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Hedge Fund CIO: "We Haven't Yet Diffused AI Across The Economy To The Degree That It Can Be Useful"

By Eric Peters, CIO of One River Asset Management

“President Putin said, ‘I would love to meet Zelensky in Moscow.’ And I said, ‘I don't think...you know, I have to put myself in his position. I don’t know that he’d go to Moscow,” said Trump, seated next to Zelensky in the Oval Office, the two of them discussing Russia’s war on Ukraine. “Maybe he would. Would you go to Moscow?” Trump asked Zelensky, putting him on the spot, cameras snapping away. “It’s difficult. There are a lot of Ukrainian drones there,” answered Zelensky, unable to suppress a smile. “That’s right,” said Trump. “It’s dangerous,” laughed Zelensky.

Human beings really are the best. We can adapt to the sickest crap. And if we really can’t stop ourselves from killing one another, may as well start joking about it. Iran’s Larijani joked that the IRGC could take Trump out with a micro-drone while sunbathing at Mar-a-Lago. Trump told Fox News that it’s been a long time since he’s been sunbathing, “Maybe I was around 7 or so. I’m not too big into it.”

It wasn’t long ago that the Iran war seemed like a big deal. It used to be that killing heads of state was taboo. And I can remember when people thought closing Hormuz would spark a global depression. Russia’s biggest industrialist, Andrey Melnichenko, warned of the potential for a horrifying outcome if Russia continues down its self-destructive path. I’m pretty sure he was hinting that Putin might use a tactical nuclear weapon if backed into a corner.

I first saw a philosophical justification for a preemptive tactical nuke strike 2mths ago [here]. Apparently, now that humans have adapted to the doctrine of mutually assured destruction, our thermonuclear nukes have become a bit of a joke, because no one would dare ever use one. The VIX index naturally declined to 15. Which mechanically forces volatility-controlled investment strategies to take more risk. Lifting equity prices. Lowering volatility. Inviting volatility sellers. Just like every other late market cycle. After a while it honestly gets kind of funny. 

Artificial Intelligence+

To break dependence on Western technology and drive a new era of growth, in 2024 Beijing explicitly categorized its industrial focus into:

1. Six Future Industries (long-term, frontier technologies) and
2. Six Emerging Pillar Industries (near-term economic drivers).

Then in Aug 2025, Beijing formalized an “Artificial Intelligence+” initiative, which treats AI as foundational, cross-cutting tech - like electricity or infrastructure - rather than a standalone sector. The initiative emphasizes deep AI integration across The Sixes. 

The Six Future Industries are frontier technologies that Beijing seeks to establish first-mover advantage and dictate global standards over 10yrs. China’s Ministry of Industry and Information Technology established six broad overarching categories (Future Manufacturing, Information, Materials, Energy, Space, Health). These translate into six specific priorities: Embodied Artificial Intelligence, Brain-Computer Interfaces, Quantum Technology, Hydrogen & Nuclear Fusion Energy, Biomanufacturing, and 6G Mobile Communications. 

The Six Emerging Pillar Industries are to drive immediate, massive economic output.

• Integrated Circuits: domestic semiconductor manufacturing to bypass US export controls.
• Low-Altitude Economy: drones, flying cars, and infrastructure to manage low-altitude airspace.
• Intelligent Robots: automation hardware for factories/logistics.
• Aviation and Aerospace: commercial spaceflight, satellite networks, domestic commercial aircraft.
• Energy Storage: advanced battery tech to support the grid.
• Biomedicine: advanced pharmaceuticals and medical equipment.

Ten Basis Points:

“It’s going to be China or the US,” said the CIO, an American who built his firm in Asia, investing in equities, tech names, macro themes. “A European sovereign AI is a pipe dream – they think Mistral will be their LLM and they’ll build data centers? Really? How exactly?” he asked. “They need Nvidia. They need a tech stack that has emerged from American and Asian IP that combines to form these magical machines that you throw a model into.” To create intelligence. “And what happens to these nations that can’t afford tokens in the next few years? How do India and Brazil and all these second-tier companies even compete?”

“We’ve entered an era where the biggest of the big - Google, Microsoft, SpaceX, Tesla, even JP Morgan - will be accessing tokens in ways that is going to catapult their businesses ahead of everybody else,” continued the CIO. “This sort of faux debate over cheap open-source AI versus expensive Anthropic is nonsense. There’s a shortage of intelligence - pure and simple – we’re below ten basis points of market penetration in this stuff across the global economy, why are people even having a debate over this?”

“Given all the component shortages and constraints, and the anti-AI populist backlash, we could see a horrific market crash along the way, but we haven’t yet diffused this technology across the economy to the degree that it can be useful,” he continued. My Tesla drives me everywhere. I’m a super user, virtually alone. But in 10 years, no one will drive. “We have zero AI in  regulated processes within banks, healthcare companies and insurance companies because the errors and hallucination are being ironed out.” But they will be. “This could be the last great bull market in technology. What could eclipse superintelligence?” 

Anecdote:

“As we know the two principal players and their mentor, I take their words and actions as a serious roadmap,” said the CIO. We were discussing Bessent’s speech at the Economic Club of New York [here] and Warsh’s press conference following his first FOMC meeting [here]. “Much like the Chinese Communist Party 5-year plans, we’re glimpsing the future for American economic policy. Having watched the Chinese game the global trading system to the point that it broke leads me to believe it should be reassembled in Scott’s vision for something more equitable,” continued the CIO, an American who built his firm in Asia, investing in equities, tech, macro themes.

“AI competition with China is also central to this strategy. It’s possible that like Reagan spending Gorbachev into the ground, we could cause the Chinese system to hit the wall.” Interesting.

“Beijing’s national data center strategy is to build massive scale in token factories.” CXMT is their national DRAM champion and is about to IPO. Its disclosures reveal deep inefficiencies. Beijing will inevitably subsidize its losses. “Chinese open-source models are all the rage on Twitter. They’re not as good for complex thinking but very good at specific tasks and sub agent work. Therefore, as these models sit on US tech stacks, no Chinese innovator is making money - AWS makes the money for producing the token,” he said.

“Having already sunk massive amounts into EV, Solar, and other areas, one day the Chinese may well hit a wall, especially given they have yet to tackle their property sector.” The chronic decline in Chinese property prices has caused a depression in domestic consumption.

“If Scott’s strategy works and allied nations realize it’s better to play along then not, the Chinese export markets could become smaller precisely when they need them most. At the same time Taiwan, Singapore, Korea, and Hong Kong do stuff we need so we could work more diplomatically with them as they are no longer the Asian Tigers of our youth,” he said.

“Let’s see how it plays out but it’s fascinating and why guys like us stay in the game.”

Tyler Durden Sun, 07/12/2026 - 21:41

Sara Gore shared a positive update just months after revealing a cancer diagnosis live on the air in April. The journalist, who hosts NBC’s “Open House” and “New York Live,” took to Instagram on Sunday to share what she called “just a little update” with her followers. “I’m doing really well. Let’s get that out...

"I'm doing really well," the "Open House” and “New York Live" host shared with fans.

A 65-year-old man was entering the turnstiles at the Sutphin Blvd-Archer Avenue subway station in Jamaica, Queens around 3:20 p.m. on Thursday when the alarming assault unfolded.

The fast-moving stomach parasite Cyclospora is rapidly spreading across the country, sickening thousands of Americans across more than 30 states.

Theodore Roosevelt could have been describing Lindsey Graham when he said, “The man who really counts in the world is the doer, not the mere critic — the man who actually does the work.”

Shocking video shows a pack of coyotes prowling a West Los Angles neighborhood and preying on pets as residents warn the sightings are becoming more frequent. 

