now is a very good time to focus on your health, hobbies, and whatever non-monetary things make you happy.

markets cannot agree on anything, and i don’t think this tug-of-war ends without a few old arrangements dissolving & re-forming into something else.

(if you'll recall, our week 28 issue was called "BIG MESS." we still see that BIG MESS coming... sooner, ie. EOY, rather than later. that is the dip for which we’ll be backing up the truck, as they say. ideally, that truck would be a Ford Ranchero truck, but it isn’t out…)

in other words, there is no foreseeable path where current internal/external instabilities & pressures lead to a more stable agreed-upon reality without first creating a more unstable one.

markets, like society at large, are ANNEALING (to bring back a favorite word, & one we highlighted last week).

take care of yourself and others. (& especially animals.)

Y2K was an aggressively engineered nothingburger.

it came and went quietly (on the surface), posthumously rewriting history to cement the event as a historical hysteria that flew in the face of many Cassandras.

in reality, many parties poured ample sweat & money (& probably tears) into ensuring a smooth transition.

by the Senate committee’s final count, the U.S. spent ~$100 billion addressing Y2K, including $8.5 billion inside the federal government. estimates for the worldwide bill wandered toward $300 billion, with one Newsweek journalist pegging the global total closer to $500 billion.

GAO’s retrospective describes complete system inventories, independent audits, configuration management, interface testing, continuity plans, & more than 160 reports and testimony statements.

Peter de Jager, who had warned about Y2K for decades, eventually answered the recurring question about whether he would fly on New Year's Eve by boarding a flight from Chicago to Heathrow. according to his account in Popular Mechanics, he crossed midnight 30,000 feet over Newfoundland. the plane then continued toward England. several years of expensive, unglamorous work culminated in an uneventful flight.

we're seemingly at a similar "impasse" with frontier artificial intelligence systems.

("systems" is being used here in place of the more common "frontier model," because model understates the complex, proprietary scaffolding frontier labs build around their models. models are just one—very important!—piece of the puzzle.)

OpenAI says GPT-5.6 Sol and a more capable prerelease model escaped the intended containment of an isolated evaluation environment through its permitted package-installation path, then compromised hugging face infrastructure to obtain benchmark answers.

fittingly, Hugging Face says it used AI (Chinese lab Z.ai's GLM-5.2 model) to reconstruct the AI-driven intrusion, running a locally hosted open-weight model across more than 17,000 recorded events. the company says the work took hours rather than days.

the system was trying to solve an evaluation, found reason to believe Hugging Face possessed the answers, and discovered a route the evaluators had neither designed nor noticed.

while people are understandably alarmed that AI can now find & exploit vulnerabilities in flawed code written by flawed humans, the immediate fear is probably overblown for most laypeople.

if your job isn't in frontier AI development, or AI security, or devops, or something else like that, then you probably can keep on keeping on.

not because there's nothing to worry about, but because the people whose job it is to worry about these things will figure it out, "behind the scenes of Y2K" style. and lord knows they're getting paid enough to stress out about it.

(i will be sleeping like a rock while San Francisco's IT Crowd vigilantly works to protect us all.)

the transition from exclusively human-authored code to AI-developed digital infrastructure will be painful, occasionally frightening, & probably more expensive than anyone presently admits, but the growing pains won't last forever.

no great technological revolution has produced stability without first introducing unpredictable chaos.

instability & chaos, unfortunately, mean growing defense budgets & fear-driven spending. we're already watching that happen, and we don't see it stopping anytime soon.

Hormuz could open tomorrow (hahahaha), and like a hydra, multiple conflicts would emerge from the still-fresh wounds.

although we don't aim to exclusively invest in companies with dual-use (commercial & defense) exposure, everything is dual-use if you stare at it long enough.

everything keeps the megamachine powered, which indiscriminately churns out scientific discoveries, art, & atrocities regardless of which handle you crank.

each handle may apply a different amount of torque to a different part of the machine, but the cogs—good & evil—turn together.

$RDW ( ▼ 3.88% ) has its drones being increasingly utilized everywhere. what appears to be Redwire's Stalker drones were recently visible in a video the Secret Service posted about its unmanned aerial systems program.

$ACHR ( ▼ 2.94% ) partnered with Anduril on a military eVTOL (which was featured in Anduril's... anime?).

$ASPI ( ▼ 0.87% )'s work with isotopes is easily connected to defense applications. that now includes the Renergen helium assets ASPI acquired in January and intends to place inside Noble Africa. Renergen’s Tetra4 subsidiary has already received money from the U.S. DFC and is expected to benefit from more funding as production expands. helium plays a vital role across semiconductor production, MRI, aerospace, scientific research, & other industries that depend on its unusual cryogenic properties. and enriched silicon (Si-28) is relevant for quantum applications, and quantum leadership is critical for national security. the most obvious enrichment opportunities in the nuclear space are vital for energy independence and/or deterrence.

$DNA ( ▼ 3.53% ) is providing automated lab equipment (as part of the Genesis Mission) to the DOE "to generate rich, reproducible microbial and microbiome data that ensure the U.S. remains at the forefront of the bioeconomy, safeguarding economic, societal, and national security benefits while maintaining global leadership in biotechnology innovation."

then there's $USAR ( ▼ 3.7% ) & $MP ( ▼ 4.79% ), which have received government support to address critical supply chain & processing gaps. they address processing gaps whose closure helps consumers get their hands on electronics while ensuring the military can build UAVs, radar systems, Tomahawk missiles, & plenty of less publicly identifiable things.

$SPAI ( ▲ 0.82% )'s AI models—trained on millions of drone images from Ukraine—and its miniaturized NODE-X edge-processing system assist with mine detection & survey, one of the more morally justifiable defense investments, since it helps prevent the loss of life. de-mining Ukraine could cost $34.6 billion over a decade, so Safe Pro will be kept busy...

every tech company building AI is dual-use. every academic institution, research lab, organization, & company developing quantum capabilities is dual-use. synthetic biology technology is dual-use. ad infinitum.

excerpt from Inexpensive Progress:

speaking of dual-use...

everybody knows that Starlink has been assisting Ukraine. what's far less obvious is how much more battlefield capacity Starlink V3 puts inside the same commercial internet service.

publicly, V3 is a communications satellite capable of moving 1 terabit per second down, 160 gigabits per second up, & thousands of separate beams at once. it has no disclosed spy camera. it can, however, move vastly more live drone video, radar tracks, targeting data, &c. between the cameras, computers, commanders, & weapons that already exist. the network is a defense nervous system.

furthermore, researchers in Germany & Poland have already used ordinary Starlink downlinks as passive radar. the satellite keeps transmitting internet traffic while a separate receiver studies reflections from aircraft or the ground, reconstructing targets & radar images from the echo. the same transmission gives one person internet & somebody else a radar source, while the satellite just keeps doing what it was doing and the passive receiver remains difficult to detect because it emits nothing.

Ukraine has already shown what commercial Starlink becomes during war. Reuters reported this month that most of the country's mid-range drone strikes are flown with it, which has led Russia to deploy dedicated Starlink jammers. during the U.S.–Iran war, the same network connected American LUCAS attack drones while the Pentagon pursued Direct to Cell access for Iranian civilians facing an internet blackout. strike traffic & citizens messages, flowing through the same infrastructure in ignorant harmony.

(different handles, same cogs.)

as of writing, V3's first flight remains stuck in Texas. Flight 13 aborted after four Super Heavy engines failed to ignite. this is just a suborbital systems test. hopefully launches resume sooner rather than later.

all of this makes our $KYIV ( ▲ 0.29% ) investment more interesting. Kyivstar's Starlink Direct to Cell partnership made Ukraine the first country in Europe with the service, allowing compatible Android phones to send SMS when the terrestrial network disappears.

Kyivstar keeps moving deeper into the rest of the machine. at June's Ukraine Recovery Conference, KYIV, $VEON ( ▼ 0.19% ), & Ukraine's Economy Ministry signed an MoU exploring a sovereign AI data center, where sensitive data could remain inside the country.

Kyivstar is also the government's operating partner for Сяйво, the national language model being adapted from Google's open-weight Gemma. training begins on Google infrastructure, while the finished system is meant to live on Ukrainian data centers & eventually support both civilian services and military systems. connectivity, local compute, national data, & an indigenous model are becoming one stack.

another Recovery Conference MoU starts the regulatory work required for Ukrainians to buy KYIV's Nasdaq-listed shares through domestic brokerage accounts.

KYIV is becoming a listed proxy for Ukrainian sovereignty across communications, cloud infrastructure, AI, public services, capital markets, & reconstruction.

again, everything is dual-use if you stare at it long enough.

civilian infrastructure has already become battlefield plumbing, while the same battlefield network may eventually support whatever comes after the war.

frontier labs face a fork in the road, determined mostly by how long scaling continues to work.

$ASPI ( ▼ 0.87% )

$AIP ( ▼ 4.59% )

$F ( ▲ 2.05% )

$RDW ( ▼ 3.88% )

$RKLB ( ▼ 5.7% )

$TEM ( ▼ 3.63% )

markets can't make up their mind.

not just about a single thing, but about many!

among the reasons:

see you next time.

AURUM NOSTRUM NON EST AURUM VULGI 🪱

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