Monty's Missive #3: May 24, 2026
The one about stretching inflation, conscience, climate goals, SOXX and more...
— [Image: AI]
Can you find all the Easter eggs? Well some are in your face, some maybe not so much. All correlating to the update itself.
If you’re new, welcome. If you’re here a while, it bears repeating:
This geographically incorrect rendering - while it followed my pretty detailed instructions very closely but not completely accurately - is why I also think AI is nowhere near the level where CEOs think it is.
The above image is the only AI-generated content on here. I think this is important to point out these days when lines seem to blur more and more on what’s human content. There’ll also be typos which I usually miss even though editing thoroughly and revisiting - but maybe not so thoroughly as to catch them all.
Why is it 10 topics since Number 1?
Coincidence, believe it or not.
It just happened in the first three ones. At least I’m consistent, and I stopped at number 10 because it’s getting… long.
I’d do less - or even more - as I catch sort my “relevant set” for the week.
But I will do the cutoff at roughly 20 Minutes of estimated reading time.
Unfortunately btw, Substack does not allow for hot linking to headlines… something they definitely need to work on - this way you could skip things that don’t interest you - though I fancy to think that everything I write is obviously interesting.
You can tell me about the length of weekly updates after 3 iterations here:
Just one click, it helps me get better:
This week, read about:
01. Let me get this Strait! Or: Cuba Crisis 2.0
02. Is Anyone Keeping Track of the “Iran Deadlines”?
03. Markets in for a tough time ahead?
04. AI & BS – a marriage made in heaven?
05. Kentucky Republican GOP nomination goes to Bond Villain Type
06. Transport Costs Indicate Future Inflation & “Cornering” the VLCC Market
07. TotalEnergies & BP want no “pull out” (of Windmill Project in North Sea)
08. Nvidia Earnings – Crushing It?
09. Germany & France aim for 40% stake in tank builder KNDS
10. Closing thoughts – is the Market “Crushing it” or “Getting Crushed”?
B. Bonus - Watching SOXX May 22 update…
01. Let me get this Strait! Or: Cuba Crisis 2.0
Cuba was getting “choked out slowly” by a US Blockade in the past weeks and months that, by my accounting, has not been very widely reported by any mainstream media outlets outside a few outliers who concentrated on the politics side and left the human suffering to the Cubans largely. One piece stuck with me specifically for the cynicism of twisting the message into a “solar revolution”:
— Source: CNN, May 13 editorial
The humanitarian suffering side was completely blacked out it seems to me aside some half sentences. As a reminder: the nation is 100% out of oil by now and there are rolling blackouts, reportedly lasting for full days, no gasoline left for even the thrifty and “adapted-to-scarcity regime” islanders who legendarily are maintaining one of the coolest vintage car fleets on the planet in Havana. They just can’t get newer ones due to being “blocked out of global trade” and buy western ”modern” cars. They are probably the best self-trained specialist thrift mechanics on these old-timers by necessity. Hopefully, after this latest episode of US strongman posturing, we can visit that Island again to see this:
— Cuban Car Legends - Image by Greg Montany on Pixabay
In less bright colors than the Havana motor fleet:
It seems to be “51st state shopping time” for the US administration, who are looking to lock down and secure one of the few close island nations that are not part of the USA “defense network”.
Cuba is geographically close enough to continental US, as an independent nation, to pose a credible “staging area” threat, which was exactly the case why the Cuban Missile Crisis was so serious.
There’s no threat of that magnitude today – at least known to the public – since the nation is notoriously malnourished, underdeveloped and sanctioned to all hell.
And now we have an additional military blockade, choking the country out of oil and the few goods they can trade?
What’s next? Bringing democracy to the islanders the way it’s supposed to be done?
And then? Getting the new leaders to sign to join the US as a fully-fledged member state? Or maybe just some “economic cooperation” based on the Venezuela example, adding a military base for good measure because of the above?
You can read more about all the “Straits” in my latest essay:
In Dire Straits
— Three Dire Straits, illustration. Not strictly “geographically correct”, but pretty nicely rendered.
02. Is Anyone Keeping Track of the “Iran Deadlines”?
Four weeks ago, the deadline for Iran to get back to US was set as “infinite” per the best interpretation.
