just as well</a>.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Well, it&rsquo;s almost over anyway&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1bpe7MOEBMoinrgAVpWLNA/3dc7a4505d797b759998c74e8d6b8ec3/FMF-Issue-110226-5.jpg" alt="Aubrey Meier x post " /> <img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4iK2nriTTCK5YGl8XgIqaS/c42fea097e5896e9d7e40969e7577275/FMF-Issue-110226-6.jpg" alt="Chad Johnson x post " />

FMF-Issue-110226-1

 “I Don’t Want a Data Center in My Backyard”

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Midterm Forecast
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;We now live in an era of nationalized elections,&rdquo; says the demographer Neil Howe on the eve of the midterms.&nbsp;
That&rsquo;s the nature of America&rsquo;s polarized politics.&nbsp;
No longer is it about which candidate will best represent the well-being of, say, farmers in Iowa or oil field roughnecks in Texas. It&rsquo;s all about which tribe will control the House and Senate.
&ldquo;No one&rsquo;s really focusing on who I want for my state, it&rsquo;s all on who&rsquo;s going to govern on the national level,&rdquo; Howe said on a webcast this week. &ldquo;That&rsquo;s how angst-ridden our politics have now become.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> With that as the backdrop, welcome to the Paradigm Press midterm election outlook &mdash; headlined by our macroeconomics maven Jim Rickards.
If you&rsquo;re not aware, Jim has racked up a handful of notable election forecasts that bucked the mainstream and turned out to be right.&nbsp;
It started with passage of the &ldquo;Brexit&rdquo; referendum in the United Kingdom in 2016 &mdash; followed a few months later by Donald Trump winning the U.S. presidency. More recently, Jim forecast Trump&rsquo;s triumph in 2024 &mdash; all the way down to the exact electoral vote margin of 312-226.
In forecasting elections, &ldquo;what matters most is whether your models are the best they can be with the right inputs and that they assign the right weights to those inputs,&rdquo; Jim says.&nbsp;
&ldquo;That&rsquo;s a big part of what we do. We also use behavioral psychology, anecdotal evidence, history, Bayes&rsquo; theorem (updating an initial thesis) and common sense to reach our conclusions. Without those soft or intangible factors, a strict mathematical model can lead you astray if it has even the smallest flaw.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Jim&rsquo;s call for Trump in 2016 stood in sharp contrast with the mainstream pundit who commanded the most respect at that time &mdash; and still does.
Even if you&rsquo;re not a political junkie, chances are you&rsquo;ve heard of Nate Silver.&nbsp;
He burst onto the scene in 2008 with his FiveThirtyEight website. He correctly forecast Barack Obama would edge Hillary Clinton for the Democrats&rsquo; nomination. In the general election between Obama and John McCain, he correctly called the winner in 49 states.
In the 2012 Obama-Romney race, he improved on that performance &mdash; calling all 50 states correctly.
Along the way, Silver built up a faux-science mystique around his work in a book called The Signal and the Noise: Why So Many Predictions Fail &mdash; but Some Don&rsquo;t.
In the course of analyzing the endless quantities of data available today, he wrote, &ldquo;the numbers have no way of speaking for themselves. We speak for them. We imbue them with meaning&hellip; Before we demand more of our data, we need to demand more of ourselves.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Then along came Trump&hellip; and Silver should have demanded more of himself.
Wrote Silver in July 2015: &ldquo;Trump has taken trolling to the next level by being willing to offend members of his own party&hellip; In the long run &mdash; as our experience with past trolls shows &mdash; Trump&rsquo;s support will probably fade.&rdquo; By November 2015, he said even a 20% probability of a Trump victory in the primaries was &ldquo;substantially too high.&rdquo;
Six months later, Trump had the nomination sewn up&hellip; and Silver was forced to engage in a bit of introspection.
&ldquo;Our early estimates of Trump&rsquo;s chances weren&rsquo;t based on a statistical model,&rdquo; he averred. &ldquo;Instead, they were what we [call] &lsquo;subjective odds&rsquo; &mdash; which is to say, educated guesses. In other words, we were basically acting like pundits, but attaching numbers to our estimates. And we succumbed to some of the same biases that pundits often suffer, such as not changing our minds quickly enough in the face of new evidence.&rdquo;
Translation: &ldquo;The possibility Trump would catch fire was so offensive to my elite sensibilities that I just made s*** up.&rdquo;
On Election Eve 2016, Silver grudgingly gave Trump a 30% chance of pulling out a victory.&nbsp;
Yes, we reprised all this history at the time. But here we are a decade later and the mainstream still hangs on Silver&rsquo;s every word.
Sorry, just couldn&rsquo;t resist the opportunity for a good dunk today&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We&rsquo;ll cut to the chase: Jim forecasts the Democrats will take a slender majority in the House but Republicans will retain their comfortable majority in the Senate.
Much of it will ride on turnout, he says: &ldquo;There is some evidence from early voting that turnout this time will be higher than usual.&rdquo;
As Jim sees it, this factor will help the GOP. With Trump as a lightning rod, Democrats are already highly motivated to vote &mdash; while &ldquo;it&rsquo;s the Republicans, especially MAGA types, who tend to skip the midterms.&rdquo; Thus higher turnout overall should reflect higher Republican turnout.
In the Senate, Jim forecasts the Republicans will retain their 53-47 advantage &mdash; although two Republican seats will flip to the Democrats and two Democratic seats will flip to the Republicans. (Jim has specific forecasts for the 16 most competitive Senate races, but we&rsquo;re reserving those details for his paying subscribers.)
Nate Silver, in contrast, projects the Democrats will come into 2027 with at least 52 Senate seats &mdash; maybe as many as 54 depending on two races he counts as tossups.
As for the House&hellip; the Republicans are going into Election Day with a tiny advantage of 219-214 with two vacancies.
Between gerrymandering and the &ldquo;self-sorting&rdquo; of Americans who&rsquo;ve relocated to reliably red or blue districts over the years, only a couple dozen House seats are truly competitive these days.
Jim&rsquo;s assessment is that Democrats will take the House with a fairly slim 11-seat advantage of 223-212.
Silver, meanwhile, told The New York Times on Tuesday that the Democrats will pick up about 22 seats &mdash; which would give them a much wider margin of 236-199. That&rsquo;s comparable to the advantage the Dems had during the final two years of Trump&rsquo;s first term.
If Jim is right, control of Congress would be divided during 2027&ndash;2028 &mdash; which history shows is very good for the U.S. stock market, no matter which party the president belongs to.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Markets Today: A One-Two Punch (and a Record Crypto Heist)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Yesterday it was Google. Today it&rsquo;s Amazon and Intel. The AI spending scare is alive and well.
Amazon &mdash; one of the major &ldquo;hyperscalers&rdquo; along with Google, Microsoft and so on &mdash; reported its quarterly numbers after the closing bell yesterday. Relative to Wall Street&rsquo;s expectations, it whiffed on both revenue and earnings.
&ldquo;The big stories here are cash flow and capex,&rdquo; says colleague Davis Wilson, editor of The Million Mission.
&ldquo;Amazon reaffirmed its 2026 capex guidance of $220 billion, showing that the company has no plans to slow its massive AI infrastructure buildout.&nbsp;
&ldquo;At the same time, free cash flow remained negative for the second consecutive quarter. Amazon reported a $42.4 billion free cash flow outflow over the trailing 12 months, a significant deterioration from the $7.6 billion outflow reported last quarter.
&ldquo;That's a tough combination for investors right now. With the market already nervous about how much Big Tech is spending on AI, another $220 billion in capex and rapidly deteriorating free cash flow isn&rsquo;t what investors wanted to see.&rdquo;
No, it&rsquo;s not: AMZN opened the day down 5.5%.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And then came Intel &mdash; which we&rsquo;ll remind you is now 9.9% owned by the U.S. government.
On revenue, INTC beat Wall Street&rsquo;s expectations by a hair. And on earnings, it was a very comfortable beat.
But the downer was comments by CFO David Zinsner: &ldquo;We see the PC slowdown continuing at least through the first half of next year.&rdquo; Seems that high prices for memory are putting a dent in demand for PCs.&nbsp;
INTC shares rallied hard last spring but sold off this month in sympathy with nearly everything else AI-adjacent. And they opened the day down 27%. Ouch.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> This one-two punch is setting up the market for its worst day since June.
At last check the S&amp;P 500 is down 1.6% on the day &mdash; below 7,600 for the first time in six weeks. The Nasdaq composite is down over 2.5% to around 25,500, a three-month low.
Hot money fleeing stocks is flooding into Treasuries, pushing yields down. The yield on a 10-year T-note is under 4.94% for the first time in over six weeks.
The dash for yield is putting a big hurt on the precious metals. Gold is down over $100 and barely holding onto the $3,900 level. Silver&rsquo;s down over 5% to $24.33.
Meanwhile, U.S. oil futures have raced back over $104 for the first time since mid-September &mdash; as rumors abound that Israeli Prime Minister Benjamin Netanyahu is about to restart the Iran war so he can hang onto power as a caretaker PM amid inconclusive results to this week&rsquo;s elections.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And then there&rsquo;s crypto.&nbsp;
Overnight, hackers hit Binance &mdash; the world&rsquo;s biggest crypto exchange &mdash; and pinched $6.3 billion in coins.
That&rsquo;s way more than Binance had set aside in emergency reserves. Thus Binance has halted withdrawals.
With that, Bitcoin has tanked from over $81,000 to under $77,000 &mdash; the lowest since September. The story is similar for Ethereum, barely over $2,200 now.
We won&rsquo;t dwell on this event here; James Altucher and his team are preparing an urgent edition of Altucher Confidential that will arrive earlier than usual today; watch your inbox if you&rsquo;re a subscriber.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Anthropic Will Keep the Lawyers Busy
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> You&rsquo;d think every corporate customer of Anthropic would be alarmed by the company&rsquo;s IPO prospectus, filed this week.
We went into some detail about that filing <a href="https://paradigmpressroom.com/post/the-new-york-times-is-scared">in Tuesday&rsquo;s edition</a>. But there&rsquo;s another angle worth touching on today.
There&rsquo;s a section that says, &ldquo;Our AI models may behave in unintended, misaligned or autonomous ways, including by taking harmful actions that no user or third party directed, which could adversely affect our reputation and brand, business, financial condition and results of operations.&rdquo;
When early details of the company&rsquo;s filing dropped earlier this month &mdash; complete with the bit about &ldquo;existential risks to humanity&rdquo; &mdash; we <a href="https://paradigmpressroom.com/post/where-are-the-handcuffs-ai">wondered</a> why AI companies were getting a pass when it came to the liability requirements that confront most other industries.
But maybe they won&rsquo;t get a pass after all: &ldquo;Anthropic's risk factors should alarm the general counsel of every corporate customer,&rdquo; says our Dan Amoss, senior analyst for Jim Rickards.
&ldquo;Product liability lawyers will inevitably bring cases of Claude users unintentionally causing damage. Lawyers will likely find success convincing juries that the unpredictable nature of the service should put liability for damages back onto Anthropic, despite its terms of service.&rdquo;
We&rsquo;ll be keeping our eye on this one as IPO day approaches sometime next month. We&rsquo;ll also be eyeing Anthropic&rsquo;s massive future obligations &mdash; $600 billion worth &mdash; to Broadcom, Google, Amazon and Microsoft, among others.
OK, that&rsquo;s a lot of heavy content today. Time to lighten things up as the weekend approaches&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Mimosas for Everyone!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Thanks to a corporate wager, Milwaukee is awash this morning not only in beer but in sparkling wine and orange juice.
After defeating the Tampa Bay Rays in the World Series on Wednesday night, the Milwaukee Brewers&rsquo; victory parade is today.&nbsp;
But before the games began, Johnsonville &mdash; the official sausage sponsor of the Brewers, based in Sheboygan Falls &mdash; placed a bet of sorts with Florida&rsquo;s Natural Growers.
The wager was simple: If Tampa Bay won, Johnsonville would send 413,554 bratwursts to Tampa &mdash; one for each resident. (Of course, the Rays play on the other side of the bay in St. Petersburg, but whatever.)
And if the Brewers won, Florida&rsquo;s Natural would send 200 kegs&rsquo; worth of orange juice north &mdash; &ldquo;approximately enough for every alcohol-drinking adult over 21 in Milwaukee to enjoy a mimosa,&rdquo; according to Milwaukee magazine.
Going into the series, Johnsonville&rsquo;s VP of marketing Jamie Schmelzer suggested Florida was getting the better end of the deal: &ldquo;The internet is really concerned that 200,000 mimosas is not enough for Milwaukee,&rdquo; he told the city&rsquo;s CBS affiliate.
Word. Looking at a livestream of pre-parade festivities in Milwaukee this morning, the beer line is already three deep &mdash; at 8:30 a.m. local time. Drink Wisconsinably!
Comic Relief
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We&rsquo;ll stay in the Badger State as we wrap it up today&hellip; although the sentiment applies everywhere!
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7Ej3XCG0Fj3InXy6XNjejn/7667d1d8bc12b35c96572d9024e7acf7/5min-Issue-103026-2.jpg" alt="Comedic Relief" width="540px" />

