Fish Rots from the Head Down:

The week ended on October 16, 2026, interesting news items to look at for the past fortnight are:

Fish Rots from the Head Down: It is mid October and the economic impact of the Zionist Shiite War are showing up everywhere especially in countries with politicians who value their own throne more than the well-being of the country they lead. It is at this time that we need to discern the white wash false signs and politically designed narratives from the complete underlying facts. (Fig, 1)

Trump/Putin Diesel Deal - on October 9, 2026, the U.S. Department of the Treasury issued a temporary license suspending sanctions on Russian diesel deliveries until April 2027. In exchange, Russia is pledged to supply several million tons of diesel to U.S. and global markets to help combat soaring domestic fuel prices ahead of the November 3 midterm elections. What was not announced was , Ukraine;s access to Starlink and Starshield satellite internet communications was abruptly restricted immediately following the announcement of the Trump/Putin diesel deal and with it Ukraine’s drone strikes against Russia. (Fig. 2).

Little Financial Appetite for Super Intelligence -  The Australian data centre developer Firmus rocketed in private market valuations from about $1.85 billion in late 2025 to roughly $15 billion by August 2026. The valuation was achieved by a private placement to NVIDIA and Blackstone. In late September, Underwriters (Morgan Stanley, BOA, JP Morgan and Morgans Financial) distributed aggressive pre-marketing reports valuaing the company up to US$58B -US$70.4B. On October 1, the IPO was launched at $43.7B ($11.0 per share). By October 8, cold response from potential investors triggered a repricing to $8.25 per share (25% discount) and went as low as $5.50 but even with that, the IPO was not successful and on October 10, investors completely walked away. (Fig. 3).

The Firmus debacle showed institutions no longer buy the over-the-top hype of Super Intelligence. This news is a shock-wave that reverberate all around the globe resulting in a bloodbath of AI and semiconductor stocks. (Fig. 4).

Leading the pack is SK Hynix of South Korea (-47.7%), Corewave, a US Data Centre developer (-29.87%), Micron Tech, US memory chip manufacturer (-18.47%), TSMC (-9.03%), Oracle (-6.87%), Nvidia (-6.67%) and by comparison Silver (-5.61%) and Gold (+0.2%).

Since the end of September 2026, credit default swaps (CDS) on AI-related companies have widened sharply, hitting record levels, with particularly severe stress on data center operators reliant on debt financing. Coreweave CDS spread breached 1,100 basis points, Oracle to 300, Softbank 424 basis points, Nvidia 90 and Meta 105 basis points.

In our last Blog, we reported that the 2026 first half earnings of Google and Alphabet and other AI related stocks were significantly boosted by unrealized gains on private valuations of AI related investments. The same logic that catapulted the Mag 7 earnings upwards would weigh down their earnings to crash.  

Like the 2008 sub-prime fiasco, when the AI dominoes finally fall, it will cause a cascading effect first on the $25 trillion combined value of the US AI and semiconductor stocks, then the $2.5 trillion Private Equity and Credit market, the Tsunami will travel to hedge funds, ETF, insurance, pension and endowment funds, to commercial banks, stock exchanges and central clearing houses and ultimately central banks and national treasuries. The final act is to default or print and you all know they have only one option - a humongous print similar to the Wiemar Republic. (Fig. 5).

Dear readers, I may be early in my alarm but that is what alarms are designed for.

MOAB (Mother of All Bombs) and the new Mid East Geo-political Realities -  CNN reported that US military had deawn up contingency plans to use MOAB to strike Iranian energy facilities and nuclear sites. The MOAB is a large-area blast weapon and not a deep-penetration “bunker buster” and unlikely to have reaeffect in destroying Iranian nuclear facilities which typically are deeply buried under the solid granite Pickaxe Mountain. Sources described it as more of a “psychological warfare” tool. Independent military analysts ascribed the use of MOAB is designed as a cover for Trump to exit from the Mid East war theatre similar to the theatrics of bunker buster bombing in 2025 which accompanied a broadcast of victory and mission accomplished. (Fig. 6).