United States Retains Spot As World's Top Oil Producer

Authored by Naveen Athrappully via The Epoch Times,

The United States was the largest crude oil producer in the world in 2025, outputting a “record-high” 13.6 million barrels per day (bpd), according to a July 9 statement from the Energy Information Administration (EIA).

America’s output was far ahead of second-placed Russia, which produced 9.9 million bpd. Saudi Arabia came in third with 9.6 million bpd, with Canada in the fourth spot at 5 million bpd. The difference in oil output between the United States and other top producers widened last year, with Russian supplies mostly remaining unchanged year-over-year while Saudi Arabia saw a modest increase.

The 13.6 million bpd output breaks the previous U.S. and global production record of 13.2 million bpd set in 2024. The United States first overtook Russia as the top global oil producer in 2018 and has since retained the number one spot.

EIA attributed the consistently high oil production in the United States to “continued gains in drilling productivity and operational efficiency across key shale basins, which allow operators to extract more oil per well.”

Powered by shale development, the United States has become not only the top crude oil producer “but the largest producer of crude oil ever,” the agency said.

In addition to record-high production last year, exports have been climbing. In April, U.S. exports of crude oil and petroleum products hit a record, with crude oil exports averaging 5.6 million bpd, 21 percent higher than the previous record from December 2023, the EIA said in a July 8 statement.

The exports of finished petroleum products, including jet fuel and motor gasoline, hit the highest level since December 2024.

The record-high exports in April 2026 came amid disruptions to energy shipments through the Strait of Hormuz due to the U.S.–Iran war, a development that ended up boosting global demand for American energy. Brent crude oil futures had hit a peak of over $126 per barrel in April. Prices have since come down and ended Friday at around $76.

In its latest statement, EIA said the jump in oil production last year happened despite oil prices being lower, with the West Texas Intermediate (WTI) price dropping from an average of $77 per barrel in 2024 to $65 per barrel in 2025. WTI is a benchmark for crude oil produced in the United States.

Moreover, EIA predicts America’s crude oil production to be close to 13.7 million bpd this year and to rise to 14.2 million bpd in 2027.

Boosting Oil Production

The higher oil output follows multiple actions taken by the Trump administration aimed at boosting production.

In November 2025, the administration announced the approval of new oil drilling leases off the coasts of Alaska, Florida, and California.

In January this year, the administration initiated the first step to offering oil and gas drilling leases in California, with the Bureau of Ocean Energy Management seeking information on potential lease areas to auction as early as next year.

In March, the Department of the Interior conducted an oil lease sale in the National Petroleum Reserve–Alaska, the first since 2019.

This action came under criticism from the environmental group Sierra Club. Mike Scott, Sierra Club’s oil and gas campaign manager, in a March 18 statement, accused President Donald Trump of making oil corporation CEOs richer at the cost of the environment.

“The Western Arctic is not just any landscape—it’s one of the last true wild places in the country, home to rare and threatened wildlife and cultures that have subsisted on the land for thousands of years,” Scott said.

“Drilling in the Arctic won’t solve our energy crisis, but it will cause irreversible damage to these pristine landscapes. Big Oil has been champing at the bit to get its hands on these lands, and Trump is making their wishes come true.”

Secretary of the Interior Doug Burgum had said, post the lease sale in Alaska, that the sale underscored the reserve’s vital role in strengthening America’s energy security.

The reserve “was created to support our nation’s energy needs, and this successful sale demonstrates what’s possible when we align responsible development with that original purpose,” Burgum said. “Revenues from these leases will help bolster local communities, create good‑paying jobs, and ensure that Alaska continues to be a cornerstone of America’s domestic energy production.”

Meanwhile, the U.S. Department of Justice has decided to ditch the oil and gas leasing restrictions imposed by the prior administration in the Coastal Plain of the Arctic National Wildlife Refuge. Alaska and its industrial development and export authority had filed lawsuits challenging the restrictions.

