Transcription
Um, lot to go through. [sighs] Obviously, the main thing is hopefully next week when I do this video, the next world will be world champions. Uh, and I get to enjoy it. But let's go on with the markets.
Um, if you haven't listened to the Gavin Baker, Brad Gersonner, uh, interview, a lot of what I'm going to talk about can be summarized in in what they did. I thought they covered everything extremely well. And for those of you who are perma bearish, uh even though they are self-proclaimed AI pill and I guess I'm AI pilled as well from a power user perspective, theirs is from an investment perspective. Um I think the stories that I've been telling along with what they're getting. Um this is the signal that I give you guys in this week to keep you up on what's going on. uh to let people have their bubble talk to go through this. But really the foundation is will artificial intelligence be more of our life every single day and will the buildout be financed by people who can handle the financing of it. Are the governments supporting it? I think they go through this well.
We got the recap. Hyperscalers are weak and again this is all part of my belief of the secular rotation away from the hyperscalers in the mag 7 and into the rest of the marketplace. I'll go through that. The pricing war is continuing. Um, commoditization of these inflation above 4%. Uh, I'll go through that. I did create a Jensen Yuang knowledge brain. I'll highlight it again today for the subscribers. You guys have it up on the website in terms of how to do it. Uh, I'm going to talk more about Signal Alpha Agency in terms of uh, the whole concept that I'm trying to bring with the videos, but also with the reports and everything. And then specifically on names, chemicals uh are breaking out and a spotlight name that I've highlighted before. I just want to go through some details specifically to Vera Rubin and Complexity.
So here's the interview with uh Brad Gersonner and Gavin Baker on the BG2 pod. Definitely a listen. They cover SpaceX uh highlight that it's the fourth largest hyperscaler and it only took 30 days. So for people that are negative on SpaceX, uh you can go list it in there. I covered it on Pomp this week as well. It's not a bullish argument on SpaceX, but it is a uh a logical side compared to all the bears that are out there uh on the name from a valuation perspective. Uh basically, they talk about the stock market after the runup and how you should think about it. Uh I talked about it as the end of the fireworks show. they go through a similar thing. They remind everyone something that I've talked about which is at the beginning of the year and really uh at the end of the of 2025 everything was about a bubble based on not being able to get the revenues. Now as the revenues are coming in and it's very clear nobody's really backing off the bubble. They just moved to the next bubble scene. That is the sign of a bubble and bubble talk uh is when whatever your argument is the capex will never happen. They won't be able to get the money for it. uh the ar the revenues will never come through. Every single argument continues to go. I saw someone uh who is another bear on this who's written multiple pieces saying this is exactly like fracking and what happened and to a degree I agree except for the fact that that's why I don't want to belong the hyperscalers.
So remember guys, you can be bearish on the capex and on the revenue delay, but that doesn't mean that you should be bearish on the stock market or a collapse. There are two totally different things that can happen. I am bearish on the hyperscalers relative to the receivers of the money and relative to health care companies which will benefit like Eli Liy in a whole bunch of different applications. The hyperscalers are going to finance this. They are in a race to commoditization and all of them including anthropic and open AAI may not get the money that they're supposed to get in the end. We'll see what happens. But I am not positive on those. So as much as I might be AI pilled, I am different than Brad Gersonner and Gavin Baker in not sitting there saying that I think that Anthropic and Open AI will definitely be winners in this whole thing. I'm not convinced about that.
Um they go through all of those. They talk about the capex numbers, how big they're likely to be, how insatiable compute is. U they go through fable five. I think this is important. What I want to highlight here is basically this whole front of what it means. And rather than just go through the comments of how we're at this point that you could argue is RSI or or getting close to AGI. Imagine if Albert Einstein had just thought about fundamental physics 24 hours a day. He doesn't have to eat. He doesn't have to sleep. He doesn't have to relax. He doesn't drink and never gets old and he thinks for one year. I mean, we might actually, you know, have solved a lot of these intractable problems. The reason I want to bring that up, I talk about this all the time. Remember, a year ago, people didn't even believe AI was good. So, again, every bubble theme, the same people say the exact same thing. They just move on to the next argument, and it's all based on the fact that number one, they're missing it. Number two, this can't happen because I've seen this before. They're using the industrial revolution BS to go through it. I'll say it again. I went to Silicon Valley, went to Singularity University in 2013 because I was in the same boat. I didn't think this was possible. Exponential innovation is the key. You can make a lot of money trading it. And if something does happen that we get a correction, we'll look for the signs. Right now, they're not there.