In a previous blog titled “Preparation Precedes Blessings”, we have identified a possibility of 10 regional power blocs to emerge after a fall of the Anglo American Zionist Alpha, we are one step closer to that realization. (Fig. 7)

Finally, Neil Ferguson, historian and co-author of the book “The Fourth Turning” identify the current state of politics is in favour of strongman and authoritarian leadership, interstate conflict, technological advances that made legacy defence systems obsolete and AI advancement that usurp traditional institutional powers. (Fig. 8).

My friends, be alert and expect the unexpected to happen.

Revelation 13:1  Then I stood on the sand of the sea. And I saw a beast rising up out of the sea, having seven heads and ten horns, and on his horns ten crowns, and on his heads a blasphemous name. 2  Now the beast which I saw was like a leopard, his feet were like the feet of a bear, and his mouth like the mouth of a lion. The dragon gave him his power, his throne, and great authority. 3  And I saw one of his heads as if it had been mortally wounded, and his deadly wound was healed. And all the world marveled and followed the beast. 4  So they worshiped the dragon who gave authority to the beast; and they worshiped the beast, saying, "Who is like the beast? Who is able to make war with him?" 5  And he was given a mouth speaking great things and blasphemies, and he was given authority to continue for forty-two months. 6  Then he opened his mouth in blasphemy against God, to blaspheme His name, His tabernacle, and those who dwell in heaven. 7  It was granted to him to make war with the saints and to overcome them. And authority was given him over every tribe, tongue, and nation. 8  All who dwell on the earth will worship him, whose names have not been written in the Book of Life of the Lamb slain from the foundation of the world. 9  If anyone has an ear, let him hear. 10  He who leads into captivity shall go into captivity; he who kills with the sword must be killed with the sword. Here is the patience and the faith of the saints. 

Destructive Hubris

The week ended on October 2, 2026, interesting news items to look at for the past fortnight are:

Destructive Hubris: My family is on heightened alert as we cross into the final quarter of 2026. Yes, Trump displayed a certain level of courtesy and respect toward Xi and the two great nations kept their swords in their sheaths. But what was not announced was the off-ramp presented by Xi to ease global tensions and the looming economic disaster—simply for Trump to honor the MOU already signed with Iran. Allow me to draw a too-simplistic analogy: Trump, as an ex–real estate developer, should know that both Israel and the US’s cheap bids for real estate in Gaza and Iran were inadequate. Rather than a revision to give better terms, Netanyahu and Trump instead employed gangster tactics and totally alienated all other stakeholders, particularly their creditors. I can only draw the conclusion that they are both exhibiting “destructive hubris.” (Fig. 1)

Destructive hubris is extreme overconfidence, arrogance, and pride that causes a person to ignore warnings, overstep human limits, and trigger a catastrophic downfall. The consequence of destructive hubris are: (i) Sudden, severe failure that harms not just the individual, but organizations, teams, and innocent bystanders, and (ii) complete loss of trust, broken relationships, and poor decision-making within groups.

1. Expiring Deadlines & Escalation Risks: (i) September 28: Expiration of a deadline issued by Mohsen Rezaei regarding the U.S. naval blockade. (ii) September 30: A crucial 45-day deadline set by Iran on August 16 for the U.S. to lift its naval blockade, after which Iran threatens to shift from a defensive stance to an active offensive posture. (iii) September 30: An Iraqi resistance deadline demanding a full military exit by the U.S. forces from Iraq. (Fig. 2)

On Thursday, September 29, U.S. forces pulled out from their last bases in Iraq, a departure celebrated as a victory by Iran and its allies, who now have deep influence in the country where 4,500 Americans died during more than two decades of war. (Fig. 3).

To every political and military analyst, the departure from Iraq signaled that (i ) the U.S. cannot defend her final 2,500 troops in Iraq, (ii) by extension, the US cannot defend her Gulf allies, and (iii) a new security arrangement will emerge in the region, pivotal around the relationship with Iran. Cast our memories back to 2009, when the U.S. built her largest embassy in the world at a cost of $750 million. She felt invincible and had grand plans to totally dominate the richest oil region in the world. 7 wars in 7 years to remove all resistance from Iraq, Syria, Lebanon, and finally Iran. The plan failed. The petrol dollar use-by date officially expired on September 29, 2026.