On July 7, the department said that these restrictions violated federal law and asked the court to dismiss the lawsuits.

U.S. acting Attorney General Todd Blanche said that the prior administration’s actions “improperly limited” Alaska’s energy potential through “unreasonable” regulations. “This settlement supports the Trump administration’s commitment to secure American energy independence and our national security for generations to come.”

Tyler Durden Sun, 07/12/2026 - 21:00

Mets baseball president David Stearns has maybe his toughest assignment ever now, which is to clean up the mess he’s made.

Hilton shares her children with husband Carter Reum.

Hilton shares her children with husband Carter Reum.

You’ve got to hand it to them: A one-day work week is certainly an innovation. Especially for elected officials earning a quarter of a million dollars per year.

The late Sen. Lindsey Graham ranked in the bottom half of Congress' big earners despite more than three decades in office and a top role leading the GOP.

A huge fire engulfed a pub in Bangkok early Monday morning, killing at least 27 people and injuring dozens before firefighters brought the blaze under control, officials said.

SAN FRANCISCO — There’s little risk of Logan Webb taking the mound nursing a hangover this week in Philadelphia, like he did after enjoying his first All-Star experience a little too much. It’s not because the Giants’ ace doesn’t plan to partake in the pregame party. After some discussion with manager Tony Vitello and the...

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The Department of Justice is probing ​allegations that United Auto Workers President Shawn Fain took actions to improperly benefit his fiancée and retaliated against another ‌senior union member.

These Are The States Driving America's Economic Growth

The U.S. economy grew 2.1% in real terms in 2025, but that national figure tells only part of the story. While every state economy expanded, some grew nearly ten times faster than others.

Using the latest data from the U.S. Bureau of Economic Analysis (BEA), this map, via Visual Capitalist's Gabriel Cohen, compares real GDP growth across all 50 states and Washington, D.C.

The Sun Belt Ascendant

No states grew more in 2025 than Florida and South Carolina, which both expanded by 3.1%. Their strong growth rates reflect the continued economic momentum of the American South and the broader Sun Belt.

Arkansas (2.2%), North Carolina (2.7%), and Texas (2.5%) also performed better than the national average.

This data table ranks U.S. states based on their 2025 real GDP growth, measuring the change in overall economic output after adjusting for inflation.

 

Both the Southeast and Southwest regions grew by an average of 2.3% in 2025. Increasingly, these Sun Belt regions have benefited from favorable corporate tax regimes and lower costs of living relative to more traditional growth hubs such as the Northeast and Far West.

 

Population growth has also become an important driver of the region’s economic expansion. Lower housing costs in many markets, business-friendly tax policies, and continued migration from other parts of the country have supported stronger demand, investment, and job creation across much of the Sun Belt. Two-thirds of the fastest-growing cities in the U.S. are southern Sun Belt cities, often in Florida or Texas.

The Continued Strength of California and New York

However, strong growth was not limited to the South. California, the nation’s largest state economy, saw growth of 2.5%.

Despite record domestic migration outflows, the Golden State remains a major economic force with sustained, above-average growth. Similarly, New York registered 2.9% growth in real GDP in 2025, third-highest in the country.

Growth within these traditional heavyweights was powered by robust private investment and strong years for sectors such as technology, healthcare, finance, and professional services.

The Slowest Growth in the Nation

Nationwide, the slowest growth was registered in North Dakota (0.3%), followed by West Virginia and Wyoming at 0.5% each. No state’s GDP contracted in 2025, while Washington, D.C. saw just 0.4% annual growth.

At the regional level, the Plains (1.4%) and Great Lakes (1.7%) regions lagged the rest of the country. These regions were particularly hurt by downturns in agriculture and a manufacturing slump, both of which were impacted by trade disruptions.

Meanwhile, a record-long government shutdown in late 2025 also affected many local communities dependent on federal agricultural financing.

