Nouriel Roubini On AI: Broad Sunlit Uplands Etc.

So much for "Dr. Doom".

By-the-bye the original Dr. Doom, Henry Kaufman, looks to be on track to celebrate his 99th birthday in a few months.

From Fortune Magazine, July 18:

‘Dr. Doom’ Nouriel Roubini says we’re headed for universal basic income or ‘some form of socialism’ as AI revolutionizes work—He calls that optimistic 

Top economist Nouriel Roubini, who was among the first to predict the 2008 financial crash, earned the nickname "Dr. Doom" for his stark warnings, though he has been more upbeat lately.

And when it comes to artificial intelligence, which has stirred all kinds of apocalyptic predictions, he insists he's looking at the brighter side.

In an interview on Bloomberg TV on Friday, Roubini was asked about ways to fix Social Security, as the trust fund that helps fund benefits is due to run out of money by 2032.

He replied that a large chunk of the population will be replaced by AI and robots in the next 20-25 years, so raising the retirement age will not be sufficient.

"Eventually, we need some form of universal basic income for everybody while they work and once they retire," Roubini added. "We're already on the way."

With AI poised to disrupt the labor market, top tech leaders like OpenAI CEO Sam Altman have suggested governments might provide a guaranteed amount of money to people, though he has since backed away from the idea.

Still, the idea persists, and the U.K.'s minister for investment said early this year that the government is weighing the introduction of a universal basic income as a means to support workers in industries where AI threatens to displace them.

In Roubini's view, the AI revolution is the most important in human history in terms of tech innovation, and it will develop into artificial general intelligence, meaning AI will match or exceed human cognitive capabilities.

That will unlock massive economic growth, he said, with GDP accelerating from 2%-4% by the end of the decade to 6% by 2040 and 10% by 2050. At that point, the government can tax the "winners" and redistribute the money to everyone else.

"We'll have either ex-post distribution—that is universal basic income—or we'll have it ex-ante. Ex-ante means some form of socialism," Roubini explained. "Essentially, the government is going to take over some fraction of the big tech firms."....

....MUCH MORE 

SemiAnalysis On Moonshot AI's Kimi K3: Probably Good For Nvidia and HBM; Not So Much For Open AI

Via Xitter: 

Similar to DeepSeek in January 2025, Panicans may think that the AI networking switch TAM will massively shrink because Kimi K3 uses KDA Attention, which reduces KV-transfer networking bandwidth by up to 10x. But the opposite is true, as we explain below. 👇️ 1/8🧵 pic.twitter.com/FNrFeHzRWi

— SemiAnalysis (@SemiAnalysis_) July 18, 2026

Thread at Thread Reader

Ending with a Jevons Paradox Cambrian Explosion, to mix a couple metaphors.

...More efficient attention will further push context lengths from 1M to 5M+, with less context rot. Jevons’ Paradox means that making attention more efficient will lead to wider AI adoption, which will require more networking. 8/8 

In essence the model is so big it will only be optimally run on Nvidia's premier offerings+High Bandwidth Memory+NVLink - Mellenox networks.

Here's their commentary:

[Emergency Episode] Moonshot’s Kimi K3 has Arrived! China has a Frontier Model 

Kimi K3 2.8T is so large that it will not fit on a single NVIDIA DGX B200, even at FP4. A GB300 NVL72, B300, or MI355X system is required, as each GPU has 288 GB of memory.

One optimization that could make Kimi K3 fit on B200 is to gang multiple nodes together and use a… pic.twitter.com/7Yu1dJoPm0

— SemiAnalysis (@SemiAnalysis_) July 17, 2026

AI Trained to Find Craters on Mars Just Found 73 Hidden Volcanoes on Earth’s Ocean Floor.

As noted over the years: The damn things are everywhere. 

From ScienceAlert, July 11:

Deep beneath the ocean waves, dangers lurk.

Not from cryptic monsters like the kraken, but from powerful forces reshaping the ocean floor itself.

Most of Earth's volcanic activity takes place underwater. Yet the scars those volcanoes leave behind have remained largely hidden.

Now, through an AI-assisted search of the seafloor, a team led by volcanologist Andrea Verolino of Paris-Saclay University in France has identified 73 previously unknown volcanic calderas hidden beneath Earth's oceans.

Calderas are vast crater-like depressions left when a volcano empties enough of its underground magma chamber for the ground above to collapse in on itself. Some are long extinct, but others mark volcanic systems that could erupt again.

"Our dataset," writes the team in an early-access paper published in Communications, Earth & Environment, "fills a major observational gap and provides a reproducible, upgradeable framework for submarine volcano characterization, underscoring the need to incorporate submarine calderas into future global volcanic assessments."

Most of Earth's volcanic activity takes place beneath the sea, where tectonic plates are constantly pulling apart, colliding, and sliding beneath one another. These restless boundaries allow magma to rise toward the surface, building volcanoes across the ocean floor....

....MUCH MORE, a deep dive, so to speak. 

 Here's January 2023's "More Land For Norway":

No, not by invading Finland, Norway already did that. And the Finns were tallying the upside of annexation: NATO membership, Royal family, oil revenues etc.

The number of submarine volcanoes around the world is still pretty much unknown. One study extrapolated a small census out to three million of the damn things if you count the inactive ones. Links after the jump....

*****

...We put some of our prior links in 2021's "Submarine volcanoes release enough energy to power the United States":

Weird Hum Heard Around the World Was the Birth Of A Submarine Volcano
One of the stories on the Mayotte volcano referred to it as rare. They aren't rare at all.

"Beneath the Ocean, a World of Mountains"
We have no idea how many submarine volcanoes there are.
There was a subsea survey a decade ago that extrapolated out to three million* of the damn things.
We're only now looking at the mud volcanoes in the Arctic.
Lots of stuff to figure out.....

****

....Here's a 2007 story from NewScientist:

The true extent to which the ocean bed is dotted with volcanoes has been revealed by researchers who have counted 201,055 underwater cones. This is over 10 times more than have been found before.

