What’s new here?
Let’s be fair. This is a media report on Warsh’s views, with all the possible wrinkles that can go with that. But with that in mind, let’s take it at face value.
Here’s what the appointment of Warsh to the Fed could mean for interest rates this year
“Warsh has argued for lower interest rates on the belief that AI will significantly boost productivity and push down inflation. Like Trump, he rejects the belief that inflation is caused by the economy growing too fast and workers getting paid too much. Rather, he argues inflation is caused by the government spending too much and printing too much money. He also believes any inflation from tariffs will be a one-off.”
This is confused. On one hand “he argues inflation is caused by the government spending too much and printing too much money”. On the other hand, he “has argued for lower interest rates on the belief that AI will significantly boost productivity and push down inflation”.
These two propositions can’t both be true. If inflation is caused by spending and printing, it can only be reduced with less spending and printing. AI and productivity have nothing to do with it. If technology reduces real costs of production, that’s a real reduction in prices, not a reduction in inflation.
In short, changes in prices can be caused either by real cost changes or inflation, or both. The business of monetary policy is with the second kind.
Technology can and does reduce the costs of production. But if it does, in the absence of inflation consumer prices should decline. If they don’t, that’s inflation. Pretending it isn’t is tantamount to the government claiming for itself all the benefit of technological advance.
Of course rising consumer prices are even worse. You have both the amount of inflation that offsets real cost declines plus still more. It sounds like Warsh – or the writer’s interpretation of Warsh – is saying this is what he wants. That’s what the Fed’s “2% inflation” target really amounts to. Muddling the two together is an insidious way to claim you’re producing less inflation than you really are, and dates back at least as far as Greenspan, who touted “productivity” as holding down inflation in the late 1990s while inflating a stock market bubble.
If there is any new and clear thinking here, it’s escaped me. Don’t sell yer gold yet!
Well written blog my friend………….however i like to play devils advocate.
Back in the late 1970s my father called me from my bedroom to see a BBC 2 tv program.
It was called “The chips are down”. It was about the sudden explosion of the Microprocessor & the effects on the workforce.
The effects were if you where working in a factory you were STUFFED……..a simple machine was going to be able to do your job better & cheaper. Sure it would create new jobs but vast numbers of production workers would go.
Up to this time UK wage rates were set by Ford, whatever Ford gave their workers was used as a guide to what everyone else wanted or got…………….then the car plants shut.
One of the main drivers of wage growth had gone.
We are an the curbs of the same thing happening now. AI & more importantly Battery tec!
Cheap Sodium ion batteries will start in mass production in the next few months. This will allow cheap home battery storage, thus allowing energy poor nations to better manage what they can produce locally & reduce imported Hydro carbons.
Then there is Solid-state or Silicon Carbon battery tec.
I was blown off my feet early this week to find that China are mass producing Smart phones with a Silicon Carbon battery that has 825 wh kg!…for refence most cars have 140-160 wh/kg.
That will change EVERYTHING……..Phones/Computers/Cars/Drones
Thanks, mega … fair enough. Nothing intended beyond monetary policy … there are all kinds of ways of addressing employment disruptions through legitimate fiscal channels. My point is merely that the Fed and media don’t have a coherent grasp on even their own reckoning of inflation. Is it monetary or is it technological?
Far as employment goes, the Fed can do nothing sustainable about it. In the short run a burst of inflation might give it a boost, but only by reducing real wages. Then what happens? Workers work just as much but get less for it. Screwed again. Eventually they may get their wages raised but then the Fed reduces them again and round and round we go…
This may be one of Warsh’s stronger points; to the extent media reports are accurate, he favors more focus on inflation in monetary policymaking. The only thing the Fed actually can control is the security it issues … the Federal Reserve Note aka US dollar. By issuing a bunch of it it can temporarily affect other economic variables, but the only lasting effect is lost purchasing power. We see its legacy in the affordability crisis.
So what to do about unemployment? Remove regulatory rigidities that make it hard for the private sector to adjust, like mandated employer benefits that make job changes unnecessarily difficult. Make job retraining easier. Simplify unemployment benefits. And though I’m skeptical of claims that AI will result in permanent mass unemployment – it’s just another ‘it’s different this time’ argument – if it does, a UBI is a better way to deal with it. Inflation just makes people poorer.
Yep, China gearing up
https://carnewschina.com/2026/01/30/catls-sodium-ion-batteries-officially-enter-passenger-vehicles-report-says/
Trump’s Pick For Fed Chair May Not Be Approved by the Senate—And Not For the Reasons You May Think
This story is a great example of what’s wrong with Congress. It should never be up to one person. I can’t vote for or against Tillis, can you? Only voters in North Carolina can. Yet he is effectively acting on behalf of people in all fifty states. Patently undemocratic.
The committee and seniority system is effed up. It concentrates power. With no constitutional basis.
This isn’t about Warsh or Powell or Fed independence … it’s about who gets to decide. We elect one hundred senators and none of them are entitled to make policy on their own. Full stop.
This mess that paralyzes Congress is largely responsible for out-of-control executive power. Congress has itself tied up in knots, can’t act, and so we wind up with an increasingly imperial presidency and runaway unaccountable executive agencies.
Not to mention judges legislating from the bench because the legislature couldn’t bring itself to be clear.
Start by repealing the Seventeenth Amendment. The original plan was for the Senate to give states a seat at the table in Washington as a check on federal power. Then clean up the House and Senate bureaucracies by making it so that any member, with a sufficient number of cosponsors, can bring a matter up for a vote. No formal role for party affiliation. No kings in the executive and none in the legislative either.
Here’s another example:
https://finance.yahoo.com/news/stablecoin-politics-threaten-derail-us-062859093.html
“That concern appears to be playing out in Washington. The Senate Banking Committee has delayed progress on the broader CLARITY Act amid intense lobbying from the banking sector.”
