Thursday, May 7, 2026

How a Shortage of Electricians Could Derail the AI Boom (PWR; MWH; AGX; LGN)

From Barron's, May 4/5:

The artificial-intelligence boom was just getting past its last bottleneck. Now, another one is popping up—electricians.

A year ago, a shortage of natural gas turbines was the biggest limiting factor behind the AI boom, because data centers couldn’t build enough power plants to get electricity to those data centers. But turbine-makers have been ramping up production.

Today, a shortage of contractors with electrical expertise is the most pressing problem.

Rob Gaudette, CEO of power producer, laments the shortage of “qualified construction crews. Because if you have a turbine and no humans, you just have a turbine.”

GE Vernova, the global leader in turbines said last month that turbines “are really not the gating item” slowing down data centers, pointing instead to other factors like a lack of EPCs, or engineering, procurement, and construction firms. EPCs can mobilize hundreds of workers to build major infrastructure projects.

It is not a problem that can be solved instantly. The speed of the AI buildout is straining America’s skilled electricity workforce. Over the next decade, America is expected to need an additional 81,000 electricians a year, the Bureau of Labor Statistics says, among the fastest growth rates of any profession.

By 2034, America is on track to have less than two electrical engineers for every megawatt of power capacity the country needs to add, down from seven in 2024, according to Ben Lowe, an energy expert at consultancy Roland Berger. “The fact of the matter is we just don’t have enough people to do the work,” he said.

The shortage has tech companies worried. Big tech players have no time to waste when it comes to the AI buildout. They’re spending $700 billion this year alone to build out data centers and other major capital projects. Some of the tech giants are getting directly involved in training the next generation of electricians. Last year, Google said it would support a plan to train 100,000 new electricians and 30,000 apprentices, because of the shortage.

Having a good contractor on call is now a must-have for companies building power plants, and they are willing to pay up for them. NRG locked in a multi-project deal with Kiewit, a Nebraska-based EPC, to install GE Vernova turbines. “It’s a three-party agreement,” Gaudette said in an interview with Barron’s.

Kiewit is privately held, but EPCs that are publicly traded have seen big benefits....

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"DOJ, CTFC Investigating $2.6 Billion In Suspicious Iran War Oil Trades"

From ZeroHedge, May 7:

U.S. authorities are investigating more than $2.6 billion in oil futures shorts that landed within minutes of major announcements tied to the 2026 U.S.-Iran conflict. The Department of Justice (DOJ) has joined the Commodity Futures Trading Commission (CFTC) in a widening inquiry into potential misuse of material non-public information in one of the most liquid and geopolitically sensitive commodity markets on earth, ABC News reports. 

The trades in question involved bets that oil prices would fall shortly before major U.S. or Iranian announcements tied to the Iran war. .

The Trades

Data sourced from the London Stock Exchange Group (LSEG) - which captures exchange-traded futures flow but strips identities - reveals four distinct clusters of aggressive shorting in WTI and Brent crude futures:

  • March 23: >$500 million in shorts executed in a one-minute burst roughly 15 minutes before President Trump announced a five-day delay on planned strikes against Iran's energy infrastructure. Oil prices subsequently plunged ~15%.
  • April 7: ~$960 million short position placed hours before the temporary ceasefire announcement (oil dropped sharply on the news).
  • April 17: $760 million short bet executed ~20 minutes before Iranian Foreign Minister Abbas Araghchi declared the Strait of Hormuz open to commercial traffic.
  • April 21: $430 million additional short layer placed 15 minutes before Trump extended the ceasefire.

Total exposure: >$2.65 billion in directional bets that oil's geopolitical risk premium was about to collapse. These were institutional-sized clips that moved the tape.

The CTFC began investigating suspicious oil trades last month, which has now expanded under DOJ scrutiny....

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FrenchTech: France's Schneider Electric In The News

Three stories that dropped out of the feedreaders over the last month or so. 

From Energy Digital, April 12:

Microsoft and Schneider: Is Energy's Future Fully Automated? 

Microsoft and Schneider Electric are working to make automated operations a concrete reality for energy producers, distributors and manufacturers

Schneider Electric and Microsoft, two of the most technologically-innovative companies of the modern era, have struck up a partnership that looks set to make waves in the energy sector.

Together, the firms hope to build the foundations of the next generation of energy systems using the twin powers of AI and automation.

Specifically, Schneider and Microsoft are aiming to cut the cost of hydrogen production, while also optimising energy use and creating a scalable path to digital efficiency.

Across much of the industry, power producers and manufacturing plants still rely on hardware-locked systems that can limit their ability to upgrade or incorporate industrial AI. The two companies hope their collaborative efforts can usher in a newer, simpler, more streamlined era....

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From Reuters, April 29:

Schneider Electric tops revenue forecast as it rides AI data centre wave 

Schneider Electric narrowly beat first-quarter revenue expectations on Thursday, once again ​boosted by the global artificial intelligence data centre buildout reinforcing ‌the French group's role as one of the most sought-after suppliers.

Revenue in the three months through March grew 11.2% organically to 9.77 billion euros ($11.39 billion). That was a ​notch above the average consensus estimate of 9.76 billion euros, with ​10.1% organic growth expected by analysts polled by the company. 
Large cloud ⁠providers, also known as hyperscalers, are expected to invest more than $600 billion ​into data centres and other AI-related infrastructure this year alone, analysts say. 
Schneider makes ​power equipment, server racks and most importantly cooling systems that let energy-hungry data centres operate at peak performance. The booming demand for this technology, particularly from the United States, ​is driving Schneider's earnings, offering a stable and alternative revenue stream to ​the legacy electric equipment business. 
The $182 billion company, the fifth-largest by market value in France, ‌is ⁠reaping gains from its acquisition of U.S. liquid cooling specialist Motivair last year...
....MORE 
 
And finally, also from Reuters, this time via The Star (Malaysia), May 7:
 
Schneider Electric to launch Southeast Asia training hub in Malaysia 

KUALA LUMPUR: French energy technology firm Schneider Electric plans to open a South-East Asian training centre in Malaysia this year, a senior executive has said, as a boom in artificial intelligence (AI) infrastructure drives up power demand in the region.

South-East Asia’s data centre capacity is expected to grow three-fold by 2030, according to analysts, with Malaysia emerging as a major hotspot, attracting investments from tech giants, such as Microsoft, Amazon and Alphabet’s Google in recent years.

The country is also a key hub for semiconductors, accounting for about 13% of global testing and packaging....

....MORE 

More than a hub, Malaysia has become a magnet for foreign investment. Previously:

May 2024 -  "Microsoft CEO Pledges $2.2 Billion in Latest Asian AI Investment" - This Time Malaysia
 
June 2024 - "Malaysia is emerging as a data center powerhouse amid booming demand from AI"
 
October 2024 - "Oracle to Invest $6.5 Billion in AI and Cloud Infrastructure in Malaysia"
Malaysia is becoming something of a regional hotbed for data centers....  
 
October 2024 - "Google breaks ground on Kuala Lumpur, Malaysia, data center" 

AI Use Case, 2017: "The makings of a smart cookie"

From the Google blog, December 4, 2017:

The makings of a smart cookie

Now that the holidays are in full swing, you’ve probably already dipped your hand into the cookie jar. You may have a favorite time-tested holiday cookie recipe, but this year we decided to mix up our seasonal baking with two new ingredients: a local bakery in Pittsburgh and our Google AI technology.

Over the past year, a small research team at Google has been experimenting with a new technology for experimental design. To demonstrate what this technology could do, our team came up with a real-world challenge: designing the best possible chocolate chip cookies using a given set of ingredients. Adding to the allure of this project was the fact that our team works out of Google’s Pittsburgh office, which was once an old Nabisco factory.

Using a technique called “Bayesian Optimization,” the team stepped away from their computers and rolled their sleeves up in the kitchen. First, we set a bunch of (metaphorical) knobs—in this case, the ingredients in the cookie recipe, i.e., type of chocolate; quantity of sugar, flour, vanilla, etc. The ingredients provide enough unique variables to manipulate and measure, and the recipe is easy to replicate. Our system guessed at a first recipe to try. We baked it, and our eager taste-testers—Googlers ready and willing to sacrifice for science by eating the cookies—tasted it and gave it a numerical score relative to store-bought cookie samples. We fed that rating back into the system, which learned from the rating and adjusted those “knobs” to create a new recipe. We did this dozens of times—baking, rating, and feeding it back in for a new recipe—and pretty soon the system got much better at creating tasty recipes.

After coming up with a really good recipe within Google, we wanted to see what an expert could do with our “smart cookie.” So Chef John, our lead chef in the office teaching kitchen, introduced the team to Jeanette Harris of the Gluten Free Goat Bakery & Cafe. Jeanette was diagnosed with Celiac over 10 years ago and she turned her passion for baking into an opportunity to offer treats to those who usually can’t partake. “When John came to me with the idea of creating an AI-generated cookie I didn’t know what to expect,” says Jeanette. “I run a small local bakery and take great care to ensure I’m providing safe, quality ingredients to my customers. But once the team took the time to explain what they were trying to do, I was all in!”....

....MUCH MORE

https://blog.google/innovation-and-ai/technology/research/makings-smart-cookie 

Capital Markets: "USD Remains Soft, Norway Hiked, Mexico to Cut, and UK Votes"

From Marc to Market:

Hopes that the war on Iran is nearly over and that the Strait of Hormuz will open soon and ease the supply shock that has rippled across the global markets continues to underpin risk appetites today. The AI boom and the infrastructure and defense spending in Europe are also contributing. The dollar is mostly softer, oil prices lower and yields extending their pullback. 

Preliminary data lends credence to claims that Japanese officials intervened again yesterday to strengthen the yen. The initial estimate suggests it slightly few dollars[sic[ than it did on April 30. Norway’s central bank surprised the market with a rate hike earlier today, and the swaps market is pricing in another. Sweden’s Riksbank stood pat after the softer than expected CPI reported yesterday....

....MUCH MORE 

Here's his comment on the yen:

The dollar plummeted quickly yesterday amid speculation that the BOJ stepped back in as the market approached JPY158. Within minutes, the greenback had been sold to almost JPY155.00. The preliminary estimate is that the BOJ sold around $30 bln. The initial rebound carried it back slightly through JPY156.55. European and North American participants pushed it down to around JPY155.60 before bids returned but the market seemed reluctant to push it above the JPY156.60 area ahead of the return of Japanese markets today. It has been confined to about today between JPY156 and JPY156.55. Options for $1.5 bln at JPY156 expire today. 

And In The OTHER Bayer Case: "US judge calls proposed Bayer Roundup settlement a 'filthy' deal"

Last week we looked at the case currently before the U.S. Supreme Court on the lack of labeling:

German Chemical Colossus Bayer Gets Mixed Reception At Supreme Court On Roundup Suits

And from the Environmental Working Group project, The New Lede, April 30:

US judge calls proposed Bayer Roundup settlement a “filthy” deal 

In a tense hearing on Thursday, a federal judge who has been overseeing thousands of cases in nationwide Roundup litigation expressed scathing criticism of a proposed class action settlement that Roundup maker Bayer is pushing forward in a Missouri court.

The proposed $7.25 billion deal, which Bayer and a group of plaintiffs’ attorneys unveiled in February, appears “mind-boggling,” “legally problematic,” plagued with “major problems,” and was filed in a secretive and hasty manner that amounted to a “filthy” deal, US Judge Vince Chhabria said in a hearing over the proposed agreement.

Chhabria, who serves in the Northern District of California, is in charge of multidistrict litigation (MDL) involving people suing the former Monsanto company, now owned by Bayer. Plaintiffs in the cases allege that exposure to Monsanto’s glyphosate weed killers caused them to develop cancer and Monsanto failed to warn them of cancer risks.

Chhabria has overseen the litigation since 2016, and in 2021 rejected a proposed $2 billion class action settlement filed in his court.

Bayer has since paid out more than $11 billion in jury awards and settlements to resolve more than 100,000 claims, but still faces approximately 60,000 unresolved cases. Company officials have said they hope the new settlement plan will help bring the litigation to a close.

