May was a nexus month: An unexpected electoral swing in Canberra, a tariff shock that froze China-to-U.S. sailings, and a fresh wave of AI-factory build-outs that will soon gulp more electricity than Japan’s entire grid.
“First-order minds trade headlines; second-order minds trade consequences.”
— my scrawl in the margin of this month’s notes
When tides, moons and storms align, it is the second-order currents—not the surface chop—that decide who makes harbour. The pages that follow track those deeper currents across the five horizons and four growth pillars (Land · Labour · Capital · Technology), what I call my ‘Signal from the Noise‘ strategy.
Why May Felt Like a Punch-Up at History’s Pub
Picture three burly patrons bursting through the tavern door at once:
- Election Cyclone — Canberra swings left, hard and fast.
- Tariff Hammer — Washington slaps Tarrifs the size of steel anvils on China.
- AI-Factory Fever — Every hyperscaler announces yet another gigawatt campus.
Each brawler alone is noisy. Together they start a bar-fight that rearranges the furniture for a decade. This letter breaks up the scrum, drags out the underlying motives, and hands you the coat-check ticket labelled Opportunity.
1 · Global-Horizon Macro Currents
1.1 The post-election macro reset
Labor converted 77 seats into 94, leaving the Coalition on 43 and the cross-bench enlarged.
A bigger caucus means fewer internal veto points—and a higher probability of regulatory activism (yet more red tape ahead). Expect quicker movement on industrial-relations amendments, energy-transition subsidies and housing tax reform. For CFOs, the discount rate on long-lived assets just ticked up (potentially: Alot).
1.2 Industrial Policy 2.0 – tariffs or turbines?
Commentators call the April tariff package brinkmanship; we see industrial mobilisation. Executive Orders 14259 and 14266 hike reciprocal duties on Chinese inputs precisely when AI campuses need steel, concrete and megawatts The White House. Flexport data show a 60 % collapse in China→US ocean bookings within three weeks, the sharpest capacity withdrawal since COVID-19 Flexport.
“Lose the compute race once and you never catch up; the curve only steepens.” — Eric Schmidt, TED 2025
Domestic steel makers have already reacted: Nucor shipments rose 10 % YoY in Q1 on stronger spot prices driven by tariff-fuelled demand Reuters.
As I contended with a notable Economist last week at a conference, the simple minded, consume the simple headline “Trump loves a deal, its just his ego running out of control”. I contended that it is the accumulation of many of the topics I have discussed before:
- Secretary Bessent pursuit of unequal non-trade barriers and manipulation of the WTO rules
- Reagan Thatcher styled ‘New Order’ for reshaping the Global trading system and isolating China as offered by Stephen Moran at Hudson Bay Capital
- New World order in Re-Shoring and Friend-shoring as the Cold War re-ignights over idiology and protection of the dominance of the USD as the sole globally traded currency
- Protecting USD treasuries, coutering the Triffen dilemma: ie. rebalancing terms of trade as Triffin warned that, over time, ever-larger external liabilities would erode confidence in the dollar and eventually force a painful adjustment.
- Rule of Law: China’ and much of the rest of the world who align with China are abusers international law and in a Technology race, the US want to stand firm on ‘Rule of Law’
- MOST FOUNDATIONAL and IMPORTANT: this is the era of the 21st Century Manhattan Project equivelant.
- Truly Transformative Tech in Agentic Ai (hyperscaling at a hyperscaled rate)
- Large Scale Robotic manufacturing of all high value goods and of Humanoid Robots themselves
- Agentic Ai and aggregated problem solving from embeded systems of known knowledge
- Agentic Ai and new discoveries from supercomputers and quantum computing creating new knowledge areas and new knowledge within
1.3 Demography & demand cliffs
Independent demographers now estimate China over-counted its population by ~130 million; the working-age cohort is falling outright Financial Times. Russia’s own statistics office forecasts a drop from 146 m to 139 m by 2046 TASS. Commodity demand anchored to those consumers will peak sooner and lower than most models assume.
Pillar touchpoints: Land (commodities), Labour (demographics), Capital flows.
Not only is this a problem for the Chinese, rather is a problem for the rest of the world.
As the Chinese population Supply/Demand shift becomes clearer, the work demands more, goods cost more, and the Triffen dilemma exacerbates as the costs of Chinese goods ratchets upwards (America would then be in the position of importing inflation y-on-y from their single largest supplier)
Second order impact, as the Chinese factories have been built for sweatshop like conditions with thousands of employees, re-tooling what is $35T of installed manufacturing ‘sheds’ is going to take a significant amount of capital, resources, capability and energy, displacing their factory workers.
Socially this is a disasterous situation if the Chinese decide to lay off workers (it is a communist country), and replace them with robots, and as mentioned above, the capital required to do so, of which the world are only prepared to loan them at higher rates than the ‘risk free rate’ of the USA.
Enter the only othe real options to provide scale at speed, with lower capital costs, leveraging existing labour supply: India, Mexico (integrated with USA), Canada, Vietnam, Korea.
India
India is a great geo-political option as well as a tactical and capital option as India is demographically ~20 years behind China, have a large population of highly educated realists, who have culturally bridged the east and the west for over a century. There is strategically a lot to like for American Corporates, to scale in India – if only for India’ convoluted National Union styled quasi-federal or asymmetric federal state (its complicated, and the states/regions relationship with the Central Government is inconsistent across the country.
Mexico
Mexico is a great geo-political option as well as a tactical and capital option as Mexical is demographically ~30 years behind China, have a very large working age population of highly educated realists, who have (in the north of the country) been culturally aligned to the west for over a 50 years. There is strategically a lot to like for American Corporates, to scale in Mexicao, least of which is the shared boarder, however there are risks with the south, the limited industrialised land to the North and Population is in the center, cut off by the range.
Canada
Canada is a great geo-political option as well as a tactical and capital option as Canda is basically a state of America, as Trump puts it. It has been culturally aligned to the west for over a 100 years. There is strategically a lot to like for American Corporates, to scale in Canada, least of which is the shared boarder, however they tend to be more leftist that the leftists in America, which from America’ point of view is concerning.
America themselves
America on the other hand, has a highly skilled workforce, however to few workers. As they outsourced their manufacturing for the last 50 years to China (particularly low to medium tech) America has realised that this is the ‘tipping point‘ in which they must re-industrialise for the rest of the 21st Centry and that whilst capital is relatively cheap (note Kondratiev and Dalio) through investment over the next credit cycle.
2 · Geopolitical Manoeuvres
- AUS-US drift risk – A super-majority Labor government may cool alignment with Washington just as AUKUS Pillar II tech-transfer funds are readied. Boards relying on U.S. export-control licences should scenario-plan for diplomatic whiplash.
- The re-ignited Cold War – The Hoover Institute argues the current contest is not “Cold War 2.0” but the same zero-sum dynamics rekindled. Today’s choke-points are chip fabs and undersea cables, not Fulda Gaps.
- Indo-Pacific winners – India, Vietnam, Taiwan and Malaysia rise as the logical processors of Australian ore as Chinese demand tapers.
Pillars: Capital flows, Technology.
AUS-US Drift Risk
(Why Canberra’s new arithmetic could give boards whiplash)
The ALP’s 94-seat romp gifts the government something no recent counterpart has enjoyed: the votes to legislate at speed and (mostly) without horse-trading. One unintended side-effect: the diplomatic thermostat with Washington can now be dialled to “lukewarm” without fear of domestic blow-back.
That matters precisely when AUKUS Pillar II—the bit that funds joint work on under-sea robots, AI/ML and quantum sensing—is edging from concept deck to cheque book National Defense Magazine. If Canberra’s rhetoric tilts a few degrees toward “strategic autonomy” just as U.S. export-control lawyers are finalising the fine print, licences that looked bullet-proof in March can suddenly sprout conditional clauses.
