Congress To Seize Control Of AI: States Stripped Of Regulatory Power

Via JonFleetwood.substack.com,

Buried deep in Congress’s 1,116-page “One Big Beautiful Bill Act” is a provision so sweeping, so dystopian, and so underreported that it’s hard to believe it was passed at all.

Section 43201 of the bill, blandly titled the “Artificial Intelligence and Information Technology Modernization Initiative,” doesn’t just fund the federal government’s full-scale AI expansion—it removes every state’s right to regulate artificial intelligence for the next decade.

Let that sink in: For the next ten years, no state in America—not even your state—will be allowed to create its own safeguards, protections, or liability standards for how AI is developed or deployed.

“No State or political subdivision thereof may enforce any law or regulation regulating artificial intelligence models… during the 10-year period beginning on the date of the enactment of this Act.”

- Sec. 43201(c)(1) of the bill

This is not a theoretical threat.

It’s a federal ban on local AI regulation—handing the reins to the very bureaucrats and corporate tech giants already embedding AI into military systems, healthcare, financial markets, education, and law enforcement.

This section of the bill is a preemptive strike against state sovereignty.

It neuters legislatures and governors from protecting their own citizens—just as powerful corporations and federal agencies rush to install AI systems into every layer of society.

It’s not just overreach.

It’s a federal power grab dressed as “modernization.”

And President Trump is now marching on Capitol Hill to personally demand the bill’s passage—pushing the very legislation that would shield his $500 billion Stargate AI surveillance grid from any state-level resistance.

The bill—developed by the House Budget Committee, which passed the legislation yesterday—still needs to be voted on in the House and Senate before it hits Trump’s desk, so if you want your senators and representatives to vote no on it, you can contact them here and tell them why.

The House is expected to vote on the One Big Beautiful Bill by the end of this week.

Tyler Durden Wed, 05/21/2025 - 09:50

GLAAD Claims Free Speech Surge On Social Media Undermines LGBT Safety

One of the most detrimental self-sabotage efforts of the woke movement was their rabid push to control public speech online.  In the case of gay and trans issues, any criticism no matter how factual or logical was met with Orwellian oversight.  For most major social media apps, simply engaging in debate with LGBT activists could mean your account would be flagged and silenced for days or weeks at a time.  Refusing to use a trans person's preferred pronouns could result in a permanent ban.  

Such policies were established hand-in-hand with federal government efforts to codify LGBT language and make gay and trans people a privileged class protected from any and all scrutiny. Governments and social media platforms partnered up to institute speech controls that might not be possible otherwise.  Under the guise of "protecting LGBT people" from discrimination, the door to arbitrary censorship was opened. 

This is why in the US there is no such thing as a legal definition for "hate speech".  Classifying any speech as "hate speech" would represent a clear violation of the 1st Amendment.  Yes, you can "yell fire" in a crowded theater, and yes you can call people whatever pejoratives you want to call them.  Hurt feelings are irrelevant to the law, and this is a good thing.

GLAAD, the gay and trans lobby group, thinks otherwise.

The organization issued an “alarming” Social Media Safety Index report this month, which found that, after significant rollbacks in protected speech, social media platforms are overwhelmingly "failing to protect" LGBTQ people.

The only major app that did not receive an "F" grade on LGBT safety was TikTok, which got a D+.  GLAAD has now changed it's grading system due to the lack of platforms meeting their standards.  For 2025, the platforms were rated numerically, with TikTok at 56/100; Facebook: 45/100; Instagram: 45/100; YouTube: 41/100; Threads: 40/100; and X the lowest at 30/100.

“At a time when real-world violence and harassment against LGBTQ people is on the rise, social media companies are profiting from the flames of anti-LGBTQ hate instead of ensuring the basic safety of LGBTQ users,” GLAAD President and CEO Sarah Kate Ellis said in a statement shared with TheWrap.  “These low scores should terrify anyone who cares about creating safer, more inclusive online spaces,” she added.

Taking into account the fact that woke activists consider mean words to be the same as an act of violence, it's difficult to take any warnings from GLAAD seriously. 

The report lists 14 indicators which address a range of issues affecting LGBTQ people online, including data privacy, moderation transparency, training of content moderators, and workforce diversity.  The factor that most interests GLAAD, however, is online censorship. 

Jenni Olson, senior director of social media at GLAAD, argues that “The terrible rollbacks from Meta and YouTube are the most important news this year,” referring to both company’s recent decisions to allow previously prohibited hate speech, such as references to LGBTQ people being “abnormal” and “mentally ill” as well as the use of pejorative terms such as “tranny” and “transgenderism.” 

“It is especially horrible that YouTube removed gender identity from its list of protected characteristics - and yet is continuing to state that the policy hasn’t changed, when it very clearly has …This is just unprecedented for a major platform. It is extremely concerning for a company to remove a protected characteristic group from a hate speech policy,” Olson said.

In other words, online speech policies are going back to normal and GLAAD doesn't like it.  Frankly the amount of social division and strife caused over protecting the fragile feelings of a tiny percentage of the total population isn't worth it.  LGBT groups are nothing more than a convenient minority vehicle which the establishment tried to use to inject thought control into the public consciousness.  The societal damage done has been immense and will take years to reverse.   

The popular anger over LGBT issues was created by the very activists crying about safety.  If they had left people alone instead of trying to force their ideological language on the masses, there would be no animosity today.  They earned public suspicion by trying to silence public discussion. 

Tyler Durden Wed, 05/21/2025 - 09:30

 

 

“Few outsiders think new stores, no matter how well-conceived, will get Apple back on the hot-growth path… Maybe it’s time Steve Jobs stopped thinking quite so differently.”

—BusinessWeek, May 21, 2001

 

24 years to the day — May 21, 2001 — a Businessweek1 commentary explained why the newfangled Apple Stores were destined to fail. This pronouncement motivated subsequent blog posts (notably in 2005 and 2021) and a full chapter in “How Not to Invest.”

In the spirit of this woefully misguided — but not atypical — exercise in the Dunning-Kruger effect, I want to share a brief excerpt from the new book:

“Sorry, Steve: here’s Why Apple Stores Won’t Work”

A year after Fortune’s Cisco debacle, BusinessWeek published a story on Apple’s foray into retail stores. Not just BusinessWeek, but many naysayers laughed off the inevitable failure of Apple’s push into retail. Numerous armchair pontificators freely shared their uninformed opinions as to why this concept was destined to fail. “I give [Apple] two years before they’re turning out the lights on a very painful and expensive mistake,” predicted retail consultant David Goldstein.

After all, established consumer electronics chains were all in decline, and the writing was on the wall. Gateway would soon close its retail stores (2004), and not long after, CompUSA would shutter its physical locations (2007).

Investors should always be on the alert for structural errors in media stories: Authors operating outside of their expertise; people unaware of recent developments; extrapolators extending present trends far into the future. It is an excellent reminder of exactly the kinds of errors investors should avoid. A fallible human being publishing their uninformed opinion in print should never be the basis for making any intelligent investment decision.

There are many genuinely revolutionary products and services that, when they come along, change everything. Pick your favorite: the iPod and iPhone, Tesla Model S, Netflix streaming, Amazon Prime, AI, perhaps even Bitcoin. Radical products break the mold; their difference and unfamiliarity challenge us. We (mostly) cannot foretell the impact of true innovation. Then, once it’s a wild success, we have a hard time recalling how life was before that product existed.

The Apple Store was clearly one of those game-changers: By 2020, Apple had opened over 500 stores in 25 countries. They are among the top-tier retailers and the fastest to reach a billion dollars in annual sales. They achieved the highest sales per square foot in 2012 among all retailers. By 2017, they were generating $5,546 per square foot in revenues, twice the dollar amount of Tiffany’s, their closest competitor. Apple no longer breaks out the specifics of its stores in its quarterly reports, but estimates of store revenue are about $2.4 billion per month.

That guy who wrote, “Sorry, Steve: Here’s Why Apple Stores Won’t Work,” I wonder what the rest of his portfolio looks like…

Finance seems to encourage this kind of forecasting. We are bad at this because we often lack awareness of what we do and do not know about the limits of our expertise; we do not truly understand the present, let alone the future. We often wishfully predict what we want to be true, rather than what will come to be.