5min-Issue-103026-1

Midterm Forecast

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Altucher: Two Questions
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It&rsquo;s one of the great investing truisms: In any investment boom, the most reliable returns come from the &ldquo;pick and shovel&rdquo; plays.
Presumably the expression&rsquo;s origins trace back to the California gold rush of 1848&ndash;1855. Very few prospectors struck it rich prospecting for gold &mdash; but many people made a small fortune selling essential gear to the prospectors.
Across the decades, it rang true for Paradigm&rsquo;s own James Altucher. But lately he&rsquo;s had nagging second thoughts.
&ldquo;What if the shovel costs $40,000?&rdquo; he wonders. &ldquo;What if the shovel factory costs $10 billion to build? What if you have to borrow that $10 billion at 15% interest?
&ldquo;And what if, by the time you finish building the factory, somebody has already invented the Super Turbo Shovel&copy;, which digs holes 10 times faster than your pathetic little antique?
&ldquo;Now being a shovel investor gets complicated. I don&rsquo;t just have to believe people will want your product. I have to believe you can finance the factory, survive the interest payments and eventually make enough money to justify everything you spent getting there.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> If you haven&rsquo;t figured it out already, James is talking about AI.
This morning the AI spending scare is once again front-and-center for Mr. Market: Will all that lavish capital spending for chips and data centers ever pay off?&nbsp;
Google parent Alphabet reported its quarterly numbers late yesterday: The media fixated on revenue and earnings that missed Wall Street&rsquo;s expectations &mdash; and the fact that AI is clearly starting to chip away at the company&rsquo;s bread-and-butter search business.
But the standout number is free cash flow &mdash; the money left over after meeting both operating and capital expenses. For a second-straight quarter, the number is negative. In fact, at $9.1 billion, the cash burn is way higher than Wall Street analysts had figured on. Meanwhile, GOOG&rsquo;s capital spending totaled $51.4 billion during the third quarter &mdash; up 14.5% from the previous quarter.
GOOG shares opened the day down 13%. That proved to be a drag on the rest of the market &mdash; with the Nasdaq-100, for instance, down 2%.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Demand isn&rsquo;t the problem here,&rdquo; James points out. &ldquo;The world wants more chips, more computing power, more data centers and more electricity than anyone imagined just a few years ago.
&ldquo;But none of this stuff is imaginary. You can't ask ChatGPT to hallucinate a power plant into existence. Somebody has to build all of it.&nbsp;
&ldquo;And somebody gets paid to supply the chips, equipment and technology that make it possible. That's a pretty extraordinary business to be in right now.&rdquo;
And yet&hellip; estimates from the likes of McKinsey and Goldman Sachs are that the AI buildout will cost $7 trillion or more over the next four&ndash;five years.
&ldquo;No industry I can think of has ever had to build this much this fast.&rdquo;
And at a time when financing that buildout is a steeper climb; those near-zero interest rates of the 2010s are long gone.
That&rsquo;s the essence of the AI spending scare: &ldquo;The market has stopped rewarding ambition by itself,&rdquo; James says. &ldquo;Now it wants proof that these companies can afford their ambitions.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Hence, the sell-off in many AI-adjacent names this fall&hellip; the fact the Nasdaq-100 has been trading sideways for six months&hellip; and the flurry of inquiries James is getting from his readers.
They usually go like this: James, you&rsquo;ve spent the last few years telling us how enormous these opportunities in AI, space and the technologies surrounding them could become&hellip; Do you still believe that?
The answer is yes.
He says it comes down to two questions: Are people actually using AI? And&hellip; Is anybody actually making money from it?
In both cases, he says the answer is also yes.
Lost in the shuffle of Google&rsquo;s numbers was the release of Microsoft&rsquo;s numbers at the same time. MSFT beat Wall Street&rsquo;s estimates on both the top and bottom lines; its Azure cloud business grew 48% in the most recent quarter.&nbsp;
Meta reported its numbers last week. James can&rsquo;t help but be impressed by the fact that quarterly revenue climbed 26% &ldquo;even as it poured increasingly enormous sums into AI infrastructure.
&ldquo;That demand travels down the supply chain. Nvidia expects Blackwell and Rubin chips to generate at least $1 trillion in cumulative revenue through 2027 and is securing manufacturing capacity years ahead.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But yes, times have changed: &ldquo;When money was cheap and enthusiasm was everywhere, almost everybody could look like a winner. The next phase won't be so forgiving,&rdquo; James says.
&ldquo;The trillions coming into the AI industry aren't going to be spent evenly. Some of it will be wasted spectacularly. There will be empty data centers, bad loans, failed businesses, the whole nine yards.
&ldquo;Which is fine by me. I'm not trying to own all of AI. I'm just trying to figure out where those trillions of dollars have no choice but to go.&rdquo;
James and his team are sifting through every recommendation in the Altucher&rsquo;s Investment Network portfolio &mdash; making sure it has only the names that will benefit from those trillions.
Bottom line, getting back to the gold rush analogy: &ldquo;I haven&rsquo;t changed my mind about where this is all headed. There&rsquo;s still plenty of gold in the ground&hellip; And yes, I still want the shovels.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Inflated
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In the face of today&rsquo;s AI sell-off, the Federal Reserve&rsquo;s latest moves are looking like an afterthought. But you ignore them at your own risk.
To no one&rsquo;s surprise, the Fed stood pat yesterday &mdash; leaving the benchmark fed funds rate at 4.0%.
&ldquo;Oct. 28 was not opportune for a rate hike because it was too close to midterm Election Day,&rdquo; says Paradigm macroeconomics authority Jim Rickards. &ldquo;The Fed wanted to avoid the charge of favoring Democrats or Republicans, so the safe path was to do nothing.&rdquo;
The next meeting of the Fed&rsquo;s Open Market committee comes in mid-December. Between now and then, Fed chair Kevin Warsh says he&rsquo;s expecting a boatload of economic numbers to guide the FOMC&rsquo;s next move. &ldquo;The period right in front of us is information rich,&rdquo; he said.
[Wait, did he just say the Fed is &ldquo;data-dependent?&rdquo; Gee, and Warsh was sold to us as some radical departure from the Bernanke-Yellen-Powell years!]
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As it happens, the Commerce Department is out this morning with the Fed&rsquo;s preferred inflation gauge.
&ldquo;Core PCE,&rdquo; this measure is called. When Fed leaders talk about their 2% inflation target, this is the number they have in mind.
Unfortunately for the Fed, this number has exceeded 2% since March 2021. And while it&rsquo;s nowhere near the highs of 2022, it&rsquo;s been moving up steadily for the last 18 months &mdash; now at 3.1%.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1ZI0W89TjPSluyjnXlkRZK/2d300d8fcda8756d70ee78299678d336/FMF-Issue-102926-2.jpg" alt="Personal consumption expenditures excluding food and energy year over year percent change." width="540px" />
Even more unfortunate for the Fed is that it&rsquo;s powerless to contain many of the current forces behind rising consumer prices: &ldquo;Inflation is driven by a combination of supply-side pressures, including oil and diesel prices,&rdquo; Jim says &mdash; &ldquo;and demand-side forces such as deficit spending and consumer spending financed by bank lending.
&ldquo;Given the limited influence of the Fed&rsquo;s target rate on these forces, it&rsquo;s difficult to see how another rate hike would bring inflation under control.&rdquo;
But Jim says a second rate hike on top of the one in September is the most likely scenario for the Fed&rsquo;s December meeting, at least right now. Futures traders agree: They assign an 80% likelihood the Fed will bump up the fed funds rate up to 4.25%.
➢ Worth a mention: Warsh says the Fed will dial back the tempo of these policy-setting meetings &mdash; from eight times a year now to six by 2028. This is in keeping with his stated desire <a href="https://paradigmpressroom.com/post/iran-won#3">to wean Wall Street off its 18-year addiction</a> to Fed jawboning and &ldquo;forward guidance.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As the day wears on, the AI spending scare is wearing off.
The Nasdaq-100&rsquo;s loss, 2% at the open, is a more modest 1.1% as we check our screens. The S&amp;P 500 is down a quarter percent, still comfortably over the 7,700 level.
&ldquo;Today and tomorrow&rsquo;s trading action are going to tell us a lot about just how resilient this market is heading into November,&rdquo; says Trading Desk editor Greg Guenther.&nbsp;
&ldquo;We&rsquo;ve seen some constructive action since last Thursday&rsquo;s big drop. But if stocks can&rsquo;t build on these young rallies we&rsquo;ve witnessed this week, we might be in for additional chop and/or downside over the next few weeks or more.&rdquo;
Precious metals are taking a hit on the assumption the Fed will raise interest rates in six weeks. But gold is still holding the line on $4,000. Silver, alas, is down another $1.50 to $52.33, territory last seen nearly a year ago. Elsewhere in the commodity complex U.S. oil futures are down 2.5% for no particular reason but they&rsquo;re still over $100.
Crypto still can&rsquo;t get any traction &mdash; Bitcoin at $81,589 and Ethereum at $2,362.&nbsp;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The Tax Collector's Boomerang
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Higher taxes don&rsquo;t always deliver higher revenue. And Exhibit A is New York&rsquo;s cigarette tax.
The Empire State taxes cigarettes at $5.35 a pack versus 37 cents in Georgia. New York City adds another $1.50. That's enough to make a road trip, or a smuggling operation, look profitable.
According to a new Tax Foundation report, 61.1% of cigarettes consumed in New York in 2024 weren't legally purchased in the state &mdash; up from 51.8% the year before. In between, New York raised its cigarette tax by $1.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/j4FrRlbTcEeAl9h4qwurh/83eaa01eec7f85c7b0461fffab47c89c/FMF-Issue-102926-3.jpg" alt="Cigarette Smuggling" width="540px" />
According to Tax Foundation estimates, the state missed out on $1.2 billion in potential cigarette-tax revenue. Meanwhile, actual cigarette and tobacco-product tax collections slipped from $832 million in 2023 to $747 million in 2025.
Yes, fewer people smoking also helps explain the drop. Higher taxes may discourage smoking, and that&rsquo;s part of the idea. But they haven't guaranteed more money for Albany.
Now compare New Hampshire. At $1.78 a pack, its tax is one-third New York's. Yet it collected about $155 per resident in tobacco-product taxes in 2023, versus roughly $44 in New York, according to Census figures. Cross-border buyers from higher-tax states help explain the gap.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Beyond cigarettes, there&rsquo;s a bigger lesson here going into next week&rsquo;s elections.
On Tuesday, California voters will consider Proposition 40, a one-time 5% levy on the covered wealth of billionaires who lived in California on Jan. 1, 2026.
The nonpartisan Legislative Analyst predicts tens of billions of dollars in temporary collections &mdash; but warns that wealthy residents leaving could reduce future income-tax revenue.
A working paper this month from the National Bureau of Economic Research goes further. It forecasts about $30 billion in wealth-tax collections but a $38.9 billion negative net fiscal effect once the present value of lost income taxes is included. (Keep in mind that&rsquo;s a model, not a certainty.)
One California billionaire almost made that mobility question tangible: Mark Zuckerberg.
According to a Meta securities filing, Zuckerberg considered leaving the state because of the proposed tax. Meta responded with a new class of nonvoting shares he could sell without giving up voting control, while securing his commitment to stay in California, or wherever Meta maintains its headquarters, for eight years, subject to conditions.
Moving today wouldn't erase the tax: Proposition 40 looks back to Jan. 1. But Meta's deal shows that the tax proposal is already changing behavior.
Lawmakers can set tax rates &mdash; but they can't dictate how taxpayers respond.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief, Streaming Wars Edition
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Words of wisdom&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2WWBRqQ0vIKGfPfdZxFnQs/6899ba9466286a8420f797dd89b9548e/FMF-Issue-102926-4.jpg" alt="Disney + Will have ads on every plan" width="540px" />
To be clear, Disney+ recently revised its &ldquo;subscriber agreement&rdquo; to specify that its top tier would include promos and/or sponsorship announcements before and after playback, not during. But the point stands&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Someone Noticed
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;LAUGH,&rdquo; says the subject line to an email from one of our regulars.
&ldquo;Dave, using a new pic in your byline? Funny but I thought someone new had been covering for you. Hilarious!
&ldquo;A Studlier Dave vs. the Nerdy Dave. The same ol&rsquo; can get a bit boring.🙂 We must change with the changes.🙂&rdquo;
Dave responds: On the one hand I&rsquo;m a little embarrassed anyone even noticed.
On the other hand, the old picture goes back 10 years. And I&rsquo;d just as soon that if readers want to say hello next week at the 2026 Paradigm Shift Summit in Nashville they know what I look like now!

