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Rough Notes: Jan 12, 2026

Digest of recent rough notes

The following is a new, regular email, based on my (also new) "Rough Notes" feature on the site. It will send out digests of my regular notes, like what you see below.

Here are ten recent rough notes from the site.

1.
Red Queen Strategies in Agentic AI

Fascinating paper on red queen competitive strategies among agentic AIs in a programmatic sandbox, and how the competition evolves. The main takeway: rapid evolution toward a general-purpose behavioral strategy. But, more insidiously, rapid synchrony in approaches, given similar reward functions, training data, etc. This, of course, is profoundly destabilizing. https://arxiv.org/abs/2601.03335

Jan 12 · Permalink →
2.
Debate on AI Costs and Benefits

Long but fitfully worth reading "debate" between Michael Burry, Dwarkesh Patel, and Jack Clark about the costs and benefits of current AI. It somehow devolves into nuclear advocacy, which is weird, given that there are far more useul rabbit holes. https://post.substack.com/p/the-ai-revolution-is-here-will-the

Jan 12 · Permalink →
3.
In-firm AI Usage Shows Limited Benefits

While surveys like this area always fraught, that the signal from in-firm AI usage isn't strong enough for most companies to say they are benefiting is striking. Again, early days, and an economy-wide 5% gain would be material for productivity, but the uncertainty is noteworthy.

Jan 12 · Permalink →
4.
AI Impact on Trading and Time

So, I sort of agree with this from Michael Burry about how AI is already making trades inroads, but the trouble is time is not fungible, Just because I could do a bunch of things, with an LLM assist, doesn't meant I would or should do that. I see people constantly getting in over their heads by starting things. https://x.com/rohanpaul_ai/status/2010179244366938408

Jan 11 · Permalink →
5.
Americans and their acceptance of chance

“[Americans] who live in the midst of democratic fluctuations have always before their eyes the image of chance; and they end by liking all undertakings in which chance takes a part.”

— Alexis de Tocqueville , from Democracy in America, Part II

Jan 10 · Permalink →
6.
Claims of AI and broader market bubbles

One of the stranger claims about AI is that there isn't an AI bubble, there is an "everything bubble", across debt, equities, alts, private credit, etc.

Fair enough, but it is a little like telling a patient they have many things wrong, and then stopping triumphantly there.

Examples:
Unhedged https://www.ft.com/content/6e49718f-220b-4de9-87e3-7469df24a925
Richard Bernstein https://www.bloomberg.com/news/articles/2026-01-08/market-bubbles-go-way-beyond-ai-says-richard-bernstein-advisors

Jan 9 · Permalink →
7.
AI Related IPOs Surge in 2026

A major theme in capital markets in 2026 will be a tidal wave of AI-related IPOs, and not just the frontier model suspects. Bankers will drag out everything possible, most of which will be garbage, in an echo of the 1999 dot-com IPO wave. It's already started in China, and it's coming to the U.S.

Jan 9 · Permalink →
8.
Data Center Air Pollution Health Costs

Data center health impacts, from a new piece in The Lancet:

- The PM2·5 released from training a large AI model is more than that emitted during 10,000 round trips by car between Los Angeles and New York City
- Public health costs from air pollution attributed to data centres in the US alone projected to reach $10b-$20b per year by 2028

https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(26)00033-4/fulltext?rss=yes

Jan 9 · Permalink →
9.
BIS report on AI spending trends

New BIS report on the AI spending ... enthusiasm, and it's somewhat more skeptical than I expected. It points to the potential for the inevitable reversal to have larger effects than one might expect, given it's rapid transition from equity to debt financing. https://www.bis.org/publ/bisbull120.pdf

Jan 8 · Permalink →
10.
New Books on Speed and Land

Two books, one upcoming, and one recent, newly on my reading list:

1. Speed: How It Explains the World, by Vaclav Smil https://www.amazon.com/Speed-Explains-World-Vaclav-Smil-ebook/dp/B0DVGSKNR5

How the relentless pursuit of speed shapes technological landscape and social & environmental realities

2. The Land Trap, by Mike Bird
https://www.amazon.com/Land-Trap-History-Worlds-Oldest-ebook/dp/B0DW27PFL4

The role of land, through history, in making the rich richer and the poor poorer.

Jan 8 · Permalink →