<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" />About &ldquo;the AI Bubble&rdquo;...
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The mainstream is starting to invoke &ldquo;the b-word&rdquo; when it comes to AI.
&ldquo;Are We In an AI Bubble?&rdquo; asks U.S. News and World Report.
Several outlets are answering with a definitive yes. Or even asserting that the bubble is bursting.
&ldquo;As the thrill of the initial AI buzz starts to fade,&rdquo; write&rsquo;s CNN&rsquo;s Allison Morrow, &ldquo;Wall Street is (finally) getting a little more clear-eyed about the actual value of the technology and, more importantly, how it&rsquo;s going to actually generate revenue for the companies promoting it.&rdquo;
The disappointment after Nvidia&rsquo;s quarterly numbers last week &mdash; including a 9.5% drop on Tuesday this week &mdash; is adding to the gloomy vibe.
&ldquo;Shed a tear, if you wish, for Nvidia founder and Chief Executive Jensen Huang, whose fortune (on paper) fell by almost $10 billion that day,&rdquo; writes Los Angeles Times business columnist Michael Hiltzik. &ldquo;But pay closer attention to what the market action might be saying about the state of artificial intelligence as a hot technology. It&rsquo;s not pretty.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The time for a bubble will surely come &mdash; but Paradigm&rsquo;s AI authority James Altucher says not yet.
&ldquo;It's an easy conclusion to jump to,&rdquo; he acknowledges. &ldquo;After all, we've seen this movie before, right? The hype cycle kicks in, valuations go through the roof and then... pop!&rdquo;
If you lived through the dot-com bubble of the 1990s, you know exactly what James is talking about. The Nasdaq nearly doubled during 1999. Then it peaked in March 2000 and began a sickening grind down for the next 2&frac12; years. When all was said and done, the Nasdaq collapsed 78%.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />But if it&rsquo;s a dot-com analogy you&rsquo;re looking for, James says rest easy: &ldquo;If we were to draw a parallel to the internet boom, we'd be somewhere around 1994 or 1996.
&ldquo;Remember, Amazon was just a twinkle in Jeff Bezos' eye back then. Google didn't exist. Facebook was still a decade away. The real game-changers were yet to come.&rdquo;
Speaking of Amazon, James points to the company&rsquo;s AI assistant called Amazon Q. It &ldquo;isn&rsquo;t just a fancy chatbot,&rdquo; he says. &ldquo;It&rsquo;s a workforce multiplier.&rdquo;
&ldquo;According to Amazon CEO Andy Jassy, Amazon Q has saved the company a mind-boggling 4,500 developer-years of work&rdquo; &mdash; which translates to $260 million in efficiency gains spread across one year.
&ldquo;And Amazon isn't alone in embracing AI,&rdquo; James adds. &ldquo;A recent Bloomberg Intelligence survey found that 66% of companies are working on deploying generative AI co-pilots.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />As we mentioned two days ago, the next leap forward for AI comes next week &mdash; when Apple unveils its AI-enhanced iPhone and other devices on Monday.
It&rsquo;s been a long time coming &mdash; too long, say the Apple critics. But as we also said earlier this week, Apple takes the time to get things right. It learns from its competitors&rsquo; early mistakes. That&rsquo;s why people carry around iPhones these days and not BlackBerrys or Palm Treos.
So if the advent of AI is akin to the rollout of the web in 1994&ndash;96&hellip; then you might say Apple&rsquo;s &ldquo;AiPhone&rdquo; release is comparable to Microsoft&rsquo;s release of Windows 95.
Remember that? People lining up outside Circuit City in the middle of the night? So they could get their shrink-wrapped boxes of Win95 CD-ROMs?
It sounds so ridiculous now, but that really happened. Here&rsquo;s a terrific screengrab we spotted on Reddit&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/w1hPWyzr4s7lRTTBV7epx/afcccd5b1aab0228f0c098a6f2ab16b9/windows_95_launch.png" alt="Windows 95 Launch" />
So yes, the AI bubble will blow up to an unsustainable magnitude and then pop. Eventually. But in the meantime, there still are ample opportunities to accumulate life-changing wealth.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />The Jobs&hellip; and the Reaction
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The much-touted August job numbers are out&hellip; and they&rsquo;re by and large a disappointment.
The &ldquo;expert consensus&rdquo; among Wall Street economists was that the wonks at the Bureau of Labor Statistics would conjure 160,000 new jobs for the month.
That&rsquo;s a weak number; it takes 150,000&ndash;200,000 just to keep up with the growth of the working-age population.
In the event, the actual number was 142,000. Worse, the July and June numbers were revised down. Average monthly job growth the last three months is a meager 116,000.
Meanwhile, the official unemployment rate ticked down to 4.2% &mdash; an improvement on 4.3% the month before, but up from 3.4% since April of last year.
Of course, Wall Street is viewing these numbers through the prism of what they mean for Federal Reserve policy. The Fed holds one of its every-six-weeks meetings on Sept. 17&ndash;18.
&ldquo;The employment picture is now the focus of the Federal Reserve,&rdquo; Paradigm&rsquo;s Jim Rickards wrote his Strategic Intelligence readers this morning. &ldquo;Fed Chair Jay Powell has pivoted from concern about inflation to concern about unemployment. The latter pivot is much more troubling because it signals that a recession is upon us and the Fed may be too late (as usual) to do anything about it.&rdquo;
As a reminder, the Fed has pegged its benchmark fed funds rate at 5.5% since July of last year &mdash; after the most aggressive rate-raising cycle since the early 1980s, aimed at containing inflation.
In the futures market, traders are pricing in a 57% probability the Fed will cut a quarter percentage point&hellip; and a 43% probability of a half-percentage point cut.
But hold on &mdash; there&rsquo;s one more incoming data point between now and the Fed meeting. The official inflation numbers for August will be released next Wednesday. An unexpected rise in the inflation rate will put the Fed in a serious bind.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />As for the stock market, Wall Street can interpret these job numbers one of two ways.
They can say, Oh look, a weak job number &mdash; the Fed might cut rates more aggressively. More EZ money for us!
Or they can say, Oh look, a weak job number &mdash; the Fed kept rates too high for too long and we&rsquo;re going into a recession!
It&rsquo;s the latter interpretation that&rsquo;s holding sway today: All the major U.S. indexes are in the red, the S&amp;P 500 down nearly 1% at 5,455.
Gold is flat at $2,515. Silver is losing a little ground at $28.57. Bitcoin has slid below $55,000.
Crude can&rsquo;t catch a break &mdash; down another buck to $68.13, the lowest since December of last year. (Reminder: It was over $84 only two months ago.) An oversold bounce is likely soon, but momentum is not on the side of the oil bulls.
<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" />Longshoremen Strike Update
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;We must be prepared if we have to hit the streets at 12:01 a.m. on Tuesday, Oct. 1, 2024,&rdquo; says Harold Daggett, president of the International Longshoremen&rsquo;s Association.
It&rsquo;s now 24 days until East Coast and Gulf Coast dockworkers might go on strike. Their current contract expires at the end of the month. Going into a new round of talks with the U.S. Maritime Alliance yesterday, the union did not sound an optimistic note.
&ldquo;We can&rsquo;t even get past the economics of the contract,&rdquo; Daggett says. &ldquo;We are very, very far apart.&rdquo;
Vincent Clerc, the CEO of the shipping giant Maersk, says even a one-day strike would foul up supply chains for a week.
&ldquo;If suddenly you create a big traffic jam because of a strike on a market as big and consequential as the U.S. East Coast and Gulf,&rdquo; Clerc said at a news conference last month, &ldquo;it&rsquo;s going to have serious ripple effects across not only the U.S., but across other geographies.&rdquo;
A one-week week would have downstream impacts for one month &mdash; and shortly before the holidays, to say nothing of Election Day.
The Biden administration stepped in to forestall a freight rail strike ahead of the 2022 midterms. No word yet about how the White House might intervene this time.
<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" />Friday Fun Fact
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />From the Department of &ldquo;Who Knew?&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4nEfSqCeE8z4tGdGLUL02w/ae52a0e0dc14e82650863221fe95abcc/michael_a_arouet_tweet.png" alt="michael a arouet tweet" />
Critics point out those Domino&rsquo;s results are only after dividends are reinvested &mdash; while Google parent Alphabet didn&rsquo;t start paying a dividend until this year. Even so&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: The Next Day
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The reader response to <a href="https://paradigmpressroom.com/post/election-interference-for-the-206th-time" target="_blank" rel="noopener">yesterday&rsquo;s edition</a> was, by and large, muted.
No one accused me of being a &ldquo;useful idiot&rdquo; of Vladimir Putin, so there&rsquo;s that. A couple of people objected to &ldquo;political&rdquo; content even though I took pains to lay out the financial implications of Washington&rsquo;s ongoing animus toward Moscow.
We did hear from one of our regulars who rose to Donald Trump&rsquo;s defense.
&ldquo;Dave, I am with you all the way on this except for one thing,&rdquo; he writes: &ldquo;Donald Trump has repeatedly stated that we are nearer to nuclear war with Russia than almost anytime in history. I've watched many rallies, interviews and town hall meetings with Trump and it is part of his policy statement: End the war in Ukraine and use diplomacy to lower the risk of nuclear war.
&ldquo;And I believe he will attain that goal very quickly (maybe not 24 hours as advertised) when he wins the election.&nbsp;
&ldquo;To rein in the debt we need to stop escalating wars by insisting that a country like Ukraine join NATO, and then paying for war. Slapping sanctions on Russia that do not work, confiscating its property so our currency gets dumped and choking off energy supplies while draining the strategic oil and gasoline reserves for political purposes are also foreign and domestic duds of the Harris-Biden administration (Sleepy Joe did actually refer to his administration that way &mdash; Freudian slip...)&rdquo;
Dave responds: There are words and there are actions.
Trump apologists either downplay or deny it&hellip; but the $95 billion in new aid for Ukraine that Congress passed last spring wouldn&rsquo;t have happened were it not for Trump&rsquo;s behind-the-scenes support.
House Speaker Mike Johnson pushed it through after a meeting with Trump at Mar-a-Lago. Lindsey Graham greased the skids on the Senate side. Trump even quietly took credit for structuring some of the aid in the form of a loan. (The Wall Street Journal <a href="https://www.wsj.com/politics/policy/why-donald-trump-didnt-sink-mike-johnsons-ukraine-aid-bill-81fe8d11" target="_blank" rel="noopener">told the whole sordid story</a> at the time, but no one noticed because the truth didn&rsquo;t serve anyone&rsquo;s partisan agenda.)
Meanwhile, what is Trump&rsquo;s plan to end the war? Would Russia gain control of the four Ukrainian regions that Moscow has annexed? Would western Ukraine join NATO while the central part of the country becomes a neutral buffer zone? Would NATO missiles be withdrawn from Poland and Romania?
Don&rsquo;t we deserve to know, given the stakes?
Absent the specifics, Trump&rsquo;s promise has no more credibility than <a href="https://www.csmonitor.com/1997/1209/120997.opin.column.1.html" target="_blank" rel="noopener">Richard Nixon&rsquo;s &ldquo;secret plan&rdquo; to end the Vietnam War</a>.

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Paradigm Pressroom's 5 Bullets

The mainstream is starting to invoke “the b-word” when it comes to AI. The time for a bubble will surely come — but AI authority James Altucher says not yet.

AI’s “Windows 95” Moment

<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" />Here We Go Again
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />If it&rsquo;s presidential election season, it must be time for banner headlines about a really, really skeeeery foreign influence op&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7iJ7yUq4lWCgsgRwM5bsQ4/2d7688a7461e42ef590d2a98296a12d4/matt_taibbi_tweet.png" alt="Matt Taibbi Tweet" />
If you missed the news&hellip; Yesterday the Biden administration took several steps to counter what it alleges to be &ldquo;election interference&rdquo; on the part of the Russian government. Most of those steps target the state-run English-language news channel RT.
The biggest of those steps is a Justice Department indictment of two RT employees, accusing them of &ldquo;covertly&rdquo; funding a digital media firm based in Tennessee to distribute &rdquo;hidden Russian government messaging&rdquo; &mdash; with the alleged aim of boosting Donald Trump&rsquo;s presidential campaign.
Neither the company nor its U.S. clients were named in the indictment, but it wasn&rsquo;t hard to put two and two together. The outfit is called Tenet Media and its most prominent client is one of the most banal and obnoxious conservative &ldquo;influencers&rdquo; &mdash; Dave Rubin.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/51iq0G8kG9oOamSChU0Kqn/c801b3c62b03946d9e5aca181435f570/michael_tracey_tweet.png" alt="Michael Tracey Tweet" />
&ldquo;If this was really some sort of &lsquo;Russian influence&rsquo; operation they did a terrible job generating views,&rdquo; tweets the independent political reporter Michael Tracey. &ldquo;It seems like the &lsquo;investment&rsquo; was more about duping gullible &lsquo;content creators&rsquo; than about actually creating the content.&rdquo;
Yep. For his part, Rubin and the others say they had no idea of any Russian connection. No comment yet from Tenet Media.
The whole thing is so much theater on the part of the Biden administration. Explains antiwar.com news editor Dave DeCamp: &ldquo;The indictment charges the two Russians with conspiracy to launder money and a conspiracy to violate the Foreign Agents Registration Act (FARA), a law that requires individuals or entities engaging in lobbying or other activity on behalf of a foreign country to register as foreign agents with the DOJ.
&ldquo;Since both Russians are based in Russia, the case is not expected to go to trial, making the indictment largely symbolic.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />If you&rsquo;re a newer reader and wondering why we&rsquo;re taking up this topic in a financial e-letter&hellip; well, several reasons.
To begin with, the nation&rsquo;s leading business daily saw fit today to give the story front-page, above-the-fold treatment&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/36tR4KjYenqj9INuD45Gj3/1ec5516a4bd82fb377a3c5210da1d716/wsj_headline.jpg" alt="Wall Street Journal headline" />
For The Wall Street Journal, the story takes precedence over a major acquisition by Verizon&hellip; and over U.S. Steel&rsquo;s threat to shut down some of its factories if the feds nix the company&rsquo;s takeover by Japan&rsquo;s Nippon Steel.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />More importantly, the whole &ldquo;Russian interference&rdquo; thing hits uncomfortably close to home here at Paradigm Press. Over the years, two of our colleagues have turned up on blacklists smearing them as Russian stooges.
<a href="https://5minforecast.com/2016/11/28/the-truth-about-fake-news-and-useful-idiots/" target="_blank" rel="noopener">Shortly after Election Day 2016</a>, our former colleague David Stockman &mdash; best known as Ronald Reagan&rsquo;s budget director &mdash; was one of about 200 writers and websites implicitly tarred by The Washington Post for boosting Moscow&rsquo;s talking points.
<a href="https://5minforecast.com/2017/11/01/might-useful-idiot-russia/" target="_blank" rel="noopener">The following year</a>, our macroeconomic maven Jim Rickards turned up on a list of people who&rsquo;d been interviewed on RT. Never mind that both Dick Cheney and Michelle Obama turned up on the same list!
The smears are risible. Both gentlemen are red-blooded American patriots. They just happen to criticize American institutions like the Federal Reserve and the big banks in ways that on occasion resemble the criticisms you encounter watching RT. (And Mr. Stockman is no Trump partisan; his latest book title is Trump&rsquo;s War on Capitalism.)
In the eyes of the Establishment, their real crime is to criticize those institutions at all. How dare they undermine everyday Americans&rsquo; confidence in the abilities and motives of the power elite? (&ldquo;Sowing discord&rdquo; is the term you often encounter in corporate media.)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Laughable as the latest developments are, we&rsquo;re getting used to this sort of thing.
It started in the 2016 campaign cycle when Russian-based internet troll farms circulated cheesy memes on Facebook. Not all of them were related to the election &mdash; and the stuff that was election-related wouldn&rsquo;t change anyone&rsquo;s mind about who to vote for&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/V7EMEgF7KCGoTTqQOnJQU/5d04135195d9a7bfaec59ff75c423b87/hillary_vs_jesus.png" alt="hillary vs jesus" width="300px" />
Still, the &ldquo;Russian meddling&rdquo; narrative caught fire with the help of the &ldquo;deep state&rdquo; and corporate media. It couldn&rsquo;t have been decades of misrule by the Clintons and Bushes and Obamas that galvanized an upswell of support for Trump: It had to be the Russkies!
By 2018, two-thirds of Democrats responding to a YouGov poll believed that Moscow actually &ldquo;tampered with vote tallies&rdquo; to get Trump elected &mdash; a claim so outrageous that even the Hillary-friendly &ldquo;U.S. intelligence community&rdquo; never went there.
If the consequences were no more serious than silly polling results, it would be one thing. But they&rsquo;re not. 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" />Dollar Destruction and Nuclear War (Good Times&hellip;)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The power elite&rsquo;s animus toward Russia drove many of the deep-state policies that ultimately provoked Russia&rsquo;s invasion of Ukraine &mdash; and all the disastrous financial consequences for the West that will follow.
To be sure, it was Vladimir Putin&rsquo;s decision to invade. But that decision came only after the Biden administration refused to give Putin the time of day on his demands &mdash; that Ukraine stay out of NATO and that NATO missile bases be withdrawn from Poland and Romania.
Given Russia&rsquo;s long history of invasions from the West &mdash; Hitler, Napoleon, the Poles, the Swedes &mdash; those demands were a reasonable starting point for negotiations.
Alas, it wasn&rsquo;t to be. Two days after the invasion in February 2022, Washington and Brussels imposed unprecedented sanctions on Moscow &mdash; freezing the dollar- and euro-based assets of Russia&rsquo;s central bank.
From that moment on, leaders of every government in the world that&rsquo;s not a U.S. ally realized if it can happen to the Russians, it can happen to us too.
The dollar&rsquo;s share of global currency reserves plunged from 55% in 2021 to 47% in 2022. Scads of dollars previously held overseas started flooding back home, helping drive inflation to heights unseen in over 40 years.
Meanwhile, central banks around the world started dumping their U.S. Treasuries &mdash; depriving Uncle Sam of an essential source of financing for his prodigious $35 trillion national debt.
Instead, central banks began loading up on gold at an unprecedented pace &mdash; a major reason the dollar price of gold has soared since the invasion from $1,800 to all-time highs over $2,500.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Of course, for me to even recite this history and tease out the consequences opens me up to those same charges of &ldquo;sowing discord&rdquo; and &ldquo;amplifying Russian talking points.&rdquo;
But then, I&rsquo;m used to it by now. Eight years ago this month, I wrote for several days running about an elite conceit in Washington that everything bad in the world was Putin&rsquo;s fault.
&ldquo;Dave, curious to know why you are a Russophile,&rdquo; a reader wrote. &ldquo;Are you or your ancestry from Russia, or are you married to a Russian lass?
The answers, then and now, are no. Not a Russophile, although I&rsquo;m partial to the music of Rachmaninov. No Russian blood. Ditto for my wife. Never visited Russia. Never owned any Russian stocks, either, other than perhaps some microscopic portion of a gold-miner mutual fund.
But I did reveal, in the interest of full disclosure, that I have an immense aversion to being vaporized in a nuclear war.
&ldquo;Given the massive arsenals on hair triggers still possessed by Washington and Moscow,&rdquo; I said, &ldquo;U.S.-Russia relations are the paramount issue; the markets and the economy become rather secondary matters if the Earth is pockmarked with smoldering radioactive craters.&rdquo;
But these days, even <a href="https://paradigmpressroom.com/post/90-seconds-to-armageddon" target="_blank" rel="noopener">expressing concern about nuclear escalation and the fate of humanity</a> is cause for suspicion.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5jIBTIjGtSzKk9rpq01O7M/c370d43014f34eb70e3d482833120c16/baba_yaga_tweet.png" alt="baba yaga tweet" />
And that&rsquo;s even though Joe Biden, during one of his lucid moments, acknowledged that the risk of nuclear war is as high now as it was during the Cuban Missile Crisis of 1962.
Alas, he said that in a private gathering with rich donors &mdash; not in an address to the American people.
Nor do you hear Kamala Harris or Donald Trump talking about these issues on the campaign trail. Will the media bring them up during the debate next week? Dream on.
Enough for now. We still have the markets and the mailbag to attend to&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" />Two Speed Bumps on the Road to Rate Cuts
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The stock market faces two more speed bumps on the road to Federal Reserve rate cuts this month.
Thirteen days from now, the Fed will embark on a new rate-cutting cycle &mdash; even though inflation by its own favorite measure still hasn&rsquo;t come down to its 2% target.
The Fed has clearly shifted its attention from a falling inflation rate to a rising unemployment rate &mdash; and for good reason, says Paradigm&rsquo;s Jim Rickards.
&ldquo;Unemployment goes up during recessions and is usually a lagging indicator, meaning that a recession is already here before the rise in unemployment becomes noticeable to policy makers. The Fed will not admit it, but that&rsquo;s what just happened.
&ldquo;The U.S. economy is a much more powerful force than Fed interest rate changes or White House policy tweaks. It has its own dynamics that are not very amenable to Fed policy even if the Fed pretends otherwise.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />With that in mind, the Labor Department releases the August job numbers first thing tomorrow morning. The &ldquo;expert consensus&rdquo; on Wall Street is looking for 160,000 new jobs &mdash; barely enough to keep up with population growth.
A surprise to the downside could generate a nasty reaction in the markets: No longer would the Fed be lowering rates to engineer a &ldquo;soft landing&rdquo; in the economy. No, it would be lowering rates to stave off a recession &mdash; exactly the scenario Jim&rsquo;s been anticipating all year.
Beyond tomorrow, there&rsquo;s one more speed bump before the Fed meeting on Sept. 17&ndash;18 &mdash; and that&rsquo;s the release of the official inflation numbers next Wednesday.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In the meantime, the major U.S. stock indexes are all in the red &mdash; the S&amp;P 500 down over a half percent at 5,489.
Gold has edged back over $2,500; silver is back within 20 cents of $29. Bitcoin can&rsquo;t catch a break, in danger of cracking below $56,000 for the first time in nearly a month.
Crude is showing little reaction to an announcement that the OPEC+ nations are delaying plans to step up production by two months. At last check a barrel of West Texas Intermediate is up only a half percent at $69.56. It&rsquo;s the first time in eight months that crude has traded under $70.
<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 (Sort Of)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />This is the section of our daily dispatch where we try to find something humorous or quirky. Our main topic today reminds me of a meme that&rsquo;s been going around for a few years&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4MP4sX3JtbpdyX2ojwWN1r/4876c8f8d84f2018755a00b9e4ad43b2/your_enemy_meme.png" alt="your enemy is not in russia but at home" />
Frankly, I&rsquo;d just as soon include Trump in there. Trump contributed mightily to the current sorry state of affairs vis-a-vis Russia. (People forget, but he does have a track record in the presidency on which he can be evaluated.)
He tore up arms control treaties with Moscow. He permanently stationed U.S. troops on Russia&rsquo;s borders. He sent lethal weaponry to Ukraine &mdash; a reckless step Barack Obama refused to take. Of course, no one on either side of the political divide wants to talk about these things, either.
<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;Full Faith in Our Government&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />We didn&rsquo;t plan it this way but we conclude today&rsquo;s edition where it began &mdash; back to the whole &ldquo;sowing discord&rdquo; thing.
After <a href="https://paradigmpressroom.com/post/the-madness-is-cranking-up" target="_blank" rel="noopener">our Labor Day edition</a> following up on the Trump assassination attempt, one of our regulars wrote in to point out that the feds have determined that the shooter had no political motive.
Which is true, as far as it goes.
I replied that I&rsquo;m not willing to take those findings at face value while the CIA possesses documents about the JFK assassination that it won&rsquo;t release in full.
He wrote back: &ldquo;I do appreciate your willingness to put my remarks in print. However, you prove the point that sometimes it is hard to admit making a mistake. Justifying your views based on an assassination attempt in the &rsquo;60s does not provide you cover.
&ldquo;Our investigative techniques have improved a bit since JFK and I have the full faith in our government to find the truth.&nbsp;
&ldquo;The lesson learned is do your homework, get the facts and refrain from knee-jerk opinions until you are satisfied that you have done your due diligence. You wouldn't be the first to fail at this process. Many politicians talk first and get the facts later, only to look foolish.&nbsp;
&ldquo;As a type of journalist yourself, you have more of a duty to react more slowly and accurately than politicians who have pure power as their goal, not necessarily the truth. No one is perfect, it's a work in progress.&rdquo;
OK&hellip; To be clear, I don&rsquo;t have an opinion about whether the shooter had a political motive. I&rsquo;m just saying I&rsquo;m not willing to take the FBI at its word. This is an agency that overlooked obvious clues about the Oklahoma City bombing in 1995 and the Sept. 11 attacks in 2001. (Search &ldquo;Coleen Rowley&rdquo; for a refresher about the heroic 9/11 whistleblower.)
You say you have &ldquo;the full faith in our government to find the truth.&rdquo; I do not share that faith.
This is a country founded on the principle that those who seek out and exercise political power are to be viewed with suspicion because they seek out and exercise political power. They never deserve the benefit of the doubt.
And why, after the debacles of the 2008 financial crisis and COVID, would anyone want to give them the benefit of the doubt anyway?

shutterstock 1145746142 (1)

Why the “Russian meddling” narrative is so dangerous for the dollar (and world peace)