The new class action settlement effort is not filed in Chhabria’s court, but instead was filed by Bayer and the group of plaintiffs’ lawyers in Missouri, in the St. Louis Circuit Court for the City of St. Louis, where many Roundup cases are pending.

“How this went down” 
The agreement was filed on Feb. 17. Lawyers for Bayer and the team of plaintiffs’ lawyers joining with Bayer in the deal held a meeting with the St. Louis judge the same day they filed it, without public notice and without a transcript being made of the conversations.

Bayer and the supporting plaintiffs’ counsel tout the deal as a means to “deliver billions of dollars of compensation to tens of thousands of plaintiffs.”....

....MUCH MORE 

"AI with Chinese Characteristics"

Ahead of next week's Summit meeting between Presidents Trump and Xi where this may come up:

From Geopolitical Monitor, May 6:

In November 2025, Nvidia CEO Jensen Huang told the Financial Times that “China is going to win the AI race.” But what does it mean to “win” such a race? Huang’s comments made headlines, but many outlets focused solely on the potential for Chinese artificial intelligence (AI) models to match or surpass the capabilities of their US counterparts without considering the implications of widespread adoption of China’s version of the frontier technology. The AI race is not only about how powerful any single model is, but also how countries seek to integrate it into daily life. The Chinese Communist Party’s (CCP) vision for AI is comprehensive and concerning, aimed at creating a version of the technology that ideologically aligns with the Party and further tightens its grip on power. Meanwhile, the proliferation of Chinese AI tools beyond China’s borders poses a multifaceted threat, encompassing data security concerns, censorship, criminal misuse, and military applications.

How the Chinese Communist Party Views AI

The CCP is conscious of the risks posed by AI.

In September 2025, China released its AI Safety Governance Framework 2.0, which warned of several catastrophic risks of AI systems, including the potential “loss of control over knowledge and capabilities of nuclear, biological, chemical, and missile weapons” and that “extremist groups and terrorists may be able to acquire relevant knowledge” through AI systems. In April 2025, Chinese President Xi Jinping warned a Politburo study session on AI that the technology poses “unprecedented risk and challenges” and called for China to “speed up the formulation and improvement of the relevant laws and regulations, policy system, application specifications, and ethical criteria, construct systems for technology monitoring, early warning for risks, and emergency response, and ensure the safety, reliability, and controllability of AI.”

At the same time, Xi has called AI “the next epoch-making technological transformation” and CCP leadership has pushed a “whole nation” strategy to catch up to the United States in technology. China’s 15th Five-Year Plan, published in March, envisions AI as both a driver of China’s economic growth and a key pillar of its national security apparatus, with expansion of the country’s AI + initiative, focused on widespread adoption and integration of AI across all areas of society guided by “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” being a key goal.

“Safe, Reliable, and Controllable” AI

Accordingly, the CCP has attempted to strike a balance between innovation and regulation, introducing stringent AI safety measures while still ensuring that firms like Alibaba, Baidu, DeepSeek, and Zhipu can keep pace with their Western rivals. To Western onlookers pining for their governments to do more to reign in the nascent technology, some of these regulations may seem appealing. The Cyberspace Administration of China has introduced or proposed rules to prevent the creation of deepfakes, require AI-generated content to be labeled, and regulate AI services that simulate human behavior. While some of these measures may be beneficial for Chinese citizens, their primary purpose is to ensure continued political control for the Party. As a recent report from the Australian Strategic Policy Institute notes, regulations are in place to ensure that AI is “safe, reliable, and controllable,” meaning that AI companies are supposed to promote “core socialist values,” and prevent the proliferation of content that “harm[s] the national image,” or “incite[s] subversion of state power.”

For instance, China’s Provisions on the Administration of Deep Synthesis Internet Information Services specifies that providers should “adhere to the correct political direction, public opinion orientation, and values trends” and that deepfake services should not be used for purposes that “endanger the national security and interests, harm the image of the nation, harm the societal public interest, disturb economic or social order, or harm the lawful rights and interests of others.” It is no coincidence that the “lawful rights” of individuals are listed after the concerns of the state, as fundamentally, China’s AI regulations serve the state and Party over the people. Moderation guidelines for large language models (LLMs) ostensibly designed to regulate “unsafe” content that promotes terrorism, for example, are equally if not more concentrated on content that is deemed harmful to the Party and state, including sensitive topics like the Tiananmen Square massacre, producing AI tools that reinforce CCP propaganda and control over society. Beyond censorship, the CCP’s state security apparatus has enthusiastically adopted AI, using it to power an extensive surveillance system to more closely monitor China’s 1.4 billion people....

....MUCH MORE 

May 7, 1861 - Abraham Lincoln Accepts The Citizenship Of San Marino

From Mr. Lincoln.com, May 7, 2019:

Lincoln’s Gracious Letter to a Tiny, but Admiring, Republic 

On this date (May 7) in the year 1861, the President of the world’s largest republic responded to a curious letter sent to him by the leaders of perhaps the world’s smallest republic.

At the time, the modern republican form of government, which had seemed to hold so much promise during the early part of the century, now seemed doomed to failure.  Numerous republics in Europe and the Americas had proved short-lived and had slid into political chaos or reverted to monarchies, empires, or dictatorships.  In fact, for many people all around the world, the crisis in the United States would ultimately decide the question of whether a people could govern themselves, whether popular government was a viable option.

A few weeks after Abraham Lincoln’s inauguration, the government of “the Most Serene Republic of San Marino” sent him a letter, written in both Italian and English.  San Marino, which claims to be the oldest republic in the world, is located in the northern part of the Italian peninsula, about ten miles inland from the Adriatic Sea.  Its area is only 24 square miles – less than half the size of Washington, DC – and it had only about 7,000 inhabitants in 1861.

The letter from the “Regent Captains of the Republic of San Marino” to Lincoln read as follows:

… It is a some while since the Republic of San Marino wishes to make alliance with the United States of America in that manner as it is possible between a great Potency and a very small country.