The team estimates that in total there could be about 3 million submarine volcanoes, 39,000 of which rise more than 1000 metres over the sea bed....

Human beings aren't near as smart as we think we are, a point I exemplify on a daily basis at Climateer Investing.

"Ships in Caribbean Told to Avoid Underwater Volcano ‘Kick ’em Jenny’ Over Risk of Eruption"
Avoiding anything named Kick 'em Jenny sounds like a good idea....

Giant underwater volcano found off Indonesia
Further proof that Homo Sapiens really don't know all that much about how the pieces fit together. After the headline story from EarthTimes I'll link to one of the most amazing finds of the last couple years.
From the ET:

Jakarta - Scientists have discovered a giant undersea volcano off Indonesia's Sumatra island, the state-run Antara news agency said Friday. The volcano spans 50 kilometres at its base with a height of 4,600 metres, said Yusuf Surachman, a director at the state-run Agency for the Assessment and Application of Technology. Indonesian, American and French scientists found the volcano 330 kilometres off Bengkulu province on Sumatra while they were surveying the sea floor to study changes in its geological structure following major earthquakes in the region. "This volcano is huge and tall. There are no volcanoes of similar height on Indonesian land," he was quoted as saying by Antara. Surachman said the scientists did not know if the volcano was active....

Did you catch that? A volcano 15,000 feet tall and thirty miles across at its base. And, oh, it might be active.....

In 2016 National Geographic reported:

Six underwater volcanoes found hiding in plain sight
The edifice, named Actea, is one of six volcanoes recently discovered while scientists were mapping the underwater landscape of the Sicilian Channel, a heavily trafficked waterway off the southwest...

 Oh.

And many more. Up north it's not just Iceland that has volcanoes. There are active volcanoes in the Bering Sea. 

And off of Antarctica. Damn things are everywhere we look.

A few months later, April 2023: 

"“It’s just mind boggling.” More than 19,000 undersea volcanoes discovered"

*** 

Ja, ja I got your 3600 foot outcrop and raise you this hitherto unknown specimen...  

And: "Europe's largest underwater volcano at risk of collapse"

 This story is two years old and there is no sign that collapse is going to happen tomorrow but is something our obscure perils group would consider covering. Just another example of all these damn submarine volcanoes.

From Deutsche Welle, May 5, 2019:

The biggest underwater volcano in Europe could erupt at any moment and cause a tsunami, according to new research. For residents of southern Italy, the Marsili is just one more disaster threat to live with.

And....let's just say there's an awful lot we don't know. 

"‘Adversarial clothing’: are garments designed to confuse facial recognition systems about to go mainstream?"

This stuff looks a little too tame to fool the camera.

From The Guardian, July  17:

Designers say that as well as offering a degree of protection from surveillance, their clothes make a powerful fashion statement about the importance of privacy 

As facial recognition technology is rolled out across Britain’s public spaces, a new generation of designers say privacy could be the next big fashion trend.

Companies have started incorporating “adversarial patterns” in their garments – carefully designed arrangements of shapes, colours and repeated motifs said to exploit weaknesses in some computer vision systems.

The designers say advances in computing have made it easier to incorporate such patterns into commercially viable garments. Experts caution that the effectiveness of the patterns depends on the surveillance system and the conditions in which it is used, but Nick Tidball, the co-founder of the clothing brand Vollebak, thinks “adversarial clothing” could be on the cusp of going mainstream.

“Anti-surveillance feelings are so widespread that all it would take is for a single celebrity to wear one of these garments, currently popular in the countercultural fashion world, to a high-profile event for it to take off,” he said.

“So-called ‘adversarial clothing’ wins on many levels. As well as the practicality of protection, it’s fashionable and fun, it makes a powerful, public statement that many are in agreement with, it spreads even more awareness about the importance of privacy and it helps encourage public debate.” 

Unlike traditional CCTV, modern computer vision systems can identify faces, follow individuals across cameras and search footage at scale.

Recent advances in generative AI have made this type of automated identification cheaper and more widely available to police, retailers and private businesses, an expansion recently warned against by Britain’s biometrics watchdogs, which have called for more laws and a regulator to clamp down on misuse.

Evidence of misuse and that black and Asian people are more likely to be incorrectly identified than white people has led to increasing public concern. A recent poll showed almost 60% of people believed facial recognition was “another step towards turning the UK into a surveillance society”.

Dr Jennifer Bell, a senior lecturer specialising in creative AI, fashion and digital culture at Nottingham School of Art & Design, said clothing with anti-facial recognition designs was increasingly available at high street prices and was being marketed to a wide demographic. “That growing awareness combined with a lowering of cost often precedes the tipping point towards a real cultural moment,” she said.

Daniel Preuß, the co-founder of the Urban Privacy clothing brand, said new technology meant you could now “combine smart, striking style with invisible protection”.

He emphasised that because surveillance systems are so powerful, no design can guarantee security from detection, but said “the added value of fashion is to spread awareness and help propagate public discourse”.

Preuß said his designs used large-scale prints, asymmetrical cuts and streetwear-inspired silhouettes to confuse facial recognition algorithms. The company said its Urban Ghost coat integrates LEDs into the hood that emit infrared light to dazzle night-vision surveillance cameras.

Preuß, who co-founded his company after reading about the whistleblower Edward Snowden’s revelations about US surveillance in the Guardian, said his designs played with the fact that “facial recognition systems freak out when they see multiple faces at once”.

“Our patterns play with that chaos, confuse algorithms and make it way harder to pin you down,” he said.

Bell, however, said “none of these products are tried and tested, and a lot of these surveillance technologies can deal with a little resistance … [but] even if the designs don’t necessarily work perfectly, fashion is also a visible sign of resistance.

“This is consumers collectively coming together to make a visible statement.”....

