1.
Jemima Kelly calls out the delusion among the successful Silicon Valley venture capitalists about the limits to their knowledge.
“If you go back, like, 400 years ago it never would have occurred to anybody to be introspective,” said a great sage of Silicon Valley last week, during the modern-day equivalent of a Socratic dialogue (a podcast). “Great men of history didn’t sit around doing this stuff.” The sage was none other than Marc Andreessen — venture capitalist, crypto enthusiast, devoted Democrat turned Donald Trump adviser, and author of the 2023 late-capitalist cry for help, the “Techno-Optimist Manifesto” (“love doesn’t scale . . . let’s stick with money”). The man who bet big on Web3 (remember that?) and NFTs (remember them?), and who once described criticisms of the metaverse as “reality privilege”. (Meta, on whose board Andreessen sits, announced this week it was all but pulling the plug on the metaverse.) The a16z founder was proudly explaining to Founders podcast host David Senra that he had “zero” levels of introspection. “Move forward. Go,” was his own anti-introspective mantra. “I’ve found that people who dwell on the past get stuck in the past. It’s a problem at work and it’s a problem at home.” He went on to claim that the very concept of the individual was only invented a few hundred years ago and that it wasn’t until the start of the 20th century that we started to believe in guilt and self-criticism.
She says something which more people should be talking about.
Andreessen seems to conflate the idea of overthinking, and even of guilt, with introspection, a word deriving from Latin that simply means “looking within”... He also fails to realise that the current era is the only one in which we would even have the option of not being introspective; the only one in which the a16z-backed merchants of the attention economy have made non-optional boredom extinct. In a recent X post, Andreessen described his “information consumption” thus: “1/4 X, 1/4 podcast interviews of the smartest practitioners, 1/4 talking to the leading AI models, and 1/4 reading old books. The opportunity cost of anything else is far too high, and rising daily.” (One wonders whether he reads the old books, or asks those leading AI models for their summaries.) My main issue with Andreessen is not so much that he’s wrong; it’s that he’s so confident about it. He sounded similarly confident when he told us that bitcoin represented a breakthrough akin to the internet, that Web3 was the future and that we shouldn’t fear AI because “the moral of every story is the good guys win”. We seem to believe, as a society, that wealth, influence and confidence can be equated with wisdom.
2. The market does not think that the war is about to end anytime soon.
In the last two weeks, there has been a big build-up of call options — which give a holder the right, but not the obligation, to buy an underlying futures contract — compared with put options, which give the holder the right to sell a futures contract. In the first week of the conflict, the opposite was true. That suggests the market believes we are in for further upside in oil prices rather than downside. The average strike for call options expiring in June expiration was $126 a barrel of oil whereas for put options it is $81. Worth noting, there is a small build in call options with a June strike price of $450 a barrel.
3. Off-grid energy is on the rise in the US to power data centres.
By the end of 2025, an estimated 39 percent of the gas power capacity being developed in the United States was designed to serve data centers on-site, according to the Global Energy Monitor, a nonprofit organization that tracks energy projects. That is up from 5 percent at the end of 2024...
Wait times vary by region, but it now takes an average of four years or more for data centers to connect to U.S. grids, according to JLL, a real estate services firm... Companies are gravitating to gas because it can theoretically generate electricity all day, unlike the wind or sun. And smaller gas generators and engines can be installed much faster than nuclear power plants... Industry analysts and executives also question whether power plants built alongside data centers will remain competitive if it becomes easier to connect to the grid.
The most striking thing to me about the brand age is the sheer strangeness of it. The zombie watch brands that appear to be independent and even have their own retail stores, and yet are all owned by a few holding companies. The giant, awkwardly shaped watches that reverse 500 years of progress in making them smaller. The business model that requires a company to rebuy their own watches on the secondary market to catch rogue customers. The very concept of rogue customers. It's all so strange. And the reason it's strange is that there's no function for form to follow.
