The Frontier

Anas al-Haji contends that it is in neither party's interest to resolve the conflict over the Straits, implying it will remain an ongoing geopolitical issue.

WTI crude oil is trading at $70.50, up 1.25%, remaining significantly below its highs from previous war escalations.

Marty Bent notes Scott Bessent's 'America 250' speech at the Economic Club in New York focused on re-architecting supply chains to withstand pandemics, cyber attacks, war, and financial shocks.

The core question for US economic strategy is whether its supply chains can withstand coercion and reliance on countries that could use economic leverage.

Marty Bent observes efforts to reshore critical supply chain components within the US, citing companies like Knox Metals and Valor Atomics, which brought a small modular reactor online in nine months.

The phrase 'economic statecraft,' previously confined to analysts like Michael Every, is now being directly used by prominent decision-makers like Scott Bessent, signaling a mainstream shift in rhetoric.

Despite geopolitical fracturing, the dollar has remained strong, with Scott Bessent arguing that nations cut off from the dollar system would rejoin due to its unmatched liquidity.

The US issued 60-day waivers for Iranian oil sanctions, unlocking billions in revenue for Tehran, provided oil is invoiced in US dollars, a measure reportedly taken up aggressively by China and Iran.

The DXY index is currently at 101, near post-Liberation Day highs, contradicting many predictions of the dollar's demise following geopolitical conflicts.

While oil prices trend towards pre-war levels, consumer electronics are experiencing 10-20% year-on-year price increases due to intense AI-driven memory demand.

Dylan Patel from Semi-Analysis estimates the current memory shortage, exacerbated by the AI boom, will likely not be resolved until 2027.

Marty Bent discusses the US administration's increasing control over frontier AI model releases, suggesting powerful AI will be treated as a national security asset.

While over 80% of tokens used are open source, more than 90% of the economic value spent on AI tokens accrues to frontier models, suggesting a volume/dollar bifurcation in the market.

Marty Bent suggests that open-source AI models face significant UX hurdles and capital expenditure challenges, making distillation the primary hope for them to catch up to frontier models.

Apollo Global Management experienced 17% withdrawal requests from a private credit fund, renewing concerns about liquidity risks in the private credit and private equity sectors.

Cash advances from the Federal Home Loan Bank to life insurers reached Q1 2020 highs, signaling potential growing distress for insurers exposed to private credit funds.

Private equity firms acquiring insurers often replace asset managers with themselves, funneling assets into private investments that now face headwinds from AI-driven deflation in software companies.

The sUSDe 'Stretch' token de-pegged from its $100 par value, falling to $72 before recovering to $78, amidst a Bitcoin price dip to $58,000.

BlackRock reiterated its guidance for a 1% to 2% Bitcoin allocation in investor portfolios, a recommendation first made official in December 2024.

Marty Bent observes many "number go up" Bitcoin investors are currently focused on AI, while Peter St. Onge argues AI has longer market legs than prior "stonks." Peter suggests Bitcoin's current "crab walk" is partly due to AI drawing market attention.

Peter St. Onge, drawing on his dot-com experience, identifies AI semi stocks as being in a bubble due to rapid price increases but with lower valuations than dot-com. He cites Andrew Lo's research from NYU that bubble duration, not multiples, determines collapse, predicting another 1-1.5 years of "free money" in AI based on a dot-com overlay.

Peter St. Onge distinguishes AI semi companies from dot-com firms, emphasizing they are "minting profits" with pricing power, unlike 1990s internet stocks that earned no collective profit. Marty Bent highlights AI's "unlimited appetite for compute" due to its ability to productively replace expensive labor, such as $40 of AI tokens replacing "three weeks of a Goldman Sachs analyst."

Peter St. Onge views AI as having "10x the impact" of the internet, acting as an expert resource comparable to Murray Rothbard or the Nobel Committee. He stresses that current AI is merely the "chatbot stage," the "first one percent" of its potential, citing its role in the 2024 Chemistry Nobel for protein folding and predicting quasi-immortality within 10 years.

Peter St. Onge predicts AI will "gut" wages for "college-educated generalists" while creating a "blue collar renaissance" with the strongest wage growth in 60 years. He cites PwC estimates of 4.7 million construction jobs for AI data centers and notes that 84% of those most vulnerable to AI displacement are women in administrative roles.

Peter St. Onge argues that robot automation progresses much slower than AI, illustrating with the "80 years for half of the factories to electrify" after the first US factory electrification around 1870. He explains existing capital will be utilized until worn out before costly robotic replacements are deployed.

Peter St. Onge praises Trump's hands-off, pro-AI approach as beneficial, drawing parallels to Bill Clinton's internet policy, but warns against government partnerships that could control information. He expresses optimism for the broader economy due to deregulation, including 450 major deregulations last year, and Trump's tax cuts which act as "rocket fuel" for investment via accelerated depreciation.

Peter St. Onge describes new Fed Governor Kevin Warsh as a former "hard money guy" who now favors easy money due to AI's deflationary potential, which he called "the greatest deflationary technology of our lifetimes." Peter supports Warsh's "Robin Hood monetary policy" to fight inflation by selling the Fed's $7 trillion balance sheet, without harming jobs. He advocates ending bailouts, citing the 1919-1921 "Forgotten Depression" as an example of letting businesses fail for economic health.

Peter St. Onge attributes the "completely screwed up" housing market to the Fed's extreme rate fluctuations, trapping homeowners with 3% COVID-era mortgages who cannot afford 7% rates now. He suggests regulatory reforms, like reducing environmental mandates and zoning, could cut new construction costs by $50,000-$100,000.

Marty Bent and Peter St. Onge observe Gen Z as significantly "more based" and distrustful of authority compared to millennials, attributing this to their early exposure to information before widespread internet censorship (pre-2016/17 YouTube). Peter suggests this leads to a default skepticism of official sources.

John Tinsman's AOTG ETF, launched in 2022, invests in high earnings and revenue growth businesses with low marginal costs, defined as the cost to produce one additional unit of good. This strategy prioritizes scalability and high profit margins.