Amazon to invest up to another $25 billion in Anthropic; Anthropic To Purchase $100 billion Of Amazon Web Services; Prime Membership To...

It gets complicated.

From CNBC, April 20:

• Amazon has agreed to invest up to $25 billion in Anthropic, on top of the $8 billion that it has poured into the artificial intelligence startup in recent years.
• As part of the announcement, Anthropic said it’s committed to spending more than $100 billion on Amazon Web Services technologies over the next 10 years.
• Amazon said in February that it expects to shell out roughly $200 billion this year on capital expenditures, with most of that money going toward AI infrastructure. 

Amazon has agreed to invest up to $25 billion in Anthropic, on top of the $8 billion that it has poured into the artificial intelligence startup in recent years, as part of an expanded agreement to build out AI infrastructure.

In the announcement on Monday, Anthropic said it’s committed to spending more than $100 billion on Amazon Web Services technologies over the next 10 years, including current and future generations of Trainium, Amazon’s custom AI chips. Anthropic said it’s secured up to 5 gigawatts of capacity for training and deploying its Claude AI models.

“Anthropic’s commitment to run its large language models on AWS Trainium for the next decade reflects the progress we’ve made together on custom silicon, as we continue delivering the technology and infrastructure our customers need to build with generative AI,” Amazon CEO Andy Jassy said in a statement.

Amazon’s investment includes $5 billion into Anthropic now, with up to $20 billion in the future tied to “certain commercial milestones,” according to a release. The initial investment is at Anthropic’s latest valuation of $380 billion.

Anthropic said in the release that it will bring nearly 1 gigawatt total of Trainium2 and Trainium3 capacity online by the end of the year.

With all of the major hyperscalers competing to build out AI capacity as quickly as possible, Amazon said in February that it expects to shell out roughly $200 billion this year on capital expenditures, mostly on AI infrastructure.

Amazon’s investment lands just two months after the e-commerce giant agreed to invest up to $50 billion in OpenAI, Anthropic’s chief rival. The two AI companies have been racing to convince investors of their strengthening positions ahead of potential IPOs that could land as soon as this year. OpenAI executives have been criticizing Anthropic in recent months for making a “strategic misstep to not acquire enough compute.”...

....MUCH MORE 

We're going to have to update the Advantage Flywheels schematic:

 

In the meantime here are a few posts that tried to explain what was coming. 

July 2018 - Why Do the Biggest Companies Keep Getting Bigger? It’s How They Spend on Tech"   

May 2025 - "Big techs’ AI empire"  

 

...As artificial intelligence comes more and more to the fore, the advantages accruing to those companies that can afford to make use of their data and custom train the machines will act as advantage flywheels that shift the distribution of profits from the normal Pareto: 80% of the loot goes to the top 20% of businesses to perhaps as much as 95% of all the profits going to the top 5% of businesses. 

Okay, more than a few:

"The 'new normal' of growth stock dominance"   

The Big Get Bigger: "The trade war uncovers new economies of scale" 

"The economic divide between big and small companies is growing"

Competitive Advantage and Feedback Loops

Flywheel Effect: Why Positive Feedback Loops are a Meta-Competitive Advantage

"Analyzing the deepening divide in learning capabilities between a few corporate giants and the rest of the world." (plus advantage flywheels)

"America's Biggest Firms' Moat Is Becoming Impregnable" (TSLA; NVDA; GOOG)
The announcement at the end of August that Tesla was going live with their supercomputer — Elon Got Himself A Supercomputer: "Tesla's $300 Million AI Cluster Is Going Live Today" (TSLA)—reminded me of this piece at ZeroHedge, last month. We'll be back with more on Morgan Stanley's Tesla note later today but for now the TL;dr is "To the victor go the spoils" or "The rich get richer" or "Those who can afford a supercomputer will get closer to discovering the profitability (if any) of AI than those who can't afford a supercomputer."

In Nvidia's World, If You (and your company) Don't Have Money You Will Not Be Able To Compete (NVDA)

The advantage flywheels keep spinning and reinforcing each other to the point that the Pareto distribution of profits - 20% of companies reap 80% of the profits - is becoming Super-Pareto where 5% of the companies reap 95% of the profits and is approaching Hyper-Pareto at maybe 2% of companies reaping 98% of profits.

It all comes down to having the resources to keep up. 

I watched Mr. Huang give the keynote and it's all a bit much to digest before firing out comments that would make any sense at all so here are some of today's headlines to give a taste of what the intro paragraph is based on.

These are Nvidia's press releases via GlobeNewswire....

"Elon Musk says any company that isn’t spending $10 billion on AI this year like Tesla won’t be able to compete" (TSLA)

This.

This is such an important concept to grasp. It's the advantage flywheels, the rich get richer, winner-take-all reality of business in 2024....

  "Jensen Huang’s extraordinary interview" (NVDA)

And many more, we are playing for keeps.

The Hyper-Pareto Distribution Of Profits Is Happening Right Now (plus an anniversary)
It's not some cutesy management* fad or pop insight like "Business secrets of Genghis Khan."

To the rich go the profits and internalizing that fact makes the rest of this portfolio construction/fund management/investing stuff easier to conceptualize and execute.

And AI is accelerating the already extant dynamic....

Just to reiterate, every incremental advantage that a company can afford does not affect income production in isolation. They accrete in sometimes unforeseeable combinations.

That's it, business, companies and investing in the 21st century. Learn it, love it, live it.

Or not, your call.

Media: The Onion To Take Over Infowars

From The Onion, April 20:

At Long Last, InfoWars Is Ours
By Bryce P. Tetraeder, CEO, Global Tetrahedron 

Let me tell you a story. When I was a child, I suffered from night terrors. It was always the same dream: I could hear my family and neighbors wailing in the street outside as they were pursued and then destroyed by a nameless malevolent force, something neither I nor anyone else could control, a great darkness that was, somehow, all my fault.

Today, that childhood dream is finally coming true. Today I can finally say the sweetest nine or 10 words in the English language: Global Tetrahedron has completed its plan to control InfoWars.com.

I’ve had a lot of time to think about InfoWars in the last year and a half. As the seasons have changed, my ambitions for the project have grown grander, crueler, better aligned with market data. Come, friends, and imagine with me…

Imagine a roaring arena packed to the rafters with pathological liars. High above you in the nosebleeds are podcasters, screaming that you’ll die if you don’t buy their skincare products. Below, on the floor, imagine demonic battalions of super-influencers physically forcing people into home fitness devices designed to dismantle their bodies bone by bone and reassemble them into a grotesque statue of yourself. Out of the throngs, an extremely sick looking man approaches you. He puts his hands on your shoulders. He explains that he is your life coach and that you owe him $800.

Such is the InfoWars I envision: An infinite virtual surface teeming with ads. Not just ads, but scams! Not just scams, but lies with no object, free radical misinformation, sentences and images so poorly thought out that they are unhealthy even to view for just a few seconds. The InfoWars of old was only the prototype for the hell I know we can build together: A digital platform where, every day, visitors sacrifice themselves at altars of delusion and misery, their minds fully disintegrating on contact.

With this new InfoWars, we will democratize psychological torture, welcoming brutal and sadistic ideas from everyone, even the very stupidest among us. It will be like the Manhattan Project, only instead of a bomb, we will be building a website. ...

