On this final day of 2024, we bring you a special video edition to help prime your portfolio for 2025.
Welcome to your post-holiday video edition of the 5 Bullets!
As you ease into your day, you won&rsquo;t want to miss some never-before-seen content forecasting one of the biggest investment trends for 2025.
In fact, exactly two weeks ago, Paradigm&rsquo;s top minds convened in Baltimore &mdash; where trading pro and former hedge fund manager Enrique Abeyta issued a monumental New Year&rsquo;s prediction.
He posed one intriguing question: Which Mag 7 mainstay will lose over 30% in market cap?
<script src="https://fast.wistia.com/embed/medias/78b3ao61gj.jsonp" async=""></script>
<script src="https://fast.wistia.com/assets/external/E-v1.js" async=""></script>
<div class="wistia_responsive_padding" style="padding: 54.58% 0 0 0; position: relative;">
<div class="wistia_responsive_wrapper" style="height: 100%; left: 0; position: absolute; top: 0; width: 100%;">
<div class="wistia_embed wistia_async_78b3ao61gj videoFoam=true" style="height: 100%; position: relative; width: 100%;">
<div class="wistia_swatch" style="height: 100%; left: 0; opacity: 0; overflow: hidden; position: absolute; top: 0; transition: opacity 200ms; width: 100%;"><img style="filter: blur(5px); height: 100%; object-fit: contain; width: 100%;" src="https://fast.wistia.com/embed/medias/78b3ao61gj/swatch" alt="" aria-hidden="true" /></div>
</div>
</div>
</div>
In fact, Enrique believes, a major tech player&rsquo;s meteoric rise might be coming to an end.
And he&rsquo;s here to outline how this company will shock investors and financial media alike as he compares this scenario to a well-known plunge during the dot-com crash.
However, Enrique remains optimistic about this tech giant&rsquo;s long-term future, suggesting its value could eventually double. Or even increase tenfold.
Click above to view Enrique&rsquo;s surprise 2025 forecast&hellip; While you enjoy a lazy day in your pajamas (if you&rsquo;re into that sorta thing).
Best regards,
Emily Clancy Paradigm Pressroom&rsquo;s 5 Bullets

Enrique-marketcap

mobile masthead 5MIN

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

Paradigm’s top minds convened in Baltimore — where trading pro and former hedge fund manager Enrique Abeyta issued a monumental New Year’s prediction. 


Mega-Cap Meltdown in 2025

FMF-Issue-82826-Featured

“They Need Us and We Can Control Them”

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Iran Won
<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 Middle East and Persian Gulf, &ldquo;the dominant power in the region going forward will be Iran, not the U.S. or Israel.&rdquo;
So wrote Robert Kagan last weekend in The Atlantic.
Kagan is no Islamist sympathizer and he&rsquo;s certainly no peacenik. In 1997, along with Bill Kristol, he founded the infamous Project for the New American Century. PNAC laid the intellectual groundwork in D.C that made the Iraq War possible a few years later. Over the decades, Kagan has been at least as hawkish about Iran.
But ideology notwithstanding, he sees the writing on the wall.&nbsp;
Tomorrow marks six months since Washington and Tel Aviv launched a sneak attack on Iran while negotiations were ongoing.
If the idea was to &ldquo;decapitate&rdquo; Tehran&rsquo;s leadership and install a more friendly regime &mdash; the Venezuelan template, just with more violence &mdash; it backfired spectacularly.
Kagan&rsquo;s assessment: &ldquo;Iran has, with American help, completely reconfigured the power structure of the Middle East and the Persian Gulf.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Less than two weeks into the war, we published an edition on March 10 titled <a href="https://paradigmpressroom.com/post/what-if-iran-wins">&ldquo;What If Iran Wins?&rdquo;</a>
Our own Jim Rickards pointed out how enormous a country Iran is, with forbidding terrain. He also was among the very first public figures to warn about Washington&rsquo;s alarming shortage of weaponry &mdash; which has since become common knowledge.
Jim is no America-basher, nor is he anti-Trump. He wants Trump&rsquo;s presidency to succeed &mdash; not least because if it doesn&rsquo;t, it leaves an opening for the <a href="https://paradigmpressroom.com/post/socialism-then-and-now">Democratic Socialists</a>.
So it pains him to say, as he did this week in Rickards&rsquo; Strategic Intelligence, that &ldquo;Trump has lost all credibility on his conduct of the war in Iran.&rdquo;
Jim won&rsquo;t go so far as to say Iran has won the war. But at the same time, nothing has taken place over the last six months to counter the concerns he expressed during the war&rsquo;s first days. And is there any doubt Iran holds sway over the region in a way it did not six months ago?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Victors in war do not make concessions, they dictate terms,&rdquo; tweets the military analyst Will Schryver.&nbsp;
At what point over the last six months has Trump dictated terms to Tehran?
Meanwhile, Tehran did dictate terms under the short-lived &ldquo;Memorandum of Understanding&rdquo; signed in June. And even now, Tehran dictates terms about who can transit the Strait of Hormuz &mdash; which was free for all to navigate before Feb. 28 of this year.
For Iranian leaders, that&rsquo;s plenty victory for now. And Jim Rickars says time is on their side.
&ldquo;The longer the clock ticks,&rdquo; he said yesterday in The Situation Report, &ldquo;the greater the possibility that the U.S. will blink first in terms of Iran&rsquo;s demands because of the threat to the U.S. and the global economy coming from the closing of the Strait.&rdquo;
When might that be? Both at home and abroad, crude reserves are being drained and not being replenished. Don Johnson, chief economist at MacroEdge and an oil industry veteran, believes we&rsquo;ll be staring down fuel shortages by the end of October.&nbsp;
Jim&rsquo;s guidance for the next two months: &ldquo;Investors can prepare for this looming financial Armageddon by increasing allocations to gold, silver, cash, real estate and U.S. Treasury bills.&nbsp;
&ldquo;Those assets will preserve wealth and liquidity and are robust to the inflation that will result from a world with broken supply chains and unprecedented uncertainty.&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" />NVDA&rsquo;s Halo
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Tech stocks are riding high on the latest quarterly numbers from Nvidia.
NVDA reported after the closing bell yesterday. Revenue and profit both doubled &mdash; and management forecast that pace would accelerate.
With that, NVDA shares are up 7.7% as we write&hellip; and the Nasdaq Composite is up 1.2% to 26,449.
&ldquo;Risk on,&rdquo; Weekly Wealth Alert editor Alan Knuckman says on our internal e-chat. He thinks this could be the catalyst for new highs in the Nasdaq-100. At just under 29,500 it&rsquo;s about 4% below its record close in early June.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;After listening to Jensen Huang and CFO Colette Kress' conference call, I came away even more bullish than before,&rdquo; writes colleague Davis Wilson.
It&rsquo;s fair to say Davis, editor of our sister e-letter The Million Mission, is the most passionate NVDA advocate in our shop.
On the call with analysts, management said the firm expects revenue growth next year of 70% &mdash; in contrast with the average analyst&rsquo;s expectation of 44%.
&ldquo;That means Wall Street&rsquo;s current $575 billion revenue estimate for 2027 should really be revised closer to $680 billion,&rdquo; Davis writes. &ldquo;Assuming similar margins, that&rsquo;s earnings per share closer to $16 &mdash; well higher than the current $13.13 estimate.
&ldquo;At the current price tag of $220 per share&hellip; the world&rsquo;s most dominant AI company sells for less than 14X forward earnings.
&ldquo;Realistically a company of this caliber should trade at 20&ndash;25X forward earrings &mdash; conservatively.
That&rsquo;s a price target of $320&ndash;400.&rdquo;
You can review Davis&rsquo; full updated case <a href="https://million-mission.com/posts/nvda-greater-than-greater-than-greater-than-more-bullish-than-ever">right here</a>.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Apart from the tech sector, the other major indexes are also in the green today &mdash; the S&amp;P 500 up a half percent and the Dow a quarter percent.
Hats off to readers of The Trading Desk. Greg Guenthner told them yesterday to take 435% gains from their call options on the software name UiPath. Not bad for only 13 days &mdash; and way more than enough to offset the loss they took yesterday on another position.
And we&rsquo;d be remiss to overlook the breakthrough at Revolution Medicines &mdash; which won FDA approval yesterday for a pancreatic cancer treatment. Ray Blanco recommended shares to his Catalyst Trader readers about 14 months ago, and they&rsquo;re up 480% to date.
