Kelan retweeted
After DOGE, Elon came to a conclusion most people missed.
He tried to reform the state from the inside. He failed. And he said it plainly: the government can't fix its own deficit. Nobody in power actually wants to cut. The machine protects itself.
So he drew the only logical conclusion. If the state can't be reformed, there are only two ways this ends.
Either global bankruptcy. Debt keeps compounding, interest payments eat the budget, and the system collapses under its own weight.
Or robots. AI and robotics grow the economy so fast that the debt becomes manageable, and abundance makes the old fights over scarcity irrelevant.
Here's the part almost nobody sees.
For two centuries, capitalism has had a marketing problem. Its gains are real but slow and invisible. 2% growth a year doesn't feel like anything. Your life gets better over 30 years and you never connect it to the system that did it. Meanwhile, the left's promises feel immediate and concrete: a check, a subsidy, a benefit. That's why the left wins on promises even when it can't deliver them. Capitalism produces the wealth, socialism takes the credit.
Robots break that asymmetry.
When productivity doubles in a few years instead of a few decades, people will see it. Things get cheaper, services get better, opportunities appear, in real time. For the first time in history, people will connect capitalism and their rising standard of living directly, almost instantly. The causal chain becomes visible.
And that changes everything politically.
So there are two scenarios.
Scenario one: we stay in the current inertia. No breakthrough, or a breakthrough we regulate to death. The debt wins. Living standards stagnate, then fall. A frustrated electorate turns to whoever promises the most, and that pushes toward a hard collectivist left. But collectivism fails, as it always does. And when it fails, the most organized, most disciplined collectivist force left standing isn't the old left. It's radical Islamism. Bankruptcy, then communism, then something worse.
Scenario two: robots win. Abundance arrives, and it arrives visibly. The link between free enterprise and prosperity becomes obvious to everyone. And this is the key point: it becomes obvious to everyone, including the minorities the left was counting on. Because their long-term incentive is the same as everyone else's. A kid in the suburbs gains infinitely more from a booming, abundant West than from a bankrupt state handing out promises it can't keep. Abundance is the most powerful integration machine ever built.
That's the Western renaissance.
The West doesn't need to win the culture war by arguing. It needs to win it by delivering. And for the first time, it has the technology to deliver fast enough for people to notice.
The race isn't left vs right anymore. It's robots vs bankruptcy.
Kelan retweeted
One of the things the data analysts on our side obsessed over was "composition"—whether the electorate looked close enough to 2024 for Republicans to win. And despite polls that showed a Democrat blowout, the data kept on telling us the same story: in some states turnout was merely OK, in other states it was downright amazing, and in no state was it catastrophic. There was a genuine sense of optimism on our team: our people were showing up.
So, I asked the smartest data guy I know, does that mean we're going to shock the world? "No," he told me. "We might do better than the polls suggest. But the data is telling us that a lot of Trump/Vance 2024 voters are pissed and planning to vote for the other guys. Our voters are turning out, but they may not vote for us."
Well, that looks prophetic now. Our voters did show up. In Florida, for example, the electorate was 9 points more Republican than Democrat, just a couple points worse than 2024. Undoubtedly there were places we could have done better on turnout. But the main problem is not turnout. The main problem is that many people who voted for Trump/Vance in 2024 voted for Democrats in 2026.
There will be a lot of infighting and arguing over what happened and why that is. One of the pollsters I really respect told me that our economic messaging wasn’t sharp enough down the stretch. I’m sure that’s true.
But the real reason we lost is obvious to almost everyone.
Another pollster—one of the smartest people I know in politics, told me yesterday we’d lose the generic ballot by 13 points. I felt negative going into Tuesday, but even I was shocked by this. In his polling, he saw that a lot of Trump 2024 voters were angry and planning to vote for Democrats. He asked those voters who had abandoned us what would cause them to come back on our team. The top four answers, accounting for nearly all of the responses were:
1) End the war
2) Focus on cost of living/inflation
3) Put America First
4) Change our relationship to Israel
Our voters showed up. And the above four reasons are why many of them voted for Democrats. This is according to a pollster who nailed the results. While many spent Monday attacking Rachel Campos Duffy for calling for a diplomatic resolution to the conflict, it turns out her political advice was sound. (She’s also a great person.)
In the next few months, there's going to be a lot of gaslighting. Expect to hear any number of establishment politicians say the solution to our woes is amnesty. I'm open to the idea that we should change enforcement—by focusing more on businesses that hire illegal labor, for instance. But anyone pushing amnesty is lying to you.
