The introduction of prediction markets such as Polymarket and Kalshi are exploding in popularity. At the same time crypto currency trading seems to be falling off a cliff. Are the two connected?

 

"Crypto is so yesterday," said one Gen Z trader, in response to my question. Younger investors are turning their attention to platforms where users can trade contracts on the outcome of future events. Today, one can bet on everything from the outcome of the mid-term elections to when the next Fed interest rate cut will occur. Not only can you bet on political or cultural events but increasingly on sports and real-world events.

 

I suspect that economic conditions  may be behind Gen Z's shifting preferences. The average salary for a Gen Z is under $40,000. Speculating in Bitcoin has become an expensive proposition with the price around $63,000 per coin. It has traded as high as $124,000. That is a far cry from the days of $15,000 or less.

 

That doesn't mean the younger generations are completely abandoning cryptocurrencies but are instead changing the way they speculate. In addition, the narrative has changed. The number of HODLs ("hold on for dear life") have declined as dreams of  a $1 million Bitcoin seem less feasible. Prediction markets offer a simpler, cheaper and more scalable alternative.

 

You can still bet on the future price of crypto, along with individual stocks, bonds, gold, or whatever. "Why buy Bitcoin when you can buy a cheap contract that offers you the same chance to profit?" argues another Gen Z trader. The simplicity of the prediction market structure is also appealing. There are no research reports, promises of gains or losses based on scenarios or schedules. The price you pay reflects a bet on a simple yes or no, to happen or not to happen. It appeals to a generation increasingly skeptical of project promises.

 

However, the prediction market uses cryptocurrency infrastructure to underpin its platform. Custody, settlement and payment processes run on block chain technology. With the support of stablecoins. Bitcoin contracts are still one of the most active speculative markets.  

 

Another encouraging development is that prediction market platforms are regulated by the Commodity Futures Reading Commission. As such all prices are set by buyers and sellers and not by "the house." In many ways, prediction market contracts are like trading futures contracts. You are essentially buying or selling a financial derivative when you invest in prediction contracts.

 

In 2025, this prediction markets saw trading volume expand to more than $27.9 billion. Open interest, which is the total value locked in contracts broke $1 billion. These contracts are both liquid and easy to trade. One can pay for them in both crypto currencies and regular currencies.

 

Supporters argue that these platforms represent a new frontier for fintech. Their platforms innovation has combined the blending of capital markets, crypto, prediction-economics and sports betting into one. The rapid growth in this new avenue of investment, speculation, or just plain gambling depending upon your view, has attracted outside investment. Several institutional players believe this new technology has enormous potential. The retail brokerage firm Robin Hood, as well as Coinbase Global, are entering the market. No surprise there, but some of the largest exchanges and financial institutions in the world are also embracing these betting platforms.

 

In October 2025, The New York Stock Exchange parent company, Intercontinental Exchange (ICE), purchased a $2 billion stake in prediction leader Polymarket. The S&P Down Jones Indices also announced a partnership with another fintech company, Dinari, to create a crypto-focused index. DraftKings and Flutter Entertainment, two sports betting operators, entered the prediction markets in December 2025. Flutter joined hands with the CME Group, to launch FanDuel Predicts in five U.S. states and plans to go nationwide this year.

 

Supporters argue that these platforms use innovation financial technology tools that allow traders to better discover efficient pricing of event risk. Yet prediction markets today are sitting astride several industry fault lines. Including sports on their platforms, for example, are encroaching on already established regulatory domains.

 

Many states are in an uproar as a result, predicting that these new markets make it easier for coaches, players, or referees to bet on matches they may be able to influence. The wave of recent betting scandals in 2025 makes regulator's fears that much more immediate. Rather than new investment alternatives, many regulators see them as an easy avenue toward further corruption.

 

This week two congress representatives Blake Moore, R-Utah, and Salud Carbajal, D-Calif., jumped into the fray by introducing legislation that would prohibit the listing of contracts for sale related to terrorism, assassination, war, gaming (sports or athletic competitions ), or illegal activity. Betting on certain outcomes in the U.S./Iran conflict may have sparked this bipartisan effort to reign in the prediction markets when it comes to what they deem to be threats to public safety and national security risks.

 

In my opinion, trying to stem the flow of this new prediction market arena in the age of AI is futile. Over the next 10 years, the sector is projected to reach a market size of $95 billion, with a growth rate of 47 percent.  Even an old codger like me, is already monitoring the betting on any number of events from war in Iran to the earnings on Nvidia. I suggest you do the same.

 

Iran is on everyone's radar screen. Markets are tumbling. Oil is skyrocketing, and explosions echo throughout our evening news shows. You may be nervous but remember that we have been here before.

