***** denotes well-worth reading in full at source (even if excerpted extensively here)
ABRIDGED VERSION.... ON VACATION FOR TWO WEEKS
Economic and Market Fare:
Interest rate hikes as a guide
Bubble Fare:
***** The AI Fraud
............ We’ve seen episodes of corporate fraud many times before in history. In recent years, fraud tends to go accompanied by the narrative of a “revolutionary technology”. Consider Theranos as an example. They promised a product that is supposed to diagnose everything off a single drop of blood, but secretly went off to get blood tested with regular methods for their clients. You put up a high tech face, for a low tech product.
.......... But what I’m interested in, is pondering how this AI mania came to be. When everyone suddenly becomes convinced something is the future, there’s usually money involved, rather than a technological breakthrough. And that brings us to Nvidia, a company now worth more than the entire Chinese stock market.
Nvidia has a long history of fraud. There are a number of people looking at this. There is Nobody Special on Youtube. I can recommend his videos on this. Here is one that is particularly amusing, exposing how a bunch of mobsters are using a shell company to buy Nvidia GPUs: ..
More important, however, is the Coreweave story: ..
This is a case where Nvidia invests in a company, which then goes on to use the money Nvidia invested in it, to buy a bunch of Nvidia GPUs. This is how you fake revenue. In the stock market, companies like Nvidia have to achieve just one thing: Revenue has to grow every quarter. As long as that happens, the price of the stock goes up, which means the guys on board see their stock options jump up in value. ........
.......... The other trick of course, is that these companies overcharge each other for their products. Imagine I have a painting worth 10 dollar, you have a painting worth 20 dollar. I sell you mine for 110 dollar, in exchange I buy yours for 120 dollars. We can now both report huge sales. And importantly, we inflated the value of our products. Microsoft, Meta, Nvidia, Amazon, all have an interest in inflating the AI bubble. And they’re all each other’s customers. Why would they negotiate the price with Nvidia?
China Fare:
1/9
— Michael Pettis (@michaelxpettis) June 3, 2024
Bloomberg: "China’s whole economic model is not sustainable because of “vastly inadequate” domestic spending and a lack of investment opportunities, according to Paul Krugman. Beijing should be supporting demand not more production.https://t.co/N2kp9vN9Dq via @markets
Charts:
1:
(not just) for the ESG crowd:
.... The combination of less water, more heat, extreme weather events and unreliable planting seasons means that at some point India’s harvest is going to fail in a big way. If this was a “India only” problem, well, the rest of the world could get India thru, but it isn’t, India’s just one of the most vulnerable countries. ......
Geopolitical Fare:
********* Why I Don't Condemn Hamas For October 7
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