We look at the Dunning-Kruger effect later, but the key takeaway is most of us are not very good at metacognition—estimating our own skillsets. Learning what we do and don’t know—working within our capabilities— that’s challenging enough, without other people’s bad forecasts in our heads.

~~~

To be fair, “Sorry, Steve” reflected the consensus of the investment community in 2001. We were in the midst of the tech/dot-com implosion; Apple had been barely saved by Microsoft in 1997; retail specialty stores were already running into trouble.

But everything in this article was already reflected in AAPL’s price.

A decade later, Daring Fireball’s John Gruber reflected on “Sorry Steve,” observing, “Apple’s retail foray was surely doomed. His case was based on a severe misunderstanding of Apple as a company, of its relationship with its customers, and of its then-potential for the coming decade.”

As we soon found out, that potential was immense. As in trillions of dollars in value creation.

This entire embarrassing debacle is a stark reminder of critical elements for media consumers and investors alike:

1. Media opinion and commentary are mostly speculation, no better or worse than anybody else’s.

2. All experts are experts in how the world used to be.2 This is especially problematic at major inflection points.

3. When it comes to predicting the future, especially consumer tastes, nobody knows anything…

We often give excessive and frequently undeserved credibility to media outlets, including television and magazines. Certainly, the folks who own printing presses and well-equipped studios must know what they are talking about? They wouldn’t merely be filling broadcast hours and column inches with speculative bullshit because that is essentially their business model?

Perhaps…

For more examples of media errors and the strategies you can use to counteract their most pernicious effects, I humbly suggest reading “How Not to Invest.”

 

 

See also:
A Big Misunderstanding John Gruber, (Daring Fireball, December 20, 2012)

Popular or Best? (January 1, 1998 About This Particular Macintosh, January 1998) (TBP)

 

Previously:
Wall Street Remains Clueless as Ever as to Apple’s Products (January 14, 2005)

Wall Street Still Doesn’t Understand Apple, Ritholtz Says (Bloomberg, August 24th, 2021) 3

Why the Apple Store Will Fail… (May 20, 2021)

Nobody Knows Anything (May 5, 2016)

Predictions and Forecasts

 

Source:
Sorry, Steve: Here’s Why Apple Stores Won’t Work
Cliff Edwards
BusinessWeek, May 21, 2001

 

__________

1. This was before Bloomberg purchased BW in 2009…

2. Paul Graham (2014), “When experts are wrong, it’s often because they’re experts on an earlier version of the world.”

3. Over the next year, AAPL would gain 12%, versus losses in the S&P 500 of -7.7% and the Nasdaq 100 of -15.9%.

 

 

 

 

 

 

 

 

For more information about “How Not to Invest” and where to buy hardcovers, e-books, and audio versions, please see this.

 

 

 

 

The post “Sorry, Steve: Here’s Why Apple Stores Won’t Work” appeared first on The Big Picture.

Breaking Down Global Military Spending By Country In 2024

In a world where superpowers are defined by economic and military stature, countries continue to invest hundreds of billions in military and defense every year.

In 2024, global military expenditure reached $2.7 trillion, hitting a record high - and just three countries made up more than half of the total.

This infographic, via Visual Capitalist's Niccolo Conte, breaks down global military spending by country in 2024, highlighting the top military spenders using data from the Stockholm International Peace Research Institute (SIPRI).

The World’s Biggest Military Spenders in 2024

America continues to dominate global military expenditure, spending nearly $1 trillion or 3.4% of its GDP on defense in 2024. U.S. military expenditure makes up over one-third of the global total, and it also has the world’s biggest defense budget.

Here’s a look at the top 20 countries by military spending in 2024:

China follows the U.S. with an estimated $314 billion in military expenditure, up 7% from 2023. Over the last decade (2015–2024), China’s military spending increased by 59%.

Meanwhile, Russia’s spending was up by 38% year over year at nearly $150 billion. Together, the United States, China, and Russia—often considered strategic competitors—made up 54% of global military expenditure in 2024.

Germany and India round out the top five, with both countries ramping up military spending in light of rising geopolitical tensions in recent years. India’s simmering tensions with Pakistan and China contribute to its defense budget.

Meanwhile, as a major NATO member, Germany’s spending is partly down to the conflict between Russia and Ukraine. Together, NATO countries made up 55% of global military expenditure in 2024.

In the eighth spot, Ukraine has seen the biggest jump in military spending in recent years—with its 2024 spending at nearly 10 times 2021 levels. It also has the highest military burden globally at 34.5% of its GDP in 2024. Although peace talks between Russia and Ukraine are ongoing, a complete ceasefire is yet to be achieved.

To see how global military expenditure has evolved in the 21st century, check out 20 Years of Global Military Spending on the Voronoi app.

Tyler Durden Wed, 05/21/2025 - 04:15

UK Space Ambitions Clash With NATO Airspace Concerns

Via CityAM,

• The UK’s new vertical launch spaceport at Saxa Vord poses risks to Icelandic airspace and territorial waters, potentially disrupting transatlantic flights and marine ecosystems.

• Exclusion zones for rocket launches could interfere with NATO's ability to effectively patrol the Greenland-Iceland-United Kingdom gap, an area of strategic importance for defense.

• While a memorandum of understanding exists between the UK and Iceland, it may not adequately address the full defense and military ramifications of frequent space launches in this critical region.

When I relocated to the UK from New York in 1984, the Cold War was at its peak. US nuclear and conventional forces were spread across Europe and fears of a Soviet invasion or nuclear exchange were ever-present. In the UK, another critical strategic concern was the Greenland-Iceland-United Kingdom (GIUK) gap, which are two stretches of the North Atlantic separating these three countries. During the Cold War, Soviet naval forces aimed to control this gap to access the broader North Atlantic and block NATO reinforcements to Europe, a scenario famously depicted in Tom Clancy’s Red Storm Rising.

After the Cold War ended and the so-called Peace Dividend reduced the gap’s significance, its strategic importance faded. However, since 2014, with Russia’s renewed assertiveness, the GIUK gap has regained prominence in NATO planning. The US reopened Keflavik Naval Air Station in Iceland in 2016, re-established its 2nd Fleet in 2018 to protect the gap and, as recently as March 2025, Standing NATO Maritime Group 1 increased its patrols in the region.

I warn of danger

While NATO has prepared for Russian threats, a new risk closer to home is now emerging: the UK’s and Europe’s first vertical launch spaceport at Saxa Vord, Shetland. Ironically, this site was once an RAF early warning and air defence base during the Cold War, bearing the motto Praemoneo de Periculis, or “I warn of danger”.

Commercial space launches are still in their infancy, but recent incidents such as SpaceX’s launch failures – spreading debris across Florida and the Caribbean and grounding flights – and a Norwegian test rocket explosion highlight the risks. Saxa Vord itself attempted a rocket launch last August, resulting in an engine explosion. The international nature of space launches means that countries near Saxa Vord, especially Iceland, are directly in the path of up to 30 planned launches per year, four a month at peak, with ambitions to increase to 40 or 50 annually.

These launches pose multiple risks to Iceland and the GIUK gap:

• Rockets may enter Icelandic airspace, with first-stage returns falling through Icelandic airspace and into territorial waters.

• Catastrophic failures could scatter debris, whilst hazardous chemicals from rocket propellants threaten marine ecosystems.

• Rerouted transatlantic flights of up to 76 a day, according to Icelandic air traffic control’s ‘anonymous’ response to the CAA’s Saxa Vord licence consultation.

• Even more importantly and less scrutinised – the presence of exclusion zones for launches could undermine NATO’s ability to patrol the gap effectively.

Memorandum of Misunderstanding 

These risks are partly managed by a memorandum of understanding (MoU) signed between the UK and Iceland in July 2021. The MoU mandates the closure of designated Icelandic sea and airspace areas before launches and outlines some procedures for debris recovery. However, while a handful of Icelandic officials are aware of the implications, the broader political and media discourse in both countries has yet to grapple with the full defence and military ramifications of the impact of such numbers of launches into NATO’s strategic sea and airspace.

The current trajectory of UK space ambitions – and planned rocket launch from the UK – means the UK’s space ambitions could inadvertently undermine the very security framework that underpins Western interests in the North Atlantic and the Arctic.

There is an urgent need for both the UK and Icelandic governments to reassess the risks from Saxa Vord, ensuring that existing bilateral agreements align the UK’s space programme with enduring geopolitical realities and the security needs of NATO and its allies. Saxa Vord has to be a success – but upon the present strategy security triumphs space whilst Iceland is developing its own space strategy – which might well consider how launch capability could be nationalised to give greater control over risk.

Tyler Durden Wed, 05/21/2025 - 03:30

Tea Or Coffee?

Today, May 21 marks International Tea Day. 

With a global market valued at nearly $50 billion in 2023, tea is said to be the second most consumed beverage in the world. 

As the United Nations notes, the tea industry provides "a major source of income and export earnings for some of the poorest countries and, thanks to its high labor requirements, generates numerous jobs, particularly in remote and economically disadvantaged areas."

As Statista's Anna Fleck reports, Statista Consumer Insights surveyed 23 countries around the world to find out more about global tea drinking habits. 

It found that while tea was a popular choice for many respondents, coffee proved to be consumed by a higher share of adults in almost every country surveyed, save for Turkey, Morocco and India. 

 

You will find more infographics at Statista

In the United States a comparatively lower share of people said they drank tea (46 percent) or coffee (53 percent) regularly, while soft drinks were more popular (56 percent).

Tyler Durden Wed, 05/21/2025 - 02:45

How Hackers Can Control Your Phone With "Zero-Click" Attack

Authored by Chris Summers via The Epoch Times (emphasis ours),

In 2025, most people are inseparable from their laptops and smartphones. With that familiarity has come a wariness of the dangers of clicking on unsolicited emails, SMS, or WhatsApp messages.

But there is a growing menace called zero-click attacks, which have previously targeted only VIPs or the very wealthy because of their cost and sophistication.

Illustration by The Epoch Times, Shutterstock

A zero-click attack is a cyberattack that hacks a device without the user clicking anything. It can happen just by receiving a message, call, or file. The attacker uses hidden flaws in apps or systems to take control of the device, with no action needed from the user and the user remains unaware of the attack.

“Although public awareness has increased recently, these attacks have steadily evolved over many years, becoming more frequent as smartphones and connected devices proliferated,” Nathan House, CEO of StationX, a UK-based cybersecurity training platform, told The Epoch Times.

“The key vulnerability is in the software, rather than the type of device, meaning any connected device with exploitable weaknesses could potentially be targeted,” he said.

Aras Nazarovas, an information security researcher at Cybernews, told The Epoch Times why zero-click attacks usually target VIPs, rather than ordinary individuals.

“Since finding such zero-click exploits is difficult and expensive, most of the time such exploits are used to gain access to information from key figures, such as politicians or journalists in authoritarian regimes,” he said.

“They are often used in targeted campaigns. Using such exploits to steal money is rare.”

In June 2024, the BBC reported that social media platform TikTok had admitted that a “very limited” number of accounts, including those of media outlet CNN, had been compromised.

While ByteDance, the owner of TikTok, did not confirm the nature of the hack, cybersecurity companies such as Kaspersky and Assured Intelligence suggested it stemmed from a zero-click exploit.

“The part that requires high levels of sophistication is finding bugs that allow such attacks and writing exploits for these bugs,” Nazarovas said.

“It has been a billion-dollar market for years, selling zero-click exploits and exploit chains. Some gray/dark market exploit brokers often offer $500,000 to $1 million for such exploit chains for popular devices and apps.”

An attendee inspects the new iPhone 16 Pro Max during event at the Apple headquarters in Cupertino, Calif., on Sept. 9, 2024. Experts warn of a rise in zero-click attacks—cyberattacks that compromise devices without any user interaction. Justin Sullivan/Getty Images

Nazarovas added that while ordinary users have been hit in the past by zero-click ‘drive-by’ attacks. These are attacks that emerge after the unintentional installation of malicious software onto a device, often without the user even realizing it. They have become more infrequent with the growing gray market for such exploits.

House said zero-click exploits often seek out vulnerabilities in software and apps that are expensive to discover, which means the perpetrators are usually “nation-state actors or highly-funded groups.”

Expanded Spyware Markets

Although there have been recent innovations in AI that have made certain cyber crimes, such as voice-cloning or vishing, more prevalent, Nazarovas says there is no evidence yet that it has increased the risk from zero-click attacks.

House said people could use AI to “write zero-click exploit chains for people who would have otherwise lacked the time, experience, or knowledge to be able to discover and write such exploits.”

But, he said, the increase in zero-click attacks in recent years, “stems mainly from expanded spyware markets and greater availability of sophisticated exploits, rather than directly from AI-driven techniques.”

He said zero-click attacks have existed for more than a decade, the most infamous of which was the Pegasus spyware affair.

In July 2021, The Guardian and 16 other media outlets published a series of articles, alleging that foreign governments used the Israeli-based NSO Group’s Pegasus software to surveil at least 180 journalists and numerous other targets around the world.

Alleged targets of Pegasus surveillance included French President Emmanuel Macron, Indian opposition leader Rahul Gandhi, and Washington Post writer Jamal Khashoggi, who was slain in Istanbul on Oct. 2, 2018.

A woman checks the website of Israel-made Pegasus spyware at an office in Nicosia, Cyprus, on July 21, 2021. Pegasus has been tied to several high-profile international zero-click attacks in recent years. Mario Goldman/AFP via Getty Images

In a statement at the time, NSO Group said, “As NSO has previously stated, our technology was not associated in any way with the heinous murder of Jamal Khashoggi.”

On May 6, a California jury awarded WhatsApp’s parent company, Meta, $444,719 in compensatory damages and $167.3 million in punitive damages, in a privacy case against NSO Group.

The WhatsApp complaint was focused on the Pegasus spyware, which, according to the lawsuit, was developed “to be remotely installed and enable the remote access and control of information—including calls, messages, and location—on mobile devices using the Android, iOS, and BlackBerry operating systems.”

“While ordinary users can occasionally become collateral targets, attackers generally reserve these costly exploits for individuals whose information is especially valuable or sensitive,” Nazarovas said.

According to Nazarovas, corporations offer hackers ‘bug bounties’ to incentivize them to find these exploits and report them to the company, rather than selling them to a broker who then sells them on to parties who use them illegally.

Read the rest here...

Tyler Durden Tue, 05/20/2025 - 20:55

David Sacks' Lieutenant Explains The Real Reason Why Trump's AI Deal With UAE Is A Yuge Win For America

Sriram Krishnan, Senior White House Policy Advisor on Artificial Intelligence, joined the Monday edition of TBPN to explain why the U.S.-UAE AI Partnership is a strategic victory for the United States in its race to lead AI development against China, a perspective largely (and unsurprisingly) overlooked by mainstream media.

EXCLUSIVE: we asked @sriramk to break down the $600B deal announced last week by @WhiteHouse.

"We signed the first AI acceleration partnership. There are 3 critical components to this deal."

"First, this represents a large investment in US data centers and US AI infrastructure.… https://t.co/cL4RUfgTRV pic.twitter.com/8MRimP0rMg

— TBPN (@tbpn) May 19, 2025

SRIRAM KRISHAN: We signed the first AI acceleration partnership. You guys probably read about in the press, but there are probably three important components that just, I wanted to have the technology brothers have the alpha and the have the first group on that. The most important part, the first part, is that this represents a large investment in U.S. data centers and U.S. AI infrastructure. So these countries will be investing in U.S. AI infrastructure. To make them as equal, if not larger, than the data centers and infrastructure they're building back home. So this means, obviously a large infusion of capital revenue to data centers here in America. 

JORDI HAYS: That story was kind of lost. Right? I feel like a lot of the focus was on localized investment and infrastructure. 

JOHN COOGAN: To break it down in language that a venture capitalist could understand. This is something like what we're seeing with Stargate where there's a ton of capital forming and that's coming from SoftBank, but it's also coming from Middle Eastern investment funds and sovereign nations investing in American infrastructure. And then there's a whole host of companies that might come in the stack to actually build a new data center. Is that right?

SRIRAM KRISHAN: Exactly. You should be doing our talking points. I would say, look, these countries have AI ambitions, right? They want to buy American AI. They wanna buy our semiconductors. They want to buy our large language model. They want to use us. And so as a part of this deal, they're agreeing to a few things. The most important thing they're gonna agree to is that capital, like you mentioned, right? Like, and, and this is, by the way, net new. This is not part of any existing project. Sure. These net new deals will mean infrastructure being built out physically in the US.

So for example, if they build out X megawatts of gigawatts of capacity, yep. This will mean the same X megawatts of gigawatts of capacity in the US, and this is an important point. Because some of the chatter has been, Hey, how does America maintain its lead? Well, one of the ways we maintain our lead is everything that is being built up by our allies. We get a matching deal back home. So that's probably the number one headline.

The second headline would be that the vast majority of the GPUs that are as a part of this deal, which is gonna be, say, hosted in the UAE, will be hosted, run, operated by American hyperscaler companies, right? And so, you probably know them all, right? These would be large American companies who. They will be running it, hosting it, maintaining, and this is actually important because this represents an expansion opportunity for all of our companies. This means they would get to win market share away from competition from other countries. And obviously there's a whole huge amount of revenue and ecosystem coming in. And so that's the second key point, the vast majority of the GPUs are going to be run by American companies, often by a lot of our friends in these large, uh, you know, hyperscaler companies.

And the third point, and this is, again, something just lost in the chatter, is I'm sure you've heard questions about, Hey, how do we make sure these GPUs, you know, don't get to somebody they don't need to be. So there are rigorous security protocols in place, so every GPU gets shipped over. We are gonna make sure that, a., they can't be physically diverted. These are really large boxes. You can't hide them under your t-shirt or your tux and kind of stick them out the door. You can't really go George Clooney Oceans 11 on them. So one is there's going to be a large amount of physical verification and physical security protocols.

The second is remote access. We are gonna make sure through these deals, through the framework that nobody who's not supposed to have access, especially from countries of concern, can get access.

And so these three kinds of the core pillars, and here's why this event, right? And I think everybody in your audience who's like a technology person, a technology brother, or in the software world, here's why they'll understand it. What has history taught as a software industry? The company with the biggest network effect, the biggest ecosystem wins, right? We've all grown up with Microsoft. How did Microsoft win with the Windows and Office ecosystem? Think about this as the American AI ecosystem.

We are getting these resource-rich countries who are critical allies in very interesting geopolitical places to basically adopt the American AI stack, right? Up and down. This means they are going to be part of our ecosystem for years and decades to come, and it essentially forms a shield from them ever adopting or using technology or working closely with some people that we don't want them to work with. In a way, I kind of think of this like a software ecosystem play, where we now have them tied to the American AI ecosystem.

 

Tyler Durden Tue, 05/20/2025 - 20:30

Trump Unveils $175 Billion Plan For "Golden Dome" Missile Defense System

By Ryan Morgan of Epoch Times

The Department of Defense has selected a design for President Donald Trump’s “Golden Dome” missile defense initiative, Trump announced on May 20.

“I’m pleased to announce that we have officially selected an architecture for this state-of-the-art system that will deploy next-generation technologies across the land, sea, and space, including space-based sensors and interceptors,” Trump told reporters at the White House.

In his first week in office, Trump signed an executive order directing the Department of Defense to devise a plan to implement his missile defense proposal.

“It should be fully operational before the end of my term. So we'll have it done in about three years,” the president said.

Trump said the plan the Department of Defense has selected should cost about $175 billion to complete.

The plan will meld new technologies with existing U.S. missile defense systems.

Canada may also partner with the United States to help develop the improved missile defense shield, the president said. “Canada wants to be a part of it, which would be a fairly small expansion, but we'll work with them on pricing.”

In addition to new and improved space-based sensors and interceptors, Trump’s January executive order called for the Department of Defense to consider non-kinetic missile interception technologies such as lasers.

The order also tasked the department with examining methods and technologies for intercepting missile threats before they can launch, or in their initial boost phase.

Standing beside Trump during the Oval Office announcement, Secretary of Defense Pete Hegseth noted the parallels between Trump’s missile defense proposal and the Strategic Defense Initiative put forth by President Ronald Reagan in the 1980s.