 

And while war is a monstrous thing, its impact on your stock market investments is negligible. Last summer, I remember reading a J.P. Morgan research report that listed 36 geopolitical events between 1940 and 2022 that we could call crises. What they found was that in the first three months after an event, markets do underperform.

 

However, if you look at returns six and 12 months later, it was as if the risk event had never happened. You might know this, but in the heat of battle, many investors let emotions override their objectivity. Don't do it.

 

This conflict, although less than a week old, is playing out just like so many others. There has been a sharp sell-off in stocks and a flight to quality into the U.S. dollar. Energy prices, both for oil and gas, have also spiked, as they did on several prior occasions, most notably in 1973 and at the onset of Russia's invasion of Ukraine in 2022.

 

This time around, however, gold and even U.S. Treasury bonds, which are usually a "go-to" in times of geopolitical strife, have not responded as expected. It is unusual since gold has historically been one of the best-performing hedges against war risk. It may be that gold has already had a spectacular run both in 2025 and thus far in 2026. That may mean traders are hesitant to chase the price higher.

 

This war could curtail both energy shipments and production. Investors fear that rising energy prices may spark a resurgence in inflation. This is one reason the yield on longer-dated U.S. Treasury bonds spiked rather than fell. Higher yields and a stronger dollar — both antithetical to gold and other commodities — could also explain gold's poor performance.

 

Higher energy prices are among the main determinants of inflation, as energy permeates almost every aspect of the economy. The longer and steeper the price of oil and gas climbs, the higher the inflation rate. Herein lies the risk of the present conflict between Iran and the U.S.

 

Normally, as I said, wars in the past have had little to no impact on equity market returns on a one-year horizon; there have been exceptions. The 1973 oil crisis did have a lasting impact on returns. The reason had everything to do with a prolonged oil supply shortfall. That resulted in a two-fold hit to the U.S. economy as growth slowed and inflation rose, producing a period of stagflation.

 

This time around, we have a completely different scenario when discussing the energy markets. Back in 1973, America relied heavily on Middle Eastern oil, while U.S. production was already as high as it could be given the technology available at the time.

 

Today, the U.S. is among the world's leading energy producers, and the worldwide supply of oil and gas is plentiful. Bringing more of these resources online while the conflict continues may temporarily disrupt global markets, but few expect the energy shortfall to linger for many years. Remember 2022, the Russia/Ukraine war also spiked oil prices, but they quickly fell as additional oil supply came online.

 

We are in an era where trade wars, real wars, and repeated supply shocks challenge the world's economies and will continue for at least the next decade. Older generations must relinquish control so new leaders can guide us.

 

Unlike in prior decades, these new threats cannot be managed by an interest rate cut, a little more fiscal spending, or a protest march. Shocks to the system, whether through conflict, political and/or climate change, artificial intelligence, or pandemics, will require new leadership and policies. It is an age where economic and political relationships have been upended, and that, my dear reader, will continue.

 

 

The winter storms of ice and snow that buried much of the U.S. in January and February were large enough to impact the economy. It will be months before the final tallies are in, but many economists expect the price tag to be over $100 billion.

 

That seems like a lot of money. I guess if you take into account the indirect and longer-term costs, like business supply chain disruptions and even medical costs, then maybe. Sure, there was some disruption. On those minus-degree days, we only took the dog out for a few minutes to do its business. And yes, we may have curtailed our trips to the grocery store a little, or to a restaurant, but how does that add up to that much money?

 

I mean, I could understand if we were discussing a series of hurricanes or tornadoes, which have now become commonplace under climate change. The high cost of damage from such disasters is usually attributed to infrastructure. But how can a spate of reduced shopping hurt the economy that much?

 

Well, airline cancellations come to mind. When you cancel as many as 11,400 flights, there is significant lost revenue for both airlines and their passengers. Then there are power outages, which also impact businesses, sometimes for a few days. Trucks also find it more difficult, if not impossible, to make deliveries at least on the actual days of snowfall.

 

One area that could see some significant losses is in vehicle sales. The January 2026 vehicle report seems to bear this out. Last week, the Bureau of Economic Analysis indicated that sales really took a nosedive, hitting a three-year low. That does make sense, since not only would buyers need to drive to the showroom in snowstorms, but they would also want to test-drive a new car before buying it.

 

Most consumers may not realize it, but natural gas prices also surged. The week ending January 30th saw the largest inventory drawdown since the Energy Information Administration began record-keeping in 2010. Wholesale prices rose 81 percent. Since then, the EIA has raised this year's price forecasts by 25 percent.

 

Housing construction also took a hit. As one small example, the guys building a spare room in our condo could not cut the lumber needed outside, so they had to ferry the wood back and forth from their shop. Imagine putting on a new roof or laying cement in 2 feet of snow! Some analysts are now predicting a 3 percent decline in residential investment growth in the first quarter.