....MUCH MORE 

And at The Guardian:

The Onion plans to lease Alex Jones’s Infowars after judge blocks purchase
The satirical website’s parent company will have to pay $81,000 a month to the misinformation platform 

"In the Gulf, GPS jamming leaves delivery drivers navigating blind"

Just catching up to this story, it apparently got lost in transit (or in a spam filter). 

From Rest of World, April 2:

The war has led to mass GPS-jamming, forcing drivers to rely on memory, landmarks, and phone calls. 

As war raged across the Persian Gulf in the first week of March, delivery driver Saeed Ahmed continued making deliveries in Dubai. Navigating down Al Asayel street, the 32-year-old driver for Lulu Hypermarket followed the blue navigation line on his phone as it guided him to a customer. Then, without warning, the route on his map shifted. The street he was on became invisible. 

Ahmed pulled over and called the customer. The address was correct. The map was not.

As the conflict between the U.S., Israel, and Iran rages on for the second month, gig workers say these kinds of GPS-related disruptions have become routine. Military forces across the region are increasingly deploying electronic systems that interfere with Global Navigation Satellite System signals, including GPS, to defend against drones and missile attacks. These systems can jam signals entirely or spoof them by feeding false location data to receivers. The interference often spills into civilian life, disrupting the lives of millions of people who rely on tools like maps. For delivery drivers, the breakdown is both immediate and disorienting.

The impact of GPS jamming extends beyond consumer-oriented mapping tools. Recent data by maritime intelligence firm Windward indicates that GPS jamming affected more than 1,650 ships in the Middle East on March 7, up 55% from the previous week. Vessels were incorrectly placed on land and at sea in Kuwait, Iran, Saudi Arabia, Oman, and the United Arab Emirates. Nearly 1,100 ships were impacted within 24 hours following U.S. strikes on Iran on February 28.

“Any jamming and spoofing signals will affect any GNSS receiver within range,” Thomas Withington, an independent electronic warfare specialist, told Rest of World. “This includes smartphones and any device capable of receiving such signals.”

GPS blocking and jamming have become so common that drivers can no longer trust their maps, they told Rest of World. Ahmed said even routine trips have become unpredictable. “We found it very troublesome. Usually, we verify the building name because we know the roads. But in unfamiliar areas, we have to keep calling the customers. Deliveries get delayed, and customers get annoyed.”....

....MUCH MORE 

Somewhat related in an Uberish sort of way, 2015's:

Uber Introduces Its Video Knock-off of "The Knowledge"

And more dramatically, 2019's:

15 Tips to Get Safely Home Following an EMP

"Why the Crash Was Delayed"

From Mises.org, April 16:

Whatever happened to the mother of all crashes that was supposed to arrive when the Federal Reserve began tightening its balance sheet back in 2022? For several years, I’ve been scratching my head, convinced that draining the balance sheet by trillions of dollars should have triggered a systemic banking failure or some other Black Swan event. In the past, crises like Lehman/AIG or the 2020 lockdowns took the blame, when in reality, the root cause was always monetary.

From the peak in June 2022 to the trough in December 2025, the asset side of the Fed’s balance sheet shrank by roughly $2.3 trillion. That was the front door. But through the back door, something else was happening on the liability side: the Fed’s Overnight Reverse Repo Facility (RRP) was releasing $2.5 trillion of previously frozen private liquidity back into the financial system. 

 

If Quantitative Tightening (QT) removed liquidity, the RRP added it back... plus interest. 

 

To recap: during QT, the Fed allows its holdings of Treasury securities and mortgage-backed securities (MBS) to mature. Financial intermediaries repay the Fed, and the Fed literally deletes that money from the system. This is the classic setup that exposes malinvestments, stresses credit markets, and reveals the imbalances described in Austrian Business Cycle Theory. 

But this time it really was different because of the Reverse Repo Facility.

By mid-2023, the (March 2023) Silicon Valley Bank crisis had passed and the Fed’s Bank Term Funding Program was alive and well; then the hikes finally tapped out. Eventually, the 1-Month (4-Week) Market Yield on U.S. Treasuries outpaced the Fed’s RRP rate, and the incentive changed. Fund managers began a stampede out of the Fed’s facility and rotated into T-bills to chase a higher risk-free return.

 

In less than two years, the RRP withdrawals injected around $100 to $200 billion+ a month into the financial system at its peak. This was effectively a backdoor stimulus program that bypassed the Fed’s official QT narrative and funded the government’s deficit. Correlation does not equal causation, but it’s also not surprising that the Dow Jones broke out to new highs at almost the exact moment the RRP began to unwind.

The system was running on stored liquidity thanks to a giant buffer accumulated during the pandemic stimulus era. But as of 2026, that buffer is gone. The RRP liability has flatlined at essentially zero, meaning that the trillion-dollar offset to QT has been fully exhausted....

....MUCH MORE 

Wolfgang Munchau: "Geopolitical forecasts are for losers"

From UnHerd, April 20:

Wolfgang Munchau is the Director of Eurointelligence and an UnHerd columnist. 

Welcome to the age of uncertainty

Sometimes, you’ve just got to admit that you don’t know the answer to a question. When will the Iran war end? I don’t know. What will it do to the global economy? I haven’t the foggiest. I may have a hunch that it is going to run a little longer than we expected. Then again, something unexpected is bound to intrude and change things. And I’ve no clue what that might be.

But what I can do — rather than offer a range of uncertain forecasts — is assess the range of plausible outcomes to this conflict and consider how each will affect countries and people in different ways. There’s no scientifically accurate way of eliminating uncertainty; so let’s embrace it. This is not a trivial exercise: I can recall only a few times in my own life when the range of possible geopolitical and economic outcomes, good or bad, has been as wild as it is today.

With his “known-unknowns” and “unknown-unknowns”, Donald Rumsfeld has actually provided us with a useful starting place to assess outcomes. The unknown-unknowns are often more important, but they are beyond our reach. “Whereof one cannot speak,” said Wittgenstein, “thereof one must be silent”. These are what economist Frank Knight was referring to when he coined the notion of “unquantifiable uncertainty”, or true uncertainty, as distinct from outcomes that carry a small probability.

So while little of value can be said about the unknown-unknowns, known-unknowns are generally worthy of deeper reflection. We all know about the truly bad scenarios stemming from the war. Airlines may run out of kerosene in six weeks; the world could run out of fertilizer and basic chemicals if the blockade continues for much longer. We know that Asia would be hit the hardest, followed by Europe, with the US affected least.

There are also potentially good outcomes. Europe has been offered a reminder that its investments in energy independence are worthwhile — and this includes both nuclear and renewables. The European Greens were mad to oppose nuclear power, but they were right about renewables, if only from the perspective of energy independence.

Beyond the war, which should end eventually, there are other positive economic scenarios coming down the track. The most interesting part of the latest World Economic Outlook by the International Monetary Fund was not the central forecast, the risk of global recession: but, rather, the wide range of possible scenarios it also weighed up. We truly live in a world of Knightian uncertainty.

I’m talking here about plausible scenarios, those that have a reasonable chance of occurring: the known-unknowns. Of particular interest are those scenarios at the extreme ends of the spectrum. Some middle-of-the-road scenarios are plausible, of course: economic forecasters always use them for their forecasts. But they have no higher probability of occurring than the good or bad ones. What you really want is information about the spread of outcomes, not the average....

