The contrarian long view: AI, bonds, and oil

It seems that everywhere you look in the financial media these days there is persistent hype about artificial intelligence (AI) and the companies developing it. Right alongside this great investment boom is doom and gloom about the future value of bonds. Oil, too, is frequently covered for two reasons, the inability of oil futures prices—which seem suspiciously low—to reflect the long-term effects of what is happening in the Persian Gulf and the high prices of refined products such as gasoline and diesel where the real squeeze seems to be right now.

It's hard to resist the constant din of such news in order to arrive at an independent assessment. But that is precisely what we should strive to do in the face of what seems like the overwhelming consensus. However, I am not writing to give you financial advice which often requires precise timing to be of much value. In the financial markets—as I have learned again and again—being early is almost always the equivalent of being wrong. What I hope to do is to help you understand the financial news better. First, let me declare that I have no financial interest in anything mentioned in this piece lest you think I am "talking my book."

To be a contrarian with a long view requires a lot of mental armor as near-term events almost always contradict your prognostications. Trends in financial markets tend to go on longer than any skeptic can conceive. As famed economist John Maynard Keynes is quoted as saying, "Markets can remain irrational longer than you can remain solvent." Taking the long view, not surprisingly, requires not only patience but also fortitude.

Sulfur and the emerging food crisis

Sulfur has become an indispensable element for the modern industrial system including for agriculture. Before the outbreak of the Iran war, 24 percent of the world's supply of sulfur passed through the Strait of Hormuz. I can find no reliable information on whether sulfur is being shipped through the strait now after the Iranian government claimed control. I suspect the amount is close to zero.

The sulfur price at the start of the Iran conflict was approximately $500 per metric ton for sulfur originating from the the Middle East. It now sits above $800. Some customers paid more than $1,000 in June for Canadian-origin sulfur, a record. These high prices are threatening worldwide phosphate fertilizer supplies which depend on sulfuric acid for their production. To understand why this is happening, it's important to have some background.

In the densely interconnected web of global production, sulfur sits in the middle as the basis for sulfuric acid, a chemical that finds wide application in industry including for improving octane in gasoline; as raw material for detergents, resins, dyes, and explosives; for the "pickling" of metals, that is, the removal of oxidation from the surface; as an electrolyte in lead-acid batteries; as a laboratory reagent, that is, a chemical used for analysis and synthesis of chemicals; and for the production of phosphate fertilizer, an essential plant nutrient critical to obtaining high yields in today's industrial agricultural system. In fact, 50 percent of all sulfuric acid is used to make fertilizers, 42.5 percent to make phosphate fertilizer and 7.5 percent to make ammonium sulfate (a source of nitrogen) and sulfur fertilizer products. (Sulfur is an important soil nutrient by itself.)

Altman to humanity: Accept some bad things to get benefits of AI

The leader of the most visible company hawking the future of artificial intelligence (AI), Sam Altman, CEO of OpenAI, told Politico a little over a week ago that "the world should accept some bad things happening for the benefits of this technology." Let me provide additional context. Previously Altman has said the following:

1. "It is terrifying because of the power that superintelligent AGI wields to destroy human civilization, intentionally or unintentionally." -- Lex Fridman Podcast #367 (March 25, 2023)

2. "Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war." -- Center for AI Safety statement (No date)

3. "I was very intent on not destroying the world before having kids." -- Vanity Fair interview (October 5, 2026)

I do not know for a fact that AI can destroy civilization, and I'm not sure exactly what Sam Altman means when he says that. But I do know one very important thing that bears repeating again and again: Any product or system that has a nonzero chance of destroying all of human civilization should be abandoned. There is no amount of benefit that can justify risking the destruction of the entire human project no matter how small the risk.

U.S. Supreme Court to decide whether climate suits can go forward

Tomorrow, the U.S. Supreme Court will hear arguments about whether a lawsuit filed in state court in Colorado seeking damages from two major oil companies for the climate-change related damage inflicted on Boulder County can go forward.

Here's the short version: The Canadian-based Suncor Energy Inc. and Texas-based ExxonMobil say that policies regarding climate change and any alleged damages resulting from it are matters for the federal government and courts only and that therefore the state suit should not be allowed to go forward. Boulder County says that it merely seeks compensation for damage done to Boulder and its residents by decades of emissions from these two companies. It is not seeking to change the policies of the federal government.

The energy companies contend that a victory for Boulder County would allow many similar suits to proceed and could bankrupt the oil industry by essentially creating a judicially ordered "carbon tax" in the form of damages.