Elsewhere, gold is treading water just below $4,600 while Bitcoin has poked its nose back over $80,000. U.S. oil futures are little moved, just over $82.
So&hellip; having now addressed NVDA, let&rsquo;s move on to the other big market-moving story of the week&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" />Wall Street&rsquo;s Withdrawal Pangs
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Wall Street suffers from an 18-year addiction &mdash; and the new Federal Reserve chair Kevin Warsh is cutting off its supply.
Tomorrow&rsquo;s the day when by tradition, the Fed chair delivers the much-hyped keynote address to an annual confab of central bankers in Jackson Hole, Wyoming.
The mainstream media previews emphasize how Warsh&rsquo;s stated commitment to get inflation under control is running headlong into Treasury Secretary Scott Bessent&rsquo;s efforts to shore up the market for U.S. Treasury debt.
&ldquo;You don&rsquo;t want an unpredictable, whimsical Treasury,&rdquo; warns Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. If Bessent goes too far, Shalett tells the Financial Times &ldquo;it would be an admission that they&rsquo;re worried in D.C. about debt sustainability.&rdquo;
As the FT frames it, &ldquo;The response to Bessent&rsquo;s surprise intervention has heaped pressure on the Fed chair to soothe investors&rsquo; concerns over the financial and economic risks emanating from the Trump administration&rsquo;s war in Iran, which has sent costs spiraling for consumers and businesses.&rdquo;
All true as far as it goes. But Warsh has an even bigger problem &mdash; which gets back to that 18-year addiction&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Since the 2008 financial crisis, three successive Fed chairs &mdash; Ben Bernanke, Janet Yellen, Jerome Powell &mdash; have hung their hats on &ldquo;forward guidance.&rdquo;
That means the Fed bends over backward to telegraph its intentions to the market before it makes a move. No surprises, no drama.&nbsp;
Over a decade ago, our sister e-letter The Daily Reckoning compiled an Essentialist&rsquo;s Glossary &mdash; a very tongue-in-cheek catalog of financial terms that were in vogue at the time. Here was the entry for &ldquo;forward guidance.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/eBiJPPb18XFVnmoW10i3i/320e492efa88d85507e39fd0a7957a67/FMF-Issue-082726-1.jpg" alt="Forward guidance Policy" width="540px" />
The problem with forward guidance is that Wall Street became hooked on every speech, every interview, every belch and wheeze emanating from every Fed official.&nbsp;
Case in point: CNBC thought this was worthy of sending to my iPad this morning&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/20EKqz1sAJ1kyVoExxG8kI/0a033fc5366157ab576f906bb0f1a796/FMF-Issue-082726-2.jpg" alt="CNBC" width="435px" />
As the recovering finance pro Ben Hunt observed in 2019, Fed jawboning began to matter more to asset prices than traditional metrics like supply and demand, or sales and profits. &ldquo;It&rsquo;s the use of words and narratives,&rdquo; Hunt said on the Hidden Forces podcast. &ldquo;There are no fundamentals for markets now.&rdquo;
Warsh, it seems, wants to get away from that. He studied at the feet of the late Alan Greenspan &mdash; who during 19 years as Fed chair was notorious for obfuscation, misdirection and bafflegab.
Only a few months into the gig in 1987 he told a Senate committee, &ldquo;If I seem unduly clear to you, you must have misunderstood what I said.&rdquo;
But it was an entirely different era. Fed policy wasn&rsquo;t fueling high consumer price inflation. (It did fuel asset bubbles.) There was no social media reacting to every development in the markets and the economy 24/7. And no one expected the Fed chair to hold regular press conferences. (Bernanke started those in 2011.)
So Warsh has a tough climb tomorrow &mdash; trying to say nothing while sounding profound and tamping down inflation expectations at the same time. We&rsquo;ll be here to chronicle the market fallout&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" />So Much for Internet Privacy
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meta&rsquo;s $18 billion settlement with 48 state attorneys general might have destroyed the last remaining shreds of internet privacy.
Shortly before the market opened yesterday, the company came to terms and closed an epic case centering on the alleged harm that its Facebook and Instagram platforms bring to teenagers. Perhaps the biggest change is a default two-hour time limit on the apps for users under 18.
&ldquo;Under this settlement,&rdquo; says a statement from the Electronic Frontier Foundation, &ldquo;young users will now have less access to Meta products, and a lesser ability to exercise their rights to speak, access information and art and culture, associate and form communities and play.&rdquo;
But there&rsquo;s an even bigger consideration&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This settlement &mdash; and the litigation that led to it &mdash; was effectively a backdoor effort by the government to mandate age verification. It succeeded,&rdquo; tweets Nico Perrino of the Foundation for Individual Rights and Expression.
Age verification online is one of those issues that makes politicians of all stripes feel warm-n-fuzzy. Look at what we&rsquo;re doing for the children!
But age verification is a process that inevitably ensnares adults as well &mdash; compromising anyone who wishes to speak up while remaining anonymous.
From the Electronic Frontier Foundation&rsquo;s statement: &ldquo;The settlement also embeds age assurance into every product, mandating the collection of even more personal information from users of all ages; this enshrines Meta's harmful surveillance into law, and it will compromise users' privacy and anonymity while increasing their exposure to data breaches and government data requests.&nbsp;
&ldquo;And the data minimization and security measures don&rsquo;t keep states from using data collected under the agreement for other law enforcement purposes&hellip;&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> No sooner was the agreement signed than Meta was badgering TikTok and Google-owned YouTube to adopt its new strictures&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4CbpsZuggAkANtQ2XV33iQ/fb68b7cdb8b7a2bba510fd7622452580/FMF-Issue-082726-3.jpg" alt="Meta an open letter" width="540px" />
Meta was trying to pass itself off as fostering social responsibility. But as the day wore on, people began noticing a curious section of the settlement.
As the New York Post puts it, TikTok and YouTube &ldquo;must agree to make the same safety changes to their apps before Mark Zuckerberg will pay the full amount of the deal.
&ldquo;Under the bizarre clause, Meta is initially on the hook for 70% of the payment, or about $12.7 billion. The remaining 30%, which totals $5.3 billion, will be &lsquo;released&rsquo; only in the event that TikTok and YouTube pay a combined $5.3 billion and impose changes including a one-hour daily usage limit for teens, a &lsquo;night mode&rsquo; barring use during bedtime hours and age verification.&rdquo;
How can these terms be imposed on TikTok and YouTube if they weren&rsquo;t parties to the lawsuit?
Whatever. The agreement has had no meaningful impact on Meta&rsquo;s share price. It was up slightly yesterday and is down slightly today.
<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" />As Long as You Brought up 1990&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Now a brief follow-up to <a href="https://paradigmpressroom.com/post/the-totally-fake-inflation-numbers">Tuesday&rsquo;s edition</a> &mdash; about how the government&rsquo;s inflation numbers are totally fake.
This tweet&rsquo;s been making the rounds this week&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5SbadrCadaWnjKAnwGGqbQ/a4416db0bca8f51d2d2e1d2f6582adfb/FMF-Issue-082726-4.jpg" alt="Leading Report tweet" width="540px" />
That number checks out with the official inflation figures: In theory you need an additional 1.6 times the number of fiat dollars you held in 1990 to have the same purchasing power today.
But how realistic are the official figures?&nbsp;
In most households, housing is the single biggest expense. In 1990, your editor rented an apartment in Denver for $225 a month. I looked up what it goes for now &mdash; at least $1,060, maybe more. That&rsquo;s a 3.7X increase.
True, 1990 marked rock-bottom for the housing market after the savings-and-loan crisis and the onset of a recession. But the following year, I moved to Tampa and rented an apartment for $375. This unit now sets you back $1,250. That&rsquo;s still a 2.3X increase. And a lot more than 1.6X.
I know, anecdotes aren&rsquo;t evidence. But they are an illustration. And they&rsquo;re something to think about the next time your instinct is to tune out younger people when they complain about affordability&hellip;