But then it has been moved up again to “now”. May 17th:
03. Markets in for a tough time ahead?
If SOXX continues up (see Bonues section) the chances are that my “wobbly top” is invalidated and it’s off to the races again. This snapshot is interesting and I left it in because May 19 sent a very different technical picture vs. after Nvidi a reported on Wednesday.
I still wouldn’t want to be getting in now with a new long at these levels…
— SOXX iShares Semiconductor Index – Dayily Chart, May 19, 2026 – 1 day to NVDA earnings
There’s “smart money” with institutional-size flows that sits on a potentially 2x $INTC, $MU and many others who had a manic blow-off in euphoria. This FOMO inflow might just get reversed technically, while fundamentally, there’s still a severe shortage of HMB4 (newest generation high-bandwidth memory, needed for LLM inference) and GPUs - which to me seems very artificially conjured because Nvidia basically is the only provider of high-end GPU compute of note.
04. AI & BS – a marriage made in heaven?
Nvidia is now taking 2nd fiddle potentially going forward, with “previously thought dead” intel, ARM and AMD seemingly “catching up” on the CPU side and the whole “Agentic fever dream” sect that currently yells to “automate everything” needs more CPUs in their magical AI orchestra. I wouldn’t be amazed if they invent an absolutely new necessary part that you’d need to add to your symphony next as commonsense takes a backseat.
Speaking of which:
A lot of revenue forecasts are currently built on a lot of BS metrics:
Source: Ars Technica based on Fortune & first reported by FT (paywalled, archived)
A great piece from Les Barclays on this practice and how it feeds into financial models (and financing):
I’ll just focus on the report alleged by Microsoft & Amazon employees recently, with META reportedly hosting “AI leaderboards” internally.
And where would we be if our AI’s savior and deity Jensen Huang (CEO of Nvidia) wouldn’t propagate that metric as a “god-given” fact:
“If you have pay an engineer $500,000 […] and he isn’t at least consuming $250,000 worth of tokens, I’d be deeply alarmed…”
—Jensen Huang, CEO Nvidia, All-In Podcast. Watch scene here, read more at Forbes.
You see, tokens are the “fuel” that gets burned in conversing or working with an LLM model.
The short version is that it’s the analog of gas going into your LLM motor and the more you put in, the more it costs but the supposedly “better” your output is.
Only that metric is not telling the full story – if you bloat your prompt you also will use more tokens maybe for nothing and it might confuse your model of choice.
The model takes input, slices it into “tokenized requests” that are then assessed and weighted by the LLM algorithm and then fed back into “likely” output. They are still not “thinking machines”, that’s what people forget. They are getting good at contextual nuance, but you can still go down crazy rabbit holes the more you work with them.
Now, what would you say is the likely reply from a “save the climate” apostle when you talk to them about the wonders of AI and how it’ll “save the world”.
Will that person say “it’s good for the climate” or not? Try it out.
I bet you 90% don’t even know how models really work in the back end and won’t know that AI is a real climate killer by their specifically loose standards.
Fact is: It guzzles gallons water for cooling too-hot hardware that uses vast amounts of scarce resources (to build) and energy (to run) and it’s putting strain on local grids – worst use case example:
“Well done, Susan! That cat looks like Jack from accounting if you squint at it!”
(Carrie, Head of Accounts Receivables)
Wile this is the likely “correct” answer:
“Susan! That cat pic burned 200,000 tokens and with that energy used we could wash the company’s day supply of fancy espresso cups for our clients! Stop using your LLM for cat pics, I’m serious!”
(Craig, Head of Controlling)
The practice of “tokenmaxxing” has way more implications. Let’s talk about balance sheet cosmetics.
If modeling revenue for an AI-as-a-Service company, you’ll need some assumptions on future demand.
What do you think OpenAI should be going for with and without that malpractice of a box-checking middle-manager’s wet dream tokenmaxxing at their IPO? What if the factor of “tokenmaxxing” would be 5x that of “normal levels of token requests”?
Maybe once the practice gets eliminated due to being found out as “BS metric”?
The circular AI finance bro system gets another horse in the merry-go-round: first you had GPU selling to customers you lent money to in order for them to buy your hardware, this introduces data center demand forecasts built on models that potentially have tokenmaxxing statistics baked in as a potential “trajectory metric of rising token demand”.
