Russia's Summer Offensive Failed To Deliver Gains, And With Enormous Losses

Assessments of Russia's battlefield performance during its summer offensive are uniformly grim: failure to deliver territorial gains, an abnormally high kill to wounded ratio, recruiting advantage effectively erased by enormous casualties with Russia losing five soldiers for every Ukrainian. 

This year is set to become the Kremlin's worst of the war as cumulative losses have surged 60% due to Russia's desperate attempts to achieve some sort of positive outcome, all of which have come up short. JL

The Economist reports via Alex Stezhensky reporting in the New Voice of Ukraine:

Russia’s major summer offensive in Ukraine failed to deliver the territorial gains the Kremlin hoped for, despite record numbers of mobilized troops and months of sustained assaults. Territorial advances remain marginal, while losses are enormous. As of October 3, Russia’s cumulative losses surged 60%, reaching 984,000 to 1.44 million troops lost, with between 190,000 and 480,000 killed. “Moreover, a sudden collapse of Ukraine’s defensive lines is unlikely. If nothing changes dramatically, Putin cannot win the war on the battlefield. Taking over all of Ukraine would require another 103 years.  The fact that he keeps trying only shows that he’s out of ideas.” 

In Past 9 Months, Over 25,000 Russian Soldiers Have Deserted Ukraine Front Units

As a result of the increased casualties Russian forces are suffering in Ukraine, desertions from units in the Kremlin's Central Military District have exceeded 25,000 in nine months.

This number is contributing to the Russians' inability to mass enough troops to execute offensive operations and is another factor giving Ukraine the ability to counterattack successfully at numerous locations along the front. JL

Espreso Global reports:

In the nine months November 2024 to July 2025, over 25,000 soldiers of the Central Military District of the Russian Federation have deserted their units. The desertions occur in various ways: some leave their positions directly on the battlefield, others disappear from their deployment points, and some soldiers do not return from medical treatment or leave. The main reasons for desertion are harsh service conditions: widespread "dedovshchina" (hazing), a catastrophic lack of supplies, and mass deployments to so-called "meat assaults."

Kremlin Losses So Great In Failed Pokrovsk Attacks, They're Running Out Of Troops

Russia's attempt at reintroducing armored attacks to try to take Pokrovsk is failing as badly as the previous efforts. Casualties are so high that the Kremlin is literally running out of troops.

And while the Russians keep on coming, they have nothing more to show for it than they did during the previous two years of failed attempts. JL

Euromaidan Press reports:

Is Russia losing 30,000 troops a month? Or is it 50,000? Russian 155th Naval Infantry tried to captured the village of Shakhove, northeast of Pokrovsk with 22 armored vehicles on Thursday—and failed, dramatically.  "Two units of armored vehicles were detected by reconnaissance and destroyed by artillery and [first-person-view] drones of the Unmanned Systems Forces before they even tried to hide in the forest."The Azov corps hit 13 vehicles, destroying nine of them and sending the rest scurrying back to their dugouts. “They even didn’t reach the front line.”

Renting An Apartment Now During San Francisco's AI Frenzy? Good Luck

Thanks to AI, San Francisco is back. Rents in The City last year rose more than double the increase in New York, the nation's most expensive housing market. 

The average apartment in San Francisco now rents for $3,315, so affordable only to those making tech salaries. JL

Natalie Bocha reports in the New York Times:

Driven by a boom in A.I. companies, San Francisco’s residential rents have soared the most in the nation over the past year. Neighborhoods near A.I. companies — such as Mission Bay, where OpenAI has its headquarters — are particularly popular. Rents in Mission Bay jumped 13% over the past year. Many techies at A.I. start-ups work long hours and want to live close to their offices. Apartment prices in the city rose an average of 6%, more than double the 2.5% increase in New York City. That now puts the average rent for a San Francisco apartment at $3,315 a month, right behind New York City’s $3,360, the nation’s highest. 

