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Sunday, November 8, 2026

2026-11-08

 ***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:




Market Fare:

What does that even mean?

.............. On Thursday 11/5/26 the SPX fell 4.3% and the NDX fell 6.3%. Investors immediately focused on “who blew up?”. This is a reasonable question to ask. Throughout my career, the rapid often forced unwind of positions has caused outsized market moves. Furthermore, when the unwind is over markets recover.

Some of those forced unwinds have been
  1. Extremely broad and long lasting (like banks in the GFC).
  2. Extremely narrow like Victor Neiderhoffer (RIP) in October of 97, or Situational Awareness this summer.
  3. In between version where a few big names get forced to unwind and others less well publicized are forced out at the same time for the same reason like LTCM with all fixed income arbs getting sucked in in 1998, or Merrill and Kidder blowing up in MBS in 1994 dragging Orange County pension fund and the whole hedge industry down with it.
  4. Even retail like Korea this spring, or Mrs. Watanabe when the real yen carry trade exploded in March 2011 after the Fukushima tsunami. 
.....................



The goal-seeking for a bullish narrative was strong among the sell-side analysts today. Here's a roundup of some of the more reasonable ideas behind today's bounce...
  1. Clarity - the event is passed and Trump "absolutely willing" to accept the results and a 'medium bad' outcome for Republicans 
  2. Gridlock - lowers the risk premium. Dem majority plus Trump’s willingness to work with it “should act as a break on extreme policy outcomes and bring down risk premia” - DB Saravelos. 
  3. Plunging Oil - recognition of Iran War as reason for Dem Sweep, Trump confirmed he wouldn't escalate in Iran any time soon, and "expect Dems to use fiscal deadlines to seek to limit the war with Iran" - GS Hatzius
  4. Hopes of Tariff Rollback - "...roll back selected tariffs, and reverse spending cuts enacted last year." - GS Hatzius, and it fits who led today with AAPL/MSFT surging as investors perceived the stock as a winner from the Democratic sweep.
  5. Hedges Unwound - deeply in the money protection was sold (driving down vol and sparking the heavy delta/gamma flow-driven rebound)
  6. Technicals - NDX bounced off its 200DMA
  7. Rotation - Money is moving out of AI CapEx (on worries that Democrats will regulate AI more) and into cash-generating MegaCaps.
  8. Seasonality - 6 months after the past 19 midterm elections, SPX higher 100% of the time, with an average gain of 14.18%.


.......... This year’s drop from “very bullish” to neutral has five precedents:
  • 2000,
  • 2007,
  • 2010,
  • 2015, and
  • 2018.
They are not all the same.

What separated the major tops in 2000 and 2007 from the short-lived drawdowns of the 2010s was the level of inflation, which constrains central banks. 

In the 2010s, inflation was consistently low, so central banks pivoted quickly and reflated markets before the downturns built momentum. In 2000 and 2007, by the time policymakers eased, it was too late. Today, headline CPI is 3.7% and the Fed is still hiking. .............






QTR: Life After AI: Where The Money Is Now Moving
Wall Street is beginning to question the AI spending frenzy, and the beneficiaries may not be the companies everyone expects.

.........I continue to believe tech, particularly the more speculative corners of the AI trade, is headed lower over the short to medium term. Yesterday’s rally didn’t change that view. As I discussed yesterday, citing Gordon Johnson, I think much of the move could be attributable to VIX compression and the unwinding of election-related hedges. Once the election uncertainty disappeared, investors no longer needed as much protection, implied volatility fell, and the resulting repositioning helped push stocks higher.

That doesn’t mean there wasn’t genuine buying, or that the market can’t rally further. But I would be careful about mistaking a mechanical relief rally for a fundamental improvement in the outlook. Valuations remain stretched, financing costs remain a problem, and the economics of the AI infrastructure boom are increasingly difficult to justify. The election, in my opinion, added another layer of risk rather than removing one.

What interests me more than yesterday’s index performance is where money appears to be moving to.

For a few months, I’ve been arguing that 2027 could be characterized by a rotation away from speculative AI and technology investments and toward larger, established companies with real earnings and durable businesses. .........




......... Citrini Research is a well-regarded independent boutique whose thematic and topical reports have made a big splash on several occasions in 2026. With nice timing, its latest output, "State of the Themes," dropped Wednesday, in the immediate aftermath of the midterm elections. It made one bold prediction, of "peak capex growth."

Reducing this argument to simple numbers, the note points out annualized hyperscaler investment is approaching $1 trillion while annual recurring revenue in the whole AI ecosystem sits around one-fifth of that. Clearly something has to give, Citrini observes, and it probably involves a bit of both: reducing the capex and lifting the revenues. .........



Material Fare:




Vid Fare:








A.I. Fare:

Semis were sold off hard, and fear, uncertainty and doubt are back. It is not time to panic. It is time to prepare and do the homework: 19 names, fundamentals and our 10 semiconductor holdings.

................... That is the moment we wrote the rules for. A correction to major support inside a rising trend is where you buy the dip, not where you sell the trend.


Thoughts on the election; will datacenters be stopped? Ai infrastructure margins, the potential for capex plateau, and beware the AI Religion



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(not just) for the ESG crowd:

He left a legacy that deserves both admiration and critical scrutiny


Tindale: Decarbonisation: The Fantasy upon which Net Zero is built.
The models behind Australia’s 2050 date need carbon-removal machines at thousands of times today’s scale, and leave out the copper. On the UN panel’s own figures, net zero by 2050 is folly.

The logic of decarbonisation is the foundation of net zero: cut the world’s carbon dioxide emissions to net zero, and warming stops rising.

The decarbonisation models, global computer models of energy and climate, turn the logic into a pathway that reaches net zero around 2050.

Net zero is the policy that carries us along the pathway, and Australia has written net zero by 2050 into law. The path runs through giant imaginary machines that pull carbon dioxide back out of the air.

The decarbonisation models put a dollar price on each machine and skip the question a builder settles before pouring a slab: whether there is enough copper, steel and other materials to build it.

Australia’s target of net zero by 2050 carries out a route drawn by global computer models, and the route holds on a condition that an American economist wrote in three words in 1973: “if it exists”.