Again, my point has nothing to do with the merits of the act, but the corruption of the sausage factory. Because excessive power has been concentrated in a committee, legislation is more vulnerable to special interests. It would be far more difficult to buy off the whole Senate.
In other news Mega might be getting his hair back.
PP405……….a new Drug developed by UCLA & funded by Google has just had its 1st large scale test. 35% of men reported a 24% increase in hair growth…….not the complete answer but a very good 1st stab.
By 2028 they might be on the market & am sure it will improve over time.
Mike
Just wondering…………………AMERICA+Russia V CHINA+Europe ?
Mike
Wow!
The Epstein files…………….makes the Pentagon paper look tame!
3 million pages………….lot still to see
I won’t get into the subject matter on the files……………..but it shows what Dark Forces are at play.
A “Vampires Ball”…………….lets drive a few stakes in!
Mike
OK its 11:38 pm ish here in Blighty & this post will not be a “Megas Dispatch from England”.
Give the subject matter i don’t consider something i could poke humor at.
However things here are moving quickly:-
Peter Mandelson the former government minster & recently sacked British ambassador to the US has been forced to formally resign from the Labour party. It is said he will be forced to testify before Congress.
Former Prince Andrew is also being told by the British Prime minster that he too must open up about wot he got up to with his mate”Jeff”
More downside in the metals tonight. Of the four we regularly follow, only copper is higher. Gold, silver, platinum are all down 4%-8%.
This is rapidly going from short term overbought to oversold. I see no material change in the fundamentals … this looks like an exodus of fast money that has piled on the bandwagon over the past few weeks, reminiscent of the bubblet we saw in October except more violent … less like a bear market than a reversal of just the past couple weeks of too-far-too-fast gains.
What happens over the next few days is a crap shoot, but I expect by the end of the week volatility will subside as the fast money ebbs and prices will stabilize. The best course of action for long term investors is not to try to guess what prices will do in the short run, but decide what allocation they’re comfortable with and only buy or sell as needed to bring it into their target range. Besides helping to control risk, it can boost returns by facilitating a buy-low-sell-high bias without having to guess short term price movements.
Peter Mandelson…….when he was a government minster was feeding Epstein secret government documents……this is another Profumo affair!
Too frightened to look at Gold, the Epstein files are shocking……..my sister got mum to bath today…..Thank God
It should be safe to look tomorrow. Short term may be a crap shoot, but the dice are loaded in favor of the lows for this crashlet having been put in this morning.
Those lows btw were ~$4404 ~01:30 EST. Gold has atm already regained over $200 of the losses.
Gold now at $4783.80 … up $379.80 from the low early this morning.
My speculation that the low was in is on increasingly firm footing. The fast money has apparently been warshed out.
We been here before……………..
Mandelson thing getting VERY hot…………the Prime Minster has called for him to give up his Lord ship. This is just the tip of what i think is going to be a MEGA Iceberg!
Let the sh1tstorm come………..
Looks like a few illustrious Americans are losing their lordship in this scandal too…
https://www.telegraph.co.uk/politics/2026/02/02/mandelson-leaked-no-10-documents-to-epstein/
More background on Warsh:
What Warsh’s Crisis-Era Fed Days Say About His Approach
“Forward Guidance”
“Not that confusion is necessarily unhealthy in his view—Warsh has long said the Fed can tend to give a bit too much guidance to markets.
“We need to wean the markets from the degree of certainty that we no longer possess,” Warsh said after a Fed rate hike in 2006.
He sent a similar message in April 2025, saying in a speech that Fed officials would be “well-served to skip opportunities to share their latest musings.”
Otherwise, he warned, policymakers “can become prisoners of their own words.””
Music to my ears. Regular readers are familiar with my rants – in almost every FOMC post – about the Fed talking too much. In particular, trying to tell markets what it’s going to do before it does it. It can’t be both data dependent and chart a course ahead before the data become available. The financial markets and media waste faaar tooo much time trying to parse from its emissions more about the Fed’s future policy path than it can know itself. Forward guidance as a policy tool was embarrassingly overused at best.
Now, finally, someone at the helm who shares that view. What next? No more rate targeting? He will swear off putting anything on the balance sheet other than treasuries and gold?;-)
Interesting if he sticks to his guns. He’s especially got to deal with “economists” like those in the article that state
“unwinding it could bring “unpleasant consequences for mortgage rates,” wrote Samuel Tombs, chief U.S.economist at Pantheon Macroeconomics. Making homebuying more expensive would be at odds with Trump’s desire to bring rates down.”
Affordability will not be affected one bit as house prices will adjust. In fact , here in the UK, prices have been relatively stable despite higher interest rates. Wages have been increasing and younger people are feeling more confident. It’s the over 50s who are complain the most.
Exactly. Most people buy homes on payments, so lower rates permit them to take out larger mortgages and pay higher sales prices. Home prices soared in the wake of the super low post covid rates.
Housing affordability is a bigger picture problem. There may be no limit to the supply of money, but actual real capital is finite. When you devote large amounts to other priorities, whether they be war or data centers, other areas must get less. Purchasing power has been transferred from would be homebuyers to government and big tech.
My parents had a 17.5% mortgage rate in 1983 in the US, but were able to keep fixing lower as rates declined rapidly from there.
The same exact thing, give or take a few years, occurred down here in Australia and New Zealand( and I assume across the West) in central bank formation flying.
I think it was achievable(despite the very painful medicine),due to very low debt to income ratio(compared to now), massive increase in productivity, and massive increase in government spending(like now, but with more job creation then).
I think of it like an airplane:
Back under Paul Volker, he was like an F15 pilot conducting a “Viking Departure”, maximum accelerating and 90 degree straight up vertical climb.
He had a high performance lightweight(liabilities) aircraft with extremely high thrust(low debt load) and high octane fuel(high value currency).