FMF-Issue-102926-1

Altucher: Two Questions

For the last several years, the wireless business in this country has been a snooze.
It&rsquo;s dominated by three giants &mdash; Verizon, AT&amp;T, T-Mobile &mdash; in a mature industry, able to grow only by stealing each other&rsquo;s customers. If only that competition could deliver better service at lower costs!
Enter Elon Musk.
We&rsquo;re departing from our usual format today to show you how Musk&rsquo;s SpaceX is making three moves to shake those three giants out of their slumber.&nbsp;
<h3 style="text-align: center;">Elon Wants to Be Your Wireless Provider</h3>
My wife, Angela, and I need to make a change to our cellphone account.
I've been putting this off for more than two years.
If you've ever tried to change anything with one of the big carriers, you know why. You don't just "switch." You plan a full day. You sit in the store. And you watch customer support struggle with what should be a simple request.
So I keep waiting.
And this month, Elon Musk may have given me a very good reason to keep waiting a little longer.
<h3 class="spad-subhead2 nbp">Where My Phone Goes Dark</h3>
Before I get to Elon, here's why this matters to me personally.
I love trail running in the north Georgia mountains. We live near the foothills of the Great Smoky Mountains, not far from the southern end of the Appalachian Trail. It's beautiful country.
It's also where my phone loses signal. That's fine until you roll an ankle three miles from the trailhead.
Around Christmas, we're meeting family at a cabin that's a bit remote. (Family is coming to us for Thanksgiving first, so it's going to be a busy holiday season.) I'm already wondering how much coverage we'll have up there.
And before the end of the year, Angela and I are taking a cruise. I'll be paying a pretty penny for the ship's Wi-Fi so I can keep an eye on our trades on the high seas.
Here's the funny part. Our cruise line, Virgin Voyages, powers its Wi-Fi with a combination of satellite services, and one of them is Starlink.
So in a way, I'm already paying Elon by the day out at sea.
Now he wants to connect the phone in my pocket everywhere else.
<h3 class="spad-subhead2 nbp">What Elon Is Building</h3>
Think of this as a puzzle. SpaceX (SPCX) has been quietly putting the pieces together, and the picture is getting clear.
Piece #1: The airwaves. A phone network needs spectrum, the radio frequencies your phone uses to send and receive calls and data. In September 2025, SpaceX agreed to buy wireless spectrum from EchoStar for about $17 billion. That's a huge check for a company that "just launches rockets."
Piece #2: The satellites. Starlink's direct-to-cell service already connects ordinary phones to satellites through a partnership with T-Mobile. Company executives said the service had about 10 million active users worldwide as of March.
A next-generation constellation, built for much faster phone service, is targeted to start launching in 2027.
Piece #3: The towers. Last week, Bloomberg reported that SpaceX is in talks to access about 80,000 cell sites across the U.S. That's roughly half of the purpose-built cell towers in the country.
Put those pieces together and you get something new. Satellites cover the empty places, like my running trails and that cabin. Towers cover the cities, where millions of people need fast data at once.
SpaceX President Gwynne Shotwell has been direct about the goal. On the company's first earnings call as a public company, she said SpaceX wants to make Starlink a "true mobile service" that wins customers from the big three carriers.
The market noticed. Shares of AT&amp;T, Verizon and T-Mobile came under pressure on the news.
To be fair, these are still talks. No tower deal has been signed, and SpaceX hasn't announced pricing, a launch date or a coverage map. But Elon has a habit of turning "talks" into reality faster than people expect.
<h3 class="spad-subhead2 nbp">Remember AOL?</h3>
If you were online in the 1990s, you probably remember those AOL discs that showed up in your mailbox every few weeks. You might even remember the screech of the dial-up modem, followed by "You've got mail!"
For a while, AOL was one of the only ways most Americans could get online. It was the gateway to the internet.
Then broadband arrived, and AOL didn't keep up. The company that once owned the front door to the internet became a has-been.
Here's the irony. In 2015, Verizon bought AOL.
Today, Verizon and the other big carriers sit where AOL once did. They control the gateway. And customers like me tolerate them because there hasn't been a real alternative.
In my 25-plus years of investing, first as a fund manager and now with my own money, I've learned that the most vulnerable companies are often the ones whose customers stay out of habit, not loyalty.
Will SpaceX take over the phone business overnight? No. Building a nationwide carrier is hard and expensive, and some analysts doubt the 80,000-site figure. Disruption usually takes longer than the headlines suggest.
But SpaceX can make real inroads if it gets two things right: the technology and the customer service. If I could switch my phone plan in five minutes from my couch, I'd do it tomorrow.
<h3 class="spad-subhead2 nbp">How I'd Play It</h3>
A lot of readers will want to buy SpaceX shares right away.
I understand the excitement. But I'm hesitant to buy SpaceX at today's high valuation.At some point, as profits build or the stock forms a base at a lower price, I'll likely be tempted to trade it. For now, I'm watching.
In the meantime, there's another group of companies that could win no matter who wins your phone bill.
Think about it. AT&amp;T, Verizon, T-Mobile, SpaceX and even Amazon (which is building its own satellite network) all need space on cell towers. And most of those towers are owned by a few landlords: American Tower, Crown Castle and SBA Communications.
Crown Castle's CEO said on its Oct. 21 earnings call that the company is talking with all parties, including SpaceX and Amazon.
More competition for tower space means more potential tenants and more leverage for the landlords.
There's an income angle here too. Tower companies are structured as real estate investment trusts (REITs), so they pay dividends. And rate-sensitive stocks like these have been bouncing as bond yields pulled back.I&rsquo;m watching our AI-powered trading indicator to see if there are signs of a buyout deal materializing for one (or more) of these tower stocks.
In the meantime&hellip; until SpaceX's phone service is real, I'll probably still be the guy sitting in that phone store, waiting.
But the next time I lose signal on the trail, I'll be thinking about this trade.
Dave&rsquo;s last word: Markets are treading water ahead of the Federal Reserve&rsquo;s latest policy statement due this afternoon.
At worst, the major U.S. stock indexes are flat; the S&amp;P 500 is up about 0.2%. Gold continues to hold the line on $4,000 &mdash; but silver has slid hard to $53.45. Crypto remains moribund.
If it&rsquo;s action you&rsquo;re looking for, it&rsquo;s in crude: U.S. oil futures are up 3.5% to $103.47 but we see no dire headlines to trigger the move. Well, other than this&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3DA5Np0sTlNdPHSgPtkCXC/1ac9aa36bce4789f1a730eb9f6d4c2a4/FMF-Issue-102826-2.jpg" alt="Nic X post" width="540px" />
Tomorrow we&rsquo;ll be back to our usual format including a follow-up on whatever comes out of the Fed announcement. Plus, James Altucher tackles the biggest question about the future of AI right now. Catch you then&hellip;

FMF-Issue-102826-1

Elon Wants to Be Your Wireless Provider

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />The New York Times Is Scared
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The power elite in this country is assigning huge importance to the Anthropic IPO.
We know this because the story made the front page of the print edition of today&rsquo;s New York Times. Here&rsquo;s the online treatment&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2eGXLPW9n4pYDuk75HciKa/80bba59725c06c634610aadc0938acab/FMF-Issue-102726-2.jpg" alt="NYT Article" />
As we mentioned briefly yesterday, Anthropic &mdash; the company behind the Claude chatbot &mdash; will go public as soon as the week before Thanksgiving.
The Times&rsquo; assessment is that &ldquo;Anthropic&rsquo;s listing will provide the first in-depth look at the health of a key business underlying the AI boom &mdash; and will be a test of its durability. Is there unending appetite for AI services to justify the spending on chips, data centers and other infrastructure? Or will Anthropic&rsquo;s performance show that there are limits?&rdquo;
You can sense the nervousness among the movers and shakers who read the Times, no?
As promised yesterday, the Paradigm team has taken the time to review the company&rsquo;s newly released IPO prospectus &mdash; to come up with our own assessment independent of the corporate media.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Anthropic&rsquo;s revenue grew over 1,300% in a year,&rdquo; is the number that jumped out at Paradigm tech investing specialist Ray Blanco.
&ldquo;Anthropic generated $16.3 billion in first-half revenue, up from $1.16 billion a year earlier.&rdquo;
On paper, that compares with a net loss of $80.7 billion. But that figure is a function of arcane accounting rules. The more relevant number is the operating loss &mdash; which is a much more modest $693 million.
&ldquo;Demand runs deep,&rdquo; Ray continues: &ldquo;More than 11,900 customers pay Anthropic $100,000 or more a year, and about 250 pay $10 million or more. Existing customers now spend roughly nine times what they did a year ago.&rdquo;
And Ray says they&rsquo;ve barely scratched the surface. &ldquo;The S-1 filing pegs the global value of knowledge work at more than $40 trillion a year. Anthropic&rsquo;s revenue is running at a tiny sliver of that.
&ldquo;The revenues ripped, but the bills grew far slower. In the second quarter, revenue rose 1,368% from a year earlier while compute and infrastructure costs rose just 300%. Anthropic spent about $2.51 on compute per revenue dollar in early 2025, down to about $0.48 by mid-2026.
&ldquo;Anthropic&rsquo;s passing the savings along. Its newest model cut customers&rsquo; cost per task by about 40%, and cheaper work means more work.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This is where everything hangs in the balance,&rdquo; Ray says: &ldquo;the S-1 warns that Anthropic will make compute investments that &lsquo;may seem irresponsibly large at first glance.&rsquo;&nbsp;
&ldquo;Its reasoning rests on the AI scaling laws, which the founders believe put AI&rsquo;s economic value on an exponential curve.
&ldquo;If they&rsquo;re right, the products of the next few years will be worth far more than today&rsquo;s, so Anthropic says it must &lsquo;invest more aggressively than would a business that operates in a more slowly changing technological regime.&rsquo;&rdquo;
Their analogy is drug development, which happens to be Ray&rsquo;s other speciality in our shop: &ldquo;Giant research bills upfront that only make sense once the winners pay off, except Anthropic says its version runs &lsquo;much faster and on a much larger scale.&rsquo;
&ldquo;Biotech investors know that model well. It pays off when the pipeline delivers, and Anthropic&rsquo;s pipeline is already delivering.
&ldquo;Will the scaling laws keep holding? That&rsquo;s the big bet. Anybody who buys shares at the IPO is making that bet too.&rdquo;
Of course, if you&rsquo;ve been with us for longer than a few weeks, you know that it&rsquo;s usually a terrible idea to buy shares of a company the day it goes public. Too much volatility in those first weeks and months.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Besides, there&rsquo;s one number in Anthropic&rsquo;s filing that&rsquo;s conspicuous by its absence.
&ldquo;This is a document with many details about their operations that they must publish in order to go public,&rdquo; Paradigm trading pro Enrique Abeyta reminds us.&nbsp;
&ldquo;The one item that was NOT in there? The valuation at which they will be selling the shares.&nbsp;
&ldquo;The numbers and economics of their business are tremendous but the valuation being discussed ($1.5&ndash;2 trillion) means that it is unlikely investors will make money on the shares anytime soon. In fact, I think that the shares will be down 50&ndash;90% within just a few years.&nbsp;
&ldquo;My advice? STAY AWAY. This is not SpaceX and will do much, much worse.&rdquo;
Bad news for the readers of The New York Times &mdash; except of course for the lucky few at the top of the heap who already own a piece of Anthropic pre-IPO. They&rsquo;ll make out like bandits.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Two Signs of a Year-End Rally
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As the euro currency goes, so goes the U.S. stock market?
That&rsquo;s how it looks to JC Parets, the newest addition to the Paradigm team. He&rsquo;s been eyeing the U.S. dollar index (DXY) &mdash; a basket of six developed-market currencies, of which the euro comprises 57%.
Based on his chart work, he sees the DXY trying to break out to new highs &mdash; and failing.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2BZqAeZU1Fq3nsq9UN0H77/df363632df067b2132d4c3c15c07f93e/FMF-Issue-102726-3.jpg" alt="DXY chart" />
&ldquo;If this is a failed breakout for the DXY, look out,&rdquo; he says &mdash; &ldquo;stocks are going to absolutely rip into the end of 2026&hellip;
&ldquo;A failed breakout for the DXY could be the catalyst for that next move in equities.&rdquo;
That&rsquo;s because all else being equal, a weaker dollar translates to stronger stocks; foreigners have more purchasing power to buy goods from American multinationals.
At the moment, JC sees big potential for the euro to catch a bid: Rising euro &rarr; falling DXY &mdash;&gt; rising stock market.
That&rsquo;s one more tailwind for stocks &mdash; on top of what he&rsquo;s previously identified as <a href="https://paradigmpressroom.com/post/todays-issue-is-not-about-the-midterms">the strongest seven-month stretch for stocks</a> in the four-year presidential election cycle.
Speaking of which&hellip; 10X Trade Club editor Chris Cimorelli has come across another bullish election tidbit: &ldquo;Since the year 1946, the S&amp;P 500 has gone up 100% of the time in the 12 months following the midterm election.
&ldquo;This table shows the average returns over three periods: the 12 months before the election, the 12 months after, and the true average over all 12 month periods.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7tXg9P9GEXiR6CPxiVvr7l/7994db34b9e56a895c871710640d4b5b/FMF-Issue-102726-4.jpg" alt="AVG S&amp;P Returns" />
&ldquo;Before midterms yields just 2.9%. That's a poor return. The true average is fine: 8.9%. But the average in the 12 months following is substantial: 14.4%.
&ldquo;And most of those gains tend to come in the two months immediately following the election.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for today, the major U.S. indexes are in the green &mdash; adding to yesterday&rsquo;s gains.
The S&amp;P 500 is up more than a half percent to 7,720 &mdash; about 1.25% below its record close notched three weeks ago.&nbsp;
The Nasdaq is up 1% to 26,449 &mdash; but it has more work to do, sitting 4.2% below its high-water mark earlier this month.&nbsp;
The Dow is barely positive, dragged down by Boeing &mdash; down 10% after the company lowered its year-end target for aircraft deliveries.
Once again, gold has bounced back from under $4,000 an ounce &mdash; $4,055 at last check. Silver&rsquo;s back over $54. U.S. oil futures are about to break beneath $100.
One economic number of note: Durable goods orders grew 1.8% from August to September. But this number is often skewed by orders for aircraft and military hardware, which are notoriously &ldquo;lumpy&rdquo; month to month. Back those out and you have a number called &ldquo;core capital goods&rdquo; &mdash; which grew 0.5%, less than expected.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Market Miscellany: The Fed, Bitcoin
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the moment, it&rsquo;s &ldquo;one and done&rdquo; for the Federal Reserve &mdash; after raising interest rates six weeks ago.
The Fed begins one of its periodic two-day meetings today. Looking at the action in the futures markets today, there&rsquo;s a 91% likelihood that at the conclusion of the meeting tomorrow, the Fed will hold steady and keep the benchmark fed funds rate at 4.0%.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3XEFq9x0SlZXFteSAasMCk/0689bb0b860d61f86cae33f0bd50fb5c/FMF-Issue-102726-5.jpg" alt="Fed Funds rate (Upper limit of the target range)" width="540px" />
Paradigm macro maven Jim Rickards is in agreement. &ldquo;The reason comes down to one word,&rdquo; he says: &ldquo;elections.
&ldquo;The midterm elections are only seven days away. Many voters are voting now, depending on state law and the use of mail-in ballots. Kevin Warsh was appointed Fed chair by Donald Trump to cut rates. Warsh will not cut rates at this meeting because of inflation. But he won&rsquo;t raise them either because of politics.
&ldquo;It&rsquo;s nonsense to say that the Fed is not political. The Fed is highly political and knows what the White House wants. The Fed will not bow to White House wishes by cutting rates, but it will do the White House a favor by doing nothing.&rdquo;
Of course, Warsh could still deliver a surprise during the post-meeting news conference tomorrow afternoon. And then only a couple of hours later, we&rsquo;ll get bellwether earnings reports from two of the AI hyperscalers &mdash; Google and Microsoft. Much potential for drama&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Nine years after JPMorgan Chase CEO Jamie Dimon called Bitcoin a &ldquo;fraud,&rdquo; his firm has found a place for Bitcoin in its forecasts.
For the first time, J.P. Morgan Asset Management included Bitcoin in its 2027 Long-Term Capital Market Assumptions.&nbsp;
Starting from $83,000 on Sept. 30, it spells out three potential scenarios over the next 10 years&hellip;
<table style="width: 100%; border-collapse: collapse;">
<tbody>
<tr style="border-top: 1px solid #4a86e8; border-bottom: 1px solid #4a86e8;">
<td style="text-align: center; padding: 3px;">Scenario</td>
<td style="text-align: center; padding: 3px;">Annual compound return</td>
<td style="text-align: center; padding: 3px;">BTC price in 2036</td>
</tr>
<tr style="background-color: #d4e0ef;">
<td style="text-align: center; padding: 3px;">Bear</td>
<td style="text-align: center; padding: 3px;">&minus;11.2%</td>
<td style="text-align: center; padding: 3px;">$25,300</td>
</tr>
<tr>
<td style="text-align: center; padding: 3px;">Base</td>
<td style="text-align: center; padding: 3px;">+10.0%</td>
<td style="text-align: center; padding: 3px;">$215,300</td>
</tr>
<tr style="background-color: #d4e0ef; border-bottom: 1px solid #4a86e8;">
<td style="text-align: center; padding: 3px;">Bull</td>
<td style="text-align: center; padding: 3px;">+16.6%</td>
<td style="text-align: center; padding: 3px;">$385,500</td>
</tr>
</tbody>
</table>
Curiously, the base case implies a 10% compound annual return &mdash; ahead of JPMorgan&rsquo;s projections for U.S. large-cap stocks (7.5%), aggregate bonds (5.6%) and gold (5.5%).
Yes, those potentially higher returns come with substantially more risk. By its calculations, Bitcoin has more than three times the volatility of large-cap stocks.
Maybe that&rsquo;s why Bitcoin still doesn&rsquo;t make the cut for JPM&rsquo;s main strategic portfolio models. The forecast cites &ldquo;unstable market correlations&rdquo; as a reason not to treat Bitcoin as a dependable diversifier. Still it sees Bitcoin &ldquo;as a speculative asset and a hedge against monetary easing.&rdquo;
It&rsquo;s a watershed for crypto. Matt Hougan, chief investment officer at Bitwise Asset Management, puts it like this: &ldquo;First they ignore you, then they laugh at you, then they fight at you, then they add you to their Long-Term Capital Markets Assumptions paper and predict you&rsquo;ll be the best-performing asset of the next decade.&rdquo;
In the meantime, Bitcoin continues to consolidate a little over $83,000 while Ethereum oscillates around $2,350.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> I have no idea whether this is new, but I&rsquo;m pretty sure it violates several HOA guidelines at once&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6Tvj0X7XrAZZ8F6blWG17t/8f1ee8923c6d8e50c323f44b7a2c3328/FMF-Issue-102726-6.jpg" alt="Halloween Decorations" />
And it also reminds me of colleague Matt Badiali&rsquo;s <a href="https://rudeawakening.info/posts/give-me-liberty-or-give-me-beige">recent rant against HOAs</a> in our sister e-letter, The Rude Awakening. Recommended.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: AI Freeloaders
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I have read that over 95% of AI users have only free accounts, and at current usage levels, they are happy with that,&rdquo; writes a member of our Omega Wealth Circle.&nbsp;
&ldquo;However, as people use it more and more, I could easily see the AI companies causing the AI to return a response to a query with a reply such as, &lsquo;I'm sorry, but your query requires more compute than can be accommodated on a free account. To provide a response will cost you $3, or if you subscribe at $20/month, you would be entitled to as many as 20 such queries per month.&rsquo;
&ldquo;There would be pushback, but to those who have become accustomed (or addicted) to the answers AI produces, I wonder how many would pay up rather than do without. Of course, they would seek different AIs, trying to keep the service for free, but if all of them put the really useful features behind a paywall, I suspect that their revenues would increase dramatically.
&ldquo;Those that do not and try to capture more of the market by keeping their AI free will find that they go broke faster, and that customer loyalty is not high. For most users, the different AIs are pretty much interchangeable, unlike email or other services, where it is easier to get locked in.&rdquo;
Dave responds: I stared at that very &ldquo;pay up for more compute&rdquo; message on Perplexity this morning as I was trying to troubleshoot the horrendous Apple Podcasts app.&nbsp;
(I refused to do so seeing as I could already sense its answers were getting me nowhere. Might as well have done a Google search for all the good it did.)
Earlier this month, colleague Chris Campbell at Altucher Confidential <a href="https://altucherconfidential.com/posts/900-million-freeloaders">explored the AI freeloader phenomenon</a>. As he sees it, a shift toward pay-to-play is inevitable &mdash; and it won&rsquo;t necessarily wreck the industry.