The economist was William Nordhaus. ...............................................................



Sci Fare:

New primate research reveals how neurons rapidly alternate between conscious perception and hidden visual worlds.



U.S. B.S.:


........... Instead of defying the deep state, Trump commandeered it, Once despised by the neocons, Trump became their darling when he launched a catastrophic new war on Iran, on a pretext so flimsy that I can’t remember what it is. Something about “preventing Iran from getting nuclear weapons.” Meanwhile, he has prolonged the Ukraine war or the Israeli wars in Lebanon, Syria, and Gaza (if the latter can be called a war at all instead of a slaughter). ... In hindsight, I should have anticipated this in light of the enormous amounts of money entering the Trump campaign from right-wing Zionists, who are inseparable from the neocons and the infamous “Project for a New American Century” in West Asia. Tellingly, Kennedy’s poll numbers—and campaign morale, and my influence in the campaign—began to shrink when he espoused extreme Zionist views after October 7, making him, in the words of Jeffrey Sachs, “half a peace candidate.” I should have understood that Zionism is inseparable from the war agenda, because Israel is an arm of the empire, integral to the imperial project. Unfortunately, I ignored my misgivings and stuck with Bobby Kennedy, reasoning that, after all, he was better than the other two guys (Trump and Biden). Later, I hoped that Trump’s antiwar instincts would prevail over his Zionist backers and he would screw them over (as he has other former allies). 

............ As for corruption, the magnitude of the Trump family’s profiteering, cronyism, and bald-faced self-dealing puts to shame the petty venality of the Biden family, sordid though it was. The Bidens raked in millions; the Trump family, billions. 

............. All of this offers an easy formula for Democrats to win back power, but I think we should aspire to more than that. In tomorrow’s election, the Democrats will probably win a resounding victory. That is good (at least to the extent that Congress can do anything after decades of imperial presidency), because a check is sorely needed on the administration’s deranged and tyrannical actions. But the Democrats are the essence of the very establishment against which Kennedy’s supporters were revolting. The Democrats were the ones that provoked the Ukraine war and sabotaged its negotiated settlement. They were the ones that greenlit the Gaza genocide. They administered the lockdowns and mandates of the Covid era, censoring, harrassing, and debanking dissidents, and expanding the definition of “digital hate” to cover valid political dissent. They cooked up the Russiagate hoax and the lawfare against Trump. They spouted increasingly hateful and belittling views about their opponents’ supporters (a “basket of deplorables”). For a generation now, they have been just as cozy with the intelligence agencies, the Defense Department, the corporations, Wall Street, Big Pharma, Big Tech, and Big Everything as the Republicans. They have stewarded the neoliberal order with its deteriorating health, decaying infrastructure, and hollowing out of the middle class. This state of affairs is what drove millions of people to support Kennedy in the first place.

The Democrats can win this election just by being less bad than Trump’s Republicans. Nothing much will change, though, until they (or perhaps some new political force) embody the authentically populist spirit that animated the early Kennedy campaign. .............


The Republicans didn’t win Tuesday, obviously. But they didn’t lose, either.

“Now that the Democrats have finally scored an unambiguous victory in the midterm elections,” an editor at The New York Review of Books wondered in print this morning, “the question is no longer how they might regain power, but what they should do with it.” This is curious times ten. Amid all the celebrations of the Democrats’ romp at the polls last Tuesday, why would anyone ask what their plan is now that they have won decisive majorities in both houses of Congress? Shouldn’t it be perfectly clear what the out-of-power party is going to do now that it is the party in power?

The short answer is the Democrats do not have a plan. Or is it that the Democrats’ plan is to have no plan? Or, a third and plausible possibility, they have a plan but do not want all those voters who just gave them a political triumph to know what it is?

“What is our assignment?” Chuck Schumer, the New York Democrat who will probably be named Senate majority leader in short order, asked the other day. “First, Americans want Washington to bring down the cost of living.” Assignments do not count as plans or policies, we must conclude. The Democrats have been trying this on for years: State the case but don’t make the case? And what about “second, “third,” and so on down a list the “centrist,” Zionist Schumer does not seem to want to talk about? What about ending the war against Iran? What about U.S. support for the Israeli regime’s genocidal campaigns (plural)? What about the Pentagon budget? What about America’s gross overcorporatization? What about, what about, what about?

This is an important passage in America’s political story. Corporate media invite us to exhale deeply, understand the Democrats’ victory as a groundswell of good old American liberalism, and look forward to the salutary things to come now that “Trumpism” will pass into the past. I read the moment differently. All the jubilation with which the press and broadcasters fill the air is sheer spectacle, it seems to me. In the time Trump has left in the White House he will be licensed to pull this crumbling republic yet further rightward than it has already traveled in the course of some decades. The progression—check that, regression—from republic to empire will be rendered close to irreversible these next two years. And as Trump pulls the Democrats will push in this same direction. 

In net terms the elections just concluded will confirm not only the demise of “the left,” in quotation marks: America has not had a left since the post–Vietnam years. They will also deliver the bitter truth that there is no such thing as American liberalism (and in truth there never has been). The losers last Tuesday stand to win, the winners will serve the losers in just this way, and the true losers—this is nothing like a first in American political culture—will be those whose votes put the winners in power.

There will be no coming back from this—not this time, not as things stand. There is no one in power left to bring America back. Only Americans can bring America back.



Vice President JD Vance made the surprising admission on social media that Trump administration’s war with Iran was what caused the massive Democratic Party sweep of the midterm elections, stating plainly that “The reason we lost is the war.”

Saying “the real reason we lost is obvious to almost everyone,” Vance noted that a poll found Trump 2024 voters who ditched the president’s party in 2026 gave four main answers to the question of what the Republicans could do to win them back: “1) End the war, 2) Focus on cost of living/inflation, 3) Put America First , 4) Change our relationship to Israel.”

................... So the story isn’t that Americans spontaneously transformed into a country full of tender-hearted peaceniks in November 2026. The story is that Iran was able to impose an economic cost on ordinary Americans for the actions of their evil government.