It’s expensive taking an aircraft to high altitude(high interest rates), but once there it’s far easier to manage and gives the pilot a lot more options.
Now the next Fed Reserve Chair is piloting a low performance heavyweight(liabilities) aircraft with low thrust(high debt load) and low octane fuel(diluted currency).
The Dot Com bubble popping, the real estate bubble popping, the GFC, COVID, and now massive inflation have acted like aircraft losing lift and having to exchange altitude(interest rates) for airspeed(economic activity) to remain flying.
Which means we’re in trouble again, while we’re “low and slow”.
We have been flying progressively lower and lower with declining margin for error.
You can attempt a Viking Departure in a 747 fully laden with obese passenger weight(liabilities) with low thrust to weight ratio turbines(high debt load relative to thrust) and watered down low octane fuel(diluted currency) but that would violate the laws of financial physics and lead to catastrophic failure.
So isn’t the only viable option left dumping weight(balance sheet liabilities)?
Not a perfect analogy, but it’s the best I can think of.
To me, I’m thinking 3 paths ahead:
Option 1 Warsh achieves Volcker-lite credibility/trust
Gold range bound and possibly retraces further
Option 2 Ambiguity wins, fiscal gravity dominates
Interest rate cuts resume
Gold resumes secular climb
Option 3 System stress forces retreat and credibility/trust is lost
Market mess (rates, banks, Treasury auction failure)
Fed backstops again
Gold conducts an F15 like Viking Departure trying to get back to the Moon first
My wife and I bought our first home in 1985 on a 12.5% mortgage. We had modest incomes but prices were affordable. Our next mortgage was nine and change, but prices had risen too. The next was in 1989 at seven something, for still higher prices. Rates fell and prices rose; mostly a wash.
I seem to recall reading that Warsh was inclined to work closely with Treasury to help ease the federal debt burden with easier money, Not completely inconsistent with his supposedly hawkish rep … he did everything he could to keep from getting in this situation in the first place, and had he had his way money would have been tighter all along. Too low too long rates helped create this mess … easy money works by incentivizing borrowing … and politicians are not immune.
But now we are where we are and that may account for the seeming evolution of views. Frankly, I’m not sure I would do different were I in his place. There has to be some quid pro quo though … easing the debt burden by letting inflation run hot won’t work unless it is coupled with a greater effort to bring federal debt under control. Otherwise it’s the same old same old … easy money leads to bigger deficits. Like trying to cure an alcoholic with more booze. If he doesn’t see some meeting in the middle I wouldn’t be surprised if he pushes towards tighter money,
“Back under Paul Volker, he was like an F15 pilot conducting a “Viking Departure”, maximum accelerating and 90 degree straight up vertical climb.”
……………….Its going to be more like landing a Khe Sanh in 1968!
https://www.telegraph.co.uk/business/2026/02/03/gold-bubble-financed-vladimir-putins-war-machine-over/
A Joke……………
Brought to you by a coalition of crypto industry neocons and military industrial complexers.
Our Model Portfolios continue to fire on all cylinders. Not just on metals … on a day when the S&P was deep in the red, all four of our core stock ETFs – VYM, VFMF, VYMI, VSS – were in the green. They have collectively been outperforming the world market, partly by virtue of being Mag-7-lite, as the Rotation continues. Being broadly diversified while also underweighting overvalued supercap growth is working. The broad commodity exposure via COMT is more than pulling its weight too.
In the past three months:
SPY: +2.12%
VYM: +9.18%
VFMF: +12.19%
VYMI: +14.06%
VSS: +9.59%
These figures are price only, so since each of these funds yields more than SPY, their outperformance is actually understated. They all have also outperformed over the past year:
SPY: +14.58%
VYM: +14.98%
VFMF: +17.50%
VYMI: +37.26%
VSS: +33.23%
All without the benefit of top heavy exposure to glitzy overhyped teracap growth stocks.
Our MP quad lost ground to dollars today, but once again outperformed the market by declining less. Hard to do better than that … gaining more on up days and losing less on down.
Alpha!
That didn’t last long.
Gold is back over $5000, silver over $80, platinum over $2200, and copper over
$0.40.
(I’m stating copper in troy ounces, cuz at this rate it will soon be a precious metal;-)
Sodium ion battery tec users aluminium not copper in its construction
New All Aluminum EV motors are coming……………..BTW China arrives in Blighty
https://www.autocar.co.uk/car-news/new-cars/chery-confirms-lepas-launch-uk-year-its-fourth-brand
BYD already here…………i see them all the time.
Once Sodium ion battery tec is here we have very long life/Fast charging……..Germany sez China is 15-20 years ahead!
https://www.carscoops.com/2026/02/us-rare-earth-stockpile-auto-supply-chain/
Worth watching how it goes
Mega’s Dispatch from England:- Political Sh1t storm arrives
Things are happening quickly here, i think we might be witnessing the fall of this Government. The Blowback from the epstein files has landed here well & truly.
For those not of this land Peter Mandelson a former government minster in the Blair government sacked twice & recently brought back to become Britain’s ambassador to US.
The Epstein emails show he was very much a “Fellow traveller” with Epstein & his clan. The true horror of what they were into is not for this blog pages, but it chills your blood.
The latest is a “What did the Prime minster know & when did he know it?” ….sort of thing. Talk round the campfire is the Security services issued a report on Mandelson before he was named ambassador for the Prime minster to review.
“Strangely” the PM is rather keen that parliament does NOT get to see this document. He tabled a motion that he would decide what files would be allowed to be viewed on nation security rules.
Give that there is a Nation security sub committee that is already FULLY vetted many of whom are former minsters he was told to F*k off!
He just pulled his own motion from a vote in the House of Commons…………..i think he be out VERY soon.
Mike
Thank you! Appreciate your keeping us informed on England.
