“As a floor trader in the 1990s, I learned to be fader of market moves,” said Yoda, high in the Rockies. “Then in the dotcom bubble I learned to be a follower,” continued the most talented short-term trader I’ve ever known. “This is not a dotcom repeat, those companies went public with no profits, sometimes no revenues.” Today’s companies mint money. “How will this end?” asked Yoda. I sat silent, patient. “It doesn’t matter. You can’t care. Not at this stage in the cycle. Now is when you make money owning things. This is when the faders go bankrupt.”

Overall: “There will soon be billions of AI Agents transacting, and they need rails that can keep up,” said Brian Armstrong, Coinbase Founder/CEO on the quarterly earnings call. Less than 1% of the investors in the world can explain what AI Agent transactions are or why they’ll be integral to the functioning of a modern economy. Over the coming few years, that will change – that’s what opportunity looks like. “Crypto is the only option that checks all three boxes: Fast, cheap, and global.” With investors obsessing over the Hormuz Strait, the pace of transformation happening across key sectors in the global economy proceeds uninterrupted. I’m closest to the guts of the financial system, money flows, policy, plumbing. The coming change is stunning. In Q4 2025, Coinbase, Google and numerous others teamed up to build payment rails that allow Autonomous AI Agents to instantly transact at vast scale, without the need for banks, using stablecoins on blockchain rails. They called it x402, an agentic payments protocol [here]. “USDC and Base are now powering the majority of on-chain stablecoin transactions for AI Agents. And when Agents pay with crypto on-chain, they use USDC 99% of the time, and over 90% of those transactions happened on the Base chain in Q1,” continued Armstrong. In ten years, almost no one will need to understand how this works, because blockchain rails will be operating beneath the surface, moving money, securities, and collateral seamlessly, like the data flowing to and from your mobile phone. “We’re seeing Agents also use the x402 protocol for a wide variety of use cases including trading, AI inference, media generation, storage, and more,” said Armstrong, just one of many young builders, leveraging humanity’s increasingly powerful technologies to change how the world operates, in ways that the incumbents never would.

For Week-in-Review and Weekly & Year-to-Date market data, scroll to the bottom.

Infinity: “Even I’m surprised, but not surprised,” said Sparks, investor, entrepreneur, iconoclast. “The problem is that it’s nearly impossible to grasp geometric demand curves,” he continued, discussing the dynamic whereby as the price of AI computing power declines, demand for it increases at a greater rate. For most products, a 10% price drop might increase demand by 5%. In AI compute, the same 10% price decline might boost demand by 20%. The shape of the resulting chart for AI compute price vs demand is logarithmic, and consumption trends toward infinity.

Infinity II: “That’s a different way of saying that the coming data center and power constraints we discussed a few years ago are as big as I could have imagined,” continued Sparks. “But if I had a base case and a wildly extreme case, it’s played out to the topside.” Well before Covid arrived, Sparks sketched a first-principles picture of the future. The lines for compute demand grew non-linearly, logarithmically. So, he built his first data center. Then two. More and more. Then came the Chinese lab leak. And like most great investors, Sparks pressed his bet. Zoom.

Infinity III: “But despite the arc of these curves that everyone is looking at today, I think ultimately you want to be a token user,” said Sparks, entering harvest season for data center and power generation investments made throughout this cycle. “Tokens are mispriced relative to the benefit to the user, and I think the businesses you can build using them will be subsidized by the hyperscalers, so that’s where I see the next amazing opportunity,” he said, describing the coming wave of businesses that will be built using AI tokens as prices collapse and supply explodes.

Infinity IV: “The challenge for entrepreneurs will be the difficulty in building moats to defend their new business models,” he said. “In the last big tech cycle, the new models that emerged and accrued all the profits built their moats through network effects.” Amazon. Google. Facebook. Apple. YouTube. Instagram. “The real value in these businesses is not in their code, it’s in their monopoly power,” he said. “It seems unlikely that in this new world of AI it’ll be possible to build defensible network moats of those kinds, and it might not be possible to build moats at all.”

Infinity V: “Given the choice we now face, I definitely want to be sided with the Barbarians at the Gate, as opposed to being aligned with the incumbents,” said Sparks, Conan to his core. “But once the coming wave of entrepreneurs tear down the walls, I don’t see how they’ll defend the profits they’ve solen from these monopolies and oligopolies.” Imagine wave after wave of marauders, armed with Mythos and its ever more intelligent successors, plundering, pillaging. “The more I think through that future the more clearly it appears to be chaos for capitalism.”