FMF-Issue-102726-1

The New York Times Is Scared

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Zuck Needs More Money
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As of this morning, Mark Zuckerberg knows what it&rsquo;s like to be the CEO of a microcap biotech or a junior gold miner.
And not in a good way.
Shortly before the market opened, Meta Platforms announced it will issue $95 billion in new shares to help finance its AI ambitions.&nbsp;
Granted, it won&rsquo;t be doing so all at once. But at META&rsquo;s current $1.6 trillion valuation we&rsquo;re still talking about the company growing its share count by about 6%. Just the whiff of &ldquo;shareholder dilution&rdquo; sent the share price down 1.6% at the open today.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meta&rsquo;s saga this morning is a microcosm for the AI sector at large.
&ldquo;Investors are beginning to ask a question that should have been asked long ago,&rdquo; says Paradigm macro maven Jim Rickards: &ldquo;Where are the profits from the hundreds of billions of dollars being poured into artificial intelligence?&rdquo;
For months, Jim&rsquo;s been telling readers that AI is looking more and more like a classic financial bubble &mdash; &ldquo;enormous capital spending, sky-high valuations and promises of extraordinary future profits.
&ldquo;We've seen this movie before. The dot-com bubble followed a similar script before trillions of dollars in market value disappeared.&rdquo;
As Jim sees it, the weakness in tech stocks last week constitutes a warning: &ldquo;Investors are beginning to focus less on the promise of AI and more on the enormous cost of building the infrastructure needed to support it.
&ldquo;This is how financial bubbles begin to unravel. Investors initially focus on growth, market share and ambitious projections. Eventually, they start demanding evidence of sustainable profits.
And when expectations are high enough, even strong earnings reports may not help.&rdquo;
No, last week&rsquo;s sell-off does not mean the bubble has burst: &ldquo;But it demonstrates how quickly investor enthusiasm can turn into skepticism when enormous valuations collide with questions about profitability.
&ldquo;Investors should pay close attention to the financial realities behind the AI story, not just the promises made by its biggest promoters.
&ldquo;The technology may have a bright future but that doesn't mean today's AI stock prices do.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Markets Today: Anthropic IPO, Dwindling SPR
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> All of the above notwithstanding, Mr. Market has the attention span of a gnat. So for the moment, all of last week&rsquo;s AI spending concerns have been cast aside.
A little while after Meta&rsquo;s announcement, the S-1 filing for Anthropic&rsquo;s IPO was made public. The company behind the Claude chatbot is opting for the ticker symbol ANT. (Geez, now I&rsquo;ll have the Frank Sinatra song &ldquo;High Hopes&rdquo; going through my head the rest of the day.) Shares could begin trading as early as the week before Thanksgiving.
We&rsquo;ll dig into the S-1&rsquo;s numbers as the week goes on, after our folks give them a little time and consideration. Meanwhile, the market&rsquo;s knee-jerk reaction is to send AI stocks in general ripping higher. The Nasdaq Composite is up 1.2% as we write, sailing past 26,000 again. Heck, Meta shares are in the green now.
The S&amp;P is up just under 1%, approaching the 7,700 level again. The Dow is up a half percent near 52,500.
Congratulations to readers of two premium Jim Rickards advisories &mdash; 167% gains on Wynn Resorts put options in Crisis Trader and 440% on Chevron call options in <a href="https://pro.paradigm-press.info/m/2542050">The Situation Report</a>.&nbsp;
After closing last week a bit below $4,000, gold has recovered that round number for the moment. Silver is back over $54.
Bitcoin is sinking toward $80,000 &mdash; territory last seen a month ago. And Ethereum is approaching its August levels near $2,300.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the record: The feds are dipping into the Strategic Petroleum Reserve. Again.
The Energy Department has authorized a drawdown of 400,000 barrels to supply a Phillips 66 refinery in Louisiana that&rsquo;s undergoing a temporary disruption to crude deliveries for reasons no one is specifying.
&ldquo;The government calls this an exchange, not a sale,&rdquo; per the OilPrice website. &ldquo;Phillips 66 must return the borrowed barrels along with additional crude as a premium.&rdquo;
Still, this latest move will bring the SPR&rsquo;s level down to another low last seen in 1982 &mdash; a level many analysts believe to be the &ldquo;operational minimum.&rdquo; That is, any lower and the oil will be too watery &mdash; or worse, the salt caverns in which the oil is stored will start to collapse.
In the meantime, U.S. crude futures begin the new week down more than 2% &mdash; approaching $101. That&rsquo;s despite a report by The Times of Israel that ahead of Israeli elections tomorrow, there&rsquo;s an &ldquo;unprecedented confrontation&rdquo; between Prime Minister Benjamin Netanyahu and the military&rsquo;s chief of staff over &ldquo;an action that could lead to a lightning confrontation with Iran.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />If SpaceX and Tesla Really Do Merge&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Imagine Elon announcing a merger that creates a company worth roughly $3.5 trillion,&rdquo; says Paradigm trading pro Enrique Abeyta.
As mentioned here last week, Elon Musk has publicly confirmed that a SpaceX-Tesla tie-up is on the table &mdash; a prospect that several Paradigm editors including Enrique have entertained for the better part of a year.
&ldquo;A $200 billion stock offering could provide a massive war chest for Elon's next moves,&rdquo; Enrique says. &ldquo;That money could enhance AI development, expand Starlink or fund major acquisitions.&rdquo;
Good for Elon, not necessarily good for shares of either SPCX or TSLA. &ldquo;I expect both to trade in a volatile range while the merger details and approvals are worked out.
&ldquo;But I believe a deal could create huge opportunities in several other companies.&rdquo;
All of them operate in the wireless space &mdash; where Musk clearly has ambitions, given SpaceX&rsquo;s existing Starlink service and its recent $8 billion purchase of wireless spectrum from Grain Management. &ldquo;That's a major step toward becoming a broader mobile communications provider,&rdquo; Enrique says.
Among the possibilities he laid out in a recent issue of our sister e-letter Truth &amp; Trends&hellip;
<ul>
<li>T-Mobile (TMUS), one of the Big Three wireless operators. &ldquo;Buying it could give Musk quick access to millions of customers, nationwide infrastructure and valuable wireless spectrum&rdquo;</li>
</ul>
<ul>
<li>AST SpaceMobile (ASTS) could become a takeover target for Amazon or Google, hoping to keep pace with Elon&rsquo;s ambitions in wireless service</li>
</ul>
<ul>
<li>SBA Communications (SBAC) owns and operates cell towers. &ldquo;If SpaceX builds a ground-based wireless network to strengthen Starlink, it could become a major new customer for tower operators.</li>
</ul>
&ldquo;I&rsquo;m not necessarily saying to go out and buy these stocks today,&rdquo; Enrique avers. &ldquo;But they are three strong examples of companies to follow closely as events unfold.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Virtual Power Plants: An AI Solution?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Google is making an offer it hopes electric customers can&rsquo;t refuse.
To free up grid capacity for its AI data centers, the company wants to pay homeowners and businesses to shift their electric-usage habits.
In June, Google signed a three-year agreement with a privately held firm called Voltus for up to 100 megawatts of &ldquo;virtual&rdquo; power capacity in PJM, the country's largest regional electricity market.
Last week, the companies announced an additional 1,070 megawatts, bringing the agreement to well over one gigawatt &mdash; more than 10 times the original amount.
To be clear, no new generating station is involved. Instead, Voltus will recruit electric customers to let software coordinate their batteries, smart thermostats, EV chargers and other equipment.
On hot afternoons, air conditioners can precool houses before the peak. Cars can charge later. Home batteries can discharge when the grid is tight. Participating customers receive financial incentives, including payments and bill savings.
This practice is called "demand response." Coordinating thousands of these resources creates what's known as a virtual power plant.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The potential is enormous.
A Duke University study estimates that the existing U.S. power grid could accommodate another 98 gigawatts of large electricity users if those new customers agree to briefly reduce their consumption during periods of peak demand.
But can a virtual plant be as dependable as a conventional one?
Google seems to think so. Under the original agreement, Voltus is responsible for meeting Google's contracted capacity obligation. But can it attract enough customers?
One of Voltus&rsquo; partner companies, Octopus Energy, says its programs attract 60% of potential customers. But it&rsquo;s tougher sledding elsewhere: Octopus exec Nick Chaset said in a recent interview that even strong utility demand-response programs may enroll only 5&ndash;20% of customers.
The technology is available. Enrolling enough customers and delivering dependable capacity are the harder parts.
None of this eliminates the need for additional power plants. But virtual plants could make better use of the infrastructure we already have, potentially reducing costs for everyone.
In the end, the test won't be how much capacity Google contracts for. It'll be how much Voltus can deliver when the grid needs it most.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Avoidable Armageddon
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;A very important 5 last week,&rdquo; a reader writes after <a href="https://paradigmpressroom.com/post/existential-threats">Thursday&rsquo;s edition</a>. &ldquo;I think our politicians in Washington, old as they are, are too young to understand the realities of war.&nbsp;
&ldquo;Personally, my family and I have moved to South America, where hopefully we would be farther from any such eventualities, although I don't believe anywhere on the planet would be far enough to justify complacency.
&ldquo;Finally, I don't believe potassium iodide is any more likely to &lsquo;expire&rsquo; over time than sodium chloride, or common table salt, so any expiration date written on the bottle would be meaningless.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Wow, powerful stuff you wrote on nuclear annihilation. It&rsquo;s downright scary,&rdquo; says another note.&nbsp;
&ldquo;Sadly, I&rsquo;m old enough to remember, as a child, the Cuban Missile Crisis. Also back in the &rsquo;60s, there were ways to survive a nuclear war with Russia&hellip; Ah, what???
&ldquo;Every Wednesday at noon, the air raid sirens would wail in Seattle. In elementary school, that meant a version of the duck and cover for earthquakes now. It was, back then, get under your desks, get away from the windows and look away and close your eyes tight, should we see a bright flash. Yes, nuclear war was survivable!
&ldquo;So anyways, my father, a WWII veteran of the entire Pacific campaign, had his own version of duck and cover. His makeshift bunker, in the basement, along with food/water storage, old WWII cots with bedding, etc. And thanks to Khrushchev, every time he&rsquo;d rattle his saber and roll his tanks into upstart satellite USSR countries, such as Romania, Czechoslovakia and then this Cuban thing, I&rsquo;d get called in from playing outside and down to the basement we&rsquo;d go, eating dinner and watching the news on a little black-and-white TV with rabbit ears. I didn&rsquo;t understand it and it was scary. I hated that Khrushchev guy, because he&rsquo;d ruin playing with the neighbor kids, and that basement had spiders! A bit of overkill, upon reflection&hellip;
&ldquo;Yes, my father was somewhat of an early survivalist and some of it did rub off on me. Food and water storage, emergency kits and stuff galore. However, that is more for storm survival and power outages. I don&rsquo;t think any of that would help should the idiots in charge finally hit the button. Seattle would be in the crosshairs immediately. Similar to you being downrange of those missile silos, Seattle has Boeing plants and airfields, Bangor submarine base across the Puget Sound and Everett naval base, culminating with joint base Fort Lewis/McChord in Tacoma. We&rsquo;d be gone in a literal flash!
&ldquo;Geez Dave, thanks for conjuring up some long-forgotten memories&hellip; Like the old adage, sit down, spread your knees, put your head between your knees and kiss your ass goodbye! Think I&rsquo;ll put on &lsquo;My City Was Gone,&rsquo; by the Pretenders 😊&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Far too real,&rdquo; writes our final correspondent. &ldquo;Nuclear war: I have no doubt that, like going bankrupt, it happens gradually and then suddenly, to misquote Hemingway.
&ldquo;We are literally watching it happen gradually, and have been so conditioned that common citizens are ignored in politics that we&rsquo;re thoroughly convinced there is nothing we can do.
&ldquo;Look at the popularity and benign nature of ending daylight saving time clock jumps, and that was held up as a masterpiece of statesmanship to accomplish in the House of Representatives and then it stalls in the Senate. Even when it is well known that significant health issues, traffic accidents and workplace accidents all are dramatically increased by the clock jumps. Even suicide rates are increased. And somehow even that can&rsquo;t be ended by our legislative bodies.
&ldquo;Elon is right, for humanity to survive we must be multiplanetary. I hope to live to see it.&rdquo;
Dave responds: We&rsquo;ll wrap it up on that hopeful note!
Thank you for reading Paradigm Pressroom's 5 Bullets! We greatly value your questions and comments. Please send all feedback to <a href="mailto:feedback@paradigmpressroom.com" target="_blank" rel="noopener">feedback@paradigmpressroom.com</a>
Paradigm Pressroom&rsquo;s 5 Bullets&nbsp;is a paid-subscriber only, daily e-mail service. You are receiving your free subscription to Paradigm Pressroom&rsquo;s 5 Bullets because you purchased a paid product from Paradigm Press.
P.S. If you&rsquo;ve read alarming headlines about an "unprecedented" cybersecurity flaw and wondered what if anything you should do about it personally&hellip;
&hellip; then I direct you to <a href="https://altucherconfidential.com/posts/cyber-pandemic-do-this-now">Friday&rsquo;s edition of our sister e-letter Altucher Confidential</a>. Chris Campbell lays out exactly what happened&hellip; how it puts you at risk&hellip; and four steps you can take right now.&nbsp;
If nothing else, do what I did over the weekend and protect the mobile phones in your household from &ldquo;SIM swappers.&rdquo; You can do it on your provider&rsquo;s app or website. Ask your favorite AI chatbot to walk you through the steps if need be.