2. Yen Carry Trade: The Pillar of Japan’s Industry—The Auto Industry is under severe stress, with Toyota and Honda set to reduce annual production by 800,000 vehicles. (Fig. 4).

With import costs rising rapidly and export revenue down, speculators are having a field day shorting the yen. Yet with destructive hubris, the US Treasury Secretary challenged the world with his yen and bond intervention that “He is the House.” It took just thirteen days for Bessent to eat humble pie. (Fig. 5).

The term “I am the House” came from a pop culture reference in the Netflix television series The Gentlemen (Season 1, Episode 6: "All Eventualities"). (Fig. 6).

The unwinding of the Yen Carry Trade is by no means out of the woods. Of course, this has happened before in the neo-mercantilist period of pre-WWI, when countries weaponized their FX rates to compete and national exchange rates were like cannonballs rolling on a ship’s deck. (Fig. 7).

A single country’s attempt for own survival will result in defensive measures by other countries.

Compare and contrast the proxy for creditworthiness expressed in terms of the yield of the 10-year notes. (Fig. 8).

Within the same period, the exchange rate of CNY has strengthened against the other currencies despite the fact that China was the sole nation that lowered its interest rates. (Fig. 9)

3. Destructive Hubris in AI Trade - Although the IPO of Anthropic was delayed, its Form S-1 was leaked and showed that in 2025, Anthropic had revenue of $4.6 billion, an operating loss of $8.06 billion, a net loss of $42 billion, and $518 billion of future computing commitments, of which $400 billion is non-cancellable take-or-pay. On this very skewed set of financials, Anthropic is targeting a valuation of $2 trillion. So far this year in 2026, Amazon and Google have booked unrealized profits due to the increase in the valuation of Anthropic by $70.2 billion for Amazon and $78 billion for Google in the first half of 2026. Had Amazon and Google had a slightly larger stake, they would have been required to adopt equity accounting for Anthropic’s operating loss instead of a huge profit on a private valuation. When we put this into context, the reported first half of Amazon’s profit was only $62.65 billion ($70.2 billion from Anthropic valuation), and Google’s first half was $174.77 billion ($78 billion from Anthropic). These tech titans’ results are not as robust as they appeared.  

For critics who may have doubts about my thesis regarding AI valuation, may I present below the credit market’s overall assessment of AI (Fig. 10).

The takeaway points from the credit market observation is:AI-related credit is trading at a wider spread than non-AI credit in both Investment Grade (IG) and High Yield (HY). The divergence is much larger in High Yield than in Investment Grade.

(a) IG AI–non-AI spread difference: 18 bp → 37 bp from January to September. HY AI–non-AI spread difference: 110 bp → 165 bp.

(b) The AI credit premium has generally widened during 2026. IG: approximately +19 bp increase in the AI/non-AI differential. HY: approximately +55 bp increase.

(c) HY shows the strongest evidence of investor discrimination. The much larger spread differential suggests investors are demanding substantially more compensation from AI-related lower-rated borrowers.

(c) The divergence accelerated during the year. By August/September, the difference between AI and non-AI credit was considerably greater than at the beginning of 2026.  

4. Which Domino to Fall first: We had a long history to guide us of how and when a fiat currency fails. The cycle of life is remarkably simple. Rise: Driven by initial trust, convenience, and commerce.  Fall: Caused by debasement, over-issuance, and inflation.  Replenish: A forced return to hard assets like gold or silver after trust collapses.

There are 4 primary reasons behind a fiat currency failure: 

(a) Over-Printing: Violates scarcity.  (b) Unsustainable Debt: Violates Solvency.  (c) Loss of Confidence: Violates trust.  (d) War & Crisis: Violates economic stability.

Allow me to capture this history from experiences both in the West and the East. (Fig. 11) and it does not matter which domino falls first.

Unlike the GFC in 2008, the world is polarized and divided, and countries are not working in concert to hold the old system together. Even within a single country, the K economy is against nationals uniting to share the burden of making amends for a failed social order. There is no more energy to prevent chaos from breaking out.

My friends, be warned and be prepared.

