FMF-Issue-073026-Featured

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

Paradigm Pressroom's 5 Bullets

Altucher: The Tech Sell-off — Fact vs. Fiction

<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" />You Think Inflation&rsquo;s Bad Now?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Inflation &ldquo;is about to get much worse,&rdquo; Paradigm&rsquo;s Jim Rickards warned his Situation Report readers on Monday.
And that was before the Iran war got cranked up again last night &mdash; sending oil futures shooting higher again.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7vqCPA5sV1huFPJ7cNNs0y/6d4d71bc83be1e887d74cbd56c243c2a/FMF-Issue-072926-1.jpg" alt="Oil Futures skyrocketing" width="540px" />
Yesterday Israeli prime minister Benjamin Netanyahu was in Washington &mdash; his eighth visit to the United States in the last 18 months, just in case you&rsquo;re keeping score. After meeting with Donald Trump, Netanyahu pronounced it &ldquo;one of the best conversations&rdquo; they&rsquo;ve ever had.
Evidently Iranian leadership figured another U.S. attack was coming, so they should act preemptively for once. They lobbed a few missiles at a U.S. base in Jordan, to limited effect.
Or maybe Iranian leadership knew the Federal Reserve was making a decision on interest rates today and wanted to jack up the oil price to make the Fed lean in the direction of raising rates.
You know, just to mess with Trump. At this rate, why wouldn&rsquo;t they?
This morning on Fox News, Trump went on a foul-mouthed harangue &mdash; promising to deliver a &ldquo;beating&rdquo; to Iran. Which the Iranian side is surely prepared for and might even welcome.
Amid that backdrop, U.S. oil futures are up nearly 7% at $84.63.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Lost in the war-is-off, war-is-on-again headlines is the fact the Strait of Hormuz remains closed to anyone who lacks Tehran&rsquo;s permission.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/326TkLBL7UoOTCTA5Ag3Cb/4617639366c59b1c27a85a8890754718/FMF-Issue-072926-2.jpg" alt="War is Off war is On" width="540px" />
&ldquo;This closure affects not only oil and liquefied natural gas (LNG),&rdquo; says Jim Rickards &mdash; &ldquo;but also urea, nitrates and sulfur, all of which are critical inputs for fertilizer. Helium exports are also affected, and helium is essential to semiconductor manufacturing.
&ldquo;The only reason the global economy has not already partially shut down is because prewar stockpiles helped cushion the disruption. Those inventories are now being depleted, and the world is moving dangerously close to a global recession.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Which brings us to the Energy Department&rsquo;s weekly inventory figures &mdash; which come out every Wednesday.
Private-sector reserves fell by 3.7 million barrels last week &mdash; the biggest drawdown in six weeks. The big terminal at Cushing, Oklahoma remains at &ldquo;tank bottoms&rdquo; &mdash; which means that with any further drawdowns, there won&rsquo;t be enough pressure to move the oil into pipelines.
Meanwhile, another 3.7 million barrels was drained from the government&rsquo;s Strategic Petroleum Reserve. We&rsquo;re at still another lowest-since-1983 level.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5xWQ2QwmnhrUduYGFFwe5O/b5cf69b668ae50b2889ed15cf837114d/FMF-Issue-072926-3.jpg" alt="SPR nearing all time lows" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The ripple effects from the closure of the strait are only beginning,&rdquo; Jim Rickards continues.&nbsp;
&ldquo;Global shipping is itself a supply chain, involving shipowners, charterers, captains and crews, insurers, logistics hubs and sovereign navies. When a vessel is stranded in the Persian Gulf, it cannot be somewhere else loading new cargo.
&ldquo;Goods will begin piling up in Shanghai because container ships cannot complete their normal rotations. The costs of those delays, known as demurrage, are eventually added to the price of whatever goods consumers ultimately buy.&rdquo;
According to AAA, the national average gas price today is $4.09 &mdash; up meaningfully from $3.86 a month ago.
&ldquo;The price of gasoline is literally in your face every time you fill your tank,&rdquo; Jim says. &ldquo;But diesel may be even more important because nearly everything you buy, whether in a store or online, arrives by truck. Trucks run on diesel. Those higher transportation costs eventually work their way into the price of almost everything you purchase.
&ldquo;Price increases move from crude oil to refined fuels to paper towels and soap in the blink of an eye. That process is still in its early stages because this war is nowhere near an end.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And don&rsquo;t forget about fertilizer.
&ldquo;One-third of globally traded urea, a key fertilizer input, and one-half of seaborne sulfur, another critical ingredient in phosphate fertilizers, passes through the Strait of Hormuz,&rdquo; Jim tells us.&nbsp;
&ldquo;Those supplies are now effectively cut off from world trade. Fertilizer prices at the New Orleans hub, a major import location, have risen from $516 per metric ton before the war to $683 today.
&ldquo;Russia and Southeast Asia have some nitrate supplies, but moving them is not as easy as placing a phone call. The logistics chains involve railroads, ports, vessels and unloading capacity at their destinations. All of that must be reconfigured on short notice from existing supply routes.
&ldquo;These disruptions take months to sort out, and suppliers may hesitate because they&rsquo;ll insist on long-term contracts rather than one-time sales. Given those logistical hurdles, higher prices are inevitable.&rdquo;
And that&rsquo;s for those of us lucky enough to live in the developed world. In the Global South, &ldquo;we could be looking at mass starvation on a scale not seen since Bangladesh in the 1970s or China during the Great Leap Forward.&rdquo;
If you&rsquo;re a Rickards reader, hold on to the energy recommendations from Jim and his team. If you&rsquo;re not a Rickards reader, you can offset your rising cost of living with an ETF like the State Street Energy Select Sector SPDR ETF (XLE).&nbsp;
[Dave&rsquo;s disclosure: XLE is a long-term hold in my portfolio.]
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Markets Today: Odd Behavior
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The stock market is not behaving the way it usually does on a day like this.
Usually the major indexes tread water ahead of a Federal Reserve policy announcement &mdash; and ahead of major earnings announcements. Both are coming our way this afternoon.&nbsp;
By the time you read this, the Fed will have announced that it&rsquo;s leaving the benchmark fed funds rate steady at 3.75%. The potential drama lies in whatever Fed chair Kevin Warsh says during his post-announcement press conference, only the second of his term.
Then after the close, two of the big AI &ldquo;hyperscalers&rdquo; report their quarterly numbers &mdash; Microsoft and Meta. Wall Street gave a hostile reception last week to Google&rsquo;s plans to continue stepping up its capital spending on data centers and other AI infrastructure &mdash; even if that spending does benefit other AI players like the chip and memory suppliers.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For whatever reason, Mr. Market is mashing the sell button ahead of these events.
The S&amp;P 500 is holding up best among the major U.S. indexes &mdash; but it&rsquo;s still down over 1% and below 7,400 for the first time in a month.
The Nasdaq is down nearly 1.5% and well below the 25,000 mark now. And the Dow is down 1.75%, back below 52,000.
Amid the sell-off, Paradigm readers are still booking winners: Alan Knuckman urged his Weekly Wealth Alert readers to take 100% gains this morning on Ford call options. Meanwhile yesterday Ray Blanco recommended that Catalyst Trader readers take 143% gains on the biotech name Axsome Therapeutics.
Precious metals are likewise selling off with gold about to lose its grip on $4,000. But silver is fairly steady, a hair under $57.
Not much to say about crypto &mdash; Bitcoin just over $64,000 and Ethereum just under $1,900.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We now have a clearer picture of the downdraft that might be headed the stock market&rsquo;s way for the next couple months.
Bespoke Investment Group has updated its fascinating chart comparing the Nasdaq Composite&rsquo;s performance during the 1990s dot-com boom and the 2020s AI boom.
It sets the starting point of the dot-com boom with the launch of the Netscape web browser in December 1994. And it sets the start of the current boom with the launch of ChatGPT 3.5 in November 2022.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1GbyTSqLza8JlmMIlEjRsu/be1706391339a68b791cb36083993190/FMF-Issue-072926-4.jpg" alt="Nasdaq % change" width="540px" />
Note the substantial drop that might be just ahead of us if this analogue continues to hold.&nbsp;
In 1998 the drop was triggered by the Russian government defaulting on its debt. A U.S. hedge fund called Long Term Capital Management was sitting on complicated bets tied to Russian debt. And all of the big banks had a daisy-chain relationship with LTCM.&nbsp;
Jim Rickards &mdash; who was lead counsel for LTCM &mdash; says the crisis had the potential to bring down the global financial system. But Jim negotiated a rescue with the banks and the Federal Reserve &mdash; no taxpayers were harmed in this operation &mdash; and the market roared back later in the year.&nbsp;
That late-1998 recovery set the stage for the blowoff top in 1999 and early 2000.
Here in 2026, we still have late summer and early fall to get through. &ldquo;We are going into the worst seasonal period of the year &mdash; August to October,&rdquo; says Paradigm trading pro Enrique Abeyta.&nbsp;
And that&rsquo;s not just 1998 &mdash; that&rsquo;s the average performance going back nearly a century.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Data Center Power Play
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The nation&rsquo;s biggest power-grid operator says when push comes to shove, everyday people and businesses will get priority over data centers.
PJM Interconnection serves 67 million customers in a region stretching from New Jersey to Illinois &mdash; including the biggest concentration of data centers in the world in northern Virginia.
On Monday, PJM warned the data center operators on its grid that starting next year they could face mandatory power outages to prevent other customers from experiencing blackouts.
&ldquo;The present trajectory of rapid load growth, tightening supply and rising capacity costs is not sustainable,&rdquo; said PJM chair Paula Conboy.
PJM plans to hold an emergency power auction in September &mdash; with data centers expected to shoulder the bulk of the rising costs.&nbsp;
The regular annual auction held this month was a bust. &ldquo;Despite the high prices that are meant to incentivize the construction of new power plants,&rdquo; says a Reuters dispatch, &ldquo;PJM fell short by about 6.8 gigawatts of its reliability requirement to meet projected demand &mdash; a steeper shortfall than what resulted from the previous auction &mdash; which raises ⁠the risk of blackouts on the grid.&rdquo;
&ldquo;The decision arrives as the breakneck pace of data center construction has grid operators scrambling to generate power,&rdquo; the Tech Crunch site reminds us. &ldquo;By 2035, data centers are expected to use four times more electricity than they do today&hellip;
&ldquo;The move will likely spur many new data centers &mdash; and potentially existing ones &mdash; to set up their own sources of on-site power. Those that don&rsquo;t will probably rely on backup generators, which tend to be costlier to run&hellip;&rdquo;
It&rsquo;s been over two years since we first warned that AI was turning into <a href="https://paradigmpressroom.com/post/the-monster-that-ate-the-power-grid-ai">&ldquo;the monster that ate the power grid.&rdquo;</a> Last year, many Paradigm readers profited from the trend by playing independent power producers like Talen Energy. New profit opportunities were on the agenda today during the Paradigm team&rsquo;s weekly conference call, so watch this space as well as your paid publication(s).
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> This seems like an amenable way to wind down our recent socialism discussion&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3WaPFa251o75GcfGnx3r8O/4c47f7712b4b8e196c80ecbffccec235/FMF-Issue-072926-5.jpg" alt="Teach your kids about socialism Meme" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: When Editors Disagree
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> I&rsquo;d planned a mailbag focused on the data center backlash today, but a reader&rsquo;s query takes precedence.
He writes in light of Mason Sexton&rsquo;s warnings that the current bull market might come to an end this week.
&ldquo;This may not be proper to ask James Altucher and Jim Rickards about, but would they please comment on Mason&rsquo;s predictions? Are they selling a lot of their stocks soon or just riding the market out?
&ldquo;We have paid James and Jim a lot of money and I believe the members would like to know what they think about Mason&rsquo;s predictions.&rdquo;
Dave responds: I sent your inquiry to our executive concierge Dustin Weisbecker for follow-up. But let me address the question in a general way, for you and everyone else.
You should know up front that we don&rsquo;t enforce a &ldquo;company line&rdquo; among our team.
The last thing we want is for our editors to censor or second-guess themselves. You&rsquo;ve paid good money for your subscription(s) and you deserve the editors&rsquo; unvarnished, no-holds-barred opinions.
On those occasions when their opinions diverge, we respect your intelligence enough to weigh those opinions and come to your own conclusions. (Presumably if you subscribe to both Rickards and Altucher publications, you&rsquo;ve done exactly that when it comes to gold and Bitcoin.)
Good editors are few and far between, but we attract them like moths to a flame &mdash; for good reason.
A typical denizen of Wall Street is always answering to someone &mdash; clients, advertisers, the board of directors. When he's not looking over his own back, he's kissing someone else's backside. If he thinks the stock or other security his firm is flogging is junk, he has to hold his tongue.
All those problems go away if he comes to work for us: He's beholden to no one. He can speak his mind. He can live where he likes &mdash; the beach, the mountains, the small town where he grew up. Subscription revenue (from people just like you) is our industry's bread and butter, so as long as he speaks his truth and his truth resonates with his subscriber base, he's golden.
Whatever paid publications you have, stick with the guidance of the editor or editors as long as their ideas continue to ring true for you. Their research is thorough and well-considered. They wouldn&rsquo;t be on our team if it weren&rsquo;t.
And thanks for the opportunity to address the question once again. We have new readers all the time, and even old hands need a gentle reminder now and then&hellip;

FMF-Issue-072926-Featured

You Think Inflation’s Bad Now?