....MORE 

One way to test it is to walk into a high end casino and time how long it takes for security to come tap you on your shoulder. If it's more than ten minutes you are just making a statement not hiding from the camera 

Related July 9 - News You Can Use: "How to hide from killer drones"

And April 2018: 

If interested we have a few hundred posts on facial recognition and attempts at defeating same including this oldie-but-goodie from 2018:

ICYMI: The Most Valuable AI Start-up Inthe World Does Facial Recognition

Some thought us mad with our focus on countermeasures to the surveillance state. But there was a method to that madness.

We've looked at responses ranging from simple dazzle camouflage back in 2013's How to Hide From Cameras:

To hairstyles + makeup that confuse facial recognition algos:

...but this raises its own set of problems, not the least of which is 

taking a half hour to apply just so you can go down to the lobby.

To Hyperface clothing with thousands of pseudo-facial "hits" that simply overwhelm the computer:
"Anti-Surveillance Clothing Aims to Hide Wearers From Facial Recognition "

From the scholarly stuff such as "Fooling The Machine: The Byzantine Science of Deceiving Artificial Intelligence".
To, as noted in ""Magic AI: 'These are the Optical Illusions that Trick, Fool, and Flummox Computers.":

...First though a bit of housekeeping.
Just so you know, I don't actually use the make-up techniques featured in the earlier posts. Despite the fact they have some efficacy at fooling the camera they make you look like a moron to human observers on the street. Better to just put on some glasses and blend into the crowd.

Can you pick out the Kennedys in this photo?

Here's why we cared: There is big money in this stuff!!

 

"Brussels set to axe 2039 net-zero industry target"

From EurActiv, July 17:

The carbon pricing overhaul means factories and coal power plants could continue business as usual into the 2040s  

The European Commission will today present a reform of its flagship industrial carbon pricing scheme, the first of many overhauls of climate and energy laws as the EU moves further from the Green Deal of the early 2020s towards more pro-industry and electrification policies.

The bloc’s most effective climate policy over two decades has been the carbon price on industrial emissions – the Emissions Trading System (ETS) – under which factory and power plant operators currently pay around €80 for every tonne of CO2, or equivalent, they emit.

Since 2005, emissions in the sectors covered have roughly halved, reducing annual greenhouse gas emissions by the equivalent of about a billion tonnes – with the electricity industry contributing most through the shift from coal to cleaner gas and renewable wind and solar power.

But heavy industry is feeling the pinch as the generous free allocation of emissions allowances they have enjoyed since the 2010s dries up.

Moreover, a recent increase in the rate at which the overall supply is reduced each year – by 80 million tonnes, or roughly the total greenhouse gas output of Austria – means that no more will be issued after 2039.

For boardrooms across Europe, the deadline for reaching net-zero is looming dangerously close.

Backpedalling 
The EU executive has been under tremendous pressure from industrial lobbyists and half of the EU to throw their companies a lifeline.

Now, according to sources involved in the negotiations, the Commission is poised to present sweeping changes to the scheme: delaying the end-date by reducing the annual lowering of what amounts to an emissions cap, and prolonging the supply of free pollution permits.

Peter Liese is the centre-right MEP who led the last reform of the ETS regulation and has already been named lead negotiator on today’s proposal. “Zero emissions in 2039 are absolutely unrealistic for steel and cement plants, the chemical industry – and especially for aviation,” Liese said on Thursday....

....MUCH MORE 

Iran International Liveblog, July 19

 From Iran International, July 19:

LIVE
updated 2 hours ago
Kuwait military says intercepting Iranian missile, drone attacks

Summary

• Air raid sirens sounded across Bahrain following Iranian attacks, the Interior Ministry said on Sunday.

• The General Staff of the Kuawaiti Armed Forces said on Sunday its air defenses were intercepting Iranian missile and drone attacks, as air raid sirens sounded in parts of the country.

• Two US service members were killed in action in Jordan on July 17 as US and partner forces defended against Iranian ballistic missile and drone attacks, US Central Command said, adding that one service member remained missing in action.

• Mojtaba Khamenei said repeated US violations of the MoU showed Washington could not be trusted and warned Iran and the Axis of Resistance had “unforgettable lessons” for the United States.

• Iran suspended its commitments under the Islamabad MoU with the US, accusing Washington of violating the agreement and saying no new talks were underway.

• US strikes hit bridges, a road tunnel, surveillance sites, underground weapons storage and maritime facilities during a seventh consecutive night of attacks.

• Iran launched missiles and drones at US-linked facilities in Jordan, Kuwait and Bahrain. Jordan said it intercepted 10 missiles early Saturday, while Kuwait reported injuries and damage to a power and desalination plant.

....MUCH MORE 

"Monetary Authority of Singapore in talks to cut taxes for fund managers"

Incentives matter.

From Crypto Briefing, July 19:

Singapore's central bank is negotiating with investment firms as the city-state doubles down on its ambitions to become the world's premier asset management hub 

Singapore wants more of the world’s money, and it is willing to negotiate on taxes to get it. The Monetary Authority of Singapore is in active discussions with investment firms about reducing the tax burden on fund managers, a move that fits neatly into the city-state’s broader campaign to pull capital away from rival financial centers.

What Singapore is actually offering 
Singapore revised its flagship fund tax incentive schemes, specifically the frameworks known as Sections 13O and 13U, with updated eligibility criteria that took effect in 2025. These schemes allow qualifying funds to enjoy tax exemptions on specified income, and the revised criteria tightened the rules around which funds managed by Singapore-based entities can qualify....

....MUCH MORE 

Penn Wharton: Relax, We Have 20 Years Before The U.S. Economy Implodes In An Irreversible Collapse

Well now it's a bit over 17 years.

A repost from October 2023. 

In the words of Viktor Chernomyrdin, second longest serving Prime Minister of Russia and first Chairman of Gazprom:

"We wanted better, but it turned out as always." 

From Wharton's Penn Wharton Budget Model:

October 6, 2023

When Does Federal Debt Reach Unsustainable Levels?

Summary: PWBM estimates that---even under myopic expectations---financial markets cannot sustain more than the next 20 years of accumulated deficits projected under current U.S. fiscal policy. Forward-looking financial markets are, therefore, effectively betting that future fiscal policy will provide substantial corrective measures ahead of time. If financial markets started to believe otherwise, debt dynamics would “unravel” and become unsustainable much sooner.

Key Points

• The U.S. “public debt outstanding” of $33.2 trillion often cited by media is largely misleading, as it includes $6.8 trillion that the federal government “owes itself” due to trust fund and other accounting. The economics profession has long focused on “debt held by the public”, currently equal to about 98 percent of GDP at $26.3 trillion, for assessing its effects on the economy.

• We estimate that the U.S. debt held by the public cannot exceed about 200 percent of GDP even under today’s generally favorable market conditions. Larger ratios in countries like Japan, for example, are not relevant for the United States, because Japan has a much larger household saving rate, which more-than absorbs the larger government debt.

• Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation). Unlike technical defaults where payments are merely delayed, this default would be much larger and would reverberate across the U.S. and world economies.

• This time frame is the “best case” scenario for the United States, under markets conditions where participants believe that corrective fiscal actions will happen ahead of time. If, instead, they started to believe otherwise, debt dynamics would make the time window for corrective action even shorter.

---

When Does Federal Debt Reach Unsustainable Levels?
Introduction

This introduction to this brief is, by necessity, a bit more technical than found in most PWBM briefs. We provide a small “primer” for policymakers and other readers to understand how PWBM analyzes the impact of debt on the U.S. economy. These insights generally apply to the workings of other dynamic models used by government scoring agencies.

As we have discussed elsewhere, government debt reduces economic activity by crowding out private capital formation and by requiring future tax increases or spending cuts to accommodate future interest payments. The dynamic “overlapping-generations (OLG) model”, originally based on the seminal work by Diamond (1965) and Auerbach and Kotlikoff (1987), is the workhorse framework for analyzing the impact of government debt on the economy through both, tax and spending channels. The Penn Wharton Budget Model (PWBM) and the Congressional Budget Office use versions of the OLG model largely based on the papers by Nishiyama and Smetters (2005, 2007, 2014), subsequently modified in various ways over time. The Joint Committee on Taxation also has access to its own OLG model for assessing dynamics.

It is generally not well understood outside tight academic and DC modeling circles that these models effectively crash when trying to project future macroeconomic variables under current fiscal policy. The reason is that current fiscal policy is not sustainable and forward-looking financial markets know it, leading to the economy “unraveling” through “backward induction”....

....MUCH MORE

August 21 and September 21: There It Is: The Yield On The 10-Year Treasury Index Futures Just Surpassed the October 2022 High Of 4.3330% (TNX)

The debt apologists will tell you it doesn't matter because "we owe it to ourselves," but it appears ourselves are demanding quite a bit of compensation for our trouble.

4.3340% +0.0830% as of 10:13AM EDT

The CBOE 10-year T-note futures traded up to a 4.9750% yield an hour ago.

Back to Viktor. On the future: 

"We will live so well that our children and grandchildren will envy us!"

"Chinese gem lab rakes in profits as world embraces artificial diamonds"

Much as the sale of sub-prime mortgage originator Golden West Financial by Herb and Marion Sandler marked the precise moment that the smart money left the game, so the sale of the Oppenheimer family's remaining stake in DeBeers was the tell to get out of the natural diamond mining and marketing businesses.

From the South China Morning Post, July 15:

Lab-grown diamond maker Power Diamond sees profits triple as De Beers warns of ‘protracted’ challenges in natural stone market 

A Chinese lab-grown diamond producer saw its profits triple over the first half of the year, as consumers around the world increasingly abandon natural diamonds in favour of cheaper artificial stones.

The pivot had led De Beers to suspend production at South Africa’s largest diamond mine, Venetia, for two years as part of a cost-cutting drive, with the company warning that it was confronting “protracted challenging conditions as the diamond industry evolves”.

The rise of man-made gems has battered demand for natural stones in recent years. The global lab-grown diamond market is worth about 127.2 billion yuan (US$18.8 billion), and the greatest demand comes from the United States, according to a report released at an industry forum in central China’s Henan province in December.

China dominates the growing market, with the country expected to account for nearly two-thirds of global output of lab-grown diamonds by 2030, according to the report. Most of China’s production takes place in Henan, state media reported last year.

Power Diamond, a major producer in Henan, is one of the biggest beneficiaries of the pivot to lab-grown stones. The company projects its net profits attributable to shareholders to reach between 80 million yuan and 93 million yuan in the first half of 2026, nearly triple the level recorded during the same period last year, it said in a filing with the Shenzhen Stock Exchange on July 10....

....MUCH MORE 

November 7, 2011 - End of the Oppenheimer Era at DeBeers: Nicky Oppenheimer on What the Family Will Do With the $5.1 Billion 

***

May 7, 2006 The Day the (mortgage) Music Died
This is a repost from 2007 of one of the most spectacularly correct market calls I've ever seen 

AI/semiconductors/software: "Forrester Global Sovereignty Forecast: Despite Rising Geopolitical Tensions, Technology Sovereignty Will Advance Slowly Through 2030"

Yesterday I found myself wondering how the Central African Republic was ever going to compete. Here Forrester raises the same question re: Europe. 

From Forrester Research, July 16: 

China and the US will remain leaders in technology sovereignty, leaving most European and midsize countries dependent on external alliances to close capability gaps 

According to Forrester’s (Nasdaq: FORR) Global Sovereignty Forecast, 2025 To 2030, global technology sovereignty — a country’s ability to develop, operate, and secure critical technologies independently of foreign governments’ influence — will evolve slowly over the next five years. The average tech sovereignty score across all 14 countries assessed (Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, South Korea, Spain, the UK, and the US) is expected to rise only minimally, from 39% in 2025 to 40% in 2030. China and the US lead the pack, recording the highest overall tech sovereignty scores at 82% and 79%, respectively. Both countries are expected to maintain their lead over the next five years, underscoring that tech sovereignty will remain concentrated among a small number of geopolitical and economic powers. To close capability gaps and reduce critical technology dependencies, other countries will need to rely on strategic partnerships and alliances. 