The reason we lost is the war. The president himself said so last night.
If you'd like to argue it was worth it, that losing the Senate for the next 6 years was worth it, then do so. Argue it was a worthwhile cost to pay. Agree or disagree, that's at least honest.
But everyone knows why we lost. And any honest conversation about where we go from here must start there.
I remain hopeful about our country. To the people who are pissed off and want to say, “I told you so”: you’re right, you did tell us so. Take that energy into electing Republicans who share your worldview. To the people who are just pissed at the results, you should be. Let’s take that anger and get back to the work of saving our country.
The Friday price action on $NQ and tech stocks generally does indeed look like massive deleveraging rather than some fundamental shift, or reaction to "new information."
The unwind in Hedge Fund equity exposures this year has been the biggest since at least 2017.
Active de-grossing (reduction in long + short positions) by global hedge funds has now hit over 8% of total gross exposure since June, according to the Morgan Stanley Prime Brokerage Content team.
This has taken gross leverage for US long/short funds down to the 10th percentile versus the last year.
I shared one Star Wars politics or markets meme (share copy-link) and now my ENTIRE feed is full of Star Wars memes. Since the share copy-link is a very heavy weight for the X algo, assume whatever you are sharing you will get a lot more of.
Kelan retweeted
There is nothing special about this pullback.
Much of the panic surrounding neoclouds, AI capital expenditures, and the sustainability of the infrastructure buildout is simply the market searching for explanations for falling stock prices.
When AI stocks were rising, record capex was evidence of extraordinary demand. When those same stocks started falling, suddenly the same spending became evidence of an impending financial disaster.
One fact with two interpretations that depend entirely on the price action of the market.
Go back to August 1998.
The technology bull market had been running for about three years.Amid fallout from the Asian financial crisis and Russian ruble crisis, earnings expectations were deteriorating, valuations were elevated, and investors were becoming increasingly concerned about unprofitable Internet companies.
On August 6, the New York Times published an article titled "Market Gyrations May Point to Shift in Investor Strategy." One fund manager declared, "Boring is going to outperform sexy."
Investors were supposedly abandoning momentum and speculative technology shares in favor of profitable businesses, balance sheets, dividends, and traditional valuations.
Russia defaulted on its debt. The Asian financial crisis was spreading internationally. The yen carry trade had imploded as the USD plunged 8% against the yen in a single day. US embassies were being bombed.
President Clinton ordered missile strikes against Afghanistan and Sudan while simultaneously facing a scandal that would result in his impeachment. Major financial institutions suffered enormous losses, and the spectacular collapse of Long-Term Capital Management threatened the stability of the global financial system.
Corporate earnings forecasts were falling. Investors feared a U.S. recession. Many of the same technology companies that had driven the bull market were now leading the decline. Many of them had fallen 40-60% from their 1998 highs.
Even the Federal Reserve's first interest-rate cut on September 29 initially disappointed investors. The Dow fell that day and plunged another 238 points the following session.
The news seemed almost uniformly terrible.
But the market didn't care forever.
After a violent reversal in early October, improving confidence in corporate earnings, Japanese banking reforms, and a surprise emergency Fed cut on October 15 helped restore risk appetite.
By November, the Dow was making new all-time highs. Internet stocks were exploding higher again.
What had looked like the end of the internet trade was, within about a month, actually a correction preceding one of the most extraordinary speculative advances in stock-market history.
In today’s market, Microsoft just reported 48% Azure growth. Google Cloud revenue more than doubled. Meta expects $135–145 billion in capex this year and has announced plans for a potentially record-sized $97.5 billion equity capital raise.
If the market really was that concerned over capex spending, instead of using it as an excuse to explain the pullback, the market would have sold off on the META news.
Anthropic has now filed its IPO registration statement. We have midterm elections approaching, another consequential round of earnings, and a Fed that just held rates steady even as another hike is widely anticipated in December.
There are plenty of potential catalysts over the coming two months.
More importantly, this does not resemble the sentiment backdrop of a speculative bubble climax. Generational bull markets don't die midway through a basing period, but typically after euphoric saturation and a parabolic rally in leading names.
Consensus on AI is deeply divided. Being loudly anti-AI has practically become fashionable. Some AI critics have even built enormous audiences around the idea that the economics of the industry are unsustainable. Plenty of investors seem almost eager to watch the entire trade collapse.
That isn't the sentiment or narrative around which tops are typically made.
The Internet trade didn't end in the panic of 1998. It ended after the extraordinary acceleration of 1999 and early 2000 when being bearish was the market equivalent of wearing a dunce cap.