“Election Interference” for the 206th Time

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />The New AI King Is&hellip; Apple?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Heh, and we thought yesterday would be the last time we&rsquo;d have anything to say about Nvidia for a while.
But as it happens, NVDA was hit hard amid a broad stock-market sell-off yesterday (about which more in Bullet No. 2).
The share price tumbled 9.5% &mdash; which translates to a one-day shrinkage in NVDA&rsquo;s market cap of $279 billion and a $10 billion hit to CEO Jensen Huang&rsquo;s net worth.
And that was before Bloomberg reported that NVDA was served with a subpoena from the Justice Department: &ldquo;Antitrust officials are concerned that Nvidia is making it harder to switch to other suppliers and penalizes buyers that don&rsquo;t exclusively use its artificial intelligence chips.&rdquo;
Checking our screens, NVDA is microscopically in the green today.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />At least one group of Wall Street analysts sees Nvidia losing its crown as the leading AI stock next year. The new king is destined to be&hellip; Apple?
According to a research note from Citi, the development of AI is proceeding in three stages &mdash; chips and servers, followed by infrastructure and finally devices. (If you were with us yesterday, you&rsquo;ll note the similarities to our own James Altucher&rsquo;s &ldquo;AI stack.&rdquo;)
As Citi sees it, we&rsquo;re transitioning into the third stage &mdash; where Apple is poised for dominance.
From a Business Insider summary: &ldquo;While Nvidia has dominated much of the infrastructure stage, it appears to be prime time for AI technologies to transition to on-device capabilities that will lead to large-scale consumer and enterprise adoption&hellip;
&ldquo;Apple is setting the stage for this transition with its upcoming release of &lsquo;Apple Intelligence,&rsquo; which brings AI capabilities to the iPhone lineup.&rdquo;
The company will roll out these AI capabilities during its annual dog-and-pony show set for next Monday.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />And with that rollout, iPhone owners will finally have a reason to upgrade for the first time since they splurged on electronics for work-from-home in 2020.
Citi forecasts that AAPL will sell 85 million units of the new iPhone 16 in 2024&hellip; and 92 million units of the iPhone 17 in 2025.
"We view Apple as in the best position to make it possible given its leading position in the premium smartphone market and seamless integration of software and hardware," writes Citi&rsquo;s Atif Malik.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />And to think that not so long ago, Apple was seen as the also-ran in the AI sweepstakes.
We took note of the mainstream pile-on six months ago. Yahoo Finance: &ldquo;You'd think the phrase &lsquo;If you can't beat em, join em&rsquo; shouldn't apply to an enterprise packing hundreds of billions of dollars to throw at a problem.&rdquo;
But as Paradigm&rsquo;s AI authority James Altucher explained at the time, &ldquo;Apple is taking a slower and more cautious approach to releasing customer-facing applications of AI.
&ldquo;Apple has a history of waiting to optimize new technologies before releasing them to the market,&rdquo; he reminded us. &ldquo;Apple&rsquo;s slow delivery in the AI space would suggest the company believes today&rsquo;s AI technology does not meet its standards and that there's more innovation that can be squeezed out to produce the perfect product.&rdquo;
This has long been the Apple way: Let Sony screw up a digital music player&hellip; while Apple quietly perfects the iPod. Let BlackBerry and Palm make the early mistakes on a smartphone&hellip; while Apple refines the iPhone so it&rsquo;s a must-have item from Day 1.
And so it goes with AI: Let ChatGPT (and its sponsor Microsoft) take the heat when large language models make stuff up &mdash; oh, excuse me, &ldquo;hallucinate.&rdquo; Let Google take the flack for Gemini being so &ldquo;woke&rdquo; that it couldn&rsquo;t or wouldn&rsquo;t generate images of white faces.
Twenty-one months after ChatGPT propelled AI into mainstream awareness&hellip; Apple is poised to dominate AI starting Monday.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />The Media Always Has Its &ldquo;Reasons&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />So, about that stock-market sell-off yesterday, the worst we&rsquo;re told in &mdash; gee, nearly a month&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3sEXFB0UnGG4jo7qSwNzhD/9eeae74380a03e42d6e1fa2fd54a481b/breaking_news_notifications.png" alt="Breaking News Notifications" width="400px" />
This is a classic instance of the media fishing for &ldquo;explanations&rdquo; behind every move in the markets.
We mentioned the &ldquo;disappointing economic report&rdquo; and &ldquo;signs of weakness&rdquo; in manufacturing yesterday: The ISM Manufacturing Index for August rang in at 47.2 &mdash; well below the 50 dividing line between a growing factory sector and a shrinking one.
But the number was only slightly worse than expected. And as we said yesterday, what else is new? The number has been mired below 50 almost nonstop since late 2022.
There could be any number of explanations behind yesterday&rsquo;s sell-off. A high roller using too much leverage facing a margin call. Trouble in the banking system that&rsquo;s not yet headline news. Maybe just a collective realization that the market is too richly priced by historical standards (at least until the zeitgeist shifts again in a day or two!)
But whatever the explanation is, it&rsquo;s not an ISM number that surprised no one and reinforced a longstanding trend.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In any event, the selling is over for now. The major U.S. indexes are little changed from yesterday&rsquo;s close. At 5,531 the S&amp;P 500 is 2.4% off its record close in mid-July.
Gold is still stuck a little below $2,500 but silver has recovered the $28 level. Bitcoin can&rsquo;t seem to crack through the $58,000 barrier.
After the release of the Energy Department&rsquo;s weekly inventory numbers, crude has slipped under $70 for the first time since early January.
<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" />Canna-Business Is Not Booming
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The time for cannabis investing has come&hellip; and gone. For now, anyway.
From The Associated Press: &ldquo;A decision on whether to reclassify marijuana as a less dangerous drug in the U.S. won&rsquo;t come until after the November presidential election &mdash; a timeline that raises the chances it could be a potent political issue in the closely contested race. The U.S. Drug Enforcement Administration last week set a hearing date to take comment on the proposed historic change in federal drug policy for Dec. 2.&rdquo;
Not good for the legal-weed sector: &ldquo;Cannabis names have languished for years at this point, plagued by oversupply, and frustrated over and over again by the failure of the federal government to move the ball on legalization,&rdquo; says Paradigm&rsquo;s Ray Blanco &mdash; who guided his readers to profits on several cannabis names starting in 2016.
&ldquo;Things looked very promising under the Biden/Harris administration, but despite a favorable configuration in both Congress and the White House, nothing has happened.&rdquo;
Nor, as you see, will anything happen until after Election Day. For now, &ldquo;cannabis is still scheduled in the most restrictive category by the DEA,&rdquo; says Ray &mdash; &ldquo;alongside truly hard drugs with &lsquo;high abuse potential and no medical use&rsquo;.&rdquo;
Maybe that would change under a new administration. Over the years, Kamala Harris has softened the hard-core prohibitionist stance she took as a prosecutor in California. And Donald Trump is hinting at support for a legalization referendum on the ballot this year in his state of residence, Florida.
But for now, &ldquo;I don&rsquo;t think we&rsquo;ll see any positive legal moves for the industry anytime soon,&rdquo; says Ray &mdash; &ldquo;leaving it stuck with the disadvantages of operating in a restrictive financial environment and dealing with a punishing tax code that won&rsquo;t let it take normal business credits and write-offs.&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" />Copper Thieves Operate in Broad Daylight
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The national trend of copper theft has gotten so bad, you could lose your electricity as a result.
Police in Dallas, Fort Worth and other areas of north Texas say there&rsquo;s been a flurry of such thefts recently. And as far as they can tell, it&rsquo;s not the work of organized gangs &mdash; just common thieves eager for a buck.
From CBS&rsquo; Dallas outlet: &ldquo;The thieves aren't opposed to climbing poles and using ladders, fences or even cars to carry out their efforts, according to Garland police, while the vehicles &lsquo;they are using are regular and unmarked cars, trucks and vans&rsquo;...
&ldquo;Thieves seek the valuable metal by targeting utility poles, electrical substations and other infrastructure. Authorities say the stolen copper is sold to recyclers for high profits, causing significant disruptions and financial costs.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1wRq9IryisGxlmVKrwcJVs/9e85bff16b7c0e6a3a37808f3e43664b/garland_thieves_1.png" alt="Garland Thieves" /> <img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5e67rQL4D6kDX26RbjIkX7/baba9c86c4fb79208ca5b6c7da888f3e/garland_thieves_2.png" alt="Garland Thieves - Pic 2" />
Not official utility workers [Garland, Texas Police Department screengrabs]
Nor is Texas alone. Northern California has seen a similar spike this summer. "In the past year, we have had 220 reports of wire theft, which is 200 more than the previous year," says Bisa French, the fire chief in Richmond.
In one incident, the thief didn&rsquo;t know what he was doing and was electrocuted inside a vault owned by PG&amp;E, the electric utility.
Other incidents are targeting phone and internet lines. Two communities briefly lost 911 service in June.
AT&amp;T is offering a $5,000 cash reward for tips that result in arrests. It&rsquo;s also suing a recycling company in the Bay Area that it says was buying stolen copper.
Look for this trend to come to a neighborhood near you if the economy turns south later this year&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: Predictions Are Hard
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Today&rsquo;s entry in the mailbag is a reminder of the wisdom attributed to Yogi Berra &mdash; predictions are hard, especially when they pertain to the future.
&ldquo;I enjoy reading the missives from Paradigm and appreciate the fact you let your editors voice their opinions without needing to tow any company line. That said I was struck by the following from Sean Ring in yesterday&rsquo;s edition:
&ldquo;&lsquo;I just don&rsquo;t know how anyone can want to get short right now,&rsquo; Sean writes in his Monthly Asset Class Report at the Rude Awakening.
&ldquo;&lsquo;The problem with brilliant people is they see far into the future. Too far, by half. Sure, there will be a day to sell, but it&rsquo;s not today, and I don&rsquo;t think it&rsquo;ll be anytime soon.&rsquo; Sean sees the S&amp;P on its way to 6,000.
&ldquo;I don't consider myself to be brilliant but I am a pragmatist and a student of history. As such it appears that the economy is in the early stages of a depression and that equities are historically overvalued. The parallels to 1929 are obvious to those that study history and as such I am predicting that equity markets will begin an unprecedented crash in the next six weeks (they peaked as of Aug. 30).
&ldquo;My second prediction is that Sean will leave Paradigm in the next year, either of his own volition or through Paradigm's choosing. Not because I think Sean is incompetent or a bad egg but because &lsquo;public sentiment&rsquo; will move against him. When the masses more irrationally or not all get caught up in their wake.
&ldquo;Of course I'm human and could be horribly wrong. But I'm human so I'm also a little vain and therefore wanted to get my call out in the hope that you reach out to me when both of these come true.&rdquo;
Dave responds: It comes back to John Maynard Keynes&rsquo; quip about how the market can stay irrational longer than you can remain solvent. (Keynes was a lousy economist, but a pretty good investor!)
Just guessing here &mdash; but you&rsquo;ve already achieved financial independence?
If so, good on you. You have the luxury of declaring, &ldquo;The stock market is wildly overvalued &mdash; I&rsquo;m out.&rdquo;
Most of our readers don&rsquo;t have that luxury.
We could have made a very solid case that &ldquo;stocks are overvalued, avoid them&rdquo; almost any time in the last 10 years &mdash; and we would have done our readers a considerable disservice!
Even now, it might be a disservice. Look at the other major asset classes&hellip;
<ul>
<li>Treasuries are rallying in the near term, but we&rsquo;re in the early years of what&rsquo;s probably a new 40-year cycle of falling prices/rising rates</li>
</ul>
<ul>
<li>It&rsquo;s only in the last few months that gold has broken out into an indisputable bull market</li>
</ul>
<ul>
<li>And as we mentioned yesterday, hiding out in cash instruments yielding a guaranteed 5% will go bye-bye as the Federal Reserve starts cutting interest rates.</li>
</ul>
As for Sean, I expect he&rsquo;ll stay in the fold for a good long while. He&rsquo;s an eminently sensible fellow &mdash; strong opinions, loosely held.
Which comes back to another famous line attributed to Keynes: &ldquo;When the facts change, I change my mind. What do you do, sir?&rdquo;

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At least one group of Wall Street analysts sees Nvidia losing its crown as the leading AI stock next year. Which company could be crowned the new AI king?

The Next NVDA Is AAPL

<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&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The typical retail investor loves AI. The typical American citizen, not so much.
Starting last year, the Gallup pollsters began asking people about their attitudes toward AI. They&rsquo;ll do so every year as long as such polling remains relevant.
This year, the survey finds a majority (56%) who believe AI will do good and do harm in equal amounts.
But nearly a third (31%) believe it will do more harm than good &mdash; down from last year, but still a substantial minority.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/48v5bGijGKBA4XO8bPD8Dc/c7a1ac7d61bdaea4cfb3db888cdf3c4d/survey_ai_1.png" alt="AI Survey Results" />
Drill down into the specifics and you find supermajorities worried about AI&rsquo;s impact on everything from hiring and firing&hellip; to medical advice&hellip; to self-driving cars. (Elon Musk still has a lot to prove&hellip;)
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3X2YNzfdZfUbn8YyUiWe5H/9e3fce861377d84439614e2e15702158/survey_ai_2.png" alt="AI Survey Deep Dive" />
In addition, 75% of survey respondents believe AI will &ldquo;reduce the total number of jobs&rdquo; while an even higher percentage (77%) trust businesses either &ldquo;not much&rdquo; or &ldquo;not at all&rdquo; to use AI responsibly.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Seen in this light, a lot is riding on today&rsquo;s rollout of new Apple gear equipped with what the company calls &ldquo;Apple Intelligence.&rdquo;
At about the same time this edition of 5 Bullets hits your inbox, Apple CEO Tim Cook will conduct his annual product-release event.
In recent years, this event has become something of a snooze &mdash; especially as it applies to AAPL&rsquo;s flagship product, the iPhone.
An upgraded camera? New capabilities for the home button? An app that counts your daily steps more accurately? No one cares anymore.
For days now, Paradigm&rsquo;s AI authority James Altucher has been forecasting that today&rsquo;s event will be different. Its impact will be on a par with the original iPhone rollout in 2007.
Recall there was a nearly six-month gap between the time Steve Jobs took the stage to introduce &ldquo;an iPod, a phone, an internet communicator&rdquo; in a single device&hellip; and the time it was actually released.
Days before the release in June 2007, James went on CNBC to predict Apple&rsquo;s market cap would grow tenfold.
No one believed it. &ldquo;Everyone was glued to their BlackBerrys, and people were still wondering if Apple was full of crap.&rdquo;
The naysayers were missing the point: &ldquo;That moment wasn&rsquo;t just about phones or social media; it was about a generational shift, the kind of tectonic change that rewrites everything.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />James believes today&rsquo;s event is of equal or even greater magnitude.
Granted, this time there are fewer naysayers.
&ldquo;Apple is about to release something that WILL change the game. Many have caught on,&rdquo; says James. &ldquo;Analysts are pounding the table this time.
&ldquo;But they aren&rsquo;t talking about the right thing. While all eyes are on Apple, there&rsquo;s a tiny AI company &mdash; a critical supplier &mdash; flying under the radar.&rdquo;
Makes sense, right? AAPL&rsquo;s market cap did grow tenfold in the decade after the iPhone&rsquo;s release. But Apple is a mature, dividend-paying blue chip nowadays: Don&rsquo;t expect it to equal that performance.
Instead, James says look to this tiny supplier with the potential to 10X your money in a year &mdash; and perhaps 100X over the next decade.
<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" />All the Job Growth in All the Wrong Places
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />A brief postscript to the August job numbers discussed in <a href="https://paradigmpressroom.com/post/ais-windows-95-moment" target="_blank" rel="noopener">Friday&rsquo;s edition</a>&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5EcsNSTBJZldFIOcGEvwWL/66e7cded244b239f9b63e520e70ae60d/antoni_tweet.png" alt="EJ Antoni Tweet" />
That&rsquo;s according to economist E.J. Antoni at the Heritage Foundation. We mention this data point because it&rsquo;s the continuation of a trend.
Recall that last month the government revised a year&rsquo;s worth of figures from April 2023&ndash;March 2024 &mdash; erasing 818,000 &ldquo;new jobs.&rdquo;
The revisions revealed that whatever job growth occurred during those 12 months was &ldquo;even more dependent on government and education/health care than thought.&rdquo;
That is, the least productive and most parasitic corners of the economy.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The U.S. stock market is staging a modest recovery after its worst week all year.
All the major U.S. indexes are in the green, the S&amp;P 500 up over a half percent at 5,440 &mdash; about 4% beneath its record close notched in mid-July. The Dow&rsquo;s gain is stronger, the Nasdaq&rsquo;s weaker.
Gold remains stuck just below $2,500 but silver has clambered its way back above $28. Bitcoin has inched back over $55,000 for the moment.
The oil price is up nearly a buck to $68.40. It started moving moments after the National Hurricane Center upgraded a disturbance in the Gulf of Mexico to Tropical Storm Francine. Hurricane-force winds will be lashing oil and gas operations off the Texas and Louisiana coasts come Wednesday morning.
Then again, this oil rally might just be an oversold bounce.
The big economic release this week comes Wednesday with the official inflation numbers. That will be the last major data point before the Federal Reserve decides whether to cut the fed funds rate a quarter-percentage point or a half. That decision comes Sept. 18, a week from Wednesday.
<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" />De-dollarization, Continued: The BRICS 2024 Agenda
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />From the it&rsquo;s-big-if-it&rsquo;s-true file&hellip; the BRICS constellation of countries is drawing up ambitious new &ldquo;de-dollarization&rdquo; plans.
This year&rsquo;s summit of BRICS leaders takes place in Kazan, Russia from Oct. 22&ndash;24. Member nations now include the original four of Brazil, Russia, India and China&hellip; the later addition of South Africa&hellip; and this year&rsquo;s entrants of Iran, the United Arab Emirates, Ethiopia and Egypt.
The agenda, according to Russia&rsquo;s official news agency Tass, includes &ldquo;a common unit of account (Unit), a platform for international settlements in BRICS digital currencies (Bridge), a payment system (Pay), a settlement depository (Clear), an insurance system (Insurance) and a BRICS rating alliance.&rdquo;
The name of the common currency, the Unit, is not new: Paradigm&rsquo;s macroeconomics maven Jim Rickards confirmed that for us two months ago. Also not new is that 40% of the Unit&rsquo;s value will be pegged to gold, and the rest to the BRICS countries&rsquo; fiat currencies.
But the rest of the agenda makes clear that the Unit will have a support structure allowing BRICS member nations to bypass SWIFT &mdash; the financial-messaging system that greases the gears of the global economy. SWIFT is based in Europe, but largely operates under Washington&rsquo;s influence.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />To be sure, Russia is the BRICS country most eager to get out from under the dollar&rsquo;s thumb &mdash; and most eager to publicize this agenda.
Many of Russia&rsquo;s banks and other financial institutions were kicked out of SWIFT after Moscow invaded Ukraine in early 2022. And as we&rsquo;ve mentioned regularly, the dollar- and euro-based assets of the Russian Central Bank were frozen.
Other countries that aren&rsquo;t Washington&rsquo;s allies wonder if they might be next. Whether they&rsquo;re as eager to go down the de-dollarization road as Russia remains to be seen. China? Definitely. India? Maybe not so much.
Whatever is announced at the leaders&rsquo; summit next month will be hammered out well beforehand. As Jim told us last year, working groups from the BRICS nations hold 160 meetings every year in addition to the annual gatherings of the presidents and prime ministers.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Coincidentally or not&hellip; the day after Russia laid out the BRICS agenda, Donald Trump promised a &ldquo;100% tariff&rdquo; on countries that &ldquo;leave the dollar.&rdquo;
At a rally in Wisconsin Saturday, Trump said the dollar has been &ldquo;under major siege&rdquo; for eight years and he&rsquo;s determined to maintain the dollar&rsquo;s status as the globe&rsquo;s reserve currency.
&ldquo;You leave the dollar and you&rsquo;re not doing business with the United States because we are going to put a 100% tariff on your goods,&rdquo; he said.
Exactly what criteria his administration would use to determine whether a country is &ldquo;leaving the dollar,&rdquo; he did not say.
&ldquo;The statement follows months of discussions between Trump and his economic advisers,&rdquo; says Bloomberg, &ldquo;on ways to penalize allies or adversaries who seek active ways to engage in bilateral trade in currencies other than the dollar.&rdquo;
It would be nice if the future of the dollar would come up during the Trump-Harris debate tomorrow night&hellip; but we&rsquo;re not counting on it.
<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" />No Ordinary Dime
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />There&rsquo;s nothing about the metal value of this coin that makes it worth $500,000.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/408MeBnVWfBNFjvp0s3bG/1cdccd8564c8f95dd292aff85d6bab96/roosevelt_dime.jpg" alt="Roosevelt Dime" width="320px" />
It&rsquo;s no ordinary dime&hellip; [GreatCollections photo]
Nope, this Roosevelt dime is dated 1975 &mdash; a decade after the U.S. Mint stopped making dimes with silver.
Nor is it valuable just because it&rsquo;s a proof coin &mdash; made with a high-quality finish especially for collectors.
What makes this coin valuable is that someone at the San Francisco Mint screwed up nearly 50 years ago.
Then and now, proof coins are made only in San Francisco. Thus, they have an &ldquo;S&rdquo; mint mark.
But of the 2.8 million proof dimes made in 1975, two were missing the &ldquo;S.&rdquo;
&ldquo;While serious coin collectors have long known about the existence of these two rare dimes,&rdquo; says The Associated Press, &ldquo;their whereabouts had remained a mystery since the late 1970s.&rdquo;
One of them was sold at auction in 2019 for $456,000 and sold again privately a few months later &mdash; price unknown.
The other belongs to three sisters from Ohio who recently inherited it from their brother. He and their mother bought the dime in 1978 for $18,200 &mdash; about $90,000 in today&rsquo;s dollars. &ldquo;Their parents, who operated a dairy farm, saw the coin as a financial safety net,&rdquo; says the AP.
The dime sat in a bank vault for years; now the sisters are ready to part with it. Auctioneer Ian Russell of GreatCollections in southern California expects it to fetch $500,000 next month.
That&rsquo;s a 27X gain in 46 years. Not bad &mdash; although the S&amp;P 500 has grown over 56X in the same time frame. Just sayin&rsquo;!
<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" />This Year&rsquo;s October Surprise: Coming In September?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Russia, Russia, Russia in the mailbag&hellip;
&ldquo;I saw in <a href="https://paradigmpressroom.com/post/election-interference-for-the-206th-time" target="_blank" rel="noopener">the Thursday edition</a> you talked about how recently Tenet was accused of being paid by Russians to run stories favorable toward Russia, and just today one of my friends was talking about it and shared an article with me and <a href="https://www.nbcnews.com/politics/justice-department/why-did-justice-department-drop-its-prosecution-2-firms-linked-n1161886" target="_blank" rel="noopener">it gave me a pretty good laugh</a>, so I thought I should pass it on.
&ldquo;Note it is dated as being from FOUR years ago. As I thought Robert Barnes had adequately explained in a video, the DOJ has used indictments to pump out political propaganda before and they're doing it again.
&ldquo;The embarrassment of withdrawing a case four years ago as soon as a lawyer showed up to defend the accused company is why the DOJ has only indicted two Russian individuals, who they reasonably believe will not come to America to defend themselves in a court of law, and not RT or Tenet; so long as no one challenges them they can and will continue to parade around the indictment as a matter of fact instead of a baseless accusation made for political gain.
&ldquo;So you can add all that to your healthy skepticism of whether or not anything that comes from the government is to be taken at face value as well as knowing just how ironic the name &lsquo;Department of Justice&rsquo; is.&rdquo;
Dave responds: I remember that case well. In 2018, a grand jury convened by Special Counsel Robert Mueller indicted 13 Russian nationals and three Russian companies for plotting &ldquo;information warfare&rdquo; against the United States with Facebook memes and such.
The indictments fueled the narrative of &ldquo;Russian meddling,&rdquo; and with no risk prosecutors would ever have to prove their case. After all, it&rsquo;s not as if these Russians would ever face trial in the United States, right?
But then one of the companies, called Concord Management, actually demanded its day in court! In early 2020, the Justice Department quietly dropped the case, tail between its legs.
So yes, this farce is similar &mdash; only this one is dragging Americans&rsquo; names through the mud. The timing is concerning&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2hQt8LIibSg7yh9zHny6Yu/c2ca3be0e5541c6364fede6f708818e6/dave_smith_tweet.png" alt="Dave Smith tweet" />
Given the number of people who vote early or vote by mail now, the proverbial &ldquo;October surprise&rdquo; might be unleashed in September.
What will be this election cycle&rsquo;s version of the Hunter Biden laptop story?
Recall it was dismissed as &ldquo;Russian disinformation&rdquo; and suppressed on social media before everyone acknowledged it was authentic &mdash; and indeed was the basis for a federal prosecution of Hunter Biden&hellip;