I am working on a dedicated piece about this (out soon).
Question: ever wonder if AI can achieve the feat of making a circle rounder?
05. Kentucky Republican Congress Nomination Goes to Bond Villain Type
— Source: AP News. Did Ed Gallrein probably already buy a white cat and silver swivel chair?
Thomas Massie was the 15-year congressman of the Kentuckians. Massie was probably the last real holdout on what the word “conservative” means in classical terms - as in “conservate” size of state, budget, taxes and what arguably would be a sense of decency in your actions.
I can only follow this from “afar” but it seems the decency model is running out of favor. Decent people have no place in the current setup of the U.S. of A.
I don’t really know Gallrein, but based on the things you can see he basically is only missing one white cat and silver swivel chair away from being cast in the next gender-diverse and probably climate-neutral Bond movie.
For Republicans and the trajectory of state and budget in the US, this is bad news. Massie was a “holdout” on many hot button topics and he frequently raised his voice when all the yespeople in Congress just played along nicely and traded stocks based on their latest meetings.
Yes, he was just one decent and inconvenient no vote in a sea of eager agreeing beavers with whatever the POTUS comes up with, and yet:
While that one vote doesn’t change things, the message is “there is no place for different opinions”.
To me it seems Thomas Massies all over the world are like that tiny little uncomfortable voice in the back of anyone’s mind, that shred of conscience that despite whatever you are currently doing makes you feel a bit weird if you vote yes to burden your children’s children with 1.5 Trillion of new debt so the Military can have a few more rockets.
This is what the average politicians’ conscience probably looks like:
-- American Dad meets “Roger’s Conscience” in “Brains, Brains & Automobiles” (Season 5, Episode 4) – drowned out and caged. Roger might be good politician material!
And of course, if your conscience looks somewhat like that, no one tells you why this is “kicking down”:
Or, if you’re the Director of “White House Communications”, and feel infinitely secure and untouchable, you might post things like this on X:
-- White House Communications Director, Steven Cheung demonstrates his comms skills, artfully on X.
With massive credentials and a chiseled face (potentially chiseled out of a marshmallow) you can get away with (almost) anything.
And while we’re Bond Villains & Henchman:
— 007 James Bond “Goldfinger”, still one of the greats coming out of MGM Studios – maybe oddly accurate? Where it differs from reality: Oddjob was a mute.
Any parallels to anything in the real world of today are … coincidental as per the movie boiler plate.
Getting back on track here: Either you know what “decency” is and you likely have it, or you don’t and that might qualify you for political office in 2026.
But if you’re really smart you’d probably want to avoid politics. Just a guess.
If you lack common decency you’ll likely just vote for anything as long as your seat is not in danger and if your conscience is a mute and caged.
How about adding $1.5T worth of new debt on top of a mountain of already wobbly ~122% to US GDP, and rising like a hockey stick chart? What’s 1.5T more in the grand scheme of things? And what’s the grand scheme?
Maybe that’s warning no one wanted to hear about the Industrial-Military complex by Eisenhower, by all historic writings a decent man and maybe the last such US President interested in balanced budgets?
For which Pete Hegseth (and POTUS) are asking to put those $1.5T more.
1.5T is a lot of moolah for just the firepower industry and future generations will be delighted to know they have been burdened with by their parents, all decent people to boot, I’m sure.
Just a reminder:
Don’t we have our own circus to watch, you may ask, in Europe?
You’re absolutely right! How did you know and who blabbed?
Here’s the point: all this is a parallel.
Just like for Thomas Massie in the Republican Party of 2026, there’s no place for difference in opinion in the EU or local European parliaments – which are not the same, as a reminder. Whether voices of dissent are about “doing everything to save the climate” (and nothing else!), how to budget for it or how much to “protect your children” by mandating age verification checks on social platforms. Isn’t that nice of them, so caring and protective?
Of course, if you need to prove you’re not a child that’s just NewSpeak™ for Digital ID for children of all ages if you want to post what you think about 1.5T of new debt or similar things. But the official version sounds a lot “nicer”.
And is it only me thinking the hairstyles of our grand leaders are somewhat similar?
