Mad Hedge Biotech and Healthcare Letter
May 27, 2025
Fiat Lux
Featured Trade:
(THE BIOTECH THAT FIGURED OUT HOW TO MAKE OXYGEN PROFITABLE)
(VRTX), (GILD), (AMGN)
A few months ago, I was catching up with a former colleague over coffee when he casually mentioned something that nearly made me spit out my latte.
“You know this little pill I take twice a day?” he said, tapping his chest. “It probably costs more than most people’s rent. Maybe their mortgage too.”
He was talking about Trikafta, Vertex’s blockbuster cystic fibrosis treatment that clocks in at a cool $300,000 annually.
Before I could wrap my head around that number, he added the kicker: “But my doctor said my lung function has improved 18% since I started taking it. Hard to put a price on actually being able to breathe, you know?”
That’s when it hit me. Vertex Pharmaceuticals (VRTX) hasn’t just created a drug — they’ve essentially figured out how to monetize oxygen.
And right now, with the stock drifting from $520 down to the $430s, it might be time to pay attention to this particular feat of capitalist ingenuity.
Here’s what makes Vertex absolutely fascinating from an investment perspective: they’ve built what amounts to the world’s most expensive subscription service, except canceling isn’t really an option.
They own 95% of the cystic fibrosis market, pulling in over $10 billion annually from roughly 70,000 patients who have exactly zero viable alternatives. When your customer’s choice is “pay up or slowly suffocate,” customer retention becomes remarkably predictable.
This isn’t some discretionary purchase that gets cut during economic downturns. This is “I need this to live” medicine, backed by patent protection through 2039.
But here’s where the story gets really interesting, and where most investors are missing the plot.
Vertex management isn’t content to just milk their CF cash cow until it runs dry. They’re using that $10 billion annual windfall to fund what’s essentially the world’s most expensive venture capital experiment, betting on moonshot therapies across diabetes, pain management, and gene therapy.
Think about this for a second: they’ve taken the most predictable revenue stream in biotech and turned it into a funding mechanism for high-risk, high-reward bets in massive markets.
It’s like if Netflix (NFLX) decided to use their subscription revenue to fund space exploration — audacious, potentially brilliant, and definitely not boring.
The diversification efforts are where things get spicy.
Their gene therapy for sickle cell disease is approved but rolling out slower than a government DMV line.
Their pain management program? Well, let’s just say their recent chronic pain trials showed “no separation between drug and placebo,” which is biotech speak for “whoops, back to the drawing board.”
Meanwhile, competitors like Tris Pharma are out there posting phase 3 data showing their pain drugs actually outperform standard opioids.
Vertex was first to market with their non-opioid pain treatment Journavx, but being first with mediocre results in a competitive race is like being first to show up at a party that turns out to be terrible.
This creates a delicious valuation puzzle that most analysts are approaching all wrong.
Vertex trades at 24x forward earnings while peers like Gilead (GILD) and Amgen (AMGN) sit around 13x. The market is essentially saying, “We’ll pay double the normal biotech multiple because we believe in your ability to not screw up spectacularly.”
But here’s the math that makes this whole thing make sense: strip out the CF business — growing conservatively at 8% annually — and it probably justifies about $69 billion of their current $110 billion market cap.
That leaves $41 billion, roughly 38% of the company’s value, riding entirely on whether their pipeline experiments actually work.
For a company with two approved non-CF treatments and five more shots on goal by 2028, you’re either getting a bargain or overpaying dramatically. There’s not much middle ground in biotech.
What makes the current setup particularly intriguing is the timing.
Over the next 18 months, Vertex has multiple binary events that could either validate that $41 billion pipeline bet or send it crashing back to earth.
Diabetes trial results, expanded pain indications, international approvals — each one a mini-lottery ticket that could justify the current valuation or obliterate it.
The risk, obviously, is that biotech graveyards are littered with companies that had one brilliant success and used the profits to fund a dozen expensive failures.
The transition from dominating rare genetic diseases to competing in mass markets like diabetes and chronic pain is like going from playing chess to playing football — completely different skill sets, completely different rules.
But here’s what I find genuinely compelling about Vertex’s position: they don’t need to hit grand slams on every pipeline program. They just need to not strike out completely.
With their CF fortress generating consistent free cash flow and management that’s proven they can navigate the FDA’s regulatory maze, the downside seems reasonably well-protected.
The current pullback feels more like broader biotech rotation than any fundamental deterioration in Vertex’s prospects. When quality companies with predictable cash flows and legitimate growth optionality go on sale, that’s usually when interesting opportunities emerge.
What you’re buying with Vertex isn’t just another biotech stock — you’re buying a regulated utility that happens to be running a venture capital fund on the side. The utility part keeps paying the bills while the VC part swings for the fences.
Besides, if you’re going to corner a market, might as well pick something people can’t live without.
Global Market Comments
May 27, 2025
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD or THE BOND VIGILANTES ARE BACK!
(MSTR), (GLD), (AAPL), (QQQ), (MSTR), (FXE),
(FXA), (FXB), (FXY), (TLT), (WMT)
A friend of mine once told me that when he dies, he wants to be reincarnated as the bond market. I don’t blame him. So would I.
The administration can talk up stocks, fire entire government agencies, ignore court rulings, arrest judges, and intimidate its own political party. The one thing it absolutely CAN’T do is control the bond market, which so far is giving the president’s performance a firm thumbs down by taking bond yields up to new 2025 highs, and prices to new lows.
Even if Trump appoints the most dovish Fed governor in history, which is likely in a year, the bond market won’t wear it for a second, potentially taking yields into double digits. The Fed can only control overnight interest rates. It can only affect long-term rates through quantitative tightening or easing, which now stands at $6.7 trillion of easing. The bond market is in charge of everything else.
The bottom line is that the bond market was far more willing to lend to President Biden than President Trump. That’s what the numbers say. That’s not just because Trump plans to increase the National Debt from $36 trillion to $51 trillion over the next 4-10 years. Trump has also threatened to withhold tax payments to foreign investors, impose limitations on capital flows, and default.
Let me tell you why the bond vigilantes are seeing red. The just-passed House budget plan assumes massive increases in tax revenues because it thinks the economy is growing at a 3% annual rate. News flash no 1: It isn’t. The economy is, in fact, shrinking as it does in recessions. It assumes that tariff revenues will double. New flash No. 2: tariff revenues have shrunk dramatically because of the collapse of international trade.
The US Treasury also assumes that foreign investors will continue to buy 30%-50% of our new bond issues. News flash no. 3: foreigners are selling huge amounts of their US Treasury bonds, not buying, which is why 30-year bond prices have collapsed and are basis points away from an 18-year high in yields at 5.18%.
The bond vigilantes are not to be taken lightly. The last time they were this upset was in 1979, when they took ten-year US Treasury bill yields up to 16%, causing a three-year-long recession. Stocks fell by 30% from already very low lows. The 20% inflation rate then was caused by the second oil shock and a collapsing US dollar, not tariffs.
I remember all this well because I was in the White House at the time during the administration of Ronald Reagan. Don’t kid yourself, this can’t happen again.
If it does, you can expect the S&P 500 to plunge to 3,000 or less. That’s because the S&P 500 price earnings multiple in 1979 was only at 7.9X versus 21X today.
The stock market seems to have tunnel vision, as it can only listen to one story at a time. After the inauguration, it saw high tariffs coming with laser-like focus, and the Index fell by 21%. On April 9, when tariffs were cut from 145% to 30%, the stock market decided that AI is more important than tariffs, and they soared by 23%. It will worry about tariffs when it actually sees them, which may be weeks or months off. Now bond yields are the order of the day, taking stocks down again.
Whatever happened to the original bond vigilantes? Inflation fell from 20% to 0.6%. The budget deficit ground down to zero during the Clinton administration in 1999. Then, people thought that the bond market might cease to exist, and insurance companies were making contingencies for investing in corporate debt instead. The bond vigilantes disappeared forever to become a footnote in history.
Oops!
Europe has responded to the trade war, including the 50% tariff threat issued on Friday, with their “TACO” Strategy-Trump Always Chickens Out. Trump’s cave on Chinese tariffs, from 145% to only 30%, has given Europeans hope that the best response to the trade war is to do nothing and let Trump negotiate with himself. They are aware that the longer negotiations drag on, the greater the political price Trump has to pay at home.
Even a 30% tariff will bring a US recession, but that beats the heck out of a depression that the 145% tariff would have caused. Could Europe be hanging on for the same 30% deal?
I wonder if the Chinese and the Europeans are talking to each other?
Recession expectations may leap from soft to hard data on Thursday, May 28, at 8:30 AM when we get the first preliminary read on Q2 GDP.
My May performance is down -2.43%. That takes us to a year-to-date profit of +25.97% so far in 2025. My trailing one-year return stands at a record +83.00%. That takes my average annualized return to +50.46% and my performance since inception to +777.86%.
It has been another wild week in the market. I took profits in my (SPY) short when the Dow Average suddenly cratered by 1,000 points. I took a small loss in (TLT), preferring to get out of the way of a rampaging hoard of bond vigilantes. I added two new longs in (MSTR) on the dip. That leaves me 60% short in (MSTR), (GLD), (AAPL), and (QQQ), 20% long in (MSTR), and 20% cash. We are about to retest the market lows.
Some 63 of my 70 round trips in 2023, or 90%, were profitable. Some 74 of 94 trades were profitable in 2024, and several of those losses were really break evens. That is a success rate of +78.72%.
Try beating that anywhere.
Stocks Crash on Treasury Bond Yield Spike, with ten-year yields hitting 4.6%. Wall Street’s worries about a ballooning deficit that threatens America’s status as a safe haven were reflected in a $16 billion Treasury sale of 20-year bonds that bombed, with stocks, bonds, and the dollar falling. A Foreign boycott was a major issue. The prospect of a House bill that could add up to $16 trillion to the national debt over the next 4-10 years has sent all asset classes into free fall, except for gold.
The Bond Vigilantes are Back, and are not to be taken lightly, as seen by yesterday’s failed auction of 20-year US Treasury bonds. The last time they were this upset, they took the ten-year US Treasury bill yields up to 16%, causing a three-year-long recession. Stocks fell by 30% from already very low lows. The 20% inflation rate then was caused by an oil shock and a collapsing US dollar, not tariffs.
Trump Threatens 25% Tariff Against Apple, unless the company builds iPhones in the US, which can’t be done. The shares dropped 6% on the news. The Dow dumped 400 points at the opening. Another day, another trade war. Maintain your (AAPL) short.
Walmart (WMT) is Planning Mass Layoffs, some 1,500 jobs, as demanded by the high prices brought by the trade war. Walmart is the largest U.S. private employer with about 1.6 million employees. It employed about 2.1 million employees worldwide in total, according to its website. It is also the country’s biggest importer, with about 60% of its imports, mainly items such as clothing, electronics, and toys, from China.
The company had last week said it would raise prices for some products by the end of May as President Donald Trump’s trade war hits its supply chain and increases expenses.
Existing Home Sales Hit 16-Year Low, down 0.5% to 4 million units. Inventory jumped 9% MOM and 21% YOY. That is a 4.4-month supply, a five-year high. The median home price is at $414,000, up 1.8% YOY. First-time buyers accounted for 30% of the sales. Homes over $1 million are doing better, up 6% YOY. The contract cancellation rate doubled due to the stock market crash.
