Israel Settling Scores, OpenAI Is Winning But Messy, 21 Lessons

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Let’s dive in…

Israel seems to be doing its best impersonation of Michael Corleone at his son’s baptism. They’ve leveled Gaza, decapitated Hezbollah, and are now hitting the Houthi’s. Iran prided itself on the “Ring of Fire,” it had constructed around Israel. These proxies were meant to protect it when it went fully nuclear.

I think we’ve just witnessed the largest balance of power shift in the Middle East in at least a generation. Who knows how this ends up but the scale and scope of it is impressive to say the least.

Many were shocked by Israel’s intelligence failure and slow response to Hamas’s October 7th attack. It looked like the Israelis had lost their edge. These actions show that edge is very much intact. What I’m coming to realize is that Hezbollah was always the bigger threat. They could make Israel unlivable with their rocket capability. Much of the intelligence community in Israel was rightly focused on that more existential threat.

Hamas was only ever going to be able to carry out terrorist attacks. Horrible and psychologically damaging but very limited in actual military impact. We’ll see how Iran responds but the regime there is unstable. I’m not sure how many cards they have to play but we shall see.

OpenAI is in the process of closing the largest venture capital funding round in history at $6.5 billion on a rumored $150 billion valuation. At the same time the company is transforming from a non-profit to a for profit B-Corp.

Watching this is fascinating. Elon’s mad because he gave them $50m to get started and it looks like he’ll own no stock. He’s suing. Microsoft is somehow converting its bizarre $10 billion investment from a year or two ago and Sam Altman will get some percentage of the company too.

Meanwhile the company is hemorrhaging senior leaders but it is way out in front of rivals with its base model and now a reasoning model. Unraveling this mess is a full employment program for Wall St lawyers.

Russell Napier is an economic historian. I know putting those two words together usually puts people to sleep but he has an important message. In this talk, he goes through his 21 lessons from financial history. This reads like a New Rules guidebook.

He shows how we’ve gone through similar experiences in the past and how it’s played out. De-globalization, inflation, and how governments will respond with more market intervention. You need a historian to understand this. Economists with a text book are blind to these key lessons from history. This gets my highest recommendation possible.

Keep learning,

Alan

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