As we think not extension of territories but conformity of opinions to procure friendly relations, so we are sure you will be glad to shake hands with a people who in its smallness and poverty can exhibit to you an antiquity from fourteen centuries of its free government.

Now we must inform you, that to give to the United States of America a mark of high consideration and sincere fraternity … the citizenship of the Republic of San Marino was conferred for ever to the President … of the United States of America and we are very happy to send you the diploma of it.

We are acquainted from newspapers with political griefs, which you are now suffering therefore we pray to God to grant you a peaceful solution of your questions.  Nevertheless we hope our letter will not reach you disagreeable, and we shall expect anxiously an answer which proves us your kind acceptance.

By the time Lincoln received the letter – it was delayed because they sent it to New York, apparently thinking that city was the capital – the Civil War had already begun, and the President and his administration were surely quite busy.  Yet something about the letter prompted Lincoln and his Secretary of State William H. Seward to send back an equally gracious reply, dated May 7:

Great and Good Friends

I have received and read with great sensibility the letter which as Regent Captains of the Republic of San Marino you addressed to me on the 29th of March last.  I thank the Council of San Marino for the honor of citizenship they have conferred upon me.

Although your dominion is small, your State is nevertheless one of the most honored, in all history....

....MUCH MORE 

 For what its worth the Office of Legal Counsel later (by a century) determined the gift did not violate the emoluments clause of the U.S. Constitution.

These days the Serene Republic doesn't want just anyone becoming a citizen

Or tapping into the relative wealth and exemplary GDP per capita of its citizens. 

From the BBC:

Tiny republic bans gold-diggers

Wednesday, May 6, 2026

"World Starts To "Build" Around Hormuz; Japan Buying UAE Oil Bypassing Strait As ADNOC To Spend $55 Billion On Pipelines"

From ZeroHedge, May 6:

Long after the Iran war is just a bookmark in the history books, one distinct consequence will persist: much of the world, at least the part that does not fall under the Chinese sphere of influence, will do everything it can to avoid the Strait of Hormuz and failing that, have a Plan B. Just like when the Biden admin weaponized the US Dollar in 2022 by booting Russia from SWIFT after the Ukraine war, and in the process started the biggest gold and bitcoin rally in history as the rest of the world parked its savings in non-USD assets, so the world's most important oil choke point will never again be viewed again in the same way after Iran launched dozens of rockets at the ships transiting it. 

This shift in perception is what James Thorne, chief market strategist of WellingtonAltus, called "Iran’s Historic Mistake"; he explains it as follows: 

By weaponizing the Strait of Hormuz, Iran committed a strategic blunder of historic proportions. Tehran meant to punish America. Instead, it exposed every power built on imported energy, vulnerable sea lanes, and the delusion that globalization repealed geography. China is exposed. Europe is exposed. Britain is exposed. Iran has created a world where hard resource power decides outcomes.

And the punchline:

Iran’s mistake is that once Hormuz becomes structurally unreliable, the world builds around it. That means bypass corridors, revived pipeline politics, and urgent planning for routes linking Aqaba to Mediterranean outlets near Gaza and the long-stalled Basra-to-Aqaba pipeline. The old energy order is cracking. The UAE’s OPEC exit signals cartel discipline giving way to national advantage under pressure.

The full note can be found here, and we didn't have long to wait to see the world it predicted begin to emerge. 

Earlier today, Nikkei Asia reported that Japan agreed to buy an additional 20 million barrels of crude oil from the United Arab Emirates as Tokyo continues pursuing alternative supply channels amid the effective blockade of the Strait of Hormuz. Japan used 2.36 million barrels of crude oil per day in 2025, the economy ministry reports. Based on this average, the additional 20 million barrels from the UAE could cover eight to nine days' worth of demand, so much more is coming. 

The deal was finalized Tuesday after Ryosei Akazawa, Japan's minister of economy, trade and industry, met with the Emirati industry minister in Abu Dhabi. Akazawa told reporters after the meeting that he had requested increased oil supplies for Japan. 

Roughly 40% of Japan's crude oil imports comes from the UAE. The Middle Eastern country, which left the Organization of the Petroleum Exporting Countries on Friday, intends to gradually increase oil production at its own discretion, which could lead to more cooperation with Japan.

Japan will pick up the Emirati oil at the port of Fujairah on the UAE's eastern coast, which lies on the Gulf of Oman, allowing for crude exports without going through the Strait of Hormuz. 

The war in the Middle East -- a region on which Japan has relied for more than 90% of its oil supply -- has spurred Tokyo to approach other oil producers. It reached a deal last month to procure 1 million barrels of crude from Mexico.... 

....MUCH MORE 

"Private payrolls rose by 109,000 in April, topping expectations, ADP says"

From CNBC, May 6:

  • Private companies added 109,000 jobs for the month, a step up from the 61,000 created in March and better than the Dow Jones consensus estimate for 84,000, ADP reported Wednesday.
  • Education and health services again dominated, adding 61,000 jobs. Trade, transportation and utilities gained 25,000. Construction, another consistent leader in recent months, rose by 10,000.
  • Though the headline number was better than expected, it’s broadly consistent with what Fed policymakers and economists have described as a low-hire, low-fire environment.

Private sector job creation was stronger than expected in April, providing more evidence of a stable labor market and less incentive for the Federal Reserve to lower interest rates amid persistently higher inflation, ADP reported Wednesday.

The payrolls processing firm said companies added 109,000 jobs for the month, a step up from the 61,000 created in March and better than the Dow Jones consensus estimate for 84,000. The March total was revised down by 1,000.

Wages for those staying in their jobs rose 4.4% annually, down 0.1 percentage point....

....MUCH MORE 

Reuters Analysis-"Stunning US profit strength ignites stocks' charge to record peaks"

From Reuters, May 6:

  • Q1 earnings for S&P 500 on track to rise 28.2%, strongest since Q4 2021
  • Estimates for rest of 2026 also climbing
  • AI boost, corporate resiliency seen as key for US businesses

NEW YORK, May 6 (Reuters) - A humming U.S. corporate profit engine is at the heart of the U.S. stock market's rally to record highs - an encouraging sign for investors as long as the fuel driving profits keeps flowing. 

