Aschenbrenner's $35bn AI Fund Blowup Exposes Leverage Trap
Situational Awareness, the AI-focused hedge fund run by 24-year-old Leopold Aschenbrenner, lost roughly $35bn in six days, collapsing from a $45bn peak to around $10bn and forcing a fire-sale of its public book to Citadel. The fund had told investors on July 24 that it returned 439% in the first half, using up to 400% leverage to concentrate bets on AI infrastructure and short traditional software names. As prices moved against it, forced deleveraging drove its longs down and its shorts up, cascading into liquidation. Assets in US leveraged ETFs have meanwhile climbed to a record $218bn, up 60% since March, raising concern of a South Korea-style unwind where the Kospi recently fell 44% from June highs and over a million retail accounts received margin calls.
US Joins Tokyo to Prop Up Yen in First Move Since 2011
The US Treasury intervened alongside Japan to support the yen after it slid to nearly 164 per dollar, a 40-year low. Tokyo sold as much as $59bn to buy back its currency, and Washington joined in - its first such action since a G7 operation in 2011 - unusually selling euros rather than dollars from its reserves. The move is partly self-interested: Japan holds over $1tn in US Treasuries, and further yen defence would mean dumping more of them into an already strained market.
Trump Media Sells Early Access to Truth Social Posts
Trump Media has launched Truth API, a real-time feed giving financial firms early access to Donald Trump's posts for a reported $100,000 per month. The product is aimed at high-frequency traders, whose algorithms react to market-moving presidential statements within seconds. The arrangement channels trading-firm fees directly to a company controlled by the sitting US president.