“One of the things about securities fraud lawsuits is they don’t tend to happen until people have lost money from them.”

GMO’s Ben Inker on Realvision, 2020

“A KPMG report on how A.I. is being used by businesses across the world exaggerated adoption of the technology with bogus case studies that appear to have been based on AI hallucinations.”

A trillion dollars used to be a lot of money.

The numbers involved with these IPO’s is staggering, $1.819 TRILLION just for these three by my math.

That’s equal to the amount of mortgage-backed securities the Fed bought using fun coupons from 2013-2022!

An unimaginable number.

OpenAI loses money on every deal, but they make it up in volume!

If SpaceX’s valuation hits $3 trillion, it’ll be equal to the amount of fun coupons the Fed squirted into Wall Street in just 3 months in Spring 2020.

An unimaginable number.

“The massive write-downs of goodwill by Nortel Networks and JDS Uniphase begin to suggest how far from viability it is possible to wander. In the case of JDS, $ 44.8 billion of acquisitions made during “The Fabulous Decade” (to borrow the title of a new book on the 1990s by Clinton Fed appointees Alan Blinder and Janet Yellen) turned out to be worthless.”

Jim Grant, Mr. Market Miscalculates

The Money Crisis, Its Causes and Remedies by Alfred Yaple (1873), a book on the Panic of 1873, which Yaple blamed largely on the post-Civil War use of paper money.

Plus ça change, plus c'est la même chose.

• “Such issues being superabundant, lead the people into feverish schemes of wild speculation and enterprises, to carry out which they issue their promises based upon the anticipated gains of such undertakings. They call these promises “stocks,” etc.; and all are soon deceived by the supposition that such debts are wealth…”

• “The almost daily contraction and expansion of the value of such promises, as compared with coin, tempts to “betting” on the value upon a given future day, which buying and selling “short” simply is. Combinations —” rings “—are then formed to affect values at given times, from which real interests suffer. More grain and pork, gold and produce of all kinds, are, in form, bought and sold than there is in the land, the parties never expecting to deliver or receive any of the article, but only to pay or take the difference between the contract and the then market price. With a fixed measure of values, fluctuations would be too little to admit of heavy gambling. But, with the credit standard, all real business, that founded upon the actual gold and property of the country, is at the mercy of such gamesters, when the actual property of the land, affected only by the laws of supply and demand, ought to regulate markets.”

• “…people under such circumstances always become more extravagant. This extravagance reaches the producing classes as well as others, while many turn mere gamblers, cloaking their real calling under the respectable appellation of business. But sooner or later the system must fail; a settlement forces itself; a crash is the result, and suffering, misery, and ruin are wide-spread and everywhere.”

• “They therefore cherish the delusion that, in the given instance, their affairs are exempt from the operation of inevitable and unchanging laws. But, after the system of anticipating or borrowing from the future has been carried beyond reasonable limits, then every new resort to it by issuing further promises produces immediate and very observable evils. Such additional promises merely lessen the purchasing power of the aggregate mass of promises already out to an amount equal to the increased issue, and nothing is really gained in the present, while the burden for the future is increased just so much. This is not the case so long as the limit to which debt may be safely incurred, has not been reached. One terrible consequence follows—the best part of the productive classes are immediately injured.”

“Core” CPI (ex-food and energy)

Health insurance went down??? CPI is a cruel joke.

Here's Arthur Burns, the previous Jerome Powell, in September 1987.

This was back when central bankers (allegedly) had an "abhorrence of inflation," whereas today's clowns want inflation, the cruelest, most regressive tax.

“In monetary policy central bankers have a potent means for fostering stability of the general price level. By training, if not also by temperament, they are inclined to lay great stress on price stability, and their abhorrence of inflation is continually reinforced by contacts with one another and with like-minded members of the private financial community. And yet, despite their antipathy to inflation and the powerful weapons they could wield against it, central bankers have failed so utterly in this mission in recent years. In this paradox lies the anguish of central banking.”

“Statements in favor of a 2% target were non-existent before 2007”

“From around 2000 until the Great Recession, there was general consensus among participants that their inflation target should be about 1½%, significantly below both average inflation over the period and survey measures of longer-run inflation expectations.”

“Our basic trouble was not an insufficiency of capital. It was an insufficient distribution of buying power coupled with an over-sufficient speculation in production. While wages rose in many of our industries, they did not as a whole rise proportionately to the reward to capital, and at the same time the purchasing power of other great groups of our population was permitted to shrink.”

Franklin D. Roosevelt, May 1932

NFIB Small Business Economic Trends, May 2026

Part of the economy is on a sugar rush – almost all related to A.I. investment spending and it’s flying high. The stock market is posting new highs, but again, mostly due to that one soaring sector. Meanwhile, gas prices have spiked reflecting a reduction in the global oil supply, but also the risk premium that war has produced. Oil is a cost component in just about everything, so its rising price shows up in just about everything. A net 36% (seasonally adjusted) of the owners reported raising their selling prices, well above the historical average of net 13%. This leads right into CPI inflation, which is too strong to give the Fed license to reduce rates. It may even consider raising its policy rate.

The employment picture looks increasingly gloomy, as job openings continue to decline. Openings fell to 2020 levels as did hiring plans— recession numbers without a recession. Sales prospects are not strong, but not falling apart. Perhaps the economy is becoming bifurcated, one piece driven by AI spending, rising asset prices (e.g. stocks) and spending by higher income consumers benefiting from AI, while the other piece suffers from rising costs.

Uncertainty is the enemy of growth and investment, and it is high. Much is related to the Iran War and its impact on the global oil supply and other commodities, the sooner it’s resolved, the quicker some “normality” will be restored.

Via Grant’s:

Xi Jinping to the rescue! As the Iran war serves to choke off a material chunk of global oil supplies, downshifting demand from China serves to keep a lid on global energy costs: the Middle Kingdom imported 7.82 million barrels per day (mbpd) in May per freshly released customs data, down from 11.6 mbpd on average last year to mark its lowest single-month total since October 2017. For context, the Strait of Hormuz’s de-facto closure serves to eliminate some 15mpbd of global supply, natural resource investors Leigh Goehring and Adam Rozencwajg estimate.

“China’s backing off from the crude market has played a crucial role in attempting to rebalance the global market [and] cap oil prices,” Warren Patterson, head of commodities strategy at ING Group, told Bloomberg. “The extent of [this downshift] has taken most of the market by surprise.”

In a rare moment of inter-hegemonic harmony, the world’s other economic superpower likewise works overtime to balance the supply-versus-demand equation: U.S. crude exports reached a record 5.6 mbpd in May, according to the Energy Information Administration, up 7.6% on a sequential basis and 56% year-over-year. Thanks to ongoing releases from the Strategic Petroleum Reserve, meanwhile, domestic oil stocks fell to 433.7 million barrels on May 29. That’s down 8 million barrels from the prior week (double the average estimate from Reuters-surveyed analysts), bringing the total war-related drawdown to 63.9 million barrels.

How much longer can the Sino-American balancing act persist? “Sometime in the next few weeks we will reach a level where the U.S. can’t go much lower,” warned Richard Joswick, head of oil pricing and trade flow analytics at S&P Global Energy CERA, in a June 4 webinar.

Stocks at the Cushing, OK. storage hub – the delivery point for West Texas Intermediate crude – ebbed to 22.4 million barrels, approaching the 20 million figure which represents the facility’s operational minimum. Below that threshold, “there is not enough oil to pump out and transfer between tanks and blending becomes a challenge, which could delay or cut outbound flow of oil from Cushing,” Jeremy Irwin, global crude lead for analytics firm Energy Aspects, told Reuters on Saturday.

Even a prompt return to the pre-March status quo would leave the world oil market in a hole. Some 500 million barrels of crude and refined products will be required to replenish global stockpiles used since the U.S. and Israel attacked Iran on Feb. 28, a recent analysis from S&P concludes. For each day that the conflict persists, that figure grows by a further 5.8 million barrels.

Delinquencies Down? Not So Fast...

A Conversation with Bill Moreland from BankReg Data (April 6) Love this guy.

On FDIC-insured bank loans to NDFI’s (non-Depository Financial Institutions.:

“To be charitable, these loans aren't traditional, right? Some of these things are difficult to classify. Maybe that's by design, maybe that's as a result, but, net net, what's happening is these NDFIs are eating the call reports. I mean, some banks now are upwards of 40%, 45% of their loan book is NDFIs, and we really don't know what they are, right?”

Very insightful paragraphs here:

“The problem is we had scraped down into the bottom of the barrel, so where do you lend? Well, lo and behold, $5 trillion of new money gets dumped into the system in 2020, 2021, and 2022.

So to give you a reference point, we had $14.5 trillion of deposits in the U.S. banking system at the end of 2019, $14.5 trillion. So all the money that comes in, whether it's earnings, or it's inheritance, or just all the money that flows, flows into a bank. Well, within two and a half years, the number climbed to $20 trillion. So if you wonder why everything's 35% more expensive, it's monetary. We want to call it supply chains, and I'm not saying supply chains weren't part of it during that time, but it's money, right? We printed 35% more money and 38% more money and dumped into the system.

So my wife keeps saying, is housing going to come down so we can get a second house in our retirement? I'm like, no, because it's already in the system. Unless you have value destruction, and we start destroying that money, it's in the system, right? Everything's going to be elevated. The problem for banks is they now had to do something with that money. So the ones that didn't have a history, and we kept interest rates at zero for a mighty long time, which means we raised a whole generation of people who were 34, 35 years old that had never lived in non-zero [world].

So at the time that we threw a bunch of money in the system and depressed risk, we basically threw a bunch of money and said, you got to go do something with it. So what ended up happening was a huge amount of lending that took place. But banks aren't stupid. They knew that they were already at the bottom of the barrel. But what happens when you you don't have to make student loan payments? Is student loan payments a political issue? No, it's an economic issue. When everybody fills up their cup of debt, their ability to service debt, right, to pay their minimum payments, when you fill that up, economic growth stalls.

So what do we do? We empty people's cup of debt, right? And you do it by suspending mortgage payments, suspending rent, suspending student loan. So you emptied out everybody's cup of debt. But what you also did is you wiped out all the negative credit events on the marginal buyer. You no longer had delinquencies. You no longer had charge-offs. So just at the time we printed all this money and said, banks got to do something with it, everybody's credit scores, businesses and consumers started to get better. Great, we can go lend to them. Lend them some more money. And it's what we call the artificial consumer. It was fake.

And so what ended up and happened is that gave us two and a half, three years of great growth. But once again, we're back to the bottom of the barrel. So why am I bringing this little history lesson up? NDFIs are a way for us to continue to have banks lend to people they wouldn't normally lend to.”

What’s happening is a lot of financial engineering is taking place to try to buy time out of this.

“I've got NDFI clients, right? I got people on all sides of this. They say, you keep talking about how Wells Fargo and Bank of America modifying tons of loans. I got three hotels, each one of them $6, $7 million in loans, and they're not working with me. I keep telling them this ain't working.

And I'm like, stop making payments. The reason they're not working with you is because you're paying. But what happens is - and I'm not an advisor - but sure enough, a couple of months later, they call back up. I'm like, ah, I want to hear the story. They're like, oh yeah, all we did was threaten to stop making the payments, and they automatically lowered our payment. So I ask them, hey, are those hotels going to work now with your lower payment? No. They need about a 35% to 40% reduction on the loan for it to work. So eventually, but we're trying to sell them. So I think what's happening is a lot of financial engineering is taking place to try to buy time out of this.”

“So what they did in 2024 Q1 was we changed the rules around what we call a loan modification. The big bank lobby, the BPI, the Bank Policy Institute, lobbied FASB to change the rules in FASB. And I'm old enough to remember GAAP only. I'm old enough to remember back in the early 90s, we weren't taught non-GAAP, right? So if we think FASB is the arbiter of honesty and truth, I think those boundaries get pushed because of lobby.

So FASB changed the rules and said, there's no longer a life-to-date Ferris wheel. You get on, you make 12 payments, you get off. Well, that's pretty clever. Bill Moreland at Wells Fargo in the 90s would have loved that rule, almost like Bill Moreland in the 90s would have designed the rule that way. Because now what's happening is you're lowering payments, but no one ever knows it. And if you do it the right way, for everybody that gets off the Ferris wheel, you add another group. So your modifications look like they're 1.5%, 2%, 3%, but in reality, they're upwards of 6%, 7% cumulative.

So I think Bank of America is, and I can make a pretty convincing case, not 8.5%. They're close to 11% to 12%. And that's a completely different perspective. But here's the problem. If you look at the rules, it sure looks like the rules allow for serial loan modifications, which is what we're seeing now.”

If you’ve got kids, you think of the world differently.

“Look, I've got kids, right? And if you've got kids, you think of the world differently. And I don't know how, on one hand, you solve an overvaluation problem without value destruction. And that's really what we're talking about here. I mean, every asset class is overvalued. And you can say, well, it's not overvalued. Dude, paying 38, 40 PE on Microsoft, that seems rich to me. But basically, on one hand, we need value destruction. We do. But we don't want to take that. But on the other hand, we all want our kids to be able to buy a house. We all want our kids to be able to get married. We all want our kids to be able to get a job. And so I can flat out tell you, I see the world through my lens. Kids are having a much harder time finding jobs. And I'm talking computer science kids. I mean, we have a ton of them in our house always. I'm talking aerospace engineers coming out of Purdue. I mean, these are pretty high-level kids, right? They're struggling.

And so what is happening is, I think we're going to avoid a 2008-9. They will do everything they can to avoid this. We cannot have value destruction. Well, stop overvaluing. Stop inflating everything, and this won't happen. But they don't want to do that. But the other flip side to this is they won't let that happen. But we're going to have an economic malaise. So my thing is, I used to say, hold on. 2024, it's going to happen. Hold on. 2025, it's going to happen. Now, I'm pretty much going to say, look, I think we're going to have an economic malaise of not a lot of economic growth while we grow into these valuations. And it could take five years or seven years, right?”

There’s a coordinated effort to give the perception that things are getting better

“Don't be afraid to take some risk, right? But don't make those decisions based upon anything you read in the Wall Street Journal or CNBC or American Banker or Bloomberg that, hey, delinquencies are magically getting better in consumer and commercial real estate. Go lend in commercial. It's what I call the wealth effect for chief risk officers and chief lending officers.

There's a coordinated effort to give the perception that things are getting better and they're much better, and they're using data, manipulated data from the largest banks, to make the case. So I get $10, $12, $15 billion asset banks that call me up. They say, man, you're the Pied Piper of doom. I'm like, I don't want to be a Pied Piper of doom. I hate that. But they're like, you're so negative, not in a bad way. You're cautioning us, but you're skeptical of what's going on in commercial real estate. But we look at the national numbers that delinquencies look like they're getting better. We look at our local market. We look at our book. I think we want to lend more.

And what I'm saying is, is if two of those numbers are manipulated, be careful, right? That's it. Is not saying don't, but if you're hearing things that are trying to reinforce what you're kind of wanting to do, understand that somewhat of the story is very much a manipulated story. If we're modifying 38% of mortgages, a second or third time, housing is not as great as we think it is, right? And finally, exposing your borrowers to interest rate risk is also another problem that should rates go up.”

Property Insurers Are Piling Into Private Assets, as Other Investors Hit Pause

Home and car insurers are joining other deep-pocketed institutions from life insurance companies to university endowments in snapping up private investments. They are late to the party…Property and casualty insurers’ moves into so-called alternative investments have picked up just as many pensions and endowments have started to question whether the returns those funds can generate will be as attractive as they have been in decades past.

From the comments: “six or seven years from now we will be reading about how insurance carriers got caught short and needed to be bailed out because they didn’t have the funds to pay claims.”

‘Rent now, pay later’ loans target US consumers squeezed by housing costs

Fintech groups are seeking to capitalise on the growing number of Americans who struggle to pay for housing, offering “rent now, pay later” loans as the cost of living pushes up demand for short-term financing.

Affirm, a Nasdaq-listed company that is one of America’s biggest “buy now, pay later” lenders, recently partnered with fintech Esusu to pilot so-called rent-split loans. Three other companies that specialise in these housing loans told the FT that their customer bases were rapidly expanding.

Rent-split lenders cover a tenant’s monthly payment to their landlord and receive the money back in instalments spread over the course of the month, in effect splitting up the borrower’s rent bill into smaller sums.

Wemimo Abbey, co-founder of Esusu, said the loans serve a growing number of people who work freelance or gig economy jobs with irregular pay schedules. “People can make [rent payments], it’s just the timing,” he said.

“Recent inflation has been really sticky, but incomes are not going up,” Abbey added. “So that’s what makes us think this is going to be a massive, massive market.”

Freddie Mac is auctioning off 1601 Royal Crest Drive in Austin, which features multiple apartment buildings, on June 24. The starting bid for the auction is $9.5 million.

The previous owners, Mia Riverside, allegedly defaulted on a $50.2 million loan granted in March 2024, which the mortgage giant subsequently took over. Freddie Mac foreclosed on the property and won it at a January foreclosure auction with a $50 million bid, according to the Austin Business Journal. The complex on the site holds 526 apartment units, and is completely vacant, according to the publication.

Melody Wright

“I needed to go out and prove my theories to myself of what I thought was happening, and that’s when I took my first road trip. So, you asked me what did I learn, John? You know, this time around, it’s important because what I learned last time around is that the data does not match reality in any way, shape, form, or fashion. And

I couldn’t understand why the permits didn’t match. I couldn’t understand why the listings for sale didn’t match. I couldn’t understand why there were all these missing listings on even the new home sites that you know. So then I came back and I just started digging and figuring out how all this data was collected. And you know, every time you come back from one of those trips, you start to wonder, did I really see what I saw? Did I really see what I saw?

So what did I learn? This trip was more just a a confirmation that nothing has changed. It’s the same, and the data is not accurate at all. And so you have to figure out why. And now I have such a background in why all of that data is missing. But it’s a difficult message because it’s not one thing. Everybody wants it to be it’s subprime or it’s the ARMs or whatever. No, this is a massive macro story that also is micro in many ways, so you have to be able to go look to put those two things together. I hope that made sense.”

• “You go to somewhere like Lakewood Ranch and, you know, realtor.com might say there’s a hundred new homes for sale, but no, there’s thousands of them. Thousands.”

• “Everybody’s going to go look at the mortgage delinquency schedule on the FRED site and they’re going to see this super low delinquency. Read the title. It’s for commercial banks. Commercial banks don’t do the majority of lending and mortgage anymore, and you can’t forget that the agencies sold off a lot of their non-performing assets to people and hedge funds that don’t report to credit. There is distress out there that’s happening right now that no one knows about.”

Oh Yeah?
Compiled from Newspapers and Public Records by Edward Angly (1931)

OCTOBER 26, 1929.
”Conditions do not seem to foreshadow anything more formidable than an arrest of stock activity and business prosperity like that in 1923. Suggestions that the wiping out of paper profits will reduce the country’s real purchasing power seem far-fetched.”

—Wall Street Journal

“We’ve never had a deflationary bust because inflation was too close to zero, or 1.5% instead of 2% - we’ve had them because we’ve had these tremendous ASSET BUBBLES...”

- Stan Druckenmiller, 2021

"Jim Grant: What the Fed calls 'deflation' is actually progress"

Nice little substack podcast I came across, Debt Serious. Here are a couple podcasts I recently listened to:

• Hidden Risks in PE-Owned Life Insurance | Tom Gober of Thomas Gober Forensic Accounting

• The Fed, Liberty, and Private Credit | Jim Grant of Grant’s Interest Rate Observer

Dan Rasmussen

“So the consensus was very clear. There was a wonderful survey that Preqin did in maybe 2018, and the survey question was, “Do you expect private equity to outperform by zero to 2%, two to four, or greater than four,” or something, and something like 91% of institutional investors thought it was at least 2%. Underperform was not even an option. It was literally complete consensus.