Entire Russian Special Forces Unit Ambushed, "Eliminated" In Sumy By Ukrainians

Ukrainian forces continue their opportunistic counterattacks against Russian units which are poorly disciplined, overconfident, badly supplied or just vulnerable. 

This has recurred across the front, at Pokrovsk, Zaporzhzhia, Kharkiv and, repeatedly, in Sumy, where Russian units have become especially prone to ambush, possibly because they have become isolated by the focus on moving troops and other resources to Pokrovsk. JL

Vladislav V reports in Militarnyi:

Ukrainian forces eliminated a unit from Russia’s elite 3rd directorate of the Senezh Special Purpose Group which had been operating in the Kharkiv, Sumy, and Chernihiv regions, carrying out raids against civilians and Ukrainian troops. Fighters from the State Border Guard Service’s DOZOR special unit, together with the soldiers of the 105th Territorial Defense Brigade, crushed the Russian group and eliminated its commander. The group walked into a well-organized Ukrainian ambush and was destroyed.

Russia Shoots Down Own Su-30 Jet During Ukraine Drone Attack On Crimea

The relentless Ukrainian drone and missile attacks are not only taking a toll on Russian economic and military assets far from the front, but appear to be causing confusion among the Kremlin's overworked air defense forces. 

Russian cannot afford to lose more planes and pilots among Ukrainian targeted assets. JL

Volodymyr Ivanyshyn reports in the Kyiv Independent:

Russia shot down its own Su-30SM fighter jet over Crimea while its air defense was trying to intercept Ukrainian drones flying to the peninsula deep inside Russia overnight. Intercepted radio communications reveal that the pilot flying the fighter jet in northwestern Crimea was killed after two engines caused fire. The Ukrainian drone attack hit a facility near the Gvardeyskoye airbase in Crimea, and the footage shows the oil depot nearby on fire.

In Zaporizhzhia, Ukraine Capitalizes On Success With Renewed Counterattacks

As Russia's renewed armored assaults on Pokrovsk have yielded the same results experienced over the past two years, reports indicated that the Kremlin was shifting some units to south to Zaporizhzhia and Dnipropetrovsk, which they believed to be softer targets. 

It hasn't worked out that way. Not only have the Russian attacks borne little or no fruit, but the Ukrainians are successfully counterattacking - and retaking territory - from under-resourced Russian units. JL

Decimus reports in Daily Kos:

The names of the locales are eerily familiar, harkening back to the ill-fated Ukrainian Summer offensive of 2023  - Orikhiv, Mali Shcherbaky, Stepove.  Mala Tokmachka, the jump off point of the 2023 Summer offensive is about 20km east of this new Ukrainian advance (which follows) Russia’s move to focus its efforts away from its failed bloodbath at  Pokrovsk towards Dnipropetrovsk and Zaporizhzhia oblasts in Southern Ukraine.

Ukraine's New Formula For Peace: Less Talk, More Weapons

Ukraine is now manufacturing 60% of the weapons it is using to fight Russia - with the percentage for drones even higher. 

And having finally convinced NATO and the US that Putin will never negotiate unless he is forced to, Kyiv is doubling down on its commitment to fight rather than talk, convinced that the only way to persevere is to beat his forces on the battlefield - as the Ukrainians increasingly are doing. Ukraine's requests now are less focused on diplomatic efforts and more on securing the weapons it needs to make Russia feel pain. Long range attacks against the energy infrastructure on which its economy is dependent combined with front line defeats of Putin's military are forcing the Kremlin to begin to face reality, the hard way. JL

Constant Meheut reports in the New York Times:

Kyiv wants fewer talks and more weapons to strike Russia to force Moscow to negotiate an end to the war. Ukraine is betting that strikes inside Russia to hit economic assets like oil facilities and military targets raise the cost of the war for Russia. Over the past 1,000 days, Russia managed to seize less than 1% of Ukraine’s territory. While Ukrainian officials have acknowledged that Ukraine cannot recapture all of its territory, they have bolstered their push to secure more arms. Kyiv believes that, for all the talk of Western-backed security guarantees, only a huge military buildup can compel Russia to stop its aggression. "There are no security guarantees except friends and weapons."

