one life, it's worth an attempt
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Joined September 2021
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When I read this post I realize that quants and discretionary traders are not playing the same game.
Actually makes me more bullish on discretionary trading.
Inspired by recent discussion about whether it's possible to learn trading outside an elite firm.
If you're the kind of person that reads this project and thinks it sounds fun, imo you'll be able to learn employable trading skills just fine on your own.
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@grok what is the takeaway
The US AI bubble is resting on 3 key assumptions: 1- shortage of compute 2- no roadblocks to the infra rollout and 3- there will be ample financing to support the outlandish capex spend assumptions.
Let’s take these one by one and put it past the Casio stress test.
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Mega based John mcafree
A Wired journalist went to interview John McAfee once and described the following encounter:
‘He loads the bullet into the gleaming silver revolver, spins the cylinder.
"This scares you, right?" he says. Then he puts the gun to his head.
My heart rate kicks up; it takes me a second to respond. "Yeah, I'm scared," I admit. "We don't have to do this."
"I know we don't," he says, the muzzle pressed against his temple. And then he pulls the trigger. Nothing happens. He pulls it three more times in rapid succession. There are only five chambers.
"Reholster the gun," I demand.
He keeps his eyes fixed on me and pulls the trigger a fifth time. Still nothing. With the gun still to his head, he starts pulling the trigger incessantly. "I can do this all day long," he says to the sound of the hammer clicking. "I can do this a thousand times. Ten thousand times. Nothing will ever happen. Why? Because you have missed something. You are operating on an assumption about reality that is wrong."’
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@grok what % of investment grade AI-related debt is at risk of being re-rated to non investment grade? What would be the implication if some of these bonds defaulted? What catalysts could trigger a default?
The corporate bond market is facing real structural limits in absorbing this volume of debt:
AI-related debt now accounts for roughly 30% of net new US IG bond supply, way > concentration thresholds which is driving spreads widening. And that’s before the brewing crisis
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The top will be either i) US boots on the ground in Iran or ii) the minute before the strait opens again (a deal is announced)
Short open interest isn’t particularly elevated and isn’t the reason oil prices are high.
More than 200 days into the US-Iran war, there are still more oil shorts than there were just before the war started.
I’ll say it again: As long as that remains the case, the top in oil is still ahead of us.
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Monday will be telling for the short $USO trade. The news over the weekend wrt Russia vs Ukraine and US/Israel vs Iran/houthis escalating fighting seemingly couldn’t read worse, but the price on hyperliquid isn’t at fresh highs from a few days ago.
I would wager that if we don’t have a daily higher close on Monday, the local top could be in for the short.
My reasoning is simply that increasingly bad news can’t push the price of oil higher, therefore, there will be a reversion to the mean lower.
I’m also looking at $BWET to mean revert with $USO.
BREAKING: Ukraine fired more than 1,600 drones at Russia overnight, its largest drone attack since WW2, striking the Kapotnya oil refinery in Moscow. It is the city's only refinery, which supplies about 40% of the region's fuel, and is now on fire.
Trump claimed just six days ago that Ukraine had agreed to stop hitting Russian energy targets, that Russia had agreed likewise, and that the world's diesel price rise "is mostly caused by the Russia/Ukraine War, not Iran."
Zelensky named the Pelican among the weapons used, its first ever usage in combat.
Oil markets open in 7 hours.
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Thinking through this a little deeper, there is NO way anyone is going to slow down.
The main reason for this is most likely i) to get the US gov to essentially ban the cheaper Chinese AI competitors bc they are "dangerous" aka they are the same but cheaper to use ii) encourage the government to take a stake in these companies so they truly become too big to fail in case this AI CapEx supercycle goes tits up.
We Must Pace the Frontier: I’ve written a new essay on why the AI industry should slow down, with a three-part plan for doing so.
Anthropic is unilaterally committing to the first of these steps. We’ll provide third-party evaluators with permanent, employee-level access to our systems, so that they can verify adherence to our safety measures, report on incidents, and assess models’ alignment during training.
You can read the full post here: darioamodei.com/post/we-must…
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TLDR there is a 4D chess TACO incoming where Trump can essentially bail on the Iran war and blame the gulf states. I like it.
On Iran
The same developments strengthening Iran’s bargaining position may also be creating an opening for China, and a politically useful exit for Trump.
Saudi Arabia’s East–West pipeline was shut after a drone attack originating from Iraq. A critical route designed to bypass Hormuz has itself proved vulnerable. Separately, the Iran-aligned Houthis seized Perim island at Bab el-Mandeb, strengthening their position around the Red Sea’s southern entrance.
Saudi Arabia asked Washington for direct military help against the Houthis. Trump declined, although intelligence support continues.
This is not complete abandonment, but it will probably feel like it to the Saudis and demonstrates a limit to the additional fighting Washington is willing to undertake.
My read: Iran’s leverage has increased, while the Gulf states have more reason to question whether relying on American protection alone can secure their infrastructure and exports. That creates pressure to negotiate, not necessarily because they trust Tehran, but because the alternatives are becoming more costly.
China is an important part of this equation.
Hormuz matters for its Gulf energy supplies. Bab el-Mandeb matters for the Asia–Europe shipping route through Suez, as well as Red Sea oil shipments heading towards Asia. Disruption at both therefore threatens different parts of China’s economy: energy supplies on one side, trade routes on the other.
This does not mean Chinese trade stops. Ships can divert around Africa, and many already have. But longer journeys and higher transport costs are still an economic penalty, a costly solution with consequences.
The cost is already visible: Reuters reported this week that the Gulf of Oman–China supertanker freight benchmark reached roughly $11.50 per barrel, its highest since that benchmark launched earlier this year.
Beijing also has economic leverage with Tehran. China bought more than 80% of Iran’s seaborne oil exports in 2025, according to Kpler data cited by Reuters. That gives it an important relationship through which to press for accommodation, though economic leverage is not the same as control over Iran or the Houthis.
The diplomacy is worth watching.
On September 8, Wang Yi discussed energy and shipping security with Qatar’s prime minister. China’s official readout described Qatari support for closer coordination and a more independent regional security framework. Today, September 12, Xi urged BRICS to take a peacemaking role in the conflict.
My interpretation is that Beijing has both an economic incentive to stabilise the region and an opportunity to gain influence by helping regional governments reach an accommodation. It does not need to replace the American military to become more important diplomatically.
That is the possibility I would watch around the proposed Oman talks: a settlement that improves shipping and regional security while reducing Washington’s freedom of action.
Restrictions on using Gulf territory, airspace or American facilities for attacks on Iran could conceivably become part of a broader bargain. Those are possible future concessions, not confirmed terms of Monday’s discussions. I would put more weight on gradual restrictions and diversified partnerships than on Gulf states collectively expelling US forces.
For Trump, that could create an unusual outcome: a strategic setback that still offers a political exit.
November’s midterms are approaching, while energy-driven inflation and pressure for higher interest rates are increasing the domestic cost of the conflict. A credible improvement in energy flows would address part of that pressure, without guaranteeing lower rates.
A Gulf-led agreement could let Trump argue that regional governments chose their own accommodation with Iran, so America should not expand the war on their behalf. He could place responsibility for the concessions on those governments while presenting reduced US involvement as respecting their decision.
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