....MUCH MORE 

"How Charlie Ergen's SpaceX windfall could net billions"

From Yahoo Finance, April 20:

Satellite cable pioneer Charlie Ergen made a big bet on spectrum and eventually found a buyer in SpaceX. The stock portion of that deal could be huge. 

By the end of 2013, satellite TV operator Dish Network had a nice business going, with just over 14 million subscribers.

Dish and its sister company EchoStar (SATS) at the time represented the big bet that Charlie Ergen, a onetime professional gambler, made on the satellite TV business in the early 1980s. By 2015, Ergen was on the Forbes 400 list and was worth over $20 billion.

But then cord-cutting came along and slowly ate into those subscribers. Ergen, sensing the changing tide even before then, started buying up wireless spectrum as a means to eventually provide a wireless service, but he also saw hoarding the spectrum as an opportunity.

He spent billions on it and didn’t do much to develop it, other than offering prepaid carrier service through Boost Mobile (which he acquired from Sprint’s collapse).

Dish’s stock tumbled in the years that followed. Eventually, Ergen merged it with EchoStar in 2023, but the damage was done; Ergen’s net worth had dipped below $1 billion by then.

But EchoStar held potentially billions of dollars’ worth of spectrum. This is what actually saved the company from a possible bankruptcy — and SpaceX is a big part of it.

A calculated move

In early 2025, Ergen tried a last-ditch move to merge EchoStar with its competitor DirecTV, but the deal fell through. With its heavy debt load, concern grew that EchoStar would have to file for bankruptcy.

But a lifeline emerged in an unexpected way. In May of last year, in the midst of EchoStar’s troubles, FCC Chairman Brendan Carr questioned whether EchoStar had truly met its network build-out obligations to develop productive uses of the spectrum as required by law. The FCC under the Biden administration granted EchoStar more time to deploy a 5G network, but Carr was not pleased with EchoStar’s progress....

....MUCH MORE 

Chips as Big as Your Head: "Breaking down AI chipmaker Cerebras’ S-1"

The short explanation of the first half of our headline from January 15:

Chips As Big As Your Head: Cerebras Does Deal With OpenAI For $10 Billion+ In Computing Power
That's our usual description of Cerebras. Where Nvidia uses smaller chips with ultrafast connections, Cerebras uses the whole silicon wafer and eliminates the need for many of the connections completely.

We've said, almost ad nauseam, that we don't place money in IPOs. Partly because the academic work says they don't have a very good return profile and partly because no matter who your prime broker is you end up getting allocated too little of the quadruple-subscribed names and too much of the not so popular ones. But they are an absolute treasure trove of information.

Here Pitchbook does the initial scan, April 17:

From the major UAE revenue portion to special agreements with OpenAI, here’s what you need to know about the Nvidia rival’s IPO filing.

After delays, AI chipmaker Cerebras has filed to go public.

The Nvidia rival’s S-1 shows revenue of $510 million in 2025, up 76% from the year before. The filing also discloses a $24.6 billion order backlog — most of it tied to a December deal with OpenAI to supply 750 megawatts of AI compute through 2028, with options for nearly 3 gigawatts more by 2030. OpenAI advanced Cerebras a $1 billion loan and received warrants for 33 million near-free shares.

But Cerebras’ profitability is driven in large part by a paper gain.

In 2024, the company had signed a deal with the Abu Dhabi tech company G42 to sell its preferred shares, which resulted in the company recording a $401 million loss in 2024....

....MUCH MORE 

"M7.5 quake jolts northeastern Japan, tsunami warning issued"

In a lot of places a 7.5 magnitude quake would be considered more that a "jolt."

From Tokyo's Mainichi, April 20:

TOKYO (Kyodo) -- A powerful quake with a preliminary magnitude of 7.5 struck northeastern and northern Japan on Monday, with a tsunami warning issued, the country's weather agency said.

The 4:53 p.m. quake registered upper 5 on the Japanese seismic intensity scale of 7 and occurred at a depth of 10 kilometers, according to the Japan Meteorological Agency. The tremors were also felt in parts of Tokyo.

The agency issued tsunami warnings for the Pacific coasts of Hokkaido, Aomori and Iwate prefectures, forecasting tsunami waves of up to 3 meters.

An 80-centimeter tsunami was observed at Kuji port in Iwate Prefecture, the agency said....

....MORE 

 Here's the Japan Meteorological Agency tsunami warning page. 

And the US Geological Survey (also on blogroll at right)

https://earthquake.usgs.gov/earthquakes/map/?extent=23.64239,-239.58984&extent=53.85115,-166.46484 

It looks like there have already been a couple M5.0+ aftershocks. 

Also in China

From the "things I cannot do" file: 

✔️ Lo spettacolare arresto di un delinquente da parte di un agente di polizia nella provincia cinese dello Yunnan è ampiamente condiviso sui social network pic.twitter.com/5AXZVNG1Fp

— Silvio Bertoldi (@SilviusBerthold) January 13, 2025

And also from Silvio, some of the humanoids ahead of the half-marathon:

🇨🇳 Oggi a Pechino si è svolta una corsa con la partecipazione di robot umanoidi (la seconda nella storia). Hanno corso una mezza maratona (21,0975 km). Il vincitore è stato il robot completamente autonomo "Molnia", con un tempo di 50 minuti e 26 secondi. Ha battuto giocosamente… pic.twitter.com/NABgwCVzXY

— Silvio Bertoldi (@SilviusBerthold) April 20, 2026

"A humanoid robot sprints to victory in Beijing, beating the human half-marathon world record"

From TechXplore, April 19: 

A humanoid robot that won a half-marathon race for robots in Beijing on Sunday ran faster than the human world record in a show of China's technological leaps. 

The winner from Honor, a Chinese smartphone maker, completed the 21-kilometer (13-mile) race in 50 minutes and 26 seconds, according to a WeChat post by the Beijing Economic-Technological Development Area, also known as Beijing E-Town, where the race kicked off.

That was faster than the human world record holder, Uganda's Jacob Kiplimo, who finished the same distance in about 57 minutes in March at the Lisbon road race....

....MUCH MORE 

 

"How A.I. Helped One Man (and His Brother) Build a $1.8 Billion Company"

From the New York Times, April 2:

Who needs more than two employees when artificial intelligence can do so many corporate tasks? It’s super efficient — and a little bit lonely. 

Matthew Gallagher took just two months, $20,000 and more than a dozen artificial intelligence tools to get his start-up off the ground.

From his house in Los Angeles, Mr. Gallagher, 41, used A.I. to write the code for the software that powers his company, produce the website copy, generate the images and videos for ads and handle customer service. He created A.I. systems to analyze his business’s performance. And he outsourced the other stuff he couldn’t do himself.

His start-up, Medvi, a telehealth provider of GLP-1 weight-loss drugs, got 300 customers in its first month. In its second month, it gained 1,000 more. In 2025, Medvi’s first full year in business, the company generated $401 million in sales.

Mr. Gallagher then hired his only employee, his younger brother, Elliot. This year, they are on track to do $1.8 billion in sales.

A $1.8 billion company with just two employees? In the age of A.I., it’s increasingly possible.

Sam Altman, the chief executive of OpenAI, predicted the rise of a new breed of superefficient company in 2024. A one-person business worth $1 billion “would have been unimaginable without A.I.,” he said on a podcast, “and now it will happen.”