AI's Brutally Concentrated Economics: 3% of Investments Generate 60% of Returns

Over the past couple of weeks, talk about an AI bubble and its fearsome implications has gone from a whisper to a full-throated roar. Not that that has appeared to dim investors' appetite for the sector. 

But one of the nuances emerging is whether one person's popped bubble may be another's opportunity. Specifically, the issue is the degree to which AI returns may be concentrated in a very few companies; much like the post-dot-com era, but occurring faster and at bigger multiples. AI concentration is not new news: Big Tech has dominated from the get-go and much of the payout is driven by the possibility of startup acquisition, not organic growth. So talk of a bubble may be more dependent on when investors finally give up on their smaller bets than on whether AI will really dominate the economy as it becomes ingrained over the 30 or so years history tells us it takes for a technology to become so deeply embedded as to be deemed essential. JL

Steven Rosenbush reports in the Wall Street Journal:

AI companies are losing money at an epic pace. The economics of AI have turned sharply against them, at least for now, and for reasons that weren’t widely anticipated.  There are increasingly urgent concerns about massive capital spending, soaring valuations, high debt levels and the circular nature of AI firms pouring money into other AI firms. (But) demand for AI, measured in units of data processed, is soaring right now. The entire AI bet may turn on how far and fast it ramps - and returns in AI may be very highly concentrated, leaving many contenders out in the cold. “In venture capital, 6% of investments result in 60% of returns,” venture capitalist Vinod Khosla told me. “In AI, I think it will be half that percentage resulting in more than 60% of returns.”

Ukraine's Helicopters Emerge As Accurate, Cost-Effective Anti-Drone Weapons

Once thought to have been rendered so vulnerable as to be irrelevant on the modern Ukrainian battlefield, helicopters have recently emerged as surprisingly accurate and cost-effective anti-drone weapons.

The Ukrainians' 'copters have been so successful in this mission that Ukraine has announced the formation of new helicopter units specifically tasked with this assignment.  With their array of armaments and their relatively low cost compared to interceptor drones, helicopters appear to have taken on a new life as a defense technology. JL

Espreso Global reports and Jake Epstein reports in Business Insider:

As Ukraine grapples with relentless drone attacks, a surprising and cost-effective countermeasure is emerging from an unexpected source: its fleet of traditional helicopters and light aircraft. Helicopters can shoot down as many as 40% of the Russian drones in their coverage areas, depending on the weather. Ukraine will now form new helicopter units to shoot down Russian drones. Recently, a Ukrainian Mi-8 helicopter gunner downed six Shahed-136 'kamikaze' drones and four decoy drones in a single mission. The operational cost for that one-hour flight was $1,000 to $1,500—a fraction of the €30,000 to €60,000 required for specialized interceptor drones to achieve the same result. 

Putin Achieved Opposite Of His Goal As Ukraine Becomes De Facto NATO Member

Putin's intention was to demilitarize Ukraine, then take it over. 

Instead, through its innovations, leadership and determination, Ukraine has thwarted Russia's ambitions, exposed its weaknesses and, in the process, become a valued de facto member of NATO as it is increasingly integrated into NATO's defense strategy. JL

Lawrence Freedman reports in Comment Is Freed:

One of Putin’s objectives in 2022 was to ‘demilitarise’ Ukraine. He has achieved the opposite. Ukraine has built its industrial capacity to a remarkable extent. It now provides 60% of its own kit and ammunition. It has become a major innovator in drone warfare. 4.5 million drones will be produced this year. It has unmatched operational experience which it now shares with Europe. Despite its extraordinary battlefield losses Russia continues to fail to make serious gains. Its energy infrastructure is attacked on a daily basis. The West is not doing Ukraine a favor by helping it resist; it is Ukraine doing the West a favor. Russia is clearly the aggressor and Ukraine the aggrieved. Russia is an autocracy, Ukraine a democracy. Because of this Ukraine is being integrated into European security structures, (and) becoming a de facto member of NATO.

