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Advanced Micro Devices recently announced a deal to sell a ton of computing power to OpenAI over several years. To sweeten the deal (and to even make the deal possible), AMD issued warrants that will enable OpenAI to purchase up to ten percent of AMD for a penny a share. In addition to some very big numbers, the deal also features the two letters investors love most these days: AI. So AMD’s stock soared on the news. And as long as the AI boom keeps growing unabated, deals like this could continue to be a win, win, win (sellers’ stock goes up, buyers get money to buy sellers’ products, and investors get to brag about their hockey stick investment gains in portfolios filled with stocks they know are really great even if they can’t quite explain what they do). Let’s add a fourth win. Because the AI economy is currently the key driver to much of what’s going well in the US economy; it’s a rising tide holding up a whole lot of boats. But let’s be clear. In the deal described above, AMD “is basically paying OpenAI to become a customer.” And transactions like this are part of a growing trend known as circular deals. “Broadly speaking, circular financing often goes something like this: One company pays money to another as part of a transaction, and then the other company turns around and buys the first company’s products or services. Without the initial transaction, the other company might not be able to make the purchase. The funding mechanism could take the form of an investment, a loan, a lease or something else.” Even Oedipus is like, “whoa, that sounds overly incestuous.” For now, it’s a virtuous circle. But, as we’ve seen in the past, virtuous circles can turn vicious in the blink of an AI. The question for investors is how to participate in the circle jerk up until the point it becomes a circular firing squad and leaves your investment portfolio circling the drain. Because, “the deals can work fine, until they don’t.” And don’t get me wrong. Circular deals aside, I hold many of these stocks in my own portfolio. What do you think I am, a total square? WSJ (Gift Article): Is the Flurry of Circular AI Deals a Win-Win—or Sign of a Bubble?
2
Off the Rails
“The brightline is a beautiful train. Ultra-quiet and decorated with streaks of highlighter yellow, it carries passengers between Miami and Orlando, sometimes moving as fast as 125 miles per hour. It restores glamour to the humble railroad: During your ride, if you wish, you can order a half bottle of Veuve Clicquot for $59; the on-board bathrooms are large and clean enough to take a decent mirror selfie in. Condé Nast Traveler has called it ‘super chic.’” But that’s not the whole story. “What the Brightline is best known for is not that it reflects the gleam of the future but the fact that it keeps hitting people.” The Atlantic (Gift Article): A ‘Death Train’ Is Haunting South Florida. “Floridians have started calling it the ‘Death Train’ and maintain a sense of gallows humor about it, saying that it must be “fed” regularly to keep hurricanes away. Train attendants told me that Brightline engineers and conductors sometimes darkly joke about earning a “golden ticket”—which is when the train hits someone at the right time so that the three paid days off a worker gets for emotional distress are rolled into a weekend that takes up most of the week.”
3
Holy Owned Subsidiary
“Prayers may be abundant in foxholes, but commanders typically do not dictate matters of spirituality. Hegseth has swerved dramatically from that precedent. In addition to being the highest-profile member of the administration who belongs to the Communion of Reformed Evangelical Churches, or CREC, an Idaho-based denomination that identifies as Christian nationalist, he has made Christianity a conspicuous part of his official duties. He leads regular Pentagon prayer sessions, posts often on social media about his faith (he posted a verse from Psalm 27—’The Lord is the stronghold of my life, whom shall I fear?’—in September), and describes the military’s mission in explicitly biblical terms. In one recent podcast appearance, he identified ‘spiritual readiness’ as a core part of the military mission. ‘That’s why wherever we can, we invoke the name of God; we invoke the name of Jesus Christ,’ he said. ‘We want that spoken and talked about inside our formations.’” The Atlantic (Gift Article) on how Pete Hegseth is bringing his fundamentalist interpretation of Christianity into the Pentagon. Holy Warrior.
+ “The coalition of signatories includes streaming service Lindell TV (started by MyPillow CEO and Trump ally Mike Lindell), the websites the Gateway Pundit, the Post Millennial, Human Events, and the National Pulse. It also includes Turning Point USA’s media brand Frontlines, as well as influencer Tim Pool’s Timcast, and a Substack-based newsletter called Washington Reporter.” WaPo (Gift Article): Pentagon announces a new right-wing press corps after mass walkout.
4
Tattoo Be or Not to Be
“Graham Platner, a Democratic candidate for the U.S. Senate in Maine, said on Wednesday that he had covered up a tattoo that he got years ago that resembled a Nazi symbol. Mr. Platner, who is running for the seat held by Senator Susan Collins since 1997, said in a video podcast interview that was broadcast on Tuesday that he got the tattoo, a skull-and-crossbones image that is widely recognized as a Nazi symbol, while drunk 18 years ago and was unaware of its extremist association.” (Ever wonder if today’s political landscape is attracting our best and brightest?) NYT (Gift Article): Maine U.S. Senate Candidate Says He Covered Up Tattoo That Had Nazi Imagery.
+ Defector: What Job Is A Guy With A Nazi Tattoo Qualified For? “There is an unconscionable industry built around making people decide how much less than what they deserve they are willing to accept.”
5
Extra, Extra
Pacific Time: “The U.S. struck another alleged drug vessel Tuesday night, this time on the Pacific side of South America, Secretary of Defense Pete Hegseth confirmed Wednesday. In what is the eighth known U.S. attack on a boat since Sept. 2, two individuals aboard the vessel were killed, Hegseth said. The other seven strikes targeted vessels in the Caribbean. A defense official confirmed the vessel was in international waters off of Colombia.”
+ Pay Dirt: NYT (Gift Article): Trump Said to Demand Justice Dept. Pay Him $230 Million for Past Cases. “Senior department officials who were defense lawyers for the president and those in his orbit are now in jobs that typically must approve any such payout, underscoring potential ethical conflicts.” (Potential is doing a lot of work there.)
+ Solar Plexus: “Produce and power are both costly in the state. So researchers are testing ways to address both issues using the same land.” This Solar Farm in Alaska Provides Something Extra: Free Food. (Clean energy and food production? Seems unlikely this administration will continue funding something this woke.)
+ Jag Drag: “This incident looks to have been by some distance, the single most financially damaging cyber event ever to hit the UK.” Jaguar Land Rover looking at $2.5 billion price tag from crippling cyberattack.
+ Checkered Past: The story related to the young death of American chess grandmaster Daniel Naroditsky has a new twist. Chess world mourns grandmaster Daniel Naroditsky’s death, rages against Russian rival who alleged cheating.
+ Robes and Lobes: “Joshua Sussberg sat before a bankruptcy judge at a hearing. He was part of a legal team representing retailer Claire’s. But Sussberg had something else on his mind. The 47-year-old Kirkland & Ellis attorney launched into a story about how about 30 years ago, when he still had hair, he got an ear pierced.” The Bankruptcy Court Where People Can’t Stop Talking About Piercing Their Ears.
6
Bottom of the News
“There have been plenty of children’s stories about animals breaking out of zoos. But at one zoo in Northern California, a young black bear broke in. That’s what happened last week at Sequoia Park Zoo in Eureka, Calif., when a zoo employee found a wild black bear standing with its nose pressed against the fencing of an enclosure, prompting a response by police and state authorities. It also left officials at California’s oldest zoo with a mystery about why a bear came in from the wild, introduced itself to the zoo’s bears and played with their toys, before being shown the exit.” Bear Breaks Into California Zoo to Mingle With Other Bears.
+ Supermarket chain Aldi has teamed up with London fashion brand Agro Studio to create a puffer coat that resembles a giant baked potato. (It’s so realistic that wearing it set off my glucose monitor.)
+ Sam Adams