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The typical retail investor loves AI. The typical American citizen, not so much.

AI’s 2007 Moment

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />The Last Word (for Now) About NVDA
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />With the &ldquo;unofficial&rdquo; start to autumn this week, we have one item of unfinished business from the summer.
As we mentioned on Thursday, Nvidia &mdash; the poster child for all things AI &mdash; delivered standout quarterly numbers, while also announcing a $50 billion share buyback. But the reaction was a 6.4% sell-off in NVDA shares.
&ldquo;Big deal,&rdquo; says Paradigm&rsquo;s AI authority James Altucher.
As a reminder, James recommended NVDA shares in Altucher&rsquo;s Investment Network last September. In June, he recommended selling half the position for a 183% gain, and letting the rest ride.
So what does he say now?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;Here's what everyone needs to remember,&rdquo; James wrote his readers on Friday.
&ldquo;Every division of every S&amp;P 500 company has a budget to spend on AI in ways that will increase profits.&rdquo;
James furnishes examples: &ldquo;John Deere is using AI to make self-driving tractors. Perfume companies are using AI to make better synthetic perfumes. And someone out there is using AI to listen to all of my conversations so I see YouTube videos about whatever I just spoke about.
&ldquo;AI is going to add $15 trillion to the economy in the next few years.&rdquo;
Meanwhile, &ldquo;there is a waiting list for Nvidia chips. You have to know someone who knows someone if you want to be at the front of the line for Nvidia chips.&rdquo;
James&rsquo; conclusion: &ldquo;Nvidia is doing great and will continue hitting all-time highs for years to come.&rdquo;
That said, the biggest gains are undoubtedly in the rear-view. Five years ago, you could have invested $100 in NVDA and it would be worth $3,000 now. You won&rsquo;t replicate that performance between now and 2029.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />A lot of virtual ink is spilled across the interwebz on the question of who will be &ldquo;the next Nvidia.&rdquo;
From James&rsquo; point of view, that&rsquo;s not the right way to think about it. The right way has to do with something he calls &ldquo;the AI stack.&rdquo;
It&rsquo;s a whole series of downstream effects from Nvidia&rsquo;s famous chips. He describes it like so&hellip;
<ul>
<li>First the broad chip/GPU makers like Nvidia</li>
<li>Then the data center plays</li>
<li>Then the data center hardware</li>
<li>Then the data center communications</li>
<li>Then AI application-specific chip companies</li>
<li>Then companies that provide data</li>
<li>Then enterprise software in AI</li>
<li>Then, finally, consumer plays.</li>
</ul>
&ldquo;Every layer of this AI stack will have its own &lsquo;Nvidia&rsquo; and we want to be in all those stocks before they zoom higher,&rdquo; James says.
&ldquo;A stock that will fly so close to the sun we won't be able to see it because of the light. Until it finally falls and we realize it was just a mortal company like everyone else.
&ldquo;But right now we are still at the top of the stack. Nvidia still dominates.&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" />Goodbye, 5% T-Bills and CDs. Now What?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />If you haven&rsquo;t figured it out already&hellip; the days of 5% Treasury bills, money market funds and CDs are numbered.
It&rsquo;s been nice as long as it lasted &mdash; about 18 months when all&rsquo;s said and done &mdash; but the Federal Reserve will embark on a new cycle of interest-rate cuts later this month. Those cuts will have a domino effect on cash instruments like T-bills and CDs.
No, we&rsquo;re not going back to the days when cash yielded next to nothing&hellip; but income-focused investors are about to face &ldquo;an obvious challenge,&rdquo; says Paradigm&rsquo;s income investing pro Zach Scheidt.
The solution? High-quality dividend stocks.
&ldquo;Unlike the roller coaster ride of interest rates, dividends from strong companies tend to be remarkably stable,&rdquo; Zach says &mdash; &ldquo;and often grow over time.
&ldquo;Many quality dividend stocks have solid track records of steady, growing payouts. It's like having a raise built into your investment. These stocks tend to hold their long-term value in any interest rate environment, assuming their underlying business remains healthy.&rdquo;
What&rsquo;s more, &ldquo;lower interest rates can act as an additional tailwind for these companies,&rdquo; Zach adds. &ldquo;For one thing, falling rates will lower borrowing costs, which should help stabilize profit margins and free up more cash flow for dividends. Management teams that prudently hoarded cash during uncertain times may decide to reward shareholders with higher payouts once the coast is clear.
&ldquo;Better yet, as interest rates fall and yields on &lsquo;safe&rsquo; investments like bonds and money market funds shrink, yield-hungry investors start looking elsewhere. Where do they turn? You guessed it &mdash; dividend stocks.
&ldquo;This influx of investors can drive up the prices of dividend-paying stocks, leading to significant capital gains on top of your dividend income.&rdquo;
No, it&rsquo;s not a way to get rich quick. &ldquo;The true power of dividend investing is revealed over years and decades, not weeks or months,&rdquo; says Zach.
But it does offer what he calls a perfect combination &mdash; &ldquo;steady income, potential growth and a hedge against falling interest rates.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Both the U.S. stock market and precious metals are off to a rough start in September.
All the major U.S. indexes are down at least 1% on the day. At last check, the S&amp;P 500 is down 1.5% and the Nasdaq well over 2%. No, there&rsquo;s no obvious news catalyst.
As Paradigm&rsquo;s recovering investment banker Sean Ring sees it, it&rsquo;s short-term noise after the S&amp;P 500 notched a record monthly close on Friday at 5,648.
&ldquo;I just don&rsquo;t know how anyone can want to get short right now,&rdquo; Sean writes in <a href="https://rudeawakening.info/posts/pre-election-everything-rally" target="_blank" rel="noopener">his Monthly Asset Class Report</a> at the Rude Awakening.
&ldquo;The problem with brilliant people is they see far into the future. Too far, by half. Sure, there will be a day to sell, but it&rsquo;s not today, and I don&rsquo;t think it&rsquo;ll be anytime soon.&rdquo; Sean sees the S&amp;P on its way to 6,000.
Gold also set a record monthly close on Friday &mdash; just a hair over $2,500. But the Midas metal is down over $22 at $2,477. As usual, silver&rsquo;s getting clobbered worse &mdash; down over 2.5% to $27.78.
Crude is getting destroyed &mdash; a barrel of West Texas Intermediate down nearly $3 to $70.60. Thus it&rsquo;s plunged beneath all the lows that it tested in August. Indeed it&rsquo;s now testing lows that were last seen at the start of this year.
Bitcoin&rsquo;s run past $60,000 didn&rsquo;t last; checking our screens it&rsquo;s back below $58,000.
➢ The one economic number of note today is the ISM Manufacturing Index &mdash; registering more or less as expected at 47.2. Any number below 50 suggests a shrinking factory sector &mdash; and the number has been mired beneath 50 almost nonstop since late 2022. File this one under, &ldquo;So what else is new?&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The Office Space Debacle
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />More than four years after &ldquo;work from home&rdquo; became a thing, the impact of empty office space is about to hit the banking sector &mdash; hard.
Last month, UBS announced plans to liquidate a $2 billion real estate fund &mdash; a fund whose assets consist overwhelmingly of office space. Too many investors were asking for their money back at a time when those assets are valued at fire-sale prices. UBS decided it was better to wind down the fund altogether.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;Financing for office buildings and industrial park construction typically has two stages,&rdquo; says Paradigm&rsquo;s Jim Rickards &mdash; drawing on his experiences at Citibank and elsewhere.
&ldquo;The first stage is a construction loan, which typically has a two- or three-year maturity depending on how long it takes to finish the structure. Credit at this stage is based on the developer&rsquo;s equity, reputation, location and leasing prospects.
&ldquo;The second stage is a take-out loan, which is a long-term mortgage (20 or 30 years) used to repay the construction loan. The long-term mortgage is paid with rentals from the property or sales to third parties. Credit is based on the extent to which the building is pre-leased.
&ldquo;So far, so good. Difficulties arise when one or more of the assumptions behind the credit decision do not play out as expected&rdquo; &mdash; as in the case of that UBS real estate fund.
&ldquo;A construction loan may not be taken out by a long-term mortgage if tenants or buyers of the property get cold feet. A long-term mortgage may not be amortized if tenants do not renew leases or go into default themselves.&rdquo;
And so it&rsquo;s been ever since the work-from-home trend took hold during the COVID pandemic.
&ldquo;Banks can work with distressed borrowers by extending maturities, lowering interest rates and hoping for a turnaround &mdash; a process known as &lsquo;extend and pretend.&rsquo; That works as long as the original valuations can be maintained through the absence of mark-to-market accounting.
&ldquo;The collapse begins when some lenders are forced to foreclose, or some borrowers go into bankruptcy. Then the fire sales begin, and true values are revealed. Accountants quickly force other lenders to write down their own valuations. Then the fire sales turn into an out-of-control wildfire.
&ldquo;We&rsquo;re at that stage right now.&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" /> Word to the Wise
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Even someone with experience in IT security can fall victim to scammers&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4SUubC91seYMhXBem6bTOD/faa43d5e53405e8ce4445f271e563fc4/abc7_news_tweet.png" alt="ABC7 News Tweet" />
For Chester Frilich of Concord, California, the trouble began when he got a call one day from someone claiming to represent his internet provider, Comcast Xfinity.
&ldquo;According to a police report he later filed,&rdquo; reports San Francisco&rsquo;s KGO-TV, &ldquo;Frilich told investigators Xfinity told him someone used his personal information to upload videos to a pornographic website and that they were generating a report to the Federal Trade Commission.&rdquo;
Sure enough, an hour later someone named Brown claiming to represent the FTC calls and tells him he&rsquo;s under investigation for wire fraud.
&ldquo;Frilich says Agent Brown also told him someone rented an apartment in Texas in his name and that the FTC didn't believe he'd made those transactions. To help him, they would move all his money to a secure account&hellip;
&ldquo;He put large amounts of cash and gold in boxes, picked up by couriers who supplied a password he'd been given. Concord PD believes the couriers may have been rideshare drivers.&rdquo;
The ruse was finally exposed when one day he was told there was no courier in his area; he&rsquo;d have to send $8,500 cash in a box via UPS to a CVS drugstore in the Los Angeles area. Someone at the CVS got suspicious when the two people who showed up to collect the package had photos of an ID and not an actual ID.
The case remains under investigation. All told, Frilich is out nearly $200,000.
Should he have become suspicious earlier? Shipping cash and gold in boxes, picked up by Uber/Lyft drivers? We won&rsquo;t judge here &mdash; we simply pass along a cautionary tale.
Bonus points: As part of &ldquo;moving his money to secure accounts,&rdquo; Frilich cashed out his CDs and an IRA. He owes the IRS over $30,000 he doesn&rsquo;t have. The agency is already threatening to put a lien on his house.
<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 Wannabe Assassin&rsquo;s Motive
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;Good read, but not necessarily relevant,&rdquo; a reader writes after <a href="https://paradigmpressroom.com/post/the-madness-is-cranking-up" target="_blank" rel="noopener">yesterday&rsquo;s edition.</a>
&ldquo;Perhaps you may have missed the memo that this particular would-be assassin wasn't even partisan. He researched how to assassinate the easiest, most convenient, close-to-home target whether it was Trump or Biden. No apparent ties to any political party, just the deranged attempt to kill someone with his skills.&nbsp;
&ldquo;This puts all the theoretical political conjecture in your article to rest, at least for now.&rdquo;
Dave responds: I take it you&rsquo;re referring to the FBI&rsquo;s findings <a href="https://www.politico.com/news/2024/08/28/trump-shooter-motive-fbi-00176614" target="_blank" rel="noopener">released</a> last week?
You&rsquo;ll have to forgive me for being unwilling to take those findings at face value when the CIA still won&rsquo;t come clean about why the agency <a href="https://archive.is/sTj0d" target="_blank" rel="noopener">opened a file</a> on Lee Harvey Oswald in 1959 &mdash; four years before the JFK killing.

shutterstock 2121042635 (1)

Nvidia, the poster child for all things AI, delivered standout quarterly numbers… What does our AI authority James Altucher say now? 