Russia's Pokrovsk Attacks Turn Into 'Catastrophic Bloodbath' As Kremlin Loses 20,000 More Troops Than It Can Mobilize Monthly

The Kremlin's latest armored assaults at Pokrovsk have turned into a 'catastrophic bloodbath' as Ukrainian drones, artillery, mines and infantry have destroyed so much Russian armor and killed so many Russian soldiers that the Kremlin is losing 20,000 more troops than it can replace on a monthly basis.

After two years of attempted assaults, the Russian attack approaches are now obvious to Ukrainian defenders, who are able to deploy their drone, artillery and mines in ways that decimate the Russians before they can even reach Ukrainian lines. JL

David Axe reports in Trench Art:

A Russian mechanized offensive in Donetsk now underway is turning into a bloodbath. Russia launched two major armored assaults around Pokrovsk this week—both ending in catastrophic losses and disaster for Russian tank columns. On Monday, the Russian 5th Motor Rifle Brigade rolled 18 armored vehicles toward Myrnohrad, east of Pokrovsk. Drones and artillery from Ukraine's 79th Air Assault Brigade destroyed a tank and 12 IFVs killing 100 Russians. On Thursday, Ukrainian forces destroyed 20 vehicles from a column of three dozen tanks and fighting vehicles assaulting Pokrovsk. The losses matter because Russia can’t replace what it’s losing. Russian field armies are suffering 18-to-20% greater losses over the last week - 20,000 more than they can mobilize monthly.

Kremlin Recruiting "Hits Diminishing Returns" As High Pay Fails To Offset Casualties

As bonuses and other financial incentives fail to attract new recruits, the Kremlin may be forced to embark on a stealthy 'rolling compulsory mobilization of reservists' enabled by a change in Russian law.

The problem is that Russian casualties in Ukraine remain extraordinary by contemporary standards, even for a country whose indifference to human and material losses is legendary. Every Russian likely to be incentivized by the monetary rewards has already signed up while the pool of potential recruits is diminished both by other job options in the war economy as well as by reports of the bloodbath facing new recruits so that higher financial incentives generate diminishing returns while becoming a greater burden for Russia's already challenged economy. JL

The Institute for the Study of War reports:

The Kremlin’s “pay-to-play system” for attracting recruits through high bonuses and financial incentives “is likely hitting diminishing returns.” Moscow’s recruitment offices have failed to raise enlistment rates despite offering bigger payments than in 2023 and 2024. This is forcing the Kremlin to adopt a different approach using rolling compulsory mobilization of reservists in the face of its continuing high casualty rate in Ukraine.  ISW concluded that rolling compulsory mobilization could allow Russia to generate manpower more cheaply than the current costly volunteer drive but may pose greater political risks to the Kremlin.

Russia 's Pokrovsk Armor Attacks Thwarted Repeatedly By Ukraine Drones, Artillery

Russia's return to the use of frontal attacks led by armored vehicles has not, so far, produced better results than they did previously.

Ukrainian drones and artillery remain effective and efficient defenses against the renewed armor assaults, just as they have against infantry infiltration. The vehicles exposure - exacerbated by the loss of foliage cover now that autumn has arrived - has contributed to their destruction despite the greater volume of armor in use. JL

Sofiia Syngaivska reports in Defense Express:

 Ukrainian units have intensified their hunt for Russian heavy and light armored vehicles, significantly weakening the Russians' ability to conduct offensive operations in the Donetsk region. Throughout (the first half of) October, Ukraine's operators demonstrated exceptional efficiency, destroying 12 tanks, 46 armored vehicles, and eliminating 642 enemy troops. The destruction of such a volume of enemy armor has had a tangible operational impact. Russian units lost not only their mobile protection but also much of their frontline fire support, which heavily relied on armored vehicles. Further assaults become increasingly unsustainable. 