Looks like another wave down in metals is developing. We shouldn’t be surprised … the October selloff was a three wave (two down with one intervening up) affair too. Elliott Wave aficionados will recognize it as a standard corrective formation.
This is more than casual observation … corrective waves are inherently counter to the trend of next larger degree. A five wave (three down) pattern would be classified as impulsive and in the same direction as the next larger degree.
This also aligns with the fundamental thesis that the major trend in gold is being driven by unrestrained growth of government debt, and the lack of attractive financial assets due to richly priced stocks and bonds … in stark contrast to the circumstances in 1980. As we have observed on several occasions over the past few months, physical commodities are among the most promising assets.
Bitcoin appears to be in a death spiral. It has just breached 71,000 after rising as high as 126,198 October 6. Long time readers know I will be dancing on its grave, as it is one of the most colossal wastes of natural and human resources ever concocted.
This extends to most cryptocurrencies, but not all. Some are backed by actual assets. Tether Gold, for instance, is backed by gold, and the amount of gold buying to provide the requisite backing is comparable to central bank buying … no small potatoes.
One has to wonder … why, for the token brazenly touted as “digital gold”, was it decided to back it with nothing? Or conversely, to market a token backed by nothing as “digital gold”? Food for thought …
Bitcoin has now broken below $65,000. Financial media ask questions like ‘What’s driving it down?’
Asking the wrong question is no way to get the right answer. The better question is ‘What made it go up?’ What really requires explanation is why people ever would pay thousands of dollars for mere strings of ones and zeroes. And why they still pay anything at all.
There never was a solid answer. When you boil it down to its essence, people paid up because it had gone up, and because outrageous price targets were publicized playing on people’s greed. Not a good reason.
And that lack is all you need to recognize … it never had a good reason for going up. People took leave of their senses and are slowly recovering, one by one.
We’d be remiss not to trace the existence of such manias to its source: The fertile manure of easy money. Wall Street never seems to lack for the risks of tight money, but can’t see the downside of easy money when it’s right in its face. Bubbles, with their massive wastes of both natural and human capital, are the inevitable result.
Imagine if all the time and energy put into mining, promoting and distributing bitcoin had been devoted to productive pursuits like more affordable housing, better infrastructure, better healthcare … the costs of easy-money-induced malinvestment to living standards are very real.
We’ve been here before … dotcoms, Enron, Global Crossing, Bernie Madoff … and the Fed has learnt nothing. Let’s hope Warsh can change that.
Kevin Warsh must move fast to undo the worst Fed mistakes in decades
“The Fed doesn’t need more than 3,000 bureaucrats and hundreds of Ph.D. economists, given all the mistakes they’ve made in recent years. They could have just as easily created 9% inflation with half that many people.”
Moore gets a few things right here, but I take issue with his proposal to use a basket of commodities as an inflation gauge. As explained in The Claw Machine, stock prices are important canaries in the inflation mine, and would have to be prominently included in any such basket. Commodities alone would result in policy chronically running late.
My guess is that wouldn’t be very popular with Wall Street.
Tesla getting KILLED in the UK.
They suffered another sudden drop in sales.
I note that Model X & S are now not being produced.
His “Killer” Battery years late has arrived, already superseded by China being (according to Germans) 20 years ahead on battery tec.
He already losing interest in Tesla & i think it will be allowed to wither on the vine
Meantime in China
https://carnewschina.com/2026/02/05/changan-and-catl-unveil-worlds-first-mass-produced-sodium-ion-passenger-ev/
Worries about Tesla per se are misplaced. Big tech in general is under fire. Even Microsoft has been taken to the woodshed. Tesla doesn’t need fundamental pins to drop; it’s selling at hundreds of times earnings and there’s no better reason for something to go down than being too high to start with. Car sales declines were already baked in due to the expiration of federal subsidies and declining global warming fervor in general. It’s not really even a car company any more, branching out into AI and humanoid robots. xAI and SpaceEx are merging and slated to go public and Tesla might ultimately be included.
We may be hearing numerous little stories about individual companies, but it’s really one big story … the bubble is in collapse. Bitcoin shows the loss of infatuation with technodazzle and bubble assets. And given the recent action in metals, it’s possible we might be on a bit of a deflationary jag; what fundamental reason is there for silver to be down 39%, twice as much as Tesla? They typically come after a burst of inflation and prices of leveraged assets experience an exaggerated response. The spike in the USD and UST supports this interpretation.
We’re in the zone of the decline Synthetic Systems predicted, with the selloff in stocks and rally in treasuries. It missed the selloff in gold though, possibly because it was atypically leveraged and overbought.
Intraday we’re now even seeing Tesla stock rebound with the rest of the market and gold and silver. This can’t be explained by anything unique to Tesla.
Speaking of silver, if my wave hypothesis is valid it’s approaching second chance levels for those who missed out buying before. It’s roughly at parity with gold versus five years ago. I’ve moved the bulk of my non-gold commodities to COMT at this point but continue to have a modest allocation to SLV.
Today it’s Amazon’s turn in the dog house. Seems the market is unimpressed with its announcement that plans to spend as much as $200B on AI. This follows similar punishment for other undisciplined “hyperscalers”. More evidence the AI bubble is imploding. When they start going crazy with the spending, investors are taking away their credit cards.
Bitcoin gets a zero price target in wake of Burry warning
It’s been converging towards intrinsic value since topping out on 20261006 at $126,198. It’s now fallen more than $63,000 and more than 50% down from its high. If I read Burry right, he suggests that the pickup in pace of the decline may be affecting gold and silver as leveraged bitcoin players are forced to raise cash to cover margin debt, in a classic example of selling not what you want to, but what you can.
This may well account for the aforementioned “deflationary jag” … bitcoin had grown big enough and was owned with enough leverage to trigger system-wide price declines when it crashes … effectively a short squeeze in the dollar as traders rush to cover.
The dollar surges in value in real time markets, and inflation turns into deflation on a dime.
Bitcoin bouncing today … a reminder of Wolf Richter‘s adage that “Nothing Goes to Heck in a Straight Line”!
https://www.telegraph.co.uk/business/2026/02/05/we-can-see-its-a-bubble-but-no-one-knows-when-will-it-burst/
“They” got the press ramping against Gold/Silver…………….back the truck up time!
Mega’s dispatch from England:- Times up Plebs/1
For sometime Mega’s driving pleasure has been somewhat upset by the UK government. As many of you will recall successive British government’s have the annoying habit of buying votes.
This has been thus far achieved by borrowing/printing & worse of all rapping the American taxpayer! In short British bastards assumed that they owned the US military…..now with Trump they don’t.
When i think of some of the appalling poverty i see in the US the lack of a good affordable health service & i wonder why? The hash answer is that US people are taxed to death to pay for NATO.
Well you don’t need me to tell you that the winds of change are now blowing at hurricane force!………….& those Limey bastards now suddenly see tough choices ahead.
Here in dear old Blighty we are seeing the 1st real signs that change is on the way. 1st we had the news that Motability a British charity that uses Mega’s money to lease BMW/Audi/Merc to the “Privileged poor” to piss on Mega & other silly sods that get up & go to work. Worst still this provided a steady flow of said cars onto the 2nd hand car lots to fuel the unwashed scum.
Well just before Xmas Motability informed everyone that from now on EXPENSIVE LUX brand will NOT be supplied. Indeed they are now aiming for 50% of cars to be UK production….EG Nissan Leaf.
Mega’s dispatch from England:- Times up Plebs/2
Well the next hammer blow is just arriving in April.
Road Tax, for a lot of old SUV’s or Lux cars mainely those using a 2 litre Turbo Diesel engine the Road Tax has er…….gone up rather a lot…………….£780 ish ($1060!) just to drive away an old Mega annoying TDi’s
You see back in the day these Plebs had 85BHP & not much torque. However a 2 litre TDI can give an easy180 bhp & V8 levels of torque…..a problem. However its also becoming a problem for the UK Government.
Given that the North sea is almost bone dry we now have to import our energy. Given that we are now coming to the end of what borrowing & printing can do we face have a problem…..getting enough $ to buy said Hydro carbons.
Given that Russia is not an option, Venezuela has been taken off the map & Iran is being guarded……its a major problem.
On the other hand we have vast amounts of Wind power that is being wasted because we no way to store it. Thus the Dark forces that govern this nation are making a decision. Rather than to try to import lots of Diesel so BMW owning Bell ends & Welfare Queens can strut their stuff …….its time for a new approach.
Mega’s dispatch from England:- Times up Plebs/3
Time for a new cheap EV, stripped on expensive safety tec. It will in time use CATL’s new Sodium ion battery tec & a very small (Low power) EV motor.
Performance limited electric battery or P.L.E.B car…………….soon the 2 litre TDI will be a rare sight on British roads……………….& Mega will be HAPPY.
Despite the ho-hum dividend, SCHG beat the S&P 500 by an impressive 15%
“SCHG’s performance demonstrates why growth investing works. The fund has nearly doubled over five years, driven by companies that prioritize reinvestment over distributions.”
Yet it’s underperformed Vanguard’s high dividend yield VYM. Is there no end to corporate media propaganda?
Wall Street and Silicon Valley so want Mr & Mrs John Q Public to fork over their hard earned capital without having to pay them for it.
Earnings are when the company sends you a note telling you how much money it made for you.
Dividends are when it sends you the money.
One of the things that is reaching the threshold of public detection is the impact of AI.
AI infrastructure spending is sucking up capital, electricity, materials, and skilled tradespeople.
In 1985, Intel left the memory chip business and pivoted to CPUs because there was no money competing against Japan on commodity chips.
But today, memory chips are expensive due to the infinite(for now) appetite of AI infrastructure.
I don’t envy those buying electricity or in need of an electrician within the blast radius of a giga-data center under construction.
Those are some of the costs, but what of the benefits of AI?
YTD we’ve seen the Morgan Stanley SaaS(Software as a Service) Index is down 15% YTD after an 11% decline last year.
Circa $1 trillion up in smoke due to investor concern about companies that recently possesses customer “lock in” as durable as document storage businesses, now at great risk of being disrupted by AI.
Anthropic’s recent Claude Code update(as well as some others such as legal capabilities) was received so well, it destroyed the valuations of some companies deemed most at-risk.
Having some close friends intimately involved in AI, it feels like AI first firms, particularly small AI first firms, are the new scavengers of the business environment Serengeti. They are small, agile networks able to adapt to eat almost anything.
For example, I spoke with one firm here providing AI services/support for businesses and government. They have added an in-house AI venture arm. But unlike the old 1 in 10, or more recent 1/20 or 1/30 venture investments, they’re hitting nearly 10/10 quite capital lite, albeit it’s still early days.
I’m increasingly of the belief that agile and adaptive AI-first companies and networks will have a higher probability of success or survival in the period ahead.
Especially if there’s a business-fiscal-monetary equivalent to a Jurassic era Yucatan asteroid strike. The smaller, more agile, and more adaptive species survived and thrived in the wake of it.
Salesforce(CRM) is just one example. Salesforce and its acquired Slack are both highly visible bullseye targets for companies looking to eliminate massive monthly SaaS costs.
A company spending $1m a year on SaaS costs that can replace them with in house products for 90% less(albeit perhaps with just 80% of capability, but including all core functions) becomes quite compelling, and perhaps even deflationary at scale.
Defensible moats, and more recently defensible deserts, are collapsing and making the previous seemingly invulnerable, quite vulnerable.
The recent erosion of SaaS and adjacent tech firms, accelerated by AI implementation and rapidly advancing potential, seems to fit into the 2026 Synthetic Systems model right about now.