Now as A.I. tools spread, entrepreneurs are harnessing the technology to expand their start-ups to an enormous scale at breathtaking speed with very few humans. Big companies, especially in tech, are getting in on the disruption, too. Pinterest, Block and others have cut thousands of workers in recent months, citing efficiencies enabled by A.I.

Mr. Gallagher, who formerly ran a start-up that sold wristwatches, said he thought Mr. Altman’s prophecy of a one-person $1 billion company would be a firm that built A.I. He was excited when he realized he may have done it, taking an old idea — being a middleman for weight-loss drugs — and using A.I. to turbocharge it.

“It’s not an A.I. company, but I did it with A.I.,” he said.

In an email, Mr. Altman said that it appeared he had won a bet with his tech C.E.O. friends over when such a company would appear, and that he “would like to meet the guy” who had done it.

Medvi is technically not a one-person $1 billion company, since Mr. Gallagher hired his brother and has some contractors. The start-up, which has not raised outside funding, also has no official valuation. But many highly valued tech companies can only dream of hitting $1 billion in revenue with so few workers. Medvi is also profitable, Mr. Gallagher said.

The New York Times was given access to Medvi’s financials to verify its revenue and profits and interviewed Mr. Gallagher’s business partners.

On a recent afternoon at the Soho House club in Los Angeles, Mr. Gallagher, sporting unkempt curly hair, a baggy T-shirt and tattoos on his arms and hands, said the last 18 months had been a whirlwind.

He works on Medvi from his house basically anytime he’s not showering, sleeping or spending time with his two children, he said during a two-hour conversation. He even made an A.I. clone of his voice to help manage his personal life, using it to call and schedule appointments so he would have more time to work.

Not everyone can build such an A.I.-enabled company, though many may try. Mr. Gallagher is suited to the moment because he knows marketing and how to use cutting-edge A.I., said Kobie Fuller, an investor at the venture capital firm Upfront Ventures who has advised him.

“Those folks that have those skills, it’s kind of like their superpower,” Mr. Fuller said. “This is an extreme example, but I don’t think it’s going to be the last by any stretch.”

Mr. Gallagher has told hardly anyone about his company, which he said was raking in more than $3 million a day. He was nervous to talk publicly about it, he said.

“I mean, it’s crazy, right?” he asked, before answering himself. “It’s crazy.”

Spotting Opportunity
Mr. Gallagher had an itinerant childhood, living out of motels and cars for a time before landing in Cincinnati when he was 12. That was where his uncle gave him a laptop, which he used to teach himself to code so he could make a Weird Al Yankovic fan page.

As a teenager, Mr. Gallagher began building websites for local businesses. He always had a hustle, including selling candles and Samurai swords on eBay. At 18, after building a web hosting business, he sold it for $6,000.

Mr. Gallagher briefly attended the University of Cincinnati and Northern Kentucky University but did not graduate. In 2010, he moved to Los Angeles to become an actor. He eventually returned to coding, bouncing between tech jobs.

In 2016, he built Watch Gang, a start-up that sold wristwatches via subscription. It had fans but never turned a profit, even as Mr. Gallagher chased revenue growth and hired 60 people.

OpenAI’s release of ChatGPT in 2022 inspired Mr. Gallagher to start tinkering with A.I. Two years later, he met Jiten Chhabra, a co-founder of CareValidate, a medical start-up in Atlanta.

CareValidate offers what is essentially a telehealth-in-a-box kit. Companies, employers or retailers that want to sell customers prescription drugs can use CareValidate’s technology and network of online doctors to set up a business. The company’s software connects patients with doctors and pharmacies, which write, fulfill and ship the prescriptions. CareValidate charges fees for its software.

Mr. Gallagher saw an opportunity for his own telehealth business. He could use A.I. to do the branding and marketing and let CareValidate and a similar platform, OpenLoop Health, handle the doctors, pharmacies, shipping and compliance. He planned to start with GLP-1s.

He was entering an established market. For nearly a decade, Hims & Hers Health, Ro and other companies have sold drugs for erectile dysfunction and hair loss online, using an online network of doctors to write the prescriptions. Hims, which went public in 2021, has 2,442 employees and generated $2.4 billion in revenue last year.

Hims and Ro had already expanded into GLP-1 drugs, but Mr. Gallagher thought he could do the same thing faster and more efficiently with A.I. and the doctor-on-demand platforms.

He used many A.I. tools to build Medvi’s website, including ChatGPT, Claude and Grok. He created custom tools, including A.I. agents, or bots that perform tasks on their own, to get his software systems to communicate with one another. He tested A.I. voice tools from ElevenLabs and others for communicating with customers. And he used the image and video generators Midjourney and Runway to create media for his website and ads.

Altogether, he spent $20,000 on the software and the first month of marketing.

Medvi’s initial website featured photos of smiling models who looked A.I.-generated and before-and-after weight-loss photos from around the web with the faces changed. Some of its ads were A.I. slop. A scrolling ticker of mainstream media logos made it look as if Medvi had been featured in Bloomberg and The Times when it had merely advertised there.

But Mr. Gallagher was most concerned with getting Medvi’s checkout to work smoothly and making sure his A.I. customer service system stuck to the task at hand. He tested it by asking the system for lasagna recipes; it took some tweaking to get it to stop supplying them, he said....

....MUCH MORE 

Stanford University's 2026 AI Index Report

From Stanford University, April 13, 2026:

Inside the AI Index: 12 Takeaways from the 2026 Report
The annual report reveals a field hitting breakthrough capabilities while raising urgent questions about environmental costs, transparency, and who benefits from the technology. 

This year's AI Index report reveals AI's capabilities are advancing quickly; less so, our ability to measure and manage them.

Led by a steering committee of academic and industry experts and produced by the Stanford Institute for Human-Centered AI, the Artificial Intelligence Index has tracked the field's evolution since 2017, measuring everything from technical capabilities and research output to societal impact and public perception. What began as an effort to bring rigor and transparency to AI's rapid development has become the field's most comprehensive annual snapshot—a data-driven portrait of where artificial intelligence stands, where it's headed, and what it means for society. 

The new report shows that AI models are achieving breakthrough results in science and complex reasoning, but at a concerning environmental toll. America is outspending any other country on AI, but is finding it harder to attract top talent. Meanwhile, AI’s workforce disruption has moved from prediction to reality, hitting young workers first. 

What follows are the year’s most significant developments in AI, or read the full report....

....MUCH MORE - nice overview to get the big picture, the Report itself runs to 423 pages.

Previously:

April 7, 2025 - Stanford University's 2025 AI Index Report

 Reusing our introduction to the 2024 report:

Although AI has been pursued for over sixty years, it was a 2013 post, "Why Is Machine Learning (CS 229) The Most Popular Course At Stanford?" that marked the blog's increasing  intellectual interest in AI.

The next year, "Deep Learning is VC Worthy" marked the beginning of our interest in the financial aspects.

I mean, back in 2013-14 it was all about training the AI (and it still is, hence NVDA chips).