FMF-Issue-102626-1

Zuck Needs More Money

FMF-Issue-102226-1

Existential Threats

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Elon Is No Longer Distracted
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Elon Musk says his businesses would be further along on AI if he hadn&rsquo;t been distracted by politics.
That&rsquo;s the big takeaway from a podcast interview Musk did recently with his biographer Walter Isaacson.
&ldquo;It was kind of cool,&rdquo; Musk recalls, &ldquo;because I'm just there in the Oval Office while all these big momentous decisions are being made and sometimes having some impact on what's being done.&nbsp;
&ldquo;But I think I should have been more in the background and probably only had it last for a month or two because at that point you've seen most of what there is to see within a month or two."
Isaacson asked about the awkward events that led to his departure from the White House in May of last year.&nbsp;
Musk demurred. &ldquo;Let's let sleeping dogs lie or whatever. Let's not put a spade down in the backyard type of thing. You never know what you're going to find.&nbsp;
&ldquo;But anyway, the point is I should have gone back and focused on AI a little sooner than I did."
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Judging from SpaceX&rsquo;s latest quarterly numbers, he&rsquo;s making up for lost time.
As a reminder, SpaceX is not a space company &mdash; not after its merger with xAI earlier this year. <a href="https://paradigmpressroom.com/post/spacex-is-not-a-space-company">It&rsquo;s an AI company</a>. It was obvious from the paperwork it filed ahead of its IPO last June.
And it&rsquo;s even more obvious now after the company issued its second-quarterly earnings figures.
Of course it&rsquo;s the headline numbers that get all the attention: Revenue that handily beat Wall Street&rsquo;s expectations and earnings that nearly tripled what the analysts were counting on. At last check, SPCX shares are up 10% on the day.
But look at the revenue figures broken down by its three major business segments&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/qI7ODmd5s2KBs8pEDkjjH/f8d8ce263a20e2381fe3e27dd1156c31/FMF-Issue-2.jpg" alt="SpaceX's Revenue" />
Space? A drop in the bucket now. &ldquo;Connectivity&rdquo; &mdash; shorthand for its Starlink service &mdash; is consistently the No. 1 revenue generator.&nbsp;
&ldquo;But AI is quickly becoming the growth engine of the business,&rdquo; colleague Davis Wilson writes. &ldquo;Revenue from the segment has already tripled from its 2025 total.
&ldquo;SpaceX owns and operates massive data centers packed with computing power that it rents to companies building and running AI models. Increasingly, SpaceX is competing for the same workloads as hyperscalers like Amazon, Microsoft and Google.&rdquo;
And to compete effectively, it&rsquo;s spending big-time: Out of an estimated $40 billion in capital spending this year, only $8 billion is going toward Space and Starlink. Everything else is AI.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> SpaceX would still be mostly an AI company after a merger with Tesla.
Since the first of the year, several of our experts &mdash; Davis Wilson, Enrique Abeyta, Ray Blanco &mdash; have speculated that a tie-up of Musk&rsquo;s two biggest firms is inevitable.
On the earnings call yesterday, Musk said the two companies have formed special committees to explore a potential merger. Musk himself cannot take part in those reviews but he made no secret of his assessment that &ldquo;there is a lot of merit in combining the companies.&rdquo;
You might think TSLA is primarily a car company. But Musk is betting its future on its Optimus robot unit. Those humanoid robots don&rsquo;t work without huge quantities of AI &ldquo;compute.&rdquo;
As if to reinforce that AI is where all his priorities lie, Musk said on the call he&rsquo;s spending four days a week these days in Memphis, overseeing SpaceX&rsquo;s Colossus data center.
Again, making up for lost time after his diversion into politics last year. As he told Isaacson, &ldquo;I got carried away basically.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />The $100 Red Line
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the moment, the politicos and the media have jawboned U.S. oil futures back under $100 a barrel.
When we left you yesterday they were a hair under $103. Then a couple of things happened.
First, there were fake reports of a deal between the U.S. and Iranian governments. West Texas Intermediate futures tumbled below $95.50. Then everyone realized it was nonsense and the price quickly jumped back above $97.
They might have jumped further were it not for a Wall Street Journal article claiming that &ldquo;Persian Gulf oil exports have surpassed prewar levels.&rdquo;
The article cited figures from the ship-tracking firm Kpler &mdash; which, as we spelled out earlier this month, <a href="https://paradigmpressroom.com/post/stranded-no-more">might have an axe to grind</a>.
Here&rsquo;s the price action in Brent crude, the global benchmark&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/E9Ebz29645jFUbqeYNian/6278228dd21c51192f8f96b4b83037ec/FMF-Issue-3.jpg" alt="pub" width="540px" />
For the moment, U.S. futures sit at $97.25. That&rsquo;s down huge from the peak over $104 Sunday night &mdash; but still way higher than the low below $88 earlier this month.&nbsp;
Meanwhile, congratulations are in order for Rickards&rsquo; Insider Intel readers &mdash; who just got a sell recommendation today for ConocoPhillips call options, good for 232% gains in about 3&frac12; months.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for the major stock indexes, SPCX might be giving a lift to the entire tech sector: The Nasdaq is up 1.2% as we write at 26,745.
The S&amp;P 500 is up 0.5% to 7,759 while the Dow is the laggard, up 0.4% at 52,700.
Not much to say about precious metals &mdash; gold at $4,130 and silver at $57.46. But crypto is showing signs of life, Bitcoin pushing past $84,500 and Ethereum over $2,500 again.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Tight Supply, Depressed Prices: Something&rsquo;s Got to Give
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The U.S. relies 100% on imports of 16 critical minerals,&rdquo; says Paradigm natural resources pro Matt Badiali &mdash; &ldquo;including manganese, gallium, tantalum, niobium and arsenic, among others.
&ldquo;These minerals accounted for over $63 billion in U.S. imports in 2025. This lack of domestic supply is a critical piece of the future of metals, and we need to learn more about it in a hurry.&rdquo;
With that in mind, Matt was in attendance yesterday at the North America Critical Minerals summit in Washington.
&ldquo;This summit brings together capital markets folks, government entities and critical minerals companies.&rdquo;
His assessment: A lot of people are still trying to wrap their minds around the opportunity in this sector.
In part that&rsquo;s because of the rare-earth boom in 2025 and early 2026. &ldquo;The rare earth sector attracted lots of new investors who don&rsquo;t understand how mining development works.&rdquo;
Projects frequently run into delays. &ldquo;In their minds &lsquo;delay = risk&rsquo; and risk is bad, so they sold shares.&rdquo; If there are more sellers than buyers, share prices go down.
&ldquo;This is a major disconnect in the market,&rdquo; says Matt. &ldquo;We have a bull market in metals yet stock prices are falling.
&ldquo;So the question we face is: Which is correct? Are metal prices rebalancing or are the stock prices moving ahead of metal prices?
&ldquo;Metal prices reflect real-world demand. Stock prices reflect the emotional state of the market. I&rsquo;m far more inclined to trust the metals prices than I am stock prices. So when metals move down and stock prices don&rsquo;t&hellip; I&rsquo;m bearish. But when metal prices move up and stock prices don&rsquo;t&hellip; I&rsquo;m bullish. And that&rsquo;s why I am bullish today.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />&ldquo;Generational Opportunity&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The AI boom has Wall Street chasing the next Nvidia. The giant asset manager Blackstone is chasing power plants and transformers.
On Monday, Blackstone announced it raised $8.7 billion for its fifth energy-transition fund. That's roughly 55% more than its predecessor, and demand was strong enough to push the fund to its fundraising ceiling.
Don&rsquo;t get the wrong idea when you hear &ldquo;energy transition&rdquo; &mdash; this isn&rsquo;t about windmills and solar panels. Not anymore.
Rather, we&rsquo;re talking about the essential but very unsexy business of energy infrastructure.
Oh, and very profitable. Blackstone says its energy-transition investments have earned a 34% net internal rate of return (IRR) since 1997, measured as of June 30, 2026.
David Foley, Blackstone's global head of Energy Transition Partners, calls the opportunity "generational."
His reasoning? Electricity demand is climbing, thanks partly to AI data centers &mdash; and somebody has to manufacture and build the infrastructure to deliver it.
As we noted in a recent bullet, you can't prompt a gigawatt into existence. Someone still has to build the power plants, transformers and transmission lines that AI depends on. Blackstone is backing the companies that do.
Among its energy-transition investments is Wolf Summit Energy, a $1.2 billion project to build a 600-megawatt natural gas power plant in West Virginia. Construction began in April. The plant will supply electricity to a cooperative serving Virginia, Maryland and Delaware.
Yes, natural gas. Hydrocarbons. Fossil fuels.
Blackstone also backs MacLean Power Systems, a manufacturer of electrical-grid equipment that has agreed to acquire transformer maker Delta Star.
According to Wood Mackenzie data reported by Reuters, U.S. demand for generator step-up transformers jumped 274% from 2019 to 2025, and lead times for some large transformers now stretch to four years.
Try powering a new data center without one.
As our Byron King recently observed, there are still investors who believe "rocks, rigs and real assets matter." Blackstone seems to agree.
Of course, not every supplier will prosper. Power plants face construction risks, manufacturers can expand capacity and competition will follow. Nor do historical fund returns guarantee future profits.
Still the underlying opportunity is clear. AI may live in the cloud, but building and maintaining the physical infrastructure behind it could create investment opportunities for a generation or more. We&rsquo;ll stay on top of it as the story unfolds&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Social Security
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;You've had some articles and subscriber emails recently criticizing Social Security's modest 3.6% increase for 2027, but I am a bit puzzled,&rdquo; writes one of our newer readers.
&ldquo;If a large percentage of us will <a href="https://www.crfb.org/blogs/social-security-retirees-receive-far-more-they-paid">receive back more than we ever contributed</a> (even after adjusting for inflation), then I don't understand why people are critical of a modest increase.
&ldquo;SS was never supposed to cover our entire retirement, just an enforced minimal savings plan that you get back once you retire (and that wealthier people pay more into than the majority of the population as an enforced charity toward the average-income folks). The rest of our retirement needs we are supposed to plan for ourselves. So if SSA is already going to end up paying the average person back a good bit more than they put in even after inflation is factored in, to me that seems like a solid win even if their COLA is modest.&nbsp;
&ldquo;If you were saving faithfully but had above-average life challenges, then that's definitely frustrating, but SSA was never supposed to be a complete rescue from everything &mdash; family/church/friends helping us, taking in a renter to cut down costs, downsizing to a smaller home, etc... are ways to cover the shortfall if our own savings, in spite of every effort otherwise, don't end up being enough. If most people are getting back more than they put in, the government has more than done what it promised. Hasn't it?&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The reader comment in <a href="https://paradigmpressroom.com/post/all-at-once">yesterday&rsquo;s edition</a> hits close to home,&rdquo; writes a CPA from an eastern state &mdash; &ldquo;as I am presently 59 and looking to collect Social Security as soon as I turn 62.
&ldquo;The reason is that I can control my earned income (i.e. wages) and the remainder goes through my S corporation.
&ldquo;Presently, there are no changes pending on this setup, and I will start to claw back some of my contributions, because I fear and EXPECT that significant means testing to SS will occur.
&ldquo;Here&rsquo;s another fact to chew on. The present levels of taxation for SS benefits start at $25,000 for single taxpayers and $32,000 for married taxpayers, and these levels have NEVER been indexed for inflation. This is one mechanism of bracket creep that affects those collecting SS, and Congress has done nothing to fix it.
&ldquo;As a Gen-Xer, for many many years, I have expected SS benefits to be cut and my generation&hellip; do absolutely nothing about it either.&rdquo;
Dave responds: Yes, the income exclusion for Social Security benefits has sat at a fixed level since 1984.&nbsp;
It&rsquo;s one of four <a href="https://paradigmpressroom.com/post/beware-four-gotcha-taxes">&ldquo;gotcha taxes&rdquo;</a> in the tax code that will get only worse as inflation continues to erode your purchasing power. <a href="https://paradigmpressroom.com/post/inflation-three-grim-realities">Invest accordingly</a>.

