Weekend Reading #377

This is the three-hundredth-and-seventy-seventh weekly edition of our newsletter, Weekend Reading, sent out on Saturday 15th August 2026.

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What we're thinking.

This week saw what we consider to be the announcement of something significant and systemic. And while the word systemic usually conjures up negative thoughts when it comes to financial markets, in this case it is in our view emphatically positive. Monday saw Nvidia announce a joint initiative with all the largest asset managers and private credit providers on the planet. While the usual skeptics have rushed to talk about circular financing again, this is a real wood from trees moment. Our take is that compute is becoming embedded in the financial system. And it is being done very much deliberately. The hyperscalers have used cashflow and now have begun using debt to finance their AI rollout plans but will eventually come to a point where markets say no more, as they hinted over the course of the past month or so. So, who then is going to bankroll the largest private infrastructure plan in US history? The answer is the public. This plan announced on Monday is what some would call evil genius. Blackstone, KKR, Apollo et al create products backed by the underlying compute to fund the build by offering a yield product to institutions (and maybe thereafter retail as these guys are good at doing). These will be great products until they are not. But at this point the return to investors doesn't even matter. The scale of what is about to come is gargantuan. Compute is becoming part of the machinery of markets, and the message is that the AI buildout is not a flash-in-the-pan. Neocloud providers added to the excitement with both Coreweave and Nebius releasing stellar results. A key point has been that the useful lives of older GPU's have been extended once again. A core part of this ambitious plan is that underlying GPU values do not collapse. These results help in this moment no doubt. And with the plan, the opportunity to be a neocloud provider now will exist to anyone who wants to take the risk. THIS IS NOT BEARISH. Maybe one day it will be, but it is actually closer to the beginning than the end. Furthermore, Sandisk announced some long-term guidance Thursday emphasizing 80% GROSS margins until 2030 which does put pay to any argument about cyclicality, if not certainly the extension of the cycle.

With so much going on one could almost forget about Iran. One simply must remember that most of what we read in the West is anti-Trump and his regime. While it appears that he is constrained by the looming midterm elections and fears that a spike in oil prices will derail his party at the polls, it underplays the implosion of the opposition. No one really knows what the Dems stand for and there is lots to unfold. What if the siege of Iran works? What if they still win the midterms regardless? It is difficult to see a bull case unless one thinks from first principles - something sadly scarce today.

What we're listening to.

I've read Stephen Pressfield's books before and when he appeared on Rick Rubin's pod I had to listen. He is a really interesting fellow who views his characters (and especially his villains) like children. His original success was The Legend of Bagger Vance, but he branched from there to become a successful military historical fiction author. I loved his take on Alexander the Great and listening to him made me excited for his next one, The Arcadian, which sounds rollicking. DC

What we're reading.

A big theme for me this week is sport. And I don't mean to watch. The LA Lakers sold this week to Josh Kushner and Bob Iger for $12.5bn which is a big number considering it was only sold last year for $10bn. Nice flip for Mark Walter (don't know who he is but he is now much richer). What's also interesting is that this week a consortium including Jeff Bezos is seemingly buying a stake in Liverpool Football club at a valuation of around $6bn. Could it be that in a world where AI is going to dominate all virtual content the demand for real things is going to go up A LOT. I think so.
 
James Aitken put together this piece on markets and the Fed which is a good read. He believes that the market is taking Warsh's seeming quietness as a sign he will be dovish. And that he argues is a mistake. Warsh, as we have written in our view, is trying to reduce spoon-feeding by giving no guidance and he reluctance to go into detail is more likely attributed to this. We also note that the market has now priced in ZERO hikes this year. Do what you want with this info, especially with Jackson Hole coming up!
 
Darius Dale again echoes the above sentiment, repeating his logic on Forward Guidance this week. I emphasize his work again because he really does get the big policy and macro calls more often than not.
 
After finishing the Red Rising series, I needed a palate cleanser and tried a spy thriller by David Ignatius. Phantom Orbit is his latest and its full of action and education because it's about satellites and space - a more modern problem but one that is growing in significance. It involves the Russians, Chinese and Americans and I raced through it in 3 days. DC

So it looks like Tether does have what it says it has – at least they certainly do now, after announcing that KPMG conducted a full-blown audit of their reserves including counting physical gold bars. Sceptically, one could obviously say “that’s not to say that they always had it”, and honestly who knows? We are here today now, and they’re good for the money with a $6.8bn USD surplus to spare (based on the mark to market value of their book). Are the marks good? Is the paper as good as the marks? KPMG says they’re clean – up to each of us whether to trust that judgement.
 
While briefly revisiting the Crypto rabbit hole, I came across this article about something called Casascius Bitcoins – physical Bitcoin pieces created more than a decade ago which are now collector’s pieces, both by virtue of their physical rarity and by virtue of the BTC they contain (or rather, the private key within). Shaped pretty much like medallions, each one contains a private key controlling quantities of bitcoin in various denominations (25, 100, 500, even up to 1,000 BTC each), sealed beneath a tamper-proof holographic seal. The owner of a Casascius Bitcoin could obviously open up the seal and use the private key to move the Bitcoin away; conversely, a sealed Casascius Bitcoin is a physical representation of the value it contains – a true 1 of 1. Fascinating story, and one that started as fun experiment, and ended up as one of the rarest collector’s items in the world.  EL

What we're watching.

The CNBC roundtable with Jensen Huang and the private credit CEOs is an absolute must watch and is the source material for the comments in the "What we are thinking" section above. Compulsory homework.
 
I finally went to see The Odyssey this week. A month after release, it was still a sellout. The cinema was packed. Movies are making a comeback and it’s awesome. Seems like everyone has had enough of sitting at home watching and scrolling simultaneously and wants to get out. The trigger was a movie that is actually good. One that took risk to create. A lesson there for sure. As for the film itself, bear in mind I’m not a student of classics though I wish I was (I’m not going to be).  The classics snobs have belittled the movie as historically inaccurate. The culture guys have labelled the casting woke. For me I just went to see a movie to be entertained and it was AWESOME. Best film I’ve seen in many years. Can’t even remember the best one before this it was that long ago. It was a proper epic. Magnificently shot. The story itself is a tale as old as time and the experience at the Imax was an assault on the senses - loud and hectic. Absolute must watch. DC