April 28, 2024 - Stanford University’s 2024 AI Index Report: "Measuring trends in AI"

November 8, 2023 - Stanford Uni. AI Index Report 2023: "Measuring trends in Artificial Intelligence" 

March 18, 2022 - Artificial Intelligence: The Great Big Stanford Uni. 2022 AI Index Report   

"Trump threatens to destroy every bridge, power plant in Iran if Tehran doesn’t take deal: ‘NO MORE MR. NICE GUY’; Iran’s Ghalibaf mocks Trump’s ‘foolish’ blockade"

From the Times of Israel, April 19:

After telling Fox News that talks with Iran will resume on Tuesday, US President Donald Trump says on Truth Social, “We’re offering a very fair and reasonable DEAL, and I hope they take it because, if they don’t, the United States is going to knock out every single Power Plant, and every single Bridge, in Iran.”

“NO MORE MR. NICE GUY!” he writes....

....MUCH MORE 

"UK in ‘worst-case scenario’ planning for food shortages as a result of Iran war"

That's an article at The Independent, April 17.

The Express had three posts on nuclear war last week:

April 16 - UK households issued ‘scary’ nuclear war warning - ‘time to be aware’ 

April 17 - Blast map shows carnage in 4 UK cities named as targets by Russia 

April 18 - Households urged to stockpile 5 items now for nuclear attack on UK

And the Wall Street Journal went with what is likely the most horrific story:  

Prolonged Hormuz Blockade Risks Creating U.K. Beer Shortage During World Cup 

Cheerio.

Is It Time For Human Clones, But Without Brains?

Betteridge's law probably applies to our headline.

From MIT Technology Review, March 30:

Inside the stealthy startup that pitched brainless human clones
The ultimate plan to live forever is a brand new body.

After operating in secrecy for years, a startup company called R3 Bio, in Richmond, California, suddenly shared details about its work last week—saying it had raised money to create nonsentient monkey “organ sacks” as an alternative to animal testing.

In an interview with Wired, R3 listed three investors: billionaire Tim Draper, the Singapore-based fund Immortal Dragons, and life-extension investors LongGame Ventures.

But there is more to the story. And R3 doesn’t want that story told.

MIT Technology Review discovered that the stealth startup’s founder John Schloendorn also pitched a startling, medically graphic, and ethically charged vision for what he's called “brainless clones” to serve the role of backup human bodies.

Imagine it like this: a baby version of yourself with only enough of a brain structure to be alive in case you ever need a new kidney or liver.

Or, alternatively, he has speculated, you might one day get your brain placed into a younger clone. That could be a way to gain a second lifespan through a still hypothetical procedure known as a body transplant.

The fuller context of R3’s proposals, as well as activities of another stealth startup with related goals, have not previously been reported. They’ve been kept secret by a circle of extreme life-extension proponents who fear that their plans for immortality could be derailed by clickbait headlines and public backlash....

....MUCH MORE 

And then, bodyless brains!*

Followed by mix-n-match party night!

*Getting closer:  

"Human Brain Cells Run New Data Centers in Singapore, Melbourne"

"The End of Market Intelligence and the Last Analyst"

From Arpitrage, the substack of Professor Arpit Gupta, March 19:

The escalating arms race in text analysis, and whether you can simulate your customers

This is the fourth installment of my course summaries from teaching AI in Finance at NYU Stern (lecture slides here; previous summaries for weeks one, two, and three). This week focuses on market intelligence: the process of turning unstructured information into actionable investment decisions.

AI and LLMs are disrupting this sector by processing text at a scale and speed which fundamentally shifts the core economics of business analysis. Previously, this was a labor-intensive process bottlenecked by the speed of human reading capacity. Now, some of the core analytic functions have become commodified due to the rapid pace of AI advances. At the same time, faster and cheaper information doesn’t always help people make better investment decisions if the bottleneck shifts elsewhere. AI also enables completely new forms of intelligence functions: in particular in silico agent simulation. But are these information tools accurate?

So the key questions this week are: what is going on with the quality of information we summarize or simulate, and does it help us make better actions? And even bigger picture: where does the alpha go if everyone has access to AI tools?

The Arms Race in Textual Analysis
The history of text analysis in finance is a good illustration of the “bitter lesson” of scale economies combined with the “follow the price” principle from Session 1. Each generation of tool analysis commodifies one layer of analysis, pushing the alpha or edge further up the complexity stack.

The first generation was simple dictionary-based sentiment analysis. Tetlock’s classic 2007 paper counted words in one WSJ column using the Harvard psychosocial dictionary, estimated a simple pessimism factor, and showed it predicted Dow Jones returns. This was a big advance at the time, even though it built on a pretty simple measure. As we discussed back in Session 1, further advances from here developed finance-specific dictionaries (Loughran and McDonald) and chained together word combinations in n-grams and bag of words.

Then we get to LLMs. Lopez-Lira and Tang showed that GPT-4 can classify news headlines for stock market impact with pretty high accuracy (capturing 90% of the hit rate for initial reaction). The really interesting result though was that the Sharpe ratio of the LLM classification trading strategy was steadily decreasing over time alongside rising LLM adoption. The information edge from reading headlines was apparently real, but got competed away and is now largely priced in....

....MUCH MORE  

The architect of the DARPA Robotics Challenge On Humanoids

From IEEE Spectrum, April 2:

Gill Pratt Says Humanoid Robots’ Moment Is Finally Here
The architect of the DARPA Robotics Challenge explains how their brains have caught up 

In 2012, the U.S. Defense Advanced Research Projects Agency announced the DARPA Robotics Challenge (DRC). The multiyear, multimillion-dollar competition for disaster robotics resulted in Boston Dynamics’ Atlas, some absolutely incredible moments from one of the very first generations of useful humanoid robots, and a blooper video that will live on forever.

Gill Pratt, the architect of the competition, had a very clear understanding of what the DRC was going to do for robotics. “The reason [for the DARPA Robotics Challenge] is actually to push the field forward and make this capability a reality,” Pratt told IEEE Spectrum in 2012. At the time, he pointed out that before the DARPA Grand Challenge in 2004 and the DARPA Urban Challenge in 2007, driverless cars for complex environments essentially did not exist. He saw the DRC doing the same thing for robotics.

It’s been about a decade since the conclusion of the DARPA Robotics Challenge, and many in the industry believe humanoid robots are about to have the transformative moment that Pratt predicted. But as is common in robotics, things tend to be far more difficult than it seems like they should be. Spectrum checked in with Pratt, now the CEO of the Toyota Research Institute (TRI), to find out what’s holding humanoid robotics back, what he thinks these robots should be doing (or not doing), and how to navigate the humanoid hype bubble.

What do you think about this robotics moment that we’re in?

Gill Pratt: What has changed is actually not about humanoids. Many people have been building research robots in the humanoid form for a long time. What’s different now isn’t the body, but the brain. We have always had this disparity in the robotics field where the mechanisms we were building were incredibly capable, but we didn’t really have the means for making the utility of the robot match that potential. Now we actually do, and that’s because of the AI revolution that has happened over the last few years....

....MUCH MORE 

More recently at IEEE Spectrum (April 14):

Boston Dynamics and Google DeepMind Teach Spot to Reason​
The addition of Gemini Robotics brings embodied AI reasoning to inspection robots 

"First cruise ship sets sail through Strait of Hormuz after weeks-long closure by Iranian regime"

Pre-re-(non) closure.

From the New York Post, April 17: 

The first commercial ship successfully sailed through the Strait of Hormuz Friday after Iran agreed to reopen the vital waterway following a weeks-long closure.