— DJT and VDL hammer out one-sided tariff deals and compliment their hairstyles on the EU summit (July 2025) 1
06. Transport Costs as Driver of Future Inflation & “Cornering” the VLCC Market
Source (originated by Logistics Managers Survey)
Logistics seems to be on no one’s mind – unless you’re shipping a package maybe and notice that prices have gone up at UPS, FedEx and DHL as well as postal services.
But rarely do “normal people” look at container freight rates or VLCC spot prices for oil & gas tankers. However, those give an important macroeconomic clue. They might be one of the most reliable “frontrunning” indicators of future inflation. Or an indicator something’s wrong – sometimes it’s both.
Everything gets shipped these days in part or in full. Buying “local” still might include parts that have been shipped. Packaged food has several ingredients that might have done some traveling.
Meaning: if this index goes up, production prices go up when new stock is shipped, which ends up in your favorite branded specialty sauce’s price tag potentially. Cooking locally and organic might have hidden fees from some ginger root sourced in India or China. So unless you live on potatoes and local-sourced stuff, depending on where you live, your diet might suffer tasteful consequences. And forget about locally sourced electronics. It’s not the 80s.
With this index at its highest since 2018 we have an indication that something’s about to be broken again – it’s likely freight shipping being cornered as well.
Coincidentally, there’s a Korean company (Sinokor) who is currently “cornering” the VLCC spot price market where oil tanker capacities are bid and booked, so inputs of oil/gas are affected by this very “interesting” approach to making a few bucks and this will factor in to the above statistic. And Sinokor is happily merging more fleets.
07. TotalEnergies & BP want to pull out of Windmill Project, Face € 750M Penalties in Germany
“Pulling out” is frowned upon generally as a good solution. Especially for agreed-upon business deals originally signed in 2023 to build out German North Sea windmill projects worth roughly 7.5GW capacity. At least on paper, that’s a lot of energy… if that wind is blowing.
TotalEnergies and BP, amongst other “investors” had bid for massive rights-to-build wind energy parks in a designated huge field owned by the North Sea country conglomerate of nine eager renewable energy beavers like UK, Denmark, Germany, Norway and others.
The task was to build about 100 GW of maximum windmills capacity reportedly.
The wind has turned however, and BP and TotalEnergies don’t want to build anymore.
They pledged roughly 800M € (~$936M at current f/x), of which reportedly roughly 10% have been paid so far as a security payment when the bid was successfully placed. That’s 80M € gone with the wind.
The whole deal was for a payment “plan” as the buildout of windmills commenced and until full payments were made – for a planned 70GW of potential capacity on paper.
This means: the German state now has the indelible task of:
1) Think about using that law they wrote for the effect of getting wind energy built on the high seas, the “SeeWindG” (“Ocean Wind Law”, Germans love poetically named binders full of paragraphs).
2) The law states a fine of “a factor of 100 multiplied with the unrealized energy installation size quotient” – (and the quotient for the security guarantee itself is stated in this clause, so 100€ per kW of “to-be installed energy”. Maybe someone didn’t do the math at BP & TotalEnergies – or someone did and they thought “hey, that’s cheaper than actually building the things”:
Napkin math for fines maximum:
TotalEnergies and BP share = 7.5 GW x 1,000 factor (kW) = 750 M€ fine.
It’s either a case of “should’ve read the fine print” or less FOMO in the energy “Renewables El Dorado” (2022-2025), where everything on paper was taken for granted, it seems.
The energy giants are citing a lot of (doubtful) reasons that sound more like “the dog ate my homework” type of defenses. “Everything got more expensive” – in which someone didn’t think it is at all possible rate regimes change, costs of financing to up, inflation hits hard on cost of materials after ZIRP for 12 years in Europe and ECB, and US-China tariff wars are waged, the country that owns a lot of the supply chain for windmills. Things like that. Gridlinks are another sore topic in Germany that an “energy giant” should probably have a way better grasp of realization vs. “planning on paper”.
And if you sign a deal for 750M€ I’d wager you have a good chunk of money for hiring expensive advisors to help you run scenarios of investment risk.
There’s the distinct possibility a higher-up tells controlling to shove it and model revenue based on the current scenario so we have a good story to tell.