Reagan’s Strategic Defense Initiative included a number of aspirational missile defense concepts, and some critics referred to it as Reagan’s “Star Wars” proposal.

“President Reagan, 40 years ago, cast the vision for it. The technology wasn’t there. Now it is, and you’re following through,” Hegseth told the president.

Congressional Republicans have put forth a $150 billion supplemental military spending package, with about $25 billion set aside to kickstart the Golden Dome project. The $150 billion defense spending plan is one piece of a larger bill that Trump and his allies are hoping to pass through the reconciliation process, avoiding a potential Senate filibuster.

Trump expressed confidence that the reconciliation bill will pass.

“We’ve already spoken to everybody that we have to speak to,” he said.

“Everybody’s in line.”

Adding to his Golden Dome announcement on Tuesday, Trump named Gen. Michael Guetlein, vice chief of space operations for the U.S. Space Force, as the program manager for the project.

Trump said Guetlein is “one of the most respected people in the world, having to do with defense.”

Tyler Durden Tue, 05/20/2025 - 20:05

US Veteran Freed From Venezuelan Prison After Latest Trump Diplomacy With Maduro

In another diplomatic win for the Trump administration, a US Air Force veteran unlawfully imprisoned in Venezuela has been released on Tuesday, following secret talks with President Nicolás Maduro's representatives and Trump's special envoy Ric Grenell.

Joseph St. Clair, a 33-year-old combat-disabled veteran, had been detained in Venezuela since November, and was one of nine Americans declared by Washington as 'wrongfully detained'.

Images source: the St Clair family/770 KTTH Conservative Talk Radio

"This news came suddenly, and we are still processing it — but we are overwhelmed with joy and gratitude," parents Scott and Patti St. Clair said.

Few initial details of his release or the terms of any possible deal or incentives offered Maduro have not been forthcoming. However, Grenell's talks with Venezuelan officials, reportedly in Antigua, likely focused on both oil and the migrant crisis.

Conservative news outlet Newsmax says it "learned that Grenell and Treasury Secretary Scott Bessent on Tuesday extended the waivers for U.S. companies' oil licenses in Venezuela by 60 days."

Clearly the Maduro government is ready to engage in top-level negotiations with Washington, in hopes for sanctions relief, and in return it is likely also willing to take back migrants.

According to background on St. Clair's arrest last year:

Air Force veteran Joe St. Clair, their 33-year-old son, was traveling as a tourist near the Venezuelan border in October 2024 when he and a friend from Colombia were arrested by Venezuelan authorities, who transported them across the border to a Venezuelan prison, his family said. “We learned that Joe decided to take a trip near the border with one of his friends to visit [the friend’s] family member and got too close to the border and got abducted by the Venezuelan police,” Scott St. Clair explained.

“They were shaken down, questioned and searched. All their possessions were taken.” St. Clair said he was told the border is “fluid,” and that Venezuelan authorities detain Americans as bargaining chips to gain leverage against the U.S. to ease restrictions placed on the country. Joe is a linguist who served as a tech sergeant in the Air Force until 2019. He was honorably discharged after nine years of service, his family said.

He had actually been deployed on four combat tours in Afghanistan. It's unclear whether the two travelers were inside Venezuelan territory or not.

This follows an initial big release of six Americans from Venezuela back in late January...

Venezuela frees 6 Americans after meeting between President Maduro and Trump’s envoy https://t.co/ZUdtlS1M20 pic.twitter.com/cc8nqhnc7O

— New York Post (@nypost) February 1, 2025

St. Clair's parents had been very active in public lobbying for his freedom, calling on President Trump to "act now to save Joe and his fellow captives" at various events and rallies, including in D.C.

Trump has of late been emphasizing a foreign policy message of peace through strength and dealmaking and diplomacy, as opposed to the chaos of proxy wars and conflict.

Tyler Durden Tue, 05/20/2025 - 19:40

Experts Warn Trump's "Big Beautiful Bill" Could Codify Big Land Grabs

Agricultural advocates and lawmakers are sounding the alarm this week, as section 41001 of the proposed Budget Reconciliation Act (the Big Beautiful Bill) contains language that would centralize local authority to the federal government regarding land use and land expropriation.

Property rights are under attack again.

A House Energy and Commerce proposal for the budget reconciliation bill would override state laws that protect landowners’ private property rights from being taken by Green New Deal carbon sequestration pipeline companies.

The proposal… https://t.co/FWKqiaVwbe pic.twitter.com/wakjgv3d4D

— Speaker Jon Hansen (@SpeakerHansen) May 14, 2025

Beginning under the Biden administration's Federal Plan for Equitable Long-Term Recovery and Resilience (ELTRR), funding from the Inflation Reduction Act (IRA) and the USDA credit line, known as the Commodities Credit Corporation (CCC), were allocated to ideologically aligned Non-Governmental Organizations (NGOs). 

Using contract law, NGOs were then tasked with creating a carbon market and strategic buyout programs for federally funded public-private land acquisitions—entered into as an agreement structure with local municipalities—to facilitate the Green New Deal.  

Carbon capture has captured Farm Credit, and could soon capture lands across America's Heartland.

Amid a flurry of administrative rule changes, the Biden administration prioritized government-backed Farm Credit lending for rural utilities. Reallocating parts of the USDA's Rural Development budget, the Biden administration attracted "eligible organizations" to "invest in renewable energy infrastructure and zero-emission systems," to "significantly reduce greenhouse gas emissions."

Simultaneously, as part of the ELTRR's "whole-of-government" approach; the Environmental Protection Agency (EPA) exempted certain "Green Energy" infrastructure projects, such as solar and carbon capture from Environmental Impact Studies, while 45Q tax credits promised billions in government subsidies, and agencies eased land acquisition regulations for "Federally Assisted Programs."

This coalescence created a proverbial gold rush. Suddenly, private equity firms like Blackrock and Vanguard quickly began backing projects for Carbon Sequestration infrastructure, such as the 2,500-mile C02 pipeline project spanning five states. 

Now, as Congress works to immediately halt IRA funding and reign-in the "whole-of-government," state lawmakers and agricultural advocates warn the cure could exacerbate the disease.

According to Amanda Radke, a fifth-generation cattle rancher who has fought against giving private corporations eminent domain power in South Dakota, "this proposal would open the door for federal overreach and eminent domain abuse, especially with the $10 million price tag to fast-track these projects."

"I'm deeply concerned that the current proposal for the budget reconciliation bill will grant centralized federal authority over the permitting of carbon dioxide pipelines," Radke said. "This Green New Deal has held America hostage for far too long, and it's time for Congress to cut ties with this boondoggle once and for all. Landowners across the nation are calling for Congress to cut wasteful spending, halt the subsidies of the IRA like the 45Q tax credit, and protect our private property rights." 

S.D. landowners have also found a fierce advocate in Speaker of the House, Rep. Jon Hansen. Hansen, who is now running for Governor,  and running-mate Rep. Karla Lems, have led the charge to protect private property rights in the State of South Dakota. 

However, according to Hansen, these hard-won efforts could now be a moot point. 

"President Trump has made it very clear that he wants to end the Green New Deal scam. In spite of that, politicians in Washington are trying to sneak a provision deep in the budget bill that would override the hard-fought protections that we have put into place for farmers, ranchers, and land owners in South Dakota," Hansen told ZeroHedge.

While GOP leadership has made quiet promises that the bill will be amended, an updated draft has yet to materialize prior to Wednesday's vote. A fact that isn't sitting well with Radke or Hansen.

"While we've been told this language would be cut on Wednesday morning, farmers and ranchers are waiting for reassurance from Congressional leaders that our land is, in fact, not for sale to the highest bidder," Radke said. 

For Hansen, however, anything short of killing this section, will be considered an absolute failure.

"All members of Congress must reject this proposal," Hansen said. "Anything short of killing the land grab proposal and totally defunding the 45Q tax credit is an absolute failure to deliver on ending the green new deal scam and a failure to defend our peoples' constitutional rights."

Tyler Durden Tue, 05/20/2025 - 18:50

Israel Preparing Possible Preemptive Attack On Iranian Nuclear Facilities: US Intelligence

Update(1830ET): At a moment it has become very clear that Netanyahu could care less about 'pressure' from Western allies the US, UK, and Canada, there are breaking reports Tuesday evening that a preemptive Israeli attack on Iran's nuclear sites could be imminent. According to CNN:

The US has obtained new intelligence suggesting that Israel is making preparations to strike Iranian nuclear facilities, even as the Trump administration has been pursuing a diplomatic deal with Tehran, multiple US officials familiar with the latest intelligence told CNN.

Such a strike would be a brazen break with President Donald Trump, US officials said. It could also risk tipping off a broader regional conflict in the Middle East — something the US has sought to avoid since the war in Gaza inflamed tensions beginning in 2023.

The same report underscores that no 'final decision' has been made yet, and this is perhaps another ploy by the Israelis to show the West and the Mideast region that it means business, in the wake of "Israel's 9/11" - the Oct.7, 2023 Hamas terror attacks. 

The late in the day headline resulted in an immediate spike in oil prices... 

* * *

The United Kingdom on Tuesday suspended its free-trade agreement negotiations with Israel over the growing Gaza crisis, and after British Prime Minister Keir Starmer expressed disgust at newly expanded Israeli military operations in the Gaza Strip, also as famine threats at least 500,000 Palestinians.

Starmer described that he and his French and Canadian counterparts are "horrified" by the Netanyahu government's escalation in Gaza. This also comes as international headlines and warnings grow more dire. For example Al Jazeera has the following new headline: "Starving Palestinians resort to eating animal feed, flour mixed with sand".

"We repeat our demand for a ceasefire as the only way to free the hostages, we repeat our opposition to settlements in the West Bank, and we repeat our demand to massively scale up humanitarian assistance into Gaza," Starmer told parliament.

David Lammy with Israeli President Isaac Herzog, via GPO

A Monday joint statement by the UK, France and Canada had threatened sanctions on Israel. Britain further did slap targeted sanctions on Israeli settler groups and individuals. 

Later on Tuesday, Foreign Secretary David Lammy voiced agreement with Starmer, saying that Israel’s actions are "morally wrong" and "unjustifiable." He also said of the fresh sanctions, "I have seen for myself the consequences of settler violence. The fear of its victims. The impunity of its perpetrators."

In announcing the pause in free-trade agreement negotiations, Lammy further revealed that the Israeli ambassador had been summoned. Britain is reportedly demanding the full resumption of humanitarian aid deliveries to the Gaza Strip.

Responding to shadow foreign secretary Priti Patel, Lammy told parliament:

I think the whole house should be able to utterly condemn the Israeli government’s denial of food to hungry children. It is wrong. It’s appalling.

Opposing the expansion of a war that has killed thousands of children is not rewarding Hamas. Opposing the displacement of 100,000s of civilians is not rewarding Hamas. On this side of the house, we are crystal clear that what is happening is morally wrong, unjustifiable, and it needs to stop.

Starting Friday the Israel Defense Forces (IDF) announced an expanded mobilization of troops for operation 'Gideon's Chariots'. Some two million Palestinians are expected to be forced into a "humanitarian zone" while most of the enclave is destroyed and flattened.

The policy somewhat contradicts Trump's main messaging during last week's Gulf tour, wherein he emphasized peace through deal-making, and not 'chaos' in the war-torn Middle East. 

This is probably the most pressure Israel has come under from its Western allies since Oct.7, 2023. As we previously reported, even Vice President JD Vance abruptly canceled a planned trip to Israel following the Netanyahu government's declaration that it would ramp up operations to conquer all of Gaza.

Meanwhile the domestic policy fight within Israel has been ramping up too...

Yair Golan, an IDF major general and leader of Israel’s Democrats Party, said Monday that Israel is killing babies as a hobby:

“A sane country does not wage war against civilians, does not kill babies for a hobby, and does not set goals involving the expulsion of populations.” pic.twitter.com/NofvIAdNW9

— Dave DeCamp (@DecampDave) May 20, 2025

Axios had written that "The US official said Vance made the decision because he didn't want his trip to suggest the Trump administration endorsed the Israeli decision to launch a massive operation at a time when the U.S. is pushing for a ceasefire and hostage deal." 

Neither the US nor UK have every fully cut funding or arms transfers to Israel for any reason, and are unlikely to ever escalate to that point, no matter how tense relations become.

Tyler Durden Tue, 05/20/2025 - 18:33

After Credit Downgrade, Maryland's Leftist Governor Torpedoes Reparations Bill To Avoid Political Blowback

The optics are grim for far-left Maryland Governor Wes Moore. As the state grapples with a fiscal crisis (deficit explosion), a credit downgrade, illegal alien invasion, violent crime, the looming threat of resident and business flight, a potential tsunami of new taxes, and a worsening power crisis, Moore is facing a growing backlash from all Marylanders. His ability to lead is increasingly being questioned—and it's becoming clear he's far from presidential material.

Moore has managed to anger both sides of the political aisle. The latest outrage comes from within his own party after he vetoed a bill that would have established a state commission to study and recommend reparations for African Americans affected by slavery.

In a letter explaining his decision, Moore said it's not the time for another study, emphasizing the need for direct action to address racial disparities such as the wealth gap, homeownership, education, and food insecurity.

"I will always protect and defend the full history of African Americans in our state and country," Moore wrote in his letter, adding, "But in light of the many important studies that have taken place on this issue over nearly three decades, now is the time to focus on the work itself: Narrowing the racial wealth gap, expanding homeownership, uplifting entrepreneurs of color, and closing the foundational disparities that lead to inequality — from food insecurity to education."

He continued: "We have moved in partnership with leaders across the state to uplift Black families and address racial disparities in our communities. That is the context in which I've made this difficult decision. Because while I appreciate the work that went into this legislation, I strongly believe now is not the time for another study. Now is the time for continued action that delivers results for the people we serve."

Moore's rationale—more likely crafted by his advisors—appears rooted in political optics. These far-left redistribution programs are so detached from capitalist principles and Western values that they risk being deeply unpopular, especially at a time when Maryland's finances are unraveling after decades of Democratic overspending and an economy overly dependent on government funding.

We suspect Moore's veto has also angered hardline Marxist Democrats in the state, who continue to push for socialist systems that redistribute wealth from the productive to the less productive. Under the current leadership of activist progressives, Maryland is on a death spiral—and it's not us saying this—but some leaders of some of the largest companies that operate in the Baltimore area have told us this.

With Democrats furious over Moore's veto of the reparations bill, the governor has now managed to infuriate both sides of the political aisle.

The Maryland Legislative Black Caucus was not pleased with Moore: 

"The state's first black governor chose to block this historic legislation that would have moved the state toward directly repairing the harm of enslavement."

Meanwhile, Maryland's financial outlook continues to deteriorate, with a $3 billion budget shortfall looming—likely paving the way for new taxes and triggering yet another wave of resident flight.

It just keeps getting WORSE

Maryland has now LOST its prized AAA bond rating from Moody's. Add that to the growing list of what Maryland has recently lost.

- FBI Headquarters
- Washington Commanders
- IonQ’s quantum computing hub
- Six Flags America

What will be next?

— Chris Papst (@chrispapst) May 15, 2025

A large asset manager based in Baltimore told us earlier this year that they had advised clients to leave the state before the impending tax tsunami and to avoid purchasing Maryland municipal bonds due to the high risk of a credit downgrade.

And last week, Maryland's financial credit profile deteriorated, for the first time in decades—after Moody's downgraded the state's creditworthiness to Aa1 from AAA.

Since 1973, Maryland has maintained a top-tier credit rating, long seen as a reflection of fiscal discipline and responsible governance. However, far-left Democrats in Annapolis have chosen to run deficits to fund their progressive pet projects. This credit downgrade puts Maryland on the disastrous pathway toward becoming "Illinois 2.0."

“I think it’s disgraceful that we’re going to set up a reparations tax that might tax one race and give to another race all in the name of equity,” Matthew Morgan, a Republican delegate, said in April before voting against the bill.

Epoch Times noted, "Some lawmakers also took issue with the bill's broad language, which gave the proposed commission wide discretion in defining eligibility. They warned that, in theory, this could extend benefits to millions of people across the United States or even the world, costing billions of dollars."

Perhaps Moore should take some personal time—maybe at the upscale Caves Valley Golf Club, where sources say he is a member—and reflect on his state strategy while paying a round of golf. With crises piling up well before Trump's second term began, Moore has yet to demonstrate strong leadership Maryland needs.

Tyler Durden Tue, 05/20/2025 - 18:00

Working Out Is Right Wing, And That's A Good Thing

Authored by Braeden Sorbo via American Greatness,

The media has a new villain: fitness...

According to recent articles, engaging in physical exercise is now linked to right-wing extremism. 

The narrative suggests that lifting weights, building discipline, and taking responsibility for your body are somehow dangerous acts. The Guardian claims that getting in shape could turn you into a “right-wing jerk,” while TIME runs pieces on “the white supremacist origins of exercise.” MSNBC warns that during the pandemic, workout trends ended up leading to “extreme” ideologies.

Seriously? Can we just stop with the nonsense?

I’ll tell you the real reason fitness is under attack. It breeds autonomy. And autonomous men are a threat to systems built on dependence and compliance.

Allow me to be controversial: physical strength and mental resilience are connected. According to a 2022 study published in Frontiers in Psychology, individuals who maintain regular physical activity demonstrate significantly higher psychological resilience and lower levels of anxiety and depression. When you commit to training your body, you’re also training your mind. You’re learning delayed gratification. You’re becoming comfortable with discomfort. You’re developing the backbone to say no—to weak ideas, to bad leadership, to mob thinking. In other words, weak people are agreeable, which is exactly what the government wants.

Testosterone plays a central role in this. Individuals with higher levels of testosterone flowing through their bodies are more likely to question authority and even think for themselves. A 2015 review in Biological Psychiatry explained that testosterone influences areas of the brain involved in motivation, emotional regulation, and social behavior, helping men navigate challenges with clarity and confidence.

But wait, there’s more! Another study in PNAS (2019) directly debunked the myth that testosterone reduces empathy, showing no evidence that it impairs cognitive empathy at all. Translation: Higher testosterone doesn’t make you a bad person. It makes you sharper, more focused, and more prepared to lead.

So why the war on fitness? Because fit, strong, disciplined men are harder to control.

They don’t break down from online shaming. They don’t beg bureaucracies for handouts. They know how to fight—metaphorically and literally—and that makes them dangerous to anyone trying to neuter society. As Jordan Peterson once said, “A harmless man is not a good man. A good man is a very, very dangerous man who has it under voluntary control.”

When you’re physically able to defend yourself, you become dangerous—in the best way. The world thrives on intimidation. That’s why so many people—especially young women—go along with destructive ideas like abortion or men in women’s sports. Deep down, they know something’s off. But fear keeps them quiet. Now take a man who’s strong, capable, and confident—traits often earned through training—and you have someone who can’t be bullied into submission. He doesn’t fold under pressure. He doesn’t need the world’s approval because he knows he can stand on his own.

Without the ability to defend yourself, you stop forming your own opinions. You become agreeable out of survival instincts. Weakness breeds obedience. What’s been labeled as toxic is actually essential. Without strength, there is no freedom. And without testosterone, there is no original thought—just borrowed scripts and empty slogans. The stronger the body, the more stable the mind. The more you train your limits, the less likely you are to break under pressure.

Socially, the story is the same. Parenthood and family responsibility—things once considered pillars of adulthood—are now “conservative red flags.” But the data says otherwise. A 2022 study published in the National Library of Medicine found that becoming a parent consistently predicts a shift toward more conservative values across different cultures. Why? Because raising a child forces you to care about things that extend beyond yourself.

So yes—men who lift, who lead, who protect—are more likely to value tradition, reject chaos, and push back against cultural decay, and that’s a good thing.

If being physically fit, masculine, and protective lands you on a government watchlist, maybe it’s the government that should be watched. If being strong, loyal, and self-reliant makes you “right-wing,” maybe being right-wing just means you haven’t lost your mind.

The gym isn’t just about vanity and lifting big things. It’s about whether you can defend your home when the need arises. It’s about your son learning to lead, not obey. It’s about your daughter growing up knowing someone strong has her back.

So if working out makes you a right-wing extremist, then we need more gyms.

Tyler Durden Tue, 05/20/2025 - 17:40