“The AI Stack”

<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 History Rhymes
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Just glancing at the calendar: Has it already been nearly eight weeks since the Trump assassination attempt?
Your editor is old enough to have a vivid and unusual memory of the last time someone tried to kill a U.S. president.
It was March 30, 1981. In the Central time zone, it happened when the school day was almost over. At the conclusion of ninth-period English class, a student from a classroom nearby burst in: &ldquo;Reagan got shot!&rdquo;
I walked home and turned on CNN. At that time, CNN had been around for only a few months. It was an upstart outfit, willing to take chances the &ldquo;Big 3&rdquo; networks would not.
One chance it took that day was live and impromptu man-on-the-street interviews in New York.
Most people expressed the requisite shock and/or horror. Then there was a woman in her 30s who said something to the effect of, &ldquo;Well, I guess I&rsquo;m not surprised, really &mdash; what with the budget cuts he&rsquo;s planning and all&hellip;&rdquo;
The part about &ldquo;He had it coming&rdquo; was merely implied. Callous, perhaps, but harmless.
For whatever reason, the memory stuck. Somewhere in the early 2000s it occurred to me that the post-9/11 atmosphere in the country had turned so paranoid that had it happened then, the woman would have surely gotten a visit from the feds.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />With the passage of two more decades and another assassination attempt, well&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2I2hLHL2T9g4Pj5lfoSE0g/365f36e05551f542d166775341e24153/WillSchryverTweet.png" alt="Will Schryver Tweet" />
A &ldquo;volatile escalation of division&rdquo;...
I penned some thoughts about all of this &mdash; including the market implications &mdash; only 48 hours after the attempt on Donald Trump&rsquo;s life. Most of it has, I daresay, held up pretty well. Time for some updates and revisions in this holiday edition of our 5 Bullets.
For obvious reasons, I still can&rsquo;t help thinking about <a href="https://paradigmpressroom.com/post/civil-war" target="_blank" rel="noopener">a new American civil war</a> &mdash; and a relevant episode from the old one.
In May 1863, Wall Street experienced a bull market known as the &ldquo;Chancellorsville rise&rdquo; &mdash; after a Confederate victory in Virginia that racked up more than 17,000 Union casualties. The market rallied on the theory that with the war lasting longer than expected, the Union government would have to issue more inflationary &ldquo;greenbacks.&rdquo;
Easy money fueling a bull market. Sound familiar?
<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;The Trump Trade&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In the immediate aftermath of the attempt to take out Trump, Mr. Market was pricing in a Trump victory come November. Bloomberg called it &ldquo;the Trump trade.&rdquo;
&ldquo;The series of wagers &mdash; based on anticipation that the Republicans&rsquo; return to the White House would usher in tax cuts, higher tariffs and looser regulations &mdash; had already been gaining ground since President Joe Biden&rsquo;s poor performance in last month&rsquo;s debate imperiled his re-election campaign.&rdquo;
That was then, this is now: &ldquo;The topsy-turvy U.S. presidential election has Wall Street racing to adjust its bets,&rdquo; Bloomberg reported last week, &ldquo;as Democratic party candidate Vice President Kamala Harris keeps surging in the polls against the once presumptive favorite, Republican former president Donald Trump&hellip;
&ldquo;Indexes from Goldman Sachs Group Inc. that track trading strategies for each party show the Democratic one started outperforming the Republican one right around the time Biden stepped down as candidate.&rdquo;
For once, Wall Street and corporate media have it right: &ldquo;The election is far from over and far from certain,&rdquo; Paradigm&rsquo;s Jim Rickards wrote his Situation Report readers last week. And this is after Jim confidently forecast a Trump victory over Biden throughout the first half of 2024.
Adding to the volatile atmosphere: In the immediate aftermath of the assassination attempt, billionaires Elon Musk and Bill Ackman endorsed Trump.
Neither was exactly a surprise &mdash; but the news reinforced the impression that competing cadres of billionaires are lining up on opposite sides in this election.
That&rsquo;s <a href="https://paradigmpressroom.com/post/the-apple-way/#4" target="_blank" rel="noopener">a stark change from eight years ago</a> &mdash; and another &ldquo;volatile escalation of division&rdquo; suggesting incipient civil war. Read on&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Disturbing Discourse (NOT the &ldquo;Bull&rsquo;s-Eye&rdquo;)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Already there&rsquo;s a disturbing turn in the discourse across these United States &mdash; as if 2024 wasn&rsquo;t already <a href="https://paradigmpressroom.com/post/supreme-cowards" target="_blank" rel="noopener">a terrible year for freedom of expression</a>.
You didn&rsquo;t have to look far on social media to find howls from the right about how Joe Biden and/or other Democrats &ldquo;incited&rdquo; the attempt on Trump&rsquo;s life.
Really? Biden said, &ldquo;We&rsquo;re done talking about the debate, it&rsquo;s time to put Trump in a bull&rsquo;s-eye&rdquo; &mdash; and that&rsquo;s some sort of dog whistle to activate a sleeper or something?
Isn&rsquo;t this hand-wringing the kind of &ldquo;words are violence&rdquo; rhetoric that&rsquo;s come from the left for many years? Justifying all manner of social-media censorship in the name of policing &ldquo;hate speech&rdquo;?
Yeah, it cuts both ways. On X-formerly-Twitter, the irascible political reporter Michael Tracey reminds us of an episode in which liberals accused conservatives of incitement: Sarah Palin&rsquo;s political action committee used bull&rsquo;s-eye imagery to denote the congressional districts the PAC was &ldquo;targeting&rdquo; in the 2010 midterms &mdash; including that of Rep. Gabrielle Giffords (D-Arizona), who was shot and wounded in early 2011.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2HXcANkp3Ht273CabmE49h/fef9c0cea3ac42070a7aa6ba2c73bea9/SarahPAC.png" alt="Sarah PAC infographic" width="440px" />
It&rsquo;s a metaphor, people. Gee, whatever happened to the conservative defense that Trump&rsquo;s words should be taken &ldquo;seriously but not literally&rdquo;?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />That said, the critics on the right have one valid point.
You don&rsquo;t get to spend eight-plus years demonizing Trump as &ldquo;literal Hitler,&rdquo; a threat to &ldquo;our democracy,&rdquo; an agent of a foreign power &mdash; and then act surprised when someone tries to put a bullet in him. Nor do you get to wish him a speedy recovery and say political violence is never acceptable. (Remember that?)
I for one would like to hear from neoconservative theorist Robert Kagan, who published a 6,000-word screed in The Washington Post last November practically begging for Trump&rsquo;s assassination.
Don&rsquo;t take my word for it &mdash; decide for yourself. <a href="https://archive.ph/gXSdC" target="_blank" rel="noopener">Here&rsquo;s a non-paywalled link</a>. As the independent journalist Matt Taibbi said, &ldquo;It could have been headlined, &lsquo;Where&rsquo;s Hinckley When You Need Him?&rsquo;&rdquo;
And yet&hellip; despicable as Kagan&rsquo;s rhetoric may be, it is and should be protected speech.
More than 50 years ago, the Supreme Court drew bright red lines about what constitutes incitement. Sensible lines they are: Unless, for instance, you&rsquo;re standing outside someone&rsquo;s house with a mob urging them to burn it down at that moment, everything is fair game. Only &ldquo;imminent lawless action&rdquo; is off-limits.
I sure as hell don&rsquo;t want to live in a world where the woman in New York on the day of the Reagan shooting would feel as if she had to police her thoughts lest they be viewed by overwrought politicos as &ldquo;incitement to violence.&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" />Trust in &ldquo;the System&rdquo;? Forget It&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Meanwhile, the erosion of trust in &ldquo;the system&rdquo; that <a href="https://paradigmpressroom.com/post/from-jfk-to-jeffrey-epstein" target="_blank" rel="noopener">began with the JFK assassination</a> is probably beyond the breaking point. Justly so&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/p19u9Ddm6bW0O36ZEUuTC/fa28fed48df347c37e29624bf0633033/ThomasMassieTweet.png" alt="Thomas Massie Tweet" />
It&rsquo;s worth recalling here that the resignation of Secret Service chief Kimberly Cheatle is an exceedingly rare instance of a senior government official falling on her sword. Even so, it didn&rsquo;t happen until 10 days after the shooting.
Before she stepped down, the journalist Jeff Stein &mdash; who&rsquo;s been covering the Washington scene since the 1970s &mdash; wrote in his SpyTalk column on Substack&hellip;
<blockquote>In my adult lifetime, I can&rsquo;t recall a senior official taking responsibility for the millions of lives lost from their failures &mdash; or outright mendacity &mdash; ranging from Vietnam, through Cuba, Chile and Central America, onward through 9/11, through Iraq and Afghanistan, not to mention domestic disasters like opioid megadeaths and bank collapses, and done the right thing by stepping up, apologizing and resigning out of principle. My AI searches for examples came up blank.</blockquote>
Here at 5 Bullets, our memories are nearly as empty: The only instance before Cheatle we can recall was FEMA director Michael Brown after Hurricane Katrina in 2005. That&rsquo;s how little accountability there is within the Beltway.
Mr. Stein also reminds us that some of the Secret Service agents on JFK&rsquo;s detail were so drunk after a night of carousing in Dallas they could hardly walk.
Writes Jefferson Morley, a journalist who&rsquo;s been suing the CIA for over 20 years to open up all the JFK records&hellip;
<blockquote>The cultural reflexes engrained by the trauma of Nov. 22 and the ensuing governmental coverup have been unleashed by the near-miss of July 13: deep suspicion of the authorities, distrust of democratic institutions, fear of a high-level plot and the sense of things falling apart, all turbocharged by a social media information system unknown in the 1960s and 1970s.</blockquote>
<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" />The Media&hellip; and the Process of &ldquo;Othering&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />I suppose I should say a thing or two about the corporate media, seeing as that&rsquo;s how I earned my living for the first 20 years of my adulthood.
For all the roasting the media got for its initial hesitancy to label what happened the evening of July 13 as an assassination attempt&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/62F68qDJPVZcFsxNLnZCle/057a973993341ed1f1de6d7032616cf5/CaesarInjuredMeme.png" alt="ceasar injured in group hug" width="440px" />
&hellip; there were several instances in which the legacy media acquitted itself with professionalism.
It was a New York Times photographer who got the justly famous bullet photo. It was the New York Post that named the suspect two hours before the officials did. It was Pittsburgh&rsquo;s CBS outlet that scored early interviews with the suspect&rsquo;s classmates. And Pittsburgh&rsquo;s NBC affiliate uncovered <a href="https://www.wpxi.com/news/local/alleged-trump-shooter-spotted-by-law-enforcement-nearly-30-minutes-before-shots-fired-sources-say/Q6GIK5RP6RBY5PHIMYBNXRTEBI/" target="_blank" rel="noopener">damning failures</a> on the part of the people charged with Trump&rsquo;s protection.
Most important, it was BBC reporter Gary O&rsquo;Donoghue who got the interview with the red-haired guy who said he saw the gunman climbing up a building to the roof, rifle in hand &mdash; and who tried to warn the authorities to no avail.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5otU9N0EHO9xMbaBrx4Nfu/72c2102ba4da72ed364f2ff77b0c61c8/TrumpInjured.png" alt="trump injured after apparent shooting at rally" width="490px" />
The process that ended with Cheatle&rsquo;s resignation began with Greg Smith&rsquo;s account going viral barely an hour after the shots rang out. Millions of people saw it, and they can&rsquo;t unsee it.
Near as we can tell, Smith has kept his silence since that night. Presumably the feds have interviewed him extensively by now. Given how millions of people already know his story, it would have been mighty hard for the feds to browbeat him into changing that story.
In other words, they weren&rsquo;t able to do to him what they did to the several witnesses who saw a mysterious <a href="https://roberteringer.substack.com/p/robert-f-kennedy-gone-55-years-ago" target="_blank" rel="noopener">woman in a polkadot dress</a> the night that Robert F. Kennedy was killed in 1968.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />It was tempting, 48 hours after the shooting, to think that &ldquo;the drama is all over now.&rdquo; 
Even before the shooting, Trump was starting to look competitive in &ldquo;blue&rdquo; states like Virginia and Minnesota.
But going into Labor Day weekend, Harris might have a shot at battleground states like Georgia that were previously leaning Trump.
It&rsquo;s still 64 days until Election Day. And 140 days until the inauguration.
The &ldquo;volatile escalation of division&rdquo; is not over. The process of &ldquo;othering&rdquo; has not been arrested &mdash; a process described by historian Michael Vlahos in The American Conservative in 2018: &ldquo;Warring identities have concluded that the only solution is the complete submission of the enemy party, and both sides are beginning to prepare for an ultimate showdown.
&ldquo;Othering is a transforming process, through which former kin are reimagined as evil, an American inner-enemy, who once defeated must be punished.&rdquo;
Vlahos even likened the red-blue divide to &ldquo;an irreparable religious schism, deeper in doctrinal terms even than the 16th-century Catholic-Protestant schism.&rdquo;
With that in mind, we cited the aforementioned Matt Taibbi back in July &mdash; with a cautionary note that does not let corporate media off the hook.
&ldquo;We should probably all steel ourselves for what will surely be the Mother of All Propaganda Onslaughts. To say this is a critical moment in American history is an understatement.
&ldquo;Everything is on the line, which means no lie will be out of bounds, no move too treacherous to try. Madness incarnate, and nowhere near over.&rdquo;
Indeed, the madness is sure to be cranked up even further here in September.
We close with the words of Dubya Bush&rsquo;s White House chief of staff Andrew Card in 2002 &mdash; foreshadowing the Bush/Cheney propaganda onslaught before the invasion of Iraq in 2003.
&ldquo;From a marketing point of view, you don&rsquo;t introduce new products in August.&rdquo;

shutterstock 2302928041 (1)

Your editor is old enough to have a vivid memory of the last time someone tried to kill a U.S. president… 