They talk about seasonality, which I brought up in the uh uh in a bunch of stuff including an expost this week just about the usage going down, a reason why we're tired. I always think stocks, the markets, I imagine them as runners. You've had a lot of stocks that forget about climbing a mountain or a hill. They've gone straight up a cliff. They're tired. They need to rest. That's the consolidation argument that I would uh go through. So S&P for the week after a sharp down move, the biggest one since liberation uh week. Well, we had a minor bounce. So we're doing some bit of consolidating. Uh I still believe that we're probably going to have a lot of back and forth. Some of that's going to show up as I go through this and just say in the back of your mind, a lot of back and forth, a lot of positives, a lot of negatives. Investors are positioned for positives, so the negatives get reinforced to me. And that's where we kind of end up in this position where I think the names that people don't want to go higher are probably the ones that go higher for a bit of time. Sounds like a momentum unwind, but the reality is I don't think the thematic portfolio that I put together is going to correct too much. The Q's uh a little bit better week, but again make back about half of last week. Uh IWM new all-time highs. It's hard to have a bare market when small caps are at new all-time highs while we've got energy prices going higher. While we just build in Fed rate hikes and yet somehow or another, small caps make new all-time highs. Not bearish, guys. Not bearish.
Here's probably the chart that is freaking people out the most. And I say that because having been in this seat, having had a lot of PMs report to me, when their P&L is shaking, it gets them scared. This is the TMT momentum volatility which is at all-time highs going back 25 years. It just continues to shake. So that shakes people out generally on the worst days and then they chase back in on the worst days and you get this back and forth because they're worried about missing something.
Here's a big deal. Hyperscalers relative to the S&P. This is the last three years. Um I only just show this just because the last three, but this is relative to the S&P. We've had back-to-back 4% down weeks. We haven't seen that at any point. In fact, we've only had four before these two. The hyperscalers are weak and this is clearly a rotation and this is the way that we're playing the capital raises. They are using clearly the hyperscalers to buy SpaceX, to buy Anthropic, to buy this. That is where the capital's coming from, but also they're overweight these names. So, the Mag 7 fits into the same side. In fact, here's IWM relative to the Mag 7. This is a monthly return. So far, we're up 9.8% in IWM over the Mag 7. Uh this is back a decade. There's only two other times that this occurred. So again, you're getting a uh fairly large rotation. And here's the chart of it. IWM over the MAG 7 not only making one-year highs but look how strong the move has been the last consecutive days showing the rotation the S&P is down 2% monthto date and eight of the 11 sectors are now up for the month it's just that these are not the places that people are long industrials is but you've got all of the mag seven obviously dominating this but also semis uh seeing some pullback so I just want to make sure on the on the webinar I for the subscribers this week. This was basically the title of it, which is navigating the AI midcycle slowdown.
Uh I believe we are in what is effectively a midcycle slowdown for AI. For those of you uh not familiar with kind of the macro term on this, when you come out of a recession, you get explosive growth relative to what it had been. It always surprises investors. Earnings revisions go higher and then all of a sudden at some point, whether it's the next quarter or the quarter after, you reach a point where the second derivative changes. And two things have occurred. Investors are now comfortable that the economy is accelerating. They're comfortable that earnings are good and they're now positioned for it. Analysts are positioned for it. And then it gets harder and more choppy. That's where we are. I do not think this is the beginning of a bare market. I do not think this is the unwind of a bubble. Um I do believe there are pockets of where the retail is overinvested and I believe those will end up being resolved through consolidation. every bubble we have seen over the last few years. I don't care what it was. Silver at uh at the beginning of the year, gold for most of last year, Palunteer, these things unwind through a correction and then through consolidation with inside a bull market on the broader market. That's what I believe will happen when the memory names actually start to see some unwinds, whether it happens in a day or whatever.
I'm going to continue to say this um again for mutual funds, for pension funds, for anybody who has a benchmark. Read this paper. Um ask me for it. Reach out. Again, you need to be ready for the rotation that is happening has been happening which will continue to happen. My thematic portfolio of 100 names. So total market cap is 20 trillion. The market cap of the mag 7 is 22 trillion. This is the rotation. You're going from seven names into effectively a 100 names. That is a dispersion situation for you options traders. Here is the thematic portfolio relative to the hyperscalers making new highs. I've said this is the trade you want to have on. You're not getting any kind of a correction in here. If you're short the hyperscalers, which are the spenders, if any of the bubble thing happens, the hyperscalers are going to suffer as well. and their multiples are extremely high and now they have debt. They have some dilution. There's going to be more.
