Insider Newsletter: Issue #329

There is a particular kind of fear stalking the markets right now. Fear of AI hollowing out the economy and concentrating power into half a dozen hands. Fear of the Strait of Hormuz never quite reopening. Fear of governments seizing pension funds, of windfall taxes, of conscription, of the crypto-collateral trojan horse, of digital serfdom dressed up as “modernisation.”

We understand where it comes from. The algorithm rewards alarm. Podcasts that traffic in apocalypse get clicked. New X personalities arrive every week with a microphone, a thesis about the end of civilisation, and a Patreon link.

What none of them ever have to answer is the question that actually matters...given all that, what are you doing with your money?

That is the question we keep getting asked. So we answered it. At length. In this issue.

We Said These Things Out Loud

A few months back we wrote that the war in the Middle East was not going to resolve, because none of the major actors had a rational reason for it to resolve. That piece on the incentive structure of the conflict has aged better than anyone in the Capitalist Exploits offices would have wanted...and we would much rather have been wrong about it.

We wrote that the closure of the Strait of Hormuz was not a six-week story. We did the twelve-order cascade through copper, fertiliser, and the global grid. We wrote a planting-season piece warning that the disruption to fertiliser flows had a clock attached to it, and that clock did not care about diplomacy.

The market is still acting like the second half of that cascade is not coming. The math says otherwise. There is a section below that walks through actual transit times for Saudi crude bound for the US Gulf Coast, vessel by vessel, with a working assumption of about thirty days laden. The point of doing the maths is to identify when the flow actually reduces. That is when the price story stops being a price story and becomes a shortage story. We are arriving there now.

Half of the rest of the issue is a list of long-running calls now showing up on the front page of newspapers.

The US Selective Service System has just confirmed automatic registration of the draft pool starting in December. We told subscribers this was coming. The rebuttal at the time was the cliché that the youth were too lazy and too soft to ever go along with it. We argued, then, that this was beside the point. It is.

Australia’s Albanese government is openly tapping the country’s $4.5 trillion superannuation pool to fund $53 billion in defence spending. The UK is pulling pensions into estate tax from 2027 and converting “productive finance” into the polite term for redirecting your retirement savings into government priorities. We have written for years that pension funds are too big a pile of money sitting in front of too desperate a parasite class for that pile to remain untouched. Hungary did this in 2010. Argentina in 2008. Ireland in 2011. Poland in 2014. Cyprus in 2013. The full playbook is below.

ESG has already begun its quiet retreat. Recent Australian polling shows more than 70% of voters supporting new refineries and oil and gas drilling in the wake of the Middle East war. We said years ago that energy security would oust ESG once the price of oil broke a particular line in the sand. That line was crossed quietly some months back.

All of this falls into the same pattern. We were not predicting black swans. We were reading the incentive structure of debt-saturated democracies. The incentive structure has not changed. Which is why the list is not done.

Three Things Worth Pricing

Three numbers landed our desk this month and earned their own sections inside.

Semiconductors are now 14% of the entire US stock market. At the dot-com peak the figure was 7%. The chip sector then crashed 80% over the next two years and took twenty more just to claw back to that level. AI has carried the weighting from 4% to 14% in five years. Either the demand justifies it...or what we are watching is the largest single-sector concentration since the dot-com mania, and arguably since 1929.

The US 30-year Treasury yield has been compressing inside a three-year trading range, just below 5%. Long ranges and tight compression do not break gently. We are sticking our necks out below with a number for where the 30-year is headed inside five years. The number is high enough that a great deal of corporate America’s capital structure does not survive it. We have done the working through what that does to a stock trading at 50x earnings. The result is not pretty.

And there is a third thread, more philosophical than tactical, that has been quietly bothering me for months. If a fiat currency is the unsecured liability of a central bank...and if the next monetary architecture is going to be anchored to something real, as the BRICS payment discussions, the central bank gold buying, and the commodity-backed settlement structures all suggest...then the entities that hold the physical nodes of that system will be on the right side of the reset. The piece below begins to sketch what owning a stake in that infrastructure could actually look like, using a financial instrument that pre-dates fiat by roughly seven hundred years.

Below the Line

Below the paywall sits the rest of Issue #329. Five names in the Big Five this month, including one down 90% since 2023 and a pair we have written about repeatedly that have already done 200% off the lows but still trade beneath their 2014 levels. Two option structures on the OIH ETF for the readers who want to play the bullish oil services thesis with leverage built in. The pension-raid playbook, country by country. The 30-year yield framework. The treasury reframe in full.

If you are a paid newsletter subscriber, keep scrolling. If you are not, this is the kind of issue where the gap between watching things happen and knowing how to position for them is at its widest.

The Insider Service...the portfolios we actually run, the entry levels, the position sizing, the named companies behind the themes...lives at capitalistexploits.at.

The portfolio does not require an apocalypse to pay. It only requires history to keep rhyming with itself.