Florida High Speed Rail: "The Great Train Bankruptcy"

Following on April 30's "In Case You Missed It: The Cost Of California's High-Speed Rail Project Is Now Approaching A QUARTER-TRILLION Dollars"

I apparently have a fascination for train disasters, just not of the Gare Montparnasse variety:

 

From Puck, April 22:

A rare, privately owned U.S. rail line between Miami and Orlando is proving popular with riders, but a $6 billion debt pile is pushing Brightline and its hedge fund owners toward a likely restructuring reckoning. 

For the last decade or so, Brightline, a privately owned railroad company, has been building out passenger service between Miami and Orlando, a 235-mile corridor that is both too far to drive comfortably and too short to fly—the perfect distance, in other words, for an intercity train service in Florida. The concept was the brainchild of Wes Edens, a co-founder of Fortress Investment Group, after the company acquired the Florida East Coast Railway corridor and set out to build a modern train service between the two cities, with stops along the way in Aventura, Boca Raton, Fort Lauderdale, and West Palm Beach. The trip takes about three and a half hours, only somewhat faster than driving. But that’s just one of the reasons Brightline is in trouble.

Ridership in 2025 exceeded 3 million passengers, roughly half the company’s projections in a 2024 bond prospectus. Ridership for the first two months of 2026 was over 562,000, up about 10 percent year over year, with revenue rising 11 percent to nearly $38 million. As best as one can tell, Brightline hasn’t been able to achieve EBITDA positivity, but everyone seems optimistic that EBITDA of some sort is on the horizon for 2026.

Brightline, as they say in the restructuring world, seems to be a case of good company, bad balance sheet. Ridership and financial performance may be off to a better start this year, but the company also has a substantial amount of debt—approximately $6.3 billion of debt and preferred stock spread across a variety of securities, holding companies, and operating companies. Stress is already visible. The company missed its interest payment, due earlier this year, on a $985 million tranche of debt issued by the Florida Development Finance Corporation, then failed to pay the interest during the grace period.

On April 15, a majority of those bondholders agreed to extend the grace period on the interest payment to May 15. Those bonds now trade around 37 cents on the dollar, down sharply from par last summer. Other tranches tell similar stories: Brightline’s $1.1 billion of high-yield taxable bonds, with an 11 percent coupon, are trading around 29 cents on the dollar; uninsured operating debt of $1.1 billion is trading around 67 cents; while $1.1 billion of operating municipal debt insured by Assured Guaranty Ltd. is near par, at 97 cents.

This, of course, is when the financial and legal advisors show up to help design some sort of liability management exercise, or L.M.E., to try to reduce the debt load, hopefully with the help of some of the biggest creditors. Brightline has hired Perella Weinberg Partners to advise on the L.M.E., or whatever the restructuring turns out to be, as well as longtime counsel Skadden Arps. Municipal bondholder creditors have hired GLC Advisors, a restructuring boutique, and the law firm HSF Kramer. The high-yield taxable bondholders, meanwhile, have brought in Evercore and Davis Polk, while the fortunate bondholders at the operating company—fortunate in that their bonds are insured—have hired Lazard and Milbank.

No one is speaking publicly. Ben Porritt, a spokesman for Brightline, declined to comment on the record, as did Perella Weinberg. GLC did not respond to my request for comment about the negotiations between the company and its creditor groups. But the contours here are familiar. Large creditors, including firms like Nuveen and First Eagle Investments, could end up converting some of their debt to equity and perhaps walking off with the company. Fortress could still emerge as an equity holder, depending on how things shake out. If the past is any predictor, an L.M.E. could result in creditors putting in new money in exchange for moving up in the capital structure above creditors who don’t participate in the new funding, as occurred with Saks Global five months before the company filed for bankruptcy. One never knows these days what creditors are capable of when pitted against one another and confronted with a potential financial carcass.

A $45 Million Revolver

Brightline, for its part, has acknowledged the challenge, explaining in its February 2026 operating report that it continues “to actively pursue the planned issuance of a substantial amount of equity, the proceeds of which would be used to repay principal and interest of existing higher-coupon indirect parent entities’ debt of ours and to increase cash reserves.” The company added that it had used some of its cash reserves to make an interest payment on January 1 for a series of 2024 bonds. “In the meantime,” it continued, “we have been in discussions for the potential incurrence of additional debt,” the net proceeds of which would “be expected to be used to provide liquidity for the company’s ongoing operating requirements.”

However, Brightline cautioned, the terms and conditions of its “existing indebtedness include restrictive covenants that limit our ability to incur debt, and we expect that we may need to obtain consent from certain holders of certain of our and our indirect parent entities’ debt to incur the additional debt.” The company said negotiations to raise new debt or equity, as well as to potentially enter into an L.M.E., were ongoing but may not succeed. “There can be no assurances that we or our indirect parent entities will complete any such transaction on terms that are favorable, at our desired timing, or at all, or that such transactions will be sufficient to meet our or our indirect parent entities’ needs,” the company said.

The ratings agencies have been less circumspect. Fitch downgraded $2.2 billion of Brightline Trains Florida senior secured private activity bonds from B to CCC, as well as $1.1 billion of Brightline East senior secured taxable notes from CCC+ to CC. The downgrades, Fitch wrote, reflect “substantial credit risk and very low margin of safety as liquidity has depleted more quickly than expected since mid-2025, which has elevated default risk by 1H2027.” The agency continued: “Although ridership and revenue have grown year over year, the ramp-up continues to fall short of Fitch’s cases. The addition of new train cars to address capacity constraints has not alleviated concerns that demand will rise sufficiently and quickly enough to drive higher ridership and fare revenue to cover near-term debt service. There remains a high degree of uncertainty around the trajectory of the ramp-up and the timing of cashflow stabilization.”

There are nearer-term concerns as well. Brightline has a $45 million revolver due and payable in May, Fitch noted, adding that the maturity could be extended a year. Failing that, the company “lacks the funds” to pay it off. (I’m told repayment of the revolver won’t be a problem.)....

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Previously:

June 2023 - The U.S. Has High-Speed Rail

It's not as fast as the trains in France, and about the same speed as Japan's Tokyo - Osaka run, but it is quicker than California's.*

From ConstructionDive, June 22:

Brightline’s $5B Orlando high-speed rail extension complete 

September 2023 - "Faster trains to begin carrying passengers as Amtrak’s monopoly falls"

From the Washington Post, August 30:

The only private operator of intercity passenger trains is about to launch new service in Florida. Next? Trains at 186 mph between Las Vegas and Southern California.