The average American is a propaganda-addled empire zombie who has been indoctrinated into cold-hearted indifference to their government’s abuses in the global south. American voters didn’t reject the war in Iran because they believe it’s immoral to bomb schools and civilian infrastructure in depraved wars of aggression overseas, they rejected it because it was costing them more to fill up their pickup trucks and they were having to pay more money for their buckets of Mountain Dew and ranch dressing. 

If Trump had won the war in four to six weeks as he initially claimed he would, his monstrous attack on Iran would have been no more consequential in the voting booths than his regime change interventionism in Venezuela. It is only because Iran succeeded in doing whatever it needed to do to retain the military strength needed to impose a financial toll on the American electorate that the Republicans lost the Senate for years to come. War with Iran is now officially political poison because of Iranian strength. ....................

US officials love to whine and complain that Iran spends its money on its military instead of on the Iranian people (though the United States is literally the absolute dead-last country on earth who has any business airing such a grievance), and to this day they’re still weeping crocodile tears about the way Tehran aggressively smacked down the CIA/Mossad uprising at the beginning of the year. But Iran has shown the world that a nation must retain its strength if it wants to retain its sovereignty and avoid being turned into another resource extraction scam for the US empire.

Every country that retains the necessary muscle to beat back the US empire’s efforts to absorb it into its power umbrella invariably gets smeared by the imperial propaganda machine as a tyrannical and despotic rogue state, but it is the US empire who makes it necessary for governments to exert force if they don’t want to be replaced with subservient US puppet regimes. Western propaganda likes to frame the global struggle as free democracies versus oppressive autocracies, but really it’s just nations who wish to retain their sovereignty versus the empire who wants to take that sovereignty away from them. ...........



War Fare:


I haven’t written a lot about the US elections. The Democrats will win, since Trump has completely trashed the US economy with his policies and caused a cost of living crisis (you ain’t seen nothin’yet), the only question is how large the Democratic wave is.

Democrats controlling Congress is unlikely to make much of a difference. Even if they have enough votes they won’t remove Presidential war powers, even though constitutionally those belong to Congress and were given by Congress to the President. Likewise Trump’s signature policies of erratic tariffs with no plan and violent immigration enforcement will not cease.

It’s hard to predict Trump, but the evidence suggests another attack on Iran immediately after the election. The US has been shifting massive resources to the Middle East in preparation. The Iranians, once again, seem unlikely to attack first even though they can see the buildup, so I guess they’ll tank the first hit again.  ....................

.............. The world is on the brink. US elections will not change that. Nothing will seriously change until America admits it has lost the war and makes peace on terms that reflect that.

That remains the most likely outcome, but the longer it takes for America to admit it’s loss, the worse the suffering will be. I repeat my advice to stock up on fuel, food, medicine and other goods (motor oil, etc…)

As for America, until there’s an actual opposition party, elections will simply shuffle the chairs on the deck and inexorable American decline will continue.



Geopolitical Fare:


It is said that history is written by the victors, but what’s interesting is that this is also true of the present story. Those who are winning the capitalism game get to set the narrative about what is currently happening in our world.

If you succeed in dominating the humans you share a planet with using our current socioeconomic systems of labor exploitation and resource extraction, then you get to buy up politicians, media outlets, online platforms and influence operations which allow you to determine the mainstream narratives about what’s going on in our world, in the same way the victorious armies of the past often had the power to shape the historical record in their favor.

The present is therefore written by the victors.

Those who’ve landed at the top of the heap have the power to circulate narratives which normalize the abusive system they benefit from, and to scare the public away from seeking to implement other systems of power distribution and resource allocation.

They have the power to shape public perception of world events, to reverse victim and perpetrator in their narratives about international conflicts, and to frame the western empire as a passive witness to the terrible things that are happening around the world rather than the primary driver of those horrors. ..................

Power is the ability to control what happens. Absolute power is the ability to control what people THINK about what happens. Those who are winning the capitalism game are able to exert absolute power over our society.

The real source of power in our world is not money, nor resources, nor armies, nor weapons. The real source of power in our world is narrative, and the ability to control it. ................


QOTW:

Turner: The Democrats are the dogs who caught the car and think they’re really fast and have strong jaws when in reality voter rage at Trump’s losing war on Iran, data center madness, the ongoing genocide in Gaza virtually guaranteed the opposition party a huge win.

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Sunday, November 1, 2026

2026-11-01

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:

Fed Chairman Warsh asserted GDP and capital spending are broadening, we disagree. Their policy pivot was an own goal.

Executive Summary
We see strong headline growth but little evidence that consumption, capital spending, or earnings are broadening enough to sustain a secular boom. We believe the AI investment cycle is moving from peak capex growth toward monetization, with tighter financing conditions and uneven productivity gains raising the risks around that transition. We remain modestly cautious: the Fed’s hawkish pivot has increased the cost of capital, earnings momentum is slowing, and we do not yet see sufficient price adjustment or policy relief to call a buying opportunity.




Market Fare:




Give the Boring Ones a Chance...


........... Last week, 177 S&P 500 stocks made new one-month highs.
That's 35% of the entire index.
Meanwhile, just 47 stocks made new one-month lows.
Sounds pretty constructive, right?
Well, those 177 stocks making new highs represent just 25% of the index's weight.
The 47 making new lows? Nearly the same amount. ............


On Tuesday, America votes. Why is this important? Because the months after a mid-term have historically been the sweetest stretch of the entire four-year presidential cycle.

On Tuesday, America votes. The fear gauge just pushed above 20 for the first time since June, and the calendar says this is exactly where the ride gets bumpy. This week: why April, November and December are the stock market’s happiest months, why uncertainty is the market’s kryptonite, and why the months after a mid-term have historically been the sweetest stretch of the entire four-year cycle.

"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."
– Peter Lynch

........ Markets have moods. And the moods follow a calendar.

Over almost a century of data, three months sit at the top of the S&P 500’s league table: November, April and December. Look closely and you will notice what they have in common.

Each one comes with a celebration: .............


.............. The stretch from the fourth quarter of the mid-term year through the second quarter of the pre-election year has historically been the best nine months of the entire cycle, with the S&P 500 gaining around 20% on average since 1949. In every 12-month period after a mid-term election since 1946, the S&P 500 finished higher, by about 15% on average. Measured from the mid-term year’s low, the average gain one year later has been roughly 30%.