Released for the first time, Forrester’s Global Sovereignty Forecast includes a tech sovereignty index, which measures a country’s ability to develop, operate, and secure critical technologies independently to reduce exposure to geopolitical risks. The index assesses each country across nine dimensions of technology sovereignty: government AI investment, cloud sovereignty, technology workforce availability, AI model development, data center capacity relative to technology spending, data center autonomy, semiconductor production, software creation, and rare earths processing. 

Among all technology dimensions, semiconductor manufacturing shows the strongest projected improvement, led by the US and South Korea, whose chip production scores are expected to increase from 45% in 2025 to 79% in 2030, followed by Japan (36% to 53%), China (40% to 51%), and India (0% to 13%). Even with these improvements, semiconductors and software will remain among the most significant sovereignty challenges due to concentrated chip supply chains and a handful of dominant software providers....

....MUCH MORE 

Maybe after the July 27 full release of Moonshot AI's flagship model, everyone in the C.A.R. will just download Kimi K3.

"What is China’s Moonshot AI and why is it roiling markets?"

From Singapore's Straits Times, July 18:

Chinese start-up Moonshot AI released a new artificial intelligence model on July 17 that drew global attention both for its powerful capabilities and for sending stock markets reeling around the world.

The Beijing-based company’s Kimi K3 AI model delivers performance on industry benchmarks that rivals top-tier offerings from OpenAI and Anthropic, a surprising breakthrough for a firm that has operated in the shadow of local competitor DeepSeek.

AI and semiconductor stocks tumbled on investor concerns that the rise of China’s AI businesses could force US leaders such as Anthropic to pull back on their investments. That could undercut demand at industry powerhouses Nvidia, SK Hynix and Samsung Electronics, whose stock prices fell following the Moonshot news.

What is Moonshot?
Moonshot was founded in early 2023 by Yang Zhilin, a former Tsinghua University professor who previously worked at Meta Platforms and Alphabet’s Google.

Before the breakout of DeepSeek, he was the poster boy of Chinese AI.

An alumnus of Carnegie Mellon University, Yang has written more than a dozen widely cited research papers on natural language processing. When he set out to launch his own company to challenge OpenAI, venture capitalists rushed to back him. MoonShoot AI’s valuation soon reached US$20 billion (S$25.82 billion) as Kimi became China’s most popular ChatGPT alternative.

What else is Yang Zhilin known for?
Moonshot’s founder is not just an academic.

The 33-year-old is a huge music fan who has infused his company with the names of his favourite bands. Conference rooms at headquarters sport names including Radiohead, Led Zeppelin, Queen and Nirvana.

Kimi’s subscription plans are named after the tempo guidelines of classical music: Adagio, Andante and Moderato. The start-up was originally called the Dark Side of the Moon in Chinese, after Yang’s favourite Pink Floyd album.

What is Moonshot’s business model?
Moonshot is looking to raise as much as US$2 billion in new funding at a valuation of US$30 billion, Bloomberg reported in June, putting it among the leaders in China’s AI market.

The Kimi developer is in the process of dismantling its offshore structure to pave the way for an initial public offering in Hong Kong, after Beijing tightened its grip on overseas listings. 

The company’s annual recurring revenue – a gauge of its forward-looking sales – topped US$200 million in April, driven by surging demand for its chatbot and large language models. The company sells tiered subscription plans for the chatbot and offers its underlying technology to enterprise clients.

What threat does Moonshot pose to US rivals?
Moonshot claims that the latest version of Kimi excels at coding tasks. US firms are spending hundreds of billions of dollars on AI infrastructure to run and improve their models – much of it going to chipmakers. Coding is one of the most lucrative offerings by advanced model companies, driving revenue for Anthropic and OpenAI ahead of their planned IPOs. If Moonshot can provide a viable alternative, that could upend the business case for its competitors.

Chinese models have already priced their services aggressively, undercutting their US rivals....

....MUCH MORE 

Mark July 27 on your calendars. That's the day Moonshot will release the full model weights.

Also at the Straits Times: 

China’s Moonshot unveils AI model, fuelling tech rout

China wants the world to use its AI – but not all of it

"'Bloodbath': Analysts react to Asian shares sinking on tech selloff"

And Korea's market was closed on Friday. It's a pretty big deal.

From Reuters, July 17:

Asian markets slid sharply on Friday, with equity benchmarks in Japan and Taiwan falling as much as 6%, as a global rout in technology stocks accelerated.

 

Japan's benchmark Nikkei 225 gauge confirmed correction territory, down more than 10% since its all-time high close on June 25.

 

TAKAMASA IKEDA, SENIOR PORTFOLIO MANAGER, GCI ASSET MANAGEMENT, TOKYO:  

"The Nikkei is highly correlated with the SOX ​index. The pace of the SOX's gain was unsustainable, and there's been a correction in it. A correction was anticipated, but it is happening earlier than ‌market expectations."

"The market has become wary of whether hyperscalers can make returns that justify their massive investments. And these investments are funded by highly leveraged loans from banks and private lenders." 

CHRISTOPHER FORBES, HEAD OF ASIA AND MIDDLE EAST, CMC MARKETS, SINGAPORE: 

"They were good (tech) earnings. But it just shows how much was baked into the price. SpaceX is a pretty good proxy for market sentiment right now, and it's below the IPO price."

"I'm still not ​seeing any panic — people are buying gold and silver and those have been losing trades."

 

"But the reality is that the world is watching yields go higher...hence the market is ​selling off."

