<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" />Celebrate the Second!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The second day of July 1776 will be the most memorable epoch in the history of America,&rdquo; wrote Founding Father John Adams &mdash; in a letter to his wife, Abigail.
<blockquote>I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires and illuminations from one end of this continent to the other, from this time forward forever more.</blockquote>
No, not the Fourth, Adams believed. The second, 250 years ago today.
It was on July 2, 1776, that the Continental Congress, meeting in Philadelphia, passed a resolution offered nearly a month earlier by Virginia&rsquo;s Richard Henry Lee&hellip;
<blockquote>Resolved, That these United Colonies are, and of right ought to be, free and independent States, that they are absolved from all allegiance to the British Crown, and that all political connection between them and the State of Great Britain is, and ought to be, totally dissolved.</blockquote>
The delegates had spent much of the previous week debating Lee&rsquo;s resolution. Meanwhile, the actual Declaration of Independence languished &mdash; having been submitted by Thomas Jefferson back on June 28.
Only after Lee&rsquo;s resolution passed did the delegates get down to debating and editing Jefferson&rsquo;s document &mdash; which they adopted on the Fourth. Whew.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Then there&rsquo;s the matter of whether the Declaration was signed on the Fourth.&nbsp;
The overwhelming historical evidence is that the signing took place on Aug. 2, once the final draft had been put on parchment.
That said, late in their lives both Adams and Jefferson swore up and down it was signed on the Fourth. The 20th-century Princeton historian Julian Boyd, who spent over 35 years editing The Papers of Thomas Jefferson, was likewise persuaded &mdash; but he remains in the minority.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As long as we&rsquo;re in the weeds here, we should (briefly) return to the inalienable/unalienable thing.
I referred in Tuesday&rsquo;s edition to our &ldquo;inalienable&rdquo; rights &mdash; much to the consternation of a longtime reader who pointed out the language of the Declaration says &ldquo;unalienable.&rdquo; He asserted there&rsquo;s a huge difference. An AI search told me there was no meaningful difference &mdash; but that didn&rsquo;t square with my memory of a lecture I listened to long ago.
Now another reader weighs in: &ldquo;As a copy editor/tech editor for 60 years, I was predisposed to ask the same question way back in school days. The answers I always got were exactly what AI was telling you. The words mean the same.&nbsp;
&ldquo;In my professional opinion, they even mean the same today; anyone trying to build a case for a distinction is simply &lsquo;making a distinction without a difference.&rsquo;&rdquo;
I subsequently managed to locate the lecture recording. Turns out my memory was faulty and the AI take is correct. As the late libertarian scholar George H. Smith said in the 1980s&hellip;
<blockquote>You may have noticed that although we usually say inalienable rights spelled with an &ldquo;i&rdquo; the Declaration speaks of unalienable rights spelled with a &ldquo;u.&rdquo; Does this difference reflect a subtle change in meaning? Most likely not. It probably reflects what we call today a typographical error.&nbsp;</blockquote>
<blockquote>Jefferson used the word inalienable in his original draft. Where and how the &ldquo;i&rdquo; became a &ldquo;u&rdquo; is anyone&rsquo;s guess.</blockquote>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> No matter. Whichever word you use, the meaning is the same &mdash; and essential to the Founders&rsquo; vision. Smith again&hellip;
<blockquote>Jefferson and other radical Whigs believed that human beings have natural rights. Natural rights are rights we were born with, rights we enjoy in virtue of our nature as human beings. These rights do not rely for their validity on any person or government. And no person or government can legitimately violate them or take them from us.&nbsp;</blockquote>
<blockquote>Natural rights seemed so obvious to many 18th-century Americans that the Declaration calls them self-evident.</blockquote>
Natural rights have nothing to do with majority rule &mdash; which too many miseducated Americans believe to be at the heart of the American experiment.
No. Your inalienable rights are rights that no majority &mdash; no matter how large &mdash; can ever take away from you.
That&rsquo;s something to celebrate and preserve &mdash; today, and on the Fourth and on every other day as well.
<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" />Meta&rsquo;s Lies, OpenAI&rsquo;s Backdoor Bailout
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Facebook is a big fat liar,&rdquo; declared our AI authority James Altucher today on the Paradigm mobile app.
When we left you yesterday, the big tech news was that Facebook parent Meta planned to lease its mushrooming data-center infrastructure to outside customers &mdash; that is, getting into the same business as Amazon Web Services, Microsoft Azure and CoreWeave. META shares leaped almost 10% on the day while CRWV tanked hard.
&ldquo;Let's get this straight,&rdquo; says James: &ldquo;META is not selling compute and companies that sold off are going to bounce back hard.
&ldquo;First off, META has paid tens of billions of dollars to CoreWeave, Google and others to BUY compute from them. In fact, META's demand for compute has been so great that Google has had to ration them.
&ldquo;The idea that they have excess compute is ridiculous, particularly when they can't even buy enough compute to meet their own demands.
&ldquo;So why was this news leaked? To get the stock price up so they can sell shares at inflated prices to buy compute.&rdquo;
James says he&rsquo;d be a &ldquo;strong buyer&rdquo; of companies that took a hit from the news yesterday &mdash; CoreWeave as well as memory makers Micron and SanDisk.&nbsp;
Checking our screens CRWV and MU are down another 3.5% on the day&hellip; while SNDK has shed another 11%. META has given up nearly half of yesterday&rsquo;s gains.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile the big tech news today is ChatGPT maker OpenAI pitching the federal government on a backdoor bailout.
&ldquo;OpenAI has discussed giving a 5% stake to the U.S. government,&rdquo; reports the Financial Times, &ldquo;as the $852 billion AI startup seeks to clear political obstacles by securing financial buy-in from the Trump administration.&rdquo;
Giving. Yes, how magnanimous on the part of OpenAI co-founder and CEO Sam Altman. What have we peasant taxpayers done to deserve this splendid humanitarian gesture?
&ldquo;Giving the government an ownership stake,&rdquo; the article goes on, &ldquo;could help secure good relations with the administration and would mark an attempt to address political blowback by sharing the wealth generated by AI with the public.&rdquo;
Wealth? OpenAI is losing money hand over fist &mdash; depending on who you want to believe, $21 billion during 2025, more than double the 2024 total.
As one sober assessment on X puts it, &ldquo;This is bullish if you now assume that the government will be very incentivized to make sure AI doesn&rsquo;t fail&hellip;
&ldquo;This is bearish if you assume that OpenAI is having some serious issues and now the U.S. gov will have to hold the bag when things don&rsquo;t work out.&rdquo;
As you&rsquo;ll recall, OpenAI has filed for an IPO with the Securities and Exchange Commission. But the latest scuttlebutt is that the offering will be pushed back into 2027. One theory is that a delay would improve the odds of the company reaching Altman&rsquo;s goal of a $1 trillion valuation at the time it starts trading publicly. Stay tuned&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" />About the Job Numbers&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> With a three-day weekend starting tomorrow, the government is out with its monthly jobs report a day early.
The wonks at the Bureau of Labor Statistics conjured 57,000 new jobs for June.
On the one hand, that&rsquo;s not an awful number &mdash; not with the U.S. border having been more or less sealed since the spring of 2025. We no longer need 150,000 or more new jobs each month to keep up with population growth; several experts think 30,000 is adequate.
On the other hand, no one among dozens of Wall Street economists was expecting a number this low. In addition, the robust numbers for May and April were revised down &mdash; and not by a little.
One eye-opener in the report was a monthly decline in the number of leisure-hospitality jobs. Really? With the World Cup going on in 11 U.S. cities? OK then&hellip;
The official unemployment rate ticked down to 4.2%.
Your editor is always suspicious of the headline job numbers. Like the official inflation rate, they&rsquo;ve been subject to statistical tinkering over the last 40-plus years.
There are a couple of numbers the statisticians can&rsquo;t game, and they don&rsquo;t look good&hellip;
<ul>
<li>The labor force participation rate &mdash; the percentage of working-age adults either working or looking for work &mdash; sits at 61.5%. Aside from the COVID disruptions of 2020, the number hasn&rsquo;t been this low since June 1976, just ahead of the Bicentennial</li>
</ul>
<ul>
<li>The employment-population ratio sits at 59.0%. It does not sit at 50-year lows &mdash; but it&rsquo;s been dropping like a stone for six months.</li>
</ul>
In theory, the lower-than-expected headline number of 57,000 should be cooling expectations that the Federal Reserve will raise interest rates later this year. And in theory, that should be giving the stock market a lift today.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Instead, the major U.S. stock indexes are a decidedly mixed bag.
At last checkthe Nasdaq was down over a half percent, the Dow up over three-quarters of a percent and the S&amp;P 500 pancake-flat at 7,484.
Instead, it&rsquo;s the precious metals enjoying an across-the-board rally &mdash; gold up $95 to $4,125 and silver up two bucks, just a penny away from $61. Crypto is also bouncing, with Bitcoin well over $61,000 and Ethereum approaching $1,700.
U.S. oil futures have sunk nearly another buck to $67.70 &mdash; where it was on Day 3 of the Iran war.
The latest drop comes despite Vice President Vance telling an interviewer that the purpose of the 60-day &ldquo;memorandum of understanding&rdquo; is merely to buy time &ldquo;to sort of refill the world&rsquo;s oil economy&rdquo; after which the Trump administration would &ldquo;see where the hand is.&rdquo;
Does Vance think no one in Tehran will see this interview?
<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 as long as we had air conditioning on the brain <a href="https://paradigmpressroom.com/post/crank-up-the-all-american-ac">in yesterday&rsquo;s edition</a>&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3adb1tKYwxOy2MOSTSszTx/72956d2ae6c0da0c9c461261a6b57f25/FMF-issue-070226-2.png" alt="Comedic Relief" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Pipelines, American Comeback
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Perhaps you can help me with something. Why would anyone, other than Iran, ship oil (or anything else) through the Strait of Hormuz in 24 months?&rdquo; a reader inquires.
&ldquo;I would think they would be actively expanding pipelines and other infrastructure to bypass this chokepoint in the future &mdash; rather than be held hostage by Iran anytime they want to do so.
&ldquo;I would certainly see Saudi Arabia as leading this and helping the Gulf states, if needed, bring it to fruition. Nothing else makes long-term sense, but I am surprised that there has been no news around planning for a long-term &lsquo;Hormuz alternative.&rsquo;
&ldquo;Love your work!&rdquo;
Dave responds: It&rsquo;s in the works. Or at least there&rsquo;s some jawboning.
Last week the CEO of the French oil giant Total said &ldquo;we must invest in pipelines to bypass the strait, which is an absolute priority." It wasn&rsquo;t clear whether he was speaking of his own firm or if he was using the royal &ldquo;we&rdquo; addressing the industry as a whole.
In any event, pipelines aren&rsquo;t a panacea.&nbsp;
Iran made a strategic decision during the hot-war phase this spring to conduct only theatrical pinprick attacks on Saudi Arabia&rsquo;s Yanbu oil terminal &mdash; which handles the crude coming from an east-west pipeline crossing the kingdom.&nbsp;
If Tehran had decided to attack for real, the impact would have been catastrophic &mdash; taking another 5 million barrels of oil a day off the market.
Too, as our own Byron King points out, oil pipelines don&rsquo;t solve the &ldquo;Hormuz problem&rdquo; for liquefied natural gas, helium, sulfur, fertilizer and so on.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Can I share yesterday&rsquo;s 6th Bullet with friends and family?&rdquo; a reader writes after yesterday&rsquo;s extended edition.
Adds another: &ldquo;I have never read such a positive, encouraging article in any of the
many financial newsletters to which I subscribe. Thank you, Ray Blanco.&rdquo;
Dave: You can always share the material we publish at our daily e-letters. They&rsquo;re free content intended to supplement your paid subscription.
We knew Ray&rsquo;s piece would be a hit. Going into the holiday weekend, we&rsquo;re cross-posting it at several of our sister publications. The handiest link to give to friends and family is <a href="https://rudeawakening.info/posts/the-builders-are-back">today&rsquo;s Rude Awakening</a>. Enjoy!

FMF-issue-070226-Featured

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

Paradigm Pressroom's 5 Bullets

Celebrate the Second!

<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" />Crank up the (All-American) AC
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So you&rsquo;ve probably heard about the heat wave in Europe. But maybe you haven&rsquo;t heard about the crackdowns on people who &mdash; God forbid &mdash; want relief from the heat.
&ldquo;Air conditioning is very rare in European homes,&rdquo; says CNN &mdash; present in only one of every five households. In the U.K., it&rsquo;s only one of every 10.&nbsp;
&ldquo;Many residents ride out the searing heat with the help of electric fans, ice packs and cold showers.&rdquo;
&ldquo;It was my luck,&rdquo; writes Matthew Petti at Reason, &ldquo;that I arrived in Britain to pick up my master's degree just before a heat wave hit&rdquo; &mdash; with daytime highs of 95 Fahrenheit.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It&rsquo;s not that people across the Atlantic relish suffering through the heat. It&rsquo;s that Europe&rsquo;s control freaks and power trippers want people to suffer.
&ldquo;A combination of environmental regulations, NIMBYism and cultural snobbishness have slowed down Europeans who want to buy an AC unit,&rdquo; Petti writes.
For instance&hellip;
<ul>
<li>Homeowners with AC are subject to periodic inspections in several countries &mdash; including Hungary, Slovakia and Greece. The inspections cover everything from energy usage to noise to historic preservation rules</li>
</ul>
<ul>
<li>For several years, Spain and Italy have ordered public and commercial buildings to keep the thermostat no lower than 81 and 77 degrees Fahrenheit respectively during summertime</li>
</ul>
<ul>
<li>In Switzerland&rsquo;s Geneva canton, homeowners must prove a medical need before they can install AC.</li>
</ul>
Of course, these rules are frequently &ldquo;for thee, but not for me.&rdquo;&nbsp;
Last Friday the European Commission&rsquo;s headquarters building in Brussels shut down the AC &ldquo;due to extreme weather conditions&rdquo; &mdash; but only on the seven lowest floors. The senior staff on floors 8&ndash;13, including EC President Ursula von der Leyen, stayed cool as cucumbers.
Complained one of the lower-floor staffers to Politico: &ldquo;It&rsquo;s like feudalism.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And then there&rsquo;s the U.K. &mdash; where people have been ordered to remove AC from their homes even as temps soar past 100 Fahrenheit.
Local officials &ldquo;have told residents to take down their cooling units over concerns about carbon dioxide emissions,&rdquo; reports the conservative-leaning GB News channel.
The rules are frequently confusing and contradictory &mdash; setting up &ldquo;situations where units are fitted believing they comply with rules, only for council enforcement teams to turn up and demand their removal.&rdquo;
In London&rsquo;s Camden section, inspectors told a resident to &ldquo;permanently remove&rdquo; two cooling units from the rear of the property, saying they violated the neighborhood council&rsquo;s &ldquo;cooling hierarchy&rdquo; policy.
The homeowner appealed the decision &mdash; only to be told to open second-floor windows for ventilation. When the homeowner raised concerns about crime and the risk of a break-in, the inspectors then pointed out &ldquo;the absence of ceiling fans&rdquo; in the home &mdash; even though there&rsquo;s no explicit requirement for ceiling fans.
In the end, the homeowner won an appeal &mdash; by pointing out the property did have solar panels, thereby assuaging the busybodies&rsquo; &ldquo;climate&rdquo; concerns.
And that&rsquo;s just one example of many in Great Britain. The situation is so absurd it&rsquo;s become the stuff of memes&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/RPs1SpMDyLCyEtSome8R1/ac2b28051cf6d470ecda4bcb0146e1e9/FMF-Issue-070126-1.jpg" alt="AC MEME" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> No wonder Europeans visiting the United States for the World Cup seem so happy &mdash; especially now amid our own heat wave.
&ldquo;I've been getting a kick with news stories of foreigners visiting the U.S. for the World Cup, awestruck and marveling at our advanced level of civilization &mdash; like air conditioning, and how restaurants just come right out and serve water when you sit down,&rdquo; observes Paradigm&rsquo;s resident oil field geologist Byron King. &ldquo;There's even ice (!) and free refills at fast-food joints.&nbsp;
&ldquo;Of course, this also reflects the U.S. energy buildout, in which energy is widely available and relatively low-cost.&nbsp;
&ldquo;By comparison, other nations of the world are energy-impoverished... even so-called &lsquo;advanced&rsquo; countries like Germany and the U.K.&rdquo;
Last week on the Daily Feed section of the Paradigm Press mobile app, Byron shared this infographic courtesy of the Visual Capitalist site. &ldquo;Helps put it all in perspective,&rdquo; he says.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6W2d1c7jK7Qtm6LqhAFwLl/0247a1b4edf1a781026152099754a52d/FMF-Issue-070126-2.png" alt="Fuel Consumption chart" width="540px" />
&ldquo;And note how China-China-China is such a vast energy producer, much of it for industry (versus air conditioning, ice, fast food, etc.). And note how China generates more energy from just coal than the U.S. generates energy in total.&nbsp;
&ldquo;Point is... when good things happen, follow the energy trail. And when bad things happen with energy... well, that's a predictor as well.&rdquo;
Something to think about as we recall how the Founders sweltered their way through adoption of the Declaration of Independence in Philadelphia 250 years ago. On this day in 1776, the weather diaries kept by Thomas Jefferson and Phineas Pemberton suggest temps well into the 80s and thick humidity.&nbsp;
And no AC for any relief.&nbsp;
Now there&rsquo;s something to be grateful for this week as you crank down the thermostat. Only in America! (Well, Japan and South Korea, too. Their adoption of AC in the home is nearly as extensive as our own&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" />Meta, Markets, Oil
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Among the big market movers today is Facebook/Instagram parent Meta.
&ldquo;META is up 10% today after giving investors exactly what they wanted: a plan to monetize its massive AI spending,&rdquo; says colleague Davis Wilson at The Million Mission.
&ldquo;The company is reportedly developing a cloud computing business that would rent excess AI compute to outside customers &mdash; putting it in competition with Amazon Web Services, Microsoft Azure, Google Cloud and even CoreWeave.
&ldquo;For months, investors questioned whether Meta's hundreds of billions of dollars in AI infrastructure spending would ever generate a return.
&ldquo;Now they have an answer.
&ldquo;Instead of letting unused computing power sit idle, Meta&rsquo;s turning it into a new revenue stream.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Not that Meta&rsquo;s move is powering the rest of the stock market today.
To be sure the major indexes are in the green &mdash; but in the case of the Nasdaq, just barely. The S&amp;P 500 is up about a quarter percent; the 7,500 level is looking more and more like a ceiling at the moment.&nbsp;
The Dow is up 0.4% &mdash; once more in record territory at 52,522, goosed by the addition of Google parent Alphabet to the index this week (replacing Verizon) along with strong performance by Caterpillar.
Precious metals are staging a modest comeback, gold up nearly $75 to $4,079 &mdash; with silver up 2.7% and back over $60. Bitcoin has hefted its way back over $60,000 and Ethereum over $1,600.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. crude futures are sinking toward $68 &mdash; apparently because there&rsquo;s no sign that U.S. reserves are being replenished.
The Energy Department is out with its weekly inventory numbers: Despite a shaky &ldquo;memorandum of understanding&rdquo; between the United States and Iran, the U.S. government drained another 5.5 million barrels from the Strategic Petroleum Reserve, dropping its total level to another low last seen in 1983.
Private-sector reserves were drained an additional 3.8 million barrels. The silver lining here is a small inventory build at the giant terminal in Cushing, Oklahoma. As mentioned here in recent days, Cushing was approaching &ldquo;tank bottoms&rdquo; beyond which it can&rsquo;t go on pumping and transferring crude.
<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" />&ldquo;It&rsquo;s for the Children&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Ready to verify your age before you go online? The U.S. House just took a huge step in that direction.
The late Rush Limbaugh observed that some of the worst legislation tends to be enacted &ldquo;for the children&rdquo; &mdash; and that&rsquo;s certainly the case with the &ldquo;Kids Internet and Digital Safety Act,&rdquo; which of course shortens to KIDS Act.
Digital rights groups like Reclaim the Net warn that the KIDS Act raises huge concerns &ldquo;about government overreach, privacy erosion and the expansion of online surveillance.&rdquo;
So of course the legislation passed the House Monday night with <a href="https://clerk.house.gov/evs/2026/roll228.xml">overwhelming bipartisan support</a>, 267-117.
&ldquo;Buried inside the KIDS Act are provisions that will push online services to verify all users&rsquo; ages, require government-directed moderation policies for online speech and even create new rules about private and encrypted communications,&rdquo; writes Joe Mullin for the Electronic Frontier Foundation.&nbsp;
&ldquo;While supporters continue to claim this bill protects minors online, its requirements come at the expense of privacy, free expression and the ability of people of all ages to use the internet without revealing sensitive data.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Technically the measure doesn&rsquo;t require websites and apps to conduct age verification. But it sure as heck pressures them to do so.&nbsp;
&ldquo;The problem,&rdquo; Mullin writes, &ldquo;is a website operator doesn&rsquo;t need actual knowledge that a user is a minor to get in legal trouble. It applies when a platform &lsquo;knows or should have known&rsquo; a user&rsquo;s age &mdash; a low, negligence-style standard of knowledge. If an online service gets it wrong, it&rsquo;s going to be up to courts and regulators to decide, after the fact, if an online service &lsquo;should&rsquo; have known a user was 16.&rdquo;
Given that burden, most website/app operators will simply opt to make all users verify their age.&nbsp;
&ldquo;Some companies may respond by requesting driver's licenses or passports,&rdquo; Mullin continues.
&ldquo;Others will rely on age-estimation systems that attempt to guess users' ages by looking at existing activity or doing facial scans.&rdquo;
Say goodbye to online anonymity.
And it gets worse. Another section of the bill creates new rules for encrypted messaging platforms like WhatsApp &mdash; aimed at curbing discussion among young people about drugs, alcohol, gambling and so on.
&ldquo;The KIDS Act never answers an obvious question,&rdquo; Mullin says: &ldquo;how exactly is a platform supposed to address those activities if they&rsquo;re inside encrypted communications that it can&rsquo;t read?&nbsp;
&ldquo;That will create pressure for providers to weaken private communications or limit features on encrypted private services.&rdquo;
The good news is that the Senate has yet to act. The bad news is that the Senate version of the KIDS Act is even more restrictive.&nbsp;
We&rsquo;ll keep you posted&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" /> You laugh because you know it&rsquo;s true&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1GnfkQWPO2Qj7oMbV7YYZy/83284730e54c0d8c92f23dc0f979a7bf/FMF-Issue-070126-3.png" alt="Comedic relief" width="540px" />
Amazing how they can pass legislation shredding online privacy but just can&rsquo;t get around to that bill limiting their own trading activity&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: &ldquo;Unalienable&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After I closed yesterday&rsquo;s edition with a reference to &ldquo;our inalienable rights,&rdquo; a longtime reader was quick to correct&hellip;
&ldquo;Um, Dave, that's &lsquo;unalienable&rsquo; rights. More than a slight difference &mdash; means we can't even give 'em away.
&ldquo;New poll for you -- how many of your readers catch it?&rdquo;
Dave responds: You&rsquo;re the only one who wrote in. And it is true: The parchment says &ldquo;unalienable.&rdquo;
I confess to listening to an authoritative lecture years ago about the distinction &mdash; and it&rsquo;s become muddled in my mind with the passage of time.
Unfortunately, I&rsquo;m on deadline and I can&rsquo;t trust AI to refresh my memory.&nbsp;
One link after another suggests no difference between the two, even at the time the Declaration of Independence was adopted&hellip; that Jefferson&rsquo;s early drafts said &ldquo;inalienable&rdquo; and somewhere along the line it was inadvertently changed to &ldquo;unalienable&rdquo;... and that throughout the 19th century, common usage adopted &ldquo;inalienable&rdquo; especially as Abraham Lincoln used the word in his speeches.
And I don&rsquo;t trust any of it. I&rsquo;ve got the authoritative lecture in audio form somewhere on my computer, but Apple&rsquo;s deprecation of iTunes over the years has made it impossible for me to locate it readily. (Maybe AI can help me?)
Don&rsquo;t get me started on how Apple has gone down the tubes, a process underway even while Steve Jobs was still alive&hellip;