June 2025 - Some Good News Out Of California: The High-Speed Rail Line To Las Vegas 

Media: "'More Stories, More Inventory’: Inside the Backlash to McClatchy’s AI News Tool"

From The Wrap, April 21:

Miami Herald, Sacramento Bee and Kansas City Star unions have filed grievances against the company as TheWrap obtains new details on McClatchy’s “content scaling agent” 

During an hourlong staff meeting last month, McClatchy’s vice president of local news Eric Nelson pitched what he called “a powerful addition to our toolbox.”

Nelson was promoting the company’s new “content scaling agent,” an AI summarization tool powered by Anthropic’s Claude, which he said can help reporters find “new audiences, angles and entry points.”

“Journalists who embrace and experiment with this tool are going to win,” Nelson told the group, according to multiple people familiar with the meeting. “Journalists who are defiant will fall behind. Bottom line: We need more stories and we need more inventory.”

Since reporting earlier this month how McClatchy’s new AI tool has angered staffers across several of its Pulitzer Prize-winning newsrooms, TheWrap has obtained new details about how the tool works from the March 17 company meeting, including screenshots of the tool, and insight into how management is pitching it to employees and responding to reporters’ concerns about adding their bylines to AI-assisted articles.

Executives have framed the tool as “Grammarly on steroids,” a way to extend a story’s reach beyond its initial audience. But some journalists at McClatchy, a 168-year-old newspaper chain serving nearly 30 U.S. markets, fear it could undermine their work and are pushing back.

At least three unions representing McClatchy newsrooms  — the Miami Herald, the Sacramento Bee and the Kansas City Star — filed grievances against the company last week for allegedly violating contract provisions requiring advanced notice for any “major technological change,” according to two people familiar with the matter. The move followed information requests from some of those unions expressing concern over “limited information and mixed messaging” about the product.

The contrast between executives’ enthusiasm for the tool and employees’ reluctance to use it reflects how generative AI tools have splintered newsrooms across the country. Outlets such as Cleveland’s Plain Dealer have used the technology to let reporters prioritize reporting over writing, while unionized staffers at Pulitzer-winning outlets such as ProPublica and the New York Times have sought AI guardrails in negotiations, even prompting a daylong walkout at ProPublica.

A McClatchy spokesperson did not respond to TheWrap’s detailed questions about the company’s AI strategy, its internal guidelines and executives’ comments at the March meeting. 

How it works 
The content scaling agent, or CSA, allows newsroom editors to generate short- and long-form summaries of reporters’ stories; versions targeted at specific audiences; and video scripts for reporters to produce short-form content from their stories....

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Marc Chandler: «The Dollar Bear Market Is Just Getting Started»

I've held off posting this because it was published just before the February 28 attacks on Iran and the movement to American assets and to the dollar. Here's the last six months of the US Dollar Index, DXY via TradingView. The index settled at 97.608 on February 27; 98.211 on May 1.

 

 

note: China's currency is not a component of the DXY. 

 

From Neue Zürcher Zeitung's The Market.ch, February 19:

Currency strategist Marc Chandler is bracing for further turbulence in the foreign exchange markets. He outlines the Trump administration’s rationale for a weaker dollar, the looming risks facing the Swiss National Bank, and the profound implications for investors should the era of dollar dominance come to an end. 

Deutsche Version

While the daily news cycle has already moved on, the shockwaves from the dollar’s abrupt devaluation in recent weeks will not be so easily dismissed by the financial markets.

For Marc Chandler, the recent tremors are yet another signal that the greenback is locked in a long-term downtrend. The chief market strategist at Bannockburn Global Forex has navigated the currency markets for some four decades. He recalls the time at the start of his career in the Chicago futures pits when exchange rates were still being scribbled in chalk on blackboards.

«This year’s decline caught even dollar bears like me by surprise,» says Chandler, referring to the panic that gripped markets in late January. To him, the currency’s weakness is a manifestation of a fundamental shift in the established global order. Under President Donald Trump, he argues, the U.S. is retreating from its leadership role – a move that brings the dollar’s unique role as the world’s reserve currency into question.

In an in-depth interview with The Market NZZ, which has been edited for length and clarity, Chandler outlines why the administration welcomes a weaker greenback and the tools it may deploy to further that goal. He also examines why the Swiss National Bank may soon be forced into unconventional territory and how investors can navigate an era defined by heightened currency volatility.

The initial market fervor has cooled somewhat, yet the dollar has found itself under renewed pressure this year. How do you read these shifts in the currency markets?

In China, the phrase ‹May you live in interesting times› is intended as a curse. After living through the past weeks, I can understand why. The big moves in the foreign exchange markets capture the major forces we’re seeing unfold. Only a year into President Trump’s second term, US policy has already undergone a series of major shifts. I think they’re a defining factor in the dollar’s current trajectory, leading many to wonder if we are witnessing the end of what’s called American exceptionalism.

Are witnessing the dawn of a new global order?

We can debate the potential end of American exceptionalism in terms of the dollar. But the start of this year has revealed two significant ways in which that exceptionalism remains still intact, even if it’s no longer mirrored in the financial markets. The first is the aggressive foreign policy seen in the US actions in Venezuela as well as the threats regarding Greenland. No other country in the world could do that without facing serious ramifications. Imagine what would happen if China tried to do something like that.

And what’s the second point?

Secondly, the Trump administration has successfully negotiated a carve-out that exempts US companies from global corporate tax reform. So America still insists on being the judge, jury, and executioner, but it won’t tolerate any other country doing so.

America has historically justified its role as the ‹global policeman› through the ideals of democracy, liberty, and fair trade. Isn’t it now undermining the very image it spent decades cultivating—an image that was already under significant scrutiny?

I agree. Just as Coca-Cola once damaged its brand by trying to change its formula, America has hurt its own brand. There is, however, a critical distinction: while companies can often rebound, I believe it will be far more difficult for the US to recover its standing. The US was instrumental in creating the post-World War II order, which frayed around the edges at times, facing problems and charges of hypocrisy. But there was always a general agreement on the rules of engagement, certain norms and traditions such as the freedom of navigation through the world’s oceans.

What does it mean for the dollar if these foundational conditions no longer apply?

I’ve always reasoned that there are two ways the dollar could lose its preeminence in the world economy: encroachment, in which another currency supplants the dollar, or abdication, where the US pursues policies that shrink back from the global leadership it previously sought. Today, I think the US is giving up, abandoning its role it exercised through the IMF, the WTO, and other international bodies. But it’s not just that the US is defecting from the established world order, it’s also shooting itself in the foot for the coming world order.

What to you mean by that?

It’s hard to tell what the coming world order will look like, but we can see certain broad strokes. For example, there’s a real chance that China is going to win the AI war. You can just look at the sheer number of engineering graduates in China, and then you have the fact that the US government has essentially fired more than 10,000 STEM PhDs since President Trump took office. Another point: partly because of immigration, the US demographics are a little bit better than those in continental Europe. But now, we’re cutting that off – and not only are we cutting it off, but many Americans, including the administration, are proud of it.

So, is the pressure on the dollar here to stay?

When it comes to what this all means for the dollar, I believe the peak is already behind us. The DXY index for instance, which measures the US dollar against a basket of major currencies, including the euro, the British pound, the yen and the Swiss franc, reached its high-water mark in September 2022. So I think a long-term bear market for the dollar is just getting started. While most people agree on the general trend, strategists and analysts are bickering over the speed of the downturn. This year’s decline caught even dollar bears like me by surprise, especially when you consider the sharp moves against the Mexican peso and the Australian dollar.

Despite the violent swings in the currency markets, the US bond market has remained surprisingly quiet. How do you explain this disconnect?

People often talk about the exorbitant privilege the US enjoys thanks to the dollar, suggesting it grants us lower borrowing costs. But it’s not true. The US pays higher interest on its debt than most developed countries, including Germany and Japan, and certainly Switzerland – and for good reason. US politicians, and arguably the public themselves, prefer the economy to run fast. Meaning, if we have to choose between unemployment and inflation, we would generally accept a little more inflation in exchange for lower unemployment. Furthermore, given the political changes in the US and their unpredictable nature, investors are demanding a higher premium to hold dollar assets. In other words, they require higher interest to compensate for the anticipated decline of the dollar.

In this context, contradictory statements from the White House have recently fueled even more uncertainty. Does the Trump administration want a weak dollar?

In the market’s mind, there’s a general understanding that the president and his administration want to see a weaker dollar. They don’t say it out loud, but the policies that they advocate – lower interest rates, boosting exports, and putting tariffs on imports – clearly imply a weaker dollar. The US economy grew by more than 4% in the third quarter of 2025, and it looks to have expanded at a solid pace during the final three months of the year. Cutting interest rates in this kind of environment would likely send the dollar sharply lower.

There is frequent talk of a ‹Mar-a-Lago Accord›, essentially a 21st-century sequel to the 1985 Plaza Accord, where France, West Germany, the U.K., and Japan agreed in a concerted effort to appreciate their currencies against the dollar. What are the odds of such an agreement today?

I don’t think there’s any chance that the Trump administration will find Europe or Asian countries like China and Japan open to a new Plaza Accord. They won’t risk an appreciation of their currencies to levels that are inducing domestic deflation. In the US, we’re proud of what happened back then. The Plaza Accord is one of the highlights when we tell this story about the dollar and the post-Bretton Woods era. However, in other countries, the perception is not as positive. China hasn’t forgotten what the US did to Japan, forcing a sharp revaluation of the yen that hollowed out the Japanese economy and fueled a massive bubble.

So what kind of policy can we expect the Trump administration to pursue?....

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"Goldman, JPMorgan Show Wall Street’s Split in Quantum Computing Race"

From Bloomberg, April 26:

As a breakthrough proves elusive in the quest to deploy the nascent technology and boost earnings, global finance is divided on how to proceed. 

Roughly three years ago, Goldman Sachs Group Inc. looked like it had an edge in Wall Street’s race to master quantum computing.

The banking giant had assembled a handful of highly specialized scientists and partnered with Amazon.com to figure out how the nascent technology could be used to juice better returns for its raft of wealthy clients. They were shocked by what they found.

Goldman’s researchers discovered they would have to run an algorithm for millions of years in order to solve the problem. What’s more, the processor would need to have at least 8 million so-called logical qubits — a set of quantum bits that form the building blocks of quantum computers. Current machines consist of fewer than 100.

Shortly after, Goldman’s quantum team evaporated amid the bank’s widespread cost cutting program. While it now employs next to none, its rival JPMorgan Chase & Co., on the other hand, has persisted with a team of well over 50 physicists, computer scientists and mathematicians, exploring applications in optimization problems, machine learning and cryptography.

The contrast between the two of the world’s largest lenders is emblematic of the split among global financial firms debating ways to harness what’s touted to be the next big thing after artificial intelligence. Experts say quantum computing can reshape areas ranging from new drug discovery to machine learning and risk modeling in finance, with the potential to add billions of dollars in revenue. But it’s also thought to be still years away from offering many practical solutions, raising questions about its near-term value.

Unlike pharmaceutical, defense or material sciences firms — which appear to have a clearer understanding of where they would like to use quantum computing — banks, insurers and asset managers are chasing fixes to a myriad of complex problems: transaction fraud, risk management, how to maximize returns from a portfolio and asset price prediction, to name just a few. The wide array of issues they want to tackle and the limitations imposed by currently available hardware have made it more difficult for them to pinpoint potential benefits.

Wary of these challenges, many financial firms have largely stayed on the sidelines, happy to let others take the lead in exploring these machines that are exponentially more powerful than existing supercomputers. But some like JPMorgan are pouring resources in the hope that one day the technology would give them an edge over competitors.

“We’re positioning ourselves so we can take advantage by understanding what the problem space is across our portfolio,” said Rob Otter, JPMorgan’s head of global technology applied research who earlier ran State Street Corp.’s digital technology department, including quantum research.

While JPMorgan declined to reveal the exact size of the team, Otter said his crew is seeking ways to resolve performance issues and bottlenecks using a quantum computer across the business — including the investment bank — working with colleagues covering portfolio analytics, asset and mortgage pricing.

In November, the bank said it had developed a method to process and analyze large, fast-arriving datasets more efficiently using Quantinuum Ltd.’s Helios processor, which would enable the bank to perform complex tasks like anomaly detection, fraud monitoring, or network analysis quicker. In March last year, it demonstrated an algorithm on a quantum processor with Amazon.com that could make portfolio selection easier by identifying large sets of uncorrelated assets, enhancing diversification and risk management.