Proverbs 16:18  Pride goes before destruction, And a haughty spirit before a fall. 19  Better to be of a humble spirit with the lowly, Than to divide the spoil with the proud. 20  He who heeds the word wisely will find good, And whoever trusts in the LORD, happy is he. 21  The wise in heart will be called prudent, And sweetness of the lips increases learning. 22  Understanding is a wellspring of life to him who has it. But the correction of fools is folly. 23  The heart of the wise teaches his mouth, And adds learning to his lips. 

Insanity

The week ended on September 25, 2026, interesting news items to look at for the past fortnight are:

Insanity: On August 21, 2026 I sounded an alarm that a clear sign would be visible that the USD hegemony will crack by October this year. Having explained both the technical and fundamental aspects in the last two blogs, this week I like to take stock of recent data points that reinforce my conviction. This hopefully would allow readers to judge whether my forecast is still on track or whether insanity has set in on my thinking. As is typical, any bold forecast would receive its fair share of cynicism and ridicule. (Fig. 1)

1. Interest rate movements - One of the mistakes made by a casual observer of the financial market is that the US Federal Reserve always has the power to control key global interest rates. This is because the controlled MSM has spent years educating the public that it is. Quite the contrary, the Fed is just another follower of market interest rate movements and has recently been a slow follower. The truth is the Fed can only change the Fed Funds Rate, and typically the Fed follows the market rate of YR2 rate of Treasury notes. (Fig. 2).  

Remember the Fed chant of “transitory inflation” in 2021, the market determined that inflation was out of control and sold off low-yielding Treasuries from mid-September 2021, it was only 163 days later that the Fed finally accepted her error in judgment and began a series of interest rate hikes.

The Fed had recently, on September 17, raised interest rates by 25 basis points. (Fig. 3).

This would have no impact on the Trump Administration to reduce spending, but such an increase in interest payments on the humongous $40 trillion of federal debt means that the interest payment will be similar to any other increase in government deficits and will fuel inflationary pressures. (Fig. 4)

showed after an initial knee-jerk reaction of narrowing the FFR spread, the gap between FFR and Treasury Yield resumed its upward momentum.   

2. US Out of Cash - The technical driver of my foreca-st was that by October 2026, the US economy will be out of cash (Fig. 5).

This week, there were two clear signals toward that forecast. (i) SoftBank offered a $10 billion USD bond priced at around 9–10% when the average non-investment-grade bonds was trading at 7.4%. (Fig. 6).

Both Softbank and the lead bookrunner (Citigroup) knew they would be scrapping at the bottom of the barrel for cash, as both the U.S. Treasury and corporations are crowding out each other for the interests of investors, and (ii) Wall Street analysts have reported that US banks have tightened credit to consumers and corporations to the tune of $1 trillion.

3. AI Problems Surfaced - Oracle ( one of the key hyperscalers) issued a force majeure notice to Blue Owl Capital regarding "Project Jupiter," a massive 2.45-gigawatt AI data center campus in Doña Ana County, New Mexico.  (Fig. 7).

 4. The West is trapped in both the Ukraine War and the Iran War and needs China’s Help - In an op-ed, the Wall Street Journal Editorial Board outlined five key points and warnings Donald Trump should present to Chinese President Xi Jinping, including halting military and targeting assistance to Iran, protecting U.S. artificial intelligence models, defending Taiwan's peaceful status quo, ending rare-earth mineral economic coercion, and using tariff powers to stop support for Russia. Read the full editorial at Wall Street Journal (Fig. 8).

Would China cut off its major energy supplies to let US aggression triumph?

5. Crack Spread - Anyone who had simply focused on the spot crude price increase this year from US$60 to the current price of US$97.47 (+67%), would have severely underestimated the impact of the inflationary pressure brought on by the current geo-political conflict. (Fig. 9).