FMF-Issue-070126-Featured

Crank up the (All-American) AC

<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" />Survey Says: Freedom and Opportunity
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;My parents brought us here in 1967 to achieve the American dream &mdash; and they did, and so did their four children,&rdquo; writes a Paradigm Press subscriber who hails from New Jersey.
&ldquo;I am truly proud and my children also live the American dream and also my eight nephews &mdash; truly proud to be an American.&rdquo;
Ahead of the nation&rsquo;s 250th anniversary this weekend, we invited you during yesterday&rsquo;s edition to tell us what part of the country you come from and what makes you most proud to be an American.
Our own invite here was supplemented by separate invites from Paradigm macro maven Jim Rickards, AI authority James Altucher and publisher Matt Insley. All told we got over 5,200 responses.&nbsp;
To be sure, I&rsquo;ve not had a chance to go over all of them. I did, however, copy and paste them into ChatGPT and asked for an executive summary.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Across hundreds of responses, one theme overwhelmingly dominates: Freedom is the defining source of American pride,&rdquo; is the chatbot&rsquo;s main takeaway.
&ldquo;Respondents repeatedly cited freedom &mdash; not just as an abstract ideal, but as the foundation for nearly every other aspect of American life they value. Freedom of speech, religion, opportunity, movement, enterprise, and self-determination appeared far more frequently than any other theme.&rdquo;
Some of them simply responded, &ldquo;Freedom.&rdquo; Others specified the freedom of speech, free exercise of one&rsquo;s religion, the absence of tyranny or the ability to choose one&rsquo;s own path.
Says a California reader: &ldquo;Freedom. Freedom of speech, expression and religion. That the powers bestowed to us are not granted by the government, but from God.&rdquo; Right on.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;A second major theme was opportunity,&rdquo; ChatGPT continues.
&ldquo;Many described America as &lsquo;the land of opportunity&rsquo; where effort &mdash; not birth &mdash; determines success.&rdquo;
&ldquo;I&rsquo;m proud of the fact that everyone, including me, has the opportunity to decide how they'd like to succeed in life,&rdquo; says a respondent from upstate New York. &ldquo;I changed my mind numerous times over my lifetime and every time I was rewarded with multiple opportunities as well as wonderful teachers to help me along my path.&rdquo;
Beyond freedom and opportunity, many respondents invoked their faith. Others, military service.&nbsp;
Some people chose to get political &mdash; inevitable given the tenor of the times, I guess. We&rsquo;ll skip over those ones on this occasion.
We give the last word today to someone from the Philadelphia area &mdash; where this week in 1776 Thomas Jefferson submitted his draft of the Declaration of Independence to the Continental Congress&hellip;
<blockquote>We celebrate the Fourth of July not because it was the founding of our form of government. That happened in 1789 with the ratification and implementation of the Constitution.</blockquote>
<blockquote>No, we celebrate July Fourth because it was a seminal moment in the history of the world. Yes we declared our independence as a sovereign nation, but it was an announcement to the world of a new form of sovereignty. The revolution of sovereignty of the individual over the sovereignty of the state. The first time any such form of government was to be attempted.</blockquote>
<blockquote>Make no mistake, there have been many other revolutions throughout history. But none was as significant as this.</blockquote>
<blockquote>For the first time men had stated that rights which previous had been the dominion of a king or emperor come from something greater. Something that supersedes the bonds of servitude to the whims of an all-powerful ruler. That those rights are unalienable.</blockquote>
<blockquote>That a man was free to exercise his will the way he felt best for himself. As long as his will was, as Thomas Jefferson wrote, &ldquo;within limits drawn around us by the equal rights of others.&rdquo;</blockquote>
<blockquote>Is the document perfect? No. But it set in motion the seeds to create a more perfect union of men. And continues to do so.</blockquote>
<blockquote>So when you hear those words you've heard so many times before, &ldquo;We hold these truths to be self-evident, that all men are created equal,&rdquo; remember that when they were written it was not so self-evident.</blockquote>
Hear, hear. Thanks to everyone for their submissions.
<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" />Takeover Announcement Now, Bidding War Later?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The big takeover news of the week is something the Paradigm team spotted in advance.
One of the trendy space names &mdash; Rocket Lab Corp. (RKLB) &mdash; is acquiring industry workhorse Iridium Communications (IRDM).
Only seven days ago, subscribers of Altucher&rsquo;s True Alpha learned that IRDM was looking like buyout bait &mdash; given a sudden bout of buying by institutional investors. This is the &ldquo;blue spike&rdquo; that True Alpha readers know is their signal to act&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4qbYHDBkz2Z3i4AAAzLjRQ/3879d215663276991e4b193f1ec2b6a0/FMF-Issue-063026-1.png" alt="IRDM" width="540px" />
Sure enough, word broke before the market opened Monday morning &mdash; a recurring &ldquo;weekend trade&rdquo; phenomenon True Alpha readers seize on for big gains.
The background: Iridium owns 66 low-Earth orbit satellites, along with access to a slice of the radio frequency spectrum used for satellite phones and similar technology. (If you have one of Garmin&rsquo;s high-end devices for hiking in the backwoods, it relies on Iridium satellites.)&nbsp;
The company&rsquo;s satellites and frequencies are also used by the U.S. military. That&rsquo;s what makes IRDM a juicy takeover target.
Rocket Lab could have tried to build its own satellite network. But it was easier to acquire an existing one that already generates a profit. RKLB now has the whole satellite &ldquo;stack&rdquo; &mdash; building them, launching them and operating them.
Well, that&rsquo;s assuming the deal goes through.
Altucher&rsquo;s True Alpha strategist Zach Scheidt thinks IRDM could become the object of a bidding war. Zach and James Altucher recommended IRDM call options last week &mdash; and they&rsquo;re urging readers to continue hanging onto them until the story fully plays out.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The broad stock market is drifting higher again today amid a low-volume trading week.
The S&amp;P 500 is up nearly three-quarters of a percent, knocking on the door of 7,500 for the first time since mid-June. The Nasdaq&rsquo;s gain is stronger, the Dow&rsquo;s weaker.
Among the big movers is military drone maker AeroVironment (AVAV) &mdash; up over 15% after delivering killer quarterly numbers.&nbsp;
Several Paradigm editors have been perking up to the drone story in recent days. In both the Russia-Ukraine war and in the Persian Gulf, &ldquo;relatively inexpensive drones are proving capable of threatening or destroying assets that cost hundreds or even thousands of times more,&rdquo; says trading pro Enrique Abeyta. &ldquo;That shift has enormous implications, not just for military planners, but for investors as well.&rdquo;
To explore the possibilities of drones in detail, check out <a href="https://million-mission.com/posts/55-billion-reasons-to-go-drone">Davis Wilson</a> at The Million Mission and <a href="https://dailyreckoning.com/drones-invade-moscow/">Adam Sharp</a> at The Daily Reckoning.
Elsewhere, gold is holding its own at $4,027 while silver&rsquo;s up over a buck to $59.55. Bitcoin looks as if it wants to break below $58,000 &mdash; which would be the lowest since September 2024.
<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 Hormuz Disconnect
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Markets have responded to the idea that Hormuz is reopening. They have not fully priced the question of on what terms,&rdquo; says Mason Sexton, editor of The Map.
Sorry if you think we&rsquo;re beating a dead horse here. But the distinction matters. Washington and Tehran can&rsquo;t even agree on whether they&rsquo;re holding talks today &mdash; much less how the Strait of Hormuz is going to operate in a postwar world.
&ldquo;The market has priced &lsquo;reopening&rsquo; as if it means immediate normalization,&rdquo; Mr. Sexton wrote his readers yesterday.&nbsp;
&ldquo;The more likely outcome is a new normal defined by higher costs, slower flows and persistent political uncertainty. That uncertainty is not incidental. It is central to Iran&rsquo;s leverage.&nbsp;
&ldquo;Washington appears to expect toll-free reopening and a return to normal. Iran, by contrast, has signaled that the strait will not return to its prewar administrative status.&rdquo;
Indeed, Tehran has set up a Persian Gulf Strait Authority &mdash; which will oversee insurance requirements for ships, and presumably a toll of one sort or another.
&ldquo;A strait that is technically open but subject to Iranian-administered fees, insurance approvals, selective delays and renewed political bargaining is not equivalent to the prewar strait. It is entirely possible that Iran allows outbound crude to move while restricting or slowing inbound traffic as a means of extracting further concessions.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This creates a problem for oil markets because the buffers that suppressed prices during the past several months cannot continue indefinitely,&rdquo; Mason warns.
&ldquo;Commercial inventories have been drawn down. Strategic reserves have been tapped. China has reduced imports, helping dampen price pressure.&nbsp;
&ldquo;But these are temporary cushions, not durable solutions. If China returns to the market, if negotiations stall or if Hormuz traffic remains materially below prewar levels, the relief trade in crude could reverse quickly.&rdquo;
For the moment, however, U.S. crude futures continue to hover just over $70 a barrel &mdash; more or less where they were on day four of the war in early March.
And while oil and gasoline futures usually move in tandem, that&rsquo;s not been the case in recent days. Gasoline futures are rising, much to Donald Trump&rsquo;s consternation.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7M6zIywlpCTJTV34WHtBuv/bc52715e200f4aa47865b133306eea6b/FMF-Issue-063026-2.png" alt="DJT Tweet" width="540px" />
Trump is learning that his people can jack around with U.S. oil futures&hellip; but that doesn&rsquo;t lower the costs of producing and refining physical barrels.
This is the second time in less than a week that Trump has hit out at fuel retailers for &ldquo;high&rdquo; prices. Your editor has a small position in the VanEck Oil Refiners ETF (CRAK)... but I&rsquo;m starting to wonder if the political risk is too much to bear. Nixon-era price controls and gas lines, anyone?
<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 (and Some Aging Statistics)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Timely thought for the day&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5fv4HIkcjjZ6RcMvjxfABu/a168c57a3a263367cb5372e1e6e14deb/FMF-Issue-063026-3.png" alt="Comedic Relief" width="540px" />
Which got your editor to wondering&hellip;.
Seems it&rsquo;s been several years since the Tax Foundation undertook a comprehensive survey of fireworks taxes among the 50 states.
But as of 2019, six states imposed statewide excise taxes on fireworks sales &mdash; on top of existing sales taxes. They ranged from 2% in Texas to 12% in Pennsylvania and West Virginia &mdash; with Georgia, Indiana and Michigan falling in between.&nbsp;
<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: Lisa Cook, Politicians&rsquo; Love
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I know that people are saying Fed governor Lisa Cook can&rsquo;t be fired because of the Supreme Court decision. Not true,&rdquo; a reader writes.&nbsp;
&ldquo;All it did was deny a government-requested stay of a preliminary injunction preventing her removal. The decision was narrow &mdash; Cook is entitled to due process by statute.&nbsp;
&ldquo;Now, in the companion case, Slaughter, the court found the executive could fire any member of the executive branch.
&ldquo;So after all the more litigation and charges against Cook that may come in further proceedings, the court may then reach the question of whether the executive can dismiss a Fed governor for &lsquo;cause&rsquo; or if the Fed is &lsquo;special.&rsquo; Under Slaughter, the executive possibly could fire Cook after affording the due process relied on in today&rsquo;s decision.&nbsp;
&ldquo;I&rsquo;ll admit, they seem to presage less of an ability to fire a Fed governor due to the Fed&rsquo;s special nature and history on monetary policies. But it&rsquo;s still an open question.&rdquo;
Dave responds: Perhaps I was careless with my brief mention yesterday. Thank you for parsing the nuances &mdash; which I glossed over because to me it&rsquo;s more important to abolish the Fed than to quibble over who has hiring and firing authority. Heh&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> One of our longtimers chose to weigh in on our American Pride survey via the mailbag rather than the survey form&hellip;
&ldquo;Dave, our planet has some rather remarkable lands and people. None more so than the land we call America and the people we call Americans.
&ldquo;(Now, if only our Pols would love us back.)&rdquo;
Dave: We don&rsquo;t need the love of our politicians. Just their respect for our inalienable rights&hellip;

FMF-Issue-063026-Featured

Survey Says: Freedom and Opportunity

For most of its history, the United States treated debt with suspicion, if not outright fear. That instinct came from four men who understood, in ways modern policymakers seem to have forgotten, debt is less an economic tool and more a political weapon.
George Washington, Benjamin Franklin, Thomas Jefferson, and John Adams, America&rsquo;s founders, architects, and revolutionaries, were students of history. History taught them one simple lesson: nations don't collapse overnight. They decay under the weight of obligations they can&rsquo;t control.
Washington warned against entanglements that could drag the young republic into endless commitments. Today, America is entangled in alliances abroad and its balance sheet at home.
Franklin, the pragmatist, understood the corrosive nature of excess. &ldquo;Rather go to bed without dinner than to rise in debt,&rdquo; he said. Today, the United States does neither. It spends without restraint and borrows without consequence&hellip; for now.
Unlike that statist Alexander Hamilton, Jefferson feared centralized financial power and permanent debt, arguing that each generation should pay its own way. Now, that idea is almost quaint. The current system doesn&rsquo;t just pass the bill to the next generation; it compounds it.
Adams was blunter still: &ldquo;There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.&rdquo;
We chose the latter.
Now comes the reckoning. Not in soft theory, but hard mathematics.
When Interest Becomes the Budget
Within a few years, interest on the national debt is projected to become the single largest line item in the federal budget &mdash; overtaking defense, Medicare, and eventually Social Security, if nothing changes.
This is one obscenely incredible post:

<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3KzgoEGvh50kdv6WvT74Gv/11e97debf45f378b5520e6960082ba65/mr-issue-06-11-26-img-2.png" width="540px" />

Credit: <a href="https://x.com/charliebilello/status/2064824365309444427">@charliebilello</a>
The numbers are already brutal. The government paid roughly $882 billion in net interest in fiscal 2024 &mdash; nearly triple the $345 billion paid in 2020, and more than it spent on national defense or Medicare. In 2025, that figure climbed again to an estimated $970 billion, or about 19 percent of all federal revenue collected.
Read that again. Nearly 1 in 5 tax dollars now goes just to pay interest. That&rsquo;s before a single soldier is paid, a single pension check is mailed, or a single road is repaired.
Based on CBO projections, annual interest costs will exceed $1 trillion around 2026 and continue to climb to roughly $1.8 trillion by 2035. Over the next decade, cumulative interest payments will run into the tens of trillions. Over the next 30 years, the U.S. is on track to spend nearly $100 trillion on interest alone if current policies persist.
This is nothing if not a slow-motion transfer of national income from taxpayers to bondholders.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1KiBlQ3H2zIuPqp43BY2CY/4e11fa54afd7244ea2a5fccec4a715dd/mr-issue-06-11-26-img-3.png" alt="" width="540px" />
You can see this in the above chart. Net interest costs are rising from a few hundred billion in 2020 to roughly $1 trillion by the mid-2020s, then marching relentlessly toward $1.8 trillion by 2035. It&rsquo;s not a gentle slope. It&rsquo;s an accelerating curve.
From Spending Priorities to Interest Tribute
The more alarming story isn&rsquo;t the nominal dollars. It&rsquo;s the changing composition of the federal budget itself.
Interest costs have already become the government&rsquo;s second-largest expenditure, trailing only Social Security and outpacing every other major program. As a share of total federal spending, interest is projected to reach 15&ndash;16 percent by the end of this decade &mdash; surpassing the prior peaks of the 1990s, but this time on a far larger debt base with far less room to maneuver.
As a share of the economy, interest is heading into uncharted territory. CBO-style projections show net interest rising from just over 3 percent of GDP in the mid-2020s to around 4.5 -- 5 percent by the mid-2030s, and higher still beyond that.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1J8E7uRvGQCgz1LQ0NCPC6/3c849c825b8db99427c6305aca550c1c/mr-issue-06-11-26-img-4.png" alt="" width="540px" />
The above chart tells this story cleanly: one line shows interest as a share of GDP grinding higher; another shows it climbing through the mid-teens as a share of federal outlays.
At some point, the budget is no longer about national priorities. It&rsquo;s about servicing past decisions.
That&rsquo;s the tipping point the four founders would have recognized immediately.
Once interest becomes your largest expense, you&rsquo;re not governing freely. You&rsquo;re managing liabilities.
Debt as Stealth Political Control
Every dollar spent on interest is a dollar that cannot go to defense or infrastructure. It&rsquo;s a transfer from citizens to creditors. Those creditors include foreign governments and large institutional investors whose only concern is that America keeps paying.
To put a finer point on it, let&rsquo;s look at the numbers for this past May, thanks again to Charlie Bilello:

<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3Osh6JjAoJ2ZLfj9NUxEP5/07cb28b2e245e6ad265ebd5cd4c982ae/mr-issue-06-11-26-img-5.png" width="540px" />

Credit: <a href="https://x.com/charliebilello/status/2064829101001556076?s=46">@charliebilello</a>
You read that right: $107 billion spent on interest in the month of May 2026, just behind Social Security.
This is where the founders&rsquo; warnings stop sounding like philosophical musings and start sounding like a risk memo.
Washington feared entanglements that would limit the republic&rsquo;s independence of action. A government that must roll over trillions of dollars at ever-higher rates is not fully independent. It&rsquo;s constrained by what markets will tolerate. One only needs to monitor The Donald&rsquo;s war-on/war-off policy, which depends only on when the markets are open.
Jefferson&rsquo;s skepticism of permanent debt was not anti-growth naivety. It was a recognition that a state that lives forever in arrears slowly mortgages its future policy choices.
Adams&rsquo; line about conquering a nation by debt rather than by the sword was not hyperbole. It was a description of how power actually operates: not through the now pass&eacute; direct coercion, but through the more modern means of controlling cash flows.
We&rsquo;re living in that world now. The U.S. is still nominally sovereign, militarily dominant, and the issuer of the world&rsquo;s reserve currency. But its fiscal trajectory is increasingly dictated by a simple math problem: how to service a ballooning stock of debt in a world of higher rates.
When interest consumes 15&ndash;20% of your budget and a quarter of your revenues, you&rsquo;re working for your bondholders, not your citizens.
What Happens When the Bill Comes Due
The markets will tolerate this&hellip; until they don&rsquo;t.
There is no precise breakpoint on a chart where confidence disappears. But the mechanisms are familiar:
<ul>
<li>Borrowing costs rise as investors demand compensation for fiscal risk.</li>
<li>The currency weakens as foreigners question its long-term purchasing power and store-of-value status. (Just check out TLT&rsquo;s dreadful returns since 2020.)</li>
<li>Policymakers are forced into bad choices: higher taxes, sudden spending cuts, financial repression, or higher inflation.</li>
</ul>
The CBO&rsquo;s long-term outlook already assumes that interest rates stay elevated enough to keep interest costs outpacing growth in both revenues and the underlying economy. That&rsquo;s how you get to projections where interest alone may be the single largest category of federal spending within a decade.
None of this would surprise Washington, Franklin, Jefferson, or Adams. They had all studied what happened to overextended empires like Spain, France, and Britain. Their reach exceeded their revenue. Our Four Fathers understood that debt, if abused, was a slow form of national subjugation.
Unfortunately, their successors (and their voters) ignored them.
Wrap Up
The result is visible now, not in abstract theory, but in the federal budget line where interest is about to eclipse everything else.
The successors systematically dismantled every cultural, political, and fiscal safeguard its four founders had tried to leave in place to stop this from happening.
Debt becomes destiny. And the charts are telling you: destiny is getting closer.

FMF-Issue-070426

George Washington’s Warning

<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" />American Pride
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I&rsquo;m in love with America,&rdquo; says a visitor to the United States, one of the many here for the World Cup.
Earlier this month we took note of the many visitors &mdash; mainly from Europe, but not exclusively &mdash; who are wowed by the sights of this vast land, and sharing their impressions on social media.
To be sure, a lot of it has to do with America&rsquo;s consumer culture. Costco, Walmart, Buc-ee&rsquo;s stores. &ldquo;Oh, gawd damn!&rdquo; said a Norwegian fellow entering a Bass Pro Shop.
But it&rsquo;s more than that. Many of them are venturing beyond the cities whose stadiums are hosting the matches.
&ldquo;With each wide-eyed video of travellers documenting their first encounters with everything from roadside convenience stores to ranch dressing, fans are highlighting the real America &mdash; one that's rarely portrayed in films and TV, has nothing to do with politics and that many visitors often miss,&rdquo; says freelance travel writer Jeff Bogle.
&ldquo;Along the way, they're not only reminding those of us who live here of the many quirks that make this country special; they're also helping us fall back in love with it,&rdquo; Bogle writes in an article for a foreign outlet &mdash; the BBC.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> "Many U.S. citizens have been feeling down on their country, and sad that their nation is seen in a negative light overseas," says clinical psychologist Charlotte Russell &mdash; a Brit who runs a website called The Travel Psychologist.
"With the negative news in the run-up to the World Cup&hellip; seeing people actually enjoying the U.S. and its people feels more intensely joyful."
Bogle &mdash; who interviewed Russell &mdash; concurs. &ldquo;After consuming so many of these social media posts and videos, I find myself overwhelmed with a sense of national pride that I haven't experienced for some time.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Which brings us to a reader survey we&rsquo;re conducting this week.
Going into the 250th anniversary of the nation&rsquo;s founding this Friday&hellip; we have two simple questions to ask you:&nbsp;
<ol>
<li>Where in America are you from?&nbsp;</li>
<li>What makes you most proud to be an American?</li>
</ol>
<a id="2"></a>
You can <a href="https://docs.google.com/forms/d/e/1FAIpQLSfZF6yzvXQ8ECrZwtOCf2fNyftdvNndijbqPhES6Z15X0WgvA/viewform">click here to submit your answers at this web form</a>. We&rsquo;ll share your answers here tomorrow.
Yes, there&rsquo;s a money-and-markets angle to all of this. But we&rsquo;ll get into that as the week goes 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" />War&rsquo;s on, War&rsquo;s Off
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And now for something that&rsquo;s probably fake news&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5n871LvaXzwp530hmWEgPC/9560b76064fd540eb55658686d8921ea/FMF-Issue-062926-1.png" alt="pub" width="540px" />
It&rsquo;s got the ring of plausibility to it. Major military action by Washington often comes after the markets close on Friday afternoon. That&rsquo;s been the case throughout Donald Trump&rsquo;s second term, as well as Joe Biden&rsquo;s term before it.
Problem is, there doesn&rsquo;t seem to be an article corroborating the claim on NBC News&rsquo; website. Google News and two AI engines come up dry.
Conceivably it was something a reporter ad-libbed Friday night during NBC Nightly News? The Grok AI engine speculates &ldquo;it could be from a recent TV segment, live blog update or subscriber/paywalled NBC article not fully indexed [on the web] yet.&rdquo;
Again, it&rsquo;s highly likely the announcement of airstrikes on Iran was in fact timed for after the market close.&nbsp;
But applying my old-school journalism sensibilities &mdash; honed during 20 years as a TV news producer and manager &mdash; I&rsquo;m calling BS on the claim that someone in the Pentagon acknowledged as much to NBC News.
<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 Axios site was up to its <a href="https://paradigmpressroom.com/post/tank-bottom-date-july-4/#2">old tricks</a> yesterday &mdash; reporting just before futures markets opened for the week that Washington and Tehran would stop the shooting.
As a result, U.S. oil futures begin a new week more or less where the old one ended &mdash; about $70 a barrel.&nbsp;
Amazing how that works. It&rsquo;s as if Washington can wage war only on the weekends, lest it throw markets for a loop.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But hold on: On Thursday, CME Group &mdash; the outfit that oversees the most widely used U.S. commodities exchanges &mdash; announced it would launch an oil futures contract that trades 24/7.&nbsp;
It&rsquo;s a smaller contract &mdash; only a tenth of the size of the existing &ldquo;Micro WTI&rdquo; futures contract &mdash; thus targeting the retail crowd, not the pros. CME Group also recently launched a one-ounce gold contract that trades &lsquo;round the clock.
"Our new WTI and Gold futures provide regulated products that are right-sized and available 24/7, ensuring traders can manage exposure whenever news breaks,&rdquo; says CME Group&rsquo;s Derek Sammann.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In the meantime, here&rsquo;s your first reminder this week that traffic through the Strait of Hormuz is still nowhere near normal.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/40SIoaBXKcJWhpQayxJ2Ki/4f00e4626058d74a7b48f5623e0506ed/FMF-Issue-062926-2.png" alt="pub" width="540px" />
By the way, Axios&rsquo; story &mdash; citing U.S. officials &mdash; says U.S.-Iranian talks are supposed to resume tomorrow. So far, no confirmation from the Iranian side.
<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" />Strange Day
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Last Thursday brought &ldquo;one of the strangest sell-offs of the entire year,&rdquo; says Paradigm trading pro Enrique Abeyta.
&ldquo;In just 27 minutes, the Nasdaq-100 plunged nearly 1,000 points while the S&amp;P 500 erased roughly $1 trillion in market value.
&ldquo;And this was all without a single major headline explaining the move.
&ldquo;The Nasdaq opened nearly 1% higher before suddenly tumbling almost 3% in less than half an hour!
&ldquo;It's a reminder that today's market is operating in a very different environment. Record levels of investor enthusiasm are colliding with record amounts of uncertainty about AI, inflation and interest rates.
&ldquo;When that happens, volatility can seem to appear out of nowhere.&rdquo;
All of the Paradigm editors are aware of this potentially delicate situation. For now, it&rsquo;s a watch-and-wait affair. But if that changes, keep an eye on your inbox and/or the Paradigm Press app for actions to take.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The volatility is in retreat as a new week begins.
Among the major U.S. indexes, the Nasdaq Composite is leading the way &mdash; up nearly 1.5% to 25,670. The S&amp;P 500 is up over three-quarters of a percent and back over 7,400. The Dow is the laggard &mdash; up only a half percent but that puts it in record territory over 52,000.
Precious metals are losing ground, gold only 25 bucks over the $4,000 level and silver about to crack below $58. Bitcoin remains stuck under $60,000 and Ethereum under $1,600.
➢ For the record: The U.S. Supreme Court just ruled 5-4 that Donald Trump cannot fire Lisa Cook &mdash; one of seven members on the Federal Reserve&rsquo;s Board of Governors. The majority opinion says to preserve the Fed&rsquo;s independence, it was Congress&rsquo; intention to limit the president&rsquo;s power to remove Fed governors. (The Fed hasn&rsquo;t been truly &ldquo;independent&rdquo; for decades, if ever, but that&rsquo;s another story&hellip;)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> File this one under &ldquo;the market climbing a wall of worry&rdquo;: The Bank for International Settlements says the AI boom is setting the stage for a prolonged &ldquo;investment bust.&rdquo;
The Switzerland-based BIS &mdash; sometimes called the central bank for central banks &mdash; is out with its annual economic report, spotlighting the $1 trillion that Microsoft, Google, Meta, Amazon and Oracle plan to spend on data centers from 2025 through year-end 2026.
The report says there are &ldquo;instructive parallels&rdquo; between the present moment and previous booms and manias &mdash; such as the buildout of canals and railroads, and more recently the 1990s dot-com boom.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/42ODmINDIquJghVQA4uGEu/51d48ab5b4b48b28f84fac96760a493b/5Bullets_0629.png" alt="pub" width="540px" />
The report says in each case there was &ldquo;a genuine technological breakthrough that attracted capital in excess of what commercial returns could ultimately justify&rdquo; &mdash; leading to &ldquo;an eventual reversal in investment, including economywide recessions.&rdquo;
From where we sit, this is one more indication that the AI boom still has legs before the inevitable bust.&nbsp;
It&rsquo;s when the experts become convinced that the boom will go on forever that you should start to worry&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" />What the Street Doesn&rsquo;t See (MU)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Micron Technology shares are up 1,000% in the last 18 months &mdash; and James Altucher is telling Altucher&rsquo;s Investment Network readers to hold on tight.
As mentioned here last Thursday, MU delivered boffo quarterly numbers &mdash; revenue up 346% year over year, gross margins now 85%.
And James believes Wall Street is still underestimating its potential &mdash; for two reasons.
One is that MU has insulated itself from the chip industry&rsquo;s notorious boom-bust cycle. &ldquo;The company has now signed 16 long-term supply agreements with customers, covering 2026 through 2030 &mdash; take-or-pay deals, meaning customers commit to minimum purchases and pay deposits upfront.
&ldquo;Forty percent of revenue is now contracted through 2030, locking in Micron&rsquo;s highest margins in history for years to come&rdquo; &mdash; even when the inevitable turn comes.
Meanwhile, the most intensive demand for AI no longer comes from the &ldquo;large language model&rdquo; chatbots. It comes from agents &mdash; the kind of AI that can execute tasks for its users. Agentic AI &ldquo;requires roughly 50 times more memory,&rdquo; says James.
And that&rsquo;s before humanoid robots become all the rage: Tesla&rsquo;s Optimus robots will sell for under $20,000 &mdash; putting them &ldquo;within reach of midsize manufacturers, not just the Fortune 500.
&ldquo;Micron's CEO mentioned robotics as a new demand driver on this week's earnings call,&rdquo; says James. &ldquo;Not a single analyst brought it up during the Q&amp;A segment. Nobody has gone back to run the numbers yet.&rdquo;
All of this as MU trades at 9.5 times forward earnings &mdash; compared with 20.8 times for the S&amp;P 500.
&ldquo;The people who buy it 18 months from now, after agents are running every enterprise software stack and Optimus is on factory floors and Wall Street has finally rebuilt its demand models, will wish they had owned it today,&rdquo; James concludes.
<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: $40 Oil
<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 oil sinking to $40 in the next three years &mdash; broached in <a href="https://paradigmpressroom.com/post/40-oil">last Thursday&rsquo;s edition</a> &mdash; a reader writes&hellip;
&ldquo;I think there will be a reassessment by countries that are dependent on fossil fuels to determine if that remains their future.
&ldquo;Now knowing just how easy it is to cause a major disruption in deliveries by countries like Iran and Indonesia, a shift to renewables may be prudent. If the countries holding the reserves come to the same conclusion, they will recognize that their oil reserves are going to become worth less and less as time goes on.
&ldquo;OPEC is finished as a monopoly (if it ever was one), thereby eliminating production caps, so oil-producing countries will race to increase production to take advantage of these higher prices.
&ldquo;Whether that will result in $40 oil, I don&rsquo;t know, but wouldn&rsquo;t it be ironic if President Trump went down in history as the president that did the most to further the cause of renewables?&rdquo;
Dave responds: For the moment, we still lack the technological breakthrough that will wean the world off oil for large-scale transportation.
Yes, China is putting its population in vast numbers of electric vehicles (powered in many cases by coal!)... but beyond personal transportation there&rsquo;s still no substitute for diesel, jet fuel and bunker fuel for ships.
Meanwhile, a prediction of $40 oil isn&rsquo;t the same thing as saying oil will stay at $40.&nbsp;
Below $60, production for many American firms becomes a money-losing proposition. If they start to cut back&hellip; well, it&rsquo;s that old saying in the commodity space about how &ldquo;the cure for low prices is low prices.&rdquo;

FMF-Issue-062926-Featured

American Pride

&ldquo;As far as I know, there has never, in all of history, been a time when the markets have been so corrupted,&rdquo; a reader wrote to us.
The reader wrote to us&hellip; 15 years ago.
Point being, &ldquo;market manipulation&rdquo; is nothing new.&nbsp;
Way back in 1930, people complained about market &ldquo;pools&rdquo; &ndash; which were sort of an early version of hedge funds. One author said a pool possessed the power to &ldquo;put the price of a stock wherever it sees fit.&rdquo;
But how exactly does the rigged game work here in 2026?
Today as we head into a (hopefully) lazy summer weekend, I bring in my colleague of nearly 20 years &ndash; Paradigm chartmeister Greg Guenthner.
&ldquo;Gunner&rdquo; exposes three lies you&rsquo;re told&hellip; and the rigged reality behind them.
<h2 style="text-align: center;">Everyone Knows the Market Is Rigged. But How?</h2>
Let's get something straight before we go any further&hellip;
You've been told a very clean story about how markets work.&nbsp;
A company does well, and the stock goes up. A company misses earnings, and the stock goes down. Bad news hits, investors panic and sell. Good news lands, they buy.&nbsp;
Simple. Logical. Fair. But that story is a lie.
A full, elaborately constructed lie that exists to separate you from your money and hand it quietly to people who know how the game really works.
Wall Street is a casino where the house doesn't just have an edge &mdash; it writes the rules, moves the chips, and signals its partners before the table even opens to the public.&nbsp;
Today, I want to share three of the biggest ways in which Wall Street is rigged against everyday investors like you and me.&nbsp;
Each one is invisible if you don't know what to look for. Each one is completely legal.&nbsp;
And once you see them, you can't unsee them &mdash; which means you can start using them, instead of being used by them.
#1: The Tail Wags the Dog
Here's a question almost nobody thinks to ask&hellip;&nbsp;
If a stock is supposed to move based on company news and investor decisions, why does it sometimes move violently when there is no news at all?
The answer involves a corner of the market most retail investors don't think about very much: options.
The Lie We're Told: Stocks move every time because of company fundamentals. A CEO gives a great interview, earnings come in strong, a product launch goes well &mdash; investors get excited, buy the stock, and the price rises. Simple. Logical. Makes intuitive sense.
The Rigged Reality: The options market is often bigger than the underlying stock market itself. And when huge money moves through options, it mechanically forces the stock to move &mdash; news or no news.
To understand why, you need to understand who's on the other side of every options trade.
Think of it like a casino.&nbsp;
When you walk into a casino and place a $1,000 bet on red, the casino takes your bet. They don't care which way the roulette wheel spins &mdash; they've run the math, they know the edge is theirs over time, and they'll make money in the long run.&nbsp;
Options Market Makers work the same way. When a big investor (call them a "whale") buys $10 million worth of options on a stock, the Market Maker takes the other side of that bet. They have no opinion on the stock. They just facilitate the trade and collect fees.
But here's where it gets strange &mdash; and this is the part Wall Street never explains&hellip;
Unlike a casino that can lose a million dollars on one spin of the wheel, Market Makers can't afford to be exposed to a $10 million directional bet.&nbsp;
So the moment they take the other side of that whale's options trade, their computers automatically start buying the underlying stock to hedge.
All because an algorithm is mechanically balancing a ledger.
The stock starts moving up, and retail investors see it breaking out. Then they pile in, attributing the move to some news story, some momentum, some fundamental shift in the company's outlook. They're buying from the Market Maker, who is quietly offloading shares at elevated prices.
The tail just wagged the dog. And retail investors were the last to know.
Watch for massive options volume hitting a stock with zero news attached to it&hellip; No earnings, no analyst upgrade, no press release.&nbsp;
Just a surge of options activity out of nowhere.&nbsp;
That "ghost volume" is a signal &mdash; the Market Maker just got hit with a large bet, and their hedge-buying algorithm is about to go to work.&nbsp;
Buy the stock before the news cycle picks up. The algorithm will push the price higher as it hedges. The retail crowd will follow, chasing what looks like a breakout. Sell to the latecomers.&nbsp;
You bought the mechanical move. You exit into the narrative.
#2: The Liquidity Trap
Picture this&hellip;
A stock you own has been holding firm at $50 for weeks. That price level is what traders call a "support line" &mdash; a floor where buyers historically show up and keep the stock from falling further. You've got a stop-loss set just below it at $49.50. If the stock breaks through $50, you'll automatically sell and cut your losses.
The stock drops to $49.75. Then $49.60. Then $49.48&hellip; just below your stop.
You get stopped out. The stock immediately reverses and rockets to $53.
You just experienced a stop hunt. And you weren't alone.
The Lie We're Told: Support lines on a chart are safe zones. If a stock holds above support, it signals strength. If support breaks, it's a warning sign &mdash; and your stop-loss protects you from the damage.
The Rigged Reality: Support lines are maps. And when millions of retail investors all put their stops at the same level, they've just marked an X on the treasure map for anyone big enough to use it.
Here's the problem a whale faces: imagine you need to buy five million shares of a stock. You can't just click "buy" for five million shares.
Doing so would drive the price up against you before your own order is filled. You need someone to sell you five million shares, all at once, at a price you're comfortable paying.
So here's what actually happens.&nbsp;
The whale identifies a major support level where retail stop-losses are clustered.&nbsp;
They use a small fraction of their capital to aggressively push the stock below that support &mdash; it's a bait move. Every retail stop-loss triggers. Panicking investors flood the market with sell orders.
The whale's computers sweep up all those sell orders at a discount. Five million shares, instantly, at a price below support. Then the whale stops pushing down. The stock reverses and rockets back above support. The whale is now long five million shares at a great price. Retail is flat, confused, and watching from the sidelines.
Watch for a stock breaking below a major support level &mdash; the kind that's been solid for weeks or months, the kind everyone has circled on their charts.&nbsp;
At that exact moment, check the options flow. Is massive, bullish options activity hitting simultaneously with the breakdown? Large call buys, unusual put selling, big premium moving to the upside? If yes, the breakdown is fake. The whale isn't bearish on the stock &mdash; they're buying calls because they know the stock is about to recover.&nbsp;
They're taking the other side of your panic. The reversal is coming!
#3: Weaponized Fear
Think about hurricane insurance.
On a calm Tuesday in March, you can buy a full year of hurricane insurance for your Florida home for a few hundred dollars.&nbsp;
The weather is beautiful, the forecast is clear, and the insurance company is happy to take your money because the risk feels very low.
Now it's late August. Category 4 storm in the Gulf. Landfall predicted within 72 hours.
That same insurance policy just got very expensive. Because, of course, fear just went through the roof.&nbsp;
This is exactly how volatility &mdash; and by extension, options prices &mdash; works in the stock market.
The Lie We're Told: Trade the stocks that are moving the most. High volatility means high opportunity. Follow the action, chase the headlines, buy the stocks that are in everyone's feed.
The Rigged Reality: High volatility means you're paying maximum price for insurance.&nbsp;
Wall Street has already priced the fear into the options. You're buying the most expensive version of the opportunity.
Here's the key term: implied volatility, or IV.&nbsp;
Think of it simply as the price the market charges for options. High IV means options are expensive. Low IV means they're cheap.&nbsp;
And before a major earnings announcement, Wall Street jacks IV up to extreme levels &mdash; because the market is pricing in the uncertainty of the upcoming news.
Retail investors, hit by FOMO, buy in at that peak.&nbsp;
They pay a massive "fear premium" for their calls or puts.&nbsp;
The earnings announcement drops. Even if the news is good &mdash; even if the stock moves in the direction the retail investor predicted &mdash; implied volatility collapses immediately. The hurricane passed. Insurance is cheap again.
This is called IV Crush.&nbsp;
And it's how retail investors lose money on a trade they called correctly.
Look for stocks with flat, quiet, boring charts.&nbsp;
No news... No momentum&hellip; No social media chatter.&nbsp;
These are the stocks where volatility is lowest &mdash; where options are dirt cheap. Watch for a single spark: a sudden burst of unusual options volume hitting quietly, with no obvious catalyst.&nbsp;
This is smart money positioning ahead of a move they see coming.&nbsp;
Buy cheap options alongside that early volume.&nbsp;
You're buying hurricane insurance in March, before anyone starts watching the weather. When the catalyst eventually hits and the public piles in, implied volatility explodes. Your cheap options are now expensive. Sell to the latecomers who are buying in fear.
You're not predicting the future. You're buying cheap before it gets expensive &mdash; and selling expensive to the people who waited for confirmation.
The Game You're Already Playing
Here's the hard truth most people never accept&hellip;
You are already playing this game. Every time you buy a stock, you're sitting across the table from someone who has been doing this longer, faster, and with more information than you.
The question was never whether the game is rigged. It is. It always has been.
The question is whether you're going to keep playing it blind or start learning to read the table.
These three forces &mdash; mechanical options hedging, stop-loss hunting, and weaponized fear &mdash; aren't exotic strategies used once in a while.&nbsp;
They're running constantly, in every market, on every ticker, every single day. The same machinery that's been quietly taking money from retail investors for decades.
But machinery has patterns. Patterns can be read. And once you know what you're looking for, the signals are everywhere.
You don't necessarily need to beat Wall Street at its own game.
You just need to stop being the one they're playing against.