More than two-thirds through ​the first-quarter reporting season, S&P 500 companies are on track for their highest quarterly earnings growth in more than four years. Future projections are also growing rosier: Analysts' estimates ‌for future 12-month U.S. earnings have risen by over 10% since the start of the year, according to LSEG Datastream. 

As some of the worst-case economic fears tied to the war in Iran have receded, investors said Wall Street has been able to focus on the earnings strength, helped by massive investments in artificial intelligence technology and a generally solid economic backdrop.
 
"Because things have not gotten worse and the ceasefire has been in place for some time now, it's been earnings that have driven the ​move higher," said Chris Fasciano, chief market strategist at Commonwealth Financial Network.
 
The benchmark S&P 500  is up 6% for the year, building on three straight years of solid double-digit percentage gains. The ​index has surged more than 14% since March 30, following a swoon sparked by the start of the U.S.-Israeli war with Iran.

https://www.reuters.com/graphics/USA-STOCKS/EARNINGS/dwpkynaxkpm/chart.png 

STRONGEST QUARTER IN 20 YEARS?
Investors ⁠had expected generally solid results when the reporting season kicked off last month, but they have far surpassed expectations. S&P 500 earnings are expected to have jumped 28.2% in the first quarter from a year ​earlier, including results from 350 index companies that have reported and analysts' estimates for those yet to report, according to data as of Tuesday from Tajinder Dhillon, head of earnings and equity research at LSEG Data & Analytics.
That ​increase would be the highest since the fourth quarter of 2021, when businesses were recovering from pandemic lockdowns.
 
"Excluding special factors like favorable base effects and corporate tax cuts, earnings growth is arguably the strongest in two decades," Binky Chadha, chief U.S. equity strategist at Deutsche Bank, said in a note....
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Capital Markets: "TACO Delivered a Day after Cinco De Mayo"

From Marc Chandler at Bannockburn Global Forex:

There is one overarching fundamental development today that is driving the risk-on in the capital markets and weighing on the dollar. President Trump announced the US was suspending its new escort service in the Strait of Hormuz. Ostensibly at the request of Pakistan and other countries, the decision was to give negotiators more time. Front-month oil futures contracts are off 8-10% today. It has arrested the rise in bond yields and is lifting equities. 

The dollar is lower against the G10 currencies, but the Norwegian krone, which is particularly sensitive to large moves in crude oil prices.
The yen jump dramatically in a few minutes in Asia Pacific turnover, and although Japanese markets were still closed for the extended holiday today, there is much speculation that Japan officials intervened again as the dollar had reached its best level (almost JPY158) since the apparent intervention on April 30....

...MUCH MORE  

"Axios: US and Iran nearing one-page MOU to end war, start 30 days of nuclear talks"

From/via the Times of Israel, May 6:

The White House believes it’s nearing a one-page memorandum of understanding with Iran to end the war and lay out a framework for talks on the regime’s nuclear program, Axios reports, citing two US officials and two other sources briefed on the issue.

The US expects a response from the Islamic Republic within the next 48 hours, according to the outlet.

It says the proposal consists of 14 points, and is being crafted by Trump’s Mideast envoy Steve Witkoff and the president’s aide and son-in-law Jared Kushner, in collaboration with several Iranian officials.

The plan would reportedly declare an end to the war and trigger a 30-day negotiation period, in pursuit of an agreement to open the Strait of Hormuz, limit Iran’s nuclear program, and lift US sanctions on the regime.

The US is reportedly seeking a moratorium on all uranium enrichment by Iran for at least 12 years, with a provision that would extend the moratorium if Iran were found to have violated it.

At the end of the negotiated period, the Islamic Republic would be allowed to enrich to the low, civilian-use level of 3.67%, while committing never to seek a nuclear weapon and to submit to enhanced inspections, including snap inspections by the UN....

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Goldman Sachs: "Tracking Trillions: The Assumptions Shaping the Scale of the AI Build-Out"

From Goldman, May 1:

Executive Summary

The AI CapEx debate is usually framed as a demand-side question—will adoption justify the spend?—but the size of the investment itself is not a single, fixed number. It is highly sensitive to a small set of assumptions about how the infrastructure itself is built and renewed.

Four assumptions are most impactful in determining the scale of the build-out:
  • 1 The economic useful life of AI silicon, where small shifts in replacement cadence move cumulative spend by hundreds of billions
  • 2 The cost and complexity of next-generation data centers, which are rising as AI workloads push power density higher and system integration deeper
  • 3 The chip and architecture mix, whose impact depends on whether compute demand is elastic (reshaping margins) or inelastic (reshaping totals)
  • 4 Elongation from power, labor, and equipment bottlenecks, which in stress scenarios can feed back into demand-side doubt

Several widely discussed dynamics matter for returns, volatility, and value distribution across the ecosystem but do not materially change the aggregate scale of capital required.

Current estimates of the ultimate scale of the AI build-out—regardless of the demand side—are far more conditional than they appear. For investors and operators, a critical question remains: What fundamental assumptions do we have about the future, and how resilient are our plans to changes in those assumptions?

This analysis is a scenario-based framework intended to explore how different infrastructure assumptions may affect aggregate capital requirements, not a forecast of future spending.

Framing the Question

A single AI query feels weightless—a question typed, an answer returned, no moving parts in sight. But the progress of AI rests on a deeply physical edifice: millions of processors, hundreds of thousands of kilometers of cabling, industrial cooling systems, and power demands that rival those of midsize countries. Better understanding of the complexity of that physical infrastructure—and the assumptions upon which its build-out rests—should inform how we think about the scale, durability, and risks of today’s AI capital expenditure boom.

The scale of these expenditures is enormous. Estimates of $4 trillion to $8 trillion of total capital investment over the next five years have featured prominently in recent market commentary. That capital is used to buy new chips, build new data centers, and construct new power, all in an effort assemble sufficient computing infrastructure to meet the moment. Debates about whether this figure is “too high” are usually framed around a demand-side question: Will AI adoption and monetization justify the spend?

But there is an equally important supply-side unknown. The scale of required investment for the AI build-out is itself more uncertain than commonly assumed. Estimates rest on a number of assumptions that, if changed, can significantly increase or decrease the amount of capital required.