They were plugging historical returns, and saying, hey, private equity is quote unquote the best performing asset class, and therefore we should have as much money in the best performing asset class as we can. The number that they sort of circled in on was 40%. We should be 40% in privates. That’s what Yale and Harvard ended up at, and a bunch of other smaller endowments, even though the market-cap weighted size of private equity as an asset class is probably about 4% of the market cap of the public equity market. So if you’re 60% public equities, you should be, you know, 3% private equity at market cap weight. But that’s not how they thought about it. They thought, well, it’s the best performing asset class, we should follow the endowment model and always should be 40% in it.

Then within private equity, you were saying, well, I want to invest in the best performing managers. Well, who were the best performing managers? The ones with the most software exposure, because that was what was hot. And software was supposedly eating the world at the time.

And then what sort of capped it all off, the sort of thing that created the final frenzy, the extinction burst, was there were a bunch of deals done in 2018 and 2019 at very high prices, and a lot of the skeptics were saying, hey, this stuff is crazy! Even for software we shouldn’t be paying these type of multiples.

Then Covid hits and all of a sudden all tech is valued like an insane amount, so all those expensive deals in 2018-2019 were golden, right? There were huge winners, and so then that was the moment where the lights went on and people said it doesn’t matter what you pay. If you’re buying a great software business, it doesn’t matter what you pay, because it didn’t matter in 2018-2019. Look at the returns we made. We actually could have paid two or three, four, five turns more for that business and we still would have made 3x our money at current valuations. The key thing we need to do is put the most money into the ground in software as fast as possible. Forget the valuations. These are just great businesses.

And that that was sort of the peak, right?”

Jim Grant

• “Today is one of the greatest bubbles of all time…this one is much bigger, much more lurid, I would submit to you, than almost any other preceding cycle.”

• “The excitement surrounding the potentialities of artificial intelligence dwarf the excitement generated by the worldwide web, by the internet by fiber optic cables, and I think the dollars - even when adjusted for inflation - are larger today.”

• Meb Faber: “A small part of me wants to take out the 1999 highs on the final CAPE ratio1 just to say we we lived through it again.”

• On the Panic of 1873: “what set prices tumbling, what set real wages rising was human progress.”

• “I submit to you that air conditioning is as transformative in its way - it changed human migration patterns, it made habitable the great sunbelt, it gave us the year-round Congress - isn’t that great? But you look back, these air conditioning stocks in the 1950s were four, five, six times, eight times earnings.”

• The GFC was “the greatest failure of ratings and risk management ever…”

• “Bernanke, I think, did not do any of us a great turn by single-mindedly invoking the experience of the 1930s to address the problems of 2009 and 2010 and 2011 and 2012 and on, when the funds rate was pushed down and when all manner of distortions followed from that suppression of that interest rate.”

• Powell “got behind the powers that were intent on barring Judy Shelton from a place in the Board of Governors. She was the person who wanted to have a different way of thinking of things. She likes gold. She likes the gold standard ways in some form, and she’s not really a gold standard advocate, but she wanted the Fed to have something to do with gold. Monetary affairs to have some grounding in the discipline of gold. That was her own line. I believe that J. Powell actively resisted her candidacy as he should not have done. Political malpractice if you ask me, which you did. So that’s my take on Jay Powell.”

• “It’s up against the valuations it does not discuss. It’s up against the margin debt it does not discuss. It’s up against the now gently accelerating aggregates for M2 and C&I loans, commercial industrial bank loans. It is up against, most of all, the leverage that its own manipulated and suppressed interest rates instigated in the past five or six or seven years. That’s what the Fed is up against. Much of it is its own doing.”

• “Never queue up for an investment, right?”

The Cattle Empire That Turned Out To Be A Giant Ponzi Scheme

Classic.

“There are two sides of me,” Brian McClain scrawled on a piece of paper to his wife.

One that loves you, he wrote. “The other that stole from people.”

For years, McClain had kept cattle here in his hometown and on the Texas Panhandle, buying calves at auction and selling them for profit three months later. His 80,000-head operation—powered by a $50 million loan from an agricultural bank and $120 million from investors—appeared to be a blowout success for the former chemicals plant worker. He lived in a 4,100-square-foot brick home surrounded by a manicured lawn, with gold-framed photos from his recent wedding in the entryway.

He also had a big secret: Most of the cattle were imaginary.

Once the lender got around to a physical check to count cattle and value McClain’s collateral—the first full inspection after more than four years of sending him money—it enumerated only 8,916 animals.

In the end, the rancher burned through the $170 million taken in from the bank and investors—some of them friends from his small Kentucky town. He managed to placate the bank when it occasionally raised concerns about financial figures that just didn’t make sense—including how his feed costs were wildly out of tune with the number of animals he claimed. And he kept his investors on board by paying out “shares of the profits,” which often stayed on paper as they rolled them into new investments.

Credit Spreads

Credit Card Balances

“Forced Repositioning”

Bob Dylan on 60 Minutes, 2004

EB: Do you ever look back at the music that you’ve written and look back at it and say “Wow! That surprise me!”?

BD: I used to. I don’t do that anymore. I don’t know how I got to write those songs.

EB: What do you mean you don’t know how?

BD: All those early songs were almost magically written. Ah… “Darkness at the break of noon, shadows even the silver spoon, a handmade blade, the child’s balloon…” Well, try to sit down and write something like that. There’s a magic to that, and it’s not Siegfried and Roy kind of magic, you know? It’s a different kind of a penetrating magic. And, you know, I did it. I did it at one time.

EB: Do you think you can do it again today?

BD: Uh-uh.

EB: Does that disappoint you, or…?

BD: Well, you can’t do something forever. I did it once, and I can do other things now. But, I can’t do that…

EB: Why do you still do it? Why are you still out here?

BD: Well, it goes back to that destiny thing. I made a de…bargain with it, you know, long time ago. And I’m holding up my end.

EB: What was your bargain?

BD: …to get where I am now.

EB: Should I ask who you made that bargain with?

BD: [laughs] With the chief commander.

EB: On this earth?

BD: [laughs] In this earth and in the world we can’t see.

Jimmy Dore

Dore is a liberal, to the left of Schumer and Pelosi. Carlson is right-wing.

Both have come to realize that these labels are meaningless, and that common ground on shared issues is key. Ron Paul and Dennis Kucinich understand this, as do Ro Khanna and Thomas Massie.

• “In the United States, capital is above the government, so the economy doesn’t work for the people. It works for a handful of international globalist billionaires, which is why we have homelessness everywhere. We have the biggest prison population in the world, and we get go bankrupt just to get educated. You get bankrupt when you get sick.”

Tucker Carlson: “It’s a hard jump for your average right-winger - me, for example - to accept the fact that corporations are even more malicious than government.”

Dore: “Way more.”

Dore: “The people who slaughter people for profit - which is what the last 25 years Since 9/11 has been, just slaughtering people for prophet - they wouldn’t rig an election? Of course, they would.”

Carlson: “By the way, that's the one thing you're not allowed to say.”

• “People who consider themselves liberal - the last thing they want is to be challenged from their left.”

• “The Democrats say they hate Trump, but they love him because their biggest fundraiser is Donald Trump.”

• “Bernie Sanders tucks his tail. He endorses Hillary Clinton, and he extracts not one concession for doing so. Nothing. He didn’t ask for anything for him, for his supporters, to vote for Hillary Clinton.”

• “People immediately say, well, if you’re going to criticize the Democrats, you must be a Republican. You must be a Trumper. I’m like, no, the Republicans never asked for my vote. Democrats did, and I got tricked by them. I got tricked by Bernie Sanders. I got tricked by AOC hard.”

Carlson: “Is [Newsom] in any sense different from Chuck Schumer or Pelosi or anybody like that?

Dore: “No, you don’t get to be there if you are.”

Carlson: “I actually [campaigned for Trump]…then to wake up, and substantively he’s no different from Chuck Schumer on economics and foreign policy…”

Dore: “Or Lindsey Graham.”

• “We had an anti-war rally in Washington, DC and Code Pink wouldn’t join in. Their whole thing is to be against war, and they wouldn’t join it because there were certain speakers on the lineup that they didn’t feel agreed with their views on LGBTQ…that organization just proved themselves to be a bunch of cosplaying women.”

• “January 6, which we now know was an FBI psy-op…”

• “Just like Governor Whitmer. They were going to kidnap her, turns out nine out of the 13 people in the van were FBI.”

• “You got people who consider themselves liberal repeating don’t do your own research, don’t look into things, just trust the government. Trust the government and trust Big Pharma. And now we know they lied about everything, and those people still don’t know anything.”

• “Liberals, the people I know in Hollywood, they’re not spiritual, religious, and so they turn science into a religion, and they turn Fauci into their deity.”

• “Liberal democracy has turned out to be neither liberal nor democratic. They're illiberal. They're illiberal and undemocratic. Just like they proved during COVID.”

Under the Trump crypto playbook, the family always wins. Investors don’t

Risking little of their own money, the US president and his sons have added at least $2.3 billion to the family fortune from their main crypto ventures, while the investors they've wooed have taken a $2.3 billion hit, a Reuters examination found.

Luke Gromen: “I would say [inflation’s] probably 8% right now, and has been for probably 20 years.”

Dave Collum: “Which means we’ve been in a recession the whole way.”

Gromen: “Yep. On a real basis. And how would we know that? Well, we would see record political divisiveness in this country.”

I got some abuse for quoting Luke’s comment above, but 8% is certainly no more ridiculous than the official CPI, and I’d argue much closer to reality - but I have no econ PhD.

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USS Liberty

A fun end to the week

Sort of a slow week until Friday it seemed to me. Not much music in this post, not many good podcasts out lately. Hopefully everyone survived Friday’s secular bear market. Regardless, have a great weekend, amigos!

Could we please have a moment of silence out of respect for Micron's "record market-cap wipeout"?

Micron ended the day at $864, back where it was 10 days ago.

Still plenty of liquidity though

Via @RealStockCats:

“Some subjects are so serious that one can only joke about them.”

- Niels Bohr

Never Forget. June 2020:

“The journalists have constructed for themselves a little wooden chapel, which they also call the Temple of Fame, in which they put up and take down portraits all day long and make such a hammering you can't hear yourself speak.”

Georg Christoph Lichtenberg

I don’t see “Iran” listed here:

Nazi Germany or Canada 2026?

This study explores the potential economic savings from expanding medical assistance in dying (MAiD) in Canada, where it is currently a leading cause of death, to include vulnerable groups that cost the government more than they contribute in taxes.

These groups include individuals with severe mental health issues, the homeless, drug users, retired elderly, and indigenous communities. Both voluntary and non-voluntary scenarios were analyzed, projecting total savings of up to CAD $1.273 trillion by 2047.

With an estimated 2.6 million deaths in the voluntary scenario, mostly among mentally ill and elderly populations, this cost-saving measure raises significant ethical concerns. Financially incentivizing MAiD could shift healthcare priorities away from providing necessary support, potentially devaluing vulnerable lives and fostering a troubling reliance on assisted death as an economic solution. The findings highlight a need for ethical scrutiny of MAiD policy expansion.

Comment from reader BDH:

I live in the intermountain west (east of the Rockies) and EVERYTHING in the west (from the Sierras to basically the Mississippi river) is cooked. Burnt and fried. Lowest snowpack EVER recorded basically everywhere. Lower than the 1930s. (dust bowl). It didn’t snow or rain here at all, the mountains were brown in March (when they should be covered with feet of snow). The reservoirs are kinda full but that’s for this year. Everything out here is irrigated and many ditches aren’t even going to run. Some are going to run for 40 days. (usually like 120) and they aren’t going ot start until July 1st. So nothing is planted, nothing is going to germinate and nothing is going to grow. Can’t feed animals nothing so herds of all types are going to decrease and of course farmers who’ aren’t farming aren’t buying seed, fertilizer, diesel, repairs, nothing is being harvested, so no harvesting crews, no plant crews doing the processing adn shipping and of course none of those people are going to be spending any money either so restaurants, car dealers, etc. This is the entire Ag community across the west. Basically a big negative number this year. But i’m sure it’s all ok.

You do not have enough food, water and friends.

Comment from reader MoodyP:

FWIW on oil. I’m on the Board and the 2nd largest SH of a 40 year old, closely held oil and gas royalty firm, w/mineral rights on a couple hundred acres in Northern MI. 4 oil rigs, 7 gas rigs currently operating, 3 oil rigs, 3 gas wells mothballed. 1.2-1.5 million in revenue per year. 12-30% historical dividend over 40 years.

Baywood, Inc.

We have two producers. We get a monthly report on production, revenue, demand, etc.

Since the start of the Iran war they have seen (1) no increase in demand (2) not enough increase in revenue to reactivate the mothballed rigs (3) no sign of any looming ‘shortage (4) no action by the state to lift current enviro regs that limit run time to 12 hours per day (5) no action by their corporate parent to request waivers to allow longer run times.

Our First quarter revenue was up 11% over Q1 2025, a far cry from the near doubling of prices at the pump. Production was flat, oil rigs run around 75% capacity.

Just sayin…

Oh and lastly. And this is true for the dozens (actually a couple hundred) of the small producers in Northern MI. Oil production could more than double, almost overnight with minimal increase in marginal cost. Rigs can only operate 12 hours per day based on state law. Ramp and shut down takes 90 minutes out of the 12 hours, so actual production is 10-10.5 hrs. If the restrictions were lifted then 13-14 hours of production would be added to each 24 hour period. And if the demand and price point were reflective of the narrative (looking at you Art Berman) the mothballed rigs could be brought online within 30 days. Essentially, we could more than triple what we are currently producing on the oil side. Our SH would love it.

On the nat gas side the glut is so big and prices are so low it’s barely a break even proposition.

Most of the oil goes to Canada for refining, although it sometimes gets routed elsewhere. The Nat Gas mostly ends up in Texas.

Over the 40 years of being involved in this, literally hundreds of small producers in MI and throughout the Midwest have gone out of business. As a small producer it’s hard to make money. The regulations are stifling and the prices refiners are willing to pay have not kept up with production costs. Not even close.

Somebody along the line is making a lot of money. I can say with 100% confidence, it’s not the small operation or producers. Our annual meeting is coming up. Our SH are likely to be unhappy, given the price at the pump and the current narrative.

Hmm. Maybe we could have Berman as a guest speaker.

The United States is drawing down both its emergency oil reserves and commercial stockpiles as the war with Iran continues. In an effort to stabilize global energy markets, the United States is depleting its own reserves while Washington works to secure a lasting deal that would see the Strait of Hormuz reopened and Iran prevented from obtaining a nuclear weapon. New data released by the U.S. Energy Information Administration (EIA) showed another major decline in U.S. oil inventories, as Washington continues to release crude from the Strategic Petroleum Reserve (SPR) and to export to allies amid growing shortages.

Commercial crude inventories reportedly fell by 8 million barrels during the week ending May 29, while the SPR declined by an additional 8 million barrels to around 357 million barrels.

The news raises new concerns about how long the United States can continue to act as an emergency oil supplier to largely Asian markets…

When President Biden took office in January 2021, the U.S. SPR held approximately 638 million barrels of crude oil

Chris Whalen

Take him or leave him, but he is quite quotable on bank stuff.

• “The lending of banks to non-bank institutions, private equity funds, etc., is definitely subprime, and much of it is on a nonrecourse basis, which means the bank can’t go after them when they default.”

• “When you have as much asset price inflation as we’ve seen in the past decade and more, it gets rid of a lot of sins.”

• Q: “What do you think has been maybe one of the worst impacts of QE?”

  Whalen: “I think the most striking impact is on housing. the actions of the Fed to buy those mortgage back securities…”

• “Deciding to run a hedge fund and thinking that you can dust off the work of James Tobin and engage in yield curve control is absurd. We’ve just seen the Bank of Japan try to do that for over a decade, and they have failed miserably. So why did the Fed think that they could do that? Because the result was losing hundreds of billions of dollars for the Treasury. And I do think that’s something that Powell and the other members of the FOMC should be held accountable for.”

• “Most economists frankly never think about the balance sheet even though it’s the most important part of monetary policy today.”

Luke Gromen on auditing Fort Knox

“We’re cautiously optimistic that they would do that in order to set up some sort of what Dr. Judy Shelton has talked about, which is some sort of gold-backed Treasury bonds. That is a way perhaps the only way to contain long-end yields while doing all this. That is essentially going back to gold. That’s going back to a pre-1971 kind of system, and I to me it can’t happen at $5,000 gold. It can’t probably happen at $10,000 gold, because what would happen is what happened in ‘ 67,’68, ‘69, which is, hey, you Americans are running way too big a deficits. We’ll buy the bonds and then we’ll demand the gold, and then we’re right back to where we were. So I would think if we were going to move in a direction where there’s some sort of allowing gold to go higher followed, by some sort of issuance of gold-backed bonds - look at $20,000 gold, I’ll buy 3% 30-year paper in the United States all day long, and so will a lot of other people. And so that kind of fixes the problem. Then you can cut rates, etc., etc. So, I would think the first step in that process if we started to go down that path would be an audit to establish credibility.”

Why Richard Nixon torpedoed the global monetary system

Not mentioned here is that the U.S. did have enough gold to back the dollar in 1971 - just not at $35 an ounce. Maybe today $30k gold would do it. Maybe someday we’ll find out.

Jeffrey Garten
”In 1955, for example, the US had 165 per cent more gold than it needed to redeem all the dollars outside the US. But by 1970, 1971, it only had 25 per cent. So over the period, it became clearer and clearer that the basic commitment of exchanging the dollar for gold was not credible…

There was a fear in the US, and actually in other countries too, that they would come to the US, say, here are dollars; we want gold, and the US wouldn’t be able to redeem it…”

Robin Wigglesworth
”At this stage, I think even Germany alone had more dollars than there was gold in Fort Knox, right?”

You see this a lot:

“I think you have to be a tech person today. It’s such a it’s a big and growing and compounding part of the economy. It affects everything else.”

- Dan Loeb, 2026

"Do You Believe? How Yahoo! Became A Blue Chip. A tale of how Wall Street and the rest of us learned to stop worrying and love an insanely valued Internet stock." (June 7, 1999) by Joseph Nocera and Tyler Maroney1

Apparently 21 new ETFs involving SpaceX stock have already been filed with the SEC (as of May 30, 2026)

I asked Grok to analyze the Space X Form S-1 and this is what it gave me:

The funniest part of this 1998 cartoon is the valuation amount:

Via Grant’s.

Historians will study this period, and learn nothing.

Google’s gargantuan $80 billion funding package announced Monday evening marks the latest escalation in the artificial intelligence arms race. That sum itself equates to nearly one-tenth of all equity issuance last year, according to Dealogic, while the $40 billion in at-the-market share sales – due to commence in the third quarter – compares with Saudi Aramco’s $29.4 billion IPO in 2019, which remains the largest such offering on record, at least for a few more weeks until SpaceX comes down the pike.

Then again, Google’s plans look positively routine when compared to recent activity among AI startups: venture capital fundraising registered at $255.5 billion over the three months through March, according to PitchBook, already topping the $254.4 billion seen across 2025. The OpenAI-Anthropic-xAI triptych accounted for two-thirds of that sum, leaving $83.5 billion in funding split across 1,543 first quarter deals. Yet even that latter dollar-figure still outpaces any quarterly tally outside the three months through June 2025.

Ed Zitron

“I think that investors are exit liquidity for venture capital, and I think that these are dangerous, unstable companies that have faced basically no real scrutiny for most of the years of their investment. You have journalists and analysts who are actively cheering them on. This is a dangerous precedent, and it’s a dangerous thing for retail investors who are being conned by this.”

AI Doesn’t Have ROI

Every single user of every single AI subscription service is having their tokens subsidized and the actual cost of AI obfuscated. As a result, every frothy, fluffy hype-piece about Claude Code or AI in general is a kalopsia — the belief that something is more beautiful than it really is.