NH's First Black Sheriff Jailed For Blowing Public Money On Travel With Women

A New Hampshire man who was heralded as the first black sheriff in the state's history was sentenced on Monday to 3 1/2 years in prison for squandering $19,000 of taxpayers' money on expensive getaways with multiple love interests -- and then lying to investigators about what he'd done. Tightly following the script we've seen so many times before, the disgraced "barrier-breaker" had previously said fellow Democrats who investigated his crimes were racists, and that his term in office was "rife with inequities." Despite repeatedly lying to the court and violating his bail conditions, his sentence was a fraction of what prosecutors sought. 

At 35 years old, Democrat Mark Brave was also the youngest-ever sheriff in New Hampshire history when he was elected in November 2020 -- following the summer of George Floyd and amid the Black Lives Matter mania that swept the country and helped usher under-qualified blacks into many top roles in and out of law enforcement. "It’s something I feel should have happened a long time ago, but I’m honored that I will be the person to pave the way,” said Brave at the time. (Alas, some barriers proved insurmountable that year, as a self-described transgender Satanist lost the Cheshire County New Hampshire sheriff race.) 

pic.twitter.com/2cDFI1Tid9

— Daniel Concannon (@TooWhiteToTweet) May 19, 2025

“His repeated lies, misuse of taxpayer funds, and abuse of office were not just criminal — they were a profound betrayal of the public trust and the oath he took to serve with integrity,” said New Hampshire Attorney General John Formella in a statement. That said, the sentence handed down by lily-white Judge Dan St. Hilaire was far lighter than the seven- to 14-year confinement that prosecutors had requested. Brave will technically be eligible for parole in 3 1/2 years, but the reality is that he'll walk even sooner if he participates in certain prison programs. He must pay $18,969 in restitution to Strafford County. 

Mark Brave was led out of the courtroom in handcuffs (WMUR)

The judge's leniency was at odds with his characterization of Brave's conduct. “The court has reviewed a record that has been unlike any other case that has come before it, mainly because of the continuation of the crimes that were being committed while the case was proceeding." The judge was apparently referring to Brave's: 

• Lying to the grand jury
• Lying on his application for public defense by failing to disclose $1.5 million received on the sale of his home
• Violating his bail conditions by paying $52,000 to lease an apartment in Boston, when he was mandated to remain in New Hampshire; he also traveled to Florida and Puerto Rico
• Lying to the judge, saying he was living in Dover with his ex-wife and that he was out of money
• Failing to disclose his purchase of a 1968 Porsche, though he posted videos and photos of the vehicle to social media

Brave went wild with his county credit card, using it to fund multiple trips to destinations in Florida, Baltimore and Maryland for getaways with various women -- with at least some of the trysts happening while Brave was married. He attempted to conceal his misuse of funds by attributing the travel to fictional business meetings and training sessions. He also lied to investigators and a grand jury. Some of his lies were exposed by hotel lobby security cameras that captured him in the company of women on trips where he claimed to have been traveling alone.      

Brave created an entirely-new job in his department for longtime "friend" Freezenia Veras -- then jetted off to Florida with her using a county credit card (NH Journal)

Brave's misconduct started to unravel when an audit prompted an inquiry into JetBlue tickets purchased for a 2022 trip to Fort Lauderdale. Not content to merely steal public money, Brave opted for JetBlue's pricey "EvenMore" package, with the pair of tickets costing $1,615. Defending the expenditure, Brave said he needed the extra room because he's 6' 2" tall, and claimed he'd traveled with a "well-built, muscular" deputy. Investigators found, however, that he was traveling with female employee.

In another comical instance in which he was caught in a lie about a supposed business trip with a colleague, County Administrator Raymond Bower asked Brave why the hotel room only had a single king-bed. "There was a slight pause, and he said, “Oh, aw, the other person slept on the couch,” Bower said in an affidavit.  He also lied about spending money on business meals associated with meetings with the completely fictional "New England Sheriff's Association." 

He also installed a friend, Freezenia Veras, in a newly-created $80,000 job, and jetted off to Florida with her for a non-existent consultation with a law enforcement agency. In one of his many lies to a grand jury, Brave denied that he took another woman on a dinner cruise using his county credit card. When prosecutors whipped out a photo of Brave and the woman, he hilariously couldn't come up with her name: "Her name, her name is … um … let me see, I forget which one this is. I’ve been dating a lot of people,” he told the grand jury, according to NH Journal. 

Brave used public money for his trip to visit Kenisha Epps-Schmidt -- then talked her into giving him $2,300 for a used-car purchase he never made (NH Journal)

Brave also traveled to Maryland to spend time with Kenisha Epps-Schmidt, whom he'd met online. He tried papering over that embezzlement by attributing the trip to a Washington DC meeting with Rep. Chris Pappas that never happened. Brave proceeded to cheat Epps-Schmidt out of $2,300 she gave him to buy a car -- which he never did.   

Add it all up, and we have another low-IQ miscreant advanced to a position of authority because he had the right skin color. That's bad enough, but the black-catering madness carried over over to his sentencing, as a white Republican judge ensured a short stay in prison despite the black defendant's profound and repeated contempt for the criminal justice system all throughout the adjudication of his crime.   

As part of his plea deal, Brave is barred from seeking a law enforcement job during his post-confinement probation. That still leaves him in prime position to become the boyfriend of a leftist congresswoman or a progressive NGO executive and take a salary for providing "security consultant" services. Just axe former Rep. Cori Bush or Black Lives Matters Global Network Foundation co-founder Patrissee Cullors how it works.  

*  *  *

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Click hat... add to cart... check out... receive awesome hat... Tyler Durden Tue, 05/20/2025 - 16:40

Boomers, Let's Face It: The Math Doesn't Work

Authored by Charles Hugh Smith via OfTwoMinds blog,

There are many consequential things we can't discuss factually because the topic upsets everyone. And since getting upset shuts down any direct discussion of difficult issues, these issues metastasize into problems that end up sinking the ship.

The Titanic has already struck the iceberg and is doomed, but since this upsets the passengers, we dance around the facts rather than take immediate action. Everything about the situation is upsetting, and so emotions dominate the zeitgeist: resentments, blame-game, accusations, the whole self-reinforcing dynamic leads to people shouting at others as they drown. The last word, indeed.

Federal deficit spending and the overweighting of entitlement spending on retirees is too upsetting to discuss factually, so we don't. But the math doesn't work, and so the ship will sink. This was obvious 20 years ago, when I posted this: Boomers, Prepare to Fall on Your Swords (June 2005), in which I suggested that well-off Boomers address the problem by gracefully making the necessary sacrifices rather than heap them on the younger generations.

It was even more obvious by 2013, when I posted this: Generation X: An Inconvenient Era (May 23, 2013), in which correspondent Eric A. explains how the math doesn't work.

Let's start with some necessary stipulations. When I suggest well-off Boomers accept the need to make sacrifices to save the ship from sinking, I suggest this as someone in this cohort.

I am a Boomer, drawing my Social Security benefit, which like my lifetime income, is close to the national median SSA benefit. I'm solidly in the middle of the pack. Being over the age of 65, I also have Medicare benefits. Like many others of my generation, I've lived frugally, saved money, worked hard, etc. Since I'm still working, I pay Social Security and Medicare taxes--15.3% of all earned income as I am self-employed.

Unlike others in my generation, I attribute only a modest percentage of my net worth to frugality and working hard, as the majority of whatever "wealth" I own is the direct result of the hyper-financialization credit-asset bubble that's been inflated since 2007.

Those who were able to buy assets such as houses and stocks decades ago saw their net worth rise to extraordinary heights in the bubble. Those who didn't or couldn't buy assets before the bubble did not see their net worth rise to extraordinary heights.

Let's go over how we got here. The current federal tax system and retiree benefits evolved in the 1930s to the mid-1960s. In the 1930s, retirement meant poverty for many workers who were unable to save a nestegg large enough to fund their no-earnings years. Social Security was enacted as a way of using the SSA taxes paid by current workers (1% of wages in those days) to fund a modest retirement income for retirees.

Social Security was always a pay as you go system. Whatever SSA tax revenues that weren't distributed piled up in a Trust Fund. This Trust Fund was eliminated in the mid-1960s, and excess SSA taxes went into the federal general fund. The current Trust Fund is a useful fiction. When SSA runs a deficit, the Treasury funds the deficit by selling Treasury bonds, just as it does with all other deficit spending.

Political realities demanded that the program be universal to attract widespread support. So millionaires collect Social Security and Medicare benefits, too. As SSA's financial foundations erode, a modest reform was enacted: above a modest income, 50% of SSA benefits are taxed as regular income.

Back when the program was enacted, there were around 10 workers for every retiree. The demographics and economy were different then. The economy was mostly domestic, and the bubble of the 1920s had popped. Financialization and globalization were at low ebb. Everyone assumed there would always be 10 workers for every retiree.

But people started living longer, the disabled were added to Social Security, and Medicare ballooned from a modest program to an open-ended spending juggernaut. In other words, the economy changed, demographics changed, but the system has not been changed to reflect these realities. SSA and Medicare taxes have increased dramatically, but these programs are still funded by payroll taxes paid by employees and employers.

Capital (assets, income from capital gains, speculation and investments) only pays a thin slice of Medicare via the Net Investment Income Tax (NIIT) on capital gains incomes above $200,000 for single taxpayers and above $250,000 for couples filing jointly.

What we're actually discussing isn't just generational; it's 1) the open-ended nature of the Medicare and Medicaid programs, 2) the impossibility of relying on two workers to pay all the benefits for each retiree as the number of retirees and beneficiaries exceeds 69 million people while the full-time workforce is 135 million, and 3) the extraordinary wealth divide in the U.S. where the majority of the wealth is held by the top few percent and the retiree generation (Boomers) for the reasons stated above.

The solutions are as obvious as plugging a hole in the ship's hull.

1) The tax burden has to be shifted from labor to capital via financial transaction taxes and ending the multi-trillion dollar exclusions on capital gains.

2) Social Security and Medicare benefits must be means tested; those collecting $10,000 a month in other pensions and investment income don't need Social Security benefits, which should be reserved for those with no other substantive source of steady income in their retirement years.

3) The open-ended entitlement programs must be limited in some fashion, and there is no way to do this that will not upset everyone. Hard choices--triage--must be made, as doing nothing is choosing to let the ship sink.

Let's feast on the facts of the matter. Those who need a calming agent, please do so now.

Here's household/non-profit net worth. The household sector has a net worth of $160 trillion. Notice that the total is far above the inflation rate. This is a credit-asset bubble on steroids.

Here is total debt. Borrow a bunch of money into existence and dump it into financial speculation, and voila, a debt-fueled asset bubble for the ages.

Here is total public debt. Is a parabolic rise really sustainable? No, the math doesn't work, especially as interest rates rise: the debt costs nothing to service at 0%, but the interest payments are huge at 4%.

Apologists love to attribute the debt to inflation or "growth," but that's misdirection. As a percentage of the nation's GDP (gross domestic product), the debt has risen 4-fold since president Reagan shepherded Social Security reforms in the early 1980s, and doubled as a percentage of GDP since 2007, before the Federal Reserve bailed out the status quo with hyper-financialization.

Here is a pie chart of federal spending. Social Security, Medicare and Medicaid are 44%. Toss in the other mandatory spending--a big chunk of which is interest paid on federal debt--and there's not much left to cut. The reality is there is no way to slow the runaway debt train without tackling open-ended retirement / healthcare programs.

The vast majority of projected growth in federal spending stems from these programs and the interest paid on funds borrowed to fund them. Unfortunately, these facts don't disappear because we don't like them.

Boomers hold the majority of net worth. So it follows that increasing taxes on capital will impact the Boomers who are wealthy--and younger folks who are wealthy, too, of course.

It's interesting how debt and the net worth of the top 1% have soared in tandem. Could it be that soaring debt-asset bubbles have benefited the top 1% far more than the debt bubble has benefited the bottom 50%? And if that's the case, then what does this suggest in terms of saving the ship from sinking?

The passengers on the Titanic arguing with each other can't stop the ship from sinking by "winning the argument." Silencing those willing to discuss the issues factually doesn't actually make the factual realities go away.

Those of us who run businesses / are self-employed don't have the luxury of not dealing with financial realities. Triage comes with every enterprise. We need a national discussion of triage that doesn't immediately degrade into denial or histrionics. And no, AI and stablecoins aren't going to make all this go away, any more than hoping the Central Bank of Mars will emerge to give us a 36 trillion-quatloo bailout.

Boomers--and Gen X, Millennials, Gen Z--let's face it: the math doesn't work. Triage means sacrifices will have to be made and distributed to those most able to afford them to spare those least able to afford them. The ship is not just taking on water; it's loaded with third rails and sacred cows that can't be touched, and so it's doomed to sink if we do nothing.

Tyler Durden Tue, 05/20/2025 - 16:20

No Trial Data, No Vax: FDA Demands Gold Standard Testing For Any New COVID-19 Vaccines

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The Food and Drug Administration (FDA) will not approve COVID-19 vaccines for many Americans absent trial data showing that the benefits outweigh the risks, top agency officials said on May 20.

Dr. Marty Makary, commissioner of the Food and Drug Administration, in Washington on May 5, 2025. Anna Moneymaker/Getty Images

“Moving forward, the FDA will adopt the following Covid-19 vaccination regulatory framework: On the basis of immunogenicity—proof that a vaccine can generate antibody titers in people—the FDA anticipates that it will be able to make favorable benefit–risk findings for adults over the age of 65 years and for all persons above the age of 6 months with one or more risk factors that put them at high risk for severe Covid-19 outcomes,” such as asthma or cancer, FDA Commissioner Dr. Marty Makary and Dr. Vinay Prasad, head of the FDA’s Center for Biologics Evaluation and Research, wrote in a New England Journal of Medicine article.

“For all healthy persons—those with no risk factors for severe Covid-19—between the ages of 6 months and 64 years, the FDA anticipates the need for randomized, controlled trial data evaluating clinical outcomes before Biologics License Applications can be granted.”

Pfizer, Moderna, and Novavax, which have received licenses for their COVID-19 vaccines, did not immediately respond to requests for comment.

Several medical groups that have commented on FDA steps concerning COVID-19 vaccines, such as the American Academy of Family Physicians, did not return inquiries.

The FDA in 2024, in its most recent action concerning the Pfizer and Moderna vaccines, approved updated versions for most Americans and extended emergency authorization for others, despite there being no trial data available for those formulations.

The regulatory agency on May 16 approved Novavax’s COVID-19 vaccine for the first time. The approval was for adults aged 65 and up. The agency said that people aged 12 to 64 could receive a Novavax shot, but only if they have one of the conditions that puts them at higher risk for severe COVID-19 outcomes.

An earlier version of Novavax’s shot was tested in a randomized, controlled trial in 2021.

The Centers for Disease Control and Prevention currently recommends that people aged 6 months and older receive one of the latest COVID-19 vaccines, but just 13 percent of children and 23 percent of adults have followed that recommendation.

Makary and Prasad noted that a number of other countries, such as Australia and Germany, only recommend COVID-19 vaccines to certain populations.

“While all other high-income nations confine vaccine recommendations to older adults (typically those older than 65 years of age), or those at high risk for severe Covid-19, the United States has adopted a one-size-fits-all regulatory framework and has granted broad marketing authorization to all Americans over the age of 6 months,” they wrote on Tuesday. “The U.S. policy has sometimes been justified by arguing that the American people are not sophisticated enough to understand age- and risk-based recommendations. We reject this view.”

The officials said that while the quick development of COVID-19 vaccines was a scientific and medical achievement, the benefit of repeated dosing—some people have received at least six doses—is unclear.

The trials of the vaccines should measure prevention of symptomatic COVID-19, with secondary endpoints including severe COVID-19, hospitalization, and death, according to Makary and Prasad, who said that the trials should include participants who contracted COVID-19 within the past year, and they should follow participants for at least six months “to ensure that early booster gains persist.” The control group could receive a saline placebo, the officials said.

“Ultimately, these studies alone can provide reassurance that the American repeat-boosters in-perpetuity strategy is evidence-based,” they wrote.

Health Secretary Robert F. Kennedy Jr. recently pledged to require placebo-controlled trials for new vaccines.

Makary and Prasad planned to talk about the policy update at 1 p.m. on Tuesday.

This is a developing story that will be updated.

Tyler Durden Tue, 05/20/2025 - 15:40

"Today I Will Show My Naked Body": Rep. Nancy Mace Combats Voyeurism During Oversight Hearing

Rep. Nancy Mace (R-SC) showed 'photos of her naked body' during a House Oversight meeting on Tuesday as the latest twist in her crusade against voyeurism.

Mace was engaged to Charleston-based software entrepreneur, Patrick Bryant. After purchasing two properties together, their relationship ended abruptly in 2021 after Mace reportedly discovered Bryant on a dating app.

Mace would later claim in a February speech on the House floor that in November 2023, she discovered a digital cache of over 10,000 videos and photos on Bryant’s phone, depicting rape, nonconsensual photos, and videos of women and underage girls, including herself. 

She recounted finding a video of herself naked, unaware she was being filmed, and alleged that Bryant recorded her without consent - and claims that Bryant and several other men conspired to commit sexual exploitation, voyeurism, and assault targeting multiple women, including minors, for over two decades.

She also says she found evidence of an app storing files from a hidden camera - with one alone containing 10,633 videos.

Rape, Drugging and Sex Trafficking

Mace alleged that in 2022, while at a property co-owned by Bryant and another accused man, she consumed two vodka sodas, blacked out, and was raped, though she could not confirm if Bryant was the perpetrator - but that Bryant and his associates drugged her and other women, suggesting the incidents might have been filmed or sold on the dark web.

She also accused the men of sex trafficking, alleging they paid each other to abuse women, which she described as a “premeditated, calculated exploitation.”

Bryant, a co-founder of the software firm Code/+/Trust and former chairman of the Charleston Metro Chamber of Commerce, categorically denied all allegations.

"I categorically deny these allegations. I take this matter seriously and will cooperate fully with any necessary legal processes to clear my name," he told the Associated Press, calling Mace's accusations "devastatingly harmful" and an attempt to further her political career.

'Today I will show my naked body'

Which brings us to today - when Mace posted on X; "Today I will show my naked body on one of the videos predator and rapist Patrick Bryant took of me and many other women. Mace made the statement one hour after she posted: "In my Oversight hearing today I’m going to expose predator and rapist Patrick Bryant for the monster he is. With evidence. Naked bodies. Legs spread apart. Upskirt photos. The kinds of things he would film and photograph women without their knowledge, permission or consent."

Real men guard a woman’s privacy; predators harvest it.

In my Oversight hearing today I’m going to expose predator and rapist Patrick Bryant for the monster he is. With evidence. Naked bodies. Legs spread apart. Upskirt photos. The kinds of things he would film and photograph… pic.twitter.com/12yh1wqTIv

— Rep. Nancy Mace (@RepNancyMace) May 20, 2025

People waited with anticipation...

Look at Nancy Mace's fuckin' beefers and tell me you don't want to see her naked, shitlord. pic.twitter.com/gSdXYONGwz

— The Most Antisemitic Man in the World (@mostantisemitic) May 20, 2025

* * *

* * *

Me and the boys getting ready to watch Nancy Mace present her ample receipts on C-SPAN -- pic.twitter.com/AwgKlHPqG8

— JK Johnny (@_JohnnyJones) May 20, 2025

Needless to say, it was a huge letdown. 

Nancy Mace seems to bait-and-switch us all by releasing a blurry still from a video of her allegedly “nude,” rather than a clear image of her voluptuous tits.

Follow: @NewsBarron pic.twitter.com/cjqNdLjiCN

— News Barron (@NewsBarron) May 20, 2025

Mace was ridiculed far and wide...

Americans: can you please lower taxes and deport illegals?

Nancy Mace: https://t.co/QEJVEoB9Lp pic.twitter.com/wA3LGExjJF

— Rock (@TheCensoredRock) May 20, 2025

Personally, I think Nancy Mace should go to jail for this bate-and-switch. https://t.co/8n7qu3JQVs pic.twitter.com/QGPbpJ295y

— BasilianThought (@BasilianThought) May 20, 2025

Nancy "nothing burger" Mace strikes again. pic.twitter.com/vhQaqFvvzV

— Yukon Cornelius (@Project_Yukon) May 20, 2025

Click here for boob redemption...

*  *  *

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Click hat... add to cart... check out... receive awesome hat... Tyler Durden Tue, 05/20/2025 - 15:20

 

 

The transcript from this week’s, MiB: John Montgomery, Bridgeway Capital Management, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