The Madness Is Cranking Up

<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" />U.S. Debt Is a &ldquo;Time Bomb&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;Take a look at America. That's a time bomb,&rdquo; says Swiss Finance Minister Karin Keller-Sutter in a recent interview with Swiss newspaper Blick.
&ldquo;Debt levels in the U.S. [are] a risk to international financial stability,&rdquo; she elaborates.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4m9NQvaik7OqJ0WY57sYga/4c352da07398c8ec31940888ec4a2a49/swiss_minister_time_bomb.png" alt="swiss minister calls us-eu debt time bomb" />
Courtesy: X
Keller-Sutter further notes the stark contrast between Switzerland's prudent fiscal management and the precarious financial situation in the U.S. (More on that in a moment.)
As proof, she points to U.S. stock-market volatility in early August as a harbinger of potential economic troubles, describing it as &ldquo;an expression of investors&rsquo; fear of a recession.&rdquo;
A reality which isn&rsquo;t lost on Paradigm&rsquo;s currency expert Jim Rickards&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The Swiss franc's strength as a safe haven is well established and rooted in history, Jim highlights. 
Considered a safe-haven currency since World War I, this long-standing reputation attracts investors during times of economic uncertainty or market turbulence.
And even when global markets are performing well, the Swiss franc often maintains its strength due to several key factors:
Debt-to-GDP Ratios
<ul>
<li>Switzerland: The debt-to-GDP ratio is reported at 38.3%, with a total debt of around $316 billion against a GDP of approximately $822 billion as of 2023</li>
</ul>
<ul>
<li>United States: In stark contrast, the U.S. has a significantly higher debt-to-GDP ratio of 134%, reflecting an &ldquo;out-of-control&rdquo; national debt burden, says Jim.</li>
</ul>
Trade Balances
<ul>
<li>Swiss Trade Surplus: Switzerland maintains a trade surplus, bolstered by strong exports in precision equipment, luxury goods and a thriving tourism sector. &ldquo;Switzerland has a $1.15 billion trade surplus,&rdquo; Jim says</li>
</ul>
<ul>
<li>U.S. Trade Deficit: On the other hand, the U.S. is facing a substantial trade deficit which contributes to the depreciation of the dollar relative to the franc. &ldquo;The U.S. has a $238 billion trade deficit,&rdquo; he adds. &ldquo;There&rsquo;s really no comparison there.&rdquo;</li>
</ul>
Interest Rates and Inflation
<ul>
<li>Interest Rates: Switzerland's short-term policy interest rate stands at 1.25% while the U.S. rate is a much higher 5.50% &mdash; which helps savings accounts, sure, but hinders borrowing</li>
</ul>
<ul>
<li>Inflation: &ldquo;These rates should be put in the context of inflation, which is 1.3% in Switzerland versus 2.9% in the U.S.,&rdquo; says Jim. &ldquo;But when adjusted for inflation, the real rate in Switzerland is -0.05% compared with 2.6% in the U.S.&rdquo;</li>
</ul>
Adding to Switzerland&rsquo;s economic strength&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Switzerland holds a significantly higher amount of gold relative to its GDP compared with the U.S. &mdash; nearly four times more gold, in fact. 
&ldquo;The United States (No. 1) has 8,133 metric tonnes of gold (worth $654 billion) in its reserves while Switzerland (No. 7) has 1,040 metric tonnes (worth $83.6 billion),&rdquo; Jim says.
&ldquo;When those reserve holdings are put in the context of GDP, Switzerland has an 8.90% ratio of gold-to-GDP while the U.S. has a 2.27% ratio of gold-to-GDP.
&ldquo;The U.S. has more gold by weight but Switzerland has a much higher amount of gold relative to the size of its economy,&rdquo; he says. &ldquo;This arguably makes Switzerland the better safe haven.&rdquo;
This substantial gold backing enhances the franc's appeal, especially when gold prices rise in U.S. dollar terms. And Switzerland's robust and well-regulated financial sector only adds to the franc's appeal.
&ldquo;Given the economic, social and geopolitical uncertainty in the world today,&rdquo; Jim concludes, &ldquo;Switzerland ranks highly as a safe haven and, in many ways, the franc is more of a &lsquo;go to&rsquo; currency than the U.S. dollar.
&ldquo;That situation,&rdquo; he says, &ldquo;is likely to become more pronounced in the months ahead.&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" />Perpetual Inflation
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />With 19 days until the next FOMC meeting, inflation is still stuck closer to 3% than the Federal Reserve&rsquo;s preferred 2% target. 
The Commerce Department issued its read on &ldquo;core PCE&rdquo; this morning. By this yardstick, consumer prices rose 0.2% in July &mdash; in line with expectations. Meanwhile, the year-over-year inflation rate is stuck at 2.6% versus the 2.7% economists anticipated.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2tdNp7SkCTnXv5e8W6cZCA/85dee9fb2e2f96d34151a5ad0a70daa7/5Bullets_Chart_083024.png" alt="nope still not 2% yet" />
Will July&rsquo;s &ldquo;cooling&rdquo; inflation measure &mdash; if you can call it that &mdash; &ldquo;give the Fed some leeway to be more aggressive with rate cuts,&rdquo; Barron&rsquo;s speculates. &ldquo;Only if the labor market shows a steep deterioration.
&ldquo;In his speech at the Fed&rsquo;s annual Jackson Hole economics conference, Chairman Jerome Powell said policymakers didn&rsquo;t want to see further deterioration in the labor market. That makes the jobs report for August, to be released on Sept. 6, more pivotal in determining what happens next for rate policy,&rdquo; says Barron&rsquo;s. 
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Taking a look at stocks today, the S&amp;P 500 index and tech-heavy Nasdaq are barely in the green this Friday afternoon, at 5,595 and 17,540 respectively. The staid DJIA, on the other hand, is down 0.25% to 41,235.
Commodities? A sea of red. Crude is down almost 3% to $73.70 for a barrel of West Texas Intermediate. As for precious metals, gold is down over 1% to $2,530.90 per ounce while silver is down almost 3% to $29.25.
Finally, turning to the crypto market, Bitcoin is down 1.5% to $58,540; Ethereum&rsquo;s chopped down 2.6%, just under $2,500.
<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" />Central Banks and Gold: Follow the Leader
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In a report last week, Bank of America analysts pointed out that &ldquo;gold is the only asset that's outperforming U.S. tech shares.&rdquo; 
Indeed, gold has seen impressive gains this year, rising about 20%, and outperforming the S&amp;P 500 Index, U.S. Treasuries, crypto and more.
<ul>
<li>&ldquo;In comparison, [cryptocurrencies] have risen 17.7%, stocks have rallied 15.4%, the overall commodity sector is up only 1.9%, government bonds have increased by 0.6%, and the U.S. dollar has gained 0.2% year-to-date,&rdquo; says an article at Kitco.</li>
</ul>
Interestingly, despite gold's strong performance, individual investors aren't driving this rally. In fact, gold investments have seen $2.5 billion in net outflows this year, suggesting that many investors are selling to lock in profits.
This unusual situation &mdash; rising prices coupled with investor outflows &mdash; indicates that a different group is behind the increased demand for gold.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />BoA suggests: &ldquo;Do what central banks are doing... buy gold.&rdquo;
Central banks purchased a record 483 tons of gold in the first half of 2024, which is 5% higher than the 460 tons purchased in the first half of 2023.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6mfQaxPFoBY0dwAzR7YE2w/4bbc1904ed53d83013c6908becf47a2a/central_bank_gold_demand.png" alt="chart 10 - central bank gold demand in H1 was the highest on record - goldhub" />
Source: Metals Focus, World Gold Council, Gold Hub
&ldquo;Gold is now the second-largest reserve asset (16.1% versus 15.6% for the euro) and has one of the lowest correlations to stocks across asset classes,&rdquo; BoA analysts note.
&ldquo;Gold could see more investor inflows as downside risks continue to grow in equity markets,&rdquo; Kitco adds.
Namely, analysts believe potential interest rate cuts by the Federal Reserve could lead to increased inflation, a scenario where gold typically performs well.
&ldquo;Bank of America doesn&rsquo;t expect the S&amp;P 500 to benefit as the Federal Reserve looks to kick off its new easing cycle,&rdquo; the article continues. &ldquo;The analysts note that an equity sell-off could happen sooner rather than later.&rdquo;
&ldquo;Investors should buy gold,&rdquo; Markets Insider concludes, &ldquo;even as the metal hovers around record-high prices.&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" />You&rsquo;re Going to Need a Bigger Vault
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />A massive vault for precious metals recently opened near Singapore's Changi Airport, reflecting a growing trend to own physical gold and silver.
It&rsquo;s called The Reserve &mdash; a sleek six-story facility built by Silver Bullion Pte Ltd. and capable of holding 10,000 tons of silver and 500 tons of gold.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6ECyi7oycsfJ1WOjS7YgCq/83ce63de8de60f516ef6d640f9e58dea/the_reserve.png" alt="The Reserve" />
Courtesy: thereserve.sg
This surge in demand for physical bullion storage comes even as gold prices hit record highs this year, surpassing $2,500 an ounce. According to Silver Bullion&rsquo;s founder Gregor Gregersen: &ldquo;The feedback we've got from those conversations is that basically we need more vaults.&rdquo;
The preference for physical bullion over exchange-traded funds (ETFs) &mdash; &ldquo;paper gold,&rdquo; Jim Rickards calls them &mdash; is worth mentioning..
Philip Klapwijk of Precious Metals Insights Ltd. explains: &ldquo;People are taking a long view and they're not happy with the way the world is going on both the economic and political fronts, and are therefore increasing their allocations [to] gold.&rdquo;
While storing physical gold has its drawbacks, including storage fees, physical gold (and silver) offer advantages in terms of privacy and when-the-SHTF security.
And the trend has led to an increased demand for secure storage solutions &mdash; particularly in stable jurisdictions like Singapore.
<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 Butter Baron Spreads the Wealth
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />After the passing of Danish butter magnate Lars Emil Bruun in 1923, his will contained an unusual stipulation: His extensive collection of coins, notes and medals &mdash; accumulated over some 60 years &mdash; was to be held as an emergency reserve for Denmark&rsquo;s national collection.
If everything remained intact after one century, his collection could be sold to benefit his descendants. Now, 101 years later, the first set of coins from Bruun&rsquo;s impressive 20,000-piece collection is set to go up for auction.
Hosted by Stack&rsquo;s Bowers, the auction will feature over 280 lots, including gold and silver coins from Denmark, Norway and Sweden, dating from the late 15th century to the end of Bruun&rsquo;s life.
The entire collection is valued at around $72.5 million, making it the most valuable collection of world coins to ever hit the market.
Among the highlights is a rare 1496 gold noble of King Hans, which could sell for up to $1 million.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/22ICPPY6P8nHaQgG3qncH8/24f9c5705bfcbc91ee448ee8228f3d28/coins.png" alt="1496 King Hans gold noble" />
Courtesy: Stack&rsquo;s Bowers Galleries 1496 &ldquo;King Hans&rdquo; gold noble
&ldquo;Hands-down my favorite piece in the sale is the 1496 gold noble of King Hans, who was king of Denmark and Norway under the Kalmar Union, as well as Sweden for a brief time,&rdquo; says Matt Orsini of Stack&rsquo;s Bowers Galleries.
&ldquo;It is important on so many levels &mdash; it&rsquo;s the very first gold coin struck by Denmark, it&rsquo;s the very first dated coin struck by the Danish kingdom and it&rsquo;s unique in private hands,&rdquo; he says.
&ldquo;The good thing about collecting coins,&rdquo; Bruun once told a Danish magazine, &ldquo;is that when you are upset about something or you feel unsettled, then you go and look at your coins, and then you calm down&hellip;
&ldquo;People who are exclusively devoted to their business make a great mistake. I, for one, could never imagine thinking about nothing but butter until my dying days.&rdquo;
Heh, indeed&hellip; In terms of enjoying a reasonable work-life balance, it sounds as if Bruun didn&rsquo;t spread himself too thin.
Speaking of which, Happy Labor Day from the 5 Bullets team!
Of course, the markets will be closed that day. But check your inbox for Monday&rsquo;s edition&hellip;

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The Swiss franc's strength as a safe haven is well established and rooted in history, Jim highlights. 

Swissie Spanks the Dollar 

<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" />Less Than Earth-Shaking
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Well, that was underwhelming. Nvidia&rsquo;s quarterly numbers did not bring on nirvana&hellip; nor did they bring on the apocalypse.
Not that we expected either outcome &mdash; although we did hear from an irritated reader.
&ldquo;Looks like Jim Rickards missed his &lsquo;world is falling&rsquo; prediction with Nvidia. I'm sure we'll never see any apologies for sending us followers into panic mode.&rdquo;
Panic mode?
Jim was not projecting an IMMINENT CRASH in the event of a Nvidia disappointment. He did say the potential is there for a swift downdraft in the broad market &mdash; 10&ndash;15% over the course of weeks.
Guess what? That potential is still there. His recommended way to play it in Rickards&rsquo; Crisis Trader has until January to play out.
Jim issued two prior warnings along these lines in 2022 &mdash; which you&rsquo;ll recall was the worst year for the stock market since the 2008 financial crisis. Those two warnings resulted in gains of 75% in a few weeks and 130% in a month.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />So what are we to make of NVDA&rsquo;s numbers &mdash; and the immediate reaction?
Sales and profits more than doubled during the second quarter. The company will buy back $50 billion of its shares &mdash; a substantial total, though less than half the record set by Apple earlier this summer.
But gross profit margins narrowed from the previous quarter &mdash; in part because of a production glitch with Nvidia&rsquo;s next-generation Blackwell chips, the ones CEO Jensen Huang <a href="https://paradigmpressroom.com/post/beyond-blackwell" target="_blank" rel="noopener">touted</a> on stage, Steve Jobs-style, back in March.
With that, NVDA shares are down 5% at last check &mdash; but for the moment they&rsquo;re not dragging down the stock market as a whole.
The company is promising to step up Blackwell production in the fourth quarter of this year and book &ldquo;several billion dollars&rdquo; in Blackwell revenue.
But even if it comes through on that promise, NVDA&rsquo;s gross margins might continue to get squeezed for two reasons&hellip;
<ul>
<li>Stiffer competition</li>
<li>Selling less capable chips to China to avoid running afoul of U.S. sanctions.</li>
</ul>
&ldquo;That&rsquo;s probably why institutions are selling on this earnings beat,&rdquo; ventures Jim Rickards&rsquo; senior analyst Dan Amoss.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Outside of Paradigm, one knock on Nvidia we&rsquo;ve encountered is the fact that its business is heavily reliant on &ldquo;vendor financing.&rdquo; 
That is, if you want to buy Nvidia chips and don&rsquo;t have a pile of cash on hand, Nvidia will be happy to lend you the money.
The history of the 2000 dot-com bust and the 2008 financial crisis is littered with companies that got into trouble with vendor financing. Amid the 2008 crisis, General Electric&rsquo;s finance arm needed a $139 billion federal backstop for its debt. GE also borrowed $16 billion from the Federal Reserve.
No, we&rsquo;re not saying Nvidia will be begging for a taxpayer bailout anytime soon. We&rsquo;re not even saying its best days are necessarily behind it.
But after 18 months of nonstop hype and a share price that&rsquo;s soared from $20 (split-adjusted) to over $120 even with today&rsquo;s sell-off&hellip; it should be no surprise if NVDA shares will take a breather for a while.
➢ Trivia aside: Not that it means anything, but Nvidia became a part of the S&amp;P 500 index in November 2001. The company it replaced was the scandal-wrecked failure called Enron.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />The Not-So-Mighty Consumer
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />If Nvidia doesn&rsquo;t signal a new downdraft in the stock market, maybe Dollar General does?
DG just disappointed the Wall Street analyst consensus on both sales and earnings. Shares are down 25% on the day.
Some of that is the company&rsquo;s own fault. &ldquo;Dollar General has said that it needs to improve its stores and how it handles inventory to curb losses,&rdquo; says CNBC.
All the same, &ldquo;the softer sales trends are partially attributable to a core customer who feels financially constrained,&rdquo; says CEO Todd Vasos.
Perhaps the top 20% of wealth holders and income earners in this country are still feeling flush and secure in the summer of 2024. That&rsquo;s not DG&rsquo;s core customer.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Zooming out to get a better handle on how the mighty American consumer is faring&hellip;
It&rsquo;s worth noting the monthly retail sales numbers from the government are not inflation adjusted. If you adjust for a rising cost of living, retail sales are flat or even down compared with three years ago &mdash; when inflation really started to bite.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7cR3iNj97roKTs5VIFKnI/12e74cc47e1ce5e6549a2261bf1fca3f/8.29_Inflation_Squeezing.png" alt="inflation is squeezing the consumer" />
Something to think about whenever you see headlines about &ldquo;robust consumer spending.&rdquo; Eventually, those numbers translate to less-than-robust earnings for corporate America.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />But on this day, neither NVDA nor DG is having a material impact on the stock market.
All the major U.S. averages are comfortably in the green. At 5,634 the S&amp;P 500 is up three-quarters of a percent and barely 30 points off its all-time high notched in mid-July.
Precious metals are rebounding, gold at $2,520 and silver at $29.47. Crude&rsquo;s August gyrations continue, a barrel of West Texas Intermediate up nearly a buck today to $75.47.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Amid much drama, Bitcoin sits a hair under $61,000.
&ldquo;An abrupt sell-off appeared out of the blue&rdquo; on Tuesday night, says Paradigm chart hound Greg Guenthner. &ldquo;I just so happened to see the fall in real-time, so I poked around to see what the experts were saying. It turns out that BTC and ETH were dropped due to a liquidation event which partially had to do with Russia testing Bitcoin framework (the idea began that the U.S. gov&rsquo;t wouldn&rsquo;t like this and impose some sort of anti-Bitcoin regulations).&rdquo;
Is it true? Who knows? It&rsquo;s not the news that matters, it&rsquo;s the reaction. (See Nvidia above.)
&ldquo;The big question here,&rdquo; says Greg, &ldquo;is whether that &lsquo;selling event&rsquo; was isolated... or if it killed all the momentum that was building up on Friday.&rdquo; 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" />The Rural Recession
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Rural America might well be in a recession already.
More than half of economists specializing in agriculture say the U.S. farm economy is in recession right now. That&rsquo;s according to the Ag Economists&rsquo; Monthly Monitor compiled by the publication Farm Journal and the University of Missouri.
&ldquo;That's a big change from where we were just 16&ndash;24 months ago, and it shows a lot of folks are worried about where we sit today,&rdquo; says Mizzou economist Scott Brown.
It hurts that U.S. corn prices sit at a four-year low. If it weren&rsquo;t for strong cattle prices, the overall picture would be worse.
&ldquo;We know crop receipts are going to be lower than what they would have said back at the start of the year, cattle probably higher, hogs probably higher and dairy probably higher,&rdquo; Brown continues.
Can it get worse? Yes, one economist responded in the anonymous survey. &ldquo;If we have an economy-wide recession, what happens to beef demand?&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />A further gloomy picture emerges from the Rural Mainstreet Index.
Every month, Creighton University economist Ernie Goss conducts a survey of bank CEOs in rural sections of Illinois, Iowa, Missouri, Minnesota, the Dakotas, Nebraska, Kansas, Colorado and Wyoming &mdash; areas dependent on agriculture, energy or both.
Goss then compiles an index in which readings above 50 indicate a growing rural economy, and numbers below 50 suggest contraction.
The August number comes in at 40.9, the weakest reading since last November. It&rsquo;s been under 50 for 12 straight months.
One of the respondents to Goss&rsquo; survey is Jim Eckert, CEO of Anchor State Bank in central Illinois. &ldquo;The sad part&rdquo; he says, &ldquo;is that most of our farmers will lose money or just break even due to poor commodity prices.&rdquo;
About 100 miles to the west, Havana National Bank CEO Jeff Bonnett describes his small-business customers as &ldquo;struggling.&rdquo;
&ldquo;The overall increase to inflation since pre-COVID days is taking a toll on rural America,&rdquo; says Bonnett. &ldquo;By the time working folks in our area pay their utilities, groceries and fill the tank up as needed each month, there is little disposable income left for dining out, entertainment and small business and crafts shopping.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Nor is the outlook likely to improve soon.
Crop prices probably won&rsquo;t start recovering until 2026, economist Ben Ayers tells the Axios site.
Thus, the U.S. Department of Agriculture is forecasting the steepest decline in farm income in history this year &mdash; after touching records in 2022.
With farm income depressed, &ldquo;companies like John Deere and Bridgestone have laid off thousands of Iowa workers who build farm equipment over the last year,&rdquo; Axios reports &mdash; &ldquo;leaving deep cuts in urban and rural workforces statewide.&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" />Great Moments in New York Governance
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Wait, isn&rsquo;t cannabis legal in New York?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/10MAmAR4nE3Sc7kruKl0ns/5845158303f66127f7d5fb30bb7cd864/mayor_eric_adams_tweet.png" alt="mayor eric adams tweet" />
Yes, it is legal. As we&rsquo;ve chronicled previously, it became legal only after the prohibition-minded former Gov. Andrew Cuomo realized how much tax revenue legal weed would raise.
But, no surprise, New York City imposed taxes on legal cannabis that are so high, there&rsquo;s still a thriving black market. Thus, the mayor crows about a seizure of illegal pot. Amazing.
The politicos never learn. New York City imposes the highest cigarette taxes in the country &mdash; which is why there&rsquo;s a thriving black market for smokes smuggled in from lower-tax jurisdictions like North Carolina.
Let&rsquo;s just hope that enforcement of the pot taxes don&rsquo;t result in <a href="https://5minforecast.com/2019/07/16/when-tax-collection-becomes-murder/" target="_blank" rel="noopener">another Eric Garner</a>.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: &ldquo;The Policy&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;With you rescinding your self-censoring policy, can we hear what you have to say about J.D. Vance as follow-up to your Cat Lady article?&rdquo; a reader writes. &ldquo;We&rsquo;re dying to know.&rdquo;
Dave responds: In the first place, I think &ldquo;self-censoring policy&rdquo; is a little harsh.
The only guideline was that we wouldn&rsquo;t spend hundreds of words bashing either a single presidential or vice-presidential candidate in a single day, the better to discourage new readers from jumping to conclusions.
That said, it was a dumb policy for me to adopt. As I said the other day, the atmosphere now is sufficiently toxic that people are looking for reasons to be outraged and they&rsquo;ll find them no matter what.
As for your inquiry&hellip; I&rsquo;m not sure what there is to follow up on. <a href="https://paradigmpressroom.com/post/in-defense-of-childless-cat-ladies" target="_blank" rel="noopener">The original write-up</a> speaks for itself &mdash; or it should for anyone without partisan blinders.
In particular, anyone who believes in the values of individual liberty and small government should be deeply troubled by Vance&rsquo;s willingness to use government as a tool to &ldquo;reward the things that we think are good&rdquo; and &ldquo;punish the things we think are bad.&rdquo;
Time was when Republicans at least gave lip service to those values even if they didn&rsquo;t mean it. I guess it&rsquo;s better that the mask is off now?

