Faith in the Possible

Reid Hoffman's recent essay of the same name frames Silicon Valley as a quasi-religious movement. Its central doctrine: the technology company, deploying scalable technology, is the primary instrument of human progress, more so than the state, the church, or NGOs.

A response in the comments offered a sharply different perspective from China and the Global South. In that view, progress flows from state capacity and systemic organisation, such as grids, infrastructure, and industrial policy, not from startups operating in a vacuum. Silicon Valley's success, the argument goes, was materially underwritten by globalisation, American hegemony, and cheap offshore manufacturing. Faith alone did not build it. Where Silicon Valley defines progress as frontier invention, China and the Global South define it as the mass deployment of cheaper energy, transport, and housing.

The divergence runs deeper than philosophy. It maps directly onto the striking gap in public attitudes toward technology. In a Stanford HAI/Ipsos poll, 83% of Chinese respondents view AI products and services as more beneficial than harmful, compared to just 39% of Americans.

Western governments face a structurally sceptical public and will face friction deploying AI at scale. Chinese state policy aligns with public sentiment, and a coordinated industrial policy suggest a faster deployment curve for AI-linked infrastructure. China is most likely to translate AI capability into economic output most efficiently, even if America continues to lead in models. This still suggests staying long AI infrastructure enablers regardless of where the deployment friction lies, and perhaps short application-layer names whose valuations embed frictionless adoption curves.

The CBO Plans to Live Forever. They say optimists live longer, and no one harbours more optimism about the U.S. fiscal deficit than the Congressional Budget Office. In a recent interview with Fortune Magazine, CBO Director Phillip Swagel offered a notably sanguine assessment: the U.S. navigated both the 2008 financial crisis and COVID; Congress is "smart and thoughtful" when forced to act; bond markets remain stable; and policymakers will move before Social Security and Medicare reach insolvency.

There is a quieter counterargument embedded in the same data his agency produces. The deficit is not a cyclical shock like 2008 or COVID, which demanded an immediate response. It is the accumulated product of missed budget deadlines, chronic goalpost movement, and a broken appropriations process that has become structural. Bond markets may appear stable today, but the Treasury market is increasingly exposed to exactly the kind of slow-burn dysfunction that Swagel's crisis-response optimism does not address. Congress tends to be thoughtful when a cliff is visible. The problem is that this one is a slope.

The Treasury market vulnerability is not hypothetical. It is unfolding in slow motion. Term premium is already rebuilding, and any further dysfunction in the appropriations process or debt ceiling negotiations could accelerate it. For fixed income allocators, the traditional safe-haven logic for long-dated Treasuries deserves fresh scrutiny. For equity markets, a sustained re-pricing of the risk-free rate remains the most underappreciated tail risk in current positioning.

A Battery Charge is Now Like Going to the Gas Station. CATL's new Shenxing 3 battery charges from 10% to 98% in just over six minutes at normal temperatures comfortably beating BYD's nine-minute benchmark. The Qilin 3 battery delivers 1,000 kilometres of driving range from a pack weighing just 625 kilograms, a 255-kilogram reduction compared to an equivalent lithium iron phosphate system.

These are not incremental improvements. Chinese manufacturers have already translated earlier generations of this technology into formidable market share gains. Chinese brands now account for 93% of EV sales in Indonesia, 35% in Malaysia, and 74% of Brazil's EV market. In the UK, a useful bellwether given its lack of EU tariffs on Chinese-made vehicles, Chinese brands went from virtually no presence in 2020 to approximately 9–10% of total new car registrations in 2025. Spain, the Netherlands, Belgium, Norway, and Italy appear likely to follow a similar trajectory as localised production in Hungary and Turkey reduces Chinese manufacturers' exposure to EU tariff barriers.

With oil prices structurally elevated and charging times now approaching the friction threshold of a petrol stop, the core objection to EV adoption is weakening faster than most forecasters expected.

The charging time gap has now closed to the point where it no longer constitutes a meaningful barrier for most use cases. Combined with ongoing cost deflation in battery packs, the remaining obstacles to mass adoption are infrastructure and psychology, both of which tend to follow volume, not precede it. The medium-term read is continued share erosion for legacy OEMs in markets without meaningful tariff protection. For commodity markets, the oil demand displacement thesis is now on a shorter timeline than it was two years ago.

Autonomous Warfare is Here. U.S. Special Operations Command is establishing an "Autonomous Warfare Center", the first dedicated institutional infrastructure for AI-driven targeted killing. The centre is embedded in the FY2027 Pentagon budget and has attracted minimal congressional scrutiny. Notably, the same budget eliminates funding for civilian harm mitigation, which raises questions about whether the "human in the loop" assurances that have long accompanied discussions of autonomous weapons remain a genuine constraint or merely a rhetorical one.

The structural beneficiaries are clear: Anduril, Palantir, Shield AI, and their peers are positioning precisely for this moment. The more consequential implication is systemic. Automated kill chains compress decision timelines, reduce the cost of initiating military action, and therefore structurally raise the probability of miscalculation and escalation. A world in which the friction of lethal force is engineered away is a more volatile one.

Autonomous warfare is not a near-term market event, but rather a persistent tail risk that compounds over time. Lower friction for military action raises the baseline probability of conflict involving major powers or their proxies, with knock-on effects for energy prices, emerging market risk premia, and broad risk appetite. Defence technology remains one of the clearest structural growth themes in Western government spending, but the escalation dynamic it enables deserves a place in scenario planning that is not in most portfolio frameworks.

China Produces More Billionaires and Keeps It Quiet. China has quietly retaken the global billionaire crown. According to the Hurun Global Rich List 2026, it now counts 1,110-dollar billionaires against the United States' 1,000. The manner of the reclaiming is itself instructive: there was no announcement, no press tour, no triumphalism.

The posture of Chinese billionaires is a studied contrast to their American counterparts. They grant virtually no interviews, avoid public scrutiny, and treat visibility as a liability rather than an asset. They build in silence and stay off camera. The recapture of the top position was made, and nothing was said.

The composition of China's new billionaire class is heavily weighted toward semiconductors, industrial technology, AI, and new energy, reflecting where Beijing's capital allocation priorities sit, as distinct from its official pronouncements. This is patient, strategically directed wealth creation in hard technology. For investors tracking the China innovation story, the Hurun sectoral breakdown is a more honest signal of where durable competitive advantage is being built than any Five-Year Plan summary.

Private Credit: The Crisis Is Still Building. Sona Asset Management, a credit hedge fund, recently published a white paper on the private credit industry, drawing on an unnamed industry insider who noted that private credit managers were receiving deals "only if the CLO market rejected them". The fee-driven deployment culture, the paper argues, was designed to originate, not manage. The resulting concentration in software portfolios is now showing signs of acute strain.

The most prominent casualty this week was Thoma Bravo’s Medallia, which neared an agreement to hand over the company to its lenders, wiping out $5.1 billion in equity. Blackstone, KKR, Apollo, and Antares Capital hold the $3 billion in debt. AI disruption risk is cited as a secondary concern about future competitiveness, but the immediate cause is straightforward, an unsustainable debt load inherited from the cheap-money era.

The systemic backdrop is getting more serious. Insurance capital that flooded into private credit created what the Sona paper calls "permanent deployment pressure at scale that dwarfs any individual fund." Regulators have noticed with the SEC opening investigations into major managers, focusing on valuation practices and scrutinizing conflicts of interest. The Treasury has made information requests to funds and insurers. The Fed is querying banks on their private credit exposure.

The Medallia restructuring is almost certainly not the last. The more significant signal is the regulatory and remarking cycle now in motion. As managers are compelled to mark portfolios more honestly the gap between stated NAV and market-clearing value will become visible.

End Note

Given the latest assassination attempt on President Trump, I researched whether he has been the most targeted President in U.S. history. The data is biased in that with modern surveillance we know of more plots than in the 1800s. But what seems clear is that Barack Obama and Trump, with 4-6 assassination plots each, have had double the number of plots and attempts than from the George Bush and Bill Clinton eras.

Iran and the U.S. did not meet in Pakistan over the weekend and continue to implement blockades. Israel started bombing Lebanon again, although claiming that they are allowed to neutralize emerging threats as part of the ceasefire. France, Qatar, Saudi and Russia are also having talks with Iran. Too many talks; not enough sailing.

Omar Sayed