And this year’s starting point matters. In every mid-term year since 1950, the S&P 500 stood higher six months after October 26, a perfect 19 out of 19, by about 15% on average. In the seven of those years that entered late October up 5–20% year-to-date, as 2026 has, the index was higher three, six and twelve months later every single time. ....................

So, what do we do with the cloud over next Tuesday?

Honestly, not much. We stick to the plan. The monthly savings plan keeps running, our quality businesses keep compounding, and if Mr. Market hands us a dip in the weeks around the vote, we already know which names we would like to own a little cheaper (that is exactly what our screening is built for). Panic-selling into a mid-term has historically been one of the most expensive habits in investing. Peter Lynch knew why.

Nobody at arvy knows how Tuesday ends. We don’t need to. Long-termism has always been our biggest edge, whoever sits in the White House and whichever color the next stretch of Chart 4 turns.

The cloud will pass. Keep the umbrella handy. ...


A mechanical look at what’s driving CCC spreads wider

................. Through August 2026, CCCs widened 243 bps while HY tightened 5 bps. Look only at the index and you’d think this was a CCC-specific problem. But look at the underlying bonds and you get a very different picture.

The median CCC bond tightened 25 bps over those 8 months. Bonds that started the year at 95 or better tightened 67 bps at the median, and the 80 to 95 bucket tightened too. Of the 106 issuers in the index on both dates, 59 tightened. The widening was concentrated in bonds that were already below 80, and inside that group it was extreme.



Material Fare:

After a gold pullback into our 2-year cycle-low window, the risk/reward is attractive now. Five candidates from our screening, and the one we are adding to this week.

............... After a vertical run into late January, the metal has spent nine months correcting, and this week it is testing the support zone it has defended repeatedly over the past year. On Monday, in arvy Macro Cycles, Michael wrote that gold is heading into its 2-year cycle low, the Q4 low he has projected since his 2026 outlook, and that he buys into this weakness. His 8-year cycle still points to a major top in 2028, with a minimum target of $8,800.

The long-term case has not changed. The entry price has. .......................................

Our screening scores more than 2,000 quality companies every month on the «Good Story» (moat, returns on capital, balance sheet) and the «Good Chart» (trend, relative strength, accumulation). Rank the subsectors by their median Composite, and gold has been first in every snapshot since 20 August, straight through the September and October pullback. Across the fourteen snapshots on this heatmap it has never ranked lower than sixth. .....................




Quotes of the Week:

Blind Squirrel: 
A line doing the rounds on Palo Alto’s Sand Hill Road is “the average of zero and infinity is infinity” as they justify their increasingly large bets on AI startups.



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(not just) for the ESG crowd:

Part One: Can we afford ‘free’ trade?


A new study found that plastic straws have the lowest negative environmental impact in most of the categories — including human toxicity.




R.I.P. Fare:

Researchers say his portrayal of the Star Trek character represented curiosity, thoughtfulness and an effort to understand others.



Sci Fare:

AI can do things humans researchers can’t, even in groups.



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Sunday, October 25, 2026

2026-10-25

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Market Fare:

Revolving macro headaches

.............. It’s always easy to get lost in macro risks.

Some are easier to ignore (AI funding, Coreweave etc).

Others are a more difficult (inflation, bond yields).

Some are impossible (Iran/France?).

If there is anything 2026 has taught us is that it’s easy to have a view on EPS growth in different markets and expect those markets to perform in line in a given year, but it’s sometimes very hard to appreciate that these gains will only come when the risk picture is at its poorest. .........



Material Fare:


Markets have been volatile over the last several weeks, with selling pressure spreading across tech stocks and speculative assets. Gold and miners have been no exception, with the latter getting caught up in the broader liquidation and suffering significant selling pressure of their own.

While still beating the NASDAQ by about 6% over the last 3 months, miners are down -16.5% in the last month, plunging far more than the QQQ’s which are down just -5.75% in comparison. 

I thought it would be a good time to take a few minutes this morning to explain that personally, this is precisely the type of environment I have been anticipating for years (gold and miners plunging alongside a risk selloff), and it does nothing to change my longer-term bullish outlook on gold and gold miners.

What we’re seeing is entirely consistent with the thesis I’ve been laying out over the last few years, though the thesis is far from being proven right. ..........



 



Bubble Fare:




A.I. Fare:


Despite massive investments and widespread hype around artificial intelligence, the technology has delivered zero financial payoff to corporate America outside of tech. Revenue per worker is rising for the Mag 7 but is flat for the S&P 493, see the first chart below. Profit margins are rising for the Mag 7 but are flat for the S&P 493, see the second chart below. And there are still no signs of AI boosting productivity growth, see the third chart below. With no impact on the bottom line, mainstream corporate America is pulling back and starting to view token spending not as a source of growth but as a cost center that weighs on margins. ..............


Jean Baudrillard's critics called his ideas "blithe idiocies." Jensen Huang calls them a business plan — and trillions of dollars are riding on it.

........... The reason I’m writing this piece is because I did some silly things when I was in college—things like reading the post-modern French theorist Jean Baudrillard—and, frankly, I’ve noticed that some of these AI tycoons are starting to sound like him.

.......... One of Baudrillard’s most famous claims was that people had stopped using “models” of the world to describe reality and started using them to create new realities instead.

Fair enough. But then he took the argument a step further, and in an unsettling direction.

Ultimately, he claimed, people would come to accept what their models told them as reality, even if the model didn’t correspond with what was happening outside their front door. A point would be reached, he worried, after which people would find the artificial model to be “more real” than reality itself.



Crypto Fare:

Hendry: love it least.
those who know it best love it least. i'm buying.