I’ve argued for a while now that amid the enthusiasm over AI the costs weren’t being factored in. A recent example: Has The AI Bubble Sprung A Leak? suggests they’re beginning to.
Apparently you have a lot of company in not wanting a hyperscale data center anywhere near you. People are noticing escalating electric bills and data centers are in the cross hairs. The grass roots opposition is strong, but of course trillion dollar tech companies have a lot of pull too. I suspect they will ultimately have to internalize the costs by building their own power plants. That’s a lot more expensive than chips and software.
Angry town halls nationwide find a new villain: the data center driving up your electricity bill while fueling job-killing AI
Yes it does seem to fit with SS modeling … SS is far from infallible but its outlook for a significant equity selloff this quarter is among its more credible projections. We’re also on the lookout for this metals rally yielding to a broader commodities rally. In general the latest “new economy” meme is giving way to “old economy” reality. Value and hard assets have already begun to outperform.
Outlook 2026
The Dow Jones Industrial Average just broke 50,000 for the first time.
CNBC is peeing its pants.
Should see the stock market in Argentina
The Dow in Argentine pesos:
Mega’s Weekend Waffle:- Battery life
1st may i just update you on a few political moves, the PM has holding a drinks evening at Checkers. Checkers is a large country house used by the Prime minster of the day to conduct meeting in an informal & relaxed way.
A round 50 Labour MP’s have been invited so the PM can meet them personally to reassure them that he a nice bloke & didn’t know much about Peter Mandelson & Epstein. I don’t think it will cut much ice, they just see what a useless fool he is.
Talking about Epstein i note how the British MSM is failing to report very much if anything from the files, how strange………..
One Email stood out for me. It was from the CEO of Barclays Bank discussing the on going bailout of the bust banking system. “They (the people) should be on the streets rioting but they are just watching circuses”
……………………….the night is young motherf**ker!
Now onto the subject that i think we should be looking at, China & battery production.
As you know CATL is shipping Sodium ion battery tec with an impressive 175 wh/kg.These batteries have a number of advantages over LFP or NMC. They are able to run 10,000 charging cycles, that 10 times wot NMC can thus very long life time.
They are able to operate at very low temps, so if you live somewhere the winters are long & very cold these babies lose very little range. The killer is cost, they don’t use Lithium & they dont use copper. Thus nations like India can make full use of the tec………& should some SOB try to cut off the surrple of Lithium…….well it will have no political impact.
Indeed its hard not to be impressed by China on this one. While the West have been spending the last 20 years being ever increasing assholes China has been busy with Battery research …..which now appears to be bearing fruit.
CATL is building plants EVERYWHERE, they shipping 175 wh/kg, by next year they have over 200 wh/kg & dirt cheap. Mean time they played something of a Blinder by going to market with a Smart phone with a cutting edge Silicon Carbon battery with 827 wh/kg!
Now we need more information on this battery, the firm who producers it sez they going for + 1000 Wh/Kg!………….we could be seeing a step change in technology here. Meantime the West leading Solid state producer (Quantumscape) can only manage 300 wh/kg, little better than NMC.
China is where Japan was in the 80’s.
Mike
Mega’s Monday catch up:- Times almost up for British PM
Starmer, The hapless Limey leader is almost gone. His right hand man resigned yesterday & another jumped ship hours ago. He is looking VERY unstable, indeed he has threatened to call a election!
It reminds me of that scene in “Blazing Saddles” …………………
Lets see wot happens.
Update:- He lives………..for now.
It seems that they cant find a Leader to replace the “Dear Leader”…….the Labour party is split between those lefty types whom have a strange idea that its there party & the Elites people whom were dropped in to run the job.
When Starmer goes then either the Elites get their way or they crash the economy/pound etc.
What is FAR more interesting is the sh1t King Charles is now getting. The MSM is doing ALL it can to play it down. On his visits the crowds are now quite openly jeering him, not just about Andrew but also little comments like “You & your lot of just parasites!”
I saw the look in his eyes of Horror & fear………..
US politics is no prettier. Issue of the day seems to be DHS funding … Dems refuse to approve it without gutting immigration enforcement and Reps are digging in their heels. Overlooking the obvious solution … Reps give Dems what they want on extending extended Obamacare (ACA) tax credits in exchange for more targeted ICE restraints that allow deportations of illegals to proceed while better respecting basic rights of citizens and states.
Most conservatives don’t really care about deporting every last illegal immigrant. Violent offenders are top priority. And if someone has been in America for ten years without causing trouble or being a burden on society, give them a path to legal status and citizenship.
Meanwhile allowing the extended ACA tax credits to expire is electoral suicide for Reps. If they have a better alternative to the ACA, great, but until it’s ready for prime time, hobbling the existing program isn’t going to help anything but getting unelected this fall.
A partial replacement of Obamacare makes an already big mess even bigger. The tax credit cliff imposes extremely high marginal effective tax rates in the vicinity of the cutoff … hardly a winner with conservatives or the middle class … and healthcare finance, with its multiple overlapping programs that nevertheless still leave gaps … is already too complicated.
The Epstein files are going again…….Trump said to be named a lot. Trump is not obeying orders……”They” V “They”……..as Lyndon Laroche said
64-year-old Wall Street firm flags unusual gold accumulation
“In a recent report, Jefferies analysts noted an unexpected surge in physical gold buying by a non-sovereign entity, at a pace that now rivals national central banks.”
Now that’s digital gold.
Hilarious. A product very closely tied to the whole cryptocurrency bubble is backed by U.S. dollars and gold. I don’t bother even looking at cryptocurrencies but I wouldn’t be surprised if Tether did not have any Bitcoin assets backing its “stable” coin. That’s quite an indictment of what a cryptocurrency is truly worth. All the talk of Bitcoin’s value being in the energy used to mine it or in the blockchain is obviously utter rot and it should be clear that many cheerleaders of cryptocurrencies tacitly believe that, too.
The energy used to mine bitcoin is gone. Dissipated into heat and irrecoverable due to entropy. To represent the energy as somehow embodied in the bitcoin is as fatuous a notion as saying a 100 watt light bulb is worth more when it’s burned out than it is new because it stored up the 100-200 kWhr of electricity it burned over its lifetime.
Tether Gold, one of the tokens issued by Tether, may be a different story. Each token is backed by an ounce of physical gold stored in a Swiss vault. Tether is buying gold literally by the ton for this purpose. Holders of Tether Gold can redeem it for physical gold in Switzerland. It is what bitcoin could have been if it had been the “digital gold” it was touted to be.
By the same token, you could also call gold ETFs “digital gold” so it’s not the first or only, and I don’t know how Tether is covering expenses.
Some years ago, I was made aware of a cryptocurrency that is backed by gold or silver. That cryptocurrency is called Kinesis. I thought it was a fairly interesting idea as it possessed all the attributes of good money unlike cryptocurrencies such as Bitcoin. Kinesis was even more peculiar in that you supposedly owned physical gold or silver bullion that you could take possession of and yet there were no vaulting fees. Kinesis claims that they can offer free vaulting because transaction fees cover it. In fact, Kinesis claims that if you own gold or silver through them and don’t transact, you’ll somehow get paid a percentage of the transaction fees. I never touched Kinesis because it sounds too good to be true.
Another thing that surprises me about Kinesis is that if it is legitimate and truly 100% backed by the gold and silver they claim to have, it serves as a Good Money transmission system indepedent of the international banking system. I cannot imagine any country allowing such a thing to exist. As it is, I believe Kinesis is very small and very few people use it so they are left alone. However, I think it’s a pretty good possibility that Kinesis is eventually seized by a government for “money laundering” or “funding terrorist activities.”
By the way, there is a cryptocurrency out there called Bancor. I thought that would be a marvelous name for a cryptocurrency that is fully backed by gold. 🙂
It may be that these gold backed cryptos aren’t popular with governments, which could explain why Tether has its vault in Switzerland and if you want to redeem your Tether Gold you have to take delivery there.
Gold backed crypto is basically academic as far as I’m concerned since I don’t do cryptos. Gold ETFs are fine with me since they integrate seamlessly into my brokerage accounts. Oh a year or two ago I did a few trades with the bitcoin ETFs GBTC and IBIT just for kicks. In all made about enough on them to buy lunch.
I just think it’s interesting that there are actually gold backed cryptos while one that’s backed by nothing gets promoted as “digital gold”.
Bloody Hell!!!!!!!!!!!!!!!!!!!!!!!!
I thought it would be J P Morgan but this is one Hell of a find!!!!
BTW Jobs numbers are out looking bad.
US manufacturing in recession
Bitcoin has a market cap of about $1.4T. Gold has a market cap of $35.4T.
Which do you suppose gets more coverage on financial TV?
Bloomberg has an entire program devoted to crypto. CNBC doesn’t need one because most of its regular programming is AI and crypto. Gold only gets attention when it moves so dramatically it’s impossible to ignore.
Bitcoin has been promoted as an asset that is outside the system, yet the evidence is overwhelming that it is very much an establishment phenomenon. It’s not the grassroots asset it’s touted to be, but a Wall Street and Silicon Valley love child.
Gold competes with Wall Street’s lucrative wares and challenges government power. Bitcoin’s disingenuous marketing as “digital gold”, complete with images of a gleaming golden coin, suggests the aim is to displace gold in the public’s affection. It’s not working.
Gold and Economic Freedom
“This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan
1966
Mega in bed with flu……………….normal service will resume as soon as possible.
You know you’re on leave without pay … this is no government job;-)
Hope you feel better soon!
Former Goldman commodities guru sees another decade of rising prices for metals and critical minerals
“Currie explained that primary critical minerals – “anything that has an atomic number to it, that’s in the periodic table, is going up right now,” while “anything that’s a molecule and has a carbon – corn, wheat, etc. -have been stuck.”
What Currie refers to as “anything that has an atomic number to it” is what I’ve referred to often as “elementary commodities”, because they are, well, elements. The fundamental distinction is that unlike ‘molecular’ commodities, they can neither be created nor destroyed, apart from nuclear reactions. So they are fixed in quantity. This is beginning to spread, however, to other commodities like oil, as the energy it supplies can neither be created nor destroyed.
Run It Like It’s Hot!
Feeling a bit better……………I see Prince Andrew’s best pal from a few years ago has just had a plane crash…………….hmmmmm
Does anyone get the feeling that things are gathering pace?
Mike
Outlook 2026
“Other commodities not so much. Oil especially is historically cheap and broad commodity indices like the SPGSCI, heavy in energy, could be the sleepers that awake in the coming year. The iShares ETF COMT would be one way to play it. And although I generally avoid mentioning individual stocks that I own, TPL would be another. It responds powerfully to rising oil prices; although it is not an “energy stock”, but a land stock … it just happens that the land is in the Permian Basin.”
Since this post COMT is up 12.4% and TPL is up 40.5%.
……………..and you cant afford to give me sick pay?
Lol okay you get your regular rate
On the heels of January’s fireworks, gold appears to have settled into a narrow trading range of about $5000-$5100. Too narrow, really, to last very long. And when it does break out, it could move sharply in the direction of the breakout.
The overarching bias is gently bullish near term, but a prominent downside risk is, seemingly perversely, hotter official price inflation data. Especially after this morning’s strong employment report, such data could quickly toss cold water on expectations of further monetary policy easing.
Live from Kitco
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
Well that happened fast. Sooner than I expected anyway. Gold back in high beta mode, down 3% when stocks are down 1%. Another little deflationary squall hitting today … the only positions I have that are up are dollars, treasuries and REITs. I liked it better when it was boring.