~~~

 

Bloomberg Audio Studios, podcasts, radio News. This is Masters in business with Barry Ritholtz on Bloomberg Radio.

00:00:16 [Speaker Changed] This week on the podcast, I have an extra special guest returning for the first time in a few years. John Montgomery, he’s the founder of Bridgeway Capital, established in 1993. And the firm is really a very interesting mix of quantitative value-based and factor-based investing. It’s really none and all of the above. It’s a little more nuanced and sophisticated than that. The firm first came to my attention ’cause I was kind of intrigued by the idea of donating half their profits to, to charity. That’s unusual in the world of finance. In addition, they’ve put up some really impressive numbers over the past 30 years, which has given them the opportunity to donate tens of millions of dollars to their favorite organizations. I thought this conversation was fascinating and I think you will also, with no further ado, Ridgeway Capitals, John Montgomery.

00:01:17 [Speaker Changed] Thanks Mary. It’s great to be here.

00:01:19 [Speaker Changed] It it’s great to see you. Let, let’s, for people who may not be familiar with the firm and your background, let’s start with how your interesting and unusual career BS in engineering, ba in philosophy from Swarthmore. Then you get a graduate degree from MIT and you go to Harvard Business School. What was the career plan?

00:01:42 [Speaker Changed] The career plan originally was urban development and transportation. So that was my first career, was working with various bus and transportation companies to improve the quality of life in the cities. People ask how does that relate to investing? And I say, well they’re both service industries, right? They’re both people intensive and those are the the elements that I love.

00:02:06 [Speaker Changed] And I gotta imagine there’s a ton of data analytics and optimization thinking that goes into both.

00:02:14 [Speaker Changed] That’s true. I like the intersection of people and, and analysis and both industries give a lot of opportunity that I love serving people. They’re both service industries. So I’m a happy camper. That,

00:02:26 [Speaker Changed] That makes a lot of sense. You, you were pretty early to computer modeling and statistical methods as a research engineer at MAT, this is the late 1970s. That sort of data analytics wasn’t really well understood back then. How did that background help when it comes to modeling portfolios or applying those methods of statistical analysis to investing?