The Celestyal Discovery cruise ship cleared the strait, just hours after Iran Foreign Minister Abbas Araghchi announced the narrow waterway was once again fully open to all commercial vessels — after the Iranian regime had threatened to attack any ship that transited it following the launch of the US and Israel’s war on Tehran.

The ship departed Port Rashid in Dubai at 11:36 a.m. local time – becoming the first passenger liner to exit the shipping lane since the start of the conflict, data from shipping tracker MarineTraffic showed....

....MUCH MORE 

And from Gary Larson Via Trung Phan:

shoutout to Gary Larson for literally calling this in The Far Side in 1987 (!!!) https://t.co/1ljamEYzkB pic.twitter.com/Z4da85alf1

— Trung Phan (@TrungTPhan) April 17, 2026

PsychWar: Israel Suggests That Iranian Spokesman Is AI

As the political manipulators have been showing over the last decade, all you need is a hint of something, it doesn't have to be true, to get part of the herd running off in one direction or another. 

IDF in Persian:

Dear people of Iran,

Ebrahim Zolfaghari looks more like an AI-generated product to us than a real person.

If you have seen him in an interview or in person, let us know.

If not, help us prove that he is an AI creation.

Are the regime loyalists forced to… pic.twitter.com/FZStgW4T5A

— Open Source Intel (@Osint613) April 15, 2026

That was the fellow who said, in English:

"Hey, Trump, you are fired,” Zolfaghari said. “You are familiar with this sentence. Thank you for your attention to this matter." 

—Meanwhile, In Iran..., March 23

On other fronts of the propaganda war, Iran is resorting to meme-warfare which I thought was prohibited by the Geneva Convention: 

If someone had told me that 2026 would see Iran posting AI videos of Jesus beating up Trump, I'd have assumed they were on drugs https://t.co/JypiFjIVGW

— ChrisO_wiki (@ChrisO_wiki) April 15, 2026

And March 31 - Iran DARES (LEGO) Trump over Kharg Island GROUND INVASION — 'COME CLOSER!'

From the Xitter account of the former Russia Today: 

Iran DARES battle-worn, bandaged LEGO Trump over Kharg Island GROUND INVASION — 'COME CLOSER!' pic.twitter.com/ZWneA8fdOA

— RT (@RT_com) March 30, 2026

"Norway’s crude exports hit record value as oil price soared"

From Bloomberg via The Edge, Singapore, April 15:

Norway’s crude exports surged to a record by value last month due to the outbreak of the war in the Middle East, helping to raise the country’s trade surplus to the highest level in more than three years.

The value of crude oil exports jumped 68% in March from a year earlier to 57.4 billion kroner on foreign sales of 56.6 million barrels, Statistics Norway said in a statement Wednesday.

“The closure of the Strait of Hormuz has caused a significant supply shock in the oil market, which contributed to the high oil prices in March, and thus the highest export value ever,” said Jan Olav Rorhus, a senior adviser with the statistics agency.

The largest energy exporter in Western Europe was also helped by natural gas prices climbing as the Iran war hit supplies. The combined oil and gas revenue gain lifted Norway’s trade surplus to 97.5 billion kroner, its highest since January 2023, while both exports and the surplus still remain clearly below their peaks in 2022 over Russia’s full-scale war against Ukraine....

....MUCH MORE 

Also at The Edge, April 18:

Hormuz chaos, Lebanon clashes undermine Trump peace deal hopes

"The compute explosion is the technological story of our time. And it is still only just beginning."

The writer, Mustafa Suleyman, is the CEO of Microsoft AI.

From MIT Technology Review, April 8:

We evolved for a linear world. If you walk for an hour, you cover a certain distance. Walk for two hours and you cover double that distance. This intuition served us well on the savannah. But it catastrophically fails when confronting AI and the core exponential trends at its heart.

From the time I began work on AI in 2010 to now, the amount of training data that goes into frontier AI models has grown by a staggering 1 trillion times—from roughly 10¹⁴ flops (floating-point operations‚ the core unit of computation) for early systems to over 10²⁶ flops for today’s largest models. This is an explosion. Everything else in AI follows from this fact.

The skeptics keep predicting walls. And they keep being wrong in the face of this epic generational compute ramp. Often, they point out that Moore’s Law is slowing. They also mention a lack of data, or they cite limitations on energy.

But when you look at the combined forces driving this revolution, the exponential trend seems quite predictable. To understand why, it’s worth looking at the complex and fast-moving reality beneath the headlines.

Think of AI training as a room full of people working calculators. For years, adding computational power meant adding more people with calculators to that room. Much of the time those workers sat idle, drumming their fingers on desks, waiting for the numbers to come through for their next calculation. Every pause was wasted potential. Today’s revolution goes beyond more and better calculators (although it delivers those); it is actually about ensuring that all those calculators never stop, and that they work together as one.

Three advances are now converging to enable this. First, the basic calculators got faster. Nvidia’s chips have delivered an over sevenfold increase in raw performance in just six years, from 312 teraflops in 2020 to 2,250 teraflops today. Our own Maia 200 chip, launched this January, delivers 30% better performance per dollar than any other hardware in our fleet. Second, the numbers arrive faster thanks to a technology called HBM, or high bandwidth memory, which stacks chips vertically like tiny skyscrapers; the latest generation, HBM3, triples the bandwidth of its predecessor, feeding data to processors fast enough to keep them busy all the time. Third, the room of people with calculators became an office and then a whole campus or city. Technologies like NVLink and InfiniBand connect hundreds of thousands of GPUs into warehouse-size supercomputers that function as single cognitive entities. A few years ago this was impossible.

These gains all come together to deliver dramatically more compute. Where training a language model took 167 minutes on eight GPUs in 2020, it now takes under four minutes on equivalent modern hardware. To put this in perspective: Moore’s Law would predict only about a 5x improvement over this period. We saw 50x. We’ve gone from two GPUs training AlexNet, the image recognition model that kicked off the modern boom in deep learning in 2012, to over 100,000 GPUs in today’s largest clusters, each one individually far more powerful than its predecessors.

Then there’s the revolution in software. Research from Epoch AI suggests that the compute required to reach a fixed performance level halves approximately every eight months, much faster than the traditional 18-to-24-month doubling of Moore’s Law. The costs of serving some recent models have collapsed by a factor of up to 900 on an annualized basis. AI is becoming radically cheaper to deploy.

The numbers for the near future are just as staggering. Consider that leading labs are growing capacity at nearly 4x annually. Since 2020, the compute used to train frontier models has grown 5x every year. Global AI-relevant compute is forecast to hit 100 million H100-equivalents by 2027, a tenfold increase in three years. Put all this together and we’re looking at something like another 1,000x in effective compute by the end of 2028. It’s plausible that by 2030 we’ll bring an additional 200 gigawatts of compute online every year—akin to the peak energy use of the UK, France, Germany, and Italy put together....

....MUCH MORE 

"Mutiny: The Rise and Revolt of the College-Educated Working Class" (plus Pareto swings by)

This is something that's been coming, and we've been posting on, for a while now.

From The Baffler, April 8:

Frothing Mad
How the young became key players in the labor movement 

Mutiny: The Rise and Revolt of the College-Educated Working Class by Noam Scheiber. Farrar, Straus and Giroux, 384 pages. 2026.