Ukraine Has Damaged Putin's Most Valuable Asset: His Aura Of Invincibility

It's has been embarrassing enough that in two years of concerted effort, the once feared Russian military has not been able to take Pokrovsk, Chasiv Yar, the remainders of Donetsk and Luhansk oblast (which Russia claims to have annexed) to say nothing of subduing the rest of Ukraine. Putin's supposedly invincible army has been defeated, repeatedly, despite enormous help from China - to which Russia is now a vassal state - and even North Korea, once considered a pathetic beneficiary of Russian largesse and now a supplier of armaments without which Russian can't continue its war. 

But then, last week, to add insult to injury, Putin announced a Middle East conference...and not a single country of note responded to the invitation. Sad. As a certain US President might say. Putin's most valuable intangible asset - and perhaps his most valuable asset period - has been his aura of invincibility. However improbable or outrageous his claims and demands, no one wanted to take the chance of crossing him. His reputation for ruthlessness - and luck - preceded him. But that was then. When even a Putin fanboy like President Trump, admittedly with his own agenda and needs, started mocking the Russian military and challenging Putin's leadership after Putin got a tad too shirty, thinking he had the American in his pocket, the game was up. The tiny Baltic countries on Russia's border are defying Putin and are actively supporting Ukraine. NATO is brazenly taking sequestered Russian assets and giving them to Kyiv. Everyone is being careful, but no one is really afraid anymore. And that is his greatest loss of all. JL

Andrew Ryvkin reports in The Atlantic:

Putin’s biggest win came from convincing the world that he’s winning, even when he isn’t. (But) Putin (is) a dictator who’s bet everything on a failed invasion, a country losing its sphere of influence, and an economy that’s rapidly cooling. Today, Russia’s armed forces are bogged down. There are no tanks rolling toward Kyiv, no lightning offensives seizing regions, no major cities under siege. Russia does not even have air superiority in Ukraine. Putin has made his objectives clear. But far from seizing all of Ukraine, Russia has not even conquered the regions it wrote into its constitution. A realistic view of his power strips Putin of his biggest leverage: the perception of his invincibility.

Global VC Defense Tech Funding Leapt 33% To $31 Billion, Driven By AI, Robotics

Global venture capital investment in defense technologies is skyrocketing as governments rearm using AI, autonomous vehicles, robotics and computer vision.

VCs are attracted to the market by massive government budgets and the militarization of technologies in which they have already been investing for years. And the margins are attractive, as a relatively small investment in drones and other tech, which are inexpensive by historical venture standards, can deliver an outsize impact and return. Stanford University is hosting a conference on defense investing (Stanford Defcon) next week. The success of Ukrainian and other European firms, combined with the already impressive Israeli experience and US firms such as Palantir and Anduril is expected to continue driving this market. JL

Patricia Cohen reports in the New York Times:

Globally, venture capital investment in defense-related companies leaped to $31 billion last year, a 33% increase from the year prior. Technologies like robotics, AI and computer vision are widely accessible, mass-producible and increasingly affordable. Now they are being militarized. Autonomous weapons that do not need complex and costly safety features to protect human life are cheaper and simpler. A drone made of plywood and foam costs a few hundred dollars, but it can destroy a multimillion dollar tank. "A couple million bucks of venture capital money can fund development of smaller technologies." A gold rush mentality has set in. “Everyone wants to invest in defense.”

Infiltration Failed, So Russia Again Tries Assaults - Which Aren't Working Either

The Russians' zigzag attack changes - frontal assaults, infiltration, armored attacks, infiltration again, then back to frontal assaults reveal their strategic bankruptcy. Nothing they are doing is working due to Ukraine's better intelligence, drone and artillery tactics. 