........... don coxe, a wonderful canadian broker and commodities strategist, said something i've never forgotten: the most powerful bullish thrusts begin when those who know it best love it least. it was redolent for me in 2005, when i launched an agricultural equity fund partly on the strength of that line. farmers fucking hated being farmers and were selling off their land, and that turned out to be the beginning of a great move in the ags. bitcoin is there now. it was conceived as a rebellion against the people who ran the banks, and the people who know it best can't stand that the suits are showing up at conferences. the revolution got a dress code, and the founders' disgust is exactly the signal coxe taught me to look for. 

the calculus is straightforward to the point of rudeness. bitcoin's market capitalisation is roughly $1.5 trillion, and in the world of global capital markets that's tiny. there's something like at least $500 trillion of global savings out there, and the gold market alone is valued at about $35 trillion. a million dollars a coin works out at around $20 trillion, which would still leave bitcoin smaller than the yellow metal it was supposed to challenge. the move i'm describing is more than twelvefold from here, and all it would really do is promote the thing from curiosity to asset class. gold carries a bigger number every day without anybody calling it a mania. ..........

......... the brightest young minds want to be in finance and ai now. before ai they were all over bitcoin, and i think they'll come back to it, because the s&p isn't the answer if you're 30 years old today. you're going to have to take more risk, and you should be buying bitcoin now. bitcoin could be a million bucks and your ten-year prospective return from the s&p could be zero, and i can imagine those two together. the index is a fine place to compound a fortune you've already made. it's a much stranger place today, to start one from nothing. .........



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(not just) for the ESG crowd:

Bardi: The Collapse of the Ecosphere
Recovering will take at least 14 milion years. A blip in Earth’s history, but a long time for humankind.




Sci Fare:

Orexin agonists have been approved for the treatment of a type of narcolepsy, yet they could also treat conditions across the health spectrum.



Geopolitical Fare:




Other Fare:

Curtin: Background Assumptions

What is the explanation for the brainwashing of so many Americans when it involves the nefarious, unspeakable deeds of their government? Why are so many so easily duped time and again? Why is there such a vast ignorance of the truth behind national and international affairs?

I would suggest that the answer lies not just with the specific issues themselves and the lies and propaganda used to befuddle people, but with the cultural and social background assumptions that frame their thinking. The latter serves to cut to the root of people’s belief in their own power to think freely and clearly about the former. Invade people’s minds over many years with an ongoing series of interconnected memes, keep their attention focused on trivia, occupy their minds with alleged facts that induce a frenzied depression, and then fooling them on specific issues – e.g. Ukraine, Russia, Iran, Palestine, Syria, elections, etc. – becomes much easier.

I am a retired philosophically informed sociology professor whose specialty is the sociology of knowledge, which is indebted to the early work of Marx, Nietzsche, Scheler, and Mannheim, among others. This sociological specialty is rooted in a very long philosophical tradition into the nature of “knowledge,” “reality,” and illusion, a notable example being Plato’s allegory of the cave. The sociology of knowledge is the study of how we know what we “know,” why we think what we think we know is “real,” and how knowledge is historically situated and conditioned and therefore relative to time and place ..............


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Sunday, October 18, 2026

2026-10-18

 ***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:




Key Takeaways
  • Inflation driven by supply shocks is "bad" inflation, and bad inflation is self-liquidating because rising income doesn't support it.
  • September headline CPI ran 3.7% while core sat at 2.6%. The gap is gasoline, up 34.2% over the year and now more than half of the monthly increase.
  • Real wages have turned negative, and labor's share of output just set its lowest reading since the series began in 1947.
  • The 10-year breakeven sits near 2.3%. The market that gets paid to price inflation is not pricing an inflation problem.
Most of the argument about inflation right now is a fight between people using the same word for two completely different things. One side sees a 3.7% headline print and starts sketching a repeat of 1979. The other sees core running more than a point below it and declares the problem solved. Both are reading the same release. The distinction that matters is not how big the number is, but whether anybody's income is financing it. That is the line between "good" inflation and bad inflation, and almost nobody draws it. ................



The United States is putting another 17 million barrels of crude from the Strategic Petroleum Reserve on offer, one day after the IEA accelerated emergency stock releases as governments scramble to get more oil and fuel into a tight market.



The world is entering a new era of geopolitical confrontation, increasingly reminiscent of the Cold War. The wars in Ukraine and the Middle East, the rearmament of major powers, the fragmentation of international trade and the growing importance of strategic alliances are transforming the foundations of the global economic system. What distinguishes the present environment from the original Cold War, however, is the financial condition of the world economy. Governments are carrying substantially higher debt burdens, while financial asset valuations have benefited from decades of declining interest rates, expanding liquidity and relatively predictable inflation.

To understand the economic implications of this geopolitical transformation, we must begin with what I consider the three fundamental axioms of world dominance: energy, defense and money. ..................

......................................................................... The world is entering a period in which the three axioms of dominance—energy, defense and money—are becoming more closely interconnected.

The Middle East demonstrates that possessing energy resources does not guarantee economic security when production facilities and export routes are vulnerable to military conflict. Japan demonstrates that sophisticated industrial economies remain strategically exposed when they depend on imported energy and feedstocks. Europe demonstrates how energy costs can weaken industrial competitiveness, reduce household purchasing power and aggravate existing fiscal and political vulnerabilities. France, in particular, illustrates how the pressure can extend into sovereign bond markets when governments face rising expenditure requirements and declining fiscal flexibility.

These developments are different manifestations of a common geopolitical transformation. The globalization era encouraged countries to organize production around economic efficiency. The emerging order is increasingly organized around security, strategic alliances and the capacity to withstand prolonged confrontation. The transition requires substantial investment in defense, energy infrastructure, industrial capacity and strategic inventories. It can increase production costs and reduce the efficiency of international capital allocation.

And it is occurring at a time when governments, corporations and households already carry exceptionally large debt burdens. This is the fundamental difference between the original Cold War and the world of today. The earlier confrontation took place within a very different financial system. Today’s global economy has accumulated debt and financial asset valuations that make it considerably more sensitive to sustained increases in interest rates. If geopolitical confrontation persists, the consequences may become structural.

The resulting increase in the cost of capital would affect governments, corporations, households and financial asset valuations. The most important consequence of the energy shock may therefore emerge not in oil markets, but in the market for capital. Energy determines a nation’s capacity to produce. Defense determines its ability to protect that capacity. Money determines how long it can sustain both.

The central risk is that the cost of defending the new geopolitical order will exceed what the existing financial structure can comfortably sustain. And if that happens, the ultimate adjustment will be determined not by the price of oil alone, but by the price of money.




Market Fare:

The stock market's record-high margin debt is keeping Wall Street pros up at night

.............. The fear is that a steep tech sell-off could be the spark that causes the record amount of borrowed cash to combust, triggering margin calls and resulting in a wave of forced selling that derails the bull market.

It may sound like an unlikely scenario, but it's a growing risk investors need to contend with, especially considering how concentrated the market is in tech and how exposed US households are to a sudden drop in equity prices ..............




Material Fare:


It ended, apparently, in the spring. Gold ran to a record in the last days of January 2026 - $5,608 an ounce on one spot reading, roughly $5,405 on the LBMA benchmark, and $5,318.40 on COMEX futures, three figures describing the same metal and differing by nearly $300, which is a reminder that the price depends on which price you mean - and then it simply stopped. By the middle of October the metal was changing hands near $4,112, some 27 per cent below the January spot peak, while silver, having briefly touched $121.62 on 29 January, had lost more than half its value and was trading around $56. Two metals, two collapses, and for anyone who had spent three years waiting for the precious metals complex to deflate and stop interrupting the serious business of equity markets, a comfortable conclusion was available: the thing had been a trade, the trade had unwound, and the world could return to its previous arrangements. ..................

That pairing - a violent correction alongside a deteriorating physical balance - is the substance of what follows. The word shock has been devalued by overuse, and precision is worth the trouble here. A shock, as the term is used in this article, is not a spike on a screen or the sort of one-week convulsion that produces memorable charts and forgettable analysis. It is closer to a condition: the moment when the price of a metal and the physical availability of that metal stop agreeing with one another, and the gap becomes large enough that ordinary arbitrage can no longer close it. Price spikes are events. What gold and silver have been signalling is a change in the settlement mechanics of the world economy, ..................

Gold is behaving the way an asset behaves when sovereign institutions begin treating it as a reserve again rather than as a diversification, and silver is behaving the way a metal behaves when its industrial consumption outruns its ability to be produced. These are two different mechanisms producing two different prices, but they are pointing in the same direction, and the direction concerns confidence: confidence in the financial system in the first case, confidence in the productive system in the second. When both begin to erode at once, the practical consequences run through supply chains, borrowing costs, defence procurement and ultimately consumer prices, and they do so with a lag long enough to be politically comfortable and short enough to be economically unpleasant. ........................

..................................... Zoltan Pozsar, then at Credit Suisse, published a note in March 2022 whose central claim has aged unusually well. He argued that the freezing of Russia's reserves had fractured the assumptions underpinning the dollar-based financial order, and that what followed would be organised around commodities rather than around credit.
"We are about to witness the birth of Bretton Woods III." - Zoltan Pozsar, Credit Suisse, March 2022.
Whether the label is accurate is debatable; the substance - that reserves would be held in things rather than in promises - has been borne out by four years of official-sector behaviour. ...............

.......................................... The argument, honestly stated, rests on three legs - sovereign accumulation, physical deficit, and fiscal deterioration - and it would take the failure of at least two to make it wrong. A single leg giving way would be survivable. All three failing within the same decade would be close to a refutation, and anyone who insists that cannot happen is overstating the case in the opposite direction.



3. Commodities: see upside risk for commodities given macro tailwinds, constrained supply, thematic demand drivers, messier for longer geopolitics, and resurgent sentiment/positioning.
4. Agri Commodities: continue to see upside risk in agri commodities (as a group) given cheap valuations, soft capex, improving sentiment, weather risk (El Nino), geopolitics, and bullish technicals.






Investing Fare:

Plus, energy trounces equities


Same finish line, opposite portfolios, and two completely different ways to lose. Quality fails too early, momentum fails too late, and the interesting portfolio is the overlap.


.......... Top-quintile momentum in large-cap US stocks compounded at 13.78% a year against 9.83% for the S&P 500, over ninety-four years. Note the log scale, and note that this is a different universe and a different construction from the MSCI numbers above. Do not read the two side by side as though they measure the same thing.

What matters is the shape. Nearly a century of the same tilt, through the Depression, the war, the Nifty Fifty, the 1970s and everything since. Whatever momentum is, it is not a data-mining artefact of the last thirty years.

So what is it doing?

It is not really reading stocks. It is reading factors.

This is the finding of Sina Ehsani and Juhani Linnainmaa, published in the Journal of Finance in 2022 under the rather good title «Factor Momentum and the Momentum Factor». Their result is that momentum in individual share prices comes out of momentum in factor returns, and that factor returns are positively autocorrelated almost everywhere you look. ...............

....................... Which is why the discipline is always the same at arvy: you research regardless of the tape, and you act when the tape stops arguing. Not one-year returns on capital, which predict essentially nothing. The five-year average, which is where the signal actually lives. ...............






A.I. Fare:

Why are convicted criminals at the heart of the financing and roll-out of AI? Because the global economy is based on practices which in any other realm would be a complex criminal conspiracy.

I'm writing about AI again today so you might think this is an article about AI and it isn't. So then you might think it's about data centres (which are not the same thing as AI), and it's not about them either. It's actually about vape shops. Or police colleges. Or the Royal Mail. And it's definitely about the Dark Triad. And political lobbying.

Because it is about almost everything in our economy. Because it's about company financial accounting.

But don't go! Because it isn't really about accounting at all. It's really about criminals. Well, criminals and vape shops and the Royal Mail and data centres and a police college. Because they're all sort of the same thing. That thing is Dark Triad. Oh dear, I'm going to have to slow down...

This week the International Monetary Fund placed a collapse in AI stock as a top five global risk along with nuclear war. That is quite a statement, but it is not an exaggeration. The US stock market is so reliant on Big Tech just now and the US is so reliant on stock markets these days and the world is still so reliant on the US as the foundation of the global economy that risk means big risk.

But from whence does the risk emanate? The short answer to this question is 'from the same place that subprime debt risk came from', because basically AI investment is almost exactly the same financial scam as subprime. I am not going to go into all of this here but you'll need a slightly longer explanation than that.....................

................ Complaining about the fact that almost no-one was charged over the 2008 crisis is not a complaint about moral failure but legal failure. Crimes were committed and swept under the carpet.