FMF-Issue-062626-Featured

Everyone Knows the Market Is Rigged. But How?

<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" />$40 Oil?!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;Get Ready for $40 Oil &mdash; Hear Me Out&rdquo; was the headline to a piece penned last week by Paradigm trading pro Enrique Abeyta.
Provocative, for sure. Maybe he was even trying to get a rise out of oil bulls like&hellip; well, myself.
&ldquo;What if the market is already pricing in a world none of us is ready for,&rdquo; he asked &mdash; &ldquo;one where oil trades at $40 a barrel?&rdquo;
At the time of the article seven days ago, U.S. oil futures were still hovering near $80.
Yesterday, they fell below $70.&nbsp;
So let&rsquo;s follow the breadcrumbs&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />The case for $40 oil centers on the world&rsquo;s two biggest oil consumers &mdash; the United States and China.
Earlier this month we mentioned how <a href="https://paradigmpressroom.com/post/spacex-and-smoothies/#3">China slashed its oil imports</a> after the Iran war began &mdash; so much so that it offset as much as a third of the barrels lost to the Strait of Hormuz&rsquo; closure.
&ldquo;China spent the last 20 years preparing for exactly this scenario,&rdquo; Enrique says. &ldquo;While much of the world focused on maximizing efficiency, China focused on maximizing flexibility.
&ldquo;The country invested heavily in electric vehicles, liquefied natural gas infrastructure, refining capacity, coal-to-liquids technology, strategic petroleum reserves and alternative energy systems.&rdquo;
Those are heavy-duty, long-term investments. How likely is it that China will go back to its old ways once global oil flows normalize?
Meanwhile, the United States is less vulnerable to oil shocks than in previous decades because of bountiful shale oil. Twenty years ago, no one expected America to become the world&rsquo;s No. 1 crude producer. But it did in 2018.
&ldquo;During the recent crisis, the U.S. wasn&rsquo;t scrambling to secure foreign supplies,&rdquo; Enrique says. &ldquo;In many cases, it was helping supply the rest of the world.
&ldquo;For the first time in modern history, the world's largest energy importer and one of the world's largest energy producers may both be moving toward a future where oil matters a little less than it once did.
&ldquo;If that happens, the biggest surprise of the next decade won't be that oil went higher. It will be how much lower it ultimately went.&rdquo;
Thus, Enrique&rsquo;s conclusion: &ldquo;I believe there&rsquo;s a real possibility that crude oil trades below $40 per barrel within the next three years.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Still not persuaded? There&rsquo;s precedent: Look at what happened less than 15 years ago.
For most of the period 2011&ndash;2014, crude traded in a range between $80&ndash;110.&nbsp;
But by early 2014, the U.S. shale patch &mdash; only a few years old then &mdash; had blundered into massive overproduction. The OPEC nations cranked up their own production to squeeze their new American competition. Meanwhile, based on the history told in James Norman&rsquo;s book The Oil Card, it&rsquo;s highly likely the Obama administration engineered a takedown of the oil price to punish Russia for seizing the Crimean Peninsula from Ukraine.
In June 2014 crude still traded for over $100. Less than two years later, it bottomed at $26.
All that said&hellip; before we get to $40 oil, we might still be in for a face-ripping rally from current levels.&nbsp;
For that part of the story, we move today&rsquo;s mailbag section up from its usual slot to Bullet No. 2&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Oil: A Reader&rsquo;s Frustration
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;I've been kind of annoyed with the media headlines and market response in regards to the negotiations going on with Iran for almost a week now,&rdquo; writes one of our regulars.
This individual doesn&rsquo;t write often, but when he does he always puts thought into it.&nbsp;
&ldquo;Assuming that the success of the negotiations is a sure thing, we've got the demining of the strait of Hormuz, which is scheduled to take a month. Then assuming insurance companies are again willing to take on risk immediately, once all the ships stuck there leave it'll take them perhaps another month to get to their destinations.
&ldquo;Taking Trump at his word that we're going to be &lsquo;out of reserves in four weeks,&rsquo; that leaves us about a month of being &lsquo;out of reserves&rsquo; before shipments once again begin reaching their destinations. A month of being out of reserves sure doesn't sound like about $75 per barrel of oil making any sense at all.
&ldquo;Now adding some reality to that mix, where there is not only a possibility of the negotiations failing, but a significant chance of them failing, there seems to be no acknowledgement of any such possibility of failure either in the mainstream reporting or in the market prices!
&ldquo;Now that a week has almost passed since the announcement of the talks, we've got some progression of events that there still seems to be no reply to in the markets. Namely that the traffic through the strait is still heavily restricted by Iran on account of Israel still having military forces in Lebanon, and now the Iranians walking out of negotiations after Trump continued to threaten them.&nbsp;
&ldquo;I can only look at the prices and come to the conclusion that either the Dead Internet Theory also applies to markets or that the 'smart money' and insiders are so sure of the success of negotiations that they are actually not taking into account the high likelihood of things going wrong after Trump has been promising this would be over in two more weeks for a few months now.&nbsp;
&ldquo;Thanks for letting me vent about the slow-motion track wreck playing out in real-time.&rdquo;
We thank the reader for his input. Your editor&rsquo;s response follows immediately&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The Messy Road to &ldquo;Normal&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Jeez, what a doomer. A real panican you are.
I jest, of course.&nbsp;
Ever since Trump&rsquo;s 39th announcement of a peace deal two weeks ago, I&rsquo;ve taken pains to sprinkle these daily missives with reminders that&hellip;
<ul>
<li>Traffic through the Strait of Hormuz remains a fraction of its prewar level</li>
</ul>
<ul>
<li>Even if traffic through the strait returned to prewar levels tomorrow, it would take months to unscramble everything else that the war scrambled (production shutdowns, ships that aren&rsquo;t located where they&rsquo;re needed, etc.)</li>
</ul>
<ul>
<li>Israel could at any time monkey-wrench the agreement, to which it is not a party. (Israeli troops continue to occupy southern Lebanon.)</li>
</ul>
<ul>
<li>U.S. crude stockpiles continue to dwindle. The government&rsquo;s Strategic Petroleum Reserve is its smallest since 1983. The big private-sector hub at Cushing, Oklahoma is at &ldquo;tank bottom&rdquo; levels; if refilling doesn&rsquo;t start within days, the terminal will be physically incapable of pumping and transferring crude.</li>
</ul>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />And yet&hellip; the drop in crude prices this month is the steepest on record outside of the COVID lockdowns in the spring of 2020. I feel your pain, dear reader.
Some of it is the aforementioned plunge in Chinese crude imports.&nbsp;
But a lot of it sure looks like a deliberate attempt by the Trump administration to distort the price signals that oil should be sending. (I&rsquo;m not singling out Trump here. As we&rsquo;ve chronicled many times before, <a href="https://paradigmpressroom.com/post/the-cia-and-the-oil-price/#3">the feds have fiddled with oil futures</a> regularly for over 40 years.)
When the world normally produces 103&ndash;106 million barrels of oil per day&hellip; and when up to 15 million of those barrels are shut in&hellip; and when the oil price is still under $100&hellip;
&hellip; well, that&rsquo;s going to encourage the world to continue consuming oil at more or less its prewar pace.&nbsp;
Put another way, prices didn&rsquo;t rise enough to make you change your fuel-consumption habits.&nbsp;
And so the reserves are running on empty.
Earlier this year in a series of podcast interviews, I listened to several oil-industry experts anticipating what the world would look like once some sort of peace deal was in place.
Their consensus was that oil prices would fall steeply on the announcement of a deal&hellip; and then when physical reality started to bite, prices would start to take off again.
These weren&rsquo;t screaming randos on the internet shoring up my own confirmation bias. They&rsquo;re sober, respected figures in the industry.
Bottom line: We might well be headed long term to a world of $40 oil. But for the moment I&rsquo;m not selling my oil stocks even though they&rsquo;re now trading at prewar levels.
Oh, and I&rsquo;m also making sure our vehicles at home stay topped up&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" />Markets Today: Summertime Stumble?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />If history continues to rhyme, the stock market is headed for a summertime stumble.
Every once in a while we spotlight a chart from Bespoke Investment Group. It compares the performance of the Nasdaq composite during the 1990s dot-com boom and the current AI boom.
It sets the starting point for the dot-com boom with the introduction of the Netscape web browser in December 1994&hellip; and the starting point for the AI boom with the rollout of ChatGPT 3.5 in November 2022.
As far as we know, the chart was last updated about two months ago&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/73YvCOFYUCCFikrGpmA6Y8/f0f1b0392582861d3cf547820ded775e/FMF-Issue-062526-1.png" alt="Nasdaq" width="540px" />
Now&hellip; look at what happened in the late summer and fall of 1998. The market had a big scare when the Russian government defaulted on its debt &mdash; which had a domino effect that took down the American hedge fund Long Term Capital Management.
From a peak of just over 2,000 in mid-July, the Nasdaq sank below 1,450 by early October &mdash; nearly a 30% drop in less than three months.
If the pattern continues to hold &mdash; and to date, it&rsquo;s been uncanny &mdash; look for a slide to begin next week or maybe after Independence Day before the index stages a recovery in mid-September.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />The big market stories today are Micron and inflation.
Chip darling Micron reported its quarterly numbers after the closing bell yesterday. They blew away the expectations of Wall Street analysts. MU shares are up 10.5% as we write &mdash; but still shy of their record close Monday.
You might think the tech sector would be rallying hard under that circumstance &mdash; and you&rsquo;d be wrong. Checking our screens the Nasdaq is down over a half percent on the day, adding to the previous three days&rsquo; losses, at 25,369.
The S&amp;P 500 is up about a third of a percent at 7,383 &mdash; more or less the midpoint of its trading range the last two months. The Dow, meanwhile, is powering nearly 1.5% higher into record territory, approaching 52,600.
➢ The biotech sector has been very kind to Paradigm readers in the last 24 hours: Microcap Millionaire readers booked a 530% gain on one pick... while Catalyst Trader readers collected 120% on another. In both cases the editors advise selling half the position while letting the rest ride.
Gold has clambered its way back over $4,000 for the moment and silver is inching higher at $57.87. Bitcoin remains under $60,000 and Ethereum well below $1,600.
The Commerce Department came out this morning with &ldquo;core PCE,&rdquo; the Federal Reserve&rsquo;s preferred measure of inflation.&nbsp;
It rings in at 3.3% year-over-year &mdash; not a surprise to Wall Street economists, but still the highest since October 2023 and nowhere near the Fed&rsquo;s 2% target.&nbsp;
With that in mind &mdash; as well as the new Fed chair Kevin Warsh saying he&rsquo;s laser-focused on &ldquo;price stability&rdquo; &mdash; futures traders assign a 60% likelihood the Fed will raise short-term interest rates by September.
<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" />Sen. Warren Gets Kinky
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Something weird happened yesterday on CNBC&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5JHYQUdtRaaHgJcAsiU9ER/765bdd8e690ae3743041c73ade74a3c5/FMF-Issue-062526-2.png" alt="CNBCpub" width="540px" />
During a live interview, Sen. Elizabeth Warren (D-Massachusetts) said, &ldquo;AI doesn't get to engage in a bunch of funky, hinky bookkeeping.&rdquo;
Somehow the cutline thrown up on the screen a few moments later changed &ldquo;hinky&rdquo; to &ldquo;kinky.&rdquo;
The interwebz had plenty of fun with it.&nbsp;
One of the more family-friendly takes came from longtime Paradigm Press friend and mining/energy financier Rick Rule: &ldquo;The only entity that gets to engage in funky, kinky bookkeeping is the government.&rdquo;&nbsp;
Word&hellip;

FMF-Issue-062526-featured

$40 Oil?!

<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 Needs a Rescue
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The first trial balloon about a bailout of the AI industry&hellip; went over like a lead balloon.
We chronicled it at the time: Back in November an executive at ChatGPT maker OpenAI spoke at a conference about her company getting <a href="https://paradigmpressroom.com/post/openai-wants-a-bailout">taxpayer-backed loan guarantees</a>.&nbsp;
A federal backstop like that would &ldquo;really drop the cost of financing,&rdquo; enthused CFO Sarah Friar.
The backlash was&hellip; well, furious is an understatement. Friar had to walk back her remarks on LinkedIn.
Within hours, White House AI czar David Sacks <a href="https://paradigmpressroom.com/post/no-bailout-for-you-openai">nixed the idea</a>. &ldquo;There will be no federal bailout for AI.&rdquo;
But Sacks&rsquo; role in the White House has diminished since then. And the Trump administration has <a href="https://paradigmpressroom.com/post/ai-speeding-toward-a-brick-wall">abandoned its hands-off approach to AI</a>.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Which brings us to what seems like another trial balloon &mdash; this one floated by Vice President Vance.
Reminder: Vance has a history in Silicon Valley. After giving up his law career he became a principal at one of Peter Thiel&rsquo;s firms. He accepted funding from venture capitalist Marc Andreessen and ex-Google CEO Eric Schmidt.
&ldquo;The president is supportive of the United States owning these big AI companies,&rdquo; Vance said last week during a podcast interview.
On the surface, that sounds like what the feds have already been doing over the 18 months &mdash; taking ownership stakes in everything from Intel&hellip; to U.S. Steel&hellip; to rare-earth firms like MP Materials.
But then Vance added something curious: He said Donald Trump &ldquo;likes the idea as sort of a sovereign wealth fund idea.&rdquo;
That sounded like an off-the-cuff remark. It was not. OpenAI has an entire white paper proposing a &ldquo;public wealth fund&rdquo; whose proceeds "could be distributed directly to citizens, allowing more people to participate directly in the upside of AI‑driven growth, regardless of their starting wealth or access to capital."
Is your BS detector going off? Good. 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" />USA SWF?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It&rsquo;s here we should pause to acquaint you (or reacquaint you) with what a sovereign wealth fund is.
Basically a SWF is a government-owned investment fund that can hold everything from stocks to bonds to real estate or even hedge funds.
Many SWFs got their start with bountiful mineral or energy wealth. The biggest in the world is Norway&rsquo;s, a $2.1 trillion colossus organized in 1990 with surplus revenue from North Sea oil.
Many Americans first learned about SWFs during the early phases of the 2008 financial crisis &mdash; when the oil-rich Abu Dhabi Investment Authority plowed $7.5 billion into Citigroup. At the time, it was a lifeline for Citi, but in the end it wasn&rsquo;t enough; Citi took a bailout from the U.S. government and Abu Dhabi booked a loss.
But a SWF isn&rsquo;t entirely a &ldquo;foreign&rdquo; concept: The Alaska Permanent Fund, formed in the 1970s as Alaskan crude started flowing to the lower 48 states, is now $80 billion strong.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Here&rsquo;s the problem with Uncle Sam establishing a SWF.
As perhaps you&rsquo;ve noticed from the preceding examples, governments typically create a SWF when they have a generous surplus of revenue.
As you&rsquo;re likely aware, the U.S. government does not have a surplus.
In fact, going into the Iran war, Uncle Sam&rsquo;s annual deficit relative to the size of the economy was the biggest in history outside of a war, financial crisis or pandemic. Here&rsquo;s one of these charts we can&rsquo;t share often enough&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6S6UBuMnENSfhR3CJsXdL8/523cb39bc9ed9d7e58f9b5e4dc7b55a8/FMF-issue-062426-1.png" alt="Annual budget" width="540px" />
So where&rsquo;s the seed money for the SWF supposed to come from?&nbsp;
OpenAI proposes that it come from AI companies themselves. Which sounds good in theory until you realize that precious few AI companies turn a profit &mdash; certainly not OpenAI and the other chatbot makers.&nbsp;
So how exactly is a SWF supposed to work under that circumstance? How would everyday Americans &ldquo;participate directly in the upside of AI-driven growth&rdquo;?
They would not.&nbsp;
&ldquo;A sovereign wealth fund, which almost always comes along with not having a huge deficit and debt and/or great commodity wealth, is a terrible idea for the USA,&rdquo; tweets AQR Capital chief Cliff Asness. &ldquo;More taxes to pay for [an] utterly corrupt ideologically whacko government to play with (I say this in a bipartisan way).&rdquo;
Economist Don Johnson of the MacroEdge firm is even more blunt: The purpose of the SWF chatter is to obscure the fact that AI companies will be in line for taxpayer bailout &mdash; like the banks in 2008. &ldquo;I love that we&rsquo;re rebranding TARP 2.0 (for AI companies) to sovereign wealth fund.&rdquo;
Back then it was sold to the people as absolutely necessary to prevent the financial system from collapsing. Now it&rsquo;ll be sold as absolutely necessary for America to keep its technological edge over China (and, secondarily, to prop up the stock market should it start to falter).
<a id="3"></a>
There&rsquo;s a lot more to say about the subject, but we&rsquo;ll leave it here for today. Just wanted to get the topic on the record.&nbsp;
Because it will come up again&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" />Update: SpaceX-Tesla Tie-Up
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> This whole SpaceX-Tesla merger thing is getting legs &mdash; five months after colleague Davis Wilson first suggested it.
From Paradigm AI authority James Altucher: &ldquo;I've never seen this before. Elon Musk just exercised 300,000,000 options of Tesla (TSLA) and he DID NOT SELL A SINGLE SHARE.
&ldquo;This is very unusual and extremely bad from a personal finance perspective
&ldquo;In general when someone exercises options, they lock in a profit at that point (in Elon Musk's case, it&rsquo;s a $116 BILLION [!] profit.) Once they lock in the profit, they have to pay the taxes on the profit even if the stock goes down from there.
&ldquo;In other words, when they actually sell the shares they may no longer have a profit or they may have a much smaller profit, BUT they still have to pay the full tax amount.
&ldquo;NOBODY ever does this. I can't even think of another time in history where someone exercised a significant amount of stocks and held on to every single share.
&ldquo;SO WHAT DOES THIS MEAN? Elon needed the shares (and soon!) to get more control over Tesla. Before this exercise of shares, Elon controlled 13% of Tesla. Now this brings him up to 20% control of TSLA shares. With that much control it is unlikely anyone can outvote Elon on a major decision.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Gee, what major decision might be on the horizon?
James&rsquo; answer: &ldquo;Elon is going to propose a SpaceX-Tesla merger (&lsquo;That might make Elon's life a little easier&rsquo; &mdash; the COO of SpaceX recently stated) and he wants to make sure there are zero issues. So he is giving himself much greater controlling interest even though he will have to pay tens of billions in taxes even if it could cost him billions in overpaying the taxes.
&ldquo;That's how much it&rsquo;s worth it to him to merge these two companies.
&ldquo;Who will benefit? SpaceX? Unclear. Tesla? Unclear.
&ldquo;All of the suppliers to this mega-merged company? Absolutely. And then some.
&ldquo;These are the companies we are focused on right now,
&ldquo;Again, I have never seen anything like this. But this is Elon playing chess on a board that includes: rockets to Mars, internet for the entire world, autonomous vehicles, humanoid robots, 100,000 orbital AI factories and obviously much more.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />SpaceX is in the red today, as is the Nasdaq and the S&amp;P 500.
The red on the Nasdaq is a lighter shade than it was yesterday but at last check it&rsquo;s still down nearly a half percent to 25,478 &ndash; approaching its lows of earlier this month. The S&amp;P 500 is down a tad to 7,355 while the Dow is once more showing green. (SpaceX is down about a half percent but still above its opening price of $150 last Friday.)
The market&rsquo;s next big catalyst comes after the close today &ndash; when chip darling Micron reports earnings. MU is among the semiconductor names that have soared to nosebleed heights the last couple of months. We shall see&hellip;
The picture in precious metals is positively fugly. Gold is down 3% and has sunk below $4,000 for the first time in seven months. Silver is down four bucks to $57.31, a level last seen in December.
No joy for crypto, either &ndash; Bitcoin has now been cut in half from its October 2025 peak, under $60,000 for the first time since October 2024. Ethereum has sunk below $1,600.
As for oil&hellip; here&rsquo;s a visual to help reinforce what we said yesterday about shipping volumes through the Strait of Hormuz&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3RiRJxWBwTQnp4SOP8S8lE/ea6393928e29636a3845a896feca3191/FMF-issue-062426-2.png" alt="Strait of Hormuz vessel chart" width="540px" />
Meanwhile the U.S. Energy Department&rsquo;s weekly inventory numbers show that another 9 million barrels were drained from the government&rsquo;s Strategic Petroleum Reserve. At 331 million barrels, the SPR is the lowest it&rsquo;s been since 1983. Inventories at the big private terminal in Cushing, Oklahoma now total 19 million barrels &ndash; basically the <a href="https://paradigmpressroom.com/post/tank-bottom-date-july-4">&ldquo;tank bottom&rdquo;</a> we warn about now and then.
And none of it matters to U.S. oil futures &ndash; down nearly three more bucks today and approaching $70, another level last seen in early March when the Iran war was getting cranked up.
<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" />Financial Fathers, Continued
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Now for something to pass on to the next generation.
Ahead of Father&rsquo;s Day last week, our weekly editorial meeting took an unexpected turn: The Paradigm editors rose to a challenge from our trading pro Enrique Abeyta, whose son just turned 13: What&rsquo;s the one piece of financial advice you&rsquo;d give to a 13-year old?
The answers were terrific, as Sean Ring chronicled in <a href="https://rudeawakening.info/posts/financial-fathers">last Friday&rsquo;s Rude Awakening</a>.&nbsp;
Logistical considerations didn&rsquo;t allow me to take part in the discussion. I was a little surprised no one brought up a piece of advice that precedes pretty much all the other excellent guidance that was on offer.
Avoid consumer debt.
In his 2007 book Crash Proof, money manager Peter Schiff drew a critical distinction between good debt and bad debt&hellip;
<blockquote>Capital debt, or investment debt, refers to loans made to businesses to finance capital formation, such as an automobile manufacturer building a new plant. Such loans benefit society and lead to higher living standards. The earnings the automobile company gets from its increased production enable it both to pay the interest on the debt and to repay the principal. Anything left over represents profit, which is the return on investment that a business deserves for taking risk and for successfully combining the factors of production.</blockquote>
<blockquote>Society benefits in several ways. Consumers now have more cars, workers have more jobs, savers earn interest and get their principal back and the business earns a profit, which can be used to finance still more capital investment.</blockquote>
<blockquote>Consumer debt, in contrast, refers to money lent to individuals to finance consumption. Such loans represent a waste of scarce savings that might otherwise have gone to finance capital formation. When individuals borrow to consume, there is no income-producing asset acquired. Therefore, the loans can only be repaid out of reduced future consumption.</blockquote>
<blockquote>Society does not benefit, since such loans do nothing to increase the supply of consumer goods and actually do the opposite, as borrowers consume goods that would otherwise be available for nonborrowers. Although consumer loans ultimately enable savers to be rewarded with interest, assuming they are paid, they are of no benefit to society as a whole. In fact, by redirecting savings away from capital investment, they actually undermine the higher living standards that might have been achieved in their absence.&nbsp;</blockquote>
I bolded the bits in the final paragraph to underscore a wider consideration: Every action we take in life ripples out to the rest of the world &mdash; often in ways we might not see or understand on a surface level.&nbsp;
To be clear, Schiff didn&rsquo;t characterize all consumer debt as bad. For instance, a car loan is perfectly fine if that&rsquo;s what you need to get to work; you&rsquo;re paying for it with wages you couldn&rsquo;t earn without the vehicle. It&rsquo;s not fine if you&rsquo;re having a midlife crisis and craving a convertible.
Anyway, just wanted to submit that guidance for young people on top of all the other outstanding counsel offered by my colleagues!
<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" />A (Real, Physical) Mailbag
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Today&rsquo;s mailbag section is a little different. It&rsquo;s not an email sent to <a href="mailto:feedback@paradigmpressroom.com">our inbox</a>. It&rsquo;s snail-mail &mdash; and gifts &mdash; addressed to Paradigm&rsquo;s Baltimore-area headquarters.
He runs a small manufacturing firm in New England&hellip; he&rsquo;s a faithful Jim Rickards reader&hellip; and he looked forward with anticipation to our America 76/26 event earlier this month in Philadelphia.
&ldquo;I attended Villanova University &mdash; missed Pope Leo by one year &mdash; and spent lots of time in Philly,&rdquo; he writes.
&ldquo;Traveled back last year to take close-up photos of the Liberty Bell to model and create the tooling for this celebratory piece to share in our country&rsquo;s semiquincentennial celebration! Let&rsquo;s hope for another 250 years of a FREE and democratic republic.&rdquo;
And he sent a dozen or so of these zinc die-cast Liberty Bell keychains.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7zXfxtBDHaaj4rS0dGLR2X/f2e0136f477386d3048dd13605b577fa/FMF-issue-062426-3.jpg" alt="Key chain" width="540px" />
&ldquo;Proudly Made in USA,&rdquo; the packaging says on the back. No trivial trinket, this.&nbsp;
We thank him for his generosity.&nbsp;
&ldquo;Appreciate all of your insights and ideas,&rdquo; he added in a P.S.&nbsp;
And we thank him for a reminder of why we do what we do.