 

The early February bomb cyclone that hit the lower East Coast, combined with the ongoing deep freeze that has covered parts of central and south Florida, could cause as much as $15 billion in total damage and economic loss. The citrus groves and other crops were damaged extensively.

 

If I step back and look at the overall impact on most Americans, it seems clear that our heating costs are going up this year. The average family spent almost $1,000 to heat their home last year. We should expect that cost to rise 9 percent. If you use electricity to heat, tack on another 3 percent to that. Fixing water damage from burst pipes can cost as much as $30,000, and many insurance companies won’t pay unless you can prove that your thermostat was set on at least 65 degrees.

 

And then there are the "panic buyers." Even here in New England, grocery stores and supermarkets are often packed in the days before a winter storm. Of course, prices are higher because retailers know they can markup groceries and supplies the most.

 

The good news depends on the weather. Just this week, Boston, New York and other parts of the Northeast saw record snowfall levels.  If storms and icebox temperatures persist, it will take longer for the economy to recover. If not, and we get a break, most economists expect any lost output could be made up quickly in this first quarter of the year.

 

In December 2025, the president unveiled plans to revamp the Navy. He announced the construction of two new battleships, each costing between $10 billion and $15 billion. It's a start, but still only a drop in the bucket for reviving American shipbuilding.

 

Why is that important? First off, in commercial terms, almost 80 percent of global trade by weight is transported by ships. If you also consider the capabilities of our armed forces, you understand that nearly 90 percent of their supplies, equipment, fuel, ammo, and food are delivered by ships. In addition, if we encounter a national emergency, the Navy will depend on commercial shipyards to build warships and support ships, as well as to transport equipment and troops.

 

We learned this during World War II. At its height, the U.S. accounted for nearly 90 percent of global shipbuilding output. Today, that output has declined to a mere 0.2 percent of gross tonnage. What happened? Competition. After the war, the rest of the world needed to be rebuilt, much of it with American money, and the shipyards were among the areas that had been decimated.

 

Japan, for example, could offer lower labor costs, no union issues, brand-new shipyards, and prices that undercut American construction by as much as 60 percent. The fact that foreign steel production skyrocketed as well and was sold at a fraction of the U.S. price didn't help either.

 

You know this, how? You might ask. As a kid in Philly in the early '50s, lots of neighborhood dads worked at the Philadelphia Naval Shipyard after the war. They made a good living then, since U.S. shipbuilding was still in its heyday. But the decline was rapid.

 

In the 1970s, the U.S. government attempted to reverse that slide with the Merchant Marine Act of 1970. Shipbuilders spent more than a billion dollars modernizing their yards and making capital improvements with government backing. America also asked the Japanese, now the world's top shipbuilder, to introduce new techniques and practices to reinvigorate our moribund industry.

 

It worked. For a brief period, the U.S. became the second-largest commercial shipbuilder in the world, behind Japan. Many of these new ships were Liquified Natural Gas carriers and oil tankers. However, the 1973 oil crisis put an end to that. The petroleum industry was on its knees, and demand for new ships dried up.

 

Despite that setback, our shipbuilding productivity improved in the years that followed. Meanwhile, foreign shipbuilders — especially the Chinese — improved even faster. In 2008, China surpassed Japan in shipbuilding output; by 2010, it overtook Korea to become the world's largest shipbuilder.

 

By 2022, the U.S. had built just five ocean-going, commercial ships compared to China's 1,794 and South Korea's 734. Today, the Navy estimates that China's shipbuilding capacity is 232 times that of the U.S. Even worse, it costs twice as much to build a ship in the U.S. as it does elsewhere.

 

Nine Asian and European carriers, organized into three cartels, now control 90 percent of the U.S. containerized shipping trade. To add insult to injury, one Chinese company produces 80 percent of all the ship-to-shore cranes in America. I could go on, but this is about shipbuilding, not about the Chinese, who also produce 95 percent of the shipping containers. The 2025 order book for new vessels indicated that China accounted for 75 percent of orders, followed by South Korea at 19 percent. 

 

Under these circumstances, how is Donald Trump going to make American shipbuilding great again?

 

Largely by following the tactics used by the U.S. in the Seventies. A new office of shipbuilding has been established and is again offering special tax incentives to develop the industry. Last year, the U.S. signed deals with three affiliates of Hanwha Group, the world's third-largest shipbuilder. The $500 billion deal is earmarked for maritime investment. In 2024, Hanwha bought the Philly Shipyard for $100 million. This is the sad remnant of my boyhood Naval Yard. That yard closed in the 1990s, laying off thousands of South Philly workers.

 

Hanwha is sinking $5 billion into the shipyard to upgrade the site. It is also training what they hope will be a new generation of shipbuilders, while investing in robotic labor. Management estimates that, if they hit their target of 20 boats per year, the workforce could top 10,000. That's a big "if."

