All Hail AI (If We Survive WWIII)
The Next 10 Years, Powered by AI
Today is one of those best-of-times, worst-of-times editions of these 5 Bullets.
We had one at the very start of the year — pointing out that even as the Depression wasn’t over and the war drums were beating in Europe, tens of millions flocked to the 1939–40 New York World’s Fair to marvel over technology’s many triumphs.
It was at that venue where, among other things, RCA’s David Sarnoff conducted the first public demo of television.
And so it goes today. Begin with the plus side of the ledger…
"AI will power the stock market for the next decade,” says Cicso’s ex-CEO John Chambers.
“I think the overall question if you're an investor and you invest in a portfolio of AI stocks, and [if] you did it consistently over the next five–10 years, you're going to do very well,” he tells CNBC.
Chambers ran Cisco from 1995–2015. The knock on his tenure is that even now, Cisco’s share price is lower than at its peak in early 2000.
But that’s not altogether fair. On Chambers’ watch, Cisco’s annual sales grew 25x — from $1.9 billion to $49.2 billion. It’s not his fault that dot-com stocks were bid up to ridiculous heights in 1999–2000.
Clearly the guy’s got some measure of business acumen. So when he says AI-adjacent stocks will outperform non-AI stocks by 3x, we won’t dismiss it out of hand.
Still, you can’t just throw darts at a board when selecting AI stocks. (In fact, we’ll cover a couple of Google’s latest AI stumbles later in today’s edition…)
Paradigm’s own AI authority James Altucher is stoked about one name in particular right now. What it does, he says, is crucial to the AI industry. What’s more, it “checks off a whole list of boxes that’s almost impossible to find in any fast-emerging industry.
“I’m talking about a company that's got companies like Nvidia wrapped around its little finger, has its eggs in all the right geographic baskets and is basically the secret sauce in the semiconductor manufacturing process.
“Oh, and did I mention this company is sitting pretty with long-term customer agreements and partnerships in all the right places?
“Plus, with the way advanced chip designs are going… the demand for what this company does is going one way: UP.
“But here's the real kicker: It's got a rock-solid financial position, a war chest of cash and the kind of expertise that makes its competitors green with envy.”
If you’re a member of the Paradigm Mastermind Group, you’re already privy to the name and ticker of this company.
If you’re not, you should know this company is just one of several names in the PMG portfolio that James believes can generate life-changing wealth.
We don’t keep PMG membership open all the time — and the current membership campaign ends tonight at midnight. Follow this link, and James will make the case for one of his favorite names of 2024.
So that’s the best-of-times bullet today. On to the worst…
Slip-Sliding Toward World War III
For whatever it’s worth…
“British families are being urged to stockpile three days' worth of food and water to build national ‘resilience’ amid growing threats from China, Russia, Iran and North Korea,” reports the Daily Express.
“U.K. Deputy Prime Minister Oliver Dowden will call on people to plan for being without access to key services in the wake of prolonged power cuts, cyberattacks and flooding.”
Is it scare-mongering, or is there something Mr. Dowden knows that we don’t? Read on…
Back stateside, the House Armed Services Committee has approved a bill requiring the Pentagon to draw up plans for blockading fuel shipments to China in the event of a conflict.
Proposed by Rep. Ronny Jackson (R-Texas), the measure will be tacked onto the National Defense Authorization Act — the annual “must-pass” military legislation.
Of course, if you know even basic history about World War II, this might strike you as the setup for Pearl Harbor 2.0.
The brief backstory: On July 26, 1941, Washington and London imposed an oil embargo on Japan. Two days later, the Netherlands joined that embargo. It wouldn’t be long before Japan would be deprived of the fuel it needed to wage its ongoing war in China. Thus it was only a matter of time before Tokyo would strike out against the Allies as well — eventually attacking Pearl Harbor on Dec. 7.
Are the members of the House Armed Services Committee aware of this history?
Meanwhile, a bipartisan delegation of congresscritters has arrived in Taiwan, led by House Foreign Affairs Committee Chair Michael McCaul (R-Texas). It’s a show of support for Taiwan’s new president William Lai — who’s stopped just short of declaring independence from mainland China.
Not coincidentally, Beijing has launched its biggest military exercises in the region since then-House Speaker Nancy Pelosi’s visit to Taiwan in August 2022.
Washington upped the ante in the dispute significantly last year — sending military aid for the first time in addition to selling arms to Taipei.
Thus we return to a question posed by syndicated columnist Pat Buchanan in 2021 — a question we spotlighted last year: “If China uses force to compel Taiwan to repudiate any right to independence, are we prepared to fight a war with a nuclear-armed China over the island's political status and orientation?”
We have to leave that question hanging for now because of alarming new developments in the Ukrainian proxy war between Russia and the Western powers.
As we mentioned earlier this month, Britain’s foreign secretary went on record saying Ukraine is at liberty to use British-supplied weapons to strike inside Russian territory.
With Ukraine’s back against the wall right now, there’s also growing talk inside the Beltway about letting Ukraine strike inside Russian territory. Here’s the aforementioned Rep. Michael McCaul laying out potential targets during a recent congressional hearing…
Look at all these targets within range of the missiles we said we’d never send Ukraine but are sending now!
The Biden administration’s official policy for the time being is to try to have it both ways: “We have not encouraged or enabled strikes outside of Ukraine,” said Secretary of State Antony Blinken during a visit to Ukraine on May 15, “but ultimately Ukraine has to make decisions for itself about how it’s going to conduct this war.”
Sounds like a blank check made out to Volodomyr Zelenskyy, right?
This is dangerous stuff, as Paradigm’s Jim Rickards said only yesterday in our sister e-letter, the Daily Proof: The mindset in Washington is “that since Russia hasn’t responded aggressively to previous provocations, that it probably won’t in the future.”
Disturbingly, one of Jim’s recommended reads of 2024 is Nuclear War: A Scenario by Annie Jacbosen.
There’s a high likelihood he’ll talk about nuclear escalation among other things tomorrow afternoon at the next edition of our occasional roundtable discussions we call the Whiskey Bar.
Jim will be joined by his senior analyst Dan Amoss, Paradigm senior geologist Byron King, Paradigm income specialist Zach Scheidt, Rude Awakening editor Sean Ring and “Moneyball economist” Andrew Zatlin.
The setting for this session of the Whiskey Bar is the Watergate Hotel in Washington, D.C. Fifty years after Watergate prompted the resignation of President Richard Nixon, our team returns to the scene of the crime to unpack the latest developments in geopolitics, markets, inflation, AI and more.
The discussion will be hosted by publisher Matt Insley and VP of Publishing Doug Hill. The video stream begins promptly at 3:30 p.m. EDT tomorrow.
You don’t need to sign up in advance and we won’t try to sell you anything. Just check your inbox for a link to the stream tomorrow afternoon.
Biden Doesn’t Dare Veto This Crypto Bill
The SEC’s approval of spot Ethereum ETFs wasn’t the only landmark development in the crypto space last week.
[Once more, props to our crypto team of James Altucher and Chris Campbell for sticking their necks out and forecasting approval at a time very few would do so…]
As we mentioned on Thursday, the House passed crypto legislation known as FIT21 — with 71 Democrats crossing the aisle to vote with over 200 Republicans.
“This is crypto game theory in action,” says Paradigm crypto analyst Chris Campbell. “Trump’s campaign announced they’re going to build a Bitcoin and ‘crypto army’ to take down Biden in the election. This forced the White House to come out and say they're willing to work with Congress on crypto regulations. Talk about a 180!”
In light of these developments, “the Biden administration is unlikely to veto the FIT21 bill,” says Chris.
Result? A fog of regulatory uncertainty that’s lingered for years over crypto is about to lift. “Clarity is coming. Fast,” he says.
“As usual, we’re on the lookout for the big opportunities with huge upside potential.”
In the near term, however, the major cryptos have staged a major rally and retreat in the last 24 hours. Bitcoin is barely above $68,000 while Ethereum fetches $3,839.
Elsewhere, the big story is an Asian rally in precious metals that’s got some staying power in the West.
While U.S. markets were closed yesterday, gold rallied smartly — recovering some of its losses late last week. And those gains are holding today, the bid $2,357 at last check. Silver is back within 4 cents of $32.
As for stocks, not much to say: As we write, the Nasdaq is up a half percent, in record territory just over 17,000. The Dow is down a half percent, back below 38,900. The S&P 500 splits the difference, nearly flat at just over 5,300.
The big newsmaker is T-Mobile, up nearly 1% on plans to take over most operations of U.S. Cellular — the biggest remaining independent wireless provider.
Cautionary AI Tale
Talk about burning your bridges…
Hmmm… That seems like a more substantial critique — with longer-term impact — than Google Gemini’s failure to generate images of white faces, ridiculous as it was…
When Your Large Language Model Scrapes The Onion
Meanwhile, there are still bugs in the system with Google’s large language model.
Its new AI search feature called AI Overviews has served up some — ummm — interesting answers to reader queries.
For instance, asked how to make cheese stick to pizza better, AI Overviews suggested “non-toxic glue.”
And when posed with the nonsensical question, “How many rocks should I eat?” AI Overviews earnestly served up the following…
Google insists these are “isolated examples.” Because what else are you going to say when the BBC reports that “some of the answers appeared to be based on Reddit comments or articles written by satirical site The Onion”?
We’ll leave it there today. We have a very full mailbag, but it will have to wait till tomorrow!
Best regards,
Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets
