2 miles deep @bebsiwax

Is it just me or this is the croc AND the jaw?!

🛢️ How Is Oil Transported Globally? Total: 104.4M barrels/day (H1 2025) 🌊 Maritime trade — 79.8M bpd → Strait of Malacca — 23.2M bpd → Strait of Hormuz — 20.9M bpd → Cape of Good Hope — 9.1M bpd → Other maritime — 6.6M bpd → Suez Canal + SUMED Pipeline — 4.9M bpd → Danish Straits — 4.9M bpd → Bab el-Mandeb — 4.2M bpd → Turkish Straits — 3.7M bpd → Panama Canal — 2.3M bpd 🏜️ Non-maritime (pipelines, land, rail) — 24.6M bpd

Current Middle East Gulf production shut-ins stand at ~13 MMbpd (out of a ~105 MMbpd market) If Trump blockades the Strait and forces Iran to shut in production that total rises to ~15 MMbpd. It’s been strange to see Iran continue to export through the war so this isn’t a shocking move, per se, but it, too, will come at an additional cost to the global economy starved by the Hormuz stoppage. The Strait of Hormuz has been closed for 6 weeks, more than 400 million barrels of oil that should have been produced this year have been lost to the market.

US embargo on Iranian oil Is the new baseline scenario @robin_j_brooks open.substack.com/pub/robinjbroo…

It's 2036 and 80% of jobs have been replaced by AI and robotics.

@patrick_oshag @InvestLikeBest Economically a great idea. But how do you ensure it's secure in space? Anyone has insight on this aspect?

The $1 Trillion Mega Deal: Where Does OpenAI’s Money Come From? “Circular Revenue” and “Equity-for-Purchase”: The Financial Engineering Behind a Trillion-Dollar Order OpenAI’s financial magic is realized through two distinct yet logically connected models—those with AMD and NVIDIA. Together, these two structures illustrate how AI compute power has evolved from a mere capital expenditure (CAPEX) into a financialized and securitized asset class. (1) The AMD Model: Performance-Based “Equity-for-Purchase” The partnership with AMD is unprecedented in semiconductor history. On the surface, it looks like OpenAI is agreeing to purchase up to 6GW worth of AMD Instinct GPUs, valued at roughly $90 billion. However, the essence lies elsewhere: AMD granted OpenAI warrants—the right to purchase up to 160 million AMD shares at a nominal price of $0.01 per share. This structure is, in effect, a financial formula that converts hardware purchases into stock options. If AMD’s stock price rises to $600 due to large-scale GPU adoption, the total value of the equity OpenAI can exercise would be about $96 billion—almost equivalent to the total GPU purchase amount. In other words, if the collaboration succeeds and the market rewards it, OpenAI could effectively “acquire GPUs for free.” The beauty of this structure lies in its performance-linked equity incentive. AMD’s long-term valuation becomes directly tied to OpenAI’s infrastructure growth. As AMD’s stock rises, OpenAI can liquidate the exercised shares to raise cash, and use that cash to purchase subsequent GPU batches—creating a self-sustaining capital recycling loop that dramatically reduces its capex burden. (2) The NVIDIA Model: The More Direct “Circular Revenue” The partnership with NVIDIA is even more straightforward. NVIDIA plans to invest up to $100 billion in OpenAI over the next decade. This capital will, in turn, be used by OpenAI to purchase NVIDIA GPUs. Goldman Sachs defines this structure as “Circular Revenue.” That is, the money NVIDIA invests ultimately returns to NVIDIA’s own revenue line. It appears as revenue growth on paper, but in accounting terms, it’s a self-reinforcing cycle where supplier financing flows back as company revenue— hence investors must evaluate the quality of such earnings with much greater caution. Goldman Sachs’ Analysis: OpenAI’s Actual Cash Flow Structure Beneath the elegant surface of this financial engineering lies a massive funding gap. Goldman Sachs breaks down OpenAI’s financials into two parts: Operating Cash Flow and Capital Commitments. ▪ From the operating cost perspective: • By 2026, OpenAI’s annual infrastructure operating expense is projected at $35 billion. • Funding composition: • Internal revenue: 48% • Vendor financing: 27% • External capital (equity + debt): 25% Viewed narrowly, this structure seems self-sustaining. ▪ But once capital commitments (large-scale CAPEX) are included: • Joint data center construction with NVIDIA: ~$60 billion • Project “Stargate”: ~$19 billion → Total funding need: ~$114 billion Under this broader lens, the structure becomes sharply imbalanced: • External capital dependency: 75% • Internal revenue contribution: 17% • Vendor financing: 8% In short, OpenAI’s own cash flow is far from sufficient—its future hinges entirely on continued inflows of massive external capital. This colossal “AI infrastructure empire” cannot be sustained without liquidity from financial markets. ⸻ “AI Boom or Grand Bubble?” This structural transformation has generated an explosive wealth effect in the short term. After OpenAI announced its partnerships: • Oracle’s market capitalization surged by $244 billion • AMD’s market capitalization rose by $63 billion This in turn reinforced market confidence, creating a self-reinforcing feedback loop within the financialized AI ecosystem. However, that same loop is now flashing bubble warning signals. ⸻ Key Risks ① Credit and Growth Risk Moody’s issued a warning on Oracle’s credit rating, citing “excessive reliance on a single customer—OpenAI.” The entire AI infrastructure ecosystem rests on the assumption that user growth and monetization will continue exponentially. If that assumption cracks, the entire circular structure could collapse. ② Cost Discipline Risk A Silicon Valley investor described OpenAI as “a company born without cost discipline.” Sam Altman himself declared, “Profitability isn’t even in my top 10 priorities.” That mindset is an asset when liquidity is abundant—but becomes a fatal flaw when markets tighten. ③ Structural Industry Risk Goldman Sachs notes that NVIDIA’s customer composition is shifting rapidly. Instead of the traditional stable hyperscalers, the share of AI startups and sovereign AI funds dependent on external financing is surging. By 2027, their respective contributions to NVIDIA’s revenue are estimated at $66 billion and $46 billion. This is a short-term growth driver—but it also magnifies volatility and valuation risk. ⸻ Conclusion: The Frontline of a Grand Financial Experiment OpenAI’s $1 trillion “GPU empire” is not just a technology investment— it is a grand experiment intertwining financial innovation, industrial alliances, and market expectations. At its core lies “Circular Financing”—an expansion built on the collateral of future expectations. Whether this experiment becomes the foundation of the next industrial revolution or collapses into a credit-fueled mirage of circular leverage and speculative euphoria remains to be seen. What is clear, however, is that OpenAI—together with global capital markets— has already taken its seat at the largest betting table in human financial history, under the name of AI.

Sober podcast on the AI build out from Marathon Asset Management (who use the Capital Cycle framework) - Edward Chancellor is the host. Worth a listen - here are the key 6 points 1. Massive Investment, Uncertain Returns: The scale of investment is unprecedented, with estimates from MS & Citi pointing to cumulative spending of $3T on data centers & $1.4T on R&D through 2029. In contrast, current revenues are modest (OpenAI's current annual revenue run rate is roughly $13B). 2. Over-Depreciation & Accelerating Obsolescence: Hyperscalers are depreciating assets like chips over 5-6 years. However, with new chip platforms being released annually by $NVDA, this schedule seems optimistic. $AMZN recently reduced its depreciation period due to the "increased pace of technological development," suggesting others may follow suit. 3. The Lack of Tangible Profits: A recent MIT study of 300 publicly disclosed AI projects found that 95% failed to boost profits. Similarly, a McKinsey report found that among companies using generative AI, over 80% reported no tangible impact on their earnings. 4. The "Prisoner's Dilemma" for Big Tech: Executives feel trapped. $GOOGL's CEO has stated that the "risk of underinvesting is dramatically greater than the risk of overinvesting." Zuckerberg of was even more cavalier, reportedly saying, "If we mis-invest a couple of $100B, so be it." This mindset is driven by the fear of being left behind, a lesson learned from companies like IBM in the PC era or Intel in the mobile era. 5. Data Centers and the "Dumb Pipe" Problem: Capital has poured into data centers, with their high fixed costs and low marginal costs, which could lead to a "dumb pipe" problem. As new players like $ORCL and $CRWV increase competition, the industry could face intense price wars, ultimately eroding profitability & turning the infrastructure into a commoditized utility, much like telecoms after the dot-com bust. 6. The Allure of the Winner-Take-All Model: The staggering $12T increase in the value of the top ten US tech firms since ChatGPT's release shows that the market is rewarding a potential "winner-take-all" outcome, where a handful of companies capture a monopoly-like position. However, history warns, specifically the dot-com boom, where most of the winners, like $GOOGL and $META, emerged after the bubble burst.

love these.

AP Research @AlphaPicks

11 months ago

Our Global Primer Series continues. After STIR trading, part II of our SOFR series dives into interest rate options. alphapicks.co.uk/p/global-prime…

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Magazine cover curse?!?

JaguarAnalytics @JaguarAnalytics

11 months ago

$3 trillion bet. Big bet. economist.com/leaders/2025/0…

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A great point to a popular heuristic.

Tiho Brkan @TihoBrkan

a year ago

Like any other rule or advice in investing, there are always nuances and fine print. The long time horizon only works for the index due to survivorship bias feature (cutting losers and holding winners). It very very rarely works for individual stocks. As a fact backed by vast

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brilliant...

Politi_Rican 🇵🇷 𝕏 🇺🇸 @TheRicanMemes

a year ago

This is too good 😂😭

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Inflation...

Barchart @Barchart

a year ago

Gold now outperforming the U.S. Stock Market (dividends included) over the last 25 years 🚨🚨 Incredible!!

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Well said

Barchart @Barchart

a year ago

Gold now outperforming the U.S. Stock Market (dividends included) over the last 25 years 🚨🚨 Incredible!!

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@ConsensusGurus thank you. could it be read as an one-off 3 year term, after the first 3 years?

@jamesjho_ @coinbase what is the term or tenor of the revenue share agreement?

NASDAQ is within 5% of all-time highs and both hedge funds + mutual funds are still underweight tech. The disbelief rally has legs, because no one believes it.

username realBonaldBump indicates that this tweet is satire

I just love it that Donnie has got your back. Pile in on the US STOCKS!!! NFA.