The attack routes they choose are obvious, their leadership remains uninspired and abusive to troops, while logistics continue to be a vulnerability. The growing question is why they continue to fail to learn and adapt after almost four years of war. JL 

  
New Voice of Ukraine reports:

For months the Russian army has mainly used infiltration tactics, avoiding direct fire contact with Ukrainian units. (But) because the Kremlin did not achieve the desired results with that tactic, it returned to assault operations. The Russians have been amassing armored and tank equipment near Pokrovsk for this purpose.The number of open attacks has increased significantly. Russian forces attempted to carry out two synchronized attacks on the 38th Separate Marine Brigade near Myrnohrad, Donetsk Oblast - both were repelled.

Ukraine War Leads To Doubling of Orders For 100 Year Old .50 Cal Machine Gun

The Browning M2 .50 caliber machine gun, affectionately nicknamed the "Ma Deuce," was invented in 1921. It was a staple of allied fighting in WWII.

So why, in 2025, has demand for this heavy machine gun doubled? The basic reason is its power and reliability. The Ukrainians have used it successfully both for suppression of ground attacks and as an anti-drone weapon. This performance has caught the attention of NATO forces. France has now retrofitted 2,000 of the guns it had in inventory. JL

Matthew Loh reports in Business Insider: 

The war in Ukraine is sparking renewed interest in tried-and-true machine guns, including some dating back to World War II. FN Browning's global demand and production this year for machine guns is expected to double that of 2022. Mobile Ukrainian crews mount 50 cal M2 heavy machine guns on civilian trucks to shoot down slow-flying Russian Shahed attack drones. American inventor John Browning designed the belt-fed heavy machine gun in 1921. By 1945, the US had produced over 2 million. 90 countries still use the machine gun. FN has now retrofitted 2,000 of the aged guns for France.

Intercepts Reveal Russian 'Panic, Starvation' Inside Ukraine's Sumy Kill Zone

As they advance across multiple sectors of the front, Ukrainian forces have established a formula for trapping over-extended and under-supplied Russian units.

Aware that the Russians are loathe to cede any ground - even if surrounded - due to fear of incurring Kremlin displeasure, the Ukrainians isolate Russian units, enticing their commanders to send reinforcements which are then either destroyed by drones and artillery or trapped with their would-be rescuees. The Ukrainians can then finish them off thanks to analysis of probable Russian movements into preplanned fire zones. Sumy is the latest example of this tactic lethally at work. JL

Euromaidan Press reports:

Ukrainians are creating yet another fire pocket around Yunakivka, a crucial Russian-controlled town in Sumy Oblast. Ukrainian forces are using their proven formula: take the Russian ground lines of communication under fire control, isolate and starve the Russians, then turn the trap into a kill zone without chance of evacuation. Russian commanders, bound to hold territory at all costs, refuse to withdraw from doomed positions, which the Ukrainians are counting on and ready to exploit. The Russians switching to defense after their attempted push forward was annihilated by Ukrainian drones and artillery, Russian soldiers are killed by their own for attempting to surrender.

Russian Soldier Making Video Mistakenly Reveals New Anti-Drone System Site

Oops.

That whole operational security thing can be so darned inconvenient at times...JL

Dmytro Shumlianskyi reports in Militarnyi:

A Russian soldier uncovered the location of a new electronic warfare system -equipped with both a sector antenna for targeted jamming of Ukrainian drones and an omnidirectional system - designed to counter Ukrainian drones while filming a video. Shortly afterward, a Ukrainian FPV drone destroyed the system and its pickup truck. The EW system was hit near the settlement of Rakitnoye in Russia’s Belgorod region, about 25 kilometers from the Ukrainian border.

With the Ukrainian Drone Teams Taking Out Russia's Oil Refineries

Ukraine's drone teams started out as self organized and often self funded groups of like-mined individuals. Now, three years later, they are entire regiments with 2,000 troops. 