00:02:52 [Speaker Changed] Well, the statistical side definitely comes from my degree and then work as a project manager at MIT. So you’re right, late seventies till 1980, the investment piece of that didn’t come till business school about three, four years later. And that was kind of, you could say by chance or on a lark, I thought, well, you know, there’s an opportunity cost of stepping out of your career Sure. Where you have a, you know, a paycheck to go back to business school full time, which I did and thought while I’m here I’ll take a few investing courses and see if I can use those to earn back the opportunity cost of going to business school for two years.

00:03:32 [Speaker Changed] So from transportation to finance, that sounds almost, but not quite purposeful. Is that, is that a fair description?

00:03:40 [Speaker Changed] I think that’s a very accurate description. So, and, and actually didn’t leave the transportation field immediately after business school. I was in an investing course and we’re doing a case study professor in the class and ask the question, who here thinks that they’ll be able to outperform post leaving Harvard Business School, this track record And 80% of the hands go up in the room. I’m not one of them, by the way. So the whole

00:04:10 [Speaker Changed] Class from Lake Wobegon, everybody’s above

00:04:12 [Speaker Changed] Average. Yes, yes, exactly. I mean, and I immediately got the 80 20 rule. It’s like, wait a minute, this can’t be, and if this is a microcosm and the methods that we were using to think about the markets and valuation and net present value, kind of CFA classic kind of analysis, if this is a microcosm of Wall Street in five years, which probably it is, then quantitative methods should give you a leg up on the competition for a lot lower cost.

00:04:40 [Speaker Changed] So you’ve previously discussed the epiphany you had at Harvard Business School. Is that the epiphany or was it something else?

00:04:47 [Speaker Changed] That was a major piece of it? I would say the, the primary insights were behavioral finance ones we would call, like I didn’t, I’d never heard the word right. Behavioral finance at the time.

00:04:57 [Speaker Changed] It, it, that as a phrase didn’t exist for another 25 years.

00:05:01 [Speaker Changed] Probably not. You know, you see, you watch, I once had a boss who said this guy has enough sheep skins to skin a sheep. But if I ever did go back to school, the next degree I would love to have is in psychology. Really? ’cause I, there’s so much there and especially the intersection of psychology and money.

00:05:18 [Speaker Changed] When, when do you finish up at HBS? What, when, what, what year was that?

00:05:23 [Speaker Changed] 1985.

00:05:23 [Speaker Changed] Alright, so what do you do between that and 1993 when you launched Bridgeway?

00:05:29 [Speaker Changed] So the first thing I did was investing as a hobby. So that was my advocation for the next six years. And my personal track record and investing was about twice the market for those periods. Right. In a, in a good period, scalable

00:05:45 [Speaker Changed] Or kinda little aberrational

00:05:48 [Speaker Changed] Findings? No, reasonably scalable. Reasonably scalable. I would say enough that after six years I had the thought of making my advocation my next career and did something that was, was modeled to me by the mayor of Houston, my hometown at the time. And that is to take a year off between careers. He had actually had four careers in his life in different fields and every time he switched, he took a year off just to study the heck out of the next step. So that’s when I really studied deeply the research why what I’d been doing was working more about when it might not and writing a business plan for Bridgeway.

00:06:27 [Speaker Changed] That, that’s pretty fascinating. I, I took a year off between college and grad school, but I had no idea I was actually doing what you advocate I, or what the Mayor of Houston advocates. I just was kinda lost and not sure what to do next and spent a year thinking about it before pulling the trigger on law school. But your hometown is Houston, the firm is still located in Houston, right? Yes. Since 1993. That’s when you launched where you launched. And from the very beginning you said something kind of unusual about the firm. We want to donate half of our profits to nonprofit organizations. Tell us where that idea came from. It’s fairly unusual either in finance and I’ve been to Houston. That’s a kind of unusual idea in Houston as well.

00:07:23 [Speaker Changed] That’s true. If I gather around, you know, just random business people in Houston and say that we donate half our profits. I have to say, I get some very puzzled looks around the room. Not so much from other purpose driven people in different fields though, but yes, it’s different. Where did that come from? You know, we think things come from one place, but usually there are a lot of forces at bay. So I would look back to my father, who was a businessman and CEO of an oil exploration firm and believe that business was a way to change the world and engage. Sure. My mother was what I would think of as almost a professional volunteer. So giving back to the community, and this was in a time when the war on poverty, you know, was the slogan at the time. So I was hugely influenced by both of my parents.

00:08:14 But I would say also a conversation with my wife on the, the very first conversation of starting Bridgeway and it went something like this, lemme get this straight John. You’re thinking of leaving the transportation industry where you have a lot of experience and a W2 to start a company in an industry you’ve never worked with. No, no initial, no guarantees, no guarantees on the, on the money side. And I said, yes, we talked that through. I, I have to say I’m married to an extraordinary woman. I didn’t realize at that age of 37 how extraordinary she was. But she believes in supporting people who have a dream and she did that for me and for Bridgeway. So she was all in, she had two questions. Yeah. Question one. Can we still send our our daughters to college? That was like, I should have paid more attention to that question because my budget, my business plan was 50% of our net worth before it was all said and done. It was 150% of our net worth. Right. So it took three years to break even when my business plan had it at one. The second question was, do I have to go to cocktail parties?

00:09:33 [Speaker Changed] Why? Why would she

00:09:34 [Speaker Changed] Not her cup of tea?

00:09:35 [Speaker Changed] No, but I mean, why would she imagine launching a fund is gonna require it’s

00:09:40 [Speaker Changed] Just your

00:09:41 [Speaker Changed] Spa. Just like that’s sort, she

00:09:42 [Speaker Changed] Grew up in Washington DC around that’s, you know, academicians and government people. And her, her view of business was you have to go to cocktail parties in schmooze with people.

00:09:50 [Speaker Changed] Right. That makes sense.

00:09:52 [Speaker Changed] And having taken a course in negotiation at Harvard Business School, I immediately recognized the opportunity and said, dear, not if you don’t want to. So she only comes when she, when she desires to come wherever I am. But she’s an amazing soulmate and supporter of everything Bridgeway.

00:10:10 [Speaker Changed] That that’s fantastic. So, so you’ve been donating half your profits to these different organizations over 30 years, is that right?

00:10:19 [Speaker Changed] 31 years. So

00:10:21 [Speaker Changed] How much have you guys donated? What are the organizations you support? What, what’s been the response in the community

00:10:27 [Speaker Changed] Over the decades? We don’t give exact numbers. We’re a privately held firm since we donate half, we don’t report our profits specifically either, but I’ll just say it’s tens of millions. Okay. Over, you know, what’s 30 months?

00:10:39 [Speaker Changed] Substantial amount

00:10:39 [Speaker Changed] Of capital, substantial amount of capital. The bullseye of our giving is our own affiliated Bridgeway foundation. This is an extraordinary organization led by a powerhouse of a woman, Shannon Davis. Our mission statement focuses on ending genocide and preventing war atrocities of which there are too many opportunities in the world today. So that’s the, that’s the cross hairs of our,

00:11:08 [Speaker Changed] Lemme interrupt you right here. Sure. Because I know you have very quantitative leanings. How do you measure how successful you are in stopping genocides? It just, generally speaking, it’s hard to measure something that doesn’t happen. So you’re always engaging in counterfactuals. Yes. But how do you know if you’ve moved the needle?

00:11:31 [Speaker Changed] It’s probably no easier, no more difficult than things that we do on the investment side and in the stock market. There’s time series analysis. We actually hired an outside firm to come in and review the record of what we had done in our first engagement with an organization called the Lord’s Resistance Army. And, and if you want more details, there’s a book called To Stop a warlord that Shannon Davis wrote. I never thought we’d be able to tell the story at that level because you don’t wanna put at risk the people that sure are on the ground doing the, the, the real work. However, she found a way to do that and protect them. And so there’s a book that goes into a lot of detail on that, but people think there’s not a way to measure it. There is, and you’re right, being a quantitative statistical guy, you can bet that that comes up on the table frequently. Huh.

00:12:22 [Speaker Changed] Really, really fascinating. What’s been the response from the community?

00:12:26 [Speaker Changed] The smallest end community is the Bridgeway community. So that’s the 28 people at Bridgeway we call partners. Right. They sign on for this work because it’s in the mission statement. You don’t not know about it coming in and you don’t come if, if this isn’t right worthy of

00:12:40 [Speaker Changed] The life calling, you buy from

00:12:41 [Speaker Changed] Day one. And, and that’s, that’s everything. The community of Houston, I would say less so, but it’s, it’s specific to individuals. So every once in a while you, you get somebody who’s like, unbelievable. That’s amazing. And can I come, huh? That level we have partnered with other organizations, one of those being Howard Buffet, Warren Buffett’s son that does substantial philanthropic work.

00:13:07 [Speaker Changed] Is, is he in Texas?

00:13:08 [Speaker Changed] No, no, he’s in Nebraska. But we have partnered with him and work in the Ukraine. Worked in the first year of getting generators in for obvious reasons and getting the grain out for obvious reasons. I tell people at Bridgeway, we don’t know squat about farming, but Howard Buffet does. And the third thing is documenting war crimes. And that’s actually something that Bridgeway Foundation knows a lot about,

00:13:33 [Speaker Changed] Documenting war crimes,

00:13:35 [Speaker Changed] Documenting.

00:13:36 [Speaker Changed] And what do you do? We does this then go to the Hague, to the un. What do you do with, once you’ve documented, and it should be fairly substantial in Ukraine considering the Russians have been bombing civilian hospital schools, infrastructure, apartment buildings. That it, it looks horrific. What do you do with all of that information once you’ve documented a war crime in Ukraine? So

00:14:01 [Speaker Changed] It depends on what national or international jurisdiction engages. So optimally you like to keep it at the country level if possible. The international criminal court is the other place that you can take a case and that’s where That’s in The Hague.

00:14:17 [Speaker Changed] That is in the Hague. Okay. Yes. So so that’s what I was, I was really thinking about. Do they take these on as individual cases or are they kind, you know, it seems like the UN is sort of paralyzed ’cause of you just have one voting member say no and that that’s that

00:14:32 [Speaker Changed] At the, one of the indices of the international criminal court was Dominique Angu who was a general and the Lord’s Resistance Army, the first conflict that I mentioned earlier. And we played a major role in getting him to the Hague to stand trial for justice. So wow, win win for justice.

00:14:51 [Speaker Changed] And

00:14:51 [Speaker Changed] Then, and as a deterrent by the way, to kind of thugs of the world that think they can get away with war atrocities,

00:14:57 [Speaker Changed] What one would hope, what happens when you have somebody like Putin who’s kind of hard to reach and is SCOs in Moscow and you know, how many hundreds of thousands of people have been killed? Civilians non-combatants killed in the Ukraine. How, how do you reach someone

00:15:16 [Speaker Changed] Like that? I would say, you know, one step at a time and then, you know, it’s a lot of hard work slugging through and then occasionally you just need a stroke of good luck for something going the right way. Typically it takes more time. You know, they say the arc of justice gets there, but it’s slow. That’s not an exact quote, but Sure. That’s my

00:15:35 [Speaker Changed] Martin Luther King

00:15:36 [Speaker Changed] Right. Summary of it. Yes,

00:15:38 [Speaker Changed] Sure. So we’ll come back to this ’cause this is really fascinating. I, I had no idea you were so international in, in the philanthropic sphere, but we’ll definitely circle back to that. Let, let’s start talking a little bit about that track record. You have a couple of mutual funds, a couple of ETFs. I’m assuming you’re running other stuff as a either separately managed accounts or a separate what have you. I know one of your funds since inception has outperformed the market by about a hundred basis points. And the other, I don’t know if it’s still a mutual fund, I know it started as a mutual fund is now about 300 basis points over market returns. Tell us about the mutual funds in ETFs you run on behalf of Bridgeways clients.

00:16:26 [Speaker Changed] Yeah, so let me, let me talk about the strategies. One you referred to is aggressive investors and as the name would indicate, it has high

00:16:35 [Speaker Changed] Beta,

00:16:35 [Speaker Changed] A very well high beta, but very high exposure to the factors that we want, that we believe in.

00:16:42 [Speaker Changed] So high active share. And when you say factors,

00:16:45 [Speaker Changed] Yes, very high active

00:16:46 [Speaker Changed] Share. So you, I, you know, I should have mentioned this earlier, what, what a lot of people call smart beta, you guys were doing long before anyone had a name on it. You’ve been doing smart beta, you’ve been doing factor investing a long time. Tell us a little bit about the sort of factor investing that drives bridgeways returns.

00:17:04 [Speaker Changed] Well, these are factors that we believe in. First of all, my, some of my co-portfolio managers will bristle if you refer to us as a factor based firm. I own that a little bit more, but it’s a fair point in the sense of being systematic, statistically driven over long periods of time. But there are human elements, like if, if, if there were no human element, everybody would be operating the, the identical strategy out there. So yes, we believe in value, we have our own proprietary mix of metrics and we can show statistically based on data over decades why we do that.

00:17:41 [Speaker Changed] So let me stop you before you go on to the next one. When most people hear value, they immediately think, you know, low pe, low price to book ratio. Your approach to value, I know is a little more sophisticated than that. Put some flesh on the bones. Tell us about bridgeways value approach.

00:18:02 [Speaker Changed] So we believe in value, quality and sentiment or the three primary legs of the stool within that. One of the things that we’ve done for a long period of time is mix different measures. So, and why do we do that? It’s because it gives you a more stable return stream over time. So if academically, you know, paper, when I was in business school came out Fama French and value has the three

00:18:28 [Speaker Changed] Factor model, the five factor model.

00:18:30 [Speaker Changed] And then, and the three factor then was price to book. And it’s a metric, but we could show statistically that if you match it with things like pe with things like price to sales, which has its own part, think through the balance sheet and the income statement, different ways to measure value, that putting them together in a efficient way gives you a, a steadier stream of returns into the future. So that’s why we do that. There’s a very interesting output of that though that comes. So I was at a conference, I don’t know, I’m gonna say maybe 12 years ago or so, paper presented by Novi Marx on quality. And he’s personally, like, everybody’s excited, I’m excited. We go back and the first thing we all always try and do is replicate the work of it’s new. So we replicated the work, we we put it into see could it help our models? And the answer was no. Do you know why the reason was no, because

00:19:29 [Speaker Changed] You already had quality

00:19:31 [Speaker Changed] Represented. And in Verly we had already included quality in the, in the process because of

00:19:36 [Speaker Changed] Multi, that doesn’t surprise me because you’re, you’re talking about different metrics and when I think about value and I, I also think about value traps and I know you cannot generate the numbers you have if you’re constantly buying stuff that’s cheap, but low quality, high debt, all these other issues that come up eventually those things have to underperform. Yes. So, so I kind of had the sense that you guys have quality exposure just by your long-term track record. So you reproduce no v’s work. Where do you go from there?