JOHAN JAVEUS, SENIOR ECONOMIST, SEB, STOCKHOLM: 

"Probably a combination of factors where the selloff is partly driven by profit-taking on many AI stocks, coupled ⁠with the recurring doubts of an AI investment bubble. The fact that the SpaceX IPO has done so poorly makes many investors extra nervous."

KEI OKAMURA, PORTFOLIO MANAGER, NEUBERGER BERMAN, TOKYO 

"I think ​the Fed was likely a trigger. Kevin Warsh and his comments and changing views towards what appears to be quite hawkish Fed policy started a cascading effect towards taking chips off the table."

 

"We ​started to get a lot more momentum in terms of the selling pressure, first off with the very high profile names like SK Hynix and Samsung, but from there it has kind of spread."

"So the Nikkei is trending as bad, if not a little bit worse. The word 'bloodbath' is accurate because it is across the board."

FABIEN YIP, MARKET ANALYST, IG, SYDNEY:

"I think the focus now from investors is about the sustainability, not just whether ​the growth numbers will go up... but more about whether these numbers are achievable while still maintaining certain healthiness in the balance sheet."

 

"Retail investors have borrowed to trade in this really ​impressive AI rally, so I think the unwinding of leveraged positions will definitely exaggerate the decline as well."

"If tonight, the selloff continues into the U.S. session, I think Korea, when it reopens, is going to be ‌quite disastrous."....

....MUCH MORE 

Capital Markets: "War and Tech Slump Weigh on Sentiment"

 From Marc Chandler at Bannockburn Global Forex:

There are two major concerns that are spurring risk off ahead of the weekend. First, the Middle East war is escalating, and there does not seem to be a near-term off-ramp. Second, the rout in technology stocks is rippling through the equity markets, and sharp losses in many Asia Pacific equity markets have been recorded today and the Nasdaq is poised to gap dramatically lower. 

The US dollar is mixed but mostly firmer and it looks poised to finish the week on a firm note. Japan’s finance minister threatened to take “decisive action” if necessary, but the yen failed to respond. The yen is weakest for the fourth week in the past five, though volatility is low. The UK will have a new prime minister on Monday, and the prospect of a market-friendly Chancellor of the Exchequer has spurred a Gilt rally, the same was thought of the current Chancellor a couple of years ago....

....MUCH MORE  

"Airbus migrating 70 critical apps from AWS to France's Scaleway amid digital sovereignty push"

From The Register, July 17:

Total of 900 applications including ERP, CRM, and manufacturing systems going to be kept 'under European control' 

Airbus is migrating its most critical applications for sensitive workloads from AWS to French cloud provider Scaleway's under a drive to increase digital sovereignty. 

As exclusively revealed by The Register in December, the European-based aerospace manufacturer, said it needed to guarantee the data remained “under European control" and was launching a tender at the start of 2026. 

Catherine Jestin, head of digital at Airbus, told us on Thursday: "The selection of Scaleway is a combination of a very strong technical answer and a very strong commercial offer making it competitive compared to hyperscalers' public cloud offerings. In addition, Scaleway is committed to involving Airbus in the definition of its future product roadmap."

"The objective is to host Airbus's most critical applications (those required for the Minimum Viable Company). This represents 900 applications and we will start with 70 of them today hosted on AWS." 

Applications being sent to Scaleway include ERP, manufacturing execution systems, CRM, and product lifecycle management. Finding a cloud provider to host its most sensitive applications for defense and industrial workloads was not a certainty when the process began, Airbus told us last year, because European cloud providers do not have the scale of their US rivals. 

Jestin said Airbus will continue to work with AWS. Skywise, a platform that aggregates and analyzes aviation data, and Case Management Assistant for customers' technical queries will continue to be hosted by AWS. 

In a statement, she said: “By integrating a trusted, high performance, cloud environment that keeps our critical data assets shielded from foreign extraterritorial laws, we are ensuring that our digital infrastructure keeps pace with our aerospace innovation, while maintaining control and resilience of our industrial operations.” 

Since President Donald Trump came to power for a second term, his antagonistic approach to allies - some of them now former allies - has created economic and geopolitical tensions between the US and Europe. 

This has heightened concern about the US Cloud Act, which allows the American government to request data held in overseas datacenters owned by US businesses, and only served to reinforce calls for digital sovereignty....

....MORE, plus previous articles. 

Here at the Sun King Group we're all for French sovereign AI, France was one of the first major markets to which Nvidia made the sovereignty pitch:

December 2023 - Nvidia CEO Jensen Huang Says AI to See ‘Major Second Wave (NVDA)

AI to See ‘Major Second Wave,’ NVIDIA CEO Says in Fireside Chat With iliad Group Exec
NVIDIA’s Jensen Huang says sovereign AI a growing need for countries to reflect unique cultural, linguistic, industrial characteristics
European startups will get a massive boost from a new generation of AI infrastructure, NVIDIA founder and CEO Jensen Huang said Friday in a fireside chat with iliad Group Deputy CEO Aude Durand — and it’s coming just in time.

February 2024 - "Nvidia chief sees rise of ‘sovereign AI’ infrastructure across nations, driving demand for company’s advanced chips" 

March 2024 - Here's Nvidia's "Sovereign AI" Pitch (NVDA)

June 2024 - France's "Mistral AI warns of lack of data centres and training capacity in Europe"  

October 2024 - "Parlez-vous AI? Francophone scholars warn against English language dominating AI"  

January 2025 - "Jensen Huang Wants to Make AI the New World Infrastructure" (NVDA)

This sovereign AI you speak of, I have heard of it.  