Now it depends on German Energy Minister Katharina Reiche to decide if pulling the penalty card is in order.
Reportedly, there are also sore “loser bidders” that are complaining “but we’d have for sure built it!” - they would have pinky-sworn, for sure.
BP and TotalEnergies seem to have gotten a different idea with the prospects of actually building capacity approaching.
For Germany this only means: less energy if even only on paper. But maybe it helps to spur them finally into building less unreliable, random sources of energy? Here’s to hoping.
Some advanced reading available [2, 3] – to be taken with the usual “church of renewables” lens.
Share this with anyone who enjoys market updates with a twist:
08. Nvidia Earnings – Crushing It?
And then, there’s a little smuggling of sanctioned Blackwell GPUs going on as well as reported by several sources. [ex.: 4] So far, a few independent actors that allegedly are responsible according to recent charges, and one of the Supermicro co-founders? And is Chinese model DeepSeek run by Blackwell - or is this just a reporting op to make the chips even more “desirable”… if they need such a thing?
“This was an extraordinary quarter. Demand has gone parabolic. The reason is simple. Agenetic AI has arrived. AI can now do productive and valuable work,”
-- Jensen Huang, Nvidia Earnings Release, Wed May 20 about Nvidia’s GPUs (for ex.: Barrons)
The stock seems indecisive at best and whipsawed around a lot – so a long position right here is probably devoid of any “Margin of Safety” as laid down by Seth Klarman.
Earnings per share beat, 2x Net income, 85% revenue yoy (Nvidia earnings highlights)
With revenue almost doubled yet again and guidance up… the stock stayed flat outside of some usual volatility knee-jerk. I’d interpret this as a “sell the news” event, but the “buy the dip” crowd is reliably at it the day after, maybe providing great exit liquidity in case I’m right.
Guess the market’s definition of “crushing it” has changed with all the overblown expectations coming out of the AI trade.
09. Germany & France want Boy’s War Toys: aim for 40% stakes in tank builder Defense IPO of KNDS later this year
My impression is that there is a wave of “War FOMO” in Europe, specifically in Germany and France, the two biggest economies. How do I know? This could be a good pointer:
— per Reuters: Germany and France aim for 40% stake, respectively, in new Defence IPO of “KNDS” planned for 2026 out of Frankfurt.
Governments investing in corporations is usually the least amount of smart investment, even if it’s critical investments in the Defense Industry. In this case my argument would go: “Have you looked at how Ukraine shot down a platoon of Russian tanks in 2024?” – so you’re taking a stake in a company that builds gigantic, slow and expensive targets for agile drone warfare?
Oh, and since they’re also referencing the “Leopard 2”… maybe they didn’t get all the memos:
…drones often target the relatively thinner armor on the top of tanks – the areas that were historically less protected because earlier threats mainly came from other tanks or ground-based missiles. Today, they’re a window of opportunity for soldiers armed with new tech.
— National Security Journal report on Leopard 2 tank warfare in Ukraine
And as a side note: just by playing Call of Duty Modern Warfare, any juvenile knows that by using a Javelin Tank Missile System you can defeat even a heavily armored vehicle via the surface-to-air-to-surface attack vector, exploiting the “top weakness” of any tank:
In 2026 it’s not an expensive Javelin ($240K a pop without the actual launcher), it’s much cheaper explosive-bearing drones delivering the kill shot. Maybe even something as simple as attaching something that goes “boom” to your favorite heavier action cam drone.
Any of this should be recommended as educational for any defense procurement official.
But government money is usually dumb money, especially if funded by huge public debts that are intangible to whomever might be and dishing out the funds.
10. Closing thoughts – is the Market “Crushing it” or “Getting Crushed”?
I’d think the SOXX and the market overall driven by all this AI euphoria is still as wobbly as a drunken sailor after a night out binging before the next morning. He’s not down yet, he’s looking for more sailing. Seas are getting choppy, likely.
With all the obfuscation around the diverse conflicts around Iran/Hormuz, China/Taiwan and US/Cuba, paired with the deteriorating macro headwinds of rising yields and the 30-year US yield >5%. Those are all warning signals for extended stock rallies that most sailors can’t see because they don’t know if the sea is choppy or they’re still drunk from last night.
