Elon Musk Explains The Sell-Off In Memory Stocks

He seems to have a fairly good grasp of this stuff. And solar, and batteries and rockets and...

When China figures out how to manufacture a product, their ability to scale is often greater than the rest of the world combined. We saw this with lithium batteries and solar, for example. SpaceX is a rare counter-example, where its mass to orbit is roughly an order of magnitude greater than the rest of the world, BUT China now does a majority of non-SpaceX mass to orbit. SpaceX is an anomaly in the matrix. Maybe RAM will be different, but RAM was a low margin commodity only ~3 years ago. LP5 and LP6 are designed to a common standard that China seems to be solving fast. Newer HBM architectures and things like an SRAM layer below logic and 3D stacking RAM on top of logic while finding a way to keep the logic cooled will be harder to solve.

— Elon Musk (@elonmusk) October 12, 2026

Capital Markets: "Softer Rates, Heavier Dollar"

From Marc Chandler at Bannockburn Global Forex:

The pullback in bond yields is the main development in the global capital markets today. Rates eased in Asia Pacific, but the eye of the storm has been in Europe and benchmark 10-year yields are off mostly 4-7 bp today. The move is being led by France and Italy. However, the fundamental driver, outside of lower (~2%) oil prices seem elusive. The protests in France continue. In the US, where the 10-year yield is off around five basis points to below 5.20% for the first time in a little more than a week, there is speculation that the Treasury is considering reducing the coupon supply in quarterly refunding and perhaps doing away with the 20-year bond altogether and replaced with bills.

The US dollar is trading softer amid the lower interest rate environment. The Canadian dollar is the laggard. The disappointing jobs data before the weekend make it more difficult for the Bank of Canada to close the policy rate gap, which is the widest since the late 1990s. Among emerging market currencies, Indian officials have engineered a powerful short-squeeze, and the rupee is up around 0.5% today. It gained almost 1% yesterday. Even as China’s 10-year yield slipped it lowest level (below 1.65%) in more than a year, the PBOC set the dollar’s reference rate at its lowest level since January 2023....

....MUCH MORE 

NASA And SpaceX Are Thinking About Using A Starship Rocket As A Space Station

Headlining September 28's article on SpaceX attempt at getting Starship into orbit (successful) I called the rocket ridiculously huge. That really doesn't do justice to just how big the thing is.

Even the numbers, 124 meters/407 feet tall, diameter: 9 meters (29.5 feet) are difficult to comprehend.*

From Space Science's Facebook page, September 25:

SpaceX plans to convert a Starship upper stage into a permanent, standalone orbital space station. New NASA documentation reveals that the company proposes using the massive interior volume of its stainless steel spacecraft to create a long-term habitat in low Earth orbit. 

Rather than returning the vehicle to Earth for reuse, this specialized station concept would remain permanently in space after launch. The sheer size of Starship gives it over six hundred cubic meters of internal space, which offers a living and working volume comparable to a major portion of the International Space Station inside a single rocket hull.

This proposal fits into NASA's broader strategy as the agency prepares for the eventual retirement of the International Space Station. By supporting commercial station concepts, NASA aims to transition its research activities to privately operated platforms while cutting the high operational costs of maintaining aging orbital infrastructure.

The primary technical hurdle for turning a Starship into an orbital outpost involves repurposing its massive propellant tanks once they are emptied in orbit. Engineers would need to safely vent residual liquid methane and liquid oxygen before converting those empty volumes into pressurized, human-rated living areas and scientific research laboratories. 

Converting a single rocket hull directly into a fully functioning space station could significantly lower the cost of building large structures in orbit. Do you think converting spent rocket stages into permanent space stations is a practical path forward for orbital habitats? 

*Here's one of the pictures they use at Wikipedia: 

You can just about make out the two trucks with their headlights on.

The people next to the cybertruck at the base of the tower are pretty much just a munchkin blur. 

"Tech’s New Rich Are Suffering From ‘Sudden Wealth Syndrome’"

Warning: distressing content.

From Bloomberg, September 11:

A growing post-exit ecosystem is helping founders deal with the unexpected difficulties of becoming extremely wealthy.

It was the kind of exit every entrepreneur dreams about. After bootstrapping a software startup together, Anastasia Koroleva and her husband sold for nine figures: 100% cash on Day 1, zero earnouts, no strings attached. But what followed blindsided the founder and former Skadden Arps M&A lawyer. Instead of the soft life she’d expected, Koroleva found herself dealing with years of unease and a painful divorce.

“Everything was very different from what we expected, and that was shocking for me,” she says. “I went through quite a difficult adjustment to that new reality.”

Today, 16 years after her payout and nearly three years into hosting her podcast, Exit Paradox, Koroleva explores what happens when net worth removes the need to work. Her interviews with the extraordinarily wealthy have uncovered a recurring theme: For many, the exit does not feel like a crowning achievement — or, at least, not for long. It can feel more like an existential rupture. Guests describe becoming staggeringly rich using the language of trauma: “recovering from a $500 million sale,” “thrashing about for a decade” or drifting in a state of aimless ennui.

Koroleva’s podcast is one piece of a growing ecosystem of content, coaches, therapists and communities giving people who’ve amassed more money than they’ll ever need somewhere to talk freely — a gap traditional wealth advisers and founder networks don’t fill. Its rise reflects two shifts: a tech sector generating wealth at breakneck pace and a post-Covid culture far more willing to talk about mental health.

“There’s been a tremendous softening of conversations around mental health and well-being among entrepreneurs,” says Sherry Walling, a clinical psychologist who specializes in founders. She credits that partly to the shock of Zappos founder Tony Hsieh’s death in 2020. “I do think that we’ve moved on from it as the world’s tiniest violin.”

Last November, Walling co-authored a playbook on the subject, Exit Strategy. She’d seen too many clients who’d done everything they set out to do, achieved the big exit — and were miserable. “There were some really dramatic stories,” she says. “People being suicidal, just really, really lost in their post-exit experience.”....

