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The oil spread nobody's watching: Brent's premium to WTI is $10.47, up from $3.26 at the end of July. Widest month-end gap since May 2018.
When U.S. crude gets that cheap vs. the world, export docks get busy and Gulf Coast refiners buy feedstock at a discount.
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Accountability Check
Hedgeye has covered $MCD for almost 20 years
This Harvard Biz School dude Chris Kempczinski denied us @HedgeyeFood access to @McDonalds Investor Day today (because we're bearish)
It's just sad. So are the "elites" running parts of Corporate America. They get paid while you lose money
OWL retweeted
Nebraskans work hard for everything they earn.
Pete Ricketts never had to.
Here's "How Pete Got His Jobs" Pt. 1.
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Gotta love trying to pick investments at the intersection of "duopoly in a world-historical transformational technology" and "measuring our profit margins by excluding clearly, obviously recurring costs that are technically not opex"
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REAL CONVERSATION: The AI Bubble and the Market Risks Ahead app.hedgeye.com/insights/187… via @hedgeye
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Next 10 years of US deficits, per CBO. Two things worth noting: 6%+ of GDP used to require a war, recession, or pandemic, and this baseline assumes none of those. Ten straight years, no downturn. That's likely the best-case scenario.
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These two are going to get married.
The only question is whether they do so willingly...
or if there is a shotgun in the room.
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The best way to phrase it is that college used to be a ticket into the upper-middle class and now it's a tax you have to pay to stay in it
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"I'm not offended by all the dumb blonde jokes because I know I'm not dumb. I also know I'm not blonde."
-Dolly Parton
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Let me explain the technical problem for US/Canada/Mexico trade and why this trade dispute is so consequential.
NAFTA 2.0 essentially treats North America as one giant market. Not absolutely but lots of benefits afforded to counter parts inside not afforded to countries outside.
China recognizes the US has become much more restrictive on trade with China. So China says, I can still get the benefit of trade with the US by routing my trade through Mexico or Canada.
Oddly enough, the US is saying to Mexico and Canada, we want the assurance that when we buy a product that says Made in Mexico it is made in Mexico with as many non-Chinese parts as possible, by non-Chinese workers, and by non-Chinese firms. It's kind of amazing that Canada objects to that idea.
What is notable is that Mexico has actually cooperated with the United States on these trade issues. This is not to say they are perfect no country is, even the US is not, but Mexico has decided very clearly its interests are best served by blocking Chinese activities like trans-shipment. US-Mexican trade is booming.
Conversely, Canada is actively undermining US interests by signing deals with Beijing and rejecting American requests to block and take actions on things like trans-shipment, high risk imports, and money laundering just to name a few. You can rail against the US and Trump all you want but the basic requests are not burdensome or anything draconian.
If Canada really wants to align itself as the conduit for Beijing into the North American market, that is your sovereign right to pursue that course of action. It is also the US sovereign right to say we disagree with that and will not bind ourselves to your agreements with Communist China. Sorry not sorry
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In 1948, a 32-year-old at Bell Labs published a paper nobody fully understood.
Engineers found it too mathematical. Mathematicians found it too engineering-focused. One prominent mathematician reviewed it negatively.
That paper - "A Mathematical Theory of Communication", became the founding document of the digital age.
The man was Claude Shannon. Father of Information Theory.
At 21, he wrote the most important master's thesis of the 20th century.
Working at MIT on an early mechanical computer, Shannon noticed its relay switches had exactly two states - open or closed. He had just taken a philosophy course introducing Boolean algebra, which also operated on two values: true and false.
Nobody had ever connected these two things.
His 1937 thesis proved that Boolean algebra and electrical circuits are mathematically identical, and that any logical operation could be built from simple switches.
Howard Gardner called it "possibly the most important, and also the most famous, master's thesis of the century."
Every digital computer ever built traces back to this insight.
At 29, he proved that perfect encryption exists.
During WWII, Shannon worked on classified cryptography at Bell Labs. His work contributed to SIGSALY, the secure voice system used for confidential communications between Roosevelt and Churchill.
In a classified 1945 memorandum, he mathematically proved the one-time pad provides perfect secrecy, unbreakable not just computationally, but provably, permanently, against an adversary with infinite power.
When declassified in 1949, it transformed cryptography from an art into a science. It laid the foundations for DES, AES, and every modern encryption standard.
At 32, he defined what information is.
His 1948 paper introduced one equation:
H = −Σ p(x) log p(x)
Shannon entropy. The average uncertainty in a probability distribution. The minimum bits required to encode a message.
Three things followed:
> He defined the bit - the fundamental unit of all information. His colleague John Tukey coined the name.
> He proved the channel capacity theorem, every communication channel has a maximum rate of reliable transmission. You can approach it. You can never exceed it.
> He unified telegraph, telephone, and radio into a single mathematical framework for the first time.
Robert Lucky of Bell Labs called it the greatest work "in the annals of technological thought."
Where his equation lives in AI today:
Cross-entropy loss - the function training every classifier and language model, is derived directly from H. Decision tree splits use information gain, which is H applied to data. Perplexity, the standard LLM evaluation metric, is an exponentiation of cross-entropy.
Every time a neural network trains, Shannon's formula runs inside it.
He also built the first AI learning device.
In 1950, Shannon built Theseus, a mechanical mouse that navigated a maze through trial and error, learned the correct path, and repeated it perfectly. Mazin Gilbert of Bell Labs said: "Theseus inspired the whole field of AI."
That same year he published the first paper on programming a computer to play chess. He co-organized the 1956 Dartmouth Workshop, the founding event of AI as a field.
The man:
He rode a unicycle through Bell Labs hallways while juggling. He built a flame-throwing trumpet, a rocket-powered Frisbee, and Styrofoam shoes to walk on the lake behind his house.
He called his home Entropy House.
When asked what motivated him: "I was motivated by curiosity. Never by the desire for financial gain. I just wondered how things were put together."
In 1985, he appeared unexpectedly at a conference in Brighton. The crowd mobbed him for autographs. Persuaded to speak at the banquet, he talked briefly, then pulled three balls from his pockets and juggled instead.
One engineer said: "It was as if Newton had showed up at a physics conference."
He died in 2001 after a decade with Alzheimer's, the cruel irony of information slowly leaving the mind of the man who defined what information was.
Claude, the AI model, is named after Claude Shannon, the mathematician who laid the foundation for the digital world we rely on today.
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Whoever bet against Salem @dsaleminvestor 2 months ago is getting an education in patience
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There are people you should trust. @rcwhalen and @NickNemo17 are truly doing G-d's work these days. Whalen's latest summary says it all:
"We believe that the unwind of 777 Partners and the literally hundreds of affiliates involved in this fiasco provides a picture of how the private credit trade is going to end. Millions of retirees who depend on life insurance and annuities could be affected by unsound management practices by private credit and equity managers who care only about profits." theinstitutionalriskanalyst.…
Yep @HedgeyeComm 🔥 And $NFLX over TRR. Thanks Freebird!
Freedbird on fire!
@HedgeyeComm reiterated the Long Bomb on $NET on The Call @HedgeyeTV this morning
And hit the bottom of the RR as well. 🎁
Jenks telling you to buy $RCL on a move towards $400 @HedgeyeGLL - lots of stocks to buy/sell
Another driver of hospitals’ bad debt? wsj.com/finance/if-you-get-i…
Another driver of hospitals’ bad debt? wsj.com/finance/if-you-get-i…
