Otter said his team may be able to start running useful algorithms on a quantum processing unit in the next couple of years. Now, “we’re waiting for the hardware to be more commercially viable in order to use them,” he said.

Still largely in the domain of academic research, the technology is based on the complex principles underpinning quantum mechanics. Just like traditional computers, quantum computers also use tiny circuits to perform calculations, but they do that simultaneously, rather than in sequence. That allows for complex problems to be solved at vastly faster speeds than those of classical processors.

Business consultants even have some early estimates for its potential. Research by McKinsey & Co. last year said revenue from quantum computing is likely to surge to as much as $72 billion by 2035, from about $4 billion in 2024, fueled by developments in industries such as chemicals, life sciences and finance.

Read More: Quantum Computing Is Finally Here. But What Is It?

Given the stakes, others in the world of finance — besides JPMorgan and Goldman — have been poking around as well, but with varying intensity.

UBS Group AG is upskilling around 50 of their quant analysts in the basics of quantum computing. Spanish lender BBVA SA has worked with Multiverse Computing SL on speeding up ways to optimize portfolio management, and also with other firms. Credit Agricole SA has looked at how quantum algorithms can anticipate credit downgrades better. Many lenders are also racing to upgrade their cryptography, wary that the immense power of the emerging technology may enable it to break encryption standards.

But most of the action is currently led by tech titans including Alphabet Inc.’s Google and International Business Machines Corp., plus a raft of startups, as they build and test software and hardware, like Google’s Willow and IBM’s Heron processors. Though current models are too small and unreliable to be useful, they have been collaborating with companies across industries to explore potential applications by offering their services on the cloud.

Read More: Google’s Quantum Computer Solves Septillion-Year Task in Minutes

For instance, BMW is working with Nvidia Corp. and quantum software firm Classiq to find ways to improve drivetrains and cooling systems; Novo Nordisk A/S and Roche Holding AG are looking at modeling molecular interactions for new discoveries; and, Exxon Mobil Corp. is working with IBM to map the most efficient routes for its tanker fleets.

But for financial firms, developing solutions for risk tolerance and portfolio diversification gets trickier.

Plus, when it comes to applications for finance, “there’s a lot of confusion” about the direction, further complicated by differences in system architectures and technologies used to build them, said Subodh Kulkarni, chief executive of quantum computer builders Rigetti Computing Inc. — one of a growing number of listed companies in this area. That could mean one bank may have to work with multiple quantum computing companies to meet its needs instead of just one.

“We certainly see increased interest from various different higher-end financial companies,” Kulkarni said. “We certainly see them hiring quantum physicists, exploring algorithms and doing research with companies like us, IBM and a few others.”....

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The Lifecycle of an Apocalypse

From Palladium Magazine, April 22:

For as long as any of us have been alive, we have seen an ever-changing series of popular predictions for how industrial technology is about to destroy civilization. Nuclear war was supposed to kill everyone, whether by literally exploding all of civilization or by irradiating the world’s surface or by nuclear winter. Toxic pollution and resource depletion were supposed to leave the world a barren wasteland. Overpopulation was supposed to lead to mass starvation, universal resource wars, and the collapse of society. Global warming was supposed to make the planet too hot for human life. And today, many people fear that artificial intelligence will disassemble humanity for parts.

So far, however, civilization has not been destroyed. It seems the demand for techno-apocalypses is much greater than the supply. What’s going on here? Why are so many people always convinced that technology is on the cusp of destroying civilization?

Of course, each individual prediction of doom has its own internal reasoning which should be evaluated apart from the broader trend. However the sheer number of widely expected techno-apocalypses, and the similarities in how the ideas are spread throughout society suggest a common pattern at work, separate from the question of how plausible any particular apocalypse scenario might be.

To understand this, the first thing we have to look at is when and where has this been happening. Is this a general phenomenon that humans do in all times and all places, or something that happens in all technological civilizations, or is it something specific to modern Western civilization?

It would be strange if there were popular predictions of techno-apocalypse before rapid technological change became such a visible force. This is indeed what we find. Before the modern era, the closest match is popular “millenarian” movements in Christian societies. These rhyme a little bit with modern techno-apocalypse, and the psychological effects on the believers are remarkably similar to the effects of modern techno-apocalypse beliefs, but they’re not really what we’re looking for. For one thing, millenarian beliefs are about society being radically transformed into a permanent utopia rather than being destroyed, and for another, the transforming force is Christ bringing about the Last Judgment rather than technology. We’ll have to keep looking.

Do we see techno-apocalypticism emerge as soon as rapid technological advance sets in? Actually, no! If we look around the Industrial Revolution, starting around the 1770s or so, there is nothing of the sort. Only a few cutting-edge intellectuals started to realize how important technological progress would be. Ben Franklin watched the prototype hot air balloons and immediately realized that air power would someday transform war, but rather than feeling anxious about the destruction it would cause, he hoped it might “[c]onvinc[e] sovereigns of the folly of wars.” This futurism was unusual even among intellectuals like Franklin, and none of it filtered down to popular discourse—understandably, because industrial technology was not yet transforming the regular person’s daily life.

It was not until the Second Industrial Revolution, starting roughly around the 1860s, that technologies like trains and mass production and electric lights rapidly intruded on urban people’s daily lives, and regular people began to perceive technological progress as a major force in the world. Yet, while there was popular discourse about technological progress, we still do not see techno-apocalyptic anxieties. The only case that looks a little bit similar was the “coal question,” the idea that available supplies of coal—at the time the only industrial power source in use—would eventually run out and industrial civilization would go with it. The idea was common knowledge in intellectual circles, but made approximately no impression on the public. Intellectuals occasionally brought up the “coal question” during popular debates about high coal prices, but never with the palpable anxiety of 20th century writers talking about “peak oil” and the like, and it never achieved any traction beyond the sort of philosophical futurist who in 2026 has opinions about the “simulation hypothesis” and the “Fermi paradox.”

The Apocalypse of 1914 
What was the first techno-apocalypse that achieved popular traction? It first emerged right after the First World War and abruptly dominated public discourse. Nearly every thinker and pundit anywhere in Western civilization suddenly worried that war with ever more powerful weapons would destroy civilization.

It’s no mystery where this idea comes from! Industrial war, with trucks bringing men and supplies to the front en masse, and machine guns mowing them down by the hundred, caused death and destruction on a scale no one had seen in living memory. While the per capita death toll from the World War was on par with earlier great power super-wars like the Seven Years’ War or the Napoleonic Wars, the World War affected people more profoundly....

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"The Origin of Our Species: How Grains and Grasses Fed (and Still Feed) Humankind"

From Literary Hub, March 25:

David George Haskell In Praise of a Versatile, Life-Giving Plant 

As I walk through the broomsedge in June, dozens of grasshoppers clatter away with every footstep. Bees and wasps wing past, leafhoppers spring, and beetles scurry for cover. This productivity is why so many birds depend on grasslands for their breeding or wintering. Grasslands, especially those in humid areas with good soil, provision their local food webs as richly as do forests.

Grasses also build soil. Their leaves send about two thirds of all the food they make to the underworld. There, roots tunnel many meters down. As they grow, they break up clay and rock, exude sugars and other molecules, and interweave their cells with fungi. When the roots die, they add spongy organic matter to the soil. This soil‑building process is so productive that it lifts the ground. When a degraded grassland returns to health, the ground heaves up, as if inhaling with relief. In old grasslands, the soil can be rich with organic matter to a depth of several meters. When prairie goes under the plow, most of the organic matter disappears, turning living water‑holding, nutrient‑rich soil into mineral dust. Today, despite widespread degradation of grasslands, one third of all carbon stored on land is still locked up in grassland soils.

As fellow volunteers, the staff of Birds Georgia and I sow grass seed, we enact the grassland ethos: Build community, one species helping another. Grasses are creators. They use cooperative partnerships to build their homes, places that, in turn, open possibilities for others. They hoard soil carbon, create habitat for other plants, and feed animals.

Grasses are creators. They use cooperative partnerships to build their homes, places that, in turn, open possibilities for others.

Although we don’t often imagine ourselves in this way, we are a prime beneficiary, a species built by grass.

What’s for dinner? Grass. Wherever you live, some kind of grass is probably feeding you.

When the prophet Isaiah proclaimed that “all flesh is grass,” he intended a commentary on the fleeting nature of human life, but he also spoke an ecological truth. In Isaiah’s time and in ours, grass sustains us. If we stacked in 50‑kilogram sacks the total cereal harvest in 2023, the pile would reach to the moon forty times. That’s 2,836 million metric tons of grass flowers matured into seed. Three grasses—rice, maize, and wheat—account for 90 percent of this superabundance, supplying us with two thirds of food calories. The juices of sugarcane, another grass, supply another 1,900 million metric tons. Barley, sorghum, oats, millet, rye, and wild rice are grasses, too.

Livestock fattens on grass from pasture and the maize‑filled troughs of feedlots. While our great ape cousins feed on forest fruits, leaves, and animal prey, we depend on grasses. If we named ourselves for our primary food, we would be grass apes, Homo poaceae, for Poaceae, the scientific name for the grass family, from the ancient Greek for “fodder.”

It is the nutritive gifts of grasses, with help from oil‑rich fruits like mustards and oil palms, that caused the increase in food calories available to humans over the last millennium and, especially, the last century. The cereal harvest in 2023 was 50 percent higher than that of 2000 and three times that of the 1960s, outpacing human population growth on all continents. Famines are rarer than they were and now largely emerge from human injustice and war, not the failure of plants to yield food. Such productivity comes with severe costs: felled forest, mined and synthesized fertilizer, among many. But those who in the nineteenth and twentieth centuries made erroneous predictions of imminent mass starvation erred by underestimating the world‑changing potential of grasses.

These global patterns are evident in kitchens. At home, the bottom drawer of our kitchen cabinet grinds when I pull it open. The poor thing has worn sliders and is loaded with bags and tubs. Bread flour, whole wheat flour, all‑purpose white flour, masa, purple cornmeal, medium‑ground yellow cornmeal, plain fine cornmeal, semolina flour, barley flour, and sorghum flour. Some are baking staples, ingredients for pancakes, loaves, and corn breads.

Others are aspirational, plucked in moments of enthusiasm as Katie and I push our cart through the aisles of the Dekalb Farmers Market, a bustling warehouse near our home stocked with bulk dried goods and fresh produce from across the globe. Regardless of their origin, every one of the flours in our kitchen drawer is ground‑up grass seed, the product of a mature grass flower. Other kitchen drawers hold rice and pasta, also made from grass seed. Our kitchen, like kitchens over much of the world, is a bouquet of grass.

From the three hundred thousand species of flowering plants on Earth, we’ve plucked a handful of grasses and founded modern agriculture on their productivity. What made grass so special? The answers reveal not only why we latched onto them so firmly, but also how grasses managed to take over much of the planet long before humans evolved.

Grass flowers are super‑mothers, giving their embryos ample provisions. Under a magnifying glass we can see how. I pull open the complaining kitchen drawer and dip a teaspoon into some bags, retrieving flours that I dust onto scrap paper under a bright counter light. What looked to my unaided eye like powders of different colors reveal themselves under the lens as diverse and beautiful. I expected white flour to look fluffy, but magnified it looks like coral sand. I smooth the tiny pile with the back of my spoon and the flour becomes a miniature tropical beach, a gleaming expanse enlivened with a scattering of darker grains.

Whole wheat flour seems made of tan‑colored sand mixed with shredded cardboard, as if a hurricane had passed through a shipping warehouse on its way to the beach. The grains of purple cornmeal are larger than those of the wheat flours and are intermixed with white‑blue pebbles and chunks of broken obsidian. Uncooked rice grains loom over these sands. They are slightly translucent and etched with lines, as if ancient Egyptians had built their obelisks from milky glass. Who needs magic mushrooms when we have 7× hand lenses?....

....MUCH MORE 

Possibly also of interest:

• The Bread We Eat Is Junk Food: Blame the Wheat 
• "Wheat Nerds and Scientists Join Forces to Build a Better Bread"
• "Amber Waves: The Extraordinary Biography of Wheat"
• "Turning air into bread"

JPMorgan: "How tech became everything to everyone"

The writer, Kriti Gupta is Executive Director, Global Investment Strategist, J.P. Morgan Private Bank.