Meantime in China:-
https://carnewschina.com/2026/02/12/chinas-automakers-accelerate-solid-state-battery-timelines-geely-and-chery-target-vehicle-demonstrations-by-2027/
Ho Ho Ho Limey
https://news.sky.com/story/economy-grows-by-worse-than-expected-0-1-in-final-quarter-of-2025-13506108
Microsoft AI CEO, Mustafa Suleyman, says that “most, if not all, professional tasks” undertaken by white collar workers will be fully automated by AI within the next 12 to 18 months.
Pay no attention to AI insiders talking their book. Oh he may be right, but not that soon.
Amara’s Law comes to mind:
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
Much like the internet / e-commerce in the late 1990’s.
15-20 years after the Dot Com Bubble popped, all of those bold claims had come true.
I believe the same cycle will occur with AI, just faster.
Here’s an article about that.
https://www.zerohedge.com/ai/microsoft-ai-ceo-warns-most-white-collar-jobs-will-be-fully-automated-within-next-12-18-months
He sounds like he’s a bit caught up in the AI hype. The same thing happened to a lot of corporate types in the dotcom days too … building thousands of miles of fiber optic cable that took years to be fully used. Poster child: Global Crossing
I’m not saying it won’t happen, but folks in Silicon Valley ivory towers are underestimating the institutional change that needs to take place. It just won’t happen as fast as they think.
Ok, lets check Gold & Silver………………oh Bugger
We’re still giving back last month’s excesses. Classic correction. The larger trend from the October lows is so far still intact.
Looks like too many piled on the anti-dollar bandwagon and the trade got overcrowded … too many on one side of the boat and it wants to tip the other way. With the selloff in stocks, this is more of a dollar up day than anything else, though metals are taking more than their share. Another little deflationary squall … the only things I have in the green today are dollars, treasuries and REITs.
Old story. Something starts to look like a sure thing. It attracts speculators who aren’t even interested in it, but jump on anything that’s moving. They lever up. Eventually it goes too far too fast, the fast money flees, and there’s a rush for cash to cover margin calls. Like a mini-2008. It can cross asset classes too. Bloomberg is reporting that people are selling gold to cover losses in stocks. Wyckoff comments:
Gold, silver sell off rapidly; reasons are unknown
His speculation about a potentially hot CPI would be a concern. Otherwise the fundamental case for gold hasn’t changed. The fast money needs to get flushed out, then the fundamentals are back in charge.
Bloomberg’s story seems credible, given that stocks opened at their highs of the day and were already down 1% at 11:09 EST when gold first started its decline. It then flash crashed, posting most of its declines for the day over just the next eight minutes. Not that Wyckoff’s conjecture lacks merit; the speed of the decline suggests a big player unloading.
BTW today’s downdraft was too far too fast too … tomorrow could easily be an up day. Prices are already showing a bit of recovery this evening.
Watch for the CPI release in the morning. If the metals get past that in good shape, this selloff is probably over.
The best case scenario for metals bulls is that prices stabilize and gently rise from there. If it’s off to the races again, it courts another waterfall crash. Boring is best.
Well gold survived the CPI, the dip is finding solid support, and the broader trend remains intact.
Here’s more on Thursday’s flash crash:
Wall Street retreats to the fence after flash selloff, Main Street remains bullish ahead of thin holiday trading week
An executive summary … interesting insight into what may have led to it and what may come next, but the consensus is … nobody knows.
https://www.zerohedge.com/geopolitical/japanese-lesson-troubled-britain
A party fast going to WAR against itself as well.
Mike
https://www.zerohedge.com/economics/warsh-likes-it-hot-and-will-move-feds-inflation-target-25-35
Gee wiz…………. who have thought it?
Financial industry wishes masquerading as forecasts. Getting consumer price inflation down would mean lower asset price inflation too. Wall Street wants to sell stocks!
Nothing new anyway. The Powell Fed stopped tightening short of its 2% “inflation” goal and has been easing since. Watch not what they say, but what they do.
https://www.telegraph.co.uk/business/2026/02/13/nhs-palantir-suffer-200bn-wipeout-says-big-short-investor/
Flu back, feel ill……………going to bed
Mega’s Despatch from England:- Prep work
Ok i need to be brief but the ground is shifting.
I just feed mum her Tea & i had BBC News on along with all the twaddle i saw something that caught my eye:-
” US Secretary of State Marco Rubio has spoken of a defining moment and a “new era” as he travels to Europe to give a major speech at the Munich Security Conference.”
Also
“World’s rules-based order ‘no longer exists’, Germany’s Merz warns”
In short Europe getting dumped……but we knew this.
The Fact the “Ministry of truth” is flagging this up now tells me that a BIG move is now coming.
Also on Mega’s detector:-
“Bank of England chief economist: We cut interest rates too fast
Huw Pill says aggressive cuts amounted to a ‘policy error’ that may have contributed to price rises”
A hint to the end of loose money?…….rates higher to back the £ as GOLD starts to return?
Mega’s bulsh1t detector went off the scale on this one:-
https://news.sky.com/video/doctor-says-patients-forcibly-removed-from-hospitals-in-iran-13500388
“Babies being throw out of incubators” ……..heard that somewhere else before
To inject a little nuance … I don’t think Europe per se is getting dumped … at least not by the US (though maybe the EU is). Or better yet not by Trump. And he doesn’t think of England as part of Europe. He doesn’t like the current political leadership. If somebody like Farage were in charge you’d see a different attitude. Trump is favorably disposed towards England … less then a year ago he even proposed joining the British Commonwealth.
Treasuries have been rallying this quarter much as Synthetic Systems projected. Stocks have dipped too. But any victory lap would be premature. This isn’t it … stocks would have to sell off more than this. What we’ve seen so far is volatility characteristic of most of the past year.