Wondering how these state-level growth patterns fit into the national picture? Check out OECD Cuts U.S. Growth Forecast Over Tariffs, Policy Uncertainty on Voronoi, the new app from Visual Capitalist.

Tyler Durden Sun, 07/12/2026 - 20:25

Oil Jumps, Futures Drop On Fresh Iran Strikes, Hormuz Confusion

Oil jumped and US equity futures fell after the US launched another round of strikes against Iran, while conflicting claims over the status of the Strait of Hormuz heightened uncertainty.

S&P 500 futures dropped 0.2% in early trading Monday after the cash index closed 0.4% higher on Friday.

WTI crude climbed 3% at the open, trading around $74, while the dollar rose against most major peers. 

Risk crept in after the US military launched several rounds of strikes in recent days, culminating with the latest barrage around 5pmET on Sunday aimed at further weakening Iran’s ability to strike civilian vessels transiting the Strait of Hormuz, the US Central Command said. The latest action followed Iranian drone and missile attacks on US allies including Kuwait, Jordan and Qatar in response to earlier US strikes. 

At 5 p.m. ET today, U.S. Central Command forces began launching more strikes against Iran to continue degrading their ability to attack civilian mariners and commercial ships freely transiting the Strait of Hormuz. The Commander in Chief has directed the strikes to hold Iranian…

— U.S. Central Command (@CENTCOM) July 12, 2026

Confusion over the status of the Strait of Hormuz only added to the uncertainty, after Iran said it had closed the waterway while the US military and maritime authorities said shipping continued through its southern route. According to Axios, a US official said "around 20 commercial vessels transited through the Strait of Hormuz in coordination with the US military over the last 24 hours, in addition to several vessels without US coordination."

“The latest developments over the weekend suggest markets may face a volatile start to trading which could test the glass half full mentality we have seen recently,” Nick Twidale, chief market analyst at AT Global Markets, wrote in a note to clients.

Besides a return to hostilities, investors are also bracing for a pivotal earnings season, with results from JPMorgan, BofA, Citi, Goldman and Wells all due Tuesday. According to Bloomberg, S&P 500 companies are expected to post a 24% jump in second-quarter profits, though the benchmark’s rally has become increasingly reliant on gains outside the technology megacaps that have driven markets in recent years.

In Europe, Deutsche Bank expects Stoxx 600 firms to report a 12% jump in second-quarter earnings, following a 7% rise in the first quarter. Profits for MSCI Asia Pacific constituents are estimated to rise 39%, up from 6.9% in the previous three months, largely driven by chip-exporting powerhouses such as Korea and Japan. 

The outlook is being tested by persistent inflation, higher energy prices and growing expectations the Federal Reserve may resume raising interest rates, threatening corporate margins. Just last week, several Fed officials warned that surging memory prices are rising core inflation, with Goldman calculating that the impact on core PCE by year-end will be +0.5% due to surging chip costs.

With US and global equities trading near record highs and valuations elevated, investors see little room for disappointing results.

Investors will also keep a close eye on this week's US CPI data, after oil’s biggest weekly gain since mid-May revived concerns that higher energy costs could further complicate the disinflation story. Consumer and producer price reports - the last inflation readings before the Fed meets later this month - will offer fresh clues on the path of interest rates.

Traders have ramped up bets on further tightening, with swaps pricing almost 40 basis points of Fed hikes by December, up from about 15 basis points in early June. Economists surveyed by Bloomberg expect both headline and core inflation to have eased slightly in June, though both are forecast to remain well above the Fed’s 2% target.  

Fed Chair Kevin Warsh will also make his first congressional appearance since taking the helm after pledging to scale back forward guidance on the rate outlook.

Tyler Durden Sun, 07/12/2026 - 20:20

They have no excuses for being this bad, 17 games under .500 and adding to their litany of most embarrassing seasons ever. And to emphasize why no alibis should be allowed, they were swept into the All-Star break by the Red Sox, who have had all of their pathologies, yet are doing what the Mets...