Here are the hyperscalers relative to the S&P chart. It's not a good-look chart. More importantly, we're now down since 2024. This unwind or this rotation has been happening. So, you're late to the party if you haven't done anything, but I think you need to focus on it. Here's the S&P relative to the hyperscalers. So the hyperscalers are moving down and I think this correlation break is going to continue as the rotation goes.
Here is the token index. I highlighted this on the webinar and this is one of the reasons why I think it's very difficult at this point to be uh positive on the AI trade for the summertime at least for it to just go continue to go parabolic. I think it will be choppy. I think you need to rotate. I think you need to pick names. uh all of the Excel files that I've produced for you guys. I would highly uh recommend spending time on them uh just because I think you're going to be able to navigate this more. But this token thing is accelerating to the downside. It's a combination of more open- source usage, especially on the Chinese model side, but it's also the fact that the summertime you're going to see less usage just because of vacation and because of schools being closed. Um here it is. This is not a minor trend. This is a real defined trend. you're making. These are the daily drops percentage- wise. So, our biggest drop was actually on Friday. Here's the overlay with the hyperscalers. They're being caught up in the token side. So, there's clearly a story here, guys. Don't ignore it. There's absolutely a story for the options traders. And again, here's the VIX EQ showing the volatility of the ini individual names. If you're rotating from companies that are three to five billion in market cap and you're rotating into a hundred names where the average market cap is going to be like 150 uh billion, you're going to have more volatility in these names. It's just a sausage squeegee thing. And here's the VIX down here.
Now, if we're actually going to get a bubble type unwind, if something big is going to happen, I put the hyperscalers inversed here. It's going to happen in the white line. This is the CDX for IG. Right now, we're not seeing anything on the credit side. Always remember that if we're really having a bubble unwind, the credit place will take part of it. I'll go through uh private credit in some other place as well.
Remember this, Sam Alman's stunning admission about the pressure that is there from their own customers on pricing. OpenAI considers drastic price cuts, anticipating war for users. Price wars are not a good thing. Um, and they're not only not a good thing for anthropic and for uh open AI, the prospect of a price war is deeply uncomfortable for hyperscaling tech giants such as Amazon and Microsoft who've been spending wildly on AI infrastructure so they can sell computing capacity to the big AI firms. The cost of components going into these keeps rising. So any threat to the pricing side or the profits of these companies is troubling. So again, when you start getting into this and you're like, "A price war would be brutal." I would not ignore these because this will be brought out again. This is this circular relationship or mapped as Morgan Stanley said, as the most dangerous money loop in history. Again, if there's anything going on with inside this money loop, that is a negative. Oh, free cash flow burn. And again, I'm not showing this to say I'm negative. I'm showing this to show you what the negative arguments will be and why the market will have a harder time. These stories as this is accelerating. We're going to start getting into more numbers when we get into the second quarter and the second quarter is not going to be as big a surprise as the first quarter uh because we've already done a lot of the work and because bottlenecks are are definitely going.
Why Alman also admitted AI costs have become a huge problem. This becomes a big story. It's spreading. This is in an Axios or he acknowledged the issue had arrived all of a sudden and that early in 2026 nobody cared about cost. Everyone was happy with their spending, but now they're complaining and they're getting complaints on the cost. You're seeing more and more of these and you're seeing more and more cancellations. There was a story on Meta late uh last night. It is Saturday morning now. You're getting more and more of these. I'm seeing them through X every day. Citadel put out something. Uh this was mainly on the token index and tokconomics. Uh again, what the AI bulls won't say out loud. Uh I'm a bull in AI. I'm saying it out loud. So did Brad Gersonner. So did Gavin Baker. So as you guys are getting worried that no one's talking about the token side. Uh commoditization to me is going to happen again. That's why I want to not focus on the hyperscalers.
