PTJ vs. Skynet
Paul Tudor Jones reminds us that AI is an existential threat to humanity. He cited a comment in a breakout session at a recent AI conference he attended where a proposition was raised that there is a 10% chance that AI could wipe out 50% of humanity within the next 20 years. While most attendees disagreed, all four leading AI modelers present agreed with the statement, which alarmed Jones.
But Most AI is actually BS
Alex Karp, CEO of Palantir, reminds us that most AI products are “bullshit” and don’t actually provide any real world value.
Is it either Biohacking Super-Intelligence, Productivity Boom, Or Productivity Bust
I’m just glad we made a bunch of progress on the AI investment thesis yesterday - Ha!
While AI debates rage on, markets remain tethered to more terrestrial forces—like Powell and the Fed.
Setting Up For The Fed
In the real world, the 10 year auction was solid, but lest we forget the Fed is still buying Treasuries at auction. We’ll go into today’s Fed decision with the S&P at 5,606, the 2Y Treasury at 3.79% and the 10Y Treasury at 4.30%.
Speaking of the Fed decision, while the outcome of the decision is essentially a foregone conclusion, what might be at stake is further information about where the bar for rate cuts might be. Of course, no one seems to be of the opinion that further rate hikes might be needed - ever. No one except Harvard economist Kenneth Rogoff who recently forecasted a significant inflation shock in the next decade.
Will The Fed Or AI Save Or Fail The Dollar?
In case you missed it Rogoff has been making the media rounds in support of his new book, Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead. While I haven’t read the book, in his media appearances Rogoff has been open about the vulnerabilities to the Dollar’s dominance and the problems facing the credibility of the U.S. in the eyes of the world.
Will the Fed be able to stabilize the dollar against tariff-driven inflation or exacerbate debt concerns, as Rogoff warns? Meanwhile AI’s uncertain future, whether it’s our productivity pal, an over-hyped bubble that bursts, or a threat to our existence, each outcome could help bolster the Dollar’s dominance, or accelerate shifts away from it. After all, if someone beats the U.S. to “superintelligence” or AI military supremacy, I would think that might not be the best for the dollar.
Might As Well Buy Everything We Can Now
We all know that changing trade deals and patterns is part of the Dollar narrative, potentially resulting in de-dollarization.
Yesterday’s trade data showed a record trade deficit with an all-time high in imports during April as everyone freaked out (possibly rightfully so) ahead of tariffs.
Perhaps everyone is well read on their Nassim Taleb and adhere to the theory that he who panics first survives: “The central rule in life is that it is much, much better to panic early than late.” and “If you must panic, panic early. Be scared when you can, not when you have to."
Should that thinking apply to AI regulation? Or perhaps that mindset should have applied to central banking? What do I know.
The real question for the day is will the Fed get overshadowed by trade or geopolitical news.
XTOD’s:
XTOD: Conclave ready. Several North American Cardinals who have been staying at the Pontifical North American College during this interregnum period, departed this afternoon with the cheers and prayers of the seminarians and staff of the College sending them off.
XTOD: Big news. According to U.S. President Donald J. Trump, the Houthis in Yemen have communicated to U.S. decision-makers that they will stop the strikes on commercial and naval shipping in the Red Sea and Gulf of Aden. This comes after significant strikes on Sana’a International Airport earlier that rendered it inoperable, according to the Israel Defense Force.
XTOD: Some of the first footage from one of tonight’s strikes by the Indian Air Force against a claimed “terrorist site” near Bahawalpur, Pakistan.
XTOD: Martin Wolf's short and sharp three point summary of why policy makers should care about persistent global imbalances is well worth reading https://t.co/XqiLemdSpJ
XTOD: "There are times when chasing the things money can buy, one loses sight of the things which money can't buy and are usually free."
XTOD: The unique relief that comes from doing what you love.
https://x.com/USCCB/status/1919868193327210516
https://x.com/sentdefender/status/1919788524230107455
https://x.com/Brad_Setser/status/1919788424560583125
https://x.com/sentdefender/status/1919855784000627183
https://x.com/morganhousel/status/1919791643630436606
https://x.com/patrick_oshag/status/1919814418633806173
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