Anecdote: “When you’re going through the gloaming, two opposing thoughts can be true at once,” said Sparks. I obviously had no idea what gloaming meant but gave it a minute. “At twilight, you’re going through this transitional period, and two possible futures can seem like realistic possibilities.” Okay, I was tracking. “There was a time when Amazon and Sears Roebuck coexisted,” said Sparks. “Eddie Lampert bought Sears in 2005. Amazon and Sears both operated in that gloaming. Lampert and Bezos were both worth about $3bln at the time.” Fast forward twenty years and Bezos’s net worth is up 10,000% and Lampert remains largely frozen in time. “It was true that they were on equal footing, and it was also false. In fact, looking back, you can see that it was an absurd, fleeting moment. And that’s exactly what happens in these transitions.” Amazon has a market cap of roughly $3trln, having plundered Sears and so many struggling retailers. “When you’re in these periods, and we’re in one now, most people kind of want to believe that both incumbent and disrupter can prosper, and that those who can tear down existing monopolies will resist being torn down themselves.” Both cannot be true. “But even if we’re at five minutes to midnight in terms of the market reckoning, you can remain in this state for what can feel like a long time. Which is what probably drove Chuck Prince to say that as long as the music is playing, you’ve got to get up and dance.” Chuck was the CEO of Citigroup, and that was in 2007. By March 2009, Citi’s stock price had fallen from $550 to $0.97. “We’ve probably entered the blow off phase in this cycle, and it could run a lot higher and last a lot longer. But on the other side is carnage for many incumbents,” he said. “The next big opportunity is in figuring out where the future value will accrue in a defensible way. I’m thinking about that a lot. It’s a really interesting problem. And there’s always an answer.”

Good luck out there,

Eric Peters

Chief Investment Officer

One River Asset Management

Week-in-Review: Mon: US durable goods orders 0.8% as exp, factory orders 1.5% (0.6%e). Turkey CPI 32.37% (31.25%e). Hantavirus infections linked to a cruise ship in the Atlantic Ocean. US transportation stocks plunged after Amazon announced expanded logistics offering making it a major competitor for parcel carriers and air freight companies. S&P -0.4%. Tue: US trade balance -$60.3b (-$61.0b e), JOLTS job openings 6866k (6850k e). Australia RBA cash rate target 4.35% as exp. New Zealand unemp rate 5.3% (5.4%e). South Korea CPI 2.6% as exp. Oil declined as the ceasefire held and the US downplayed the prospect of a return to active war. Coinbase to cut 14% of staff citing volatile markets and AI. Alphabet raises $17b from debt sales for latest AI push. S&P +0.8%. Wed: US ADP emp change 109k (120k e). Poland base rate unch 3.75% as exp. Hong Kong ret sales value 12.8% (9.4%e). The US presented a proposal to end the war, with Iran expected to send a response via Pakistan in the next two days. China asked banks to pause new loans to US-sanctioned refiners over ties to Iranian oil. Anthropic signed computing deal with SpaceX to increase Anthropic’s computing resources. S&P +1.4%. Thu: US init jobless claims 200k (205k e). Mexico overnight rate 6.50% as exp. Mexico CPI 4.45% (4.54%e). Sweden Riksbank policy rate unch 1.75% as exp. Taiwan CPI 1.74% (1.70%e). US struck military targets in Iran after the country fired on US Navy in the Strait of Hormuz, threatening the ceasefire. Trump-Xi summit still scheduled for May 14-15 despite China’s Iran concerns. S&P -0.4%. Fri: US change in NFP 115k (65k e), unemp rate 4.3% as exp, UMich sent 48.2 (49.5e). Canda unemp rate 6.9% (6.7%e). US prepares AI security order for US agencies to partner with AI companies to protect against AI-enabled cyber attacks, with directive stopping short of requiring government approval for models. Trump announces three-day ceasefire between Russia and Ukraine. S&P +0.8%.

Manufacturing PMI (high-to-low): Sweden 57.2 (previous month 56.2), Taiwan 55.3 (previous month 53.3), Japan 55.1/51.6, India 54.7/53.9, Switzerland 54.5/53.3, Netherlands 54.4/52, UK 53.7/51, South Korea 53.6/52.6, Canada 53.3/50, Czech Republic 52.9/52.8, France 52.8/50, United States 52.7/52.7, Brazil 52.6/49, Greece 52.4/54.5, China 52.2/50.8, Italy 52.1/51.3, Spain 51.7/48.7, South Africa 51.6/50.8, Germany 51.4/52.2, Austria 51.2/52.4, Singapore 50.7/50.5, Hungary 50.5/50.3, Vietnam 50.5/51.2, Indonesia 49.1/50.1, Poland 48.8/48.7, Hong Kong 48.6/49.3, Russia 48.1/48.3, Mexico 47.7/48.9. Services PMI: India 58.8/57.5, UK 52.7/50.5, China 52.6/52.1, Sweden 52.5/55.9, Brazil 52.3/50.1, US 51/49.8, Japan 51/53.4, Australia 50.7/46.3, Italy 49.8/48.8, Russia 49.7/49.5, Ireland 49.7/50.7, Spain 47.9/53.3, Germany 46.9/50.9, France 46.5/48.8.

Weekly Close: S&P 500 +2.3% and VIX +0.20 at +17.19. Nikkei +5.4%, Shanghai +1.7%, Euro Stoxx +0.1%, Bovespa -1.7%, MSCI World +1.8%, MSCI Emerging +6.9%, Bitcoin +2.1%, and Ethereum +0.5%. USD rose +0.6% vs Canada, +0.4% vs Turkey, +0.1% vs Indonesia, and flat vs Sweden. USD fell -1.6% vs South Africa, -1.6% vs Mexico, -1.3% vs Brazil, -1.1% vs Russia, -1.0% vs Chile, -0.6% vs Australia, -0.6% vs Euro, -0.5% vs India, -0.4% vs China, -0.4% vs Sterling, and -0.2% vs Yen. Gold +1.9%, Silver +5.8%, Oil (WTI) -6.4%, Oil (Brent) -7.3%, NatGas (US) -0.8%, NatGas (EU) -3.5%, Power (EU) +14.0%, Copper +5.2%, Iron Ore +3.2%, Corn -1.9%. 10yr Inflation Breakevens (EU -15bps at 2.20%, US -4bps at 2.46%, JP -3bps at 1.95%, and UK -9bps at 3.45%). 2yr Notes +1bp at 3.89% and 10yr Notes -2bps at 4.36%.

YTD Equity Index Returns: Korea +75.4% priced in US dollars (+77.9% priced in won), Taiwan +43.6% priced in US dollars (+43.6% in Taiwan dollars), Israel +34.3% in US dollars (+22.2% in shekels), Hungary +32.1% (+21.2%), Norway +30.8% (+19.5%), Brazil +28% (+14.3%), Turkey +26.7% (+33.8%), Japan +24.3% (+24.6%), Thailand +16.1% (+19.1%), Russell +15.3%, Mexico +13.6% (+8.6%), NASDAQ +12.9%, Portugal +11.9% (+11.5%), Poland +10.9% (+11.1%), Austria +10.6% (+10.5%), Italy +9.8% (+9.7%), Finland +9% (+8.9%), Australia +8.9% (+0.3%), China +8.2% (+5.3%), S&P 500 +8.1%, Belgium +7.9% (+7.6%), Greece +7.8% (+7.5%), Canada +7.7% (+7.5%), Malaysia +7.7% (+4%), Singapore +7.5% (+5.9%), MSCI World +7.4% in US dollars, Netherlands +7.3% (+7%), Vietnam +7.3% (+7.3%), Sweden +6.1% (+6.6%), Saudi Arabia +5.1% (+5.2%), UK +4.3% (+3%), Spain +3.7% (+3.4%), Colombia +3.6% (+2.6%), Chile +3.6% (+2.6%), South Africa +2.9% (+2%), HK +2.4% (+3%), Euro Stoxx 50 +2.4% (+2.1%), New Zealand +0.7% (-2.8%), Switzerland +0.5% (-1.3%), France -0.2% (-0.5%), Germany -0.5% (-0.6%), UAE -1.5% (-1.5%), Ireland -2.6% (-2.9%), Philippines -4.2% (-1.5%), Argentina -5.5% (-9.3%), Denmark -5.7% (-5.7%), Czech Republic -5.9% (-5.6%), India -11.9% (-7.5%), Indonesia -22.4% (-19.4%).

Disclaimer: All characters and events contained herein are entirely fictional. Even those things that appear based on real people and actual events are products of the author’s imagination. Any similarity is merely coincidental. The numbers are unreliable. The statistics too. Consequently, this message does not contain any investment recommendation, advice, or solicitation of any sort for any product, fund or service. The views expressed are strictly those of the author, even if often times they are not actually views held by the author, or directly contradict those views genuinely held by the author. And the views may certainly differ from those of any firm or person that the author may advise, converse with, or otherwise be associated with. Lastly, any inappropriate language, innuendo or dark humor contained herein is not specifically intended to offend the reader. And besides, nothing could possibly be more offensive than the real-life actions of the inept policy makers, corrupt elected leaders and short, paranoid dictators who infest our little planet. Yet we suffer their indignities every day. Oh yeah, past performance is not indicative of future returns.