Podcast: Why AI Has No ROI with Paul Kedrosky

PK critique of this paper: AI Dark Output: The Visible Cost of Invisible Output

“If you allow me to redefine GDP, I could present you with some tremendous numbers. The entire paper is absolutely fascinating as an example of what’s often called motivated reasoning. I need to believe this, therefore I construct an argument to allow me to continue to believe it, and the way I get there is by redefining a variable [GDP] that’s already very squishy in the first place. Let’s not pretend that, you know, measuring GDP is much easier than like, I don’t know, measuring muons in a cloud chamber or something.”

• An AI consultant tells Axios one of their clients recently spent half a billion dollars in a single month after failing to put usage limits on Claude licenses for employees.

The Value Line Geometric Composite Index is an "equally weighted index using a geometric average. Because it is based on a geometric average the daily change is closest to the median stock price change."

For those worried about deflation, don’t be.

“For those of you who are unfortunate enough to watch CNBC and read other financial statements, you’ll know that the Fed is absolutely obsessed with Japan. They’ve been talking about this Japan analogy for 10 or 15 years now or certainly since Bernanke took over. And let me just show you something. This is the core CPI in the U.S. I’m sure you’ve heard the word “deflation” more than you’d like to hear it in the last three or four years. We’ve never had deflation. Our CPI has gone up 40 percent over this time with not one period of deflation.”

Stan Druckenmiller, 2015

Still true!

Ignorance manifests itself also in the confusion of deflation and contraction and of the process of readjustment into which every expansionist boom must lead. It depends on the institutional structure of the credit system which created the boom whether or not the crisis brings about a restriction in the amount of fiduciary media. Such a restriction may occur when the crisis results in the bankruptcy of banks granting circulation credit and the falling off is not counterpoised by a corresponding expansion on the part of the remaining banks. But it is not necessarily an attendant phenomenon of the depression; it is beyond doubt that it has not appeared in the last eighty years in Europe and that the extent to which it occurred in the United States under the Federal Reserve Act of 1913 has been grossly exaggerated.

The dearth of credit which marks the crisis is caused not by contraction but by the abstention from further credit expansion. It hurts all enterprises—not only those which are doomed at any rate, but no less those whose business is sound and could flourish if appropriate credit were available. As the outstanding debts are not paid back, the banks lack the means to grant credits even to the most solid firms. The crisis becomes general and forces all branches of business and all firms to restrict the scope of their activities. But there is no means of avoiding these secondary consequences of the preceding boom. They are inevitable.

- Ludwig von Mises, Human Action

There were months of “deflation” even in 1920’s Germany:

Bill Moreland

• “How did Silicon Valley happen? Silicon Valley Bank happened because you got a bunch of 35-year-old managers at that bank that thought 0% interest rates were forever, and they were loading up on a hundred billion dollars of extra treasuries and mortgage back securities at 1.8%.”

• “Flagstar is bankrupt. They were and they should have gone under. In a normal world, they should have got under a year and a half ago. But about a year and a half ago, we changed the rules…”

• “I’ve heard from fairly high level people that of the largest banks that are modifying mortgages, 40% of them are on their second or third loan modification. Why? Why? Why are we doing this? Why does this make sense? It makes sense because everybody’s on the same side of the table and the only rational people that are going to pay the price are the next generation.”

• “We may be in this environment where we just fudge the numbers for the next seven, eight years, which means low job growth. Everything looks great on paper, and as long as no one’s ever held to account, does it work? Maybe, but I don’t I don’t think so.”

Since Lockdowns, a 12% GDP Loss; Half of US Dollar Purchasing Power Stolen

How can consumer sentiment be at historic lows given that the overall data seems to raise no loud alarms?

…The core of the problem is a constantly changing [CPI] methodology in official data. The formula was changed eight times over 35 years. All the changes seem technical and vaguely justifiable, once explained. Adding them all up, you get wild distortions in the data that the index is supposed to reveal…

In 1998, there was a new fashion for hedonic adjustments. This stemmed from an observation that quality is always improving, especially in digital goods and computer functioning. The idea is that you might be paying the same or even more but you are getting more bang for your buck with quality shifts. You guessed it: hedonic adjustments drew the inflation rate lower. Notably, hedonic adjustments never run the other way, raising prices when quality decreases…

…real prices have run 32% higher over 45 years than the government reports. Over a 55-year window, the Reality Index ran 54.4% faster than CPI…To put it another way, consider the loss of purchasing power since 1980. According to the CPI, the loss has been to make $1 in 1980 worth only 26 cents. According to the Reality Index, the loss is greater: $1 in 1980 is now worth only 19 cents. By any standard, that is a shocking devaluation.

Blackstone’s BCRED Caps Redemptions After Investors Seek 10%

The $79 billion Blackstone Private Credit Fund told shareholders that it would allow redemptions of only 5%…That’s in contrast to the previous quarter, when BCRED, the biggest fund of its kind, went to unusual lengths to allow investors to pull all of the 7.9% of shares requested. Senior executives were tapped to help finance the withdrawals with their own cash at the time…

Cliffwater LLC also told investors this week it capped redemptions from its flagship private credit vehicle at 5% after they requested 17% to be returned. In the prior quarter, the Cliffwater Corporate Lending Fund had given investors back about half of the 14% they had sought…

BCRED has delivered 9.3% in annualized total returns since inception, outperforming leveraged loans, the fund told investors. Its portfolio overall is marked at 96.1 cents on the dollar as of April 30, with the worst 5% of the portfolio marked at 68.3 cents on the dollar.

Fresh Investor Retreat Reignites Debate on Private Credit Peak

What if the retail investors deserting semi-liquid funds are selling out at — or close to — the peak for private credit? What if the typical BDC shareholder, widely considered to have ‘misunderstood’ the liquidity profile of the asset class, actually turns out to be the smartest money in the room?

…Meanwhile in Europe, Partners Group Holding said on Wednesday it would also impose a 5% limit on exits from its $8.6 billion Global Value fund after 2Q withdrawal requests surged to around 9.8%, in a sign the anxiety sweeping evergreen private credit vehicles may be seeping into other private markets…

Reports from Bloomberg Intelligence and JP Morgan’s asset management arm in May suggested investors paring private credit exposures were actually directing money into assets with similar illiquidity profiles, such as real estate and infrastructure - which are showing brighter return prospects.

“The relative value math is a big part of investor considerations as they build portfolios,” Aaron Mulvihill, Global Alternatives Strategist at JP Morgan Asset Management, told Going Private. “In our 2026 Long-Term Capital Market Assumptions, private credit return expectations were downgraded from 8.2% to 7.7% , while real estate returns were increased from 8.1% to 8.2%.”

“We are also seeing investors look at areas like asset-backed lending, which is backed by tangible collateral, or distressed debt, which is counter-cyclical,” he added.

I’m amused by the use of “Long-Term Capital” above. I guess the JPM strategist wasn’t born yet in 1998. Also enjoyed the “flight to quality” of going to distressed debt.

Private Equity Strikes Again: “Wall Street Takes Its Cut of $34 Trillion in US Homeowner Wealth”

Clearly part of the problem (as usual) is financially naïve homeowners, but they are like minnows compared to super-predator sharks like the Carlyle Group (Jay Powell’s old outfit).

“the townhome in Jacksonville, Florida, was the best that Marian Hoag could afford.

She bought the place for $65,000, and watched its value triple over the next decade after a migration-fueled boom in Florida real estate prices. Now, she sees those gains as more of a liability than a windfall.

Hoag owes tens of thousands of dollars after signing a home equity investment contract, a form of financing that trades a share of future appreciation for cash up front. It’s a rapidly growing segment that’s attracted Fortress Investment Group, Carlyle Group Inc. and Bain Capital as backers in various forms. Private credit giant Blue Owl Capital Inc. said in December it plans to deploy $2.5 billion into the contracts in the coming years, one of the largest commitments yet.

For investors, the agreements are a lucrative way to tap into the $34 trillion that Americans have tied up in their homes, turning future price gains into a new stream of returns. For homeowners, they can mean giving up a large share of the appreciation that would otherwise build long-term wealth — and in some cases, owing far more than they initially borrowed…

The products are the latest effort by Wall Street to meet global investors’ voracious appetite for US housing by turning home equity into a tradable asset, fueled this time by the roaring growth in private credit. The contracts can be bundled, financed and sold to institutional investors. Investment banks have been packaging the HEIs in bond sales that are routinely oversubscribed…

Unlike a credit card with a clear interest rate, the true cost of an HEI is opaque, like a financial time bomb that only detonates years later when the homeowner realizes exactly how much of their future they sold off, said Ken Johnson, a real estate professor at the University of Mississippi.

HEIs “are a lot like fishing lures — bright and shiny — but with many hidden hooks,” he said.”

“I never looked at myself as a libertarian. I used to think of myself as a Republican. I wouldn’t say that anymore. I’m not a Democrat. There’s no election that’s fixing any of this. I just want people to leave me alone.”

Mike Farris

Michael Saylor’s Bitcoin Machine Is Misfiring on Every Cylinder

The strain came into focus this week after Strategy disclosed it had sold 32 Bitcoin worth about $2.5 million. The sale was tiny relative to its roughly $54 billion holdings, but symbolically significant. It marked the company’s first Bitcoin sale since late 2022 and challenged a core promise that the cryptocurrency would be held indefinitely.

The question facing Saylor is no longer simply whether Bitcoin rises. It is whether Strategy can simultaneously protect the value of its Bitcoin holdings, support the stock and maintain confidence in its preferred shares.

“I don’t see it as possible for him to protect all three,” said Richard Galvin, founder of Sydney-based digital-asset manager DACM. “One of them will have to take the pain to protect the other two.”

The average Bitcoin cost (June 1) at Microstrategy is around $75,700.

Reminiscing…

Doug Casey in 1980 with Phil Donahue.

People think you must choose one of the two flavors.

"Bill Gates Spent Years Crafting His Image. Now It’s Cracking."

Here’s a detailed look at how the usual suspects - the Rothschild & Rockefeller Foundations - along with UK think tanks & luminaries such as Jeff Epstein, Gates, Carney, Lagarde and economist Frank van Lerven, want "conditional [central bank] money, administered by unelected institutions."

“They are such fools that they seem to expect that, though the Republic is lost, their fish-ponds will be safe.”

- Cicero

MEGYN KELLY: “What’s core MAGA now?”

SHAWN RYAN: “I have no idea. Pedophiles Supporting Israeli Lobby?”

Kelly: “I wasn’t surprised [Massie] lost. They just spent so much money to try to defeat him. Normally, they spend like $500,000 in these races. If they spend $500k, it’s a lot. And this one was $30 million piled against him by the Israel lobby.”

Ryan: “Yeah. AIPAC’s literally bragging about it on X.”

Kelly: “Yeah. Yeah. They’re really proud of themselves. They got him fired for Israel. I mean, I guess it’s not as bad as getting our guys killed for Israel.”

• Kelly: “The problem for Trump now is that he has defined MAGA literally to those who agree with Mark Levin. If you don’t agree with Mark Levin, you’re not MAGA, which means you must be a neocon whose main issue is what’s in the best interest of Israel. And that defines MAGA down to nothing. It’s a nub.”

Megyn Kelly: “Israel’s really happy with President Trump. Really happy.”

Shawn Ryan: “He’s got a 99% approval rating over there. Maybe he’ll get the f*** out of here and move.”

• Kelly: “When have you ever seen Trump exposed to bad polls not come out and attack the polls? Why isn’t he doing that? Because it’s every poll. It’s every poll. Left, right, center. There hasn’t been one poll that’s good for him, other than one CNN survey of core MAGA voters early on”

• Ryan: “When somebody like Joe Kent - with his background, and everything that he has actually done for the country -I think that’s a big wakeup call. That is a big statement for a guy like that to come out and say I can’t in good conscious support this shit.”

"Narcissists are unstable and go through repeated cycles of self-destruction (with other people usually paying the heft of the price). Narcissists tend to be divisive, vindictive, confrontational, aggressive, hate-filled, raging, incoherent, judgement-impaired, and irrational."

Sam Vaknin, Narcissistic and Psychopathic Leaders

• Dan Steffens: Prepare for Potential Energy Shock as Emergency Reserves Hit Bottom

A little reminiscing about pre-Fed Chair Alan Greenspan shilling for convicted felon Charles Keating, head of Lincoln Savings and Loan

Keating hired lawyers, including four of the largest firms in New York. Arthur Liman of Paul, Weiss, later to achieve notoriety as the Senate counsel in the Iran-Contra hearings, recommended that Keating reinforce Benston with Alan Greenspan, former chairman of the Council of Economic Advisers for Gerald Ford, at the height of his reputation because he had been chairman of the committee that crafted the compromise on Social Security taxation. Greenspan was then a private consultant heading a not very successful firm that dissolved in 1987 on his departure to become chairman of the Federal Reserve Board. His specialty was what he once called “statistical espionage,” and the book on him in that capacity was that you could order the opinion you needed. The PBS public affairs show Frontline reported in May 1990 that Greenspan was paid $40,000 for writing a couple of letters and testifying for Keating.

Greenspan endorsed Benston’s study, and went much further. Accepting Keating’s figures on his own company as the truth, he hailed his client as representative of the group of new S&L venturers who were going to save the industry. Later, in a fawning and false letter to the Federal Home Loan Bank of San Francisco supporting Keating’s application for an exemption from the rule on direct investments, Greenspan expressed confidence that Keating’s operation of his S&L could not pose a risk of loss to the FSLIC “for the foreseeable future.”

Neither Greenspan nor Benston referred to—or, perhaps, understood—the peculiar accounting conventions that permitted S&Ls to book a stream of profits on unsold land and construction projects. Under the rules of the AICPA—rules continued in the 1989 draft of the AICPA’s guide Audits of Savings and Loan Institutions—owners of unimproved real estate and construction projects can increase the reported value of these assets by their expenditures for holding and development costs, including interest. Builders of course must find someone to finance such expenditures, but S&L owners who are also developers can simply pay them out of insured deposits. Most S&Ls booked a further increase in the value of their properties based on the salaries of the people involved with the projects. Several are known to have calculated these increased valuations by applying the interest rates they paid for their highest-cost brokered deposits (including the fees to the brokers) rather than an interest rate reflecting their average cost of funds. Such things were approved by the Big Eight accounting firms, at least six of which were quite willing to go along with what they called “aggressive accounting” if the fees were high enough. Not infrequently, as noted in chapter 3, the most inexcusable accounting practice was quite acceptable to the Bank Board.

Greenspan and Benston did not consider the objection to direct investment by S&Ls that came from Kent Colson, executive director of the National Association of Home Builders, who argued that his members who had to borrow their funding in the market should not have to compete directly against S&L owners who simply converted insured deposits to the working capital of construction companies. Nor did it enter their theorizing that the sort of builder most likely to acquire an S&L was the undercapitalized gambler. One such person said to Michael Patriarca of the San Francisco Home Loan Bank, who had questioned the capital adequacy of his thrift, “Look, if I had enough capital I wouldn’t need to be in this kind of business.”

”There is wisdom in crowds.” - some guest on CNBC

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Sorry, but this is such a great (and still relevant) article, here it is in full:

Two years ago, a securities analyst at T. Rowe Price named Lise Buyer decided she wanted to follow Internet companies. T. Rowe Price is a legendarily conservative mutual-fund complex, the kind of place where such traditional measures of value as price/earnings ratios are paramount. Its fund managers make a fetish of avoiding fads, and they stay away from companies with outsized market capitalizations--companies like those that have emerged, one after another, in the new Internet universe. Microsoft, with its P/E of 63, is about as far out on the limb as a T. Rowe Price fund manager is likely to go.

Buyer had a deep respect for what she calls T. Rowe’s “valuation bias”; indeed, it was her bias as well. Yet there was something irresistible about the Internet. “I just thought it had incredible potential,” she says. Besides, she thought it might be fun to participate in something so new, something so rich with possibilities. So in fall 1997, she left T. Rowe Price and joined Deutsche Morgan Grenfell as its Internet stock analyst. (In July 1998 most of DMG’s technology group, including Buyer, moved to CS First Boston.) Instantly, she was thrown into a world the likes of which she had never experienced. In this world, the tried-and-true valuation measures Buyer had always relied on were useless. After all, you can’t have a P/E ratio if you have no “E”--and most Internet companies were years from reporting earnings. Yet the stocks were flying, and market caps were reaching gargantuan levels. Companies with seven-figure revenues had ten-figure market caps. Companies with negative operating margins had multibillion-dollar stock valuations. Companies would go public in the morning and have billion-dollar valuations by nightfall. And these weren’t the exceptions. They were the rule.

At first Buyer was bewildered. She still wanted to be able “to make the math work,” the way she always had at T. Rowe Price. But she couldn’t. By any normal measure, the valuations of these Internet companies were preposterous. So she turned to a surprising source: “I went back to Graham and Dodd,” she says. She began rereading her copy of Security Analysis, the classic text written in 1934 by the great value investor, Benjamin Graham, and his partner, David Dodd. After much searching, this is what Buyer found:

“Unseasoned companies in new fields of activity...provide no sound basis for the determination of intrinsic value.... Analysts serve their discipline best by identifying such companies as highly speculative and not attempting to value them.... The buyer of such securities is not making an investment, but a bet on a new technology, a new market, a new service.... Winning bets on such situations can produce very rich rewards, but they are in an odds-setting rather than a valuation process.”

Today Lise Buyer covers 13 Internet companies. She has a “buy” rating on 11 of them. Yet she concedes, “I still can’t make the math correlate with the stock prices.” No matter. She points to the Graham and Dodd quote, which is posted on the wall behind her desk. “Reading that,” she says wryly, “helped give me the courage to abandon my valuation bias.”

This is a story about one of the companies Lise Buyer has a “buy” on: Yahoo. More precisely, it’s a story about Yahoo’s stock price, which, as FORTUNE goes to press in mid-May, stands at $158 per share.

To be sure, Yahoo the company has been one of the great success stories in the short commercial history of the Internet. Founded five years ago by Jerry Yang and David Filo, two Stanford grad students who created a Web “directory” more or less for fun, Yahoo today is widely considered one of a handful of companies destined to dominate its portion of the Internet “space.” Its management team, led by CEO Tim Koogle, has built Yahoo into a powerful “portal” and one of the best-known brands in cyberspace. Its strategic moves--such as the recent acquisitions of GeoCities and Broadcast.com--have been applauded as savvy. The company’s ability to “aggregate eyeballs,” as they say in e-business, is unquestioned: In March more than 31 million people visited the Yahoo site, putting it just a hair behind the No. 1 site, AOL.

Most impressive of all, Yahoo is the rare Net company that is profitable. It turned its first small profit in the fourth quarter of 1996--a year ahead of most people’s expectations. In the first quarter of 1999, Yahoo earned $16 million on $80 million in revenues. If earnings keep growing at the current pace, the company will make more than $100 million this year.

If the performance of Yahoo the company has been spectacular, the performance of Yahoo the stock has been unearthly, even surreal. In 1997, a year when Yahoo the company grew by 242%, Yahoo the stock rose 517%. Last year the company tripled its revenues and saw profits go from a penny a share to 13 cents a share; the stock ran up 584%. (So far this year the stock is up another 33%, despite the big falloff in Internet stocks that started in mid-April.)

