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"AI Mania" Is About To End: Harris Kupperman

quoth the raven's Photo
by quoth the raven
Saturday, Jul 25, 2026 - 12:18

Submitted by QTR's Fringe Finance

I’ve long admired Harris Kupperman, the founder of Praetorian Capital, for his ability to cut through noise and spot big-picture themes before they become consensus.

Harris just released his thoughts on markets, AI and his positions in his Q2 investor letter, which I’m happy to share with my subscribers.

n his most recent letter, Harris talks about the surprising market reaction to the Middle East war, the fund’s recent underperformance, and why he still believes the global economy remains trapped in a system of economic “Feudalism.”

He also explains why the fund missed the AI boom, where he now sees second-order opportunities, and how he is positioning for a potential slowdown in AI spending and a broader market decline (photos added by QTR for emphasis).

Markets Are Complex

Six months ago, if you had asked me what would happen during a Mid-East war, I’d have guessed that gold and US Treasuries would rally on a global flight to safety. Nope, they declined—markets are complex. I would have guessed that if we drew more than a billion barrels of global commercial inventories, oil would scream out of control. Nope, it’s effectively unchanged since the conflict began—markets are complex. If you asked me how our core book would do, I’d have told you that we’d likely outperform given our heavy weighting towards volatility and inflation beneficiaries. Nope, we’ve given up ground—markets are complex.

I’ve always been of the view that in the short run, markets can trade at literally any price level. Throughout my career, I have repeatedly been humbled by securities that have exceeded even my wildest expectations of where they could trade. While the overall decline in our portfolio was quite moderate by this Fund’s standards, I remain humbled, as I really would have expected our book to have performed better in a Mid-East war that saw increased volatility and inflation readings. Markets are complex.

It’s worth taking a step back and trying to frame what happened. As you know, I’m firmly of the view that we’re in a Feudalist economic system. Rather than rehash my view of Feudalism again, just think of it this way: the oligarchs of foreign countries underpay their workers to produce products for our citizens to consume. Their resulting dollar earnings are then recycled into US Dollar risk assets, leading our currency and assets to be overvalued, our businesses unable to compete globally outside of a handful of sectors like technology, and our economy effectively hollowed out. Our overpriced assets then allow increased consumption, and the cycle begins anew. This ecosystem benefits the top few percent of families in both nations, while impoverishing everyone else. Economic Feudalism.

When Hormuz was closed, some unique trends happened...(READ THIS FULL ARTICLE HERE). 

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