<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" />It&rsquo;s Still Not Too Late
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The headlines this morning are about oil back over $100. But &ldquo;copper&rsquo;s record-breaking run above $14,500/ton should get everyone&rsquo;s attention,&rdquo; says the legendary commodities expert Jeff Currie, who spent nearly 30 years at Goldman Sachs.
In the short term, traders are trying to get ahead of any new tariffs that might be announced by the Trump administration.
But the long-term story is a familiar one if you&rsquo;ve been keeping up with these daily missives &mdash; supply and demand.
The red metal is up 17% year to date.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Prices keep rising because copper is the most important metal for electrification,&rdquo; Paradigm&rsquo;s Matt Badiali reminded his Real Wealth Insider readers yesterday.
&ldquo;It's so integral to electricity that it has no substitute in many cases.&rdquo;
Matt directs your attention to a recent report from S&amp;P Global called Copper in the Age of AI. It projects a 50% jump in copper demand between 2025&ndash;2040.
But while the report anticipates demand for 42 million metric tons of copper come 2040&hellip; production will likely fall 10 million tons short &ldquo;without meaningful supply expansion.&rdquo;
Bringing a new mine online is a tedious process: Start it today and you might not be up and running until&hellip; well, 2040.
That means for the time being, &ldquo;most of the new copper supply will come from expanding existing mines, rather than from new mines opening up,&rdquo; Matt says. &ldquo;We simply can't bring new mines on fast enough to meet supply needs.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the moment, copper mining stocks are still bargain-priced.
&ldquo;Despite the demand tailwinds behind copper,&rdquo; says Matt, &ldquo;the wars in Russia and Iran have recently kept a lid on copper miners' share prices&rdquo; &mdash; as you can see in this chart of COPX, the big copper miner ETF&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2ISaWb0CleedSBcZf45oDg/800ba49ccecccb761e47e8b0888a1924/FMF-Issue-090926-1.jpg" alt="Copper is cold" width="540px" />
But judging by the quarterly numbers of the biggest companies in the space&hellip; that&rsquo;s about to change.
&ldquo;For example,&rdquo; Matt says, &ldquo;giant miner Teck Resources (TECK) reported EBITDA (earnings before interest, taxes, depreciation and amortization) up 204% year over year. Freeport-McMoRan (FCX) beat earnings estimates by 25%. That was the trend across the copper mining sector.
&ldquo;I expect the third quarter's results to be even better.&rdquo;
We&rsquo;ve mentioned COPX several times so far this year. It&rsquo;s still not too late&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" />Missiles Fly, Oil Soars
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;All evidence suggests that both Iran and the U.S. are spoiling to return to full-scale combat operations,&rdquo; says a tweet from retired Army officer Daniel Davis, now host of a podcast with a growing following.
&ldquo;Iran knows that to fire on U.S. warships will elicit a major response, and the U.S. knows that to continue hitting civilian tankers in exchange for a military strike is going to spawn an even bigger Iranian retaliation.&rdquo;
Sure enough, U.S. forces launched more airstrikes against Iranian oil tankers last night &mdash; and Iranian forces responded with a heavy missile attack on U.S. bases in Jordan.&nbsp;
It seems the news about the Trump administration wanting to keep a lid on the war ahead of the midterm elections was so last week.
And with that, Brent crude futures &mdash; the global benchmark &mdash; have indeed gone back over $100 a barrel. U.S. futures are up 3.5% on the day at $96.36, the highest since early June.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And so once more, the familiar pattern: Rising oil prices translate to rising inflation expectations, which translate to rising bond yields.
Oil prices were already jumping yesterday &mdash; and the yield on a 10-year Treasury note reached 4.805% &mdash; the highest closing level since October 2023.
This morning, the Treasury Department announced it would buy back $6 billion in longer-term Treasury debt &mdash; even more than the $4-plus billion Treasury Secretary Scott Bessent was touting last month.
If the idea of today&rsquo;s super-sized announcement was to keep a lid on yields, it&rsquo;s not working. The &ldquo;bond vigilantes&rdquo; are showing up and expressing a vote of no-confidence in Uncle Sam &mdash; with the 10-year yield inching still higher to 4.841% as we write.
The high-water mark in October 2023 was 4.99%. If we move into 5% territory, we&rsquo;re looking at the highest yield on the 10-year since 2007. And it&rsquo;s the 10-year that most affects everything from mortgage rates to corporate debt.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the moment, higher inflation expectations are also translating to a precious metals rally and a stock-market slump.
At last check, the S&amp;P 500 is down a half percent at 7,635, threatening to break below a level that&rsquo;s held for more than a month. The day&rsquo;s losses in the Nasdaq and Dow are closer to three-quarters of a percent.
But gold is up nearly 50 bucks and back over $4,400. Silver has jumped nearly 2.5% to $67.26. Crypto is treading water, Bitcoin at $78,625 and Ethereum just under $2,500.
Your editor has been remiss in noting some of the recent winners racked up in Paradigm publications. They include&hellip;
<ul>
<li>73% on Fortuna Silver Mines, a long-term holding in Rickards&rsquo; Strategic Intelligence</li>
</ul>
<ul>
<li>30% in a matter of weeks on shares of Peabody Energy in Mason Sexton&rsquo;s The Map</li>
</ul>
<ul>
<li>100% in a day for Altucher&rsquo;s True Alpha, playing call options on a small=cap cybersecurity name&nbsp;</li>
</ul>
<ul>
<li>Gains of 317% and 645% on Intel call options in Chris Cimorelli&rsquo;s 10X Trade Club (the latter materializing in one day).</li>
</ul>
<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" />One More Time: Busting a BRICS Myth
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The Global South will continue tiptoeing away from the dollar this week &mdash; but don&rsquo;t expect a new global reserve currency anytime soon.
Leaders of the BRICS nations will gather for their annual meeting in New Delhi, India on Friday and Saturday.
As you&rsquo;ll recall, BRICS is a grouping of the world&rsquo;s biggest developing economies &mdash; Brazil, Russia, India, China and South Africa. Since 2023, those five countries have been joined by Ethiopia, Egypt, Iran, Indonesia and the United Arab Emirates.
&ldquo;One thing I always keep an eye on is the BRICS&rsquo; usual push to reduce reliance on the U.S. dollar and Western financial institutions,&rdquo; says Paradigm macroeconomics authority Jim Rickards.
&ldquo;On the face of it, there has been some progress. Russia and China are settling an increasing proportion of trade in their own currencies.
&ldquo;But this hasn&rsquo;t been facilitated by the BRICS group itself. Sanctions have forced Russia to move away from the dollar. And in China, the rise in renminbi cross-border settlement in large part reflects increased financial flows between mainland China and Hong Kong.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Every BRICS summit comes with breathless social-media hype about an imminent alternative to the dollar as a reserve currency. &ldquo;That&rsquo;s not happening,&rdquo; says Jim.
The reason is one he&rsquo;s emphasized for years now: &ldquo;The key is not the currency itself, but a bond market in that currency large enough to absorb global savings. The U.S. Treasury securities market is the only market in the world large enough to do that job.&rdquo;
Thus, dollar-denominated assets still make up 59% of global reserves.
&ldquo;That does not mean the BRICS and others have been standing still,&rdquo; Jim cautions. &ldquo;They are creating payment systems, clearing houses and lending arrangements to shield payments from U.S. interdiction and asset freezes. The latest development in this trend is a Russian ruble stablecoin called A7A5.
&ldquo;The brilliance of stablecoins is that once the buyer deposits rubles and receives A7A5 tokens, there's little incentive to swap out of the trade. Stablecoins create long-term demand for the underlying currency while giving the token holder a store of value and something that can be exchanged in the cyberworld.&rdquo;
But don&rsquo;t get the wrong idea: The dollar&rsquo;s position isn&rsquo;t invincible.
&ldquo;If the dollar is rejected globally,&rdquo; says Jim, &ldquo;it won't be for another currency. It will be for gold.
&ldquo;You don&rsquo;t need a bond market to own gold. You just own the gold. If you want to see the demise of the dollar, don&rsquo;t look at foreign exchange rates or interest rates. Look at the dollar price of gold.&rdquo;
➢ On that score&hellip; note that even after a big pullback this year, the dollar price of gold is up 115% from the time Russia invaded Ukraine in February 2022 and Washington froze the Russian central bank&rsquo;s dollar assets.
<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" />Plot Twist!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It appears the robotaxi that has no steering wheel or pedals does have a manual driving mode.
Let&rsquo;s back up a bit: Last week, Tesla debuted its Cybercab in Austin, Texas. As it happens, Paradigm&rsquo;s Davis Wilson, editor of our sister e-letter The Million Mission, is based in Austin and gave one a spin yesterday.&nbsp;
Sure enough, there is no steering wheel or pedals. &ldquo;The interior consists of two seats and a giant screen in front of you.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4fVwYr6KmdFMG2F4lmG8J1/d9a718a9cbc741885bf6271148ca073d/FMF-Issue-090926-2.jpg" alt="Giant screen" width="540px" /> Look ma, no hands! [Davis Wilson photo]
As Davis sees it, the Cybercab delivers both a smoother ride and a more direct route to his destination compared with the Waymos owned by Google parent Alphabet. <a href="https://million-mission.com/posts/my-ride-in-elons-cybercab">You can see his full review right here</a>.
Meanwhile, someone else trying out the Cybercab this week made an eye-opening discovery&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1gQ3f1Ck2WTTwW7w9ed7Jt/b19e06d4134db3288e40caeec489ffcc/FMF-Issue-090926-3.jpg" alt="pub" width="540px" />
As the Elektrek site reports, &ldquo;a Cybercab still has to be moved by a person sometimes, whether that&rsquo;s repositioning it in a depot or nudging it out of a tight spot, and with no wheel and no pedals, an on-screen joystick is how you do it. Tesla has never shown this mode publicly&hellip;
&ldquo;A touchscreen joystick is fine for creeping a car across a parking lot at walking speed, but those controls honestly look awful to use. It&rsquo;s not a serious answer to the question regulators are actually asking, which is what happens when a driverless car needs a human and there&rsquo;s no real way for one to take over.&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: Social Security
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The Social Security system is out of containment. It is best to eliminate it. Yes, totally phase it out over the next 50 years or less,&rdquo; a reader writes after <a href="https://paradigmpressroom.com/post/social-security-default-2027">last Wednesday&rsquo;s edition</a>.
[And this individual hastens to add he&rsquo;s been collecting a check for 26 years.]
&ldquo;Those now 40 years old and above &mdash; required to stay in. Those 30&ndash;40 years old &mdash; option to stay or go. Those under 30 &mdash; mandatory to go.
&ldquo;All those required or choosing to go would receive back all contributions they paid in. (Not employer's share, just their own.)
&ldquo;In 40&ndash;50 years, the youngest now would have passed on and the program would be buried, too.
&ldquo;Those out of the system would receive years of strong propaganda and retirement planning advice making it clear that they have to take care of their own future. The private market will do the job.
&ldquo;Something would have to be worked out about disability and dependent children but that is just a detail. The monster dies and plagues us no more.&rdquo;
Dave responds: Hardcore.&nbsp;
But see, you&rsquo;re proposing a solution &mdash; which is the last thing the control freaks and power-trippers want.
It goes back to the original conception of government old-age pensions in Germany under the &ldquo;Iron Chancellor&rdquo; Otto von Bismarck during the 1880s.&nbsp;
&ldquo;Bismarck&rsquo;s explicit aim,&rdquo; wrote the historian Ralph Raico, &ldquo;was to prevent the workers from attaining middle-class status through gradually accumulating private means and then passing them on to their children, in a steady intergenerational embourgeoisement of their families.&nbsp;
&ldquo;Instead, members of the working class would be made ever dependent on state pensions, for which they were expected to show a fitting gratitude.&rdquo;
To this day, the U.S. Social Security website has <a href="https://www.ssa.gov/history/ottob.html">a page devoted to Bismarck&hellip;</a>
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/14IrJcTDbLb0CE6JEiDOI9/3a44592674a275fe482f46e50ea267f9/FMF-Issue-090926-4.jpg" alt="Bismarck German Chancellor 1862-1890" width="540px" />
And so it goes.

FMF-issue-090926-Featured

mobile masthead 5MIN

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

It’s Still Not Too Late

<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" />Scary September (Is It Real?)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> There&rsquo;s something about the &ldquo;unofficial end of summer&rdquo; that concentrates the minds of finance types.
Thus, the front-page, above-the-fold headline in this morning&rsquo;s Wall Street Journal, the day after Labor Day: &ldquo;Markets&rsquo; Hot Days Give Way to Cooler Outlook.&rdquo;
&ldquo;In the past couple of months, equity investors cheered soaring profits at big companies, shrugged off jitters in the bond market and nudged megacap tech shares back near records.
&ldquo;Now, as the post-Labor day stretch begins, new challenges lie ahead, including ever-shifting odds of an interest-rate increase from the Federal Reserve, sky-high expectations after a stunning earnings season and the persistent threat of higher consumer prices as fighting in the Middle East drags on.&rdquo;
Whatever. All of the issues enumerated in that last paragraph were looming last week and last month. They&rsquo;re no more or less urgent now than they were last Friday.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Here&rsquo;s what&rsquo;s really at issue: &ldquo;September is the toughest month of the year for stocks,&rdquo; says Paradigm trading pro Enrique Abeyta.
The Fed, earnings expectations, inflation &mdash; those are just an excuse. The real problem is the calendar.
&ldquo;In the last 20 years,&rdquo; Enrique tells us, &ldquo;the S&amp;P 500 has been higher only 45% of the time &mdash; and the last 10 years have been particularly difficult.&rdquo;
And that&rsquo;s just this century. Going back to 1928, the S&amp;P has slipped an average 1.1% during September.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Why? Nobody knows for certain. But there are some logical explanations,&rdquo; Enrique says.
&ldquo;Think about what happens during summer. People go on vacation, Wall Street trading desks thin out and portfolio managers spend more time away from their screens.
&ldquo;A 2009 study published in the Journal of Financial Markets examined 51 stock markets and found that trading activity falls during summer vacation periods. Both large and small investors traded less.
&ldquo;Another study, published in Financial Management in 2017, examined school holidays across 47 countries. It found that stock returns during the month following major school holidays were 0.6&ndash;1% lower than during other months.
&ldquo;The researchers found that reduced investor attention during vacations may cause information to get reflected in stock prices more slowly.
&ldquo;Then September arrives. Kids go back to school, adults go back to work and portfolio managers return to their desks. And they&rsquo;re returning with plenty of fresh information.
&ldquo;Second-quarter earnings season is almost over, and investors have a new set of earnings, guidance and management forecasts to consider. Meanwhile, the third quarter is nearing its end, giving funds another reason to reassess and rebalance their portfolios.&rdquo;
The most likely outcome this year? Enrique says it&rsquo;s &ldquo;highly likely we see (at minimum) some increased volatility and more likely a healthy correction.&rdquo;
Emphasis there on the word healthy. Bull markets need to pull back now and then, consolidating and catching their breath before the next leg higher.&nbsp;
In the meantime, we&rsquo;ll address a couple of the aforementioned &ldquo;uncertainties&rdquo; in Bullets No. 2 and 3&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" />The Oil Price Is Deceiving
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. oil futures begin the week over $92 &mdash; up nearly a buck to their highest since late July.
U.S. and Iranian forces traded sporadic airstrikes over the holiday weekend &mdash; but the concern this morning is renewed fighting between Saudi Arabia and the Houthi faction in Yemen, which is loosely aligned with Iran&rsquo;s government.
In particular the Houthis hit Saudi Arabia&rsquo;s Jizan refinery on the coast of the Red Sea &mdash; a refinery that&rsquo;s crucial to Saudi Arabia&rsquo;s plans to distribute oil through channels other than the Strait of Hormuz.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Investors shouldn&rsquo;t focus only on the headline Brent and WTI prices. Those are futures prices,&rdquo; cautions our macroeconomics authority Jim Rickards.&nbsp;
&ldquo;The physical market is considerably tighter, particularly when you look at refined products such as gasoline, diesel and jet fuel.&rdquo;
Which brings us to a problem corporate media are largely ignoring &mdash; refining capacity.
&ldquo;U.S. refineries are running near their limits,&rdquo; Jim warns, &ldquo;while Ukrainian attacks continue to damage Russian refining infrastructure.&nbsp;
&ldquo;The result is growing pressure on refined-product supplies. That&rsquo;s exactly the kind of pressure that can keep energy prices elevated and feed inflation.&rdquo;
The impact has been biggest with diesel fuel &mdash; which trades at a record premium relative to the price of crude. Yesterday, diesel in California sold for a record-high price of $7.79 a gallon.
Meanwhile, Labor Day gasoline prices were the highest on record &mdash; and the White House has hit upon a new message going into the midterm elections&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/18ZDgRw0meVS9hBCaHCAZ1/e1226b3942bf3190b29351e9e366b71b/FMF-Issue-090826-1.jpg" alt="The trick to lowering gas prices is driving less" width="540px" />
What&rsquo;s next? Donald Trump delivering a White House address <a href="https://www.washingtonpost.com/history/2024/10/01/jimmy-carter-sweater-environment/">in a cardigan sweater?</a>
<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" />Rickards Calls It Now: No Rate Hike
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, you can check the Fed off your list of uncertainties right now: &ldquo;The Fed is not going to raise interest rates,&rdquo; says Jim Rickards.
Jim is standing against the consensus here: Looking at the futures markets this morning, traders assign a 58% likelihood the Fed will bump up the Fed funds rate from 3.75% to 4% at its next meeting a week from tomorrow.
&ldquo;Fed officials are clearly leaning hawkish,&rdquo; Jim acknowledges. &ldquo;Kevin Warsh made that apparent in his recent Jackson Hole speech. But leaning toward higher rates and actually raising them are two different things.
&ldquo;The Fed is not particularly worried about unemployment right now. Last Friday&rsquo;s employment report only reinforces that view. The economy added a stronger-than-expected 162,000 jobs in August, while unemployment held steady at 4.1% &mdash; giving the Fed little reason to worry about a weakening labor market.
&ldquo;Inflation is another matter.
&ldquo;It remains well above the Fed&rsquo;s 2% target, and that&rsquo;s where policymakers are increasingly focused. Some FOMC members are already leaning toward higher rates, but they&rsquo;re not ready to pull the trigger in September.
&ldquo;October is another possibility, but that meeting falls just days before the Nov. 3 midterm elections. I think the Fed will be extremely reluctant to raise rates that close to an election.
&ldquo;That leaves Dec. 9 as the more likely window for a rate hike.&rdquo;
In the meantime, Jim likes gold, military stocks and energy stocks to offset your rising cost of living.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The major U.S. stock indexes are starting the week in the red &mdash; but not dramatically.
The S&amp;P 500 is down 0.4% as we write, back below 7,700. The Nasdaq&rsquo;s loss is more modest, the Dow&rsquo;s steeper. Gold sits just under $4,400, silver a little over $66. Bitcoin is climbing down from the $79,000 level while Ethereum is approaching $2,500.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> On Main Street, &ldquo;uncertainty remains high,&rdquo; says Bill Dunkelberg, chief economist at the National Federation of Independent Business.
The NFIB is out this morning with its monthly Small Business Optimism Index. The headline number rings in at 98.7 &mdash; down from 99.8 the month before, but still above the index&rsquo;s 52-year average.
The commentary accompanying this report was unusually pointed. &ldquo;The Iran war lingers on with many promises that the war was about to end, but it didn&rsquo;t and hasn&rsquo;t,&rdquo; writes Dunkelberg and colleague Holly Wade. &ldquo;This has escalated the cost of energy which raises the price of almost everything. A third (31%) of the owners reported raising their average selling prices and about as many plan to do so in the coming months. This will not help the Fed get inflation to its goal of 2%.&rdquo;
On the portion of the survey asking respondents to identify their single most important problem, 23% cited &ldquo;quality/availability of labor&rdquo; &mdash; down from 27% the month before, but it&rsquo;s clear that good help is still hard to find.
&ldquo;My problem is that no one wants to work,&rdquo; says the owner of a services-oriented business in Tennessee. &ldquo;I have advertised in all the areas I know of, and we have had a total of zero applications. In 30 years of business, this has never happened.&rdquo;
Taxes and inflation were tied for second on the single most important problem list &mdash; both cited by 16%. Everything else was 10% or less.
<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" />Commodities: It&rsquo;s Still Early
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This is not sustainable,&rdquo; says Paradigm natural resources pro Matt Badiali.
Matt points us to this chart from Crescat Capital showing that relative to the entire global stock market, the mining industry is the smallest on record &mdash; just 1% of the total market cap.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5Ig6mSZntlNI01HxMCUQ7E/9188129e8f5f34659c4873c814057932/FMF-Issue-090826-2.jpg" alt="Mining Industry as a % of global equities chart" width="540px" />
&ldquo;If everything you use starts in a mine, then you must put capital in the ground and this must change,&rdquo; Matt continues.&nbsp;
&ldquo;It's not an &lsquo;if,&rsquo; but a &lsquo;when.&rsquo; We need to get our capital in place for the when, because when these commodities go, it's big and fast.&rdquo;
And it&rsquo;s not just the mining space. It&rsquo;s also energy and agriculture &mdash; the entire commodity complex. The VanEck fund family shares this chart showing how cheap commodities are relative to the S&amp;P 500. (The black line is a commodity index from Standard &amp; Poor&rsquo;s; the blue line is a commodity index from Bloomberg.)
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/67trpM2MGqIO861wiax2mu/a5f8414dbbbbb06d63355c239d060e50/FMF-Issue-090826-3.jpg" alt="Commodities vs stock price" width="540px" />
&ldquo;Comparable extremes have historically preceded commodity outperformance,&rdquo; says VanEck&rsquo;s commentary &mdash; &ldquo;as supply tightens and prices revert to the mean.&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: AI Debt, AI Boom
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We got several appreciative notes after last Thursday&rsquo;s guest edition featuring Sean Ring from The Rude Awakening &mdash; unpacking <a href="https://rudeawakening.info/posts/the-smoke-detector-is-beeping">the trouble with AI-linked corporate debt</a>.
&ldquo;Most enlightening,&rdquo; said one reader. &ldquo;It explained a lot of things.
&ldquo;Thanks for the explanation of CDS and how they work. Much appreciated. Keep up the good work.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Next, a reader invokes the infamous &ldquo;magazine cover indicator.&rdquo;
&ldquo;The attached isn&rsquo;t in response to anything recently discussed in The 5 but I thought I would include it for a couple of reasons pertinent to your beat,&rdquo; he writes.
The magazine cover indicator has become stock-market lore for decades. It even has <a href="https://en.wikipedia.org/wiki/Magazine_cover_indicator">its own Wikipedia entry</a>. Basically it means that by the time a trend reaches the cover of a business magazine, the trend has played out and is about to reverse.
With that in mind&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1bwZbPKJelQlKlsnCvV5Dd/29ea0adf9320e7ae58b691dd0f2a0fdb/FMF-Issue-090826-4.jpg" alt="Barrons no end in sight" width="540px" />
&ldquo;The obvious signal,&rdquo; the reader writes, &ldquo;is their claim there is no end in sight for the AI boom.
&ldquo;A second is the smaller headline at the top : &lsquo;Warsh looks ready to take on inflation.&rsquo;
&ldquo;Given the widespread expectation of a Fed rate hike this month, might &lsquo;unchanged&rsquo; be the least expected and hence less crowded trade? If yes, might September, against all seasonality, be a bullish month for the major indexes? Just saying&hellip;&rdquo;
Dave responds: Well, you&rsquo;ve seen Jim Rickards&rsquo; take above. And several other Paradigm experts are of the same mind, no matter what futures traders are saying.
If conventional wisdom shifts over the next week ahead of the Fed meeting, then yes &mdash; a September rally is potentially in the cards. We&rsquo;ll be watching&hellip;

FMF-Issue-090826-Featured

Scary September

Elon Musk is going to need a lot of help.
Just recently on SpaceX's first-ever public earnings call, Musk laid out plans to deploy 10 gigawatts of compute by the end of 2027 &mdash; roughly the same energy usage as powering 8 million U.S. homes.&nbsp;
To build this capacity, Musk will need to acquire more than 3 million of the most in-demand processors on earth in just 12 months.&nbsp;
That's a scale no single company can build alone. Not even the guy behind reusable rockets and mainstream EVs.
Back in June, I came up with something I called &ldquo;the Elon 7.&rdquo;&nbsp;
These are the seven companies best positioned to profit from bottlenecks Elon can't solve himself.
But there were four more names that deserved to be on that list. So the Elon 7 became the Elon 11.
The reasons for that expansion split into two separate problems: building enough compute, and getting it to people.
Here&rsquo;s what I mean by that&hellip;
Elon Can&rsquo;t Build It All Alone
As much as Elon wants to build it all himself, Tesla and his other companies can't do it alone. Nowhere is that clearer than with chips.
Tesla designs its own AI chips, called AI5 and AI6, to run its self-driving software and its Optimus robots. But Tesla has no factory to build them.&nbsp;
That job belongs to Taiwan Semiconductor Manufacturing Company (TSM), the first new member of the Elon 11.
Tesla is trying to build its own chip manufacturing facility, an in-house project called Terafab. But catching TSM will take another year or two at a minimum. Until then, Tesla needs TSM to turn its designs into real silicon.
Producing the chips is only half the problem. Someone still has to turn those chips into a working data center fast &mdash; and at a scale most companies have never attempted.
Two names keep showing up when Musk's companies need that done: Super Micro Computer (SMCI) and Dell Technologies (DELL).
Together, SMCI and Dell built the racks and cooling for one of the largest AI computing clusters ever assembled, a roughly 100,000-chip buildout for xAI.
Elon may want to build it all in-house &mdash; Terafab is proof he's trying &mdash; but when the timeline is measured in months, he still needs outside crews who already know how to move that fast.
The fourth name solves a different kind of problem, one that has nothing to do with selling into Musk's spending.
Even the biggest datacenter buildout is worthless if it never reaches an actual person. AST SpaceMobile (ASTS) is built to close that gap.
AST&rsquo;s satellites connect directly to a standard smartphone (the same one already in your pocket) with no dish or special equipment required. The company has demonstrated speeds up to 1 gigabit per second straight to a regular handset.
ASTS is the piece that turns Musk&rsquo;s big datacenter buildout into something you can actually use.
If you&rsquo;re wondering why Musk would need ASTS when he already has Starlink, the answer comes down to what happens on the receiving end.
Starlink was built around dedicated terminals. ASTS was built to connect directly to the cellular hardware already inside phones &mdash; and potentially vehicles, robots and other autonomous machines.
That matters as Musk pushes further into self-driving cars and Optimus. Those machines need to stay connected wherever they go, including beyond the reach of terrestrial networks.
In other words, ASTS wouldn&rsquo;t replace Starlink. It could fill a gap Starlink was never originally designed to solve.
Where These Four Fit In
The August SpaceX earnings call is the whole story in miniature.
Musk can raise the money, design the chips, and launch the satellites. But he cannot fabricate every wafer, build every rack, or reach every phone by himself.
That gap breaks down into exactly two problems: building enough compute (the production side) and getting it to people (the delivery side).&nbsp;
TSM, SMCI, and Dell solve production. ASTS solves delivery.
Each one earns its place the same way the original Elon 7 did, by sitting at a chokepoint Musk's companies cannot build around.&nbsp;
None of that undoes the original seven. It just means the list keeps growing as the bottlenecks do.

FMF-Issue-090726-featured

 Elon Needs Help

FMF-Issue-091026-Featured

 Bin Laden’s 16,086,000:1 Return

FMF-Issue-090426-Featured 2686284751 (1)

Infinitely Human

<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" />Social Security Default: 2027
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Improbable as it might seem, there&rsquo;s bipartisan movement afoot in Washington to shore up the Social Security system.
As you might be aware, the old-age-and-survivors trust fund is on track to be depleted by 2032 &mdash; beyond which benefits would have to be cut by an estimated 22%.
Two bills are floating around Capitol Hill right now &mdash; each with bipartisan sponsorship. Neither likely has a chance of passage this year &mdash; but next year might well be a different story.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Key point: If Democrats win the House this November, that actually increases the odds that some sort of deal will come about.
Social Security reforms never take place when one party controls the White House and both houses of Congress. They happen only when both parties can share responsibility.
The major overhaul the program got in 1983 &mdash; when full retirement age was lifted from 65 &mdash; happened only because President Ronald Reagan and House Speaker Tip O&rsquo;Neill were willing to take the heat.
Smaller tweaks to the program also occurred during periods of &ldquo;divided government&rdquo; &mdash; under Bill Clinton in 2000 and Barack Obama in 2015.
Note well: Two of these reforms took place the year before a presidential election and the third took place during a presidential election year.&nbsp;
So if reform is going to happen before the 2032 deadline gets too close&hellip; 2027 would be the year.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So&hellip; what do these two bills propose?
One of them doesn&rsquo;t deserve much of our attention today. It simply passes off responsibility for reforms to one of those bipartisan &ldquo;blue-ribbon panels&rdquo; that&rsquo;s supposed to do all the hard work and then come back to Congress with an actual bill that would keep the program funded for another 50&ndash;75 years.
Which, by the way, was the vehicle that made the major reforms of 1983 possible.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Under the other bill, Social Security would default on one of its major promises.
From The Wall Street Journal: &ldquo;Sens. Bernie Moreno (R., Ohio) and Elizabeth Warren (D., Mass.) are proposing eliminating the cap on Social Security payroll taxes. The 12.4% tax, split between employees and employers, ends once wages and self-employment income hit $184,500 this year.&rdquo;
This idea isn&rsquo;t exactly new. Since 2019, Democrats have been pushing a plan to reapply payroll tax on pay of $400,000 and up. The idea was that over time, inflation would close the &ldquo;doughnut hole&rdquo; and all income would be subject to payroll tax.
So what is new is the idea of just scrapping the cap in one fell swoop.
The details are, to say the least, fuzzy. Again from the Journal: &ldquo;They haven&rsquo;t released a bill or said whether they would expand the tax to investment income. They also haven&rsquo;t said whether they are only proposing a tax increase or whether they would keep the current program structure, where having more income subject to taxes would qualify those top-end workers for larger future benefits.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Assuming it&rsquo;s a tax increase &mdash; certainly that&rsquo;s what Democrats want &mdash; this change would transform Social Security into something its architects back in the 1930s wouldn&rsquo;t recognize.
It would no longer be a social-insurance scheme. It would become just another welfare giveaway &mdash; because the higher taxes you&rsquo;d pay during your working years would no longer translate to higher benefits in retirement.
&ldquo;In a required-savings program, there is a reasonably close relationship between taxes paid and benefits received, while in an income-redistribution program this relationship is not close,&rdquo; Baylor business professor emeritus William Reichenstein explained to Reuters in 2019.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And get this: Eliminating the payroll tax cap still wouldn&rsquo;t fully shore up the system&rsquo;s finances.
&ldquo;If enacted now,&rdquo; says The Wall Street Journal, &ldquo;a plan removing the cap and denying new benefits to affected workers would close about two-thirds of the long-term hole.&rdquo;
For years, your editor has said Social Security is fixable &mdash; but only with a combination of higher taxes and higher retirement age.
<a id="2"></a>
Even then it would still be a Ponzi scheme &mdash; revenue coming in the door from working-age folks going out the door immediately for retirement-age folks. But it could be made a sustainable Ponzi scheme through the end of the century.
Again, strange as it might seem on the surface, 2027 is the year when changes are most likely in store. We&rsquo;ll keep you posted&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" />An Orderly Panic
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> When the following news alert lit up my iPad last night&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2mpvRnpPzEmfQX07hX0UOT/2cf04d39f20521e3fc7d031dd9a83832/FMF-Issue-090226-1.jpg" alt="Click here to learn more" width="540px" />
&hellip; the first thing that came to mind was Nelson Muntz.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/RWqy9gn2uQxzVB0njQdAX/a49e340b9be49c0eda6f117c15d388b8/FMF-Issue-090226-ha-ha-the-simpsons.gif" alt="Nelson Muntz HA, HA" width="540px" />
It didn&rsquo;t get any better today. The yield on a 10-year Treasury note busted past its January 2025 high of 4.8% Now we&rsquo;re at the highest levels seen since November 2023.
You&rsquo;re going to see a lot of chatter the next couple of weeks about the Federal Reserve and what it will do to short-term interest rates at its next meeting on Sept. 16 &mdash; on the assumption that whatever it does will affect longer-term interest rates like the 10-year T-note, which in turn impacts all manner of interest rates including mortgages.
But that relationship has broken down over the last two years.
Beginning in the early 1980s, every time the Fed cut short-term interest rates, the 10-year yield fell in sympathy.
No longer: Since September 2024 the Fed has cut short-term rates from 5.5% to 3.75%. But the yield on a 10-year T-note has risen from 3.6% then to 4.8% today. In fact, the yield began rising the exact day the Fed started cutting rates two years ago.
That was the market issuing a no-confidence vote that the federal government would ever get a handle on the national debt, no matter who won the 2024 election: &ldquo;80% of the increase in long rates since September has potentially been driven by worries about fiscal policy,&rdquo; Apollo Global Management&rsquo;s Torsten Slok told Bloomberg.
Which means even if the Fed cuts in two weeks &mdash; and right now, futures traders are betting on a hike &mdash; mortgage rates might still be stuck over 6.75%.
You can&rsquo;t really call what&rsquo;s happening in the bond market right now a panic, the media&rsquo;s breathless coverage notwithstanding. Maybe an orderly panic.&nbsp;
The MOVE index &mdash; which measures underlying volatility in the bond market the way the VIX does in the stock market &mdash; sits at 78 this morning. It takes levels approaching 140 to signal an imminent dislocation to the bond market. The last time that happened was nearly 18 months ago with the &ldquo;Liberation Day&rdquo; tariff announcement.
<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 jitters in the bond market are not reaching the stock market.
The S&amp;P 500 is up about a half percent at 7,666. The increases in the Nasdaq and the Dow look similar.
Precious metals are trying to stage a recovery after their drubbing last Friday &mdash; gold up about 1% to $4,369 and silver back within sight of $65. But digital non-dollar assets are losing ground &mdash; Bitcoin at $77,442 and Ethereum back under $2,400.
U.S. oil futures are over $90 for the first time since July. Traders appear unmoved by the latest Barak Ravid &ldquo;scoop&rdquo; at Axios claiming 40 vessels transited the Strait of Hormuz yesterday&hellip; nor Energy Secretary Chris Wright&rsquo;s claim today that 17 million barrels of oil crossed the Strait.
Meanwhile the weekly inventory data from the Energy Department shows that private-sector reserves shrank nearly &mdash; 4.5 million barrels last week, in contrast with expectations for a small build. Meanwhile another 3.1 million barrels were drained from the government&rsquo;s Strategic Petroleum Reserve, bringing the total down to its lowest since November 1982.
At least for now, the tit-for-tat airstrikes between U.S. and Iranian forces have let up.&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 Oil Boom in&hellip; Argentina?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> While the Latin American oil headlines this week have been about Venezuela &mdash; Chevron announced this morning it will sink $7 billion into the country over the next five years &mdash; the better near-term opportunity lies further south.
&ldquo;For decades, Argentina has been known to investors for its inflation, debt defaults and currency crises,&rdquo; says Paradigm trading pro Enrique Abeyta.
&ldquo;But thousands of feet beneath Patagonia lies Vaca Muerta, which translates to &lsquo;dead cow&rsquo; in Spanish. It&rsquo;s a massive shale formation holding the world's fourth-largest shale oil reserves and second-largest shale gas reserves.&rdquo;
And it&rsquo;s quietly taking off. &ldquo;Production is soaring. Pipelines are going up. Billions of dollars of investment are pouring in. And some of the world's biggest energy companies are taking notice.&rdquo;
Daily production has grown to 850,000 barrels, up from half a million a decade ago.
Enrique is eyeing several opportunities for both Breaking Profits and The Maverick &mdash; companies easily available on U.S. exchanges. In the meantime, he says you might want to consider Vaca Muerta&rsquo;s dominant operator &mdash; the state-controlled YPF (YPF).
And don&rsquo;t overlook the oil field services companies. &ldquo;Halliburton (HAL) and SLB (SLB) are already major providers of the hydraulic fracturing services needed to unlock Vaca Muerta,&rdquo; Enrique says.
<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" />Thought for the Day
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Well said&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6BdR3vc7G4nM1MEoLSFSVA/6809333a949f8aea34c054d4e8c19634/FMF-Issue-090226-2.jpg" alt="Governments should be like a Casio Watch" width="540px" />
<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: Crisis and Control
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> <a href="https://paradigmpressroom.com/post/they-need-us-and-we-can-control-them">Last Friday&rsquo;s edition</a> prompted the following reflections from a reader&hellip;
&ldquo;Hi Dave &mdash; I remembered the line from that official Dylan Ratigan quoted (kudos to the official for being honest but Dylan should name him) and I wondered if the government really &lsquo;controls&rsquo; our access to food, water, energy, etc.&nbsp;
&ldquo;How could they ever create a situation where people don&rsquo;t have access to basic stuff (except for situations where it&rsquo;s harder to get stuff like natural or financial disasters, etc.)? Even if they tried to restrict some things to some people via a CBDC/social credit system (this horror may be coming sooner than people think), people would resist, wouldn&rsquo;t they? At least in many states and cities.
&ldquo;So I find it hard to imagine that even in some kind of emergency, government could or would willingly restrict access to any basic things people need. They would lose what&rsquo;s left of their legitimacy in that case and, ironically, find it much harder to control people. I don&rsquo;t know what that official was thinking. Seems a bit delusional to me, probably like many others.
&ldquo;As for the Iran war, one has to wonder what&rsquo;s the real reason Trump is going so far. Is he really being that badly misled by his neocon advisers? I would think Vance or some military staff would try to instill some sense in him.&nbsp;
&ldquo;Is it just his ego? What does he think is gonna happen in the midterms when people are pissed off about gas prices and inflation? He seems like he doesn&rsquo;t even care.&nbsp;
&ldquo;One also has to wonder about deeper motives such as the fact many politicians are funded by AIPAC, the pro-Israel lobby. But what&rsquo;s the point when your side loses due to an unpopular war?
&ldquo;Or could it be something else, such as possible Israeli blackmail? Many people thought Russia had something on Trump but maybe Israel actually has something on U.S. officials. And maybe U.S. spy agencies do too. What do you think?&rdquo;
Dave responds: The powers-that-be would not and cannot impose any sort of &ldquo;control grid&rdquo; out of the blue. As you say, there would be resistance.
But during a crisis? When people fear for their lives and or livelihoods? That&rsquo;s when they can swing into action.
Really, that was the crux of <a href="https://paradigmpressroom.com/post/9-11-the-financial-crisis-and-covid">my &ldquo;cynicism&rdquo; issue last year</a>. The extreme new measures imposed in the wake of 9/11, the 2008 financial crisis and COVID were made possible only by a crisis atmosphere and widespread fear.
As for Trump, the picture has been clear for months now: Israeli Prime Minister Benjamin Netanyahu came to Washington in February, promising that a &ldquo;decapitation&rdquo; strike on Tehran&rsquo;s leadership would have the same instantaneous effects as the kidnapping of Maduro in Venezuela.&nbsp;
Few on Trump&rsquo;s team bought it. Tulsi Gabbard warned explicitly about most of the ill consequences that have in fact followed &mdash; a more hardline leadership, the Strait of Hormuz closed and so on.&nbsp;
But hubris is a powerful drug. And Trump&rsquo;s Pentagon chief and handpicked chair of the Joint Chiefs told him they could pull it off. And here we are six months later, with Netanyahu <a href="https://x.com/clashreport/status/2094160281018454480">bragging</a> about the role he played in bringing us to this juncture.
You don&rsquo;t need to go down any blackmail rabbit holes. The available facts and evidence are jaw-dropping enough.

FMF-Issue-090226-Featured

Social Security Default: 2027

<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" />Bad Policy, Big Profits
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Don&rsquo;t let politics influence your investing&rdquo; is a reliable old saw.
There are subtleties and nuances, of course.
As we said on Joe Biden&rsquo;s Inauguration Day in 2021, policies coming out of Washington, D.C., inevitably impact different industries and sectors for good and for ill. And it always pays to look out for that.&nbsp;
(Thus, the Paradigm team&rsquo;s recent attention to drones in light of the Pentagon&rsquo;s budget blueprint requesting a 240X increase for drone warfare.)
But our bigger point for a while is that if you let red team-blue team tribal loyalties enter the equation, well, it can be hazardous to your wealth.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In early 2009 as Barack Obama entered office, many investors were tempted to abandon the stock market for good.
During 2008, the financial crisis tanked the S&amp;P 500 by 38.5% &mdash; its worst yearly loss.
And with Obama pursuing a tax-and-regulate agenda at the start of 2009? It could only be downhill from there, right?
Wrong. The S&amp;P bottomed at 666 in early March. (Obama called it almost to the day &mdash; <a href="https://paradigmpressroom.com/post/obama-says-buy">which was no coincidence</a>.) Four years later, a couple of months into Obama&rsquo;s second term, it finally exceeded its 2007 peak of 1,565. By the end of his eight years, the number was 2,263.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We also recall the early months of Trump&rsquo;s first term &mdash; when the shoe was on the other foot.
In April 2017, our Greg Guenthner ventured to a conference in New York.
&ldquo;According to many of the professionals I chatted with,&rdquo; he recalled, &ldquo;the anti-Trump crowd is yanking their money out of the market at a frantic pace. Money managers attempting to play potential policy changes are getting more than an earful from their clients.&rdquo;
Or as one prominent fund manager told him, &ldquo;Half the country wants Trump to fail," one prominent fund manager told Greg. "They aren't putting their money to work."
Again, bad move: The S&amp;P 500 stood at 2,263 at the handoff from Obama to Trump. Four years later, it registered 3,799.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Heck, look at the current Trump administration&rsquo;s own rhetoric.
On April 9 of last year, Treasury Secretary Scott Bessent spoke to the American Bankers Association.
&ldquo;For the last four decades,&rdquo; he said, &ldquo;Wall Street has grown wealthier than ever before. And it can continue to grow and do well. But for the next four years, it&rsquo;s Main Street&rsquo;s turn.&rdquo;
Yeah, later that day Trump reversed his &ldquo;Liberation Day&rdquo; tariff scheme &mdash; to the delight of Wall Street. The S&amp;P 500 closed under 5,000 the previous day. A couple of weeks ago it notched an all-time record close near 7,800 &mdash; a 56% gain in just over 16 months.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But what&rsquo;s top-of-mind this morning is a poll we mentioned a few weeks ago in our Saturday edition.
In CNBC&rsquo;s regular All-America Economic Survey, there was a question this year about the U.S. government taking ownership stakes in private companies.
Only 19% thought it was a good idea&hellip; 32% were undecided&hellip; and 49%, nearly a majority, was opposed.
&ldquo;The finding comes,&rdquo; CNBC said, &ldquo;as the Trump administration has negotiated 30 deals worth nearly $27 billion in total, according to the Council on Foreign Relations, a nonpartisan think tank.&rdquo;
Not all of those deals have dollar figures on them. The biggest by far is Intel ($8.9 billion in equity).&nbsp;
The one with the most impact for our readers is probably the rare-earth name MP Materials &mdash; recommended in several of our publications. Altucher&rsquo;s True Alpha readers benefited the most, with 918% gains on MP call options.
And it&rsquo;s a safe bet at least some of those readers think it&rsquo;s a lousy idea for the feds to take ownership stakes in companies!
As it happens, the team at Altucher&rsquo;s True Alpha is zeroing in on a new opportunity that&rsquo;s looking like buyout bait for the Trump administration. And James Altucher believes the profit potential is even bigger than that 10X that readers like you booked on MP Materials.
But the window of opportunity is closing soon. <a href="https://pro.paradigm-press.info/m/2536321">For reasons James will lay out when you click here</a>, you&rsquo;ll want to jump on this before Thursday.&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" />War&rsquo;s Back On
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As night falls over Iran, so have American bombs and missiles. U.S. oil futures are up 4.3% to $89.43 &mdash; the highest since July.
When we left you yesterday, U.S. and Iranian forces had traded airstrikes. Overnight, two oil supertankers hauling Saudi Arabian crude and trying to transit the Strait of Hormuz were hit by projectiles. Then at midday on the East Coast, U.S. forces struck several targets in southern Iran.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And so a familiar pattern emerges again: Higher oil prices are feeding rising inflation expectations &mdash; and that translates to rising interest rates.
The yield on a 10-year Treasury note now exceeds 4.78% &mdash; approaching the January 2025 peak of 4.8%.&nbsp;
And it&rsquo;s not just the United States. Traders are sniffing out inflation throughout much of the developed world. As a result, the yield on 10-year Japanese government bonds just surpassed 3% for the first time since 1996. And Germany&rsquo;s 10-year rate is the highest since 2011.&nbsp;
All else being equal, rising bond yields translate to falling precious metals prices &mdash; and that&rsquo;s certainly the case today. Gold&rsquo;s late-August pop to $4,663 didn&rsquo;t have any staying power; at last check, the bid is down another $83 today to $4,364. And silver is down 2.5%, back below $65.
Tech stocks also groan under the weight of rising interest rates &mdash; and as such the Nasdaq is down over three-quarters of a percent on the day to 26,166. Barring a monster rally today or tomorrow, the index has gone three months without recording an all-time closing high.
The S&amp;P 500 is holding up better, down a half percent at 7,651. The Dow is faring about the same, back below 53,000.
Under the circumstances, crypto is lucky just to be treading water &mdash; Bitcoin a little under $78,000 and Ethereum still holding the line on $2,400.
Back to oil: Strictly from a chart standpoint, Weekly Wealth Alert editor Alan Knuckman says crude is on a trajectory to break past $90&hellip; on its way to $110.
<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" />Gimme Sulfur
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As we can&rsquo;t emphasize enough, it&rsquo;s not just oil that (in normal times) transits the Strait of Hormuz.
It&rsquo;s also refined diesel and jet fuel&hellip; liquefied natural gas&hellip; fertilizer&hellip; aluminum&hellip; iron ore&hellip; and sulfur.
Sulfur? &ldquo;This yellow element goes in nearly everything,&rdquo; says Paradigm natural resources pro Matt Badiali. &ldquo;The market for sulfur is relatively small, about $6.5 billion per year (in 2025). But we use it in a broad swath of critical stuff:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6T7NYwou1UyC7dRWDJ7Imp/a91f021a9fa2c72bb66bdba0d231748e/FMF-Issue-090126-1.jpg" alt="Pie chart of what is in transit on the Strait of Hormuz" width="540px" />
&ldquo;Most of the sulfur we use comes from oil refining,&rdquo; Matt goes on. &ldquo;A large part of global sulfur comes from refineries in the Persian Gulf&hellip;behind the Strait of Hormuz. Fully 50% of the world&rsquo;s seaborne sulfur got shut down with the Strait closed. And about 40% of the Middle East&rsquo;s supplies are offline due to military strikes on oil refineries there.
Sulfur prices were already on the rise before the war &mdash; from under $200 in the spring of 2025 to about $450 just before the war started a year later. Now they&rsquo;re over $1,000.
Bad news all around &mdash; except for refiners who can get oil from parts of the world besides the Middle East.
&ldquo;Refiners with sulfur recovery units (SRU) specialize in sour crude oil,&rdquo; says Matt. &ldquo;Initially, that was done so they could use low-cost crude oil. SRUs remove sulfur before the refiner makes gasoline or diesel. Companies like Valero, Marathon and Exxon Mobil all produce sulfur as a byproduct. And the revenues are soaring.&rdquo;
The simplest way to play it is the VanEck Oil Refiners ETF (CRAK). Matt talked up CRAK in this space shortly before Memorial Day &mdash; when it was still under $50. As we write today it&rsquo;s going for $62.42.&nbsp;
And as you can see, there&rsquo;s still more upside ahead&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" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Well, if you didn&rsquo;t laugh you&rsquo;d cry&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1w4Ctmnv6qEOcGpLZ3rBCY/6f8377bf5a308d449a1c13c856402098/FMF-Issue-090126-2.jpg" alt="Going to the doctor in 94 vs 05 v 26" width="540px" />
If you&rsquo;re a newer reader and wonder how it got this way, <a href="https://paradigmpressroom.com/post/health-care-on-trial">we devoted all 5 of our Bullets</a> to the matter one day last year.
<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: Higher Ed
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Our item <a href="https://paradigmpressroom.com/post/they-need-us-and-we-can-control-them">in last Friday&rsquo;s edition</a> about falling enrollment at Arizona and a degree in how to be an &ldquo;influencer&rdquo; at Arizona State brought forth a couple of comments&hellip;
&ldquo;Dave, there is a serious push to drop the required units for a Bachelor&rsquo;s degree from four years to three years &mdash; saves students the cost of a year of tuition, housing and living expenses &mdash; and the list of universities is growing.
&ldquo;Doesn&rsquo;t apply to every major and can impact the ability to qualify for graduate school.
&ldquo;Always enjoy your writings &mdash; oftentimes it makes me think outside the box. Much appreciated.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Dave, I'm having an internal laugh, as I envision the parents talking to their wide-eyed incoming freshman as they explain their future degree in, err... &lsquo;influencer.&rsquo;
&ldquo;I further laugh to myself, as this is a degree coming from the school of journalism. This won't end at ASU... I feel those parents&rsquo; pain.&nbsp;
&ldquo;We all thought journalism degrees were going by the wayside???
&ldquo;Err, isn't your degree in journalism? Just sayin&rsquo;, Always enjoy &lsquo;The 5.&rsquo;&rdquo;
Dave: Wow, the three-year plan reeks of desperation.&nbsp;
For the past decade or more, universities have been notorious for structuring their required-course sequences in such a way as to rope in undergrads for a fifth or even sixth year.&nbsp;
But based on what the first reader describes, the logic now is that a student who attends for three years still generates more revenue than someone who skips college altogether.
My own degree, to be precise, was in Radio-Television. I&rsquo;m sure it&rsquo;s been rebranded in some way to include the word &ldquo;digital&rdquo; now. (The major trade organization in broadcast news did so in 2010.)
As I had occasion to say <a href="https://paradigmpressroom.com/post/gold-clears-huge-hurdle#4">almost three years ago</a>, the best thing that could happen to the news biz now is that bosses get over their fixation on a college education.&nbsp;
By one estimate, more than half the reporters in the country back in the 1950s had (at most) a high-school degree. They learned their skills on the job, mentored by veterans who understood that a tutoring role came with the territory.
There&rsquo;s no reason it can&rsquo;t be done that way again. Take it from someone who&rsquo;s been there: There&rsquo;s nothing about the work that demands the &ldquo;rigors&rdquo; of a four-year degree.&nbsp;

FMF-Issue-090126-Featured

Bad Policy, Big Profits

<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" />36 Days (Musk World Domination Plan)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It&rsquo;s as certain as anything can be in finance: 36 days from now, markets will never be the same.
We should back up a bit. <a href="https://paradigmpressroom.com/post/elons-new-plan-for-world-domination">Last month</a> in a guest essay, Paradigm tech investing specialist Ray Blanco spotlighted how &ldquo;compute&rdquo; &mdash; a noun meaning computing/processing power &mdash; has become a &ldquo;secret currency&rdquo; of sorts.&nbsp;
And Elon Musk has a plan to become the dominant player in it.
Ray likened Musk&rsquo;s plan to how John D. Rockefeller came to dominate the oil business 150 years earlier. &ldquo;Rockefeller realized the money wasn't really just in the oil itself. It was in controlling the whole chain &mdash; the refineries that turned crude into something useful, the pipelines that moved it, the distribution that put it everywhere.&rdquo;
In that vein, Musk is planning something very similar to the old Standard Oil &mdash; SpaceX rockets that hoist Starlink satellites into space&hellip; Starlink satellites that provide connectivity&hellip; his Terafab project that will manufacture chips&hellip; and data centers with their own on-site electricity.&nbsp;
(And later, data centers in space itself, again lifted by SpaceX rockets.)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> What&rsquo;s coming in 36 days is also comparable to something in the oil business.
Ray explains: &ldquo;CME Group runs the markets where oil, gold and wheat get priced. On Aug. 11 they announced a new product, and this is how the head of their energy desk described it:
&lsquo;Compute has become the currency of the AI age.&rsquo;&rdquo;
With that in mind, CME will launch a futures contract for compute &mdash; and it will start trading on Monday, Oct. 5.
But there&rsquo;s a key difference between oil and compute, says Ray: &ldquo;Standard Oil was founded in 1870. Crude oil futures didn't start trading on NYMEX until March of 1983.&nbsp;
&ldquo;One hundred and thirteen years. That's how long it took the world's most important commodity to go from 'this is the strategic resource' to 'here's a listed contract you can trade.'&nbsp;
&ldquo;Compute is making the same trip in roughly three years &mdash; and landing on the same exchange.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So here&rsquo;s the &ldquo;plumbing&rdquo; of what takes place on Oct. 5: &ldquo;Pending regulatory review, CME will list two new futures contracts,&rdquo; says Ray.
&ldquo;One tracks the hourly rental cost of Nvidia's H100 &mdash; the 2022-vintage workhorse behind most of what you think of as AI. The other tracks the newer Blackwell B200.
&ldquo;Each contract represents roughly a month's worth of rent for one of those chips.
&ldquo;They settle in cash against an index published by a firm called Silicon Data, which is backed by the Chicago trading house DRW.
&ldquo;Just as almost no oil contract ends with someone hauling away a barrel, nobody takes delivery of a server rack either.
&ldquo;Right now the market is a black box. Two companies buying the exact same GPU capacity could pay wildly different prices, with no way to know who got the better deal.
&ldquo;That's the world we've been living in. Enormous sums, negotiated privately, disclosed to nobody.
&ldquo;There has never been a public price for the most strategically important resource of this decade. Not a bad one &mdash; none. No screen to check, no benchmark to argue with, no number in the newspaper.
&ldquo;In six weeks we&rsquo;ll have one.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So what will change after Oct. 5? Ray identifies three things&hellip;
<ul>
<li>&ldquo;It puts a number on obsolescence.&rdquo; That is, we&rsquo;ll have real-time knowledge of how the market values Nvidia&rsquo;s older chips versus its state of the art</li>
</ul>
<ul>
<li>&ldquo;It exposes the middlemen.&rdquo; We&rsquo;re talking about the AI cloud companies that rent out GPU capacity. Right now, their pricing is opaque. &ldquo;From October,&rdquo; Ray says, &ldquo;anyone can compare what they charge to a published benchmark. That's wonderful for operators who are truly efficient&rdquo;</li>
</ul>
<ul>
<li>Finally, &ldquo;It tells you when you&rsquo;re wrong. Every argument for owning AI infrastructure rests on compute being scarce and staying scarce. Until now, that's been a judgment call. Starting in October there's a forward curve that tells you what the market actually thinks.</li>
</ul>
&ldquo;Even if you never place a trade, that curve is a free research tool. I'll be reading it.&rdquo;
As for Musk, he&rsquo;s still &ldquo;building the compute,&rdquo; Ray says. &ldquo;He's building Terafab to make the chips. He's growing Colossus to put the chips to use on Earth. He owns the rockets to put them to work in space. Musk is minting this currency&hellip;
&ldquo;A currency without a public price is a private arrangement. A currency with one is an asset class &mdash; which is precisely what the largest pools of capital in the world need to commit at scale.
&ldquo;Musk spent the last year building the mint. On Oct. 5, somebody hands him a market.&rdquo;
Stay tuned&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" />A Monolithic Market? No More&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> With a week before the Labor Day weekend, &ldquo;the market has continued shifting away from moving as a single block,&rdquo; says Paradigm analyst Zach Scheidt.
&ldquo;For a while, everything rose and fell together on the AI headline of the day. That's breaking down now. The gap between the market's winners and losers is wider, and the tie that binds individual stocks together has come loose.&rdquo;
But that doesn&rsquo;t mean money is exiting the stock market. It&rsquo;s just moving to other sectors.
&ldquo;While tech had to take its summer lumps, the leadership has quietly broadened out,&rdquo; Zach wrote Friday for Altucher&rsquo;s True Alpha. &ldquo;Value stocks have been grinding steadily higher for months without so much as a real pullback. Financials keep printing record after record. Health care has come back to life. Energy is still sitting near the top of the board for the year.
&ldquo;Even the average stock is doing better than the headline indexes let on, with the equal-weight version of the market pushing to fresh highs while the crowd frets over a handful of megacaps.
&ldquo;A couple of beaten-down corners are showing signs of life too. Precious metals have started to wake up after a long grind lower, and the crypto-linked names are perking back up after a cold stretch.&rdquo;
More about crypto in Bullet No. 3&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for today&rsquo;s market action, the major U.S. indexes are in the red &mdash; but they&rsquo;re on track for a positive month of August.
The S&amp;P 500 is down just under a half percent as we write at 7,676. We&rsquo;re seeing similar moves in the Nasdaq and the Dow.
Bonds are selling off as well as stocks &mdash; pushing yields higher. At just under 4.76% the 10-year Treasury yield is the highest since early 2025.
Precious metals are licking their wounds after Friday&rsquo;s beat-down &mdash; gold at $4,434 and silver at $66.18.
U.S. oil futures are up nearly two bucks to $85.28 after back-and-forth airstrikes between U.S. and Iranian forces. Whether they escalate from here is anyone&rsquo;s guess.&nbsp;
Tomorrow Donald Trump is set to meet with representatives from at least 10 U.S. fuel producers and distributors. What&rsquo;s he going to tell them? Produce more? U.S. refineries are producing flat-out right now &mdash; in some cases, at the cost of routine maintenance and the preparations to switch to winter blends of fuel&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" />Crypto Awakens
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Bitcoin has awakened from a slumber &mdash; but for how long?
From a low near $63,000 on Aug. 17, the flagship crypto staged a furious five-day rally. Then last week, it topped $80,000. Checking our screens, it&rsquo;s consolidating at $78,616.
&ldquo;It&rsquo;s easy to look at Bitcoin&rsquo;s 25%-plus rally off its August lows and assume the easy money has been made. But you shouldn&rsquo;t lose too much sleep if you missed this initial move,&rdquo; says Paradigm chart hound Greg Guenthner.
&ldquo;I believe this is just the start of another Bitcoin bull market cycle. There will be plenty of opportunities to profit as crypto climbs out of the abyss over the ensuing weeks and months.&rdquo;
After its October 2025 peak over $120,000, many investors left Bitcoin for dead during 2026. Why bother when semiconductors and AI plays were ripping higher?
&ldquo;Zooming out for a longer-term view,&rdquo; Greg says, &ldquo;we&rsquo;re also seeing old resistance levels from the 2021 peak acting as a floor where buyers are stepping in.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1FerL3gA1A7tQHQl8Qow4X/ea890819865649aed986e00ac89aa31d/FMF-Issue-083126-1.png" alt="Crypto has awaken! " width="540px" />
What&rsquo;s more, &ldquo;the current Bitcoin breakout also perfectly aligns with its longer-term bull/bear cycles. All Star Charts analyst Alfonso De Pablos points out that major Bitcoin lows have been spaced almost exactly 3.91 years apart (January 2015, December 2018, November 2022).
&ldquo;This points directly to August/September 2026 as the next major turning point. We are smack in the middle of that window today.&rdquo;
So where does it go from here?
&ldquo;A Bitcoin breakout above $82K likely launches the flagship crypto above $100K for the first time this year,&rdquo; Greg says. &ldquo;Then, new highs are within reach. Meanwhile, Ethereum has already broken above its April&ndash;May highs. A resolution higher from this current consolidation pattern targets $3,000-plus.&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" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> I mean, this one&rsquo;s too easy, right?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2dimTFnTqaWd36s6bcJWR/106e1d470f764abdfdaadd7ec3075a0f/FMF-Issue-083126-2.jpg" alt="pub" width="540px" />
Now, we should clarify: Last month, the House passed something called the Stop Insider Trading Act by a mostly party-line vote of 232-198. (Thirteen Democrats joined all Republicans to vote &ldquo;yea.&rdquo;)
Generally speaking, the measure forbids members, their spouses and dependent children from buying &ldquo;covered publicly traded investments&rdquo; and they must provide public notice before selling.&nbsp;
It does not, however, require them to divest stocks they already own.&nbsp;
And in any event, passage in the Senate will be nearly impossible because a voter-ID provision was tacked onto the bill last-minute.
(Gee, you don&rsquo;t think all those Republicans voted for it knowing it would never become law, do you?)
<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: Iran
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> I fully expected some hostile reaction after last <a href="https://paradigmpressroom.com/post/iran-won">Thursday&rsquo;s Bullet No. 1</a>. But there&rsquo;s still something I can&rsquo;t figure out.
First, a sampling&hellip;
Iran, says one, &ldquo;will never recover to the status of unchecked regional bad boy who got away with literal murder for 47 years. Their relationships with their Gulf neighbors which previously survived largely on loose Islamic religious affiliation have been irreparably broken after Iran lashed out at them simultaneously proving that they are dangerous and bad for business. Iran's claims over controlling the Strait of Hormuz will become increasingly irrelevant as oil, gas and other products find alternate routes.&rdquo;
Another: &ldquo;Arguments against regime change are extremely convincing, but so is the concept of &lsquo;existential threat.&rsquo; Iran is led by extremists who weaponize a radical version of Islam to indoctrinate their people and suppress and shame any rational voices that might dissent. It is this extremism that leads me to believe conflict with Iran was inevitable. Or are we going to allow them to fund radical terror groups unchecked for decades to come? I don&rsquo;t see an out, but I see people turning a blind eye.&rdquo;
And then there was the reader who thought our assessment was &ldquo;a disservice to the president, the military, Americans, but even worse, demoralizing to Iranian citizens caught in the brutal, oppressive grip of the IRGC.&rdquo;
OK, you get the idea. There&rsquo;s no point trying to rebut anyone here. The roughly one-third of the country who still thinks the war was a good idea are dug in.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Here&rsquo;s what I don&rsquo;t get. I&rsquo;m assuming most of these critics are Jim Rickards subscribers. But Jim has dismissed the easy-victory rhetoric from the beginning.
I mean, it&rsquo;s right there again this morning in his weekly &ldquo;Five Links&rdquo; email to Strategic Intelligence readers. &ldquo;[Trump] said the U.S. controlled the Strait of Hormuz. That&rsquo;s nonsense. We operate a blockade out in the Arabian Sea beyond the mouth of the Strait, but that&rsquo;s not the same as controlling the Strait.
&ldquo;Then Trump published a map showing the Strait as &lsquo;NEW U.S. Territory.&rsquo; More nonsense. Iran has continued to exercise substantial control over traffic through the Strait despite U.S. efforts to clear shipping lanes&hellip;
&ldquo;We&rsquo;ve said since early March that Iran was winning the war and the U.S. had failed to achieve its major goals, including regime change, financial collapse and the elimination of Iran&rsquo;s stock of highly enriched uranium (HEU). We also said Iran would continue to use the Strait of Hormuz as its most powerful bargaining chip.
&ldquo;And that&rsquo;s exactly what&rsquo;s happened.&rdquo;
All of which has been duly noticed in Beijing and Moscow, by the way.&nbsp;
&ldquo;We are teetering at the edge of major escalations in both our war against Iran and our proxy war against Russia in Ukraine,&rdquo; warns a recent social media post from Joe Kent &mdash; who resigned in protest as director of the National Counterterrorism Center 18 days into the war.
&ldquo;President Trump needs to look at who he&rsquo;s surrounded by &mdash; who he&rsquo;s taking advice from, who got him into these messes &mdash; and make major changes now, before it&rsquo;s too late.&rdquo;

FMF-Issue-083126-Featured

36 Days (Musk World Domination Plan)

FMF-Issue-82826-Featured

“They Need Us and We Can Control Them”

<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" />Iran Won
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> When it comes to the Middle East and Persian Gulf, &ldquo;the dominant power in the region going forward will be Iran, not the U.S. or Israel.&rdquo;
So wrote Robert Kagan last weekend in The Atlantic.
Kagan is no Islamist sympathizer and he&rsquo;s certainly no peacenik. In 1997, along with Bill Kristol, he founded the infamous Project for the New American Century. PNAC laid the intellectual groundwork in D.C that made the Iraq War possible a few years later. Over the decades, Kagan has been at least as hawkish about Iran.
But ideology notwithstanding, he sees the writing on the wall.&nbsp;
Tomorrow marks six months since Washington and Tel Aviv launched a sneak attack on Iran while negotiations were ongoing.
If the idea was to &ldquo;decapitate&rdquo; Tehran&rsquo;s leadership and install a more friendly regime &mdash; the Venezuelan template, just with more violence &mdash; it backfired spectacularly.
Kagan&rsquo;s assessment: &ldquo;Iran has, with American help, completely reconfigured the power structure of the Middle East and the Persian Gulf.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Less than two weeks into the war, we published an edition on March 10 titled <a href="https://paradigmpressroom.com/post/what-if-iran-wins">&ldquo;What If Iran Wins?&rdquo;</a>
Our own Jim Rickards pointed out how enormous a country Iran is, with forbidding terrain. He also was among the very first public figures to warn about Washington&rsquo;s alarming shortage of weaponry &mdash; which has since become common knowledge.
Jim is no America-basher, nor is he anti-Trump. He wants Trump&rsquo;s presidency to succeed &mdash; not least because if it doesn&rsquo;t, it leaves an opening for the <a href="https://paradigmpressroom.com/post/socialism-then-and-now">Democratic Socialists</a>.
So it pains him to say, as he did this week in Rickards&rsquo; Strategic Intelligence, that &ldquo;Trump has lost all credibility on his conduct of the war in Iran.&rdquo;
Jim won&rsquo;t go so far as to say Iran has won the war. But at the same time, nothing has taken place over the last six months to counter the concerns he expressed during the war&rsquo;s first days. And is there any doubt Iran holds sway over the region in a way it did not six months ago?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Victors in war do not make concessions, they dictate terms,&rdquo; tweets the military analyst Will Schryver.&nbsp;
At what point over the last six months has Trump dictated terms to Tehran?
Meanwhile, Tehran did dictate terms under the short-lived &ldquo;Memorandum of Understanding&rdquo; signed in June. And even now, Tehran dictates terms about who can transit the Strait of Hormuz &mdash; which was free for all to navigate before Feb. 28 of this year.
For Iranian leaders, that&rsquo;s plenty victory for now. And Jim Rickars says time is on their side.
&ldquo;The longer the clock ticks,&rdquo; he said yesterday in The Situation Report, &ldquo;the greater the possibility that the U.S. will blink first in terms of Iran&rsquo;s demands because of the threat to the U.S. and the global economy coming from the closing of the Strait.&rdquo;
When might that be? Both at home and abroad, crude reserves are being drained and not being replenished. Don Johnson, chief economist at MacroEdge and an oil industry veteran, believes we&rsquo;ll be staring down fuel shortages by the end of October.&nbsp;
Jim&rsquo;s guidance for the next two months: &ldquo;Investors can prepare for this looming financial Armageddon by increasing allocations to gold, silver, cash, real estate and U.S. Treasury bills.&nbsp;
&ldquo;Those assets will preserve wealth and liquidity and are robust to the inflation that will result from a world with broken supply chains and unprecedented uncertainty.&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" />NVDA&rsquo;s Halo
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Tech stocks are riding high on the latest quarterly numbers from Nvidia.
NVDA reported after the closing bell yesterday. Revenue and profit both doubled &mdash; and management forecast that pace would accelerate.
With that, NVDA shares are up 7.7% as we write&hellip; and the Nasdaq Composite is up 1.2% to 26,449.
&ldquo;Risk on,&rdquo; Weekly Wealth Alert editor Alan Knuckman says on our internal e-chat. He thinks this could be the catalyst for new highs in the Nasdaq-100. At just under 29,500 it&rsquo;s about 4% below its record close in early June.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;After listening to Jensen Huang and CFO Colette Kress' conference call, I came away even more bullish than before,&rdquo; writes colleague Davis Wilson.
It&rsquo;s fair to say Davis, editor of our sister e-letter The Million Mission, is the most passionate NVDA advocate in our shop.
On the call with analysts, management said the firm expects revenue growth next year of 70% &mdash; in contrast with the average analyst&rsquo;s expectation of 44%.
&ldquo;That means Wall Street&rsquo;s current $575 billion revenue estimate for 2027 should really be revised closer to $680 billion,&rdquo; Davis writes. &ldquo;Assuming similar margins, that&rsquo;s earnings per share closer to $16 &mdash; well higher than the current $13.13 estimate.
&ldquo;At the current price tag of $220 per share&hellip; the world&rsquo;s most dominant AI company sells for less than 14X forward earnings.
&ldquo;Realistically a company of this caliber should trade at 20&ndash;25X forward earrings &mdash; conservatively.
That&rsquo;s a price target of $320&ndash;400.&rdquo;
You can review Davis&rsquo; full updated case <a href="https://million-mission.com/posts/nvda-greater-than-greater-than-greater-than-more-bullish-than-ever">right here</a>.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Apart from the tech sector, the other major indexes are also in the green today &mdash; the S&amp;P 500 up a half percent and the Dow a quarter percent.
Hats off to readers of The Trading Desk. Greg Guenthner told them yesterday to take 435% gains from their call options on the software name UiPath. Not bad for only 13 days &mdash; and way more than enough to offset the loss they took yesterday on another position.
<a id="3"></a>
And we&rsquo;d be remiss to overlook the breakthrough at Revolution Medicines &mdash; which won FDA approval yesterday for a pancreatic cancer treatment. Ray Blanco recommended shares to his Catalyst Trader readers about 14 months ago, and they&rsquo;re up 480% to date.
Elsewhere, gold is treading water just below $4,600 while Bitcoin has poked its nose back over $80,000. U.S. oil futures are little moved, just over $82.
So&hellip; having now addressed NVDA, let&rsquo;s move on to the other big market-moving story of the week&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" />Wall Street&rsquo;s Withdrawal Pangs
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Wall Street suffers from an 18-year addiction &mdash; and the new Federal Reserve chair Kevin Warsh is cutting off its supply.
Tomorrow&rsquo;s the day when by tradition, the Fed chair delivers the much-hyped keynote address to an annual confab of central bankers in Jackson Hole, Wyoming.
The mainstream media previews emphasize how Warsh&rsquo;s stated commitment to get inflation under control is running headlong into Treasury Secretary Scott Bessent&rsquo;s efforts to shore up the market for U.S. Treasury debt.
&ldquo;You don&rsquo;t want an unpredictable, whimsical Treasury,&rdquo; warns Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. If Bessent goes too far, Shalett tells the Financial Times &ldquo;it would be an admission that they&rsquo;re worried in D.C. about debt sustainability.&rdquo;
As the FT frames it, &ldquo;The response to Bessent&rsquo;s surprise intervention has heaped pressure on the Fed chair to soothe investors&rsquo; concerns over the financial and economic risks emanating from the Trump administration&rsquo;s war in Iran, which has sent costs spiraling for consumers and businesses.&rdquo;
All true as far as it goes. But Warsh has an even bigger problem &mdash; which gets back to that 18-year addiction&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Since the 2008 financial crisis, three successive Fed chairs &mdash; Ben Bernanke, Janet Yellen, Jerome Powell &mdash; have hung their hats on &ldquo;forward guidance.&rdquo;
That means the Fed bends over backward to telegraph its intentions to the market before it makes a move. No surprises, no drama.&nbsp;
Over a decade ago, our sister e-letter The Daily Reckoning compiled an Essentialist&rsquo;s Glossary &mdash; a very tongue-in-cheek catalog of financial terms that were in vogue at the time. Here was the entry for &ldquo;forward guidance.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/eBiJPPb18XFVnmoW10i3i/320e492efa88d85507e39fd0a7957a67/FMF-Issue-082726-1.jpg" alt="Forward guidance Policy" width="540px" />
The problem with forward guidance is that Wall Street became hooked on every speech, every interview, every belch and wheeze emanating from every Fed official.&nbsp;
Case in point: CNBC thought this was worthy of sending to my iPad this morning&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/20EKqz1sAJ1kyVoExxG8kI/0a033fc5366157ab576f906bb0f1a796/FMF-Issue-082726-2.jpg" alt="CNBC" width="435px" />
As the recovering finance pro Ben Hunt observed in 2019, Fed jawboning began to matter more to asset prices than traditional metrics like supply and demand, or sales and profits. &ldquo;It&rsquo;s the use of words and narratives,&rdquo; Hunt said on the Hidden Forces podcast. &ldquo;There are no fundamentals for markets now.&rdquo;
Warsh, it seems, wants to get away from that. He studied at the feet of the late Alan Greenspan &mdash; who during 19 years as Fed chair was notorious for obfuscation, misdirection and bafflegab.
Only a few months into the gig in 1987 he told a Senate committee, &ldquo;If I seem unduly clear to you, you must have misunderstood what I said.&rdquo;
But it was an entirely different era. Fed policy wasn&rsquo;t fueling high consumer price inflation. (It did fuel asset bubbles.) There was no social media reacting to every development in the markets and the economy 24/7. And no one expected the Fed chair to hold regular press conferences. (Bernanke started those in 2011.)
So Warsh has a tough climb tomorrow &mdash; trying to say nothing while sounding profound and tamping down inflation expectations at the same time. We&rsquo;ll be here to chronicle the market fallout&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" />So Much for Internet Privacy
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meta&rsquo;s $18 billion settlement with 48 state attorneys general might have destroyed the last remaining shreds of internet privacy.
Shortly before the market opened yesterday, the company came to terms and closed an epic case centering on the alleged harm that its Facebook and Instagram platforms bring to teenagers. Perhaps the biggest change is a default two-hour time limit on the apps for users under 18.
&ldquo;Under this settlement,&rdquo; says a statement from the Electronic Frontier Foundation, &ldquo;young users will now have less access to Meta products, and a lesser ability to exercise their rights to speak, access information and art and culture, associate and form communities and play.&rdquo;
But there&rsquo;s an even bigger consideration&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This settlement &mdash; and the litigation that led to it &mdash; was effectively a backdoor effort by the government to mandate age verification. It succeeded,&rdquo; tweets Nico Perrino of the Foundation for Individual Rights and Expression.
Age verification online is one of those issues that makes politicians of all stripes feel warm-n-fuzzy. Look at what we&rsquo;re doing for the children!
But age verification is a process that inevitably ensnares adults as well &mdash; compromising anyone who wishes to speak up while remaining anonymous.
From the Electronic Frontier Foundation&rsquo;s statement: &ldquo;The settlement also embeds age assurance into every product, mandating the collection of even more personal information from users of all ages; this enshrines Meta's harmful surveillance into law, and it will compromise users' privacy and anonymity while increasing their exposure to data breaches and government data requests.&nbsp;
&ldquo;And the data minimization and security measures don&rsquo;t keep states from using data collected under the agreement for other law enforcement purposes&hellip;&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> No sooner was the agreement signed than Meta was badgering TikTok and Google-owned YouTube to adopt its new strictures&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4CbpsZuggAkANtQ2XV33iQ/fb68b7cdb8b7a2bba510fd7622452580/FMF-Issue-082726-3.jpg" alt="Meta an open letter" width="540px" />
Meta was trying to pass itself off as fostering social responsibility. But as the day wore on, people began noticing a curious section of the settlement.
As the New York Post puts it, TikTok and YouTube &ldquo;must agree to make the same safety changes to their apps before Mark Zuckerberg will pay the full amount of the deal.
&ldquo;Under the bizarre clause, Meta is initially on the hook for 70% of the payment, or about $12.7 billion. The remaining 30%, which totals $5.3 billion, will be &lsquo;released&rsquo; only in the event that TikTok and YouTube pay a combined $5.3 billion and impose changes including a one-hour daily usage limit for teens, a &lsquo;night mode&rsquo; barring use during bedtime hours and age verification.&rdquo;
How can these terms be imposed on TikTok and YouTube if they weren&rsquo;t parties to the lawsuit?
Whatever. The agreement has had no meaningful impact on Meta&rsquo;s share price. It was up slightly yesterday and is down slightly today.
<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" />As Long as You Brought up 1990&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Now a brief follow-up to <a href="https://paradigmpressroom.com/post/the-totally-fake-inflation-numbers">Tuesday&rsquo;s edition</a> &mdash; about how the government&rsquo;s inflation numbers are totally fake.
This tweet&rsquo;s been making the rounds this week&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5SbadrCadaWnjKAnwGGqbQ/a4416db0bca8f51d2d2e1d2f6582adfb/FMF-Issue-082726-4.jpg" alt="Leading Report tweet" width="540px" />
That number checks out with the official inflation figures: In theory you need an additional 1.6 times the number of fiat dollars you held in 1990 to have the same purchasing power today.
But how realistic are the official figures?&nbsp;
In most households, housing is the single biggest expense. In 1990, your editor rented an apartment in Denver for $225 a month. I looked up what it goes for now &mdash; at least $1,060, maybe more. That&rsquo;s a 3.7X increase.
True, 1990 marked rock-bottom for the housing market after the savings-and-loan crisis and the onset of a recession. But the following year, I moved to Tampa and rented an apartment for $375. This unit now sets you back $1,250. That&rsquo;s still a 2.3X increase. And a lot more than 1.6X.
I know, anecdotes aren&rsquo;t evidence. But they are an illustration. And they&rsquo;re something to think about the next time your instinct is to tune out younger people when they complain about affordability&hellip;

FMF-Issue-082726-Featured

Iran Won

OpenAI, the company behind ChatGPT, is running into trouble.
Its growth has slowed compared to Anthropic, huge losses are piling up, and over a dozen senior leaders have headed for the exits this year.
This is all happening ahead of OpenAI&rsquo;s highly anticipated IPO, expected sometime before the end of next year.
Ordinarily, financial woes at a private tech company aren&rsquo;t something you would need to worry about. But this is different.
Much of the AI trade rests on the idea that companies like OpenAI will continue spending tens of billions of dollars on chips, data centers, and power.
And all that money flows to companies that many investors currently own.
If OpenAI fails &mdash; or even just stumbles &mdash; it&rsquo;ll have massive ripple effects across the stock market.
The Alarm Bells Are Getting Hard to Ignore
OpenAI generated $6.7 billion in revenue during the second quarter, up 18% from $5.7 billion in Q1.
That's impressive growth for almost any company&hellip; except this one.
During the same quarter, rival Anthropic's revenue more than doubled to $11.6 billion. OpenAI's operating loss, meanwhile, widened from $9.3 billion to an eye-popping $12.3 billion.
Think about those numbers as if OpenAI were already public.
Revenue grew 18%, but its closest rival grew more than 100%. And OpenAI lost almost $2 at the operating level for every $1 in revenue it generated.
How would Wall Street react to that earnings report? Probably not well.
That's important because OpenAI is preparing for an IPO that could come in 2027 and Anthropic is also preparing to go public around the same time.
So the two may soon compete for investor dollars as well as customers.
Then there are the questions about OpenAI's management team.
Recent departures include Chief Revenue Officer Denise Dresser, longtime COO Brad Lightcap and ethics chief Chlo&eacute; Bakalar.
The Financial Times has also reported on repeated shake-ups, internal politics and worker burnout.
Dresser's departure stands out.
She became OpenAI's chief revenue officer less than a year ago, then left as the company's push into business customers became more important.
One or two senior departures at a fast-growing company isn&rsquo;t abnormal by any means. But a dozen before one of history's most anticipated IPOs is suspect.
Investors don't just buy financial results. They also need to trust the people running the company.
And OpenAI is rebuilding key parts of its leadership team just as it prepares to face those investors.
The AI Money Machine
OpenAI's success has created an odd problem.
The bigger it gets, the more computing power it needs. That means more data centers, chips, and electricity. And all of that requires money.
OpenAI is expected to burn roughly $25 billion in cash this year. Its planned compute spending through 2030 has reportedly climbed to around $750 billion.
That money spreads across an enormous network.
OpenAI has major deals with Microsoft, Oracle, Amazon, Nvidia, CoreWeave and others.
Microsoft alone reported $24.1 billion in fiscal 2026 revenue from its relationship with OpenAI. Oracle reportedly has a roughly $300 billion cloud agreement with OpenAI. And CoreWeave has signed multibillion-dollar contracts with it.
In other words, OpenAI has become a central part of the AI money machine. Which brings me to one question&hellip;
Where is all that money going to come from?
OpenAI recently raised an amazing amount of private capital. There&rsquo;s no evidence it will run out of cash tomorrow.
But given its losses and spending plans, I believe OpenAI will need even more capital before its IPO.
Just look at the numbers, then consider that OpenAI isn't the only one asking investors for money.
SpaceX raised $75 billion in June in the largest IPO ever. A month later, SK Hynix raised another $26.5 billion in its massive U.S. share sale.
Together, the two deals pulled in more than $100 billion in about a month.
And let&rsquo;s not forget that OpenAI rival Anthropic is preparing an IPO of its own.
At the same time, other AI-related companies are also turning to debt markets. Oracle and Alphabet have raised billions.
And just last Thursday, it was reported that Broadcom filed paperwork that could allow it to raise more than $100 billion through debt and other securities.
That&rsquo;s on top of a similar $39 billion financing deal Broadcom already completed in June.
Then, everyone has to compete with the biggest borrower of them all: Uncle Sam.
U.S. government debt has topped $40 trillion, which means Washington also needs a steady supply of buyers for bonds.
There&rsquo;s plenty of money in the world, but not an endless amount available at any price.
SpaceX wants it. Anthropic wants it. OpenAI wants it. The companies building AI data centers want it. And the U.S. government needs it.
When everyone wants money at once, the cost of that money can rise. For OpenAI, that matters.
This is where the story comes back to you and me.
What Happens If OpenAI Stumbles?
Imagine OpenAI's growth keeps falling behind Anthropic. Its losses stay high, or investors won't finance the next $50 billion or $100 billion on good terms.
OpenAI doesn't have to disappear. It could cut spending, delay data centers, or change future plans.
But that would quickly affect partner companies that count on its spending, such as Oracle, CoreWeave, Microsoft, and Nvidia.
Then come memory chips, networking gear, power companies, utilities, construction firms, and data centers.
Markets don't wait for revenue to vanish. Stocks are priced on what investors expect companies to earn tomorrow.
If expected AI spending falls, stock prices across that chain could fall with it.
Suddenly, investors aren't just questioning OpenAI. They're questioning the entire AI spending boom.
We've seen versions of this before.
During the dot-com boom, venture money spread into advertising, telecom equipment, real estate, hiring, and other parts of the economy.
When that money stopped flowing, the damage spread far beyond failed dot-com companies.
That&rsquo;s why the problems over at OpenAI are such a big deal. It sits at the center of the AI boom, and trouble there could quickly spread to companies you own.
It only needs to stumble badly enough for Wall Street to start questioning the hundreds of billions being spent on the idea that this boom will continue.
If that happens, the problem won't belong to OpenAI anymore &mdash; it will belong to all of us.
<hr />
Dave&rsquo;s last word: If you&rsquo;d like access to Enrique&rsquo;s insights on a regular basis, you should sign up for his e-letter Truth &amp; Trends.&nbsp;
Along with colleagues Greg Guenthner and Nick Riso, Enrique unpacks everything from technical indicators and strategies&hellip; to the tools that legendary investors use to build their empires.
Just go to <a href="https://truthandtrends.com/">the Truth &amp; Trends website</a> and sign up on the right side of the homepage to get daily delivery to your inbox.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for the markets today&hellip; the major U.S. indexes are treading water ahead of Nvidia&rsquo;s earnings release after the closing bell. The S&amp;P 500 is just barely in the green at 7,682.
Treasury yields are inching back up, the 10-year note back to 4.66%. Gold is down but continues to hold the line on $4,600. Bitcoin is consolidating its recent gains, a little over $78,000.
U.S. oil futures are back over $81 in the absence of ridiculous market-manipulating headlines like the one yesterday about Washington offering sanctions relief to Iran if the Strait of Hormuz is reopened.&nbsp;
The big economic number of the day is &ldquo;core PCE&rdquo; &mdash; the Federal Reserve&rsquo;s preferred measure of inflation. At 3.3% it rings in unchanged from the previous month.&nbsp;
You will notice this number is nowhere near the Fed&rsquo;s 2% inflation target.&nbsp;
Indeed this number has been higher than 2% every month since early 2021 &mdash; a phenomenon Fed chair Kevin Warsh will have to address one way or another during his inaugural &ldquo;Jackson Hole speech&rdquo; this coming Friday.&nbsp;
More about Warsh&rsquo;s conundrum when we get back to our usual multitopic format tomorrow&hellip;

FMF-Issue-082626-Featured

Brace for Impact (OpenAI)

<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 Totally Fake Inflation Numbers
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Going by the government&rsquo;s official numbers, the inflation rate is 3.4%. But if the numbers were run the way the government ran them in 1980, it would be 11.4%.
This is why, when we mention the consumer price index each month, we typically say, &ldquo;Any resemblance between these numbers and your actual cost of living is purely coincidental.&rdquo;
For many years, an economist named John Williams has, in fact, run the numbers the way the government ran them in 1980. (And not just inflation, but also unemployment and GDP.)
His firm called Shadow Government Statistics supplies these figures to a slew of clients so they can make more realistic decisions with their investments and businesses.&nbsp;
He doesn&rsquo;t do a lot of interviews. But he popped up last weekend on the venerable Financial Sense podcast.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Starting in 1980, there have been about 20 changes&rdquo; to the way CPI is calculated, said Mr. Williams.
&ldquo;Every change has lowered the CPI compared to how it would have been calculated before.&rdquo;
As you might recall if you were around then, inflation felt out of control in late 1979 and early 1980.&nbsp;
The peak was a staggering 14.6% in March 1980 &mdash; when Pink Floyd topped the charts with &ldquo;Another Brick in the Wall, Part II&rdquo; and Dustin Hoffman was the big box office draw in Kramer vs. Kramer.
Key point: Inflation rates that high threatened to destroy the Social Security program in short order: No way could it keep up with cost-of-living adjustments that steep.
And so began that process of 20 changes in the way the official inflation rate is calculated, every one of them bringing the number down.
We mentioned two of the most egregious only last week, but we&rsquo;ll reinforce them here&hellip;
<ul>
<li>Hedonic adjustments. If the price of a new car goes up, but the manufacturers add new features to the new models, well then the price of a new car hasn&rsquo;t really gone up, has it?</li>
</ul>
<ul>
<li>Substitution. If you start buying hamburger because steak is too expensive, well, your price of beef hasn&rsquo;t really gone up, has it?</li>
</ul>
There&rsquo;s still another trick called &ldquo;geometric weighting&rdquo; &mdash; in which prices of things that are going up are given proportionally less weight in the index than prices of things that are going down.
You can&rsquo;t make this stuff up. But the economists at the Labor Department do!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;They're not fooling the average person. The average guy has a good sense of how he&rsquo;s doing; that's always the case. They're not keeping up,&rdquo; Williams said.&nbsp;
&ldquo;They know it and they vote their pocketbooks. You can fudge a number, but fudging the numbers isn't going to help you at the polls.&rdquo;
Word. A rising cost of living handed Republicans the House of Representatives in 2022. A rising cost of living handed Donald Trump the presidency in 2024. A rising cost of living will likely hand the House back to Democrats in 2026.
And so it goes when no one in Washington will take responsibility for getting federal spending back under control.
This chart&rsquo;s been making the social-media rounds this week&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2wGdHjm2tlWdis4ryYGza1/f6ddf93fed66e9b9fed3729b4af3d2aa/FMF-Issue-082526-1.jpg" alt="USA DEBT hits 40 trillion" width="540px" />
Notice how the national debt began soaring toward the end of Trump&rsquo;s first term with the mad COVID spending. It&rsquo;s an even steeper trajectory than during the aftermath of the 2008 financial crisis.
That&rsquo;s why inflation has been ruling your life for the last five years &mdash; and <a href="https://paradigmpressroom.com/post/declare-your-independence-from-inflation">if history is any guide</a>, will continue to do so into the early 2030s.
How to cope? Well that dovetails nicely into Bullet No. 2&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" />The Road to Gold $10K (Updated)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The advent of $10,000-an-ounce gold has not been prevented. Only delayed.
In mid-December last year Paradigm&rsquo;s macroeconomics authority Jim Rickards said in this space that &ldquo;it&rsquo;s entirely reasonable to suggest gold could reach $10,000 per ounce by late 2026 &mdash; on its way much higher.&rdquo;
The forecast was looking more than plausible a few weeks later &mdash; gold soaring from $4,300 at the start of January to over $5,500 by the end.
But the move was an obvious case of &ldquo;too far, too fast.&rdquo; The Midas metal experienced two sharp sell-offs on the way to a $4,000 summertime bottom. Still, that $4,000 level held fast and we&rsquo;ve been over $4,600 both today and yesterday.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3mdvpsMzoNB6PGapn6JIED/d9d79f838fe953eabe4e018a776ea44e/FMF-Issue-082526-2.png" alt="Golds wild ride" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Looking back, the big drop &ldquo;has an obvious cause,&rdquo; Jim wrote his Strategic Intelligence readers on Friday.
&ldquo;Oil prices went from $60 per barrel to $110 per barrel between late February &mdash; at the start of the war in Iran &mdash; and early April, before talk of a ceasefire and the Memorandum of Understanding (MOU) between Iran and the U.S. took hold.
&ldquo;Every country in the world needs oil, and oil is priced in dollars. That means everyone needs dollars. And one of the fastest ways to get dollars is to sell gold.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So, is the bottom in? And is $10,000 still realistic?
Apologies if you&rsquo;re a longtimer and you&rsquo;ve heard the story before &mdash; but a little over a decade ago, Jim met up in the Dominican Republic with the legendary commodities trader and world traveler Jim Rogers, author of Investment Biker and Adventure Capitalist.
&ldquo;No commodity goes to the moon without a 50% drawdown along the way,&rdquo; Rogers said. &ldquo;That&rsquo;s just how it is. If you&rsquo;re not prepared for that or can&rsquo;t deal with that, then you&rsquo;re in the wrong business.&rdquo;
Consider that gold began this century around $250 &mdash; peaking at $1,900 in 2011. That&rsquo;s a $1,650 jump. Half that figure is $825.&nbsp;
&ldquo;Therefore,&rdquo; says Jim Rickards, &ldquo;a 50% retracement of the gain from $250 to $1,900 would yield a new bottom of $1,075 per ounce.&rdquo;
As it happens, Jim originally related the Rogers encounter in this space in December 2015. The actual bottom came that month at almost exactly that figure, $1,050.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So let&rsquo;s apply the &ldquo;Rogers retracement rule&rdquo; to gold now. (Here, Jim Rickards relies on the front-month futures contract, which is a little different from the chart above.)
&ldquo;A few months ago,&rdquo; Jim says, &ldquo;I took gold&rsquo;s January high of $5,400 per ounce and its prior low of $1,650 in October 2022. That&rsquo;s a gain of $3,750. Half of that gain is $1,875, which produces an expected bottom of $3,525.
&ldquo;The actual bottom? About $3,990 on July 16, 2026.
&ldquo;That&rsquo;s not as close as Rogers&rsquo; original forecast, but it&rsquo;s close enough to be meaningful given the magnitude of gold&rsquo;s recent collapse.&rdquo;
With that, Jim forecasts that investors &ldquo;can now buy gold with some confidence that we&rsquo;re in a new takeoff stage and $10,000-per-ounce gold is the new destination.&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" />Economic Warfare Update
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. oil futures are down nearly three bucks to $82.10 because&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5nF0gdjicFDY5PPF2xUVJM/c0748103ef9245359bde4b9cc41584b7/FMF-Issue-082526-3.png" alt="Energy Headline News Tweet" width="540px" />
Really?
Why would Washington make a mild peace overture the day after Treasury Secretary Scott Bessent unleashed &ldquo;Economic D-Day&rdquo; on Iran?
Except, if you were paying attention, he didn&rsquo;t. No new sanctions actually kicked in yesterday. Instead, Bessent said he and the president and other top officials are making phone calls to other governments to spell out demands about how those nations should cease trade with Iran.
The details about who&rsquo;s being called and what&rsquo;s being demanded and what consequences will follow if they don&rsquo;t follow orders are&hellip; well, thin doesn&rsquo;t even begin to describe it.&nbsp;
The only thing we know with certainty is that several Chinese banks are in the crosshairs.
Of course, Beijing won&rsquo;t take kindly to that. For now, however, the Chinese government is keeping its words measured.
&ldquo;China calls on parties to act rationally and with restraint and avoid taking any measures that may further escalate tensions or deal a blow to global economic growth and financial stability,&rdquo; says a spokesman for the foreign ministry.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for the stock market today, the major U.S. indexes are back in the green &mdash; but not much.
At last check the S&amp;P 500 is up a third of a percent to 7,674. The Nasdaq is up a half percent, while the Dow is just barely positive on the day.&nbsp;
Precious metals are consolidating their recent gains &mdash; gold at $4,643 and silver at $68.62. Bitcoin has surpassed $79,000 but Ethereum has pulled back below $2,500.
<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" /> The evolution of the economy, as seen by one especially cynical observer&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3Y5WTp6lF2jAoIzufO5Aam/cfd783c40e8bfa9bc745dbfef00a5260/FMF-Issue-082526-4.png" alt="Comic Relief" width="540px" />
<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: Data Centers, Uncle Sam&rsquo;s Interest Expense
<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 data centers and public perceptions, we heard from a lawyer in northwest Indiana&hellip;
&ldquo;Having presented data center developments to shall we say unenthusiastic crowds (understatement), I know, firsthand, the vitriol producing the headwinds in communities.&nbsp;
&ldquo;From my experience, much of the response is grounded in the worst examples from a few data centers and does not comport with what data centers are now becoming. But with local elected officials and their families facing an onslaught of personal attacks, it is understandable that the narrative has eliminated rational discourse in many areas.&nbsp;
&ldquo;However, I&rsquo;m starting to see a below-the-headlines change that is worth noticing. In the past few weeks, I have received requests for my group to consider development in communities with existing industrial infrastructure to help provide financial support that is becoming more acutely needed as a result of state government shifting financial burdens to municipalities in my area of the world.&nbsp;
&ldquo;Also, when compared with steel or other industries or vacant brownfields, data centers are environmental wins. These days, data centers, while perhaps receiving some financial incentives, largely must pay &lsquo;tolls&rsquo; to enter any community in the form of direct incentives that far exceed any other use a municipality could bring in to shore up the balance sheet (often a remarkable windfall that provides dividends well into the future that will enable those communities to level up for residents).&nbsp;
&ldquo;And the weight of the leverage is with the municipality such that the municipality can insist on the highest levels of available technology to eliminate or highly ameliorate the issues that have framed the data center discussion.&nbsp;
&ldquo;I thought I&rsquo;d put this on your radar for the future. Appreciate your messages.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> To our second and final correspondent today: &ldquo;You may have covered this before, but would really like to hear your perspective on what happens to our economy when (we all know that it is not if) the interest expense on the national debt becomes the No. 1 line item expense in the federal budget.
&ldquo;Really love your stuff!!&rdquo;
Dave responds: We&rsquo;re a ways away from that juncture if you go by the Treasury Department&rsquo;s latest monthly statement.&nbsp;
We direct your attention to the right side of this graph, covering the first 10 months of fiscal year 2026 &mdash; i.e., through July 31.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2fJBL9nF1S4jNwExFZigzS/4e1a523e480d0f26fb9a982338eb3a1a/FMF-Issue-082526-5.png" alt="Fiscal year 2026 Deficit" width="540px" />
But your question is still highly relevant as interest expense on the debt continues to swell.
Short answer: The more money Uncle Sam has to borrow, the less money is available to the private sector to borrow so it can expand operations, hire people and so on.&nbsp;
This is the so-called &ldquo;crowding out&rdquo; effect.&nbsp;
If the concept is new to you, that&rsquo;s because it hasn&rsquo;t been an issue for many decades. Interest rates fell steadily from the 1980s through the 2010s.&nbsp;
During Barack Obama&rsquo;s presidency, the national debt rose relentlessly &mdash; but because interest rates sat near historic lows, the annual cost of financing that debt registered a slight decline.
But those days are over. We&rsquo;re in a new 40-year cycle of rising rates that began in 2020 when the yield on a 10-year Treasury note was a paltry 0.5%. (It&rsquo;s 4.66% this morning.)
That&rsquo;s why the federal government&rsquo;s annual interest expense doubled between fiscal years 2022&ndash;2025.
Again, Uncle Sam&rsquo;s ravenous need to borrow more and more deprives the private sector of the funds it needs to grow and thrive.
And wouldn&rsquo;t you know it, this is happening at the very moment the AI industry needs to borrow gobs of money to build data centers and other infrastructure.&nbsp;
But that&rsquo;s a story for another day&hellip;

FMF-Issue-082526-Featured

The Totally Fake Inflation Numbers

<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" />AI&rsquo;s &ldquo;Really Weird Math&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We pick up today where we left off with <a href="https://paradigmpressroom.com/post/chatgpf-the-f-is-for-fiasco">last Thursday&rsquo;s Bullet No. 1</a> &mdash; the probability that ChatGPT maker OpenAI will blow up before it ever goes public.
Or &ldquo;the OpenAI-pocalypse,&rdquo; as coined by Paradigm trading pro Enrique Abeyta.
Every few weeks, there&rsquo;s a new &ldquo;tell&rdquo; about what&rsquo;s coming. Last week it was a Wall Street Journal report revealing the company&rsquo;s revenue grew 18% from the first quarter to the second &mdash; a respectable figure were it not for the fact it&rsquo;s a fraction of the growth booked by OpenAI&rsquo;s main competitor Anthropic.
If OpenAI had disclosed that information as a publicly traded company, &ldquo;shares would have gapped down 30%,&rdquo; says Enrique &mdash; who&rsquo;s been on alert since late last year for a moment when everyone realizes the company is mostly hype and hot air.
That moment has not arrived yet &mdash; but something will trigger it sooner or later.&nbsp;
It comes back to the complexity theory championed by our macro maven Jim Rickards &mdash; or as he popularized it, &ldquo;avalanche theory.&rdquo;
&ldquo;A single snowflake can turn a seemingly stable snowpack into a roaring avalanche that destroys everything in its path. Once the snowpack is arranged in an unstable way, a single snowflake can unleash carnage. Of course, a single snowflake is so small you never see it coming.&rdquo;
Those revenue numbers last week were just the latest snowflake among many.&nbsp;
Today we&rsquo;ll examine a few other snowflakes that continue piling up&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In January, OpenAI confessed to its own vulnerabilities in a paper with the obscure title &ldquo;Ending the Capability Overhang.&rdquo;
&ldquo;The company boasted that ChatGPT had 800 million users, an impressive figure, yet only
50 million (6.3%) were willing to pay for the service,&rdquo; writes fund manager Daniel Oliver at Myrmikan Capital.&nbsp;
&ldquo;Of those paid users, the top fifth percentile used the service seven times more intensely than the median paid user.&nbsp;
&ldquo;In other words, of the 800 million users, only 5% of the 6.3%, or 2.5 million users, demonstrate that they are getting any real value out of the $20 per month service.&rdquo;
Per an article in Fortune two months ago, OpenAI booked $13 billion in revenue last year&hellip; and $21 billion in losses.
Further, CNBC reported six months ago that the company expects revenue through 2030 to total $280 billion&hellip; while it plans to spend $600 billion during that same period. (And that&rsquo;s scaled back from a previous plan to spend $1.4 trillion.)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Unfortunately, bad things that might happen to OpenAI won&rsquo;t necessarily stay contained to OpenAI.
More from Oilver: &ldquo;Microsoft (market cap $3 trillion) reports $627 billion in back orders, half of which is just from OpenAI.&nbsp;
&ldquo;The company has not yet hit the bond market for financing its foray into AI, but it has engaged in questionable accounting. For example, Microsoft invested $13 billion into OpenAI in 2023, but reportedly $10 billion of that figure was in the form of credits for OpenAI to use Microsoft&rsquo;s cloud services. Microsoft then counts the use of those credits as revenue.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Sounds crazy, right? But that&rsquo;s routine when it comes to the industry&rsquo;s &ldquo;really weird math&rdquo; described in a new book by author Cory Doctorow.
Under the partnership between these two companies, &ldquo;Microsoft gives OpenAI &lsquo;tokens&rsquo; that OpenAI can spend to access the computers in Microsoft&rsquo;s data centers,&rdquo; he writes.
&ldquo;OpenAI books these tokens as investment revenue, at face value. This is some very funny accounting. The tokens Microsoft invests in OpenAI can only be redeemed for Microsoft data center access&hellip;
&ldquo;The really weird math comes after OpenAI redeems its tokens with Microsoft to power ChatGPT and its other products: Microsoft books [those transactions as] AI-related revenue to its cloud-computing division.&rdquo;
Doctorow uses the analogy of an ice cream parlor with video-game machines in the back. &ldquo;To play these, you need tokens that you can get from the cashier in exchange for dollars. But the cashier likes you, so they give you $10 worth of video-game tokens to play, which you promptly pump into the Galaga machine.
&ldquo;Using Microsoft and OpenAI&rsquo;s funny accounting, the ice cream parlor has &lsquo;invested $10&rsquo; in you (by giving you $10 worth of funny-money tokens), and then the ice cream parlor &lsquo;earned $10 in revenue&rsquo; (when you pumped the tokens into the machine).&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We&rsquo;ll reiterate a point we made on Thursday, a truism related by the investment newsletter legend Doug Casey: &ldquo;Events that are inevitable aren&rsquo;t necessarily imminent.&rdquo;
So for now we&rsquo;ll give Daniel Oliver the last word &mdash; suggesting that even the key players know on some level that something has the potential to end badly.
&ldquo;The most telling comment from Microsoft&rsquo;s [most recent] earnings call was from CEO Satya Nadella: &lsquo;All of us are reading this 1873 as the book to be read.&rsquo;&nbsp;
&ldquo;Liaquat Ahamed&rsquo;s latest book, 1873, tells the story of the burst of the railroad investment bubble and the ensuing &lsquo;first great depression.&rsquo;&rdquo;
➢ As for Doctorow&rsquo;s book, it&rsquo;s titled The Reverse Centaur&rsquo;s Guide to Life After AI. I won&rsquo;t go to the trouble of explaining a &ldquo;reverse centaur&rdquo; today. I&rsquo;ll almost certainly circle back to this book in a few days, seeing as I&rsquo;ve barely started it.
<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: The Pros vs. the Mom and Pops
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> An intriguing divide is emerging in the U.S. stock market, says Paradigm analyst Zach Scheidt.
&ldquo;Right now, professional investors are nervous, and retail traders are excited,&rdquo; Zach writes for Altucher&rsquo;s True Alpha. &ldquo;The gap between those two camps is a solid litmus test for what we can expect in the coming months.
&ldquo;Professionals tend to fixate on valuations, future earnings and growth rates. They answer to benchmarks and committees. They move slowly and they hedge their bets.
&ldquo;Retail traders look at stories. They get fired up about a trend, they can move fast and they can concentrate their positions in a way the big institutions never could.
&ldquo;Now, we'd rather be the nimble individual trader any day of the week. That's the whole edge of trading your own book. But it still pays to understand why the professionals are uneasy.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Zach points to Snowflake Inc. (SNOW).
&ldquo;The stock trades north of $300,&rdquo; he says. &ldquo;At that price, you're paying more than 100 times what the company is expected to earn next year, and still around 90 times what it's projected to earn two years out. That's the kind of valuation that only works if the growth story keeps getting more exciting from here, not less.
&ldquo;This is what froth looks like because it doesn't even mean the stock can't keep running. Names like this can stay expensive far longer than anyone expects. But the risk baked into a valuation like that is real, and it's exactly the sort of thing that has the professional crowd sleeping with one eye open.
&ldquo;None of that is a call to short Snowflake. We're pointing at it because it's a clean example of the exuberance running through parts of this market right now. Know what you own, and know what you're paying for it.&rdquo;
<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 U.S. stock indexes, they&rsquo;re a mixed bag.
At last check, the S&amp;P 500 is down more than a third of a percent to 6,745. The Nasdaq is down two-thirds of a percent, while the Dow is up slightly.&nbsp;
Recent winners in the Paradigm portfolios include a huge 547% gain in less than six weeks on ConocoPhillips call options in Rickards&rsquo; Insider Intel (more than enough to offset a loss on Venture Global).
On the short side, readers of Rickards&rsquo; Crisis Trader booked 85% gains on Thor Industries put options.
Mason Sexton has racked up a string of short-term stock wins in The Map &mdash; including 22% in a month on the big silver ETF SLV, and 18% on the &ldquo;neocloud&rdquo; name Nebius Group in only a week.
Elsewhere, bond yields are inching down for the moment &mdash; the 10-year note back under 4.7% and the 30-year bond at 5.23%.
Gold is soaring again &mdash; up 1.5% to $4,673, another high last seen in mid-May. Silver&rsquo;s gain is more modest, but it&rsquo;s still knocking on the door of $69 for the first time since June.
Crypto is moving from strength to strength &mdash; Bitcoin now only $150 away from the $80,000 level, the highest in over three months. And Ethereum has crested $2,500.
Two big events loom this week: Nvidia&rsquo;s earnings report after the closing bell Wednesday, and Federal Reserve chair Kevin Warsh&rsquo;s maiden outing addressing the annual confab of central bankers in Jackson Hole, Wyoming Friday. Watch this space&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" />Hormuz Hallucinations
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. crude futures are down nearly 2% to $85.36 &mdash; perhaps still under the sway of Axios reporter Barak Ravid.
Over the weekend, Ravid posted a story citing &ldquo;three U.S. officials&rdquo; claiming that 40 oil tankers hauling 16 million barrels of crude transited the Strait of Hormuz on Friday &mdash; escorted by the U.S. military on the southern side of the strait near the coast with Oman.
The claim doesn&rsquo;t remotely square with independent monitors like the analytics firm Kpler, which recorded zero tankers departing the strait Friday.
Later today Treasury Secretary Scott Bessent will formally roll out the Trump administration&rsquo;s &ldquo;Economic D-Day&rdquo; plan of sanctions targeting Iran, supposedly so severe they&rsquo;ve &ldquo;never been seen in the history of the economic isolation of a country.&rdquo;
Your editor expressed <a href="https://paradigmpressroom.com/post/inflicting-maximum-damage-and-pain/#2">skepticism</a> about that on Friday &mdash; which was reaffirmed over the weekend when someone started recirculating this tweet from Obamatime&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6VgL9AW7AxPqbA5uH2m0wY/6612bc1a0c59dbd1722a5c1a49481ec9/FMF-Issue-082426-1.png" alt="Barack Obama tweet" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, the U.S. government&rsquo;s Strategic Petroleum Reserve sits at 289.7 million barrels &mdash; the lowest since 1982.
For perspective, the SPR was over 400 million just before Donald Trump and Benjamin Netanyahu launched the Iran war six months ago. In fairness, it was over 600 million before Joe Biden started draining it to save the Democrats&rsquo; midterm election prospects four years ago.
A scary chart from Bank of America&rsquo;s been making the rounds this morning. It shows the combined total of both private-sector inventories and the SPR, measured in days of available supply.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7IhjMI1fWVMeHTgJwaSzko/65b3bff3cd39e1a3e0030c2369b8fd5e/FMF-Issue-082426-2.png" alt="Us Crude inventories (Include SPR) at 40-50 years low" width="540px" />
Yikes. The biggest squeeze right now is in diesel prices &mdash; which feed through everything that&rsquo;s transported by truck. And right now diesel prices are about 20 cents a gallon away from their all-time high under Biden.
Meanwhile, we might be looking at the highest Labor Day gasoline prices ever.
<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" />Thought for the Day
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Here&rsquo;s another chart making the rounds today. What do Chinese leaders know that American leaders don&rsquo;t?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5x9t974zt573DzT5iJY3vy/e619b96e5e5feb0e10e0287fede339a4/FMF-Issue-082426-3.jpg" alt="China Gold Vs Treasury Holdings" width="540px" />
Reminder: Those are the publicly disclosed gold holdings of the People&rsquo;s Bank of China. The real number is likely twice as high, maybe more.
<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: Power Outages, Scrambled Political Lines
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;While the outcome of long-term power outages would be devastating, I believe this to be somewhat misleading,&rdquo; writes a reader after <a href="https://paradigmpressroom.com/post/inflicting-maximum-damage-and-pain">Friday&rsquo;s edition</a>.&nbsp;
&ldquo;History shows that our cities are capable of complete chaos within hours. Just look at the riots in LA, Minneapolis, Portland and Seattle to name a few.&nbsp;
&ldquo;The Northeast outage in the 1960s started about 5 p.m. with a transmission line failure. If a series of simultaneous outages started in the major cities at 6 or 7 p.m. (EST) on a hot weekday night, you would have full-scale riots by midnight.
&ldquo;Too many people would consider this the &lsquo;perfect shopping opportunity,&rsquo; much like a hurricane evacuation in New Orleans. Commuters would be struck during rush hour. First responders would be overwhelmed with rescues and not available to respond to the rioting, looting, etc.
&ldquo;God knows what would happen if this was extended for just.one or two days. Typically, power companies can get their systems energized within hours. However, this usually depends on power from neighboring power companies. That method would not be available if they could not transmit power due to line outages. .
&ldquo;By major cities I am thinking about New York, D.C., Atlanta, Houston, LA, San Francisco, Denver and Seattle.
&ldquo;You would not even need to hit the substations, but instead hit the major transmission lines feeding those cities, to start the outages.
&ldquo;Scary thoughts. I worked in the power business for 40 years in the Northeast and South.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Your three hot-button issues &mdash; data centers, flock cameras and U.S. aid to Israel &mdash; all seem designed to divide the conservative base,&rdquo; a reader writes after the conclusion to <a href="https://paradigmpressroom.com/post/chatgpf-the-f-is-for-fiasco">last Thursday&rsquo;s edition</a>.
&ldquo;Maybe so, but surely there are others that tie the left in knots. Here are three &mdash; communists taking over the Democratic Party, men in women&rsquo;s locker rooms and amnesty for illegal aliens.
&ldquo;Thanks for allowing me to balance out your list.&rdquo;
Dave responds: Maybe I wasn&rsquo;t clear. I was talking about issues that divide both partisan camps and that have the potential to scramble the usual loyalties.
For instance, here in Michigan, the Democratic nominee for governor is weighed down with a lot of data-center baggage &mdash; seeing as her husband is VP of the firm developing <a href="https://paradigmpressroom.com/post/maga-lansing">an enormously controversial project</a>.
Meanwhile it&rsquo;s fair to say the Democratic contest for U.S. Senate in the Great Lakes State turned on the issue of U.S. aid to Israel &mdash; or to be more precise, the unwarranted influence of pro-Israel donors.
There used to be a saying about how politics makes strange bedefellows. You don&rsquo;t hear it much anymore; too many elites are too invested in exploiting the red-blue divide.&nbsp;
But at the grassroots, some interesting coalitions are coming together. Could even be market-moving before all&rsquo;s said and done. We&rsquo;ll be watching&hellip;

FMF-Issue-082426-Featured

AI’s “Really Weird Math”

<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;Inflicting Maximum Damage and Pain&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> One day in the spring of 2014, we published an issue titled <a href="https://5minforecast.com/2014/03/13/the-18-month-nationwide-blackout/">&ldquo;The 18-Month Nationwide Blackout.&rdquo;</a>
It was actually the second of two parts. <a href="https://5minforecast.com/2014/03/12/a-niche-sectors-mainstream-moment/">In the first</a>, we spotlighted the revelation that the previous year, snipers shot up the Metcalf electrical substation in Coyote, California &mdash; not far from San Jose.&nbsp;
The impact on the power grid was minimal &mdash; but by many accounts, that was just a lucky break. (To this day, the case remains unsolved.)
Over those two days we also took note of a government report that said, "Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer."
That&rsquo;s just nine substations out of 55,000 total nationwide.
You can imagine the scale of civilizational breakdown if the lights went out for a year and a half. (Or maybe not. Normalcy bias is a powerful thing.)
A few days ago, The New York Times Magazine <a href="https://www.nytimes.com/2026/08/18/magazine/national-blackout-power-electricity-outage.html">reprised</a> this history&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7cM5IWSecen5KTXrIrKbV2/dafd916bdc27f1479d13238a2c1ee2d5/FMF-Issue-082126-1.jpg" alt="What if America went dark?" width="540px" />
&hellip; albeit with startling detail about the Metcalf saboteurs&rsquo; meticulous planning.&nbsp;
And it advanced the story by spotlighting the critical shortage of electrical transformers &mdash; a problem even if the grid stays up because so many aging transformers need replacing. It turns out many of the largest ones have to be built painstakingly by hand.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But we have to ask: What took the NYT so long?
Again, we&rsquo;re not Johnnies-come-lately to this issue. Three years after the Metcalf revelation in 2014, our firm shelled out $80,000 to acquire copies of a book called Lights Out to distribute to readers.&nbsp;
Authored by Ted Koppel, the longtime anchor of ABC News Nightline, it was sobering stuff.
&ldquo;If an adversary has as its goal inflicting maximum damage and pain on the largest number of Americans, there may not be a more productive target&rdquo; than the power grid, he wrote.
&ldquo;If a highly populated area were without electricity for a period of months or even weeks,&rdquo; he added, &ldquo;there is no master plan for the civilian population.&rdquo;
Now and then we&rsquo;ve also spotlighted the everything-connected-to-everything-else nature of the grid &mdash; laid bare by the Northeast blackout of 2003. A software glitch at an Ohio control room ended up knocking out power to 55 million people in eight states and the Canadian province of Ontario.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We also have to ask: Why is the NYT bringing all this up now?
After all, the paper sets the agenda for the rest of the legacy media &mdash; and much of the alt-media for that matter. It&rsquo;s going to be all over the place for a while.
Yeah, I know. It&rsquo;s becoming &ldquo;a thing.&rdquo; People are more aware of the power grid&rsquo;s fragility as brownouts and blackouts become more common. I started pounding the table about it here four years ago, when an industry white paper spurred me to buy a generator.&nbsp;
Too, people&rsquo;s minds have been concentrated by the advent of AI data centers, with their prodigious power demands. (This e-letter was also <a href="https://paradigmpressroom.com/post/the-monster-that-ate-the-power-grid-ai">early to the party</a> on that issue.)
The conspiracy minded will surely say the article is &ldquo;predictive programming&rdquo; &mdash; softening up the populace for a grid-down event that a nebulous they will either let happen on purpose, or make happen on purpose.
But the article does allow for cautious optimism toward the end &mdash; describing a new kind of transformer technology, and suggesting that rather than one big solution imposed from the top down in Washington, &ldquo;the best solution to a fragile grid may look like a lot of little interventions, distributed widely.&rdquo;&nbsp;
<a id="2"></a>
Hear, hear. Best to conclude this bullet on that hopeful note.&nbsp;
And we&rsquo;ll reinforce the guidance we&rsquo;ve been sharing now and then since 2022: Even in a short-term outage, no electricity means no credit/debit cards and no power to the gas pumps. Keep a wad of cash, keep your tank topped up and keep your battery-powered devices charged.
<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" />A Game of Economic Chicken
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. crude futures are set to end the week over $86 &mdash; the highest all month &mdash; even though the shooting portion of the Iran war is supposed to be over for a while.
Two days ago on social media, Donald Trump declared an &ldquo;Economic D-Day&rdquo; against Iran.&nbsp;
In addition, Treasury Secretary Scott Bessent said it&rsquo;s unlikely Washington will restart large-scale combat with Tehran &mdash; pivoting instead to a new round of economic sanctions, &ldquo;measures like have never been seen in the history of the economic isolation of a country.&rdquo;
Whatever. How many more sanctions can they impose at this point?&nbsp;
The announcement sounds a lot like the announcements that came out of the Biden administration and the European Union targeting Russia. The EU in particular has declared 21 packages of sanctions on Russia since the invasion of Ukraine 4&frac12; years ago. But go figure, Moscow is no closer to capitulation now than it was at the start.
And so begins a game of economic chicken: &ldquo;The U.S. is betting it can strangle Iran's economy to the point where Iran will concede defeat before the U.S. is forced to do so,&rdquo; writes John Mearsheimer, the renowned foreign policy scholar from the University of Chicago.
&ldquo;At the same time, the U.S. is working overtime to deal with inflation and rising bond yields, which are caused in good part by the Iran war, and which have the potential to badly damage the U.S. economy. Iran is effectively betting that continuing to limit the flow of oil and gas out of the Strait of Hormuz will threaten the US economy to the point where Washington, not Tehran, will cave first.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This economic escalation is not even remotely likely to succeed on the timeline or at the cost Bessent &amp; co. assume,&rdquo; writes our former colleague David Stockman, who served as President Reagan&rsquo;s budget director for five years.&nbsp;
&ldquo;That&rsquo;s because Iran remains substantially self-sufficient in food and many essentials, retains residual oil revenues through black-market channels and pre-blockade floating cargoes and can endure prolonged isolation far longer than the already-strained global refined-product markets &mdash; especially diesel and jet fuel &mdash; can tolerate continued severe supply curtailment.&rdquo;
Maybe Bessent realizes as much.
Otherwise, why would he be badgering Chinese leaders to join in the sanctions? &ldquo;Keep in mind, the Chinese get 50% of their energy from the Gulf. So, it would do them a big service to get with the program,&rdquo; he said on CNBC.&nbsp;
(&ldquo;Get with the program&rdquo;? Diplomacy doesn&rsquo;t appear to be Bessent&rsquo;s strong suit &mdash; in contrast with Reagan&rsquo;s Treasury Secretary James Baker.)
And don&rsquo;t rule out a return to shooting, says Trita Parsi of the Quincy Institute: &ldquo;Iran fears surrender more than war.&rdquo;&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, <a href="https://paradigmpressroom.com/post/chatgpf-the-f-is-for-fiasco/#2">Bessent&rsquo;s failed maneuvers in the bond market this week</a> continue to give a lift to non-dollar assets.
<ul>
<li>Gold is set to end the week at a three-month high approaching $4,600</li>
<li>Silver is set to end the week at a two-month high over $69</li>
<li>Bitcoin is approaching three-month highs over $77,000</li>
<li>Ethereum is pushing $2,400 for the first time since April.</li>
</ul>
At the same time yields on Uncle Sam&rsquo;s debt continue inching higher &mdash; approaching where they were on Monday before Bessent said he&rsquo;d amp up buybacks of Treasury paper. The 10-year note is nearing 4.74% while the 30-year bond is up to 5.28%.
The major U.S. stock indexes are trying to claw back some of their losses earlier in the week &mdash; but they&rsquo;re likely to end the week in the red. The S&amp;P 500 sits at 7,669. (Perspective: That would have been a record close less than three weeks ago.)
<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" />Death of Local TV (Avoid These Stocks)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Broadcast television is done. Like, as an industry. Forever. Its horse-and-buggy moment arrived this week.
As you might know, your editor worked in the TV news trenches for 20 years. I made my exit in 2007 &mdash; just as the internet was starting to change the advertising landscape in a big way.
Local TV has been in steady decline ever since. But there&rsquo;s one thing that kept it viable, even if TV stations could no longer generate the fat 35&ndash;40% profit margins of days gone by &mdash; campaign commercials.
As younger people turned away from TV, the remaining audience was concentrated among older demographics &mdash; people who happen to vote in the highest numbers. Thus, TV stations could count on a steady influx of campaign cash every two years.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> That all changed on Tuesday night with a shock election result in Florida.
The winner of the Democratic primary for U.S. Senate was a state lawmaker named Angie Nixon &mdash; proud member of the Democratic Socialists of America, collecting 56% of the vote.
Her opponent was retired Army Lt. Col. Alexander Vindman &mdash; a former National Security Council aide who was the star witness against Donald Trump during Trump&rsquo;s first impeachment in 2019.
As you might expect, Vindman was the favorite of the party establishment &mdash; and he had the campaign coffers to dominate, raising $16.3 million compared with Nixon&rsquo;s $975,000.
And get a load of the ad budgets, as recounted by Theodore Schleifer of The New York Times.
&ldquo;Vindman spent 36 times as much on ads as Angie Nixon, per AdImpact data. The loser here spent $2.2 million and the winner spent just $60,000, with zero spent on broadcast or cable.&rdquo;&nbsp;
Read that last line again.&nbsp;
It&rsquo;s a whole new world when a U.S. Senate primary candidate spends nothing on TV ads and wins by a 56-44 margin.
Yes, Nixon has an uphill battle against a Republican opponent in a red state. That&rsquo;s not the point. The point is that Nixon&rsquo;s win is the death knell for local TV stations&rsquo; cash cow. If not tomorrow, then likely before the 2028 presidential campaign cycle begins.
The days are numbered for the pure-play broadcast stocks &mdash; especially the top three station owners Nexstar (NXST), Gray (GTN) and Sinclair (SBGI). Make sure they&rsquo;re not lurking somewhere in your portfolio.
<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" /> Because no one believes the official inflation figures anymore&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7gMqBmriAkSJB3W9a8Nnvr/bd2d315d5cc60fe41184ac4d85d8be96/FMF-Issue-082126-2.jpg" alt="Comic Relief Seinfeld comic strip" width="540px" />
<a id="5"></a>
By the way, a new and rare podcast interview just dropped featuring economist John Williams of Shadow Government Statistics. He&rsquo;s the guy who runs the inflation and job numbers the way the feds did decades ago, when they were still honest. I&rsquo;ll be sure to listen and share highlights next week.
<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: Unfinished COVID Business
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Your Biased COVID Viewpoint&rdquo; says the subject line of a reader email responding to <a href="https://paradigmpressroom.com/post/now-she-tells-us-aoc">last Friday&rsquo;s edition.</a>
&ldquo;Dave, you must live somewhere far from international travel to have such a viewpoint on COVID and the lockdowns. 20/20 hindsight is convenient to such a position.&nbsp;
&ldquo;I personally knew and cared about five people who died of COVID within a month of the lockdowns starting (both before and after). The cities with international airports near the coast were most affected, and especially in NYC, which is a short distance from where I live.
&ldquo;Blaming anyone other than Trump for the majority of the carnage is really not even close to correct. I know you mentioned blaming Trump, but you are blaming him for the wrong reason. Here are his transgressions:
<ol>
<li>Ignoring advice as early as January to shut down incoming international travel. COVID was already starting to be reported as an issue, and erring on the side of caution could have saved lives AND avoided much of the lockdown hysteria.</li>
</ol>
<ol start="2">
<li>Once he closed the international travel down, he only stopped it from China. But people, especially citizens, would find a way to come via Middle Eastern country airports or other routes into NYC instead of LAX or SFO. Additionally, he didn&rsquo;t stop incoming travel from Macau, where all his rich friends go to gamble.</li>
</ol>
<ol start="3">
<li>Time and time again Trump espoused his stupid ideas instead of listening to his experts: bleach injections? Hydroxychloroquine? Etc.</li>
</ol>
&ldquo;The one thing he did right was developing the vaccine.
&ldquo;Most actions are driven by fear, and yes, the lockdowns were an overreaction when looking in hindsight. But nobody knew whom would be affected badly&hellip;what was known was that NYC was running out of ICU beds and places to store the dead. It seemed apocalyptic at the time.&nbsp;
&ldquo;Could they have reopened sooner? I believe so, but Trump used this event politically as he always does: Sow division and confusion. He and his cult followers bought into this so well that my son was assaulted by people he considered friends simply for being worried that going out with them could cause him to bring COVID back to our home and it might cause my death. And the death of my wife, as we are older, and my wife has some of the conditions that were noted as bad for getting COVID.&nbsp;
&ldquo;Worst president EVER! And I am a recovering Republican (can&rsquo;t say I like the Democrats much &mdash; woke definitely went too far)&rdquo;
Dave responds: So&hellip; you&rsquo;re not even asking for a pandemic amnesty. That&rsquo;s hardcore.
<a href="https://5minforecast.com/2022/11/03/the-election-is-already-decided/#255">In the autumn of 2022</a>, Brown University health economist Emily Oster penned an article for The Atlantic &mdash; kinda-sorta apologizing on behalf of her fellow control freaks and power trippers, saying it was time for all sides to forgive and forget.&nbsp;
"Treating pandemic choices as a scorecard on which some people racked up more points than others is preventing us from moving forward,&rdquo; she wrote. &ldquo;We have to put these fights aside and declare a pandemic amnesty."
Of the most draconian measures, she simply said, &ldquo;We didn&rsquo;t know.&rdquo;
As the Substack blogger known as El Gato Malo wrote at the time, &ldquo;The precautionary principle does not state, &lsquo;Every time you get scared, do the most radical thing you can think of if it feels like safety&rsquo; &mdash; that is precisely what it warns against.&rdquo;
These issues are not in the past, and we can&rsquo;t afford to put them there. They still matter.
We give the last word today to Chase Oliver, the Libertarian Party&rsquo;s 2024 presidential candidate&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7GY1AKXHMkX9yuoMM84DQ4/e7d0084d9eedc113dbbd004b6fa2f432/FMF-Issue-082126-3.jpg" alt="Chase Oliver quote" width="540px" />