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So what are we to make of NVDA’s numbers — and the immediate reaction?

NVDA’s Blackwell Bummer

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Heavy is the head that wears the crown — certainly for the king of AI chips, Nvidia, going into the release of its quarterly numbers tomorrow.

Nvidia Insurance

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“The most frustrating part about earnings season is that stocks don’t react appropriately once the numbers hit the wire,” Greg “Gunner” Guenthner warns. 

Earnings Psychodrama

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It seems managing editor Dave Gonigam’s response to an item of reader mail really touched a nerve.

Somehow I Touched a Nerve

<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" />Socialism Rising
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The discourse about the economy during the presidential campaign has been downright insipid. Which is why I haven&rsquo;t seen fit to address it in these pages &mdash; until today, as Kamala Harris prepares to formally accept her party&rsquo;s presidential nomination tonight.
As our favorite political reporter puts it&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/QMY0Qg0ZTOt29EAbYH8ST/65050a8e41c4b8808570a0d917100464/michael_tracey_tweet.png" alt="michael tracey tweet" />
Word.
Look, there&rsquo;s no doubt that price controls are a terrible idea. (We haven&rsquo;t really tackled that matter in this space because you can read about it anywhere including The Wall Street Journal&rsquo;s editorial page. Our mission is to seek out &ldquo;the story no one else is telling.&rdquo;)
But the concept is not communist or even socialist, for God&rsquo;s sake. The last widespread experiment with price controls in this country was implemented by President Richard Nixon &mdash; one of the most ardent anti-communists of the Cold War era.
➢ And yes, they were a disaster. Nixon&rsquo;s price controls were why there were gas lines &mdash; not the ee-vil Ay-rabs.
The comedian and podcaster Dave Smith elaborates: &ldquo;Do you really believe these tools of big banks, weapons manufacturers and giant pharmaceutical companies are going to abolish private property?
&ldquo;I&rsquo;m against these psychopaths as much as anyone, but let&rsquo;s call them what they are: corporatists. Tools of big business, who use big government to rig the system against the people on their behalf.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Which brings us to the problem with the word &ldquo;socialism&rdquo; these days:It means whatever the person using it wants it to mean.
We don&rsquo;t see anyone using it in the classic sense of the term &mdash; state ownership of the means of production. Not even self-described socialist Bernie Sanders proposes nationalizing whole industries &mdash; as happened in, say, Great Britain just after World War II.
So the people who use the term favorably usually mean a European welfare-state system of free or heavily subsidized health care, higher education and so on.
Given the disaster of crony-capitalist health care and higher ed in this country &mdash; with high and rising costs that far outstrip the overall inflation rate &mdash; it&rsquo;s little wonder this brand of &ldquo;socialism&rdquo; is catching on, especially with young adults.
➢ Statistical history: In late 2019, a poll revealed 70% of millennials were willing to vote for a socialist. 2019 was also the year when demographers said millennials surpassed boomers as the largest living adult generation!
<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" />Which Way, America? The Nordics &mdash; or Argentina?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The most vocal self-described &ldquo;democratic socialists&rdquo; point to the Nordic countries as a model to follow. If only we Americans were so lucky!
&ldquo;I think that countries like Denmark and Sweden do very well,&rdquo; Sanders told an audience in Iowa while campaigning during the 2020 election cycle.
Around that same time, a JPMorgan Chase analyst named Michael Cembalest took a deep dive into the policies and economic performance of Sweden, Norway, Denmark and Finland. Just for kicks, he threw in the Netherlands, too. He analyzed data from the World Bank, the Organization for Economic Cooperation and Development and other groups.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Cembalest concluded that relative to the United States, those five governments have stronger protections of property rights and exert less control over private enterprise.
&ldquo;While Nordic countries have higher taxes and greater redistribution of wealth, Nordics are just as business-friendly as the U.S. if not more so,&rdquo; he wrote. &ldquo;Examples include greater business freedoms, freer trade, more oligopolies and less of an impact on competition from state control over the economy.&rdquo;
Nor is Cembalest alone in his assessment. Up until 2020, the World Bank issued annual rankings of how easy it is to start a business &mdash; a vital measure given the evidence that new businesses are the key to job creation.
In the final edition of these rankings, the United States came in a pitiful 55th. All five of the countries Cembalest studied ranked higher. (New Zealand was No. 1 &mdash; while four former Soviet republics ranked in the top 10!)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;Sweden in fact is pretty much as &lsquo;capitalistic&rsquo; as is the United States,&rdquo; economist Deirdre McCloskey wrote for National Review in 2019.
&ldquo;In many fields,&rdquo; a Swedish diplomat told her, &ldquo;we have more private ownership compared to other European countries and to America. About 80% of all new schools are privately run, as are the railroads and the subway system.&rdquo;
Nor is there a bailout culture, McCloskey pointed out: &ldquo;When Saab Autos began its descent into bankruptcy, no Swede suggested that the government give the company billions on the security of its worthless stock. When Volvo became a Chinese company, no Swede objected. Compare the determination of the Bush and Obama administrations in proudly capitalist America to socialize General Motors and Chrysler &mdash; Chrysler for the second time.&rdquo;
➢ Since McCloskey wrote her assessment, Swedish leaders famously resisted conventional wisdom about COVID in 2020 and &mdash; heaven forfend! &mdash; allowed commerce to proceed more or less as usual. Sweden&rsquo;s excess death rate during the pandemic was among the lowest in Europe &mdash; and less than half that of the United States.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In fact, one of Kamala Harris&rsquo; most radical proposals looks nothing like the Nordic countries.
Last week, the Harris campaign <a href="https://www.crfb.org/blogs/kamala-harris-agenda-lower-costs-american-families" target="_blank" rel="noopener">made it known</a> that it stands foursquare behind Joe Biden&rsquo;s 2025 budget blueprint &mdash; including a 25% &ldquo;billionaire tax&rdquo; on the income of those who claim more than $100 million in assets.
Strictly speaking, the proposal is to tax unrealized capital gains &mdash; that is, the gains one accrues on a stock or other asset before selling it. (Colleague Sean Ring unpacks it in further detail in <a href="https://rudeawakening.info/posts/kamala-is-so-taxing" target="_blank" rel="noopener">today&rsquo;s </a><a href="https://rudeawakening.info/posts/kamala-is-so-taxing" target="_blank" rel="noopener">Rude Awakening</a>. Warning: His rhetorical approach is less measured than mine!)
The point here is that this scheme is a variant on a longtime soak-the-rich goal of a wealth tax.
But here&rsquo;s the problem. &ldquo;The Nordic countries tried direct wealth taxes,&rdquo; wrote Charles Lane in The Washington Post five years ago; &ldquo;all but Norway abandoned them because of widespread implementation problems.&rdquo;
Meanwhile, &ldquo;The Nordic countries&rsquo; use of co-pays and deductibles in health care may be especially eye-opening to anyone considering Sanders&rsquo; Medicare-for-all plan&hellip; His plan offers an all-encompassing, government-funded zero-co-pay, zero-deductible suite of benefits, from dental checkups to major surgery &mdash; which no Nordic nation provides.&rdquo;
➢ Harris had her own Medicare-for-all variant during the 2020 primaries &mdash; including <a href="https://paradigmpressroom.com/post/malignant-7#3" target="_blank" rel="noopener">a 4% surtax on income over $100,000</a>. Where she stands now on this score is a mystery.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />So here&rsquo;s our biggest fear: The American-style &ldquo;socialists&rdquo; will get their way, and we&rsquo;ll end up with the worst of all worlds. 
We&rsquo;ll have the Nordics&rsquo; high taxes and wealth redistribution piled on top of America&rsquo;s red tape and increasingly sketchy private-property protections.
What country might that look like? Cembalest went back to the data. He looked for a toxic stew of high tax rates, high government spending, heavy hiring-and-firing regulations, routine state interventions in markets and limits on capital inflows and outflows.
&ldquo;I couldn&rsquo;t find any country that ticked all these democratic socialist boxes, but I did find one that came close: Argentina.&rdquo;
Since 1900, Argentina has experienced the biggest relative decline in people&rsquo;s standard of living anywhere in the world. Crises, devaluations, bank closures &mdash; they&rsquo;ve been a matter of routine.
For the last eight months, the new president Javier Milei has been imposing a sort of shock therapy. But undoing 120 years of mismanagement is no small task &mdash; and whether everyday folks have the patience to endure the withdrawal pangs remains to be seen.
We&rsquo;ll leave it there today as far as &ldquo;socialism&rdquo; goes. I&rsquo;m sure I&rsquo;ve managed to offend everyone &mdash; Trump supporters for questioning their comfortable conceits, Trump critics for daring to say anything disparaging of the anti-Trump candidate. But your future prosperity rides on these issues&hellip; and I&rsquo;ve always been an equal-opportunity offender&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" />Inside Info&hellip; or Sheer Incompetence?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Here we go again with the &ldquo;Super Users&rdquo; of economic data.
&ldquo;At least three banks managed to obtain key payroll numbers Wednesday,&rdquo; reports Bloomberg, &ldquo;while the rest of Wall Street was kept waiting for a half hour by a government delay that whipsawed markets and sowed confusion on trading desks.&rdquo;
As we mentioned at the end of yesterday&rsquo;s edition, the Bureau of Labor Statistics issued revisions to the monthly job numbers from April 2023&ndash;March 2024. Monthly job growth of 242,000 turns out to be more like 174,000.
The numbers were supposed to be posted at 10:00 a.m. EDT &mdash; but they weren&rsquo;t. So analysts from Mizuho Financial Group, BNP Paribas and Nomura Holdings telephoned the agency and got the numbers that way.
&ldquo;Anger quickly mounted,&rdquo; says Bloomberg, &ldquo;as word spread across Wall Street that the BLS had begun giving out the numbers over the phone. A scramble ensued, with other firms and media outlets, including Bloomberg News, trying to obtain the figures, too.&rdquo;
It doesn&rsquo;t appear as though the BLS was doing anyone any special favors &mdash; not this time, anyway. (We&rsquo;ve chronicled <a href="https://paradigmpressroom.com/post/cryptos-next-catalyst/#3" target="_blank" rel="noopener">much skeevier instances</a> in the past.) &ldquo;The whole thing reeks of incompetence,&rdquo; the head of a money-management shop tells Bloomberg.
&ldquo;For its part, the BLS says only that it&rsquo;s notified the Labor Department&rsquo;s Office of the Inspector General,&rdquo; presumably for further investigation.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />By the way, the details behind the revisions are even worse than the headline number.
The downward revisions cut across nearly all industries and sectors &mdash; with a couple of noteworthy exceptions.
Whatever job growth occurred during those 12 months was &ldquo;even more dependent on government and education/health care than thought,&rdquo; says Ryan Sweet of Oxford Economics.
In other words, the only growth came in the least productive and most parasitic corners of the economy. Just swell.
Sweet also concludes that hiring is "still strong but less than that needed to keep up with growth in the working-age population."
Yep. As we&rsquo;ve long noted, it takes 150,000&ndash;200,000 new jobs each month just to keep up with population growth.
<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" />The &ldquo;Rotation&rdquo; Is Alive And Well
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />For the record: Even with the stock market approaching all-time highs, the Magnificent 7 names are underperforming.
&ldquo;You already know the Mag 7s have dominated since the market bottomed out in late 2022,&rdquo; Greg Guenthner reminds his Trading Desk readers this morning.
&ldquo;But they are beginning to lose their grip this quarter. According to BMO Capital Markets data, the Mag 7s are up 1.4% in Q3, while the rest of the S&amp;P 500 is up 3.8%.&rdquo;
Compare that with the previous quarter, when the Mag 7 rose 17% &mdash; while the other 493 stocks in the index actually slipped about 1%.
&ldquo;This is a positive development for the bull market,&rdquo; Gunner says. The &ldquo;rotation&rdquo; out of the giant tech-adjacent names and into other sectors that the Paradigm analysts began spotting about six weeks ago? It&rsquo;s alive and well.
&ldquo;We want to see the rally broaden out! The more stocks participating, the better!&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />That said, the major averages are digesting their recent gains today. The S&amp;P 500 is down about two-thirds of a percent at 5,586.
Meanwhile, &ldquo;Mr. Slammy&rdquo; seems bound and determined to prevent gold from notching another weekly close over $2,500. At last check, the bid is down over $30 to $2,481. Silver is in danger of slipping back below $29.
Crude is rebounding from a brutal sell-off dating back to Aug. 13. At last check a barrel of West Texas Intermediate is up over a buck and back above $73.
After several failed attempts, Bitcoin appears to have burst through the $60,000 barrier.
<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" />Silver!
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />We leave you with some silver eye candy today, courtesy of the good folks at Incrementum AG in Europe who compile the annual &ldquo;In Gold We Trust&rdquo; report&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3BowucFzZdr3wGWypP3jRI/dee4db983022c98646f7d47775d23f6e/silver_supply_demand.png" alt="Silver Supply Demand" />
<a href="https://images.ctfassets.net/vha3zb1lo47k/3BowucFzZdr3wGWypP3jRI/dee4db983022c98646f7d47775d23f6e/silver_supply_demand.png" target="_blank" rel="noopener">Click to enlarge</a>
Tomorrow we&rsquo;ll be back with an extended mailbag section to make up for the lack of a mailbag most of this week &mdash; catch you then!

