Investors face a dilemma. When the S&P 500 finished its worst quarter since 2022 last month, diversifiers like bonds and bitcoin fell too.

Even with the turnaround in mid-April, analysts at Goldman Sachs and Vanguard have projected low-single-digit annualized returns from 2024-2034.

Bloomberg asked where experts would personally invest $100,000 for their March monthly edition.

One answer that surfaced for a second time? Art.

It's what billionaires like Bezos and the Rockefellers have privately used to diversify for decades.

Why?

Thanks to the world's premier art investing platform, now anyone can invest in works featuring legends like Banksy, Basquiat, and Picasso, without needing millions.

Shares in new offerings can sell quickly but...

Our subscribers skip their waitlist*

^{*According to Masterworks data. Investing involves risk. Past performance is not indicative of future returns. See important Reg A disclosures at masterworks.com/cd.}

Hey everyone,

Let's talk about everyone's favorite (possibly) dead cat.

Physicist Erwin Schrödinger once proposed a thought experiment in 1935. It was meant to be absurd, but it became a legend.

It went like this: what if you put a cat in a box with poison and a decaying atom that would release the poison at a random interval? The cat in the box could be both dead and alive at the same time, at least until someone observed it and reported the truth.

It was meant to be hyperbole built to expose how silly the idea of a particle maintaining two states at one time could be. Schrödinger's Cat became a catch-all for something which can maintain two states at once.

Hyperbole only works when the audience knows it is hyperbole. There's reality. There's what people say about reality. Then there are infinite possibilities between these two states.

We're all in a thought experiment right now. Sometimes it feels like a joke. Is the war on? Have both sides won? Who is going to peek into the box and determine if the cat is dead or not?

Guess what: we're all opening boxes and finding out right now.

Let's get to it

-Eric

P.S. I am going overseas today. I am planning to report from a conflict zone (details soon). If you want to support independent conflict journalism the best way you can do this is to become a paying subscriber. Security in war zones doesn't come cheap so only paying subscribers will receive dispatches from the ground.

What Happened: Fighting kicked off in Mogadishu as Somali President Hassan Sheikh Mohamud's term expires on May 15. There is no election scheduled, no agreement on what one would even look like, and his Education Minister has now floated a one-to-two-year extension. The opposition Somali Future Council says it will treat him as a private citizen the moment the clock runs out. Without a successor framework, and Mohamud has invited the opposition to talks on May 10 with no confirmation they will attend.

Why It Matters: Somalia has become a flashpoint between competing powers. The UAE and Israel have thrown their lots in with Somaliland, the autonomous region to the north. Meanwhile Turkey and Egypt back the government in Mogadishu while Al-Shabaab has reclaimed most of the territory the federal government took in 2022 and 2023. It's easy to write Somalia off as a failed state, but that's just not reality. Whoever builds national security effectively will control a portion of the Red Sea and the Bab-al-Mandab chokepoint.

Given that the world has just realized how valuable energy chokepoints are, all eyes are on leadership in Mogadishu. A return to civil violence with Islamists takes Mogadishu off the map, the UAE and Israel win. Continuous power projected from the capital and building security on the Horn of Africa puts the ball into the court of Turkey and Egypt.

Remember, failed states are just assets on sale. Major powers are trying to buy while the price is low and hold until they pay dividends.

What We're Watching For:

What Happened: On May 4, the US launched Operation Project Freedom to escort tankers out of the Strait of Hormuz, largely closed since the war on Iran began February 28. Iran answered by striking the UAE with twelve ballistic missiles, three cruise missiles, and four drones, sparking a fire at a Fujairah oil facility. Saudi Arabia, blindsided, told Washington it could not use Prince Sultan Air Base or Saudi airspace. Trump paused the operation 36 hours after launching it. The night before, Israel struck Beirut for the first time since the April 17 ceasefire, killing the operations commander of Hezbollah's Radwan Force.

This is what it looks like when four people try to walk through a door at the same time. (It's silly and doesn't work).

Why It Matters: Hormuz is closed, lots of oil and fertilizer are stuck, you know that. The bigger story is what the week revealed about American power in the Gulf. Saudi Arabia is supposed to be the cornerstone partner.

It vetoed an American military operation which collapsed in less than a week. This tells us who is really calling the shots while opening a window for Israel to strike targets in Beirut. Sometimes ceasefires are more cease than fire. Between Iran, Israel, Lebanon, and the United States, everyone has their fingers on the triggers. US power is not limitless and opening the strait is now a higher priority than winning a tactical victory.

What We're Watching For:

What Happened: The Pentagon announced on May 1 it would withdraw roughly 5,000 troops from Germany over six to twelve months, leaving more than 30,000 in country. The reduction reverses the buildup that followed Russia's 2022 invasion of Ukraine, and it landed days after Chancellor Friedrich Merz publicly accused Washington of being humiliated by Iran. Trump said Thursday he would probably pull troops from Spain and Italy too.

Personal vendettas making public policy is rarely ideal.

Why It Matters: This is the first significant US drawdown in Europe since the Cold War posture was set. This accelerates European development of an independent military while making nuclear proliferation more attractive. You need decades to make and train thousands of soldiers. Russia is eyeing westward expansion in years. With the US drawing down forces, this might push Europe into the embrace of nuclear arms more rapidly than expected. My assessment is that it will.

What We're Watching For: