Memory Wars and Perp Wars...Inflation and Deflation In The Degenerate Economy.... and Speculation Is a Gateway Drug to Investing

Good morning…

I hope to see you at Stocktoberfest in NYC this year on October 5-7.

I took a few days off in New York to golf to play some incredible rounds of golf with my friend Paul Traub and our sons. Our friend Michael Silver organized the highlight of the trip…a round at Pine Valley.

We drove down to Pine Valley from Manhattan for the day and we were treated to a special day of golf on what is considered THE best golf course in the world.

I have not played Cypress or Augusta which would be on my bucket list, neither has my son Max, but after playing Pine Valley, I understand why it is number one. It was a spectacular golf experience. Our host Mark (the member) treated us like family and was an amazing host. For whatever reason he sensed that filming this impossible putt my son Max was trying to make on hole #2 was a good idea and lucky he did. Watch for yourself…

Onward…

Putting the Iran war, the Middle East war and the Russia/Ukraine war aside for the purpose of this post, there are two new wars brewing at home in the United States…the ‘perp war’ and the ‘memory war’.

The ‘memory war’ is underway (The DRAM war in particular) as a result of the AI war, the highest stake technology war being played out now across the world. The AI war is evolving fast as Open AI and Anthropic look to protect themselves from the ‘open source’ LLM’s. They are doing so by spending time at The White House looking to create a regulatory moat for themselves. There is much to be cynical about here. My friend Michael Parekh is covering it all daily as I have shared often times and you can follow him here. Ben Thompson at Stratechery also does a great job and I also check in daily at TechMeme to dig into the weeds of the big discussions.

The memory war is heating up because Micron is now a $1 trillion company from all the DRAM demand and Apple had to announce price raises across the board because of it. Micron (A US Company) has two large competitors in South Korea (Samsung and Sky Hynix) and they too have been insanely hot stocks and companies. Here are the charts up against Apple and Google just the last three years…

For simple stuff like this I go to Google and just search ‘Is Apple a Micron customer’…

There are wars within the memory war, especially in the DRAM market. Again, I asked Google to explain…

In a world where Trump wants to take Greenland, I can imagine him threatening South Korea at any moment as Apple makes the inflation case at home.

Apple does not like having to raise prices. The stock dropped almost 10 percent ($400 billion) on that news. Tim Cook will be back in the White House talking about a new inflation running rampant across America and it is NOT oil.

The MOU with Iran is all about oil inflation, so expect this ‘memory war’ to be fought along those lines too.

To the next war…

The ‘perp war’ is shaping up to be a massive war as well.

What is a ‘perp’ (thanks Google Gemini again)

The CFTC and CME just filed a lawsuit over classification of perps as the CME is worried retail starts trading perpetual futures rather then them being classified as a swap. I am all for democratizing access to investment opportunities. Do we need perps for retail? Maybe yes maybe no. You can already trade offshore using $HYPE ( ▼ 1.09% )   (Hyperliquid) so why not make it legal in the US.

Why the war?

The price charts of all the major players tells the story…

In just a few years Kalshi has rocketed to a private market valuation of $26 billion with rumors circling of a new $40 billion valuation. In just the last month, the CBOE has dropped 30 percent to a $26 billion valuation. Kalshi you can track on Stocktwits now because of our partnership with Nasdaq Private Markets.

The incumbents have spent decades building a regulation moat for their exchanges. The $CBOE ( ▼ 1.13% ) was founded in 1973 and The CME in 1898. No wonder The CME is suing. I imagine the CBOE is watching closely. The NYSE ( $ICE ( ▼ 0.51% ) ) is the largest investor in Polymarket so I imagine they are as confused as anyone as to why their stock price is going down.

The proliferation of degeneracy is deflationary as platforms battle for customers in this post SEC world. This deflation is definitely one reason that the stocks prices of the incumbents are falling. It is also likely deflationary for the economy as most people lose money betting, trading futures and perps. Instead of buying ‘stuff’ this degenerate economy blows themselves up. The last generation of entrepreneurs wanted to be Zuckerberg, but it sounds a lot easier to make your fortune with leverage and perps than starting a company to compete with the technology giants. Even Zuckerberg does not want to be Zuckerberg anymore as he has tasked a team at FaceMetaBook to build a prediction markets app for its own billions of users.

The Trumps are investors in both Kalshi and Polymarket and have their own Truth Social prediction market. I assume they are also long Hyperliquid and Solana which are the blockchains of choice for ‘perps’. I also assume Trump loves the word ‘perps’ and might claim that he invented the term very soon. I am excited to see how he spells it. I doubt the White House or Trump gets involved in this war right now because their horses are winning and the CFTC which governs all this, wants ‘perps’ to exist.

The government/CFTC free for all stance also explains why I have been getting pitched whats seems like 100 forms of perps and prediction market platforms at Social Leverage (which triggered my buying Hyperliquid in the first place). Just last week Fred Wilson (Union Square) invested $75 million in an app called FOMO. Fred was an early investor in crypto and Coinbase so he knows ‘degeneracy’. As Fred said this week on a podcast…’speculation is a gateway drug to investing’.

Fred makes ‘the’ important point here which is a constant and now growing hot debate. Is this speculation and now degeneracy ‘good’? Fred likens it as I said above to the gateway drug to investing… so ultimately an overall good.

So what could go wrong?

Elizabeth Warren, AOC, Bernie and likely most Democrats are a huge risk to this trend if the Democrats take back the White House in a few years.

In the meantime, if you follow me here you know I added Hyperliquid to my ‘degenerate economy index’ which has been great, but I did not expect the massive drawdowns it has caused in the CBOE (adding more recently), the CME and ICE. I assumed the growing market was good for everyone. I also have invested in SPV’s to buy Kalshi and Polymarket and I own own $HYPE ( ▼ 1.09% ) Solana and $PURR ( ▲ 8.98% ) .

As the CEO of Stocktwits I am seeing all this at ground level and the growth is accelerating as new investors come to Stocktwits to learn. I do not trade options or perps myself nor do I make many bets. But, if I was young and/or a new investor, I know I would be 100 percent immersed in these products and markets, not just investing in the platforms via our firm Social Leverage. This behavior has convinced me of some changes we needed to make to the Stocktwits platform that will make Stocktwits even more accessible and easy to use for this era of traders and investors. Coming in short order (next 60 days) are the launch of the Stocktwits MCP, a ‘for you’ feed, a more intuitive search function to help surface, people and ideas and a reimagined message box. Of course AI is at the center of all these changes.

Have a great Sunday.