I have heard wondrous tales of immense wealth,

Of amazing deeds performed as if by magic.
Yes I have heard of all of this...*

February 2026 - French Tech: "Mistral CEO Arthur Mensch’s $1.4B Data Center Push Powers Europe’s A.I. Autonomy"

May 2026 - "Europe built sovereign clouds to escape US control. Then forgot about the processors"

May 2026 -  FrenchTech: "Mistral AI's CEO says Europe has 2 years to stop becoming America's AI 'vassal state'"

And many more, albeit with a few diversions: 

.... This is terrible. I now have Jensen Huang speaking in Dr. Martin Luther King's cadences as he repurposes the penultimate paragraph of "I have a Dream":

Let AI ring from Stone Mountain of Georgia.
Let AI ring from Lookout Mountain of Tennessee.
Let AI ring from every hill and molehill of Mississippi.
From every mountainside, let AI ring. 

I may have to go lie down.

 

March 6

...Every, town, every village, every hamlet, every wide spot in the road, should have their own (NVDA-powered) supercomputer.

"Germany's industrial order books swell to record high in May"

This may be due to Germany taking a page from the American playbook: issue lots of debt, buy stuff that blows up (armaments), repeat. 

From Reuters, July 17:

Germany's industrial order backlog rose to a record high in May, the statistics office said on Friday, highlighting ​strong demand for a manufacturing sector that has endured ‌a prolonged downturn.

The backlog of outstanding orders grew by 1.7% in May compared with the previous month, the office said, the sharpest increase since ​September 2021, when there were catch-up effects due to ​the COVID-19 pandemic.

 

As a result, order books are the ⁠fullest since the data series began in 2015.

However, Bethmann HAL ​bank chief economist Alexander Krueger warned that high order levels ​are only valuable if they translate into actual production.

 

German industrial production rose more than expected in May, according to the statistics office, while S&P Global's manufacturing PMI ​data for June showed output ticking up for a sixth ​straight month.

 

"Despite the governing coalition's reform package, companies are likely to remain cautious ‌in ⁠this regard," said Krueger, citing challenging business conditions and higher energy costs.

Many companies are also increasingly shifting production abroad rather than keeping it in Germany, he said.

 

"Orders are also likely to continue ​piling up for ​the time ⁠being, partly due to renewed tensions in the Middle East," he said. "Supply bottlenecks are hampering production."....

....MORE 

"Tokyo, Taipei lead heavy losses as Asian markets suffer fresh tech rout"

A whole lotta plungin' goin' on.

From AFP via Yahoo Singapore, July 17:

Tokyo and Taipei led losses on a glum day for Asian markets Friday, with tech firms once again in the crosshairs as investors cash in following this year's breathtaking rally.

The AI boom has sent technology valuations soaring to record levels as traders looked to get a slice of the next big thing while firms splashed out enormous amounts of money in investment.

But questions have been raised in recent months about whether valuations have gone too far and when companies will actually see any returns.

Worries about the AI trade have hammered the value of chip firms, with the Philadelphia Semiconductor Index losing about 19 percent from a June peak, according to Bloomberg.

Asian markets have been hammered, with Seoul's Kospi bearing the brunt of the selling, having more than doubled in the first six months of the year before losing about a third of its value since hitting a record in June.

But with South Korea enjoying a holiday on Friday, Tokyo and Taipei -- which are also heavily weighted toward tech -- were at the forefront of the selling.

Japan's Nikkei sank six percent with Advantest, Tokyo Electron and tech investment titan SoftBank losing more than 10 percent. 

Chipmaker Kioxia collapsed 16 percent, meaning it has lost more than half its value since hitting a record high and becoming the country's biggest firm by market capitalisation last month. 

Taiwan's Taiex also shed more than five percent as chipmaker TSMC retreated around the same amount a day after announcing record second-quarter profit and that it would invest a further $100 billion in the US state of Arizona.

There were also steep losses in Hong Kong, Shanghai, Singapore, Sydney and Bangkok, though Manila and Mumbai rose....

....MUCH MORE 

Moody's: U.S. Disengagement From Europe's Security Affairs Is Credit Negative For European Sovereign Ratings

From Reuters, July 13:

US' NATO shift negative for Europe's sovereign ratings - Moody's 

Progressive U.S. disengagement from European security ​affairs is negative for ‌Europe’s sovereign credit ratings, Moody’s said on Monday, due the ​increased defence costs ​the region’s governments will now ⁠face.

A summit of the ​North Atlantic Treaty Organisation (NATO)) ​in Turkey last week saw its 32 member countries agree to ​shift the balance ​of responsibility for Europe’s defence to ‌the ⁠alliance’s European members, and away from the United States.

“The (U.S.) disengagement is credit negative ​for ​European ⁠sovereigns,” a report by two of Moody’s ​top rating analysts ​said. ⁠It said the “credit effect” would depend on how the ⁠shift ​was managed ​in the coming years.

Speaking of white guys, here's everyone's favorite albino rocker with "Free Ride (take it easy)":

Drought Severity Continues Slow Improvement

Our area of interest is the agricultural land on either side of the Mississippi river from Canada to the ¿Golfo de América? Roughly from the 100th meridian in the west to a north - south line on Indiana's eastern border (the "First Principal Meridian"), approximately longitude 84° 48′ 50″ west.

 

From the University of Nebraska-Lincoln, July 16:

June 2, 2026:

 

July 14, 2026 (current):

  

Over the period the experimental Drought Severity and Coverage Index (DSCI) has improved from 189 to 153. It was at 156 last week.

"'We Must Act Now': Sixteen Nobel Laureates Join Leading Economists and AI Researchers in Call to Prepare for AI’s Economic Transformation"

Lifted in toto from the Stanford Digital Economy Lab, July 13:

New statement warns that AI could drive an economic transformation larger than the Industrial Revolution — on a vastly shorter timeline — and urges economists, policymakers, and technology leaders to prepare. 

Today, a group of leading economists and AI researchers, including sixteen Nobel Laureates, released “We Must Act Now: A Statement on AI’s Transformation of the Economy,” calling for urgent preparation for the economic impacts of radically more powerful AI.

The statement, organized by economists Erik Brynjolfsson, Ajay Agrawal, Anton Korinek, and Tom Cunningham, warns that increasingly capable AI systems could reshape the economy at unprecedented speed. While AI offers enormous opportunities to improve productivity and living standards, it also raises important questions for workers, firms, and public institutions.

