This Week in Barrons: 08.2.2026

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• Kenny G’s “REAL Art of the Deal” ... Citadel emerged as the buyer of whatever was left of Leopold Aschenbrenner’s Situational Awareness fund. Yes, that’s the same Citadel that caused chip-sector panic last week by telling the world that our FED will raise rates in July.  Ken Griffin was simply following his own ‘Blood in the Streets’ playbook. 

  1. Tell the world that our FED will raise rates in July (whether it’s true or not),

  2. Smash-the-Market lower,

  3. Cause Leo’s Situational Awareness fund to liquidate,

  4. Pick up the Pieces at Clearance (Blood-in-the-Streets) pricing,

  5. Pump-the-Market higher, and then

  6. Dump it ALL!

   

  - How often do people say: “Welcome back” ... and really mean it? What if the person behind-the-counter really knew (without being told) that you were a returning customer – giving them a vote of confidence.  Per S. Gobin: Being Welcomed Back offers us dignity, safety and belonging.  Being Welcomed Back is hard to do, impossible to fake, and not easy to automate or scale. 

• In his final earnings call as Apple CEO ... Tim Cook is leaving the Mac-maker as the largest company in the world by market value.  Shares of Apple have risen ~20% this year – pushing it past the $5T market cap threshold for the first time.  As incoming CEO John Ternus prepares to take over, the company seems to have a renewed focus on what it has always done well: consumer products.  Watch for the Big Tech AI trade to become a revenue / free-cash-flow contest instead of a spending one.

• “Play the Ball, NOT the Referee” ... said FED Chair Warsh during his remarks.  The most important thing our FED did was to refuse to say what comes next.  But that didn’t stop the 30-year bond from rising the most in a single day since Nov. 2024. Torsten Slok at Apollo said: “The lack of guidance is contributing to volatility - yields are like a yo-yo.”

•  The US economy grew a measly 1.5% in the second quarter ... and over half of that was AI capex.  GDP missed the 2.1% estimate as consumer spending cooled, and USG outlays contracted.

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• The Pacific Ocean is the warmest ... in satellite record-keeping history.

• The FCC banned new Chinese robots ... targeting Unitree and Sungrow.

• China's factory production contracted for the first time ... since February.

• The EPA said power plants built solely for data centers ... and disconnected from the grid may be exempt from the Clean Air Act’s Acid Rain Program.  [FYI: USG trying to accelerate more AI infrastructure spending and reduce pressure on the regional grids.]

• Chips had their worst month since 2008 ... with South Korea's market triggering downside circuit breakers.

• Japan and South Korea both moved to buy their own currencies ... in a rare, coordinated currency intervention. 

• Amazon raised its 2026 capex forecast $20B ... and AWS grew at its fastest pace since 2021.

• OpenAI slashed GPT-5.6 prices 80% ... moving it higher on the intelligence charts for cost per task. [FYI: Cost and efficiency - let the games begin!]

• Not to be outdone, DeekSeek just released V4 Flash ... that not only matches OpenAI’s GPT-5.6, but costs 60% less per task (even after OpenAI’s price cuts).  [FYI: Remember, China’s strength is: ‘racing to the bottom’ on price.]

• Meta made smart glasses mainstream ... but also introduced non-consensual filming, a facial-recognition feature, and a single LED as the only signal to bystanders that threatens to now make them part of a surveillance movie.  If Meta cannot build credible consent into the product, it risks handing Apple and Google a privacy-shaped market-place.

• Tavus’ PAL Maker ... allows anyone to build intelligent AIs that can see, hear, and remember important details.  Just describe the type of PAL you want (face, voice, judgment, personality and guardrails) and the system will generate it.

• HeyGen’s new Video Podcast  ... converts any document, link, or idea into a video show hosted by two AI avatars, complete with edits and different camera angles.  Simply upload photos of the hosts, add a topic file, preview the automatically generated script, and publish. See how a Video Podcast works.

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What really happened with Leo’s Situational Awareness fund?

• Leopold Aschenbrenner’s wedding guests were arriving in Carmel just as his Situational Awareness (SA) hedge fund was forced to unload most of its public-stock portfolio.  

• SA launched in late 2024 with $225m in seed capital and a conviction that the build-out of physical and digital infrastructure for AI would be the defining investment opportunity of the decade. 

• SA turned that $225m into $45B before 24-year-old Leo watched his empire collapse during the chip downturn.  “We just witnessed the largest and fastest momentum crash in modern history,” said Jonathan Krinsky, BTIG chief market technician.

• The RIP: Leo’s fund gained +270% (post-fees) YTD through May, and over 1,000% since inception.  It was leveraged approx. $4 for every $1 of capital.  The fund ended by selling out to Ken Griffin’s Citadel – leaving the fund’s individual favorites like NBIS, BE, SNDK, and CRWV exposed to a post-liquidation rebound or another rush for the exits.

• [FYI: Situational Awareness has not dissolved, but rather retains its private holdings, the most significant of which is a stake in AI’s Anthropic – valued at ~$5B.]

• Last Week’s Top 4:

  1.   Our FED held rates steady ... but then the Bond Market called our FED’s bluff as the 30-year broke above 5.20%.

  2.   Iran broke the cease-fire ... just when the oil reserve had no room left.

  3.   Credit Markets started pricing in real default risk ... for that AI debt.  The clearest results came from the Situational Awareness fund’s liquidation.  Its leverage was wrong – not its thesis.

  4.   Miscellaneous signals ...

  a.   Procter & Gamble's finance chief described the consumer splitting in two, with wealthier households still buying in bulk, and lower income households cutting back.

  b.   China's decline in factory activity sent a signal that the export orders built ahead of new U.S. tariffs – are beginning to fade.

   

  Next Week’s Top 4 ... This week has no Fed meeting, and no mega-cap earnings to report.  Markets will decide on their own. Per PMD:

  1.    Will the 30-year yield hold above 5.20%?  If the 30-year holds above 5.2% through Friday, it will turn a single market event into a new baseline.

  2.    Will SpaceX's debut earnings report shake the AI trade? SpaceX reports its first results as a public company on Tuesday.  That date also triggers a lockup – freeing ~912m insider shares for potential sale.  Watch for any network deals and/or any signs of heavy insider selling.

  3.    Will a second leveraged AI Fund or Private Credit name go under?  Watch for another fund reporting forced selling, margin pressures, or a credit downgrade tied to AI exposure.  

  4.    Will the chip fight keep widening?  Chinese competition and intertwined funding relationships drove the price drops.  China started domestic production of their own chipmaking tools, and Washington answered by banning Chinese robots and power equipment.  Watch whether Samsung and SK Hynix hold their recent levels, or whether the selling resumes.

  The bond market's verdict on the Fed sits at the center of everything.  The chip fight between Korea, China, and Washington still has room to get worse – as September’s talks are still weeks away.  And the paper gains propping up Alphabet's and Amazon's earnings face real tests that land long-before any money ever needs to change hands.  Be cautious and aware of the market’s seasonality.

• Factually (a) The S&Ps closed July lower by -0.1%, but still up +9.4% YTD.  (b) Semiconductors have seen a +20% correction off their peak.  (c) Seasonality is showing semis remaining lower with elevated volatility.  (d) Even REITs and defensives are sounding a cautionary tone.  And (e) Resource-based capex is being crowded out by tech capex.  Overall, per Callum Thomas, the carnage that unfolded last week in semiconductors is probably setting up for consolidation and ranging phase (at best) vs the correction and resurgence like we saw earlier this year.  Multiple risk flags continue to wave so don’t be blindsided.

   

  TIPS:

  1. BUY: more EWZ (Brazilian ETF) + OSCR (Oscar Health)

  a. SELL Delta 30 C-Calls on Monday AM ...

  b. Let ‘em expire worthless on Friday

  2. BUY: more KWEB (Chinese ETF)

  a. SELL Delta 30 C-Calls on Monday AM ...

  b. Let ‘em expire worthless on Aug-21

  3. BUY: more Bonds ... +6% - especially if the 30-year continues to rise

  4. BUY: more DJAI / SPYI – monthly Divi-Producers

   

  HODLs: (Hold-On for Dear Life):

  • Hold / Reduce:

  - (-) Ethereum (ETH = $1,856 / in @ $310)

  - (-) Bitcoin (BTC = $63,100 / in @ $4,310)

  - (-) HYPE (HyperLiquid = crypto) == ($51.4 / in at $32)

   

  • Hold / Increase:

  - (+) Physical Gold @ $4,098/ox & Silver @ $57.7/oz.

  - (o) SLV (silver ETF) == ($52.3 / in at $27)

  - (o) GLD – Gold ETF ($371.5 / in at $212)

  - (+) EWZ (Brazilian ETF) == ($36.6 / in at $33) – Mon: Sell +C-Calls

  - (+) KWEB (Chinese ETF) == ($28.4 / in at $24) – Mon: Sell +C-Calls

  - (+) OSCR (Oscar Health) == ($31.2 / in at $11.92) – Mon: Sell +C-Calls

   

  • Monthly Income Producers:

  - (+) QQQI (QQQ monthly dividends @ 13%/yr.)

  - (+) IWMI (IWM monthly dividends @ 13%/yr.)

  - (+) DJIA (DIA monthly dividends @ 8%/yr.)

  - (+) BONDS @ +6% w/ semi-annual dividends

   

  - Please be safe out there!

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