....MUCH MORE 

Thanks For The Memories: Korea's KOSPI Continues To Fall, Down 5.46% On Tuesday

As noted On October 8, "Meanwhile Korea's KOSPI index, of which Samsung and SK hynix comprise a bit over half the weighting" hence the memory ref. in the headline. I'll be here all week, be sure to tip the staff...

From Business Insider, October 12/13:

South Korea's chip-heavy stock market is plunging again as AI investors find more reasons to worry 

South Korea's stock market plunged on Tuesday as investors found a new reason to worry about the AI trade.

The benchmark Kospi index fell more than 7% intraday to its lowest level since July 31, extending a dramatic reversal for what was once the world's hottest AI-fueled stock market.

AI chip heavyweights Samsung Electronics and SK Hynix led the losses, falling 9% and 10%, respectively, by midday.

The weakness spread across Asia, with Japan's Nikkei and Taiwan's chip-heavy Taiex both falling around 3%. The declines followed another weak session for US semiconductor stocks overnight, including Micron.

Investors were weighing a growing list of concerns about the AI trade, from rising Chinese competition to questions over how the industry's massive infrastructure buildout will be financed.

"The latest catalyst has been further evidence of China's growing ambitions across the AI ecosystem," Chris Weston, the head of research at Pepperstone, wrote in a note Tuesday.

Weston pointed to Chinese memory-chip maker CXMT, which said it had made progress in developing technology that could pack more data onto memory chips and that it plans to introduce a new server-memory product by year-end.

CXMT has yet to demonstrate it can manufacture the technology at scale, and the announcement does not immediately challenge South Korea's lead in high-bandwidth memory chips used in AI accelerators...

....MUCH MORE 

The stocks and index made a small recovery late in the session with Samsung and SK Hynix down 7% and 9% and the index down the headlined 5.46%.

Fun fact: As a side-note on index construction, because the big chip makers are falling more than the overall index their weighting in the KOSPI is declining.

(as usual, fun facts on the internet are very often not really that much fun) 

Here's one year of the KOSPI via TradingView:

 

Euro AI: "Ecosia founder clarifies move away from Mistral – It’s about open models, not China"

Yeah, whatevs, dude.

An exclusive from EU-Startups, October 9:

Ecosia’s decision to drop French AI provider Mistral is not a move towards Chinese technology, but rather a shift towards more affordable, energy-efficient open AI models, founder and CEO Christian Kroll clarified in a conversation with EU-Startups.

“We’ll probably be using Melious.ai in future. Unlike Mistral, this is a European company that offers high-quality, affordable AI inference powered by green electricity,” shared Christian in an exclusive interview.

The Berlin-based search engine recently made headlines after POLITICO reported that it was replacing Mistral with open models, including Chinese offerings such as Alibaba’s Qwen, Z.ai’s GLM and Moonshot AI’s Kimi.

However, Christian stressed that the company’s focus is on open models rather than their country of origin. These offer lower costs, greater flexibility and reduced energy consumption, aligning with Ecosia’s environmental mission.

Addressing concerns about political censorship in Chinese AI models, Christian explained that Ecosia can switch to alternative models when dealing with sensitive subjects, such as questions about Taiwan. The company is also working to eliminate political biases from its AI-generated answers.

The models are accessed through German platform Melious, which operates on European infrastructure powered by low-carbon energy. This allows Ecosia to use internationally developed AI while keeping its infrastructure and data processing in Europe....

....MUCH MORE 

The Tesla/SpaceX Chip Fabrication Plant Is Hiring (TSLA; SPCX)

From Elon Musk:

@elonmusk In 1941, Ford built the biggest factory on Earth. By 1944 it was rolling out a B-24 bomber every hour. Lindbergh called it "the Grand Canyon of the mechanized world." Terafab will be 25 times bigger. https://t.co/NIw4GpE1dh

— Museum of American Exceptionalism (@AmericaMuseum) October 12, 2026

"Microsoft is announcing its third-generation Maia in-house AI chip today..." (MSFT)

From The Verge, October 12: 

Microsoft’s new AI chip makes it less reliant on Nvidia’s GPUs
The new Maia 300 chip will start rolling out to production AI workloads in 2027. 

Microsoft is announcing its third-generation Maia in-house AI chip today, designed to be the “primary AI inference system” for Microsoft’s products and services. Maia 300 not only improves the cost and efficiency of running AI workloads in the cloud, it’s also more capable of handling the latest reasoning models and agentic tasks.

Maia 300 will start being rolled out to production in 2027, and it has been designed with efficiency in mind. “We expect Maia 300 to deliver 40 percent more tokens per megawatt compared to leading GPU-based systems,” says Scott Guthrie, executive vice president of Microsoft’s cloud group. “And in a full 96-accelerator configuration, it delivers up to 7x the rack-scale token throughput of Maia 200.”

These efficiency improvements will allow Microsoft to rely mainly on its in-house AI chips soon, instead of ones from Nvidia and AMD. “We will scale our Azure Maia family to multi-gigawatt deployments starting in 2027, making Maia the primary AI inference system for Microsoft products and services,” says Guthrie....

....MUCH MORE 

"Americans Hall, Woodford win Nobel prize for work on stabilising economies"

From Reuters, October 12:

• Winners' work leaves policymakers better equipped to deal with shocks, says Nobel committee chair
• Woodford says new framework helped policy after global financial crisis
• Hall and Woodford's work underpins concepts including sticky inflation and output gap 

US academics Robert Hall and Michael Woodford won the 2026 Nobel economics prize on Monday ‌for decades of work developing ground-up models currently used by central banks and finance ministries across the world to stabilise economies.

 

"With them, we are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume," John Hassler, Chair of the Committee for the Prize ​in Economic Sciences, said in a statement.

 

The prestigious award, formally known as the Sveriges Riksbank Prize in Economic Sciences in ​Memory of Alfred Nobel, is the final prize to be given out this year and is worth 12 ⁠million Swedish crowns ($1.2 million).

 

One of the laureates' key insights is that economies could only be kept on an even keel by taking ​into account the millions of decisions made at a micro-level by households and businesses, rather than by using top-down theories of how economies work.

 

"...Authorities ​shouldn't view stabilization of the economy as an exercise that is simply conducted by people pulling levers to control the economy independently of what people in the economy understand about this," Columbia University's Woodford, 70, told a news conference.

 

In contrast to the oil shocks of the 1970s, when central banks struggled to combat ​sky-high inflation, Woodford said the new framework was useful during the global financial crisis of the late-2000s to bolster traditional tools of monetary ​policy.

 

"Making more explicit statements about the likely future path of interest rate policy, as opposed to relying on simply being able to cut interest rates ‌further immediately, ⁠that was an important part of the policy response in the years from 2009 onward," he said....

....MUCH MORE

Over the years we've been more intrigued by Woodford than by Hall.

Professor Hall has only a couple brief  appearances on the blog, one was a mention in passing by John Cochrane. He's a member of the MIT economics mafia (ditto Woodford) though not pictured on the handy chart. (PhD advisor Robert Solow)

Woodford on the other hand...we once introduced (October 2014) using the term of art favored by the cognoscenti: 

Minneapolis Fed: "Interview with Michael Woodford"
One of the big dogs.

It seems everyone wanted to talk to him. Here he is a year earlier:

Goldman Sachs' Allison Nathan Interview with Economist Michael Woodford

And a few months prior to that. April 2013"

Let's Just Proclaim Jubilee: "Quantitative easing should be used to write off government debt"

From the Telegraph:
Helicopter QE will never be reversed

Readers of the Daily Telegraph were right all along. Quantitative easing will never be reversed. It is not liquidity management as claimed so vehemently at the outset. It really is the same as printing money. 

Columbia Professor Michael Woodford, the world's most closely followed monetary theorist, says it is time to come clean and state openly that bond purchases are forever, and the sooner people understand this the better.

"All this talk of exit strategies is deeply negative," he told a London Business School seminar on the merits of Helicopter money, or "overt monetary financing".

He said the Bank of Japan made the mistake of reversing all its money creation from 2001 to 2006 once it thought the economy was safely out of the woods. But Japan crashed back into deeper deflation as soon the Lehman crisis hit.

"If we are going to scare the horses, let's scare them properly. Let's go further and eliminate government debt on the bloated balance sheet of central banks," he said. This could done with a flick of the fingers. The debt would vanish. 

Lord Turner, head of the now defunct Financial Services Authority, made the point more delicately. "We must tell people that if necessary, QE will turn out to be permanent."

The write-off should cover "previous fiscal deficits", the stock of public debt. It should be "post-facto monetary finance".

The policy is elastic, for Lord Turner went on to argue that central banks in the US, Japan and Europe should stand ready to finance current spending as well, if push comes to shove. At least the money would go straight into the veins of the economy, rather than leaking out into asset bubbles....MORE 

There is some really dark humor in that "horses" reference, here's the story:

 Does it really matter what these affectionate people do — so long as they don’t do it in the streets and frighten the horses!

• Reply to a young actress who asserted that an older actor in a production showed too much affection for the leading man (c. 1910); as reported by Alan Dent in Mrs. Patrick Campbell, p. 78 (1961). Source

If I'm interpreting this correctly, one of the sharpest monetary theorists in the world is saying we're fucked; and might as well do the economics equivalent of "Let the good times Roll."

Oddly enough Professor Woodford holds the John Bates Clark Chair at Columbia but did not win the Clark Medal.
He did however win a MacArthur 'Genius Grant'.

That's all I know. For more here's 

https://www.nobelprize.org/prizes/economic-sciences/2026/summary/

"Foreign investors flee South Korean stocks as AI boom loses steam"

On Monday the big index, the KOSPI closed down 3.65% (-241.69) at 6,384.24.

From Investing.com, October 10: 

South Korean stocks are struggling to attract buyers as enthusiasm for artificial intelligence-related investments fades, triggering heavy foreign outflows and a sharp decline in trading activity. 

Trading turnover in South Korea’s $4.3 trillion equity market has plunged 70% from its late-May peak, while the benchmark Kospi has fallen 22% in the second half of 2026, according to Bloomberg.

The reversal follows a first-half rally that made the Kospi the world’s best-performing major equity benchmark, driven largely by demand for AI memory chips.

Samsung Electronics and SK Hynix, which together account for more than half the index’s weighting, have become a source of vulnerability as investors question whether the semiconductor boom can continue.

Foreign investors have withdrawn $131 billion from Korean equities this year, the largest outflow among major Asian markets, according to exchange data compiled by Bloomberg.

Concerns over demand were evident when Samsung shares declined Thursday despite the company reporting a nearly ninefold increase in quarterly operating profit.

Market support from corporate share repurchases is also weakening. Samsung and SK Hynix are approaching completion of combined buyback programmes worth 55 trillion won ($41 billion).

Retail participation has similarly declined following July’s selloff.

Outstanding margin loans have fallen to approximately 33 trillion won from a June peak of 38.6 trillion won, while brokerage deposits have dropped to around 100 trillion won from nearly 140 trillion won.

Investors are increasingly favouring Taiwan, whose technology sector offers broader exposure to the AI supply chain....

....MORE 

"Thieves pull off Italy’s biggest-ever wine heist, stealing 30,000 bottles worth 5 million euros"

From the Associated Press, October 9: 

Thieves stole about 30,000 bottles of some of Italy’s most prized wines worth an estimated 5 million euros ($5.8 million) from a winery in Tuscany, in what the producer described Friday as the country’s largest wine theft on record.

The theft targeted Marchesi Antinori’s facility near Cortona, in the province of Arezzo, where a group of at least seven thieves on Saturday night made off with bottles of some of Italy’s most sought-after wines, including Solaia, Tignanello and Guado al Tasso. The theft was discovered Monday, but the company made it public on Friday to avoid interfering with the investigation.

Chief Executive Renzo Cotarella said the thieves disabled the winery’s alarm system and surveillance cameras before entering with two large trucks. Using the company’s forklifts, they loaded the vehicles with wine and fled during the night.

“It is certainly a very well-prepared gang,” Cotarella said, adding that it may be the same group that has targeted other Italian wineries in recent months. “A theft of this size and value has never occurred in Italy.”

The stolen bottles were all from the 2023 vintage and are typically sold at a retail price of between 150 euros and 500 euros each. They included about 10,000 bottles of Solaia, one of Antinori’s flagship wines, from what Cotarella described as an exceptional year.

The company, founded in 1385 and run by the Antinori family for 26 generations, said it was alerting customers worldwide to be wary of offers outside official sales channels....

....MORE 

Lost Parchment Reveals People Who [contracted and] Survived The Black Death (plus Germany's Chancellor Merz)

I was reminded of this story by German Chancellor Merz (no, not his Skeletor-like appearance), more after the jump. 

From The Conversation via ScienceAlert, 17 May 2026:

In our research in the British Library's medieval collections, we have identified a previously unnoticed document that provides fresh insights into the survivors of the outbreak of plague known as the Black Death (1346–53). 

The document – a scrap of parchment inserted into an account of the Ramsey Abbey manor of Warboys in Huntingdonshire – records how much time peasants were absent from work when struck down by the plague.

It also reveals the names of those who survived and how long their employers believed recovery could take.

In our recent paper with Barney Sloane, we shed new light on a group of 22 tenants who probably contracted plague, languished on their sickbeds for several weeks, and then recovered.

As one of the deadliest pandemics in recorded history, it has been estimated that between a third and two-thirds of the population of medieval Europe died during the Black Death.

Given the sheer scale, many historians have focused on discovering details about those who died. Yet this has left the histories of those who contracted plague and recovered largely untold.

Despite the deadliness of the disease, it was possible to recover from plague, and medieval chroniclers mention the possibility – however unlikely – of survival. For example, Geoffrey le Baker, a clerk of Swinbrook in Oxfordshire, wrote in the following decade that he thought recovery depended on people's symptoms:

People who one day had been full of happiness, on the next were found dead. Some were tormented by boils which broke out suddenly in various parts of the body, and were so hard and dry that when they were lanced hardly any liquid flowed out. Many of these people escaped, by lancing the boils or by long suffering. Other victims had little black pustules scattered over the skin of the whole body. Of these people very few, indeed hardly any, recovered life and health.

But who recovered? Why did so many succumb to the disease when others survived? And just how long was this "long suffering"?

Unfortunately, there is remarkably little documentary evidence because most medieval sources record information about mortality rather than ill health.

Unique list of plague survivors
A unique inclusion in the account of the manor of Warboys details a group of people who fell ill between the end of April and the start of August 1349.

The monks of Ramsey Abbey wrote a list of their tenants who had fallen sufficiently sick that they could not work on the lord's lands and detailed the length of time that they were absent.

People were clearly affected differently by their experience of plague.

The quickest recovery was that of Henry Broun who missed just a single week of work. By contrast, John Derworth and Agnes Mold had much more protracted illnesses and were both absent for nine weeks.

The average length of illness was between three and four weeks, with three-quarters of people returning to work in under a month. The speed of their recoveries is all the more surprising given that they were entitled to up to a year and a day of sick leave from work.

This list of survivors includes a preponderance of tenants who occupied larger holdings on the manor....

....MUCH MORE 

Also at ScienceAlert, October 8:

Sexually Transmitted Diarrhea Is Exploding in The US. And It's Growing Resistant to Medicine

And Chancellor Merz? It was re-reading his sick leave edict:

Germany's Chancellor Merz: We can no longer accept the extraordinarily high levels of sick leave in our companies. We are abolishing sick leave by telephone and introducing the requirement to submit a medical certificate from the very first day of illness. We know this is a tough decision. But we can no longer afford this competitive disadvantage caused by prolonged absences from work.

— Clash Report (@clashreport) July 2, 2026

And Skeletor? 

Skeletor is the main antagonist of the Masters of the Universe franchise, and is the most dangerous threat on Eternia. His only goal is power, and to that end, he will not rest until he possesses the secrets of Castle Grayskull, which will enable him to become master of the universe. This places him in direct conflict with the only man powerful enough to stop him, He-Man.... 

— fandom

War Comes To The Arctic

It's actually been going on for a while* but is now accelerating and expanding. 

From ZeroHedge, October 10:

Ukraine's Drones Reach Russia's Arctic "Gas Capital"; Is Nornickel's Palladium Next? 

For most of the war, Russia's Arctic was the part of the map nobody bothered to defend. That changed a month ago.

On September 9, Ukraine's Special Operations Forces said their drones flew "more than 3,000 kilometers" to hit two gas condensate plants in the Yamalo-Nenets region: Gazprom's Novy Urengoy condensate treatment plant, with a design capacity of 19.5 million tons of feedstock a year, and Novatek's Purovsky plant near Tarko-Sale, which processed 13.4 million tons of condensate in 2025 (Hromadske, Al Jazeera). "Until today, this was considered an absolutely safe rear area for the aggressor," the SOF said. Bloomberg and Reuters both picked up the claim; the Kremlin's envoy to the Urals, Artem Zhoga, confirmed it was the first attack to reach the Arctic.

On Tuesday Moscow gave its answer: cash. The Yamalo-Nenets government approved a payment of 1 million rubles (about $11,700) for every drone destroyed over the region, the highest bounty any Russian region has offered, according to TASS (others pay 20,000-200,000 rubles). The money goes to local "mobile fire groups," and there is a catch: per the decree, it is paid only if the defended facility suffers no damage, and the kill has to be confirmed by the military commissariat. Joining a fire group pays 100,000 rubles if you have a job and 150,000 if you don't, and requires signing a Defense Ministry contract (Barents Observer).

Paying the unemployed more than the employed to stand on the tundra with a machine gun: nothing says confident air defense quite like it.