Chances are that “the market” is unprepared and maybe way too complacent about any prospect of the Fed Funds Rate actually getting a rise after midterms.
So, the current stagnant environment of “higher forever” euphoria and deterioration signals seems highly risky to me for just getting in without a second thought.
Still, there’s unloved corners of the market, in fact, there are very unloved ones in packaged food stocks due to the exact reason of the market seemingly expecting an inflationary regime where pricing power erodes - just my interpretation of the tea leaves, because there’s not much sense anymore to make of these valuations.
That’s just another signal the market is sending out. If you listen to its whisper – but that also means there are pockets of this crazy market that are deteriorating amidst all the bravado in NASDAQ and S&P. Just take a look at the beaten-down dog of ConAgra Brands. I am using this one as a proxy for the whole sector of “packaged food brands”. Those are literally being punished for something they can’t help: bad politics and inflationary monetary policies.
CAG is on its merry way to GFC bottom (~$10-11), if it gets closer you know we’re in for a fire drill.
Question for the ages: Will they be able to hold that crazy high dividend compared to current price and revenue - they can right now cover it, but with deteriorating vitals in revenue it doesn’t look like they should?
I kind of doubt it can hold - judged on how badly the market is trading the sector, inversely to how insanely high it’s pushing AI valuations seemingly unconcerned about their ability to even create the amount of expected revenue
The lesson here (for me) is:
I am still amazed at how much a stock of a well-established brand stock with proven revenue and some branding power can sell off while on the other end of the spectrum, you have Micron rising on sheer speculation and “forever projections in FCF models”.
Sure, ConAgra doesn’t sell Blackwells or High Bandwidth Memory - but in a real pickle a Slim Jim gets you further than a bag of Blackwell Chips™ (not a real product, though they should think about it). Those Blackwells are cruchy, but even with amounts of hot sauce they don’t sit as well.
Morale: you can’t (shouldn’t) eat GPUs but you can hoard Slim Jims to tide you over the apocalypse for a while while the AI bros wither away to obscurity.
Tentative verdict for now:
If treasury yields do rise further and if the Fed’s hand is forced even with Trump ally Kevin Warsh’s behind sitting in the Fed chair then I’d think the next repricing could be violent and to the downside once that “Wile E. Coyote” moment is realized.
Never forget what I tried to convey in Part 1 of my missives - the moment “the market” has its Wile E. Coyote realization and gravity takes hold, violently:
(as you can read in Missive #1, 10. Closing Thoughts)
As to when: my best guess would right now be:
Wile E. runs tentatively until after midterms. But that might change any second because who knows what more craziness can happen in-between then and now? Does the market even realize we might face an “oil rationing” in places?
I wouldn’t dare call that a forecast because if I did believe in it and it turns out correct, I’d go crazy meanwhile - because no one believes it until it's here.
There’s one last indicator that others in money management might believe the same (secretly), too:
— Hedge funds prime book short exposure - via MarketEar on X.
For markets, in-between “crushing it” while grinding higher and “getting crushed” by gravity there’s the inertia phase of “ignorant complacency”, my bet is we’re there right now.
Bonus: One last thing… watching SOXX May 22:
— (click image for full-size, I know dark mode can be a bit tricky to view)
Chart = May 22 Snapshot, 4h candles to show more of the manic “V” forming.
SOXX got turned inside out yet again thanks to “buy the dip”, despite Nvidia earnings being excellent and its stock trading somewhat down-sideways after.
The rest of the trade is just as euphoric as ever, with potentially just mechanical AI mania trading - if as per the 2020 “YOLO” playbook: if a lot of calls get bought, hedging is in the picture, resulting in the synthetic overall index melt-ups. A thing we’re seemingly getting too complacent with or “used to”?
Let’s see if the “top holds” as a rejection area or if it’s off to the races again (which invalidates my current skepticism about SOXX “being too high” and I guess the Q2Q3 stock fashion season is calling for “long SOXX”.
I’ll leave you with these somewhat bad SOXX puns until next time.
PS: Happy Memorial Day weekend to all who celebrate US-side!
Image Credit: © European Union, 2025, licensed under CC BY 4.0 from Bilateral Summit in July 2025