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />It&rsquo;s All Over
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The current bull market in U.S. stocks began nearly four years ago. And one market sage is convinced it ends tomorrow.
First, let&rsquo;s review how we got here.&nbsp;
You&rsquo;ll recall there was the COVID crash in early 2020&hellip; then a steep recovery for the rest of 2020 and all of 2021 as people took their stimmy checks and plowed them into the stock market.
But as soon as the calendar turned to 2022, the market took a big hit &mdash; the S&amp;P 500 tumbling from 4,800 to 3,600 in about 10 months. That&rsquo;s a 25% drop, and anything greater than 20% meets the conventional definition of a &ldquo;bear market.&rdquo;
The bottom came on Oct. 12, 2022. A few weeks later, AI burst into public consciousness with the release of ChatGPT 3.5.&nbsp;
It&rsquo;s been up, up and away ever since &mdash; albeit with the inevitable steep pullback here and there.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1AePbFMGeQ5yoVlyTkabup/73ae93b996b2a927623901b3b936f49c/7.28_5_Bullets_Chart.png" alt="S&amp;P since october 12,2022" width="540px" />
You&rsquo;ll notice the market&rsquo;s been moving sideways the last two months. The S&amp;P peaked just over 7,600 on June 2 &mdash; and hasn&rsquo;t revisited that level since.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The AI trade is looking tired, for a handful of reasons&hellip;
<ul>
<li>As we mentioned last week, Google reported its quarterly numbers. Since late 2022, Google and the other &ldquo;hyperscalers&rdquo; have been rewarded every time they said they&rsquo;re upping the amount of money they&rsquo;re plowing into AI infrastructure like data centers. But last week, Google was punished instead &mdash; the share price tumbling 6% in a day</li>
</ul>
<ul>
<li>The semiconductor stocks, measured by the Philadelphia Semiconductor Index (SOX), are in a bear market &mdash; down 25.8% from their peak only five weeks ago (including a 5.4% drop today as we write). Even the mighty Nvidia isn&rsquo;t immune &mdash; its market cap shrinking such that it&rsquo;s surrendered its crown as the world&rsquo;s biggest company to Apple</li>
</ul>
<ul>
<li>South Korea&rsquo;s stock market &mdash; dominated by the memory-makers Samsung and SK Hynix &mdash; also peaked five weeks ago and it&rsquo;s down 34% since. On several days (including today) the market has shut down altogether as &ldquo;circuit breakers&rdquo; kicked in to stop the bleeding. And that puts a hurt on the dominant U.S. memory name Micron &mdash; down another 10% today.</li>
</ul>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The market is extremely fragile right now,&rdquo; affirms Mason Sexton, editor of The Map &mdash; an assessment with nearly 50 years of market experience behind it.
His string of brilliant calls stretches all the way back to the early 1980s &mdash; when he called a bottom that marked the start of an epic 18-year bull market in stocks.
Along the way, he also called the crash of 1987&hellip; the start of the global financial crisis in 2007&hellip; and the end of that crisis in 2009.
More recently &mdash; and you might want to scroll back up to that chart above &mdash; he nailed both the drop and the recovery from the &ldquo;Liberation Day&rdquo; tariff announcement last year and the start of the Iran war this year.
Key point: Neither of those big drops constituted a &ldquo;bear market&rdquo; &mdash; that is a 20% drop or more. The bull market was still intact.
But for a variety of reasons, Mr. Sexton assesses that tomorrow will be at least the beginning of the end for the bull market that began in October 2022. And as he sees it, tomorrow might very well be the end &mdash; with a steep drop throughout August and September.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Oil Supply Takes Another Hit
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Oil prices continue to fall despite a big hit to Saudi Arabia&rsquo;s oil exports.
Of course, Saudi Arabia&rsquo;s oil exports were already constrained by Iran all but closing the Strait of Hormuz. But the kingdom could still rely on a pipeline that moved oil from the eastern portion of the Arabian peninsula to the Red Sea port of Yanbu on the western side.
No longer &mdash; not since Saudi Arabia&rsquo;s puppet government in Yemen relaunched its war against Yemen&rsquo;s Houthi faction a couple of weeks ago. The Houthis have declared the slender Bab al-Mandab waterway closed to Saudi shipping.
Result: Figures from the analytics platform Vortexa show that Saudi Arabia&rsquo;s crude oil loading volumes at Yanbu have plunged 40% in recent days. The only reason they haven&rsquo;t collapsed altogether is that the kingdom still has access to an Egyptian pipeline &mdash; and tankers can avoid the Bab by traveling north to the Suez Canal.
But in the market for U.S. oil futures, the only thing that matters is that U.S. and Iranian forces have stopped lobbing drones and missiles at each other (and Donald Trump hasn&rsquo;t amped up the war rhetoric).&nbsp;
The paper price for a barrel of West Texas Intermediate sits at $81.46 &mdash; down more than 10 bucks compared with last Thursday.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for the major U.S. stock indexes, it&rsquo;s a mixed bag: The S&amp;P 500 is up less than a quarter percent at 7,428.
The Nasdaq is holding up well &mdash; down a modest 0.15% &mdash; despite the downdraft in the chip and memory stocks. And the Dow is up 1%.
Precious metals are losing ground, gold at $4,038 and silver down a buck to $57.31. The story in crypto is similar, Bitcoin sinking toward $63,000 and Ethereum back below $1,900.
The Federal Reserve begins one of its two-day policy-setting meetings today &mdash; with the outcome announced tomorrow. Paradigm macroeconomics authority Jim Rickards anticipates the benchmark fed funds rate will be left unchanged at 3.75% &mdash; which is where it&rsquo;s been since last December.
That&rsquo;s because Jim says the Fed under its new chair Kevin Warsh is badly split &mdash; one faction that wants to cut rates to prop up the economy and another that wants to raise rates to contain inflation.&nbsp;
Under the circumstances, Jim says the new Fed chair Kevin Warsh will prevail on his colleagues to split the difference &mdash; &ldquo;do nothing, wait for another month of data and keep the door open to a policy change in September.&rdquo;
Speaking of Jim&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" />Was It Something We Said?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK, this wasn&rsquo;t on our bingo card for 2026&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5qb2U7qTgOVmUrIcloMsfw/0b3a6bd18c4b0836d3cac62ea1ff1078/FMF-Issue-072826-1.jpg" alt="Trump posts Jim on Truth Social" width="540px" />
Yes, that&rsquo;s the president of the United States&hellip; linking on his Truth Social platform to a sales promotion for Jim Rickards&rsquo; flagship publication, Rickards&rsquo; Strategic Intelligence.&nbsp;
It happened early yesterday morning during one of the president&rsquo;s periodic bouts of binge-posting.
Hey, what can we say? We&rsquo;re financial publishers. We&rsquo;re in the business of ideas that grab people&rsquo;s attention.
So far, the media haven&rsquo;t picked up on this development &mdash; not much, anyway. There&rsquo;s one online outlet that seems hostile to Trump but whose write-up on this story was very fair and down-the-middle.
Moving on&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Follow-Up: The Fort Knox Fake-Out
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In 18 months the Trump administration has moved from &ldquo;We must audit Fort Knox!&rdquo; to &ldquo;Trust me, bro.&rdquo;
When Elon Musk was still heading up the White House&rsquo;s DOGE effort in early 2025, he <a href="https://paradigmpressroom.com/post/ai-bull-run-three-more-years#3">seemed receptive</a> to public pressure for a full-on audit of the U.S. Treasury&rsquo;s gold bars held at Fort Knox, Kentucky &mdash; which would have been the first since at least 1953.&nbsp;
Musk even suggested a live video walkthrough &mdash; and on four occasions, Donald Trump said he welcomed the idea.
But our own Jim Rickards was quick to <a href="https://paradigmpressroom.com/post/golds-hype-cycle-you-are-here">throw cold water</a> on the notion. At best, he said it would be a meaningless photo op. And in the end, not even that much happened <a href="https://paradigmpressroom.com/post/fort-knox-fake-out">for reasons we explored</a> in June of last year.
You&rsquo;d think the administration would at least offer some respect to citizens who wonder whether some or all of the gold is gone &mdash; or even if it&rsquo;s all there, whether it&rsquo;s been leased to foreigners.
But no. Treasury Secretary Scott Bessent was interviewed recently by Fox News host Jesse Watters. Watters asked, &ldquo;Have you visited Fort Knox?&rdquo;
&ldquo;I haven&rsquo;t,&rdquo; Bessent answered. &ldquo;People on my staff have. The treasurer has been to Fort Knox, and I&rsquo;m happy to say all gold is present and accounted for.&rdquo;
&ldquo;There you have it,&rdquo; Mike Maharrey writes for the Money Metals website: &ldquo;The fox guarding the henhouse says the hens are all accounted for. Case closed!&rdquo;
Our only hope now is a measure in Congress called the Gold Reserve Transparency Act &mdash; and it doesn&rsquo;t appear to have much momentum. Only five House members have signed onto the measure, and that was over a year ago.
And it probably won&rsquo;t be reintroduced in the next congress because the lead sponsor &mdash; Rep. Thomas Massie (R-Kentucky) &mdash; was taken out by special interests in the primaries this past spring.
<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: Socialism (Continued)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The U.S. is already socialist,&rdquo; a reader writes as we share more responses to <a href="https://paradigmpressroom.com/post/socialism-then-and-now">last Thursday&rsquo;s edition</a>.
&ldquo;What does the federal government spend the most on and regulate the most? Education/student loans and health care. Both primary concerns of any socialist state.&rdquo;
Dave responds: Hold that thought, we&rsquo;ll come back to it&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;As you document Republican accusations against Democrats of supporting communism, how would you characterize the Trump administration's buying spree of favored private companies?&rdquo; writes another.
&ldquo;Five percent here, 10% there and pretty soon 51% altogether: &lsquo;public ownership of the means of production&rsquo; just as Karl Marx advocated in The Communist Manifesto.&rdquo;
Dave: It is problematic in the extreme (even as it has been rather profitable for some of our subscribers). And as we chronicled on Saturday, it&rsquo;s not very popular either.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Our final correspondent wishes &ldquo;to illustrate a much more foundational problem.
&ldquo;My first reaction to your piece wasn't concern about socialism. It was concern about fear.
&ldquo;Your article frames &lsquo;socialism&rsquo; as the great threat facing America. That framing misses the more immediate danger: the accelerating concentration of economic and political power into fewer and fewer hands.
&ldquo;Whether one calls the system capitalism, socialism or something else becomes almost secondary if ordinary citizens continue losing agency while political actors increasingly centralize wealth and influence.
&ldquo;Ironically, your article acknowledges the real issue when it quotes &lsquo;Election Wizard&rsquo; describing the frustration of younger generations. Millennials and Gen Z aren't simply embracing socialism because they've suddenly become students of Karl Marx. Many have concluded that the current system isn't working for them. Housing, health care, education, wages and the ability to build a secure future are all moving further out of reach.
&ldquo;That deserves serious examination rather than simply warning about socialism.
&ldquo;Paradigm often excels at questioning conventional narratives, yet this piece adopts one of today's dominant political narratives almost wholesale. Republicans increasingly portray socialism as the existential threat to America, while Democrats portray authoritarianism as the existential threat. Both narratives generate fear. Neither asks the deeper question: Why are so many Americans losing confidence in the institutions that govern them?
&ldquo;From my perspective, the fundamental issue is neither socialism nor capitalism. It is extraction versus creation.
&ldquo;We have built an economic and political system that increasingly rewards the extraction of wealth, influence and power rather than the creation of broadly shared prosperity. That dynamic can exist under governments calling themselves capitalist, socialist or something in between.&nbsp;
Labels matter far less than outcomes.
&ldquo;My concern is that we no longer possess the social cohesion necessary for a healthy republic. When citizens are encouraged to fear one another more than they question the incentives embedded within the system itself, polarization deepens. At the same time, the underlying concentration of wealth and power continues largely unabated.
&ldquo;If the discussion remains &lsquo;capitalism versus socialism,&rsquo; we risk debating labels while ignoring the systems that are actually destroying America.
&ldquo;You have the opportunity to elevate the conversation rather than reinforce another cycle of political fear. I hope you'll consider doing so.&rdquo;
Dave: That&rsquo;s exactly why I included the strategic-empathy remarks from &ldquo;Election Wizard.&rdquo;
So allow me to elaborate on your own outstanding reflections with a few words addressed specifically to anyone reading this who&rsquo;s a boomer &mdash; especially if you wrote in and said basically that millennials and Gen Z need to just pull themselves up by their bootstraps.
You need to understand that the world facing young people today is not the world you faced as a young person yourself.&nbsp;
Yes, inflation hit hard in the 1970s. And the early &rsquo;80s recession sucked. But you were able to pay for college by flipping pizzas nights and weekends&hellip; you were able to buy a starter home for only two or three times your annual pay&hellip; and the health care sector had not yet become the <a href="https://paradigmpressroom.com/post/luigi-mangione-isnt-the-problem">extractive monster</a> it&rsquo;s become today.
The 45-and-under set isn&rsquo;t so lucky. They&rsquo;d be happy to climb the ladder of success that you did &mdash; but all too often they&rsquo;ve discovered someone knocked out the first three or four rungs.
Try to see where they&rsquo;re coming from.&nbsp;
It&rsquo;s the least you can do if your GI Generation parents refused to do so for you&hellip;

FMF-Issue-072826-Featureed

It’s All Over

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Elon Calls out &ldquo;Fake News&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />It&rsquo;s getting prominent play in The Wall Street Journal &mdash; and Elon Musk says it&rsquo;s fake news.
The gist of the story is that Tesla is about to spin off the Chinese portion of its business. As the thinking goes, a spinoff would smooth the way with regulators in both Washington and Beijing whenever Musk gets around to merging Tesla and SpaceX.
Musk&rsquo;s response is emphatic.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5R16or6gB6v5vmTATd34jn/31393a1b4118ec368874c1478bb0cdc5/musk_tweet.jpg" alt="Musk Tweet" />
&ldquo;Until proven otherwise&rdquo;? Does that mean he&rsquo;s leaving the door open?
Really, the most interesting thing here is that it&rsquo;s now taken for granted that sooner or later Musk will bring TSLA and SPCX under the same umbrella.
Six months ago, it was a totally far-out notion &mdash; which is why Paradigm editors like Davis Wilson, Ray Blanco and our AI authority James Altucher were telling their readers it was at least plausible and maybe inevitable. We aim to stay ahead of the curve.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />But before the merger happens, Musk has some unfinished business in the wake of SpaceX&rsquo;s IPO.
&ldquo;Everyone covered the SpaceX IPO as a number, and I get why,&rdquo; says James Altucher. &ldquo;Over $1.7 trillion valuation, biggest IPO ever, Elon now worth more than Bezos, Zuckerberg and Ellison combined. Which is the kind of sentence that doesn&rsquo;t even sound real when you say it out loud.
&ldquo;But I&rsquo;ve been in and around markets for 25 years now, long enough to know the headline number is never the story. The story is what happens after.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;Getting rich and having capital to deploy are two completely different things, and Elon just crossed from one into the other,&rdquo; James says.
&ldquo;$180 billion doesn't sit in an account collecting interest, not for a guy who's spent his whole career doing the same thing over and over: Cash out, then pour it into the next bet before anyone else sees it coming. He did it with PayPal money. He's about to do it again.&rdquo;
James is well aware that SPCX&rsquo;s share price has tumbled since the IPO, and likewise for the space sector as a whole. If you hold these names, he gets your apprehension.
&ldquo;I&rsquo;ve lived through enough of these cycles to recognize the pattern by now &mdash; a sector runs too far ahead of itself, cools off and everyone treats the cooldown like the whole thesis just died.
&ldquo;It didn&rsquo;t.
&ldquo;I still believe AI and space are where the next decade of real wealth gets built, and every time I&rsquo;ve seen a pullback like this one, it&rsquo;s turned out to be where the opportunity was hiding, not where it went to die.&rdquo;
So where is the opportunity hiding now?
&ldquo;I&rsquo;ve been digging into that question all week,&rdquo; James tells us &mdash; &ldquo;and what I found is enough that I&rsquo;m doing something I basically never do on a weekend.&rdquo;
James is convening an Emergency briefing this Sunday Aug. 2 at 7:00 p.m. EDT. At that time, he&rsquo;ll walk you through the opportunity before it becomes front-page news.
<a href="https://signups.paradigm-press.info/2533068" target="_blank" rel="noopener">You can reserve your spot at this link</a>: We&rsquo;ll follow up with an email spelling out everything you need to know so you&rsquo;ll be ready Sunday night.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The Harder They Fall
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;When you combine ignorance and leverage, you get some pretty interesting results,&rdquo; quipped Warren Buffett once.
Wall Street is abuzz this morning about the sudden downfall of a wunderkind hedge fund manager named Leopold Aschenbrenner.
In his mid-20s, he was managing over $20 billion in assets at his firm, Situational Awareness. And then came the tumble in AI stocks this month.
He owned a lot of the most familiar names &mdash; Nvidia, Micron and so on. But he leveraged those holdings 4:1 &mdash; borrowing money in hopes of amplifying his gains. When gains turn to losses, the losses are amplified too.
&ldquo;When your lender believes their money is at risk, they can demand additional collateral.
If you can't provide it&hellip; your investments get sold to repay the loan,&rdquo; writes colleague Davis Wilson at The Million Mission. (<a href="https://million-mission.com/posts/death-by-leverage-a-warning" target="_blank" rel="noopener">It&rsquo;s a short and worthwhile read</a>, including how Aschenbrenner became a phenom at a tender age.)
And so Aschenbrenner&rsquo;s shares now belong to Ken Griffin&rsquo;s Citadel hedge fund &mdash; who for all intents and purposes bought a bunch of quality AI companies at a handsome discount.
On a couple of levels, the whole thing bears a certain resemblance to <a href="https://5minforecast.com/2021/03/29/gray-monday/" target="_blank" rel="noopener">an episode in 2021</a> &mdash; when a fund manager named Bill Hwang got too far out over his skis and likewise got a margin call. He had to shut down his firm, Archegos Capital Management.
But there are a couple of key differences: Hwang&rsquo;s mismanagement put a scare into Wall Street because a couple of his lenders &mdash; big overseas banks like Credit Suisse and Nomura &mdash; were left holding the bag. Nothing of the sort happened this time.
In addition, Hwang was sentenced in 2024 to 18 years for fraud and racketeering; he&rsquo;s out on bail while he appeals his conviction. As far as we can tell, no one accuses Aschenbrenner of anything other than hubris.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Thought for the Day
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Just to add to our Flock camera discussion at the conclusion of <a href="https://paradigmpressroom.com/post/altucher-the-tech-sell-off-fact-vs-fiction" target="_blank" rel="noopener">yesterday&rsquo;s edition&hellip;</a>
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/Yf2rbKzI36Qbtv8ZVn0Er/3c37c4b575cad5e35260e16271ebc942/surveillance_tweet.jpg" alt="Survelliance Meme" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Data Centers
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;Something about all the data center struggles that plague the news really puzzles me,&rdquo; a reader writes as we continue to follow up from <a href="https://paradigmpressroom.com/post/maga-lansing" target="_blank" rel="noopener">last Friday&rsquo;s edition</a>.
&ldquo;Communities are fighting to ban data centers because of energy costs and noise pollution. And data centers are able to sue successfully in some cases to be allowed to build anyway. Not good for either side. And so far it looks like one side or the other must lose. No one has come up with a win-win.
&ldquo;Everyone wants the good things AI can bring (medical research advancements, for one). But no one wants to live near one. (Landfills are similar &mdash; we need them but who wants to live right next door to one?)
&ldquo;But rather than fighting a win-lose heated battle, isn't it possible that more brainstorming can be done to see how to find the win-win instead?
&ldquo;The energy crisis data centers create is a real problem, but my impression is that a solution has been found to deal with that. If a data center wants to build, they have to provide their own energy infrastructure solution rather than straining the pre-existing local infrastructure beyond its capabilities.
&ldquo;But it seems like the noise and vibration problems haven't been addressed, so that remains a sticking point causing communities near data centers a great deal of stress. But can't the same approach be taken with noise and vibration pollution that is used with energy?
&ldquo;You can build a data center as long as you either (a) locate it far enough from any population so that noise and vibrations can't harm anyone or (b) the part I haven't seen suggested yet &mdash; you can build your data center near the population as long as you provide a proper solution for the known emotional costs to people of the constant sound and vibrations that data centers generate (sound-absorbing walls around the data center perimeter, perhaps, plus whatever else might be needed).
&ldquo;If a complete enough solution doesn't yet exist, then the onus is on the data centers to figure one out.&rdquo;
Dave responds: All good thoughts. If only it were so easy.
Even the energy component of the equation remains problematic when data center operators supply their own power &ldquo;behind the meter&rdquo; and don&rsquo;t connect to the power grid.
For instance, Elon Musk wanted to spin up his Colossus data center in the Memphis area quickly. So he brought in natural gas turbine generators that under ordinary circumstances are illegal to use as a primary source of electricity because they don&rsquo;t meet emission and noise requirements. He didn&rsquo;t apply for the necessary permits &mdash; knowing the application would be denied for that reason.
&ldquo;There are very few people who want a power plant in their backyard,&rdquo; Musk acknowledged ahead of SpaceX&rsquo;s IPO.
And then there&rsquo;s the whole water question &mdash; but we&rsquo;ll have to leave that for another day. Because goodness knows the story isn&rsquo;t going away&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" />Earnings Season: Mixed Verdict
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />The jury has delivered a mixed verdict on the AI buildout &mdash; at least as far as it impacts the Big Four &ldquo;hyperscalers.&rdquo;
Amazon was the last of the four to deliver its quarterly numbers after the closing bell yesterday. As far as Mr. Market is concerned, there are no worries about the company&rsquo;s continued spending on AI infrastructure and whether it will pay off in the long haul. AMZN shares are up nearly 15% on the day.
So Amazon and Microsoft got a big thumbs-up for their spending plans&hellip; while Meta and Google got a big thumbs-down.
As James Altucher sees it, even this mixed verdict puts to rest any talk of a bubble in AI.
&ldquo;When the housing bubble burst, you could get in a car and go look at it,&rdquo; he told Altucher&rsquo;s Investment Network readers yesterday. &ldquo;Whole subdivisions in Florida and Nevada with nobody living in them, streets and driveways and mailboxes and no people. That's what a popped bubble leaves behind, a pile of something nobody wants.
&ldquo;Computing can't be held. Companies rent it by the hour, and when the hour is gone it's gone. So the customer tells you every month whether they meant it.
&ldquo;Microsoft's finance chief told investors that demand keeps running past the capacity they have. Then she raised her forecast anyway.
&ldquo;Microsoft went from 20 million paying AI subscribers to 30 million in three months, 10 million more seats in 90 days. You don't add that many unless the first 20 million kept theirs.
Meta is spending just as much. It hasn't told anyone yet what's coming back. Microsoft showed the receipts.&rdquo;
That goes a long way to explain the mixed verdict.
&ldquo;In 2009 there were empty houses,&rdquo; James concludes. &ldquo;Today I go looking for them and I can't find any. I find companies that can't build fast enough, customers who keep renewing and contracts already signed for years most people won't be patient enough to wait out.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />As for the broad U.S. stock indexes today&hellip; they&rsquo;re all in the green, but just barely.
At 7,444 the S&amp;P 500 is on track to end the week higher than it ended last week &mdash; Wednesday&rsquo;s big drop notwithstanding. It&rsquo;s a similar story for the Nasdaq, back above 25,000. But the Dow has a long way to go to make up for Wednesday&rsquo;s fall even though it&rsquo;s back over 52,000.
Among the big movers is Apple, down nearly 9% after delivering its quarterly numbers. Seems an ongoing shortage of chips from Taiwan Semiconductor makes it hard for the company to meet demand for its signature phones, tablets and computers.
Congratulations to Alan Knuckman&rsquo;s Weekly Wealth Alert readers, who collected 100% gains yesterday on the remaining half of their Bristol Myers Squibb trade. (The first half was a 50% winner a week ago today.)
The bond market remains on edge about inflation: The yield on a 10-year Treasury note is over 4.73%, getting *this* close to its highs of 18 months ago. The 30-year bond is even worse &mdash; up to 5.27%, another high last seen in 2007.
Rising rates are translating to falling precious metals: Gold is down $60 to $4,042 and silver is off more than $1.50 to $57.36.
Crude is up nearly 3% to $85.86 even though U.S. forces did not conduct airstrikes on Iran last night. Traders are likely positioning themselves in case the airstrikes resume over the weekend while the market&rsquo;s closed.
Crypto can&rsquo;t get any traction, Bitcoin at $62,464 and Ethereum at $1,855.

fmf header 073126

Elon Calls out “Fake News”

<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" />War Merger
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It was just a passing mention in these digital pages 11 days ago &mdash; the possibility that the Iran and Ukraine wars would merge into a single conflict. Now we&rsquo;re here.
Yeah, yeah, I know &mdash; the headlines in corporate media are all about how the Iran war is back on pause. We&rsquo;ll get to that soon enough. Our objective, as always, is to separate the noise from the real news.
And the real news is that the Ukrainian military attacked an Iranian commercial ship in the Caspian Sea &mdash; the giant saltwater lake that straddles Europe and Asia, its coastline shared by five countries including Russia and Iran.
We told you back on July 16 that only 500 miles separated the Ukrainian and Iranian conflict zones. That gap is rapidly closing.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7d96FqF2YnUkDhNBJCDDxb/88e45bcdd2c6e7337b25b52f0c62decf/7.27_5_Bullets_Map.png" alt="TWO CONFLICT ZONES" width="540px" />
We also noted that Washington and its NATO allies furnish weapons to Ukraine to fight Russian forces&hellip; while Moscow provides ISR data (intelligence, surveillance, reconnaissance) to Iran to fight U.S. forces.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> There&rsquo;s no dispute about what happened on Saturday: Ukraine&rsquo;s president Volodymyr Zelenskyy took credit for the strike, which killed an Iranian crew member.&nbsp;
Zelenskyy claimed the ship was hauling military cargo. Iran&rsquo;s foreign minister Abbas Araghchi called the attack &ldquo;a blatant UN Charter violation&rdquo; that &ldquo;cannot go unanswered.&rdquo;
The stakes are high for Tehran. &ldquo;Iran&rsquo;s Caspian ports have become increasingly important for trade as the U.S. blockade has complicated access to its southern maritime routes,&rdquo; says the Financial Times.&nbsp;
&ldquo;The northern corridor allows Iran to import goods from states around the Caspian and receive Chinese cargo transported overland by rail through Central Asia before reaching ports on the Caspian coast.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But if the stakes for Tehran are high, they&rsquo;re even higher for Washington.
Johns Hopkins historian Michael Vlahos is alarmed. Here&rsquo;s how he put it last night during his weekly spot with the veteran radio host John Batchelor&hellip;
<blockquote>If you look at Mr. Trump&rsquo;s approach to the Ukraine war, which is to renew the assault on Russia&hellip; and you look at his approach to Iran, which has seen 14 days of relentless attacks&hellip; it speaks to an American imperial court in Washington that cannot accommodate even the idea of an alternative outcome&hellip; that they are so hooked on achieving some kind of submission on the part of their adversaries, either Russia or Iran, that they can&rsquo;t give up&hellip; even though they&rsquo;re losing on both fronts.</blockquote>
It&rsquo;s too soon to say World War III started on Saturday with the attack in the Caspian. Great wars don&rsquo;t arrive on a precise calendar &mdash; and when they begin often depends on where you sit.
Ask an American when World War II began and he or she is likely to say Pearl Harbor on Dec. 7, 1941. Ask a typical European and they&rsquo;re more likely to say Sept. 1, 1939 &mdash; when Nazi Germany and Soviet Russia began carving up Poland. Ask someone in China and you&rsquo;re liable to hear Dec. 13, 1937 &mdash; the start of the Nanjing Massacre &mdash; or even Sept. 18, 1931 when Imperial Japan invaded Manchuria.
<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" />Is It a Missile Shortage? Or Is It the Fed?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK, we can&rsquo;t ignore the noise &mdash; because that&rsquo;s what&rsquo;s moving markets for the moment.
When we left you on Friday, it looked as if Washington was going to step up its attacks on Iran. In the event, the attacks let up for the first time in two weeks.&nbsp;
Donald Trump&rsquo;s UN ambassador, Mike Waltz, went on the Sunday talk shows to say the aim was &ldquo;giving diplomacy some space.&rdquo; And he insisted it had absolutely nothing, no sirree, to do with widespread reports that U.S. military leaders are unnerved by a shortage of interceptor missiles.&nbsp;
We warned you about this looming shortage <a href="https://paradigmpressroom.com/post/unconditional-surrender">during the war&rsquo;s earliest days</a>. It&rsquo;s almost certainly the reason three U.S. troops were killed by an Iranian airstrike in Jordan a few days ago.
As we write at midday, Donald Trump himself has weighed in to say talks are making progress. (We await the usual statement from Tehran basically saying, &ldquo;Talks? What talks?&rdquo;)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> If the shortage of interceptor missiles isn&rsquo;t what prompted the peace-is-at-hand chatter again&hellip; maybe it&rsquo;s the Federal Reserve.
The Fed holds its next policy-setting meeting on Wednesday. Going into the weekend, futures traders assigned a 40% probability that the Fed would jack up short-term interest rates because of the risk that rising oil prices would fuel a new bout of inflation. Not exactly an outcome the Trump administration wants.
But lo and behold that probability is diminishing because U.S. oil futures have gotten clobbered &mdash; down nearly six bucks as we write to $83.66.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> While oil prices are falling amid claims of U.S.-Iran talks&hellip; the major U.S. stock indexes are not following the script.
Instead, they&rsquo;re treading water &mdash; the S&amp;P 500 up microscopically from Friday&rsquo;s close at 7,412. The Nasdaq is down about 0.15% while the Dow is up 0.4%.&nbsp;
➢ Congratulations are in order for Alan Knuckman&rsquo;s Weekly Wealth Alert readers, who bagged a quick 50% gain on Friday playing call options on the Big Pharma firm Bristol Myers Squibb.
Later this week, four of the &ldquo;Magnificent 7&rdquo; companies will report their numbers &mdash; Amazon, Apple, Meta and Microsoft.
Bond yields are climbing down in sympathy with oil prices: The 10-year Treasury note is down to 4.64% &mdash; still elevated by recent standards but well below the 4.7% threshold that was breached last Thursday.
Falling interest rates are giving a lift to precious metals &mdash; gold back within $12 of $4,100 and silver up over 1% to $58.72.&nbsp;
Crypto is holding its own with Bitcoin just under $65,000 and Ethereum comfortably over $1,900.
&ldquo;Bitcoin still will need to post a convincing base breakout, hold the gains and advance into the $70K range,&rdquo; says Trading Desk editor Greg Guenthner. &ldquo;Then, it needs to erase its June swoon.&nbsp;
&ldquo;Once it does this and gets back into the $74K range, I think it&rsquo;s safe to get a little more bulled up on crypto. But until then, we could be in for more chop. For now, the crypto bulls can enjoy the reprieve from what is now a 10-month bear market.&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" />FDA: Regulatory Logjam Clearing
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The FDA just caught up to my medicine cabinet,&rdquo; snarks Paradigm&rsquo;s bleeding-edge investor James Altucher.
Toward the end of May, <a href="https://paradigmpressroom.com/post/the-yamanaka-secret">James shared</a> with 5 Bullets readers how a few months earlier he went to the doctor for the first time since he was 18. (He&rsquo;s 58 now.)
The doctor was an anti-aging specialist who furnished him with a box of peptides.
&ldquo;I've barely taken aspirin in my life,&rdquo; he said two months ago. &ldquo;Now every morning I inject a small stack of needles into myself. They're subcutaneous &mdash; about half a centimeter &mdash; so it sounds more dramatic than it is.
&ldquo;What are peptides? The simplest way I've found to think about them is as text messages to your cells. Each one carries a different instruction: lose weight, grow muscle, repair tissue, improve sleep, slow aging.&rdquo;
Never heard of peptides? Bet you&rsquo;ve heard about the best-known category of them &mdash; the GLP-1s like Ozempic that instruct the body to stop being hungry.
James saw massive investment potential &mdash; a market that&rsquo;s already grown from $20 billion in 2020 to $162 billion today, and just getting started. What&rsquo;s more he saw a regulatory catalyst on the horizon.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And that catalyst triggered last Thursday &mdash; when some of the very peptides that James takes got the green light from an FDA advisory panel.&nbsp;
Compounding pharmacies can start making them in bulk. The panel&rsquo;s decision came &ldquo;over the objections of the FDA&rsquo;s own scientists,&rdquo; says James &mdash; &ldquo;which is not a thing that happens often.&rdquo;
The relevant stocks in the Atlucher&rsquo;s Investment Network portfolio did a classic pop-and-drop. Maybe that&rsquo;s because last week&rsquo;s approval is only the second step in a three-step process.
The next step is full approval by FDA leadership. &ldquo;Formal rulemaking still has to run, and that process extends into next year,&rdquo; says James&rsquo; biotech analyst Ray Blanco.&nbsp;
But Ray says it&rsquo;s only a matter of time given that Health and Human Services Secretary Robert F. Kennedy Jr. has already said he&rsquo;d work to overturn current restrictions.
For now we give James the final word: &ldquo;I've said for a while that the biggest shift in health care right now is the money moving away from just treating sickness and toward keeping people well in the first place.&nbsp;
&ldquo;This is what that shift looks like when it finally reaches the regulators.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> This meme is already out of date. The national debt is approaching $39.7 trillion.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3EZufFDc1IC3SNZQWIVjLO/10d0190e59f92f07368971dbc39c78d9/FMF-Issue-072726-2.jpg" alt="pub" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Socialism
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We got a blizzard of replies &mdash; enough to fill 10 pages of a Word doc &mdash; to <a href="https://paradigmpressroom.com/post/socialism-then-and-now">last Thursday&rsquo;s edition</a>about socialism and the advent of the DSA faction in the Democratic Party.
&ldquo;As soon as physical health conditions allow, I will leave California and move to Arizona,&rdquo; says a longtime reader.&nbsp;
&ldquo;Getting out of NYC,&rdquo; says another reader. &ldquo;The country may go completely communist but a red state will move slower and then I&rsquo;ll be dead.&rdquo;
&ldquo;I&rsquo;m 1,000% against socialism and communism! Hands down,&rdquo; says yet another. &ldquo;I spread the word every chance I can to educate everyone on the dangers and expectations of it.&rdquo;&nbsp;
This individual says it was a challenge with his own son amid a contested Democratic primary for governor of Wisconsin, &ldquo;but I explain everything to him and now he understands.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Thank you and Jim for bringing this issue to the forefront,&rdquo; a reader writes.&nbsp;
&ldquo;Most Americans have lost faith in our elected representatives, academia, athletics, education, business community, Federal Reserve, judiciary and the media. So is it any surprise that socialism/communism would be appealing to younger generations?&nbsp;
&ldquo;When you have grown up in a system that has manipulated capitalism, free markets and the rule of law, and engaged in endless foreign conflicts treating our military as if they are pawns in the game of chess, and then been educated that Western civilization is the source of all evil, what do expect would happen?
&ldquo;So where do we go from here? It&rsquo;s time to reverse Alexander Tytler&rsquo;s Cycle of Democracy before it&rsquo;s too late. So how do we do this? We all have to recognize that there is no Democrat or Republican Party, it is them versus us, and the only way to regain control of the republic is to either form another party or transform the Republican Party (which was formed to abolish slavery and polygamy) into a party that actually that actually restores confidence in the republic for which it was founded.
&ldquo;For as long as I can remember the Republican Party has been the party that acts like the party out of power when they have it and door mates when are not. They, like all politicians, speak a good game, but it&rsquo;s time to play, they are running away. Voluminous with words, cheap on actions.
&ldquo;Young people want to support a message that restores confidence in their purpose and their future. Right now, the only ones that are providing any hope are the lies that Marxists spew.&nbsp;
&ldquo;We would do all of us and them a great service by taking control of our citizenship and mentoring them that they live in the greatest country in the world, but we have gone astray from our founding principles, and it is up to us to bring it back before we suffer the fate of an evil that once established, can only be destroyed through bloodshed.&rdquo;
Dave responds: Good points &mdash; although for the sake of accuracy I&rsquo;m compelled to point out there&rsquo;s no evidence the 18th-century Scottish historian Alexander Fraser Tytler ever described a cycle of history as you describe.&nbsp;
It <a href="https://en.wikipedia.org/wiki/Alexander_Fraser_Tytler,_Lord_Woodhouselee#Debatable_attribution">appears</a> to have originated instead with the 20th-century American industrialist Henning Prentiss. A lawyer named Loren Collins did yeoman&rsquo;s work on this question <a href="https://web.archive.org/web/20110723192744/https://www.lorencollins.net/tytler.html">in the early 2000s</a>.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I have no concerns about the &lsquo;socialist wave&rsquo; whatsoever,&rdquo; a reader avers. (We&rsquo;ve had to truncate the email to keep today&rsquo;s edition to a reasonable length)&nbsp;
&ldquo;This is a natural response and should be expected. The pendulum must swing back and forth. Another opportunity for us to practice the skill of adjusting to your environment. Let me explain.&nbsp;
&ldquo;The current economics is not working for most Americans. People are losing their quality of life. Life is getting harder, so they are searching for anything that is better. &lsquo;Hey, that socialism sounds good, let's try that!&rsquo; So if the American people do not see life getting better for themselves, expect the socialist wave to swell.
&ldquo;And we must own it. Our leadership in government and business/corporations has gotten us to this point. Your quote of Charles Goyette's 2009 lamentation sums it up simply. And the bill for the pi&ntilde;ata party is coming due.&rdquo;
Dave: It pains me to say so but I am increasingly resigned to the prospect that for the foreseeable future, America will lurch back and forth every few years between right-wing dictatorship and left-wing dictatorship.
It&rsquo;s an experience familiar to many people in third-world countries, but one I&rsquo;m still adjusting to after the last five years or so &mdash; and not something I relish now that I&rsquo;ve (probably) entered the last third of my life.&nbsp;
I assume all one can do in those circumstances is try to keep one&rsquo;s head down. Easier said than done in a profession where one must tease out how public policy might affect various investments. But we&rsquo;ll press on&hellip;

273465104 flags of USA and Iran painted on cracked wall

shutterstock 273465104 (1)