FMF-issue-062426-Featured

AI Needs a Rescue

<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" />Buffett's Sudden About-Face
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As he approaches his 96th birthday, Warren Buffett is making a big commitment to AI. Yes, that&rsquo;s a radical departure. No, it&rsquo;s not a sign that he&rsquo;s losing his marbles.
As you might know, Buffett was notoriously gun-shy about technology investments during his many decades running Berkshire Hathaway.&nbsp;
He was adamant about investing only in things he could readily understand. Early on it was insurance (Geico). Later it was soft drinks (Coca-Cola). More recently, railroads (Burlington Northern Santa Fe).
Paradigm AI authority James Altucher once wrote a book called Trade Like Warren Buffett. &ldquo;The thing that stayed with me,&rdquo; James recalls now, &ldquo;wasn&rsquo;t a strategy or a formula. It was a question he kept coming back to: Will this company still be here in 20 years?&rdquo;
To Buffett&rsquo;s mind, precious few tech companies met that test.&nbsp;
&ldquo;He bought Apple,&rdquo; James says, &ldquo;but he always described it as a consumer products bet &mdash; loyal customers, pricing power, one of the strongest brands on Earth. The same reason he bought Heinz ketchup.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But then came Berkshire&rsquo;s commitment this month to Google.
When Buffett handed off the reins as CEO to Greg Abel at year-end 2025, Berkshire already held a small position in Google, about $4.3 billion. Abel quickly tripled that position to $16.6 billion.
And then&hellip; when Google issued $80 billion in new shares to fund its AI data center buildout&hellip; Abel stumped up $10 billion of that total.
&ldquo;Some read that as Abel going rogue, a new CEO making his mark,&rdquo; James says. &ldquo;But consider what it actually takes to get a $10 billion check out of Omaha.&nbsp;
&ldquo;Buffett remains chairman and the largest shareholder. A man who spent six decades watching technology booms from the sidelines doesn't sign off on something like this because a new CEO asked nicely.&rdquo;
Like Apple, this is a tech investment Buffett can wrap his sensible Midwestern mind around. It&rsquo;s no longer about squishy things like software; it&rsquo;s about tangible stuff now, James says &mdash; &ldquo;data centers, power grids, cooling systems. The kind of capital-intensive, durable infrastructure Buffett has always understood.&nbsp;
&ldquo;The moment AI became a construction problem, it became a Berkshire problem.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Berkshire&rsquo;s Google investment is only one data point demonstrating the AI buildout still has legs. James points to two more&hellip;
&ldquo;SpaceX closed its IPO raising $85 billion &mdash; the largest public offering in history &mdash; with a significant portion earmarked for AI compute infrastructure.&nbsp;
&ldquo;Then Nvidia surprised the bond market with a $25 billion offering of its own. Nvidia's business prints cash and hadn't needed to borrow since 2021, so when it raised $25 billion in bonds without warning, the market's response was striking &mdash; investors put in orders for more than three times what was available.
&ldquo;All told, nearly $200 billion was committed to AI infrastructure in less than a month. $85 billion from SpaceX's IPO. $10 billion from Berkshire toward Google's $80 billion AI buildout. $25 billion from Nvidia's bond raise.
&ldquo;SpaceX and Nvidia are supposed to bet on this. That's who they are. Berkshire isn't.&nbsp;
&ldquo;When all three point at the same destination in the same month, Berkshire is the one that tells you something new, because it's the one that had no reason to move, and moved anyway.&rdquo;
James&rsquo; bottom line: &ldquo;A lot of investors have watched the AI buildout and wondered whether the spending was real or whether it would eventually slow down. $200 billion in a single month answered that question pretty definitively.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Markets Today: Tech Corrects
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Of course, even though the AI buildout is proceeding at a furious pace, tech stocks are going to have a washout day now and then &mdash; and today is one of them.
There&rsquo;s no obvious catalyst. The Financial Times is reaching for &ldquo;fears of rising U.S. interest rates and a recent plunge in SpaceX shares.&rdquo;&nbsp;
There was no hint of it coming yesterday other than a 1.3% pullback in the Nasdaq. But overnight South Korea&rsquo;s stock market &mdash; dominated by chipmakers Samsung and SK Hynix &mdash; cratered 10% in a day.&nbsp;
The sell-off spread westward to Europe and by early this morning Nasdaq futures were down 3%.
Paradigm trading pro Enrique Abeyta spotted this chart courtesy of Charlie Bilello, chief market strategist at the Creative Planning firm. &ldquo;It shows how much semiconductor stocks have gone up recently.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6OraSr7Vetlze73FfZHpWZ/8f6bd609ade99a8e32f09b25e86c8bfe/FMF-Issue-062326-1.png" alt="pub" width="540px" />
&ldquo;Bilello points out that the semiconductor index SOX is +233.3% in the last 14 months. That is the most since it was up 233.9% back in early 2000.&nbsp;
&ldquo;Even if we are not at THE top, these stocks need to take a break, and looks like they are starting today.&rdquo;
Checking our screens, the Nasdaq has trimmed its losses to about 1.5% on the day, but still well under 26,000. SpaceX sank briefly below its first-day trading price of $150 &mdash; but dip buyers have propelled it back to $163.
<a id="3"></a>
The S&amp;P 500 is down 1%, slipping just below 7,400. The Dow, less dominated by tech, is in the green by about a quarter percent.
The selling has spread into precious metals &mdash; gold down 1.2% to $4,139. But silver&rsquo;s getting positively pummeled &mdash; down three bucks and under $62 for the first time since December. Crypto is moribund, Bitcoin at $62,502 and Ethereum at $1,659.
<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" />Oil: The State of Play
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK, as near as we can tell, this is not indicative of wider stresses in the retail market for fuel.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4lNQyabXvY92jQ2b6r4LB8/855b267e9e61cda03d018cedb47116dd/FMF-Issue-062326-3.png" alt="pub" width="540px" />
Naturally, other people have taken this report and exaggerated it into wild claims of the state government decreeing a statewide cap on retail fuel purchases at $50. Not true.
But make no mistake, peace deal or no the supply situation is still tight.&nbsp;
As mentioned here last week, the U.S. government&rsquo;s Strategic Petroleum Reserve has been drained to levels last seen in 1983. And the tanks at the big private-sector terminal in Cushing, Oklahoma are approaching &ldquo;operational minimums&rdquo; beyond which there&rsquo;s too much sludge mixed in with the oil and pipelines lose pressure.
And the situation in much of the rest of the world is even more dire.
Little wonder that last week Donald Trump said he reached a &ldquo;memorandum of understanding&rdquo; with Iran because otherwise &ldquo;We run out of reserves in about four weeks,&rdquo; running the risk of &ldquo;a worldwide depression.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And yet&hellip; traffic through the Strait of Hormuz continues to proceed at a fraction of its prewar levels.&nbsp;
Independent monitors say 71 vessels &mdash; not all of them oil tankers &mdash; transited the strait between Friday and Sunday. Before the war, Hormuz accommodated well over 100 vessels per day.
A handful of &ldquo;very large crude carriers&rdquo; capable of carrying 2 million barrels have departed the Persian Gulf via the strait &mdash; and that&rsquo;s a positive development. But precious few empty tankers are coming the other way to load up on new crude shipments. <a href="https://paradigmpressroom.com/post/ais-iphone-moment/#3">And don&rsquo;t forget about the barnacles</a>.
And so inventories continue to be drained&hellip; but U.S. oil futures are down again today on the expectation that supply chains will normalize any day now. At last check, we&rsquo;re down 2% to $73.31, the lowest since the big ramp up just after the war began in early March.
<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" />Alan Greenspan, 1926&ndash;2026
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Your editor could expend a lot of words on the passing of former Federal Reserve chair Alan Greenspan at age 100.
But Clint Russell of the Liberty Lockdown podcast is sparing me the trouble&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/E2hHZN8bpzH63kprlyUg4/6346ea0da32dafac1aa44b1303e9491d/FMF-Issue-062326-4.png" alt="pub" width="540px" />
It&rsquo;s interesting that even the corporate media had to distance themselves from the &ldquo;Maestro&rdquo; plaudits they gave Greenspan at the turn of the century.&nbsp;
The first paragraph of The Wall Street Journal&rsquo;s obit had to acknowledge that &ldquo;the 2008&ndash;09 global financial crisis had recast his aura of technocratic competence.&rdquo; The subhead of The New York Times&rsquo; article said &ldquo;he favored market-friendly stances that would later come to be associated with destructive financial forces.&rdquo;
Now they tell us&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: A &ldquo;New&rdquo; Law and an Old TV Set
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;What is the law Congress passed that's devastating to Roth IRAs AND 401(k) ACCOUNTS???&rdquo; a reader writes with evident alarm &mdash; but with no further details for us to go on.
Every once in a while, we&rsquo;ll get an inquiry like this out of the blue. It has nothing to do with anything we&rsquo;ve addressed in these missives &mdash; at least not recently &mdash; but clearly the individual feels a certain urgency to the situation. If time allows, I can go down a rabbit hole and see what turns up.
Fortunately, this one&rsquo;s pretty easy.&nbsp;
Seems there&rsquo;s a competing financial publisher &mdash; although it has a name that sounds like a public-policy think tank &mdash; issuing a dire warning about a &ldquo;new law&rdquo; that in fact was passed in 2019.
We&rsquo;ve mentioned it now and then ourselves. It&rsquo;s the SECURE Act &mdash; passed by a Democrat-controlled Congress and signed into law by Donald Trump.&nbsp;
It made several changes to retirement plans, but the notable one for our purposes today is that it killed the so-called stretch IRA.
The way it used to work was you could bequeath an IRA to your kids&hellip; and if they wanted, they could &ldquo;stretch&rdquo; out the withdrawals over many, many years &mdash; potentially the rest of their lives &mdash; even as the nest egg would keep compounding tax-free.
But under the SECURE Act, your heirs have to clean out the account within 10 years. That way Uncle Sam collects his precious revenue much sooner. At the time of passage, congressional bean counters figured it would generate about $15.7 billion over 10 years.
The extent to which this move is &ldquo;devastating&rdquo; varies from family to family. (And to be clear, spouses are exempt.)
Nonspouse beneficiaries can structure those withdrawals however they want &mdash; a lump sum at any time, monthly or annual withdrawals spread evenly across all 10 years, whatever.&nbsp;
But it&rsquo;s gotta be done &mdash; and it can definitely vault your heirs into a higher tax bracket than was the case before 2020.
Unfair to people who made plans based on the old rules? Absolutely. Which underscores the fact the feds can change the rules and break their promises whenever they like.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Congratulations on keeping balanced after reading all that stuff,&rdquo; a reader writes after <a href="https://paradigmpressroom.com/post/a-day-in-the-life-of-5-bullets">yesterday&rsquo;s edition</a> about how these daily dispatches come together.
That said, the picture of my work desk prompted one of our longtimers to write, &ldquo;What the he*l is the CRT and probably analog TV there for?! News clips from 1998? Enjoy the splendor of 480i graphics? DVD playing? Pong?
&ldquo;Thanks again for all your hard work (despite the prior millennium tech).&rdquo;
Dave responds: Meh, it still works. I&rsquo;ve got a little Roku box on top of it. It&rsquo;s not as if I need to monitor Iran&rsquo;s Press TV in glorious 4K resolution.
Actually, I&rsquo;m not sure I&rsquo;ve ever thrown away a CRT TV that&rsquo;s still functional &mdash; there&rsquo;s another one equipped with a Roku that&rsquo;s within eyeshot of the home treadmill. Thrift!

FMF-Issue-062326-2

Buffett’s Sudden About-Face

<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" />We Appreciate the Praise, But&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;The 5 is the only place I get my &lsquo;news&rsquo; anymore,&rdquo; a reader wrote to us some years back &mdash; using this e-letter&rsquo;s bygone nickname. &ldquo;It's clear to me you call it like you see it with no political bias whatsoever. So keep doing what you're doing!&rdquo;
Affirmed another: &ldquo;The only news I get is here and from a couple of mainly financial newsletters.&rdquo;
We were aghast. In response, we paraphrased the cereal commercials of days gone by &mdash; this daily dispatch is only part of a well-balanced informational diet.
Around the same time, a reader requested &ldquo;For Dave: I&rsquo;d be interested in a description of your daily informational intake.&rdquo;
Nor was he the only one.
It was a great question &mdash; especially considering my own background with 20 years in the TV news racket. I&rsquo;ve been out for nearly as long, but the news-junkie part of me never went away. I&rsquo;ll never tire of coming across a story that makes me say, &ldquo;Holy $#*%!&rdquo;... and I hope that zeal comes through to you in these missives.
I promised back then to divulge my daily informational diet, more than once &mdash; but didn&rsquo;t get around to delivering until 2022.
What follows is a 2026 update: Look for many revisions if you saw the 2025 version&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />For starters, I&rsquo;m compelled to point out that at the core of this e-letter are the paradigms &mdash; the ways of looking at markets and the economy &mdash; developed by our own experts at Paradigm Press. Without that, I&rsquo;d be just another rando on the internet.
Jim Rickards&rsquo; input &mdash; especially in the early years of his work with our firm &mdash; has been seminal. Of course, James Altucher provides a crucial window into the worlds of artificial intelligence and crypto.
Enrique Abeyta brings us 30 years of trading know-how. Ray Blanco is ahead of the curve in tech and biotech. Zach Scheidt&rsquo;s passion for income and value investing is second to none. Our recovering investment banker, the inimitable Sean Ring, never lacks for something lively to say. Byron King has been my colleague for 19 years, keeping a pulse on energy and natural resources &ndash; now joined by Matt Badiali.
Basically, I have the same level of access to their ideas as do members of our VIP level of service called the Omega Wealth Circle &mdash; only I get paid to read our editors&rsquo; work instead of the other way around!
[As long as I brought it up: Are you intrigued by the idea of all-you-can-eat access to everything we publish? That&rsquo;s what our Omega Wealth Circle offers. The key advantage is the substantial savings you achieve over subscribing to all of our services individually.
The Omega Wealth Circle isn&rsquo;t for everyone&hellip; and we don&rsquo;t open membership to just anyone. But if you already have two or more subscriptions with us, you can expect an invitation sooner or later.]
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />&ldquo;So Where Does Dave Get His News?&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />My day begins at 5:00 a.m. Eastern Time. First thing, I skim the news alerts that crossed my iPad overnight. (More about those later.)
From there, it&rsquo;s a regimented sequence that goes like this&hellip;
<ul>
<li>Front page of The New York Times. Like it or not, the Times&rsquo; front page sets the agenda for mainstream discourse in these United States &mdash; and its longevity in that regard is formidable. When I was growing up, the Gray Lady was part of an influential troika along with CBS News and Time magazine. The latter two have faded into irrelevance, but the Times endures &mdash; even as much of the rest of corporate media are now owned by only a half-dozen companies. Ignore it at your peril</li>
</ul>
<ul>
<li>The BBC iPad app: Here too, it&rsquo;s a case of &ldquo;know thine enemy.&rdquo; A shame, really. As a young man in pre-internet days, I listened faithfully to the BBC World Service&rsquo;s straight-arrow coverage on a shortwave radio. Its correspondents were everywhere! But the Beeb was already going downhill in the mid-1990s&hellip; and by 2002&ndash;03, it was just one more useless mouthpiece for the George Bush-Tony Blair death march toward endless war. Still&hellip; the BBC retains the same cachet around the world that the Times has here at home</li>
</ul>
<ul>
<li>Financial Times: I scan the front-page stories, but for any number of reasons &mdash; including decades of habit &mdash; I devote more attention to&hellip;</li>
</ul>
<ul>
<li>The Wall Street Journal: Here, every front-page story &mdash; including the &ldquo;What&rsquo;s News&rdquo; summary &mdash; gets at least enough attention from me to decide whether I should read beyond the first paragraph.</li>
</ul>
Ideally, I burn through all of that in about 20 minutes. Then it&rsquo;s off to the rest of my morning activities before I settle in for the day in earnest and resume my morning news cruise.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />I check a handful of other sources before applying fingers to keyboard&hellip;
There&rsquo;s Ed Steer&rsquo;s Gold &amp; Silver Digest &ndash; a subscriber-only e-letter that&rsquo;s a comprehensive window on the precious metals markets. But equally valuable are the crowdsourced links to financial news items I might not come across otherwise.
Meanwhile, geopolitics can always move markets, and it pays to know what sort of trouble the U.S. government is stirring up around the world. For over a quarter-century, Antiwar.com has been second-to-none in this regard &mdash; going all the way back to Bill Clinton&rsquo;s Kosovo war in 1999.
As noted in the 2025 edition, I gave up on the Drudge Report in 2024.&nbsp;
Since last year I&rsquo;ve also given up the &ldquo;Reason Roundup&rdquo; column posted each morning by Reason magazine. Just useless under its present editor.
But I still keep up with currency maven and old friend Chuck Butler, proprietor of the venerable Daily Pfennige-letter.
<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" />Social Media (Mostly X)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />When X was still called Twitter, I was able to peruse the site without an account. Elon Musk made me break down and get one.
I&rsquo;ve managed to resist the site&rsquo;s addictive qualities&hellip; although within the last year I&rsquo;ve begun <a href="https://x.com/gonigam">occasionally commenting and reposting</a>.&nbsp;
Then and now, by following a dozen or so key accounts, I discover&hellip;
<ol>
<li>Pithy hot takes that help punctuate these daily missives and</li>
<li>More news I might not discover anywhere else.</li>
</ol>
The financial accounts I follow have undergone a major overhaul since last year. Shortly after the Iran war started I had the good fortune of stumbling across three accounts that are must-follows&hellip;
<ul>
<li>Calvin Froedge, @calvinfroedge. He&rsquo;s the proprietor of Marhelm, a shipping-data platform. His BS threshold might be even lower than mine, and that&rsquo;s saying something</li>
</ul>
<ul>
<li>Don Johnson, @DonMiami3. He&rsquo;s chief economist at an outfit called MacroEdge and a keen observer of the energy markets</li>
</ul>
<ul>
<li>Carolina Lion, @CarolinaLion2. I hesitate to mention an anonymous account but he &ndash; I think it&rsquo;s a he &ndash; frequently has worthwhile things to say.&nbsp;</li>
</ul>
All three of these accounts have exercised a healthy skepticism about the prospects for a U.S.-Iran agreement&hellip; and an appropriate level of alarm about the cutoff of oil and other natural resources from the Persian Gulf region.
<ul>
<li>Meanwhile I still keep up with Don Durrett, @DonDurrett, an authority on precious metals and mining stocks.</li>
</ul>
There are also some non-financial accounts that give me fodder now and then&hellip;
<ul>
<li>Glenn Greenwald, @ggreenwald. The premier civil libertarian of the 21st century. He came to the fore during the Dubya Bush years as an old-school liberal. He&rsquo;s still an old-school liberal; it&rsquo;s the center-left of the Democratic Party that went full-on authoritarian during the 2010s</li>
</ul>
<ul>
<li>Will Schryver, @imetatronink. Fascinating military analyst. His background is an enigma but his knowledge is second-to-none. Absolute must-follow&nbsp;</li>
</ul>
<ul>
<li>Scott Horton, @scotthortonshow. His presence on X isn&rsquo;t always consistent, but that&rsquo;s because he wears so many hats now &ndash; director of the Libertarian Institute, editorial director of <a href="http://antiwar.com">Antiwar.com</a>, cohost of the Provoked podcast with Darryl Cooper, etc. But whenever he weighs in it&rsquo;s always worthwhile.</li>
</ul>
I have given up on Michael Tracey, long my favorite political reporter. Perhaps I&rsquo;ll get back into him as we get closer to the midterm elections, but last year he became zealous to a fault in attempting to debunk anything and everything related to the late financier and sexual predator Jeffrey Epstein.&nbsp;
Tracey is certainly correct that many women claiming to have been &ldquo;victimized&rdquo; while in their 20s appear to be angling for generous legal settlements. But from my perch there are still too many unanswered questions surrounding Epstein &ndash; <a href="https://paradigmpressroom.com/post/jpm-epstein-and-the-virgin-islands">especially</a> when it comes to the Virgin Islands&rsquo; lawsuit against JPMorgan Chase, <a href="https://paradigmpressroom.com/post/2025-update-from-jfk-to-jeffrey-epstein">swept</a> under the rug with a pittance of a settlement in 2023.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />You&rsquo;ll notice a lack of &ldquo;conservative&rdquo; websites on my list.
Sorry, but most of them are really subpar. Several years ago I solicited reader input about what folks were reading instead of Drudge, and I was shocked at the level of quality. Any worthwhile original reporting was buried in story after story whose only purpose was to reinforce right-wingers&rsquo; tribal identity. (Of course, the purpose of much mainstream reporting these days is to merely reinforce left-wingers&rsquo; tribal identity.)
If there is worthwhile original reporting at such conservative sites &mdash; i.e., Chuck Ross&rsquo; Russiagate coverage for The Daily Caller a few years ago &mdash; I figure I&rsquo;ll hear about it via X or the other sources listed above.
Same goes, by the way, for the premier &ldquo;alt&rdquo; financial site ZeroHedge. (I have my issues with ZH &mdash; but all the same, I&rsquo;ve been compelled to rise to its defense <a href="https://5minforecast.com/2020/02/03/in-defense-of-zero-hedge">more</a> than <a href="https://5minforecast.com/2022/02/16/mdm-alert">once</a>.)
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />News in Progress
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Because the news never stops, I stay abreast of events even as I write.
I like to think one of the unique elements of this e-letter is that of immediacy. Yes, I&rsquo;m often writing about longer-term trends&hellip; but if I can point out that there&rsquo;s something happening right this minute to underscore my point, well, so much the better.
So my iPad is set up to receive news alerts from maybe a half-dozen sources.
It&rsquo;s kind of amazing when I think about it: Modern technology can give anyone the same adrenaline rush that was once limited to folks like me who worked in a newsroom.
Long before the internet came along, every newsroom had access to a &ldquo;wire service&rdquo; furnished by an agency like The Associated Press.
When breaking news happened, the teletype would go ding-ding-ding. Would it change the lineup of tonight&rsquo;s newscast? Or the layout of tomorrow morning&rsquo;s front page? The only way to know was to get up from your desk and walk over to the machine.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4Ipo1piQnGuef0LgjvbsjR/2d5b3a476082d51a2bb8db7f57a3a536/FMF-Issue-062226-1.png" alt="United Press International" width="540px" /> I&rsquo;m just old enough to have changed the paper and ribbons on a teletype machine exactly like this one [Photo from the Salt Lake County Archives]
As newsrooms computerized in the 1985&ndash;95 timeframe, the wire services were fully integrated into those systems along with other functions like word processing, story filing, etc. No need to get up from your desk anymore; breaking news appeared at the top of everyone&rsquo;s screen at once. But well into the 21st century, the little dopamine hit that came with every &ldquo;urgent&rdquo; or &ldquo;bulletin&rdquo; (or the extremely rare &ldquo;flash&rdquo;) was still limited to newsroom types.
That all changed when Apple launched iOS 3 in 2009 &mdash; incorporating push notifications. Every news purveyor with an app could send breaking news straight to your pocket. These 5 Bullets wouldn&rsquo;t be what they are without it.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Too, I have a handful of international news channels streaming on three or four screens with the sound down. It gives me a ground-truth perspective on the news and the markets in other countries.
There&rsquo;s France 24, Germany&rsquo;s DW, Qatar&rsquo;s Al Jazeera, Russia&rsquo;s RT and China&rsquo;s CGTN, among others. Yes, they&rsquo;re all government-run and have an agenda. But they&rsquo;re way less crazy-making than American news channels. Too, having them on is kind of a throwback to my shortwave radio-listening days.
And truth be told, it&rsquo;s also a way to recreate a newsroom atmosphere in my home office &mdash; you know, with all the TVs tuned to various channels&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6LHqmgQff8SZht1y0F5IwQ/3c45c0d405312402769391c422631a2e/FMF-Issue-062226-2.png" alt="Newsroom" width="540px" /> You can take the boy out of the newsroom, but you can&rsquo;t take the newsroom out of the boy&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" />Perspective
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />If all of this sounds a little intense, well, I suppose it is.
Nor is the intensity limited to my &ldquo;working&rdquo; hours. There&rsquo;s always something urgent or important or interesting happening. Rare is the evening or weekend when I&rsquo;m not jotting something down that I think might be useful for these daily dispatches.
Which is all fine. What&rsquo;s less fine is that the intensity has been amped up to extreme levels ever since the world started flying apart in 2020.
It began with <a href="https://5minforecast.com/2023/03/10/two-weeks-to-tyranny">arbitrary lockdowns</a>&hellip; and then riots brought on <a href="https://5minforecast.com/2020/06/02/were-all-hajis-now/">in part by economic insecurity</a>&hellip; followed by a tightening noose of <a href="https://paradigmpressroom.com/post/todays-5-bullets-is-packed-with-misinformation">censorship</a>&hellip; the risk of getting <a href="https://5minforecast.com/2022/02/22/banished-left-to-die">&ldquo;financially canceled&rdquo;</a>&hellip; and the starkest <a href="https://paradigmpressroom.com/post/90-seconds-to-armageddon">threat of nuclear war in 60 years</a>.
The Trump 47 administration delivered an epic strategic blunder &ndash; a war that was <a href="https://paradigmpressroom.com/post/unconditional-surrender">supposed to be over in four days</a> and that <a href="https://paradigmpressroom.com/post/iran-a-deal-to-make-a-deal">may or may not be (tentatively) resolved now</a>. All to halt a nuclear weapons program that never existed and reopen a waterway that was open before the war began.
If I&rsquo;m not careful&hellip; I&rsquo;ll function in a chronic state of anxiety that I&rsquo;m missing an important piece of information for my writing&hellip; or for the life that my wife and I have worked so hard to create for ourselves&hellip; or both.
Gotta stay centered and have faith that I&rsquo;ll see what I need to see when I need to see it. And it&rsquo;s with that faith I&rsquo;ll often venture out for a morning hike before sitting down in the chair.
Which reminds me&hellip; I ran across this meme in 2022 and keep it on my computer desktop now. I share it with you now because, well, maybe you need it as a reminder too?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3i5Uen6Q9tHKoPQOPmgeSF/84b4145a690cf716d86efeec6179b11d/FMF-Issue-062226-3.png" alt="Friendly Reminder..." width="540px" />

FMF-Issue-062226-Featured

A Day In the Life of 5 Bullets

<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 Shuts Down Without This Substance
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In the summer of 2024 &mdash; long before the mainstream caught on &mdash; we warned that AI was becoming &ldquo;the monster that ate the power grid.&rdquo;
In the summer of 2025, the Department of Energy issued a report warning of a 100X increase in the risk of rolling blackouts by 2030 if the grid couldn&rsquo;t keep up with AI&rsquo;s exploding power demands.
As midyear 2026 approaches, here&rsquo;s what&rsquo;s changed: not much.
Yes, the grid&rsquo;s capacity is growing again after staying static from roughly 2011&ndash;2023. But it&rsquo;s nowhere near enough to keep pace with the buildout of AI data centers, which are proliferating like rabbits.
Utilities in many parts of the country are warning that during episodes of extreme heat or cold, surging demand could overload their systems. (Great timing with an El Nino bearing down this summer&hellip;)
Today we&rsquo;re delving into what could be the single-most profitable way to play the trend.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;We need copper to live a modern life,&rdquo; Paradigm natural resources pro Matt Badiali reminds us.&nbsp;
&ldquo;If you want the lights to come on when you flip the switch&hellip; you need copper. If you want to use ChatGPT or any other AI for that matter, you need more copper.&rdquo;
The power grid runs on copper&hellip; and so do those data centers.
Lately copper prices have been hovering near all-time highs of $6.50 a pound. But don&rsquo;t get the wrong idea. Matt says there&rsquo;s much more upside from here.
That&rsquo;s because he&rsquo;s seen previous copper bull markets &mdash; like the one that began at the tail end of the 2008 financial crisis. Here&rsquo;s a chart of the giant copper producer Freeport-McMoRan (FCX) along with the spot price of copper and the S&amp;P 500.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4n8oOd3QZA9aosS72qbS9j/fff6b12730c322c09e6411e042b76e3f/FMF-Issue-061726-1.png" alt="FCX" width="540px" />
&ldquo;Coming out of the crash,&rdquo; says Matt, &ldquo;Freeport&rsquo;s shares ran 400% from January 2009 to January 2011. The price of copper exploded 225% higher.&rdquo;
How does that compare with now? Take a look&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6Dpc25WCly9efiaWBWB4X1/fb7a6435b23599a7029cb9c8c4cfcdda/FMF-Issue-061726-2.png" alt="FCX" width="540px" />
&ldquo;Freeport&rsquo;s shares didn&rsquo;t start to rally until the lows in April 2025,&rdquo; says Matt. &ldquo;Since then, they rose about 130%... well below the performance from 2009. And copper prices are only up about 45%...
&ldquo;That leaves us plenty of room for bigger gains.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;And even if the copper prices stop rising for now, copper producers are about to generate massive cash flows,&rdquo; Matt goes on. &ldquo;This will be the start of a massive round of consolidation, exploration and development.
&ldquo;And it won&rsquo;t be enough.
&ldquo;It takes nearly two decades to take a copper discovery to production. And thanks to nearly a decade of underinvestment from 2012&ndash;2023, there have been far too few new discoveries.
&ldquo;According to the analysts at S&amp;P Global, new discoveries fell 90% since 1990. Since 2021, only six discoveries meet the &lsquo;major discovery&rsquo; criteria. And all the new production scheduled to come online between now and 2030 will only cover about 80% of expected demand.&rdquo;
As with gold miners, there are copper miners that fall under the category of &ldquo;majors&rdquo; and &ldquo;juniors.&rdquo; The majors are the big operators, and the safer bet for steady gains. The juniors carry more risk &mdash; but also more upside.
For majors, Matt says look at the Sprott Copper Miners ETF (COPP)... and for juniors, the Sprott Junior Copper Miners ETF (COPJ).
Matt&rsquo;s bottom line: &ldquo;If you don&rsquo;t have exposure to copper yet, you should get some now.&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" />Peace Slipping Away Already?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. oil futures are up modestly: If peace was at hand yesterday between Washington and Tehran, it&rsquo;s slipping away some today.
In the near term, the problem is Lebanon.&nbsp;
This should come as no surprise if you&rsquo;ve been keeping up with our daily missives &mdash; but Iran&rsquo;s military is underscoring its red lines in a new statement warning of a &ldquo;harsh response&rdquo; if Israel doesn&rsquo;t halt its ongoing assault on Lebanon.
On Monday a senior Trump administration official said Israeli withdrawal from Lebanon is not a condition of the U.S.-Iran agreement.&nbsp;
Today, Bloomberg published what it says is a text of the deal &mdash; it still hasn&rsquo;t been officially released by either side &mdash; and it calls on both sides &ldquo;together with their allies&rdquo; to declare an &ldquo;immediate and permanent end to the war on all fronts, including Lebanon.&rdquo;
Meanwhile, Donald Trump said the agreement is &ldquo;not final.&rdquo;
&ldquo;It&rsquo;s a memorandum of understanding, and if I don&rsquo;t like it, we&rsquo;ll go back to shooting at them, dropping bombs on their heads.&rdquo;
He didn&rsquo;t make clear whether that means the tentative deal is still subject to change&hellip; or whether he was referring to the 60 days of talks that are supposed to follow the signing ceremony for the tentative deal on Friday.
Whatever the case, he&rsquo;s clearly feeling the heat from his supporters: The president is &ldquo;facing a backlash,&rdquo; says the Financial Times. &ldquo;Tehran Accord Draws Doubts From Hawks&rdquo; is the headline on The Wall Street Journal&rsquo;s front page.
Because God forbid he do anything to displease Mark Levin and Laura Loomer.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I lean to the conclusion that the U.S. has no intention whatsoever to abide by the terms Iran is dictating,&rdquo; tweets the military analyst Will Schryver.&nbsp;
&ldquo;They just don&rsquo;t know what else to do at the moment. So they&rsquo;re buying themselves a few days to ponder the problem.&rdquo;
But let&rsquo;s say the follow-on talks proceed for 60 days starting Friday, as advertised. Then what?
&ldquo;I find it hard to believe that the discussions will lead to anything,&rdquo; writes &ldquo;Bernhard,&rdquo; the mysterious and often-perceptive analyst behind the Moon of Alabama site.
&ldquo;It is difficult to foresee what will follow in September after they fail. Trump will not want to bomb Iran just two months before the midterm elections. Iran will be reluctant to again block the Strait of Hormuz. That makes it likely that the conflict will stay unresolved and continue to simmer.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Amid this backdrop, U.S. oil futures sit at $77.71 &mdash; up more than 2% from yesterday&rsquo;s three-month lows.&nbsp;
It being Wednesday the Energy Department has released its weekly inventory figures. For the week ended last Friday, 17.2 million barrels of crude were drawn from U.S. stockpiles. That&rsquo;s both private-sector inventories plus the government&rsquo;s Strategic Petroleum Reserve.
In other words, 2.2% of the entire inventory of crude oil in this country was taken out of storage in a single week.
As Big Oil executives emphasized last month, it&rsquo;s this record drawdown of inventories that&rsquo;s helping suppress the oil price.
The problem is that we&rsquo;re approaching <a href="https://paradigmpressroom.com/post/tank-bottom-date-july-4">&ldquo;tank bottoms&rdquo;</a> soon&hellip; and it&rsquo;s going to take weeks to reopen the Strait of Hormuz even if the tentative U.S.-Iran deal goes through.
<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 New Guy at the Fed
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The stock market is treading water ahead of the Federal Reserve&rsquo;s next announcement &mdash; the first under new chair Kevin Warsh.
It&rsquo;s due for 2:00 p.m. EDT. On the one hand, it will be no surprise: The Fed will stand pat, keeping the benchmark fed funds rate steady at 3.75% &mdash; where it&rsquo;s been for the last six months. The Fed rarely delivers surprises with its scheduled proclamations; the decision is telegraphed days if not weeks in advance.
You might think the Fed is inclined to raise interest rates in light of the soaring inflation rate &mdash; from 2.4% in January to 4.2% in May.
But our Jim Rickards says Warsh and a majority of the Fed&rsquo;s Open Market Committee expect the inflation rate to ease &mdash; now that some sort of U.S.-Iran deal is (supposed to be) in the offing and energy prices will (presumably) climb down.
&ldquo;If oil prices had remained at $100 per barrel or higher, the Fed would likely raise rates. No one expects the Fed to cut rates. With oil prices falling sharply, the best course for the Fed is to do nothing.&nbsp;
&ldquo;There may be some dissent by FOMC members who want the Fed to raise rates. But most of the FOMC will support Warsh in holding rates steady for now.&rdquo;
On the other hand&hellip; once the announcement is made, Warsh will hold his first press conference as chair.&nbsp;
He&rsquo;s an unknown quantity. Traders will be watching closely for every wave of the hand and every pause for the right word, in hopes of divining Warsh&rsquo;s intentions for the next FOMC meeting at the end of July. And probably the three additional meetings before year-end.
Any surprise could take markets for a ride, one way or another. Jim Rickards will join us tomorrow for a full breakdown.
For the moment, the S&amp;P 500 is flat &mdash; just over 7,500. The Nasdaq is slightly in the red, the Dow slightly in the green. SpaceX is down 5.5% and back below $200 a share.
➢ One economic number of note: Retail sales jumped 0.9% last month, a number so high that no one among dozens of Wall Street economists saw it coming. Of course the number was skewed by rising gasoline prices. Worse, as we can&rsquo;t emphasize enough, these figures are not inflation-adjusted. If you take inflation into account, U.S. retail sales have been <a href="https://paradigmpressroom.com/post/musks-biggest-ambition/#3">pancake-flat for five years</a>.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />When AI Makes Stuff up, Continued
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Go figure: A major consulting firm has been called out for a report about how companies use AI. Seems many of the examples were&hellip; made up by AI.
From the Financial Times&hellip;
<blockquote>A KPMG report on how AI is being used by businesses across the world exaggerated adoption of the technology with bogus case studies that appear to have been based on AI hallucinations.</blockquote>
<blockquote>The October report, &ldquo;Redefining Excellence in the Age of Agentic AI,&rdquo; made numerous false claims about the use of AI by organizations including the Swiss bank UBS, the U.K.&rsquo;s National Health Service and the public transit groups Swiss Federal Railways and Transport for London</blockquote>
The report said UBS &ldquo;integrates AI agents across investment advisory, risk management and compliance monitoring&hellip; These agents operate within a composable platform co-developed with Microsoft, enabling personalized, efficient and compliant financial journeys.&rdquo;
I mean, c&rsquo;mon, the language sounds as if it&rsquo;s AI-generated too, right? (Not that consulting firms are known for their sterling prose, but still&hellip;)
The hallucinated examples were first spotted by a research group called GPTZero &mdash; which called out another report last month by the consulting firm EY (formerly Ernst &amp; Young).&nbsp;
GPTZero&rsquo;s CEO Edward Tian says these errors &ldquo;poison the well of information.&rdquo; Gee, ya think?
<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: European Visitors Paid to Post?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After we took note last Friday of all the foreigners visiting the United States for the World Cup, <a href="https://paradigmpressroom.com/post/spacex-the-iran-connection/#4">expressing wonder at the sights of this vast land</a>, we heard from a skeptical reader.
&ldquo;I strongly suspect that these &lsquo;Europeans&rsquo; who have shown up en masse are paid actors.
&ldquo;They all seem to be reading from the same script: They all profess an amazement at Buc-ee&rsquo;s Beaver Nuggets, enormous quantities of smoked meats, clean bathrooms, the Waffle House and twerking cheerleaders.
&ldquo;I believe that the former football (real American football) player J.J. Watt is behind this. He has admitted to bankrolling &lsquo;Freddy&rsquo; the German &lsquo;tourist&rsquo; who started this narrative. I believe they are being paid to promote good old-fashioned American values, since, let&rsquo;s face it, our national mood is in the ****ter.
&ldquo;I hope you can see past this psyop.&rdquo;
Dave responds: Thanks for bursting your editor&rsquo;s bubble. Apparently at least one podcaster and some other observers on social media are one-upping you &mdash; suggesting the U.S. government is behind it all.
Come to think of it&hellip; it is a little suspicious in light of all the stories about how foreign tourism to the United States has <a href="https://www.cnn.com/2026/05/25/travel/analysis-tourism-fewer-international-visitors-2025-vis">dropped like a rock</a> since the start of Trump&rsquo;s second term&hellip; to say nothing of the stories this spring about <a href="https://www.newsweek.com/world-cup-host-cities-hotels-tickets-struggling-unsold-12003833">disappointing numbers of hotel bookings</a> in the World Cup venue cities.
But doggone it, it&rsquo;s still fun to see America through the eyes of &ldquo;Freddy&rdquo; &mdash; astonished just <a href="https://x.com/FreddyLA7/status/2064530727807463920">sitting in the stands</a> at Jordan-Hare Stadium on the Auburn University campus and thinking, The European mind cannot comprehend this.