Up to the end of the golden age, mechanical watches were necessary. You needed them to know the time. And that constraint gave both the watches and the watchmaking industry a meaningful shape. There were certainly some strange-looking watches made during the golden age. They weren't all beautifully minimal. But when golden age watchmakers made a strange-looking watch, they knew they were doing it. In fact they give the impression of having done it as a deliberate exercise, to avoid getting into a rut.
That's not why brand age watches look strange. Brand age watches look strange because they have no practical function. Their function is to express brand, and while that is certainly a constraint, it's not the clean kind of constraint that generates good things. The constraints imposed by brand ultimately depend on some of the worst features of human psychology. So when you have a world defined only by brand, it's going to be a weird, bad world.
4. Interesting correlation between Truth Social posts of President Trump and oil market actions.
Traders made bets worth half a billion dollars in the oil market about 15 minutes before Donald Trump’s post touting “productive” talks with Iran sent the price of crude tumbling and ignited volatility in other assets. Roughly 6,200 Brent and West Texas Intermediate futures contracts changed hands between 6.49am and 6.50am New York time on Monday, just a quarter of an hour ahead of the US president’s post on Truth Social that there had in recent days been “productive conversations” with Tehran to end the war in Iran. The notional value of those trades was $580mn, according to FT calculations based on Bloomberg data... It was not known whether one entity or several entities were behind Monday’s trades. Trump’s announcement at 7.04am triggered a sharp sell-off across global energy markets and jumps in S&P 500 stock index futures and European equities as investors dialled back bets of a prolonged conflict.
The well-timed trades echoed the flurry of large highly profitable bets made on prediction market Polymarket on the timing of the US’s attacks in recent months on Iran and Venezuela... Several hedge funds noted that this was one of a number of examples in recent months of large trades being made ahead of official US government announcements. One trader at a major hedge fund said energy consultants had recently noticed several large block trades that they found to be unusually timed. Another portfolio manager said a series of large and well-timed trades had created a “level of frustration” among investors. “My gut from watching markets for the last 25 years is this is really abnormal,” he added. “It’s Monday morning, there’s no important data today, there aren’t any Fed speakers you’d want to front run. It’s an unusually large trade for a day with no event risk . . . Somebody just got a lot richer.”
See also this by Paul Krugman.
After the War broke out, the statements of Trump and his team have sharply lowered prices. Researchers somewhere are surely working on these to scrutinise market actions emerging alongside these decisions.
5. Ed Luce brilliantly points to a striking home truths about the war in the Middle East.
One moment, Trump is threatening “an amount of strength and power that Iran has never seen or witnessed before”. Then, roughly 36 hours later, he declares that the US and Iran have been having “very good and productive conversations”. Few took the latter on trust. It is a strange situation where the world must await a statement from Iran to check whether there was any truth to what a US president said. Iran replied that no talks had taken place. Who were we to believe?
... Trump will dial the invective up or down depending on Iran’s apparent negotiating position. The one offer Iran will never make is to give up its ability to disrupt the global energy markets. Yet that is the one thing Trump must have. Indirect talks are thus geared to swing from wild threat to outsized promise in line with Trump’s mood. Each time he is exposed as having made an empty threat that failed to push Iran into the desired concession, he will need to step up his threat level. This used to be known as the credibility gap. It does not take a seer to guess that at some point he will hint at using nuclear weapons.
6. A less discussed risk associated with the Gulf war is that on the semiconductor industry. Tej Parikh writes that the chip industry will face supply chain squeezes as the war drags on.
7. Mohammed El Erian writes about how the Gulf war could impact global financial markets.
The GCC countries have generated a current account surplus of more than $800bn in the past four years... Over the years, the GCC countries have expanded the scale and scope of their strategies to invest their patient capital, embracing the full spectrum of public and private markets, direct investments and more. Along the way, the countries have built deep financial relationships around the world and, most recently, the GCC has been at the vanguard of investments in AI, life sciences and robotics.
He points to reduced revenues and increased war reconstruction expenditures as likely to lower surplus flows into the global markets. This would come at a time when the global financial markets are feeling the pressure of sharply increased government deficit financing, refinancing of maturing debt, and a massive surge in AI investment-related borrowings. He says that the net impact on bond yields, even if in the short- to medium-term, can be significant.
8. It can have adverse long-term impacts on the energy markets.
Critical Gulf energy infrastructure that was presumed to be safe is now seen as vulnerable, he said. A precedent has been set. “Buyers will price that risk for longer than the initial outage itself,” Jan-Eric Fahnrich, a senior analyst at Rystad Energy, wrote in an analysis. Countries in Asia and Europe, which depend on L.N.G., are likely to face more expensive gas prices long after the Strait of Hormuz reopens.
And this
“This is by far the largest disruption of crude oil and refined products that we’ve ever seen in history,” said Jason Miller, a professor in supply chain management at Michigan State University. “Petroleum goes into everything,” he said, so the inflationary impact could be enormous… Higher energy prices tend to slow economic growth, increase unemployment and speed inflation. It is also important to note that the price of diesel and jet fuel — which are processed differently — generally rise faster than the gasoline that drivers buy at the pump. And that has a disproportionate effect on moving goods around the globe, whether by plane, ship or truck. Those elevated energy prices could eventually increase the priceof practically every avocado, automobile, pair of sneakers, cellphone and drug that is bought and sold around the world.
9. Nice article that points to how much of Trump's current actions are a replay of what he said and did nearly four decades back.
He sketched out the first outlines in 1987, spending $94,801 to place a full-page ad in three US newspapers. The world was “laughing” at America’s leaders over the Gulf crisis triggered by the Iran-Iraq war, Trump declared. As the US escorted tankers through the Strait of Hormuz, he said Washington was trying to “protect ships we don’t own, carrying oil we don’t need, destined for allies who won’t help”. It is a line that his tirades echo today. But back then, as he tested the waters for a possible presidential run, Trump had concluded the problem was a lack of “backbone”. Appearing a few weeks later at a New Hampshire rotary club event in 1987, Trump sneered at how the Iranian navy — “little runabouts with machine guns” — had held America to ransom. “Why couldn’t we go in there and take some of their oilfields near the coast?” he asked. The then 41-year-old businessman put it even more starkly in a 1988 interview with the Guardian: “One bullet shot at one of our men or ships, and I’d do a number on Kharg Island. I’d go in and take it.”
This is similar to his belief that tariffs should be used to correct trade deficits, which he advocated in the case of Japan in the 1980s.
10. Saudi Arabia may be a bigger proponent of regime change than Israel. A NYT report suggests.
Prince Mohammed, the people familiar with the discussions said, has argued that Iran poses a long-term threat to the Gulf that can only be eliminated by getting rid of the government. Prime Minister Benjamin Netanyahu of Israel also views Iran as a long-term threat, but analysts say Israeli officials would probably view a failed Iranian state that is too caught up in internal turmoil to menace Israel as a win, while Saudi Arabia views a failed state in Iran as a grave and direct security threat...
Prince Mohammed has argued that the United States should consider putting troops in Iran to seize energy infrastructure and force the government out of power, according to the people briefed by U.S. officials... while Prince Mohammed probably preferred to avoid a war, he is concerned that if Mr. Trump pulls back now, Saudi Arabia and the rest of the Middle East will be left to confront an emboldened and furious Iran on their own. In this view, they say, a half-finished offensive would expose Saudi Arabia to frequent Iranian attacks. Such a scenario could also leave Iran with the power to periodically close the Strait of Hormuz.
11. German railways fact of the week.
Last year, Deutsche Bahn’s punctuality fell to the lowest level recorded in the 190 years since the first railway line was opened between Nuremberg and Fürth in Franconia. A mere 60 per cent of all long-distance trains arrived with less than six minutes delay, compared with 90 per cent two decades earlier. But this data excludes all of the trains that were cancelled. Deutsche Bahn now underperforms even the worst British train operator.