Uh didn't didn't put this in right, but this was in the Wall Street Journal this morning. Again, the pressures on OpenAI and Enthropic from a pricing war perspective. Uh I don't know who hasn't figured out yet, but Enthropic's revenue is not going to scale anywhere close to what they've been projecting. Now, I happen to agree with this. Um I think Anthropic is going to grow their revenue, but I think taking the first five months of the year, which was a scramble for entities that were switching from Chat GPT Enterprise to Anthropic, just raced and they got a bunch. I think there's a lot of other reasons that are behind the scenes in the circular relationship as to what went on. But when you're seeing Microsoft talk about cancelling things, when you're talking about Meta, when you got Uber, you've got the most sophisticated places on the planet from a technology basis that are realizing that the cost is too high. I at least expect the acceleration in the AR to slow down. Maybe not. Maybe they'll make it up by more and more adopters replacing the ones that are cutting back. But the reality is any slowdown in Enthropics parabolic move, anything a pause, it's going to be a big negative. So I would just be very very wary of that risk in here.
I think this is worth reading from Alec Canitz. Again, the public outcry in the country is getting worse. Oracle was kind of a warning sign. um stock could rally dramatically and they're spending more money and I think as you go through this and you start to think about it the competition even from Colossus and some of these other places from a valuation basis I don't know I'm just getting more and more of these signs that the bottlenecks are real the push back is real and that we might see a slight kind of pullback on these things moving more for a period of time to cheaper models to less profitable models and anything on that front would scare everyone especially while the costs are going high.
This was a Cruso thing uh in terms of a pause this would have been amongst the largest AI infrastructure projects on earth. China not sure everyone saw this this week but basically this is their version of what the US is doing and they've decided that AGI is close. So they are accelerating and prepping a $300 billion plan to fund the AI buildout. This is a a step change and I think they smell blood. I think they also realize how quickly the models are getting to where they need to get there. But as I'll go through later, there's other things under the surface on the geopolitical side which suggest to me the trade war coming out of the meeting is still both relevant and still a part of this. Uh it's not rare earth anymore, but there's other places. The token usage uh which had been highly China then came down. I think this is a sign again that matches up with the token usage or the token index index going lower. You can see the pricing differential between the Chinese models, Miniax, DeepS, 10 cent, uh, Minia, and then these are the open- source ones. These are not even the cost ones of the other. I'll show those there. Now, I mean, you can just see the cost differential between the cheaper models. And I will highlight that this one here, Neatron, we're starting to get open source models which are pretty good and very cheap. So, we're just seeing them because aside from that one, you've got to go to older models like 5 4.5, but when you get into deepsek and some of these others, you're getting cheaper and cheaper costs. Uh, this is getting to be more of a worry for me for people not paying attention to it.
I think this would be a big negative if the government is taking stakes in these companies. 34% chance. If you go here, you can go see all of them and what the percentage is, but we're getting more and more to the government getting involved. I'll spend more time on that there. Um, I'm just highlighting this is really more to show you the bubble talk that will be coming and that as people I mean Peter Barrison is bearish, guys. Uh, if you follow him, if you go through it, uh, this has been a perpetual thing for the last couple years. Uh, but he put this out and again it means nothing to me on this whole thing, but I just want to show you that this stuff will come out and if you're following X and you only look at this and you don't do some research like look at someone who's more on the ai side going through what this is then just go in and say is Peterly normally bullish or bearish and I highly recommend before you start forwarding these to find out the person that you're dealing with if this is a bubble chaser. If it's a bubble chaser, you can't take what they're saying as anything more than a general post of their bias. He is generally bearish or at least highly skeptical on the near-term hype. Frequent bubble warnings. How far back did he begin calling an AI bubble? And it goes through. It was early 2025 that he started calling it or mid 2025. Sorry. I got to be fair. And before calling an AI bubble, was he calling for a recession? This is the reason why he's calling for an AI bubble because he started calling for a recession in mid 2024. He was bullish relative to consensus there. The reason I bring this up is these people will never change. And I say these people because if you have a bias and you're not trading the market, if you're not finding something to go through, if you're not at least highlighting the es and flows right now, everything I'm doing is on a bull market to a consolidation. I still believe the secular trend is in place. That is from a power user perspective, not from a a person just writing stuff. But I think you have to realize that any bull market is going to have es and flows. And right now I think the firework show is over and the agentic AI moves from discovery to digestion.
Okay. So let's go through this in a different way so you guys can see this because I wanted to make sure this was clear. Oh, you guys get to see me in a bigger way. Um, so these are all of the things that as you go through this, let me move this over here so you guys can see all of it. Um, just read this on your own. But if you put all of this together, and I wanted to make sure, model pricing falls faster than infrastructure costs are rising. The next margin squeeze may move toward hyperscalers, cloud providers, and lease capacity players. The key tension in AI is now price compression at the model layer versus inflation at the physical layer. And this is what this is. I think you have to be honest about where we are at least at a minimum to just see how this plays out. Riskreward is about identifying the place where investors have gone in and also analysts. So you could look at this and say the AI burnings earnings boom is generational. This is the long-term average earnings growth estimate. Okay. I just think now with this estimate we're at there's only downside from here in terms of if we're missing. So if you combine the likelihood that the miss involves something that people could make an argument like Peter Barerisen that it's bearish. I think you just have to pay attention to it. I think you just have to be ready.
Now on the positive side as Warren P Warren Pies put out based on those estimates we're talking about margins up at high levels. Um margins have been the story. I think they remain the story but this is another story too. Now, I don't know if when uh the long view put this out, they were trying to emphasize that this is bearish or bullish, but I'll just tell you spreads being this tight is not bearish. Now, you'll have to look to see if they start to unwind. But here's another thing that just says, think of all the bad news that's happened since this day in private credit. And yet, the BDC's the index just is consolidating. Now, maybe we'll get another run lower, but we've had more gates, more everything, and it hasn't made new lows. And part of the reason is because credit hasn't budged. So, this is the junk index overlaid with the BDC. So, initially when this breaks down, you look to see if the alligator jaws are going to connect. So, when this one happened during this big flush, which was during the software thing, which to me was a risk, and I highlighted this is a risk. We now have this following. We're just sitting here consolidating where this is at all-time highs. And I think this is important because it fits in the paper that I wrote about the rewiring of the uh the economy. If you haven't got a chance to read it, I specifically go through why this cannot be the same as the bubbles of the past. So, it came out this week. It's on the rewiring. Go read it.
Now, on the positive side from the long view, CPI is up 4.2 year. While it may be sticky, which I agree completely with this, it likely just peaked. Whether or not it peaked, I'm not really sure yet. But he adds the disclaimer, which I agree if gas prices did too. And I happen to agree with that because you can't argue that gas at the pump has gone down from 455 down to 408 as of this morning. Here is the CPI, core CPI, and this is it with sticky 3month, which is another way to look at at at core CPI. They're both down at this level. So, do I think it's going to stay in this area? Yes. I don't think we're going to fall off, but if I had to guess, if you can't go higher with the straight of horm being shut for all the oil doomers, what are you going to do? Here's right now where the Cleveland Fed expectations are for the CPI print in June. Zero or one. Uh, you think that'll be bullish?
Financials. I highlighted that we have never seen a time where the S&P didn't get under the 200 day moving average when the financials did. Well, so far we've been able to accomplish it. We did have a correction in the S&P down to it, but financials are now back above. Financials being higher is one side. Here are the banks, the KBE ETF. That is not a bearish chart, guys. So, there's been a rotation. IWM, as I said, all-time highs, not a bearish chart. Violent Factor Unwind is supposed to thin out a market. The generals keep advancing. This is great work by Jeff Degraphth. Uh, but he says as this purge in beta and MO is happening. And I showed last week historic drop in beta, largest on record for my stuff, and I think for him, it is the largest on record going back 50 years from what I remember him saying. At the same time, the equal weight breath expanded back to 63% of the names above their 20-day moving average. That's just a bullish sign. It just means rotation, guys.
Um, I thought this was interesting just to show XAI reportedly spent 40 billion to build their data center. So, Colossus and Colossus 2 reportedly he spent 40 billion. Based on public disclosure of what Anthropic and Google deal are paying, he will get paid 26 billion per year to license the compute from these data centers. That is a payback period of 18 months. So again, when you're looking at revenues versus the data center build, that means it's not a bubble, at least from the perspective of what these guys are able to charge.
Uh Brian Armstrong, who I listened to on a moonshot interview, I'll go through that. Very smart guy. Um he posted this again on the we're going to go we're going to start dividing up the intelligence. My guess is demand for intelligence is near infinite. completely agree. But 80% of the workloads will be running on 99% cheaper models within 12 to 18 months. Also completely agree. Um I'm waiting for the day that I can buy a $4,000 laptop to replace a lot of the money that I'm spending on some of these things per year with a cheaper model. Uh this is really against my openclaw stuff which is costing money and when you add in the Mac Studios and everything once we get a good enough open source model that it can fit on these machines which is coming soon. Mark Andre agreed with his take. I think this is something to pay attention to particularly when we go into the edge guys.