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The problem with the word “socialism” these days: It means whatever the person using it wants it to mean.

Socialism Rising 

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Today, a behind-the-scenes look into what goes into these daily 5 Bullets...

Coping With the Media’s Madness

<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" />Cue the Mainstream Kvetching About AI
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />The mainstream is starting to wring its hands over artificial intelligence.
&ldquo;Silicon Valley&rsquo;s tech bros are having a difficult few weeks,&rdquo; sniffs The Economist.
&ldquo;A growing number of investors worry that artificial intelligence (AI) will not deliver the vast profits they seek. Since peaking last month the share prices of Western firms driving the AI revolution have dropped by 15%. A growing number of observers now question the limitations of large language models, which power services such as ChatGPT. Big tech firms have spent tens of billions of dollars on AI models, with even more extravagant promises of future outlays.
&ldquo;Yet according to the latest data from the Census Bureau, only 4.8% of American companies use AI to produce goods and services, down from a high of 5.4% early this year. Roughly the same share intend to do so within the next year.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />This sort of argument cuts no ice with Paradigm&rsquo;s AI authority James Altucher &mdash; who&rsquo;s seen many startups come and go during his decades in venture capital and hedge funds.
&ldquo;Every technological revolution has two phases, the hype cycle and the build cycle,&rdquo; he said in this space six months ago.
&ldquo;The dot-com bubble was the hype cycle for the internet. Internet stocks rocketed to record highs before losing momentum and coming back down to earth.&rdquo;
Or disappearing entirely in the case of pets.com and most of the stocks that CNBC&rsquo;s Jim Cramer touted at the very top of the tech bubble in early 2000.
But look what happened next: &ldquo;Then the build cycle happened and we had companies like Facebook, Amazon and Google take over the internet.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Ah, but The Economist&rsquo;s editors were anticipating James&rsquo; counter-argument.
They&rsquo;ll acknowledge what happened in the early years of the World Wide Web. Something very similar happened with a bubble in British railroads that burst in 1847 &mdash; eventually leading to a buildout that transformed the economy.
But unable to shake its skepticism, the magazine put its researchers to work &mdash; determining how often the hype cycle actually results in a build cycle, examining scads of examples.
&ldquo;Tracing breakthrough technologies over time,&rdquo; the editors conclude, &ldquo;only a small share &mdash; perhaps a fifth &mdash; move from innovation to excitement to despondency to widespread adoption.
&ldquo;Lots of tech becomes widely used without such a rollercoaster ride [cloud computing]. Others go from boom to bust, but do not come back. [3D printing].
&ldquo;We estimate that of all the forms of tech which fall into the trough of disillusionment, six in ten do not rise again.&rdquo;
As their findings apply to AI, &ldquo;There is no guarantee of success.&rdquo;
All true, as far as it goes. But here&rsquo;s what The Economist&rsquo;s editors are missing this time.
As we told you last week, one of James&rsquo; most trusted contacts recently tipped him off to a $1.6 trillion shift taking place within the AI sphere. And the next big move is due this Thursday.
<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" />About That &ldquo;Robust&rdquo; Job Creation&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Now they tell us: &ldquo;U.S. job growth in the year through March was likely far less robust than initially estimated,&rdquo; Bloomberg reports &mdash; &ldquo;which risks fueling concerns that the Federal Reserve is falling further behind the curve to lower interest rates.&rdquo;
Tomorrow the wonks at the Bureau of Labor Statistics will issue revisions on the monthly job numbers from April 2023&ndash;March 2024.
This is an annual thing and not necessarily a politically motivated act. New data comes in all the time &mdash; and in recent years, employers don&rsquo;t respond to the BLS&rsquo; surveys as often as they used to.
The big banks&rsquo; economists are guessing at how big the revisions might be. Wells Fargo estimates perhaps 50,000 a month, the biggest revision in 15 years. Considering the average number of new jobs over that time span was 242,000 a month, the revision is substantial.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Another factor in play is one we&rsquo;ve mentioned through the summer &mdash; the BLS&rsquo; &ldquo;birth-death model.&rdquo;
This model is a statistical inference that tries to account for the survey&rsquo;s shortcomings. New businesses come into existence all the time; the statisticians don&rsquo;t necessarily know how many or where they are. Likewise, if a business doesn&rsquo;t respond to the survey, it&rsquo;s possible that&rsquo;s because the business no longer exists.
The problem with the birth-death model is that it tends to underestimate the number of new jobs whenever the economy is coming out of recession. And &mdash; more relevant to the present moment &mdash; it overestimates the number of new jobs whenever the economy is going into recession.
As a result, Bloomberg Economics projects that &ldquo;the underlying pace of monthly job growth is likely less than 100k &mdash; below the pace consistent with a steady unemployment rate. We expect the unemployment rate to reach 4.5% by year-end.&rdquo;
For the record, it&rsquo;s already 4.3% &mdash; up from 3.5% a year ago.
Timing is everything: Tomorrow&rsquo;s release of the revisions comes two days before Fed Chair Jerome Powell&rsquo;s vaunted &ldquo;Jackson Hole speech&rdquo; &mdash; an annual affair the fourth Friday of every August.
If he puts more emphasis on a softening labor market than on the pace at which the inflation rate is falling&hellip; the coming rate cut in September could be a half percentage point, not just a quarter. (The fed funds rate is currently 5.5%.)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />As for the markets today, the standout number is oil &mdash; a barrel of West Texas Intermediate is below $74 for the first time in nearly two weeks. The climb down from $80 a week ago yesterday has been big.
And it&rsquo;s come despite a drop in the value of the U.S. dollar relative to other major currencies. The U.S. Dollar Index sits at 101.58 this morning, the lowest it&rsquo;s been all year and down steeply from 104.5 at the start of this month.
It&rsquo;s this weaker dollar that&rsquo;s given a lift to both stocks and gold the last couple of weeks.
The major U.S. stock indexes are taking a breather today after the big run-up going back to last week; the S&amp;P 500 continues to hold the line on 5,600.
Meanwhile, gold continues to hold the line on $2,500 and silver is comfortably over $29.
In contrast, Bitcoin&rsquo;s performance of late is undermining its street cred as a non-dollar asset. This morning it still languishes below $59,000.
<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;Super Premium&rdquo; EV Batteries = Exploding Silver Demand
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Assuming the latest headlines about &ldquo;solid-state batteries&rdquo; aren&rsquo;t so much hot air&hellip; they could be a huge long-term boost for silver.
Solid-state battery technology &mdash; the next-gen evolution for electric vehicles &mdash; has been a long time coming. Last year Toyota pushed back its timeline for these batteries from 2025 to 2027. Only then would the company offer EVs with a range of 750 miles and a charging time of 10 minutes or less. And some experts said even that goal looked ambitious.
In recent days, South Korea&rsquo;s Samsung has stepped forward with claims that it&rsquo;s perfected a solid-state battery that can charge in nine minutes, deliver 600 miles of range and last for 20 years.
To be sure, they&rsquo;re pricey &mdash; thus they&rsquo;ll be limited to what Samsung calls the &ldquo;super premium&rdquo; EV segment once they go into mass production come 2027.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Among the battery&rsquo;s key ingredients: silver. Samsung is keeping the numbers close to its vest, but one investment professional suggests a single cell in these batteries might contain up to five grams of silver.
&ldquo;A typical EV battery pack containing around 200 cells for a 100 kWh capacity could require about 1 kg of silver per vehicle,&rdquo; ventures Canadian resource investing pro Kevin Bambrough.
One kilogram is just over 32 troy ounces. At current silver prices over $29 an ounce, that&rsquo;s close to $1,000 worth of silver. No wonder these batteries would be limited to the &ldquo;super premium&rdquo; market!
Bambrough runs some more numbers in an interview with Kitco News: &ldquo;With global car production standing at about 80 million vehicles per year, if 20% of these vehicles (16 million EVs) were to adopt Samsung's solid-state batteries, the annual demand for silver would be around 16,000 metric tons (16 million vehicles * 1 kg of silver per vehicle).
&ldquo;This would represent a significant portion of the current global silver production, which is approximately 25,000 metric tons annually, highlighting the substantial impact on the silver market.&rdquo;
Even if that 16,000 metric ton number turns out to be inflated, silver&rsquo;s use in next-gen EV batteries &mdash; to say nothing of next-gen solar panels &mdash; makes silver&rsquo;s trajectory look unstoppable.
As Paradigm&rsquo;s floor-trading veteran Alan Knuckman reminds us, silver&rsquo;s most recent peak of $50 in 2011 translates to nearly $70 today.
<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" />This &ldquo;Inflation Reduction&rdquo; Thing Is Hard
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Go figure: The 2022 &ldquo;Inflation Reduction Act&rdquo; is about to fuel even higher government spending than first expected &mdash; ergo, more inflation.
The background from Politico: &ldquo;President Joe Biden&rsquo;s IRA placed a $2,000 cap on out-of-pocket drug costs for older Americans, allowed beneficiaries to spread their annual drug costs over monthly installments and shouldered insurers with more responsibility to cover drug costs after a beneficiary spends a large amount. But the law did not anticipate just how much health insurance premiums would increase.&rdquo; [Emphasis ours]
Two years later, the proverbial rubber is about to meet the road: Every September, everyone who takes part in Medicare&rsquo;s prescription drug program gets an &ldquo;Annual Notice of Change&rdquo; in the mail.
It&rsquo;s a straightforward summary of what you paid and what was covered this year&hellip; and what you&rsquo;ll pay and what will be covered next year.
The Biden administration was running a severe risk that next month&rsquo;s letter would feature a shock increase for 2025 &mdash; revealed only weeks before Election Day.
In a recent interview on the Financial Sense podcast, Medicare consultant Brian McArthur estimated many patients would be hit with premium increases of 50% or more &mdash; and their plans might no longer cover the medications they need.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />To avert this election-season sticker shock, the Biden administration is improvising a new handout for the insurance companies.
The subsidy will amount to $15 per patient per month. Politico says the cost the first year will total $5 billion, but that&rsquo;s a severe undercount.
Considering 68 million people get their drugs through either Medicare Part D or a Medicare Advantage plan, that works out to $12 billion a year in new spending that Congress never signed off on.
True to form, Republicans who never worry about &ldquo;fiscal responsibility&rdquo; when they&rsquo;re in charge are crying foul because it&rsquo;s the Democrats in charge.
&ldquo;It&rsquo;s using the federal treasury for political advantage,&rdquo; Sen. Bill Cassidy (R-Louisiana), tells Politico. &ldquo;This is a way for the executive branch to implement a policy which has very positive political ramifications for them, but with very sketchy legal standing.&rdquo;
This scheme will be a &ldquo;pilot program&rdquo; for three years &mdash; presumably enough time for a Harris administration to come up with a longer-term fix? What a mess...
One could make a hypothetical argument that some of the Inflation Reduction Act&rsquo;s provisions would create new wealth &mdash; i.e., the subsidies for &ldquo;green&rdquo; energy. (Emphasis on the word &ldquo;hypothetical.&rdquo;)
But this $15-per-patient-per-month subsidy to the insurers? It&rsquo;s pure graft that will only run up the national debt further&hellip; and make inflation that much harder to get back to pre-pandemic &ldquo;normal&rdquo; levels.
<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: About the Data Breach&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;Thanks again Dave for the info on the data breach,&rdquo; writes one of our regulars after yesterday&rsquo;s edition.
&ldquo;I had heard some of it, but was waiting for more info. Luckily it came from you as our media is too enthralled with politics right now. (Party to remain anonymous, thereby adhering to <a href="https://www.paradigmpressroom.com/post/apology-from-tokyo#5" target="_blank" rel="noopener">new 5 rules</a>, I think?)
&ldquo;You're correct about the clumsiness of the Experian sign-in and creation. I had already received a free &lsquo;monitoring&rsquo; from Experian from someone who had been hacked with the customary data leak and had created a free Experian &lsquo;monitoring&rsquo; account. Funny, that freebie Experian &lsquo;monitoring&rsquo; account won't get you to a credit freeze. Had to sign up at Experian&rsquo;s clunky account to &lsquo;freeze&rsquo; my credit report with them. That doesn't even make sense, does it? Lots of expletives&hellip;
&ldquo;Oh boy, can't wait for the spam!&rdquo;
Dave responds: Have to say Experian&rsquo;s system is pretty responsive; I don&rsquo;t think I&rsquo;ve gotten anything since I irritably opted out sometime on Saturday.
As for <a href="https://www.paradigmpressroom.com/post/apology-from-tokyo#5" target="_blank" rel="noopener">the policy</a> I implemented a few days ago, I&rsquo;m already rethinking it. It&rsquo;s doing nothing to tamp down the partisanship and hostility, which was the whole point.
People of both the D and R persuasion can&rsquo;t let go of their groupthink, their hivemind, their tribalism &mdash; and they&rsquo;re spoiling for a fight.
Exactly what I do about that in these virtual pages as summer turns to fall, we&rsquo;ll have to see&hellip;

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The mainstream is starting to wring its hands over artificial intelligence. Paradigm’s AI authority James Altucher is having none of it.