US dollar Hits Two-Year Low, as the “Sell America” trade continues. It’s almost unprecedented for a currency to fall when its interest rates are rising. Debt, default, and trade wars are now the larger concern. Keep buying dips in (FXE), (FXA), (FXB), and (FXY) on dips.
New Home Sales Hit Three-Year High, up 10.9%, but rising mortgage rates and economic uncertainty remained headwinds for the housing market. Builders are definitely trying to unload inventory ahead of a recession. Data for February and March was revised significantly down, taking some of the shine from the unexpected increase in sales last month. New homes are now cheaper than existing ones.
Weekly Jobless claims are Unchanged, down only 2,000 to a seasonally adjusted 227,000 for the week ended May 17. They expect claims in the coming weeks to drift into the upper end of their 205,000-243,000 range for this year, mostly driven by difficulties adjusting the data for seasonal fluctuations. Economists, however, see layoffs picking up in the second half of 2025 as the administration’s tariffs dampen demand, snarl supply chains, and stoke inflation.
Investors Flock to Non-US Equity Funds. Investors poured $2.5 billion into ex-US mutual funds and ETFs. It’s the highest inflow on record and reverses a three-year trend. Confidence in the US is falling as long as it is demolishing the economies of foreign trading partners.
Tesla Sales Aren’t Recovering, with forecasts ranging from zero growth to down 10% YOY. The first three months of the year didn’t go as planned. Tesla delivered about 337,000 cars in the first quarter, down 13% from a year earlier and far below what Wall Street expected. At the start of 2025, the first-quarter delivery estimate was about 455,000 vehicles, according to FactSet. The miss even had Chief Financial Officer Vaibhav Taneja citing brand image “challenges”. Sell all (TSLA) rallies.
Gold Jumps 1% on US Bond Downgrade. Credit downgrades and eventual default have been the dream of gold bugs for the last 50 years. Gold is the last flight to safety asset. Buy gold (GLD) on dips.
My Ten-Year View – A Reassessment
We have to substantially downsize our expectations of equity returns in view of the election outcome. My new American Golden Age, or the next Roaring Twenties, is now looking at multiple gale-force headwinds. The economy will completely stop decarbonizing. Technology innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old. My Dow 240,000 target has been pushed back to 2035.
On Monday, May 26, is Memorial Day and a National Holiday. All markets are closed.
On Tuesday, May 27, at 7:30 AM EST, the S&P Case Shiller National Home Price Index is announced.
On Wednesday, May 28, at 1:00 PM, minutes from the last FOMC Meeting are disclosed.
On Thursday, May 29, at 8:30 AM, the Weekly Jobless Claims are disclosed. We also get the preliminary read for Q2 GDP, which should indicate whether we are in recession or not.
On Friday, May 30, at 7:30 AM, we get Core Personal Consumer Expectations. At 1:00 PM, the Baker Hughes Rig Count is published.
As for me, when I first met Andrew Knight, the editor of The Economist magazine in London 50 years ago, he almost fell off his feet. Andrew was well known in the financial community because his father was a famous WWII Battle of Britain Spitfire pilot from New Zealand.
At 34, he had just been appointed the second youngest editor in the magazine’s 150-year history. I had been reporting from Tokyo for years, filing two stories a week about Japanese banking, finance, and politics.
The Economist shared an office in Tokyo with the Financial Times, and to pay the rent, I had to file an additional two stories a week for the Pink Newspaper as well. That’s where I saw my first fax machine, which then was as large as a washing machine, even though the actual electronics would fit in a notebook. It cost $5,000.
The Economist was the greatest calling card to the establishment one could ever have. Any president, prime minister, CEO, central banker, terrorist, or war criminal would suddenly be available for a one-hour chat about the important affairs of the world.