Not all assumptions matter equally in this equation. A small number of assumptions determines how much capital must ultimately be deployed to build AI infrastructure, while other assumptions—despite commanding significant attention—primarily influence timing, monetization, or the distribution of returns.

The most critical assumptions for the level of capital expenditure required for the AI build-out include the following:

  • The economic useful life of AI chips
  • The cost and complexity of building next-generation data centers
  • The way chip architectural choices translate into system-level costs
  • The elongation of the build-out due to physical and institutional bottlenecks

Much of the broader debate focuses on dynamics that matter for returns but do not materially alter the amount of capital that must be deployed. This analysis examines these assumptions and suggests a framework for understanding which changes would push the headline capital expenditure figures higher or lower than current estimates. 

Baseline Estimates

Baseline aggregate AI CapEx estimates (bn)
~$7.6tr of capital between 2026 and 2031 across compute, data centers, and power
 

Source: Goldman Sachs Global Institute, Goldman Sachs Global Investment Research NVIDIA projections (as of March 3, 2026) Note: Forecasts and expectations are based on material assumptions subject to change. Assumes NVIDIA accounts for 75% of total compute spend in each period. Assumes 5% YoY compute growth past the projection period (2031). Uses VR200 (Rubin) chip as baseline spec ($80.5K per GPU [incl. node costs] and 3,000 W per package) across all years. Assumes 1.2 PUE, $15mn per MW for data centers, and $2,500 per kW for new power. Assumes 15% of required data center space is brownfield (i.e., excluded from calculation) in 2026, growing to 30% in 2031. Totals may not sum due to rounding.

We begin with a baseline model that projects the total scale of AI infrastructure investment implied by today’s chip sales estimates. We anchor this baseline to NVIDIA’s forward data center revenue Wall Street estimates as a proxy for prevailing expectations around XPU (GPU and other accelerators) deployment and then infer the associated requirements for data centers, power, and supporting infrastructure. This approach does not attempt to forecast AI adoption or end-market demand; rather, it provides a consistent reference point against which we can test how different supply-side assumptions expand or contract the overall scale of investment.

The baseline model implies $765 billion in annual AI CapEx in 2026, growing to $1.6 trillion in annual CapEx in 2031.

These figures include a variety of components necessary for the AI build-out. The core unit of AI infrastructure is the accelerator—a processor purpose-built for the parallel computation that AI workloads demand. Today's leading systems, such as NVIDIA's GB300 NVL72, pack 72 of these processors into a single rack, connected by high-speed backplanes and linked across facilities by hundreds of thousands of kilometers of cabling. These systems generate enormous heat, requiring industrial-scale liquid cooling. And all of it sits within data centers equipped with dedicated power delivery, redundancy systems, and grid or behind-the-meter generation. Together these layers account for baseline estimates that anticipate roughly $7.6 trillion of cumulative CapEx between 2026 and 2031. The key question is, how might changes in the useful life of silicon, the cost and complexity of data centers, the mix of chip architecture, or the pace at which physical bottlenecks persist push that figure materially higher or lower?

Assumption 1: The Economic Useful Life of AI Chips

AI accelerators (GPUs, ASICs, etc.) are the engines of AI infrastructure, and large-scale data centers house hundreds of thousands of these chips. These devices have a useful life—typically estimated at four to six years—bounded by physical degradation on one side and economic obsolescence on the other, as each new generation delivers step-change improvements in performance. Useful life of silicon chips is the single most influential variable in determining the scale of cumulative AI infrastructure investment.

Unlike other major components of the stack—data center buildings, which are typically depreciated over roughly 20 years, or power infrastructure, which often spans 25 years or more—AI silicon turns over on much shorter cycles. This fact, paired with its high cost per unit, is what makes the silicon replacement cadence so consequential.

Uncertainty around AI silicon’s useful life reflects a core tension: Rapid improvements in performance per dollar between generations of AI silicon push companies to replace hardware quickly, while the growing range of AI tasks means older chips can still deliver value for longer. This tension is sharpened by NVIDIA's unprecedented annual release cadence for GPU architectures, with each generation delivering step-function leaps in capability rather than incremental improvements. Many analysts believe that this mismatch between the annual release schedule and the quantum advances of each new generation makes the prevailing accounting treatment of four-to-six-year depreciation schedules less reflective of the value of the underlying assets.

Because silicon accounts for a large share of AI infrastructure CapEx, small changes in assumed useful life have outsize effects on cumulative spend. Extending average economic life from four years to six years materially reduces the number of replacement cycles over a given horizon—while shortening it has the opposite effect. At scale, these differences translate into substantial changes in aggregate capital requirements—and, critically, into the level of annual depreciation borne by the ecosystem—even as spending on buildings and power infrastructure remains largely unchanged.

Sensitizing the useful life of silicon
Impact on annual compute depreciation from altering silicon useful life from 3 years to 7 years

Goldman Sachs Global Institute, Goldman Sachs Global Investment Research NVIDIA projections (as of March 3, 2026) Note: Forecasts and expectations are based on material assumptions subject to change. Assumes straight-line depreciation and no terminal value for GPUs. Totals may not sum due to rounding.

To illustrate: A single accelerator purchased at $50,000 and depreciated over five years carries $10,000 per year in depreciation expense. However, if that chip becomes operationally obsolete or uneconomic to run before the depreciation schedule expires—because a new generation delivers dramatically better performance per dollar—the operator is still carrying the cost of an asset that no longer drives the economic value it once did. Multiply that dynamic across hundreds of thousands of devices, and the risk becomes a threat to the fundamental economics of the AI ecosystem. Accounting statements may reflect orderly depreciation, but operational obsolescence can impose a very different economic reality—and those shifts can arrive abruptly.

