That was exhausting. And it was only a short week. Iranian civilization and the White House insider trading desk were given a bit more time to exist under autocratic regimes while Schrödinger’s ceasefire broke out everywhere but in the Strait of Hormuz and Lebanon. This paradox seemed to inspire Melania Trump who went to the Presidential podium to assure the world’s press that Epstein criminality was not a hoax, but at the same time that she “never had a relationship” with dear Jeffrey. I’m thinking that’s a “relations” denial but that’s the Clinton nostalgia in me. Anyway, this very strange First Lady intervention has prompted some very short-term thinking about what exact Epstein bombshell is about to drop. The longer term implications might take a bit longer to decipher but, at the bare minimum, Melania appears to be keeping an eye on the catastrophic GOP polling for the mid-term elections this November. In fact, there were a few other developments this week which prompted relatively light commentary levels but could have far weightier longer term impact. Let’s start with a prompt, but one of the AI variety…
Anthropic is the parent of the chat bot Claude which recently fell out with the Pentagon. Well, it looks like Anthropic might have prompted one of their LLM chat bots (large language models) rather too well. The latest reports suggest a cousin of Claude (certainly not Greg), Mythos, could be a bigger threat to the planet than Agent Orange in the Oval Office. Yeah, seriously. Apparently, and this is the really simple language version….Mythos was tasked/prompted to find vulnerabilities in software and systems deployed by the world’s biggest institutions, banks, utilities and blue chip companies. Mythos didn’t come back with one or two “exploits” or ways to hack software, it came back with hundreds even thousands of ways to hack into software systems. Mythos was SO good, Anthropic has taken the immediate decision not to release the model to the public. That’s not all. Some very senior people have been spooked by Mythos. Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell called the CEOs of America’s biggest and most important banks into a closed-door meeting this week at the Treasury building in Washington, D.C. Expect to hear a lot more about Mythos and wonder how long before Polymarket or Kalshi start running betting books on the probability of world destruction being at the hands of digital weapons rather than nuclear weapons. But if we stick with the nuclear threat…..
Earlier in the week, CNBC’s Trump-cheering anchor, Joe Kernen, was destroyed by former Transport Secretary, Pete Buttigieg in a toe-curling TV clip which has gone viral. Kernen tried desperately to amplify Tehran’s imminent nuclear capabilities but struggled to deflect from the strategically disastrous consequences of the Iran war including the shutting down of the Strait of Hormuz. “Whataboutism” is about to hit peak volume in MAGA land to drown out the inevitable rise in prices, inflation and voter discontent in the “golden age” of the USA. Peace talks begin at the weekend in Islamabad but the longer term consequences of world fuel supplies being cut by 10-20% will be felt for months to come. As each day passes, the global economy will pay the price of minimal shipping traffic passing the Strait of Hormuz. Before the war, daily shipping traffic averaged 130 vessels. Currently, Schrödinger’s ceasefire is delivering a daily traffic total of…… 6-7 vessels. Not 67, six…or seven. No wonder Trump is panicking, and that’s before he even checks the latest polls and actual votes.
Amid all the ceasefire headlines, US voters are beginning to shift sharply. In Georgia, former Trump lovey, Marjorie Taylor Green’s seat witnessed a 25 point voter move towards the Democrats. In another swing state, Wisconsin, politicised Supreme Court elections saw a 20 point shift to the Democrats. According to the election analysis publication, the Downballot, Democrats have improved upon their 2024 presidential election margins by an average of 11% in special elections so far in 2026 and roughly 13% since the start of 2025. Prediction markets, Kalshi and Polymarket, are giving Democrats 88% odds of House control and 53% for the Senate in November 2026. Meanwhile, closer to home, Hungary goes to the polls this weekend with the real possibility of Trump and Putin fanboy, Viktor Orban, being ousted from power. A particularly eye-rolling moment during the last week of the campaign was the the arrival of US Vice-President JD Vance to complain about EU interference in the election……while on a trip to Hungary to interfere in their election. The EU-US relationship has never looked so broken, and will take years to repair. Indeed, it’s increasingly clear from a European perspective that no senior US leader gets a pass for staying quiet during this insanity. It’s not the only upside-down shift in the world we used to know…
The downturn in the performance of software stocks like SAP, Salesforce and Microsoft has been a feature of financial market commentary in recent months, spawning multiple SaaSpocalypse headlines. I’m not convinced the valuation meltdown of software under the threat of AI is fully merited. Current valuation multiples, price/earnings below 20x, are back at pre-Covid levels and below those of lower growth consumer staples stocks like Walmart. In fact, Walmart is currently trading at higher valuation multiples than Amazon. Clearly, longer-term prospects for software have currently shifted in investors’ minds but perhaps the bigger story is in hardware. The semiconductor sector (ETF $SOXX) has risen by 108% over the past year while the software sector (ETF $IGV) has declined by 14% over the same period. This scale of market performance divergence is unprecedented and is a reminder (if the Strait of Hormuz isn’t already) that the securing of the supply of physical assets (atoms, molecules) is becoming THE strategic business edge in the global tech race, and not digital code (bits).
A final thought on performance, as Ireland’s government considers new tax frameworks and savings products to encourage households and businesses to take risk with circa €340 billion sitting in bank deposits. Of course, Spark (and our 60-strong stable of companies we have funded) have skin in this game so one hopes the government is mindful of the benefits of diversification across the entire investing spectrum. A narrow solution steering monies into already publicly listed (and funded) companies would be a missed opportunity to drive investment into our capital starved start-up and SME sectors. Oh, and the investment returns in private assets are certainly worth investigation. Our own EIIS Private Portfolio service launched just over two years ago has funded 24 companies to date. Current valuations and funding milestones/marks indicate an estimated (average) performance by the entire portfolio of somewhere near 25%. Steady stuff, and early yet as these companies are just 2 years into their scaling up journey. However, there is one other BIG factor to consider. The EIIS tax rebate scheme does work, and all Spark investors have been receiving their tax rebates. Now, here’s the interesting twist. That return of cash completely changes the returns profile of the portfolio above. The average return to investors (if you had invested in all 24 companies) is actually over 100%. In just 2 years, and that’s mostly cash, not just paper. Expect us to write lots more on this very soon.
Let’s call that a little prompt, with a very big long-term impact.