Under the old, pre-Internet rules, a company with Yahoo’s revenues and projected growth rate might be able to justify a market cap of, oh, $3 billion. Instead, Yahoo’s market cap stands at $34 billion. Its P/E ratio in mid-May was around 1,062. This is uncharted territory not just for Lise Buyer but for everyone: for the day traders who have helped run up the stock so far and so fast; for the short-sellers who’ve gotten killed again and again on Yahoo; for the retail investors deciding whether to take the plunge; even for the pros at Fidelity Investments, who by the end of last year held close to 1.8 million Yahoo shares. Half of those were owned by Fidelity Magellan, the nation’s largest mutual fund, which brings us to the most astonishing fact of all: Despite its unfathomable market cap, Yahoo is now viewed as a stock “safe” enough to be held by mutual funds that manage retirement money for tens of millions of Americans. Analysts routinely categorize it, along with AOL, Amazon.com, and eBay, as an Internet “blue chip.” Fund managers buy Yahoo for “defensive” purposes.

There are plenty of people who still think that Netmania will turn out to be a bubble--and they may well be right. But for now, the more illuminating question is the more prosaic one. How did we get here? How did it come to pass that a company with $16 million in quarterly earnings could have a $34 billion market cap--and that no one dares suggest that its stock is overpriced? That story, the story of Yahoo the stock, is the story of the relationship between investors and Internet stocks. It’s about how we all learned to abandon our valuation bias.

“These valuations are such a distraction,” Michael Moritz is saying, affecting his most world-weary tone. The 44-year-old venture capitalist is slouched in his small office, his face propped against one arm; he appears to be struggling to stay awake in the face of such dreary questioning. “Clearly,” he continues, “this has mesmerized all sorts of people.” He sighs. “But I don’t think it’s that healthy for Silicon Valley--or for those trying to build a company.”

Moritz is a general partner in one of the most storied of Silicon Valley venture firms: Sequoia Capital, whose progeny include Apple Computer and Cisco Systems as well as Yahoo. Back in the spring of 1995, before Yang and Filo even knew what kind of business they wanted to build, Moritz gave them $1 million in return for a one-quarter interest in their still unformed company. Soon thereafter he recruited “T.K.,” as the 47-year-old Koogle is known in the Valley. Moritz remains a Yahoo director and adviser.

The Yahoo party line is that the company doesn’t waste time thinking about the price of its stock. Management views its job as executing its business plan, explains a company spokeswoman, and if it does that, the stock will take care of itself. Though the run-up in the stock has made him a near billionaire, Koogle deflects questions about Yahoo’s valuation. “These guys have never allowed themselves to be distracted by the hoopla over the stock,” exclaims Moritz, suddenly animated. “They’ve always understood that they are building a business and not promoting a stock. In all the conversations I’ve had over the years with Jerry and the guys, I don’t think we’ve spent five minutes talking about the stock. Not five minutes.”

Those last two sentences are, well, unbelievable. Yes, the folks at Yahoo focus on running the business, but their soaring stock is hardly a mere byproduct of a well-executed business strategy. In the new world of the Net, the stock is a critical element of the business. A high valuation gives companies like Yahoo the inflated currency needed to make deals with other highly valued Internet companies, and helps them lure the most talented people. Most of all, a Net company’s valuation has much to do with how it is perceived in the industry. Which is to say, the larger the market cap, the greater the esteem.

That Koogle understands this dynamic has been clear since Yahoo went public back in April 1996. Just months earlier, the Japanese company Softbank had sunk $100 million into Yahoo, becoming its largest shareholder. So the company didn’t need money--the classic “old economy” reason for going public. Koogle didn’t even want to do an IPO that April. “I really wanted a few more quarters. I wanted to be sure we could deliver our numbers consistently and ahead of [Wall Street’s] expectations,” he says.

In the end, though, the Yahoo CEO felt he had no choice. Two competitors, Lycos and Excite, had announced plans for IPOs, and Koogle felt Yahoo couldn’t be left behind. If Yahoo waited to go public, it might be perceived as a laggard, and forfeit what Wall Street calls the “first-mover premium.” “We couldn’t afford to be boxed in,” he says. “So we took the risk.”

Of course, the company also did everything in its power to limit that risk. During the road show, it put out a series of projections that were, in retrospect, low-ball numbers. Indeed, one trait that has marked Yahoo ever since has been its ability to beat the Street’s expectations, in part by insistently dampening expectations. To this day, analysts who cover the company have quarterly earnings estimates that are within a penny of each other--which they are guided to by Yahoo.

Managing the Street’s expectations is hardly new; Cisco and Microsoft, among many others, are famous for their conservative “guidance.” What is different for Internet companies is that IPOs are far more about publicity than about raising capital. In recent months some Internet companies have gone public with the explicit goal of having the stock run up 300% and 400% on the first day. They leave tens of millions of dollars on the table because they view the potential PR bonanza as so important. For Yahoo the issue was simple--it hoped the IPO would confirm its leadership in the portal business. (Of course, back then it was called the “search engine” business.) Lycos and Excite went public just weeks before Yahoo, and neither shot the lights out. Yahoo, on the other hand, priced its offering at $13 a share (these are pre-split prices), saw the stock jump to $43, and closed the day at $33--up 154%, giving it a first-day market cap of over $800 million. Yahoo’s stock had outperformed the others; by the tortured logic of the Internet, that made Yahoo the leader in portals.

There is one other crucial fact about Yahoo’s IPO--and indeed all Internet IPOs--that helps explain some of the giddy rise in Net stock prices. The “float” was tiny. When Yahoo went public, it had around 26 million shares outstanding. But only 10% were made available to the public. The rest remained in the hands of the founders and other insiders, such as Sequoia and Softbank. With a float that small, Yahoo was virtually guaranteed a successful IPO, since demand for its shares would far outstrip supply. This remains true today. After three stock splits, a handful of acquisitions (which usually require the issuance of more stock), and the normal amount of insider selling, Yahoo has around 200 million shares outstanding and a float of a little over 80 million shares. Since the stock’s popularity has grown just as fast, a supply-demand imbalance still exists. As Michael Parekh, the Internet analyst at Goldman Sachs, puts it, “Float matters.” Truth to tell, in the early days of a Net stock’s life, little matters more.

Lise Buyer was hardly the only person to see that a job as an Internet stock analyst was highly desirable. As a researcher at Paul Kagan Associates in the early 1990s, Steve Harmon had also caught the bug. “When I first saw Mosaic”--the revolutionary browser that became Netscape Navigator--”I said, ‘This is it,’ “ he recalls. He had neither the connections nor the wish to land a job like Buyer’s at a mainstream Wall Street firm. Instead, in 1996 he hooked up with Mecklermedia, a magazine publisher that was quickly branching onto the Web. On Meckler’s Internet.com Website, the company’s new “senior Internet and media investment analyst” began writing twice a day about Internet stocks.

Yahoo was one of the first he wrote up. On the eve of its public offering he gave a glowing appraisal of Yahoo’s prospects, flatly predicting that its IPO performance would outdo Lycos’ and Excite’s. He conceded that there were those who thought its valuation would be “frothy,” but he downplayed those concerns. He went on to say something that is now widely accepted by Wall Street: that Yahoo was not, in fact, a technology-driven “search engine” but rather a “directory service,” an accumulator of Web content that would make money mainly from advertising--and that that would turn out to be the superior business model. “Some could say that Yahoo is what America Online wants to be when it grows up,” Harmon wrote in a notable burst of enthusiasm.

Three years later, Harmon, now 34, can still recite that line from memory. Sitting in a coffee bar in Palo Alto, he is happy to recall other triumphs as well. He set up the first index of Internet stocks, he says. He was prescient about not just Yahoo but also DoubleClick, Inktomi, @Home, and a raft of other Net stocks. He is read by Bill Gates, John Doerr, Marc Andreessen--and some 100,000 investors who get his reports via e-mail.

Harmon believes he is in the vanguard of a new kind of investing--in which Internet users learn about Internet stocks from Internet analysts like himself and then use the Internet to trade those stocks. “I’m in sync with the Net,” he says. “I believe in the new axiom: If you use it on Web Street, buy it on Wall Street.” He sneers at high-profile Wall Street analysts like Morgan Stanley’s Mary Meeker, whom he views as hopelessly behind the curve. “She didn’t pick up coverage of Yahoo until last year,” he scoffs. “She was two years behind me.” His popularity is such that he is on the verge of expanding from his Internet.com base to form a new company. He is thinking of calling it e-harmon.com.

Harmon has indeed been “in sync” with Internet investors. And to give him his due, his analysis of Yahoo (and other Internet stocks, for that matter) has been right on the money. But the truth is that his analysis only partly explained what was driving the stock upward. In the beginning especially, Yahoo’s stock wasn’t moving as a result of a superior business model. Yahoo’s stock was moving because of its small float.

Most of Harmon’s readers, after all, are day traders, small investors, and hedge-fund managers who constantly move in and out of Net stocks. They don’t much care whether Yahoo the company is a search engine or a directory service; they only want to know whether Yahoo the stock will go up in the short term. So when Harmon and others like him pounded the table for Yahoo, the day traders picked up on that and collectively drove up the stock. With less than three million shares in circulation, it wasn’t that hard to make it move. “I want to be in a stock with a two-million-share float,” says a New York day trader named Lee Ang, a Harmon fan who works out of the New York branch of the Carlin Financial Group, which rents office space and equipment to day traders. “All you need is the littlest hype, and it will run up.”

“This is complete momentum-style investing,” adds Mayer Offman, a day trader who holds the title of “chief strategist” at Carlin. “When the Net became popular, you had thousands of people putting most of their money in these stocks.” Though Yahoo has become, in Ang’s words, “less interesting” of late--in large part because the float is much bigger--it was one of the most popular Internet stocks in the first couple of years it was publicly traded. At a time when it was difficult to buy a block larger than 2,500 shares, Offman knew groups of day traders pushing to buy 10,000 or 20,000 shares at a time. “There were times when you had 20% of the people trading primarily in Yahoo,” he adds. “Without these guys, Yahoo would be at a third of the price it is today.”

For day traders, says Offman, “valuation is meaningless.” Anyone who thought otherwise got his head handed to him. Short-sellers, believing the stock was overvalued, would make periodic runs at it. But these were suicide missions. With the float so small, it was relatively easy for people on the long side to snap up most of the available shares and “squeeze the shorts”--forcing them to capitulate and buy stock to cover their positions, which drove the price even higher. Hedge-fund managers who had started out shorting Yahoo often switched to the other side and began buying it up instead.

This wasn’t the only form of capitulation to the power of this stock. There was also a kind of intellectual capitulation, perhaps best exemplified by a man named Bob Walberg. Like Harmon, Walberg is an analyst who writes for an Internet site, Briefing.com. But Walberg did not instantly warm to Internet stocks. Having spent 15 years working at regional brokerages, Walberg thought of himself as an analyst who took “a conservative, value-oriented approach.” He was horrified by Internet valuations. And he said so.

Throughout 1997 he harped on the issue of valuation. “After watching short-sellers lose their lunch over the past couple of weeks after being kicked in the stomach by the likes of…Yahoo,” he wrote in one fairly typical July 1997 missive, “it is difficult for Briefing to say one should have any regard for valuations when it comes to high-profile stocks...[but] now that the [second-quarter earnings] are out, what could drive the stock materially higher at this level?” He repeatedly mentioned the high market caps and warned investors that if market sentiment turned, things could get very ugly.

But of course market sentiment didn’t turn, and by the early part of 1998, with Net stocks moving faster and higher than ever, Walberg ran up the white flag. That April, after Yahoo had reported yet another quarter in which it had beaten expectations, he wrote: “Of course it is hard to justify the multiples that this issue commands...but as everyone that has tried to short the stock will tell you, it is very difficult to fight the momentum and the following that this issue has experienced since going public.” Never again did Walberg make a big deal of valuation. What was the point? He had come to agree with Offman: “Valuation doesn’t matter.”

“Once you reach the conclusion that it is the supply-demand equation that is moving these stocks, and not valuation, you have to make a choice,” Walberg says. “You can ignore what is driving the stocks and opt out of the game. Or you can ignore valuation and stay in the game. We decided we didn’t want to opt out. Besides, you have to recognize that investors are trying to pick winners--and Internet stocks have been the big winners.” This past December, Walberg penned a darkly brilliant line that summed up his current view of Net mania: “At the heart of the Internet revolution,” he wrote, “the most desired thing is Internet stock.”

Steve Harmon never had to capitulate on valuations. That’s because he had decided from the very beginning that using the valuation “metrics” of the past for Internet stocks made no sense. For one thing, traditional metrics were just going to scare people off. For another, this really was a new world, in his view. “Newspapers will trade at six times cash flow,” he says. “Everybody knows that’s the deal. Broadcasting is eight to 12 times cash flow. But we don’t have any comparable way to gauge Internet stocks.” So he decided to invent some metrics that he could apply to Internet companies.

For instance, Internet companies were measuring the growth of their audiences by tallying the number of times a particular Web page is looked at. “What if I took the market value of an Internet company and divided it by monthly page views?” Harmon remembers asking. “What would I get?” He used this metric to compare CNET and Yahoo, and it showed that CNET was trading at a premium to Yahoo on a “page view ratio” basis. “To me,” he adds, “that suggested Yahoo was undervalued.”

Having decided that this was a useful exercise, Harmon created other measures: Market cap/users; market cap/ad views; revenue/subscriber; market cap/potential market share, and a half dozen others. On the one hand, most of these new metrics were laughable--what did they actually measure? On the other hand, they certainly did suggest that their inventor was “in sync” with the Internet mentality. Harmon had implicitly given up on the idea of comparing Internet stocks with “old economy” stocks. He was saying that the only way to value Internet stocks was to compare them with each other. Relative to, say, Disney, Yahoo’s valuation of course seemed completely nuts. But compared with CNET, it didn’t look so bad at all--in fact, you could argue that it was undervalued!

Relative valuation--that was the idea. It was an idea soon embraced by Wall Street. By spring 1998, the Street, too, was about to capitulate.

If you ask Yahoo CFO Gary Valenzuela what he thinks about day traders, he gives a fatalistic shrug. “There is not much you can do about them,” he says.

And in fact, throughout the period when day traders and hedge funds were driving up the price of the stock--to Yahoo’s great benefit--the company ignored them. Instead, Yahoo executives spent their time explaining themselves to Wall Street. That, after all, was the stock-buying constituency they wanted to attract.

In those early days the Street wasn’t interested; the Internet thing was just too scary for most big institutional investors. But Koogle and the other execs never let up; they knew that laying the groundwork would serve them well when Wall Street finally woke up to the Internet.

That’s why it was so important for Yahoo to show profits early--it didn’t want a reputation as another profitless Net outfit whose stock floated on air. It wanted the Street to view it as something real. That’s also why Yahoo made such a point of managing--and beating--analysts’ expectations.

Koogle and the rest of the Yahoo management team also made a point of not acting like a bunch of wild and crazy startup guys. They stopped talking about how Yang and Filo had developed their site in a trailer full of empty pizza boxes. Instead, they were low key and professional, never talking up the stock and always talking about the business. They dealt in real numbers, not “blue sky” projections. They conveyed the impression that they were grownups who knew how to run a business--precisely the way Wall Street likes to see management act.

Sure enough, by spring 1998 the Street was taking notice of Yahoo. The stock by then had risen 745% from the original IPO price. Its multiple was still astronomical, but Yahoo’s ability to deliver great results--while conveying a conservative image--made the dizzying multiple a little easier to overlook.

Besides, by then some 20 analysts were covering Yahoo--up from three after the IPO--and they were all lining up behind the stock. That was the next big step. Lise Buyer picked it up in January. Mary Meeker came on board in April somewhat sheepishly--she was late to the party, she conceded in her first report. And right around then--shortly before Yahoo announced its first-quarter results--the stock really took off. Having split once, and about to split again, Yahoo’s float was now well over ten million shares. But there suddenly was much more demand! By July, when the run-up finally ended, Yahoo’s market cap had risen from $5 billion to $9 billion.

Which still begged the question that forever hung over Yahoo: How did you explain its valuation? Even though the company kept announcing good results, the multiple kept leapfrogging ahead of those results. In effect, the stock price kept outrunning the performance of the company.

The analysts who covered Yahoo could still love the stock because, like Bob Walberg, they had all gotten their minds into that different place--the place where you acquiesce to the logic of Internet valuations. On some level, it was a requisite for the job. How could you cover these companies, after all, if you didn’t deeply believe in the medium and its potential? Sure, they would say, many of these valuations seemed crazy now, but someday some of the companies being built would end up justifying their stock prices. In the case of Yahoo, you had to believe that major advertisers like Procter & Gamble would eventually spend big bucks on the Net. Because Yahoo had already done such a good job of establishing itself as a major Internet brand, it wasn’t hard to make the next leap--namely, that when the P&Gs finally arrived, they would spend the lion’s share of their ad dollars on Yahoo.

Every Internet analyst made arguments along those lines when visiting clients. Most also had ways of dealing with the question of current valuation that was inevitably raised. Most avoided “old-economy measures” such as P/E ratios, which were so off the charts, and used measures like price-to-sales ratios, which at least looked a little more “normal.” (Yahoo’s price-to-sales ratio in mid-1998, for instance, was 103.) All relied on relative valuation measures--thus keeping the comparisons within the Internet universe. That was the key, really: Once you viewed Net stocks in relative terms, it all seemed to make sense. Some analysts liked revenue per customer measures, while others pointed to the growing number of visitors to the Websites. One analyst smushed these together and came up with a “value per customer” metric. (”We then take the steady-state per-customer operating income...and apply a dividend discount model to come up with a value per customer,” he helpfully explained.) Analysts who liked to crunch numbers favored “discounted cash flow” models as a way of defending the valuations. They made cash-flow estimates five or six years into the future, then worked backward to the present. The problem is that since we know so little about where the Net is headed, predicting cash flow so far into the future is largely meaningless. While it looked like old-fashioned valuation analysis, it wasn’t. Rather, it was a kind of disguised justification: an implied acknowledgement by the analysts that investing in this new technology was a bet--just as Graham and Dodd had said back in 1934.

The smart ones, like Buyer, understood that. Having never completely gotten rid of her “valuation bias,” she actually wrote a quarterly “valuation report” for her clients. It was primarily an effort to find meaning in relative valuation measures. But she conceded up front that she was still groping for answers. “People expect Internet analysts to have the answer,” she says. “But we don’t. This is about adjusting on the fly.” In one recent report, she joked, “We think the variable that might most explain current relative valuations could well be the number of weekly mentions on CNBC.” In that same report, though, she wrote bluntly, “At some level, the attempt to rationally explain the valuations on Internet securities is an exercise in futility.”

Does that mean she’s down on Internet stocks? Of course not. It simply means that she has to find other criteria. And she has. “I have four tests for an Internet company,” she says. “Does someone need what they are doing? Do they have a sustainable advantage? Is there a business model that will lead to profitability? Is the management good?” Yahoo meets her criteria, so it’s on her list of recommended stocks. The valuation? It is what it is.

In the end, that’s the lesson the stock has imprinted on those who follow it: If you get hung up on valuation, you’ll get hurt. Look at what happened to Paul Noglows, for instance. Noglows, the Net analyst for Hambrecht & Quist, had covered Yahoo since late 1996, longer than just about anybody. He loved the company, believed in the model, and pushed the stock. In the early days, he recalls, “clients would laugh at me when I brought up Yahoo.” The first time it doubled in price, investors asked if they should sell and take their profits. No, he’d said, stay the course. “I just believed in it,” he says. “I had faith.”

But in 1998, during the stock’s great summer run, his faith wavered. In just five weeks, Yahoo ran up 82%. “It has exceeded the market cap of Viacom,” Noglows recalls thinking. Even in relative terms it seemed expensive: It was trading at 37 times estimated 1999 revenues--that was his preferred metric--while its competitors were trading at 14 times 1999 revenues. “I started having a crisis of confidence,” he says. So in early July, he downgraded Yahoo, along with AOL, to “hold.” His stated reason? Valuation concerns.