But one dynamic that could extend useful lives—and lend support to the prevailing depreciation treatment—is the emergence of a tiered deployment model for AI silicon. Beyond the demand for leading-edge training lies many less performance-sensitive workloads that may be well suited to trailing-edge silicon and benefit from the depreciated cost of such devices—such as certain inference scenarios, edge computing, deployment in emerging markets, and synthetic data generation. Today, the rental price of trailing-edge NVIDIA devices such as A100s and H100s remains high enough to suggest useful lives of five to six-plus years. That could be a consequence of the extreme capacity constraints model providers are operating under today, or it could be a signal about the sustained value of silicon in the AI era—and thus the appropriateness of its prevailing depreciation timelines.

Buildings and power systems are long-lived assets, while AI silicon turns over far more quickly. As a result, assumptions about accelerator replacement cycles can plausibly shift multiyear infrastructure investment totals by hundreds of billions of dollars.

Assumption 2: The Cost and Complexity of Building Next-Generation Data Centers....

....MUCH MORE 

Tuesday, May 5, 2026

"Asia markets hit records on AI euphoria, yen surges again"

From Reuters, May 5/6: 

  • KOSPI clears 7,000 mark as Samsung joins the $1 trillion club
  • MSCI All-Country World Index sets fresh all-time high
  • Yen surges to 155 against the dollar as intervention talk swirls
Stocks leapt, oil prices sank and the dollar dropped on Wednesday ​after U.S. President Donald Trump touted "great progress" towards a "final agreement" with Tehran, while momentum in AI-driven trades accelerated.
 
Trump said he would ‌briefly pause an operation escorting ships through the Strait of Hormuz, which carries about a fifth of global oil and has been blockaded by Iran since late February, triggering a global energy crisis. The news sent Brent crude tumbling 1.6% to $108.07 per barrel, while S&P 500 e-mini futures were up 0.3%.
 
MSCI's All-Country World Index rose 0.4% to ​a fresh record alongside similar milestones for its Emerging Markets benchmark and its broadest index of Asia-Pacific shares outside Japan  which jumped ​2.8%. The share surge was led by a 6.6% charge for South Korea's Kospi 
which cleared the 7,000 mark ⁠for the first time.
 
Elsewhere in foreign exchange markets, the yen strengthened sharply in afternoon trading, gaining as much as 1.8% to 155 against the ​dollar as traders remained on the lookout for fresh intervention by authorities in Tokyo in support of the beleaguered currency.
 
"There’s a bit of optimism around ​a U.S.-Iran 'deal' at the moment; it’s possible the authorities decided that was a good moment to give the yen an extra nudge," said Thomas Mathews, head of markets for Asia Pacific at Capital Economics in Wellington. "That said, it might just be thin holiday-affected trade; best to wait and see how it fares towards the end of the ​week."....
....MUCH MORE 
 
Also at Reuters: 
 
Samsung Electronics' market cap surpasses $1 trln after US AI chip stocks surge 

GLP-1 Weight Loss Drugs Cut Need For Millions of Truckloads Of (junk) Food

From FreightWaves, March 22:

Ozempic slims America — and it’s lightening truckers’ loads!

The freight market is no stranger to disruptive forces — tariffs, recessions, weather, economic fluctuations, and capacity crunches have all reshaped freight demand over the years. But a new contender is emerging from an unexpected corner: the widespread adoption of GLP-1 medications (think Ozempic, Wegovy, Mounjaro, and similar GLP-1 receptor agonists).

These drugs, originally developed for diabetes management and now massively popular for weight loss, suppress appetite and reduce overall caloric intake. Early estimates suggest that even at current penetration levels — roughly 12% of U.S. adults — the downstream effect on food and beverage demand could be substantial.

Recent analyses, drawing from academic studies out of Purdue, Cornell, and others (including 2025 updates), point to an approximate 3% drop in total caloric food demand due to appetite suppression. That may sound modest, but in the context of America’s food supply chain, the numbers scale quickly.

U.S. trucks move more than 2 billion tons of food and beverages annually. At an average payload of around 20 tons per truckload, that’s roughly 100 million+ truckloads per year dedicated to food and bev freight.

Apply a 3% reduction across that volume, and you’re looking at approximately 3 million fewer truckloads annually....

....MUCH MORE 

And thus doing more to cut carbon dioxide emissions than most partisan policy prescriptions.

Blue Energy and GE Vernova Plan 2.5 Gigawatt Gas Nuclear Hybrid (GEV)

 Sadly it wont be called Prius+ (+++++++++)

From InvestorsHub via MSN, May 5

Blue Energy and GE Vernova plan hybrid nuclear-gas power plant in Texas

Blue Energy and GE Vernova Inc. (NYSE:GEV) have unveiled plans to jointly develop a 2.5-gigawatt power facility in Texas that will combine nuclear and natural gas generation. The companies say the project would be the first of its kind to integrate both technologies at this scale. 

Combining Nuclear and Gas Technologies 
The proposed plant will incorporate GE Vernova Hitachi Nuclear Energy’s BWRX-300 small modular reactor alongside GE Vernova’s 7HA.02 gas turbines. Blue Energy is targeting a final investment decision in 2027, with delivery of the gas turbines expected by 2029.

Phased Development Timeline 
Blue Energy has already secured approval from the Nuclear Regulatory Commission for a development approach that allows key construction phases to be carried out in a different sequence. The company plans to begin preliminary site work in 2026 and submit its application for a construction permit in 2027.

Under current plans, the gas turbines would begin supplying around 1 gigawatt of electricity from 2030. Once the nuclear reactors are operational—potentially as early as 2032—the facility would transition to delivering approximately 1.5 gigawatts of nuclear-generated power....

....MORE 

It doesn't look like Blue has actually built a nuke plant but they have a nice website.

And $425 million in venture cash. 

Property-Casualty Insurance: "State Farm launches all out war on California in blistering statement after bombshell wildfire exposé"

From the New York Post, May 4:

California’s largest home insurance company tore into state regulators Monday as it faces potential multi-million dollar fines and a suspension of its license.

“Wildfire survivors deserve real solutions — not a distorted picture of State Farm’s response. We strongly disagree with the Department’s characterization,” State Farm General Insurance Company said in a statement.

The lengthy, strongly worded response came within hours of the state of California issuing a damning verdict following an investigation into the company’s handling of customer claims after the 2025 wildfires.

The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” the insurance giant, which insures over a million in California, said.

