<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />SpaceX Is Not a Space Company
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> From Paradigm&rsquo;s lips to CNBC&rsquo;s ears&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3S0YwtrZLajRpu299eolGF/b475cb41e67633f7c8f7d0b0c6d996aa/FMF-Issue-052726-1.jpg" alt="Unsual_Whales Tweet" width="540px" />
Way back in January, colleague Davis Wilson at our sister e-letter The Million Mission <a href="https://million-mission.com/posts/ticker-symbol-elon-coming-soon?vid2=f7584bb8d0f8b4ef03ea4a2a79cb9ffebd5601637dfb4b221b21055bfe10aa56fb9565c7166c12ea93687031263ed97489aead8f437e4ddd1cfcbcd5e6a6bb06&amp;utm_campaign=FMF_Issue_02.03.26_&amp;utm_source=Iterable&amp;itbl_templateId=21797526&amp;itbl_campaignId=16746037&amp;utm_medium=Email">mused</a> about just this possibility: &ldquo;What if Elon Musk eventually consolidates all of his companies into one mega-entity?&rdquo;
Days later, Musk took an initial step in that direction &mdash; bringing his xAI artificial-intelligence venture under the SpaceX umbrella.
For the moment, a SpaceX-Tesla tie-up remains in the realm of speculation. And so we&rsquo;ll keep the focus today on what we know &mdash; and there&rsquo;s a lot to know in the prospectus SpaceX filed with the feds last week ahead of going public 17 days from now.
In yesterday&rsquo;s edition, our tech-investing pro Ray Blanco spotlighted the standout number in that document: SpaceX sees AI as a $26.5 trillion market, compared with a paltry $370 billion for space.
Today Davis Wilson shares his own insights after pulling apart SpaceX&rsquo;s S-1 document&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It&rsquo;s not just that SpaceX sees AI as a vastly bigger market than space: It&rsquo;s also the fact SpaceX is spending its precious capital accordingly.
&ldquo;For the three months ended March 31, 2026,&rdquo; says Davis, &ldquo;SpaceX spent:
<ul>
<li>$1.05 billion expanding its Space segment</li>
</ul>
<ul>
<li>$1.33 billion on Connectivity (Starlink)</li>
</ul>
<ul>
<li>And a shocking $7.72 billion building AI infrastructure.</li>
</ul>
&ldquo;That means SpaceX is currently spending roughly 7X more on AI than its actual space operations.
&ldquo;This completely changes the narrative around the company.
&ldquo;Most investors still think rockets are the main story. The S-1 strongly suggests AI increasingly is.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> All that spending would be impossible without Starlink. &ldquo;Rockets and AI generate the headlines &mdash; but Starlink generates the cash flow,&rdquo; says Davis.
The &ldquo;Connectivity&rdquo; division of SpaceX &mdash; dominated by Starlink &mdash; generated $7.2 billion last year in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
&ldquo;Meanwhile,&rdquo; Davis tells us, &ldquo;SpaceX&rsquo;s Space segment lost $657 million in 2025, while its AI segment lost $6.4 billion.
&ldquo;In other words, Starlink is increasingly funding the rest of Elon Musk&rsquo;s empire.&rdquo; As such, Davis thinks &ldquo;Starlink may ultimately be the most important business inside SpaceX.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, the integration between SpaceX and Tesla is already tighter than you might think.
Davis unearthed the following from SpaceX&rsquo;s filing&hellip;
<ul>
<li>&ldquo;Tesla owns 18,990,195 shares of SpaceX Class A common stock</li>
</ul>
<ul>
<li>SpaceX obtained goods and services from Tesla of $11 million in 2023, $4 million in 2024 and $144 million in 2025</li>
</ul>
<ul>
<li>xAI obtained goods and services from Tesla of $191 million in 2024 and $506 million in 2025</li>
</ul>
<ul>
<li>Tesla has directly and indirectly purchased advertising on SpaceX&rsquo;s X platform</li>
</ul>
<ul>
<li>Even the cost of Elon&rsquo;s jet usage is split between SpaceX and Tesla.</li>
</ul>
&ldquo;The lines between these companies are becoming increasingly blurred,&rdquo; says Davis &mdash; making that mega-merger more and more plausible. &ldquo;Maybe one day my prediction will come true &mdash; Ticker Symbol: ELON.&rdquo;
Davis is on the fence about whether he&rsquo;ll actually buy once SpaceX starts trading June 12 as SPCX.
&ldquo;But at the very least,&rdquo; he says, &ldquo;I now understand what I&rsquo;d actually be buying.
&ldquo;And no&hellip; regardless of what most people think, it isn&rsquo;t a rocket company.&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" />Here We Go Again (Again)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> All evidence to the contrary, the &ldquo;war&rsquo;s almost over&rdquo; trade is in play for a second straight day.
At last check, U.S. oil futures are down over 4% at $90 on the nose. That&rsquo;s even though there&rsquo;s still no &ldquo;deal&rdquo; between Washington and Tehran that would bring the Iran war to a conclusion.
Even if the two sides can somehow come to terms on uranium and the Strait of Hormuz, Tehran wants Israel to stop bombing Lebanon &mdash; and there&rsquo;s no sign Israel is willing to let up. (Remember when Donald Trump &ldquo;forbade&rdquo; Israel to attack Lebanon last month?)
And so shipping through the strait remains at a trickle relative to when Washington and Tel Aviv launched the war three months ago.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4NWxWnoTSEaZlipaUUGkQd/49a35cd3f8e9dd38bde14a240cfc2314/FMF-Issue-052726-2.jpg" alt="pub" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, the major U.S. stock indexes are taking a breather &mdash; the S&amp;P 500 and Nasdaq down fractionally from yesterday&rsquo;s record closes.
Paradigm readers are savoring a handful of gains racked up by the editors just yesterday&hellip;
<ul>
<li>Greg Guenthner&rsquo;s Trading Desk readers collected 435% in just over a month playing call options on the red-hot space name Redwire</li>
</ul>
<ul>
<li>It took less than three months for Altucher&rsquo;s Investment Network readers to collect 140% on the chipmaker Astera Labs</li>
</ul>
<ul>
<li>Microcap Millionaire readers bagged 382% in less than a year on Navitas Semiconductor</li>
</ul>
<ul>
<li>Chris Cimorelli&rsquo;s 10X Trade Club readers pulled in 123% in less than four months with call options on Enphase Energy.</li>
</ul>
Precious metals are getting clobbered again despite the &ldquo;war&rsquo;s almost over&rdquo; atmosphere. Gold is down $64 to $4,442, a two-month low. And silver&rsquo;s off more than two bucks, retesting its May lows at $74.63.
Crypto remains stuck in the mud, Bitcoin under $75,000 and Ethereum at $2,060.
<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" />AI Regulation Rethink
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the record: The Trump administration is pulling back on its plans for heavy-handed AI regulation.
Earlier this month we told you how the White House&rsquo;s thinking underwent a major transformation since last year: Gone was the president&rsquo;s talk about how AI is too important to burden &ldquo;with foolish rules and even stupid rules.&rdquo; Instead, National Economic Council Director Kevin Hassett started talking about AI being regulated &ldquo;just like an FDA drug.&rdquo;
Your editor was <a href="https://paradigmpressroom.com/post/ai-speeding-toward-a-brick-wall">appalled</a> at the prospect. The FDA is the last thing that comes to mind when you think about innovation and competitiveness.
But last Thursday, at nearly the last minute&hellip; Donald Trump called off a signing ceremony for an AI executive order that had been in the works for weeks.
As he explained it, he doesn&rsquo;t want to get in the way of the American AI industry&rsquo;s advantages over China.
&ldquo;I really thought that could have been a blocker, and I want to make sure it&rsquo;s not&hellip; I don&rsquo;t want to do anything that will get in the way of that lead.&rdquo;
It appears David Sacks still holds sway in this administration even though he&rsquo;s stepped back from his role as the White House AI and crypto czar.
Sacks stands for the hands-off approach that was the administration&rsquo;s stance last year. &ldquo;There&rsquo;s a very visceral negative reaction here because we know how damaging that would be to innovation,&rdquo; he said recently on the All In podcast that he co-hosts.
As it happens, Sacks still has a voice within the White House as co-chair of the President&rsquo;s Council of Advisors on Science and Technology.
One wonders if Sacks has been getting input from Elon Musk now that it turns out SpaceX is mostly an AI company: Both men belonged to the original &ldquo;PayPal mafia&rdquo; during the 1990s&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" />Your Bank Won&rsquo;t Ask for Your Passport After All
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK, it looks as if you won&rsquo;t have to present your U.S. passport just to open a bank account.
Three months ago <a href="https://paradigmpressroom.com/post/your-bank-wants-your-passport">we sounded the alarm</a> as the Trump administration was poised to issue a sweeping executive order forcing banks to collect information about their customers&rsquo; citizenship status.
In theory it was aimed at cracking down on illegal migration. In practice it was a huge step toward a show-me-your-papers society for law-abiding citizens. You would have had to cough up a passport or birth certificate not only to open a new bank account, but even to keep your existing one.
It appears the White House has dialed back on the proposal. Not because of pressure from the public &mdash; but rather pressure from the banking industry, which blanched at the new paperwork requirements.
The final executive order, issued last week, merely directs banks to &ldquo;make a person&rsquo;s immigration status an explicit part of a bank&rsquo;s assessment of whether a customer poses a money-laundering risk,&rdquo; according to The Wall Street Journal.
Clear as mud, right?
At least we know this much: Unlike the original proposal, whatever enforcement takes place won&rsquo;t be visible to the customer.
Well, unless the bank decides you &ldquo;pose a money-laundering risk&rdquo; and closes your account.
Which is a potentially greater risk than you might think.
Under previous instances of unclear federal mandates, JPMorgan Chase shut down everyone from porn starlets to gun-shop owners to crypto bros.
It could easily start happening again &mdash; and all because the U.S. government can&rsquo;t keep track of who&rsquo;s in the country legally and who&rsquo;s not.
<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: Intergenerational Warfare
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Dave, I don&rsquo;t think it is an &lsquo;I got mine&rsquo; philosophy,&rdquo; a reader writes on the subject of boomer attitudes toward younger generations. &ldquo;I believe it&rsquo;s more that we see the waste in the name of equality.
&ldquo;Government establishes student loans for everyone. It lowers standards and provides loans that have no bearing with what the degree will produce, e.g. $200,000 in loans for a job that won&rsquo;t earn the student $50,000.
&ldquo;Schools lower entrance standards in the name of fairness, knowing full well the student will not make it past the first year. This extra money is gravy for them. It doesn&rsquo;t cost much to carry a student that will flunk out the first year.
&ldquo;So what do they do? Build more extravagant buildings that aren&rsquo;t really needed. Add extra courses in new disciplines to attract more students that will suffer. Add more administrative staff and cut back on the quality of teaching staff. That makes the degree weaker, resulting in lower ranking for the programs.
&ldquo;Students suffer and are behind the eight ball if they even make it to graduation.
&ldquo;I went to a smaller university ranked No. 3 nationally in engineering. The total expenses including food and housing for the four years were approximately $15,000 per year. Starting salaries for graduates were approximately $9,000 per year. That&rsquo;s 60% of the total expenses.
&ldquo;The ratio is now 20% for engineering grads and their ranking in engineering is No. 53. But they added many liberal arts programs in order to diversify the student body. They also spent $200 million on a performing arts theater for the 30 or so music majors. God knows what the ratio is for music majors.
&ldquo;A few ideas:&nbsp;
<ul>
<li>Make universities liable for a majority of student defaults. They knew the loans wouldn&rsquo;t be paid</li>
</ul>
<ul>
<li>Limit total loans to two years of average starting salary for their planned degree. Annual loans would be limited to a percentage based on the number of credits scheduled. If a student plans on a six-year program, they are limited to 1/6th of the loan total per year. No front-end loading.</li>
</ul>
&ldquo;I know these ideas are unrealistic for a government that can handle its own finances, but I do believe it is what makes us boomers cynical about people not handling their own finances with student loans, credit card debt, etc. They are just used to low interest money being available with no regard to how they will pay it back.&rdquo;
Dave responds: So you raise many valid points about how government intervention has messed up higher education&hellip; but then you put the responsibility on the students?
We now have two generations of Americans for whom it was impossible to pay for college by flipping pizzas part time &mdash; but they were also told they&rsquo;d be condemned to a life of penury if they didn&rsquo;t get the sheepskin.
All they did was respond to the incentives, perverse as the incentives were. And that&rsquo;s on them?
The simplest fix &mdash; not a panacea, but a good start &mdash; would be to make student loans dischargeable in bankruptcy again. They were until 2005 &mdash; until Joe Biden shepherded the change through the Senate and George W. Bush signed it into law. Bipartisanship!

FMF-Issue-052726-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

SpaceX Is Not a Space Company

FMF-Issue-052626-Featured

Today's 5 Bullets

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Musk&rsquo;s Biggest Ambition
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The sooner this technology is perfected, the sooner the societal stress over data centers is dampened.
For over six months now, we&rsquo;ve been waxing enthusiastic in these pages about the potential for data centers in space &mdash; delivering the AI &ldquo;compute&rdquo; the world demands with 24/7 solar power.
Data centers in space won&rsquo;t compete for scarce electricity with existing homes and businesses. They won&rsquo;t suck up prodigious amounts of water for cooling. They won&rsquo;t generate noise that keeps neighbors up at night.
The existing power grid simply can&rsquo;t accommodate the current buildout of data centers. Something&rsquo;s gotta give.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Data centers already eat electricity like a small country. And AI adoption isn't slowing down. It's going vertical,&rdquo; affirms Paradigm AI authority James Altucher.
In yesterday&rsquo;s Altucher Confidential, James said energy is the single biggest constraint on AI &mdash; and whoever solves the energy problem wins the AI race. Not whoever has the smartest model or the most sophisticated chips.
&ldquo;You can build the most powerful artificial intelligence the world has ever seen. Give it a name and a personality. And it will sit there doing absolutely nothing &mdash; because you can't plug it in&hellip;
&ldquo;The grid we have was not built for this. It was built for air conditioners and refrigerators and the occasional Christmas display. It was never built to run a digital civilization.&rdquo;
But data centers in space? They can be purpose-built to meet all their own power demands.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;If even part of AI compute moves up there, we're looking at a brand-new layer of infrastructure underneath the entire economy,&rdquo; James goes on. &ldquo;The way railroads were a layer. The way the internet was a layer.&rdquo;
As we&rsquo;ve chronicled since last fall, Elon Musk is the biggest enthusiast of orbiting data centers. And James says Musk has put a number on their economic potential.
$1 quadrillion. With a Q. That&rsquo;s 1 followed by 15 zeroes. A thousand trillion.
To be clear, James is extrapolating from something Musk said at Tesla&rsquo;s most recent shareholder meeting.
&ldquo;Elon said AI and robotics could grow the global economy &lsquo;by a factor of 10 or maybe 100.&rsquo; Run the low end against world GDP and you land on $1 quadrillion.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;And here's why Elon can say it with a straight face: This doesn't apply to one product. It applies to everything he is building,&rdquo; James goes on.
&ldquo;The robotaxi network. The Optimus humanoid robots. Grok, and whatever comes after Grok. Every one of those runs on compute. And compute runs on power.
&ldquo;So the real bottleneck across his entire empire is power. Always power. Solve power, and you don't improve one product &mdash; you unlock all of them at once.&rdquo;
Really, energy is Musk&rsquo;s biggest ambition. Because everything else stems from that.
Musk is keenly aware of all this as he prepares for SpaceX&rsquo;s IPO on Friday, June 12. Remember that his xAI venture and the Starlink satellite network both operate under the SpaceX umbrella. Energy is key to all of it.
&ldquo;He's taking an entire ecosystem public,&rdquo; says James. &ldquo;And if you've watched Elon operate for 20 years, you know exactly what he does next. When something is critical to his plans, he does not politely wait for the market to hand it to him. He buys it. He partners with it. Or he pulls it inside the tent.
&ldquo;He did it before. He'll do it again.&rdquo;
With that in mind, James has been digging into one small company that&rsquo;s key to Musk&rsquo;s ambitions.
&ldquo;It already works with SpaceX. It already has real, functioning technology in orbit &mdash; today. It&rsquo;s NOT a household name. You've never seen it on CNBC. Most professional investors couldn't tell you what it does. But it is sitting on precisely the kind of technology a man building a trillion-dollar AI empire cannot afford to be without.&rdquo;
If you&rsquo;re a Microcap Millionaire subscriber, you&rsquo;re already hip to what James is talking about.
<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" />$6 Gasoline
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The national average gasoline price sits at $4.56 a gallon, according to AAA &mdash; and Paradigm natural resources pro Matt Badiali says $6 is in view this summer.
&ldquo;The only good news is that high prices cure themselves,&rdquo; he wrote for yesterday&rsquo;s Daily Reckoning. &ldquo;It just takes pain and time.&rdquo;
Matt sees parallels between the present moment and the summer of 2008 &mdash; the first time gas prices eclipsed $4 a gallon.
&ldquo;We stopped driving and conserved when we could,&rdquo; he recalls. &ldquo;We carpooled. When we went out to run errands, we ran ALL of them at once. And we changed our plans to accommodate the extra expenses.&rdquo;
Result: Fuel consumption fell 21.5% between December 2007&ndash;May 2009. (OK, it helped that millions of people were thrown out of work in the &ldquo;Great Recession&rdquo; and had nowhere to commute. But you get the point.)
And that $4 gas in the summer of 2008? It was well under $2 by early 2009.
&ldquo;The price fell off so much, so quickly because at the time, 60% of the demand for oil came from personal automobiles,&rdquo; says Matt. &ldquo;And if we all stop driving, there&rsquo;s plenty of oil again.
&ldquo;Today, light-duty vehicles (cars, SUVs and motorcycles) use 52&ndash;60% of U.S. oil demand. That means personal vehicles still have a major impact on demand. And when driving becomes a luxury, a huge swath of the country will conserve.&rdquo;
By the way, that $4 a gallon in 2008 translates to $6.34 today. With the Strait of Hormuz still all but closed, Matt thinks we&rsquo;re on our way there. &ldquo;All over the world, governments are burning through strategic oil reserves. The reality is about to come crashing home this summer.&rdquo;
You can offset those high prices with gains in your portfolio. Matt says you can consider the United States Gasoline Fund (UGA) &mdash; an ETF that tracks the gasoline price via options. Or the VanEck Oil Refiners (CRAK). Refiners have to grapple with rising oil prices, yes, but they still sport handsome margins.
[Dave&rsquo;s disclosure: I own a small position in CRAK.]
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, In the short term, U.S. oil futures are sinking big-time &mdash; down over 6% and back below $98 for the first time in over a week.
Supposedly that&rsquo;s because Donald Trump says U.S.-Iran talks are in their &ldquo;final stages.&rdquo; (Gee, where&rsquo;ve we heard that before? And were there suspicious trades ahead of that remark?)
From everything we see, the Iranian side is signaling that no talks will take place while the annual Muslim pilgrimage to Mecca is underway. If so, that means nothing happens until after May 30.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As Nvidia goes, so goes the whole stock market? Kinda feels like it.
Nvidia reports its quarterly numbers after the closing bell today. NVDA isn&rsquo;t just the biggest company in the world. It&rsquo;s a bellwether for chip stocks. Lately, chip stocks have been a bellwether for the tech sector. And tech has been a bellwether for the whole market.
All of these things touched record highs last Thursday &mdash; only to hit an air pocket since. The reaction to Nvidia might well set the tone for everything else in the coming days.
And what will drive the reaction? Davis Wilson at our sister e-letter The Million Mission says investors want to know three things&hellip;
<ul>
<li>&ldquo;Does the AI investment boom still have legs?</li>
<li>&ldquo;Can Nvidia maintain its dominant position as competition ramps up?</li>
<li>&ldquo;Any updates on selling chips to China following CEO Jensen Huang&rsquo;s recent Beijing summit alongside President Trump?</li>
</ul>
&ldquo;Tonight&rsquo;s earnings call will set the tone for the entire AI market heading into the second half of the year.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In the meantime, the broad market is in the green today on the aforementioned &ldquo;war&rsquo;s almost over again&rdquo; trade.
The S&amp;P 500 is up nearly 1% to 7,422. The gains in the Dow and the Nasdaq are even stronger.
Likewise bonds are rallying, sending yields down &mdash; the 10-year Treasury note at 4.58% and the 30-year bond at 5.12%. (Those levels are still very high by recent standards.)
Precious metals are licking their wounds, gold back over $4,500 and silver approaching $76. Crypto is also staging a modest rally with Bitcoin back over $77,000 and Ethereum above $2,100.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />About Those Retail Sales&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We don&rsquo;t have a lot of economic data points this week &mdash; so it&rsquo;s worth stepping back to examine the bigger picture when it comes to one of the most-reported numbers out there.
We mention the retail sales figures each month. Frequently we mention how they&rsquo;re not adjusted for inflation.
So what would you see if they were adjusted for inflation? The folks at Statista did just that this week.
&ldquo;Between April 2021 and April 2026,&rdquo; writes Statista&rsquo;s Felix Richter, &ldquo;monthly retail and food services sales (adjusted for seasonal variations, holiday and trading day differences) increased by 24.3%.
&ldquo;While that sounds like the economy must be humming along nicely, sales were essentially flat when adjusted for inflation.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/rz8AKPi3ALKeFx8IwICqu/f6b721c114358ebf10f0b6d26f4b63b5/FMF-Issue-052026-1.jpg" alt="Real Retail Sales" width="540px" />
&ldquo;From a positive perspective,&rdquo; he continues, &ldquo;that means that Americans haven&rsquo;t really cut back on their purchases despite the financial pain that inflation has inflicted on many households.
&ldquo;From a more negative viewpoint, it means that Americans are spending (a lot) more to keep the same living standard, which is not just bad for consumers but also for retailers trying to actually grow sales.&rdquo;
Worse, over the last five years wages haven&rsquo;t kept pace with the official inflation rate. Wages almost caught up with prices as the calendar flipped from 2025 to 2026 &mdash; but then came the Trump-Netanyahu &ldquo;excursion&rdquo; into Iran and once again price increases are running away from wage increases.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Worse still, the official inflation rate understates your real increase in the cost of living. 
Maybe you already know that intuitively&hellip; but we should emphasize this point more often: Federal statisticians have been monkeying with the inflation numbers for decades to make them seem better than they really are.
Here are the two major techniques, with supporting examples&hellip;
<ul>
<li>Hedonic adjustments. If the price of a new car goes up, but the manufacturers add new features to the new models, well then the price of a new car hasn&rsquo;t really gone up, has it?</li>
</ul>
<ul>
<li>Substitution. If you start buying hamburger because steak is too expensive, well, your price of beef hasn&rsquo;t really gone up, has it?</li>
</ul>
Seriously, this is how government statisticians think.
Result: In mid-2023 the official inflation rate was about 4%. But economist John Williams at Shadow Government Statistics runs the numbers the same way the feds did in the 1970s &mdash; and by that yardstick inflation was running at a 12% clip.
<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" /> As long as we&rsquo;ve had AI and resistance to AI on the brain in recent days&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/37Jyc5WD1lqIWYByHKYoSV/b0d009b56dd93a35e81965b6b36757ee/FMF-Issue-052026-2.jpg" alt="Comedy Relief" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: AI Data Centers, Again
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Dave, I can't be the only reader who is on the fence about these AI data centers,&rdquo; a reader writes as we continue to get feedback from <a href="https://paradigmpressroom.com/post/backlash-data-centers">last Friday&rsquo;s edition</a>.
&ldquo;Your writers have made it abundantly clear that they will gobble up enormous amounts of power and water. It's the &lsquo;jobs' part of the equation that seems to be missing? I can assume there would be quite a few construction jobs as these huge warehouses are erected and they will need enormous HVAC and power switching systems.
&ldquo;BUT what happens after they're built? Just a couple of guys waiting around for things to break down? Or is there a real need for the technically savvy to be inside testing, running, repairing and what not?
&ldquo;So will they create 100/200/500/1,000 jobs after commencing operations or are they just great big power-sucking empty warehouses?&rdquo;
Dave responds: Well, let&rsquo;s return to Maine &mdash; the first state where a moratorium on data center construction reached the governor&rsquo;s desk.
As we mentioned at the end of April, Gov. Janet Mills vetoed the bill because there was no carve-out for a data center already under construction in the town of Jay. She said it would bring 800 temporary jobs and 100 permanent ones.
Presumably that 8:1 ratio is consistent regardless of the project size?
We&rsquo;ll leave it there for today &mdash; except to note that the largest headline on the front page of today&rsquo;s Wall Street Journal is: &ldquo;Americans&rsquo; AI Rebellion Grows, Fed by Energy Costs, Job Losses.&rdquo;
Hey, you heard it here first!

FMF-Issue-052026-Featured

Musk’s Biggest Ambition

FMF-Issue-052826-Featured

The Yamanaka Secret

<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" />All the Choices Are Bad
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> When it comes to the Iran war, &ldquo;Trump has no good options,&rdquo; Jim Rickards wrote his Strategic Intelligence subscribers yesterday morning.
Later in the day, as if to reinforce the point, Trump announced he was postponing a &ldquo;scheduled attack of Iran&rdquo; that was supposed to start today.
He said he did so in response to a request from the leaders of Saudi Arabia, Qatar and the United Arab Emirates. For whatever it&rsquo;s worth, The Wall Street Journal says &ldquo;several Gulf officials from some of the countries Trump mentioned said they were not aware of the imminent plan to attack Iran he described.&rdquo;
Even before Trump&rsquo;s announcement, one financial-minded wag on X said there was no way an attack would take place today. Or tomorrow.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1whjndDufJojuOzaY4stCD/d51f834dad0ad3c9dd17ac6e0844f963/FMF-Issue-051926-1.jpg" alt="JustDario Tweet" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;At this point, it&rsquo;s apparent that Iran has gained the upper hand in its conflict with the U.S. and Israel in the Persian Gulf and the wider Middle East,&rdquo; Jim Rickards elaborates.
&ldquo;Trump has no clear plan for victory and no easy way out without risking the appearance of defeat.&rdquo;
It was Jim who warned us in early March that the U.S. military lacks the defensive and offensive missiles to wage a sustained campaign against Iran; the corporate media caught up with his assessment only a few days ago.
Call him a panican if you insist. But Jim&rsquo;s pro-Trump credentials are second to none. He still has contacts in the intelligence community from his days working with the CIA to track terrorist financing. If the trajectory of events is going poorly now, he&rsquo;s not afraid to level with his readers.
&ldquo;Trump has not achieved regime change,&rdquo; Jim continues. &ldquo;He has not secured the removal of Iran&rsquo;s highly enriched uranium stockpiles. If anything, the conflict has unified the Iranian people rather than divided them.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Meanwhile, the Strait of Hormuz remains effectively disrupted by the ongoing military standoff involving Iran and U.S. naval forces. Oil flows have been severely affected since late February.
&ldquo;The impact is not limited to the United States or the Persian Gulf. Japan, South Korea, China and parts of Europe depend heavily on energy shipments moving through the strait&hellip;
&ldquo;The only way to accomplish the goals of seizing uranium, forcing regime change and fully reopening the Strait of Hormuz would be a large-scale invasion backed by overwhelming air power.
&ldquo;If Trump chooses that route, he risks an escalation path similar to the one the U.S. experienced in Vietnam from 1965&ndash;1975.&rdquo;
And that&rsquo;s if such an undertaking is even possible. If you mustered every active combat division in the Army and Marine Corps, you&rsquo;d have about 175,000 troops. That&rsquo;s roughly the same number deployed at the peak of the Iraq War in 2007 &mdash; and Iraq is a quarter the size of Iran.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, why does the economic impact remain relatively muted (apart from, of course, higher fuel prices)?
The most dire forecasts of impacts overseas haven&rsquo;t come to pass. As Jim Rickards points out, &ldquo;The lights are still on in South Korea. Manufacturing plants are still humming in Japan. And U.S. stock markets are at or near all-time highs.&rdquo;
But Jim says rest assured the crisis is coming.
&ldquo;There are several reasons the crisis has not yet hit the global economy apart from the obvious impact of higher energy prices. First, a large volume of oil and liquid natural gas had already been shipped before the conflict escalated and was already at sea outside the Persian Gulf. Those shipments took four&ndash;eight weeks to reach their destinations, creating what amounted to a floating pipeline of energy supplies.
&ldquo;That cushion is now disappearing. The last vessels from the earlier shipping cycle are reaching ports, and replacement cargoes are limited.
&ldquo;After that, countries can draw down petroleum and natural gas held in storage, including strategic petroleum reserves. But those reserves are finite and difficult to refill under current conditions.&rdquo;
Meanwhile, &ldquo;fertilizer shortages could disrupt the spring planting season in the Northern Hemisphere. Helium shortages may begin constraining semiconductor production. And oil and natural gas shortages could hit Japan, South Korea, New Zealand and China particularly hard in the coming weeks.
&ldquo;The crisis is not over. In fact, it may barely be beginning.&rdquo;
In the meantime, however, U.S. oil futures are up nearly two bucks in the last 24 hours &mdash; $108.67 as we check our screens, the highest all month.
[Special message from Jim Rickards: &ldquo;On Thursday, June 4, at 2:00 p.m. ET, my team and I will broadcast a free LIVE summit from Philadelphia &mdash; the birthplace of the American experiment.
&ldquo;We&rsquo;ll break down what&rsquo;s really driving markets in 2026, including the Iran war and energy shock, the growing stress in private credit, inflation, the affordability crisis, critical minerals, gold, AI-driven power shortages and the future of the Trump agenda.
&ldquo;Joining me will be Dan Amoss, Byron King, Zach Scheidt, Matt Badiali, Adam Sharp and other trusted colleagues as we share our latest research, investment ideas and market outlook.
&ldquo;We&rsquo;ll also reveal select Strategic Intelligence stock picks LIVE during the broadcast.
&ldquo;This won&rsquo;t be a dry economics lecture. Expect fast-moving conversation, lively debate, behind-the-scenes stories and practical insights you can use immediately.
&ldquo;There&rsquo;s absolutely no cost to attend and no credit card required.&rdquo;
More details coming from Jim in the days ahead, but for now save the date: Thursday June 4.]
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />SpaceX Needs More Revenue
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Interesting timing here. Just as SpaceX gears up for the largest IPO in history, Starlink is quietly raising prices across several plans,&rdquo; says colleague Davis Wilson.
As mentioned in yesterday&rsquo;s 5 Bullets, SpaceX&rsquo;s IPO date is now set: Friday June 12, launching under the ticker SPCX.
And events are moving fast and furious. Regardless of the data plan, Starlink customers are seeing price increases of $5&ndash;10 a month.
&ldquo;Once a company prepares to go public,&rdquo; says Davis, &ldquo;Wall Street starts focusing intensely on revenue and earnings. Starlink is increasingly being positioned as the recurring cash flow engine helping justify SpaceX&rsquo;s reported $1.75 trillion valuation.&rdquo;
Maybe the analogy here is Apple. The hardware like the iPhone gets all the headlines &mdash; but AAPL is a subscription-revenue machine between the App Store, iCloud and Apple Music. Starlink performs the same function for SpaceX even as Falcon and Starship launches grab all the attention.
Thing is, &ldquo;competition is coming,&rdquo; Davis says. &ldquo;Amazon is rapidly building out Leo, which aims to compete directly with Starlink in satellite internet.
&ldquo;Right now, Starlink clearly has the lead. But the satellite internet race is just beginning, and pricing power could become much more important once serious competition enters the market.&rdquo;
As for the bigger picture, Davis cautions that &ldquo;massive IPOs often stumble out of the gate, even when the underlying company becomes wildly successful.&rdquo;
No one remembers now&hellip; but Facebook took a 40% spill after going public in 2012.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As was the case Friday and yesterday&hellip; high oil prices are fueling inflation expectations, which are driving Treasury yields higher.
At last check the 10-year T-note is up to 4.67% &mdash; the highest since early 2025. And the 30-year T-bond is up to 5.18% &mdash; another level last seen in 2007.
Unlike yesterday, the bond market jitters are spilling into the stock market &mdash; the S&amp;P 500 down two-thirds of a percent at 7,355 and the Nasdaq down 1%, breaking decisively below 26,000. The Dow is holding up somewhat better.
Also unlike yesterday, precious metals are selling off again &mdash; gold breaking below $4,500 for the first time since late March and silver approaching $74.
Crypto is holding its own compared with 24 hours ago &mdash; Bitcoin at $76,570 and Ethereum just over $2,100.
<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 and Electric Costs, Continued
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Data centers drove up wholesale power prices 75.5% during the first quarter of this year for the country&rsquo;s biggest grid operator.
PJM Interconnection serves 67 million customers in 13 states including Virginia, home to &ldquo;Data Center Alley&rdquo; in Loudoun County.
The 75.5% figure comes from a report issued by Monitoring Analytics, the independent market monitor for PJM.
&ldquo;Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance and high prices,&rdquo; says the report. &ldquo;But for data center growth, both actual and forecast, the capacity market would not have seen the same tight supply demand conditions.&rdquo;
Looking ahead, &ldquo;the price impacts on customers have been very large and are not reversible,&rdquo; the report goes on. &ldquo;The price impacts will be even larger in the near term unless the issues associated with data center load are addressed in a timely manner.&rdquo;
The report says the only practical solution is for data centers to supply their own power, not connected to the grid.
&ldquo;This broad bring-your-own new generation solution to the issues created by the addition of unprecedented amounts of large data center load does not require a continued massive wealth transfer through ongoing shortage pricing,&rdquo;
Clearly the issue isn&rsquo;t going away. Paradigm&rsquo;s Baltimore-area headquarters is in PJM territory. One of our team members reports seeing a &ldquo;No to Data Centers&rdquo; yard sign in the distant suburbs of Harford County &mdash; even though data centers aren&rsquo;t currently allowed under county code.
<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" /> Before anyone sees this and gets their boxers in a wad&hellip; this is another one of those memes I share both because it&rsquo;s pithy and because it reflects the vibe in at least some conservative pockets of social media&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6v4DcwS7u6Y6o7z6iW0LM7/9a25489c58e017757246b03c8b9b9ab7/FMF-Issue-051926-2.jpg" alt="Comic Relief" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Generational Warfare
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, I&rsquo;m still getting an earful about the last meme that got people&rsquo;s hackles up &mdash; the one shared in <a href="https://paradigmpressroom.com/post/kevin-warshs-no-win-bind">last Thursday&rsquo;s edition</a>.
&ldquo;I get you&rsquo;re trying to show the zeitgeist but at the same time you also show no respect to the massive numbers of readers who pay you who are in fact boomers and Gen-Xers.
&ldquo;Please be more respectful &mdash; and besides that, the millennials and Gen-Zers had it so freaking easy in a world that gave them so much protection and new exciting things, all the new tech, never had to worry about nothing to do, they had it all in the palm of their hands, probably the most spoiled generations IMO&hellip;&rdquo;
You get the idea. I won&rsquo;t share the whole thing. It was very long and it expressed the sort of generational grievances you find everywhere on social media these days. (Although I got a chuckle when he said he was born in 1977; this editor was born, ummm, rather earlier than that.)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> This generational-resentment thing is getting out of hand.
You see it when Kevin O&rsquo;Leary &mdash; the boomer who wants to build a massive data center in Utah &mdash; hits out at Gen-Zers who he says make $70,000 a year and spend $28 on lunch.
His rant earned an outstanding riposte from Melissa Witte, aka Villgecrazylady, aided by the Grok AI engine&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3tqfxdUtQqv9dH5dzy44Cb/0829a86151522cfd20bbbfa7452a7974/FMF-Issue-051926-3.jpg" alt="Mel Tweet" width="540px" />
But don&rsquo;t take it from someone who I&rsquo;m guessing is an early-wave millennial.
Take it from this early-wave Xer: If you&rsquo;re a boomer, it&rsquo;s not about how hard you worked and what you sacrificed. It&rsquo;s about how you were able to accumulate assets before the power elite hollowed out the middle class in this country and robbed subsequent generations of any hope they could live a better life than you.
(Why do you think they&rsquo;re not interested in having kids?)
Also, do not lose sight of how this year&rsquo;s graduating class got profoundly messed up by COVID lockdowns, restrictions and mandates when they were high school sophomores. (Or juniors or seniors if they ended up on the five- or six-year plan because of how universities deliberately stack prerequisites to extract more money from students.)
I&rsquo;ll leave it there for now. Meanwhile, a boomer reader&rsquo;s comment last week about the FICA taxes he paid over the years prompted the following reaction&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I read comments about Social Security with a bit of frustration. Yes, I am collecting from Social Security.
&ldquo;Politicians that were elected during my working years are largely responsible for destroying the system by giving out benefits that cannot be paid in the long run.
&ldquo;Those currently paying into the system should also realize that the system was set up assuming people would have children who would contribute in the future. Yes, SS is a Ponzi scheme, but not having children is a bleak future in many ways.
&ldquo;It would hurt me financially, yet it would truly be fair to cut benefits now to recipients because they did not protest 20&ndash;50 years ago.
&ldquo;There is no doubt in my mind that benefits will be compromised in the future. We will see reductions across the board, means testing, full taxation of benefits or destructive inflation so that the full benefit will be of much less value (and cost to the government).
&ldquo;Who will tell the uncomfortable truth to the population? Are there enough mature and thinking people in the country to understand the truth?&rdquo;
Dave responds: Your outlook for Social Security&rsquo;s fate is spot-on.
A pity, because the system wouldn&rsquo;t be that hard to fix. As I&rsquo;ve mentioned now and then since at least 2019, nothing about Social Security is so broken that it can&rsquo;t be fixed with some combination of higher taxes and higher retirement age.
(Yes, it would still be a Ponzi scheme. That&rsquo;s a separate question.)
Maybe in time the partisan divide can be overcome as it was in the early 1980s and the system can be put back on a sounder footing.
Medicare, however, is <a href="https://paradigmpressroom.com/post/luigi-mangione-isnt-the-problem">beyond hope</a>.

FMF-Issue-051926-Featured

All the Choices Are Bad

<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" />A Google-Elon Handshake?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Yes, resistance is real and warranted,&rdquo; a reader writes from Minnesota about the backlash against AI data centers.
We got a lot of responses to <a href="https://paradigmpressroom.com/post/backlash-data-centers">Friday&rsquo;s edition</a> exploring that backlash. We&rsquo;ll share several &mdash; including on-the-ground observations near prospective data center sites &mdash; later in Bullet No. 5.
But for the moment, we want to spotlight something we <a href="https://paradigmpressroom.com/post/data-centers-in-space">first tackled last fall</a> &mdash; data centers in space.
As a reminder, orbiting data centers solve the problems of Earth-bound data centers &mdash; the power consumption, the noise and so on. They could be powered by 24/7 solar power that doesn&rsquo;t compete with homeowners and businesses for scarce electricity on our pale blue dot.
Pie in the sky, you say? There are engineering challenges for sure. But Elon Musk thinks they can be overcome.
In fact, he thinks the next generation of SpaceX&rsquo;s Starlink satellites will be ideally suited for the task.
Orbiting data centers are central to SpaceX&rsquo;s investor pitch ahead of what&rsquo;s likely to be the biggest IPO in history. (And by the way, according to several media outlets the IPO date is now set &mdash; Friday June 12. That&rsquo;s 25 days from now. The ticker will be SPCX.)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Google doesn&rsquo;t think it&rsquo;s pie in the sky either.
Last week The Wall Street Journal reported that Google and SpaceX are in talks: SpaceX would launch the rockets taking Google data center satellites into orbit.
What makes that interesting is that last fall, Google announced its own launch initiative called Project Suncatcher &mdash; working with the firm Planet Labs (PL) to build prototype satellites for data centers.
Clearly, Google is covering its bases. Also, the new arrangement is to Google&rsquo;s advantage given its 6.1% ownership of SpaceX.
The news comes on the heels of Anthropic&rsquo;s own partnership with SpaceX &mdash; in which Anthropic gets access to all the &ldquo;compute&rdquo; within SpaceX&rsquo;s giant data center complex in Memphis. As part of that announcement, Anthropic expressed interest in having SpaceX launch its own orbiting data centers.
Now&hellip; step back for a moment to think about what this Google-SpaceX tie-up means&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The largest information infrastructure company in the world is negotiating with the largest space company in the world to deploy AI compute in space,&rdquo; says Paradigm tech investing pro Ray Blanco.
&ldquo;That single piece of news is the loudest validation yet of what&rsquo;s to come. Power-hungry, polluting industries &mdash; starting with AI data centers &mdash; are moving off Earth and into orbit.
&ldquo;This isn't a future event, although its full expression will be. It&rsquo;s starting to happen right now, in contracts and capital expenditure decisions being made.&rdquo;
The announcement lit a fire last week under several of the space-oriented names in Ray&rsquo;s Catalyst Trader portfolio.
&ldquo;This isn't a momentum trade riding the SpaceX IPO,&rdquo; says Ray. &ldquo;This is the market repricing space as a real industrial sector &mdash; defense, commercial and infrastructure.&rdquo;
Stay tuned in the days ahead. Now that the date for the IPO has been set, we&rsquo;re on the lookout for ways to piggyback the event for profits between now and June 12.
<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" />Data Center Energy Merger
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Back on Earth, the data center phenomenon is one of the big market stories today.
NextEra Energy (NEE) is merging with Dominion Energy (D) in a $67 billion deal.
It&rsquo;s interesting in that NextEra is one of those &ldquo;independent power producers&rdquo; that aren&rsquo;t regulated utilities. They&rsquo;ve been on our radar at Paradigm since early 2025. (A year ago at this time we did a rare free pick in 5 Bullets of Constellation Energy &mdash; which rose 34% by year-end.)
Dominion, on the other hand, owns regulated utilities in North Carolina and Virginia &mdash; the latter state being home to &ldquo;Data Center Alley.&rdquo;
For the moment, the Street is down big-time on NEE&rsquo;s effort to diversify, sending shares down 5.2% at last check. Dominion, on the other hand, has rallied 10%.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Elsewhere, the Iran war looms over markets now that the ceasefire has lasted nearly as long as the hot phase of the war.
Early this morning, Donald Trump said the &ldquo;clock is ticking&rdquo; for Tehran &mdash; and with that, U.S. oil futures have leapt over 1.3%. They&rsquo;re approaching $107 for the first time since April 30.
As was the case Friday, rising oil prices are translating to rising inflation fears and thus rising bond yields: The 10-year Treasury note is over 4.6% for the first time in a year. (That won&rsquo;t do any favors for mortgage rates.) The 30-year T-bond is up to 5.13%, another high last seen in 2007.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But unlike Friday, the fear isn&rsquo;t being transmitted through the stock market &mdash; not too much anyway. 
The Nasdaq is down about three-quarters of a percent, sinking back toward 26,000 &mdash; dragged down largely by another 2.6% drop in the Philadelphia Semiconductor index.
The S&amp;P 500 is down a little over a third of a percent at 7,381. The Dow is flat at 49,511.
Pullbacks are healthy, and that&rsquo;s how Zach Scheidt &mdash; strategist for both Altucher&rsquo;s True Alpha and Rickards&rsquo; Insider Intel &mdash; sees it right now.
&ldquo;A short-term reset in semis paired with a broadening into the less-loved parts of the tape would be the best possible setup for this market.
&ldquo;It calms the nerves around the chip mania. It gives the equal-weight S&amp;P 500 a chance to start participating. It pulls in money that's been sitting on the sidelines because everything looked too extended.
&ldquo;We've been calling for this kind of broadening for a couple weeks now. If we get it, the rally has a lot more room to run. If we don't &mdash; if money pulls out of semis and just sits in cash &mdash; that&rsquo;s a different conversation.
&ldquo;But the fact that many of the daily lows are getting bought tells me that the market bulls aren&rsquo;t out of gas just yet.&rdquo;
Meanwhile, precious metals are relatively quiet too &mdash; gold flat after Friday&rsquo;s beatdown at $4,541 and silver up less than a buck to $76.55.
No joy in crypto &mdash; Bitcoin sinking toward $76,000 and Ethereum very close to breaking below $2,100.
Oh, and in case you need a reminder&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/68Wp5XieLS3WRYEzu9bGmT/95af31974c0f7e9b5e00b4a937188ecc/FMF-issue-051826-1.jpg" alt="Don Johnson Tweet" width="540px" />
<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 There a Deal?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It appears the feds are about to drop their very strange &ldquo;fraud&rdquo; case against India&rsquo;s second-richest man.
During the final weeks of the Biden administration, the Justice Department charged the billionaire Gautam Adani with bribing Indian government officials to snag juicy solar-energy contracts.
Yes, Washington prosecuted someone overseas for bribing his own government officials &mdash; on the theory that it somehow amounted to &ldquo;misrepresenting&rdquo; his firm&rsquo;s anti-bribery and anti-corruption practices to its American investors and lenders.
(Did any of Adani&rsquo;s American investors complain? No, they did not.)
None of it made any sense. As I wrote at the time of the indictment, if you&rsquo;re in Washington, D.C.... and if your status as &ldquo;the world&rsquo;s sole superpower&rdquo; is hanging by a thread&hellip; and if the nation-state that&rsquo;s home to one out of six humans on Earth is deftly playing off Washington against Beijing and Moscow&hellip;
&hellip; then it&rsquo;s probably a dumb idea to prosecute the second-richest guy in that country on a flimsy pretext, especially when he&rsquo;s besties with the guy who&rsquo;s been prime minister for over a decade now.
Shortly after taking office last year, Donald Trump signed an executive order directing the Justice Department to revise the guidelines for how it enforces the 1977 law under which Adani was prosecuted. India&rsquo;s business media speculated about what it might mean for the Adani case.
Well, we&rsquo;re starting to learn.
Last week, The Washington Post reported the Justice Department is on the verge of dropping the case. Also last week the SEC settled a related civil complaint with Adani and his nephew for $18 million.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The timing of these developments is&hellip; interesting.
Lost in the pomp and circumstance of Trump&rsquo;s visit to China last week was a meeting of the BRICS foreign ministers in India.
As you&rsquo;ll recall, BRICS is a grouping of the world&rsquo;s biggest developing economies &mdash; Brazil, Russia, India, China and South Africa. Since 2023, those five countries have been joined by Ethiopia, Egypt, Iran, Indonesia and the United Arab Emirates.
Iranian foreign minister Abbas Araghchi urged his counterparts to condemn what he called &ldquo;violations of international law by the United States and Israel.&rdquo;
No condemnation was forthcoming.
In fact, there was no joint statement at the conclusion of the conference &mdash; not even something vague and vanilla about safe passage through international waters.
As host of the summit, India was on the hook to find consensus. Maybe that wasn&rsquo;t possible; depending on what media outlet you want to believe, the United Arab Emirates nixed any joint statement. And that makes sense given that among the Arab sheikdoms, the UAE is the most hostile to Tehran.
But on the other hand, maybe New Delhi found it advantageous to avoid consensus. As noted above, Indian leaders have spent years skillfully playing off Washington against Beijing and Moscow &mdash; their charter membership in BRICS notwithstanding.
(Also, don&rsquo;t forget India and China have an intractable border dispute.)
We&rsquo;ll never know if there was a quid pro quo here: India deep-sixes a BRICS condemnation of the United States, while Washington drops the case against Adani.
But stranger things have happened&hellip;
[Just in: As we&rsquo;re about to hit &ldquo;send,&rdquo; Reuters reports the Trump administration is dropping the criminal case.
&ldquo;The resolution of outstanding cases against one of the world's richest people came after Adani's attorney, who is also a personal attorney of U.S. President Donald Trump, said last month his client wanted to invest $10 billion in the United States ⁠but could not do so while the cases proceeded, according to a source familiar with the matter.&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" /> Here&rsquo;s a meme we just ran across that kinda tees up today&rsquo;s mailbag&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4ThRZWJFvfgTLlxAxG4aeC/a7804ec3b34f64a76d2fed74434b4dda/FMF-issue-051826-2.jpg" alt="Comedic Relief" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Data Center Backlash
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The average American does not want a data center installed anywhere near where they live,&rdquo; a reader writes as we resume the responses to Friday&rsquo;s edition.
&ldquo;There is no &lsquo;plus&rsquo; for them to risk it. Declining property values, risks to their water, noise pollution, risks to the air they breathe, increased utility costs, potential blackouts and traffic.
&ldquo;And for what? So Zuck and Gates and Bezos and O'Leary and the rest of the Killbillies can get even richer. Perhaps they will be willing to tempt communities into supporting them with a bit of a sweetener &mdash; a tax-free payoff to each property owner within a certain distance of the data center. Let's start the bidding at $1 million each. That's only $10 billion for 10,000 residents.
&ldquo;Chicken feed next to the data center capital expenditures. And tax deductible for them.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Indiana residents are resisting,&rdquo; says our next entry. &ldquo;Who would agree to rolling blackouts? It&rsquo;s insane.
&ldquo;I&rsquo;m not a tech person, but it is my understanding a large number of data centers are needed to create a network of autonomous vehicles, drones, robots and other &lsquo;intelligent machines&rsquo; operating over large geographical areas that run on cloud computing infrastructure. But why?
&ldquo;Can these machines not operate independently within specific use cases? Drones for farming. Robots for resource extraction. Can factories not run on in-house programming to make a toaster? Can a supercomputer not scrape data and find a cure for cancer with one small local server farm?&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I live in Cathedral City, California &mdash; next door to Palm Springs. Down valley is the town of Coachella&hellip; primarily on agriculture economy in a desert locale.
&ldquo;Residents of Coachella are currently opposing the approval of the construction of a Data Center Complex, based on concerns of air pollution, electric supply consumption and consumption of an already depleting supply of water in a desert environment.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I think the backlash is warranted! It's going to get worse.
&ldquo;AI centers will have complete control over your privacy. As soon as they get hacked into, the whole economy will be turned upside down.
&ldquo;Even now you can't trust Big Tech. It's all about control and taking your money in the name of progress. China and Russia are going to experience the same thing. The biggest difference is they will kill their own people to get their way.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We also heard from a longtime reader with very specific subject-area knowledge.
&ldquo;I have read &lsquo;the 5&rsquo; since its inception, but can count on one finger the times I have provided feedback. I have a MS (with Distinction) in Computer Science specializing in artificial intelligence.
&ldquo;Unlike all the &lsquo;experts&rsquo; that come out of the woodwork, I actually have some first-hand
knowledge of AI. I always hesitate to say &lsquo;it's different this time&hellip;&rsquo; but this time it actually may be different.
&ldquo;The potential for AI to be used for &lsquo;bad&rsquo; things is &lsquo;off the charts.&rsquo; If the potential is there,
then someone, somewhere, at some time will use it for nefarious purposes.
&ldquo;Personally, I agree with Anonymous Conservative, but I refer to &lsquo;data centers&rsquo; as &lsquo;human control centers.&rsquo; I pray I am wrong, but believe I will still be among the living when the SHTAIF (my own acronym &mdash; sh** hits the AI fan!).
&ldquo;Dave, I always enjoy reading your thoughts&hellip; and there will be no &lsquo;buts&rsquo; here.&rdquo;
Dave responds: Thanks to all who wrote in.
Tellingly, no one wrote in to say the issue is overblown or that the opposition is stirred up by activists with a hidden agenda.
And there&rsquo;s a significant slice of the Paradigm readership &mdash; mostly James Altucher subscribers &mdash; who presumably have high awareness about and enthusiasm for AI. Make of that what you will.
In any event, the issue isn&rsquo;t going away. It is not yet a risk factor in AI-related investments&hellip; but we&rsquo;d be remiss not to keep the issue on our radar as the year goes on&hellip;

FMF-issue-051826-Featured

A Google-Elon Handshake?

<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" />Backlash! (Data Centers)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Lake Tahoe &mdash; home to gorgeous skies, clear waters, year-round recreation. And soon, no electricity.
OK, that&rsquo;s an overstatement. But the fact remains that &ldquo;Lake Tahoe doesn&rsquo;t know where its power will come from after next ski season,&rdquo; says a report at Fortune &mdash; &ldquo;and it&rsquo;s a major problem for the 49,000 residents who call the region home.&rdquo;
The Tahoe area is served by a small power company called Liberty Utilities. Liberty gets its power from NV Energy, a Berkshire Hathaway subsidiary serving most of Nevada. NV Energy just gave notice that it will cease furnishing power to Liberty Utilities after May 2027.
The power currently going to Tahoe will be redirected to&hellip; data centers.
As it happens, northern Nevada is one of the fastest-growing data center corridors in the country.
The situation in Tahoe hasn&rsquo;t turned into protests. Not yet, not there.
But elsewhere&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;I&rsquo;ve never seen anything like this backlash against AI and data centers,&rdquo; says the veteran energy journalist Robert Bryce.
&ldquo;Just to put it in context,&rdquo; he said last weekend on the Financial Sense podcast, &ldquo;in all of 2025, there were 49 rejections or restrictions of data centers in the U.S. &mdash; 49 for all 12 months. There have already been 79 in the first four months and one week of 2026.&rdquo;
Polling by Quinnipiac University shows that among Americans who oppose data centers in their communities, 72% are concerned about rising electricity costs&hellip; 64% are concerned about the water that data centers suck up for cooling&hellip; and 41% are concerned about noise.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Ground Zero for the data center backlash this month is Box Elder County, Utah.
On May 4, an overflow crowd showed up for a county board meeting &mdash; 600 people packing an exhibition hall at the county fairgrounds, another 300 outside.
On the agenda &mdash; an enormous 40,000-acre data center project called Stratos, requiring 9 gigawatts of electricity, about twice the electricity currently used in the entire state of Utah.
The atmosphere got so heated the board retreated to an inner room and streamed the proceedings to the crowd on Zoom.
Commissioners voted to green-light the data center. They said their hands are tied because the land in question isn&rsquo;t zoned &mdash; and that by giving their approval, they&rsquo;ll have more of a say in the process going forward.
Opponents still hope the process won&rsquo;t go forward at all. Yesterday, they took their case to the steps of Utah&rsquo;s capitol building in Salt Lake City.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2TW7rEF96KBVey7H1aVKKT/b31adb67916b826128c2ffc2ddbe5ae8/FMF-Issue-051526-1.jpg.png" alt="No Data Center Protest" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />One of the major investors in Stratos has become a lightning rod because of his celebrity status &mdash; Kevin O&rsquo;Leary of Shark Tank fame.
This week he tried to make his case during an interview with Tucker Carlson. It didn&rsquo;t go well.
At one point, O&rsquo;Leary tried to invoke &ldquo;capitalism&rdquo; and Carlson shot back, &ldquo;How is this capitalism? If taxpayers are paying for some of it, how is that capitalism?&rdquo; O&rsquo;Leary dodged the question and went off on a tangent about how red states like Florida are attracting people and business from blue states like New York.
<a href="https://x.com/FurkanGozukara/status/2054745428927635471" target="_blank" rel="noopener"><img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3YTxhdT9mac1hp4A4ODOOW/7e55dbd10738edd79ee9be11b282904f/FMF-Issue-051526-2.jpg" alt="Furkan Tweet" width="540px" /></a>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />But it&rsquo;s not just about the NIMBY (&ldquo;not in my backyard&rdquo;) effect. Something bigger is at work. The backlash is &ldquo;cultural,&rdquo; according to Bryce.
&ldquo;Ordinary people are looking at Big Tech &mdash; Amazon, Google, Oracle, Microsoft, Meta/Facebook, the rest&mdash;and they don&rsquo;t trust Big Tech. Our privacy is being taken, and I think people are looking at all this and saying, &lsquo;I can&rsquo;t fight these monster, multitrillion-dollar companies in the virtual world. But I can fight them, or even stop them, in my neighborhood.&rsquo; I think that&rsquo;s key.&rdquo;
Carlson tapped into that sentiment elsewhere in his episode this week &mdash; apprehensions about AI and what the power elite plans to do with it.
&ldquo;If you&rsquo;re rolling out what they&rsquo;re telling you, and clearly they believe, is the single greatest technological change in the history of human life on this planet&hellip; you&rsquo;d think one of your main concerns is does this change the relationship of the powerless to the powerful, the relationship of the citizen to the state for example?
&ldquo;But that doesn&rsquo;t seem to be Larry Fink&rsquo;s main concern. His main concern is how do we protect our investment?&rdquo;
Let&rsquo;s delve into this cultural backlash for Bullet No. 2&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />&ldquo;Rewiring the World&rdquo;... for an AI Dystopia?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />AI was a major topic earlier this month at the Milken Institute Global Conference in Beverly Hills.
Among the speakers was Larry Fink &mdash; CEO of BlackRock, the world&rsquo;s biggest asset manager.
After discussing Iranian drone attacks on data centers in the United Arab Emirates during the early days of the Iran war, Fink said, &ldquo;How do we make sure we&rsquo;re protecting those $50 billion, $75 billion investments? We have to relook at everything because of the role of drone warfare.
&ldquo;Right now we&rsquo;re looking at it internationally but one of my concerns is could it be a domestic terrorism, using a $3,000 drone?&rdquo;
You didn&rsquo;t have to look far to find online commenters who took those remarks to mean that Fink believes anyone who opposes data center construction might be a budding domestic terrorist&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4knJESwgMslb225Yx6Tz4f/f3905a802c4f73fade68c0c4004a70d4/FMF-Issue-051526-3.jpg" alt="No Data Shadow of Ezra tweet" width="540px" />
Also speaking on the panel with Fink was the legendary investor Bruce Flatt, sometimes called the Warren Buffett of Canada. He waxed enthusiastic about &ldquo;rewiring&rdquo; the world economy.
&ldquo;For the next 10 years,&rdquo; he said, &ldquo;we will be rewiring the global economy to lay the networks [of] cloud, artificial intelligence factories and data centers&hellip;
&ldquo;There will be $10 trillion from power, AI factories, data centers and fiber buildout laid to basically rewire the world for the new economy that&rsquo;s coming.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />&ldquo;That new economy is probably going to be our total enslavement, owning nothing and pretending to be happy so we don&rsquo;t get beamed every night,&rdquo; says the individual behind the Anonymous Conservative website.
&ldquo;Increasingly when I hear &lsquo;AI data centers&rsquo; now, I really hear &lsquo;Our mechanism of total surveillance and complete control which will never allow our power to be challenged in any way.&rsquo; 
&ldquo;Unfortunately, as the Covid episode and the migrant replacement show, they appear to have a strong desire to kill us, and presently are only restrained somewhat by a small fear of triggering resistance. It looks like AI data centers may remove that small fear.&rdquo;
OK&hellip; I&rsquo;m not saying I agree with that assessment. I&rsquo;m just saying that&rsquo;s the sentiment out there. Anonymous Conservative is an extreme manifestation of a vibe that resonates with a sizable swath of the population at large.
These issues &mdash; both the localized backlash against data center construction and the wider backlash against AI on privacy/surveillance grounds &mdash; aren&rsquo;t going away.
It&rsquo;s at this point I turn it over to you, dear reader. Is there a backlash where you live? Do you think it&rsquo;s warranted? Do you think it&rsquo;s overblown? Write and we&rsquo;ll share your responses next week: <a href="mailto:feedback@paradigmpressroom.com">feedback@paradigmpressroom.com</a>
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The Disappointment Trade
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />It&rsquo;s one of those risk-off days in the market, across nearly every asset class. And for once, corporate media aren&rsquo;t falling all over themselves to find &ldquo;reasons.&rdquo;
&ldquo;S&amp;P 500 and Nasdaq fall, strained by tech pullback and yields spike,&rdquo; is the most that CNBC will venture.
Oftentimes there&rsquo;s no &ldquo;reason&rdquo; at all for a single day&rsquo;s trading action. But if there&rsquo;s one today, it might be this: Mr. Market was expecting some sort of grand bargain coming out of the Trump-Xi summit in Beijing &mdash; after which Chinese leaders would lean on their friends in Tehran to reopen the Strait of Hormuz.
But Trump is flying home with no such outcome.
Thus, the disappointment trade: U.S. oil futures are up nearly $3.50 to $104.59 &mdash; the highest all month. (Also, with the summit now over, Trump could conceivably resume the war later today after the markets close for the weekend. No one wants to be short crude under those circumstances.)
Rising oil prices translate to rising inflation expectations &mdash; which then translate to rising Treasury yields.
The yield on a 10-year note has sailed up to 4.58%, the highest in nearly a year. The 30-year bond is up to 5.12%, the highest since &mdash; yikes!
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3TMjoFem0j1V77QLSaJr8C/64b785cda7e952660b9560c023c9832b/FMF-Issue-051526-4.jpg" alt="Jim Bianco Tweet" width="540px" />
That&rsquo;s bond investors saying they want to be compensated for the risk of taking on Uncle Sam&rsquo;s debt at a fixed rate over a long stretch of time.
Jitters in the bond market of this magnitude almost always drag down the stock market. After closing yesterday over 7,500 for the first time, the S&amp;P 500 is down nearly 1%. Ditto for the Dow. And the Nasdaq is down nearly 1.25%.
The highflying chip stocks are dipping a little closer to earth, the Philadelphia Semiconductor index down 3.2%.
Precious metals? Getting crushed. Gold is down over $100 to $4,542. Silver is down over $7 to $76.26.
Crypto is faring reasonably well under the circumstances. Still Bitcoin is sinking toward $79,000 and Ethereum near $2,200.
One economic number of note: The Federal Reserve says industrial production jumped 0.7% in April &mdash; way more than expected. It remains to be seen whether that&rsquo;s the start of an uptrend, or just a surge of incoming orders from buyers hoping to beat looming price increases.
No major economic numbers next week &mdash; instead all eyes will be on Nvidia&rsquo;s earnings, due after the closing bell on Wednesday.
<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" />Fort Knox Redux
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />Aw c&rsquo;mon, not this again.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6DhCdDBpsECScuKFfElBl5/025b42f6620d4f6fdfd7860115a3dad9/FMF-Issue-051526-5.jpg" alt="Watcher guru tweet" width="540px" />
&ldquo;We wanted to go and knock on the door of Fort Knox &mdash; a very thick door &mdash; and to see whether or not we have any gold in there,&rdquo; said Donald Trump a few days ago on Sharyl Attkisson&rsquo;s syndicated news show.
&ldquo;It&rsquo;s a very interesting question. We played with that. I wonder if they left the gold in Fort Knox, because they steal a lot,&rdquo; he rambled. &ldquo;I do want to go to Fort Knox sometime.
&ldquo;I want to see if the gold is there, which I&rsquo;m sure it will be.&rdquo;
Whatever.
We remember the buzz early in Trump&rsquo;s second term. Our Jim Rickards <a href="https://paradigmpressroom.com/post/golds-hype-cycle-you-are-here">poured cold water</a> on the notion even then. By summertime, when it was obvious the audit was never gonna happen, <a href="https://paradigmpressroom.com/post/fort-knox-fake-out">Jim explained </a><a href="https://paradigmpressroom.com/post/fort-knox-fake-out">why</a> it was never gonna happen.
For anyone taking Trump at his word about Fort Knox now &mdash; well, it&rsquo;s time to trot out the meme.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/14SU2KQfOPh0bNNiPWwEtY/ea2ea66f6f85084f85ad791d88a1e0f5/FMF-Issue-051526-6.jpg" alt="Comedic Relief" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Generational Resentment
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" />The meme shared <a href="https://paradigmpressroom.com/post/kevin-warshs-no-win-bind">in yesterday&rsquo;s edition</a> brought forth the following objection&hellip;
&ldquo;Dave &mdash; saw your &lsquo;cartoon&rsquo; with retiring boomers laying in wait to attack hardworking millennials &mdash; interesting take on working-class boomers who busted their asses for years and get their basic SS bene and Medicare.
&ldquo;Some like this old guy remember all the years paying self-employed FICA as well as FICA for two&ndash;three employees for years. Dude, I coulda done better avoiding SS and paying into my own acct. in lieu of that. Anyway, I am now looking for the nearest high cliff so that I can just keep on walking.
&ldquo;Short memories are the part of the devil's brew to create hate and discord. Maybe you thought it was just humor, but you missed the mark, and you dropped a notch or two in my personal respect ledger.&nbsp;
&ldquo;You still get a bunch of things right, so I'll keep reading. Hang in there (not literally!)&rdquo;
Dave responds: Sometimes I share a meme not because I necessarily agree with it, but as a reflection of the zeitgeist. And that&rsquo;s the case here.
No doubt you worked hard to attain your present circumstances. Point is, there are legions of millennials and Gen-Zers who feel that no matter how hard they work, they&rsquo;ll never be able to live as well as the boomers of their personal acquaintance.
This might be especially so for the oldest millennials, now turning 45 (!) and approaching the midpoint of their working years.
Today&rsquo;s not the time to get into the whys and wherefores of the younger generations&rsquo; resentments. Suffice to say they exist &mdash; and they&rsquo;re going to come more and more to the surface in the years ahead.
No judgment attached here &mdash; just an early-wave Xer calling balls and strikes&hellip;

FMF-Issue-051526-Featured

Backlash! (Data Centers)

<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" />Kevin Warsh&rsquo;s No-Win Bind
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Kevin Warsh might rue the day he put himself in contention for the job of Federal Reserve chair.
He won Senate confirmation yesterday, 54-45. The only Democrat to vote yea was Pennsylvania&rsquo;s John Fetterman.
Mainstream media coverage focused on the narrow vote, in contrast to years gone by when Jerome Powell and Janet Yellen commanded more bipartisan support. Yesterday&rsquo;s vote &ldquo;reflected how tensions with the White House have dragged the Fed deeper into the political fray,&rdquo; as The Wall Street Journal sees it.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> That&rsquo;s not even half the story: &ldquo;Warsh is stepping directly into one of the most dangerous policy environments in decades,&rdquo; says Paradigm macro maven Jim Rickards.
As you know, Donald Trump wants the Fed to lower short-term interest rates. Presumably Warsh wants to accommodate the president&rsquo;s wishes &mdash; in contrast with Fed hawks who want to leave rates alone or even raise them.
Unfortunately for Warsh, the most recent inflation and job numbers &ldquo;give the Fed&rsquo;s hawkish wing exactly what it wants,&rdquo; Jim tells us.
As mentioned here on Tuesday, the official inflation rate has sailed up to a three-year high of 3.8%. And the headline number for new jobs during April was a healthy 115,000.
From the standpoint of conventional monetary policy there&rsquo;s no reason to cut rates at the next Fed meeting a month from now.
And even if Warsh wants to cut, he&rsquo;s one of only 12 members of the Fed&rsquo;s Open Market Committee; he has to persuade at least six other members to see things his way.
&ldquo;The hawks will argue the labor market remains resilient,&rdquo; Jim says. &ldquo;They&rsquo;ll say inflation risks tied to war-driven energy prices are still elevated. They&rsquo;ll warn that cutting rates prematurely could ignite another inflation wave.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;That leaves Warsh trapped between economics and politics before he even settles into the chairman&rsquo;s office,&rdquo; Jim goes on.
&ldquo;If he pushes aggressively for cuts, critics will immediately accuse him of doing the White House&rsquo;s bidding. Every move will be scrutinized through the lens of political influence. Once markets believe monetary policy is being dictated politically rather than economically, trust erodes quickly.
&ldquo;But Warsh faces the opposite danger as well,&rdquo; Jim goes on.
&ldquo;If he moves too cautiously&hellip; if he delays cuts and sounds overly concerned about inflation&hellip; he risks disappointing the very political coalition that helped elevate him to the position in the first place.
&ldquo;That creates a no-win scenario.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Especially in light of the fact that &ldquo;Warsh isn&rsquo;t inheriting a normal inflation cycle. He&rsquo;s inheriting stagflation risk,&rdquo; says Jim.
It&rsquo;s that awful 1970s combination of economic stagnation and inflation at the same time. Inflation is roaring again this year &mdash; and the job market isn&rsquo;t nearly as healthy as the headline numbers suggest. For instance, temporary employment is weakening; when businesses need to cut payroll, temps are usually the first to go.
Warsh now owns &ldquo;a policy trap unlike anything we&rsquo;ve seen in decades,&rdquo; Jim concludes.
&ldquo;Markets initially may celebrate his arrival. Wall Street generally likes the idea of lower rates. Risk assets tend to rally whenever investors believe monetary easing is coming.
&ldquo;But markets may be underestimating how difficult it will be for Warsh to actually deliver those cuts.&rdquo;
Bottom line: &ldquo;This isn&rsquo;t simply a personnel change at the central bank. It&rsquo;s the beginning of a political, economic and monetary collision that could shape markets for years to come.&rdquo;
And we&rsquo;ll aim to keep you ahead of the curve.
<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: Bad Signs, Good Signs
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> While the U.S. stock market is at all-time highs, something disturbing is happening beneath the surface.
One day recently, the S&amp;P 500 set a record close. But at the same time, less than 60% of the index&rsquo;s 500 component stocks exceeded their 50-day and 200-day moving averages.
&ldquo;It has happened only a handful times in the past,&rdquo; says Paradigm trading pro Enrique Abeyta &mdash; &ldquo;all of them between Dec. 21, 1998, and March 22, 2000, the end of the internet bubble.&rdquo;
No, that&rsquo;s not a sell-everything signal. Because on the other hand, last week the S&amp;P notched a weekly close above its upper Bollinger Band for the first time in over a year.
&ldquo;The Bollinger Band,&rdquo; Enrique tells us, &ldquo;is a technical signal measuring distance from moving averages.&rdquo;
What just happened has happened only a few times before &mdash; and 100% of the time the S&amp;P was higher both nine months later and one year later.
Put it all together and Enrique says we have a valuable signal for market timing &mdash; &ldquo;good/great for the next year but then watch out below!&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Speaking of good/great, the S&amp;P just surpassed the 7,500 mark for the first time &mdash; up over three-quarters of a percent on the day.
The Nasdaq&rsquo;s gain is even stronger, now just 25 points away from 26,700. And for once, the Dow is more or less keeping pace &mdash; back over 50,000 for the first time since February.
Paradigm readers have racked up a slew of winners over the last 24 hours&hellip;
<ul>
<li>Enrique&rsquo;s Breaking Profits readers have collected 300% on Credo Technology &mdash; one of his first recommendations when this entry-level newsletter was launched last year</li>
</ul>
<ul>
<li>PRO-level readers of Rickards&rsquo; Strategic Intelligence bagged 63% gains on a long-term holding in Seabridge Gold</li>
</ul>
<ul>
<li>Chris Cimorelli&rsquo;s 10X Trade Club readers bagged a fast 291% playing Apple call options and another 284% with calls on a Chinese internet ETF</li>
</ul>
<ul>
<li>On the bearish side, Rickards&rsquo; Crisis Trader readers collected 336% in less than a month playing put options on Tractor Supply.</li>
</ul>
The big economic number today is retail sales &mdash; up 0.5% from March to April, on par with Wall Street&rsquo;s expectations. Of course, that&rsquo;s skewed by rising gasoline prices; back those out and the jump is a more modest 0.3%. Which is even more disappointing when you realize these numbers are not adjusted for inflation.
Meanwhile, not much news we can see yet from the Trump-Xi meeting in Beijing &mdash; other than Xi making clear that the issue of Taiwan could bring the two superpowers into conflict. (Three years ago your editor <a href="https://paradigmpressroom.com/post/no-blood-for-chips">made the case</a> that there&rsquo;s nothing about Taiwan worth risking American blood and treasure over.)
Treasury yields are backing down but the 10-year note is still over 4.45% and the 30-year bond remains above 5%.
In the commodity complex, U.S. oil futures are down slightly but still over $100. Gold is back below $4,700 and silver is off over two bucks to $85.14.
Bitcoin is rallying, just shy of $81,000 again while Ethereum sits at $2,284.
<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 Follies
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In Washington, FDA commissioner Marty Makary just got the heave-ho &mdash; for the wrong reasons, in the eyes of our biotech expert Ray Blanco.
Makary resigned under pressure yesterday &mdash; &ldquo;pushed out over his decisions regarding vapes and abortion pills,&rdquo; says Ray.
And not for rejecting a string of promising drugs that would have helped desperate and dying patients.
&ldquo;That tells you what the political priority structure is,&rdquo; Ray tells us. &ldquo;But the FDA has always been a mess.
&ldquo;In 1992, FDA Commissioner David Kessler said the quiet part out loud: &lsquo;If members of our society were empowered to make their own decisions&hellip; then the whole rationale for the FDA would cease to exist.&rsquo;
&ldquo;We had the man running the agency, on the record, stating that the entire institution depends on patients not being allowed to choose.
&ldquo;That principle is why a dying cancer patient can't access a therapy that might save them. It's also why a healthy adult couldn't decline a vaccine they had questions about during COVID. It&rsquo;s the same architecture.
&ldquo;A 2018 analysis in Cancer Medicine, authored by oncologists at the University of Ottawa, MD Anderson, and UCSD, calculated what FDA delays actually cost. The finding: One life-year is lost in North America for every 2.2 minutes of approval delay. Worldwide, one life-year every 12 seconds.
&ldquo;Makary made things worse because he doubled down on denying lifesaving therapies.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Alas, Makary&rsquo;s departure doesn&rsquo;t change what Ray calls &ldquo;the fundamental anti-freedom-to-choose architecture that is the FDA&rsquo;s reason to exist.
&ldquo;Moreover the denial machine he created remains in place&rdquo; &mdash; led, Ray says, by Katherine Szarama, a Makary pick still serving as acting director of the FDA&rsquo;s Center for Biologics Evaluation and Research.
&ldquo;She wrote the policy that produced the recent gene and cancer therapy rejections before she joined the agency.
&ldquo;I predict biotech will rally when she&rsquo;s replaced.&rdquo;
Stay tuned&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief, Pulse of the Nation Edition
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We present the following both for its entertainment value &mdash; and as a revealing window into attitudes and resentments here in these United States&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2mbU6mhXA0pp6JpNkIORDo/824399954276b0c784afd04bebdb7448/FMF-Issue-051426-1.jpg" alt="Comedic Relief" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: AI Regulation (and More)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;The idea of the Federal Death Authority (FDA) being in charge of AI is a joke. Right?&rdquo; a reader writes after <a href="https://paradigmpressroom.com/post/ai-speeding-toward-a-brick-wall">Tuesday&rsquo;s edition</a>.
[To be clear, the Trump administration is talking about FDA regulation as a model for AI regulation. Which is just as concerning. But go on&hellip;]
&ldquo;I remember the story published after the death of FDA regulator <a href="https://en.wikipedia.org/wiki/John_Nestor">John Nestor</a>, and his habit of getting on the Washington beltway and immediately moving to the left-most lane while slowing his car down to 55 because &lsquo;that's the speed limit.&rsquo; Also the fact that his reign of uselessness was marked by not approving any new drugs.
&ldquo;That's exactly what's needed for great innovations!&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Regarding AI, believing restraint in a capitalist model is a part of the equation is laughable to me,&rdquo; counters another reader &mdash; &ldquo;not to mention (fill in your favorite foreign adversary) will stop at nothing to shove their AI advances up America&rsquo;s ass. Our adversaries&rsquo; advances in AI scare me more than the monsters shepherding AI in the U.S.
&ldquo;Each day I look forward to The 5. I don&rsquo;t necessarily agree with all you share, but it always gives me a lot to think about and I always believe you try to deliver objective perspective. Thank you.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The discussion of AI regulation Tuesday prompted our final correspondent to say that &ldquo;Dave, your skepticism about Trump has been validated.
&ldquo;His idiotic Iran war seems to have completely changed his America First trajectory. It has also started making him afraid of the bogeyman. He &lsquo;lost&rsquo; the 2020 election in large part because he did not follow his instinct relative to COVID and shutdowns. He got fooled into getting into this war by those that were good at playing on his hubris. Now we are stuck, and our kids will be in the crosshairs if Trump can't get comfortable taking an L here.
&ldquo;But he's now second-guessing himself on other things, like AI, and stopped thinking in terms of USA first. He's now in this &lsquo;make the world a better&rsquo; place, which is where every stupid president has been politically, except maybe Reagan. And look how America has suffered.
&ldquo;Trump is turning out to be a RINO, as they all end up being, save for a few, e.g., Massie. So discouraging.
&ldquo;If even our greatest hopes turn out to be like Trump is turning out to be, there is no hope. I believe we will be a full communist state within 10 years. Between the libertarians that do nothing except root for the unobtainable, the RINOs that all perform the role of fisherman, i.e., giving a little line here and there to reel in the conservative fish, and fascist leftists, we are doomed.&rdquo;
Dave responds: And people call me cynical!
As long as you brought it up&hellip; the special interests&rsquo; long knives are out for Thomas Massie, with his primary election in Kentucky&rsquo;s Fourth Congressional district next Tuesday.
&ldquo;Don&rsquo;t believe the BS last-minute accusations and betting market shifts,&rdquo; says the comedian and podcaster Dave Smith. &ldquo;These are obvious signs of a concerted effort.&rdquo;
&ldquo;Our country hangs in the balance,&rdquo; adds Clint Russell of the Liberty Lockdown podcast. &ldquo;Thomas Massie may be our last line of peaceful defense.&rdquo;
I&rsquo;d like to think Russell is engaged in hyperbole here &mdash; but I fear he might be on to something.

FMF-Issue-051426-Featured

Kevin Warsh’s No-Win Bind

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />AI Speeding Toward a Brick Wall
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> If you care about American competitiveness in the AI space, today&rsquo;s Bullet No. 1 won&rsquo;t be easy reading.
Twice last week, we took note of a major change of heart on the part of the Trump administration. The power of Anthropic&rsquo;s new Mythos model &mdash; supposedly unearthing major vulnerabilities in nearly every operating system and web browser &mdash; sparked fears within the West Wing of a major AI-enabled cyberattack.
Thus an executive order of some sort is in the works that will result in much more government oversight of the sector.
In addition, Team Trump is doubling down on a Biden-administration scheme in which major AI firms share their models with the feds before they&rsquo;re released to the public.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Gone are the freewheeling days of 2025 in which Silicon Valley expected Trump and crew to keep their hands off AI.
&ldquo;We&rsquo;re going to make this industry absolutely the top,&rdquo; said the president last summer. &ldquo;We can&rsquo;t stop it with politics. We can&rsquo;t stop it with foolish rules and even stupid rules.&rdquo;
That was then, this is now: During a recent interview on Fox Business, Kevin Hassett &mdash; director of Trump&rsquo;s National Economic Council &mdash; fleshed out what the coming executive order might look like.
&ldquo;We&rsquo;re studying possibly an executive order to give a clear road map to everybody about how this is going to go and how future AIs that also potentially create vulnerabilities should go through a process so that, you know, they&rsquo;re released in the wild after they&rsquo;ve been proven safe, just like an FDA drug.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Seriously? The FDA is the model for AI regulation?
For decades, the entire purpose of the FDA has been to impose an extensive and costly regulatory regime &mdash; protecting well-capitalized Big Pharma firms that have the resources to shoulder the costs, while freezing out any upstarts.
Of course, it&rsquo;s all sold to the public as necessary for our safety. That&rsquo;s even though the system still allows disasters to come to market like fen-phen (a combo of weight-loss drugs) and Vioxx (a painkiller). Both caused major heart problems and were ultimately withdrawn.
An &ldquo;FDA of AI&rdquo; would send the industry quickly hurtling toward a brick wall.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> This isn&rsquo;t the first time an agency notorious for stifling innovation and progress has been cited as the model for AI regulation.
In May of 2023, about six months after ChatGPT became a phenomenon, we took note when OpenAI chief Sam Altman was hauled before Congress for a hearing.
He shamelessly played to the sensibilities of his audience at that moment &mdash; begging for government regulation and licensing on the grounds that AI might be used to propagate &ldquo;misinformation.&rdquo;
&ldquo;We&rsquo;re going to face an election next year,&rdquo; he said. &ldquo;And those models are getting better.&rdquo;
One senator suggested a good template for AI regulation would be the Nuclear Regulatory Commission. Altman said the &ldquo;NRC is a great analogy&rdquo; for the sort of regulation he supports.
Reality check: The NRC all but killed off nuclear power in this country: Since the 1970s, construction time for new plants ballooned from four years to 14&hellip; while plans for 60 reactors were scrapped.
Gee, those 60 reactors might&rsquo;ve come in handy right around now when AI needs more electricity and the utility industry can&rsquo;t keep up with the demand. (More about that in Bullet No. 4 today.)
But again, OpenAI was and is an entrenched incumbent in the AI space; it&rsquo;s in Altman&rsquo;s interest to use the heavy hand of government to strangle any up-and-coming competitors.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Adopting an FDA-style regulatory regime for AI would represent a shocking policy reversal by the Trump administration, and a major about-face on how America has approached software, online speech and digital commerce,&rdquo; says a statement from Neil Chilson at the Abundance Institute and Adam Thierer at the R Street Institute.
The new developments this month mark &ldquo;a startling turn&rdquo; from Trump&rsquo;s previous stance &ldquo;where he allowed tech companies to do what they wanted without hardly any government oversight,&rdquo; the Brookings Institution&rsquo;s Darrell West tells MarketWatch.
Then again, it&rsquo;s not altogether surprising: The major advocate for the hands-off approach was venture capitalist David Sacks &mdash; who left his post as the administration&rsquo;s AI and crypto czar in March.
Sacks, an original member of the &ldquo;PayPal mafia&rdquo; with Peter Thiel and Elon Musk in the 1990s, told Bloomberg he&rsquo;d &ldquo;used up&rdquo; his 130 days as a special government employee not subject to Senate confirmation. (In reality, he was pushed out days after saying the administration should &ldquo;declare victory and get out&rdquo; of the Iran war.)
Investment implications?
<a id="2"></a>
On the one hand, regulation favors all the big incumbents &mdash; both publicly traded ones like Microsoft and Google and the still privately held ones like OpenAI and Anthropic. On the other hand, a lack of up-and-coming competition makes the big incumbents fat and lazy, limiting their profit potential. They become better for short-term trades than long-term investments.
This story is just beginning. We&rsquo;ll stay on top of it in the months ahead&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Oil: Reality Reasserting Itself?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Maybe the paper price of oil is moving closer to the real-world price of physical barrels.
U.S. futures are up another 4% today, now over $102 &mdash; back to where it was a week ago, before <a href="https://paradigmpressroom.com/post/groundhog-day-iran-edition">the alleged &ldquo;scoop&rdquo; by Axios reporter Barak Ravid</a> about the White House &ldquo;getting close to an agreement with Iran on a one-page memorandum of understanding to end the war.&rdquo;
To hear the mainstream tell it, the jump yesterday and today is a function of Trump now pouring cold water on the prospects for a deal, or even for the cease-\fire to hold up.
But really&hellip; is he going to restart the war just before he meets with Chinese President Xi Jinping? (Trump lands in Beijing tomorrow.)
More likely that the price of crude futures is coming into closer alignment with the price of &ldquo;wet&rdquo; barrels for delivery to customers. We&rsquo;ve mentioned regularly that this real-world price is closer to $140 or higher &mdash; and we&rsquo;ve also described <a href="https://paradigmpressroom.com/post/the-cia-and-the-oil-price">the long history</a> of how oil futures are manipulated for political ends.
Reality might be starting to assert itself.
Meanwhile, the real-world impacts continue to mount. The following tweet from the owner of an oil-change franchising outfit went viral last night: We present it as a public service announcement in case you missed it.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3ykGJmLSaS1YfgwPQDzG2g/5b9cd804c781a6e244a587247ea3c344/FMF-Issue-051226-1.jpg" alt="Costa Tweet" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> At the same time the mainstream is finally catching up to what we&rsquo;ve been telling you for weeks&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3b4k5OuipD7VQqX0vA5uB9/b624d8d3c7034a0828f07fae0a610295/FMF-Issue-051226-2.jpg" alt="WSJ Tweet" width="540px" />
Ummm&hellip; we mentioned the supertanker&rsquo;s arrival a week ago today.
And that was on top of Byron King&rsquo;s previous exposes in this space &mdash; one of them <a href="https://paradigmpressroom.com/post/about-that-iranian-proposal/#3">over a month old!</a> &mdash; about the dire situation in California thanks to the fact the state is not connected to any major U.S. pipelines and thus relies on imports from the Persian Gulf region.
Byron tells us this week the situation would be even worse were it not for an influx of tankers arriving from the Gulf Coast via the Panama Canal &mdash; more in the last two months than during all of 2025, in fact.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The big market-moving story today is the release of the official April inflation figures.
They clocked in more or less as expected &mdash; up 0.6% month-over-month and 3.8% year-over-year. That&rsquo;s the fastest annual pace since May of 2023. Inflation has clearly broken out of the 2.4&ndash;3.0% range where it oscillated from mid-2024 until just before the war began.
With that, nearly every major asset class is selling off&hellip;
<ul>
<li>The S&amp;P 500 is down nearly 1% to 7,344. The Dow&rsquo;s loss is narrower, the Nasdaq&rsquo;s steeper</li>
</ul>
<ul>
<li>Treasury prices are falling, sending yields higher &mdash; the 10-year note back over 4.4% and the 30-year bond over 5%. (Generally these levels have triggered some sort of conciliatory announcement from the administration about the war, the better to calm down the bond market. We&rsquo;ll see&hellip;)</li>
</ul>
<ul>
<li>Gold is down nearly $80 to $4,655 and silver down nearly 3% to $83.56. (In fairness, silver needs a rest&hellip;)</li>
</ul>
<ul>
<li>Crypto is languishing, with Bitcoin sinking back toward $80,000 and Ethereum at $2,260.</li>
</ul>
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Mood on Main Street
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The vibe on Main Street amid the war is similar to the vibe amid the tariff drama just over a year ago.
The National Federation of Independent Business is out with its monthly Small Business Optimism Index. The April reading is 95.9 &mdash; basically unchanged from March, marking two straight months below the index&rsquo;s long-term average dating back to the mid-1970s. Similar numbers emerged in April 2025 after the fright brought on by the president&rsquo;s &ldquo;Liberation Day&rdquo; announcement.
&ldquo;Inflationary pressures continue to be a challenge for Main Street,&rdquo; says NFIB Chief Economist Bill Dunkelberg. Gee, ya think?
That said, inflation does not top the portion of the survey where respondents are asked to identify their single-most important problem. Instead &ldquo;quality of labor&rdquo; is back on top for the first time in six months; 18% of respondents say good help is hard to find.
&ldquo;In our rural northern California area,&rdquo; says a retailer, &ldquo;qualified/skilled/knowledgeable help is nonexistent. Unskilled is nonexistent.&rdquo;
&ldquo;I&rsquo;m on a livestock farm,&rdquo; says a Tennessee business owner, &ldquo;and it is impossible to find help. Any warm body expects $20 per hour for what should be a minimum-wage job.&rdquo;
&ldquo;It is difficult to find qualified auto technicians that want to progress in this field,&rdquo; says a response from New York.
After labor quality cited by 18%, taxes were right behind at 17% and inflation at 16%. Everything else was 10% or less.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Power Grid: Level 3 Alert
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. electric utilities are operating under a rare Level 3 alert &mdash; the highest level issued by NERC, the North American Electric Reliability Corporation.
The reason &mdash; &ldquo;data centers unexpectedly dropping load or oscillating demand rapidly, creating reliability concerns,&rdquo; reports the industry website Utility Dive.
In its own words, NERC warns that utilities &ldquo;generally did not have sufficient processes, procedures or methods to address emerging computational loads.&rdquo;
Don&rsquo;t get the wrong idea: We&rsquo;re not necessarily staring at widespread blackouts this week. But the organization is ordering its member utilities to take seven steps toward stabilizing the grid and report back on their progress by Aug. 3.
Context: Even before AI burst on the scene in late 2022 we were warning the grid was increasingly unstable. Too many coal and nuclear plants were being retired, and there wasn&rsquo;t nearly enough solar and wind capacity coming online to take their place.
AI data centers took a situation that was already urgent and made it dire.
Later this month, NERC will be out with its annual &ldquo;Summer Reliability Assessment&rdquo; &mdash; identifying which parts of the country will be most vulnerable to rolling blackouts in the event of a severe heat wave. We&rsquo;ve been monitoring this report regularly since 2022, so stay tuned&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Hantavirus
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> A couple of readers took the time to write after your editor sounded an early alarm <a href="https://paradigmpressroom.com/post/spacex-partners-with-rival">in yesterday&rsquo;s edition</a> about hantavirus, with an eye toward the events of COVID six years ago&hellip;
&ldquo;A point of clarification on that British Army team parachuting onto Tristan da Cunha,&rdquo; says one of our regulars &mdash; &ldquo;it has nothing to do with any containment protocols. Remote island with no airport.&rdquo;
&ldquo;As a board-certified practicing industrial hygienist,&rdquo; says another reader, &ldquo;I feel the hantavirus fears are way overblown and not comparable to a highly communicable respiratory virus like COVID.&nbsp;
&ldquo;Hantavirus is caused by rodent feces that have become dried on surfaces, and through mechanical processes have been able to become airborne and then inhaled. (Even though rare varieties have some ability for person-to-person transmissibility &mdash; such cases still require very close contact between individuals &mdash; and therefore population spread is very limited.)
&ldquo;Appreciate your insights and articles &mdash; even though I sometimes disagree &mdash; I always find your stuff interesting to read.
&ldquo;Keep up the good work &mdash; and thanks for helping us to be better investors.&rdquo;
Dave responds: Thanks to both of you for the input. To be clear, I brought it up yesterday not with an eye toward the actual threat but toward the suspiciously alarmist media treatment. After <a href="https://paradigmpressroom.com/post/covid-9-11">the tyranny and trauma imposed on this land during 2020</a>, I think the wariness is warranted.
One of my must-follows on X in recent weeks is Calvin Froedge, founder of the Marhelm shipping data platform. He says he lost friends in January 2020 when sounding an early alarm about a &ldquo;novel coronavirus&rdquo; emerging in China&rsquo;s Hubei province.
He says he is not ready to sound a similar alarm now. But he&rsquo;s on alert for evidence suggesting hantavirus was subject to gain-of-function research developing a strain that can be easily spread through coughing and sneezing.
That evidence has not emerged yet&hellip; but under the circumstances, it&rsquo;s wise to keep an eye out.
At the very least, it&rsquo;s been discouraging and disquieting this week to look up at my screens of international news channels &mdash; and once again be greeted by the sight of WHO chief Tedros Adhanom Ghebreyesus.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4QzdM03vQ4vQ0Z3e7CYune/e4eae8176215b3b377b89a3419250c9c/FMF-Issue-051226-3.jpg" alt="Tedros Interview" width="540px" />
Really, I&rsquo;d have been happy to go through the rest of my life never seeing that guy again&hellip;

FMF-Issue-051226-Featured

AI Speeding Toward a Brick Wall

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />SpaceX Partners With Rival
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> On the surface, the story is only mildly interesting.
Anthropic, the company behind the Claude AI platform, announced a deal last week with SpaceX.
"We're partnering with SpaceX to use all the capacity of their Colossus One data center," said Anthropic head of product Ami Vora.
That&rsquo;s the big one located in Memphis &mdash; so big that Elon Musk made sure to install its own on-site power plant fed by natural gas, so it would be less of a burden on the local power grid.
The agreement will help Anthropic meet the exploding demand for its services.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But the story gets more interesting when you realize Anthropic and SpaceX are competitors.
Recall that Musk merged his AI venture called xAI into SpaceX earlier this year.
When Colossus One went into service in July 2024, its initial task was to train up xAI&rsquo;s chatbot Grok. Now Anthropic gets access to all that computing power in Memphis.
So why would they be striking up a partnership like this?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> That&rsquo;s where the story gets most interesting.
Here&rsquo;s what SpaceX said in its announcement of the partnership: "As part of this agreement, Anthropic also expressed interest in partnering to develop multiple gigawatts of orbital AI compute capacity.&rdquo;
We first started telling you about data centers in space last November. If people are getting sick and tired of data centers being built in their neighborhoods and driving up electric bills &mdash; and they are &mdash; what can the AI industry do?
Well, the industry can put data centers in orbit. The advantages are unbeatable &mdash; 24/7 solar power that doesn&rsquo;t compete with homeowners and businesses for scarce electricity back on Earth.
By January, Musk himself was talking up orbiting data centers at the World Economic Forum in Davos, Switzerland: &ldquo;The lowest-cost place to put AI will be in space. And that will be true within two years, maybe three at the latest.&rdquo;
If Anthropic&rsquo;s needs are exploding to the point it needs access to Colossus One&hellip; space really is the next logical frontier. Anthropic needs Musk and SpaceX to make it happen &mdash; and Musk is happy to play ball.
<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" />AI and Productivity: It&rsquo;s Happening
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It&rsquo;s not just that demand for &ldquo;compute&rdquo; is exploding. &ldquo;We&rsquo;re starting to see real evidence that the compute is being used productively,&rdquo; says Paradigm analyst Zach Scheidt &mdash; &ldquo;rather than just being hoarded for the next training run.&rdquo;
Zach wears several hats in our firm &mdash; including as senior analyst for Altucher&rsquo;s True Alpha. He perked up last week when he saw the latest numbers on productivity from the U.S. Labor Department.
Bottom line: &ldquo;Workers are getting more done in fewer hours.&rdquo;
That means AI is no longer just a story about the prodigious amounts of capital that Microsoft, Meta, Google and Amazon are pouring into data centers.
Result: &ldquo;We're moving back toward &lsquo;buy ANYTHING AI-related at any price&rsquo; territory,&rdquo; says Zach.
&ldquo;That's the kind of environment where stocks tend to go higher than anyone expects, faster than anyone expects.&rdquo;
Yes, Zach is exercising caution. But for now, he says you have to respect the fact that &ldquo;earnings have been strong, capital spending continues to be robust and the AI cycle is showing no signs of slowing down regardless of what's happening overseas.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Still, &ldquo;the rally is narrowing and the rebound is being driven by the smallest number of stocks on record,&rdquo; says Zach.
Per the Financial Times, over half of the S&amp;P 500&rsquo;s gains in the past month came from only five names &mdash; Google, Broadcom, Amazon, Nvidia and Apple.
Result: SPY, the big S&amp;P 500 ETF, is surging. But RSP &mdash; the equal-weighted ETF where every stock makes up 0.2% of the total &mdash; is stalling out.
&ldquo;That tells me there&rsquo;s weakness under the hood,&rdquo; Zach says. &ldquo;Not enough to short the market on. But enough to keep us from getting too aggressive on the long side.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As a new week begins, the major U.S. indexes are all in the green &mdash; though not by much.
At last check the S&amp;P 500 is adding to Friday&rsquo;s record close &mdash; up a quarter percent and over 7,400. The Nasdaq&rsquo;s gain is more modest, but the index is nonetheless approaching 26,300. Once more, the Dow is the laggard, nearly flat at 49,640.
Congratulations are in order for Microcap Millionaire readers who on Friday bagged 363% gains with a tech industry play. (We&rsquo;re holding back on the name because the recommendation was to sell only half the position and let the rest ride.)
The big economic number coming this week is the Labor Department&rsquo;s official reading on inflation, due tomorrow.
<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 War and the Virus
<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 over two bucks to $97.62 now that Donald Trump has labeled Iran&rsquo;s response to U.S. peace terms as &ldquo;totally unacceptable.&rdquo;
[Update: Trump subsequently said the ceasefire is on &ldquo;massive life support.&rdquo; Now we&rsquo;re less than 50 cents away from $100.]
We won&rsquo;t thrash over the details. You can read them anywhere. Suffice to say the Strait of Hormuz is still all but closed. The impacts today include, but are not limited to&hellip;
<ul>
<li>The giant fertilizer producer Mosaic slowing production at two of its U.S. plants for lack of sulfur coming from the Gulf region (MOS also yanked its guidance for the rest of the year; shares are down 2.2% as we write)</li>
</ul>
<ul>
<li>South Korea imposing price controls on gasoline (with the predictable result of shortages)</li>
</ul>
<ul>
<li>India&rsquo;s prime minister asking citizens to resume working from home &mdash; as during the COVID era &mdash; to conserve fuel.</li>
</ul>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As long as we brought up COVID, we&rsquo;d better address hantavirus &mdash; just to get it on the record.
You&rsquo;ve probably heard the headlines: The passengers aboard that cruise ship where three people died have, for the most part, returned to their home countries: The Americans are being evaluated in Nebraska and Georgia.
The official line is that the risk to the public is &ldquo;very low.&rdquo; Which sounds reassuring until you remember that Dr. Anthony Fauci described the danger from COVID as &ldquo;just minuscule&rdquo; on Feb. 17, 2020. Barely a month later, he was practically ordering state governments to shut down bars, restaurants, gyms, etc.
And then there was this event on the world&rsquo;s most remote inhabited island&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3ndMLcE9dlu10HsmiUJDGW/97cac78bcf4738e25eba3f15d18c21b2/FMF-051126-1.jpg" alt="Parachute" width="540px" />
Tristan de Cunha is a British colony in the South Atlantic, home to 250 inhabitants. One of them was on the cruise ship in question, departing during a stop there.
The imagery of the paratroopers was stark and dramatic enough to remind at least one social media observer of the viral videos in early 2020 &mdash; people walking down the street and suddenly keeling over.
This is not a forecast that a new round of lockdowns is coming. But it would be foolhardy at this point to dismiss the notion out of hand.
With that, we&rsquo;ll move 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" />Gold&rsquo;s Third Phase
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Gold sits at $4,723 as a new week begins &mdash; the highest in nearly three weeks &mdash; but still well below the nosebleed highs in January at $5,600.
Last week we got a gold update from both our macro maven Jim Rickards and Money &amp; Power editor Buck Sexton.
Now we turn to trading pro Enrique Abetya &mdash; who says gold&rsquo;s price action so far this year has developed in three distinct phases&hellip;
<ul>
<li>Overbought conditions. &ldquo;The market had reached a point where gold felt invincible&hellip; The setup became too consensus-driven, too extended and ultimately unsustainable in the short term. What followed was inevitable. A multimonth correction designed to burn off excess positioning, reset expectations and bring the market back into balance. That process is largely behind us now&rdquo;</li>
</ul>
<ul>
<li>Selling amid a crisis. Why did gold sell off when war broke out? &ldquo;Large holders of gold, particularly in regions impacted by the crisis, needed liquidity. With oil revenues disrupted and financial pressures building, they were forced to raise cash. And gold, one of the most liquid assets, became a source of funds&hellip; Coming on top of an already overbought unwind, this dynamic accelerated the decline. It extended the correction beyond what most investors expected. But it also created a dislocation. Because once that forces selling subsides, the underlying drivers of gold reassert themselves. This is the phase we are entering now.&rdquo;</li>
</ul>
<ul>
<li>Repairing the damage. &ldquo;As the liquidity-driven selling tied to the crisis fades, the natural buyers of gold begin to step back in. At the same time, the broader macro backdrop remains supportive. Inflation pressures are still present. Global debt levels remain elevated. Central banks continue to accumulate gold. Geopolitical uncertainty has not disappeared. If anything, those forces have become more entrenched.&rdquo;</li>
</ul>
&ldquo;That&rsquo;s why corrections like this tend to be temporary,&rdquo; Enrique concludes. &ldquo;They reset positioning, shake out weak hands,and ultimately set the stage for the next leg higher.&rdquo;
Enrique positioned readers of The Maverick in a gold miner just last week. And readers of his Breaking Profits are up 35% in less than two months on another gold name.
While gold is moving little today, silver is on a tear &mdash; up nearly five bucks and pushing $85 an ounce.
➢ Lest we forget, crypto is consolidating near recent highs &mdash; Bitcoin at $81,594 and Ethereum at $2,329.
<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" /> OK this is almost certainly photoshopped, but&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/OrYHZs8Lzt57XyKUFtdSq/88cef510bd30c8ca45c8feedf75ba1a8/FMF-051126-2.jpg" alt="Prophecy" width="540px" />

FMF-051126-Featured

SpaceX Partners With Rival

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />&ldquo;Tank Bottom&rdquo; Date: July 4
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The ceasefire in the Persian Gulf is now one month old. And while the guns aren&rsquo;t firing (for the most part), the noise is nonetheless deafening.
A deal is on, a deal is off. The president posts on social media, the war secretary holds a press conference, the Iranians put out a new Lego video.
Noise, noise, noise.
Once more, here&rsquo;s what matters most&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/qD2jsifipXRwzmigEVq0q/843acf906dc53266837c6db6ecebc31a/FMF-Issue-050826-1.jpg" alt="Daily crossing in Hormuz." width="540px" />
AAA says the national average price for a gallon of regular unleaded gasoline this morning is $4.55 &mdash; up from $4.17 a month ago and $3.15 a year ago.
Product is pricey &mdash; but it&rsquo;s still available.
That might not be the case in some spots by the Fourth of July &mdash; which, interestingly, is also a critical date for the Iranian side.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;When do storage tanks run empty?&rdquo; a Bloomberg TV anchor asked Carlyle Group&rsquo;s Jeff Currie yesterday.
When it comes to commodities, Currie is a vital voice outside of Paradigm that we follow closely.
His answer: &ldquo;It&rsquo;s going to be sometime in the month of May that you&rsquo;re going to end up with Europe hitting tank bottoms.
&ldquo;And in the U.S. it&rsquo;s somewhere in that July Fourth time period &mdash; if not sooner.
&ldquo;By the way, the inventories number coming out of the U.S. &mdash; the ones we got last night, the ones last week &mdash; I&rsquo;ve never seen anything like that before.&rdquo;
Overall crude inventories still look robust. But beneath the surface&hellip;
<ul>
<li>Fully 5% of the U.S. Strategic Petroleum Reserve has been drained since late March (and it was already near historically low levels)</li>
</ul>
<ul>
<li>Gasoline inventories are now 4% below the 5-year average for this time of year</li>
</ul>
<ul>
<li>Distillates inventories (diesel, fuel oil) are 11% below the 5-year average for this time of year.</li>
</ul>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As we&rsquo;ve mentioned in recent days, July 4 is also a date that looms large for Iran.
Last week, corporate media outlets reported that the U.S. blockade on Iranian ports is bottling up Iranian oil shipments to such an extent that there&rsquo;s nowhere to store it and the country&rsquo;s oil infrastructure will soon be damaged beyond repair.
Bloomberg even put a date on that point of no return &mdash; sometime between tomorrow and May 18.
We gave these reports the side-eye from the start. More objective observers examining the evidence and presenting their findings on social media figured Iran had two more months before reaching the bursting point.
Later that week, Ronald Reagan&rsquo;s budget director David Stockman ran the numbers and came to the same conclusion: Iran can stick it out until nearly the Fourth of July.
Now it seems that America is facing the same drop-dead date &mdash; for the opposite reason.
Eight weeks from tomorrow. Stay tuned&hellip;
➢ For the record: We have a new estimate of the Iran war&rsquo;s cost to the U.S. taxpayer: $72 billion for the first 60 days, according to Stephen Semler of the Center for International Policy.
<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" />Insider Trading: Is the Denial a Confession?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> About the skeevy-looking insider trading in the oil markets this week&hellip;
As we mentioned <a href="https://paradigmpressroom.com/post/groundhog-day-iran-edition">in real-time on Wednesday</a>, U.S. oil futures plunged when Axios reporter Barak Ravid reported that &ldquo;the White House believes it's getting close to an agreement with Iran on a one-page memorandum of understanding to end the war.&rdquo;
About an hour and 10 minutes before Ravid&rsquo;s report was posted, someone or a group of someones placed a $920 million bet on falling oil prices. It generated $125 million in profits in just 3&frac12; hours.
Later on Wednesday, an X account called &ldquo;The Hormuz Letter&rdquo; made a grave accusation&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5B1kUs5TeFYyw9Ecm4TcgY/3823e99d2308896d1f583bf8f7651d4d/FMF-Issue-050826-2.jpg" alt="Hormuz Letter" width="540px" />
Background: The Hormuz Letter is an account launched last December. It claims to be Iranian although X says it&rsquo;s based in Europe. It&rsquo;s acquired nearly 50,000 followers, most of them since the war began.
So&hellip; who are these &ldquo;whistleblowers,&rdquo; exactly? White House insiders? Financial pros who know the ins and outs of market plumbing?
The Hormuz Letter did not say in any subsequent posts. Nor did it seem to be latching onto the reporting of any Western news outlet &mdash; nothing your editor could track down, anyway.
And so I blew the whole thing off as engagement bait on the part of The Hormuz Letter.
Until&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6e5STviTXr3M98T9FOqEJ2/ff00b043429797ffa660e1a1b987904c/FMF-Issue-050826-3.jpg" alt="Barak Ravid Tweet" width="540px" />
Why on Earth would Barak Ravid deny a thinly sourced claim from an Iranian X account that&rsquo;s been around for less than six months?
Of course The Hormuz Letter hit back with the obvious rejoinder: &ldquo;The fact that you&rsquo;re denying it confirms it&rsquo;s true.&rdquo;
This much we know for certain: Barak Ravid is a veteran of Unit 8200, Israel&rsquo;s version of the National Security Agency. He&rsquo;s also been a reliable conduit for authorized leaks from the Trump administration for months now &mdash; including a handful of market-moving claims that peace is at hand.
<a id="3"></a>
&ldquo;Time after time,&rdquo; tweets the independent journalist Max Blumenthal, &ldquo;his &lsquo;reports&rsquo; are discredited and/or shot down by Iranian officials.
&ldquo;And now, everyone who&rsquo;s paying attention is onto him.&rdquo;
Moving on&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />All-Time Lows, All-Time Highs
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In addition to the war noise, the government&rsquo;s monthly jobs report figures into the market mix today.
The headline number was robust: The wonks at the Bureau of Labor Statistics say employers added 115,000 jobs in April &mdash; nearly double what the typical Wall Street economist was expecting. The official unemployment rate held steady at 4.3%.
The longer-term picture is still&hellip; concerning.
As we&rsquo;ve pointed out now and then in recent months, the fact the U.S. border has been effectively sealed for the last year changes the calculus when it comes to new jobs: In years gone by it took at least 150,000 new jobs a month to keep up with population growth. But without an influx of immigrants, the number could now be as low as 30,000.
Unfortunately, the average over the last 12 months is closer to 21,000. Not dire, but not great.
The report also says average hourly earnings grew 3.6% over the last year &mdash; which is more than the official inflation rate of 3.3%.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The numbers notwithstanding, wage earners don&rsquo;t feel as if they&rsquo;re keeping pace: The other big economic report today is consumer sentiment from the University of Michigan.
At 48.2 the number is still in the toilet &mdash; not quite record lows, but abysmal for a survey that&rsquo;s been conducted monthly since 1977. Asked what the inflation rate will be over the next 12 months, the average respondent said 4.5%.
Often this survey is little more than a reflection of how the stock market is doing. Not now &mdash; not with consumer sentiment near all-time lows and the market near all-time highs.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Speaking of the market near all-time highs&hellip; the S&amp;P 500 is on the way to its sixth-straight winning week.
At last check the index is up three-quarters of a percent to nearly 7,400 &mdash; more than offsetting yesterday&rsquo;s modest losses. The Nasdaq is likewise in record territory, comfortably surpassing 26,000. The Dow, as usual, is the laggard &mdash; barely in the green and still 350 points away from 50,000.
&ldquo;The chip stocks are soaring again today, leaving everything else in the dust,&rdquo; says Greg Guenthner at The Trading Desk. &ldquo;But this rally is stretched to the max, and it&rsquo;s starting to concern me. I&rsquo;d like to see some consolidation before it gets out of control.&rdquo;
Amid this rally, the Paradigm editors have racked up several wins in the last two days&hellip;
<ul>
<li>Readers of Enrique Abeyta&rsquo;s Breaking Profits bagged 227% in 13 months with shares of Quanta Services (PWR). And in Enrique&rsquo;s premium advisory The Maverick, long-dated call options on PWR generated 468% gains in less than a year</li>
</ul>
<ul>
<li>Meanwhile, Altucher&rsquo;s True Alpha readers collected 50% gains on the first half of a couple of trades, while letting the other half ride.</li>
</ul>
The aforementioned noise about the situation in the Persian Gulf has put U.S. oil futures at $94.68 &mdash; not much different from yesterday, but well below the $102 we saw at this time last week. (That&rsquo;s the power of a Barak Ravid article.)
Precious metals are gyrating around their late-April levels &mdash; gold over $4,700 and silver comfortably above $80.
Bitcoin is only a few bucks from reclaiming $80,000 while Ethereum rests at $2,281.
<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 one might have been around a few years ago, but it&rsquo;s relevant once more&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/hRN6LMZVIRQbeaht8rkZu/7722dcf3c003240259686f42b1c3c754/FMF-Issue-050826-4.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: YOLO, California Fuel, Liquid Gold
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In a reminder that we can&rsquo;t take certain things for granted here&hellip; a reader submits a three-word email after Greg Guenthner&rsquo;s guest essay yesterday: &ldquo;What is YOLO?&rdquo;
YOLO is short for &ldquo;You only live once.&rdquo; The term came to the fore after legions of young people entered the markets for the first time during COVID lockdowns in 2020&hellip; and really took off amid the frenzy over GameStop and other &ldquo;meme stocks&rdquo; in early 2021.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> On the subject of the last tanker of Persian Gulf oil arriving in California this week, we heard from someone in an inland county that votes reliably &ldquo;red&rdquo;...
&ldquo;I think this &lsquo;no oil-no gasoline&rsquo; crisis will be used by the California greenies to say, You should have bought your electric cars and solar panels, now look who&rsquo;s laughing.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Buck Sexton&rsquo;s reminder <a href="https://paradigmpressroom.com/post/groundhog-day-iran-edition">in Wednesday&rsquo;s edition</a> that &ldquo;when cash is king, gold gets sold&rdquo; prompted the following reader comment&hellip;
&ldquo;That is a great point &mdash; and it jibes with a recent <a href="https://www.macleodfinance.com/p/gold-differences-of-opinion">observation</a> by Alasdair Macleod: &lsquo;U.S.-centric pricing is a credible explanation for gold&rsquo;s performance&rsquo; re: why its price seems to be doing the opposite of what it should.
&ldquo;Lately, gold falls when the risk of war increases or the price of oil goes up, and rises when tensions ease.
&ldquo;Fun times!&rdquo;
Dave responds: Really, it&rsquo;s a point we can&rsquo;t emphasize often enough. In the short term, events occur that might lead you to believe gold should rise &mdash; but it doesn&rsquo;t. (As I like to say, should is the most dangerous word in all of investing.)
If there&rsquo;s a scramble for liquidity &mdash; margin calls, derivative bets gone bad, whatever &mdash; gold is one of the most liquid assets out there. It&rsquo;s easy to sell, so it gets sold.
The most instructive example is the 2008 financial crisis. Gold surpassed $1,000 an ounce for the first time in March of that year. But when the crisis went critical that autumn, it tumbled to nearly $700.
Then it began to roar higher &mdash; reaching a peak of $1,900 less than three years later.
But leave aside the liquidity issues: After the insane ramp gold experienced in January &mdash; from roughly $4,300 at the start to $5,600 at the peak, some sort of consolidation period before the next leg higher was inevitable.
And that&rsquo;s where we are now: Gold at $4,713 might not feel great. But if you&rsquo;re a long-term holder, take heart &mdash; $4,713 was a record high less than four months ago!

FMF-Issue-050826-Featured

“Tank Bottom” Date: July 4

<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" />Groundhog Day, Iran Edition
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Here we go again&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/DGQ7P7D50yJIYQQm3dBT0/bdc4039ffdc0b55422082ca5a558234f/FMF-Issue-050626-1.jpg" alt="Peace Deal" width="540px" />
There&rsquo;s a lot that&rsquo;s happened in the last 18 hours or so. Let&rsquo;s try to make sense of it.
Last night, Donald Trump declared a &ldquo;pause&rdquo; to a scheme announced only 48 hours earlier in which international shipping would be &ldquo;guided&rdquo; through the Strait of Hormuz &mdash; but not with U.S. Navy escorts.
Just as well. No one understood the initial announcement. &ldquo;We&rsquo;ve really no idea what all this means,&rdquo; one shipping exec told the Financial Times. &ldquo;There&rsquo;s no communications plan, no routing information has been published and there&rsquo;s no assurance ships will be supported in the event of any attack.&rdquo;
The &ldquo;pause&rdquo; announcement was good to knock down the price of U.S. oil futures decisively below $100 for the first time in a week.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Then early this morning came another &ldquo;peace is at hand&rdquo; post from one of the Trump administration&rsquo;s favorite reporters &mdash; Barak Ravid of Axios.
&ldquo;The White House believes it's getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations, according to two U.S. officials and two other sources briefed on the issue.&rdquo;
Never mind, as Cato Institute scholar Justin Logan tweets, that &ldquo;Barak Ravid has predicted seven of the last zero peace deals between the U.S. and Iran.&rdquo;
Crude plunged in a matter of moments from over $98 to under $90.
➢ And par for the course, there was what looks like blatant insider trading ahead of Ravid&rsquo;s &ldquo;scoop&rdquo; &mdash; a $920 million bet on falling oil prices that generated $125 million in profit in just 3&frac12; hours.
Meanwhile, stock futures sailed higher &mdash; as frequently happens under these circumstances.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/h7YJgow88rPX8RzyJf8VK/efd5f67e25cf4c63ab739927a306d416/FMF-Issue-050626-2.jpg" alt="TT3 Tweet" width="540px" />
A couple of hours later, Trump posted on his Truth Social site that Iran will be bombed at a &ldquo;much higher level&rdquo; if there&rsquo;s no deal.
That reversed the price action in oil &mdash; from under $90 back to $96. Still substantially lower than was the case when we were writing to you 24 hours ago. Checking our screens at midday, it&rsquo;s $95.57.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The major U.S. stock indexes leaped higher as soon as trading opened at 9:30 a.m. EDT.
And those gains are still holding &mdash; the S&amp;P 500 up over 1% in record territory at 7,340 and the Nasdaq up 1.6% in record territory at 25,728. (As usual of late, the Dow is the laggard, up 1% and still 200 points away from 50,000.) It helps that there&rsquo;s been another blowout earnings report from a chipmaker: AMD is up 16.8% after boffo numbers and strong guidance.
Bonds are rallying too, sending yields down. At last check the yield on a 10-year Treasury note is back below 4.36%. What we&rsquo;ve been noticing in this space is being picked up by others&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7HbK9hZvs0AbMMeRYPDZid/e2d62216edc34c9b9d5463518696d7fb/FMF-Issue-050626-3.jpg" alt="Gromen Tweet" width="540px" />
Precious metals are rallying big-time &mdash; gold up 2.7% to $4,681 and silver up 5.6% to $76.80. Crypto, however, is consolidating with Bitcoin around $81,500 and Ethereum still a ways away from $2,400.
Meanwhile, all the supply-chain snarls we chronicled again <a href="https://paradigmpressroom.com/post/summer-of-shortages-050526">yesterday</a> remain with us: The big Dutch firm Philips says it&rsquo;s having trouble obtaining helium for its MRI and CT scanners.
&ldquo;Medical imaging has a huge global footprint and unfortunately indeed with the Strait of Hormuz we saw the vulnerability of the dependency of such a finite material,&rdquo; CEO Roy Jakobs tells Bloomberg.
And that&rsquo;s where things stand with the war. Let&rsquo;s nervously turn our attention to other matters&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Gold: What&rsquo;s Next?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Central banks picked up their gold buying in the first quarter of 2026,&rdquo; says Paradigm macroeconomics maven Jim Rickards.
&ldquo;Elevated central bank buying ramped up in early 2022, after Russia invaded Ukraine. Biden and his EU cronies foolishly confiscated $300 billion worth of U.S. Treasuries owned by Russia's central bank.
&ldquo;This instantly caused central bankers around the world to buy gold, and reconsider their allocation to U.S. Treasuries. It was the spark that accelerated the current bull run, and there&rsquo;s no end in sight.&rdquo;
The World Gold Council reports that the total for the first three months of 2026 is 244 metric tons, the strongest quarterly figure in more than a year.
If the Q1 pace holds for the rest of the year, 2026 will easily exceed last year&rsquo;s total.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6Z5BIbaF0gQIDTVUhro8im/a680a13461fcedaec0e613648632fad6/5.6_5_Bullets_Chart.png" alt="Buying Accelerates" width="540px" />
Major buyers in the previous quarter included Poland, Uzbekistan and China.
Key point: China is notorious for underreporting its gold purchases. Officially its gold stash totals 2,313 metric tons. Unofficially it could be at least twice as large.
For reference the U.S. total is 8,134 metric tons &mdash; <a href="https://paradigmpressroom.com/post/the-truth-about-gold-manipulation">assuming those bars aren&rsquo;t being leased to foreigners</a>.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But what does any of this say about gold&rsquo;s investment potential with a third of 2026 already in the rear-view?
Many market observers scratched their heads when the war began&hellip; and the gold price fell.
&ldquo;Gold is supposed to go up when the world gets messy,&rdquo; observes Money &amp; Power editor (and nationally syndicated radio host) Buck Sexton. &ldquo;And yet gold has pulled back.&rdquo;
What gives?
&ldquo;The truth is when things start to break &mdash; and make no mistake, they are &mdash; investors don&rsquo;t sit around calmly rebalancing their portfolios,&rdquo; is his answer. &ldquo;They scramble and raise cash, grabbing whatever liquidity they can get their hands on.
&ldquo;And in a world still running on the U.S. dollar, that means everyone needs dollars. Now.&rdquo;
As Mr. Sexton sees it, it&rsquo;s not a gold problem but rather a liquidity problem.
&ldquo;The war in the Middle East disrupted the global economy. Oil and natural gas don&rsquo;t move without friction anymore and countries still have to pay for that energy &mdash; no matter the price.
&ldquo;And they can&rsquo;t pay in gold. They have to pay in dollars.
&ldquo;On top of that, there&rsquo;s a slow-motion credit squeeze underway, especially in private markets. Funds that were perfectly comfortable six months ago are suddenly dealing with losses, redemptions and margin calls.
&ldquo;That&rsquo;s where gold comes in. Gold is liquid. It&rsquo;s globally recognized. It can be turned into dollars quickly. So when pressure builds, it becomes a source of cash.
&ldquo;Simple as that. When cash is king, gold gets sold.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But don&rsquo;t lose sight of that chart above. &ldquo;Even as countries deal with short-term pressure &mdash; raising dollars, stabilizing currencies, managing crises &mdash; they&rsquo;re also thinking long term and building a buffer,&rdquo; Sexton continues.
&ldquo;They&rsquo;re dumping gold with one hand&hellip; and stockpiling it with the other.&rdquo;
Deutsche Bank forecasts $8,000 gold by 2031. &ldquo;As long as central bank demand continues and gold becomes a larger share of global reserves, we could hit that number even sooner.&rdquo;
After all, &ldquo;supply isn&rsquo;t exactly flooding the market. Mining output has been relatively flat and new discoveries are harder to come by. It&rsquo;s not easy to just flip a switch and increase production.&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" />AI, the White House and Hackers
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The Trump administration is digging its fingers still deeper into the AI pie.
<a href="https://paradigmpressroom.com/post/summer-of-shortages-050526">In yesterday&rsquo;s edition</a> we told you how the administration has been rethinking its hands-off approach to AI. It seems someone or a group of someones in the White House was freaked out by Anthropic&rsquo;s new Mythos model. Anthropic says it&rsquo;s so powerful that it unearthed &ldquo;high-severity vulnerabilities&rdquo; in &ldquo;every major operating system and web browser.&rdquo; A sweeping new AI executive order might be in the works.
Now comes word that Team Trump is doubling down on a Biden-administration scheme in which major AI firms share their models with the feds before they&rsquo;re released to the public.
When launched in 2024, Anthropic and ChatGPT parent OpenAI immediately signed on. Now The Wall Street Journal reports that Google, Microsoft and Elon Musk&rsquo;s xAI have also bought into the policy.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Uncomfortable question: If the feds discover vulnerabilities that these companies managed to overlook, will they tell these companies or keep it to themselves?
In 2017, we chronicled the &ldquo;Vault 7&rdquo; revelations of WikiLeaks: The CIA discovered vulnerabilities in the hardware and software produced by American high-tech companies like Cisco.
But rather than say to those companies, &ldquo;Hey, we found this stuff &mdash; you might want to patch it,&rdquo; they said to themselves, &ldquo;Hey, what if we use this stuff to jack around with the Chinese and the Russkies and the Iranians?&rdquo;
The fact that hackers might discover the same vulnerabilities and use them to jack around with you? The CIA couldn&rsquo;t have cared less.
At the time, Reuters described how as soon as WikiLeaks published the documents, engineers at Cisco were pulled off other projects &ldquo;to analyze the means of attack, create fixes and craft a stopgap warning about a security risk affecting more than 300 different products&hellip;
&ldquo;That a major U.S. company had to rely on WikiLeaks to learn about security problems well-known to U.S. intelligence agencies underscores concerns expressed by dozens of current and former U.S. intelligence and security officials about the government's approach to cybersecurity.&rdquo;
This time, the AI giants may never find out what the feds discover until millions of their users are hacked: The 2017 document dump was WikiLeaks&rsquo; last major revelation.
<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" /> A timely reminder&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5t2kvU2a606d9qwygvxeUj/2e91506636359b0a45f5a8a9179810c4/FMF-Issue-050626-5.jpg" alt="Timely Reminder" width="540px" />[Hat tip: Ed Steer&rsquo;s Gold &amp; Silver Daily. I&rsquo;ve been a subscriber for years.]
<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: Trader Challenge, ASTS
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I entered your Top Trader challenge selecting one stock, which results in making a mockery of investing in a sense,&rdquo; a reader writes &mdash; &ldquo;a gamble on long-shot investment.
&ldquo;I'd rather see something along the lines of selecting five stocks over a fiscal quarter&hellip; an investing contest with merit. Just my humble opinion.&rdquo;
Dave responds: Thank you for the input. Maybe I didn&rsquo;t emphasize it strongly enough at the outset, but this contest had nothing to do with investing. That&rsquo;s why we called it the Top Trader challenge.
Once you&rsquo;re looking at a quarterly timeframe you&rsquo;re in the hazy dividing line between trading and investing. But we&rsquo;ll take your suggestion into consideration as we figure out how to mix it up for the next go-round.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Finally, a very short email: &ldquo;ASTS &mdash; Are you still buying?&rdquo;
To be clear, this is a free e-letter and as such we seldom tackle specific recommendations drawn from our paid publications &mdash; out of respect for the paying subscribers.
But&hellip; AST SpaceMobile is a workhorse holding in James Altucher&rsquo;s entry-level newsletter Altucher&rsquo;s Investment Network. It&rsquo;s up 345% from the initial recommendation in January 2021. This is hardly the first time we&rsquo;ve discussed it here.
Yes, the share price has taken a spill since its peak in February. But Ray Blanco &mdash; the tech and biotech specialist on James&rsquo; team &mdash; is as enthusiastic as ever.
In its quest to deliver satellite wireless service to the mobile phone you already have in your pocket, ASTS has an unbeatable advantage &mdash; access to the 700 MHz and 800 MHz portions of the wireless spectrum.
&ldquo;This is the band that actually penetrates buildings,&rdquo; says Ray &mdash; &ldquo;the signal where your phone lives.&rdquo; Aspiring competitors are stuck on higher frequencies where service will be less reliable.
Ray added to his personal position after the failed launch of an ASTS satellite last month. It was a one-off failure on the part of the rocketmaker Blue Origin. As he sees it, the fundamental story hasn&rsquo;t changed.
Indeed, shares are screaming 9.2% higher today on the news that Rakuten &mdash; the Japanese conglomerate that was an early investor in the firm &mdash; has finished its previously announced plans to sell 15 million ASTS shares. (Rakuten was deep in debt; it needed cash and it was sitting on 20X gains with ASTS.)
ASTS reports earnings next Monday. If you&rsquo;re an Altucher&rsquo;s Investment Network subscriber, watch your email (or the Paradigm mobile app) for ASTS updates as they happen.

