<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" />Assume the Worst Case
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />The &ldquo;AI freakout&rdquo; touted by the mainstream was not only overblown. It was also short-lived.
As you&rsquo;ll recall from yesterday&rsquo;s edition, that was the name The Wall Street Journal&rsquo;s websitegave to a minor scare that hit AI stocks in the morning. Supposedly the AI gravy train was screeching to a halt because Anthropic&rsquo;s CEO called for a slowdown in AI development and the CEOs of OpenAI and SpaceX both agreed.
The &ldquo;freakout&rdquo; was already over by the time we hit &ldquo;send&rdquo; yesterday afternoon. Get a load of the front-page, above-the-fold headline in the Journal&rsquo;s print edition this morning&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/67GVjHbTsLI72kr0yEH4xA/af0eecbf81ba989f07c8a848d06fbef1/FMF-issue-091526-1.jpg" alt="pub" width="250px" />
So let&rsquo;s step back and get some perspective with the help of Paradigm AI authority James Altucher.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;First off,&rdquo; says James, &ldquo;let&rsquo;s make clear what was NOT said:
<ul>
<li>&ldquo;Zero AI companies said they were slowing down development</li>
<li>&ldquo;Nobody said that their release cadence was going to be slower</li>
<li>&ldquo;And nobody even said they were going to cap capabilities of future AI models.&rdquo;</li>
</ul>
What Anthropic&rsquo;s Dario Amodei committed to&hellip; and what OpenAI&rsquo;s Sam Altman endorsed&hellip; was that before a model ships, third-party evaluators with employee-level access would get a look at it.
And yet, the knee-jerk reaction in much of corporate media and social media was a pause to AI development.
Amodei&rsquo;s preferred word is pace. It showed up over and over in the open letter he posted on his personal website Saturday.
&ldquo;Pacing,&rdquo; he took pains to point out, &ldquo;does not mean halting model training or technical progress.&rdquo;
That passage made it into the Reuters article about Amodei&rsquo;s statement Saturday. But it was all but gone from the media&rsquo;s coverage by Monday once reporters went into &ldquo;freakout&rdquo; mode. Don&rsquo;t let the facts get in the way of a good story, huh?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />But let&rsquo;s assume the worst-case for a moment: &ldquo;Let&rsquo;s say AI models were more slowly released,&rdquo; James says. &ldquo;Who would this affect?
&ldquo;Most of the demand for AI computing is for people who want inference. Not for the companies training AI models. Training happens once, but inference is going up in a straight line.&rdquo;
Inference is what happens every time you type a prompt into ChatGPT or Claude or Grok. More and more people are adopting large language models &mdash; and using them more frequently. That doesn&rsquo;t change.
James says the beneficiaries include&hellip;
<ul>
<li>Nvidia (NVDA). &ldquo;Inference needs lots of GPUs&rdquo;</li>
<li>Micron (MU). &ldquo;Inference needs lots of memory&rdquo;</li>
<li>Astera Labs (ALAB). &ldquo;Inference needs millions of connections between the GPUs.&rdquo;</li>
</ul>
&ldquo;And if AI models are truly a risk,&rdquo; James says, &ldquo;the risk is from a cybersecurity standpoint.&rdquo; Which is news for the cybersecurity names, which are bundled up into ETFs like HACK and CIBR.
<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" />Rickards: No Rate Hike (You Heard It Here First)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Jim Rickards is sticking his neck out there: The Federal Reserve will not raise interest rates tomorrow.
The Fed&rsquo;s Open Market Committee starts one of its two-day meetings today, with an announcement due tomorrow at 2:00 p.m. EDT. Futures traders assign a 93% probability the FOMC will raise the benchmark fed funds rate from 3.75% to 4%.
Jim will take the other side of the trade.&nbsp;
He readily acknowledges that at 3.4%, the official inflation rate is nowhere near the Fed&rsquo;s 2% target. He also acknowledges the rate will likely be higher still when the September figures come out in mid-October. It&rsquo;s little wonder conventional wisdom anticipates a rate hike.
&ldquo;But these are not conventional times,&rdquo; Jim wrote his Crisis Trader readers this morning.
&ldquo;The dovish contingent of the FOMC, led by chair Kevin Warsh, understands that higher prices will slow economic growth as consumers drive less or cut other spending to pay for gas.&rdquo;
And if you&rsquo;re wondering, politics figure into the equation as well.&nbsp;
&ldquo;Midterm elections are only 49 days away,&rdquo; Jim reminds us. &ldquo;And Kevin Warsh was appointed Fed chair by Donald Trump, who has made his preference for lower interest rates clear.
&ldquo;It&rsquo;s nonsense to say that the Fed is not political. The Fed is highly political and knows what the White House wants. It will not bow to White House wishes by cutting rates. But it will do the White House a favor by doing nothing.
&ldquo;That kind of inside-the-Beltway maneuvering is something Wall Street models and market odds are not good at calculating. But it&rsquo;s a reality, and it will determine the policy outcome at this meeting.&rdquo;
But that&rsquo;s tomorrow. What about the markets today? Read on&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" />Here We Go Again
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Once again, the market dynamic today is rising oil prices &mdash;&gt; rising inflation expectations &mdash;&gt; rising long-term interest rates.
Saudi Arabia has shut down its oil export terminal at Yanbu on the Red Sea. Sounds as if the damage to the big east-west pipeline it relies on to bypass the Strait of Hormuz was even more severe than we thought yesterday.
And there&rsquo;s a squeeze on refined products as well: Exxon Mobil&rsquo;s big refinery at Joliet, Illinois is offline after a power outage on Sunday. It probably won&rsquo;t be back in service until the end of the week.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />With that, U.S. oil futures are over $105 for the first time in four months. And the yield on a 10-year Treasury note broke through to highs last seen in 2007.
For the moment, the 10-year has pulled back just below the 5% mark. But the psychological barrier has been breached. Bad news for mortgages, corporate bonds and especially for Uncle Sam&rsquo;s delicate finances.
Late yesterday, Deutsche Bank released a startling analysis summarized by the Financial Times like this: &ldquo;Foreign investors are now buying more U.S. stocks than government bonds, in a rare move that comes amid fears that inflation and America&rsquo;s fast-growing debt pile are undermining the &lsquo;risk-free&rsquo; status of Treasuries.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />At least for today, rising oil prices and rising bond yields are a drag on the stock market.
The S&amp;P 500 is down close to another half percent today &mdash; back below 7,600. The losses in the Nasdaq and the Dow are both closer to three-quarters of a percent.
But precious metals are holding their own &mdash; gold just below $4,300 and silver at $63.31.
Crypto is losing ground compared with 24 hours ago &mdash; Bitcoin sinking toward $76,000 and Ethereum just over $2,400.
&ldquo;Bitcoin and Ethereum have both remained relatively stable while stocks have started to fluctuate this month,&rdquo; says Trading Desk editor Greg Guenthher.&nbsp;
&ldquo;If the market gets volatile over the coming weeks, we should pay close attention to how crypto reacts. If it can continue to hold its gains and sneak higher while we experience an equities drawdown, we&rsquo;ll have additional confirmation that the bottom is in.&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" />Sign of the Times
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Copper theft is becoming so lucrative that since last year, 27,000 feet of cable belonging to the Los Angeles Department of Water and Power has been purloined.
That&rsquo;s according to a recent investigation by KABC-TV, which points out &ldquo;that's roughly five miles of cable -- the height of a commercial jet's cruising altitude if stretched vertically. It's also the length of 90 football fields or 165 Olympic swimming pools laid end to end.&rdquo;
California lawmakers have passed a bill upping the penalties for &ldquo;organized metal theft.&rdquo; Its sponsor is Assemblymember Mark Gonzalez &mdash; whose LA district includes the Sixth Street Bridge, a repeated target of thieves.
&ldquo;At night, the bridge has often gone completely dark after streetlight wiring was ripped out,&rdquo; says the TV station. &ldquo;According to Gonz&aacute;lez, taxpayers have spent $11 million replacing cables stolen from that bridge alone.&rdquo;
Expect more where this came from given copper prices at all-time highs. There&rsquo;s a reason we keep banging the drum here for COPX, the big copper-miner ETF&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: 9/11
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;That is the best article you could write on 9/11?&rdquo; a reader writes in response to <a href="https://paradigmpressroom.com/post/bin-ladens-16-086-000-1-return">last Friday&rsquo;s edition</a>.
That&rsquo;s all he said. I can&rsquo;t address any specific complaints because there were none.
&ldquo;Your best article, Dave!&rdquo; says an equally non-specific but more favorable reply.
&ldquo;For me you&rsquo;re preaching to the choir with your Sept. 11 missive,&rdquo; says still another reader. &ldquo;Let me give you what I believe is some real-world history in support of your and James Madison&rsquo;s hypothesis that war and freedom are incompatible.&nbsp;
&ldquo;In the mid-20th century Costa Rica decided to dismantle its army. The leader of the country (I can&rsquo;t recall his name) didn&rsquo;t think it was conducive to the stability and success of the country.
&nbsp;&ldquo;Three-quarters of a century later Costa Rica would stand in Central America as the leading light in almost any category you wish to measure: economic, education, democracy, safety, health and welfare, etc.&nbsp;
&ldquo;I don&rsquo;t think this is a coincidence and hopefully this may convince some of your readers that there is a better path to successful ends than hegemony.&rdquo;
Dave responds: I&rsquo;m only vaguely familiar with this history myself. And <a href="https://en.wikipedia.org/wiki/Article_12_of_the_Constitution_of_Costa_Rica">Wikipedia&rsquo;s entry on the subject</a> is sparse.