“We reject any suggestion that State Farm engaged in a general practice of mishandling or intentionally underpaying wildfire claims, and we will respond through the process,” the statement added.

The probe, released in part on Monday, found a staggering 398 violations of state law in 114 of the 220 sample claims reviewed.

Among the key findings: claims were not investigated or resolved within required timelines, payouts were unreasonably low, and policyholders were frequently reassigned to different adjusters — creating confusion some described as “adjuster roulette.”

The insurance agency maintains the investigation does not accurately reflect the full situation.

“Using a thin sample of claims to justify sweeping allegations turns regulatory oversight into a political weapon, creating headlines instead of delivering facts and real consumer protection,” the company said.

State Farm said the review covered 220 files and that most issues were administrative or procedural — such as timing of notices, documentation, or payee details — rather than failures to pay covered claims.

It added that about $40,000 in additional payments were identified, compared with more than $5.7 billion already paid....

....MUCH MORE 

In a just world. Los Angeles Mayor Bass would be in prison on 11,000 counts of criminal negligence. 

Also at the Post:

The two possible causes for the cruise ship hantavirus outbreak — one is disgusting, the other terrifying

"NASA and JAXA data show another record-low Arctic winter sea-ice season"

Although our preferred measure of the state of the Arctic ice is volume rather than extent (because of the way ice melts: think ice cube vs. crushed ice) this is a well-written piece on the cryosphere. 

From The Watchers, May 3:

Arctic winter sea ice remained at record-low levels in March 2026, with NASA and the National Snow and Ice Data Center (NSIDC) reporting a statistical tie with the 2025 minimum winter maximum and Japan’s NIPR/JAXA dataset reporting a new record low. Despite differences in measurement methods, both datasets place the 2026 maximum among the lowest observed since satellite monitoring began in 1979.

NASA and NSIDC said Arctic sea ice likely reached its winter maximum on March 15, at 14.29 million km² (5.52 million mi²), close to the 2025 maximum of 14.31 million km² (5.53 million mi²). The two years are considered statistically tied in the U.S. dataset.

Japan’s National Institute of Polar Research (NIPR) and the Japan Aerospace Exploration Agency (JAXA) reported a lower maximum of 13.76 million km² (5.31 million mi²) on March 13, based on finalized five-day averaged satellite data. Their dataset places 2026 slightly below 2025, marking a new record low winter extent.

The difference between the two measurements — about 0.53 million km² (204 600 mi²) — reflects differences in processing methods and averaging techniques rather than disagreement about overall conditions. Both datasets show that Arctic winter sea-ice extent remained exceptionally low during the 2026 maximum period.

NASA reported the 2026 maximum was about 1.3 million km² (501 900 mi²) below the 1981–2010 average, extending the long-term decline observed in Arctic sea ice since 1979....

https://watchers.news/wp-content/uploads/2026/05/sea-ice-extent-arctic-march-2026.webp 

....MUCH MORE 

 And from the Danish Meteorological Institute, volume and thickness:

 https://polarportal.dk/api/v1/serve-image/sea?image_name=1777900556576_CICE_map_thick_LA_EN_20260504.png

https://polarportal.dk/api/v1/serve-image/sea?image_name=1777900556663_CICE_curve_thick_LA_EN_20260504.png

Nota bene: thickness and volume continue building for over a month after extent peaks. 

If interested the DMI has some narrative on the various measures:

The state of the sea ice is determined by its extent, thickness and volume

Jim Cramer Says Nice Things About Quanta Services (PWR)

Truth be told, Mr. Cramer saw the portfolio potential of PWR and GEV not too long after we did.

I don't know his thinking on Prysmian (wires) or Cameco (nuke plants, uranium mining) 

From Insider Monkey, May 3:

Jim Cramer on Quanta Services: “It’s Been Worth Owning” 

Quanta Services, Inc. (NYSE:PWR) was among the stocks Jim Cramer highlighted, as he discussed the massive AI infrastructure buildout. Cramer called the company an “obvious winner when you want to build out the electric grid,” as he stated:

I’m going to go down, literally go down the S&P’s top gainers today. I’m doing a little bit of order that changes just so we can get the narrative right, but let’s see if they’re representative of anything other than the data center, even if they’re involved in it. So let’s start with Quanta Services, PWR. This stock soared nearly 16% today. That’s a big gain. It’s an installer of power lines and infrastructures of all kinds. Quanta’s been a decent company for a long time. It’s been worth owning, but it’s been roaring because it’s the obvious winner when you want to build out the electric grid.

Management explains this very clearly right at the beginning of this incredibly stunning positive conference call they had today, “Utilities are being asked to double in size. Technology customers are demanding speed at scale they haven’t dealt with before.” See, this is a whole new way our country’s doing business. A rally that includes Quanta tells you that the data centers about a lot more than just the semiconductors and disk drives. Data centers are like giant mouths that must be fed with constant activity and never-ending electricity.

We know there are many ways for the utilities to produce more energy, the most frequent being converting natural gas to a GE turbine that’s connected to the grid. Quanta builds that. They can also build the other end where the grids connect to the data center. Quanta does this with American labor....

....MORE 

The stock is up again in premarket trade, +$15.10 (+1.99%) at $772.44 following yesterday's $15.13 (+2.04%) pop (and the 16% he mentioned above, and the last two years and...)

From TradingView:

 

The verticality at the end of the timeline is nice for the P&L but probably signals our time is growing short. 

Up 71% over the last six months through May 4, up 133% over 12 months and up 673% over the last five years. “It’s Been Worth Owning”

If interested see also:

April 30 - "Quanta Services soars 10% on earnings beat and raised outlook" (PWR)

April 30 - "Quanta (PWR) Q1 2026 Earnings Call Transcript" April 30, 2026

And some history of the infrastructure build-out over the last couple years, April 21:

 "GE Vernova and Vertiv Report Wednesday: The Real AI Data-Center Trade" (GEV; VRT)

April 9 - Quanta Services Breaks Out To A New All-Time High (PWR)

April 8 - "America’s AI Build-Out Hinges on Chinese Electrical Parts"

Also: