JD Straight Up - 13Apr26 - Mythos Mystery

Mythos Mystery

Drulard Family Capital Fund

Fortnightly Macro View

JD Straight Up:

S&P 500 at 6795 – up 6% from 6403 two weeks ago

VIX at 21 – down 30% from 30 two weeks ago

10yr Treasury yielding 4.33% (down 1% from 4.35% two weeks ago)

Agg (US Aggregate Bond Index) at 99.30 – flat from 98.96 two weeks ago

Gold at 4757 per oz (up 3% from 4599 two weeks ago)

Silver at 74.34 per ounce (up 4% from 71.34 two weeks ago)

Crude Oil (WTI) at 104 per barrel (up 2% from 102 two weeks ago)

Bitcoin at 71k (up 5% from 68k two weeks ago)

JPM shares at 307 (up 7% from 286 two weeks ago)

Deutsche Bank shares at 31.91 (up 12% from 28.47 two weeks ago)

Truist shares at 49.28 (up 10% from 44.63 two weeks ago)

Blackstone shares at 117.15 (up 6% from 110.57 two weeks ago)

Magnificent 7 Index at 394 (up 10% from 359 two weeks ago)

US unemployment: at 219,000 in latest claims – up 4% from 210,000 two weeks ago

EUR at 1.17 USD (up 2% from 1.15 two weeks ago)

GBP at 1.34 USD (up 2% from 1.32 two weeks ago)

Macro Environment

US inflation at 3.3% driven by increasing cost of fuel (up from 2.4%).  EU inflation at 2.5%, up from 1.9%.  Ceasefire continues in Gaza.  War persists in Ukraine.  US and Iranian ceasefire talks fail and US moves to blockade Strait of Hormuz.

Macro View

Energy price volatility and geopolitical uncertainty lead to risk of stalled investment and growth that usher in stagflation.  Enormous capital expenditure continues to flow to AI infrastructure and hyper-scaler buildout to support ever increasing demands for compute.  Infrastructure includes material energy and cooling requirements.

Anthropic debuted its Claude Mythos Preview model, but withheld it from wide release due to safety concerns.  The model apparently uncovered thousands of vulnerabilities in critical systems.  Skeptics claimed that Anthropic was manipulating public opinion to bolster both its innovation and its safety credentials, while others cheered its responsible, cautious and transparent approach.  The mystery remains whether Anthropic models are approaching superintelligence and are being contained until key institutions like banks and governments can prepare for their safe release, or whether all are merely being subject to public relations mastery.

Relevance

Hundreds of billions of dollars are flowing into AI buildout without a clear path to monetization.  Tens of billions are being spent and recognized as revenue and contributing to GDP growth through circular deals between chip companies, infrastructure suppliers, model builders and others.  Up to a quarter of GDP growth is reported to be attributable to AI building.  Meanwhile, human job cuts are readily explained as efficiency and transformation improvements from AI that will inevitably impact employment and wage numbers at some point.  It is entirely unclear how this all resolves itself and what the near and long term impact is on productivity, employment, wealth distribution and money flows.  It is inevitable that there will be a wave of anti-AI sentiment that builds up through fear and confusion, but it is unclear if that will become well organized or remain fringe.  US November midterm elections could be the first place to see structured campaigning and organization around the issue.  On the fringe, Sam Altman's (OpenAI/ChatGPT) house has already been the target of a Molotov cocktail and a gunshot in just the last week.

Head Scratchers

1 - How long until mainstream candidates get properly organized around politicization of AI and take a policy stance in order to build a following for general elections?  Is there a looming 'Tea Party' or something properly branded that they will coalesce around?  Will it have any impact?

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#40 - 13Apr26