Paul Donohue

Harvard Business Review just published a super interesting piece. AI’s biggest shock may be that nobody can price the future cleanly anymore i.e. we all are staring at a "AI Fog" i.e. the range of outcomes is now so wide that people cannot tell whether today’s prized skill, product, or business model will still pay off a few years from now. AI’s first big economic effect is not automation itself, but the collapse of foresight. The hidden cost of AI may be a collapse in conviction, as its erasing the visibility that modern finance depends on. Modern capitalism runs on the assumption that tomorrow will rhyme with today closely enough to justify big, slow bets. On long bets like degrees, hiring plans, factories, software valuations, and infrastructure, and those bets work only when the future is readable. All these depend on one quiet belief: the future is legible. AI attacks that legibility before it fully rewires any one industry. That hits workers first, because a medical degree, MBA, or coding career looks weaker when AI agents may absorb diagnosis, analysis, drafting, research, and junior software work. That hits companies next, because stock prices depend on durable future cash flow, and terminal value breaks down when AI can erode moats in software, services, and even specialized manufacturing. That changes behavior fast. Students hesitate to buy expensive human capital when the job at the end may be redefined halfway through training, and companies hesitate to hire when junior work, software work, and coordination work are all moving targets. Financial markets feel the same pressure, because once AI casts doubt on a company’s durability, the terminal value carrying much of its valuation starts to look less like math and more like faith. So the immediate economic consequence of AI may be shorter horizons. Less skyscraper, more tent. Less irreversible commitment, more staged investment, modular teams, and organizations built to learn before they lock in. It points to something subtler and probably more important: when institutions cannot see clearly, they stop making the kinds of commitments that built the old economy. --- hbr .org/2026/04/the-future-is-shrouded-in-an-ai-fog

$AMZN $GOOGL $META $MSFT after the bell. A big % of the overall S&P. Even bigger % of compute Cap Ex.

"If you really want to make money, found an agentic AI company. I mean, build an agent to do something. This is the agentic period in AI. Everyone's going to build agents. The agents are all going to compete." ~ Eric Schmidt, Ex Google CEO.

This is true of startups too. You launch to learn what you should have built.

Interesting and true—to an extent. Software development will become more like social media creation, but there is a threshold for information security that will require creators to be certified before users consider trusting them with data.

#CreditCrisis #JamieDimon @jpmorgan Dimon’s Core Message: Resilience Today, But Prepare for a Harsher Credit Cycle Dimon has been consistent: the U.S. economy showed resilience in Q1 2026, with consumers still earning and spending, businesses healthy, and tailwinds from government spending, deregulation, AI investments, and Fed asset purchases. However, he repeatedly stresses an “increasingly complex set of risks” that could collide like “tectonic plates.” Key risks he highlights (from his April 2026 annual shareholder letter and earnings call): • Geopolitical tensions: Ongoing wars in Ukraine and Iran, broader Middle East hostilities, terrorism, and rising tensions with China. These could spike energy and commodity prices (oil shocks reminiscent of the 1970s). • Inflation and rates: The “skunk at the party” could be inflation slowly rising (not falling) in 2026, leading to higher interest rates and falling asset prices. Interest rates act like “gravity” on assets. • Trade uncertainty and fiscal deficits: Large global deficits and shifting trade policies (e.g., tariffs). • Elevated asset prices: High valuations create extra downside risk if sentiment shifts. • Credit standards: Modestly looser in recent years (weaker covenants, payment-in-kind structures), plus limited transparency in private credit. On the next credit cycle, Dimon said: “There will be a credit cycle one day. I think when there’s a credit cycle, losses will be worse than people expect relative to the scenario.” He isn’t calling for an imminent recession but urges conservative preparation because hidden weaknesses could amplify losses. Private Credit: Not Systemic, But Still a Watch Point The ~$1.8 trillion (some estimates higher) private/leveraged non-bank lending market has seen stress (e.g., recent losses and investor pullbacks). Dimon and other bank CEOs downplay systemic risk to big banks: • Losses would need to be “very large” to meaningfully hit traditional banks. • Big banks’ collective exposure: over $128 billion (JPM ~$50B, Wells Fargo ~$36B, Citi ~$22B). They describe it as “largely a repricing of liquidity” rather than a core threat and say they’re comfortable after stress testing. • Dimon: “I’m not particularly worried” about private credit triggering a broader crisis, but he still flags weaker transparency and valuations that could worsen a downturn. The bigger concern remains the overall credit cycle rippling through the economy, not just this niche. What Q1 2026 Big Bank Earnings Actually Showed Despite Dimon’s caution, results were strong, reflecting current economic momentum: • JPMorgan Chase (JPM): Record/near-record quarter. • Net income: $16.5 billion (+13% YoY). • EPS: $5.94 (beat estimates of ~$5.45). • Revenue: ~$50.5 billion (+10%, beat ~$49.2B), driven by record trading ($11.6B, +20%) and higher investment banking fees (+28%). • Loans +11%, deposits +7%. • Credit provisions: $2.51B (down from prior year); net charge-offs manageable. • They trimmed full-year net interest income (NII) guidance slightly to ~$103B, signaling peaking “over-earning” from rates. • Capital returns: $4.1B dividends + $8.1B buybacks. • Other big banks (early reports): • Citigroup: Record revenue (~$24.6B in some reports), strong start to restructuring (“Project Bora Bora” nearly complete), solid trading and fees. • Bank of America: Solid profits, consumer spending up (debit/credit card +6%), equities trading strong, NII growth. • Wells Fargo: Mixed but generally resilient; consumer/business strength noted amid “complicated” risks. Overall themes from earnings: • Resilient consumer: Card spending up 6–9% across banks; no acute deterioration yet. • Fee and trading tailwinds: Markets and dealmaking boosted results. • Credit quality: Provisions managed; banks not seeing widespread issues but watching consumer areas (e.g., potential softening in spending). • CEOs broadly echoed “resilience”

Iran can't find all their mines in the Strait. Doesn't seem like that has been priced into /CL (or /ES).

Not a small matter

Pakistan saves the market into the close. Overnight Globex swings from social media posts awaits. Anyone trading it is an insider or crazy.

Software jobs increasing for those with experience.

Anticipated an end of quarter mark up, but 1,000 Dow handles was a little more than expected. Hope to make it through the night w/o a White House post reversing course yet again.

Claude's Auto Dream, so far, is a nice time saver for keeping memory.md organized, while allowing me to maintain control.

Dylan Darling! Johnnies Sweet 16!

A shift in the workforce from pre-AI positions to new hires for Agenting and Workflow software jobs. The massive growth in information that can be analyzed will create new software needs for corporations. Costs will decrease and economic activity will increase.

Over 33% intraday peak to trough in /CL yesterday. Oil retreated from ~$120 to ~$85 today. $13 expected move priced in for next week.

“Equity-like returns with downside protection. 
Low correlation to public markets. 
Proprietary deal flow. ✋ And a gate… in case anybody gets ideas.”

YTD Performance: 📈S&P: +0.49% 📉Nasdaq: -2.47% 📈Dow: +1.90% 📈Small Caps: +6.74% 🥇Gold: +21.67% 🛢️Oil: +17.10% 💵US Dollar: -0.65% ₿ Bitcoin: -25.08% #YTDPerformance $SPY $QQQ $DIA $SPX #GOLD $GLD #Bitcoin $BTCUSD $IWM $RUT $USD

10Y yield falling. Credit spreads rising. Flight to safety? AI deflation? Both?

Appears to have decoupled 🤷‍♂️. Crypto in search of a new narrative.

Except for Covid, last year was the worst year for economic growth in the last nine years.