Some of my biggest catches? Presidents Gerald Ford, Jimmy Carter, Ronald Reagan, George Bush, and Bill Clinton, China’s Zhou Enlai and Deng Xiaoping, Japan’s Emperor Hirohito, terrorist Yasir Arafat, and Teddy Roosevelt’s oldest daughter, Alice Roosevelt Longworth, the first woman to smoke cigarettes in the White House in 1905.
Andrew thought that the quality of my posts was so good that I had to be a retired banker, at least 55 years old. We didn’t meet in person until I was invited to work the summer out of the magazine’s St. James Street office tower, just down the street from the palace of then-Prince Charles.
When he was introduced to a gangly 25-year-old instead, he thought it was a practical joke, which The Economist was famous for. As for me, I was impressed with Andrew’s ironed and creased blue jeans, an unheard-of practice in the Wild West where I came from.
The first unusual thing I noticed working in the office was that we were each handed bottles of whisky, gin, and wine every Friday. That was to keep us in the office working and out of the pub next door, the former embassy of the Republic of Texas from pre-1845. There is still a big white star on the front door.
Andrew told me I had just saved the magazine.
After the first oil shock in 1973, a global recession ensued, and all magazine advertising was canceled. But because of the shock, it was assumed that heavily oil-dependent Japan would go bankrupt. As a result, the country’s banks were forced to pay a ruinous 2% premium on all international borrowing. These were known as “Japan rates.”
To restore Japan’s reputation and credit rating, the government and the banks launched an advertising campaign unprecedented in modern times. At one point, Japan accounted for 80% of all business advertising worldwide. To attract these ads, the global media was screaming for more Japanese banking stories, and I was the only person in the world writing them.
Not only did I bail out The Economist, I ended up writing for over 50 business and finance publications around the world in every English-speaking country. I was knocking out 60 stories a month, or about two a day. By 26, I became the highest-paid journalist in the Foreign Correspondents’ Club of Japan and a familiar figure in every bank head office in Tokyo.
The Economist was notorious for running practical jokes as real news every April Fool’s Day. In the late 1970s, an April 1 issue once did a full-page survey on a country off the west coast of India called San Serif.
It warned that if the West Coast kept eroding, and the East Coast continued silting up, the country would eventually run into India, creating serious geopolitical problems.
It wasn’t until someone figured out that the country, the prime minister, and every town on the map were named after a type font that the hoax was uncovered.
This was way back, in the pre-Microsoft Word era, when no one outside the London Typesetters’ Union knew what Times Roman, Calibri, or Mangal meant.
Andrew is now 86 and I haven’t seen him in yonks. My business editor, the brilliant Peter Martin, died of cancer in 2002 at a very young 54, and the magazine still awards an annual journalism scholarship in his name.
My boss at The Economist Intelligence Unit, which was modelled on Britain’s MI5 spy service, was Marjorie Deane, who was one of the first women to work in business journalism. She passed away in 2008 at 94. Today, her foundation awards an annual internship at the magazine.
When I stopped by the London office a few years ago, I asked if they still handed out the free alcohol on Fridays. A shocked young writer ruefully told me, “No, they don’t do that anymore.”
Sometimes, change is for the worse, not the better.
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
50 Chart for Ten-Year US Treasury Bond Yields
“All men dream, but not equally,” said T.E. Lawrence, known as Lawrence of Arabia.
The corporate landscape is on the cusp of a profound transformation, one where the traditional office dynamic will be reshaped by intelligent machines. This isn’t a distant dystopian vision, but a near-term reality, according to Marco Argenti, Chief Information Officer at investment banking giant Goldman Sachs. In a striking declaration that has sent ripples across industries, Argenti recently stated that “AI agents will be your next coworkers,” signaling a future where human and artificial intelligence collaborate seamlessly in the workplace.
Argenti’s assertion is more than a prediction; it’s a reflection of Goldman Sachs’ aggressive embrace of AI, particularly generative AI, to enhance efficiency, productivity, and innovation across its vast operations. The bank is not merely dabbling in AI; it’s integrating it at a fundamental level, from automating complex financial processes to assisting its highly skilled workforce with nuanced tasks.
The Agentic Revolution: Beyond Automation
For many, the concept of AI in the workplace conjures images of robotic process automation (RPA) – machines handling repetitive, rule-based tasks. While RPA remains a crucial component of AI integration, Argenti’s vision extends far beyond this. He speaks of “AI agents,” which are sophisticated AI systems capable of planning, executing, and even learning from complex, long-running tasks on behalf of humans. These agents, he suggests, will mature to a point where companies will “employ” and train them, making them integral members of hybrid human-AI teams.
This “agentic AI” represents a significant leap from current AI applications. Instead of simply automating a single task, agentic AI aims to rethink entire workflows, operating with a degree of autonomy and reasoning that mirrors a human employee. Imagine an AI agent not just summarizing a document, but understanding its context, extracting key insights, drafting follow-up emails, and even analyzing potential risks, all with minimal human oversight.
Goldman Sachs is already seeing tangible benefits from this approach. The firm has rolled out its internal “GS AI Assistant” to thousands of employees, including bankers, traders, and asset managers. This generative AI chatbot is designed to assist with a wide range of tasks, from summarizing lengthy documents and drafting communications to analyzing intricate financial data. The goal is to deploy this tool across the entire organization by the end of 2025, effectively making an AI assistant a common “colleague” for almost every Goldman Sachs employee.
The HR of AI: Onboarding and Management
The integration of AI agents as “coworkers” presents a unique set of challenges and opportunities for human resources. Argenti foresees a future where HR departments will manage “human and machine resources.” This will involve not only onboarding AI agents, but also setting goals for them, monitoring their performance, and even prescribing training, much like a human employee. The concept of “AI layoffs,” where less capable AI programs are replaced by more advanced versions, is also a possibility in this evolving landscape.
This isn’t just about technical implementation; it’s about cultural integration. As Argenti notes, AI agents, like new human hires, will need to adapt to the specific culture and undocumented tenets of a firm like Goldman Sachs. The challenge lies in making AI agents “culturally smarter” over time, ensuring they seamlessly integrate into the existing human workforce. This will necessitate a shift in mindset, encouraging employees to view AI agents not as threats, but as partners.
Redefining Roles: Augmentation, Not Replacement
The prospect of AI agents as co-workers inevitably raises concerns about job displacement. However, the prevailing sentiment from industry leaders, including Goldman Sachs, is that AI will primarily augment human capabilities rather than entirely replace jobs, particularly in complex sectors like financial services.
AI excels at tasks that involve processing vast amounts of data, identifying patterns, and performing rapid calculations – areas where humans are prone to error or simply cannot match the speed of a machine. This includes tasks like fraud detection, risk management, compliance checks, and preliminary data analysis. By offloading these routine and data-intensive tasks to AI agents, human employees are freed to focus on higher-value activities that require uniquely human skills.
In finance, this means a greater emphasis on strategic decision-making, client relationship building, creative problem-solving, and critical thinking. Bankers, traders, and asset managers will increasingly leverage AI insights to make more informed decisions, but the ultimate judgment and client interaction will remain firmly in human hands. The focus shifts from transactional work to advisory roles, from data entry to strategic interpretation.
The Skills Shift: What Does the Future Employee Look Like?
This paradigm shift demands a corresponding evolution in the skills required for the future workforce. Goldman Sachs is actively engaged in change management efforts, retraining and equipping its employees to effectively utilize AI in their roles. AI literacy, data analysis, and the ability to bridge technology and business strategy are becoming paramount.
Furthermore, the banking sector is actively seeking out “disruptors” – individuals who are open to and even excited by the transformative potential of AI. These are the individuals who will not only adapt to the new hybrid workforce but will also be instrumental in evolving, educating, and empowering AI agents to achieve their full potential.
Responsible AI and the Road Ahead
As with any transformative technology, the deployment of AI at scale comes with inherent risks and responsibilities. Goldman Sachs emphasizes a measured approach, balancing AI automation with robust human oversight and stringent governance. Concerns around AI hallucinations, data quality, and compliance are paramount, particularly in a highly regulated industry like finance.
The firm’s in-house “GS AI Platform” is designed with these guardrails in mind, allowing for secure and efficient deployment of AI applications while maintaining control and mitigating risks. The ongoing evolution of responsible AI principles and the development of clear regulatory frameworks will be critical in shaping the ethical and effective use of AI agents in the workplace.
The journey towards a truly hybrid human-AI workforce is still in its early stages, but Goldman Sachs’ proactive stance, driven by its tech chief’s vision, offers a compelling glimpse into the future. As AI agents become more sophisticated and integrated, they will undoubtedly reshape not only how work is done, but also the very nature of what it means to be a “coworker” in the 21st century. The message is clear: the robots aren’t just coming for our jobs; they’re coming to work alongside us. The smart move is to learn how to collaborate.
Mad Hedge Technology Letter
May 23, 2025
Fiat Lux
Featured Trade:
(THE UNBEATABLE PARTNERSHIP)
(EMR), (GRMN), (AMBA), (NVDA), (DXCM), (CSCO), (INTC), (QCOM)
Let me introduce you to one of the hottest trends in tech.
It has been on the tip of everyone’s tongue for years, and that might be an understatement, but the interaction of the internet of things (IoT) and artificial intelligence (AI) offers companies a wide range of advantages.
In order to get the most out of IoT systems and to be able to interpret data, the symbiosis with AI is almost a must.
If the Internet of Things is merged with data analysis based on artificial intelligence, this is referred to as AIoT.
Moving forward, expect this to be the hot new phrase in an industry backdrop where investors love these hot catch phrases and monikers.
What is this used for?
Lower operating costs, shorter response times through automated processes, and helpful insights for business development are just a few of the notable advantages of the Internet of Things.
AI also offers a variety of business benefits: it reduces errors, automates tasks, and supports relevant business decisions. Machine learning as a sub-area of AI also ensures that models – such as neural networks – are adapted to data. Based on the models, predictions and decisions can be made. For example, if sensors deliver new data, they can be integrated into the existing modules.
The Statista research institute assumes that there will be 200 billion networked devices by 2026.
This is exactly where AI comes into play, which generates predictions based on the sensor values received.
However, many companies are still unable to properly benefit from the potential of connecting IoT and AI, or AIoT for short.
They are often skeptical about outsourcing their data – especially in terms of security and communication.
In part because of the increased number of networked devices, which requires the connection of IoT and AI, increases the security requirements for infrastructure and communication structure enormously.
It is not surprising that companies are unsettled: Industrial infrastructures have grown historically due to constantly increasing requirements and present companies with completely new challenges, which manifest themselves, for example, in an increasing number of networked devices. With the combination of IoT and AI, many companies are venturing into relatively new territory.
By connecting IoT and AI, a continuous cycle of data collection and analysis is developing.
But companies can no longer deny the advantages of AIoT, because this technical combination makes networked devices and objects even more useful.
Based on the insights generated by the models, those responsible can make decisions more easily and reliably predict future events. In this way, a continuous cycle of data collection and analysis develops. With predictive maintenance, for example, production companies can forecast device failures and thus prevent them.
The combination of the two technologies also makes sense from the safety point of view: continuous monitoring and pattern recognition help to identify failure probabilities and possible malfunctions at an early stage – potential gateways can thus be better identified and closed in good time.
The result: companies optimize their processes, avoid costly machine failures, and at the same time reduce maintenance costs and thus increase their operational efficiency.
In this way, IoT and AI represent a profitable fusion: While AI increases the benefit of existing IoT solutions, AI needs IoT data in order to be able to draw any conclusions at all.
AIoT is therefore a real gain for companies of all sizes. They thus optimize processes, are less prone to errors, improve their products, and thus ensure their competitiveness in the long term.
Some hardware, software, and semiconductor stocks that will offer exposure to AIoT are Emerson Electric Co. (EMR), Garmin (GRMN), Ambarella (AMBA), Nvidia (NVDA), DexCom (DXCM), Cisco (CSCO), Intel (INTC), and Qualcomm (QCOM).
(KRAKEN WILL LAUNCH TOKENIZED STOCKS)
May 23, 2025
Hello everyone
CRYPTO AND THE UK – NEW REGULATORY CONTROLS.
In just over six months’ time, when 2026 rolls around, UK regulations will mandate full reporting of all crypto transactions.
Firms will have to log:
Sender & recipient names
Addresses & tax IDs
Full trade details (token type, quantity, GBP value, timestamp)
Failure to comply may result in fines of up to 300 pounds per user.
No more financial privacy in UK-regulated crypto.
Possible action steps:
Familiarise yourself with tools like BISQ – a decentralised exchange with no central custody or KYC.
Learn how to operate with peer-to-peer settlements.
Explore privacy-preserving currencies like Monero (XMR)
Consider multi-jurisdictional structures or self-sovereign setups if appropriate.
KRAKEN JUMPS INTO TOKENIZATION
Kraken (a crypto exchange) will offer tokenized US stocks to users worldwide.
Within the next few weeks, tokenized U.S. stocks will trade 24/7 as crypto assets.
What does this mean?
It means there will be
No brokers
No market hours
No borders.
Kraken’s Digital Asset Exchange’s new product is called xStocks, and it will launch for non-U.S. customers across Europe, Asia, LATAM and Africa.
Benefits:
Backed 1:1 by real shares
Settles instantly
Trades globally, 24/7
Deployed on Solana
Use as collateral in DeFi or hold in your wallet.
In other words –
Retail investors outside the U.S. get cheaper, faster access to U.S. equities.
Tokenized shares can be used across crypto rails – wallets, lending, staking.
xStocks blurs the line between TradFi and DeFi.
Market doesn’t sleep anymore – 24/7 trading becomes real.
I have spoken about tokenization before and made a point of including information about it in sales webinars, so listeners can be informed about what’s happening in this rapidly expanding corner of the financial world. We are certainly in the very early stages presently.
BlackRock, Robinhood, and Franklin Templeton are all building.
The SEC just hosted a roundtable on tokenized securities.
Democratizing global market access is the end game here.
$120 trillion sits in global equity markets, and if we think about it, most of it is locked behind geographical barriers and legacy infrastructure.
Tokenization could unlock the door to massive US capital inflows.
TRUMP AND HARVARD ARE HAVING A SPAT
Trump has frozen more than $2 billion in research funding for Harvard. He has accused the school of failing to protect Jewish students. The administration also regards diversity, equity and inclusion programs that were introduced to make amends for dark aspects of the nation’s history as racist in themselves.
Homeland Security Secretary Kristi Noem has accused Harvard of “perpetuating an unsafe campus environment that is hostile to Jewish students, promotes-pro-Hamas sympathies, and employs racist ‘diversity, equity, and inclusion ‘practices.”
The Trump Administration has told Harvard University it can’t enrol any more international students. And the international students who are already at the university must now transfer or lose their legal status. (Harvard has around 100 Australian students, so I guess they will either return home or transfer to another college. Maybe Europe will welcome them, and benefit from their knowledge.
Why has this happened?
The U.S. has shut down Harvard’s Student and Exchange Visitor Program certification. This means the school can no longer enrol foreign students.
Everyone loses in this scenario. The students lose, the university loses, and the United States loses as well.
QI CORNER
Douglas Burns (Family Offices & Institutional Investors)
Cheers
Jacquie
Global Market Comments
May 23, 2025
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