00:20:11 [Speaker Changed] There’s always a next step, Barry, if I take a look at just three of our strategies currently, it gives you a feel for the breadth of what we do. So one would be our small value strategy and you might think small value that seems pretty plain vanilla mention the research on value that we’ve done. We try and incorporate some things and how you incorporate them into the portfolio construction, where you constrain and where you don’t like how much are you willing to take on of sector risk. But our omni small value strategy is a strategy that we designed specifically for the purposes of an organization called Buckingham or bam. Then it’s now sure familiar with them. It’s it’s now called Focus Partners Wealth, great friends of ours. And our small value, omni small value fits into their allocation in a way that’s efficient for their portfolio construction. Now what’s bridgeways advantage? It’s our size. And this is something that’s true across all of our strategies currently we have a huge leg up being a smaller organization. Several reasons. Think of the omni small value because we’re smaller and we don’t have hundreds of billions under management, right? We can go deeper on small, you go

00:21:27 [Speaker Changed] Micro cap and

00:21:28 [Speaker Changed] Deeper to a degree, our benchmark is still the Russell 2000 value index. Okay? But our strategy is x real estate and utilities because our partners focus wealth partners has separate strategies for that. So we don’t duplicate that. And so that’s an example of the kind of research that we do. How does that affect the returns? Is that a, is that a good idea to do? But bridgeways own small size means that, that we don’t have Well it means several things really. Number one, it means our transaction costs are less, which based on your career, you know exactly. Sure. The importance of that. So if you’re a trader and I give you a, an order on a particular stock ticker symbol and say, go buy me a thousand shares of that and your, your job is to get this completed at the best price possible, however you wanna measure it, and I give you one ticket for a thousand shares and another ticket for 50,000 shares, but I’m gonna hold you accountable to the same price. Right? Which one do you want?

00:22:32 [Speaker Changed] Well, from a back in the day when it was 5 cents a share, you wanted the 50,000 share order. But if you’re, that’s not how you’re getting paid. Well the thousand share order is much easier to get done at a good price. Yes. 50,000 shares, especially a small cap. You may move the price up. You’re certainly not just absolutely lifting the offer and, and walking away with 50,000

00:22:53 [Speaker Changed] Shares. So for the investor, you, you want the smaller one that gets done more quickly. If you can get it done more quickly, it’s likely at a more favorable price. You, you’re less likely to move the price of the security in an unfavorable way. And that same thousand shares will be make a more meaningful contribution to a smaller shop than to a larger shop. Same number of shares is just gonna be, you know, 0.001 of the portfolio. Why even waste your time at Bridgeway? It’s more meaningful. That’s a big deal. And the last part is something that very few people I hear talking about and that’s that our effective universe is a larger universe. So that, that gets into our next strategy that I’d like to highlight, which is our global opportunities. Sure. This is a long short strategy. It’s global.

00:23:40 [Speaker Changed] This is the one that’s a hundred percent long, a hundred percent short. Yes. So less correlation to the market volatility doesn’t matter if anything volatility could actually help.

00:23:51 [Speaker Changed] Returns can. So

00:23:53 [Speaker Changed] No guarantees, but it could.

00:23:55 [Speaker Changed] Jacob Pni who, who led the research for a two year period that resulted in three peer reviewed articles, which for a firm our size is an astonishing achievement. He likes to say market agnostic is the, so long short, the success for us is defined as if, you know, the direction of the market tells you nothing about the direction of this, of the returns of this strategy. Well

00:24:22 [Speaker Changed] If you are long short, you should have half the volatility of long only, right? Yes. Is that a fair,

00:24:26 [Speaker Changed] That’s that’s pretty much right in line with our target. Okay. So half the volatility. So

00:24:30 [Speaker Changed] Is this an absolute return strategy? It is. The assumption is you’re picking stocks that you think are gonna do well and you’re also looking for stocks to short that you think you’re gonna do poorly and will do especially poorly in a drawdown. How’s that working out?

00:24:48 [Speaker Changed] It’s working out well. This is a big deal in terms of the design. A a paper that caught my attention was following 2008 and this paper took a look at all hedge funds that reported to be market neutral. And the bottom line was, most of the time they did a pretty good job. But when you really needed it in a downturn of 2008, the beta was 0.4. So about 40% of the downside. Well it’s like, okay, that’s cushion, but it’s not zero. It’s not zero, it’s not a, it’s neither an anti-gravity fund, nor do you expect not to be hurt. We’ve done research on the competition as well, and this is fascinating. And also just over the last week. So we’re now, you know, on two days that get as close to 20%, that’s enough to, you know, run your numbers and see how did they do. Our closest competitors to global opportunities have done a much better job than quote market neutral funds did back in 2008. All of ’em within a percent of zero, well no, one of ’em was 2% negative, but out of seven strategies that, that I looked at just earlier today, I would say doing a a better job.

00:26:02 [Speaker Changed] I, I think it was Cliff Asness at a QR had a paper out our hedge funds really hedged. Yes. And unfortunately the conclusion for a lot of ’em were not very much. And that sounds like it’s very consistent with the research, you guys

00:26:18 [Speaker Changed] Well we, we specifically designed this not to have the, the 2008 problem identified, but there are a couple more areas that we have a huge leg up on the competition with the strategy. Number one, again, getting back to our small size, our universe of stocks is so much larger.

00:26:35 [Speaker Changed] That’s both domestic and international.

00:26:37 [Speaker Changed] Yes. And especially internationally. That’s because out of the 9,000 or so stocks significant majority probably the, our bigger competitors simply can’t establish a meaningful position in, but our smaller, smaller

00:26:51 [Speaker Changed] Size. So there so’s a competitive advantage too.

00:26:53 [Speaker Changed] Oh it’s, and it’s big. Well, and and by the way, those are the ones that are less liquid, less efficient that you’re likely to, to win with active management.

00:27:02 [Speaker Changed] Huh. Really, really interesting. So we talked earlier about donating tens of millions of dollars, half of the profits of the firm to charity. How does that affect how you recruit employees? How you develop a compensation structure? Tell us a little bit about the impact of that on running an asset management business.

00:27:25 [Speaker Changed] Sometimes I get into conversation with a prospective client and you might hear something like, you know, it sounds like you’re good guys, you know, you’re philanthropically geared and you get awards is a great place to work. But all of that, like, put that aside. I just wanna talk about the investments and what I would say is culture is everything. It’s the housing within which we do what we do. So it’s very important and you can measure that in some statistical ways like turnover, I would say there are proxies for commitment at Bridgeway and then, you know, returns of the strategies. Why would you think that’s independent of the culture that you’ve built up?

00:28:03 [Speaker Changed] You also have an internal rule. The highest paid employee earns no more than seven times the lowest paid employee. Is that right?

00:28:11 [Speaker Changed] So statistically that’s probably true. We don’t measure it that way. There’s a new statistic that came out from the SEC required of public companies and those are some of the metrics that we look at currently. Some people think is like, oh, so you underpay that is absolutely not the intent. It’s just not to pay outrageous salaries on the top makes a lot of sense. So if you, you know, if you wanna make a cazillion the most money that you can make in our industry, you probably wouldn’t come to Bridgeway. If you wanna make an absolute livable wage and if you invest save and invest, you should be do very well over a full career then, then we’re purpose driven firm and we ascribe to Daniel Pink’s. What really motivates people is not money, but it’s purpose, which we have in strong suit. It’s autonomy and it’s mastery. So we really invest in our people by way of mastery, give them opportunities for learning and growth, invest by way of mentoring as well. And then the autonomy piece we’re trying to continually up our game with in a system of structure called traction or entrepreneurial operating system.

00:29:23 [Speaker Changed] And the firm’s culture also emphasizes accountability. Tell us about the firewood group. What what does that do?

00:29:33 [Speaker Changed] Okay, so the Firewood Group is a personal accountability group that’s not inside Bridgeway. And what happened is, in 1998, a friend of mine came to me and he said, so I want you to be on the board of directors. And he worked for a publicly held firm, but he was like, Charlie, I like you’re not in a position to ask me on your that board and I don’t know squad about that industry. And he said, no, no, not not the company board, the board of directors of my life. And he said, well what does, what does that look like? I’ve never heard of that. Out of that came the following observation. We were each members of groups that were great at support but lousy at accountability. And we both knew we needed accountability. So we formed this group specifically around the concept of, of accountability. And just to give you a very specific example, I had a life goal of ending genocide. This group starts and you know, I’m sharing life goals like, well you’ve made great progress on this one and this one, but we don’t, we think it’s time for you to actually turn the ignition on on this one. Out of that conversation. We turn the ignition on on our foundation and everything that you see that Shannon Davis is, is doing along with our partners.

00:30:44 [Speaker Changed] That’s really fascinating. And I would assume if the founder and CEO has that degree of accountability in his personal life, how does that then affect the culture of the organization? How do you bring your work ethic and your sense of accountability into the office?

00:31:04 [Speaker Changed] Well, I like to think that I model it, number one. Number two, we attract people for whom that’s an exciting concept. And number three, then you gotta actually live it out. And that’s where aspects of this structure that I call traction, or some people call entrepreneurial operating system come into play. There’s an annual goal setting process and most companies have that, the 90 day goals that they refer to as rocks. There’s a very high level of commitment toward, it’s like when you, when you take on that I’m gonna do this in the next 90 days, everybody’s looking at it as very high profile. It’s online, we have to report to the all of the partners, the leadership teams experience, and then every partner at Bridgeway, that’s every person that has a long-term commitment to and from Bridgeway has to do the same thing.

00:31:52 [Speaker Changed] So when I, when I talk about accountability, one of the things I was thinking about is the company’s annual report where you guys kind of own your biggest mistakes. Te tell us about that.

00:32:05 [Speaker Changed] That’s something we started, I don’t know, maybe a year four or five. And it comes around accountability. The normal thing is this in business or in government or academia or journalism anywhere you, you know, you wanna learn from your mistakes, but you don’t wanna own ’em too publicly. Right. It doesn’t feel good. People might ask the wrong question. We had a, a lawyer, a member of our board of directors at the time that said, you do realize you’re like putting on a silver platter or something that people could sue you over. Huh? And my, my answer to that is like, yeah, I get that. That’s true. But you can’t cut it both ways. You either have to own your mistakes, get ’em out in the open, learn from them and make sure you don’t repeat ’em or you sweep ’em in under a rug and you just can’t do both. And I choose the former, our shareholders are investors, our clients are our boss. We have a fiduciary duty to them. And I had one, an early client say, you do realize like I’m your boss and you, there’s accountability there. I should know what’s really going on. And I’m like, I can’t argue with that. That is a brilliant statement. This woman, by the way, didn’t have a high school degree and I learned so much from her.

00:33:18 [Speaker Changed] Huh. Really, really fascinating. So let’s talk a little bit about what’s going on in the marketplace. There has been a shift over the past 20, 30 years to passive from active, especially from expensive underperforming active. I don’t put you guys in that category. You’ve done well. Your fees are, are kind of middle of the road. How are you navigating what’s going on in in the marketplace?

00:33:46 [Speaker Changed] A few things that I can point to. Number one is you always have to keep working to stay ahead of the game and adding value. And that’s, that’s the research part. So we like to say small incremental improvements, but it never stops. Number two, we were an early adapter of moving some mutual funds, converting them into ETFs. So we’ve done that. That was painful ’cause it’s costly out the other side. It’s been helpful for the after-tax return of the shareholders. So big plus there and those strategies are both in positive flows. So good for the advisor as well. And the last one is, you know, don’t make indexing in passive the enemy. What can you learn from them? So Bridgeway actually came to market with our blue chip strategy. To really be an index fund, you have to have somebody else calculating it, right? Right.

00:34:39 And there are all rules and, and we decided we weren’t willing to do that. We just wouldn’t call it an index fund anymore. But it’s a mega cap strategy that gets off of what I think of as the inefficient market cap weighting portfolio construction of almost every index fund. Not absolutely all of them, but all of ’em, right? We have more than a quarter century real time data. Like this has been a mutual fund, now it’s an ETF converted. You can look at that track record and draw your own conclusions. But I like to say market cap weighting is like a momentum strategy that you never rebalance, right? So you ride the wave up and then you ride it down. And that’s just not very efficient. That leads to more volatility. This strategy on average has different ways to measure it. Beta standard deviation draw down of very roughly 5% less than a market cap weighted index of, of a, a broad index like the s and p 500. So a little bit less risk we believe, not in every market environment, but you can measure it over the long term and last decade for example. And then a little bit more return. And why is that? It’s roughly equal weighted, which means you’re always investing a little bit more in what’s done poorly and harvesting a little bit from what’s done really well. That’s buy low, sell high. Isn’t that a basic investing principle? Sure.

00:36:05 [Speaker Changed] That makes and supposedly sense to mely that sort of rebalancing is one of the few free lunches in finance. So, so if you’re not doing market cap weighting and you’re talking about blue chip companies, how, how are you weighting the portfolio?

00:36:19 [Speaker Changed] So we look at the top 35, 36 companies, we make sure that we’ve got industry representation at the time of recomposition, and then we’re rebalancing quarterly and reinvesting dividends along the way. And I’ll say roughly equal weighting. So there’s some cushion on harvesting from the top. It can go up. Our, our rule of thumb is about 4% is the maximum weight in a strategy. So if Apple or Microsoft or somebody else is 8% of an underlying market cap weighted US index, we’re gonna be half of that. But it gives you a more diversified fund in mega cap stocks, which gives you some of the downside protection and some of the risk characteristics.