For about two months he looked like a genius. Late that summer the market dropped hard in the wake of concerns about Russia, and Net stocks dropped with everything else. But in the fall they turned around and began soaring anew. Noglows upgraded AOL but kept his “hold” on Yahoo because he still thought the stock was overpriced. “It was a big mistake,” he says. By the time he finally upgraded the stock this March, it had more than tripled. Now, if you ask him about valuation, he’ll give the same answer as Mayer Offman and Bob Walberg: “Valuation is meaningless.”

“Do you know why people like me own this stock?” asks Roger McNamee. “We own it because we have no choice.”

A general partner of Integral Capital Partners, a Silicon Valley technology fund, McNamee is one of the best-known tech investors in America. He was in on Yahoo’s IPO and has owned shares of the company for most of its brief life. He appreciates the “brilliance,” as he calls it, of Yahoo’s business model and the abilities of Yahoo’s management. He likes Tim Koogle a lot. None of that entirely explains why he’s of late been loading up on Yahoo and other Internet stocks: “I buy these stocks because I live in a competitive universe, and I can’t beat my benchmarks without them.” What he thinks about their valuations is irrelevant. “You either participate in this mania, or you go out of business,” he says. “It’s a matter of self-preservation.”

Having gone from hot IPO to plaything of the day traders to darling of the analyst community, Yahoo has taken the final step on its journey to blue-chip status: It has become a “must” for mutual funds and other big institutional buyers of stock. All are under the same pressures to beat the market, which has been increasingly difficult as the S&P 500 has risen at a 20%-plus annual clip in recent years. They are also under pressure not to fill their portfolios with overly risky stocks--holdings for which they can be criticized if the stocks crash and burn.

This past fall, as Internet stocks--ignited by eBay’s September IPO--took off once again, desperate money managers finally succumbed. They began buying Yahoo in droves; between last fall and this March, Yahoo’s market cap rose from $12 billion to $50 billion (before falling recently to $34 billion), as institutional ownership of the stock climbed to 60%. With 80 million shares now in circulation, says a hedge fund manager, “you can buy a 25,000-share block now without much trouble.”

And nobody talks about valuation. Yahoo is a name everybody knows --so it isn’t considered as “risky” as an Inktomi or a DoubleClick. Besides, if it should all come tumbling down, who’s going to criticize the fund industry for owning it? It’s not as though one or two fund managers stuck their necks out.

Of late the analyst community has a new chant about Yahoo, which has brought an additional measure of comfort. The new line is that if the bubble bursts, the big Internet brands--AOL, Amazon.com, eBay, and Yahoo chief among them--will be the ones still standing. Indeed, analysts lump all four together as leaders you can bet on--the “safe” Internet stocks. “If you don’t own some of these stocks,” SG Cowan analyst Scott Reamer tells his clients, “you’re being fiduciarily irresponsible.”

“Yahoo has become a blue-chip stock because Yahoo is a blue-chip company,” adds Jaime Kiggen, an Internet analyst at Donaldson Lufkin & Jenrette. That is the new party line, and if your world-view is confined to the Internet it makes a certain sense. On the Net, Yahoo is an 800-pound gorilla. But it’s no blue chip. Companies with $16 million in quarterly profits and a $34 billion market cap are simply not blue chips, no matter how well they are run. Yahoo has the multiple it has because demand for Internet stocks remains insatiable and because the company’s execution so far has been picture perfect. Yet implicit in its market cap is the assumption that everything will continue to work out splendidly for the company--and that the Internet will turn out to be the greatest profit generator the world has ever seen. There is no margin for error in Yahoo’s valuation.

But now is not the time to worry about that--at least not on Wall Street. Now is the time to climb aboard. To look at the list of Yahoo shareholders is to realize that pretty much all of Wall Street is along for the ride. Data compiled by Thompson Financial Securities Data show that Fidelity, AIM, Janus, and Alliance Capital are shareholders. So are Mellon Bank, Chase Manhattan, and State Street Bank. Well-known hedge funds like Tudor Investment Management own the stock. The Ford Foundation owns the stock. The IBM Retirement Plan owns the stock.

Are there any holdouts left? Well, there’s one at least. The fund managers at T. Rowe Price have yet to buy their first share of Yahoo.

On June 13, 2017, Verizon completed the acquisition of Yahoo for about $4 billion.

Today Yahoo is 90% owned by the Jeff Epstein-adjacent private equity outfit Apollo!

• Merge, Bail, and Make Out Like a Bandit: Yahoo’s Marissa Mayer is just the latest CEO to fail at her job, see her company merged, and float away on a huge golden parachute. (2017)

I bring you A.I., stupid wars, endless propaganda, attacks on the Bill of Rights, Morris Day and the Time, record stock prices!!!, Pam Bondi, Charles Hugh Smith, 26% credit card rates, ridiculous rents, Greg Weldon, the despicable and clueless New York Fed, oil, Luke Gromen, Marvin Barth, Kevin O’Leary’s Utah hellscape, Las Vegas, hay prices, starvation (I mean food insecurity), wheat, cattle, poor people, bankruptcies, JPMorgan, real estate, Jerome Powell’s disastrous reign (for most), atrocious consumer sentiment, job cuts, crack up booms, Jim Cramer, Cisco, Graham and Dodd, John Maynard Keynes, Cem Karsan, Bill Fleckenstein, Joe Bergquist, Art Berman, QTR, Bob McNally, Trimmed Mean PCE!, private equity, record-high home prices, Walmart, Micron Technology, SPACEX!!!, George H.W. Bush, UAP’s!!!, the gold standard, and much more.

“No New Wars”

“This is a completely unconstitutional, illegal, aggressive war. We had no right to start it against a country that we’re in the middle of negotiations with on behalf of a third nation and based on a lie. This is a completely treacherous Pearl Harbor style attack, sneak attack, which was the day of infamy when somebody did it to us, and then we did it to them, and killed their FDR, and killed schools full of kids at the same time, too.”

Scott Horton

“With just twenty minutes remaining of the class, at 5:10 p.m., the girls had gathered in a circle around their coach in the middle of the hall to learn a new drill when the first rocket struck a military base nearby. The second exploded directly in the sky above the heads of the 26 girls, and the third hit the city’s ring road approximately 200 meters in front of the sports hall.

From those white streaks across the sky and the storm-like roar of the missiles fired toward their city of 44,000 residents, 21 people were killed. Two of those 21 were Helma and Elham…”

Vali Nasr

Americans need to hear this.

“The outcome of this war has diminished the United States and particularly President Trump at a global level. The U.S. went into a war with a country that was supposed to be a pushover, and the United States has not been able to achieve the strategic objectives with which it started the war. This country that has been under sanctions for over four decades. The U.S. would have dismissed it as a third-rate military power but Iran has forced the United States to come to the negotiating table, forced the United States into a stalemate. For a U.S. President who arrived at the scene assuming that he’s 10-feet tall, that he can bully everybody around the world into accepting American supremacy and whatever terms America puts on the table - Iran has proved to be a very, very tough nut to crack.

He’s facing a country that refuses to bow to him either in war or at the negotiating table, and forcing him to accept an outcome that he didn’t plan on when the war started. The impact of this diminishment of President Trump and the diminishment of U.S. global strategic standing was very evident during President Trump’s visit to China. He went to China mired in a conflict with Iran that he couldn’t solve, and it was very obvious that he didn’t get from that trip what he had hoped for. He didn’t get much on trade. He didn’t get much on Iran. He didn’t get much on anything other than being lectured that he better back off on Taiwan or he’s going to face confrontation with China. The unwritten understatement is that you can’t even handle confrontation with Iran, let alone confrontation with China. And so in a way this war has is having a much greater global impact that we’re going to gradually see uh unfold time in the years to come.”

As I said in early March, this war is bad for America.

EVERY SINGLE DAY:

Nothing Orwellian Here

The Justice Department is intensifying efforts to identify anonymous social media users who have criticized government deportation policies…

The cases involve relatively innocuous posts. One user posted simply “expletive ICE,” while another made what his attorney describes as a sarcastic remark on X that included an address found elsewhere on social media. Defense attorneys note the posts contain no indication of violent intent.

Civil liberties advocates warn the tactic threatens fundamental protections for anonymous speech. First Amendment Coalition Executive Director David Snyder pointed to The Federalist Papers, which founding fathers published under pseudonyms to protect themselves from government retaliation while shaping the nation’s founding principles.

As I noted back in 2015, Donald Trump is an enemy of free speech (and loves Bill Gates):

Charles Hugh Smith

• "It’s not just the cost of living is rising; the quality of life is deteriorating in ways that are not easily measurable."

• "Consumers have visibility on this degradation of the quality of everyday life, and they see no plausible evidence it’s reversing."

• "Consumer sentiment is at record lows because there is zero visibility on any real-world trends that would be positive for the bottom 90%."

Americans Are Falling Behind on Their $1.25 Trillion Credit-Card Bill

Despite her $194,000 salary, Clarke’s Chase Sapphire credit-card balance had crept up to $15,000. She could afford the $572 monthly minimum, but with a 26% interest rate, it barely made a dent.

Like many Americans, Clarke, who is 42 years old, was pushed to her financial limit by the one-two punch of inflation and the highest interest rates in decades.

Ok, sorry, but if you make $194k and are in financial distress, it’s your fault.

Americans carry, on average, about $6,500 to $6,700 in credit-card debt…

Median Asking Monthly Rent

Investor Home Purchases Fall to Lowest Level Since 2020

Greg Weldon’s Latest Always a good, short macro take.

These Fed Apparatchiks are CLUELESS!

…and never held accountable.

New York Fed:

“We find a remarkable increase in food insecurity, particularly among lower-educated and lower-income households and households with young children. We document a contemporaneous increase in pessimism among the same groups…”

Oh really?

Meanwhile…

AND, the head of the New York Fed had this to say a while back:

[An earlier part of this post has been removed because I stupidly confused “Total Assets” with “Net Worth,” due to lack of caffeine.]

Luke Gromen

• “Inflation’s going to soar, but they’re going to lie about it. Inflation will be running 12 to 15% easy. But they’re going to tell you it’s four, four and a half.”

• “I had two different people that don’t know each other that are longtime veterans in the oil market say to me, and I quote, “The Saudis were horrified, quote, horrified by the US sanctions of Russian FX.” So now it looks like you’ve got Saudis settling some portion of their oil sales in gold. That’s just a fact.”

• “All of the emerging market people are going to buy stablecoins on their phones, right? No, they’re not, because in 4 months they’re not going to be able to afford friggin’ food because you invaded Iran, you moron.”

• “Yeah, they want the American dollar. You know what they want more than the American dollar? Bread, gasoline, diesel. I’m getting worked up because I just watched the commentary relative to the actions of the government and they’re not equating how these things interact with each other.”

• Best part of the interview:

  “…this shitty little arcade in this house with two video games and they thought it was like the greatest vacation in history. So that’s another thing I would tell parents - what you view as good or bad is not what they do. They just want to feel loved. They want to be with you. They want to enjoy an experience. And it doesn’t have to cost a gazillion dollars.”

SPR Level

I read from Zerohedge that we drained about 33 million barrels over the past month.

Marvin Barth

Themistocles’ lesson for the Fed

“The eminent economic historian, Michael Bordo, was a visiting scholar at the Fed and came into my office for a chat. He took one look at my bookshelf and said, “That’s a lotta math and econometrics books. Don’t you think economic history and theory should be part of your analysis?

…I know a lot of bond traders and I’m not sure that any can tell you the price of a gallon of milk. To suggest that their pricing of future inflation is representative of consumer price expectations, given their failure to predict every instance of expectations de-anchoring from the 1970s through Covid, reflects a profound ignorance of finance, economic history and theory. The consumers that form prices in our economy struggle to balance their budgets. And by the way, they vote.

Failures of accountability like this have been one of the key drivers of populist anger. In The Politics of Rage, a report I wrote at decade ago, I found that the primary driver of populism is average citizens’ perception that they’ve been disenfranchised by elites’ pursuit of their own interests at the expense of the masses…

If you take one thing today, let it be this: You are not going to “educate” populism away or convince populists that you are acting in their best interests. They don’t trust you. And after a long sequence of “experts’” policy errors whose cost have largely fallen on the masses, who can blame them?

…By the objective measure of average inflation, the Powell Fed is the seventh worst ever and the fourth worst of the fiat era. But that’s unfair to Paul Volcker who was handed 12% inflation as a welcoming gift. In contrast, Jerome Powell inherited sub-2% inflation and is bequeathing Kevin Warsh 4.4% core PCE inflation that is accelerating.

Importantly, this poor [inflation] record was a team effort. I’m pleased to see that a few FOMC members have finally found their independence, but the record is clear: the Powell Fed had the lowest rate of dissents since the Fed-Treasury Accord secured that independence.

In closing, I’d like to relay one more lesson from ancient Greece. Athens’ greatest hero, Themistocles, saved Greece from the conquest by the world’s first true empire, the Persians. Despite that miraculous success, Themistocles was ostracised — that is publicly exiled by popular vote — for fraud and treason. Historians agree that the charges were questionable and factionalism played a role. But most also agree that Themistocles’ arrogance and lack of humility before his fellow citizens sealed his fate.

The current political assault on the Fed reflects similar factionalism. But it also results from objective policy failures that the Fed continues to deny. In a democracy, right or wrong, everyone must be accountable to the people. The Fed would do well to remember that if democracy can turn on a hero like Themistocles, it is far more likely to turn on an institution with an objective record of failure.”

A.I. more expensive that humans?

“The economics of replacing or augmenting human labor with AI may be more complicated than some early forecasts originally implied. That echoes what Bryan Catanzaro, vice president of applied deep learning at Nvidia, recently said in an interview with Axios.

“For my team, the cost of compute is far beyond the costs of the employees”

Via Grant’s:

the ongoing AI gold rush represents one of the few games in town. The Roundhill Memory Exchange Traded Fund (ticker: DRAM) now manages $11.6 billion less than two months after launch, easily the fastest ETF to reach the 11-figure milestone according to Morningstar (the iShares AI Innovation and Tech Active ETF reached $10 billion in assets 556 trading days after launch, previously the quickest for a thematic fund). While DRAM has posted a 118% price gain since its April 2 debut, new cash accounts for the bulk of AUM growth: cumulative net inflows reached $9.2 billion as of midday per data from Bloomberg.

Mondays near 20% levitation in Micron Technologies – which accounts for roughly 28% of the fund’s portfolio, inclusive of swaps – will do little to dissuade investors’ feeding frenzy. “DRAM is a textbook case of an ETF issuer catching lightning in a bottle, pairing the perfect ticker symbol with impeccable timing and an investment thesis tailor-made for the current market,” Nate Geraci, president of NovaDius Wealth Management, noted to the Financial Times Tuesday.

Kevin O’Leary’s Utah Data Center

Robert Davies, a physics professor at Utah State University, has estimated that the project would create a total thermal load of about 16 gigawatts.

That thermal load would be “the equivalent of about 23 atom bombs worth of energy dumped into this local environment every single day,” Davies told The Verge. “You’re trying to cool hot radiators by blowing hot air over them.”

The facility would continuously release an extraordinary amount of heat into one desert valley.

One preliminary estimate suggests daytime warming of 2°F to 5°F and nighttime warming of 8°F to 12°F, while Davies has warned that some scenarios could push nighttime warming as high as 28°F.

“The thermal load from the proposed Stratos project is extreme,” Davies said, according to The Guardian. “Of course it has effects. One of those effects is this: this facility imposes substantial drying on a watershed and ecosystem already in active collapse.”

Las Vegas’ famous Heart Attack Grill sends scathing closure notice

• “Las Vegas has priced the regular middle-class person out of the opportunity of having a good time”

• Heart Attack Grill “will not be renewing its long-term lease…the soul of Las Vegas has been replaced by corporate greed.”

• “I am only telling the honest truth about the tourist sector. It has become as shortsighted of a business model as I can possibly conceive of.”

Hay Prices(!)

“Hay Prices Explode to $483/Ton as Western Buyers Panic Buy”

Colorado timothy hit $483/ton in the week ending May 19, 2026. California premium alfalfa cleared at $429/ton. Meanwhile, Rock Valley, Iowa — the Midwest’s most active alfalfa auction — traded a full load of premium-grade material at $135–224/ton range.

That $259 spread between the cheapest Iowa load and the most expensive Colorado timothy is the entire story of the 2026 hay market. Two regions. Two realities. One drying out and buying anything that moves, the other sitting on supply while buyers hesitate.

“Folks are going to be more financially destitute and food insecure then we have ever seen.”

“SW Colorado here. We have had no snow this winter. No rain this spring. Irrigation reservoirs currently at 60%, leaving 40% available to farmers.

My Alfalfa fields are more dry than they have ever been. Without the decent winter moisture to keep the grounds fresh I believe we will lose about 1/3 of that irrigation water to dry ground cracks.

We have already made the decision to not cut at all this year. We are going to give the fields a year of rest. Probably focus on throwing a couple hundred pounds of wildflower seeds throughout to encourage the bees to come back.

We are in a major drought down here and this winter has been the worst in decades. We worry about the lack of income from not cutting. We worry about the lack of food reserves for our livestock next winter. But mostly, right now at least, we worry about catching fire.

Good luck out there this season family. Help your neighbors out. Check in on them, force the hard conversations. Make sure they are doing okay. Farmers will die on their pride mountains. Don’t let them.

Especially us younger farmers. I’m 45, my wife 32. We are the youngest people farming within a 4 square mile radius. All of our neighboring farms are at least 65 years old, more than half are 70 plus. Keep an eye open. Pay attention. Be nosey. It could literally save lives this year. Folks are going to be more financially destitute and food insecure then we have ever seen.”

USDA Projects Smallest US Wheat Harvest Since 1972 Due to Plains Drought

Rising fuel and fertilizer prices due to the closure of the Strait of Hormuz have sent grain production costs sharply higher, heaping further stress on the U.S. farm economy already reeling from trade disruptions caused by U.S. President Donald Trump’s tariff battles.

Historic cattle shortages push US beef prices to record highs

Las Vegas home price drop 5th highest in nation, report says

Redfin’s latest monthly report, which looks at home sales through May 3, shows Las Vegas home prices dropping 2.5 percent, which puts it behind Newark, New Jersey (3.3 percent); San Jose, California; Seattle and Dallas (all dropping 3.2) for top in the country. Home prices increased the most in San Francisco (11 percent) and Cleveland, Ohio (8.2) year over year, the report stated.

April Commercial Chapter 11 Bankruptcy Filings Increase 42% From Previous Year

“The 644 commercial Chapter 11 bankruptcy filings in April 2026 represented a 42% increase over the 454 filings recorded in April 2025”

• 3060 overall commercial filings, a 21% increase from April 2025 (2520).

• 301 small business filings, captured as Subchapter V elections within Chapter 11, a 46% increase from April 2025 (206).

Individual bankruptcy filings are rising due to persistent pressures in consumer credit markets, where auto loan delinquencies remain near 15-year highs,” said Michael Hunter, Vice President of Epiq AACER. “These trends are further compounded by a 26% surge in foreclosure filings in Q1 2026. Higher gas prices are straining consumer goods and household budgets, while continued home appreciation is pushing up property taxes and homeowners’ insurance costs. These headwinds may intensify and drive even more families toward Chapter 7 and Chapter 13 protection in the coming months.”

In April 2026, there were:

• 56,427 total bankruptcy filings, a 14% increase from April 2025 (49,641).

• 53,367 individual bankruptcy filings, a 13% increase from April 2025 (47,121).

• 18,007 individual Chapter 13 filings, an 11% increase from April 2025 (16,210).

• 35,224 individual Chapter 7 filings, a 14% increase from April 2025 (30,812).

• 62 Chapter 12 filings, a streamlined restructuring designed specifically for family farms and fisheries, a 130% increase from April 2025 (27). This is the highest monthly total since February 2020.

“Rising inflation, higher borrowing costs, and geopolitical uncertainty are intensifying the financial strain on families and businesses,” said Amy Quackenboss, Executive Director at ABI. “ABI appreciates the momentum building in Congress to permanently expand access for both distressed small businesses looking to restructure under Subchapter V and for consumers looking to file for Chapter 13.”