12. Sanctioned oil, where it used to go and where it goes now.
An estimated 100,000 talented Chinese teenagers are selected every year to enter a network of science-focused talent streams run across the country’s top high schools. The genius classes, also called “experiment” or “competition” classes, coach gifted students to compete in international competitions in maths, physics, chemistry, biology and computer science... For decades, genius classes have been turning out the leading lights of China’s science and technology sectors... Genius-class graduates include the founder of TikTok’s parent company, ByteDance, and the core developers behind its powerful content recommendation algorithm. Both leaders of China’s two biggest ecommerce platforms, Taobao and PDD, came from the genius stream, as did the billionaire who started the food delivery “super-app” Meituan. The two brothers behind the chipmaker Cambricon, now one of the leading Chinese rivals to Nvidia, were in genius classes. So were the core engineers behind leading large language models at DeepSeek and Alibaba’s Qwen, not to mention Tencent’s celebrated new chief scientist, poached from OpenAI late last year...
China’s genius classes differ in important ways from talent streams in the west. First, the system dwarfs its international competitors in scale. Second, it is state-driven. China graduates around five million majors in science, technology, engineering and maths every year, according to the state media Xinhua, compared with about half a million in the US. Tens of thousands of these graduates are genius-class students, taken out of regular classes for an intense period of study between the ages of 16-18. While others swot for China’s feared college admissions exams, the gaokao, those on the genius path have the chance to bypass that fate altogether, bagging places at top universities before they are out of high school, depending on their results in starry international competitions. The best students continue to more advanced talent schemes at the top Chinese universities, such as the elite computer science programmes at Tsinghua and Shanghai Jiao Tong universities... Starting in the 2000s, university admissions were reformed, giving more flexibility to colleges to allocate places without relying solely on the results of the gaokao. National competitions were set up for students at the end of their sophomore year of high school. Those who won top prizes in the national exam could receive direct admission to one of the 985 Project universities, China’s 39-member Ivy League equivalent...
The chance to skip the gaokao was a strong incentive for students to participate in the genius stream. The traditional pathway for high-school students in China is three years of study in the gaokao’s mandatory subjects of Chinese, English and Maths, as well as three more chosen subjects from physics, chemistry, biology, history, geography and politics. Exams in all six subjects are taken at the end of the third year. Genius-class students, on the other hand, focus on their “competition subjects”. A student competing in the International Physics Olympiad, for example, needs to not only finish three years of high-school physics but also at least half of the college-level syllabus, in order to be competitive enough to take the national exam.
Should it be any surprise then that Chinese teams sweep most of the gold medals at Olympiads, with 22 out of the 23 contestants sent in 2025 winning gold medals.
14. Energy consumption responds to prices.
After the Russian energy price shock, German households and industry used 17 and 26 per cent less gas respectively. A study of Britain’s response by economists at the Institute for Fiscal Studies found that a 45 per cent rise in residential energy prices triggered a 14 per cent drop in households’ consumption.
15. Some staggering statistics about the age of omniscalers and extreme business concentration. A new MGI report identifies nine "super-wizard" companies, omniscalers - Alphabet, Amazon, Apple, Microsoft, Meta, Tesla/SpaceX, Alibaba, Huawei, and Samsung - that are set to dominate many of the 18 fastest growing markets of the future.
Collectively they generated $2.7tn of revenue in 2025, a sum larger than the GDP of Italy. They also invested more than $800bn in research and development and capital expenditure, a share of revenue three times greater than at companies in traditional industries... In 2024, the six US omniscalers generated $550bn of operating cash flow. That was 2.5 times the money raised on US equity markets that year and not far shy of the $600bn of total bank lending to the non-financial sector... Over the past 20 years, these nine companies have been active acquirers of smaller businesses, with Alphabet and Microsoft snapping up more than 200 companies apiece. Even when a US judge found Google to have been operating an “illegal monopoly”, he refrained from breaking up the company.