 

The administration and industry plan to focus on manufacturing LNG tankers, icebreakers, and naval vessels. An Italian company, Fincantieri Marinette Marine (FMM), based in Wisconsin, is already manufacturing naval vessels, LNG-fueled cruise ships, and other commercial vessels. The U.S. is working with the Italians to expand that enterprise. In addition, last year Finland and the U.S. agreed to spend $6.1 billion to produce 11 new icebreakers for the U.S., with the first due to be completed by 2028.

 

Trump's gunboat diplomacy, whether in Iran, Venezuela, or who knows where, appears to be a strategic tool of his presidency. As such, it is vital that the U.S. commands the high seas. In an age of drone warfare, ships are vulnerable in both combat and commercial settings. It's early days, but at least the administration recognizes the need to modernize this industry. The hope is that just maybe my grandson might see the day when Philadelphia could once again be noted for something other than cheese steaks.

 

There were concerns that U.S. tariffs during the Trump presidency would spark similar responses from other nations. This could have greatly reduced global trade, possibly causing an economic recession. That outcome did not happen, but a different development did.

 

While retaliation is still a possibility, Donald Trump's multiple tariff threats have proven to be more of a negotiating tactic than anything else. The downside for foreign nations is that it has disrupted trade, stock markets, and geopolitical discourse. After eight years of this, most countries have concluded that it is far easier to do business with someone else in trade.

 

Since 2017, many trade deals between nations have excluded the U.S. Most of these deals happened quietly and received little attention. Recently, however, larger and more significant agreements have started to draw notice.

 

Last month, one of America's chief trading partners, Canada, announced a landmark agreement with China. Prime Minister Mark Carney, along with a delegation of Canadian businessmen, visited China, met with Chinese President Xi Jinping, and agreed to lift or lower tariffs on a variety of products. Everything from Chinese electric vehicles, Canadian lobsters, crabs, peas, and pork was on the table.

 

A week later, Canada and India announced an agreement to increase trade, centered on India's willingness to buy Canadian crude oil and natural gas exports. Currently, 97 percent of all of Canada's energy exports are earmarked for the U.S. That is changing. Carney has vowed to double Canada's non-U.S. exports. Therefore, targeting India makes sense since it is the third-largest consumer of oil and LNG.

 

Switching gears, at the end of January, the European Union and India clinched what was called "the mother of all deals," according to the head of the EU's executive branch. This new free trade agreement intends to deepen economic and strategic ties. If successful, this positive trade pact could impact as many as 2 billion people. The accord will allow free trade on almost all goods between India and Europe, covering everything from textiles to medicines.

 

Indian Prime Minister Narendra Modi said the agreement "represents 25 percent of global GDP and one-third of global trade." The deal is in response to the Trump administration's steep import tariffs, which have targeted both countries. Trump's duties and tariffs have disrupted established trade flows that have been in effect for decades, and our trading partners have had enough of it.

 

As for China, Trump's efforts to corral China's trade surplus have backfired. China recently reached a record $1.1 trillion trade surplus despite Trump's tariffs. U.S. tariffs have forced many nations, especially in Southeast Asia, to look for other trading partners, and China has gladly stepped in to take America's place.

 

As a result, the U.S. deficit with global trading partners nearly doubled in November, with EU trade accounting for a third of the increase and the goods deficit with China rising by about $1 billion to $13.9 billion. Year over year, the U.S. trade deficit rose 4 percent.

 

Since Donald Trump has come on the scene, the U.S. share of trade flows has been steadily declining. Over the past eight years, four of every five nations have seen trade rise as a share of their GDP. The one exception has been the U.S., where it has dipped to around 25 percent of GDP.

 

Make no mistake: America remains a dominant financial and economic superpower. The idea of "America First" has benefits — as the U.S. outpaces most peers in growth, without relying on trade. While its share of major global equity indices is almost 70 percent, it accounts for only 15 percent of global trade, a figure that is projected to continue declining.

 

While America looks inward, the EU has signed eight agreements and China nine, including a 15-nation Asian partnership the U.S. abandoned. The EU also signed major deals in South America and Mexico.

 

After nearly a year of intermittent negotiations and tariff threats, the U.S. and India abruptly signed a free trade agreement this week, just days after the EU/India announcement. Although details remain unsettled, the agreement is largely symbolic: it would lower India's main tariff from 25 percent to 18 percent and remove an extra 25 percent tariff that Trump imposed last summer in response to India's Russian oil purchases.

 

While the agreement is being touted as a win-win for both parties, India won't be buying U.S. oil to replace Russian energy. Thanks to the India/Canada deal, it is Canada that will benefit from that transaction. As the U.S. turns its back on free trade and embraces a mercantilist and tariff-fueled state economy, it leaves the door wide open for others to fill the vacuum.