Foreclosures are still low I notice, but up a bit.

JPMorgan pulls plug on $1.4B real estate fund after years of losses

JPMorgan Asset Management is winding down a flagship real estate fund that survived the Great Recession and pandemic-era volatility, but couldn’t outrun the industry’s latest reckoning.

The investment banking giant plans to liquidate its JP Morgan US Real Estate Income and Growth Fund, according to Bisnow. The 24-year-old core-plus vehicle held roughly $1.4 billion in assets at the end of 2025, according to documents tied to the Ohio Bureau of Workers’ Compensation and first reported by IPE Real Assets.

The fund, launched in 2002, carried a portfolio split across industrial, multifamily and office properties, the latter of which accounts for about 16 percent of holdings. That exposure appears to have weighed on returns as higher interest rates, sluggish office demand and frozen deal markets battered commercial real estate values over the past several years…The unwind is expected to take as long as three years…

Performance at the fund had been deteriorating for years. Documents from the North Dakota Retirement Investment Office show the North Dakota Legacy Fund’s $170 million stake lost 1.7 percent in 2025 after falling 3.7 percent the previous year. Over the last three years, the value of that investment declined nearly 10 percent. Returns only barely stayed positive over a five-year stretch.

Random Chart

Everything is Priced In

Nice Takedown of Jay Powell’s Time As Fed Chair

“It has just been one bumble, one stumble after the next. And it’s always been, ‘Oh, we just couldn’t anticipate this or we didn’t foresee that’ …this guy has been a disaster for eight years.”

Here’s another of Jerome Powell’s legacies:

Random Job Cuts in the Past Month

• Intuit to cut about 17% of its workforce

• Meta Lays Off 8,000 Employees

• LAUSD Finalizes Hundreds of Job Cuts, Many More to Come

• Grand Rapids’ Acrisure to cut 2,250 jobs, cites AI and technology

• Cisco’s says it’s cutting almost 4,000 jobs

• Cloudflare is laying off 1,100 employees

• PayPal layoffs: New CEO cuts 20% of workforce in Q1 2026

• The Daily Wire!

• Estee Lauder plans to cut up to 3,000 more jobs

• Cognizant to cut 4,000 jobs

This Micron Technology chart is linear so you can read the numbers.

Excerpt from a November 1999 LA Times article mentioning Cobalt Networks. Their market cap peaked out at $6 billion on $22 million of revenue.

Sun Microsystems bought them in 2001 for $2.1 billion, then two years later shut down the entire product line.

FT: Dotcom bubble IPOs

Take Cisco. The network infrastructure company went public a full decade before the peak of the bubble, but it benefited from the bubble no less. In March 2000, Cisco overtook Microsoft to become the most valuable company in the world. But that valuation wasn’t to last. It took Cisco 25 years, eight months and 13 days to get back to it in December 2025.

Cisco was, in a way, the picks-and-shovels stock of the internet era. And the fact that it is still around speaks to the quality of its business. But that wasn’t enough to justify its valuation in March 2000. It’s not for us to call the current cycle a bubble. But if there’s a lesson to be drawn from the dotcom IPOs, it’s that there is more to boomtime investing than just buying the companies at technology’s leading edge.

Here’s legendary contrary-indicator Jim Cramer in February 2000:

Yesterday Cramer Berkowitz paid 176 times trailing earnings for 10,000 Cisco. Frankly, as recently as three years ago, that would have been unbelievable. Every analyst would have downgraded the stock on price or valuation. More portfolio managers would be short the stock than long it. We would have sold every share.

How did this happen? How did the whole world (except the troglodyte value managers) come to understand that the price-to-earnings multiple valuation work, the traditional work, didn’t work anymore? (Newbies confused? Don’t be. I am doing a special how-to-get-started piece today that will continue into Personal Finance Friday/Saturday. It will explain all of this multiple gibberish.) How did it become routine to pay 100, 200 and 300 times earnings for some stocks, while totally avoiding other, much, much cheaper equities?

17 years ago, the first thing they taught us in how to value stocks was to see if the multiple was out of whack. We didn’t want to recommend expensive stocks to our customers. We wanted to recommend cheap stocks.

How did that come out to be wrong? How did that become something that lost you more money than it made?

Here are a few theories. One, in an era where almost every company lost pricing power either to competitors, the overseas companies or the Net, only a handful of companies could maintain gross margins and maintain organic growth. Those companies we began to pay anything for. Two, individuals became the marginal buyers and they never understood this P/E stuff anyway. And three, the capital gains for selling winners is too high, so people refused to sell, making new buyers have to pay up to get stock.

From Nixer65 in the comments on the FT article:

It’s a useful reminder for everyone that says “this isn’t like the dot-com bubble, because it was just companies that made no money back then”.

That just isn’t true.

There were a lot of very successful (and fundamentally good) companies that made lots of money that became very overvalued (alongside a bunch that made no money), and it took a long while for their valuations to recover (Cisco as a case in point - which continues to be an excellent company with great products).

So what about today? Right now there is little transparency on the business model for AI.

Until very recently the real costs of AI have not been passed through to the users. Up until now the whole AI industry has been running a subsidized model - with the offer prices not really representative of the costs of delivering the service.

Yes - this looks very much like the dot-com bubble with companies providing services at low or zero cost with the aim of figuring out how they would get people to pay for it later.

That’s now changing and we’re starting to see the true costs of the AI services (corporate customers only so far), and some users are beginning to question the value.

I recommend this piece in Fortune from this week - where Uber burned through their entire $3.4bn AI budget for 2026 in four months - and that’s without the full unsubsidized prices. Needless to say, their CEO is questioning the value proposition.

Hence we’re going to see the AI prices rapidly rise as it is unsustainable to continue making massive losses on these services. Microsoft, it seems, is going to be one of the first out the gate on this. with GitHub shifting all Copilot plans to full usage-based billing through GitHub AI Credits starting June 1, 2026. However we don’t know if this is still going to be a subsidized price...only that we’re going to see a proper usage based model.

Further, and more worryingly, all of the investment in the datacenter buildout is happening off balance sheet in SPV wrapper companies so we can’t see the costs in the accounts of META, MSFT, etc., but just because that debt isn’t on the balance sheets doesn’t mean it disappears - that debt still has to be serviced. Worse we don’t know how much of that debt is floating, and how much is fixed (a lot more private credit debt is floating that you might think).

Of course that debt might not get serviced - again a call back to the dot-com bubble and the huge amounts of long-haul fibre that was installed and written down.

However, the consequences of not servicing it will be spectacular for private credit. And shortly thereafter the banks (who are carrying a lot of that debt indirectly).

And very shortly thereafter the stock market...and economy.

So I suspect this is why you’re seeing the rush to get the big AI IPOs away this year.

Caveat emptor.

An excerpt from the 1934 edition of Security Analysis by Graham and Dodd:

Stocks Regarded as Attractive Irrespective of Their Prices.

The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new era theory led directly to this thesis. If a public-utility stock was selling at 35 times its maximum recorded earnings, instead of 10 times its average earnings, which was the preboom standard, the conclusion to be drawn was not that the stock was now too high but merely that the standard of value had been raised. Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell, but even upon the price at which it would deserve to sell. This fantastic reasoning actually led to the purchase for investment at $100 per share of common stocks earning $2.50 per share. The identical reasoning would support the purchase of these same shares at $200, at $1,000, or at any conceivable price.

An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world. It was only necessary to buy “good”’ stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic. Countless people asked themselves, “Why work for a living when a fortune can be made in Wall Street without working?” The ensuing migration from business into the financial district resembled the famous gold rush to the Klondike, with the not unimportant difference that there really was gold in the Klondike.

“From a simple valuation metric, if you look at 150 years of data, the 10-year forward returns in nominal terms, not real, at this level [current valuations], always have fallen between minus 2% and positive 2%. Nominal. Real? Way worse.”

Cem Karsan

Random Musings

• Bill Fleckenstein: “While you can say the behavior now is crazy - and it was crazy in [1929, Tokyo 1989, 1999, 2007] - that’s true. But just because the behavior was crazy doesn’t mean that you have some analog that’s going to work, because the dynamics couldn’t be more different. We now have QE and we have passive bid. We didn’t have either of those before.”

• Joe Bergquist: “Alan Greenspan gave us the bubble economy, and the last three Fed chairs gave us the all bailout, all the time, throw moral hazard to the wind economy, again and again, and it’s caused irreparable damage. Jerome Powell is leaving us with this massive mess.”

• Art Berman: “The United States is not energy independent. I mean, this is just a ridiculous lie. It’s pure propaganda. Okay, statistically it’s not untrue. Realistically, physically, it’s a fraud...
  
  The Iran War is “the worst thing that’s happened in modern history. I think this is the worst blunder, military, political, strategic blunder in human history.”

• QTR: “This may be the real endgame. If bonds break, implement yield curve control. If stocks break, flood markets with liquidity. If inflation remains too high to justify either action, simply redefine inflation until the numbers say what policymakers need them to say. First it was hedonic adjustments. Then substitution effects. Then core inflation. Now “underlying inflation.” Every step moves further away from what ordinary people actually experience and closer to whatever statistic allows policymakers to keep the debt machine operating.”
  
  QTR’s post is excellent. Read it in whole if interested: The Fed Will Invent New Inflation Numbers Out Of Thin Air
  
  TL;DR - this, from Kurt S. Altrichter:
  
  ”Warsh has signaled he wants to change the Fed’s preferred inflation gauge.
  
  The Fed has used Core PCE, which excludes food and energy, as its benchmark since 2000. Warsh favors Trimmed Mean PCE, which removes the most extreme price movements each month instead of excluding whole categories.
  
  The practical difference: Trimmed Mean PCE currently reads 2.36%, well below the 3.20% reading on Core PCE. Depending on which measure the Fed follows, the case for rate cuts looks very different.
  
  This is not a minor procedural change. The metric the Fed uses to gauge inflation directly determines when it judges the economy to be at target.
  
  If Warsh moves the committee toward Trimmed Mean PCE, he is mathematically moving the Fed closer to a declared victory on inflation, which creates runway for rate cuts even as headline readings stay elevated.
  
  You’d think with 400+ Ph.D. economists and 500+ researchers on the payroll, the Fed would run the most sophisticated macro forecasting operation on the planet, leaving Bloomberg and every major hedge fund in the dust. Not even close. When the data doesn’t cooperate, just change the data.
  
  Same thing I saw in the Army when time or weather worked against higher leadership, and we would quietly move the goalposts rather than admit the standard couldn’t be met. Can you tell why I didn’t stick around for the full 20 years?”

• Check this podcast out: Bob McNally on Hormuz, Oil Prices, and the End of Energy Security Assumptions

“29% of the Buy Now Pay Later users are using it to pay for groceries. 13% are using it to pay for rent.”

- Laks Ganapathi, Unicus Research

Private Equity Now Owns 1 in 8 Apartment Units, a 50 Percent Increase Since 2021

“Private equity firms now own almost 3 million apartment units in the U.S., which amounts to one in eight apartment units, some 13 percent of apartment units in the country. Approximately half of these units were bought since 2021, highlighting private equity’s turn to the housing market even as the U.S. suffers from a housing crisis.

Sorry, kids.

FHFA House Price Index Reaches New Record High in March

Walmart

Walmart: “…we have a large fuel business and we see that in the most recent period, the number of gallons that customers fill up with when they come to our fuel stations fell below 10 for the first time since 2022. That's an indication of stress.”

“We will not have any more crashes in our time” - Keynes, late 1920’s

“I met Keynes in the Berlin apartment maintained by the Hamburg banker Carl Melchior, a partner in M.M. Warburg & Co. Keynes and Professor Sering2 had just had an argument about price imbalances between agriculture and industry, in which Sering propounded free-trade views and Keynes took the Opposite line. The vehemence of Keynes’s speech betrayed the extreme neurotic in Adler’s sense who cannot discuss anything, but has to disparage others. This was all the more painful since Sering was the greatest European expert on agrarian policy, with which Keynes obviously was unfamiliar. Sering’s dignified and self-assured calm contrasted all too plainly with the Englishman’s pathological nervousness and trembling voice. All were relieved when Sering put an end to the painful scene by taking leave of our host. I wanted to go with him, but Melchior detained me, saying he wanted me to get to know Keynes. At first I declined, but he insisted.

Keynes asked me what I was advising my clients.

‘To insulate themselves as much as possible from the coming crisis, and to avoid the markets,’ l replied.

Keynes took the opposite view. ‘We will not have any more crashes in our time,’ he insisted, and asked me in detail for my opinions about individual companies.

‘l think the market is very appealing, and prices are low,’ said Keynes. ‘And where is the crash coming from in any case?’

‘The crash will come from the gap between appearances and reality. I have never seen such stormy weather gathering,’ I said. But speculation in securities passionately interested Keynes, and despite my obvious refusal to answer, he repeatedly asked questions about which shares on continental markets were attractive purchases.

Keynes’s biographer praises him for prescience about the coming crash. l could quite clearly prove the opposite. In 1928-9 I invited Keynes to debate crisis-forecasting with me at a public meeting of the Association for Social Policy in Zurich, but he declined on the grounds that his German was inadequate.”

Felix Somary, The Raven of Zurich

A trillion dollars used to be a lot of money.

I think this country really needs another 80% Nasdaq drop.

CNBC Guest: "The question is, is this time different?"

For what it’s worth, Crypto Rover:

SPACEX MAY BE THE BIGGEST INSIDER CASHOUT IN MARKET HISTORY!!!

SpaceX is expected to go public on June 12 at a valuation of $1.75-$2 TRILLION.

That would instantly make it larger than Microsoft and second only to Apple and Nvidia in the US market.

Yet the company lost $4.28 BILLION in Q1 2026 alone and has accumulated deficits of $41.3 BILLION since founding.

The real story is what happens after the IPO.

Insiders currently own 95% of all shares.

The public float is only 5%.

And insiders are sitting on $1.66 TRILLION of paper wealth that cannot currently be sold.

Most IPOs lock insiders up for 180 days.

SpaceX isn't doing that.

Just 60 days after listing, 20% of eligible insider shares can unlock.

If the stock rises 30% above the IPO price, another 10% unlocks.

Then five separate 7% unlocks hit between days 70 and 135.

By November 2026, 93% of early-release insider shares could already be free to sell.

This isn't just an IPO.

It's one of the biggest liquidity grab events Wall Street has ever seen.

From Grant’s:

Risk-hungry investors salivate for the upcoming SpaceX IPO, which is set to raise some $75 billion, orders of magnitude above the current $29 billion record set by Saudi Aramco in 2019. Elon Musk’s outfit, which pointed to a $28.5 trillion total addressable market in its IPO filing submitted last week, is now targeting a $1.8 trillion or higher valuation in the deal versus an April bogey of at least $2 trillion, Bloomberg reports today, though Musk denied such a downshift on X.

Sometimes I like to go back and see what what going on in years past... e.g.,

So five years later I asked Grok what happened to this ETF:

“The Collaborative Investment Series Trust FOMO ETF was reorganized (merged) into the AXS FOMO ETF in 2022 and effectively ceased to exist as a standalone fund under the original trust. The successor AXS FOMO ETF was then liquidated and delisted in Jan. 2023."

Survivor bias is huge on Wall Street.

Just something I randomly looked up:

“George H. W. Bush May be one of the few Americans of his generation who cannot recall exactly where he was when John F. Kennedy was shot in Dallas on November 22, 1963. At times he has said that he was “somewhere in Texas.”! Bush was indeed “somewhere” in Texas. And he had every reason to remember. At the time, Bush was the thirty-nine-year-old chairman of the Harris County (Houston) Republican Party and an outspoken critic of the president. He was also actively campaigning for a seat in the U.S. Senate at exactly the time Kennedy was assassinated right in Bush’s own state.”

Russ Baker, Family of Secrets

Fascinating interview with Robert McGwier.3

• On meeting Carl Sagan: “He’s supposed to be this enemy of the national security State. You saw that in Cosmos. You saw his public. No, he had on his shirt a badge. On this badge was Carl’s name. On his badge was his picture. The only way you get a picture badge allowing you to roam around the intelligence community is to be a cleared insider. He was a cleared insider.”

• Q: “What is your like 30,000 foot view of what this whole [UFO] phenomena is?” A: “That’s a very good question. And like any good scientist, I’m going to tell you exactly what I think. I don’t know.”

• On John Kiriakou: “If you want to listen to a guy, listen to Kiriakou. He is a truth-telling guy and he does not give a damn about what the consequences are. I love that guy.”4

• Interesting speculation on what happened to missing retired Air Force General William Neil McCasland. Starts around 1hr 30m in.

• Q: “How many people have like the full picture of everything? [James Fox] was saying less than 10 people.”
  A: “That’s right.”
  Q: “So these alleged super users who have this panoramic view of everything,

  who’s above them?”
  A: “That is a very good question. I don’t know the answer.”

As with any interview - especially on “high strangeness” topics - there are often parts that make sense and others where you may roll your eyes. The interesting thing here (and in a number of other similar interviews) is that the person making at times seemingly wild claims clearly has extensive scientific and government top secret experience - which doesn’t mean they’re not crazy, or part of a psy-op - but it’s not just some random schizophrenic off the street. (e.g., McGwier co-founded Hawkeye 360, which just went public - symbol: HAWK).

As the host says at the end: “I can't write anything off these days.”

Anyway, I just post things that are interesting to me. Take it or leave it.

I think the poor quality makes this more endearing…

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- W.L. Watkinson, The Supreme Conquest (1907)

Your weekend beach reading. Something for everyone.

Godspeed, amigos.

Most Fed reporters are really Fed publicists:

Never Forget!

Powell's Legacy: The Federal Debt almost doubled during his 8-years as Fed Chair.

The Fed has been Congress' drug dealer.

Also Powell’s Legacy:

Numbers Go Up!

I love this “solution” to the Fed’s inflation problem:

Nasdaq Composite Go Up!

March 10, 2000

‘’Right now, valuation measures are being thrown out the window,’‘ said Phillip Coburn, a strategist at Warburg Dillon Read. He said that the average price of technology stocks, using a measure that compares price-earnings multiples with earnings growth rates, is now twice what investors deemed reasonable only a couple of years ago.

Nonetheless, he said, money managers are only being prudent when they load up on technology stocks. ‘’Given the fact that I don’t see the end in sight, I don’t think they are being foolish,’‘ he said. ‘’They are being practical, and they are making money for their clients.’‘ …''The massive inflows into the mutual funds are going into a narrow group of funds''

Let’s light this candle!

Stuart was helping Mr. P buy Kmart stock online. Kmart was then one of America’s leading discount retailers. The Kmart Corporation was the second largest U.S. discount retailer and major competitor to Walmart. Kmart filed for Chapter 11 bankruptcy protection in January 2002. Just two years after Stuart helped Mr. P buy shares online it filed for the largest ever retail bankruptcy.

This is year-over-year…

"Nearly four in 10 Americans surveyed by Lending Tree, or 39%, said a car is a luxury they cannot afford."

According to SSA, 98.3% of American wage-earners made less than $300k (in 2023, the latest year available).

Keepin’ an eye on this…

Rates

I do this from time to time. Lately people have been sweating…

Since January 1962, the average 10-year-yield is 5.82%.

The median yield is 5.44%.

Today (May 18, 2026) 4.59%.

In early October 1981, the 10-year yield hit 15.68%, core CPI was 11.8%.

In August of 2020, the 10-year yield was 0.55%, core CPI was 1.7%.

David Dredge

Definitely one of the smartest guys I’ve run into (and I’ve run into a few).

Here he is with Grant Williams (paywalled).

• “History alone is a very poor measure of risk. It only tells you what did happen. It doesn’t tell you what could have happened.”