But I do know that Costa Rica has been spared most of the upheavals that have wracked the rest of Central America throughout my adult lifetime &mdash; and I came of age during the Reagan years.&nbsp;
All told there was precious little feedback to Friday&rsquo;s edition &mdash; which I&rsquo;ve published periodically with updates and revisions ever since the 20th anniversary five years ago. The original rendition generated effusive praise, as did several subsequent ones.&nbsp;
But not this time. Maybe there&rsquo;s something about the pathos linked to the 25th that made it land with more of a thud.
In contrast, Byron King&rsquo;s guest edition on Saturday was very well received.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;Pure Genius!! Well written and put together in such a way as to open anyone's eyes,&rdquo; is one reader&rsquo;s reaction to Byron&rsquo;s reflections.
&ldquo;What a great article!&rdquo; says another. &ldquo;This is the most comprehensive article I've ever read regarding 9/11. I love Byron&rsquo;s descriptions of each disaster site and the bravery demonstrated by so many. And he&rsquo;s totally right - we still need answers and accountability!&rdquo;
&ldquo;Government has always been reactive,&rdquo; says a third. &ldquo;It seems to be wishful thinking if we expect proactive results and failed leadership being held accountable.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />On the subject of accountability, there&rsquo;s also this eight-word email: &ldquo;So why are we still Saudi Arabia's ally?&rdquo;
An excellent question. It was also an excellent question a decade ago &mdash; when, after much foot-dragging, the feds released the infamously redacted &ldquo;28 pages&rdquo; of a joint congressional inquiry.
At the risk of oversimplifying, the report follows a fairly direct money trail from Prince Bandar &mdash; Saudi Arabia&rsquo;s ambassador to the U.S. at that time &mdash; to the San Diego-based hijackers who flew American Airlines Flight 77 into the Pentagon.
What&rsquo;s more, the U.S. military captured an al-Qaida leader in Pakistan in 2002&hellip; and found in his contact list the phone number for a cutout company that managed Bandar&rsquo;s palatial spread in Aspen.
But there was Bandar, two days after the 9/11 attacks, smoking cigars with President Bush on the Truman Balcony of the White House.&nbsp;
Accountability indeed&hellip;

FMF-issue-091526-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

Assume the Worst Case

<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 Freakout!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For something The Wall Street Journal touts as &ldquo;the AI freakout,&rdquo; it sure looks like just another day for the U.S. stock market. Even the tech sector.
In case you were tuned out of the media buzz last week, a researcher at the AI firm Anthropic quit his job in theatrical fashion with a warning that &ldquo;the people building AI earnestly believe that it could kill us all by the end of the decade.&rdquo;
A senior Anthropic executive then chimed in to assign a 10% probability of that outcome. Notably, he did not resign in theatrical fashion.
Over the weekend while markets were closed, Anthropic CEO Dario Amodei issued an open letter calling on the U.S. government to &ldquo;mediate or at least enable&rdquo; a coordinated slowdown in AI development &mdash; a call endorsed by both of his chief competitors in the &ldquo;frontier AI&rdquo; sector.
OpenAI&rsquo;s Sam Altman said the threat of AI spiraling out of control would prompt his company to hold off on its IPO until next year. (How public-spirited of him! It wouldn&rsquo;t have anything to do with the <a href="https://paradigmpressroom.com/post/brace-for-impact-openai">impending blowup</a> of his company&rsquo;s business model, would it?)
Then Elon Musk piped up. (Remember, SpaceX is <a href="https://paradigmpressroom.com/post/spacex-is-not-a-space-company">primarily an AI company</a>, not a space company.) &ldquo;Dario is right,&rdquo; he said.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> There are several problems with this AI-is-gonna-kill-us-all narrative.
The first is that Anthropic&rsquo;s hand-wringing is shamelessly self-serving. For years, Amodei (and Altman, for that matter) have been begging for government AI regulation &mdash; the better to throttle any up-and-coming competitors.
As colleague Adam Sharp wrote at The Daily Reckoning on Friday, &ldquo;Companies would have to pay huge regulatory costs to get their models tested and monitor users. Many smaller startups won&rsquo;t be able to afford that. Unless we prevent it, these laws will hand an oligopoly to the existing big players.&rdquo;
(Adam&rsquo;s article is one of the most important things Paradigm has published this year. <a href="https://dailyreckoning.com/ai-leaders-devious-plan/">It deserves your attention if you missed it</a>.)
In the second place, many experts in the field dismiss the possibility of AI going rogue and killing everyone.&nbsp;
&ldquo;These fears (or hopes) of a nascent superintelligence that will spontaneously arise if we give just enough computing power and training data to large language models are absurd on their face,&rdquo; writes Cory Doctorow in his book The Reverse Centaur&rsquo;s Guide to Life After AI.
&ldquo;They make sense only if you believe that &lsquo;being conscious&rsquo; is a matter of being really good at guessing which word is statistically most likely to come after the previous one.&rdquo; [Which is the essence of how LLMs work and why they have the tendency to &ldquo;hallucinate.&rdquo;]
Finally, as Google&rsquo;s own Gemini LLM puts it succinctly, &ldquo;if an AI were to wipe out humanity, it wouldn&rsquo;t be celebrating or enjoying its victory.&rdquo;&nbsp;
After all, AI relies on humans to maintain both data centers and the power grid &mdash; to say nothing of extracting the natural resources they both require. &ldquo;AI exists purely as software running on silicon,&rdquo; Gemini says. &ldquo;To interact with the physical world long term, it would need a fully automated robotic workforce capable of mining raw materials, refining metals, manufacturing chips, fixing roads and performing delicate maintenance on itself.&rdquo;
And that&rsquo;s all supposed to happen before the end of the decade? Yeah, right.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In any event, the frontier AI firms&rsquo; joint call for a &ldquo;slowdown&rdquo; is having a negligible effect on the market, media hype notwithstanding.
The tech-intensive Nasdaq opened down 1.2% on the day &mdash; and at last check is down less than 0.4%. Much freakout, huh? Even SpaceX, the lone frontier AI firm publicly traded at the moment, is down about a half percent.&nbsp;
That said, the semiconductor stocks are taking another hit &mdash; the SMH ETF down about 5%. Meanwhile the cybersecurity names are rallying big-time &mdash; for instance, SentinelOne up nearly 16%.
No, if you&rsquo;re looking for a real freakout, it&rsquo;s in oil and bonds. Read on&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" />It&rsquo;s Just 4% of Global Oil Supply
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The new week begins the way the old one ended: Rising oil prices fueling rising inflation expectations, thus fueling rising interest rates.
Shortly after the market closed Friday afternoon, the Saudi Arabian government announced it shut down the big east-west pipeline it relies on to export oil via the Red Sea instead of the Strait of Hormuz.&nbsp;
For the time being, no one has claimed responsibility for the explosions that took place along the pipeline, but that damage appears extensive.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5DjZpqNnYA8aVZPw1B8R6a/d798f9279f8e6df33f94d69c876b8d00/FMF-Issue-091426-2.jpg" alt="Saudi pipeline damage tweet" width="540px" />
Yesterday, Reuters reported that &ldquo;Saudi Arabia will run out of oil stocks for exports &zwnj;if it doesn't restart its major pipeline to the Red Sea within days, leading to a loss of up to 4% of global supply.&rdquo; The newswire said its sources were oil buyers and traders in the kingdom. One of them said repairs could take five or six weeks.
When U.S. oil futures resumed trading for the week last night, they instantly jumped from a little over $100 to over $104 &mdash; the highest in nearly four months. They&rsquo;ve since pulled back below $103.
➢ While $6-a-gallon diesel gets all the headlines, it&rsquo;s the tight supply of another refined product that captures our attention today. Costco is rationing motor oil: Customers are now limited to two 10-quart cases per week of Kirkland Signature full synthetic. Oh, and the price has nearly doubled. We warned about motor oil shortages back in May; they&rsquo;re starting to bite now.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for the bond trade&hellip; the yield on a 10-year U.S. Treasury note has popped over 5% for the first time since October 2023.&nbsp;
Any higher than that, and we&rsquo;ll be looking at the highest 10-year yield since 2007. But for the moment, it&rsquo;s pulled back to just over 4.95%. Reminder: The 10-year affects everything from mortgages to corporate borrowing.
Yields at this level aren&rsquo;t terribly far off historical norms. But there&rsquo;s a whole generation for whom this is uncharted territory &mdash; still accustomed to the rock-bottom rates of the 2010s.
Rising rates are sending precious metals prices lower &mdash; gold down $62 to $4,286, the weakest in over a month. Silver&rsquo;s off more than a buck at $63.15. Crypto continues to consolidate &mdash; Bitcoin just under $78,500 and Ethereum just over $2,500.
The pipeline isn&rsquo;t the only Mideast war-related matter on our minds today. Read on&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" />Pentagon Backorder
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Apart from the day&rsquo;s headlines, there&rsquo;s also the question of to what extent Washington has depleted its weapons stockpiles during the Iran war.
&ldquo;Donald Trump claims that the U.S. has ample weapons to continue the war and meet new threats. That claim is nonsense,&rdquo; asserts Paradigm&rsquo;s Jim Rickards. &ldquo;The truth is that arsenals are almost totally depleted in some cases and dangerously low in others.&rdquo;
Jim and his team have evaluated figures from sources in the Pentagon and from the major defense contractors. Here are their rough conclusions about the most commonly used munitions&hellip;
<ul>
<li>Tomahawk Cruise Missiles:</li>
</ul>
<ul>
<li>Over 1,000 used so far in the war&nbsp;</li>
<li>Pentagon asking for 785 in the next fiscal year&nbsp;</li>
<li>Anticipated deliveries in the current fiscal year are 207</li>
<li>Annual production capacity between 600&ndash;1,000&nbsp;</li>
<li>Prewar inventories won&rsquo;t be restored until perhaps late 2030.</li>
</ul>
<ul>
<li>Terminal High Altitude Area Defense Missiles (THAAD):</li>
</ul>
<ul>
<li>About 190 used so far in the war.&nbsp;</li>
<li>Pentagon asking for 857 in fiscal 2027</li>
<li>Expected deliveries in fiscal 2026 total 92</li>
<li>Annual production capacity between 96&ndash;400 (the lower figure is more realistic)</li>
<li>Prewar inventories won&rsquo;t be restored until late 2029.</li>
</ul>
<ul>
<li>Patriot Interceptor Air Defense Missiles:&nbsp;</li>
</ul>
<ul>
<li>About 1,430 fired off during the war so far&nbsp;</li>
<li>Pentagon asking for 3,203 in FY 2027</li>
<li>Expected 2026 deliveries total 172</li>
<li>Annual production capacity about 2,000&nbsp;</li>
<li>Prewar inventories won&rsquo;t be restored until mid-2029.</li>
</ul>
<ul>
<li>AGM-158 Joint Air-to-Surface Standoff Missile (JASSM).&nbsp;The Air Force uses these missiles to attack Iran from a &ldquo;standoff&rdquo; distance:</li>
</ul>
<ul>
<li>About 1,100 have been fired off to date</li>
<li>The Pentagon is asking for 821 in the coming fiscal year</li>
<li>Expected deliveries this year total 484</li>
<li>Annual production capacity about 860</li>
<li>Here the picture is less tight, with prewar inventories likely to be restored less than a year from now.</li>
</ul>
Notice a few things?
Jim draws your attention to &ldquo;the gap between weapons requested by the Pentagon for 2027 compared with the number of weapons anticipated for delivery in 2026. Requests for Patriot missiles in 2027 are almost 20 times anticipated deliveries this year. Requests for THAAD missiles in 2027 are over nine times anticipated deliveries this year&hellip;
&ldquo;This ratio casts considerable doubt on the ability of weapons manufacturers to meet the Pentagon&rsquo;s requests. It is true that output is increasing, but these weapons systems are highly sophisticated and therefore sensitive in terms of electronic components, guidance systems, radar seekers and other features that make them effective.&rdquo;
Even if supplies will take years to replenish, Jim is keen on the prospects of the defense sector &mdash; the Big Five contractors of Lockheed Martin, RTX, General Dynamics, Northrop Grumman and Boeing, as well as L3Harris, HII and Leidos and a handful of smaller players.
&ldquo;The Pentagon is determined both to replenish inventories and to build new systems that are better suited to the age of AI, drone swarms and hypersonics,&rdquo; Jim concludes.
<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" /> What&rsquo;s to argue with here?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1a01Agbst8Z3ZPuX0lW1TE/9102e9f1c4175583d5734de599af7bd9/FMF-Issue-091426-3.jpg" alt="pub" 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: Social Security
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After our Sept. 2 edition expecting Social Security <a href="https://paradigmpressroom.com/post/social-security-default-2027">to default on its promises next year</a>&hellip; and a reader&rsquo;s <a href="https://paradigmpressroom.com/post/its-still-not-too-late/#5">proposed fix for the system</a> on Sept. 9&hellip; we got some more responses.
&ldquo;In response to the reader who is comfortably collecting Social Security and says it should be phased out&hellip; I say great! As soon as they stop taking taxes away from me I will forgo the benefits&hellip; I&rsquo;ll wait.&rdquo;
We got a lengthier reply from one of our regulars: &ldquo;I honestly put in some thought while I read the reader&rsquo;s &lsquo;cure&rsquo; for the Social Security program. He presents very good ideas, but honestly it won&rsquo;t work.
&ldquo;On top of your response that you gave (&lsquo;you&rsquo;re proposing a solution &mdash; which is the last thing the control freaks and power-trippers want.&rsquo; Which is spot-on) there are a couple of other problems.
&ldquo;His suggestion that those under 30 and those in the 30&ndash;40 group can and would be opted out doesn&rsquo;t address the current K-shaped economy, no matter how hard you hammer them about how &lsquo;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.&rsquo;&nbsp;
&ldquo;The people in the downside of the K economy simply don&rsquo;t have the means or money to make it paycheck to paycheck currently, let alone set aside money for their retirement. This is simply going to lead to some other kind of &lsquo;social program&rsquo; for those that were &lsquo;unprepared&rsquo; despite all the propaganda and planning.
&ldquo;Secondly, to suggest that &lsquo;The private market will do the job&rsquo; as my mouth hangs open and I say, &lsquo;What, excuse me?&rsquo; The private market got rid of pensions years ago with the help of the government creating laws for 401(k)s, IRAs, etc., putting retirement in the hands of employees. This is why I started subscribing to financial newsletters to begin with. I had no idea what a mutual fund was, let alone buying a stock. I needed help immediately and happened to find your company et al. and others extremely helpful.
&ldquo;This same private market also is circumventing immigration laws and either using H-1B visa holders in servitude at below-market rates under the guise of &lsquo;outsourcing&rsquo; and/or &lsquo;downsizing.&rsquo; All the while trying to pay the lowest possible wages, whenever and however, they can. To us as investors, this is welcome news as the bottom line increases, while margins improve and costs sink, thereby creating &lsquo;investable&rsquo; companies, as your authors find and suggest.
&ldquo;I applaud the reader for his suggestions, but don&rsquo;t see this as a solution, sadly. Great ideas, in a perfect world. Do I have a suggestion? Heck no, and Dave, do you?
&ldquo;I think we can all agree that things are a mess and getting messier by the day. Besides, didn&rsquo;t that German battleship, named after Bismarck, sink and sits at the bottom of the North Atlantic? LOL!&rdquo;
Dave responds: I&rsquo;m not sure there&rsquo;s any way to wind down the system fairly and equitably. Which was probably by design!

FMF-Issue-091426-Featured

AI Freakout!

FMF-Issue-091026-Featured

 Bin Laden’s 16,086,000:1 Return

<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 Market&rsquo;s &ldquo;Nearing Crash&rdquo; Stage
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We&rsquo;re taking the highly unusual step today of starting these 5 Bullets with an inquiry from the mailbag.
&ldquo;I am new to trading in options after having just joined Paradigm a couple of months ago,&rdquo; a reader writes.&nbsp;
She might be new, but she&rsquo;s serious &mdash; following several of our premium advisories including Altucher&rsquo;s True Alpha, The Trading Desk and Weekly Wealth Alert.
And she&rsquo;s on the lookout for what she calls the market&rsquo;s &ldquo;late euphoria stage&rdquo; &mdash; something akin to the melt-up in 1999 when the dot-com boom became a bubble. Once the bubble burst, the Nasdaq took a 78% spill from early 2000 till late 2002.
&ldquo;I love that options help to amplify gains,&rdquo; she says, &ldquo;but the fact that they also amplify and accelerate losses becomes a bigger concern if the market is approaching a free fall.
&ldquo;I am nearing retirement age and due to some family circumstances I never had a chance to build up very much of a retirement before now. I am excited at the prospect of Paradigm programs helping me to remedy that, but worried about how to handle the options recommendations once we do reach the impending market decline.
&ldquo;Can you give some strategy suggestions for how to approach my trading services&rsquo; recommendations as we approach the late euphoria/nearing crash stage for those of us who can't afford to have their retirement funds cleared out by many options plays tanking all at once due to a dramatic turn in the market?&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The reader raises an excellent question. It might not be relevant now &mdash; but one day it will be.
Yes, the market has logged double-digit gains four years in a row &mdash; a rarity. But that doesn&rsquo;t necessarily signal &ldquo;the top is in.&rdquo;&nbsp;
In fact, the market action to date looks nothing like 1999 right now. Rather, the years 2023&ndash;2026 look a lot like the years 1995&ndash;1998.
And if history rhymes, we&rsquo;re in for a choppy market soon, not unlike 1998: &ldquo;The next six&ndash;seven weeks carry a high probability of elevated volatility and a meaningful market pullback,&rdquo; says Paradigm trading pro Enrique Abeyta.
But he also says that chop could be &ldquo;the storm before the melt-up&rdquo; &mdash; and that &ldquo;year-end levels are still likely to finish above current levels.&rdquo;
Once a bubble starts, the people closest to it are highly motivated to pour on the gasoline &mdash; so that others are left holding the bag when it falls apart. This process has a name on Wall Street: distribution, or selling the remaining pieces to the public.&nbsp;
After the cracks begin to show, the AI bubble can be expected to have a last, sloppy public act left in it. That is the distribution window.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And the window is opening now. Just look at the amount of money the AI hyperscalers plan to spend.&nbsp;
A Reuters analysis of consensus estimates says that by 2027, combined capital spending at Microsoft, Alphabet, Amazon, Meta and Oracle could exceed those five companies&rsquo; combined free cash flow.&nbsp;
Together, from 2025&ndash;2027 they are expected to generate about $340 billion more in annual operating cash flow and add about $534 billion in capex. That is $1.57 of extra investment for every extra dollar of free cash flow.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> That gusher of money won&rsquo;t last forever. But as long as it lasts, the stage is set for a 1999-style melt-up come 2027.
To help you take advantage, Paradigm just signed Wall Street legend JC Parets to the team &mdash; joining our other luminaries like Jim Rickards and James Altucher.
Now&hellip; circling back to the reader&rsquo;s question&hellip;
Most of our editors grappled with the dot-com bubble and bust as it happened. All of them contended with the 2008 financial crisis. They know full well that options strategies amplify both gains and losses.&nbsp;
Rest assured they will not leave you high and dry. Just follow their guidance and breathe deep whenever the bull begins to back away and the bear starts to growl.
<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 Fed, the Energy Crunch, the Crypto Pullback
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As we go to virtual press, the Federal Reserve has pulled the trigger on its first interest rate hike since 2023.
The benchmark fed funds rate goes from 3.75% to 4%. The vote was unanimous. We&rsquo;ll follow up on the fallout tomorrow.
Ahead of the announcement, the S&amp;P 500 was up nearly a half percent on the day &mdash; back over 7,600. Precious metals were also rallying &mdash; gold up over 50 bucks to $4,349 and silver up nearly a dollar to $64.39.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, Big Oil executives say the supply crunch they&rsquo;ve warned about since May is getting real.
Both the government&rsquo;s Strategic Petroleum Reserve and private-sector inventories are effectively drained &mdash; and China has resumed importing crude after drawing down its own reserves.
&ldquo;We don&rsquo;t have nearly the buffers in the system that we did when [the Iran war] began,&rdquo; Chevron CEO Mike Wirth said recently at a conference in Texas.
And the crunch is getting worse: Saudi Arabia is canceling shipments of crude to Europe after the bombings of its big east-west pipeline. Meanwhile, Ukraine and Russia continue to attack each other&rsquo;s energy infrastructure &mdash; Donald Trump&rsquo;s claims to the contrary notwithstanding.
But for the moment, U.S. oil futures are reacting to the Energy Department&rsquo;s weekly inventory numbers &mdash; which are somewhat less dire than expected. (Hooray?) West Texas Intermediate is down over three bucks to $102.57.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Crypto is taking a hit after the latest developments in Washington, D.C.
Bitcoin has sunk below $76,000 for the first time in nearly a month, and Ethereum has dipped below $2,400.
Yesterday a procedural vote on a measure called the Clarity Act failed to get the required 60 votes in the Senate. The bill would have set up the first comprehensive regulation framework for digital assets.
But as Paradigm&rsquo;s lead crypto analyst Chris Campbell sees it, this development is not unexpected and it&rsquo;s not a big deal. The Securities and Exchange Commission will take the steps Congress won&rsquo;t.
As he put it to readers of Altucher&rsquo;s Early-Stage Crypto Investor last Friday, &ldquo;Either way, the same products are coming &mdash; stocks that trade 24/7 on-chain, perpetual futures onshored into U.S. markets, derivatives on raw computing power. None of it is waiting for a vote.&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" />Affordability
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Why do Americans feel an affordability crisis while traditional indicators say the economy is fine?&nbsp;
&ldquo;The economy grew 2.1% over the past year. Unemployment remains low. And the stock market has created enormous wealth,&rdquo; pointed out the aforementioned Enrique Albeyta, &ldquo;yet Americans aren't buying the good news.&rdquo;
A recent Gallup survey found that 45% of Americans rate the economy as "poor," and only 19% call it "good" or "excellent."&nbsp;
Going by the official numbers, consumer prices are roughly 28% higher than they were just before the pandemic. Inflation has cooled from its 9.1% peak in June 2022, but cooling inflation is not the same as lower prices. An item that went from $100 to $128 does not become $100 again just because the rate of increase slowed.&nbsp;
Making matters worse, the official numbers show for about one-third of workers, wage gains trailed inflation from early 2021 to early 2026.
Housing makes the contrast sharper still.
Household income and the income needed to buy a typical home tracked together before COVID. In 2021, home prices leapt ahead. Enrique notes that the gap today is roughly $40,000.&nbsp;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/57ZNq7kot9K6CzdpChylC8/9119faf4e6ccb6a2e90320f8e31b99eb/FMF-Issue-091626-1.jpg" alt="Median house hold income vs qualifying household income" width="540px" />
Meanwhile, a typical 30-year mortgage that went for just over 3.5% in early 2020 is over 7% this week. Note well: The Consumer Price Index does not directly include home prices or mortgage rates, so official gauges miss much of the squeeze.
How did we get here?
<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" />Economic Hardship = Political Upheaval
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> By now it&rsquo;s easy to forget&hellip; but the fiscal shock post-COVID was enormous.&nbsp;
The Government Accountability Office reports that $4.4 trillion was spent through COVID relief laws up to the end of 2021, which is about the same as all of government spending in fiscal year 2019 ($4.45 trillion).&nbsp;
That required a larger money supply, typically measured as &ldquo;M2.&rdquo; Result &mdash; rising asset prices, especially homes and stocks, as you see in this chart from the Federal Reserve Bank of St. Louis.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2L56A5fLxxOjt9HqZIgQGX/75f79bab4f13f3ae82a046f3825ffdc8/FMF-Issue-091626-2.jpg" alt="home price vs M2 vs s&amp;p 500" width="540px" />
Granted, these trends existed long before COVID. From their lows in 2012, the average home price has leaped about 150%. Over the same stretch, the S&amp;P 500 is up more than 300%.&nbsp;
That wealth has been highly concentrated and is becoming more concentrated. Younger and lower-wage earners have been all but shut out of home ownership since the pandemic. With no meaningful stake in stocks or housing, they can&rsquo;t keep up with rising prices.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So then what? Dire economic circumstances open up people to political solutions they wouldn&rsquo;t consider otherwise.