00:37:05 [Speaker Changed] Well, well as we’ve seen in year to date in 2025, the, the mag seven have become the lag seven. Yes. So not being full market cap weight certainly had have a positive impact on, on returns. What happens when those stocks are doing great. H how comfortable do you feel if you’re not full market weight of Nvidia, apple, Amazon, Microsoft, as, as they’re going higher and higher. That’s

00:37:31 [Speaker Changed] The discipline of any investment process in the design. So know the design of what you’re investing in, know when it’s likely to outperform and when it’s not. And then you need to be comfortable with those numbers. Huh. But in that strategy, you pointed out exactly when it would, you know, underperform when the top seven, you know, and you know, there’s a nifty 50 back in the,

00:37:52 [Speaker Changed] Well you and I remember the nifty 50 in the sixties, half our, our listeners yes, are unfamiliar with them, but people talk about the magnificent seven, like it’s something new. Yes. It’s 50, 60 years old. We had the same sort of yes, top heavy market happen when everybody clamoring into the same sort of blue chips. Yes. Being weighted on a non-capital basis, having other elements drive the weighting. How do you manage around that

00:38:22 [Speaker Changed] As a disciplined investment shop? We have everything documented in detail. So there are four portfolio managers on every strategy at Bridgeway. In theory, any one of the four can step in and do that job. One because they’re trained to do so, but two, because they have documentation of how to do it. In this case, Bluechip, I mentioned there’s a quarterly rebalancing process. There’s instructions exactly how you rebalance, how you take care of unusual situations, which might be a merger, an acquisition, a spinoff. Now a company in you, you and the portfolio is no longer one of the top 35, 36 by size. So what do you do about that? So th those are the kinds of exceptions that you document and otherwise it’s fairly straightforward. What,

00:39:09 [Speaker Changed] What you’re describing sounds like a very systematic process to evaluate securities and, and build a portfolio. Tell us a little bit about the things that go into that system.

00:39:21 [Speaker Changed] Let me shift gears back to global opportunities. Sure. Which is, which gives you more of the full breadth of how we do what we do with respect to stock selection and portfolio construction. The stock selection side, as I mentioned, you’re combining factors of value, quality, and sentiment. However, that’s within a framework of intangible capital intensity and what that said,

00:39:43 [Speaker Changed] Intangible capital intensity. Yes. So are these things like intellectual property, patents,

00:39:49 [Speaker Changed] Processes? Exactly. Exactly. Okay. So high intangible capital would be exactly the things you mentioned. Research and development. If you rank them by industry, things that float to the top would be pharmaceuticals, AI software, things. At the other end of the spectrum would be things like manufacturing, transportation, utilities. So you think of old economy stocks and new economy stocks is another way to think about ’em. But we’re measuring, literally ranking these according to intangible capital intensity. The high intangible capital intensity ones don’t work real well with the classic measures of value. For example, what we found is that sentiment is a stronger predictor of future returns for those. So we don’t only use sentiment, we’re always using the combination, but we’re gonna overweight the sentiment part of that. So we have these three categories of factors underneath, which as I mentioned before, multiple ones in the framework of intangible capital intensity, which is original research that Bridgeway did over a couple of year period and published papers on.

00:40:57 That’s the overall framework. Then you’ve got, in this particular strategy, it’s global and we like to be neutral exposure on things that we don’t care about or aren’t in the design and positive on the ones that we do. So what do we not care about sectors. So we’re always trying to move back to it to be sector neutral, which means the same dollars on the long side as you have on the short side. Similarly with sectors, sectors, countries, certain factors. Book value, for example, is a classic one. Don’t like that one as much. It’s problematic for reasons that relate. Well,

00:41:33 [Speaker Changed] Well book value doesn’t real, it it tends to measure physical plants equipment.

00:41:37 [Speaker Changed] Exactly. So

00:41:38 [Speaker Changed] It works much more heavily and IP kind of gets the short shrift there.

00:41:41 [Speaker Changed] Yes, exactly. So what that means is the, the industries that are on the, the low capital intensive part of the spectrum tend to do fine with the classical measures of value. So you can see, you put all that together, you constrain the portfolio according to certain things that you don’t want it to be exposed to. People come and say, oh, global opportunities that’s got China, I don’t want any China. Well, at any one point in time, we might be a percent or possibly even two positive exposure to China or negative exposure to China. On average, we’re targeting that 0%. So you’re not gonna get a, any value add over the long term shouldn’t be coming from the actual country or the sector. It should be the specific factors that we’re trying to give exposures to. And that leads to a much steadier stream of returns.

00:42:33 [Speaker Changed] That’s really in intriguing. So I, I’ve always kind of thought of you as sort of a factor shop, sort of a value shop, sort of a quant shop, a little bit of everything. Is that a fair, is that a fair description? I I don’t wanna overgeneralize Yeah, but you guys do a little bit of a lot of things. Yes.

00:42:53 [Speaker Changed] I would say that that’s true. The, the, the one thing that you left out, which is the hard piece and a significant part of, of our time is qualifying the data. Cleaning the data, especially on the global side. Data’s cleaner in the large caps on the US side for sure. And also the model assumptions. There’s cer certain assumptions built into the model. You get a strong pick. Are the reasons that those picks of a model come to the surface, ones that really hold true in the marketplace? Is there something that you don’t know, for example, regulations that have just come out in a, in a country where that are gonna change the earnings and, and financial characteristics that you care about with a particular model. So that’s part of the work and the scrubbing and, and you know, that’s why we chafe a little bit when people say, oh, you’re just a smart beta shop.

00:43:46 [Speaker Changed] Cl clearly there’s a lot more going on than just smart beta. All right. I only have you for a limited amount of time, so let’s jump to our favorite questions. We ask all of our guests, starting with what’s been keeping you entertained these days? What are you watching or listening to?

00:44:02 [Speaker Changed] One of my favorite recent ones was actually a South Korean series called The Extraordinary Attorney. Woo. And it’s a fascinating study about a woman who’s an adult autistic, brilliant person in a law firm in South Korea and her experiences navigating a non-autistic world and the adjustments that people do and don’t try and make assumptions that people make. You know, you might think that has nothing to do with investing, but, but the assumptions side and the statistics side and then the human interaction side and, and the behavioral side is all right there. That’s one of my top recent one

00:44:46 [Speaker Changed] Really interesting. Let’s talk about mentors who helped to shape your career.

00:44:51 [Speaker Changed] Several had a mentor that passed away last year. Henry Groppe soundbite from him was respect all people all the time, no exceptions. And it’s that last piece that’s really challenging. So I’m gonna put him as a top mentor. Had some in at MIT advisors there who taught me, never come to my office just bringing problems. Always try and bring solutions when you can. People that have engaged on a human level within these that didn’t have to. Some of the better things that I’ve learned. Jack Bogle certainly on the, the cost and structure side a little gritty, which is, I like, I think that’s fun. Those are some of my mentors.

00:45:36 [Speaker Changed] Hmm. Really interesting. Let’s talk books. What are some of your favorites? What are you reading right now?

00:45:41 [Speaker Changed] Right now I’m reading two books. One is called People Dare to Build An Intentional Culture. So you can imagine why that would be attracted to me. Chapter two of that book is about love. We don’t tend to use the word love and workplace. They say, well, a more acceptable word might be genuine caring. Okay. And so we think a lot about that. We play the Simon Sinek game of why is why is that important? And underneath that, why is that important? If you play that game at Bridgeway of why you’re doing what you’re doing and get to a core value. Caring frequently comes out among different people, board members, partners at Bridgeway. The other book is Jason SWGs, recent update on The Intelligent Investor. Sure. I’m halfway through that one. It’s a, it’s a thick read ’cause it’s really two books. Right. It’s been Benjamin Graham’s book and it’s Jason SWGs commentary on it. It’s great. And

00:46:38 [Speaker Changed] Not too long ago I saw you mention, was it Dan Leys The Truth About Dishonesty?

00:46:44 [Speaker Changed] Is that right? Yes. That’s one of my favorite. I it might be, it might be a decade old now, but wonderful book on humility in statistics and in non statistics.

00:46:56 [Speaker Changed] And our, our final two questions. What sort of advice would you give to a recent college grad interested in a career in either investing or finance?

00:47:06 [Speaker Changed] I actually had this opportunity just yesterday. It was somebody, I’m gonna guess he was about 25 years old and early stage in his career. And my advice is people scare you away when it’s a, a declining industry, or not declining, but where fee pressure is increasing. So the fee pressure has been very strong, different ways to measure it, but you know, fees are less than half of what they were a dozen years back. And that scares a lot of people away. Within that there’s a lot of change and within the change there are strategic opportunities. And because it doesn’t attract as many people think supply and demand there are great, there are kind of even bigger than normal mature company opportunities and not as many people coming in, you can make a big difference in that environment. I think it’s fun and fascinating. I would definitely choose this as a career if I were doing it all over again.

00:47:59 [Speaker Changed] Hmm. And our final question, what do you know about the world of investing today that would’ve been useful back in 1993 when you were first launching the firm?

00:48:09 [Speaker Changed] Wow. I was a contrarian by nature, but I didn’t understand the dynamics of chasing hot returns and, and panicking and downturns. Understanding that dynamic better would’ve helped not because not personally, but professionally. It would’ve given some good insights for the individual investor. I would say build your portfolio and learn how to not pay attention in the downturns if it’s long-term money. And by the way, if it’s not long-term money, you shouldn’t have it in the stock market. So it’s assuming it is long-term money. The only price you really care about is the last price when you want to take the money out and that wasn’t last week or this week ever. Whether it’s up or down, there’s volatility in between. All those numbers are irrelevant. All you need to know is the last one. In the first day. You’re gonna know that number, his years in the future when you’re actually gonna need it. Huh.

00:49:05 [Speaker Changed] Absolutely. Fascinating. We have been speaking with John Montgomery, founder of Bridgeway Capital. If you enjoy this conversation, well be sure and check out any of the previous 500 or so we’ve done over the past 10 years. You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find your favorite podcast. Check out my new book, how Not to Invest the ideas, numbers, and behavior that destroys Wealth and how to avoid ’em, how not to invest wherever you get your favorite books. I would be remiss if I did not thank the correct team that helps put these conversations together each week. My audio engineer is Sam Danziger. Sean Russo is my researcher. Anna Luke is my producer. I’m Barry Riol. You’ve been listening to Masters in Business on Bloomberg Radio.

 

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US Shale Output Nearing Peak As Oil Prices Stagnate

Authored by Tsvetana Paraskova via OilPrice.com,

• Low oil prices and economic uncertainty are causing U.S. oil production, particularly in shale basins, to plateau or decline earlier than anticipated.

• Major oil companies acknowledge the accelerated peak in U.S. oil output, with the Permian Basin being the last major area still showing growth potential.

• Forecasts for U.S. crude supply are being revised downward as the profitability of shale production is challenged by current oil prices.

The decline in oil prices and the prevailing uncertainty about the economy, trade, and supply chains are accelerating the peak in U.S. oil production despite President Donald Trump’s ‘drill, baby, drill’ slogan.  

With the U.S. benchmark WTI crude prices at $60 per barrel, it’s mostly “hold, baby, hold” in the American shale patch, where output in the major basins except the Permian has already started to level off or drop. 

The U.S.-China 90-day tariff pause and the start of trade talks did little to erase the crash in oil prices from April, and even less to restore confidence or wipe out the high uncertainty regarding the economy and the cost of supply with unknown levels of tariffs. The shale patch has historically been immediately responsive to changing market conditions, but living in 90-day cycles of tariffs, no-tariffs, reduced tariffs, or surprise U.S. geopolitical moves could be too much for the oil industry, especially the smaller companies. 

The big ones, including ExxonMobil, Chevron, Occidental, and ConocoPhillips, aren’t voicing publicly concerns about doing business and doing it as usual at $60 oil. But some of them have already said that the peak in U.S. oil production is being accelerated and could be sooner than previously expected. 

The peak, whenever it occurs, does not mean a steep decline afterwards—it would rather be a long plateau of leveling off of U.S. crude oil production in which the slowdown in shale would be partly offset by rising output from the U.S. Gulf of Mexico, executives and analysts say.  

“As you know that most of the shale basins now have either plateaued or starting to decline, except for the Permian,” Vicki Hollub, President and CEO of Occidental Petroleum, said on the Q1 earnings call. 

“If companies continue to talk about dropping activity levels, I think the Permian could plateau sooner than we expected - and we had expected the Permian to continue growth through 2027,” Hollub added. 

Oxy had expected that U.S. production overall would peak between 2027 and 2030. 

“It's looking like with the current headwinds or at least volatility and uncertainty around pricing and the economy and recessions and all of that - it's looking like that peak could come sooner,” Hollub said, adding that the Permian would grow very little this year, if at all.  

Ryan Lance, the chief executive of ConocoPhillips, said on the company’s earnings call that at $60 oil, “the folks that don't have the kind of cost of supply sitting in their portfolio are going to find themselves cash-strapped and returns-strapped.”

“Obviously, the balance sheets are in pretty good shape across the industry, better than we were in the last downturn, but you'll see a lot of activity cut back,” Lance added. 

At current prices, ConocoPhillips doesn’t expect a lot of things to change for the company, although there would be changes if WTI sinks to $50 per barrel. However, “that's not our view today and doesn't represent where we think the market is going to be for the next few years,” Lance noted. 

The current mantra at ConocoPhillips is “don't whipsaw this thing too hard right now…so don't overreact, but don't put your head in the sand either.” 

Earlier this month, Diamondback Energy said onshore oil production in the U.S. has already peaked. 

“We currently estimate that the U.S. frac crew count is already down ~15% this year, with the Permian Basin crew count down ~20% from its January peak, and both are expected to decline further,” Diamondback said in a letter to investors. 

Liberty Energy, the fracking company founded by now-Energy Secretary Chris Wright, is also prepping for a slowdown in shale drilling.  

U.S. crude oil supply will rise more slowly than expected for the rest of 2025 and in 2026 and peak as early as this year, as WTI prices at $60 per barrel are testing the breakeven point of shale production, energy flows intelligence firm Kpler said last week. 

With the low oil prices, Kpler has now cut its U.S. crude supply forecast by 120,000 barrels per day (bpd) to 170,000 bpd for the rest of 2025 and into 2026, “as weaker prices threaten to slow shale production.”  

Despite steady near-term activity, growth is slowing in the U.S. shale patch, and U.S. crude output is set to peak this year, Kpler noted. 

Tyler Durden Tue, 05/20/2025 - 14:20