• “The risk becomes this application of leverage around assumed safety and volatility/safety is measured on a historical lookback. So it says the place that’s gone the longest without a fire is the safest. And so you can sell insurance there for really cheap because the measure of insurance is the probability of a fire, not the amount of damage a fire would do. So it’s not measuring the impact of the fire, it’s measuring the likelihood.”

• “Central banks should not be central planners trying to optimize some future outcome. They should be risk managers. They should be like the forest manager who’s keeping the forest floor clean, who’s doing controlled burns, who’s cutting fire breaks, et cetera. They shouldn’t be trying to optimize the perfect forest of something that they don’t understand and can’t control.”

• “The one thing I think [Warsh] can do and has to do is put the death nail in forward guidance. Why are we sitting here not just not ever adjusting our policy but telling people what our policy will be into the future with no knowledge of what the future’s going to be?”

• “If you couldn’t see already in March that this [the Iran War] had a very likely potential impact on direct resource prices, indirect resource prices and second order effects, and if you’re not aware of the long memory implications of having just come through a massive increase in your price level across the entire system, you’re fools. You’re outright fools. And the way they sit and misrepresent, “Oh, monetary policy is not the right tool to manage oil prices, and we’re going to look through the supply shock, and this is temporary, and it’ll come back down. We’re watching for indirect and second order…” Bullshit, bullshit, bullshit.”

• “The forest accumulates risk through time. And so you shouldn’t be surprised that there’s fires when lightning strikes. You should have known it was already there. And this is really the fundamental flaw.”

• “…this new competition for debt issuance by governments, and after the long period of QE and zero interest rates and massive reserve accumulation and adding leverage to banks in the Basel I, II, III and zero risk-weighted assets and the proliferation of liability-driven investment and this massive absorption until you got to - I can’t remember the number, $17 trillion of negative-yielding debt and zero interest rates and the largest outstanding debt ever at the highest price ever, the mother of all bubbles - something happened and they lost control and so it was really easy. And so everybody blew through 100% of debt to GDP and people were still buying the bonds at zero yields and negative, even though they went through 100% of debt to GDP, and now we can’t do QE anymore because we lost control of price stability, and the banks are all full on bonds that they bought at 1% yield and the yield’s now 4.5%. And they have these massive unrealized losses, and this was the whole premise around, “Who’s going to buy the bonds?” and yet, the guys selling them still need to sell more.”

Williams: Is it ignorance, or is it just the academic condition?

Dredge: Well, they’ve simplified the math down to make it easy. The whole premise of economic math, as Hayek said in his famous Nobel lecture, is “We’ve decided to treat as important that which we can measure.”

Hari Krishnan & Cem Karsan

• Hari: “Passive share was below 1% in 1994. Now we have varying estimates where passive share may be - 50%, 60% or perhaps even higher if you think of the closet indexers in the market”

• Cem: “What we're really talking about - the gamification of the market - the fact that the market itself has become essentially untethered from the fundamental basis of the economy.”

• Hari: “One could argue that the S&P 500 is driving all sorts of social changes, whether it's wealth inequality or any number of things, and that the markets are so untethered and unleashed that they're basically driving everything else, that politics are almost a byproduct of what markets do.”

• Cem: “To live in this world where we think that markets themselves are not being managed is so naïve.”

• Cem: “When the market goes up 15% like it did in two months, a month and a half really, you could argue it's somewhere between $45 trillion and $75 trillion of new collateral was created like that.”

• Hari: “The one question I would ask is if, as I believe and you probably believe as well, that the market is a complex system, can you really control a complex system over any appreciable length of time? “
  Cem: “Absolutely not.”

• Cem: “The amount of leverage and passive and structural governmental structures, everything leads into this momentum effect which then just gets eventually too big to handle. And at the end, they try and control and control and control as much as they can, because the risks are too high, and that's where we are in the story. And eventually things have to reverse.”

• Cem: “All you have to know is that from 1999 to 2000, that last year, tech earnings grew 30%. Which is the highest growth they ever had, until they went bankrupt,, and then 95% of them went bankrupt.”

• Cem: “The way the voting machine and weighing machine almost always come in line is through discontinuity, through a break, through risk, through a deleveraging effect. And there is not some smooth mechanism with which the voting machine and the weighing machine converge. They converge when liquidity dries up.”

• Hari: “The numbers we came up with with our parameterization were that at 91%, roughly, passive share, the market could go to zero in finite time…The more interesting case for us was that when the passive share gets to around 83%, volatility can increase uncontrollably at a cubic rate. A cubic rate means very quickly. And when we ran the simulations in the paper, we found lots of simulated paths going down very rapidly after about 12 years and many paths going close to zero. And so the range of outcomes was much wider. The median outcome was lower, and the bad outcomes were much, much, much worse. They actually lost money. And again, this was not to say that this will happen, but that it’s a natural consequence of a set of very humble assumptions that most people, at least quants, would agree with.”

Almost too much stuff to quote. Just listen to it yourself if you’re interested. Pairs well with the Mike Green piece below…

Mike Green: “We have the mindless bid coming from the passive robot where money is flowing into 401Ks on a continuous basis and into retirement accounts.”..

Erik Townsend: “Mike, what you're showing here is basically the biggest inflow ever in history, and you told me off the air, even though this chart only goes back to 2016, you said there is no prior example of a bigger inflow any time in U.S. history ever into the S&P 500 other than the one that's happened in the last month or so on the back of news that we've got a massive global energy dislocation, which hasn't quite hit the tape yet, but we know it's coming because we've used up that six-week lag of delivery times. We're burning into all the buffers of of spare oil that was sitting around in storage. We're about to run out of diesel fuel and jet fuel globally and have a massive crisis on our hands, and that's been - I don't wanna say the cause - but that has been coincident with the biggest inflow into the stock market in recorded history. Explain. It does sound crazy.”

Former FTX Executive Launches a ‘No Loss’ AI Trading Platform

“UpsideOnly, a platform that turns crowdsourced paper-trading strategies into shared real-money profits by executing bets with only the company’s capital. Investors place fake trades that predict the future price of assets like oil, gold and equities, after which an artificial intelligence model chooses the ones that are most likely to result in profit. The company then trades on those forecasts using its own money, and where it succeeds, shares half of the earnings with traders who created the winning signals.”

Matthew Piepenburg

• “This isn’t a gold bug kind of scare tactic to warn about the Fed losing control of this so-called yield curve. They don’t really have it anymore, and that’s because trust in overindebted Uncle Sam, that overissued IOU from from the U.S. just isn’t there. That trust has been slowly dying since during 2022 we weaponized the world reserve currency and we flow froze the FX reserves of a major power. The de-dollarization, the BRICs movement - all those things really happened post-March 2022, as I said at the time, and I was not alone. It was a watershed moment for the dollar and U.S. Treasury, and all of this is now playing out America, and the U.S.A. is not winning a lot of hearts and minds geopolitically right now.”

• “I think we’re in a recession. Main Street is absolutely quantifiably being crippled, while Wall Street in the top 10% - of which I’m a member - is enjoying the tailwinds of this Fed-driven market. To get the CPI down because Main Street is crippled is hardly good economic news. I still see stagflation coming, because no matter what happens on Main Street with demand, and it’s embarrassing, it’s criminal what we’ve done to the middle class. It’s criminal the level of wealth inequality we see in the U.S. in particular that I’ve watched over the last 20 years. It’s an insider trade, and if you’re not in the trade, you’re not inside it, and most Americans aren’t. It’s criminal. But the bottom line is no matter what happens on Main Street, which I really don’t think politicians give too much of a hoot about, they need to save their bond market. And eventually, regardless of how stressed out or demand-pulled down inflation could be on Main Street, the central banks and the Fed in particular are going to have to expand the balance sheets, become dovish at some point to save the bond market, because the government runs on those IOUs, and they’ll sacrifice the currency to do that. Whether that happens this month, next month, or the end of the year is irrelevant to me. That’s the endgame."

• “I love it when they say it’s not really QE, like it’s not really inflation, it’s transitory inflation. It’s not really a recession. We’ve changed the definition midway into a recession. It’s not really QE. It’s just another lie. I mean, even the very CPI scale that we use to measure inflation. Everyone on Wall Street knows that’s as bogus as a 42nd Street Rolex. This is another sign of the desperation of a of a regime or an empire or a system that’s breaking down. Not ending, but breaking down, losing its hegemony. You have desperation, but one of the key symptoms is dishonesty1. The very CPI scale itself is dishonest. The very term quantitative easing is dishonest. The very notion of modern monetary theory as a solution to solve a debt crisis with more debt paid for with money printed out of thin air. These are all dishonest things. And to call QE not QE is dishonest. We’ve had backdoor liquidity through the Treasury General account. We’ve had backdoor liquidity by issuing more from the short end of the yield curve. We’ve

  had backdoor liquidity and bailing out the repo markets over and over again since 2019. There’s plenty of liquidity for Wall Street, Jeremy, is what I’m trying to say. It’s Wall Street socialism and main street feudalism.”

SOX VS SPX

“I’ve heard this before.”

I liked Dan Nathan’s anecdote from this podcast. For some reason his comments were cut from the Youtube video.

Chris Whalen

• Warsh wants to go “back to a pre-2008 regime where we had scarce reserves. We’re going to let banks hold treasuries. We’re going to let them use the discount window if they need to, and we’re going to count all of that towards their liquidity requirements. But we are not going to just dump liquidity into the street, which is frankly what the Bernanke Yellen Powell Fed was all about.”

• “When FDR seized gold from Americans in the 1930s, the Federal Reserve was the first agency to come and help them, even before the law was passed. So, this is a socialist statist institution.”

• “In the first quarter of this year, bank assets grew 8%. Does that sound like inflation is low? Think about that on an annualized basis. We’re talking about a double-digit growth rate for US bank assets. What that means is that they have a lot of money to put to work, but they got no place to put it and they force up asset prices. Why are we lending the private credit? Why are we fueling the the mania and A.I. build-out? It’s because banks have nothing better to do with the money.”

Donald Trump’s Financial Disclosure Report

111 pages like this

Looks like his bond holdings are here.

Trump’s also Israel’s best Prime Minister ever.

Rory Johnston

“I think Trump expected Iran to look more like Venezuela and now we’re in the situation where it very much does not and Trump doesn’t fully know how to, you know, get himself out of this situation.”

“It’s amazing as a Canadian - I don’t mind saying this - but what a disaster the Trudeau government was for this economy. It’s just shocking.”

“The military cost of the Iran “excursion” or “diversion” for the US alone may be already over $70 billion. The administration is seeking to boost defence spending by 44 percent to $1.5 trillion. The total economic costs, including costs of repairing infrastructure and human damage, interest on debt, and impact on the economy, may exceed $1 trillion. The Iraq war’s total cost is now estimated at $2 trillion or more.”

- Satyajit Das

Thomas Gober

• "I would not purchase a life or annuity product or a pension-related product from a private equity controlled or even a for-profit company."

• “One company I did the receivership work on in Virginia, they reported a positive $40 million in surplus. Now that’s not a lot of surplus, but it’s a positive number. . The same as of date we found them $490 million below zero. How do you go from a positive 40 to a negative 490? There’s only one way. You pretend you got rid of liabilities through reinsurance, and really, you didn’t get rid of the liabilities. So, the regulator gets in and goes, “Oh my gosh, how could it be this bad?” Well, you thought the reinsurer was truly on the hook, and they’re not. So, remember, the insurance company has to pay your claim even if they’ve reinsured it. When the claim comes in, they have to pay it. Then they can get reimbursed by the reinsurer. But what if you find out the reinsurer is a sham? Those liabilities all of a sudden have to come back onto the balance sheet, and the big black hole grows overtime.”

• “In these criminal cases that I worked, these were men who were already wealthy who wanted more.”

• “If the regulators at the state level are supposed to protect the policyholders in their state, why are they letting them move the promises to pay to an island country where they don’t have to report the annual statements that they should be filing?…while I can’t tell you how underfunded they are, I can tell you that the few times we’ve actually been able to peer into that black box, it’s been really bad.”

• “Private equity is far less regulated, and they put together stuff, they bundle things and call it an asset. They can use the policyholders premiums to invest in that thing. So they could take a bunch of the stuff they don’t want anymore, that maybe has been devalued, but if they can sell them to the insurance company at an inflated value, it stays at that value, because something I call mark to mark to make believe.”

• “When I ask an independent Swiss reinsurer, would you take this $10 billion? They’re going to say, yeah, if you’ll send us $10 billion in assets. Now, they might take $9.93 billion, but it has to be commensurate. Needs to be fair and reasonable, and it’s real liabilities. So, they’re going to want real assets, right? If you do that with an independent party, they’re going to expect an arms-length transaction. But when the same executive controls the insurance company and this little secret reinsurer in the Cayman’s, he can say, “I want to move $10 billion in real liabilities to you, but I’m only going to send you $7 billion in assets.” Well, what’s he going to say to himself? Hey, great idea, right? A real reinsurer would say, “No way.” But he says to himself, “Yeah, great idea. Let’s do it.” That moment, you create $3 billion in fake surplus. You subtract $10 billion in liabilities, but you only subtract $7 billion in assets. Surplus, poof, jumps up by $3 billion. They usually would do that in a much smaller amount early on. They might do something where they pick up an extra hundred million, but the next year-end the CFO says, “We still we didn’t gain enough surplus to justify paying a stockholder dividend, and we want to be able to pay those dividends.” So, all they have to do is literally take the contract they already have, change the dates, the dollar amounts, and poof, here’s another $400 million this time. And I can show you. Yes, these companies have gone from small amounts to skyrocketing amounts in a short period of time.”

For more on insurance, watch this:

Nick Nemeth with Marty Bent:

Bent to Nemeth:

• "You've been saying that 29 of the top 30 life insurance companies in America are technically insolvent if you strip out one accounting trick..."

She paid an insurance company $99,000 to generate retirement income for life. Then it collapsed.

PHL Variable Insurance Co., a private equity-owned life insurer, collapsed in 2024 and is heading for liquidation. Benjamin’s account is frozen, and 100,000 other PHL policyholders face a $2.2 billion shortfall…the collapse of PHL illustrates how state regulators are failing to protect consumers…“The regulators are not just a little bit wrong. They are so far off that it’s catastrophic.”…PHL also conducted complex and confidential reinsurance deals with affiliates…

Only when investigators dug through the PHL wreckage did they make a grim discovery, documents show: An asset backing a 2019 reinsurance transaction and subsequently valued at $450 million was worthless…“The failure of PHL is the perfect example of what happens when an insurance company hides a black hole on its balance sheet,” said Thomas Gober…Connecticut officials said this month that policyholders are likely to receive 34% to 57% of their claims from PHL in a liquidation of the company.

Gretchen Morgenson is great.

More here: Annuity Collapse Shows Why Insurers Are a Growing Danger in 401(k)s

Joe Bergquist

• “Basically the banks lend the money to the NDFIs [non-depositary financial institutions] and then the NDFIs lend that money to other people. Could be consumers, could be other businesses, could be anything and everything you could think of. The problem is that the banks are basically blind to how is the NDFI underwriting their loans, and who are they lending that money to, and therein lies the problem. Banks might underwrite the hedge fund or the private equity firm that they’re lending the money to, but they have no idea what that firm is then doing with the money as it gets lent down the daisy chain so to speak. So that’s the issue.”

• “If anybody sees the last private credit episode that I just did, I talked about how two more companies are in big trouble, and how the dollar amounts are progressing from millions to hundreds of millions to - wait for it now - billions of dollars, right? But hey, everything that happens, it’s all one-offs. Everything’s a one-off. How many loans have to fail before it stops becoming a one-off?”

Federal prosecutors probe BlackRock private-credit fund

“Federal prosecutors are probing a BlackRock private-credit fund that surprised investors with a sharp write-down of its loan portfolio earlier this year… The Manhattan U.S. attorney’s office is investigating the valuation practices of BlackRock’s publicly traded TCP Capital fund”

KKR Private-Credit Fund Takes $560 Million Loss

The write-down—equivalent to about 10% of the fund’s net asset value—is one of the biggest indicators so far of underlying problems in a large private-credit fund. Defaults in the fund jumped to 8.1% in the first quarter from 5.5% in December, KKR said.

The $12.3 billion fund—a business-development company called FS KKR Capital decrease; red down pointing triangle—has been under pressure since last year, when it disclosed its largest investment was underwater. The stock tumbled further this year when big loans to software maker Medallia and dental service company Affordable Care went into default…

To support the ailing fund, KKR will buy $150 million of new convertible preferred shares. It will also launch a tender offer to buy $150 million of common shares at $11, slightly above Friday’s closing price. The fund itself will repurchase another $300 million of common stock in the open market.

Via Grant’s:

• Margin debt supplied by broker-dealers topped $1.3 trillion for the first time last month, up 6.8% sequentially and 53% year-on-year per data from FINRA. Similarly, aggregate leverage among hedge funds grew more than 30% across 2025 according to the Federal Reserve’s most recent Financial Stability Report, while Robinhood’s customers expanded their margin balances by 114% over the 12 months through April. “One of the telltale signs of an asset price bubble is high margin debt among institutional and retail investors,” Josephson wrote. “Check.”

• AI-related capital spending from Alphabet, Amazon, Meta, Microsoft and Oracle are set to reach $800 billion in 2026, roughly double that of a year ago and nearly matching the group’s projected cash flow from operations.

  Next year’s projected budget from that quintet stands at $1.1 trillion, equivalent to 3.3% of gross domestic product. For context, the Congressional Budget Office pegs calendar 2027 defense spending at 2.7% of output (that figure excludes the upsized military outlays requested by the Trump administration).

  While the spending spree has proved a boon for Wall Street, as a glance at the Philadelphia Semiconductor Index price chart demonstrates, unwelcome macroeconomic side-effects are on display. To wit: the Core Personal Consumption Expenditures Price Index grew at a 4.3% annualized pace over the three months through March, up from 2.4% three-month annualized figure in November 2025. As Pimco economist Tiffany Wilding pointed out Wednesday, that metric – ubiquitously described as the Federal Reserve’s preferred measure of inflation – now tops the Consumer Price Index by about 60 basis points, reversing the typical 30 to 40 basis point discount seen over the prior 40 years.

• India is taking drastic steps to shore up the beleaguered rupee, ratcheting import tariffs on both gold and silver to 15% from 6% to curtail capital flight…Indian households held some $3.8 trillion of the precious metal as of last fall, analysts at Goldman Sachs calculated in October, a sum equivalent to nearly 90% of national GDP (gold has since appreciated to about $4,700 per ounce from $4,000). More recently, investment demand registered at 82 metric tons over the three months through March, the World Gold Council likewise relays, up 52% year-over-year to surpass jewelry-focused consumption for the first time ever.

For What It’s Worth…

“This will be the 4th time the S&P 500 has hit a record high while 5% of its members fall to 52-week lows.

1. July 1929
2. January 1973
3. December 1999
4. Today”

“Construction material costs continued climbing in April, extending a sharp escalation that contractors and developers have tracked since the start of 2026. Associated Builders and Contractors reported Wednesday that construction input prices rose 1.7% month over month and 6.2% year to date…The pace of escalation has accelerated quickly.”

Why L.A. condo sales have slumped to a 20-year low

Perhaps because Karen Bass is mayor?

The number of condo units sold in the first two months slid to a more than 20-year low, according to figures from real estate data firm Attom. The median price of a condo fell nearly 5% in February compared with a year earlier, the property information provider said. Cooling condo sales may be an early sign of broader weakness in the market…

Condos are particularly tough for builders to invest in because California law allows homeowners associations, or HOAs, to sue developers for construction defects for up to 10 years after a building is completed.

It is common for an HOA to sue the developer as the 10-year statute of limitations nears, often for what developers consider minor or perceived issues. Because of the high litigation risk, the insurance premiums that developers pay for condo projects are often three to five times higher than those for an identical apartment building…

None of the six Southern California counties from Ventura County to San Diego County tracked by Attom saw median condo prices rise year over year. The biggest drop was 8.6% in Ventura County in February from a year earlier.

So how big is this problem, Anton?

Interview with commercial real estate lender Anton Mattli.

“It’s deceptive, right? Because when you read the news, and when you look at foreclosures and all that, it doesn’t look like there are that many, because everyone has been willing to kick that proverbial can down the road month after month and year after year, whether it was still lenders, or whether it was the sponsors. And as a result, it it hasn’t been as what we have seen during the GFC where everyone, whether it was on the residential side - where obviously it was the the big blow up - but even on the commercial side, lenders were willing to foreclose much faster back then than they are today. So as a result, it’s not that much visible. However, behind the scenes it’s just broiling everywhere, right?”

Multi-Family

(I don’t know these guys and am not sure who I am quoting here…)

• “A lot of his peers were experiencing distress, hemorrhaging portfolios back to lenders. Scott Everett (S2 Capital) found a pretty novel way to hang on to some of this stuff. He convinced a bunch of his investors to let him roll some of the holdings, about 10,000 units or so, into a private REIT. And the idea was a permanent capital structure. We can get Fannie debt. We can wait for things to work out. We can improve NOI and we can make the economics work. Didn’t work that way though.”

• “There’s a lot [of multi-family distressed debt] out there, and it’s starting to get transacted on. We’re coming up on five years from 2021. A lot of the debt has 5-year terms, and we’ve been talking about it for years. Like when’s the distress going to hit? And I think it’s starting to.”

“According to Bloomberg, commercial real estate lenders are finally forcing a reset. After years of extending loan maturities and waiting for interest rates, office demand, and valuations to rebound, banks and debt funds are increasingly selling distressed CRE debt at steep discounts or taking control of troubled properties outright.

The shift marks a decisive break from the industry’s long-running “extend and pretend” strategy, where lenders delayed recognizing losses in hopes that property fundamentals would recover. According to MSCI, distressed commercial real estate debt totaled nearly $132B across US property sectors in Q1 2026, though workouts of troubled loans outpaced new distress for the first time since 2022…

Bloomberg reports that lenders including Goldman Sachs, Deutsche Bank, and Ready Capital are becoming more aggressive about disposing of non-performing loans, even when doing so requires significant markdowns…

Shanghai Commercial Bank reportedly sold debt tied to a stalled Manhattan condo conversion at 335 W. 35th St. at roughly an 85% discount to the loan’s payoff amount. In Los Angeles, Netflix is reportedly negotiating to acquire the Radford Studio Center at a steep discount to its $1.85B 2021 valuation after a lender group led by Goldman Sachs seized control of the property.”

Melody Wright

• [About a recent housing conference…]
  

  “There’s so many people that really think we have a housing shortage. I stood on stage and I said, “If anybody out there thinks that we have one, I’d be happy to take them on a little tour.” And there were no takers.”

• “When you go to FRED, you know, the Fed’s data site, the people that supply [housing data] to the Fed is not some independent agency. It’s realtor.com.”

“Heat pollution from data centers can boost air temperatures in downwind neighborhoods by as much as 4 degrees Fahrenheit, researchers at Arizona State University report in a new study conducted in the Phoenix metro area.”

Obviously this is not California. The gas is way too cheap:

Empty Waymos invade Atlanta neighborhood, circle cul-de-sac for hours with no passengers

“I think yesterday morning, we had 50 cars that came through between 6 and 7.” Residents on Battleview Drive said they started seeing the autonomous, driverless cars about two months ago, but the groups and large numbers of Waymos just circling in and out only started the last couple of weeks…“We had, at one point, eight Waymos that were stuck trying to figure out how to turn around…” The Waymos are empty and not picking up anyone, and parents are worried, saying it’s not just excessive, but dangerous.

Sinister Forces: Twenty Years Later

More on Peter Levenda’s Sinister Forces here from last year.

I came to this project as a child of the 1960s: Vietnam, the assassinations, Watergate, Irangate, Koreagate, all those political scandals and fractured timelines. Now look at us. We have people in Congress talking about UFOs and demons, UFOs and angels, about a massive epidemic of child abuse and human trafficking, Epstein’s island, cover-ups that would make Nixon blush, graft and grift on an epic scale … and the sneaking suspicion among a growing segment of the population that all of these seemingly disparate events are somehow linked in one grand – if not Satanic – design.

I had already examined these links, as early as volume one of Sinister Forces, the volume subtitled “The Nine.” I demonstrated weird but undeniable, documented links between the Kennedy assassination and a group of mystics around a séance table in Maine in 1953 … between the Kennedy assassination and the 1947 UFO phenomenon … between the Kennedy assassination and a strange underground church to which, even more strangely, I belonged in 1968-1970…

Readers have complained that Sinister Forces does not offer a theory to account for everything. That, for instance, I do not come out with a position on the Kennedy assassination. That is because no mundane explanation could take into account the plethora of coincidence, synchronicity, and just plain weirdness that surrounds the events of November 1963. There is no single explanation that covers all the bases. Did Oswald act alone? That very question misses the point I was trying to make in Sinister Forces.

The assassination was prefigured years before Jack Kennedy was even born. It came from the same bizarre source (a Belgian mystic and Nobel Prize winner) that would give us Bluebird as the name of the first CIA mind control project in 1950. The people in the periphery of the assassination had used a séance to contact mysterious forces aboard a UFO in low Earth orbit in 1953. Other people believed to be involved in the assassination were part of the original 1947 UFO flap in the Pacific Northwest. Fred Crisman – central figure in the Maury Island Affair of 1947 – was interviewed by the Jim Garrison office in New Orleans for his role in the assassination, since he was the first person called by Clay Shaw after Shaw was arrested. And this is only the beginning. There’s much more…

The UFO angle – which was ignored, not known, or more likely suppressed back in 1963 – suddenly comes forward in mainstream media and even in the halls of Congress. A cabal of wealthy pedophiles, bored billionaires, psychotic politicians, and other disreputable types frolicking on a remote Caribbean island is front and center in the news. Topics that were considered fringe and frankly insane fifty years ago are now mainstream. What was described in detail and with delicate care in Sinister Forces has now become matter of fact and government disclosures.

One might say that Sinister Forces is your Michelin Guide to the modern, admittedly fucked-up, world we now live in.

But it’s a big book. Massive. All three volumes are now printed as a single tome. You could open it up anywhere and start reading, but where’s the fun in that? (Well, okay … maybe it is fun …!)…

I call Sinister Forces a “grimoire of American political witchcraft” because that description is as close as I could get to the reality. It is a kind of book of spirits, a Key of Solomon reinterpreted for a secular sorcery; a Malleus Maleficarum of American politics.

For 10 years I've been amazed at the almost complete lack of introspection from both parties on how a sleazy game-show host became President.

It's good to see a "liberal" like Cenk Uygur post this.

It'd be nice if more on the left and right woke up.

Here's my autopsy of the 2024 Democratic campaign. What cost Democrats the election, in order of importance:

1. Biden's ego. He wouldn't get out of the race despite dementia and terrible polling numbers. Then he demanded that Kamala Harris be loyal to him, even though he was enormously unpopular.
2. Kamala Harris was a terrible candidate. Hard to win when your candidate can't speak in clear sentences.
3. Horrible to nonexistent primary process, where all good candidates are shut out, and Democratic leadeship anoints the worst possible candidate.
4. They wouldn't do huge, podcast interviews. Cost themselves hundreds of millions of dollars in free media. If you can't make your own case, then you can't win.
5. Harris kept bragging about how many corporate CEOs supported her campaign. And immediately backtracked from her initial, economically populist policies.
6. Instead of pointing out how Trump could turn into a warmonger because all his top donors wanted him to start wars for Israel, she wrapped herself around Dick Cheney and Liz Cheney, verifiable warmongers.
7. The border.
8. Some extreme culture war issues that were not popular with majority of Americans.
9. Embracing Israel, after they had already committed a genocide and were deeply unpopular.
10. Listening to any Democratic consultant. They've never been right my whole life. Democrats keep hiring the same losers and wonder why they keep losing.

Bonus one:
Listening to idiots in DC. If you want to be popular in the rest of the country, go to a cocktail party in Washington - and do the exact opposite of what everyone in the room says.

“…the Trump administration disregarded readily available defenses to a lawsuit filed by the president against an agency he controls. While the Justice Department has said that Mr. Trump will not receive money from the new fund, critics have slammed the arrangement as a corrupt attempt at paying Mr. Trump’s political supporters…”

So people who work for Trump are going to give friends of Trump $1.8 billion of taxpayer money?

This is fine. I’m okay with the events that are unfolding currently.

This sentence made me grin: "When a guy starts bragging about paying for sex in Colombia and Thailand, certain assumptions are made..."

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A good investing lesson here from Howard Marks:

• U.S. All Grades All Formulations Retail Gasoline Prices (Dollars per Gallon) Since 1993

A pre-1965 dime has about $5.75 worth of silver (5/7/26).

That's enough to buy a gallon of gas (in most states) and get change back.

It's the same silver, but the currency changed.

“Gasoline is selling for 10 cents a gallon at Harold’s Super Shell station, if you pay for it in pre‐1965 silver coins — dimes, quarters, half‐dollars or dollars.”

- NY Times, October 1979

“Howard Granby, 22 years old, who runs the business for his father in this suburb west of Chicago, said this week that in the three months the offer has been in effect, “everything has just about evened off.”

“Most of the coins we get are 1964 dimes,” said Mr. Granby. “They’re worth about $1.10 each, collector’s value. Currently our regular gasoline is selling for $1.10 a gallon, super for a little over $1.18 and unleaded around $1.14.”

Occasionally, Mr. Granby makes a lucky find among the coins. He said someone had recently bought 2½ gallons of gasoline and paid with a quarter — an 1840 coin worth at least $11.”

"The high cost of living continues to top Americans’ list of the most important financial problems facing their families...While affordability issues are usually the top category of responses, this is the fifth consecutive year that they have led by a wide margin."

- Gallup

“A recent survey by Generation Lab found that more than 8 in 10 young adults rate economic conditions in the U.S. as either bad or terrible.”

“A mere 2 percent in the 18-24 age range and 1 percent in the 25-29 age range said they view the economy as excellent. Just 14 percent and 19 percent, respectively, said the economy was good.”

Nice summary of a new bank failure in Georgia by Nobody Special.

“We have our first A.I. induced bank failure...

It was all about turning out as many loans as possible to collect the fees. The taxpayers are on the hook for most of it.”

Noteworthy is that uninsured deposits at Community Bank and Trust in Georgia are unsecured creditors and will have to get in line - unlike billionaire entities like Sequoia Capital and Kanzhun who the FDIC paid off at Silicon Valley bank under Yellen’s watch.

• A Nice Obituary for Murray Stahl

• Starwood faces default on $265M hotel portfolio loan

• Joe Bergquist: Two more failures in Private Credit as Medallia and Affordable Care lose billions!

• Melody Wright: Flood Of Home Foreclosures Ahead

Melody mentions the significance of this: Freddie Mac House Price Index Decreased in March; Up only 0.7% Year-over-year

Tucker Carlson and Thomas Massie

• TC: “So the largest federal law enforcement agency [the FBI] has known for 25 years who had foreknowledge of 9/11…and has never divulged their identities.”

• TC: “…years of living in an economy where Bill Ackman makes $8 billion or something with an IQ of 105 with no track record of improving the country or creating anything. Basically just leeching off the existing system, plundering it effectively. He hates it when you say that, but he’s never explained how what he does for a living is good for the United States or productive in any sense. It’s merely extractive, probably worse than lead mining.”

• TC: “Donald Trump’s drop in support among voters under 30 is precipitous. It’s off a cliff. And there are a lot of reasons for this. The Iran war, the refusal to release the Epstein files, the mounting debt that most of them carry.”

• TC: “You would think at this point Thomas Massie would have the full support of the Republican establishment in Washington. Oh no, just the opposite. Thomas Massie has like three allies in the House of Representatives. A lot of people like him personally, but only a very few who are willing to support him publicly because he has become the number one enemy of the Trump administration.”

• TC: “Thomas Massie committed probably the most dangerous sin you can commit in Washington. He explained how the process works. How is it that members of Congress arrive there with a plan to help their constituents and their nation and wind up spending such a huge percentage of their time doing the bidding of a tiny Middle Eastern country of 9 million people?”

• TC: "He's not angry at AIPAC. He's just not playing along. He's an American. He doesn't have to play along."

• “Why would Chris LaCivita say that? Well, because he’s been hired by an Israeli called Miriam Adelson, a woman who was married to the late Sheldon Adelson, who made billions in the gambling industry, now mostly in China, who was one of, if not the single biggest contributor to Donald Trump’s campaign last time. Now, she may be an American citizen, but she was asked point blank by the President on camera, “What country are you more loyal to, the United States or Israel?” and she indicated very clearly Israel, which is her right, of course, but she kind of in stating that gives up her right to influence American politics.”

Massie on who has spent $10 million to try to defeat him:

“The RJC, which is the Republican Jewish Coalition, AIPAC, the American Israel Public Affairs Committee, Miriam Adelson, Paul Singer, and John Paulson went together [all 3 are billionaires]. They funded a PAC called MAGA Kentucky, which is neither MAGA nor Kentucky….the real reason that race is a serious race and I may lose is because a foreign lobby has fully funded - to the extent that they’ve never done in any Republican race ever before - my opponent.”

Seven months later:

This is one of the A.I. anti-Massie ads they’re funding in Kentucky:

Massie:

There’s three women, Nancy Mace, Marjorie Taylor Green, and Lauren Boebert, who signed their names on that [Epstein Transparency Act] discharge petition and all suffered…

[Marjorie] and her children got death threats over this.

Not from the left, from the right. She went to President Trump and said, “One of my children is getting death threats,” and he said, “That’s your fault.”

• “These are the people who have the ear of the president. These are the people who are dominating our foreign policy decisions. They’re the billionaires. And these are also the same people who are in the Epstein files.”

TM: “Investigate Leon Black or Jes Staley. There’s enough information even in the redacted files that anybody with common sense knows that there needs to be an investigation of those two men.”

TC: “What? On what grounds?”

TM: “On the witnesses who said they were sexually abused by those men.”

TC: “And they’ve never been investigated as so far as you know?”

TM: “As far as I know.”

• TM: “I think [Trump’s] basically gone from pushing those people away - the Dick Cheney’s of the Republican party - to inviting them in the tent. And it’s given him more power, interestingly, to align with these folks on certain issues. Whether it’s spying on Americans without a warrant, whether it’s spending more than we can afford, whether it’s starting another war in the Middle East that’s going to be hard to end - he’s listening to too many of those people right now.”

• TC: “If Democrats are so afraid of Trump, if he’s really Hitler, he’s this authoritarian crazy person who’s going to eliminate civil liberties, why would Democrats be giving that guy the power to spy without a warrant on American citizens?”

• TM: “I am terrified of central bank digital currency. It's an on/off switch for your participation in society.”

• TC: “I’m confused. You have one of the most liberal Democrats in the House,

  Jamie Raskin, of Maryland. You have one of the most conservative Republicans in the House, Jim Jordan of Ohio, but they’re on the same side on spying on Americans?”

• TM: “Another fact, when X decided to show you where accounts were based, where they were set up, and where they were operated from, the DHS account showed Israel. The US Department of Homeland Security’s X account was set up using an IP address from Israel, using an Android app purchased in Israel.

  And that doesn’t trouble people?”

• TM: “The debt has gone up $2.7 trillion in the 16 months that we’ve controlled the White House, the House, and the Senate.”

Massie on the insane new A.I. car shutoff mandate starting in 2027:

Carlson: “If the North Koreans did this, we would say this is like classic Stalinist hellscape.”

Tim Duggan

• “There’s reality, and there’s Trump’s reality.”

• “I know that there is a ton of Irish people who feel very strongly about this

  undying support to spend spend spend European money in the Ukraine, when effectively Putin had NATO setting up bases and doing agreements with the Ukraine on his border. Okay. What would America do if Canada started setting up missile launch sites on your border? Right? What would you do? I mean, you would do something, right? What if you know Germany started setting up nuclear launch capable sites on its border with France? They they would have to act.”

• Ben Kelleran: “Most people my age could not give two shits about ‘we have to do this in the Middle East’ or whatever else is going on - just doesn’t affect the day-to-day, other than the supply chain disruptions that are baked into the cake now.”

William White

A rare central banker who is not a functional idiot.

I’m an insurance agent…The first question I always ask when dealing with insurance is “Is your company owned by private equity?” I hard pass whenever the answer is yes. That doesn’t mean that the locally owned one is good, but private equity is always going to be bad. Even if the employees there really care about taking care of your elders, they don’t have the resources to do so and caregiver burnout is high…

Private equity in long term care is just a machine that sucks up generational wealth and abuses our elders through neglect. And while that was the model before, private equity cranks that shit to eleven.

“Brokerage boom drives record revenue for JLL, Newmark, and CBRE, signaling a strong post-pandemic recovery in property dealmaking.”

“CoStar reports that a brokerage boom is fueling record earnings at some of the world’s largest commercial real estate services firms. JLL and Newmark both reported their highest-ever first-quarter revenues, driven by stronger leasing, capital markets, and property sales activity. This builds on similarly strong results from CBRE and positions 2026 as the most profitable year for CRE dealmaking since before the pandemic.”

CMBS Delinquency Decreased One Basis Point in April 2026

Saving for future historians:1

“The consistent message across every bank that provided NDFI commentary was: investment-grade composition, robust collateral, and near-zero historical losses.”

I'm reminded of one of the greatest Bloomberg headlines ever, from 2018:

"Milken, Mnuchin Join Blankfein in the Hamptons to Fix World"

Surreal.

This January 1932 C.W. Anderson cartoon "speaks to the resentment many unemployed workers felt toward mechanization."

2:30am at a 7-11 near Disney World - 1987

“He handed her a single dollar, and she handed him change back. Can’t remember the last time that happened to me.”

"War crimes are cool again."

- Shaiel Ben-Ephraim

• “You used to be able to just live your life and ignore Israel if you wanted to, right? Most Americans did. You can’t do that anymore. Israel is going to get you involved in all these wars. Israel is going to make your gas incredibly expensive. Israel is going to tell you can’t have freedom of speech.”
  The buck still stops with Trump though.

• “I was talking to a friend [professor] in in China. They love the war in Iran. They love seeing Trump lose all his supporters. They’re seeing the American empire shoot itself in the head.”

DARPA: "FOREST FIRE AS A MILITARY WEAPON"

“We're not looking for a fight…Iran is the clear aggressor…”

Pete Hegseth

Iran has hit far more U.S. military assets than reported, satellite images show

“Iranian airstrikes have damaged or destroyed at least 228 structures or pieces of equipment at U.S. military sites across the Middle East since the war began, hitting hangars, barracks, fuel depots, aircraft and key radar, communications and air defense equipment, according to a Washington Post analysis of satellite imagery. The amount of destruction is far larger than what has been publicly acknowledged by the U.S. government or previously reported…”

…if you followed non-U.S. media you knew this in March…

“The threat of air attacks rendered some of the U.S. bases in the region too dangerous to staff at normal levels, and commanders moved most of the personnel from these sites out of the range of Iranian fire at the start of the war, officials have said….

Satellite imagery of the Middle East is unusually difficult to acquire at present. Two of the largest commercial providers, Vantor and Planet, have complied with requests from the U.S. government — their biggest customer — to limit, delay or indefinitely withhold the publication of imagery of the region while the war is ongoing, making it difficult or impossible to assess Iran’s counterstrikes. Those restrictions began less than two weeks into the war.”

This is from Matt Bracken, who I quoted a few weeks ago:

Marjorie Taylor-Greene

I know, I know, but I think she’s truthful here.

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