That financial jiggery pokery broke the world as we knew it, led to Trump and the rise of the far right and created a simmering financial and economic crisis we've never escaped and which is behind all the worry about western economic performance. So to stifle those worries, here's a new scam...

I mean literally. AI might prove the breakthrough western economies need but it can't be financed using methods that would get through normal accounting practices (like being able to show how you will get a return from trillions of dollars of investment). It is massively speculative and might fail as a business model (AI may just need too much energy for what it can do so and so be financially unviable at scale). So we're instead doing this through the power of scam. .....................

................... If I lied and charged you for a roof repair that wasn't needed and wasn't done, that would be illegal. That's what is happening with inflation. We're being lied to that the roof needs fixed when actually we just need Donald Trump to get the fuck off the roof.

If I offered you a contract that said 'give me money, I'll multiply it and give you back more than you gave me' and then I didn't, I'd be imprisoned. That is what every politician has said about wealth concentration and GDP growth for 50 years.

If I sold you a half-kilo bag of nails and you discovered half the contents were stones, you'd call the police. That is half the financial assets in the world just now. If I told the tax man I was 27 different people before admitting who I really was, I'd be charged. That's what nested shell companies are.

Yes, all this is now normalised. The argument is that once this kind of effectively criminality is embedded in the system, it is key to maintaining the integrity of the system. But that is because the system itself is basically a sprawling organised crime network which has only one purpose – strip wealth from the general public and the government and direct it all to the very, very rich.

I amn't talking metaphorically here. Every single element of this economy is either a public agency or regulator with 'GDP growth' as its priority, or it is a corporation legally obliged to maximise shareholder profits. It is set up to rob. Then they created university economic departments to indoctrinate another generation into this scam, and then they bought up all the media just in case. ...............



Quotes of the Week:

QTR: Friday’s selloff was not a surprise. Between deteriorating credit markets, rising Treasury yields, increasingly absurd artificial intelligence valuations, enormous amounts of leverage and an entire financial system that has spent the better part of two decades mainlining cheap money like a frat guy guzzling Jaegermeister at the bottom of an ice luge, the warning signs have been flashing for quite some time.


The power to synthesize  "a vast amalgam of constantly changing, multicolored, evanescent, perpetually overlapping data, too many, too swift, too intermingled to be caught and pinned down and labeled like so many individual butterflies"... requires a "direct, almost sensuous contact with the relevant data, an acute sense of what fits with what, what springs from what, what leads to what"...This skill combines reason, emotion, judgment, and analysis: "so many individual butterflies".





(not just) for the ESG crowd:

Ripple, Rockstrom et al: The 2026 state of the climate report: challenges and opportunities. 
Abstract
Earth’s climate system is moving deeper into uncharted territory. We present the 2026 update of planetary vital signs that track the state of Earth’s climate system, alongside indicators of the human activities driving ongoing change. Of 16 climate-related indicators, seven are currently at record extremes. Several indicators also show evidence of accelerating trends or abrupt shifts, raising concerns about increasing climate instability, interacting feedbacks, and the growing risk of crossing critical tipping points. Human activities, particularly fossil fuel combustion, remain the dominant drivers of these changes. Despite the worsening trends, encouraging signs of societal changes are emerging, including the rapid expansion of renewable electricity and battery storage, although progress remains far below the scale and speed needed to stabilize Earth’s climate system. Rapid reductions in greenhouse gas emissions, effective adaptation, ecosystem protection, and transformative societal change remain essential to reducing climate risks and securing a more resilient and sustainable future.

We are witnessing the rapid destabilization of the Earth’s climate system. This is no longer a warning for the future; it is a diagnosis of the present. Earth’s life-support systems are being pushed beyond stable limits, with changes unfolding faster than our ability to respond. Human activities are driving profound shifts in the atmosphere, oceans, and biosphere. Carbon dioxide levels in the atmosphere are higher now than any time in the last 2 million years (IPCC 2021).  ..........



Sci Fare:





U.S. B.S.:


................................. As climate change gets worse and worse it will discredit both Democracy and Capitalism. I don’t think the Chinese have done nearly as much as they should have or could have, but with their heavy electrification program, their mass planting of forests and so on they’re the only nation which has done anything significant. Not good, but better than us.

Democracy has proven unable to reign in capitalism. China executes or life imprisons billionaires who break the law, we bail them out and immunize them from their crimes by fining their companies, but not them, leaving them still rich.

It all adds up to a horrid indictment of our system, and people are not going to put up with it forever. Liberal capitalism and liberal democracy, and perhaps democracy almost entirely, will be replaced by Party systems throughout the world over the next couple generations, starting, I’d guess, in about 15 years or so.

Failure, greed and incompetence have consequences, and the democracy will one of the casualties of our elites depravity.




Geopolitical Fare:


A body of ideas with roots in academic theology and philosophy, postliberalism has emerged as an influential intellectual movement in the US and Europe. It gained a new kind of prominence with Donald Trump’s 2024 victory. Vice President JD Vance describes himself as part of the Catholic “postliberal right” and he is friends with two of its leading thinkers.1 One is Adrian Vermeule, whose work on common good constitutionalism invokes the controversial jurist Carl Schmitt, who joined the Nazi Party in 1933. The other is Patrick Deneen, author of the bestselling book Why Liberalism Failed (2018) and the successor tome Regime Change (2023)

In their recent book Why Postliberalism Failed (2026), James Patterson and Thomas Howes cast the Deneen-Vermeule version of postliberalism as an authoritarian threat to church-state separation and a quasi-fascist attack on the ideal of ordered liberty at the heart of America’s constitutional and civic republican tradition. Does Catholic postliberalism inevitably slide into fascism? Is this ideology now only one heartbeat away from the US presidency? Have European postliberals embraced the American version or forged their own vision? .............................



................... This Zuckerberg scale-tilting is a reminder of why right wing “populism” has been so successful: it is able to posture as a revolutionary anti-establishment movement while still retaining the backing of western oligarchs and empire managers. It gets the votes that come with opposing the status quo without actually opposing the status quo. It gets the popularity of revolutionary politics with none of the cost.

Capitalism leads to dissatisfaction, so some charismatic wingnut stands up and goes “You know, the problem is that we haven’t capitalismed hard enough! Those fat cats at the top don’t want you do know this, but what we actually need is MORE capitalism! MORE wealth for the wealthy! MORE authoritarianism! MORE abuse of the marginalized! And we should probably also send way more money to Israel for some reason!”

It’s a complete scam from top to bottom, but it works. It exacerbates all the problems we’d already been seeing because doing more of the same stuff that created the problems isn’t going to solve the problems, but the human mind is very hackable, and people are easily duped. These Trumpian fraudsters are able to ride popular sentiments of discontent into elected office with the backing of all the plutocratic parasites who’ve been leeching off the voters this entire time. We’ve been seeing it in the United States, we’ve been seeing it in Brazil, we’ve been seeing it in Argentina, Italy, India, and in surging iterations of the same scam in various political factions all around the world.

The question is, what comes next? What comes after people see through the scam and realize their beloved Trumps and Bolsonaros were working for the same establishment they despised and bolstering the status quo they’d been suffering under this whole time? Whatever the backlash is, we can be sure the empire will try to find some way to manipulate it and steer yet another generation back into support for the capitalist world order.

❖

Basically there are three different groups:

1. People who know things are fucked but are too busy, exhausted and propaganda-addled to oppose the status quo.

2. People who benefit from status quo fuckery.

3. People who know things are fucked and fight the status quo.

Group 1 is the largest. Group 3 is the smallest.

Right now those of us in the third group can’t do anything about the exhaustion and busyness of the people in the first group, but we CAN do something about how confused and propagandized they are. The most important thing you can do to help nudge us toward revolution at this juncture in history is therefore to inform, educate and spread awareness to counteract all the status quo indoctrination keeping public consciousness away from revolutionary politics.

By doing this we can start moving people from Group 1 into Group 3. Once Group 3 outnumbers Group 2, things will start moving very fast.



Other Fare:


....................... Anwar was someone I knew, but was not close to. My connection with Anwar was different; an important intellectual challenge on an intellectual journey. As I’ve discussed a few times in the past, my journey towards economics started in high school. Keynesianism was early on attractive and intuitive to me and reading Hyman Minsky’s book “Stabilizing an Unstable Economy” was a revelation for me. I remain one of the few defenders of that book. It’s not an easy read, but it is a very productive one. I knew, however, there was something out there called “Marxist Economics” and it looked down upon any kind of Keynesianism, whether mainstream or Post-Keynesian Economics. At least, that’s the impression I got from online articles and social media.

So I also started to read Marxist economists. I visited the offices of the independent socialist journal Monthly Review. The summer of 2010 I spent reading the “magnum opus” by some of the founders of Monthly Review called “Monopoly Capital”. I write with certitude today, but I spent the first number of years learning economics trying to hold myself in a zone of intellectual uncertainty. After all, what did I know? ...............


AI isn’t the only current challenge to the human spirit: How the hyper-specialization of higher education and the condescension of credentialed scholars can also cripple it

.................................................................. Substack has the potential as it evolves to become a kind of open forum where trained scholars can interact with ardent lovers of politics, literature and ideas.

In this context, I’d say, quite a lot of ignorance is not only OK — it’s a prerequisite for thinking new thoughts about hoary topics in the arts and sciences. A bit of whimsy goes a long way. Perhaps, as Emerson argued, it’s even a unique hallmark of The American Scholar.

Perhaps a rising generation of writers and intellectuals will leaven the crabbed caution of their learned teachers, and curb their instinct to parse every passing thought, in order to recommit themselves to a sheer love of the unknown, of reading widely and roaming freely, exploring the vastness of the universe, and the infinite riches of human experience.

In doing so, they would, like Naomi Kanakia and Jon Baskin, and Robert Boyers, rejuvenate a very great and very American tradition of letters.

And what a gift that is.



All our problems basically come down to narrative control.

People are manipulated into believing the story that Israel’s existence must be preserved at all cost because of this religious belief or that political ideology.

People are manipulated into believing the story that western elections are real and that voting in the two-party system is the only path toward beneficial policies.

People are manipulated into believing the story that capitalism is the best possible system, and that socialism always fails (organically, all by itself) because its tenets go against human nature.

People are manipulated into believing the story that the US-led liberal world order, while perhaps flawed, is still our best shot at a just and stable world.

People are manipulated into believing the story that the mass media are telling us the truth about our society and the world, and that everything works pretty much the way we were taught in school.

People are successfully manipulated in these ways because the wealthiest among us control the media and own all the largest platforms, which gives them a very high degree of narrative control. They decide what stories get told to the largest audiences about how the world works, so they control public perception of reality.

This has been happening for generations, so we grow up with our parents, teachers, preachers and pundits teaching us the narratives that they were trained to believe when they were young.

So we grow up marinating in this. It’s so rife throughout our society that most people don’t even notice it’s happening; they just think all those narratives are what reality objectively looks like.

But they’re not. They’re just thoughts. Mental noises. Stories made of words. Pick any of them apart and you’ll find that’s all they are: empty narrative fluff. Their power comes entirely from large numbers of people imbuing those narratives with the power of belief. 

The consciousness of the average human is dominated by mental stories, so if you can control the mental stories the average humans are telling themselves, then you can control the humans. Get them buying into your preferred narratives about reality and you can exert huge degrees of influence over the way they think, speak, work, shop, live, and vote.

Our entire civilization looks the way it looks because of this vast network of influence. It’s what made the Gaza holocaust possible, what makes homelessness possible, what makes ecocide possible, what makes war and militarism possible. If the public were not being successfully manipulated into accepting the narratives which justify these realities, then everyone would start un-jacking their minds from the psychological control network and building the kind of world they would prefer to see.

And what’s interesting is that believed mental narrative is also the source of suffering in humans as individuals. .....................

................. The more this happens, the weaker the hold our rulers will have on our minds at mass scale. The less we buy into the old narratives, the less capable the manipulators will be of influencing our thoughts, words and actions to their advantage.

And from there, anything is possible. If human consciousness becomes liberated from believed mental narrative on all levels, we could truly have paradise on earth.

I am more convinced then ever that this is possible. I am more convinced than ever that it is already happening.

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