War Merger

<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" />Bipartisanship
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Something&rsquo;s suspicious when both President Trump and Michigan&rsquo;s Democratic Gov. Gretchen Whitmer land on the same side of a major economic issue.
And if you happen to land on the other side? You might be on a federal watch list.
Begin with the news yesterday, as reported by Reuters&hellip;
<blockquote>President Donald Trump announced a nonbinding pledge by U.S. power producers and &zwnj;data centers on Thursday to fund or build energy infrastructure that would meet massive AI-related power needs while shielding consumers from high electricity costs.</blockquote>
<blockquote>Consumer advocacy groups and other administration critics, however, dismissed the pledge as an empty promise to consumers as Trump tries to balance his support for power-guzzling data centers against public anger over rising utility bills&hellip;.</blockquote>
<blockquote>Community meetings in many states have lasted into the wee hours as residents oppose development of data centers they view as noisy, bad for the environment and a factor in rising electric bills.</blockquote>
Trump tried to pitch data centers as a net plus: "You have communities that really want the data centers, and frankly those are the smart communities.&rdquo;
But that comment was soon followed by a remark that suggested &mdash; well, a certain inevitability to the whole thing.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/kV3HDBKfRrOxw8wIBZ6KU/45c5ffbcb9694c34ce8932640c24f0fe/FMF-Issue-072426-1.png" alt="Aaron Rupar X post" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Yeah, there was zero &ldquo;convincing&rdquo; going on earlier this year in Saline Township, Michigan &mdash; population 2,277. Only litigation and intimidation.
A consortium of companies including OpenAI and Oracle was bound and determined to build a $16 billion data center known as &ldquo;The Barn&rdquo; on a site about 15 miles south of Ann Arbor.
It&rsquo;s part of the &ldquo;Stargate&rdquo; project that Trump, OpenAI&rsquo;s Sam Altman and Oracle&rsquo;s Larry Ellison touted last year on the first full day of Trump&rsquo;s second term. The Barn had Gov. Whitmer&rsquo;s full backing.
But before the project could go ahead, about 250 acres of farmland had to be rezoned. The township board, feeling the heat from the locals, resisted. Among the objections &mdash; The Barn would grow the region&rsquo;s power demand by 25%.
Last September, both the township board and planning commission voted to nix the project.
Then the data center&rsquo;s developer &mdash; an outfit called Related Digital &mdash; sued the township.&nbsp;
The township had precious little money to fight deep-pocketed companies with an army of lawyers &mdash; and so it opted to settle the case. Under a court-ordered agreement, The Barn will get a 50% property tax abatement for the next 12 years.
And so on June 1, Gov. Whitmer was joined by OpenAI&rsquo;s Sam Altman and Oracle CEO Clay Magouyrk for a ribbon-cutting ceremony.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After the ceremony, Whitmer was chatting it up with Oracle&rsquo;s Magouyrk &mdash; and inadvertently laid the game bare for all the world to hear.
Admittedly the audio is muddy. But no one, least of all Whitmer, has stepped forward to challenge the interpretation that soon went viral. (You can click on the image to listen for yourself&hellip;)
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4Z0AIDJRDh5OX2qSNN20PF/2f32129160038795c6df04da68e18dbd/FMF-Issue-072426-2.png" alt="Click here to learn more" width="540px" />
Which is in keeping with Whitmer&rsquo;s governing style, writes Detroit News columnist Kaitlyn Buss.
&ldquo;Whether the issue was COVID restrictions, corporate subsidies, electric vehicle mandates, energy policy or now data centers, the pattern is familiar. Public opposition is treated not as a legitimate obstacle to overcome but as background noise to manage.&rdquo;
➢ Bonus points: The VP of the developer&rsquo;s parent company is married to Michigan Secretary of State Jocelyn Benson, who&rsquo;s running to succeed Whitmer as governor next year.
So the story&rsquo;s over? Hardly.&nbsp;
Opponents of the project have every reason to worry about government retribution &mdash; as do opponents of data centers everywhere. 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" />Anti-Data Centers? There&rsquo;s a Watch List for That
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> When it comes to AI, both federal and state law enforcement are surveilling what Wired magazine calls a &ldquo;new and worryingly broad category of people and activities deemed an emerging threat.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3E4bREGSDqs9nBjEMzgqDE/dd978565d62f87b0a6d8398f86fa7e08/FMF-Issue-072426-3.png" alt="Wired Magazine" width="540px" />
Earlier this year, Wired got its hands on more than 1,000 pages of unpublished reports from Homeland Security, the FBI and &ldquo;fusion centers&rdquo; that link the feds with local police agencies.
The reports come on the heels of National Security Presidential Memo 7 &mdash; a document signed by Trump last year that instructs the Justice Department to target people with &ldquo;anti-American,&rdquo; &ldquo;anti-Christian&rdquo; and &ldquo;anti-capitalism&rdquo; views.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Now you might think in the context of AI, the feds are simply zeroing in on militant types &mdash; like the fellow accused of trying to firebomb the San Francisco home of OpenAI&rsquo;s Sam Altman.&nbsp;
You know, the sort of people the FBI labels &ldquo;anarchist violent extremist actors.&rdquo;
Not so.&nbsp;
For instance, one document describes how the fusion center in northern Virginia &mdash; home to the world&rsquo;s biggest concentration of data centers &mdash; is trying to sniff out potential attacks on data centers before they happen.&nbsp;
&ldquo;But in the breakdown of Suspicious Activity Reporting indicators,&rdquo; <a href="https://www.wired.com/story/us-law-enforcement-warns-of-anti-tech-extremism/">writes</a>Wired&rsquo;s Daniel Boguslaw, &ldquo;the intelligence report lists activities that could easily be carried out by peaceful protesters, legal experts say&hellip; [A] category like &lsquo;anti-tech extremism&rsquo; could be drawn so broad as to ensnare peaceful data center protesters, AI skeptics and anyone with a bone to pick with technology that permeates modern life.&rdquo;
Says Spencer Reynolds of the NAACP Legal Defense Fund: &ldquo;These intelligence reports are part of a long tradition of agencies identifying protest or even simply having strong opinions as precursors to violence.&rdquo;
And so if you organize a data center protest in your community&hellip; you run the risk of a visit from the cops if you criticize public officials a little too forcefully on social media. They&rsquo;ll construe it as a &ldquo;threat.&rdquo;
Examples abound: <a href="https://x.com/TPV_John/status/2066692340257833375">Here&rsquo;s an especially outrageous one</a>, with the caveat we don&rsquo;t know when or where it took place.&nbsp;
These are deeply concerning developments wherever you fall on the red-blue political divide &mdash; as you&rsquo;ll see momentarily.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Data Centers Scramble the Red-Blue Divide
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The power elite&rsquo;s agenda couldn&rsquo;t be clearer &mdash; and it&rsquo;s not just about President Trump and Gov. Whitmer.&nbsp;
In May we took note when finance bigwigs like BlackRock&rsquo;s Larry Fink <a href="https://paradigmpressroom.com/post/backlash-data-centers/#2">implied that anyone who opposes data center construction might be a budding domestic terrorist</a>. This month we perked up when The New York Times among others <a href="https://paradigmpressroom.com/post/ai-data-centers-and-chinese-stooges">suggested that data-center opponents are dupes</a> of the Chinese and Russian governments.&nbsp;
Politico is out with a new poll trying to frame data-center resistance as a mostly Democrat thing, given an upswell in Democratic opposition the last six months.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/s9NspmOnThBPmpjuxTVYl/e50b3374df9950e58de20f24dcaa35cc/FMF-Issue-072426-4.png" alt="Politics split on data centers" width="540px" />
But GOP opposition is growing too &mdash; and polling data doesn&rsquo;t fully capture on-the-ground reality.&nbsp;
In May, we <a href="https://paradigmpressroom.com/post/backlash-data-centers">spotlighted</a> the opposition to a sprawling data center project in Box Elder County, Utah &mdash; which backed Trump in the 2024 election with 79% of the vote.
Last weekend brought dozens of protests nationwide &mdash; an effort spearheaded by Women for Trump founder Amy Kremer.
Either Trump doesn&rsquo;t know about these developments &mdash; or he knows and doesn&rsquo;t care.&nbsp;
Maybe he too is getting &ldquo;used to people saying &lsquo;f*ck no&rsquo; and then doing it anyway.&rdquo;
One thing&rsquo;s for sure: <a href="https://paradigmpressroom.com/post/spacex-partners-with-rival">Elon Musk&rsquo;s data centers in space</a> can&rsquo;t come soon enough.
OK, let&rsquo;s turn to the markets today&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Markets Today: All Hail the Pakistani Generals!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Aaaand&hellip; here we go with &ldquo;news&rdquo; designed to depress the oil price and lift the stock market.
From Reuters: &ldquo;Pakistan is exploring a path towards a resumption of stalled U.S.-Iran talks over ending their nearly five-month-old war, three Pakistani sources said, following a push initiated by China.&rdquo;
Ah, the good old Pakistani generals! Been weeks since we&rsquo;ve heard from them.
Let&rsquo;s see: There&rsquo;s still next to no oil moving through the Strait of Hormuz. The Bab al-Mandab at the south end of the Red Sea is a no-go for many tankers.&nbsp;
And now Bloomberg reports that China is snapping up all the Russian oil it can to offset any further losses from the Middle East. That means European buyers of Russian oil will have to turn to the United States instead.
➢ Just in: U.S. embassies throughout the Middle East have issued a unified security alert warning of possible &ldquo;unforeseen escalation&rdquo; in the Persian Gulf.
But whatevs. The Pakistani generals are good enough to drive down U.S. oil futures by 4% to $88.42. We can have a sub-$90 close this afternoon before Washington steps up its attacks after 4:00 p.m. EDT.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2CXHPUj4QapaqtkkqVDynP/0fe259275a5644e994111bb7e47d47e4/FMF-Issue-072426-5.png" alt="Calvin froedge post" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Sure enough, the major U.S. stock indexes also responded to the Reuters story.
For the first hour or so of trading, the S&amp;P 500 was little changed from yesterday&rsquo;s close. But now it&rsquo;s up more than a half-percent at 7,450. Likewise the Nasdaq recovered its early losses and is slightly in the green now.
The big earnings report that came out after the market closed yesterday was Intel. The numbers were great &mdash; sales up 25% from a year earlier, comfortably ahead of Wall Street analysts&rsquo; estimates.
But as was the case with Google and Tesla yesterday, Mr. Market worries that all Intel&rsquo;s spending will have an uncertain payoff &mdash; and that yesterday&rsquo;s numbers are as good as it gets for the rest of the year. INTC shares are down over 4% on the day.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1GvqonpG9OyAcH8rM3IzNM/b25929c4260182d644e637ed3fff24c8/FMF-Issue-072426-6.png" alt="Tommy Thornton post" width="540px" />
As the week winds down, we&rsquo;ll note several wins Paradigm readers have booked in recent days&hellip;
<ul>
<li>20% in two months on the defense contractor RTX for readers of Enrique Abeyta&rsquo;s The Maverick &mdash; a classic rebound after a bad earnings reaction during the spring</li>
</ul>
<ul>
<li>After Tesla&rsquo;s rotten quarterly numbers noted here yesterday, subscribers to Zach Scheidt&rsquo;s Income Alliance booked 72% gains on a put-option play</li>
</ul>
<ul>
<li>Ray Blanco urged his Catalyst Trader readers to grab 37% gains after nine months of holding Agios Pharmaceuticals</li>
</ul>
<ul>
<li>And members of the Paradigm Mastermind Group collected 570% after 20 months on a combined AI-crypto play. That&rsquo;s just half the position; James Altucher is urging readers to let the rest ride.</li>
</ul>
Elsewhere, precious metals are modestly in the green with gold at $4,063 and silver at $58.45. But crypto is losing ground with Bitcoin under $64,000 and Ethereum approaching $1,850.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Yesterday&rsquo;s market action brought a rare event &mdash; one that doesn&rsquo;t bode well for stocks in the near term.
On the Paradigm mobile app, trading pro Enrique Abeyta notes that both the S&amp;P 500 and the Nasdaq 100 &ldquo;gapped&rdquo; down 1% on the open&hellip; while oil futures spiked 5% at the same time.
An obscure stat? Perhaps. But &ldquo;this has happened only six times in the last 20 years,&rdquo; says Enrique &mdash; &ldquo;with most of those being in 2026.&rdquo;
The others occurred in early 2011 and early 2022. On both occasions &ldquo;it did not bode well for the stock market in the coming six months.&rdquo;
Combine that with the fact that stock market performance is usually punk going into this time of year anyway, &ldquo;we would be patient in buying dips right now.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Seeing as we started today&rsquo;s edition with bipartisanship, we&rsquo;ll end it the same way.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4z7EEHXb259oJa5NuSudZz/3cb7e4a1680077907b3bbcdcf917c1b2/FMF-Issue-072426-7.png" alt="40 trillion national debt" width="540px" />
Haven&rsquo;t forgotten about the mailbag replies after <a href="https://paradigmpressroom.com/post/socialism-then-and-now">yesterday&rsquo;s socialism edition</a> &mdash; we&rsquo;ll get to it Monday!

FMF-Issue-072426-Featured

MAGA 🤝 Lansing

<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, Then and Now
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Socialism is a failed economic theory,&rdquo; Colorado&rsquo;s Democratic Gov. Jared Polis said last night on Fox News. &ldquo;I think it&rsquo;s important to talk about the dangers of socialism.&rdquo;
We&rsquo;ll take up the governor on his challenge today.
Actually we took up the challenge years ago &mdash; <a href="https://5minforecast.com/2019/11/14/whos-afraid-of-a-little-socialism/#105">a few weeks before the first votes were cast in the 2020 presidential primaries</a>, in fact.&nbsp;
That&rsquo;s because in late 2019 a poll showed 70% of millennials willing to vote for a socialist like Bernie Sanders &mdash; significant because 2019 was also the year demographers said millennials surpassed boomers as the largest living adult generation.
Your editor was concerned, but not panicked.&nbsp;
At the time, no one used the term &ldquo;socialism&rdquo; in its original sense &mdash; state ownership of the means of production. &ldquo;Socialism&rdquo; simply meant a system of &ldquo;free&rdquo; or heavily subsidized health care, higher education and so on.&nbsp;
Which wasn&rsquo;t the worst thing in the world. In fact, research from JPMorgan Chase found that compared with the United States, the &ldquo;socialist&rdquo; Nordic countries had stronger protections of property rights and exerted less control over private enterprise.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But that was in 2019. Bernie Sanders is almost 85 now. The &ldquo;socialist&rdquo; torch has been picked up by a new &mdash; and evidently more militant &mdash; generation.
Perhaps its most famous member is <a href="https://paradigmpressroom.com/post/whos-afraid-of-zohran-mamdani">New York&rsquo;s mayor Zohran Mamdani</a> &mdash; who&rsquo;s 50 years Sanders&rsquo; junior.
In recent weeks, Paradigm&rsquo;s macroeconomics maven Jim Rickards has been sounding the alarm with his readers about the advent of congressional candidates aligned, like Mamdani, with the Democratic Socialists of America.
In a handful of primaries this summer, DSA candidates have knocked off center-left incumbents in safely Democratic districts. One of those victories came in Denver &mdash; hence the concern on the part of Colorado&rsquo;s Gov. Polis.&nbsp;
Once sworn in next January, they&rsquo;ll combine forces with the so-called &ldquo;Squad&rdquo; led by Rep. Alexandria Ocasio-Cortez (D-New York) to comprise a faction of about a dozen members who could make or break major legislation.&nbsp;
To hear Jim tell it, this generation is much more radical and you wouldn&rsquo;t be out of line to call them communist: &ldquo;They give it away when they talk about &lsquo;the means of production&rsquo; and &lsquo;the abolition of private property.&rsquo; Those phrases are straight out of Karl Marx.
&ldquo;They favor wealth taxes. That means after you pay income tax and invest the remainder, they want to tax the assets themselves, not just the income. Some people might have to sell their homes to raise the cash needed to pay the wealth tax on their portfolios.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Investors need to know what&rsquo;s coming before the DSA knocks on your door and tries to move in,&rdquo; Jim goes on.
In recent dispatches to Strategic Intelligence readers, Jim counsels residents of deep-blue states to consider moving elsewhere; as mentioned here last Saturday, a wealth tax is on the ballot in California this fall.
If that&rsquo;s too extreme a step, he advises reducing exposure to stocks &mdash; because they&rsquo;re a target for wealth taxes &mdash; and increasing exposure to cash and physical gold. &ldquo;Gold can preserve value and is difficult to trace. There is no government reporting requirement for privately held physical gold.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And there&rsquo;s another step to consider, one that could make the most difference &mdash; &ldquo;strategic empathy&rdquo; for younger voters answering the siren song of socialism.
&ldquo;Strategic empathy&rdquo; is the term coined by an anonymous account on X called &ldquo;Election Wizard,&rdquo; which is affiliated with the predictions market Kalshi.&nbsp;
It simply means you&rsquo;ve got to understand where younger people are coming from if you&rsquo;re going to have a prayer of persuading them to see things a different way.
&ldquo;Millennials got hit at two critical moments,&rdquo; Election Wizard writes. &ldquo;Many entered the workforce during the 2008 financial crisis, when jobs were scarce, wages were weak and a lot of them were already carrying student debt. Then, just as many were finally building some wealth, COVID-era inflation hammered their purchasing power.&rdquo;
[Which is why they were <a href="https://5minforecast.com/2021/02/01/the-millennials-revenge/">piling into meme stocks in early 2021</a>, by the way&hellip;]
Gen Z didn&rsquo;t have an adult experience of 2008&hellip; but many of them entered the workforce during the pandemic, and likewise feel as if they can&rsquo;t get ahead.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Furthermore, Election Wizard reminds us that millennials and Gen Z have little conception of what communism is all about.&nbsp;
&ldquo;They didn&rsquo;t live through the Cold War, the Berlin Wall or the Soviet Union. And given the state of American education, you can&rsquo;t assume they were ever seriously taught about the mass murder, repression, famine, gulags and human misery communist regimes produced.&rdquo;
Election Wizard says these generations are absolutely persuadable: &ldquo;In 2024, younger voters moved sharply to the right, while voters 65 and older shifted slightly toward Harris. Millennials and Gen Z do not belong to the left. They are now a large and powerful voting bloc, politically restless, economically frustrated and looking for someone who seems serious about ripping out what they think is broken.&rdquo;
And if Republicans don&rsquo;t deliver policies that give them a chance to better their circumstances?&nbsp;
Well, then, &ldquo;a charismatic radical like NYC Mayor Mamdani will take their anger, give it a target and turn it into power.&rdquo;
OK, your turn: How concerned are you about the socialist wave? And what, if anything, are you doing about it? (&ldquo;Vote harder&rdquo; is not an answer, heh.) Write here &mdash; <a href="mailto:feedback@paradigmpressroom.com">feedback@paradigmpressroom.com</a> &mdash; and we&rsquo;ll share your feedback either tomorrow or 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" />Tech Tanks
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Gee, what should we tackle first as we turn our attention to the markets today? Soaring oil prices or tanking tech shares?
The tech sector is falling out of bed with Google parent Alphabet having delivered its quarterly numbers after the closing bell yesterday.
The revenue and earnings numbers were great. But Mr. Market is deeply concerned about the accelerating pace at which GOOG is investing in AI infrastructure such as data centers.
&ldquo;For the full year 2026,&rdquo; says Paradigm trading pro Enrique Abeyta, &ldquo;they raised spending by almost 10% and said 2027 will &lsquo;increase significantly.&rsquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/71sjmzLYBq6voulmBYQ4Z/2884058a54800f09b142d42bcba4c59a/7.23_5_Bullets_Chart.png" alt="Data Centers cost Money" width="540px" />
Result: GOOG&rsquo;s free cash flow &mdash; the money left over after meeting both operating and capital expenses &mdash; has now gone negative for the first time in over a decade.
Time was that these Big Tech companies had money to burn. No more&hellip;
So what does it all mean? &ldquo;At some point these companies are going to have to rein back the spending,&rdquo; Enrique says &mdash; &ldquo;but it doesn't look like that is today!&rdquo;
Indeed, &ldquo;this AI buildout isn&rsquo;t stopping,&rdquo; affirms Davis Wilson of our sister e-letter The Million Mission.
It&rsquo;s bad news for GOOG today &mdash; down 7% as we write. It&rsquo;s also bad for the other &ldquo;hyperscalers&rdquo; staring up the same intimidating capex cliff. Microsoft is down 3%, Oracle 4.5%, Meta 4.75% and Amazon 5%.
But&hellip; looking ahead a few weeks and months, Enrique says all that spending will benefit semiconductors and other AI infrastructure plays. Sure enough, the Philadelphia Semiconductor Index is holding up fairly well under the circumstances &mdash; down 1.5% on the day.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Overall, however, it&rsquo;s a miserable day for the major U.S. indexes &mdash; especially the tech-heavy Nasdaq.
Checking our screens the Nasdaq is down 2.6% and in danger of cracking below 25,000 for the first time since the end of April.
GOOG wasn&rsquo;t the only &ldquo;Magnificent 7&rdquo; name to report its numbers yesterday. So did Tesla &mdash; whose earnings fell short of Wall Street&rsquo;s expectations. TSLA is down nearly 13% on the day.
The S&amp;P 500 is holding up a little better &mdash; down 1.4%. But it&rsquo;s broken below 7,400 for the first time in nearly a month.
The Dow is holding up best, down 1% but well beneath 52,000 now.
<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" />Another Oil Chokepoint
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. oil futures are up nearly 6% to a six-week high now that both of the major &ldquo;chokepoints&rdquo; for Middle East oil shipping are snarled up.
By now you&rsquo;re familiar with the Strait of Hormuz &mdash; through which traffic is still barely 10% of prewar levels. And that&rsquo;s on a good day.
But as we anticipated last week, traffic is now severely curtailed through the Bab al-Mandab &mdash; at the south end of the Red Sea.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1JUmyR8c90v8wMXyurpvqA/34fc6838db546e1930a7a521db099a24/FMF-Issue-072326-1.jpg" alt="Oil chokepoint" width="540px" />
Fighting flared up last week between Saudi Arabia and Yemen&rsquo;s Houthi faction for the first time since 2022.&nbsp;
Overnight, the conflict turned into another front in the broader Middle East crisis &mdash; as the Houthis (loosely aligned with Iran) fired missiles and drones on two Saudi Arabian oil tankers in the Red Sea.
This is problematic in the extreme for Saudi Arabia. While the Strait of Hormuz has been closed, the kingdom has kept oil flowing to the rest of the world via a pipeline stretching westward to the Red Sea, where it&rsquo;s loaded onto tankers.
But if that oil can&rsquo;t move south through the Bab, it has to instead move north through the Suez Canal&hellip; and then all the way around Africa to its Asian destinations, which adds 40-plus days to the trip. Worse, the largest tankers are too big for Suez &mdash; which means the crude has to be transferred to smaller vessels and then back onto larger ones.
Still&hellip; not all Saudi Arabian crude is stymied. We&rsquo;re seeing credible reports that vessels bound for China are still allowed to get through. Funny how that works.
What a mess. Little wonder U.S. oil futures are back over $92. And Brent futures &mdash; the global benchmark &mdash; are over $100.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Once more, rising oil prices are feeding rising inflation expectations&hellip; and thus rising interest rates.
The yield on a 10-year U.S. Treasury note punched through 4.7% today &mdash; the first time that&rsquo;s happened since January 2025. And the 30-year bond? Hoo boy&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/HPoJjzaA9wk8OP8SKy5ue/c2f94bbd070506313dca6629e4b78538/FMF-Issue-072326-2.jpg" alt="Oil Prices are feeding rising tweet" width="540px" />
But rising rates feed through to lower precious metals prices. All of yesterday&rsquo;s gold gains have been vaporized, and then some &mdash; the bid back to $4,048. And silver&rsquo;s down two bucks to $57.60.
Crypto is likewise giving up much of its gains the last 24 hours &mdash; Bitcoin back under $65,000 and Ethereum below $1,900.
<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" />Follow-Ups: Truth Social Pay-for-Play, DOGE Scam
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK, it appears Wall Street lawyers have caught on to <a href="https://paradigmpressroom.com/post/the-price-of-admission">the problem we spotlighted Monday</a> with a new scheme surrounding Donald Trump&rsquo;s Truth Social platform.
As we mentioned at the time, Trump Media (DJT) wants to charge banks and hedge funds for early access to posts by the president as well as Donald Jr. and other major names on Truth Social.
On CNN, some reporter dweeb said the scheme was legal because other social media firms like X and Meta do the same thing.
Whelp, maybe it&rsquo;s not so legal after all.&nbsp;
The Financial Times interviewed a couple of law professors who raised red flags similar to the ones yours truly raised here on Monday.
&ldquo;If I were the general counsel of any of these institutional investors I would say, &lsquo;Don&rsquo;t even touch this unless Truth Social will guarantee there will be no advance notice of any posts that contain information about the actions of the United States government,&rsquo;&rdquo; says Richard Painter, a corporate law prof at Minnesota and an ethics adviser to the Bush 43 administration.
Trump and other administration officials &ldquo;have no business commercializing information that they generate in their official positions,&rdquo; adds Duke&rsquo;s James Cox.
And yet&hellip; Wall Street firms might still choose to bite. &ldquo;His tweets move markets so we all need to pay up,&rdquo; an anonymous hedge fund exec tells the FT &mdash; although he adds &ldquo;it&rsquo;s so bad that nothing surprises me in that sense anymore.&rdquo;
File that one under &ldquo;Don&rsquo;t hate the players, hate the game.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, you can&rsquo;t make this stuff up: Some of the DOGE boys who were hired to reduce government spending are now pursuing government contracts.
<a href="https://paradigmpressroom.com/post/civil-war-by-another-name#4">You remember DOGE, right?</a> The effort spearheaded by Elon Musk to slash federal spending by $2 trillion a year? Musk commissioned young ambitious tech bros to sift through the government&rsquo;s books in search of savings.
The original $2 trillion goal then became $1 trillion. And then $150 billion. And in the end, <a href="https://paradigmpressroom.com/post/will-america-tariff-itself#3">about $9 billion or 0.1% of the federal budget</a>. DOGE formally ceased to exist by November 2025.
But now the Reuters newswire, citing three anonymous sources, reports that &ldquo;a team of former DOGE employees have raised a major funding round for a startup that aims to use AI to expand U.S. military cyber capabilities&hellip;
&ldquo;The startup, called Cathedral, was launched in recent months with a plan to secure U.S. government contracts&hellip; As part of the plan the company is looking to acquire a data center, or partner with a data center provider that can provide dedicated compute power to the cyber operations.&rdquo;
Potential valuation of the company &mdash; $1.4 billion.
It&rsquo;s at this moment we invoke the author Charles Goyette&rsquo;s lament way back in 2009: &ldquo;America&rsquo;s national government has moved way beyond a political spoils system. America has become a pi&ntilde;ata: Everybody gets a crack at it. Presidents and other elected officials pass the big stick around as a reward to those who help keep them in charge of the pi&ntilde;ata party.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We wind up today&rsquo;s edition in more or less the same place where we started&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1JJVwql1nir8IvLQ81r7bl/37b1ff9b25c5be9fb8e64a7bea668412/FMF-Issue-072326-3.jpg" alt="Bitcoin for freedom tweet" width="540px" />

FMF-Issue-072326-Featured (1)

 Socialism, Then and Now

<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" />Gasoline, Stocks and the Elections
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Ugh &mdash; it&rsquo;s 106 days until the midterm elections.
Donald Trump is not on the ballot, but his administration&rsquo;s policies are.&nbsp;
A few months ago, plans were to have Trump campaign as aggressively as if it were a presidential election year. &ldquo;He&rsquo;s going to campaign like it&rsquo;s 2024 again,&rdquo; said White House chief of staff Susie Wiles last December.
Then Trump launched a war against Iran. The national average gasoline price shot up from $3.07 at the end of February to $4.61 by Memorial Day.
&ldquo;The single most important determinant of the outcome of the midterm elections may be the price of gasoline at the pump,&rdquo; says Paradigm macroeconomics maven Jim Rickards.&nbsp;
&ldquo;That&rsquo;s easy for Americans to understand because they see it every day. The price of gas is a good proxy for inflation in general because everything you buy gets delivered to your store or your door by a vehicle that runs on gasoline or diesel.&rdquo;
For a while, the good news for Trump was that gasoline prices were trending down amid a ceasefire and a tentative deal with Tehran &mdash; back to $3.91 by Independence Day.&nbsp;
From the standpoint of electoral politics, that&rsquo;s good enough for an incumbent president. &ldquo;Americans care more about the trend than the level,&rdquo; Jim says.
But the war&rsquo;s been back on for more than a week. Gas is back over $4. And while there&rsquo;s still a long time between now and Election Day, there&rsquo;s zero sign of de-escalation right now.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> That said, Trump can &mdash; and does &mdash; still hang his hat on the stock market.
&ldquo;Trump has increasingly cast Wall Street's gains as a measure of his presidency, treating record stock prices as proof that his policies are working,&rdquo; says the Reuters newswire.
&ldquo;Trump routinely cites a rising stock market as a signal of a thriving country, raising the theme during meetings with global leaders, at rallies, even at military ceremonies. In June, before awarding three servicemembers the Medal of Honor, the highest U.S. military recognition, Trump told his audience, &lsquo;The stock market just hit a new all-time high, the 401(k)s are at a new all-time high and oil is dropping like a rock&rsquo;.&rdquo;
But this too is problematic, Jim tells us: &ldquo;Lower-middle-income and poorer voters, in many cases, don&rsquo;t even have 401(k)s. They&rsquo;re not impressed by claims about the stock market.
&ldquo;Markets are also extremely volatile. Stock indexes can go from all-time highs to declines of 30% or more in a matter of weeks. That happened in early 2020. We&rsquo;re not saying that will happen now. We&rsquo;re simply pointing out that it could, in which case Trump&rsquo;s message could turn to mud in a heartbeat.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Which brings us back to a fascinating chart we share here from time to time.
It comes from Bespoke Investment Group. It compares the performance of the Nasdaq Composite during the 1990s dot-com boom and the current AI boom.
It sets the starting point for the dot-com boom with the introduction of the Netscape web browser in December 1994&hellip; and the starting point for the AI boom with the rollout of ChatGPT 3.5 in November 2022.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1ujzwQWUjY9Hc4EZ4EYNoX/54a4cafc0872cfd90f75c7f872af86e7/FMF-Issue-072126-1.png.jpg" alt="pub" width="540px" />
More than 3&frac12; years after ChatGPT burst into public consciousness, the two lines on this chart have tracked &mdash; well, not perfectly but spooky-close. For instance, the &ldquo;Liberation Day&rdquo; tariff scare of 2025 tracks neatly with the &ldquo;Asian contagion&rdquo; of 1997 &mdash; when markets were jolted by currency crises and bank runs overseas.
Which brings us to the present moment &mdash; or should we say, roughly this time in 1998.
The Nasdaq closed over 2,000 for the first time on July 20 that year. From there, it took a steep tumble. Markets were freaked out by the Russian government defaulting on its debt &mdash; which set off a domino effect that ultimately took down the U.S. hedge fund Long Term Capital Management. The Nasdaq bottomed on Sept. 1 at 1,475.&nbsp;
The index took a 26.5% spill in six weeks. Ouch.
Of course, as you can see on the chart, the Nasdaq went on a tear after that &mdash; more than tripling over the next 18 months as the dot-com boom turned into a bubble.
But if the two lines on this chart continue to track as tightly as they have up till now&hellip; that won&rsquo;t help Donald Trump at all in the second half of 2026.&nbsp;
The Nasdaq touched an all-time high of 27,093 on June 2 &mdash; and it&rsquo;s been chopping sideways since. No guarantees of a 25% spill from here&hellip; but all the same it can&rsquo;t be ruled out.
&ldquo;Supporters wish Trump and Republican candidates well,&rdquo; Jim Rickards concludes. &ldquo;But placing your policy chips on the stock market casino can easily become a losing bet.&rdquo;

[Editor&rsquo;s note: If you&rsquo;re reading this, then you still haven&rsquo;t accessed the file drop that Jim Rickards recently authorized for you.
As a result, your access key is currently on hold and scheduled for deactivation.
<a href="https://pro.paradigm-press.info/m/2531993">Click here to learn how to activate now.</a>]
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Rising Oil, Rising Rates
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. oil futures have sailed past $85 for the first time since mid-June as global oil flows become more and more constrained.
U.S. airstrikes continue to target the Iranian coastline. Iranian airstrikes continue to target U.S. bases in Bahrain, Qatar and Kuwait. Iranian forces are also taking aim at oil tankers that attempt to transit the Strait of Hormuz without their permission.
At the risk of beating a dead horse, here&rsquo;s another chart of the traffic &mdash; or lack thereof &mdash; transiting Hormuz.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1BjglxgpNriX45tmA8R2UM/e697e2df455ea8cc831f082ff9be2575/FMF-Issue-072126-2.jpg" alt="pub" width="540px" />
Also, for the first time since the war&rsquo;s earliest days in March, Tehran claims to have struck an Amazon data center in Bahrain &mdash; a claim that no one is denying.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And all of this is happening at a time when Ukraine&rsquo;s drone attacks are starting to pinch Russia&rsquo;s oil production and exports.
&ldquo;Ukraine has developed a new capability. Its drones can now hit targets 1,500 miles into Russia. And their targets are refining and storage,&rdquo; says Paradigm natural resources pro Matt Badiali.
&ldquo;Ukraine&rsquo;s drones have hit so many refineries that Russia &mdash; the world&rsquo;s third-largest oil producer &mdash; now has to ration fuel. It suspended diesel exports for the rest of July and began importing gasoline from India.
&ldquo;The U.S. and Ukraine are following the Allied war plan from World War II in their respective conflicts. The Allies crippled Germany&rsquo;s war machine by bombing its fuel lines. You can&rsquo;t move a tank without diesel, and you can&rsquo;t fly planes without jet fuel.
&ldquo;Modern economies are exactly the same. You can cripple an economy by simply making fuel prohibitively expensive.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Once more, rising oil prices are translating to rising inflation expectations &mdash; and rising interest rates.
The yield on a 10-year Treasury note is up to 4.62% today. Aside from a day or two in mid-May, the 10-year yield hasn&rsquo;t been this high in 18 months.
In other words, the bond market is getting nervous. Previous episodes like this during 2026 have prompted some sort of conciliatory gesture from the Trump administration toward Tehran &mdash; the better to bring down oil prices, bring down inflation expectations and ultimately bring down interest rates and the cost of financing Uncle Sam&rsquo;s gargantuan debt.
Right now, that prospect is not in view. Trump says Tehran is desperate for a deal&hellip; but he has no interest in one.
<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" />ASTS: Antacid, Anyone?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Volatility, thy name is AST SpaceMobile.
As you likely know, ASTS is a favorite of several Paradigm editors. If you&rsquo;re an ASTS shareholder, you also know it&rsquo;s induced many Maalox moments over the last two months &mdash; starting at $90, sailing past $130, sinking to nearly $65, rising again to nearly $90, sinking to $55.
Oh, and it&rsquo;s up nearly 11% today at $63.60.
We got a concerned note from a reader last week: &ldquo;Please tell me I&rsquo;m sane and someone else is at least doing and feeling the same way because I&rsquo;m sick to my stomach right now literally.&rdquo;
In the first place, we&rsquo;ll tell you to follow the guidance of whatever paid publication you subscribe to. But we can also pass along the following analysis from colleague Davis Wilson of our sister e-letter The Million Mission.
The most recent sell-off came with an out-of-nowhere announcement that current shareholders were being diluted big-time.
&ldquo;Very few investors expected AST SpaceMobile to announce a $1 billion convertible note offering, which is why the stock sold off so sharply,&rdquo; Davis says.
&ldquo;That said, I think it's important to separate the financing from the business. AST isn't raising money because demand disappeared. It's raising money because building a global satellite network requires enormous amounts of capital.
&ldquo;Do I like the dilution? No. Has it changed my long-term thesis? No.
&ldquo;Short term, this is a painful reminder that speculative, pre-cash-flow companies can be extremely volatile.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for today&rsquo;s market action, the chip stocks are leading a revival of the major indexes.
The Nasdaq composite is up 1.3% &mdash; but that&rsquo;s still not enough to get back over the 26,000 level. (Again, that sideways chop mentioned in Bullet No. 1). The S&amp;P 500 is up 0.9% and back over 7,500. And the Dow is up nearly 1% and comfortably back over 52,000.
Precious metals are likewise rallying &mdash; gold up 1.6% to $4,072 and silver up nearly 4.5% to $58.61.
Bitcoin sits over $66,500, the highest since early June. The story with Ethereum is similar at $1,925.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> This might be old-fashioned Photoshop as opposed to AI &mdash; but regardless, it&rsquo;s making the rounds&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1GTj96I810hTIcqMdIh5Oo/034dc43e6488f9fb877727816a46385c/FMF-Issue-072126-3.jpg" alt="pub" width="540px" /> That said&hellip; it&rsquo;s been nearly five years since Dollar Tree gave up on its &ldquo;everything&rsquo;s $1&rdquo; pledge that was good for 35 years &mdash; moving its baseline price point to $1.25.
<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: Conflicts of Interest, China Gold
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After <a href="https://paradigmpressroom.com/">yesterday&rsquo;s edition</a> tackling both Donald Trump&rsquo;s well-timed trades and the early access to his social media posts now up for sale to banks and hedge funds, a reader writes&hellip;
&ldquo;It depends on how you define &lsquo;conflict of interest.&rsquo; In Trump's mind, nothing he or his family does can be a conflict of interest, so nothing to see here &mdash; LOL.&rdquo;
Dave responds: Well, yes.&nbsp;
I hesitated to even take on the topic yesterday &mdash; a reticence that probably came through in the restrained tone of my prose. In the current fraught political environment, there&rsquo;s a razor-thin line between being provocative and being pointlessly polarizing.
But really&hellip; what Trump and family are doing is the stuff of late-stage degenerate empires. And I&rsquo;d say that if it were a Democrat doing it, too. (Which reminds me &mdash; I&rsquo;m still incensed at how the social media giants <a href="https://5minforecast.com/2020/10/16/free-market-my/">suppressed</a> the Hunter Biden laptop story.)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Dave, why isn't the Western financial press talking about the Hong Kong clearing system for gold (Bloomberg: HAU) that goes live in four days?&rdquo; a reader inquires.
&ldquo;This is big, BIG news. The Shanghai Gold Exchange, using Hong Kong as its storefront, is challenging LBMA and COMEX as the global price maker for gold, with no paper market and contracts fulfilled in physical metal. (China is halting &lsquo;paper gold&rsquo; trading, while expanding Hong Kong vault capacity to 2,000 metric tons).
&ldquo;Additionally, with settlement in offshore yuan (CNH), China's currency is about to get overnight street cred with implicit gold backing, similar to the privilege the USD enjoys from its &lsquo;petrodollar&rsquo; status.
&ldquo;Anyone remember Xu Luode, chairman of the Shanghai Gold Exchange, remarking in 2014, &lsquo;When China has the right to speak in the international gold market, the true price of gold will be revealed.&rsquo; Well, China is finally de-rigging the paper casino and kicking out the three-card monte dealers. Zero Hour is upon us.&rdquo;
Dave responds: Clearly you&rsquo;re a long-term reader. &ldquo;Zero Hour&rdquo; was a term we coined way back in 2013 to describe a future point in time when the price of physical gold you hold in your hand would break dramatically higher from the heavily manipulated &ldquo;paper price&rdquo; commonly quoted in the media (and here, for that matter).
No one will be more delighted than I to be proven wrong here&hellip; but I&rsquo;m skeptical that we&rsquo;re looking at some sort of imminent game-changer.
It is certainly true that China is more or less reinventing the process of clearing and settling gold trades &mdash; bypassing the rigged systems of London and New York. But to what end?
In a recent commentary, Chris Powell of the Gold Anti-Trust Action Committee raised an uncomfortable question, invoking a long-ago comment of our own Jim Rickards along the way&hellip;
<blockquote>&hellip; even fans of the monetary metals who will welcome a challenge to the London and New York gold rackets may do well to wonder: Why wouldn't China itself have reasons to manipulate the gold market it has created, to use it to attack the currencies of its adversaries or to help place the yuan at more convenient levels of valuation? After all, China already openly rigs the yuan market every day.&nbsp;</blockquote>
<blockquote>In 2009 financial and geopolitical analyst Jim Rickards was <a href="https://www.gata.org/node/7835">allowed</a> to remark on CNBC, "When you own gold you're fighting every central bank in the world":</blockquote>
<blockquote>The enemy of your enemy is indeed your friend &mdash; sometimes, and maybe for a while. But why should any gold advocate think that the totalitarian regime in Beijing is any more trustworthy than the corrupt regimes in London and Washington?</blockquote>
It all comes back to a wonderful line from James Norman&rsquo;s book The Oil Card: &ldquo;Nation-states behave with logics, moralities and imperatives all their own. Who can know them? When these elephants rage, we pygmies are trampled. It pays to know when to get out of the way.&rdquo;
Whatever and whenever the outcome, it won&rsquo;t hurt and will probably help to have physical precious metals in your personal possession.
No, not in a safe-deposit box at a bank. As Jim Rickards has said for years, the moment you want that metal the most will be the moment the government calls a bank holiday&hellip;

FMF-Issue-072126-Featured

Gasoline, Stocks and the Elections

<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 Price of Admission
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;Senior members of the executive branch &mdash; who have access to privileged information &mdash; shouldn&rsquo;t be using it to get rich.&rdquo;
So said Sen. Josh Hawley (R-Missouri) in 2023. It&rsquo;s right there in our voluminous archives: He drew up a bill that would have banned senior executive branch officials from owning or trading individual stocks.
At the time The Wall Street Journal had uncovered all manner of conflict of interest throughout the executive branch &mdash; including 2,600 officials who owned shares of companies overseen by their agencies.
But that was during Bidentime. Near as we can tell, Hawley has lost interest in the cause now that a Republican is back in the White House.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Shortly before the Independence Day holiday, the White House disclosed Donald Trump&rsquo;s stock-trading activity during calendar year 2025.
All told there were more than 21,000 transactions in his accounts &mdash; many of them held in a trust run by Donald Jr.&nbsp;
Perhaps the most eyebrow-raising trades occurred on April 8 &mdash; 327 buys totaling $3.6 million, and no sells.
The next day was when the president walked back a huge swath of his &ldquo;Liberation Day&rdquo; tariffs. The S&amp;P 500 leaped 9.5% higher, the biggest one-day percentage gain since 2008. The Nasdaq soared 12.2%, the biggest one-day percentage gain since 2001.
Wild coincidence? &ldquo;Neither the president nor his family has ever engaged&mdash;or will ever engage&mdash;in conflicts of interest,&rdquo; said White House spokeswoman Anna Kelly.
Given all of the <a href="https://paradigmpressroom.com/post/groundhog-day-iran-edition">suspicious trading activity</a> this year surrounding the Iran war and the various &ldquo;peace is at hand&rdquo; articles from Axios reporter Barak Ravid&hellip; next year&rsquo;s disclosures ought to be a gas.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Last week brought news that the administration is willing to share the wealth, as it were.
From the Reuters newswire&hellip;
<blockquote>Trump Media &amp; Technology Group has unveiled a paid-for, licensed data feed that will give banks and trading firms &ldquo;the fastest&rdquo; access &zwnj;to posts from influential Truth Social accounts, such as President Donald Trump's, whose posts often move global markets.</blockquote>
<blockquote>The product, called "Truth API," will deliver posts from the 10 most influential accounts to customers at a significantly faster pace than a regular push notification on the Truth Social platform, a spokesperson said.</blockquote>
<blockquote>The feed is designed for organizations "most impacted by the cost of a delay in information," such as algorithmic trading firms, the company said in a statement. "Until now... firms that prioritize tracking influential Truth posts have relied on manual monitoring. Truth API closes the gap."</blockquote>
The Financial Times advanced the story with the revelation that potential clients would be charged as much as $100,000 a month &mdash; although clients who committed to a three-year plan would get a discounted rate of $60,000.
On CNN, anchor Dana Bash was beside herself. &ldquo;It appears to be yet another example of the Trump family profiting off of his presidency.&rdquo;&nbsp;
She then debriefed reporter Dave Goldman, who addressed the most obvious question&hellip;
<blockquote>Yeah, it&rsquo;s legal. And this isn&rsquo;t the only company that&rsquo;s doing this. X, owned by Elon Musk, and Meta, others either offer for free or sell high-speed access to the data that&rsquo;s available on their platforms. But here&rsquo;s the key. President Trump owns the platform that he&rsquo;s making news on. And so by selling access to it, he is thereby making money.&nbsp;</blockquote>
<blockquote>Remember, he owns 41% of the parent company, Trump Media, which owns Truth Social. And the company could use some money, Dana, because it only made $3 million in ad revenue last year. It lost, get this, $711 million in operating losses. This is not a profitable company, and they&rsquo;re looking for ways to make some money.</blockquote>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Does Goldman not understand the distinction between Trump Media and X, Meta, etc?
Let me spell it out for him: Unlike X and Meta, the product for sale here is advance notice of proclamations about public policy being implemented with taxpayer dollars.
Really, don&rsquo;t you deserve a cut of the $100,000 per month that banks and hedge funds will be paying for this valuable information? Or better yet, a cut of the profits they make from their advance knowledge?
But good luck suing for redress, even if there&rsquo;s a relevant statute currently on the books.
You could bring millions of your fellow taxpayers together to file a class action, but the courts would surely find some dodge to deny you &ldquo;standing.&rdquo; That is, you didn&rsquo;t suffer direct harm from this arrangement because no one took money from your bank account or your paycheck.
Absent any relief from the courts, your only recourse is the proverbial strongly worded letter.
That, and the fact that several Paradigm trading services such as Altucher&rsquo;s True Alpha and Rickards&rsquo; Insider Intel leverage publicly available information to unearth legal insider activity before market-moving news breaks.&nbsp;
As we said at the time of Hawley&rsquo;s bill in 2023, &ldquo;Get mad or get rich.&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" />&ldquo;Planning for a Wider War&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Another Monday, another claim from Washington that &ldquo;Iran wants to make a deal&rdquo; &mdash; and another dip in the oil price.
U.S. oil futures popped last night to nearly $85 amid the escalation in the Iran war. Citing a Trump administration official, The New York Times said F-16s and F-35s currently based in Europe were being dispatched to the Middle East, as well as additional refueling aircraft.
&ldquo;The U.S. is planning for a wider war,&rdquo; another U.S. official told The Washington Post &mdash; although this individual added the caveat that air defenses and other munitions have been badly depleted already. &ldquo;We do not have enough to safely sustain operations, and I don&rsquo;t think the White House is aware of that.&rdquo;
But then Secretary of State Marco Rubio said Tehran is looking to cut a deal &mdash; and all of Sunday&rsquo;s price pop vaporized. At last check, U.S. oil futures are back to $82.23 &mdash; slightly lower than they were at the end of last week.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />That&rsquo;s even though the war is potentially heating up on its western front &mdash; with the Iran-aligned Houthi faction of Yemen declaring a maritime embargo against Saudi Arabia.&nbsp;
If the Houthis are serious about enforcing this declaration, that effectively cuts off any route for Saudi Arabian oil exports. While the Strait of Hormuz has been shut down, Saudi Arabia has still been able to move some of its oil through a pipeline to its western coast on the Red Sea. From there, it transits the slender Bab al-Mandab waterway to reach Asian customers.
But if access to the Bab is shut down? Then that oil has to go through the Suez Canal and all the way around Africa.&nbsp;
The meme-o-sphere is having great fun with all of this&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/B1Z3dDXXIegcYqCgP8dde/11c19e751d7261f762ac19a8b97ee310/FMF-Issue-072026-1.jpg" alt="Fake Cease fire news MEME" width="540px" />
&hellip; but the powers that be continue to keep a lid on oil futures for the moment.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />As for stocks, the major U.S. indexes are a mixed bag.
<a id="3"></a>
The S&amp;P 500 is up 0.4% to 7,487 while the Nasdaq is up more than three-quarters of a percent to 25,724. The Dow is slightly in the red, but still over 52,000. Congratulations to Rickards&rsquo; Insider Intel readers who booked 50% gains at the end of last week playing call options on ConocoPhillips.
Crypto is regaining some of its recent mojo &mdash; Bitcoin well over $65,000 and Ethereum a hair away from $1,900.
<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" />Gold: The View From Boca
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Gold continues to hold the line on $4,000 as &ldquo;the larger monetary story remains intact for the yellow metal,&rdquo; says Paradigm mining-and-energy authority Byron King.
&ldquo;Central banks continue to diversify reserves. Investors still want an asset that is no one else&rsquo;s liability. And the dollar, for all its current strength and historic staying power, is no longer the unquestioned storehouse of global trust.&rdquo;
Byron delivered a keynote earlier this month at the Rule investment symposium in Boca Raton, Florida &mdash; hosted by the renowned mining financier Rick Rule. What&rsquo;s more, Byron had the chance to speak one-on-one with some of the industry&rsquo;s sharpest minds.
&ldquo;I spoke with Andy Schectman of Miles Franklin, a gold and silver dealer who dwells close to the beating heart of physical metal markets. His point was simple: The world is still buying gold, and much of that buying is strategic, not speculative.
&ldquo;China, for example, has used the recent slump to buy gold &lsquo;off the books,&rsquo; so to speak. This means Chinese buyers are accumulating metal outside reportable state-level channels. According to Andy, you just have to know where to look &mdash; and yes, airplanes are flying beaucoup gold to Chinese ports of entry.
&ldquo;Brien Lundin, who runs the annual New Orleans Investment Conference, made a similar point from the Florida stage. Monetary debasement has not gone away; it has merely been upstaged by louder headlines: Hollywood celebrities, World Cup soccer and Washington soap-opera politics.
&ldquo;Meanwhile, about 40% of the annual U.S. budget is outright deficit, and the national debt continues its space-shuttle trajectory upward. Can or will the U.S. ever pay down its approximately $40 trillion of debt &mdash; and that&rsquo;s just the on-the-books debt? No way.&rdquo;
The dollar price of gold might be down from its January peak, but the Midas metal still &ldquo;protects against monetary disorder.&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" />Russia&rsquo;s Dash for Cash
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />"Having cash on hand gives you some sense of control and security," a woman in Moscow tells the BBC. "If there's an emergency in the city, I know I'll still be able to buy basic necessities, even if the mobile network goes down."
As you might be aware, Ukraine is stepping up its drone attacks deep inside Russian territory &mdash; including the capital. Because drones rely on wireless phone networks to reach their targets, Russian authorities are increasingly resorting to mobile internet shutdowns.
That has the effect of shutting down credit card payments and every other kind of electronic transaction.
Hence, the dash for cash. After reviewing figures from the Russian central bank, the BBC concludes that the nation has added 1.56 trillion rubles into circulation during the first six months of the year &mdash; an amount equal to $20 billion. That&rsquo;s the highest figure on record except for the COVID year of 2020.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Cash isn&rsquo;t just a necessity for transactions: It&rsquo;s also a way to avoid the Russian taxman.
In January the Kremlin boosted Russia&rsquo;s value-added tax from 20% to 22% &mdash; and it lowered the threshold at which smaller businesses have to start paying it.
&ldquo;With margins squeezed by higher taxes and a slowing economy,&rdquo; says the BBC, &ldquo;pharmacies, restaurants, beauty salons and corner shops are increasingly steering customers toward cash to keep more income off the books.&rdquo;
"This is a very worrying moment,&rdquo; says Taras Skvortsov, CFO at Russia&rsquo;s biggest lender Sberbank. &ldquo;We are not seeing cash return to the banking system through cash collection, ATMs or self-service terminals," he tells the Interfax news agency. "It is staying in people's hands".
A survey by a trade group representing small and medium-sized businesses finds 6% of respondents saying they&rsquo;re turning to &ldquo;gray schemes&rdquo; to skirt the tax burden.&nbsp;
And those were the ones willing to fess up &mdash; the real number is likely higher.
<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: Generational Conflict, Continued
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;Hi Dave &mdash; just wanted to reply to a reader who claimed that dads working white-collar jobs outside the home led to the &rsquo;60s protests and hippies.&nbsp;
&ldquo;Firstly, most white-collar jobs were already outside the home prior to the &rsquo;50s. The only difference in the &rsquo;50s as far as I can tell is there was a better relationship between labor and business and hours were more formalized.
&ldquo;So it seems unlikely that dads outside the home led to the hippies seeing as it was already the standard going back to the Industrial Revolution.
&ldquo;But what did change was moms starting to work in the &rsquo;70s partly due to the stagflation at the time, and it increasingly became more common due to stagnant wages and a decline in manufacturing, which as you correctly mentioned were due to end of the gold standard and financialization. There&rsquo;s no signs this can or will be reversed anytime soon.
&ldquo;Anyway, the main point is that the &rsquo;60s and &rsquo;70s upheavals seemed to have partly led to the decline in the nuclear family rather than the other way around.
&ldquo;And to address the tweet about rich parents not having to see their kids struggle, they&rsquo;re not very good parents if that&rsquo;s the case. That&rsquo;s all from me for now.&rdquo;
Dave responds: Thanks for the input. I think we&rsquo;re going to shut down this thread as of today. It started with an ambiguous tweet and went off on several unexpected tangents!

FMF-Issue-072026-featured

The Price of Admission

Picture this: You&rsquo;ve got bad news to break to someone you care about.&nbsp;
You could postpone the deed until it feels like &ldquo;the time is right&rdquo;... or you could rip off the Band-Aid and get it over with right away.
This week a storied American company had bad news to break to its shareholders. It opted to rip off the Band-Aid. Shareholders did not take it well. At all.
Maybe you&rsquo;ve already figured out we&rsquo;re talking about IBM &mdash; mentioned here briefly on Tuesday. Big Blue opted to disclose bad news a few days before it was scheduled to report earnings. Shares took a record one-day tumble of more than 25%.
IBM is a long-term hold in the portfolio of Altucher&rsquo;s Investment Network &mdash; and I do mean long-term, since late 2017.&nbsp;
<h2 style="text-align: center;">IBM: One Bad Quarter. One Big Opportunity.</h2>
In 2007, I was running a hedge fund and writing a column for the Financial Times.
I wrote an article about International Business Machines Corporation (IBM).
My argument was simple: Wall Street had the company completely wrong.
They saw a fading mainframe business with nowhere left to go.
What I saw was a company that was consistently profitable, reinventing itself, and almost entirely ignored by the people who should have been paying attention.
Nineteen years later, that mainframe business Wall Street wanted to bury is still at the center of IBM's story.
This week, IBM announced a preview of next week's earnings.
The mainframe unit came in short, and the stock dropped 27%, one of the worst single-day drops the company has seen in decades.
I'm not going to pretend the drop doesn't sting.
But I've seen how this ends.
The last time Wall Street was this wrong about IBM, the stock outperformed the S&amp;P 500 by 11.5x within five years.
And from where I'm sitting, they're making the exact same mistake again.
<h3 class="spad-subhead2 nbp">Why Nobody Turns the Mainframe Off</h3>
Most people have never heard the word mainframe, so here's what we're talking about.
Mainframes are used for processing credit card transactions, flight bookings, and insurance claims.
Unlike other servers, they can handle tens of thousands of transactions per second, 24 hours a day, every day of the year without missing a beat.
The global financial system runs on them: forty-five of the fifty largest banks in the world depend on these machines, and they've been spending on them reliably for decades.&nbsp;
Then AI changed the math.
That routine upgrade money got redirected toward AI hardware instead &ndash; chips, accelerators, and servers are in short supply globally, with companies front-loading purchases to get ahead of price increases.
Which means that mainframe spending is temporarily on hold.
Wall Street is worried this is a signal that AI is going to replace the mainframe.
That&rsquo;s the part they&rsquo;ve got wrong.
Two thirds of Fortune 500 rely on them, and for good reason.
Many of them have been running mainframes for decades &ndash; and in a lot of cases, the engineers who wrote the original software are long gone.&nbsp;
Nobody inside those companies knows exactly what would happen if they turned the mainframe off, and nobody wants to be the one to find out. You don't replace a system that has never failed, not when failure means every transaction stops.
The bear case on mainframes is wrong. But here&rsquo;s the thing &ndash; the real bull case on IBM has almost nothing to do with mainframes.
<h3 class="spad-subhead2 nbp">The Problem Every Company Has Right Now</h3>
Every company buying AI hardware runs into the same problem almost immediately: they have no idea how to use it. And that&rsquo;s exactly IBM&rsquo;s business.
That's IBM's business.
Before any company can run AI, it needs its data organized.
IBM works with Fortune 500 companies, like Pepsi, Ford, and Verizon, on exactly that problem.
Decades of disorganized data. Spreadsheets in conflicting formats. Paper records. Handwritten notes.
IBM works with Fortune 500 companies like Pepsi, Ford, and Verizon to structure all of it so AI models can actually read it.&nbsp;
Here's why that matters, and why it's not a job that goes to a startup. When a Fortune 500 executive picks a vendor and it fails, that failure belongs to them personally.
IBM has been the safe answer to that problem for decades.
No startup can offer that.
IBM's consulting division is already getting paid for generative AI work.
But enterprise customers are still in the early stages of deployment, and they move deliberately.
The biggest numbers are still ahead of us. The only real question is timing &ndash; and I've been here before on that too.&nbsp;
<h3 class="spad-subhead2 nbp">The Same Bet, Nineteen Years Later</h3>
The column I wrote in 2007 wasn't a prediction that IBM would never miss a quarter.
It was an argument that Wall Street's story about IBM was structurally wrong.
That story is wrong again today.
The miss was concentrated in one unit, while total revenue grew and infrastructure sales hit records.
A 27% drop on that picture isn't a verdict on the company &ndash; it's a reaction to a single number.&nbsp;
I know it hurts if you own the stock. It hurts for me too.
But the thesis hasn't changed: IBM is consistently profitable, reinventing itself again, and positioned at the center of the biggest enterprise technology shift in a generation.
I made this same argument in 2007. Within five years, IBM had outperformed the S&amp;P 500 by 11.5x. I was early then, and I might be early now &ndash; but those are odds I'll take every time.
Dave&rsquo;s final word: Two stories are dueling for Mr. Market&rsquo;s attention going into the weekend &mdash; trouble in tech, and trouble in the Persian Gulf.&nbsp;
The shakeout in chip stocks still isn&rsquo;t over. The Philadelphia Semiconductor Index (SOX) is down another 2.2% as we write. It now meets the conventional definition of a bear market &mdash; down 20% from its peak less than a month ago. Nvidia, meanwhile, just lost its crown as the world&rsquo;s most valuable company. (Apple&rsquo;s back on top.)
That weakness is spilling over into the Nasdaq &mdash; down 1.3%. And the S&amp;P 500 &mdash; down two-thirds of a percent.&nbsp;
Precious metals are licking their wounds from yesterday &mdash; gold just under $4,000 and silver at $55.53. And crypto is pulling back with Bitcoin just over $63,000 and Ethereum at $1,818.
As for the Gulf&hellip; the war is reaching a new and dangerous stage &mdash; pushing U.S. crude futures up another 3% to a one-month high of $81.44.
U.S. airstrikes are now targeting bridges in Iran. There are credible reports that Tehran has retaliated by hitting the King Fahd Causeway that links Saudi Arabia and Bahrain&hellip; as well as power plants in Kuwait and the United Arab Emirates.
&ldquo;Looks like it is going to be a very hot July,&rdquo; writes former CIA officer Larry Johnson on his blog.
We&rsquo;re back tomorrow with our Saturday highlights edition &mdash; where we&rsquo;ll unpack a ballot measure that&rsquo;s touched off a backlash from California&rsquo;s billionaire class. (And it could be coming to a state near you.) Catch you then&hellip;