Board takeaway: any project that relies on EAR99 carve-outs, ITAR Technical-Assistance Agreements or fast-track DSP-5s needs a Plan B. Run the scenario where a three-week licence renewal stretches to 90 days—then ask who floats the working capital while engineers wait for the stamp.
The Re-Ignited Cold War
(Same code-base, fresh patch notes)
The Hoover “GoodFellows” like to joke that we’re not in Cold War 2.0 so much as Cold War 1.1—a software update on the original zero-sum game. The geography has shifted: today’s Fulda Gaps are called TSMC, ASML and Samsung; the new Checkpoints Charlie live at the landing stations of under-sea fibre.
- Chip fabs: TSMC manufactures ~60 % of the world’s logic chips; ASML owns 100 % of extreme-ultraviolet lithography. De-risking means designing supply chains that survive a three-month Taiwan Strait closure, not a three-day Suez blockage.
- Cables: 97 % of global data still rides glass on the ocean floor. Beijing’s “Digital Silk Road” aims to control 60 % of that capacity by 2030 Industrial Cyber. Cut the cable, sink the cloud.
- Hence StarLink, Kuiper, RocketLabs etc are all working to build an incontrovertible constellation of internet satellites to mitigate China and Russian aggression in communications totalitarianism.
Board takeaway: map your single-points-of-failure. If the answer is “Taiwan wafer starts” or “one subsea route out of Sydney,” you’re running hotter than you think.
Indo-Pacific Winners
(The ore goes east—but no longer to China)
With Chinese demand plateauing, Australia’s bulk cargoes are hunting new furnaces. Three stand-outs:
| Next-stop smelter | Proof‐point | Why it sticks |
|---|---|---|
| India | Iron-ore output up 3.5 % YoY to 236 Mt; Vedanta tips Delhi to overtake Brazil as #2 producerThe Times of India | Delhi’s steel dreams sync with its AI-era datacentre build-out (20 GW by 2032). |
| Vietnam | Electronics exports hit US$126 bn in 2024, +27 % YoY vietnamnews.vn | Already the “China + 1” factory floor for Samsung, Apple and Nvidia. |
| Malaysia / Singapore corridor | ASE Technology expanding Penang chip-packaging hub; ASEAN semicon investment acceleratesFinancial TimesDIGITIMES Asia | Neutral turf in U.S.–China tech tussle; deep-water ports ready for Cape-class ore carriers. |
Throw in Taiwan’s relentless demand for energy-transition metals (20 GW PV target by 2025) moea.gov.tw, and you have the makings of a new “Great Iron Triangle” skirting the South China Sea.
Board takeaway: marketing teams that still fly fortnightly into Shanghai might price a second-home lease in Ho Chi Minh, Penang or Pune instead. The future blast furnace—and the future iPhone factory—won’t wait for comfort zones to catch up.
3 · National Policy Winds (Australia)
3.1 Housing-market intervention
Negative-gearing tweaks are back on Treasury’s whiteboard, paired with a fast-track approvals pilot for projects ≥300 dwellings. The pilot aims to bypass the council-community gridlock that has become Australia’s deepest housing choke-point:
- median council DA processing time now 330 days, double the 2015 figure;
- private-sector house approvals fell 4.5 % MoM in March to 8,804 units
- akin to 2011-2013 levels dispite the population increasing by 10% over that period) Australian Bureau of Statistics
- Even as CoreLogic’s 10-year capital-city price index is up +53 % (Sydney +70 %) CoreLogic Australia.
Conflict is baked in: councils are paid to represent incumbent voters; the nation needs stock for future voters. Until that governance mismatch is solved, supply will stay rationed, prices elevated, and developers squeezed between high land costs and political delays.
3.2 IR & energy-transition activism
More hard hats, thicker rule books
A bigger Labor caucus plus a revved-up ACTU means the National Reconstruction Fund will likely shove cash faster toward battery plants and offshore-wind yards. In parallel, expect a union-backed push to fold gig-economy workers (think delivery drivers and on-demand tradies) into traditional awards. Project directors should pencil in two contingencies: (1) higher labour-compliance overhead, (2) a tighter market for qualified sparkies and riggers as clean-tech factories soak up the trades.
