The other day I listened to an interview with the CEO of Anthropic, Dario Amodei, on an Economist magazine podcast. Anthropic is in AI safety and research. They write large language models for sectors including healthcare and financial services. Many people think AI will create such fundamental change that it will eliminate jobs across large swathes of the economy.

Anthropic takes their role in this type of creative disruption seriously. They even have a Philosopher-in-residence, Amanda Askell, whose job it is to think about such things. Preparing for this new world, she says that employment should not be the only way we measure our worth.

Worrying publicly about the mass unemployment the success of your company will cause may be a smart way to excite investors about your business prospects. It may also be the height of hubris at a market peak, depending on your perspective.

That AI offers enormous promise is undeniable. Healthcare stands ready for a revolution in diagnostics as AI models assimilate hundreds of millions of case histories, test results, x-rays and outcomes to encompass the medical sector’s collective experience. There can be no greater benefit to humanity than enabling longer, healthier lives.

Will such revolutionary change slash healthcare employment? Many think it will. I’m not convinced. I doubt patients will accept a diagnosis from a computer, other than perhaps for conditions that can be treated today at an urgent care center. I see AI as increasing the tools available to health care professionals. Your doctor will interpret results from a model, or perhaps multiple models. The returns to education will increase.

I don’t think AI will replace financial advisors. People are not going to trust their health or their money to an algorithm, even while the management of both will increasingly rely on professionals using these tools.

Would an AI financial advisor have overweighted AI stocks? Or LNG exposure? Any credible portfolio construction must be designed for at least one business cycle of 5-10 years. With 100-150 years of historical market data, there just aren’t enough non-overlapping time segments to train a model.

Legal risk seems a prosaic impediment to the AI revolution. Humans make mistakes all the time. When doctors or financial advisors deliver unacceptable outcomes, they get sued, but the consequences are limited to the individuals involved. These are idiosyncratic risks. If an AI model replaced a whole class of professionals, it would introduce systemic risk.

Flawed diagnostics or improper portfolio construction could impact thousands of people simultaneously. Class action lawsuits would follow, targeting the deep pockets of the software companies who built the model. Plaintiffs might even use AI to identify patterns of damaging medical care or investing.

If this seems implausible, note that Tesla just suffered a Florida jury award of $243 million for an accident in 2019 involving their autonomous driving software. Last year over 39,000 Americans died in auto accidents, overwhelmingly due to human error. People drive recklessly and make mistakes all the time.

Autonomous vehicles could cut this dramatically. Society accepts 39,000 deaths because each was caused by the idiosyncratic risk of different individuals. If Tesla’s AutoPilot cut this by 99%, lawsuits from families of the 390 remaining fatalities would bankrupt the company, even though thousands of lives had been saved. Without legal reform, the move from idiosyncratic to systemic risk will create exposures to corporations that in America’s litigious society will be ruinously expensive.

The standard of competence of an AI model needs to approach flawlessness, exceeding the average human professional by orders of magnitude.

I love how Google search results using AI are so improved and relevant. In the 1980s and 90s when I was trading interest rates, I often put on a yield curve trade in the late summer to exploit a seasonal tendency for it to flatten in the fall. I asked Google if this pattern still exists and learned it does. Old Google would have hunted for relevant websites that didn’t properly address the question. Or I would have downloaded years of historic data and spent hours building a spreadsheet to answer the question myself.

December ‘26 SOFR futures yield less than December ‘27 SOFR futures, suggesting rates will come down next year and then move up the year before the election. I think it’s more likely that rates in two years will be lower than next year.

Trump’s continued bashing of the Fed is counterproductive in the near term. Any rate reduction needs to be unambiguously supported by the data to avoid the appearance of lost independence. They’ll move slowly.

But over time Trump will probably bully the FOMC into partial submission. Tariffs and immigration policy may by then be hurting growth. Complaints that tight monetary policy is keeping US interest expense intolerably high, because we owe so much, will be more widespread.

I think the short Dec ‘26/long Dec ‘27 spread trade is worth doing.

If you’re concerned about monetary policy taking more risk with inflation, as President Trump would like, you should own real assets. We think midstream energy infrastructure, with price hikes often linked by regulation to PPI, offers good protection in such a scenario.

We have two have funds that seek to profit from this environment:

Energy Mutual Fund

Energy ETF

Important Disclosures

The information provided is for informational purposes only and investors should determine for themselves whether a particular service, security or product is suitable for their investment needs. The information contained herein is not complete, may not be current, is subject to change, and is subject to, and qualified in its entirety by, the more complete disclosures, risk factors and other terms that are contained in the disclosure, prospectus, and offering. Certain information herein has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy,  completeness or timeliness of this information. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments.  Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

References to indexes and benchmarks are hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in an index and do not reflect the deduction of the advisor’s fees or other trading expenses. There can be no assurance that current investments will be profitable. Actual realized returns will depend on, among other factors, the value of assets and market conditions at the time of disposition, any related transaction costs, and the timing of the purchase. Indexes and benchmarks may not directly correlate or only partially relate to portfolios managed by SL Advisors as they have different underlying investments and may use different strategies or have different objectives than portfolios managed by SL Advisors (e.g. The Alerian index is a group MLP securities in the oil and gas industries. Portfolios may not include the same investments that are included in the Alerian Index. The S & P Index does not directly relate to investment strategies managed by SL Advisers.)

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involves a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of SL Advisors LLC or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made. r

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with SL Advisors LLC with respect to any linked site or its sponsor, unless expressly stated by SL Advisors LLC. Any such information, products or sites have not necessarily been reviewed by SL Advisors LLC and are provided or maintained by third parties over whom SL Advisors LLC exercise no control. SL Advisors LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client’s investment portfolio.

Past performance of the American Energy Independence Index is not indicative of future returns.