FMF-Issue-061726-Featured

AI Shuts Down Without This Substance

<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" />When Trust Is Broken
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Donald Trump is at risk of repeating one of Joe Biden&rsquo;s biggest blunders.
After Russia invaded Ukraine in 2022, Biden and his national security adviser Jake Sullivan thought it would be a clever idea to punish Moscow by freezing $300 billion in U.S. Treasuries held by the Russian central bank.
Executing that freeze was easy-peasy.&nbsp;
U.S. Treasuries &ldquo;are held on a digital ledger controlled by one or more depositories around the world,&rdquo; says Paradigm macro maven Jim Rickards &mdash; who knows the plumbing of this system inside-out from his days at Citibank. &ldquo;There&rsquo;s not much more to it than a phone call or a few keystrokes.&rdquo;
The freeze had zero impact on Moscow; Russia&rsquo;s economy chugged along just fine in the years immediately following.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But the freeze had the instant effect of undermining foreigners&rsquo; confidence in U.S. Treasuries.
We&rsquo;ve said it before and we&rsquo;ll say it again: Leaders of other governments around the world started to think, If it can happen to the Russians, it can happen to us too.
&ldquo;The reason reserve managers have such confidence in Treasuries as a reserve asset is that the U.S. is perceived to have a strong rule of law,&rdquo; Jim told his Strategic Intelligence subscribers yesterday. &ldquo;Yes, it&rsquo;s easy to freeze the securities, but the U.S. won&rsquo;t do so except after due process of law or a national security emergency.&rdquo;
But neither of those contingencies applied in the case of Russia during 2022.&nbsp;
And they don&rsquo;t apply in the case of Iran now. But that&rsquo;s not stopping the Trump administration.
A few days ahead of the deal supposedly reached between Washington and Tehran this past weekend&hellip; the White House threatened to seize $24 billion of U.S. Treasuries owned by Iran.
&ldquo;These assets,&rdquo; Jim explained, &ldquo;would be used to finance the reconstruction of war damage caused by Iran to U.S. allies in the Persian Gulf, such as Kuwait and Bahrain.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;You can debate the wisdom of these proposals, but you cannot debate the fact that the U.S. is destroying trust in its own rule of law,&rdquo; Jim says.
&ldquo;Countries around the world, including major Treasury securities holders such as South Korea, Taiwan, Japan, Saudi Arabia and China, are watching these developments in Russia and Iran and asking themselves if their own holdings of Treasuries are safe.
&ldquo;What if the U.S. doesn&rsquo;t like what one of those countries is doing in foreign policy? Will the U.S. seize their securities too?&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Another point we can&rsquo;t emphasize often enough: The 2022 Russia freeze touched off a worldwide scramble for a different reserve asset &mdash; gold.
For years, Jim has said that unlike Treasuries, &ldquo;gold is a physical nondigital asset that cannot be stolen, frozen or seized provided it is in safe storage.&rdquo;
As such, global central banks started stacking gold at a record pace in&hellip; 2022.
It sticks out like the proverbial sore thumb on this chart. And if the first-quarter figures for 2026 are any indication, this year&rsquo;s buying will exceed 2025&rsquo;s total.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5rapbFBMyvQvjHQmIqsb2h/12b9531ac8bf9813e12b6bf4efa0d977/FMF-Issue-061616-1.png" alt="Accelerates" width="540px" />
And as we mentioned a few days ago, gold has just overtaken U.S. Treasuries as the biggest asset held by global central banks.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/48dJSZCcrOnHMU5624vqWe/2ea34424495e8bdc2ca2cb629cfbb3ed/FMF-Issue-061616-2.png" alt="Safety in Gold" width="540px" />
It&rsquo;s no coincidence the gold price soared from about $1,800 at the time Washington seized Russia&rsquo;s Treasury holdings to about $4,250 at year-end 2025.
What&rsquo;s the outlook for the dollar price of gold going forward? Jim returns for insight in Bullet No. 4, after we take up other matters&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />SpaceX Gains, Other Tech Names Lose
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The share price of SpaceX has sailed past $200 on its third trading day &mdash; up 57% from Thursday&rsquo;s listing price of $135.
In after-hours trading yesterday, SpaceX added an amount to its market cap that equaled the entire market cap of Starbucks. As one skeptic pointed out, Starbucks generates twice as much revenue as SpaceX.
Once the market opened today, SpaceX&rsquo;s total market cap exceeded that of Amazon&hellip; and it soon surpassed Microsoft as well. At $2.8 trillion, SpaceX is now the fourth-biggest U.S. company. (Nvidia holds the crown at just over $5 trillion. For now.)
We&rsquo;re definitely in the &ldquo;IPO hype&rdquo; phase. That&rsquo;s the first of five phases to SpaceX&rsquo;s likely trajectory over the next year as described here <a href="https://paradigmpressroom.com/post/iran-a-deal-to-make-a-deal">yesterday</a> by colleague Davis Wilson.
Some of the social media chatter is out of control. &ldquo;A no-brainer 100X&rdquo; says one rando &mdash; unaware that SpaceX would then be 10 times the size of the U.S. economy.
On the flip side, skeptics declare SpaceX is a firm that&rsquo;s still &ldquo;basically pre-revenue&rdquo; but &ldquo;trading like a meme coin.&rdquo;
True that. But as John Maynard Keynes quipped a long time ago, &ldquo;The market can remain irrational longer than you can remain solvent.&rdquo;&nbsp;
Just ask the &ldquo;Tesla shorts&rdquo; who kept betting against Elon Musk&rsquo;s other big company throughout the 2010s&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the moment, it sure looks as if hot money is flowing into SpaceX at the expense of many other tech-adjacent stocks.
While SpaceX is up 11.5% on the day, the Nasdaq Composite is down about 0.6%. And the red-hot-until-recently Philadelphia Semiconductor index (SOX) is down 3.8%.&nbsp;
Nvidia is down 1.75% as we check our screens, Microsoft 2%. IGV, the big software ETF, is on its heels again, down 1.62%.
The S&amp;P 500 is off about a quarter percent at 7,536. The Dow, with relatively limited tech exposure, is up 1% in record territory over 52,000.
Precious metals are consolidating yesterday&rsquo;s big gains &mdash; gold at $4,341 and silver just over $70. But crypto is losing ground, Bitcoin well below $66,000 and Ethereum back under $1,800.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Hormuz: &ldquo;You Go First.&rdquo; &ldquo;No, YOU Go First&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the second day in a row, major shippers are making clear they&rsquo;re in no hurry to resume transiting the Strait of Hormuz &mdash; &ldquo;deal&rdquo; or no deal between Washington and Tehran.
The CEO of the world&rsquo;s biggest tanker operator says shipowners will likely hold off for weeks.
&ldquo;What will have to come in place is not just a simple ,agreement between the relevant countries, but it has to be material and translated into the real situations in the Strait of Hormuz, so that shipping lines can make themselves comfortable to go through,&rdquo; Mitsui OSK Lines CEO Jotaro Tamura tells the Financial Times.
That&rsquo;s on the heels of the statement we mentioned yesterday from Maersk, the No. 2 container-ship operator in the world &mdash; which pointed out that when it comes to the U.S.-Iranian agreement, &ldquo;publicly available details are still limited.&rdquo;
That remains the case today even though Vice President Vance says President Trump and Iranian Parliament Speaker Mohammad Bagher Ghalibaf have &ldquo;digitally&rdquo; signed the agreement. No confirmation on that from the Iranian side.
For that matter, there&rsquo;s confusion coming from within the U.S. side. Trump said Sunday the U.S. blockade on Iranian ports had been lifted&hellip; but in an advisory to merchant ships yesterday, the U.S. military said it remains in effect &ldquo;pending execution&rdquo; of the agreement.
Is this just a case of the left hand not knowing what the right is doing? Or is the military defying the orders of the commander in chief? (Just asking &mdash; <a href="https://5minforecast.com/2016/09/23/has-the-u-s-military-gone-rogue/">wouldn&rsquo;t be the first time</a>.)
No wonder the shippers are so skittish.
But hope springs eternal among oil traders. U.S. futures are down another five bucks on the day. At $75.64 they&rsquo;re the lowest since the early days of the war last March.
<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" />Gold $10,000 (But Maybe $3,600 First)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The bad news about gold is that Jim Rickards won&rsquo;t rule out gold sinking to $3,600. But he says even today&rsquo;s bid of $4,341 is &ldquo;an excellent entry point.&rdquo;
Yes, gold is down significantly from the late-January record &mdash; when front-month gold futures reached $5,355. But that&rsquo;s not unexpected. And $3,600 would be completely normal on the way to much higher prices.
It comes back to something Jim was told over a decade ago by the legendary commodities trader Jim Rogers: &ldquo;No commodity goes from a baseline to a permanently new high without a 50% retracement along the way.&rdquo;
Jim Rickards demonstrates how that worked with gold&rsquo;s bull market in the early years of this century: &ldquo;Using the 1999 price of $250 per ounce as a baseline and the 2011 peak of $1,900 per ounce, gold had gained $1,650 per ounce in the prior bull market.&nbsp;
&ldquo;Applying Rogers&rsquo; 50% rule, a drawdown of $825 per ounce would satisfy the condition. Subtracting $825 from $1,900 produces a target bottom of $1,075 per ounce.&rdquo;
Turns out gold bottomed around $1,050 in mid-December 2015. In 5 Bullets&rsquo; predecessor e-letter, the two Jims <a href="https://5minforecast.com/2015/12/11/rogers-and-rickards-gold-outlook/">called the bottom nearly to the day</a>.
Now Jim does the math for the present situation: &ldquo;We can reasonably date the start of the current bull market from Oct. 1, 2023, at a price of $1,845 per ounce. (Gold prices moved relatively little from 2019&ndash;2023.) The market peaked at $5,355 in January 2026. The dollar gain in that period was $3,510 per ounce.
&ldquo;A 50% drawdown of that amount is $1,755 per ounce. Subtracting that amount from $5,355 would produce a price of $3,600 per ounce to meet the 50% drawdown that the Rogers method would predict&hellip;&rdquo;
All that said, Jim won&rsquo;t rule out that we might have already seen the bottom for this cycle &mdash; $4,110 last week. Chalk it up to &ldquo;the volatile nature of commodity trading in general and gold in particular,&rdquo; he says.
&ldquo;If you own gold, hang on. If you&rsquo;re looking to buy gold, this is an excellent entry point.&rdquo;
Either way, expect &ldquo;substantial gains,&rdquo; Jim concludes &mdash; &ldquo;as a new bull market finds its legs, moves decisively past $5,000 per ounce and ultimately heads toward $10,000 per ounce &mdash; and potentially higher.&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: DXYZ
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> A handful of alert readers wrote in during the last 24 hours to shed light on the complaints from yesterday&rsquo;s mailbag that had your editor stumped.
The complaint was that Paradigm in general and/or James Altucher in particular had recommended shares of Destiny Tech100 Inc. (DXYZ) &mdash; the closed-end fund that was a proxy of sorts for SpaceX before SPCX went public last Friday.
Turns out it was in the portfolio of our now-defunct entry-level newsletter Technology Profits Confidential. Ray Blanco recommended it in 2024.&nbsp;
Later that year we shuttered the newsletter and folded it into Altucher&rsquo;s Investment Network. Some of Ray&rsquo;s picks made it into the Altucher portfolio &mdash; but DXYZ was not one of them. Of the cast-off names, Ray made clear in his final dispatch for TPC that &ldquo;I won&rsquo;t be continuing coverage of these plays moving forward. Be sure to plan your exits from these stocks accordingly.&rdquo;
&ldquo;I personally did well on it,&rdquo; says the reader who brought this to our attention &mdash; &ldquo;and sold it when additional info became available and price started to go down after the hype.
&ldquo;You should just tell your readers that timing is of essence when sell alerts are coming, even if international users like me can&rsquo;t subscribe to text alerts (at least now we have the app - for which I am very grateful).&nbsp;
&ldquo;Thank you for all the hard work you guys are doing to help us navigate as best as possible the news in the markets.&rdquo;
Ah, but there&rsquo;s more to the story&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;My first-ever encounter with Paradigm was a video I viewed around Christmas 2025,&rdquo; writes another reader who sheds additional light.&nbsp;
&ldquo;In the video, I&rsquo;m pretty sure, James Altucher either recommended it, or sure made DXYZ sound like a logical or attractive way to get in on the SpaceX IPO and avoid trying to get actual shares of SPCX. So I bought some.
&ldquo;Don't get me wrong, I made money on it but then it sort of languished and I sold it. But to act like this was a non-event with Paradigm is wrong. It&rsquo;s the whole way I got involved with James Altucher to start with. Maybe go back and take a look at the videos you guys were pumping out back then and see if you don&rsquo;t run across some old footage?
&ldquo;May I also respectfully suggest that perhaps you more judiciously create and send out videos and articles and conduct summits. I have been overwhelmed by the sheer volume and, at times, they actually appear to contradict one another. Or, at the very least, I find myself having to read them or watch them repeatedly to try to sort out the minor differences between them to make sure you guys haven&rsquo;t changed your stance. (DXYZ is a good example.)
&ldquo;I don&rsquo;t mean to be a whiner, but I am starting to wonder if I&rsquo;m just not cut out for the Paradigm investment world. I do have an MBA from Purdue, so it seems odd that I can&rsquo;t keep up better. Might it be your style of delivery or, again, the sheer volume that makes it difficult for me and maybe others?&rdquo;
Dave responds: OK, got it now. DXYZ was an &ldquo;unofficial&rdquo; pick mentioned in a sales promotion for Altucher&rsquo;s Investment Network.
Those picks often fly under my radar here. They&rsquo;re not something I can easily look up like the formal recommendations made in the monthly issues and special reports.
They&rsquo;re also a relatively new thing for us. Perhaps we&rsquo;ve been a touch cavalier in the way we treat them &mdash; relative to the formal recommendations in the paid publications, which of course are thoroughly screened, vetted and monitored. I&rsquo;ve flagged this matter to the Paradigm leadership team; thanks for bringing it to my attention.