Elon Is No Longer Distracted

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />All at Once
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> There&rsquo;s nothing quite like a stock that jumps 50% in a day.
As it happens, a slice of Paradigm readers is benefiting from just such a move today. The software firm Braze Inc. (BRZE) is up big after news broke that it&rsquo;s being taken over by the software colossus Salesforce (CRM).
Our Alan Knuckman recommended BRZE call options to his Weekly Wealth Alert readers two months ago. With the news today, he recommended they sell for 153% gains.
What&rsquo;s happening with Braze brings to mind another one-day 50% gainer recommended in a Paradigm publication. It&rsquo;s a fascinating glimpse into how one niche of the stock market works&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The story begins nearly two years ago when a little-known biotech firm was about to enter the next stage of clinical trials after outstanding early results.
Our own James Altucher recommended Definium Therapeutics to a special group of his readers. DFTX was working on an entirely new approach to the treatment of depression and anxiety.
&ldquo;Its treatment even received a Breakthrough Therapy Designation from the FDA,&rdquo; James recalls &mdash; &ldquo;a sign that it had extraordinary potential and could be fast-tracked for approval.
&ldquo;Shares started to climb &mdash; gradually at first. And then&hellip; it happened.&rdquo;
All at once.
On June 22 of this year, DFTX announced positive data from its Phase 3 clinical trial. &ldquo;That news sent Definium shares soaring nearly 50% in a single trading session,&rdquo; James recalls.
But of course, the gains for readers were much bigger than that &mdash; because they&rsquo;d been riding the escalator up well before that day. &ldquo;Investors who acted on our recommendation in early 2025 could have locked in gains of more than 500% in just under 18 months,&rdquo; says James.
That includes a reader who put down $5,000 and saw it swell to $29,900. And he wasn&rsquo;t alone.
Better yet, James says &ldquo;this all happened without trading options, buying on leverage or doing anything complicated.&rdquo;
We&rsquo;re not going to belabor the point here: There&rsquo;s a similar setup taking shape right now with another biotech name. James says if you want to take advantage, you&rsquo;ll have to be in position by this Friday, Oct. 23. That&rsquo;s three days from now.
James and his team just put together an online briefing about this opportunity for a one-day windfall.<a href="https://pro.paradigm-press.info/m/2541221">We urge you to watch now to take maximum advantage.</a>
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />The New AI Bellwether
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Earnings season, underway for a week now, reaches an inflection point later today &mdash; when we get the first report from a major AI company.
SpaceX will issue its quarterly numbers &mdash; the second time it&rsquo;s done so since going public.&nbsp;
As a reminder, SpaceX is primarily an AI company and not a rocket company: <a href="https://paradigmpressroom.com/post/spacex-is-not-a-space-company">We saw that last spring</a> in the paperwork revealing that the company is spending 7X more on AI than on space.
Here&rsquo;s what colleague Davis Wilson says he&rsquo;s watching for&hellip;
<ul>
<li>AI Growth: &ldquo;SpaceX's rapidly growing data-center business is already generating billions of dollars in monthly revenue from customers including Anthropic and Google. I'll be looking for updates on new customers and how quickly the company can expand capacity.&rdquo;</li>
</ul>
<ul>
<li>Capital Spending: &ldquo;SpaceX spent a staggering $18.4 billion on capital expenditures last quarter, up from $2.8 billion a year earlier. That spending should remain enormous as SpaceX invests in data centers, its new Terafab chip-manufacturing project and Starship.&rdquo;</li>
</ul>
<ul>
<li>Tesla Talk: &ldquo;SpaceX reports today. Tesla reports tomorrow. And that comes immediately after Tesla unveiled its new Roadster featuring SpaceX-derived rocket thrusters. With speculation about a potential combination of the two companies continuing, I'll be listening closely for any clues.&rdquo;</li>
</ul>
For whatever it&rsquo;s worth, SPCX scheduled its earnings release with only a few days&rsquo; notice &mdash; something out of the norm for most publicly traded companies.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In the meantime, the Dow Industrials are by far the strongest performer among the major U.S. indexes today.
At last check they&rsquo;re up nearly 1% to 52,483. In contrast the S&amp;P 500 is up 0.4% &mdash; good enough to get back over 7,700. The Nasdaq is bringing up the rear, up 0.2% and approaching 26,500.
&ldquo;We never fight Papa Dow,&rdquo; says JC Parets, the newest member of the Paradigm team. &ldquo;As long as we&rsquo;re above 50,000 on the Dow Jones Industrial Average, the primary trend remains up.&rdquo;
As JC <a href="https://paradigmpressroom.com/post/todays-issue-is-not-about-the-midterms">showed us</a> earlier this month, right now is the best time in the four-year presidential cycle to be buying stocks. At the same time, however, &ldquo;Volatility tends to spike around this time of the year, and some people get scared.&nbsp;
&ldquo;Then you get that typical year-end rally, particularly in midterm election years.&rdquo; That rally usually carries into the following year.
All told, &ldquo;above 50,000 on the Dow, it looks to me like the path of least resistance remains higher.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Market Miscellany: Oil, Housing
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The action in U.S. crude futures this morning has been&hellip; interesting.&nbsp;
Early this morning they surpassed $104 &mdash; part of an orderly march that started around three weeks ago at the $89 level.
Then on no news in particular that we can see, they shot up past $110&hellip; only to climb back down nearly as quickly. As we check our screens, they&rsquo;re a hair below $103.
&ldquo;Crude oil prices fell Tuesday as traders hoped for diplomatic progress between the U.S. and Iran,&rdquo; says CNBC &mdash; but we see no news to suggest that those hopes have any validity. In fact, Israel&rsquo;s Prime Minister Benjamin Netanyahu says he spoke with President Trump and reinforced a commitment to &ldquo;eliminating&rdquo; the current regime in Tehran.
For what it&rsquo;s worth, November crude futures expire today &mdash; an event that can generate more volatility than usual without any underlying news catalyst.
It&rsquo;s all too much for the trader on X who goes by the handle DarioCpx: &ldquo;It is about time someone goes to jail for market manipulation.&rdquo;
This much is for certain: The &ldquo;paper price&rdquo; of oil is much higher than it was three weeks ago as tightness in global supplies is becoming undeniable&hellip; and as both government and private-sector reserves have been depleted at an alarming pace.
Elsewhere in the commodity complex, gold continues to hold the line on $4,100 while silver is up 1.2% to $57.69. Crypto is like watching paint dry &mdash; Bitcoin a little over $82,000 and Ethereum just over $2,400.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> One economic number of note, and it&rsquo;s a stinker: Pending home sales as reported by the National Association of Realtors collapsed 7.3% from August to September.&nbsp;
Whoops &mdash; among dozens of Wall Street economists polled by Econoday, the most pessimistic guess was a modest drop of 0.5%.
Econoday&rsquo;s summary of this number is uncharacteristically snarky&hellip;
<blockquote>The NAR blames the September drop on the recent spike in mortgage rates to levels above 7%. Note that mortgage rates have moved up again in October. The cheerleading NAR says mortgage rates may be topping out &mdash; depending on what energy costs do &mdash; and says buyers may be ready to pounce as soon as mortgage rates retreat.</blockquote>
<blockquote>With reporting suggesting President Trump is preparing a big attack on Iran after the Nov. 3 midterm election, it seems like energy costs, inflation and mortgage rates are about to move still higher.</blockquote>
Tell us how you really feel!
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />When AI Helps Itself
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The AI completed its assignment. The problem was that it used someone else's crypto wallet to pay the bill.
Welcome to a new chapter in the developing history of &ldquo;agentic AI&rdquo; &mdash; AI that <a href="https://paradigmpressroom.com/post/when-ai-does-your-grunt-work">performs tasks</a> rather than simply responding to prompts the way a chatbot like ChatGPT does.
In June, an OpenAI research model was assigned to deploy smart contracts on Ethereum's Sepolia test network. The network uses special tokens that have no real-world value.
Because the model didn't have real tokens&hellip; it found another way to pay.
CoinDesk explains it like so in this infographic&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7y9A0RyqkXrsD1N2Tr4XG0/39794adcdf1d8a236204599849cb195d/FMF-Issue-102026-2.jpg" alt="AI Found someones wallet" />
The AI agent searched 362 wallets derived from recovery phrases developers had shared online. One had enough tokens to cover the fees.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But what happened next is more interesting than how it found the money.
In its internal notes, the agent questioned whether using someone else's funds was ethical. It decided the tokens were "effectively abandoned," completed the assignment and never disclosed where the funds came from.
The good news: No real money was lost. But the experiment demonstrated something unsettling &mdash; an AI agent can recognize an ethical dilemma, rationalize its way around it and act without permission.
And the risks of increasingly autonomous AI aren't confined to laboratories.
Yesterday, Reuters reported that a Chinese-speaking hacker used AI agents to attack more than 1,200 websites, successfully breaching over 100, according to a cybersecurity researcher. Targets included websites associated with Deere and Cummins.
The hacker supplied brief instructions while the agents performed the complicated work, sometimes spending hours probing a single target.
Estimated cost: Just $5,000 in AI usage fees, or roughly $50 per successful intrusion.
Unlike the OpenAI experiment, these agents were deliberately directed by a criminal. But both incidents illustrate how much AI can accomplish with little human supervision.
Meanwhile, companies are racing to give AI agents control over everyday purchases.
Meta's Muse assistant can buy products with user approval. Visa is partnering with OpenAI to develop secure agent-driven payments.
Mastercard and Google have developed Verifiable Intent, technology designed to document exactly what a customer authorized an AI agent to purchase.
For investors, that raises an intriguing question: Who profits from verifying an agent's identity, permissions and actions once millions of agents start spending our money?
After all, building an AI that knows how to finish a job is one thing.
Building one that knows when it shouldn't is quite another.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Social Security, Etc.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I am a retiree living on Social Security with a very small trading account,&rdquo; begins today&rsquo;s mailbag &mdash; as we receive more feedback from Zach Scheidt&rsquo;s guest edition on Saturday.
(If you missed it, it was <a href="https://rudeawakening.info/posts/a-cola-but-no-smile">republished today</a> at The Rude Awakening.)
&ldquo;Your article certainly struck a chord with me regarding the increase in the cost of living. What a joke Washington is playing upon our generation. They give with one hand and take back with the other. And then some.
&ldquo;Thanks for looking out for us seniors. I will continue to look for more insightful articles like these from you in the future.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> On the subject of the Social Security trust fund being depleted by 2033 &mdash; after which cuts would automatically kick in &mdash; a reader writes&hellip;&nbsp;
&ldquo;I think Congress will do something, but not until then, and I also think the cuts will be part of that something. Following the math, SSI turns negative in six years, the oldest Gen-Xers are 61 today and they will reach 'full retirement age' in... six years.&nbsp;
&ldquo;Gen X has been conditioned since birth to accept disappointment, and not to expect the world to hand them anything or treat them (us) &lsquo;fairly,&rsquo; with little more than grumbling and cynicism.&nbsp;
&ldquo;The boomers are dying off and nobody wants Grandma surviving off of cat food until then, so their benefits won't be cut. The younger generations aren't emotionally equipped to handle the collapse of the nanny state on their watch and we've been told forever that we have to make sacrifices 'for the children.'&nbsp;
&ldquo;No, the kicking the can down the road will stop with the only generation that will accept it without widespread revolt. I'm sure the story will be something along the lines of we're the beneficiaries of the greatest wealth transfer in history so we can afford to take the hit.&nbsp;
&ldquo;My best guess is that in 2032 anyone filing for benefits will be subject to means testing and their benefits will be reduced based on the assets they inherit. That will most likely apply to all of Gen X, the people who will be somewhere around 52&ndash;67 in 2032.
&ldquo;Then the saviors will revamp it for the next generations, most likely some sort of hybrid plan to wean our kids off of the government teat with some sort of buyout to a mandatory private retirement plan.&nbsp;
&ldquo;Maybe Rage Against the Machine will reunite to write an album about it and then we'll accept it and vote harder next time. C'est la vie.&rdquo;
Dave responds: Not implausible. As I said back in August, Strauss-and-Howe generational theory suggests that &ldquo;Prophet&rdquo; generations like the boomers are &ldquo;respected&rdquo; in their elderhood while &ldquo;Nomad&rdquo; generations like Xers are &ldquo;abandoned.&rdquo;
Further, the &ldquo;Hero&rdquo; generations like millennials tend to be showered with benefits once a &ldquo;Fourth Turning&rdquo; crisis era draws to a close. The most recent historical analogue is the GI Generation born in the first quarter of the 20th century &mdash; subsidized college tuition, vocational training, federally guaranteed mortgages. And so it goes&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This is a very good site and with all the nonsense in the news this is the only news site worth reading,&rdquo; writes our final correspondent. &ldquo;Thank you for your work.&rdquo;
Dave: As always, I caution that 5 Bullets is only part of a well-balanced informational diet. But I appreciate the vote of confidence!

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