They move constantly to avoid detection because they are Russia's top priority targets due to the fact that they have significantly reduced Russian oil refining capacity, affecting both the war effort and the economy. These drone units' success is widely believed to be hastening the war's end. JL

Maria Varenikova reports in the New York Times:

In August, the 14th Regiment alone hit 17 sites in Russia. The unit began with 40 people and 10 vehicles — today it is a regiment, 2,000 men. Though far from the front, the troops work in full body armor and helmets, knowing they could be targeted by a Russian ballistic missile. The mission is attacking oil refineries hundreds of miles over the horizon. The nightly attacks are coordinated between multiple groups, always on the move, launching from secret sites. Ukraine has blown up 20-30% of Russia's refining capacity. Gas prices are up 40% since the beginning of the year. Filling stations limit purchases to five gallons per driver.  “The most effective sanctions, the ones that work the fastest, are the fires at Russia’s oil refineries.” 

90% of Russia's Pokrovsk Attackers Never Arrive Alive On "Roads of Death"

By their own admission, Russian analysts acknowledge that 90% of their troops attempting to attack Ukrainian positions at Pokrovsk never make it to their targets alive. 

The reason is that Ukraine's drone forces under leader Robert "Madyar" Provdi (so named because he is of Hungarian/Magyar descent) are tasked with achieving a monthly kill rate that is higher than the Kremlin's ability to mobilize new soldiers to replace them. This analytical approach to the war is one of the reasons why Russian forces keep failing to meet the objectives set for them and why the Kremin's war aims remain unachievable. JL

RFU News reports:

As Ukrainian drone forces establish "roads of death", the Russian offensive has entered a new phase of collapse. Constant surveillance, long-range interdiction of convoys, and precision strikes on fuel and ammo trucks have left Russia unable to sustain large-scale offensives. Footage from both sides show the aftermath: twisted metal, burning wrecks, and craters every few meters. Russian riders filming their own advance revealed dozens of destroyed vehicles piled up at road bends, the points where Ukrainian operators wait for slowdown of enemy vehicles to strike. Ukrainian drones now prioritize infantry to maintain the minimum monthly kill rate - higher than Russia’s ability to mobilize new soldiers. Russian analysts admit 9 out of 10 infiltration groups never make it to their targets alive.

Why Fears Are Rising That 'Circular Financing' and Values Signal AI Bubble

No one wants to hear the 'B word.' 80% of the US stock market's rise this year can be attributed to AI. Big tech and investors are talking about trillions in infrastructure, compensation and other commitments to it. AI is, most emphatically, the new new thing. But the drumbeat of skepticism has now gone far beyond the usual tech scolds and AI doom-sayers: the Bank of England, the International Monetary Fund, Goldman Sachs' David Solomon and even JP Morgan's Jamie Dimon, Wall Street's de facto leader and wise man, have all raised questions about valuations and the ability of AI companies to pay back what they are investing, let alone borrowing. 

The latest cause for concern is Nvidia's lending to its customers - what some are calling 'vendor financing' - because investors and financial institutions are starting to pull back and/or the sums requested are so large that the ability of the borrower to generate a return defies credulity, so that the world's largest producer of AI chips is lending its customers the money to keep buying its products, extending the rally beyond its natural limits. Nvidia and others are taking a 'nothing to see here' stance, just one partner helping out another in a mutually beneficial transaction, but there is a concern that FOMO is creating a 'greater fool' theory moment as credulous AI market buffs rush in to grab overvalued equities just as VCs and Big Tech are dumping them. The prudent are paying attention. JL 

Lily Jamali reports in the BBC:

In Silicon Valley, the debate over whether AI companies are overvalued has taken on a new urgency. OpenAI boss Sam Altman said last week, "There are many parts of AI that I think are kind of bubbly right now." Warnings of an AI bubble have come from the Bank of England, the International Monetary Fund, as well as JP Morgan boss Jamie Dimon, all asking whether the rapid rise of AI companies (raise) fears these companies are overvalued. As  complex financing arrangements get more common, they may be clouding perceptions on AI demand (as) "circular financing" or "vendor financing" - (by) a company lends to its own customers so they can continue making purchases. The question is whether the money to fund companies in the sector may be drying up. AI-related enterprises accounted for 80% of the gains in the American stock market this year so "when the bubble breaks, it's going to drag down the rest of the economy."