Now on the negative side those were basically the good side of PP of CPI and everything. So PPI biggest uh jump on record. We have to pay attention this just because this includes not only the petrochemicals and all the things going on but it also includes the semiconductor side. Uh early estimates of the May PCE number again, you're talking about a point4. So as much as core CPI is good, you've got PCE which is still tracking higher and that's the Fed proverb model that just keeps the Fed stuck. Just the best way I could say it is. That's why sticky inflation is just going to keep everything on hold while this thing has positives and negatives.
Uh the energy situation, the math is getting more scary. I think that's probably why Trump is trying to continue to get the straight open, which has not happened yet. We'll see what happens. Uh he threatened this week to seize car. That got everyone freaked out. You had the will traffic at the straight return to normal. We had the October numbers back down significantly below 50. We had the September ones below below 30 and then all of a sudden they shot back up. He's done a masterful job of keeping uh speculators on their heels and not allowing people to drive up the cost of futures higher uh for fear of our risk.
Uh rate hikes are back on the table again. We don't know what's going to go on, but we just know that new Fed chair is going and it creates a lot of uncertainty. We'll see if he's hawkish. I'm starting to hear more and more people say that they're going to lean hawkish at the next meeting. Uh we'll see where that is. But again, if you have a CPI number that comes in on the lower side, we'll also have a payroll number by then. We'll see what goes on.
Uh AI servers squeeze high-end MLCC supply. You're still getting bottlenecks on important parts of the AI buildout. Uh this is the one that I want people to focus on. This is the rare earth side. This is indium phosphide. Remember that I mentioned that coherent CEO was brought on the trip. We're getting more and more stories and this is going that indium phosphate phosphide is one of the several supply chain bottlenecks collectively constraining AI data center construction. It is a necessity. It's another component that China dominates and it's an issue.
Uh Dario Modi put out a couple pieces this week. One of them was on the policy side of AI and on there they talked about Fable. Remember Mythos? I used it a lot yesterday or over the last two days and then of course overnight statement on the US government directive to suspend access to Fable 5 and Mythos 5. Amazon apparently told him a place that they were able to break in through vulnerabilities and so the government immediately jumped at the opportunity to say it was dangerous. Remember 34% chance to stay. I'm only bringing this up because I think AI again remains that as these numbers continue to get to this level and it becomes something critical for biology. Again, look at these numbers in terms of biology versus what's going we just continue to make higher and higher levels on this front. Um, and again I'm bringing this up because I think it's a negative for the hyperscalers and for the model makers. I think eventually the government is going to view it as way too important.
So, I mentioned building a Jensen Yuan knowledge brain on the webinar subscriber list. If you didn't get to see it, this is on the website. Now, a step-by-step guide to how you can build your own Jensen Yuang knowledgebrain. I showed in the webinar. If you haven't seen the re re uh play, it is on the site. You can go see how it goes. This is important as you guys go through this because I used it a lot this year um in a different way, but I showed people how to build it using co-work. Uh it took me 30 minutes to do it that way. So I put it together in a document where you can upload it and go do it yourself. I think if you're able or as you're able to do it, it will also make you a better uh AI person. I would have your kids do it as well. Everyone who knows how to do this and I go through the instructions, it will put you ahead of the AI game. I'm going to say from 99% of the people on the planet just by being able to do what takes 30 minutes and that's without any training. just upload it immediately into an LLM and ask them how to do it. And it might take you longer than 30 minutes, but when you're done, you'll be proud of yourself that you were able to do it and run a Python script and all that stuff. It's all there for you.
Um, this is the Moonshots episode. Again, remember, every time I show you a podcast on here that is great, like the Gersonner and and uh Gavin Baker one. There's a podcast recap that goes on the website. There's an email that goes out Sunday morning at 9:00 to the subscribers. Just remember this way you don't have to go listen to it if you don't want. You can just upload the link and do the transcript. I give you the timestamps if you want to watch there. But Brian Armstrong, a lot of good stuff on here in particular for the Bitcoin anti-bitcoin crowd. He goes through the quantum risk to Bitcoin in the most coherent way. Gives some websites like BIP 360 you can go to and read yourself. He also talks about the importance of the AI agents in crypto rails. Again, this is a major theme for me uh over the course of the next year. It's in the application layer. I believe that crypto will be a major story. And in September, for everyone who is cryptofocused or on the hedge fund side and the mutual fund side who's looking for digital assets in terms of the story, I am converting what I do in the YouTube into a cryptoforward one. I'm creating the data now uh in partnership with a variety of different people to be able to give you a YouTube that shows you what's happening at a sector level or a thematic level and then give you a thematic portfolio of both tokens and public equities preparing for the tokenized world.