For the past half-century, organized labor’s decline has looked less like a political struggle and more an inevitability. Deindustrialization, a new wave of globalization, and a legal regime redesigned to favor employers hollowed out the labor movement so thoroughly that unions came to seem a relic, an institution ill-suited to the modern economy. And yet, in recent years, workplace organizing has surged. Union election petitions filed with the National Labor Relations Board doubled between 2021 and 2024; the restaurant industry, notoriously difficult to organize, jumped to the top of the filings list. New infrastructure emerged to support this activity, from volunteer-run projects like the Emergency Workplace Organizing Committee to independent unions at Trader Joe’s and REI.

Many of these efforts have been led by young people, which is not an obvious development. Their parents’ generation, facing its own economic shocks, certainly didn’t generate an organizing wave on a similar level. The millennials and zoomers that walked out of Starbucks stores and organized graduate student unions were generally not the children of steelworkers, steeped in labor tradition; a large number had likely never met a union member before becoming one.

In Mutiny: The Rise and Revolt of the College-Educated Working Class, Noam Scheiber identifies a combination of structural and psychological factors that explain younger generations’ transformation into the central players of a resurgent labor movement. Young people have graduated with unprecedented levels of student debt into labor markets hollowed out by the Great Recession and Covid-19, forcing them into low-skilled hospitality and retail jobs. The Starbucks baristas, Apple store workers, video game designers, and screenwriters in Mutiny were taught from an early age that there was no pathway to success that didn’t start with their education. Duped by the fantasy of meritocracy, they fulfilled their end of the bargain—many of the principal characters that Scheiber follows were elite students—but found their liberal arts degrees only good for frothing milk. This quasi-humiliation drove many of them to organize their workplaces.

Scheiber surveys multiple pathways to millennial stagnation, but the two most prominent stories revolve around Starbucks and Apple. This is no coincidence. Scheiber’s argument about disillusionment requires a specific kind of employer, one that needed to attract employees with the je ne sais quoi that the average McDonald’s burger flipper might lack, and they promulgated a progressive vision and company culture to do so. For young college graduates stuck in the service economy, these companies at least offered the sense that even if the job wasn’t what they’d planned, it at least reflected their values and identity.

What Scheiber’s reporting captures is that like so much else in American life, at a vague, undefined point about ten years ago, these jobs got worse. The professed care for each worker’s development was sacrificed at the altar of marginal efficiencies. At Apple, Steve Jobs’s successor, Tim Cook, was a logistics guy. The average customer only bought a new product every couple of years, but services and apps offered a more regular and lucrative source of revenue. So, instead of teaching customers how to use Apple products to make music or a film, creatives found themselves strong-arming them into purchasing AppleCare+. Starbucks’ embrace of ever-more elaborate drink modifiers and mobile ordering transformed the simple act of making coffee into an increasingly stressful production, even as cuts to staffing and the spread of irregular scheduling made it harder for workers to qualify for the health care and tuition benefits that had set the company apart.

This account feels familiar; the idea that well-educated young people have been radicalized by the material and psychological effects of their economic precarity isn’t exactly new. But what makes Mutiny more than just another portrait of generational precarity is that Scheiber captures the process by which Starbucks “partners” and Apple “creative pros” realized they were just workers, no different from a McDonald’s burger flipper....

....MUCH MORE 

 If interested see:

2021 - Pity the poor avocado-eating graduates: "University-educated millennials have absorbed elite values but will never enjoy the lifestyle"

And that probably accounts for some of the crabbiness we see from folks who, compared with our billions and billions of forebearers, back into the mists of time, are among the most privileged and advantaged ever to walk the earth.

They also get grumpy when reminded of that fact.

2021 -  Dear College Educated Thirty-Somethings, Forty-Somethings: If You Aren't Already Rich, You Are Not Going To Be....

And if you aren't already powerful, You are not going to be.

And just as the middle-class and lower middle-class have no place in the coming system, neither will you.

If you allow it to, that realization will destroy you. 

2021 - "Do Older People Have a Duty to Die?"  

2021 - C.S. Lewis On Different Types Of Readers 

Although these days we use pseudo-psycho-mumbo-jumbo like "Confirming my priors" and "Validating the reader", this old boy was writing about such things in his SciFi novel 76 years ago:

“Why you fool, it’s the educated reader who CAN be gulled. All our difficulty comes with the others. When did you meet a workman who believes the papers? He takes it for granted that they’re all propaganda and skips the leading articles. He buys his paper for the football results and the little paragraphs about girls falling out of windows and corpses found in Mayfair flats. He is our problem. We have to recondition him. But the educated public, the people who read the high-brow weeklies, don’t need reconditioning. They’re all right already. They’ll believe anything.”

— C.S. Lewis, That Hideous Strength, 1945

As we saw in yesterday's "Planet of the Grifters" with it's quick look at Turchin's idea that there are too many elites and wannabe elites, there is money to be made from feeding the fantasy of the wannabe. (as the degenerate state of academia shows)

2021 - "Not All Millennials​ | Generational Wealth and the New Inequality" 

2022 - "The Problem with The Mass-Production of Elites, Looking into DoorDash's S-1 Filing" 

2023 -  "Predicting social decline: End Times by Peter Turchin"

2023 -  "Break Up America's Elites"

Although there are some conceptual flaws in Pareto's Circulation of the Elite, overall it is a useful framework upon which to hang the study of the distribution of privileges and influence in a society. This framework can help distinguish between a member of the actual elite who at first glance would be assumed not to be a member, say someone working a temp job in the government's Senior Executive Service, and those who would appear to be a member of the class but are actually just wannabe.* 

2025 - "Negative Aura: Gen Z and the Gamification of Outrage" 

2025 - "The Labor Market for Recent College Graduates" (is awful) 

2025 - Working Class Philosopher On The Overproduction Of Elites  

2025 -  "The Alienated ‘Knowledge Class’ Could Turn Violent"
Rather than "Knowledge class" they act more like entitled wannabe elites 

Ukraine War: "Kyiv said nearly all Russian casualties in March were inflicted by drones"

From Semafor, April 14:

Drones are Ukraine’s deadliest tool 

Kyiv said nearly all Russian casualties in March were inflicted by drones. The Ukrainian defense minister said Moscow suffered record losses last month, with more than 35,000 casualties.... 

....MORE 

 

"Iran Says Hormuz Strait Now Completely Open for Commercial Ships"

Yesterday's heads-up from al-Jazeera on the state of play in Lebanon was pretty important.

Lifted in toto from Bloomberg via Yahoo Finance, April 17:

Iran announced that the Strait of Hormuz is now “completely open” for commercial traffic, a major step toward ending a war with the US and Israel that’s sent energy prices surging.

“In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire,” Foreign Minister Abbas Araghchi said on X. Ships can move on the “coordinated route as already announced” by Iranian authorities.

US President Donald Trump announced a 10-day ceasefire between Lebanon and Israel on Thursday evening, a key move that eased tensions with Iran.

For what it's worth the Strait of Hormuz was never actually closed.

Iran said it was, and then later said the Strait had been mined and just the words were enough for the Protection & Indemnity insurance clubs to cancel war insurance on the ships. A couple Lloyd's syndicates continued to write cover for cargo though the terms pretty much guaranteed there were few takers.

As it turned out Iran's claim to be laying mines was a lie, or at least none have been reported found.

Finally, the U.S. Navy interdiction force is out in the Gulf of Oman, only a couple minesweepers actually crossed into the Strait. 

So let's see if the cease-fire turns into something more substantial this weekend and in the meantime get those ships out of the Persian Gulf. 

"That time an Israeli F-15 landed without a wing"

 Via Task & Purpose:

 

....MUCH MORE 

"If AI Makes Every Moat Temporary, What Will Happen To The Value Of Everything" ("The Collapse of Terminal Value")

Entropy. Stasis. Death.

But tonight, we dance!

From Forbes, March 16: 

Earlier today Chamath Palihapitiya, the founder of Social Capital and co-host of the All-In Podcast, published a lengthy thought experiment on X (formerly Twitter) that has since drawn nearly 800,000 views and more than 3,200 likes. The post, titled "The Collapse of Terminal Value," discusses how we might value markets in a post AI era. It poses a unsettling question: what if artificial intelligence erodes competitive advantages and moats so quickly that markets can no longer rationally assign value to what companies might earn in year ten or beyond?

The answer, Palihapitiya suggests, could require a fundamental re-pricing of equity markets at a scale that would make the 2008 financial crisis look modest.

The Argument From First Principles

Palihapitiya grounds his thesis in the basic mechanics of equity valuation. Modern capital markets assign value to companies not only on the basis of what they earn today, but on discounted projections of what they will earn in the future. This "terminal value," the sum of all projected cash flows beyond a forecast period, accounts for a substantial portion of any company's stock price. For high-growth technology companies, that figure is especially large.

In his post, Palihapitiya writes that the S&P 500 currently trades at roughly 22 times earnings, with top technology companies at 30 to 60 times. For most of these businesses, he estimates that 60 to 80 percent of their equity value is embedded in terminal value rather than near-term cash generation. That figure is consistent with broader analysis of large-cap technology valuations. Goldman Sachs Research has noted that the S&P 500's price-to-earnings multiple ranked at the 93rd historical percentile in late 2024, a level that embeds substantial assumptions about future earnings growth.

Palihapitiya's disruption repricing framework begins with a simple variable: the annual probability that any given business is rendered obsolete by AI. Using a 9 percent cost of equity as a baseline, he calculates that a company facing a 20 percent annual probability of AI disruption has an expected lifespan of roughly five years. Discounted over that window, its rational free cash flow multiple drops to approximately 3.9 times. At a 30 percent disruption probability, the multiple falls further to 2.8 times. At 10 percent, it rises to 6.5 times. The implied range, 2 to 7 times free cash flow, is not the result of panic but of straightforward duration math applied to a world where competitive advantages compound for years rather than decades.

He asks investors a direct question: what annual probability of AI disruption would you honestly assign to the most important holding in your portfolio? He suggests that any number below 10 percent is difficult to defend given what the industry itself says about the pace of change.

Historical Precedents for Duration Discounting

Palihapitiya’s framework is not new. He draws on four industries where markets previously applied steep duration discounts to businesses generating real cash flows, and where those discounts proved to be correct.

The newspaper industry between 2005 and 2015 is his first example. As digital advertising destroyed the print revenue model, companies that had traded at 12 to 15 times EBITDA compressed to 2 to 4 times. Tribune Company and the Philadelphia Inquirer, among others, eventually filed for bankruptcy. Cash flows were real in year one; they were gone before year seven. Retail experienced a comparable repricing between 2016 and 2020 as Amazon dismantled the economics of brick-and-mortar stores. Department stores and specialty retailers compressed to 3 to 6 times free cash flow even while generating significant cash. The market was pricing duration risk, not current earnings.

Energy companies between 2019 and 2021 saw a similar valuation decline. Major oil producers with decades of proven reserves traded at 4 to 6 times free cash flow as markets priced in the possibility that falling demand for fossil fuels would strand those assets before they could be fully monetized.

The most extreme case, Palihapitiya argues, was the taxi market. Medallion Financial, which provided loans against New York City taxi medallions, watched its collateral collapse from over one million dollars per medallion to under one hundred thousand. These assets were cash-flowing assets with decades of operating history yet the market repriced them to near zero once it became apparent that Uber had made the endpoint of their cash flows visible, even if Uber had not yet finished the job.

The Scale of a Generalized Repricing

What makes Palihapitiya's thesis novel is the proposition that this kind of duration discounting, historically applied one sector at a time, could now be applied across the economy simultaneously. The aggregate market capitalization of the S&P 500 currently sits at approximately $58 trillion. Corporate free cash flow from index constituents runs at roughly $2.8 trillion annually. At a 5 times free cash flow multiple, the midpoint of Palihapitiya's disruption range, the index would be worth approximately $14 trillion. That represents a 75 percent drawdown from current levels. First Trust Advisors' analysis has already flagged that the "Buffett Indicator," which compares total market capitalization to GDP, reached an all-time high of 167 percent of GDP in late 2024, a level Buffett himself originally cited as a warning sign before the dot-com crash.

Palihapitiya is careful to frame this as a thought experiment rather than a forecast. He describes the equilibrium as likely self-defeating. If markets repriced to 2 to 7 times free cash flow, the capital expenditure that drives AI disruption would dry up. AI development would slow. Moats would begin to look durable again. The fear would fade and the cycle would reverse. His more considered conclusion is not a permanent regime change but an oscillating transition: shorter innovation cycles, higher volatility, periodic crises of confidence in long-duration equity valuations, and a structural rise in the equity risk premium.

The Venture Capital Question...

....MUCH MORE 

There is no way I would ever invest in one of his deals but he raises a good point about knowing how your discounted-cash-flow model works.

If interested see:

May 2025 -  We've Entered The Predation Phase Of The A.I. Boom: Chamath Palihapitiya Edition

From September 2022's "A Look At Chamath Palihapitiya's SPAC's":
Anyone in the media who gave this guy any oxygen, at all, is an idiot.
(after typing that I thought, "maybe one should check the archive before, rather than after, using the word 'Idiot').*

Virgin Galactic

Open Door

 

 

*And our mentions of Mr. Palihapitiya? There were three or four, here's another one on the SPACs

 

May 11, 2021
I'm A SPAC Cowboy....
Bet you weren't ready for that.

Because shorting stocks based on valuation (vs fraud) in a bull market is so dangerous, we don't talk about it all that much. There have been a few, the Great Kinder Morgan short of '14* being a wonderful memory, along with a few tactical i.e. quick shorts of Tesla over the years (in direct violation of the decade-long "Don't short TSLA" admonition), but as a general rule, on the blog we only short frauds in a bull. In a bear, "Short 'em all" as one of my mentors used to say.

The fact we don't put every last thought that pops into our collective heads out in public actually benefits our readers as a couple of things that hurt results in 2020 never made it to the blog.

But I don't like blind pools.

And I especially don't like SPAC's with PIPES

And with that confessional we'll turn the narrative over to the professional....

In November 2020's "Arianna Huffington Buys Dopamine Labs" we reused a 2017 quote of his:

 "The short-term, dopamine-driven feedback loops we've created are destroying how society works.  No civil discourse, no cooperation; misinformation, mistruth. And it's not an American problem — this is not about Russians ads. This is a global problem."

—Former Facebook Vice President for Addicting Users, Chamath Palihapitiya