History never repeats perfectly, and today's rate environment is very different. But I think the resemblance in investor psychology is striking.
I’d be genuinely surprised if we don't have at least one more months-long rally into new highs during this cycle.
Whether it begins into the midterms, after the elections, around Anthropic's anticipated listing, or following further earnings confirmation, I suspect this correction will eventually look more like an interruption in a generational bull market than the bursting of a "bubble."
The $NDX took four months to bottom in 1998. With the exception of a handful of leaders, most stocks that are holding up have been basing out since the May-July period. We could certainly go lower, but most of the signs point to another new high before this cycle rolls over.
However, I’d place the odds of any additional powerful rallies afterward as increasingly unlikely given the fact we are already about to enter the fifth year of this bull market. I'd be careful about buying the dips next year, at least with meaningful size.
Kelan retweeted
I am excited to be an investor in trade(xyz) as they partner with ICE to bring 24/7 perpetual futures on Hyperliquid to the United States. As a market participant, I am looking forward to to using their innovative product to enhance my investment process.
Kelan retweeted
We’re opening a research preview of Claude Duet, a new app where Claude works as a proactive agent.
It comes to you with what needs your attention, completes tasks you ask of it, keeps working when you step away, and checks with you before it acts on your behalf.
Incentive drives almost all human behavior. I keep that in mind when thinking about the world, or when making personal and business decisions.
Premise:
Incentives drive all human behavior.
The corollary:
How to destroy a country:
A vast social security and support system that serves as a magnet for those who would rather not work.
An open immigration policy that does not screen immigrants to determine their ability and willingness to provide for themselves and their families.
An open immigration policy that does not screen for political and/or religious ideologies that are a threat to the country.
Economic incentives large enough to incentivize immigrants on the state dole to have large numbers of children, but insufficient for educated and economically productive mothers to be able to quit to raise a family.
The declining fertility of the most educated and productive women due to their delay to begin a family as a result of their desire and/or need to advance their careers, among other reasons, to live a life they deem consistent with their educational achievements and/or to repay their student debts.
Amnesty programs that give citizenship and voting power to illegal immigrants without consideration of their economic productivity or their threat to the country due to their religious or political ideologies.
The changing demographics and increased population due to the above factors.
The state responding to protests by increasing social support.
The continued failure to punish and hold accountable violent and looting rioters.
Government managed by a massive and growing unelected bureaucracy.
Government fraud, waste, and abuse contributed to ballooning budgets.
Anti-business legislation that makes it difficult for businesses to compete in a global marketplace being disrupted by AI, including restrictions on firing even poorly performing employees.
Overly burdensome, globally uncompetitive, corporate taxation.
Continuous increases in personal taxes to raise funds to provide for the rapidly growing welfare state.
The substantial majority of the tax burden levied on a small percentage of the population.
A growing percentage of the electorate paying no taxes and receiving welfare.
The introduction or threat of a wealth tax including the taxation of unrealized gains, i.e., taxes on paper wealth.
The flight of the most productive business builders and highest taxpayers to lower tax countries with lesser security concerns.
A growing percentage of the electorate voting for candidates that support increased welfare and laws favorable to, and/or that match the cultural and ideological needs and desires of a growing unproductive immigrant population.
The rapid rise in anti-semitism and inadequate efforts to address this hatred.
Increased borrowing by the state to fund the growing social burden.
Higher sovereign interest rates due to all of the above.
The resulting need to reduce expenditures to make the math work.
Increasingly violent protests that make life less livable for the productive and law abiding citizens leading to their accelerated departure.
And so on…
Kelan retweeted
J’ai entendu dire que la France était finie, qu’il était trop tard pour la sauver.
Mais la France est toujours aussi belle, enviable même. Sa grandeur n’a pas disparu, elle ne demande qu’à renaître.
Nous avons surmonté en un an un problème cent fois plus grave, sans avoir les moyens dont dispose la France.
La France pourrait y arriver en une semaine.
Kelan retweeted
If the unrest in France is a reflection that aging populations and tightening fiscal constraints make it increasingly difficult for Western governments to meet their promises to and expectations of their citizens, then France is just the beginning.
At some point $OPEN seemed like a good turnaround story, but either the new CEO did not deliver, or there is something wrong with the fundamentals of the business. I think the latter.
Wow you are a moron. There is literally zero chance of $2 per share.
Readers added context they thought people might want to know
It hit $2/share
x.com/MebFaber/statu…