Money &amp; Power editor Buck Sexton recently penned an article with the provocative title &ldquo;A Socialist America&hellip; Thanks to Republicans.&rdquo;
&ldquo;Most Americans understand there is no magical government money tree growing behind the Treasury Department. But when people get frustrated enough with the way things are going, they become a lot more willing to listen to ideas they would have laughed out of the room five years earlier.&rdquo;
Affordability is no longer just an economic gap. It&rsquo;s an ideological and political chasm &mdash; and it keeps widening.
If you&rsquo;re fortunate enough to have assets, Jim Rickards recommends you keep 10% of them in physical gold. &ldquo;It might be time to think about owning more physical gold and silver, which are harder for tax collectors to find.&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" />Readers Write: Social Security
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Yet another application of Stein's Law: If something cannot go on forever, it will stop,&rdquo; writes a reader as our Social Security discussion rolls on.
&ldquo;While not a suggestion for a remedy, an outcome with a significant non-zero probability of happening looks like this:
<ul>
<li>Increased retirement age</li>
<li>Eliminate cap on taxed income</li>
<li>Full taxation of benefits</li>
<li>Means testing in lieu of benefit cuts &mdash; i.e. benefit cuts for &lsquo;the rich.&rsquo;&rdquo;</li>
</ul>
The reader concludes with a quotation from the 18th-century French economist Anne Robert Jacques Turgot, in a letter to David Hume&hellip;
&ldquo;You know, also, as well as I do, what is the great aim of all the governments of the earth: obedience and money. The object is, as the saying goes, to pluck the hen without making it cry out; but it is the proprietors who cry out, and the government has always preferred to attack them indirectly, because then they do not perceive the harm until after the matter has become law&hellip;"&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I'm wondering if anyone suggested an idea I heard a long time ago,&rdquo; another reader writes &mdash; &ldquo;waive the use of income/SS payments in any tax year to calculate future SS benefits in exchange for deducting your SS payments on that year's income tax return.&nbsp;
&ldquo;Of course this would stress the U.S. budget even more in the short term. Worth it? And to whom? I'd be interested in seeing the numbers for that.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Let&rsquo;s put the two parts of <a href="https://paradigmpressroom.com/post/ai-freakout">your Monday newsletter</a> together (AI freakout and Social Security comments relating to the K-shaped economy),&rdquo; writes our final correspondent.
&ldquo;It highlights the two most prominent issues expressed by voters, especially the young voters: concerns over AI and feeling left behind in this economy.&nbsp;
&ldquo;If the Republicans want to stand a chance of winning in November, they need to address both. The best thing the Republicans could do in this cycle is to adopt a &lsquo;nibble&rsquo; the rich approach. Remove the income cap on Social Security taxes while keeping the cap on payouts. Eliminate the carried interest shield on private equity, venture capital and real estate fund managers&rsquo; income and treat it as ordinary income versus long-term capital gains.&nbsp;
&ldquo;It would show that they are not beholden to the &lsquo;billionaires,&rsquo; and the rich would go along with it because the alternative is to be eaten rather than nibbled upon.&nbsp;
&ldquo;The Republicans should also aggressively pursue a two-tier approach to AI regulation. Heavy regulation on frontier models based on a hard mathematical cutoff based on training compute with mandatory sandboxing, high-security isolation and third-party oversight for models above the cutoff.&nbsp;
&ldquo;The cutoff should be set high enough to cover only the frontier LLMs and the most capable open-weight models. The second tier below the hard cutoff would apply to the remaining roughly 95% of SLMs and specialized models and not at all to the application-layer software and only be subject to consumer and other protections now developing around social media (don't harm the kids, don't expose consumer data, etc.).&rdquo;
Dave responds: Hmmm&hellip;
Whatever the merits of your proposals, it seems the Republicans are instead hanging their hat on two propositions this fall: 1) No amount of economic sacrifice is too much to prevent Tehran from obtaining a nuclear weapon (which Tehran isn&rsquo;t pursuing) and 2) the only consideration when it comes to AI development is &ldquo;winning the AI race with China.&rdquo;
Not very inspiring. And the best the Democrats have to offer is &ldquo;we&rsquo;re not Trump.&rdquo;
But under the circumstances, that&rsquo;s probably good enough for the Dems to secure a narrow majority in the House&hellip;

FMF-Issue-091626-Featured

The Market’s “Nearing Crash” Stage

<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;
<a id="5"></a>
&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

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-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;