3.3 Critical-minerals credits
Dig it, process it, tax-credit it
Treasury’s whiteboard now sports a 30 % downstream-processing tax credit—a page torn straight from Ottawa’s playbook. Rare-earth and lithium juniors are already ordering congratulatory cupcakes; pure dig-and-ship operators less so. For EPC contractors the credit is a double-edged sword: more projects in the funnel, but higher local content rules and fiercer competition for gear and labour.
Pillars: Land, Labour, Capital.
4 · Twelve-Month Strategic Themes
4.1 Innovation flywheels
The compounding returns on one good hire
Palantir doesn’t just ship software; it ships entrepreneurs. Business Insider’s running “Palantir-Mafia” tally now lists 40-plus alumni start-ups that have raised a combined US $6 billion and already minted multiple unicorns. More than half that haul—US $3.8 billion—sits inside one outfit: Anduril Business Insider Africa.
Peter Thiel is the original Thought leader here, in his book Zero to One Peter outlines his theisis of the new thing, about old thinking, that the old economy got us here, but it wont get us there.
Peter Thiel is one of the original co-founders of PayPal, the original Software Mafia, he is also the co-founder, Venture Capitalist and major shareholder of Palantir and many of the spin off companies.
Anduril (also seed funded by Thiel is the poster-child for what happens when that flywheel spins. In April it beat nine entrenched defense primes to land a US $642 million Marine Corps contract for counter-drone systems—signed, sealed and appropriated in under 24 months. The lesson is painfully simple: innovation compounds. The earlier you get yourself on the cap-table—or the supply chain—the cheaper the ticket. Wait a funding cycle and you’ll pay venture-mark-to-market prices; wait two and you’ll be buying finished product at DoD rates.
Board note: If your own alumni aren’t spinning out R&D adjacencies, you’re not merely standing still—you’re falling behind the organisations that are.
4.2 Energy is the real AI moat
When the smartest algorithm still needs a wall-socket
Silicon Valley loves to talk about model size and parameter counts, but the International Energy Agency cares about amps and volts. The IEA’s latest baseline says global data-centre electricity demand will more than double to ~945 TWh by 2030—roughly the entire grid of Japan—and AI-optimised data centres will quadruple their own draw on top of that IEA.
Put differently: in the game of AI, winning the power-purchase agreement may matter more than winning the Kaggle leaderboard. Google and Microsoft can bundle PPAs the size of small nations; the average mid-cap can’t. That asymmetry is about to show up in margin lines disguised as “cloud OE uplift.”
Board note: Lock multi-year renewable supply now—or budget for spot-price indigestion later. In the AI gold rush, electricity is the pick-axe everyone forgot to hoard.
4.3 From ASCII to Atoms – Huang’s three eras
To look forward, in many respects you need to look back, as Nicolas Taleb says in his book the Black Swan, many events are ‘long run’ predictable, if you have the right mental model, and understand that “History and societies do not crawl. They make jumps. They go from fracture to fracture, with a few vibrations in between…”
How computing morphed from paper-punch to robot-wrangler in three giant strides
Jensen Huang tells the story better than anyone, but the punch-line is this: each time we widen the interface between humans and machines, the economic surface area explodes. First we taught silicon to read our letters; then our pictures; now it’s gearing up to steer our forklifts.
| Era | Compiler layer | Economic impact |
|---|---|---|
| Language (1960 s →) | High-level code | Knowledge work digitised. |
| Visual (2000 s →) | CUDA | Real-time video, simulation, Gen-AI. |
| Physical (now →) | Tokens + CUDA X/Omniverse | Robotics & cyber-physical twins; “every company will run an AI factory beside its physical factory.”Reuters |
The through-line is CUDA. What FORTRAN was to punch-cards, CUDA is to visual (and now physical) computing: a translation layer that lets domain experts build on the silicon rather than under it. Omniverse extends the trick to physics—letting you rehearse reality before moving an atom in anger.
Why should a board care? Because once the “physical-AI” flywheel spins, the productivity delta compounds like Moore’s Law on caffeine. Firms that miss the language-to-visual jump merely paid for catch-up licenses. Firms that miss the visual-to-physical jump will discover that their competitors’ robots now learn faster than their people. There is no late-entry price low enough to fix that.
Board note: If you can’t point to the line item where your “AI factory” budget lives—compute, power, token engineers—assume you’re on the wrong side of history’s S-curve.
Boardroom To-Do
- Stress-test revenue >25 % exposed to China.
- Map AUKUS Pillar II grants to internal R&D.
- Model electricity spend if supplier DC draw doubles by 2028.
- Secure CUDA-capable talent pipeline before wage inflation bites.
5 · Next-Quarter NSW Signals
Renewable-Infrastructure Bill. Legislation now before the NSW Legislative Council would let the Planning Minister short-circuit the normal approvals maze and rubber-stamp power-purchase agreements of 50 MW or larger inside 90 days.
That dovetails almost perfectly with the size profile of the Fortress solar-plus-storage projects we have on the drawing board. NSW is already halfway to its 12-GW renewables target under the existing Electricity Infrastructure Roadmap and has just released fresh guidelines for utility-scale wind and solar NSW Climate and Energy ActionPlanning NSW. The Bill, if passed in the winter sitting, would turn that trickle of projects into a gusher. Now is the moment to get in front of the Energy Minister’s advisers, pitch a pilot site and lock up a queue-position before the fast-track lane gets congested.
Sydney Metro West cost review. An independent panel is due to hand Treasury its final report in August, and every leak so far points to a blow-out north of the current A$25 billion cap Transport for NSWAustralia Times.
History says that when megaproject budgets balloon, they vacuum up trades, concrete and signalling talent, leaving the private market to fight for the leftovers. If you are bidding civil or M&E packages in Q4, assume labour scarcity, not just steel prices, and bake an 8–10 per cent wage buffer into your numbers. Far cheaper to pad a bid now than to renegotiate later under penalty-rate pressure.
Planning-portal e-lodgement rollout. Phase 2 of the NSW Planning Portal is live, giving councils automated workflow, live DA tracking and analytics dashboards. The first wave of participating councils is already pushing development-application determination times down by ≈30 per cent, according to Planning NSW’s own metrics and portal usage data planningportal.nsw.gov.au Planning NSW.
For project sponsors that translates into a full month of debt-carrying cost saved on a typical medium-density build. The operational takeaway is simple: coach your clients to have DA packs ready to lodge on day one of a council’s portal go-live—because once the early birds are in the queue, the time savings will evaporate fast.
6 · Noise-Cancelling Leadership
Mainstream business news is built to spike your cortisol, not sharpen your judgment. The scroll of doom—rate-rise roulette, property-bubble clickbait, “AI will end humanity by Friday”—is a dopamine dispenser masquerading as analysis. Boardrooms that trade on those sugar-rush headlines invariably end up misallocating capital: they chase whatever glitters today and ignore the slow, compounding forces that actually set enterprise value. The antidote is brutally simple: go straight to the source material. Read Treasury’s 2024 industrial-policy blueprint instead of the op-ed summary; watch the Hoover GoodFellows transcript instead of the 30-second clip; spend thirteen minutes with Eric Schmidt explaining why the AI arms race is a once-in-a-century power-shift. Then ask, “If this is true, what happens next—and what happens after that?” Turn the volume knob down on the chatter, stretch your time-horizon out to the decade, and keep this mental Post-it at the edge of your screen:
“First-order minds trade headlines; second-order minds trade consequences.”
Lastly “History doesn’t crawl; it leaps—then spends a decade explaining the leap.”
Murray Slatter
Managing Partner, Q-Factor Strategy & Transformation