FMF-Issue-061616-featured

When Trust Is Broken

<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: &ldquo;A Deal to Make a Deal&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;We have to pass the bill so that you can find out what&rsquo;s in it.&rdquo;
Remember that? Those were the infamous words of House Speaker Nancy Pelosi during the debate over Obamacare in 2010.&nbsp;
&ldquo;Truer words were never spoken,&rdquo; said Cato Institute researcher Michael Cannon. &ldquo;Heck, Obamacare gives [the health and human services secretary] so much arbitrary power to reshape the health care sector that Congress had to pass the law so that Pelosi could find out what is in it.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> At least then the text of the bill was public knowledge. We don&rsquo;t even have that much today with the oh-so-ballyhooed Iran deal.
&ldquo;I have yet to see one authoritative list of terms both sides concur is authentic and that they will abide by,&rdquo; says retired Army combat officer Daniel Davis, host of the Daniel Davis Deep Dive podcast. &ldquo;The only thing that has been discussed thus far is a memorandum of understanding to get Phase 1 enacted so we can even begin negotiations for Phase 2.&rdquo;
&ldquo;It seems to be little more than a deal to make a deal since the nuclear issue and sanctions relief were left unresolved,&rdquo; Paradigm&rsquo;s own Jim Rickards wrote his Strategic Intelligence readers this morning.
Old acquaintance Erik Townsend, host of the Macro Voices podcast, had a pithy summary of how the Iranian side sees it&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1QGE8ek7tBjdQtQCo7fq4A/9d936d48a9fed6ad0f1e94532a6b2724/FMF-Issue-061526-1.png" alt="Erik Tweet" width="540px" />
Supposedly the &ldquo;deal to make a deal&rdquo; will be signed in Switzerland on Friday. Then maybe we can see a text? Pretty please?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> That&rsquo;s assuming U.S. and Iranian representatives even make it to the signing ceremony. There are two enormous stumbling blocks between now and Friday.
The first is the status of Tehran&rsquo;s frozen assets, rumored to be valued at $24 billion.
Iranian media say that under the deal, those assets will be restored to Tehran right away. Asked about that on CBS this morning, Vice President Vance said, &ldquo;We&rsquo;re open to a lot of things that are on the table but that doesn&rsquo;t appear anywhere in the text.&rdquo;
(At least he&rsquo;s seen the text?)
Given everything we&rsquo;ve heard from Iranian leadership in recent weeks, the immediate release of these assets appears to be non-negotiable.
And then there&rsquo;s Israel &mdash; not a party to the agreement, as Prime Minister Benjamin Netanyahu has said pointedly.
Netanyahu tried to deep-six the agreement yesterday by escalating in Lebanon &mdash; bombing metropolitan Beirut, which is a red line for Tehran.
Fox News Middle East correspondent Trey Yingst &mdash; a straight shooter despite who signs his paycheck &mdash; quoted a diplomat involved in the talks as saying, &ldquo;This is a clear attempt by Israel to sabotage the President&rsquo;s deal and drag the United States back into war.&rdquo;
It didn&rsquo;t work &mdash; this time. But Beirut is non-negotiable for Tehran. And a lot can happen between now and Friday.
<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" />Deal Arrives as &ldquo;Tank Bottoms&rdquo; Loom
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And at least until Friday, the Strait of Hormuz remains effectively closed. Here&rsquo;s a one-year chart of Hormuz traffic, placed in context.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2apgxy6H9EGv5Qa9GoBHKF/76bfbb8432e222f3abee443d2ba3e479/FMF-Issue-061526-2.png" alt="Don Tweet" width="540px" />
&ldquo;At this stage, there are no changes to our operations in the region,&rdquo; says a statement from the shipping giant Maersk. &ldquo;The announced agreement is a welcome and positive development, but publicly available details are still limited.&rdquo;
(Gee, you don&rsquo;t say&hellip;)
Even if a deal is signed Friday and everything goes swimmingly from there, it&rsquo;s going to take time to unscramble the scrambled supply chains.
Clearing the strait of mines? A six-month project. Moving vessels where they need to be? Two or three months. Restarting oil production where it&rsquo;s been shut down and then restoring to prewar levels? Another three months.&nbsp;
&ldquo;The war started in a second, but the consequences will linger on much longer,&rdquo; says Amena Bakr of the trade-data firm Kpler.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Assuming this deal is for real, it comes just in time for U.S. oil inventories.&nbsp;
As we chronicled last month, Carlyle Group commodities guru Jeff Currie said that America will be approaching &ldquo;tank bottoms&rdquo; around July 4. And an Exxon executive said the only thing keeping a lid on fuel prices during the war is the fact we&rsquo;re running down inventories.
Even CNN managed to figure that out by this weekend&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/F24KH2xgJIN7ganL9KKiI/afa64c7edb847a9160fb19fa408e9705/FMF-Issue-061526-3.png" alt="CNN Tweet" width="540px" />
As of the week ending June 5, inventories at the giant terminal in Cushing, Oklahoma totaled 21.64 million barrels. That compares with 40 million or so in normal times&hellip; and &ldquo;operational minimums&rdquo; of 20 million &mdash; beyond which there&rsquo;s too much sludge mixed in with the oil and pipelines lose pressure.
Meanwhile, the government&rsquo;s Strategic Petroleum Reserve now sits at its lowest level since August 1983.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The oil price today, you ask? Down over 5% to the lowest levels in over three months, but still over $80.
That might be as good as it gets for a while. Mr. Market hasn&rsquo;t yet absorbed the realities of how long it&rsquo;s going to take to restore energy flows to where they were before the war began. (See above.)
Elsewhere, it&rsquo;s &ldquo;risk on, baby.&rdquo; At last check, the S&amp;P 500 is up nearly 2% to 7,573 &mdash; not too far off its record close of June 2. The Nasdaq is up 3% while the Dow is settling for a 1.4% gain.
Precious metals are also rallying &mdash; gold up $110 to $4,328 and silver up two bucks, only a penny away from $70 again. Crypto is getting traction, too &mdash; Bitcoin up to $66,689 and Ethereum above $1,800 again.
One economic number of note: U.S. industrial production ticked up 0.1% in May, less than expected. Manufacturing output was flat, utilities activity shrank, mining/energy output grew. All told, 76.2% of U.S. industrial capacity was in use last month &mdash; well below the 60-year average.
<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" />SpaceX: What&rsquo;s Next?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> On Day 2 of SpaceX&rsquo;s existence as a publicly traded company, SPCX shares are trading north of $170 &mdash; up 8% from Friday&rsquo;s close and 29% from the IPO price.
But where does it go from here?
&ldquo;The chart below is my best guess for how the next year unfolds after SpaceX goes public,&rdquo; says Davis Wilson of our sister e-letter The Million Mission.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/DCJHQoSf3IvB75dVI3xry/e4297ae5709f3f3c4d2784deb506ff98/FMF-Issue-061526-4.png" alt="The Space X IPO" width="540px" />
&ldquo;We&rsquo;ve seen this movie before,&rdquo; he says. It breaks down into five phases&hellip;
<blockquote>Phase 1: IPO hype. In the brief window before IPO day, demand from retail investors for a limited number of pre-IPO shares was overwhelming. &ldquo;When disappointed investors rush into the open market to buy shares after trading begins,&rdquo; says Davis, &ldquo;It creates a natural source of upward pressure on the stock.&rdquo;</blockquote>
<blockquote>Phase 2: Insiders sell. The venture capital types, to say nothing of SpaceX employees, who&rsquo;ve owned shares for years, will want to cash out. And unlike the single &ldquo;unlock date&rdquo; that typically happens with IPOs, &ldquo;shares are expected to be released in stages from roughly July through December,&rdquo; Davis says. &ldquo;Rather than one giant wave of selling pressure, SpaceX could face a series of smaller waves as more insider shares become eligible for sale.&rdquo;</blockquote>
<blockquote>Phase 3: Investors lose interest. &ldquo;The financial media will move on to the next hot story. The next IPO will arrive&hellip; I wouldn&rsquo;t be surprised if SpaceX enters a prolonged &lsquo;dead money&rsquo; period where investors simply lose interest.&rdquo;</blockquote>
<blockquote>Phase 4: Institutions buy. &ldquo;Many large funds can't buy meaningful positions immediately after an IPO. And they don&rsquo;t want to buy at such inflated prices. Instead, they wait for the hype to fade and for insider selling to run its course.&rdquo; Neither the media nor retail investors will notice. And then&hellip;</blockquote>
<blockquote>Phase 5: Retail buys back in. &ldquo;Suddenly everyone who ignored the stock during the &lsquo;investors lose interest&rsquo; phase will decide they need exposure. That's usually how it works. People don't chase what has fallen. They chase what has already gone up.&rdquo;</blockquote>
No guarantees this is how it plays out. But Davis has seen it play out just like this many times before. &ldquo;The tickers are always different, but the underlying behavior rarely changes.&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" />Trump Admin&rsquo;s Heavy Hand Slams Down an AI Giant
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It&rsquo;s now apparent what the Trump administration&rsquo;s approach to AI regulation will be going forward &mdash; lurching back and forth between a light touch and a heavy hand.
The heavy hand slammed down hard last Friday on Anthropic, the Claude maker that intends to go public later this year.&nbsp;
As we mentioned at the time, Anthropic rolled out its powerful new Mythos model in April &mdash; so powerful, the company claimed, that it unearthed major vulnerabilities in nearly every operating system and web browser.&nbsp;
As such, Mythos&rsquo; initial release was limited to only a few dozen big corporate clients so they could patch their systems. A watered-down version of Mythos dubbed Fable was released to the public last week.
The whole time, Anthropic leaned hard into the Mythos-as-cyberweapon narrative, pleading for federal regulation. (When big companies plead for regulation, it&rsquo;s always to thwart up-and-coming competition.)
Regulation arrived on Friday when the feds issued an export-control order forbidding access to both Mythos and Fable by any foreign national. That&rsquo;s even if the foreign national is in the United States, and even if the foreign national works for Anthropic.
The company was given 90 minutes to comply.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Under strictures that tight, Anthropic simply revoked access to Mythos and Fable for everyone.
Social media had a field day&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3Ptw6dJAunBUhAyXwhC2yQ/1c247823a17f3fa98ac0a47d0ded0161/FMF-Issue-061526-5.png" alt="Comedic Relief" width="540px" />
If the Semafor news site is to be believed, the order resulted &ldquo;partly over suspicions that a China-linked group&rdquo; somehow accessed Fable, the consumer version of Mythos.
For his part, venture capitalist and White House AI adviser David Sacks says the feds got a warning from &ldquo;a highly credible trusted partner&rdquo; of both Anthropic and the U.S. government: Fable was subject to jailbreak. (The Financial Times reports that partner is Amazon.)
In Sacks&rsquo; telling, Anthropic CEO Dario Amodei refused to fix it &mdash; saying it was no big deal. The feds disagreed and issued their order.
This development comes after a series of mixed signals from the White House in recent weeks: Mythos spurred the White House to rethink its previous light-touch approach during April. A heavy-handed executive order <a href="https://paradigmpressroom.com/post/ai-speeding-toward-a-brick-wall">was in the works</a> during May&hellip; but <a href="https://paradigmpressroom.com/post/apples-secret-supplier/#meanwhile">then it was watered down come June</a>. Now it&rsquo;s heavy-hand time again.
You wonder if the Silicon Valley tech bros who gravitated toward Trump during the 2024 campaign are having second thoughts&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: DXYZ, Aging in Place
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> A couple of complaints filtered into the mailbag this weekend &mdash; and I&rsquo;m hard pressed to say what brought them on.
Both readers called us out &mdash; and one called out James Altucher in particular &mdash; for talking up Destiny Tech100 Inc. (DXYZ) &mdash; a closed-end fund that was an indirect way to own SpaceX pre-IPO. (Last year, SpaceX made up more than half of DXYZ&rsquo;s holdings.)
As far as I can tell, DXYZ has never been a recommendation in Altucher&rsquo;s Investment Network.&nbsp;
Over the last year, Davis Wilson of the free e-letter The Million Mission did mention DXYZ now and then &mdash; mostly to discourage people from investing. He cautioned that it traded at nearly 4x its net asset value (September 2025) and that its price was falling even as SpaceX&rsquo;s valuation was soaring (March 2026).
If our editors give readers a bum steer, we expect them to own their oversight. But again, as far as I can tell, there&rsquo;s no oversight to own here.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After your editor made a parenthetical reference <a href="https://paradigmpressroom.com/post/spacex-there-is-no-choice">in Thursday&rsquo;s edition</a> to the fact that many boomers are choosing to &ldquo;age in place&rdquo; instead of downsizing &mdash; which helps to limit the available housing stock for younger folk &mdash; we heard from one of our semi-regulars&hellip;
&ldquo;7,000 boomers a day are making the ultimate downsize,&rdquo; he writes &mdash; &ldquo;they are dying!
&ldquo;That is 2.6 million per year. That is a lot of houses becoming empty for the younger generation. What other generation is adding that kind of real estate to the market?&rdquo;
Dave responds: Valid point. It&rsquo;s a self-correcting problem in that regard &mdash; even if it&rsquo;s not happening fast enough for young and growing families.
The eventual aging out of the boomers is also why I don&rsquo;t share in the hand-wringing you hear from many experts about the future of Social Security.&nbsp;
Boomers like to think they&rsquo;re immortal &mdash; heh &mdash; but they will be falling off the rolls sooner or later.&nbsp;
It&rsquo;s still going to take some combination of higher taxes and higher retirement age to keep the system afloat longer term. When the politicians choose to act is up in the air; under the circumstances, they&rsquo;ll likely hold off until the last minute&hellip;

FMF-Issue-061526-Featured

Iran: “A Deal to Make a Deal”

<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" />SpaceX: The Iran Connection
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So&hellip; is SpaceX&rsquo;s IPO today the reason Donald Trump called off a renewed attack on Iran yesterday?
Yesterday morning on his Truth Social platform, the president threatened to attack Iran &ldquo;VERY HARD TONIGHT.&rdquo;
But about six hours later, he declared he had &ldquo;cancelled the scheduled strikes and bombings against Iran this evening.&rdquo;
What changed?
One theory is that the Iranian side delivered damaging strikes against U.S. targets &mdash; more damaging than anyone in Washington cares to admit &mdash; and the Pentagon urged the president to hold off, allowing time to regroup.
Another theory is that a U.S. Treasury auction yesterday went poorly, with very weak demand. An escalation of the war would drive down foreign demand for Uncle Sam&rsquo;s debt even further&hellip; which would drive interest rates even higher.
But among some cynical cats on X, the consensus is that someone put a bug in the president&rsquo;s ear: You don&rsquo;t wanna mess up the SpaceX IPO tomorrow, do you?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7gb3xBCk5FKbRlPoSUnKE5/a0b9a69a2ffe76d0f17f06e6323b3f3b/FMF-Issue-061226-1.png" alt="pub" width="540px" /> <img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1GENix5dhJhx4PdosYEBko/93083e61fe9b2220f5a857d923cd03a8/FMF-Issue-061226-2.png" alt="pub" width="540px" />
To no small extent, Donald Trump sees his legacy tied up with the performance of the U.S. stock market. Now is no time to throw a wrench in the works. Remember how the market swooned at the outset of the war in March?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But it wasn&rsquo;t just the threat of a renewed hot war tanking the stock market at a delicate moment.
There was also the threat the Iranian side issued against Elon Musk&rsquo;s interests in the Middle East.&nbsp;
Yesterday morning, Iran&rsquo;s semi-official Fars News Agency reported that Tehran planned to target &ldquo;all interests related to economic holdings managed by Elon Musk in West Asia&rdquo; &mdash; including a Starlink ground station.
&ldquo;The Islamic Republic of Iran reserves the right to attack all facilities related to [Musk]-managed holdings in the region and occupied territories,&rdquo; Fars quoted an &ldquo;informed source&rdquo; as saying.
There&rsquo;s precedent behind the threat: During the war&rsquo;s early days, Tehran attacked Amazon data centers in the United Arab Emirates and Bahrain.
Now, this threat did not carry the weight of coming from the news agency IRNA &mdash; the official Iranian government mouthpiece. And if you give it a moment&rsquo;s thought, the threat was almost surely a bluff: Iranian leaders know how unpopular this war is in the United States. Why would they do anything to anger millions of everyday American investors at a moment those investors are jazzed about the SpaceX IPO?
But if you&rsquo;re sitting in the White House&hellip; and you think your legacy is inextricably linked to the performance of the stock market&hellip; you&rsquo;re not going to take any chances. You&rsquo;re going to call off the attacks.
That&rsquo;s our informed speculation, anyway. Whatever the case, the shaky ceasefire looked a bit more steady as the trading day opened&hellip; and everything was on track for a smooth introduction of SpaceX as a publicly traded company.
<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" />Here We Go Again (Again)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And so the &ldquo;war&rsquo;s almost over&rdquo; trade is back on. At less than $85 a barrel, U.S. oil futures trade today at a two-month low.
Not only did Donald Trump call off a planned attack on Iran yesterday, he said &ldquo;discussions and final points have been, in both concept and great detail, approved by all parties involved.&rdquo;
Never mind that Trump has previously said a deal is nearly done 38 times before. (That count is from CNN, but it appears to check out.) Never mind that as usual the Iranian side is being much more circumspect about prospects for a deal. And never mind that Israel has an effective veto on anything Washington and Tehran might agree to.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Amid that backdrop, and the SPCX debut, the major U.S. stock indexes are just barely in the green after yesterday&rsquo;s solid gains. The S&amp;P 500 is back over 7,400 for the first time since Monday.&nbsp;
SPCX shares began trading shortly before lunchtime on the East Coast &mdash; opening at $150 each, an 11% improvement on last night&rsquo;s listing price of $135.&nbsp;
With that, Elon Musk has become the world&rsquo;s first trillionaire. (Granted, the value of a dollar ain&rsquo;t what it used to be, but still&hellip;)
In addition to SPCX&rsquo;s premiere, leveraged ETFs based on SPCX have also begun trading &mdash; a 2X ETF with the ticker SPCH and a 3X ETF with the ticker ELON.&nbsp;
(Guess Musk is out of luck if he wants to merge Tesla and SpaceX into one giant company with the ELON ticker?)
➢ Hats off to readers of Enrique Abeyta&rsquo;s The Maverick: Yesterday they collected 105% gains after six months with shares of the space name Voyager Technologies. Enrique thought it prudent to take profits on half the position ahead of the SpaceX debut.
Despite the stock market&rsquo;s sideways chop in recent days &mdash; including last Friday&rsquo;s big drop &mdash; there&rsquo;s an underlying sign of strength: Money is flowing out of the Magnificent 7 names into the broader market.
&ldquo;Take a look at RSP, the equal-weight S&amp;P 500 ETF,&rdquo; says Paradigm analyst Zach Scheidt. &ldquo;It's outperforming the traditional, mega-cap-heavy S&amp;P 500, and it's sitting within 2% of all-time highs. We're seeing the same in small caps. IWM is right up near its own highs and has led the last few sessions.
&ldquo;This tells us that the average stock is holding up well. We're getting participation from more &lsquo;healthy&rsquo; names instead of the whole market leaning on a few giants.&rdquo;
Precious metals rallied big-time yesterday after Trump called off the Iran attacks&hellip; but checking our screens gold is back under $4,200 and silver is off nearly a buck at $66.28. Bitcoin has pushed past $63,000 but Ethereum is still mired in the $1,600s.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Data Centers In Space(X)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Just days leading up to the largest IPO in history, Elon Musk unveiled something the market hasn't fully processed yet,&rdquo; says Paradigm space and tech specialist Ray Blanco.
&ldquo;Not a rocket. Not a Starlink update. Not a Grok benchmark.&rdquo;
Rather it was a satellite designed from the jump to be a data center in space. Perhaps not surprisingly, it&rsquo;s called AI1.
&ldquo;The timing is not accidental,&rdquo; Ray wrote yesterday for Altucher&rsquo;s Investment Network. &ldquo;You don't unveil your first orbital data center satellite right before the largest IPO in history by coincidence. Musk just showed the world what he's actually building with the money.&rdquo;
One AI1 satellite generates an amount of solar power equal to that needed for powering 125 homes. &ldquo;Its solar panels span 70 meters tip to tip,&rdquo; says Ray. &ldquo;That's wider than a Boeing 747.
&ldquo;To keep those chips from melting in the vacuum of space, it deploys a liquid radiator system covering 110 square meters &mdash; roughly the floor area of a decent apartment &mdash; that bleeds heat silently into the void.
&ldquo;And the detail that separates this from everything that came before: The compute payload is interchangeable.
&ldquo;The satellite could run Nvidia GPUs or Google TPUs, or SpaceX&rsquo;s own custom Terafab silicon.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Terafab is planned for a site near Austin, Texas &mdash; sitting cheek-to-jowl with Tesla&rsquo;s Gigafactory Texas complex, but 10 times the size.
It will aim for one terawatt of annual chip output &mdash; some 80% of that destined for space.
Put simply, &ldquo;The largest chip manufacturing initiative in human history is being built primarily to supply orbital infrastructure,&rdquo; Ray says.
&ldquo;This is the capital allocation decision made by what might be the most aggressive builder in the history of technology, backed by the proceeds of a $75 billion IPO.&rdquo;
As we&rsquo;ve emphasized since we first brought them to your attention last fall, orbiting data centers don&rsquo;t compete for scarce resources on Earth: Electricity comes from solar power that&rsquo;s available 24/7. No need to suck up water for cooling; space is plenty cold. And no neighbors to object.
&ldquo;The costs that remain &mdash; launch, hardware &mdash; are falling faster than anyone predicted,&rdquo; Ray goes on. &ldquo;Starship changes the launch economics the way container shipping changed global trade.&nbsp;
&ldquo;When the cost of getting a pound to orbit drops by 90%, the math on orbital compute doesn't just improve. It inverts.
<a id="4"></a>
&ldquo;The interchangeable compute payload architecture means AI1 isn't a satellite. It's a platform &mdash; the orbital equivalent of a server rack that any hyperscaler can populate with their own silicon.&rdquo;
Just wait till everyone else figures out what we&rsquo;ve been telling you for weeks: SpaceX isn&rsquo;t a rocket company. It&rsquo;s an AI company that sees the future of AI in space.
<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" />Something to Feel Good About
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Not sure if you&rsquo;ve noticed&hellip; but there are plenty of visitors to the United States for the World Cup who can make you feel good about being an American.
LIke a fellow from Germany who&rsquo;s become a social-media sensation with posts like this&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4CmrnXyN7I82nLnjZ8ISo9/635725bf94fdd928beaccc21b1539b23/FMF-Issue-061226-3.png" alt="pub" width="540px" />
Or a young woman from Sweden checking out the Hoosier State on her way to one of the venues&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5szV3nItUA6FVOb0YJXsUS/ced4ba45e3aba63fedf8a3361e4db738/FMF-Issue-061226-4.png" alt="pub" width="540px" />
Or a visitor from Japan <a href="https://x.com/japan_nobunaga/status/2064943515931660382">discovering for the first time</a> the astounding variety of ways you can order eggs for breakfast.
In recent weeks both <a href="https://dailyreckoning.com/the-missing-spirit-of-76/">Byron King</a> and <a href="https://paradigmpressroom.com/post/america-then-and-now-1976-2026/#3">yours truly</a> have mused in our respective publications about why the vibe for America&rsquo;s 250th is much more downcast compared with the Bicentennial in 1976.
In that regard, these visitors have brought us a great gift &mdash; the chance to see our country with fresh eyes.
<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: First They Came for the Illegals&hellip;
<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/elon-failure-is-always-an-option/#4">My brief rant a week ago today</a> about a plan to seize illegal migrants&rsquo; bank accounts prompted a small flurry of reader reactions.
Some missed the point: &ldquo;The rights we have in the U.S. are not universal. Those people entering the U.S. illegally and taking advantage of our resources weaken all of us. If you ever choose to run for a public office I have $5,000 that I can contribute to your opponent.&rdquo;
Others raised a valid concern: &ldquo;On balance, your stance against government seizing bank accounts is a wise one, as government always overreaches.&nbsp;
&ldquo;However, my right to not have illegals (or anyone) stealing my tax dollars to enrich God knows who is important too.&nbsp;
&ldquo;Care to offer something beyond just saying NO to government, so that my tax dollars are protected from being stolen? An alternative solution perhaps?&rdquo;
Dave responds: It shouldn&rsquo;t be controversial &mdash; certainly not on &ldquo;the right&rdquo; &mdash; to strip illegal migrants of welfare benefits.
And yet&hellip; a budget bill passed in Washington last winter includes $5 billion in &ldquo;refugee and entrant assistance&rdquo; &mdash; cash benefits, health care, daycare, job programs.
Rep. Thomas Massie (R-Kentucky) offered an amendment to strip this funding from the bill &mdash; only to be shot down by House Speaker Mike Johnson and other GOP leadership. Donald Trump signed the measure into law, and then backed Massie&rsquo;s primary opponent &mdash; who won with the help of an unprecedented $15 million from the GOP donor class. Your beef (and mine) is with them.
I for one would be interested in seeing how it would work out if our leaders actually followed the Constitution&rsquo;s clear division of responsibilities: The federal government takes care of naturalization/citizenship, while immigration is left to the states.
That might sound outlandish to contemporary ears, but it&rsquo;s how things worked for our first century of existence as a country&hellip;

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