The statement calls on economists, policymakers, and technology leaders to deepen research on AI’s economic impacts and to begin building the policies and institutions needed to ensure AI complements human capabilities and benefits society.

“AI capabilities are advancing far faster than our understanding of the economic implications. In that gap lie the greatest opportunities of our era. We must act now to guide AI to complement humans rather than simply imitate them — and to generate prosperity for the many, not just the few,” said Erik Brynjolfsson, the Jerry Yang and Akiko Yamazaki Professor at Stanford University and Director of the Stanford Digital Economy Lab.

“The scale, scope, and speed of the advances in AI, combined with a high level of uncertainty about the magnitude and timing of the impacts across many parts of the economy, call for an ‘all hands on deck’ approach to steering AI in beneficial directions,” said Michael Spence, Nobel Laureate and Professor Emeritus at New York University.

“I’m so happy to join other leading experts in calling for the urgent need to redirect AI so that its risks are minimized and it can work for the benefit of workers and society,” said Daron Acemoglu, Nobel Laureate and Institute Professor at MIT.

“Steam, electricity, and computers each gave societies decades to adapt; AI may give us only a few years. We cannot improvise our strategy and institutions in the middle of the transformation; waiting for certainty means arriving too late,” said Anton Korinek, Professor at the University of Virginia, currently on leave at Anthropic.

“Whether rapidly advancing AI broadly elevates global living standards or severely concentrates wealth is not predetermined; it depends on how we choose to re-architect our political and economic systems today. We cannot afford to wait for the full transformation to arrive and in the meantime rely on institutional scaffolding that was optimized for a pre-high-fidelity-prediction world,” said Ajay Agrawal, Professor at the University of Toronto’s Rotman School of Management.

“We are driving in the fog, and it is extraordinarily difficult to anticipate what will happen next. It’s the right time for a coordinated effort to bring clarity to a confusing situation.” said Tom Cunningham, Researcher at METR.

The statement has been signed by more than 200 economists and AI researchers from leading universities and AI research organizations around the world. The full statement and the current list of signatories are available at http://wemustactnow.ai/.

As with most of these things, climate, nuclear energy etc. the important/valuable information is not how many people sign something, that's just politics, but rather which of the signers has the most accurate intuition/insight into what is coming.

And that, unlike the political aspect, takes some effort to glean from the mass of names. 

"JPMorgan shifts focus from Hormuz oil chokepoint to Russian refining crisis"

From CryptoBriefing, July 15:

Wall Street's biggest bank says Russian refinery disruptions now pose a greater threat to global oil markets than Strait of Hormuz tensions  

For months, the oil market’s boogeyman was the Strait of Hormuz, that narrow waterway where roughly a fifth of the world’s oil supply squeezes through. JPMorgan has now decided there’s a bigger problem.

The bank’s analysts published a note on July 10 redirecting their focus from Hormuz transit risks to the deteriorating state of Russian refining capacity. Russian refinery runs have dropped to approximately 3.6 million barrels per day, nearly 40% below pre-war levels.

From chokepoints to crackdowns 
JPMorgan had previously warned that sustained disruptions at the Strait of Hormuz could send oil prices to $120 to $150 per barrel. That scenario hasn’t disappeared, but it’s been eclipsed by the systematic degradation of Russian refining infrastructure.

Ukrainian drone strikes, which intensified beginning in March 2026, have hammered Russian refineries with surprising effectiveness. Hormuz represents a potential disruption. Russian refining losses are an actual, measurable supply deficit that’s already reshaping global product markets.
What 40% looks like in practice

A 40% decline in Russian refinery output is staggering when you consider Russia’s role in global energy markets. Before the conflict escalated, Russia was one of the world’s largest refined product exporters, shipping diesel, fuel oil, and other products across Europe, Asia, and beyond.

Losing that much refining capacity doesn’t just affect crude oil prices. It creates a bottleneck further down the supply chain. Crude can still flow, but the facilities needed to turn it into usable fuel are offline. Diesel prices, jet fuel costs, and petrochemical feedstock availability all get squeezed.

The timing also complicates matters for OPEC+, which has been carefully managing production cuts to support prices. If Russian refining stays impaired, the cartel faces a dilemma: increase crude output to compensate for lost products, or hold steady and watch refined product prices climb further.

The macro ripple effects... 

....MORE 

Related:

July 12 - The World Runs On Diesel and Diesel Is Running out

With Russian shipping and refining capacity getting whacked we're seeing crack spreads greater than the price of crude itself.

July 15 - "Ukraine’s Drone War Just Showed Up in the Price of Bread — European Wheat Futures Jumped 4% in a Week"

International Energy Agency: China's Rare Earth Curbs Could Endanger $6.5 Trillion Of Western industry

From Reuters, July 15: 

The full implementation of China's rare earth export restrictions could put $6.5 trillion of downstream production outside the country at risk, the International ​Energy Agency warned on Thursday.

 

China, the world's largest producer of ‌rare earths, expanded export controls in October last year to cover additional materials and introduced new licensing requirements, but later agreed to delay implementation for a year.

 

Rare earths are a group ​of 17 metals used in small quantities, but essential to products ​ranging from cars and aircraft to electronics and weapons systems.

 

If ⁠the controls take full effect, about $6.5 trillion of production across the automotive, ​high-tech, defence and energy sectors could be exposed to supply disruptions, the ​IEA said in its Global Critical Minerals Outlook report.

 

The U.S. and Europe would account for nearly half of the economic impact, the report added. 

"Our latest analysis shows that vast ​amounts of economic value depend on relatively small volumes of critical minerals, ​whose supply chains remain highly concentrated and are therefore vulnerable," IEA Executive Director Fatih Birol ‌said....

....MUCH MORE 

 

And at the IEA, the press release with link to the 373 page PDF:

Supply concentration, export restrictions and declining investment put critical mineral security at risk