A crack spread is the price difference between a barrel of crude oil and the refined petroleum products made from it. At the end of January 2026, the crack spread was $25 per barrel, but it has now expanded to over $70 (+210%). The crack spread has widened because refinery capacity in the Middle East and Russia has diminished due to war damage, which prompted operating refineries elsewhere to increase their margins. What is rarely reported in the MSM is the cost of oil transportation and insurance due to severe disruptions and risks. Very Large Crude Carrier (VLCC) daily spot and charter rates have skyrocketed over the past year, with benchmark spot earnings surging from historical averages of $20,000–$50,000 per day up to historic peaks exceeding $1 million to $1.2 million per day on key routes like the Middle East to China, representing roughly a 20-fold to 24-fold increase driven by geopolitical conflict, longer routing around the Cape of Good Hope, and severe vessel supply constraints. So far, the price at the pump has gone up by approximately 70%, but due to a delivery time lag and the depletion of most countries’ strategic petroleum reserves, I am afraid we have not seen the worst-case scenario at the moment.  

6. Runaway Food Cost - In my previous blog post, I reported that for every calorie of food on our plate, on average, a man needs to put in 15 calories of energy. A major portion of that energy input (up to 40%) is fertilizers and pesticides. With the closure of the Strait of Hormuz, there is a supply squeeze for nitrogen and sulfuric fertilizers. (Fig. 10).

As sulfuric acid is essential to convert potash into potassium chloride, the supply of potassium fertilizers will also face shortages. (Fig. 11).

Year to date wheat  and barley prices have increased by 38% and 26% respectively. There are reports that some farmers in Australia has ceased planting and sold the fertilizer stockpile to raise cash.

I will continue to keep a watching brief on global inflation and the factors that may have a serious impact thereon.

Revelation 6:5  When He opened the third seal, I heard the third living creature say, "Come and see." So I looked, and behold, a black horse, and he who sat on it had a pair of scales in his hand. 6  And I heard a voice in the midst of the four living creatures saying, "A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not harm the oil and the wine." 

Nothing Stops This Train

The week ended on September 11, 2026, interesting news items to look at for the past fortnight are:

Nothing Stops This Train: In my previous blog, I provided a technical indicator as to why I boldly forecast that an unwinding of the dollar hegemony will occur in October this year. In this blog, I will try to flag the fundamentals involved.  (Fig. 1)  

1. The Triffin Dilemma - The Triffin dilemma is an economic conflict that occurs when a national currency also serves as the global reserve currency. The dilemma comes in two parts: (a) To supply global liquidity: The world needs a steady, abundant supply of the reserve currency to fund international trade and foreign exchange reserves. This forces the issuer to run persistent trade deficits (buying more from other countries than it sells) and (b) To maintain currency confidence: Flooding the global market with its currency and running high trade deficits weakens the perceived value and stability of the currency, eventually eroding the confidence required for it to remain the world's reserve standard. (Fig. 2).

To the credit of Henry Kissinger, his design of the petrodollar has extended the shelf life of the USD as a global reserve currency by 40 years (1974 to 2014). Witness blow graphically, how the Triffin Dilemma worked out in U.S. current account deficits from 1971. (Fig. 3)

2014 was a pivotal year when China stopped adding her current account surpluses in USD to her national reserves. 

2. Ponzi Accounting - Once China stopped recycling annual trade surpluses into US Treasuries, alarming gaps began to develop in US sovereign funds flow. First, U.S. domestic purchases of treasuries need to step up to compensate for foreigners dragging their feet to recycle their trade surpluses. (Fig. 4).

Then there was the endless wars and COVID which has to be funded. The sad truth is that US citizens as a whole have very little savings. (Fig. 5)

To maintain confidence in the USD, the U.S. Treasury and the Federal Reserve began Ponzi accounting to whitewash the funding gaps. All the accounting tricks that caused the collapse of Enron in 2001 were brought in to make the U.S. National Accounts do not look as sick as they should. Where there were insufficient foreign buyers, hedge funds were brought in to warehouse bonds in offshore financial centres (London, Tokyo, BLICS and Liechtenstein) using leverage, swaps, and derivatives. (Fig. 6).

Where US domestic demand was insufficient, the same hedge funds were brought in to do domestic basis trade. (Fig. 7).