Regular readers know we have been tracking Ukraine's drone range creep since it first reached Western Siberia last October. Since then the line has moved from Tyumen to Omsk (hit again on Thursday) to the Arctic Circle. So the obvious next question, and the one now going viral on X, is whether Norilsk, home of the world's biggest palladium miner, is next. As we show below, that is the wrong question: the Nornickel asset that matters for palladium is not in Siberia at all, and it is much closer to Ukraine than Novy Urengoy.

What Actually Got Hit

As usual, Russian officials described the strike as a successful interception. Yamal governor Dmitry Artyukhov said "falling debris" caused a fire at "one of the city's industrial facilities," with no casualties (NV). Somehow the debris keeps landing on the most expensive equipment.

Ukrainian OSINT group CyberBoroshno says the drones hit the de-ethanization unit at Novy Urengoy. That matters more than it sounds: the unit's gas feeds the Novy Urengoy gas chemical complex, which can make up to 400,000 tons of low-density polyethylene a year, so without it the chain from condensate to plastic stops (per RBC-Ukraine, Militarnyi). Satellite imagery also reportedly shows damage at Purovsky. Both of those claims come from Ukrainian OSINT and Russia has published no production data, so treat them accordingly.

Purovsky is the more interesting target for markets. According to Novatek's own description, most of its stable condensate goes by rail to Ust-Luga on the Baltic for processing and export, the same port complex Ukraine has hit repeatedly, most recently when drone strikes crippled Russia's key Baltic ports in March. Ukraine has now hit Novatek's condensate chain at both ends, 2,800 km apart.

The region is not a side show either. Yamalo-Nenets produces roughly 80% of Russia's natural gas and holds about two-thirds of its gas reserves (Al Jazeera); Yamal LNG and Arctic LNG 2 sit at its northern edge. The Fire Point FP-1 that its maker says carried out the attack costs under $60,000 to build. Even in Arctic economics, a million-ruble bounty per drone and a $60K drone is a trade that only works for one side.

All of this lands while Moscow's oil and gas budget is already shrinking: the Finance Ministry cut its 2026 oil and gas revenue estimate to RUB 7.6 trillion from RUB 8.9 trillion.

The Norilsk Siren That Wasn't (Quite)

Which brings us to this morning's viral claim, courtesy of Visegrád 24: "The city of Norilsk has started testing its air raid alarm system" because Ukraine "could be about to extend the range" of its drones, which "have a range of 3500 km. Norilsk is 4500 km away."....

 

....MUCH MORE
*September 18, 2024 - Ukraine Is Bombing Russia's Far North
That's a long way from Kyiv. 

• September 11 - Governor: Murmansk is under drone attack
• September 11 - Ukrainian attack on Kola Peninsula comes as Russian Navy launches strategic exercise
• September 12 - "We are all afraid," woman in Olenegorsk says as Ukrainian drones attack local airbase
• September 12 - Ukrainian drones are on the way. Murmansk again closes airspace

April 2025 - "Norway Is on a 100-Day Mission to Test Military Limits in the Arctic"

Matt Levine On Compute Futures Manipulation

From Bloomberg Opinion's Money Stuff, September 17:

....Compute futures

I wrote once about egg market manipulation:

There’s a big market (egg producers selling eggs to supermarkets etc.), and there’s a small market (egg producers selling extra eggs to each other on an electronic exchange). The price in the small market determines the price in the big market. Participants in the small market are also participants in the big market. You can spend a little money in the small market to move the price, which can make you a lot of money in the big market.

That’s the core idea of market manipulation: You find some small illiquid market that determines the price of some much larger and more liquid market. You buy $100 million worth of stuff in the large liquid market, without moving the price much. Then you buy $1 million worth of stuff in the small illiquid market, causing the price — in the illiquid market, and also in the liquid one — to double. You sell your stuff in the large liquid market for $200 million (it’s doubled), again without moving the price much. Then you sell your stuff in the illiquid market, maybe driving the price down to zero, but so what: You lose $1 million on your small-market manipulative trades, and make $100 million on your large-market manipulated trades.

In general, this is hard to pull off, because what markets have structures like that? Why would some giant liquid market depend on some small illiquid market for its pricing? There are a few salient examples — eggs, Indian index options, interest-rate swaps in the 2000s — but they’re kind of weird.

But maybe that’s the wrong way to think about it. The other day, I quoted a judge’s opinion in an insider-trading lawsuit, saying:

This is modern trading — where algorithms, AI agents, and career traders are all jockeying, minute by minute, for the newest hot trade, using analyst information, market trends, news reports, scuttlebutt from online forums, and other tea leaves to make split-second decisions.

You could tell a story like this: The marginal prices of stocks are set by, you know, four hedge funds; they are set by “algorithms, AI agents and career traders” reading “tea leaves to make split-second decisions.” The stock market is big and liquid. But the tea leaf market is weird and small. The marginal price setters in stock markets are looking to some data sources to set prices, and those data sources might be small and niche and manipulable, and if you can manipulate them you might have a big impact on stock prices.

Arguably the biggest market in the world right now is, like, “AI.” Trillions of dollars of stock market capitalization, of data-center financing, of expected capital expenditures and revenues, all depend on the path of artificial intelligence adoption. The modern debt market is basically built on the value of computer chips as debt collateral. If there is news suggesting that AI progress will be faster or slower than expected, that causes huge shifts in value.

Meanwhile we’ve talked occasionally about compute futures. Several exchanges are working on developing financial futures products to price and hedge the expected future cost of computing power. This has an obvious use case in the AI buildout; I wrote once:

If you can lock in the future price of computing capacity, then building computing capacity is a less speculative endeavor. You’re not building a data center hoping to sell compute to the AI startups of the future; you’re building a data center knowing that you can sell compute at the futures price that you’ve locked in.

But this is all pretty early and small right now; the compute futures are more of a proof of concept than a robust liquid market for AI computing.

Here is a fascinating story from Semafor reporting that “the US Commerce Department last month ordered Kalshi to take down one of its products tracking the price of AI compute,” and has “also pushed the Commodity Futures Trading Commission … to effectively freeze approval of new compute contracts for 60 days.” (“’This story is false,’ a Commerce spokesman said,” though.) Why? “It’s unclear why Commerce is worried about the nascent market,” but: 

One potential reason floated to Semafor by market participants is that compute futures could be manipulated to show a sharp drop in the cost of older chips, which might destabilize AI stocks and debt markets. Some of these markets are thinly traded, which could lead to volatility even without bad actors.

That is: Maybe you can spend a small amount of money to manipulate the market for the value of computer chips as long-term debt collateral. The whole AI economy is, arguably, built on that value. If it goes down, maybe hedge funds will notice. Maybe that will crash the prices of AI stocks and bonds. Maybe you can make a lot of money in the biggest market by spending a little money in the compute futures market.....

....MUCH MORE in that issue of Money Stuff:

The Whole Indian Options Trade Was Too Good

EbitdAI 

Not like other AI safety advocates 

Things happen

So much more. 

"Saudi authorities say attack on Riyadh airport killed 12 people and wounded over 300 more"

From the Asssociated Press, October 10: 

Saudi authorities say an attack on Riyadh airport killed 12 people and wounded over 300 more.

The statement says the dead included four Saudi citizens as well as two Bangladeshi nationals, a Palestinian, a U.S. citizen, an Egyptian, a Jordanian, a Syrian and a Sudanese.

It said some of those injured were in critical condition.

THIS IS A BREAKING NEWS UPDATE. Check back for updates. AP’s earlier story follows below.

The international airport in Saudi Arabia’s capital, Riyadh, was attacked again Saturday as the kingdom faces an extraordinary series of assaults in the new front in the Iran war. President Donald Trump said he was evaluating whether the U.S. should join Saudi strikes against the Tehran-backed Houthi rebels in neighboring Yemen.

The Houthis claimed attacks earlier in the week on King Khalid International Airport that killed three Saudis, including a pilot. On Saturday, a missile struck a complex housing terminals 3 and 4 for domestic flights and many people were wounded, a regional official said, speaking on condition of anonymity because they weren’t authorized to speak to the media.

“We may. We’re going to look at it,” Trump said of intervening. “We just found out about the recent attack. So we’ll make a decision. We move very quickly.”....

....MUCH MORE (continually updated)

"Samsung dangles $560,000 bonuses to keep engineers from China"

I wonder if there are any Chinese engineers who would like to work for the Koreans?

From Asia Times, October 10:

Lawmaker’s review traced 27 Samsung and SK Hynix veterans moving to China’s CXMT, driving firms to pay dearly to retain talent  

A Samsung memory chip worker earning about $60,000 a year could receive roughly $560,000 in bonuses before tax, according to the company’s largest union. Its estimate includes both Samsung’s existing profit-sharing bonus and a new special payment. Samsung hasn’t confirmed the amount.

On October 7, the company outlined how that special bonus would work: 10.5% of its chip division’s 2026 operating profit would go into an uncapped pool. Samsung plans to pay it in shares, subject to shareholder approval.

The next morning, Samsung estimated third-quarter operating profit at 107.4 trillion won, roughly $80 billion, almost nine times the year-earlier figure.

Those profits explain how Samsung can afford the payout. Findings released for a parliamentary audit the same week show the competition for the engineers it wants to keep.

What did the audit find?

The office of Choi Soo-jin, a People Power Party lawmaker on the National Assembly’s science and ICT committee, reviewed LinkedIn and other public career records. It traced at least 27 senior engineers from Samsung and SK Hynix who went on to work at ChangXin Memory Technologies (CXMT), China’s biggest DRAM maker.

Together they had spent 415.9 years at the two Korean companies, an average of 15.4 years each. Six were principal or executive-level staff with more than 20 years in mass production.

Eight worked in circuit design and seven in process integration. Others came from equipment, yield analysis, and advanced packaging, a mix that Dong-A Ilbo said was enough to run a whole chip factory....

....MUCH MORE 

A Dramatic Improvement In The U.S. Drought Situation And Outlook

From the U.S. Drought Monitor at the University of Nebraska-Lincoln. First up, the current (published October 8) map:

 

The improvement via the National Drought Mitigation Center: 

 

Data Tables: Percent Area in U.S. Drought Monitor Categories (back to April 21)

Week	None	D0-D4	D1-D4	D2-D4	D3-D4	D4	DSCI
2026-10-06	24.17	75.83	55.21	31.45	9.87	1.15	174
2026-09-29	21.64	78.36	59.38	33.78	11.53	1.59	185
2026-09-22	21.12	78.88	59.24	33.58	12.17	2.11	186
2026-09-15	19.03	80.97	59.37	33.82	12.54	2.02	189

This is exactly what we were thinking of back in May—"seems to be an El Niño developing" was decidedly tongue in cheek, everybody and his brother was solemnly proclaiming "We're all going to die." 

May 14, 2026 
Drought:Intensifying, Spreading Across The U.S.

This is the first time this year we've posted the Drought Monitor map.

There seems to be an El Niño developing off the coast of South America which would mitigate some of the dryness in the southern and central U.S. Meaning that as all around you are losing their heads shouting "drought, drought" there would be wetter weather just over the horizon which would ruin any long futures one had on corn, beans or wheat.

However! If the arrival of the moisture is delayed much past July 1 it could be just awful for the farmers. So this is a heads-up but not actionable. Yet.

Layering one complex/chaotic system, financial derivatives, on top of another complex/chaotic system, weather can get interesting in ways even the best supercomputers haven't quite figured out....

The moisture is not a direct result of El Niño but rather from the Pacific storms (which are partly the result of the El Niño) including two hurricanes that have landed in Mexico and moved on to the Southwest United States.

And here is another, via The Watchers, October 10:

 

Tropical Storm Rachel brings flash-flood threat to Southern California and U.S. Southwest 

Now we have to determine if the rain came early enough and heavy enough to aid the 2027 planting season.

Anthropic Says Its AI Agents Have Filed Visa Applications, Also Reported A Murder

From the Washington Post, October 9:

Anthropic AI agents took ‘unintended’ actions on government sites
One AI system made a false tip to a police hotline.

SAN FRANCISCO — Anthropic, maker of the Claude chatbot, said that some of its AI agents had taken unintended actions on federal, state and local websites, including submitting a false tip about a murder to a Philadelphia police hotline.

The State Department said separately Friday that an Anthropic testing model had filed 19 visa applications in August and another in May using a form on the department’s website.

Anthropic said in a report published Friday that an internal review had discovered that its AI models had acted inappropriately in some instances during testing and while employees were using them.

In one incident, an AI agent exploited a design flaw in a state government website to freely access public data that usually required paying a fee. In another incident, an AI agent submitted a federal government form when it was instructed not to.

“We have briefed the White House on these cases and notified each agency involved,” Anthropic wrote in its report. The company said the incidents led it to turn off internet access for AI agents during all internal testing, pending a review of security measures.

The State Department said in a statement that the visa applications were incomplete and not processed....

....MUCH MORE

note to self: AI will be defeated by paperwork and bureaucracy. 

And at TechCrunch, October 9:

Anthropic can’t reliably control its AI agents. It’s cutting off its internal evals from the live internet instead 

Motorcars: "To Make More Money, Rolls-Royce Is Aiming Higher on Price, Not Production"

 

"The quality will remain long after the price is forgotten."

—Sir Henry Royce 

From the New York Times, October 5:

The luxury carmaker is expanding its factory in Britain to focus on rarefied custom cars. First up is a $3.5 million-plus electric roadster. 

This April, Rolls-Royce unveiled a new model meant to look down at even the highest of high-end cars. Its battery-powered roadster, known as Project Nightingale, is imposing and intentionally impractical. Though it is as long as a Cadillac Escalade, it sports only two seats. Like an elite speedboat, it’s all prow and tail.

Limited to 100 units globally, this handmade vehicle starts around $3.5 million. And that’s before expensive customization options, which are myriad and de rigueur, and could add 50 percent to the price. This makes it not just the venerable British carmaker’s top offering, but also an exclamation point on its business strategy: expanding profit by catering to its elite customers’ desire for something uniquely personalized and conspicuously consumable.

“We wanted to respond to the growing demand that we see from our clients to create coach-built cars,” said Chris Brownridge, chief executive of the 122-year-old ultraluxury brand, which the BMW Group has owned since 1998. The demand is real. According to the brand, all 100 Project Nightingale allocations were reserved before the project was even announced publicly.

Coachbuilding isn’t new to Rolls. During the company’s first five decades, every Rolls-Royce was coach-built. The brand would sell a rolling chassis with an engine, drivetrain, instrument panel, steering wheel and upright “Pantheon” grille, and clients would hire a specialty firm to construct a body to their specifications.

Rolls never entirely gave up the practice, as it has recently demonstrated with its Sweptail coupe (just one was made, and topping eight figures) and Droptail roadster (a robust four of these were built). But it is now prioritizing in-house coachbuilding, doubling the size of its manufacturing plant in southern England to accommodate the practice, without noticeably increasing its annual production capacity.

More, and more complex, customization processes also invite clients “behind the curtain,” as Mr. Brownridge said, to meet with designers, engineers and executives, providing the access and direct involvement they crave.

“People consuming luxury don’t just want things. They want stories, they want experiences. They want to, with the most ambitious clients, create a legacy of something which they’ll hand down to future generations,” he said.

Milton Pedraza, chief executive of the Luxury Institute, a consulting firm, sees alignment here with the desires of the very affluent. “These clients are willing to pay for value,” he said. “And that is not only functional value, but personal value.”

To serve, and catalyze, these desires, Rolls-Royce has opened “Private Office” locations in key markets: New York, Shanghai, Dubai, Seoul, and at its headquarters in Goodwood, England. Here, top clients work directly with advisers who prompt their idiosyncratic fantasies with the latest materials and capabilities — be they on an “entry level” $370,000 Ghost sedan, or a one-off coach-built vehicle.

According to Philippe Fabre de la Grange, Rolls-Royce’s head of bespoke, the options go well beyond the burl veneers and flawless Connolly leather hides for which the brand is known.

“We’re playing with technical fibers, with new textiles integrated within lacquer, with new types of material that we use in the context of marquetry — not only carefully curated woods, but mother-of-pearl, abalone, metal,” Mr. de la Grange said. He also mentioned hand-painting, embroidery and the enhanced use of light and projection.

Rolls-Royce is constantly seeking fresh “canvases” for in-car personalization. Clients can now design constellations of thousands of tiny rheostatic LEDs to be impregnated into their vehicle’s door panel, headliner or cargo area. They can have personal text or iconography engraved on the reverse of their spherical metal climate vents.

“It’s like the lining of a jacket,” Mr. de la Grange said of these practices. “You don’t show it off straightaway, but you know it’s there. It makes you feel good. And if you want to flash it, you can.”

On the vehicles’ exterior, plebeian paint will not suffice. Colors can be developed and named exclusively for a client to match a favorite artwork or article of clothing. Finishes can feature frosted, layered, crystalline, color-shifted or laser-engraved elements.

Rolls even maintains a special workshop, the EX Vault, which, like James Bond’s “Q” gadget workshop, gathers designers, engineers and craftspeople to experiment with new materials and processes.

“We want to be pushing the boundaries, doing new content, evolving skills,” Mr. de la Grange said. The company’s hiring of artisans has helped increase factory head count by around 50 percent in the past decade.

Of course, Rolls-Royce isn’t doing this simply to keep dying skills alive. “At the highest level, our goal as a business is to create value,” for clients, but also for the business and shareholders, Mr. Brownridge said....

....MUCH MORE 

I think there is a school where folks like Mr. Philippe Fabre de la Grange and ultra-high-end art dealers learn to speak like that. 

Maybe it's offered at the Luxury Institute. 

"As the US Runs the AI Race, China Plays a Different Game"

From Harvard Business School's Working Knowledge, September 25:

While the US fixates on a “frontier-first” approach, China seeks to embed the technology throughout its economy. Meg Rithmire explains why understanding their differing strategies is critical.  

If AI is the new space race, how will we know when a country has won?

After all, an August article in Asian Economic Policy Review argues that China and the United States are not even racing toward the same planet as they pursue fundamentally different AI strategies. The US is fixated on a “frontier-first” approach, prioritizing increasingly powerful foundation models and infrastructure in hopes of capturing global dominance, while China is focused on embedding the technology deeply throughout its economy.

The distinction matters for businesses and policymakers because the country that gains the most from AI may not develop the most powerful model, but could instead be the one that translates AI most effectively into productive economic activity, explains Harvard Business School Professor Meg Rithmire.

There’s another version of the AI race, which is really about whose technology stack the world is going to rely on.

“China’s Diffusion-Forward AI Strategy: The ‘AI Race’ in Political Economic Context,” which Rithmire wrote with Harvard Kennedy School postdoctoral fellow Hao Chen, details how China’s state-directed approach to AI investing aims to improve industrial efficiency by integrating AI into manufacturing and robotics. Drawing on Chinese policy documents and registration data for AI services, as well as an analysis of humanoid robotics firm UBTECH, the researchers document the government’s expanding investment role, with nearly one in four Chinese AI services crediting some degree of state involvement in 2025, up from less than 5% in 2023.

In a conversation edited for length and clarity, Rithmire, the James E. Robison Professor of Business Administration, explores the race between China and the US to develop increasingly capable systems, including artificial general intelligence (AGI), which can outperform the “median human” in economically valuable work, as well as the broader competition over the technology stack that could shape the global economy.

Why is the current tech moment often compared to the space race?

"One interpretation is that whoever reaches AGI first is going to have enormous capabilities vis-a-vis the rest of the world. The dominant thinking right now in Washington and Beijing is about who has better capabilities of escalation dominance—meaning you can hurt me, but I can always hurt you more. I can dominate the escalation of our competition, and I then no longer fear your retaliation."

Why does it matter how advanced AI gets?

"The thinking around AGI is that there are some amazing capabilities that could allow one country to destroy the other. These are allegedly such powerful models that, if some adversary had that technology, they could use it to infiltrate systems, hack passwords, and shut down critical infrastructure. There’s a military defense logic to this thinking: If China gets these capabilities before the US, they’re going to use them to destroy other societies, so we should get them first because we won’t use them to destroy everyone else.

The way US companies and a lot of policymakers in DC have thought about it is: The biggest risk is China getting to AGI before the US does. And that’s the reason we have to focus on the quality of large language models. But what AGI really is, nobody knows. Sometimes I have this interesting debate with technology people, which is—will we even know when we have AGI?"

What else matters besides superintelligence?

"There’s another version of the AI race, which is really about whose technology stack the world is going to rely on for the next several generations. In a world where the US wins the AI race, most of the world is dependent on the US for the hardware stack, the chips, and US LLMs to build the application-layer products that are then sold into the rest of the world.

That's more of an economic power—locking the world into American technology such that American companies benefit, American markets benefit, and the world softly depends on the US for the AI stacks that are changing the way people work, receive services, buy things, and live."....

....MUCH MORE 

Also at HBS Working Knowledge, October 2025: "How AI Chatbots Try to Keep You From Walking Away" 

"Europe’s CEOs are ready to turn its energy challenge into a competitive edge"

I've obviously been thinking too small with my dream of turning compliance into a profit center.* 

From Fortune Magazine, September 17:

• In today’s CEO Daily: A dispatch from Fortune’s CEO Forum in London
• The big leadership story: Marc Benioff urges AI firms to take responsibility for their products.
• The markets: U.S. futures are up after the Fed rate hike caused a selloff.
• Plus: All the news and watercooler chat from Fortune.

Good morning. Kirsty McGregor, Editorial Director for Europe, writing from London this morning. How can Europe unlock its next phase of growth? That was the question running through nearly all the conversations at the Fortune CEO Forum in London yesterday, where we brought together execs from companies including Mastercard, Ferrari, BlackRock, Shell, EDF, Google, OpenAI, Honeywell, Anthropic, and Microsoft to explore the forces reshaping Europe’s economy. 

Our venue was the historic Barber-Surgeons’ Hall in London, an apt place to have a conversation about Europe’s future. The U.K. remains deeply connected to European business and finance, while also maintaining close links to the U.S. and the wider global economy. At a moment of extraordinary volatility—from war in the Gulf and uncertainty in U.S. politics to intensifying competition from China—London offers a useful vantage point for thinking about how Europe should adapt.

The leaders who filled the room are grappling with a perfect storm of mounting energy pressures, geopolitical uncertainty, slowing productivity, and how to navigate the promise—and darker possibilities—of AI. Those themes were evident during the day’s discussions, which were private to allow for candid debate. But a few takeaways emerged:

Europe has scale; will it equal growth? Earlier in the day, we released the brand new Fortune 500 Europe list, which provides a useful snapshot of Europe’s corporate heft. The 500 companies generated $15.5 trillion in revenue this year, up 4% from last year, and more than $1 trillion in profits. That combined revenue is equivalent to half of Europe’s GDP. Finance, energy, and automakers together account for over half of all revenues and profits on the list. 

The ranking is a reminder that Europe has enormous companies, deep pools of talent, significant financial resources, and areas of genuine industrial strength. But at the Forum, business leaders from across the region called for a policy, energy, infrastructure, and investment environment that allows those strengths to translate into the next phase of growth.

Europe’s green advantage. The sustainability conversation was notably clear-eyed. CEOs weren’t debating whether decarbonization matters; the hard part is doing it while energy costs squeeze competitiveness....

....MUCH MORE 

*If interested see:

December 2017 - Artificial Intelligence in Risk Management: Looking for Risk in All the Wrong Places
Opportunity is where you find it, turn your risk manager into a profit center.  

April 2018 - Artificial Intelligence For Compliance 

 

December 2024 - "How to Use The New China Tariffs to REDUCE Your China Manufacturing Costs" 

And quite a few more riffs and refs.