From JP Morgan Wealth Management, May 1:

When investors are excited about AI, they have bought tech. When they’re worried about inflation, they bought tech. When looking for outperformance, they bought tech. When thinking about sustainability, they bought tech. When they wanted to invest in growth, they bought tech. When they wanted to lean into the Capex cycle, they bought tech. When worried about the world and in need of a company with a cash cushion, they bought tech.

These are just some of the many reasons investors have leaned into tech, even in the face of lofty valuations. The sector has been perceived as the answer to everything and everyone. It’s a must-have portfolio allocation, both a cyclical and defensive trade and the driver of earnings growth. How did we get here?

Extraordinary earnings 
Ahead of the first quarter earnings season of 2026, the tech sector was expected to contribute nearly half of expected earnings growth. That’s more than triple the estimate for the S&P 500 as a whole. Supported by surging revenue growth, operating profit has soared, outpacing headcount additions, which in turn has fed margin expansion. In short, scale is working in their favor as the largest technology platforms continue to grow while keeping incremental costs contained.

At the turn of the century, technology stocks were purely a growth trade. The internet was coming and the world knew it. But earnings lagged the structural shift at play. Cue the dot-com bubble. Then, after the global financial crisis of 2008, they became something else: a duration trade. A low-interest-rate regime and growing liquidity on its balance sheet, thanks to post-COVID issuance at near-Treasury-level rates and extraordinary free cash flow, helped build their cash cushion. Cash holdings in the Magnificent Seven stocks – which now make up about 35% of the S&P 500 – grew over 300% between 2011 and 2025.

But even with – and perhaps because of – fortress balance sheets, technology stocks remain sensitive to changes in interest rates as their valuations hinge on cash flows far into the future. They are after all, still growth stocks. And yet, also a play on changing interest rates.

Durable earnings and cash buffers have made the sector resilient even if economic conditions weaken. It’s no longer a question of growth or even speedy growth. Quarter by quarter, the stocks are measured by whether they can beat high investor expectations. In other words, can the A+ student continue to get an A+ on its earnings report card?

And yet, they remain some of the most volatile stocks in the market. A normal range of movement in either direction for the seven biggest tech stocks is over 60% larger than that of the S&P 500. It’s rare for a single sector to embody so many different aspects at once.

Tech’s ‘Industrial Era’ 
For all its association with growth and the biggest players benefitting from defensive bids, tech is also deeply cyclical – whether it’s the short boom and bust cycles of semiconductors, ad spend associated with search engines and social media or subscription-based growth at the whim of business investment.

Now, with the innovation of artificial intelligence, it’s all about physical infrastructure while already being deeply embedded in the digital ecosystem and a core portfolio allocation.

At the helm of the AI wave, tech companies are driving a surge in capital expenditure – data centers, chips and energy infrastructure on a historic scale. This begins to resemble older industrial cycles, where growth depends less on asset-light scalability and more on the ability to deploy vast amounts of capital efficiently.

For decades, tech’s appeal has been high capital returns and minimal reinvestment needs. Now, it’s the opposite: pouring billions into physical infrastructure to sustain the next wave of growth....

....MUCH MORE 

"Cyberattack on Treasury bonds could be the missing ingredient for next economic crisis"

 A repost from 2019.

The blueprint for how the insurers would treat such an event is being played out in the current Mondelez v Zurich case. From The Register, January 11:

Cyber-insurance shock: Zurich refuses to foot NotPetya ransomware clean-up bill – and claims it's 'an act of war'
Snack company client disagrees, sues for $100m

US snack food giant Mondelez is suing its insurance company for $100m after its claim for cleaning up a massive NotPetya ransomware infection was rejected – for being "an act of war" and therefore not covered under its policy.

Zurich American Insurance Company has refused to pay out on a Mondelez policy that explicitly stated it covered "all risks of physical loss or damage" as well as "physical loss or damage to electronic data, programs, or software, including loss or damage caused by the malicious introduction of a machine code or instruction."...MORE

And the headline story from The Hill, January 13:

Trust is the fuel that makes the global financial system work — yet thanks to sophisticated operations by foreign government hackers who are increasingly willing to target that system, the risk of deliberate systemic disruption has never been greater. Even worse, soaring sovereign debt accumulated by governments worldwide has created an especially weak link susceptible to attack.

A dramatic rise in borrowing, especially by governments, has set the stage for a cyberattack to cause disruption that could cascade throughout the global economy. According to reporting by Bloomberg, U.S. Government debt is near $22 trillion — 40 percent of GDP — up from $9 trillion in 2007. Global debt of all kinds now tops $247 trillion, a staggering 320 percent of global GDP. These greater levels of debt are linked to higher levels of systemic financial vulnerability, according to a study by Columbia University’s Project on Cyber Risk to Financial Stability.

On their own these debt levels are already concerning to many investors, but the real threat to financial stability is the use of Treasury bonds and other debt instruments to raise short-term capital for trades in equities.

Treasury securities facilitate trade through “repo” agreements when they are sold to a lender, with the understanding that they will be repurchased at a fixed time — usually overnight but sometimes several weeks or more. This form of overnight borrowing is normally extremely low risk and provides liquidity for equity and other markets. However, because repos are not collateral but actually sales, the purchaser of the government-backed bond can use it in their own repo or collateralized contract while waiting to return it. In a healthy economy brimming with trust, re-using the same bond in this way means more capital is available for investment.

But the Task Force on Tri-Party Repo Infrastructure noted: “at several points during the financial crisis of 2007-2009, the tri-party repo market took on particular importance in relation to the failures and near-failures of Countrywide Securities, Bear Stearns, and Lehman Brothers.” The report goes on to say that “the potential for the tri-party repo market to cease functioning, with impacts to securities firms, money market mutual funds, major banks involved in payment and settlements globally, and even to the liquidity of the U.S. Treasury and Agency securities, has been cited by policy makers as a key concern behind aggressive interventions to contain the financial crisis.”
It is easy to imagine a rival nation seeking to deliberately cause the repo market to stop functioning as a way of reducing liquidity in the U.S. and global markets and hence, inflicting severe economic damage.

A nation-state that credibly gained access to tamper with repo records, even overnight, could sow discord simply by preventing the timely settlement of repo and other government-debt affiliated trades. Trust, which undergirds so much of the U.S.-led economic order’s growth and prosperity, is a two-way street which a dedicated adversary could undermine via cyber means.

A 2017 note from the Federal Reserve highlighted that the failure of timely settlement would be systemic. Even the prospect of a temporary delay in payments due to a possible U.S. Government default threatened market liquidity in 2013. America’s allies and economic partners in emerging markets are even more vulnerable, with sometimes singular outlets for their bonds, fewer safety valves, and less resiliency to economic shocks. Saudi Arabia, whose economy has repeatedly been targeted by Iranian actors and which is seeking an infusion of cash by selling international bonds, is a leading but not the only target....MORE

"Brace for the patch tsunami: AI is unearthing decades of buried code debt"

From The Register, May 2:

Britain's cyber agency says the bill for years of technical shortcuts is coming due, and it's arriving all at once 

Britain's cyber agency is warning that AI-fuelled bug hunting is about to flush out years of buried flaws, leaving defenders scrambling to keep up.

In a blog post on Friday, Ollie Whitehouse, CTO of the UK's National Cyber Security Center, said organizations should brace for a looming "patch wave," driven by a backlog of weaknesses now being exposed faster than many teams can realistically fix them.

"All organizations have 'technical debt'; a backlog of technical issues – that is both expensive and time-consuming – as a result of prioritising short-term gains over building resilient products," Whitehouse wrote. 

"Artificial Intelligence, when used by sufficiently-skilled and knowledgeable individuals, is showing the ability to exploit this technical debt at scale and at pace across the technology ecosystem," he added. The result, according to NCSC, is likely to be a "forced correction" as those weaknesses are uncovered and addressed in bulk....

....MUCH MORE 

"9 Takeaways from the JP Morgan Chase Energy Study..."

The headline continues "...You Won't Want to Miss" but how the heck would I know what you want to miss?

In certain circles that sort of presumptuousness could lead to a tiny button being pressed, the meeting coming to a sudden end, two large gentlemen appearing as if by magic, and your being escorted off the premises, all before you had a chance to demonstrate your brilliance.

Or worse, the button isn't pressed but a judgement has been made. And not communicated to you. 

From the Energy Bad Boys substack, March 28:

We read it so you don't have to

We appeared on the Energy Central podcast this week, where we discussed the causes of rising prices, utility green plating, and that there is no easy way out of the affordability pickle we find ourselves in.

Please take a second to check it out by clicking this YouTube link. We would like to crush the competition with respect to total views, and every click counts. Thank you for your attention to this matter.

On March 3rd, JPMorgan Chase released its 16th Annual Eye on the Market Energy Paper. This year’s report, written by Michael Cembalest, is titled “Fighting Words,” and it is a 98-page analysis with hundreds of graphs and charts on the state of the energy industry.

It spans most aspects of the energy industry, but as with all things energy, much of this year’s report centers on the impact of data centers on cost and reliability. Also of note are discussions on the cost of solar and storage, conventional fuels, small modular reactors (SMRs), electricity prices, and battery storage economics.

Here are the nine takeaways we found most interesting from the study, hereafter referred to as the JPMC report.

1. The Data Center Price Debate: A PJM Deep Dive

Data center impacts on customer costs continue to dominate the headlines for electricity affordability. The JPCM report notes:

The PJM region (data center alley: VA, PA, MD, OH) has 67 GW of existing and planned data center capacity, the largest cluster in the U.S. PJM has attracted attention due to spikes in its capacity payments, which are “insurance premiums” paid to generators to commit future supply or commit to demand response reductions during peak demand. Without the cap, the recent PJM auction would have cleared at $530 per MW per day.

 

While capacity payments take place in wholesale markets, they’re partially flowing through to retail power prices in MD and NJ. Factors driving the spike in PJM capacity payments include retirement of thermal assets, data centers and declines in capacity accreditation for solar and storage.

 

The reductions in capacity accreditation for solar and storage were overdue, and the recent increase in accreditation for onshore wind seems risky to us, as MISO, which, in fairness, has much more wind capacity than PJM, has the capacity value in the mid-teens.

On a final PJM note, Cembalest seems to think data centers could end the electricity “deregulation” experiment. “Last point: some utilities within PJM are questioning whether re-regulation would be the better option (Exelon, First Energy, PPL, and PSEG); I agree with them.”

2. Data Centers Are Likely Causing Nighttime Load Growth

The JPMC report provides evidence that data centers are materially increasing electricity demand at night, which also happens to be the period when the sun doesn’t shine.

 

Nighttime loads have increased in Virginia and ERCOT since 2023. Nighttime loads are less influenced by industrial production or population. The increase in nighttime loads in data-center-heavy areas such as the Northern Virginia Dominion Zone and ERCOT suggests these facilities are driving evening demand, as JPMC notes, electric vehicles are not drawing enough power to be significant drivers of demand yet.

Cembalest writes “Nighttime load can be viewed as positive as it represents consistent load that allows utilities to monetize capital deployed assets and does not put additional strain during peak hours; but it’s another sign of rising data center demand.”....

....MUCH MORE 

If interested see also 2025's "9 Takeaways from the JP Morgan Chase Energy Study You Won't Want to Miss". 

 Or maybe you will want to miss it, your call.

"AI's biggest critic has lost the plot: Ed Zitron vs. reality"

I never really understood why so many seemingly smart people gave Mr. Zitron any of their time and/or mental bandwidth. He was wrong and very loudly so.

We have had a total of one post that even mentions him and it has nothing to do with AI, though this one, truth be told, links to his blog:

June 1, 2024
"The Man Who Killed Google Search"

From Ed Zitron's substack, Where's Your Ed At?, Apr 23, 2024:

This is the story of how Google Search died, and the people responsible for killing it.

The story begins on February 5th 2019, when Ben Gomes, Google’s head of search, had a problem. Jerry Dischler, then the VP and General Manager of Ads at Google, and Shiv Venkataraman, then the VP of Engineering, Search and Ads on Google properties, had called a “code yellow” for search revenue due to, and I quote, “steady weakness in the daily numbers” and a likeliness that it would end the quarter significantly behind....

For what it's worth, I think AI is a bubble.* 

And the headline story from The Argument, April 28:

Ed Zitron thinks that AI is a bubble.

The tech columnist — whose newsletter reportedly has 80,000 subscribers and who has bylines in The Atlantic and The Guardian — first made his case in March 2024, quoting analysts who were saying things like we were “at the peak of the hype cycle around Large Language Models and other generative AI.”

He doubled down that summer: AI was a bubble and it wasn’t clear anyone but Nvidia would make money. Zitron is today one of the most prominent people, and certainly the most prolific person, making this case — but while I’m glad someone’s making it, reading through several hundred thousand words of his recent coverage on the topic left me wishing it was being made better.

When you read “AI is a bubble,” think of the dot-com boom of the late 1990s: Yes, the internet was going to be a big deal, but valuations soared for specific companies that had small or speculative revenue, often on the assumption that they would capture the value the internet would one day deliver. They didn’t, their stocks crashed, and the invested money was mostly lost. The internet was as big as imagined — bigger, even — but Pets.com didn’t survive to see it.

In 2024, Ed Zitron was hardly alone in wondering if AI would take this route; it seemed plausible to me too. Models like GPT-4 were tantalizing mostly because of what they suggested might be possible in the future, rather than for their direct economic utility. If building bigger models didn’t pan out, it was easy to imagine that we’d see some bankruptcies.

But time passes and situations evolve. Ed Zitron, though, clearly does not.

Over the last two years, he has called the top repeatedly: The AI bubble was definitely about to burst here, and here, and here, and here, and here, and here. His conclusion hasn’t changed, but his arguments have.

The 2024 and 2025 articles make, basically, the business case against AI: that companies aren’t really using it, it isn’t adding value, and AI investors are betting that will change before they run out of cash. In 2026, the focus is much more on alleging widespread, Enron- or FTX-tier outright fraud.

This is basically an admission that he can’t make the case in terms of the economics anymore. And in deciding how seriously to take his case in 2026, I think it’s valuable to read it in parallel with his case from 2024 and 2025.

“Have we reached Peak AI?” he asked on March 18, 2024. “Things are beginning to unwind in the most annoying bubble in history,” he told us on April 21, 2026. Let’s compare the two articles.

In 2024, Zitron’s coverage of the Bubble Question was rich with admissions from businesses that they weren’t really using AI yet and did not expect AI to have significant impacts on their revenues. He quoted from earning calls in which companies said that AI-related business impacts were zero. In order to be profitable in the future, he pointed out, AI would have to get a lot better — was there any reason to think it would?

Zitron repeatedly made a specific prediction that it would not and could not. “Generative AI,” he wrote in the summer of 2024, “is peaking, if it hasn’t already peaked. It cannot do much more than it is currently doing, other than doing more of it faster with some new inputs. It isn’t getting much more efficient.”....

....MUCH MORE 

*And on AI as bubble:

July 2025 - "Microsoft and Meta’s earnings are making every part of the AI supply chain surge" (Ride the Bubble) MSFT; META; NVDA

January 7 2025's:
"Everything (retail) Nvidia Announced at CES 2025"
Reminder: We believe AI is a bubble and have made the decision to ride the bubble.

June 18, 2024: Nvidia's Financial Dominance (NVDA)

For the last year we have been referring to the AI phenomena as a bubble, perhaps not so much in financial terms but rather in terms of the psychology, the speculative frenzy. It's true in Nvidia's case, the stock could be cut in half and still be discounting the future with a 2-3% discount factor i.e. 33 to 50 times free cash flow.

However! Despite this we have been pitching a "Ride the Bubble" approach to the stock for over a year (we have an almost full decade with this one but it was in the last thirteen months that we thought it bubblelicious). Here's a July 1, 2023 post:

....So, we are faced with the decision whether-or-not to play a dangerous little game, riding the bubble knowing full well it is a bubble, or retiring to the sidelines.

For now one of our favorite economists with one of our favorite stories.

Here's the version hosted at MIT:

Riding the South Sea Bubble

By PETER TEMIN AND HANS-JOACHIM VOTH

This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare’s Bank, a fledgling West End London bank, knew that a bubble was in progress and nonetheless invested in the stock: it was profitable to “ride the bubble.” Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by such institutional factors as restrictions on short sales or agency problems...

The two most important parts of the paper "II. Hoare’s Trading Performance" and "III. Causes of Success" are definitely worth a couple minutes....

***** 

....We'll have more on the big stories, autonomous vehicles, agentic AI and humanoid robots later today.

Mr. Huang believes they are each trillion dollar+ addressable markets.

*We reiterated the ride the bubble pitch a few more times, despite some trepidation. 

note: stock prices should be divided by 10 to adjust for the most recent stock split.

January 19, 2024 at $594.91 "AI: Lessons From The South Sea Bubble". 

February 6, 2024:

Nvidia Collapses (gives back half yesterday's gains) plus Isaac Newton and Daniel Defoe do a drive by (NVDA)

The stock is down $11.87, so a little less than half yesterday's up-move. $681.45 last after trading as low as $663.00 (down $30.31 and almost the entire Monday $31.72 up-move.) Unfortunately there is a gap on the chart at $660 so it didn't completely fill. Nervous-making....

By-the-bye, that $660 ($66, new style) is the "cut in half" number.

March 6, 2024:

WSJ: An in-depth look at Nvidia's DGX H100 setup: 32 DGX boxes, each weighing 300lb, that house eight individual $25K H100 GPUs, cooling, and other chips....

Earlier this morning the stock got to $889.68 and we are still pitching the "ride the bubble" approach—up $220 since the last mention, Feb. 6—but that could change anywhere between today and the end of the NVDA GTC conference (Mar. 21)....

If interested in some of our history with the big dog there are links embedded in January 2024's "Nvidia expands its reach in China’s electric vehicle sector" (NVDA) 

Finally, as Adam Smith put it in his book on the 'sixties bull market, The Money Game:

“Now you know and I know that one day the orchestra will stop playing and the
wind will rattle through the broken window panes, and the anticipation of this
freezes us. All of these kids but one will be broke, and that one will be the multi-
millionaire, the Arthur Rock of the new generation. There is always one, and
maybe we will find him.”

—As seen in February 2024's "JPMorgan's Jamie Dimon On The Business Case For AI: "This Is Not Hype" (JPM)" 

Not being in government, I don't have the authoritarian type of authority so I tend toward Burkeian humble and lovable: 

"All which a man without authority can give--
His unbiased opinion, his honest advice, and his best reasons."
—Edmund Burke (1791)*

—Power Politics For Outsiders, March 2023 (and elsewhere)

*Potential downside: Burke was described by Edward Gibbon (he of The...Decline and Fall...) as:
"The most eloquent and rational madman that I ever knew".