Putin Is Losing the War, So Prepare For Him To Escalate

Putin's mantra is, 'when in doubt, don't capitulate, escalate.' 

The Kremlin's forces are not just not winning, on most fronts, they appear to be losing as the Ukrainians counterattack and frequently advance. The Russian economy is being savaged by declining global energy prices, exacerbated by Ukraine's strategic attacks on its energy infrastructure, which now suffers from almost 40% of its refining capacity disabled. But as for any wounded animal, this is when he is most dangerous because in order to forestall his own demise, upping the ante is the optimal way he sees out of his own dilemma. Fortunately, NATO sees this as well but the trick is turn this against him before he provokes a wider conflict. JL

Ambrose Evans-Pritchard reports in The Telegraph:

Vladimir Putin has his back against the wall. He is losing the economic war faster than he is gaining any military advantage in Ukraine. 38% of the country’s primary refining capacity is out of action. Russia’s much-feared offensive sputtered out over the summer with 800 casualties a day and little to show for it. The Kremlin failed to break Ukraine’s fortress belt or turn the tide of the war. Much of Russia’s enormous military hardware is useless. The war has become a high-tech race, and Ukraine is a step ahead. “He always raises the stakes when things are going wrong. In order not to lose, he may try to go further."

Ukrainians' Latest Zaporizhzhia Counterattack Retakes 3.5KM

Ukrainian forces continue to counterattack along the front - this time in Zaporizhzhia oblast which had reportedly been threatened by new Russian assaults. 

The significance of the news is less about the specific territory, but that the Russians appear unable not only to mount offensive operations of their own, but also to defend against Ukrainian assaults. JL

 
Espreso Global reports:

Ukrainian forces conducted a counteroffensive operation, liberating the villages of Mali Shcherbaky, Shcherbaky, and partially Stepove in Zaporizhzhia. Assault units of the 24th Battalion and the 33rd Regiment carried out a counteroffensive special operation, advancing nearly 3.5 km forward and over 5 km along the front line. The operation continues. Prymorske, Stepnohirsk, Plavni, and partially Kamianske remain under Ukrainian control,” 

Kremlin Again Tries Attacks With Aging Armor As Troop Losses Exceed Replacement

In the past year, Russian commanders tried attacking with armor, which was quickly and easily dispatched by Ukrainian drones. Not having much more armor to lose - especially of less than 50 years old - the Kremlin reverted to infantry attacks by small squads and motorcycle troops. Those resulted in such carnage - 282,000 casualties since the beginning of the year - that the Russians are trying armor again, since there are only 3 or 4 crewmen in a tank versus 12 in an infantry squad. 

But - to absolutely no one's surprise - the latest armored attacks, mostly fielding Soviet era T-64s - have met with disaster as Ukrainian surveillance and FPV drones, backed up by artillery have created an iron carpet of destroyed vehicles interspersed with the bodies of dead Russian soldiers. A breakthrough anywhere along the front remains unachievable - once again - for the Kremlin. JL

David Axe reports in Trench Art:

In early 2025, Russian forces in Ukraine stopped attacking with armored vehicles. Instead, they sent in infantry. (But) With 282,000 casualties since January exceeding recruitment capacity, Russia is choosing to trade steel for flesh—tanks have three crew versus infantry squads of 12 soldiers. It's a trade that accelerates the drain on vehicle reserves - which are very low - analysts warn could force a fundamental change by 2026.  Russian mechanized attacks in recent days have resulted the same way each time. Dozens of tanks and other vehicles roll out, in the company of bike troops. Ukrainian surveillance drones spot them coming—and explosive FPV drones and artillery take aim. Prelaid mines add to the carnage. "Moscow has not achieved a breakthrough despite Ukrainian manpower issues."