FMF-Issue-050626-Featured

Groundhog Day, Iran Edition

<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" />Summer of Shortages
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The war drums are beating more quietly than they were 24 hours ago.
Forget the competing claims and counterclaims from Washington and Tehran about who shot at whom and when.
What matters for the moment is that as Washington sees it, Tehran has not broken the ceasefire: Everything so far is &ldquo;below the threshold of restarting major combat operations at this point,&rdquo; says Gen. Dan Caine, chair of the Joint Chiefs of Staff.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> None of which changes the fact that the Strait of Hormuz remains all but closed.
We ran down the numbers two months ago. They&rsquo;re worth revisiting today. Because it&rsquo;s not just that a quarter of the world&rsquo;s crude oil transits the strait during normal times. So does&hellip;
<ul>
<li>About 15% of the world&rsquo;s refined diesel and jet fuel (which is why airline stocks are having such a rough time)</li>
</ul>
<ul>
<li>Roughly 20% of the world&rsquo;s liquefied natural gas (very bad for Europe, whose leaders already swore off Russian gas)</li>
</ul>
<ul>
<li>About 35&ndash;40% of fertilizers (Reminder: About 70% of U.S. farmers tell the American Farm Bureau Federation say they can&rsquo;t afford all the fertilizer they&rsquo;ll need this year)</li>
</ul>
<ul>
<li>Over 40% of sulfur (used in everything from fertilizers to oil refining to mining to water treatment)</li>
</ul>
<ul>
<li>And 10% or more of aluminum and iron ore.</li>
</ul>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;There are no easy substitutes for any of these outputs,&rdquo; says Paradigm&rsquo;s macroeconomics maven Jim Rickards.
&ldquo;The U.S. and Russia may increase their oil exports somewhat but LNG, chemicals, fertilizers, aluminum and refined oil products (gasoline, diesel, jet fuel) are not easily replaced if at all.
&ldquo;Kuwait&rsquo;s Mina Al-Ahmadi oil refinery, which processes 730,000 barrels of oil per day, has been struck by Iranian missiles extensively. Saudi Arabia&rsquo;s giant Ras Tanura refinery complex, which handles 550,000 barrels per day, has also come under attack.
&ldquo;Shortages will soon appear not only in crude oil but also in refined products. Of course, damage to oil production infrastructure elevates the price of LNG alongside the prices of crude oil and refined products.&rdquo;
Speaking of LNG, &ldquo;the damage to Qatar&rsquo;s Ras Laffan LNG export facilities from Iranian missiles and drones is so extensive that 20% of its capacity may be offline for years. Ras Laffan produces 20% of the world&rsquo;s LNG.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Who&rsquo;s feeling the impact most? Jim runs down a list for us&hellip;
<ul>
<li>In the world&rsquo;s least-developed countries, Jim says &ldquo;those most dependent on Persian Gulf nitrate exports and therefore those most likely to suffer from higher prices and supply shortages are Jordan, Pakistan, Sri Lanka, Egypt, Ethiopia and Kenya&rdquo;</li>
</ul>
<ul>
<li>Among the more prosperous developing countries, &ldquo;Brazil will be the hardest hit. Brazil relies heavily on imports of nitrogen fertilizer to support its agricultural output including coffee and soybeans&rdquo;</li>
</ul>
<ul>
<li>In the developed Asian economies, &ldquo;Japan and South Korea are almost completely dependent on Middle Eastern exports of oil and natural gas. Large sectors of their industrial capacity will begin to shut down within weeks if the energy shortages are not alleviated&rdquo;</li>
</ul>
<ul>
<li>And in Europe, the impact might be the most severe &mdash; given European leaders&rsquo; insistence on what Jim calls the &ldquo;Green New Scam&rdquo; of solar and wind. &ldquo;European natural gas reserves were only 46 billion cubic meters (bcm) in early March, down from 60 bcm in 2025 and 77 bcm in 2024. The Telegraph reports that Europe is burning through gas reserves faster than they can be replaced.&rdquo;</li>
</ul>
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> And then there&rsquo;s California, unique in the United States because of its reliance on oil imports from the Gulf region &mdash; the last of which just arrived at the Port of Long Beach after a trip that started before the war on Feb. 24.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6p2OPzIdlXpjyc9YJH1OFa/344f832532e3947ff68e0d90a13ee62d/FMF-Issue-050526-1.png" alt="pub" width="540px" />
Paradigm&rsquo;s resident oil field geologist Byron King went in-depth on California&rsquo;s conundrum in a <a href="https://dailyreckoning.com/california-nightmare-a-looming-energy-disaster/">special guest essay</a> last week &mdash; and the arrival of this tanker, called the New Corolla, puts it all into sharp focus.
&ldquo;After she sails away, California &mdash; namely its refiners, and political powers who care about energy &amp; stuff &mdash; must figure out how to replace all that imported oil that will no longer be arriving from the Persian Gulf,&rdquo; says Byron now.
&ldquo;Alternative sources include Ecuador and Brazil, but that involves outbidding refineries pretty much everywhere else, which are also scrambling for crude oil.
&ldquo;By the end of May, people in the Golden State will look back with fond nostalgia for the &lsquo;good old days&rsquo; of $6 gasoline and $9 diesel. It's going to get bad out there, and effects will ripple across the U.S. economy like a 200-car Union Pacific freight train. Brace for impact.&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" />Busting a Buffett Myth
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;While value investing is where he started, Warren Buffett is actually the greatest growth investor of all time,&rdquo; says our senior investment director Enrique Abeyta.
Enrique was in attendance last weekend at Berkshire Hathaway&rsquo;s annual meeting in Omaha, Nebraska &mdash; the first where Buffett was not presiding as CEO and his chosen successor Greg Abel was.
Still, Buffett&rsquo;s presence was felt everywhere. And many attendees still sing his praises as a value investor. A few were probably lugging around copies of The Intelligent Investor, the legendary book penned by Buffett&rsquo;s Columbia professor Benjamin Graham.
As a reminder, value investing means buying companies at less than book value &mdash; the accounting value of their assets. Alternatively, it means buying a company below the replacement value of its assets, or liquidation value.
Problem is, times have changed. Value investing&rsquo;s heyday &ldquo;was before these strategies became well known, the explosion in the asset management business and (most importantly) the internet,&rdquo; says Enrique.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Besides, value investing isn&rsquo;t where Buffett made his money. &ldquo;It was buying large companies that would then go on to grow their earnings tremendously,&rdquo; Enrique says.
Case in point &mdash; the ultimate &ldquo;Buffett stock,&rdquo; Coca-Cola. A $1.3 billion investment in 1988 has swelled to $24.5 billion today.
At the time of the purchase, KO sported a price-earnings ratio of 15.8X. Over the following three decades, the median P/E was 27X &mdash; up about 70%.
That&rsquo;s nice. But look at the earnings per share: &ldquo;It has grown 1,270% from $0.18 per share to almost $2.50 per share in 2023,&rdquo; Enrique says.
&ldquo;The valuation of KO stock was not what drove the appreciation in Buffett&rsquo;s stake&hellip; it was the growth in the earnings.&rdquo;
Oh, and don&rsquo;t forget the dividends. The dividend grew 2,200% from 8 cents per share to $1.84.
Which gets back to Enrique&rsquo;s favorite Buffett quote: &ldquo;It&rsquo;s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.&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 markets today, the major U.S. stock indexes are recovering much of yesterday&rsquo;s losses.
At last check the S&amp;P 500 is back in record territory at 7,259. Ditto the Nasdaq at 25,310. The Dow is also in the green, but still a long way from reclaiming its 50,000 levels of February.
The attempt in Washington to lower the temperature in the Persian Gulf (see above) has knocked over $4 off of U.S. oil futures &mdash; now just over $102 a barrel.
Interesting: The yield on a 10-year Treasury note has been bumping up against the 4.4% level for a few days now. Back in March, every time the 10-year approached 4.4%, Donald Trump made some sort of conciliatory statement or gesture toward Tehran so as to not further spook the bond market. Perhaps that&rsquo;s what&rsquo;s going on here as well&hellip;
Precious metals are staging a weak rebound, gold at $4,563 and silver at $73.18. Bitcoin has surpassed $81,000 for the first time in over three months and Ethereum is approaching $2,400.
<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" />Trump and AI and Cyberattacks
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The Trump administration is rethinking its hands-off approach to AI.
Rewind to the days after Election Day 2024: Silicon Valley venture capitalist Marc Andreessen is interviewed by Joe Rogan. Andreessen tells of a meeting he and his partner Ben Horowitz had earlier that year with Biden administration officials.
&ldquo;They told us to not even start AI companies because there&rsquo;s no way they&rsquo;ll let them succeed,&rdquo; he said. The aim was to limit AI to &ldquo;a function of two or three large companies&rdquo; under tight government control.
Asked by Rogan &ldquo;What do you do after a meeting like that?&rdquo; Andreessen replied, &ldquo;You go endorse Donald Trump.&rdquo; Which he did.
Last summer, President Trump said of AI, &ldquo;We&rsquo;re going to make this industry absolutely the top, because right now it&rsquo;s a beautiful baby that&rsquo;s born. We have to grow that baby and let that baby thrive. We can&rsquo;t stop it. We can&rsquo;t stop it with politics. We can&rsquo;t stop it with foolish rules and even stupid rules.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Evidently that all changed last month when Anthropic took the wraps off its Mythos AI model. 
Anthropic claims Mythos is so powerful it unearthed &ldquo;high-severity vulnerabilities&rdquo; in &ldquo;every major operating system and web browser.&rdquo; Seems the Trump admin is now spooked by the prospect of a major AI-enabled cyberattack.
Thus, The New York Times cites &ldquo;U.S. officials and people briefed on the deliberations&rdquo; as saying the administration is &ldquo;considering the introduction of government oversight over new AI models.
&ldquo;The administration is discussing an executive order to create an AI working group that would bring together tech executives and government officials to examine potential oversight procedures, according to U.S. officials, who declined to be identified in order to discuss deliberations over sensitive policies. Among the potential plans is a formal government review process for new AI models.&rdquo;
Anthropic, Google and OpenAI have supposedly been clued into the process.
The Wall Street Journal has confirmed the Times&rsquo; account. The Journal previously reported that the White House objects to Anthropic&rsquo;s plans to release Mythos to another 70 or so companies beyond the 40&ndash;50 that got the initial limited release.
Exactly how all of this will shift the investing landscape for AI is way too soon to tell. But it&rsquo;s not too early to put this on our radar. To be continued&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" />Sign of the Times
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Presented without comment&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/11Qhx1dlcH9A5oy95rFyhs/cda1970d8d9568a6292a0383735d96f7/FMF-Issue-050526-2.png" 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: Lucky Man
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;You sure you want to congratulate the winner of your Top Trader challenge with ELP&rsquo;s &lsquo;Lucky Man&rsquo;??&rdquo; a reader writes after <a href="https://paradigmpressroom.com/post/so-you-think-you-can-trade-results">yesterday&rsquo;s edition</a>.
&ldquo;I mean, the guy dies in the song! Not very lucky.
&ldquo;Thanks for all your hard and excellent work.&rdquo;
Dave: Well yeah, he did &mdash; but lived a very full life beforehand!
By the way, we finally tracked down and notified the $50,000 winner &mdash; a gentleman from Tennessee who was literally too busy working to answer email or pick up the phone. Once he did, he was shocked: &ldquo;Last I checked the leaderboard I was in 200th place!&rdquo;
Hey, that&rsquo;s how it works when you&rsquo;ve got a hard 30-day window. Again, thanks to everyone who took part. We&rsquo;re scheming on how to do another event like this even bigger and better.

FMF-Issue-050526-Featured

Summer of Shortages

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />&ldquo;So You Think You Can Trade&rdquo; (Results)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> OK, that was fun.
The results are in from Paradigm&rsquo;s first-ever 30 Day Top Trader challenge.
In late March, thousands of readers like you took on the challenge of identifying the one stock or ETF with the biggest profit potential between April 1&ndash;30.
As we said at the outset, this was an unusual exercise: Forget about fundamentals. This wasn&rsquo;t about identifying a &ldquo;good company&rdquo; with &ldquo;steady growth.&rdquo; This was about short-term catalysts &mdash; biotechs with big news, short-squeeze candidates, leveraged ETFs with a trendy tailwind.
And the fixed start and end dates? That only amped up the element of surprise.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Sure enough, the best-performing pick among our readers during April was a biotech that lay low until nearly the end.
Curiously, however, it wasn&rsquo;t a blockbuster trial result or an FDA approval that gave a huge lift to Edesa Biotech (EDSA) &mdash; just speculative buying ahead of a presentation the CEO will make later in May at a conference in Orlando. The company is making tracks on Phase 3 trials for a treatment of acute respiratory distress syndrome &mdash; a sudden and severe inflammation of the lungs.
EDSA&rsquo;s share price went nowhere most of April. Then it suddenly took off &mdash; racing from under $7 on April 24 to over $18 on the 30th. It wasn&rsquo;t until the final day of the challenge that EDSA emerged as the best performer of April &mdash; leaping 237.8% over the 30 days.
A total of 19 readers &mdash; fewer than one-tenth of one percent of the challenge participants &mdash; chose EDSA as their top performer of the month.
This is why we had readers make a second and third choice in addition to a top pick &mdash; to serve as tiebreakers.
Having said that, we&rsquo;re still not in a position to tell you who won the grand prize of $50,000 &mdash; nor the winner of the $10,000 second prize and $5,000 third prize. The reason is simple: We&rsquo;re still trying to get in touch with them. (Really, if it were you, it would be weird if you read it here first!)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Some more fun facts emerging from the challenge&hellip;
The second-best performer of the month was Axe Compute (AGPU) &mdash; which experienced two big leaps during the month before pulling back. Between April 1&ndash;30, it gained 219.5%.
The most popular pick, chosen by nearly 1,300 participants, was AST SpaceMobile (ASTS) &mdash; a favorite of our tech/biotech specialist Ray Blanco. As we chronicled in these pages, ASTS hit a speedbump on April 19 with its ambitions to deliver wireless service via the mobile phone you already carry in your pocket: The Blue Origin rocket carrying ASTS&rsquo;s inaugural satellite failed to deliver it to the proper orbit. It fell back toward Earth and burned up in the atmosphere.
ASTS ended the 30-day period down 12.6%. But Ray&rsquo;s conviction remains solid: The firm still plans to launch dozens of satellites this year &mdash; and it has launch contracts with firms other than Blue Origin.
<a id="2"></a>
Finally&hellip; among all the contest entries, the median return was 6.9%. Nearly two-thirds of participants &mdash; 63.6% &mdash; ended the month with their top pick in the green. And 1.2% submitted a pick that gained 100% or better.
Congratulations to the winners and thanks to everyone who took part. We&rsquo;re already thinking through how to do something like this again and make it even better. Stay tuned&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />War Back On?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The U.S.-Iran ceasefire is facing what looks like its most severe test since it came into force April 8.
The trading week started quietly enough, with Donald Trump announcing a scheme to &ldquo;guide&rdquo; shipping through the Strait of Hormuz.
The initial announcement came on social media yesterday &mdash; and gave the impression that U.S. warships might be escorting commercial vessels through the strait.
Not so, said The Wall Street Journal: &ldquo;The new mechanism is effectively a coordination cell to move traffic through the strait, involving countries, insurance companies and shipping organizations.&rdquo;
&ldquo;In other words,&rdquo; said one cynic on X, &ldquo;another Sunday market pump.&rdquo;
And it worked for a while: U.S. oil futures fell as low as $102 while stock futures were in the green.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Then everything started heating up this morning.
Iranian state media says Iranian forces fired warning shots at a couple of U.S. destroyers. Then a huge oil terminal in the United Arab Emirates came under Iranian attack. This terminal is the UAE&rsquo;s only means of bypassing the Strait of Hormuz.
CNN says Washington and Tel Aviv will return to war within 24 hours.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> With that, U.S. oil futures are back to $105.59. And while the major stock indexes opened the day flat, they&rsquo;re now decisively in the red.
The S&amp;P 500 is down a half percent from Friday&rsquo;s record close at 7,191. The Nasdaq&rsquo;s loss is about the same; the Dow is down 1%.
&ldquo;We&rsquo;re experiencing a split market right now that&rsquo;s yanking around different stocks and sectors every single day,&rdquo; writes Greg Guenthner at The Trading Desk (who won our internal version of the Top Trader challenge. No prize, just bragging rights.)
&ldquo;This back-and-forth action continues to dominate the tape. On Friday, the tech trade stole all the green while industrials, energy and consumer names slipped. On days where semiconductors are rallying, software stocks take a beating. The next day, they flip spots.
&ldquo;These moves can be frustrating, for sure. But it could all be part of a bigger consolidation looming now that the averages have fully recovered from their March lows. The market ran white-hot for an entire month so it&rsquo;s going to need to rest at some point.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> If the war is coming back into view, earnings are not retreating: Reports will continue to pour in this week although Nvidia is the only one of the &ldquo;Magnificent 7&rdquo; we&rsquo;re still waiting on &mdash; and NVDA doesn&rsquo;t report until May 20.
Of the S&amp;P 500 companies that have reported so far, FactSet tells us 84% have beaten the estimates of Wall Street analysts &mdash; better than the averages of the previous five years and ten years. And the average &ldquo;beat&rdquo; is by 20.7% &mdash; well above the recent norm.
➢ For the record: Spirit Airlines shut down over the weekend; for whatever reason the scheme the White House was hatching to use Spirit&rsquo;s jets as troop transports didn&rsquo;t pan out. As Sean Ring points out in <a href="https://rudeawakening.info/posts/the-spirit-of-capitalism">today&rsquo;s </a><a href="https://rudeawakening.info/posts/the-spirit-of-capitalism">Rude Awakening</a>, Spirit was not &ldquo;too big to fail&rdquo; &mdash; a rarity for a publicly traded company in 21st-century America.
Precious metals are losing ground &mdash; gold clinging to $4,500 and silver back under $73. On the other hand, Bitcoin is back over $80,000 and Ethereum is at $2,363.
<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" />Report From Omaha
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The &ldquo;new&rdquo; Berkshire Hathaway is ready to deploy that enormous pile of cash it&rsquo;s sitting on.
Saturday was the first BRK shareholder meeting in Omaha, Nebraska where Warren Buffett did not preside as CEO. Instead it was his chosen successor Greg Abel.
Our senior investment director Enrique Abeyta was in attendance&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6k7FmvVDG8nxRV8Sx9m8hC/f2f9e9faf03bdb02e6994876a24437a7/FMF-Issue-050426-1.png" alt="pub" width="350px" />
&hellip; and keen to hear what Abel had to say about the record $373 billion cash pile the company had accumulated by year-end 2025.
&ldquo;Many investors believe this was intentional,&rdquo; Enrique wrote his Truth &amp; Trends readers ahead of the meeting &mdash; &ldquo;that Buffett, in his final years at the helm, chose patience over action to give his successor maximum flexibility.&rdquo;
Sure enough, Abel said on Saturday that Berkshire has a shortlist of companies it wants to buy &mdash; in part or in whole.
At the right price, of course. &ldquo;There will be dislocations in markets that will allow us to act,&rdquo; he said.
Buffett jumped on such &ldquo;dislocations&rdquo; when they presented themselves over the decades.
&ldquo;During the financial crisis,&rdquo; Enrique said by way of example, &ldquo;Buffett deployed capital into companies like Goldman Sachs and Bank of America on extremely favorable terms, locking in high returns and reinforcing Berkshire&rsquo;s reputation as a lender of last resort.&rdquo;
Look for Enrique to share more reflections from Omaha later today when a new Truth &amp; Trends is published.
<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" /> There are &ldquo;sin taxes&rdquo; and then there are&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7mrAGdd0kFgVLwnbg8UR1N/d553266c00a0f99b8ce22caaf38e8246/FMF-Issue-050426-2.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: Protests, Reading Comprehension, High-end Audio
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> On the subject of the May Day protests mentioned <a href="https://paradigmpressroom.com/post/the-day-america-shut-down">off the top Friday,</a> a reader writes&hellip;
&ldquo;Recently the socialist Minneapolis City Council approved funding to assist renters who fell behind in their rent because they couldn't leave home during the ICE episode.
&ldquo;During that time there were protests encouraging people to stay home from work, school, shopping. You can't make this up.
&ldquo;IMO, they have been turning Minneapolis into a sh***ole. Used to spend a lot of time and money there, haven't stepped foot there since George Floyd and won't in the future.&rdquo;
Dave responds: Numbers are hard to come by, but it seems the May Day protests were a bust &mdash; with considerably lower turnout than the &ldquo;No Kings&rdquo; protests that take place on weekends and draw an older crowd.
Doesn&rsquo;t bode well for the organizers if they hope to pull off a nationwide general strike on May Day in two more years. On the other hand, a lot can happen between now and then&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> I was stunned to read the reason why a reader demanded over the weekend that she be removed from the 5 Bullets email list.
The relevant passage, and the trigger for her outrage: &ldquo;If you&rsquo;re taking jabs at people who are constitutionally using their First Amendment rights &mdash; if you don&rsquo;t like it &mdash; too bad, shove it up your a**es.&rdquo;
Then followed a spirited diatribe against Donald Trump.
Too bad her outrage overwhelmed her reading comprehension: I took a minor swipe at Jimmy Kimmel <a href="https://paradigmpressroom.com/post/the-day-america-shut-down">during Friday&rsquo;s edition</a>in defense of his right to say stupid things. I was taking the president and his FCC chair to task for actions that undermine the First Amendment.
This is every bit as pathetic as conservative readers who call me a &ldquo;liberal&rdquo; when I deign to say critical things about the Iran war. Is Tucker Carlson a &ldquo;liberal&rdquo;? Ron Paul?
No, this is not a renewed plea for sympathy on the part of the many gracious readers who <a href="https://paradigmpressroom.com/post/america-then-and-now-1976-2026">rose to my defense</a> (and in one notable case, apologized) when the partisan vitriol got out of hand last month. Just another reminder that tempers are on a hair trigger in the society at large.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Sometimes it&rsquo;s easy to get myopic and single-minded about markets, money, accumulation, investment, the rat race,&rdquo; says our next entry.
&ldquo;It&rsquo;s a pleasant diversion to see many of your readers have other interests and passions, regardless of what they are.&rdquo;
That&rsquo;s a reference to last week&rsquo;s mailbag thread where we went off on a high-end audio tangent. On the subject of my budget-audiophile NAD CD player, the reader adds: &ldquo;I can only say go NAD!
&ldquo;Hehe, some of us are juveniles too! :)&rdquo;
Dave: LOL, I remember seeing Corey Greenberg write, &ldquo;Go NAD,&rdquo; in the pages of Stereophile magazine in the early 1990s.
Greenberg was the young gonzo writer they brought in to shake up an otherwise stuffy editorial stable. My 20-something self thought his prose alone was worth the subscription price.
This was long before he sold out and <a href="https://www.washingtonpost.com/archive/lifestyle/2005/04/20/firms-paid-tvs-tech-gurus-to-promote-their-products/3624e757-381f-412a-8a19-de8f7e825e72/">took payments from companies to </a><a href="https://www.washingtonpost.com/archive/lifestyle/2005/04/20/firms-paid-tvs-tech-gurus-to-promote-their-products/3624e757-381f-412a-8a19-de8f7e825e72/">shill</a><a href="https://www.washingtonpost.com/archive/lifestyle/2005/04/20/firms-paid-tvs-tech-gurus-to-promote-their-products/3624e757-381f-412a-8a19-de8f7e825e72/"> their products</a> on the Today show.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;That audiophile change-up was a nice stress-buster,&rdquo; says another reader.
&ldquo;Much needed and a reminder of things that really matter. Thanks and the very best for upcoming weeks ahead as we will all be tested.&rdquo;
One more item of feedback, and there&rsquo;s not space to share the whole thing &mdash; but the reader had a suggestion: &ldquo;With all the ELP Tarkus talk, maybe you can get the guys to play &lsquo;Lucky Man&rsquo; for the announcement of the winner of the Trader Challenge!&rdquo;
Love it. Let&rsquo;s take it out today with <a href="https://www.youtube.com/watch?v=LDiLOMP9MNE&amp;list=RDLDiLOMP9MNE&amp;start_radio=1">their live version from the Royal Albert Hall</a> on their 1992 reunion tour&hellip;