FMF-issue-071726-Featured

When a Storied Company Stumbles

FMF-Issue-071626-Featured

Look Who Stole Elon’s Playbook

<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" />[UPDATE] Buffett&rsquo;s Sudden About-Face
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Some people refused to believe it.
We kicked off <a href="https://paradigmpressroom.com/post/buffetts-sudden-about-face">our June 23 edition</a> with a bold proposition by Paradigm AI authority James Altucher: Berkshire Hathaway&rsquo;s $10 billion commitment to Google came at the behest of Warren Buffett.
Was it out of character for Buffett? On the surface, absolutely. Buffett invests in tangible things he can readily understand. Insurance, soft drinks, railroads. &ldquo;Technology&rdquo; was never his bag; even his investment in Apple stemmed from the fact AAPL is a consumer-product powerhouse.
And besides, didn&rsquo;t Buffett step down as CEO at the end of last year? Also true.
But none of that mattered, said James.
James said as Buffett sees it, Google parent Alphabet is no longer a &ldquo;technology&rdquo; company. Nowadays it&rsquo;s all about &ldquo;data centers, power grids, cooling systems. The kind of capital-intensive, durable infrastructure Buffett has always understood.&rdquo;
Furthermore, &ldquo;Buffett remains chairman and the largest shareholder. A man who spent six decades watching technology booms from the sidelines doesn't sign off on something like this because a new CEO asked nicely.&rdquo;
A skeptical reader wasn&rsquo;t having it: &ldquo;Really hard to believe that Warren is buying AI,&rdquo; he wrote. &ldquo;In the past Warren has never bought stocks at their highs.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />But here&rsquo;s the man himself&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/TyO4HADLmHxLTYzwqiM2G/56de52d2b521287f66e31c5d91241b98/FMF-Issue-071526-1.jpg" alt="pub" width="540px" />
&ldquo;I initiated it,&rdquo; Buffett said in a CNBC interview this morning &mdash; not his successor Greg Abel.
&ldquo;I am not doing anything that he doesn&rsquo;t approve of. He&rsquo;s not doing anything I don&rsquo;t approve of. We talk all the time, but he is the decider,&rdquo; Buffett clarified.
Buffett said Google meets all his traditional tests. &ldquo;The trick in life is to find &mdash; I mean investing &mdash; is to find businesses that are going to earn high returns on capital for an extended period of time.&rdquo;
The commitment now is even more notable in light of the regret he expressed way back in 2018 about not investing in Google sooner.
&ldquo;When it comes to finding some of the biggest winners in the stock market &mdash; think Google, Microsoft and Nvidia &mdash; one standout feature they share is their absolute dominance in their given sector,&rdquo; James Altucher says.
&ldquo;All of these companies developed a technology so powerful that it set them far apart from their competitors, making them virtual monopolies.&rdquo;
And as far as Warren Buffett is concerned, Google&rsquo;s still got it &mdash; 28 years after it was formed and 22 years after it went public.
<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" />How Long Is Forever?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />The mainstream is worrying about the wrong thing when it comes to the Iran war.
&ldquo;Analysts Warn Conflict Risks Becoming &lsquo;Forever War,&rsquo;&rdquo; says a CNBC headline.
The article quotes a Andreas B&ouml;hm, a lecturer in international affairs at Switzerland&rsquo;s University of St Gallen, who anticipates a years-long conflict &mdash; &ldquo;a long-time low-level conflict and therefore one of the forever wars Trump pledged to end. Each side will try to raise the costs for the respective other until it will become prohibitive.&rdquo;
One problem with that line of thought, says Paradigm macro maven Jim Rickards: &ldquo;The U.S. is running low on cruise missiles, Patriot interceptors, 155 mm artillery shells and other weapons and ammunition. The strain on key stockpiles has become increasingly serious.&rdquo;
Part of the problem is Washington&rsquo;s ongoing support for Ukraine in its conflict with Russia: &ldquo;The Patriot systems supplied to Ukraine have been heavily used and several have reportedly been damaged, underscoring both the intensity of the war and the difficulty of replacing these highly sophisticated weapons. Production remains slow, and replenishing inventories will take years.
&ldquo;Trump recently met with the CEOs of major defense contractors at the White House. According to reports, he berated them for not stepping up weapons production. He seems not to realize that many production lines were shut down years ago, they take years to restart and many of these weapons are so technologically sophisticated they&rsquo;re built in relatively small numbers rather than mass-produced.&rdquo;
So as Jim sees it, a &ldquo;forever&rdquo; war isn&rsquo;t even an alternative &mdash; the current escalation notwithstanding. &ldquo;Trump may discover that sustaining a prolonged conflict is more difficult than ending one.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />For the moment, Mr. Market has once more consigned the war to background noise.
Within the last 24 hours Trump is back to threatening airstrikes on Iran&rsquo;s bridges and power plants. If he follows through on those threats, Tehran will surely lay waste to the oil infrastructure in the Gulf sheikdoms.&nbsp;
Perhaps on the theory that Trump already knows this state of play, U.S. crude futures are little changed from yesterday&rsquo;s close at $79.26.
It being Wednesday, the Energy Department has issued its weekly inventory figures. They show another 3 million barrels of crude drained from the government&rsquo;s Strategic Petroleum Reserve &mdash; plus 1.7 million barrels drained from private-sector reserves. And those figures cover the week ended last Friday &mdash; when there was at least a shred of hope the ceasefire might hold and U.S. crude futures were still around $71.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Nor is there much movement today in the major U.S. stock indexes. They&rsquo;re all down but by less than a fifth of a percent.
Shares of PayPal Holdings are up 16.2% on the news that the online payments firm Stripe is joining up with the private equity firm Advent International to submit a $53 billion bid to buy the company. 10X Trade Club editor Chris Cimorelli has been anticipating a buyout for a while. A month ago he recommended PYPL call options and this morning he recommended closing that trade for an eye-watering 1,782% gain.
Gold is down a bit but still holding the line on $4,000. Silver, however, is down two bucks to $56.59, retesting its late-June lows.
Bitcoin is knocking on the door of $65,000 and Ethereum has surpassed $1,900.
The big economic number of the day is wholesale inflation &mdash; down 0.3% in June thanks in large part to the pause in the Iran war and the resulting drop in energy prices. Still, the year-over-year increase is a blistering 5.5%.
Milestone: Small Nuclear Reactors
<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" />Milestone: Small Nuclear Reactors
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />With little fanfare, the U.S. government met a nuclear-energy goal in time for a July 4 deadline.
We mentioned the effort briefly back in February &mdash; when the U.S. military airlifted a miniature nuclear reactor to an Air Force base in Utah.
The privately held Valar Atomics is one of the companies hoping to make hay with &ldquo;small modular reactors&rdquo; that can be built at their own factory and transported anywhere to produce electricity &mdash; in contrast with the 94 mega-reactors currently in operation around the United States. No taxpayer funds were involved in the stunt; Valar picked up the cost of the flight.&nbsp;
The Trump administration set a goal of getting three of these SMRs to go &ldquo;critical&rdquo; &mdash; running all their nuclear systems smoothly &mdash; in time for the nation&rsquo;s 250th anniversary a few days ago.
That goal has been met &mdash; and a fourth reactor went critical shortly after Independence Day.
&ldquo;The fact that they can do this and do this so quickly, it shows that the preconceived notions we&rsquo;ve had about nuclear are no longer valid anymore,&rdquo; the Department of Energy&rsquo;s Michael Goff tells Politico.
But that doesn&rsquo;t mean SMRs will go into widespread commercial use just yet. Like big conventional nuclear reactors, SMRs fall under the purview of the Nuclear Regulatory Commission. The NRC is notorious for stifling innovation in the industry.&nbsp;
And while there&rsquo;s talk within the Trump administration about a path to faster NRC approval, even an enthusiast like Goff says putting SMRs into use for, say, a data center, will be &ldquo;a matter of a few years.&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" />Half-Baked Time Change
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />The good news: The U.S. House has voted 308-117 to do away with twice-a-year time change. But yes, there&rsquo;s bad news&hellip;
&hellip; They&rsquo;ve opted for year-round daylight saving time.
Every now and then in these virtual pages, your aging editor laments the insidious stressors of time change. We&rsquo;ve regularly <a href="https://paradigmpressroom.com/post/the-secret-history-of-time-change">documented</a> how it doesn&rsquo;t save energy&hellip; but it does make for more workplace accidents, car crashes and heart attacks.
In 2020, the American Academy of Sleep Medicine, along with several other groups, published a position paper in the Journal of Clinical Sleep Medicine.
Its recommendation &mdash; year-round standard time, because that&rsquo;s what would be &ldquo;best aligned with human circadian biology and has the potential to produce beneficial effects for public health and safety.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Besides, the nation previously experimented with year-round DST and everyone hated it.
After the Arab oil embargo of late 1973, Congress passed and President Nixon signed a measure imposing year-round DST. It took effect just as kids returned to school from their Christmas-New Year break in January 1974.
Even in the easternmost stretches of every time zone, where the sun rises earliest, they were going to school in the dark. This clipping from The Washington Post is easily found online&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6qyt09cJ0titGPx2u4gOZm/99f601546875de78edc877a25c7a42d6/FMF-Issue-071526-2.jpg" alt="pub" width="540px" />
Year-round DST was repealed just in time for the darkest months of the 1974&ndash;75 school year.
As for the present proposal, we&rsquo;ll see what unfolds. Four years ago it was the Senate that passed year-round DST legislation &mdash; only for it to die on the vine in the other chamber.
<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: Generations, Goldman
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />After the provocative meme I shared at the conclusion of <a href="https://paradigmpressroom.com/post/this-isnt-the-endgame">yesterday&rsquo;s edition</a> &mdash; something you could interpret more than one way &mdash; a thoughtful email rolled in.
&ldquo;I&rsquo;ll make my partisan position clear right off: Someone spent all their time making money when they should have devoted more time to teaching their kids to be adults. Kids need parents. Is this one of our greatest shortages today, or what?
&ldquo;I speak from experience, having grown up in the &rsquo;50s and &rsquo;60s, when white-collar American families traded fathers in the home for good incomes, through the alluring miracle of commuting. The cultural upheavals that concluded the &rsquo;60s were one result.
&ldquo;Things haven't gotten better, and are not on a path for self-correction anytime soon. We need to regain respect for our heavenly Father if we expect to have any idea what an earthly father should be like, and how he should operate.
&ldquo;Good topic, Dave.&rdquo;
Dave responds: Good points, dear reader. And everything you lament goes hand-in-hand with the corruption of the currency.&nbsp;
The end of the gold-linked dollar in 1971 &mdash; however tenuous the link was by that time &mdash; set in motion both the hollowing out of the middle class and the &ldquo;financialization&rdquo; of the economy.&nbsp;
You wanted to get ahead? You had to adopt the earning-and-burning lifestyle &mdash; which doesn&rsquo;t allow much room for giving children the guidance they need.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;Oh, no, no,&rdquo; objects a longtime reader after I casually labeled Goldman Sachs an &ldquo;investment bank&rdquo; yesterday, distinct from the likes of Chase and Citi.
&ldquo;Goldman is a deposit-taking commercial banking institution, don'tcha know?... fully able to hit up the Fed''s discount window.
&ldquo;Definitely not an investment bank. Absolutely not. No way. Think of them as a close cousin of Bailey Brothers Building and Loan and its officers as real-life Jimmy Stewarts.&rdquo;
Dave: Heh. Of course I was well aware of the history when I wrote what I wrote yesterday.
Goldman infamously converted from an investment bank to a &ldquo;commercial bank&rdquo; during the 2008 financial crisis so it could get access to emergency loans from the Federal Reserve&rsquo;s discount window. (Morgan Stanley did the same.)
The company did make a foray into online banking for the hoi polloi about a decade ago under the brand &ldquo;Marcus.&rdquo; But this segment of the business accounts for only a tiny fraction of GS&rsquo; revenue. Depending on how you parse the 10-K forms, it&rsquo;s as little as 1%.
Still&hellip; for purposes of the next financial crisis&hellip; Goldman remains every bit as much a &ldquo;commercial bank&rdquo; as the First National Bank of East Podunk. And don&rsquo;t you forget it!

FMF-Issue-071526-Featured

[UPDATE] Buffett’s Sudden About-Face

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />This Isn&rsquo;t the Endgame
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Perspective: A week ago yesterday, U.S. oil futures traded for under $69. For a while this morning, they were over $81.&nbsp;
That&rsquo;s what the resumption of the Iran war has done.
As you might recall, Donald Trump projected at the start of the war in early March that it would last four&ndash;five weeks, although he allowed that the U.S. military has the &ldquo;capability to go far longer than that.&rdquo;
Asked yesterday about the resumption of U.S. bombing, he said, &ldquo;We were in Vietnam for 19 years. We&rsquo;re here for four months.&rdquo;&nbsp;
Moving the goalposts much?&nbsp;
Jim Rickards&rsquo; subscribers aren&rsquo;t surprised. In early June, he told Insider Intel readers that Trump&rsquo;s only options were surrender, stalemate and escalation.
&ldquo;Surrender won&rsquo;t happen because the political damage to Trump and the loss of face are too much for Trump to bear,&rdquo; he said. &ldquo;The Iranians won&rsquo;t agree to anything that makes Trump look good. Why should they? They&rsquo;re winning the war.&nbsp;
&ldquo;Stalemate, in the form of a ceasefire, may continue, but that won&rsquo;t reopen the Strait of Hormuz.&rdquo;
Which left only one remaining option &mdash; escalation.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Now that Trump has made that choice, investors need to understand that escalation is not an endgame,&rdquo; Jim says.&nbsp;
&ldquo;The U.S. can destroy more targets and inflict enormous damage on Iran, but turning that destruction into victory is another matter entirely.
&ldquo;The administration&rsquo;s apparent strategy is to use overwhelming American military power to raise the cost of the war until Iran accepts U.S. terms.
&ldquo;The problem is that destroying targets and winning wars are two different things.
&ldquo;History offers little evidence that strategic bombing by itself can force a large and determined country to surrender. Germany failed to bomb Britain into submission during the Battle of Britain. Allied bombing destroyed much of Germany, but victory required Allied armies advancing from the west and the Red Army from the east. The United States spent years bombing North Vietnam without achieving its political objectives.&nbsp;
&ldquo;Airpower can destroy military assets, degrade infrastructure and impose enormous costs. But bombing is not the same as victory.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The economic consequences are cumulative,&rdquo; Jim goes on.&nbsp;
&ldquo;Every damaged facility takes time to rebuild. Every barrel released from reserves eventually has to be replaced. Every additional disruption to shipping adds cost and uncertainty to the global supply chain.
&ldquo;The danger is a chain reaction that moves from an energy shock to higher inflation, from higher inflation to tighter monetary policy and from tighter monetary policy to a sharp stock market decline and recession.&rdquo;
In his original write-up, Jim said escalation would produce the worst economic consequences of Trump&rsquo;s three options.
&ldquo;Trump has now chosen that path,&rdquo; says Jim.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As the day wears on, U.S. crude futures are pulling back toward $79 as the president has walked back his notion of imposing a toll on Strait of Hormuz shipping.
When we left you yesterday, he&rsquo;d said Washington would charge a toll for vessels wishing to transit the strait &mdash; a sum equaling 20% of the value of the vessel&rsquo;s cargo.
The amount was far greater than anything the Iranian government tried to impose. Nor was there any announcement about how Trump would enforce his wishes.
Perhaps sometime in the last 24 hours, someone sat him down and told him U.S. warships would have to transit the strait and be sitting ducks for Iranian drones and artillery.
And so today brought an Emily Litella &ldquo;Never mind&rdquo; moment.&nbsp;
As Trump posted on his Truth Social site: &ldquo;Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States.&rdquo;
No, he didn&rsquo;t specify which states or any amounts.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In case you&rsquo;re keeping score: The war cost Uncle Sam $103 billion through the end of June.
That&rsquo;s according to Stephen Semler of the Center for International Policy, who&rsquo;s examined everything from government data to open-source intelligence to media reports. The figure, he says, is &ldquo;larger than all but three countries&rsquo; military budgets.&rdquo;
By his reckoning, nearly half the total &mdash; $46.7 billion &mdash; has gone for weapons. Another $28.5 billion has gone for operations and another $20.3 billion for losses of damaged or destroyed bases and other assets.
And those are only the direct costs. Semler did not account for veterans&rsquo; care or the interest on the national debt that the war will accrue&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" />Bank Earnings! IBM! Inflation!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Aside from the war and oil prices, it&rsquo;s one of those days when there&rsquo;s an enormous amount of market-moving news &mdash; and noise.
For starters, earnings season is underway. In recent years, the release of JPMorgan Chase&rsquo;s quarterly numbers has marked the &ldquo;traditional&rdquo; start of earnings season.
But this morning, not only did JPM release its numbers. So did all of the biggest commercial banks &mdash; Bank of America, Citi, Wells Fargo. Oh, plus Goldman Sachs on the investment banking side.
We won&rsquo;t belabor the numbers since you can see them anywhere. Suffice to say Wells Fargo is the only one of the bunch whose shares are in the red. Goldman is up over 7.5% at last check.
But then there&rsquo;s IBM &mdash; whose shares are down 23% on the day after numbers that fell short of expectations.
CEO Arvind Krishna says last month, clients swore off IBM&rsquo;s software and infrastructure offerings &mdash; plowing money instead into hardware like memory chips. &ldquo;While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization.&rdquo;
This morning in The Map, Mason Sexton told his readers the price movement is a &ldquo;severe market overreaction&hellip; These software deals were not lost to competitors; they were merely delayed.&rdquo; From where he sits Big Blue is &ldquo;a generational buying opportunity.&rdquo;&nbsp;
[Note well: Do not freelance this if you&rsquo;re not one of his subscribers. Mr. Sexton&rsquo;s strategy relies on precise entry and exit points as well as moving stops. We&rsquo;re just passing along his insight.]
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And then there are the June inflation numbers &mdash; which at this point look hopelessly out of date.
If the Labor Department is to be believed, consumer prices fell 0.4% from May to June &mdash; helped by a 9.7% drop in gasoline prices.
Thus, the official year-over-year inflation rate climbed down from 4.2% in May to 3.5% in June.
As always, any resemblance between these figures and your own cost of living is purely coincidental. And from the vantage point of this week, the drop in energy prices looks like ancient history.
For whatever it&rsquo;s worth, Kevin Warsh is delivering his first testimony to Congress this morning as Federal Reserve chair &mdash; promising that &ldquo;if we get policy right &mdash; and we will &mdash; the inflation surge of the last five years will be a thing of the past.&rdquo;
His heart is presumably in the right place &mdash; but <a href="https://paradigmpressroom.com/post/declare-your-independence-from-inflation">history is not on his side</a>.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Put it all in a blender and you have a decidedly mixed picture for the major U.S. stock indexes.
The Dow is modestly in the red &mdash; mostly because IBM is one of its 30 component stocks. The S&amp;P 500 is up about a quarter percent while the Nasdaq is up three-quarters of a percent and back over 26,000.
Bonds and precious metals are staging a stronger rally. The yield on a 10-year Treasury note sits at 4.58%. Gold has bounced off the $4,000, sitting at $4,062. Silver&rsquo;s up over a buck to $58.64.
Crypto is trying (again) to break out &mdash; Bitcoin approaching $65,000 and Ethereum within sight of $1,900.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Data Center Vibe Check
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> New York is the first state to enact a statewide moratorium on AI data centers.
Gov. Kathy Hochul will sign an executive order today &mdash; a one-year pause &ldquo;giving us the time to establish the nation's strongest protections for ratepayers, our communities and our energy grid,&rdquo; she promises.
The order is less sweeping than a bill that passed the legislature last month; Hochul has not yet decided whether to sign it.
&ldquo;The order will take effect immediately,&rdquo; says The New York Times. &ldquo;It is not expected to affect the data demands of back-office financial services, hospitals or universities.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Lest you think the political backlash is only a blue-state thing&hellip; last month Texas Gov. Greg Abbott &ldquo;released sweeping regulatory recommendations on data centers,&rdquo; reports the Texas Tribune.
Abbott has a laundry list of AI priorities when the legislature returns to Austin next year &mdash; including a requirement that new data centers add power generation to the state&rsquo;s grid and that they cover their own grid interconnection and infrastructure costs.
In addition, Abbott wants to nix the sales tax exemption for data centers &mdash; an incentive he labels &ldquo;outdated&rdquo; and &ldquo;unnecessary.&rdquo;&nbsp;
By one estimate, the Texas state government would collect another $3.2 billion in sales tax revenue over the next two years if the exemption goes away.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, a Bloomberg analysis finds a decidedly bipartisan bent this year in the campaign ads criticizing data centers.
&ldquo;Since December, 25 federal and gubernatorial candidates have run ads either promoting their own opposition to data centers or slamming their opponent for supporting these complexes,&rdquo; says Bloomberg&rsquo;s summary of the analysis.&nbsp;
&ldquo;Twelve &mdash; nearly half &mdash; are Republicans.&rdquo; That&rsquo;s even though the Trump administration is promoting data center expansion.
&ldquo;We&rsquo;re seeing this play out on both sides,&rdquo; says Clifford Young of the Ipsos consulting firm. &ldquo;Americans believe the system is broken. Republicans tend to be more anti-establishment today than Democrats, so this is an easy softball in this electoral cycle.&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" />Money Miscellany
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The mood on Main Street is improving measurably.
The National Federation of Independent Business is out with its monthly Small Business Optimism Index. At 97.4, the headline number is the highest in four months &mdash; and close to the survey&rsquo;s long-term average going back to the mid-1970s.
&ldquo;Lower fuel costs provide welcome relief for businesses as well as consumers, with firms anticipating improved operating conditions over the next six months,&rdquo; says NFIB chief economist Bill Dunkelberg.&nbsp;
(Well, the survey was conducted last month.)
&ldquo;While there have been improvements in the overall environment,&rdquo; he adds, &ldquo;high interest rates and modest economic growth are causing owners to approach hiring and capital spending with caution.&rdquo;
On the often-revealing portion of the survey where respondents are asked to identify their single most important problem, 21% said inflation. &ldquo;[We] will not attempt any growth or expansion of services until inflation and price increases are reduced,&rdquo; says the owner of a construction firm in Indiana.
Tied for second place at 19% were taxes and &ldquo;quality/availability of labor&rdquo; &mdash; which means good help is still hard to find.&nbsp;
Everything else was in single digits, including &ldquo;poor sales&rdquo; which had been a growing problem earlier this year.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the record: Yesterday Donald Trump signed an executive order shrinking the size of two national monuments in Utah.
Presumably the move will open up the lands to mineral development as part of the &ldquo;American Birthright&rdquo; agenda that Jim Rickards has been telling his readers about for the last year and a half.
We&rsquo;ve been anticipating this specific move since the spring of 2025: There&rsquo;s <a href="https://paradigmpressroom.com/post/trump-revives-clinton-scandal">a fascinating backstory harking back to the Clinton years</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" />Thought for the Day?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Y&rsquo;know, you could interpret this social media post at least a couple of different ways&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7xUEmMBeClgGYL9o9BM8yj/d34fa9f81f73e12b9723d9e1eda3355c/FMF-Issue-071426-1.jpg" alt="Thought for the day post" width="540px" />
But rather than incite any generational warfare in the mailbag, we'll leave the interpretation to you.

FMF-Issue-071426-Featured

This Isn’t the Endgame

<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" />One Chart to Live By
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> There&rsquo;s a chart I&rsquo;ve been obsessing over for a few days. It&rsquo;s time that you take a good look at it.
Here&rsquo;s how it appeared on X, courtesy of a Swiss money manager named Thierry Borgeat. Study it closely&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/78YAUnTb7IHvnR9TB2QL2N/b71240132316310a97f1c9cf3366ed8c/FMF-Issue071326-1.jpg" alt="AVG annual real returns" width="540px" />
Borgeat&rsquo;s point is that the conventional wisdom about how you need to stay in the market for the long haul &mdash; because the market goes up an average 7% a year after inflation &mdash; rarely works out in real-world experience.
&ldquo;Notice the rhythm. A golden era, then a dead one,&rdquo; he says. &ldquo;Feast, famine, feast, famine.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Everyone who started investing after 2009 has only known the feast,&rdquo; Borgeat goes on.
&ldquo;Buy the dip worked every single time. Not because it's a law. Because you happened to live inside the blue bar.&rdquo;
On one level, I&rsquo;ve known this overview of market history for years&hellip;
<ul>
<li>If you bought at the top just before the 1929 crash, you didn&rsquo;t get back to breakeven until 1954</li>
</ul>
<ul>
<li>The Dow industrials peaked at 1,000 in 1966 &mdash; and couldn&rsquo;t surpass that level for good until 1982</li>
</ul>
<ul>
<li>The dot-com bubble burst in early 2000, at which time the S&amp;P 500 was around 1,500. The index returned to that level in 2007 and then came the financial crisis. The 1,500 level wasn&rsquo;t surpassed for good until April 2013. Brutal.</li>
</ul>
But seeing the visuals really brings it home &mdash; especially when you realize we&rsquo;re now 13 years into the current blue bar. We&rsquo;re closer to the end of this bull run than the beginning.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Note well: That chart shows the returns after inflation.&nbsp;
Recall the research we&rsquo;ve been citing regularly for a few years now: Once inflation sails past the 5% mark &mdash; as it did in 2022 &mdash; it typically takes a decade to get back to &ldquo;normal&rdquo; 2% inflation of the sort we experienced during the 2010s.&nbsp;
So we&rsquo;re looking at elevated inflation levels for the rest of this decade and into the 2030s. That means the stock market has to rally that much more to overcome the inflation rate &mdash; and for your portfolio to stay ahead of the cost of living.
Very few portfolio managers are preparing their clients for this outcome. They&rsquo;re operating under recency bias &mdash; assuming the 2% inflation of the 2010s will return any day now.
Bottom line: You can&rsquo;t invest in an index fund and hope your portfolio will stay ahead of a rising cost of living. Not now.&nbsp;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Trump Wants a Toll
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. oil futures are starting the week over $3 higher &mdash; $74.72 &mdash; now that it&rsquo;s becoming obvious to everyone that peace in the Persian Gulf is no longer &ldquo;at hand.&rdquo;
U.S. airstrikes hit Iranian oil infrastructure over the weekend. Iranian airstrikes hit U.S. bases in Bahrain, Qatar and Kuwait (as they did in March).&nbsp;
Then Tehran announced it was shutting down the Strait of Hormuz. This morning Donald Trump tried to one-up Tehran by resuming the U.S. blockade of Iranian ports &mdash; and by insisting that Washington will charge a toll for vessels wishing to transit the Strait of Hormuz.&nbsp;
Per Trump&rsquo;s declaration on social media, the toll will equal 20% of the value of every vessel&rsquo;s cargo &mdash; far more than the toll Tehran seeks to impose.
How he intends to enforce the toll, he did not say.
By the most authoritative count we can locate, only three vessels transited the Strait of Hormuz in the last 24 hours, and only one of those was an oil tanker. Here it is on a chart going back to last December&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4Lvw6WfnuLG7wEEH3YHSRG/1db863674aefb57b4535bea7e43187aa/FMF-Issue071326-2.jpg" alt="Hormuz is closer to being closed than open" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Think about what actually happened to the world's energy infrastructure these past four months,&rdquo; says Paradigm&rsquo;s Zach Scheidt, writing late last week for Rickards&rsquo; Insider Intel.
&ldquo;Iran's strike on Qatar's Ras Laffan complex knocked out a sizable portion of the country's LNG capacity, and that damage will take several years to repair. Refineries, terminals and loading facilities across the Gulf took similar hits.&rdquo;
At the same time, &ldquo;there&rsquo;s a secondary issue that will need to be addressed with stockpiles.
Governments and companies hold reserves of crude and refined products. Gasoline, diesel, jet fuel. Those reserves got drained hard in the first months of this war. The IEA directed the release of 400 million barrels. Governments around the world tapped strategic reserves to keep the lights on and the trucks moving.
&ldquo;Every one of those barrels has to be replaced.
&ldquo;So you have normal economic demand, and stacked on top of it, a second wave of demand from everyone who needs to refill what they burned through. Meanwhile, supply is constrained by infrastructure that takes years to rebuild.
&ldquo;The setup we&rsquo;re looking at here is rare. You have structural supply damage that takes years to repair, a second wave of demand coming from every reserve that needs refilling, all while the market keeps pricing in a peace that hasn't actually arrived.&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" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Don&rsquo;t count out the highflying semiconductor stocks yet.&nbsp;
The benchmark Philadelphia Semiconductor Index (SOX) is down 15% from its nosebleed peak on June 22 &mdash; but Zach Scheidt, this time in a briefing for Altucher&rsquo;s True Alpha, says Micron Technology (MU) is changing the game.
Last week, &ldquo;Micron poured the first concrete at its new fab in Clay, New York, and announced a fresh round of investment aimed at strengthening the U.S. semiconductor supply chain.
&ldquo;The commitment runs up to $3 billion and lifts the company's total domestic investment target through 2035 from $200 billion to more than $250 billion. Roughly $500 million of it goes to GlobalWafers to expand wafer development and manufacturing in Texas, paired with a 10-year supply agreement for raw silicon wafer capacity.
&ldquo;Micron's New York facility will be the largest semiconductor manufacturing site in U.S. history.
&ldquo;The market noticed. Shares surged as much as 9% intraday, and the buying spread to semiconductor equipment makers and related stocks. By Thursday's close the Nasdaq had climbed 1.3% as the AI trade was able to plant its foot firmly on the ground, preparing to regain momentum.&rdquo;
Yes, semiconductors are notoriously a cyclical business &mdash; like the oil business, subject to both spectacular booms and epic busts. But &ldquo;nobody breaks ground on the largest chip plant in American history if they think the demand is a mirage,&rdquo; says Zach.&nbsp;
&ldquo;Concrete is a confession that management firmly believes in the next decade of development, and it says it just as loud as any earnings call could.&rdquo;
No, it&rsquo;s not an all-clear to pile back into chip stocks. &ldquo;We have to see how this rebound materializes,&rdquo; says Zach. &ldquo;The fact still remains that plenty of money walked out of the AI trade for the time being.&rdquo;
And still more is walking out today, with the SOX down over 4.5% as we check our screens.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Those losses in the chip stocks are dragging down the Nasdaq &mdash; over more than 1.25% as we write and back below 26,000.
The S&amp;P 500 is holding up better, down two-thirds of a percent at 7,527. The Dow is off a third of a percent, back under 52,500.
Bonds are reacting badly to the trouble in the Persian Gulf: Rising oil prices translate to rising inflation expectations which translate to rising interest rates. The yield on a 10-year Treasury note is up to 4.61% &mdash; not far from the 4.66% of last May, which was a 16-month high.
Precious metals are getting clobbered, too: Gold is off nearly 3% and back under $4,000 while silver is down 3.8% to $57.49.
Crypto is holding its own, Bitcoin over $62,000 and Ethereum a little under $1,800.
There&rsquo;s Still Life in the Semis
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Don&rsquo;t count out the highflying semiconductor stocks yet.&nbsp;
The benchmark Philadelphia Semiconductor Index (SOX) is down 15% from its nosebleed peak on June 22 &mdash; but Zach Scheidt, this time in a briefing for Altucher&rsquo;s True Alpha, says Micron Technology (MU) is changing the game.
Last week, &ldquo;Micron poured the first concrete at its new fab in Clay, New York, and announced a fresh round of investment aimed at strengthening the U.S. semiconductor supply chain.
&ldquo;The commitment runs up to $3 billion and lifts the company's total domestic investment target through 2035 from $200 billion to more than $250 billion. Roughly $500 million of it goes to GlobalWafers to expand wafer development and manufacturing in Texas, paired with a 10-year supply agreement for raw silicon wafer capacity.
&ldquo;Micron's New York facility will be the largest semiconductor manufacturing site in U.S. history.
&ldquo;The market noticed. Shares surged as much as 9% intraday, and the buying spread to semiconductor equipment makers and related stocks. By Thursday's close the Nasdaq had climbed 1.3% as the AI trade was able to plant its foot firmly on the ground, preparing to regain momentum.&rdquo;
Yes, semiconductors are notoriously a cyclical business &mdash; like the oil business, subject to both spectacular booms and epic busts. But &ldquo;nobody breaks ground on the largest chip plant in American history if they think the demand is a mirage,&rdquo; says Zach.&nbsp;
&ldquo;Concrete is a confession that management firmly believes in the next decade of development, and it says it just as loud as any earnings call could.&rdquo;
No, it&rsquo;s not an all-clear to pile back into chip stocks. &ldquo;We have to see how this rebound materializes,&rdquo; says Zach. &ldquo;The fact still remains that plenty of money walked out of the AI trade for the time being.&rdquo;
And still more is walking out today, with the SOX down over 4.5% as we check our screens.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Those losses in the chip stocks are dragging down the Nasdaq &mdash; over more than 1.25% as we write and back below 26,000.
The S&amp;P 500 is holding up better, down two-thirds of a percent at 7,527. The Dow is off a third of a percent, back under 52,500.
Bonds are reacting badly to the trouble in the Persian Gulf: Rising oil prices translate to rising inflation expectations which translate to rising interest rates. The yield on a 10-year Treasury note is up to 4.61% &mdash; not far from the 4.66% of last May, which was a 16-month high.
Precious metals are getting clobbered, too: Gold is off nearly 3% and back under $4,000 while silver is down 3.8% to $57.49.
Crypto is holding its own, Bitcoin over $62,000 and Ethereum a little under $1,800.
<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" />Startling Stat
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The sky started changing dramatically when Starlink began launching its satellites in 2019&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5tVeZcOsE8ldiNTh9bGbUQ/8d59bf1d5a92a5bfcd570e6587947358/FMF-Issue071326-3.jpg" alt="Starlink changed everything" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Data Centers
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We got an appreciative note after <a href="https://paradigmpressroom.com/post/ai-data-centers-and-chinese-stooges">Friday&rsquo;s edition</a> deconstructing a New York Times article strongly implying that people who oppose the construction of data centers are dupes of the Chinese and Russians.
&ldquo;Dave, thanks for rooting out Nina Jankowicz. That pretty much says it all for the validity of the source.&nbsp;
&ldquo;And NYT, enough said there too - a bunch of mainstream nonsense to create for fear and division.&rdquo;
Dave responds: I can&rsquo;t help wondering if we&rsquo;re at &ldquo;peak data centers&rdquo; here in the summer of 2026&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6e3A99apsAqV3NFYZNq5UO/ff161850753b60d1bc0a5d5bb0d0574c/FMF-Issue071326-4.jpg" alt="Data Center construction growth is slowing" width="540px" />
As I said 18 months ago (and again last week), AI faces two huge constraints that digital technology has never grappled with until recently &mdash; limited capacity in the U.S. electric grid and the rising cost of borrowed money.
By now, everyone knows about the electricity part. And today&rsquo;s Wall Street Journal acknowledges the cost of financing: &ldquo;Over the past several weeks, the investment-grade corporate bond market has struggled to absorb a combined $75 billion of bond issuance from Nvidia, SpaceX and Amazon.com.&rdquo;
The so-called hyperscalers like Amazon, Google and Meta can no longer tap their free cash flow for the data-center buildout. So they need to take on debt.&nbsp;
And it sounds as if Wall Street is approaching a threshold where it says no more.
To be continued&hellip;

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