FMF-Issue-082726-Featured

Iran Won

OpenAI, the company behind ChatGPT, is running into trouble.
Its growth has slowed compared to Anthropic, huge losses are piling up, and over a dozen senior leaders have headed for the exits this year.
This is all happening ahead of OpenAI&rsquo;s highly anticipated IPO, expected sometime before the end of next year.
Ordinarily, financial woes at a private tech company aren&rsquo;t something you would need to worry about. But this is different.
Much of the AI trade rests on the idea that companies like OpenAI will continue spending tens of billions of dollars on chips, data centers, and power.
And all that money flows to companies that many investors currently own.
If OpenAI fails &mdash; or even just stumbles &mdash; it&rsquo;ll have massive ripple effects across the stock market.
The Alarm Bells Are Getting Hard to Ignore
OpenAI generated $6.7 billion in revenue during the second quarter, up 18% from $5.7 billion in Q1.
That's impressive growth for almost any company&hellip; except this one.
During the same quarter, rival Anthropic's revenue more than doubled to $11.6 billion. OpenAI's operating loss, meanwhile, widened from $9.3 billion to an eye-popping $12.3 billion.
Think about those numbers as if OpenAI were already public.
Revenue grew 18%, but its closest rival grew more than 100%. And OpenAI lost almost $2 at the operating level for every $1 in revenue it generated.
How would Wall Street react to that earnings report? Probably not well.
That's important because OpenAI is preparing for an IPO that could come in 2027 and Anthropic is also preparing to go public around the same time.
So the two may soon compete for investor dollars as well as customers.
Then there are the questions about OpenAI's management team.
Recent departures include Chief Revenue Officer Denise Dresser, longtime COO Brad Lightcap and ethics chief Chlo&eacute; Bakalar.
The Financial Times has also reported on repeated shake-ups, internal politics and worker burnout.
Dresser's departure stands out.
She became OpenAI's chief revenue officer less than a year ago, then left as the company's push into business customers became more important.
One or two senior departures at a fast-growing company isn&rsquo;t abnormal by any means. But a dozen before one of history's most anticipated IPOs is suspect.
Investors don't just buy financial results. They also need to trust the people running the company.
And OpenAI is rebuilding key parts of its leadership team just as it prepares to face those investors.
The AI Money Machine
OpenAI's success has created an odd problem.
The bigger it gets, the more computing power it needs. That means more data centers, chips, and electricity. And all of that requires money.
OpenAI is expected to burn roughly $25 billion in cash this year. Its planned compute spending through 2030 has reportedly climbed to around $750 billion.
That money spreads across an enormous network.
OpenAI has major deals with Microsoft, Oracle, Amazon, Nvidia, CoreWeave and others.
Microsoft alone reported $24.1 billion in fiscal 2026 revenue from its relationship with OpenAI. Oracle reportedly has a roughly $300 billion cloud agreement with OpenAI. And CoreWeave has signed multibillion-dollar contracts with it.
In other words, OpenAI has become a central part of the AI money machine. Which brings me to one question&hellip;
Where is all that money going to come from?
OpenAI recently raised an amazing amount of private capital. There&rsquo;s no evidence it will run out of cash tomorrow.
But given its losses and spending plans, I believe OpenAI will need even more capital before its IPO.
Just look at the numbers, then consider that OpenAI isn't the only one asking investors for money.
SpaceX raised $75 billion in June in the largest IPO ever. A month later, SK Hynix raised another $26.5 billion in its massive U.S. share sale.
Together, the two deals pulled in more than $100 billion in about a month.
And let&rsquo;s not forget that OpenAI rival Anthropic is preparing an IPO of its own.
At the same time, other AI-related companies are also turning to debt markets. Oracle and Alphabet have raised billions.
And just last Thursday, it was reported that Broadcom filed paperwork that could allow it to raise more than $100 billion through debt and other securities.
That&rsquo;s on top of a similar $39 billion financing deal Broadcom already completed in June.
Then, everyone has to compete with the biggest borrower of them all: Uncle Sam.
U.S. government debt has topped $40 trillion, which means Washington also needs a steady supply of buyers for bonds.
There&rsquo;s plenty of money in the world, but not an endless amount available at any price.
SpaceX wants it. Anthropic wants it. OpenAI wants it. The companies building AI data centers want it. And the U.S. government needs it.
When everyone wants money at once, the cost of that money can rise. For OpenAI, that matters.
This is where the story comes back to you and me.
What Happens If OpenAI Stumbles?
Imagine OpenAI's growth keeps falling behind Anthropic. Its losses stay high, or investors won't finance the next $50 billion or $100 billion on good terms.
OpenAI doesn't have to disappear. It could cut spending, delay data centers, or change future plans.
But that would quickly affect partner companies that count on its spending, such as Oracle, CoreWeave, Microsoft, and Nvidia.
Then come memory chips, networking gear, power companies, utilities, construction firms, and data centers.
Markets don't wait for revenue to vanish. Stocks are priced on what investors expect companies to earn tomorrow.
If expected AI spending falls, stock prices across that chain could fall with it.
Suddenly, investors aren't just questioning OpenAI. They're questioning the entire AI spending boom.
We've seen versions of this before.
During the dot-com boom, venture money spread into advertising, telecom equipment, real estate, hiring, and other parts of the economy.
When that money stopped flowing, the damage spread far beyond failed dot-com companies.
That&rsquo;s why the problems over at OpenAI are such a big deal. It sits at the center of the AI boom, and trouble there could quickly spread to companies you own.
It only needs to stumble badly enough for Wall Street to start questioning the hundreds of billions being spent on the idea that this boom will continue.
If that happens, the problem won't belong to OpenAI anymore &mdash; it will belong to all of us.
<hr />
Dave&rsquo;s last word: If you&rsquo;d like access to Enrique&rsquo;s insights on a regular basis, you should sign up for his e-letter Truth &amp; Trends.&nbsp;
Along with colleagues Greg Guenthner and Nick Riso, Enrique unpacks everything from technical indicators and strategies&hellip; to the tools that legendary investors use to build their empires.
Just go to <a href="https://truthandtrends.com/">the Truth &amp; Trends website</a> and sign up on the right side of the homepage to get daily delivery to your inbox.
<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&hellip; the major U.S. indexes are treading water ahead of Nvidia&rsquo;s earnings release after the closing bell. The S&amp;P 500 is just barely in the green at 7,682.
Treasury yields are inching back up, the 10-year note back to 4.66%. Gold is down but continues to hold the line on $4,600. Bitcoin is consolidating its recent gains, a little over $78,000.
U.S. oil futures are back over $81 in the absence of ridiculous market-manipulating headlines like the one yesterday about Washington offering sanctions relief to Iran if the Strait of Hormuz is reopened.&nbsp;
The big economic number of the day is &ldquo;core PCE&rdquo; &mdash; the Federal Reserve&rsquo;s preferred measure of inflation. At 3.3% it rings in unchanged from the previous month.&nbsp;
You will notice this number is nowhere near the Fed&rsquo;s 2% inflation target.&nbsp;
Indeed this number has been higher than 2% every month since early 2021 &mdash; a phenomenon Fed chair Kevin Warsh will have to address one way or another during his inaugural &ldquo;Jackson Hole speech&rdquo; this coming Friday.&nbsp;
More about Warsh&rsquo;s conundrum when we get back to our usual multitopic format tomorrow&hellip;

FMF-Issue-082626-Featured

Brace for Impact (OpenAI)

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />The Totally Fake Inflation Numbers
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Going by the government&rsquo;s official numbers, the inflation rate is 3.4%. But if the numbers were run the way the government ran them in 1980, it would be 11.4%.
This is why, when we mention the consumer price index each month, we typically say, &ldquo;Any resemblance between these numbers and your actual cost of living is purely coincidental.&rdquo;
For many years, an economist named John Williams has, in fact, run the numbers the way the government ran them in 1980. (And not just inflation, but also unemployment and GDP.)
His firm called Shadow Government Statistics supplies these figures to a slew of clients so they can make more realistic decisions with their investments and businesses.&nbsp;
He doesn&rsquo;t do a lot of interviews. But he popped up last weekend on the venerable Financial Sense podcast.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Starting in 1980, there have been about 20 changes&rdquo; to the way CPI is calculated, said Mr. Williams.
&ldquo;Every change has lowered the CPI compared to how it would have been calculated before.&rdquo;
As you might recall if you were around then, inflation felt out of control in late 1979 and early 1980.&nbsp;
The peak was a staggering 14.6% in March 1980 &mdash; when Pink Floyd topped the charts with &ldquo;Another Brick in the Wall, Part II&rdquo; and Dustin Hoffman was the big box office draw in Kramer vs. Kramer.
Key point: Inflation rates that high threatened to destroy the Social Security program in short order: No way could it keep up with cost-of-living adjustments that steep.
And so began that process of 20 changes in the way the official inflation rate is calculated, every one of them bringing the number down.
We mentioned two of the most egregious only last week, but we&rsquo;ll reinforce them here&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>
There&rsquo;s still another trick called &ldquo;geometric weighting&rdquo; &mdash; in which prices of things that are going up are given proportionally less weight in the index than prices of things that are going down.
You can&rsquo;t make this stuff up. But the economists at the Labor Department do!
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;They're not fooling the average person. The average guy has a good sense of how he&rsquo;s doing; that's always the case. They're not keeping up,&rdquo; Williams said.&nbsp;
&ldquo;They know it and they vote their pocketbooks. You can fudge a number, but fudging the numbers isn't going to help you at the polls.&rdquo;
Word. A rising cost of living handed Republicans the House of Representatives in 2022. A rising cost of living handed Donald Trump the presidency in 2024. A rising cost of living will likely hand the House back to Democrats in 2026.
And so it goes when no one in Washington will take responsibility for getting federal spending back under control.
This chart&rsquo;s been making the social-media rounds this week&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2wGdHjm2tlWdis4ryYGza1/f6ddf93fed66e9b9fed3729b4af3d2aa/FMF-Issue-082526-1.jpg" alt="USA DEBT hits 40 trillion" width="540px" />
Notice how the national debt began soaring toward the end of Trump&rsquo;s first term with the mad COVID spending. It&rsquo;s an even steeper trajectory than during the aftermath of the 2008 financial crisis.
That&rsquo;s why inflation has been ruling your life for the last five years &mdash; and <a href="https://paradigmpressroom.com/post/declare-your-independence-from-inflation">if history is any guide</a>, will continue to do so into the early 2030s.
How to cope? Well that dovetails nicely into 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" />The Road to Gold $10K (Updated)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The advent of $10,000-an-ounce gold has not been prevented. Only delayed.
In mid-December last year Paradigm&rsquo;s macroeconomics authority Jim Rickards said in this space that &ldquo;it&rsquo;s entirely reasonable to suggest gold could reach $10,000 per ounce by late 2026 &mdash; on its way much higher.&rdquo;
The forecast was looking more than plausible a few weeks later &mdash; gold soaring from $4,300 at the start of January to over $5,500 by the end.
But the move was an obvious case of &ldquo;too far, too fast.&rdquo; The Midas metal experienced two sharp sell-offs on the way to a $4,000 summertime bottom. Still, that $4,000 level held fast and we&rsquo;ve been over $4,600 both today and yesterday.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3mdvpsMzoNB6PGapn6JIED/d9d79f838fe953eabe4e018a776ea44e/FMF-Issue-082526-2.png" alt="Golds wild ride" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Looking back, the big drop &ldquo;has an obvious cause,&rdquo; Jim wrote his Strategic Intelligence readers on Friday.
&ldquo;Oil prices went from $60 per barrel to $110 per barrel between late February &mdash; at the start of the war in Iran &mdash; and early April, before talk of a ceasefire and the Memorandum of Understanding (MOU) between Iran and the U.S. took hold.
&ldquo;Every country in the world needs oil, and oil is priced in dollars. That means everyone needs dollars. And one of the fastest ways to get dollars is to sell gold.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So, is the bottom in? And is $10,000 still realistic?
Apologies if you&rsquo;re a longtimer and you&rsquo;ve heard the story before &mdash; but a little over a decade ago, Jim met up in the Dominican Republic with the legendary commodities trader and world traveler Jim Rogers, author of Investment Biker and Adventure Capitalist.
&ldquo;No commodity goes to the moon without a 50% drawdown along the way,&rdquo; Rogers said. &ldquo;That&rsquo;s just how it is. If you&rsquo;re not prepared for that or can&rsquo;t deal with that, then you&rsquo;re in the wrong business.&rdquo;
Consider that gold began this century around $250 &mdash; peaking at $1,900 in 2011. That&rsquo;s a $1,650 jump. Half that figure is $825.&nbsp;
&ldquo;Therefore,&rdquo; says Jim Rickards, &ldquo;a 50% retracement of the gain from $250 to $1,900 would yield a new bottom of $1,075 per ounce.&rdquo;
As it happens, Jim originally related the Rogers encounter in this space in December 2015. The actual bottom came that month at almost exactly that figure, $1,050.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> So let&rsquo;s apply the &ldquo;Rogers retracement rule&rdquo; to gold now. (Here, Jim Rickards relies on the front-month futures contract, which is a little different from the chart above.)
&ldquo;A few months ago,&rdquo; Jim says, &ldquo;I took gold&rsquo;s January high of $5,400 per ounce and its prior low of $1,650 in October 2022. That&rsquo;s a gain of $3,750. Half of that gain is $1,875, which produces an expected bottom of $3,525.
&ldquo;The actual bottom? About $3,990 on July 16, 2026.
&ldquo;That&rsquo;s not as close as Rogers&rsquo; original forecast, but it&rsquo;s close enough to be meaningful given the magnitude of gold&rsquo;s recent collapse.&rdquo;
With that, Jim forecasts that investors &ldquo;can now buy gold with some confidence that we&rsquo;re in a new takeoff stage and $10,000-per-ounce gold is the new destination.&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" />Economic Warfare Update
<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 down nearly three bucks to $82.10 because&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5nF0gdjicFDY5PPF2xUVJM/c0748103ef9245359bde4b9cc41584b7/FMF-Issue-082526-3.png" alt="Energy Headline News Tweet" width="540px" />
Really?
Why would Washington make a mild peace overture the day after Treasury Secretary Scott Bessent unleashed &ldquo;Economic D-Day&rdquo; on Iran?
Except, if you were paying attention, he didn&rsquo;t. No new sanctions actually kicked in yesterday. Instead, Bessent said he and the president and other top officials are making phone calls to other governments to spell out demands about how those nations should cease trade with Iran.
The details about who&rsquo;s being called and what&rsquo;s being demanded and what consequences will follow if they don&rsquo;t follow orders are&hellip; well, thin doesn&rsquo;t even begin to describe it.&nbsp;
The only thing we know with certainty is that several Chinese banks are in the crosshairs.
Of course, Beijing won&rsquo;t take kindly to that. For now, however, the Chinese government is keeping its words measured.
&ldquo;China calls on parties to act rationally and with restraint and avoid taking any measures that may further escalate tensions or deal a blow to global economic growth and financial stability,&rdquo; says a spokesman for the foreign ministry.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for the stock market today, the major U.S. indexes are back in the green &mdash; but not much.
At last check the S&amp;P 500 is up a third of a percent to 7,674. The Nasdaq is up a half percent, while the Dow is just barely positive on the day.&nbsp;
Precious metals are consolidating their recent gains &mdash; gold at $4,643 and silver at $68.62. Bitcoin has surpassed $79,000 but Ethereum has pulled back below $2,500.
<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" /> The evolution of the economy, as seen by one especially cynical observer&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3Y5WTp6lF2jAoIzufO5Aam/cfd783c40e8bfa9bc745dbfef00a5260/FMF-Issue-082526-4.png" 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: Data Centers, Uncle Sam&rsquo;s Interest Expense
<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 data centers and public perceptions, we heard from a lawyer in northwest Indiana&hellip;
&ldquo;Having presented data center developments to shall we say unenthusiastic crowds (understatement), I know, firsthand, the vitriol producing the headwinds in communities.&nbsp;
&ldquo;From my experience, much of the response is grounded in the worst examples from a few data centers and does not comport with what data centers are now becoming. But with local elected officials and their families facing an onslaught of personal attacks, it is understandable that the narrative has eliminated rational discourse in many areas.&nbsp;
&ldquo;However, I&rsquo;m starting to see a below-the-headlines change that is worth noticing. In the past few weeks, I have received requests for my group to consider development in communities with existing industrial infrastructure to help provide financial support that is becoming more acutely needed as a result of state government shifting financial burdens to municipalities in my area of the world.&nbsp;
&ldquo;Also, when compared with steel or other industries or vacant brownfields, data centers are environmental wins. These days, data centers, while perhaps receiving some financial incentives, largely must pay &lsquo;tolls&rsquo; to enter any community in the form of direct incentives that far exceed any other use a municipality could bring in to shore up the balance sheet (often a remarkable windfall that provides dividends well into the future that will enable those communities to level up for residents).&nbsp;
&ldquo;And the weight of the leverage is with the municipality such that the municipality can insist on the highest levels of available technology to eliminate or highly ameliorate the issues that have framed the data center discussion.&nbsp;
&ldquo;I thought I&rsquo;d put this on your radar for the future. Appreciate your messages.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> To our second and final correspondent today: &ldquo;You may have covered this before, but would really like to hear your perspective on what happens to our economy when (we all know that it is not if) the interest expense on the national debt becomes the No. 1 line item expense in the federal budget.
&ldquo;Really love your stuff!!&rdquo;
Dave responds: We&rsquo;re a ways away from that juncture if you go by the Treasury Department&rsquo;s latest monthly statement.&nbsp;
We direct your attention to the right side of this graph, covering the first 10 months of fiscal year 2026 &mdash; i.e., through July 31.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2fJBL9nF1S4jNwExFZigzS/4e1a523e480d0f26fb9a982338eb3a1a/FMF-Issue-082526-5.png" alt="Fiscal year 2026 Deficit" width="540px" />
But your question is still highly relevant as interest expense on the debt continues to swell.
Short answer: The more money Uncle Sam has to borrow, the less money is available to the private sector to borrow so it can expand operations, hire people and so on.&nbsp;
This is the so-called &ldquo;crowding out&rdquo; effect.&nbsp;
If the concept is new to you, that&rsquo;s because it hasn&rsquo;t been an issue for many decades. Interest rates fell steadily from the 1980s through the 2010s.&nbsp;
During Barack Obama&rsquo;s presidency, the national debt rose relentlessly &mdash; but because interest rates sat near historic lows, the annual cost of financing that debt registered a slight decline.
But those days are over. We&rsquo;re in a new 40-year cycle of rising rates that began in 2020 when the yield on a 10-year Treasury note was a paltry 0.5%. (It&rsquo;s 4.66% this morning.)
That&rsquo;s why the federal government&rsquo;s annual interest expense doubled between fiscal years 2022&ndash;2025.
Again, Uncle Sam&rsquo;s ravenous need to borrow more and more deprives the private sector of the funds it needs to grow and thrive.
And wouldn&rsquo;t you know it, this is happening at the very moment the AI industry needs to borrow gobs of money to build data centers and other infrastructure.&nbsp;
But that&rsquo;s a story for another day&hellip;

FMF-Issue-082526-Featured

The Totally Fake Inflation Numbers

<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&rsquo;s &ldquo;Really Weird Math&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We pick up today where we left off with <a href="https://paradigmpressroom.com/post/chatgpf-the-f-is-for-fiasco">last Thursday&rsquo;s Bullet No. 1</a> &mdash; the probability that ChatGPT maker OpenAI will blow up before it ever goes public.
Or &ldquo;the OpenAI-pocalypse,&rdquo; as coined by Paradigm trading pro Enrique Abeyta.
Every few weeks, there&rsquo;s a new &ldquo;tell&rdquo; about what&rsquo;s coming. Last week it was a Wall Street Journal report revealing the company&rsquo;s revenue grew 18% from the first quarter to the second &mdash; a respectable figure were it not for the fact it&rsquo;s a fraction of the growth booked by OpenAI&rsquo;s main competitor Anthropic.
If OpenAI had disclosed that information as a publicly traded company, &ldquo;shares would have gapped down 30%,&rdquo; says Enrique &mdash; who&rsquo;s been on alert since late last year for a moment when everyone realizes the company is mostly hype and hot air.
That moment has not arrived yet &mdash; but something will trigger it sooner or later.&nbsp;
It comes back to the complexity theory championed by our macro maven Jim Rickards &mdash; or as he popularized it, &ldquo;avalanche theory.&rdquo;
&ldquo;A single snowflake can turn a seemingly stable snowpack into a roaring avalanche that destroys everything in its path. Once the snowpack is arranged in an unstable way, a single snowflake can unleash carnage. Of course, a single snowflake is so small you never see it coming.&rdquo;
Those revenue numbers last week were just the latest snowflake among many.&nbsp;
Today we&rsquo;ll examine a few other snowflakes that continue piling up&hellip;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> In January, OpenAI confessed to its own vulnerabilities in a paper with the obscure title &ldquo;Ending the Capability Overhang.&rdquo;
&ldquo;The company boasted that ChatGPT had 800 million users, an impressive figure, yet only
50 million (6.3%) were willing to pay for the service,&rdquo; writes fund manager Daniel Oliver at Myrmikan Capital.&nbsp;
&ldquo;Of those paid users, the top fifth percentile used the service seven times more intensely than the median paid user.&nbsp;
&ldquo;In other words, of the 800 million users, only 5% of the 6.3%, or 2.5 million users, demonstrate that they are getting any real value out of the $20 per month service.&rdquo;
Per an article in Fortune two months ago, OpenAI booked $13 billion in revenue last year&hellip; and $21 billion in losses.
Further, CNBC reported six months ago that the company expects revenue through 2030 to total $280 billion&hellip; while it plans to spend $600 billion during that same period. (And that&rsquo;s scaled back from a previous plan to spend $1.4 trillion.)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Unfortunately, bad things that might happen to OpenAI won&rsquo;t necessarily stay contained to OpenAI.
More from Oilver: &ldquo;Microsoft (market cap $3 trillion) reports $627 billion in back orders, half of which is just from OpenAI.&nbsp;
&ldquo;The company has not yet hit the bond market for financing its foray into AI, but it has engaged in questionable accounting. For example, Microsoft invested $13 billion into OpenAI in 2023, but reportedly $10 billion of that figure was in the form of credits for OpenAI to use Microsoft&rsquo;s cloud services. Microsoft then counts the use of those credits as revenue.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Sounds crazy, right? But that&rsquo;s routine when it comes to the industry&rsquo;s &ldquo;really weird math&rdquo; described in a new book by author Cory Doctorow.
Under the partnership between these two companies, &ldquo;Microsoft gives OpenAI &lsquo;tokens&rsquo; that OpenAI can spend to access the computers in Microsoft&rsquo;s data centers,&rdquo; he writes.
&ldquo;OpenAI books these tokens as investment revenue, at face value. This is some very funny accounting. The tokens Microsoft invests in OpenAI can only be redeemed for Microsoft data center access&hellip;
&ldquo;The really weird math comes after OpenAI redeems its tokens with Microsoft to power ChatGPT and its other products: Microsoft books [those transactions as] AI-related revenue to its cloud-computing division.&rdquo;
Doctorow uses the analogy of an ice cream parlor with video-game machines in the back. &ldquo;To play these, you need tokens that you can get from the cashier in exchange for dollars. But the cashier likes you, so they give you $10 worth of video-game tokens to play, which you promptly pump into the Galaga machine.
&ldquo;Using Microsoft and OpenAI&rsquo;s funny accounting, the ice cream parlor has &lsquo;invested $10&rsquo; in you (by giving you $10 worth of funny-money tokens), and then the ice cream parlor &lsquo;earned $10 in revenue&rsquo; (when you pumped the tokens into the machine).&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We&rsquo;ll reiterate a point we made on Thursday, a truism related by the investment newsletter legend Doug Casey: &ldquo;Events that are inevitable aren&rsquo;t necessarily imminent.&rdquo;
So for now we&rsquo;ll give Daniel Oliver the last word &mdash; suggesting that even the key players know on some level that something has the potential to end badly.
&ldquo;The most telling comment from Microsoft&rsquo;s [most recent] earnings call was from CEO Satya Nadella: &lsquo;All of us are reading this 1873 as the book to be read.&rsquo;&nbsp;
&ldquo;Liaquat Ahamed&rsquo;s latest book, 1873, tells the story of the burst of the railroad investment bubble and the ensuing &lsquo;first great depression.&rsquo;&rdquo;
➢ As for Doctorow&rsquo;s book, it&rsquo;s titled The Reverse Centaur&rsquo;s Guide to Life After AI. I won&rsquo;t go to the trouble of explaining a &ldquo;reverse centaur&rdquo; today. I&rsquo;ll almost certainly circle back to this book in a few days, seeing as I&rsquo;ve barely started it.
<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: The Pros vs. the Mom and Pops
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> An intriguing divide is emerging in the U.S. stock market, says Paradigm analyst Zach Scheidt.
&ldquo;Right now, professional investors are nervous, and retail traders are excited,&rdquo; Zach writes for Altucher&rsquo;s True Alpha. &ldquo;The gap between those two camps is a solid litmus test for what we can expect in the coming months.
&ldquo;Professionals tend to fixate on valuations, future earnings and growth rates. They answer to benchmarks and committees. They move slowly and they hedge their bets.
&ldquo;Retail traders look at stories. They get fired up about a trend, they can move fast and they can concentrate their positions in a way the big institutions never could.
&ldquo;Now, we'd rather be the nimble individual trader any day of the week. That's the whole edge of trading your own book. But it still pays to understand why the professionals are uneasy.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Zach points to Snowflake Inc. (SNOW).
&ldquo;The stock trades north of $300,&rdquo; he says. &ldquo;At that price, you're paying more than 100 times what the company is expected to earn next year, and still around 90 times what it's projected to earn two years out. That's the kind of valuation that only works if the growth story keeps getting more exciting from here, not less.
&ldquo;This is what froth looks like because it doesn't even mean the stock can't keep running. Names like this can stay expensive far longer than anyone expects. But the risk baked into a valuation like that is real, and it's exactly the sort of thing that has the professional crowd sleeping with one eye open.
&ldquo;None of that is a call to short Snowflake. We're pointing at it because it's a clean example of the exuberance running through parts of this market right now. Know what you own, and know what you're paying for it.&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 major U.S. stock indexes, they&rsquo;re a mixed bag.
At last check, the S&amp;P 500 is down more than a third of a percent to 6,745. The Nasdaq is down two-thirds of a percent, while the Dow is up slightly.&nbsp;
Recent winners in the Paradigm portfolios include a huge 547% gain in less than six weeks on ConocoPhillips call options in Rickards&rsquo; Insider Intel (more than enough to offset a loss on Venture Global).
On the short side, readers of Rickards&rsquo; Crisis Trader booked 85% gains on Thor Industries put options.
Mason Sexton has racked up a string of short-term stock wins in The Map &mdash; including 22% in a month on the big silver ETF SLV, and 18% on the &ldquo;neocloud&rdquo; name Nebius Group in only a week.
Elsewhere, bond yields are inching down for the moment &mdash; the 10-year note back under 4.7% and the 30-year bond at 5.23%.
Gold is soaring again &mdash; up 1.5% to $4,673, another high last seen in mid-May. Silver&rsquo;s gain is more modest, but it&rsquo;s still knocking on the door of $69 for the first time since June.
Crypto is moving from strength to strength &mdash; Bitcoin now only $150 away from the $80,000 level, the highest in over three months. And Ethereum has crested $2,500.
Two big events loom this week: Nvidia&rsquo;s earnings report after the closing bell Wednesday, and Federal Reserve chair Kevin Warsh&rsquo;s maiden outing addressing the annual confab of central bankers in Jackson Hole, Wyoming Friday. Watch this space&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" />Hormuz Hallucinations
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. crude futures are down nearly 2% to $85.36 &mdash; perhaps still under the sway of Axios reporter Barak Ravid.
Over the weekend, Ravid posted a story citing &ldquo;three U.S. officials&rdquo; claiming that 40 oil tankers hauling 16 million barrels of crude transited the Strait of Hormuz on Friday &mdash; escorted by the U.S. military on the southern side of the strait near the coast with Oman.
The claim doesn&rsquo;t remotely square with independent monitors like the analytics firm Kpler, which recorded zero tankers departing the strait Friday.
Later today Treasury Secretary Scott Bessent will formally roll out the Trump administration&rsquo;s &ldquo;Economic D-Day&rdquo; plan of sanctions targeting Iran, supposedly so severe they&rsquo;ve &ldquo;never been seen in the history of the economic isolation of a country.&rdquo;
Your editor expressed <a href="https://paradigmpressroom.com/post/inflicting-maximum-damage-and-pain/#2">skepticism</a> about that on Friday &mdash; which was reaffirmed over the weekend when someone started recirculating this tweet from Obamatime&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6VgL9AW7AxPqbA5uH2m0wY/6612bc1a0c59dbd1722a5c1a49481ec9/FMF-Issue-082426-1.png" alt="Barack Obama tweet" 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 U.S. government&rsquo;s Strategic Petroleum Reserve sits at 289.7 million barrels &mdash; the lowest since 1982.
For perspective, the SPR was over 400 million just before Donald Trump and Benjamin Netanyahu launched the Iran war six months ago. In fairness, it was over 600 million before Joe Biden started draining it to save the Democrats&rsquo; midterm election prospects four years ago.
A scary chart from Bank of America&rsquo;s been making the rounds this morning. It shows the combined total of both private-sector inventories and the SPR, measured in days of available supply.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7IhjMI1fWVMeHTgJwaSzko/65b3bff3cd39e1a3e0030c2369b8fd5e/FMF-Issue-082426-2.png" alt="Us Crude inventories (Include SPR) at 40-50 years low" width="540px" />
Yikes. The biggest squeeze right now is in diesel prices &mdash; which feed through everything that&rsquo;s transported by truck. And right now diesel prices are about 20 cents a gallon away from their all-time high under Biden.
Meanwhile, we might be looking at the highest Labor Day gasoline prices ever.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Thought for the Day
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Here&rsquo;s another chart making the rounds today. What do Chinese leaders know that American leaders don&rsquo;t?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5x9t974zt573DzT5iJY3vy/e619b96e5e5feb0e10e0287fede339a4/FMF-Issue-082426-3.jpg" alt="China Gold Vs Treasury Holdings" width="540px" />
Reminder: Those are the publicly disclosed gold holdings of the People&rsquo;s Bank of China. The real number is likely twice as high, maybe more.
<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: Power Outages, Scrambled Political Lines
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;While the outcome of long-term power outages would be devastating, I believe this to be somewhat misleading,&rdquo; writes a reader after <a href="https://paradigmpressroom.com/post/inflicting-maximum-damage-and-pain">Friday&rsquo;s edition</a>.&nbsp;
&ldquo;History shows that our cities are capable of complete chaos within hours. Just look at the riots in LA, Minneapolis, Portland and Seattle to name a few.&nbsp;
&ldquo;The Northeast outage in the 1960s started about 5 p.m. with a transmission line failure. If a series of simultaneous outages started in the major cities at 6 or 7 p.m. (EST) on a hot weekday night, you would have full-scale riots by midnight.
&ldquo;Too many people would consider this the &lsquo;perfect shopping opportunity,&rsquo; much like a hurricane evacuation in New Orleans. Commuters would be struck during rush hour. First responders would be overwhelmed with rescues and not available to respond to the rioting, looting, etc.
&ldquo;God knows what would happen if this was extended for just.one or two days. Typically, power companies can get their systems energized within hours. However, this usually depends on power from neighboring power companies. That method would not be available if they could not transmit power due to line outages. .
&ldquo;By major cities I am thinking about New York, D.C., Atlanta, Houston, LA, San Francisco, Denver and Seattle.
&ldquo;You would not even need to hit the substations, but instead hit the major transmission lines feeding those cities, to start the outages.
&ldquo;Scary thoughts. I worked in the power business for 40 years in the Northeast and South.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Your three hot-button issues &mdash; data centers, flock cameras and U.S. aid to Israel &mdash; all seem designed to divide the conservative base,&rdquo; a reader writes after the conclusion to <a href="https://paradigmpressroom.com/post/chatgpf-the-f-is-for-fiasco">last Thursday&rsquo;s edition</a>.
&ldquo;Maybe so, but surely there are others that tie the left in knots. Here are three &mdash; communists taking over the Democratic Party, men in women&rsquo;s locker rooms and amnesty for illegal aliens.
&ldquo;Thanks for allowing me to balance out your list.&rdquo;
Dave responds: Maybe I wasn&rsquo;t clear. I was talking about issues that divide both partisan camps and that have the potential to scramble the usual loyalties.
For instance, here in Michigan, the Democratic nominee for governor is weighed down with a lot of data-center baggage &mdash; seeing as her husband is VP of the firm developing <a href="https://paradigmpressroom.com/post/maga-lansing">an enormously controversial project</a>.
Meanwhile it&rsquo;s fair to say the Democratic contest for U.S. Senate in the Great Lakes State turned on the issue of U.S. aid to Israel &mdash; or to be more precise, the unwarranted influence of pro-Israel donors.
There used to be a saying about how politics makes strange bedefellows. You don&rsquo;t hear it much anymore; too many elites are too invested in exploiting the red-blue divide.&nbsp;
But at the grassroots, some interesting coalitions are coming together. Could even be market-moving before all&rsquo;s said and done. We&rsquo;ll be watching&hellip;

FMF-Issue-082426-Featured

AI’s “Really Weird Math”

<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;Inflicting Maximum Damage and Pain&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> One day in the spring of 2014, we published an issue titled <a href="https://5minforecast.com/2014/03/13/the-18-month-nationwide-blackout/">&ldquo;The 18-Month Nationwide Blackout.&rdquo;</a>
It was actually the second of two parts. <a href="https://5minforecast.com/2014/03/12/a-niche-sectors-mainstream-moment/">In the first</a>, we spotlighted the revelation that the previous year, snipers shot up the Metcalf electrical substation in Coyote, California &mdash; not far from San Jose.&nbsp;
The impact on the power grid was minimal &mdash; but by many accounts, that was just a lucky break. (To this day, the case remains unsolved.)
Over those two days we also took note of a government report that said, "Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer."
That&rsquo;s just nine substations out of 55,000 total nationwide.
You can imagine the scale of civilizational breakdown if the lights went out for a year and a half. (Or maybe not. Normalcy bias is a powerful thing.)
A few days ago, The New York Times Magazine <a href="https://www.nytimes.com/2026/08/18/magazine/national-blackout-power-electricity-outage.html">reprised</a> this history&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7cM5IWSecen5KTXrIrKbV2/dafd916bdc27f1479d13238a2c1ee2d5/FMF-Issue-082126-1.jpg" alt="What if America went dark?" width="540px" />
&hellip; albeit with startling detail about the Metcalf saboteurs&rsquo; meticulous planning.&nbsp;
And it advanced the story by spotlighting the critical shortage of electrical transformers &mdash; a problem even if the grid stays up because so many aging transformers need replacing. It turns out many of the largest ones have to be built painstakingly by hand.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But we have to ask: What took the NYT so long?
Again, we&rsquo;re not Johnnies-come-lately to this issue. Three years after the Metcalf revelation in 2014, our firm shelled out $80,000 to acquire copies of a book called Lights Out to distribute to readers.&nbsp;
Authored by Ted Koppel, the longtime anchor of ABC News Nightline, it was sobering stuff.
&ldquo;If an adversary has as its goal inflicting maximum damage and pain on the largest number of Americans, there may not be a more productive target&rdquo; than the power grid, he wrote.
&ldquo;If a highly populated area were without electricity for a period of months or even weeks,&rdquo; he added, &ldquo;there is no master plan for the civilian population.&rdquo;
Now and then we&rsquo;ve also spotlighted the everything-connected-to-everything-else nature of the grid &mdash; laid bare by the Northeast blackout of 2003. A software glitch at an Ohio control room ended up knocking out power to 55 million people in eight states and the Canadian province of Ontario.&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> We also have to ask: Why is the NYT bringing all this up now?
After all, the paper sets the agenda for the rest of the legacy media &mdash; and much of the alt-media for that matter. It&rsquo;s going to be all over the place for a while.
Yeah, I know. It&rsquo;s becoming &ldquo;a thing.&rdquo; People are more aware of the power grid&rsquo;s fragility as brownouts and blackouts become more common. I started pounding the table about it here four years ago, when an industry white paper spurred me to buy a generator.&nbsp;
Too, people&rsquo;s minds have been concentrated by the advent of AI data centers, with their prodigious power demands. (This e-letter was also <a href="https://paradigmpressroom.com/post/the-monster-that-ate-the-power-grid-ai">early to the party</a> on that issue.)
The conspiracy minded will surely say the article is &ldquo;predictive programming&rdquo; &mdash; softening up the populace for a grid-down event that a nebulous they will either let happen on purpose, or make happen on purpose.
But the article does allow for cautious optimism toward the end &mdash; describing a new kind of transformer technology, and suggesting that rather than one big solution imposed from the top down in Washington, &ldquo;the best solution to a fragile grid may look like a lot of little interventions, distributed widely.&rdquo;&nbsp;
<a id="2"></a>
Hear, hear. Best to conclude this bullet on that hopeful note.&nbsp;
And we&rsquo;ll reinforce the guidance we&rsquo;ve been sharing now and then since 2022: Even in a short-term outage, no electricity means no credit/debit cards and no power to the gas pumps. Keep a wad of cash, keep your tank topped up and keep your battery-powered devices charged.
<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" />A Game of Economic Chicken
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> U.S. crude futures are set to end the week over $86 &mdash; the highest all month &mdash; even though the shooting portion of the Iran war is supposed to be over for a while.
Two days ago on social media, Donald Trump declared an &ldquo;Economic D-Day&rdquo; against Iran.&nbsp;
In addition, Treasury Secretary Scott Bessent said it&rsquo;s unlikely Washington will restart large-scale combat with Tehran &mdash; pivoting instead to a new round of economic sanctions, &ldquo;measures like have never been seen in the history of the economic isolation of a country.&rdquo;
Whatever. How many more sanctions can they impose at this point?&nbsp;
The announcement sounds a lot like the announcements that came out of the Biden administration and the European Union targeting Russia. The EU in particular has declared 21 packages of sanctions on Russia since the invasion of Ukraine 4&frac12; years ago. But go figure, Moscow is no closer to capitulation now than it was at the start.
And so begins a game of economic chicken: &ldquo;The U.S. is betting it can strangle Iran's economy to the point where Iran will concede defeat before the U.S. is forced to do so,&rdquo; writes John Mearsheimer, the renowned foreign policy scholar from the University of Chicago.
&ldquo;At the same time, the U.S. is working overtime to deal with inflation and rising bond yields, which are caused in good part by the Iran war, and which have the potential to badly damage the U.S. economy. Iran is effectively betting that continuing to limit the flow of oil and gas out of the Strait of Hormuz will threaten the US economy to the point where Washington, not Tehran, will cave first.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;This economic escalation is not even remotely likely to succeed on the timeline or at the cost Bessent &amp; co. assume,&rdquo; writes our former colleague David Stockman, who served as President Reagan&rsquo;s budget director for five years.&nbsp;
&ldquo;That&rsquo;s because Iran remains substantially self-sufficient in food and many essentials, retains residual oil revenues through black-market channels and pre-blockade floating cargoes and can endure prolonged isolation far longer than the already-strained global refined-product markets &mdash; especially diesel and jet fuel &mdash; can tolerate continued severe supply curtailment.&rdquo;
Maybe Bessent realizes as much.
Otherwise, why would he be badgering Chinese leaders to join in the sanctions? &ldquo;Keep in mind, the Chinese get 50% of their energy from the Gulf. So, it would do them a big service to get with the program,&rdquo; he said on CNBC.&nbsp;
(&ldquo;Get with the program&rdquo;? Diplomacy doesn&rsquo;t appear to be Bessent&rsquo;s strong suit &mdash; in contrast with Reagan&rsquo;s Treasury Secretary James Baker.)
And don&rsquo;t rule out a return to shooting, says Trita Parsi of the Quincy Institute: &ldquo;Iran fears surrender more than war.&rdquo;&nbsp;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Meanwhile, <a href="https://paradigmpressroom.com/post/chatgpf-the-f-is-for-fiasco/#2">Bessent&rsquo;s failed maneuvers in the bond market this week</a> continue to give a lift to non-dollar assets.
<ul>
<li>Gold is set to end the week at a three-month high approaching $4,600</li>
<li>Silver is set to end the week at a two-month high over $69</li>
<li>Bitcoin is approaching three-month highs over $77,000</li>
<li>Ethereum is pushing $2,400 for the first time since April.</li>
</ul>
At the same time yields on Uncle Sam&rsquo;s debt continue inching higher &mdash; approaching where they were on Monday before Bessent said he&rsquo;d amp up buybacks of Treasury paper. The 10-year note is nearing 4.74% while the 30-year bond is up to 5.28%.
The major U.S. stock indexes are trying to claw back some of their losses earlier in the week &mdash; but they&rsquo;re likely to end the week in the red. The S&amp;P 500 sits at 7,669. (Perspective: That would have been a record close less than three weeks ago.)
<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" />Death of Local TV (Avoid These Stocks)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Broadcast television is done. Like, as an industry. Forever. Its horse-and-buggy moment arrived this week.
As you might know, your editor worked in the TV news trenches for 20 years. I made my exit in 2007 &mdash; just as the internet was starting to change the advertising landscape in a big way.
Local TV has been in steady decline ever since. But there&rsquo;s one thing that kept it viable, even if TV stations could no longer generate the fat 35&ndash;40% profit margins of days gone by &mdash; campaign commercials.
As younger people turned away from TV, the remaining audience was concentrated among older demographics &mdash; people who happen to vote in the highest numbers. Thus, TV stations could count on a steady influx of campaign cash every two years.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> That all changed on Tuesday night with a shock election result in Florida.
The winner of the Democratic primary for U.S. Senate was a state lawmaker named Angie Nixon &mdash; proud member of the Democratic Socialists of America, collecting 56% of the vote.
Her opponent was retired Army Lt. Col. Alexander Vindman &mdash; a former National Security Council aide who was the star witness against Donald Trump during Trump&rsquo;s first impeachment in 2019.
As you might expect, Vindman was the favorite of the party establishment &mdash; and he had the campaign coffers to dominate, raising $16.3 million compared with Nixon&rsquo;s $975,000.
And get a load of the ad budgets, as recounted by Theodore Schleifer of The New York Times.
&ldquo;Vindman spent 36 times as much on ads as Angie Nixon, per AdImpact data. The loser here spent $2.2 million and the winner spent just $60,000, with zero spent on broadcast or cable.&rdquo;&nbsp;
Read that last line again.&nbsp;
It&rsquo;s a whole new world when a U.S. Senate primary candidate spends nothing on TV ads and wins by a 56-44 margin.
Yes, Nixon has an uphill battle against a Republican opponent in a red state. That&rsquo;s not the point. The point is that Nixon&rsquo;s win is the death knell for local TV stations&rsquo; cash cow. If not tomorrow, then likely before the 2028 presidential campaign cycle begins.
The days are numbered for the pure-play broadcast stocks &mdash; especially the top three station owners Nexstar (NXST), Gray (GTN) and Sinclair (SBGI). Make sure they&rsquo;re not lurking somewhere in your portfolio.
<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" /> Because no one believes the official inflation figures anymore&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7gMqBmriAkSJB3W9a8Nnvr/bd2d315d5cc60fe41184ac4d85d8be96/FMF-Issue-082126-2.jpg" alt="Comic Relief Seinfeld comic strip" width="540px" />
By the way, a new and rare podcast interview just dropped featuring economist John Williams of Shadow Government Statistics. He&rsquo;s the guy who runs the inflation and job numbers the way the feds did decades ago, when they were still honest. I&rsquo;ll be sure to listen and share highlights next week.
<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: Unfinished COVID Business
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Your Biased COVID Viewpoint&rdquo; says the subject line of a reader email responding to <a href="https://paradigmpressroom.com/post/now-she-tells-us-aoc">last Friday&rsquo;s edition.</a>
&ldquo;Dave, you must live somewhere far from international travel to have such a viewpoint on COVID and the lockdowns. 20/20 hindsight is convenient to such a position.&nbsp;
&ldquo;I personally knew and cared about five people who died of COVID within a month of the lockdowns starting (both before and after). The cities with international airports near the coast were most affected, and especially in NYC, which is a short distance from where I live.
&ldquo;Blaming anyone other than Trump for the majority of the carnage is really not even close to correct. I know you mentioned blaming Trump, but you are blaming him for the wrong reason. Here are his transgressions:
<ol>
<li>Ignoring advice as early as January to shut down incoming international travel. COVID was already starting to be reported as an issue, and erring on the side of caution could have saved lives AND avoided much of the lockdown hysteria.</li>
</ol>
<ol start="2">
<li>Once he closed the international travel down, he only stopped it from China. But people, especially citizens, would find a way to come via Middle Eastern country airports or other routes into NYC instead of LAX or SFO. Additionally, he didn&rsquo;t stop incoming travel from Macau, where all his rich friends go to gamble.</li>
</ol>
<ol start="3">
<li>Time and time again Trump espoused his stupid ideas instead of listening to his experts: bleach injections? Hydroxychloroquine? Etc.</li>
</ol>
&ldquo;The one thing he did right was developing the vaccine.
&ldquo;Most actions are driven by fear, and yes, the lockdowns were an overreaction when looking in hindsight. But nobody knew whom would be affected badly&hellip;what was known was that NYC was running out of ICU beds and places to store the dead. It seemed apocalyptic at the time.&nbsp;
&ldquo;Could they have reopened sooner? I believe so, but Trump used this event politically as he always does: Sow division and confusion. He and his cult followers bought into this so well that my son was assaulted by people he considered friends simply for being worried that going out with them could cause him to bring COVID back to our home and it might cause my death. And the death of my wife, as we are older, and my wife has some of the conditions that were noted as bad for getting COVID.&nbsp;
&ldquo;Worst president EVER! And I am a recovering Republican (can&rsquo;t say I like the Democrats much &mdash; woke definitely went too far)&rdquo;
Dave responds: So&hellip; you&rsquo;re not even asking for a pandemic amnesty. That&rsquo;s hardcore.
<a href="https://5minforecast.com/2022/11/03/the-election-is-already-decided/#255">In the autumn of 2022</a>, Brown University health economist Emily Oster penned an article for The Atlantic &mdash; kinda-sorta apologizing on behalf of her fellow control freaks and power trippers, saying it was time for all sides to forgive and forget.&nbsp;
"Treating pandemic choices as a scorecard on which some people racked up more points than others is preventing us from moving forward,&rdquo; she wrote. &ldquo;We have to put these fights aside and declare a pandemic amnesty."
Of the most draconian measures, she simply said, &ldquo;We didn&rsquo;t know.&rdquo;
As the Substack blogger known as El Gato Malo wrote at the time, &ldquo;The precautionary principle does not state, &lsquo;Every time you get scared, do the most radical thing you can think of if it feels like safety&rsquo; &mdash; that is precisely what it warns against.&rdquo;
These issues are not in the past, and we can&rsquo;t afford to put them there. They still matter.
We give the last word today to Chase Oliver, the Libertarian Party&rsquo;s 2024 presidential candidate&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7GY1AKXHMkX9yuoMM84DQ4/e7d0084d9eedc113dbbd004b6fa2f432/FMF-Issue-082126-3.jpg" alt="Chase Oliver quote" width="540px" />

FMF-Issue-082126-Featured

“Inflicting Maximum Damage and Pain”

FMF-Issue-082026-Featured

ChatGPF (The “F” Is for “Fiasco”)

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />The Position of **** You
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> It might be the most brilliant financial-planning advice that ever came out of Hollywood.
In The Gambler, Mark Wahlberg plays Jim Bennett &mdash; a college professor who racks up huge gambling debts he can&rsquo;t repay.&nbsp;
As a result, Jim finds the lives of his loved ones under threat from a handful of loan sharks.
During a scene that&rsquo;s made the rounds on social media in recent years, a loan shark named Frank &mdash; played by John Goodman &mdash; tells Jim in blunt terms how dumb he&rsquo;s been with his winnings.
<blockquote>Jim: I've been up two and a half million dollars.</blockquote>
<blockquote>Frank: What you got on you?</blockquote>
<blockquote>Jim: Nothing.</blockquote>
<blockquote>Frank: What you put away?</blockquote>
<blockquote>Jim: Nothing.</blockquote>
<blockquote>Frank: You get up two and a half million dollars, any a**hole in the world knows what to do: You get a house with a 25-year roof, an indestructible Jap-economy s***box, you put the rest into the system at 3&ndash;5% to pay your taxes and that's your base, get me? That's your fortress of f***ing solitude. That puts you, for the rest of your life, at a level of f*** you. Somebody wants you to do something, f*** you. Boss pisses you off, f*** you! Own your house. Have a couple bucks in the bank. Don't drink. That's all I have to say to anybody on any social level. Did your grandfather take risks?</blockquote>
<blockquote>Jim: Yes.</blockquote>
Frank: I guarantee he did it from a position of f*** you. A wise man's life is based around f*** you. The United States of America is based on f*** you. You're a king? You have an army? Greatest navy in the history of the world? F*** you! B*** me. We'll f*** it up ourselves.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/45fd751lnooooXZM4Ceo9g/a981564e804551218da5110b24a36f7b/FMF-Issue-081926-1.jpg" alt="Click here to learn more" width="540px" />
What Goodman&rsquo;s character calls &ldquo;your fortress of f***ing solitude&rdquo; is what the rest of us call &ldquo;financial independence.&rdquo; Or maybe &ldquo;the millionaire next door.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Unfortunately, $2.5 million is no longer enough for &ldquo;your fortress of f***ing solitude&rdquo; &mdash; as your editor said last night in a reply to a post of the movie clip on X.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5FSs9xPCfNJuqxzjgiywwS/b1dbebaeba42f63a27b4a8befd014660/FMF-Issue-081926-2.jpg" alt="Dave Tweet" width="540px" />
The Gambler came out in 2014. Just going by the official inflation numbers, $2.5 million then is $3.5 million now.
And as we can&rsquo;t say often enough, the official inflation numbers are doctored through statistical games that economists give fancy names to cover up the sleight of hand. Such as&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.&nbsp;
Worse, we&rsquo;re not going back to &ldquo;normal&rdquo; 2% inflation anytime soon. We&rsquo;ve cited <a href="https://paradigmpressroom.com/post/declare-your-independence-from-inflation">the historical evidence</a> regularly since 2023: Whenever the inflation rate sails past 5%, it typically takes a decade to get back to 2% or less. That means we&rsquo;re looking at elevated inflation into the 2030s.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The impact on your finances &mdash; whatever size of pile you&rsquo;ve got &mdash; can be devastating.&nbsp;
Paradigm&rsquo;s macroeconomics authority Jim Rickards breaks down the numbers: &ldquo;Just 3% inflation cuts the value of the dollar in half in 24 years and half again in another 24 years. That means in a typical career from age 17 to age 65, the dollar will lose 75% of its purchasing power.
&ldquo;It takes an amazing combination of hard work, saving and investment skill to beat those odds. With inflation above 3%, the destruction of dollar purchasing power is even greater.&rdquo;
The good news, such as it is, is that U.S. stock market returns so far in the 2020s have outpaced the cost of living. But for how much longer?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2E0boogMkeKUjzVbiWBkju/f22bb60eea99ae1723dbef7b617df760/FMF-Issue-081926-3.jpg" alt="Stock market has outpaced inflation... for now" width="540px" />
It is unusual for the S&amp;P 500 to generate double-digit returns in three consecutive years. It&rsquo;s rare indeed for four years in a row &mdash; happening only three times in the last century.
Which means that after another year or two, you can&rsquo;t put your money in an index fund and expect to stay ahead of the inflation monster.
It&rsquo;s always been our mission at Paradigm to deliver investment ideas that can outperform &ldquo;the market.&rdquo;&nbsp;
<a id="2"></a>
But the present environment gives us an even more important mission &mdash; to deliver investment ideas that will offset a relentlessly rising cost of living.
We thank you for your patronage and your trust. We know that trust has to be earned anew every day.
<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" />Move Along, Nothing to See Here
<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 using paper clips and rubber bands to prevent the bond market from blowing up.
As noted here yesterday, the yield on 30-year Treasury bonds hit 5.32% this week &mdash; the highest since 2007. Rising Treasury rates mean that people aren&rsquo;t interested in buying the debt of a debt-addicted Uncle Sam who&rsquo;s racked up nearly $40 trillion in future obligations.&nbsp;
Which is bad enough, but there&rsquo;s also a snowball effect: The higher interest rates rise, the faster the debt grows.
So this morning the Treasury Department announced Uncle Sam will more than double its buybacks of U.S. Treasury debt.
In recent weeks, these repurchases have taken place every 10 days or so, at a pace of about $2 billion per operation. Per a Treasury Department press release, the plan is to amp up each buyback to &ldquo;at least&rdquo; $4 billion starting next month.
&ldquo;Buying bonds pushes bond prices up and yields down,&rdquo; Paradigm income-investing pro Zach Scheidt reminds us. &ldquo;Lower yields ripple into mortgage rates, CD rates and borrowing costs across the board. That's stimulus.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But here&rsquo;s the problem: &ldquo;Stimulus usually shows up when an economy is struggling,&rdquo; says Zach. &ldquo;That's not where we are.&nbsp;
&ldquo;The S&amp;P 500 just hit an all-time high, and hyperscalers are pouring hundreds of billions into the economy.
&ldquo;Call it what it is: the government using its own buying power to push yields lower in a market that wasn't asking for help.
&ldquo;This is market manipulation. And manipulation doesn't end well. Free markets correct themselves. Manipulated ones do too, just more violently, once the money or the resolve runs out.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> For the moment, however, the announcement has had the desired effect.&nbsp;
The yield on a 30-year T-bond has fallen from Monday&rsquo;s peak of 5.32% to 5.2% this morning. For the bond market, that&rsquo;s a massive move in less than 48 hours.
But how long will it stick?&nbsp;
Recall that Treasury Secretary Scott Bessent <a href="https://paradigmpressroom.com/post/turning-japanese-fmf">intervened</a> at the end of July to prop up the Japanese yen &mdash; to ensure that Japanese owners of U.S. Treasuries would be less inclined to dump their holdings so they could raise needed cash.
That too knocked down U.S. Treasury yields &mdash; for a while. And then they started rising again.
Each new intervention reeks of desperation. But that&rsquo;s how it goes when your national debt explodes 68% higher since the onset of COVID and all the mad spending that followed&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" />Cancer Breakthroughs and Humanoid Robots
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> The big stock stories today are in the realms of biotech and robotics.
Shares of Moderna Inc. (MRNA) are up 136% after the company announced a successful trial of an mRNA-based shot for skin cancer.
We won&rsquo;t dwell on the implications here. Our biotech expert Ray Blanco will have an update later today for Altucher&rsquo;s Investment Network readers &mdash; and we&rsquo;ll share excerpts here tomorrow.
The other big story comes from China &mdash; where shares of Unitree Robotics began trading today in Shanghai, and they promptly soared over 450%.
Unitree is the world&rsquo;s leading maker of humanoid robots &mdash; a realm followed closely by Paradigm AI authority James Altucher.
As he explained it in this space on New Year&rsquo;s Day, James once wrote off humanoid robots&hellip; and then it hit him. &ldquo;The entire world has been constructed to fit 8 billion 5&rsquo;8&rdquo;, two-armed, two-legged humans.
&ldquo;If you want a robot that can vacuum, make a bed, cook, pack goods, stack shelves, move objects down hallways, climb stairs, open doors and work inside spaces already optimized for people&hellip; you don&rsquo;t redesign the world.
&ldquo;You redesign the worker. That worker is humanoid.&rdquo;
The U.S. leader in this space is Tesla. Unfortunately plans for its Optimus robot are behind schedule, with release for consumers and businesses pushed off until next year.
Reason? The huge number of custom components and a wicked-complex supply chain.
Of course, it&rsquo;s the suppliers to big companies that often deliver outsized gains &mdash; something James and his team are monitoring closely as Optimus moves closer to launch.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> As for the broad U.S. stock indexes, they&rsquo;re all in the green today &mdash; but not by much. The S&amp;P 500 is up about a third of a percent as we write and back over 7,700.
The real action is in precious metals &mdash; gold up $164 and *this* close to $4,500 for the first time since June. Silver&rsquo;s up 4% to $65.74.
That&rsquo;s a function of two things we spotlighted in Bullet No. 2. All else being equal, falling interest rates give a lift to precious metals, which have no yield. But at the same time, the Treasury buyback announcement has touched off a flight from the dollar &mdash; the U.S. dollar index down more than three-quarters of a percent to 98.85 &mdash; the lowest since May. Hot money fleeing dollars is moving toward gold and silver, at least for today.
Digital nondollar assets also appear to be benefiting from dollar weakness. At last check Bitcoin is up nearly $3,800 to $68,360 &mdash; and Ethereum is slingshotting its way toward $2,100.
U.S. oil futures are up over 2% to $86.60. The weekly inventory numbers from the Energy Information Administration show that supply of distillates &mdash; diesel and jet fuel &mdash; are at critically low levels. A gallon of diesel that cost $4.58 in early July costs $5.46 now.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Well, as long as we have inflation on the brain&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1C2OAkZZb3JOCZ1UVORvHn/e6512d57b0e891fcb8689958b7c795a1/FMF-Issue-081926-4.jpg" alt="Meme" width="540px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Mailbag: Private Credit
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Excellent explanation by Enrique Abeyta as to the difference between the housing bubble and the private equity bubble,&rdquo; a reader writes in response to yesterday&rsquo;s <a href="https://truthandtrends.com/posts/33-575-cracks-beneath-the-bull-market">guest edition</a>.
&ldquo;Your clear and concise description of the &lsquo;tells&rsquo; in both situations is most helpful. Too many times an author describes the problem but doesn't provide the clues we should be looking for. Thank you Enrique from a longtime subscriber.&rdquo;
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;I want to acknowledge how much I appreciate the market insights as well as your insights into private equity health,&rdquo; chimes in another. &ldquo;What you are describing relates to my local agricultural economy with local lenders tightening their evaluations for renewing operating lines of credit.
&ldquo;Annual operating lines are no longer routinely approved, leaving farmers and ranchers &lsquo;shell-shocked&rsquo; and treading water financially.
&ldquo;In a part of the country hammered by long-term losses created by wildfires as well as our state water resources department threatening water rights curtailments we are faced with a double-edged sword of asset devaluation.
&ldquo;I hope you continue to analyze the private equity market but go deeper on who is being impacted.&rdquo;
Dave responds: Rest assured we&rsquo;ll stay on top of it.
As long as you brought up your region&rsquo;s farm economy, I went and checked the Rural Mainstreet Index this morning. I don&rsquo;t do it regularly and maybe I should.
Every month, Creighton University economist Ernie Goss surveys bankers in rural areas of ten states dependent on either agriculture or energy. As with many sentiment indicators, numbers over 50 suggest growth. Under 50, contraction.&nbsp;
The index has spent five of the last six months below 50 &mdash; plunging from 52.6 in June to 42.1 in July.
&ldquo;More than half&hellip; of bank CEOs reported that very weak commodity prices will be the greatest challenge to the agriculture economy,&rdquo; Goss says.
Yes, grain prices are up &mdash; but farmers&rsquo; input costs (i.e., fertilizer in short supply after the U.S.-Israeli attack on Iran) are up more.
Thanks to all for the notes of appreciation and the on-the-ground insight.

FMF-Issue-081926-Featured

The Position of **** You

FMF-Issue-081826-Featured

Gold and Great Nations

<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" />Now She Tells Us (AOC)
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Rep. Alexandria Ocasio-Cortez (D-New York) just came clean &ndash; fessing up to something your editor&rsquo;s been saying for years.
Remember all the madness in the summer of 2020?&nbsp;
When strict lockdown orders could be violated as long as you were protesting &ldquo;systemic racism&rdquo;? When we were told mere speech <a href="https://5minforecast.com/2020/06/09/the-woke-takeover/">constituted &ldquo;violence&rdquo;</a> but deliberate property destruction was A-OK? When corporate America <a href="https://5minforecast.com/2020/06/25/the-purge-is-coming/">embraced the &ldquo;woke&rdquo; agenda</a> and employees who didn&rsquo;t toe the line got fired?&nbsp;
Perhaps the height of the insanity came when JPMorgan Chase CEO Jamie Dimon &ldquo;took a knee&rdquo; in the name of social justice&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3Y13JGB89nAFXzF9uXCOXj/955289ec4f11867ad3959e6c84a1c5b5/FMF-Issue-081426-1.jpg" alt="EKL Tweet on Jamie Dimon Kneeling in front of a giant bank vault" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Yeah, none of that would have happened were it not for the COVID lockdowns that upended the economy by government decree.
<a href="https://5minforecast.com/2020/06/02/were-all-hajis-now/">I said as much</a> even as the riots were still going full-tilt. &ldquo;Absent the lockdowns driven by the pandemic&hellip; the chaos driven by the death of George Floyd wouldn&rsquo;t be happening.&rdquo;
History is clear: Economic hardship leads to societal chaos.&nbsp;
Case in point: The 2014 riots in Ferguson, Missouri took place after poverty rates shot up in neighbhorhood after neighborhood during the preceding decade.&nbsp;
Now, think about the prelude to the Summer of Floyd: &ldquo;Two weeks to flatten the curve&rdquo; had stretched into over two months with no end in sight. At the end of May 2020, emergency economic measures including expanded unemployment benefits and an eviction moratorium were about to expire.&nbsp;
Legions of overeducated, underemployed baristas and Uber drivers had spent two months cooped up in their crappy apartments &ndash; and now they were about to be rendered penniless and homeless.
Something was bound to send them out into the streets.&nbsp;
The architects of the lockdowns had already lit the match. All they needed was a splash of gasoline. The splash of gasoline just happened to be George Floyd.
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Which brings us back to AOC.
When she burst onto the scene during the 2018 midterms, <a href="https://5minforecast.com/2019/01/17/ready-to-fork-over-your-fair-share/">she was all about economic issues and &ldquo;climate change&rdquo;</a> &ndash; tax the rich, Medicare for all, the Green New Deal.&nbsp;
&ldquo;Identity politics&rdquo; wasn&rsquo;t her thing.
But by early 2021, she <a href="https://5minforecast.com/2021/03/30/aoc-abandons-socialism/">fully embraced the woke agenda</a> as she sought to climb her way higher within the Democratic Party&rsquo;s power structure.
She even threw her fellow Democratic Socialists under the bus &ndash; saying they were coming from a &ldquo;privileged&rdquo; place if they dared to criticize Biden&rsquo;s economic policies from the left. &ldquo;For anyone who brings that up, we really have to ask ourselves, what is the message that you are sending to your Black and brown and undocumented members of your community, to your friends, when you say nothing has changed?&hellip; We cannot allow for that in our movement.&rdquo;
Later that year, she turned up at the Met Gala in New York &ndash; where tickets cost $35,000 a pop.&nbsp;
Most of the headlines were about her gown with the words &ldquo;Tax the Rich&rdquo; scrawled across her rear end. Less noticed was the fact she and the other attendees were maskless &ndash; while the hired help had to mask up.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2kDpOoyRCxOv45GLEEfL6z/298eaa642b79658f88953b94a218bec2/FMF-Issue-081426-2.jpg" alt="X post by Glenn Greenwald displaying img of AOC and her unmasked boyfriend being primped for the met gala in tax the rich dress" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> But now AOC chalks up wokery to a collective burst of temporary &ldquo;craziness&rdquo; from which we&rsquo;re supposed to just move on.
Last weekend she went on the Sunday talk show circuit. She nervously laughed her way through an interview with ABC&rsquo;s Jonathan Karl &ndash; who confronted her with the most extreme positions espoused by the social justice warriors.
<blockquote>Karl: Did the movement go too far with some of those positions? I mean, you, you briefly supported the idea of defunding the police.</blockquote>
<blockquote>Ocasio-Cortez: You know, I think that, I think that during this time, and during, especially during COVID, there was a huge opening of the Overton window. We were shut down. There was some of the highest unemployment rates that we have seen because of those shutdowns. Yeah. And I think that the, the doors were really open in trying to entertain any and every policy that was going to get us to a better place. And I actually think that the discussions that were had in that time were quite fruitful. [Emphasis mine]</blockquote>
There you are, direct from AOC. None of this would have happened if the control freaks and power trippers hadn&rsquo;t imposed their lockdowns, restrictions and mandates first.
So it&rsquo;s not just the upended lives, the disrupted schooling, the shuttered small businesses, the excruciating pain of saying final goodbyes to a loved one over Zoom, the federal spending spree that touched off the worst and most prolonged episode of inflation since the 1970s.
It was also the &ldquo;mostly peaceful&rdquo; protests, the workplace struggle sessions imposed by HR departments, the ensuing four years in which the culture wars were played out <a href="https://paradigmpressroom.com/post/peak-woke">on retailers&rsquo; shelves</a>.
All of it can and should be laid at the feet of those ultimately responsible. Anthony Fauci. Deborah Birx. The various state governors (<a href="https://5minforecast.com/2020/04/15/off-with-their-heads/">Gretchen &ldquo;Queen of Hearts&rdquo; Whitmer</a> in Michigan was the worst).
And Donald Trump &ndash; whose culpability I documented in March 2025 during <a href="https://paradigmpressroom.com/post/covid-9-11">my five-year COVID retrospective</a>. (No Trump supporter wrote in to tell me I was wrong.)
AOC wants you and me to move on. Trump too, when you get right down to it.
Never. Not until there&rsquo;s justice and accountability.
<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" />Consumers Buckling Under Inflation
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> Speaking of the worst and most prolonged episode of inflation since the 1970s&hellip; it&rsquo;s now having a measurable impact on consumer spending.
The Commerce Department is out with its monthly read on retail sales. The typical Wall Street economist was expecting a small bump up of 0.1%. Instead, there was a 0.6% decline.
This number is often skewed by auto sales (volatile month-to-month) and gasoline sales (which rise and fall along with gasoline prices).&nbsp;
But even if you factor those out, you get a nasty downside surprise. The &ldquo;expert consensus&rdquo; was expecting a 0.4% jump and instead there was a 0.3% drop.
To be sure, one month does not constitute a trend. But for the moment, the mighty American consumer is buckling under the pressure of rising prices. &ldquo;The elevated inflation rate is having a dampening effect on consumption,&rdquo; says a summary from Econoday. &ldquo;Energy costs and tariffs continue to underpin higher prices.&rdquo;
Important reminder: These retail sales figures are not adjusted for inflation. If they were, you would see that retail sales have been flat since early 2021 (when the inflation rate started taking off in earnest).
Here&rsquo;s a chart that&rsquo;s now three months old &ndash; but we can assure you the trajectory hasn&rsquo;t changed.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3d8b9KN7iogd32kUToQLop/c4e2d421cb9cd70283839122c452bd12/FMF-Issue-081426-3.jpg" alt="Real Retail Sales Haven't grown in 5 years chart" width="540px" />
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After notching a record close yesterday, the S&amp;P 500 is treading water going into the weekend.
At last check the index is down less than 0.2% to 7,786. (It couldn&rsquo;t quite break through 7,800 yesterday.) The Dow and the Nasdaq are also in the red, though not by much.
Precious metals are staging a modest rally &ndash; gold up to $4,383 and silver a few pennies shy of $65.&nbsp;
Oil, you ask? &ldquo;Iran blew up two tankers. Naturally oil is down,&rdquo; says a pithy tweet from commodities analyst Lukas Ekwueme. As we write, U.S. crude futures sit at $81.44.
Crypto is losing ground, Bitcoin well below $63,000 now.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Follow-Up: California&rsquo;s Wealth Tax
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> California&rsquo;s proposed wealth tax might never reach the ballot in November.
As we&rsquo;ve chronicled now and then this summer, the referendum proposes a one-time wealth tax of up to 5% on net worth over $1 billion. Doesn&rsquo;t matter whether those assets have been sold.&nbsp;
Silicon Valley billionaires are fighting back &ndash; Google co-founder Sergey Brin committing tens of millions in hopes of defeating the measure.
In a lengthy analysis issued this week by the Tax Foundation, senior fellow Jared Walczak finds the proposal vulnerable to a court challenge.
Among the potential objections: The measure is touted by its supporters as an excise tax rather than a tax on property. &ldquo;But courts, in California and at the federal level, have long held that the character of a tax is determined by its substance, not its form or label,&rdquo; Walczak writes. &ldquo;Merely calling a tax an excise tax does not make it one, and even if it is possible to define a tax as an excise in some fashion, it does not lose its ordinary characteristics.&rdquo;
Then there&rsquo;s the part of the referendum that applies the tax to billionaires who resided in California as of January 1, 2026. Walczak says the retroactive residency requirement is fatally flawed in light of Supreme Court precedent.
So far, no lawsuits have been filed challenging the referendum. But if it passes in November, litigation is a sure thing.
Bottom line: &ldquo;If courts invalidate the tax,&rdquo; Walczak writes, &ldquo;California will have the worst of all worlds: a threat that drives away some of the state&rsquo;s wealthiest taxpayers and spooks the next wave of startup founders, costly litigation that could drag on for years, and not a single dollar in new revenue.&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" /> Speaks for itself&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/01KV3yaGhdE5wl0g4bG3dI/fa83740d0d5e543c1629ce7c878057ef/FMF-Issue-081426-4.jpg" alt="Benjamin 100 dollar bill Meme" width="540px" />
Well, we&rsquo;ll add this.
If you go by the official inflation numbers, the dollar&rsquo;s purchasing power has depreciated 30.3% since 2013.&nbsp;
But <a href="https://paradigmpressroom.com/post/musks-biggest-ambition/#5years">given the way the inflation figures are gamed</a>, it probably is closer to 50%.
Speaking of gamed economic numbers&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: Funky Stats, Entry-Level Jobs
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> &ldquo;Hey Gonigam, watch how government numbers start to get better and better as we get closer to the mid-terms,&rdquo; a reader writes.&nbsp;
&ldquo;Trump doesnt care about how he looks in May or June. He knows the American public has no memory, and only cares about the next couple of weeks going forward. With all his political appointees (4,000 +/-) in place and ready for his final orders, those numbers are gonna get rosier and rosier ... no conflict of interest ... rrrrrrriiiiggghhhht.&rdquo;
Dave responds: Both Jim Rickards and Buck Sexton of our team &ndash; neither one Democrat-friendly &ndash; have spotlighted the perception thing.
&ldquo;Trump doesn't need perfection here,&rdquo; Buck said in this space on June 11. &ldquo;He needs people to feel like things are getting better. That's it.&rdquo;
We&rsquo;ll see. This much is for certain: Since Trump fired Bureau of Labor Statistics commissioner Erika McEntarfer a year ago, only one monthly reading of the consumer price index has come in hotter than the consensus expectation of Wall Street economists. What are the odds?
<img class="intrinsic" style="float: left; display: block;" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" align="left" /> After our item in <a href="https://paradigmpressroom.com/post/the-ai-bailout-of-2027">Wednesday&rsquo;s edition</a> about the plunge in the number of entry-level jobs, a reader writes&hellip;
&ldquo;My personal opinion is employers are using the &lsquo;wanting experience&rsquo; as an excuse to hire workers with maturity more than work experience. They want someone who is going to show up for work, every day, on time, no excuses, no entitlement.&rdquo;
Dave: Could be.
On Tuesday we mentioned the monthly survey from the National Federation of Independent Business &ndash; in which members are asked to identify their single-most important problem. &ldquo;Quality/availability of labor&rdquo; was cited by 27% of respondents.&nbsp;
In the 52-year history of the NFIB&rsquo;s surveys, the only time this figure was higher was during the worst of the post-COVID labor shortage in 2021-22.&nbsp;
The survey excerpts in the NFIB&rsquo;s report underscore the reader&rsquo;s point.
<ul>
<li>&ldquo;Labor is a challenge. We currently rely on older or retired help,&rdquo; said a retailer in Pennsylvania.</li>
</ul>
<ul>
<li>&ldquo;Our biggest obstacle is finding technicians with experience. It is also difficult to find office employees. Most [people] we hire off the street do not last. [They] miss a lot of work,&rdquo; says the owner of a construction firm in Arizona.</li>
</ul>
<ul>
<li>&ldquo;Employees want more compensation for less work/production. To keep this trend going we must find easier ways to do tough jobs and charge higher prices with stiff compensation,&rdquo; says the owner of a services-oriented business in North Carolina.</li>
</ul>
If you lack faith in the younger generations, tomorrow&rsquo;s 5 Bullets will &ndash; well, let&rsquo;s just say it won&rsquo;t do much to change your mind. Catch you then for our Saturday wrap-up&hellip;