unbound 🐂 💩

RE: AI: IT WOULD BEHOOVE YOU TO STOP WHAT YOU ARE DOING AND READ THIS: 1. It is a disturbing sign of the times when a company that claims its product may trigger human extinction gets to raise many billions of dollars of capital from bag-holding retail investors at what may be a trillion-dollar-plus valuation that only wealthy elite VC investors get to profit from. This may represent the clearest signal yet that corporate profits are the god of our society. 2. The "US vs. China AI race" is little more than a marketing campaign designed to tickle your amygdalae and scare you, via grave "national security" warnings, into allocating as much of your or your clients' life savings as possible to those who stand to gain the most power and/or profits from the AI capex bubble. @DavidSacks—Chair of the President's Council of Advisors on Science and Technology—confirmed as much in a recent @theallinpod episode: “Speaking of the Dark Ages, so this is an interesting point from history. If you go back to the medieval time period, Chinese civilization was much more advanced than European civilization, and somewhere along the line it basically switched and the West basically took the lead. And some historians have pinpointed this to the decision of a single Chinese emperor to ban shipbuilding. What that allowed is the Europeans then basically colonized the whole world, and all the riches that flowed from that flowed back to Europe. And that's how Europe took the lead. And I think that if we were to do the Bernie Sanders thing, which is basically ban AI, it's like banning shipbuilding. Chinese civilization will rocket past us. They will be the ones that make all the discoveries and discover this new world and accrue all the wealth.” 3. If I’m wrong on #2, then I won’t be wrong on this: Your baseline assumption as an investor should be that China wins the "AI race." In our data-driven view, the odds of this potentially geopolitically destabilizing outcome are far greater than the odds of the US winning the "race"—however manufactured or real it may be. Reminder: China's AI development has a structural advantage relative to US AI development when analyzed through the lens of STEM expertise. China's AI development also has a structural advantage relative to US AI development when analyzed through the dual lens of the cost of capital and the cost of tokens. China's AI development also has a structural advantage relative to US AI development when analyzed through the lens of energy. China's AI development also has a structural advantage relative to US AI development when analyzed through the lens of politics—which appears increasingly likely to slow the pace of US AI innovation and adoption. Additionally, China currently DOMINATES global critical minerals supply, at ~60% of mined production and ~90% of refined production. This is a trump card (pun intended) that China could use to effectively shut down a US military whose arsenal is being depleted via its latest round of "forever wars" in Ukraine and Iran. Refer to our 9/21 and 9/23 Leadoff Morning Notes and our 9/26 Around the Horn webcast for more details. I apologize in advance if any of this MATH or data-driven dot connecting offends the legacy NARRATIVES that you relied upon to underwrite the positions in your portfolio. My job is not to make you feel good. My job is to keep you and your family on the right side of market risk. Period. Have a great day! —Skipper 💜