There have been dire warnings lately about the threat to humanity from AI. One Anthropic researcher claimed there was a 1-in-10 chance of an AI driven apocalypse in the coming decade, citing the threat from AI with superhuman intelligence [1] with another even claiming the odds may be 50%+ [1a]. So how might this apocalypse play out?

Personally, I am sceptical of the threat of a superhuman AI deciding to kill off or enslave the human race. If an AI system is really so intelligent, it would realise that the data centres and electricity grids that are its nervous system and lifeblood will be dependent on humans, and are likely to be for some time, notwithstanding advances in robotics [1b]. Assuming it has a bias towards self-preservation, it wouldn’t seek to wipe out the human race. My fear is more from mistakes caused by AI systems, and also from AI being mis-used by humans with genocidal intent.

Reverse stress testing where an AI event threatens the human race,...

Despite a drop in the SpaceX share price denying him the status of trillionaire, Elon Musk is still the richest man alive. He is also one of the most influential, with over 240m followers on X, the social media platform he owns. But has he over-extended himself? And if so, what does it means for investors of his companies, SpaceX and Tesla, as well as the wider market?

Musk’s prowess as a businessman is undoubted. Having earned $175m from his early involvement in PayPal and its progenitors, he then invested in Tesla and led it to transform the electric vehicle (EV) market. He followed it up by founding SpaceX and making it the leading space firm along with its ubiquitous Starlink satellite communication service. He is now attempting to become a major player in the AI boom with xAI which along with X has been merged in with SpaceX.

However, I fear that Musk’s reputation may be leading to his companies being grossly over-valued. Furthermore, his AI ambitions,...

Amidst all the chaos in the US and the Middle East, it is important to keep an eye on developments elsewhere. One particular pocket of emerging risk comes from Taiwan.

In the short term, a particular point of vulnerability relates to falls in the US dollar against the Taiwanese dollar, and its impact on Taiwanese life insurers. These hold roughly US$700bn in US bonds, mostly corporate bonds [1], accounting for 6-7% of the US corporate bond market [2].

Because the exchange rate of the Taiwanese dollar and US dollar has been broadly stable in the past, a lot of this of the currency risk is unhedged. Even that which is hedged is often done on the basis of rolling 3-month hedges [3], [4]. However, a recent spike in the Taiwanese dollar against its US equivalent has led to currency losses [5]. As a result, Fitch has placed many Taiwanese insurers on downgrade watch [6]. Fitch noted that the insurers should have sufficient capital to withstand a 10% appreciation in the Taiwanese...

Six months ago, I published a blog [1] highlighting some of the risks which may arise on Donald Trump’s accession to power in January. A lot has happened since then. Comparing the risks identified with what has occurred…

1. Tariffs and trade wars - I noted Trump's election promise to levy tariffs of 10-20%, with higher tariffs on China, and that this could raise prices and reduce global growth. Sure enough, on 2^nd April, which he styled “Liberation Day”, Trump imposed a minimum 10% tariff with higher rates for those with large trade surpluses with the US [2]. These were much higher than many had feared, with the effective tariff on imports coming into the US rising from 2% in 2024 to an average of 24% [3].

Back in November, I worried that markets were not pricing in the risks posed by Trump and his tariff plans. This appears to have been borne out with stockmarkets falling sharply after “Liberation...