Republicans are going to have a terrible night, and the simple reason why is that Trump has put up perhaps the worst *performance* this term of any president in a century or more. Remember that he entered with an actual mandate: the House and Senate, a popular vote victory and a swing-state sweep, and 6-3 Supreme Court. Democrats were afraid enough to vote for mild but real immigration restrictionist legislation in the Laken Riley Act. Everyone wondered how far the "Vibe Shift" would go. Trump managed to turn that into essentially zero durable wins whatsoever. He personally *hates* the very idea of legislation, the notion that he would have to spend time going back and forth with Congress, learning details and making compromises. So he simply didn't do it! He didn't make a compelling case for abolishing the filibuster. He didn't try communicating clearly to the public in support of popular bills to get to 60 votes. He just decided not to do it at all. So they passed an unpopular tax cut, some funding for ICE, and a sop to the crypto industry, and that was basically it. Least productive Congress in decades, due to the tastes of one man. Trump adopted one of the worst macro policies we've ever had: high deficits, high tariffs, and attacks on central bank independence. We managed to pay higher interest rates while still having high trade deficits AND weakening the dollar. Just a total failure. On immigration, perhaps THE signature issue, Trump essentially min-maxxed effectiveness and backlash. Instead of trying to leverage the political moment for new laws and a self-deportation agenda (that is, walling off the economy to remove the benefit of irregular presence in the US), he opted for a maximally aggressive approach. The administration spent attention, funds, legal manpower on stunts like deporting random people to Salvadoran prisons with essentially no due process. ICE and Border Patrol were encouraged to be aggressive and confrontational, which helped contribute to the shooting deaths of American protestors. It turns out, that's extremely unpopular! What about the approach of going after employers? The obvious vector? Trump hated that idea! He repeatedly has said he doesn't want to target businesses (especially farms) that use large amounts of illegal labor. This is just an incomprehensible position. Instead of charging a few dozen businessmen and removing the incentive for millions of illegal workers to be here, you arrest people off the street one by one at the cost of thousands of dollars in manpower per each, while their crying wives and kids post TikToks about it. Upshot on immigration: electoral strength turned into a crippling electoral weakness in exchange for deporting maybe 6% of the illegally present population. The tariffs were a total shitshow. Embarrassing rollout, no underlying theory of action at all. No targeted focus on key industries. Our country tariffed products we can't grow. We tariffed *inputs* of our own valuable exports. The schemes and amounts changed constantly, sending the stock market reeling and presenting scenes of chaos to the world. Trump's messaging throughout has been generationally bad. While facing nearly 2:1 unpopularity, he spends his days posting AI slop, saying he'll rename New Mexico or invade allies, among other bizarre remarks. He brags about a ballroom and a pool repainting while gas hits records. At no point has he ever attempted any kind of message discipline. Then there are the deeply unpopular attacks on rule of law, his "game-recognize-game" pardons for all manner of scammers and criminals, the crypto schemes that he and his family engage in, the evilly conceived and embarrassingly executed legal attacks on Comey, Jerome Powell, and others. With his monthslong stand on NOT releasing the Epstein files, he became maybe the first president ever to stake out a 99-1 issue on the 1% side. That's not even getting into Iran, DOGE, his candidate recruitment choices, or countless other things. Simply put: Trump has managed to royally screw up virtually every single facet of his presidency. It's been undeniable, voters have noticed, and there's really no escape from it. This is what the GOP base chose in early 2024, and this is the world they're living with now. Where they handed the reins of history to a fat, vain, washed-up old man and let him drive.

Today marks the second time in history the Nasdaq fell more than 5% and Bitcoin fell less than the Nasdaq. The other time was on March 16, 2020. Mar 16, 2020: QQQ -12.0%, BTC -10.6% Nov 5, 2026: QQQ -6.4%, BTC -5.3%

1) Embarrasing inability to predict - the outcome of these midterms (and its drivers) were evident long ago. 2) A newfound focus on ending the war is very bullish => war risk premia and oil go down => once war over, a continued multi asset bull market is quasi guaranteed.

Midterm review of my 2026 year-end calls ➤ peace in the ME=> no peace but no kinetic war ⚠️ ➤ higher inflation => CPI from 2.4% YoY to 3.7% YoY✅ ➤ non-hawkish Fed => the Fed is hiking❌ ➤ Blue wave => historical GOP defeat ✅ ➤ S&P up 10% or more => up 15% ✅ ➤ BTC up 25% to 33% => up 8% ⚠️ ➤ Spain or Argentina as new world champions ✅ It's easy to forget how bad things were back in April.

HYPE +22% in 6 hours on ICE/Trade.xyz, rangebound for 2 weeks before, zero pre-news volume. Bravo! This is how assets react when the team and friends don’t front-run the news. In crypto you’re usually their exit liquidity.

Core CPI came in hot. Fed hike odds are up (85% priced in by now). Curve flattening: long bonds liking the upcoming hike. Warsh will hike next week. He will deliver what the market expects, and build up reputational cache.

What happened when GPT 5.6 Terra and Luna were heavily discounted on OpenRouter? Token usage exploded by 13.8x Jevons Paradox = as technology makes the use of a resource more efficient, total consumption of that resource increases rather than decreases 🧵

The reality is what we are seeing unfold is Nvidia speedrunning the creation of a synthetic hyperscaler. Apologies in advance to all the investors who are stuck in their priors that this will trigger. But what is a hyperscaler? Strip it down and it’s a scaled infrastructure collective of CPUs, networking, storage with a development platform on top. It fulfills two purposes. Financial: it pools and smooths the financial obligations of its users, renting infrastructure as opex instead of capex. And Operational: it builds software that makes consumption the underlying primitives simple by abstracting them away. The hyperscaler makes a healthy 35-40% operating margin by buying hardware at bulk pricing, pooling scale to get a lower cost of capital, and driving utilization of that hardware with software that shares and shards workloads across many customers. But in the age of AI, the atomic units of compute changed. Training (massive coherent clusters) and inference (agentic workloads) - require a fundamentally different configuration of resources. These new workloads require dramatically more accelerated compute, shifting the design target from multi-tenant utilization (the cloud era) to absolute workload performance (the AI era). The economics of the data center inverted. A giant, redundant fleet of Amazon Basics CPUs and storage doesn’t work when the job is synchronous training and one straggling node stalls the entire cluster. For inference, tokens per watt and time to first token dominate the economics, not how many VMs you can pack in a box. And none of it works in a world of limited power (at least in the West. Maybe in China). As Nvidia built more compute and sold it to the hyperscalers, it faced a fundamental problem. The hyperscalers had classic innovator’s dilemma - expecting 35-40%+ op margin, along with an underlying desire to commoditize Nvidia's 75% GMs with their Amazon Basics equivalent. Pay an ASIC vendor a 25% margin instead of Jensen’s 75%, then stack your own 40% on top! They owned the customer relationships too, enterprises developed on AWS, Azure, GCP and their data was captive there too. But most important of all, these companies moved at their own pace. They were not scrappy or hungry to operate at the pace Nvidia or the AI labs felt was necessary to build out compute to fulfill the demand in front of them. They would never look at retrofitting a 35MW site outside of Ashburn, Virginia! Meanwhile, a group of hungry entrepreneurs noticed the fat margins the hyperscalers earned renting what was basically stock Nvidia hardware with limited software on top, and started building businesses around it. Nvidia - skeptically at first - recognized that working with these partners would lead to faster development cycles and competitive fires and pressures for the ecosystem. Thus the neoclouds were born. The software these neoclouds co-developed with Nvidia were purpose built for the new workloads. They solved the new problems and requirements operating the new infrastructure needed. They were ready with hotswaps, they did predictive maintenance, they built new storage software that was built for training with cheaper ingress and egress fees, because their competitive drive was to win workloads, not to lock in enterprise data on their platform. And it was working - AI labs started preferring to work with them over the hyperscalers. Common complaints on the incumbents: too slow, too particular with how their clusters were built, virtualization and networking overlays that made GPU clusters underperform stock Nvidia reference designs. Neocloud bare metal was cheaper too as their teams built AI software, not a cloud data warehouse business. And they were happy to run at half the margin (~20%) that the big guys would never accept. But the hyperscalers still had one structural advantage: their balance sheets. Investment grade. Able to fund speculative capacity ahead of demand and rent it out at much higher spot rates. The neoclouds couldn’t play that game as lenders would only finance hardware that was already contracted with offtake. And more expensive if that offtake were the labs which at an earlier point were much more speculative. If only they could build ahead of demand, they could maybe earn the kind of returns Elon is achieving on Colossus. But the twist is that balance sheet edge is eroding in real time. Google just printed its first negative-FCF quarter and raised $50B equity. Microsoft is carrying $329B of leases signed but not yet commenced. Even the IG balance sheets hit the wall - more capital had to come from somewhere else. And that's how we got to where we are today. Look at what Nvidia has actually built. The operational half of a hyperscaler: DSX OS and Mission Control to run and operate GPU fleets, DSX reference designs and Omniverse digital twins as hardened playbooks for building a data center itself. Dynamo for inference serving. All the old secret sauces of the hyperscalers built specifically for new age data centers that they have led the way in architecting. Offered to any hungry, technically competent team with a serviceable site. And then the financing half: the revenue share and credit support model that smooths utilization across a distributed fleet the way multi-tenancy used to. Support the operator, release capacity to demand, share in upside, and now bring $500B of third-party capital to the table. Nvidia standardized the asset with reference designs, proved the compute was “fungible and transferable across customers and operators” and showed infrastructure investors DD unlevered yields across 7-8% hurdles. Those investors wet their beaks on early special situation financings, saw the paybacks, and understood the demand was global. That’s why Jensen spent 2025 flying around Europe, the Middle East, and Southeast Asia - these are the ground zero for new compute sites. The reality is that this didn’t happen just over the last 3 months. CoreWeave master agreement in 2023, the $6B spot reserve backstop in 2025 (to sponsor capacity for the inference clouds), the Blackrock AI Infrastructure Partnership in 2024, Brookfield’s $100B fund with Nvidia in 2025, KKR Helix with Nvidia in 2026. And now six independent financing platforms. Chess! So now the three fears by name. Circularity? Monday was the opposite with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR bringing third party capital, independently underwritten apart from one another, replacing Nvidia’s balance sheet rather than just extending it. Useful lives / underwritability of these assets? CoreWeave just disclussed A100s, 6 year old silicon contracted through 2029 and pushed 25% price increase on its fleet in July. The collateral is aging more like an aircraft than a smartphone as feared. Market share? If you don’t see that the platform of Nvidia and the fungibility of this compute is the reason why this is even possible - the skeptics themselves are making the bull argument. The complaint that these platforms keep capital tethered to Nvidia and away from other ASICs / accelerators… $500B that can only buy Nvidia reference architecture is a moat dressed up as a risk. So what were you doing when the first synthetic hyperscaler was built under your nose? :) All views expressed are my personal views. Does not reflect the views of Altimeter or Nvidia or anyone else. Full disclosure I/we may hold positions in companies mentioned. Purely for discourse and thinking - no financial advice.