The sums involved in these synthetic demands are humongous and are estimated by Wall Street analysts to be around US$8 trillion. Every night, these positions are funded by the Fed in collaboration with crony central banks using swap lines of up to $5T with the rest via interbank SOFR of up to $3T. The top five hedge funds—Citadel, Millennium, Capula, ExodusPoint and Balyasny—accounted for  $3.5 trillion of these synthetic demands, and their combined equity is only $200 billion. A 5% swing in bond prices would trigger an immediate $7 trillion in liquidation. To put this in context, the so-called risk-free US10YR Notes already had a YTD price drop of 6.26%. Just pause and think about why Bessent is screaming at the top of his lungs. “I am the House”. (Fig. 8).

3. False AI Narrative - The frontier US AI models will go the way of the first movers in railways, dot-coms and optical-fiber telecoms. By that, I mean, despite being a disruptive technology, the first movers will likely go bankrupt, but those who came later will reap the reward.  ChatGPT is running out of free web data to train (Reddit, X and free web sites). They are taking advantage of a change in US law to buy thousands of second books outside the U.S. to scan and train. Proprietary data farms like Thomson Reuters or People's would use open-source platforms to develop their data into income streams. 1% of customers of OpenAI and Anthropic provide 80% of their revenue. These customers are only in the hundreds.

So the reverse pyramid of US AI is like a few hundred customers ( a lot are AI startups with no revenue but funded by Venture Capitalist) spending altogether $23 billion (actual 2025). With that, OpenAI and Anthropic are running losses at least twice that amount. This, in turn, has to support a computing commitment of $1.2 trillion to the hyperscalers (Amazon, Google, Microsoft, Meta, and Oracle), which in turn commit $750 billion to buy NVIDIA chips. NVidia in turn provide circular vendor financing. The hyperscalers are borrowing billions at rates of 6% to 7% in the capital market, and this squeezes Bessent in the bond market. Bessent in turn, squeezes Takaichi.  All the US big tech cash flows have or about to turned negative shortly. Banks that have lent big bucks to Private Credit to on lend to the special purpose vehicles of Hyperscalers to build data centers are getting nervous. In reaction, banks are buying CDS (credit default swaps) against the big techs to protect their lending exposure. So share price of Mag 7 naturally lag the general market for a change. Guess who is writing the CDS and are also foundational lenders to Private Credit which provided financing to data centers. If you have learned your lesson at the sub-prime fiasco in 2008, you would know the answer—the insurance companies. Just pause and think about why Jensen Huang is screaming at the top of his lungs. “AGI has arrived” and congratulates OpenAI’s latest model, Astra. (Fig. 9).

 

The following is an excerpt from a technology analyst of Astra - The model can draft complex 3D models (such as turbofan engines), but it omits crucial engineering parts (bypass ducts, fuel injectors, bearings) because it mimics visual form without understanding physical principles, mechanics, or causality. Despite the marketing buzz around GPT-6 / Astra operating CAD/KeyCAD, models still fail on fundamental physical-world tests (e.g., scoring ~31.7%–32.3% on the CreatePT physics benchmark). 

When one truly understands the human neural network, one should be totally humbled that no machine in our lifetime could come close to the potency of the human mind. Yes, there are narrow aspects of computing that would excel any human being but in the total context and comparing apple to apple only a fool or deceiver will make a claim of AGI or Super AGI.

4. Depletion of Strategic Petroleum Reserves and Munitions — If one comes right down to basics, one can relate the physical economy or warfare is an exercise in energy transformation. Military analysts estimate that for every barrel of oil used at the front line of battle, 5 barrels of oil directly and indirectly another 35 are needed for logistical support and munition manufacturing. (Fig. 10).

For every calorie of food on our plate, on average, man needs to put in 15 calories of energy. (Fig. 11).

How sad the last superpower nation is run by a bunch of amateurs, and the world is coming fast to a day of reckoning. There will be grave consequences for allowing fools to run amok the global supply chain of energy and fertilizers. The U.S. Strategic Petroleum Reserve will run dry in October 2026, and the price of oil will spike. Equally, there will also be a fertilizer shortage and by extension food.

Be warned and be prepared, my friends.

Isaiah 26:20  Come, my people, enter your chambers, And shut your doors behind you; Hide yourself, as it were, for a little moment, Until the indignation is past. 21  For behold, the LORD comes out of His place To punish the inhabitants of the earth for their iniquity; The earth will also disclose her blood, And will no more cover her slain.