Um this was another podcast uh that I think you should listen to. I believe we're entering this stage as the AI midcycle slowdown takes over. That means it's not as easy to make money on stocks in the earning side. you will be able to produce returns, but the sharp ratio goes down. And I believe you're going to have more and more on chemicals, more and more on silver, more and more on copper, more and more on the commodity layer. That is where I want to focus in. That's where I've rotated money at the same time as the other scarcity trade that is a software bull, which is crypto. So all of those themes to me fit in with Dan Drifus who spoke at the all-in and if you go through he highlights China's control over critical minerals. This is the indium phosphide again as a major issue forcing the US government they have to support mining. It's very important. So look for the companies to have checks to have everything. And he makes a claim that we might need as much copper in the next 18 years as humanity mined over the last 10,000. And you have to start building in the reality of the orbital data centers. Uh I I'm telling you, you got to spend time on the orbital data centers. And one of the reasons is the price of silver has just collapsed. Here's why the Space X IPO could be the start of a silver boom. He highlighted this uh about how much silver there is and how much more silver would be ne necessary for data centers in space rather rather than terrestrial. Um, and then you have to remember, and this is something that I've been talking to uh institutional accounts about, a Chinese battery company on April 14th, backed by one of the world's largest automakers, rolled out the first sample all solid state battery cells off a production line in Guangjo. The company is targeting this. Go look up how much silver is needed for solid state. Silver market may be undervaluing demand. and then go look at what China's imports were for the most recent period in silver. More on the indium phosphate. Go read about it. It's an AI bottleneck.
Signal Alpha Agency. Uh I've had many many subscribers and new people really more around the world and I did a presentation for Korean brokers and for Korean investors that wanted to know from the subscriber basis why it's important. And I just want to make sure that you guys hear this. everything that I'm doing including the YouTube and then the reports and then all of the things to keep you up. This is the signal rather than listening or watching a bubble post like Peter Barrison's where he just sends something out there where he's hunting and going for negatives. I've given you a bunch of negatives and a bunch of positives on this so that you always feel like you're on top of the most important trends that are happening. It is impossible to keep up on everything that I'm showing you guys. There's 125 slides a week. I know it goes fast as I go through this, but think about it. You're getting a lot of signal in here. Why it matters now in the AI economy and what regime are we in right now? I think we're in the AI midcycle slowdown. Now, from an alpha basis, this is giving you the names and this is talking about the five layer cake and breaking it down and making sure that you can make money as a trader and as investor. That's what the tools are for in terms of giving you the the Excel sheets. And then the final part is the agency. And this is where I'm trying to help you make knowledge brains. Go watch the YouTube video on how to start with AI. The whole goal by giving you the prompts and all the things that are on the site is to make sure that you are able to do it yourself, but more importantly for your kids, for your employees and your workers. That is the whole purpose of this. And so I wanted to make sure that you guys see that as I went through just what this week was. The economy is being rewired around compute and energy and that's a very different world. This goes through how the business cycles no longer exist in the from the industrial perspective. You have to understand where the bare markets will be quote unquote. the pullbacks will be. What is different than fears over recessions? Because we're not going to have fears over recessions in an AI. We're growing too fast.
Chemical breakout. Here's the chemical market. So, I have the chemote and I want to show two things. One is the consolidation basically for five years now. We just broke out. We've now consolidated above. I think chemicals are the oil of the next 10 years. We are not transporting consumer garbage around the planet. We are now needing massive amounts of chemicals and for those chemicals you need to know how that goes in. I think the chemical part is where you should be focused a lot right now as well as the power side. Remember I wrote this paper so this is on there guys if you want to go redo it or maybe you didn't read about it because semis were the hot thing. You have to get good at moving from the different themes with inside to what I produced. I definitely believe this is a theme you want to focus on in terms of chemicals and this is the reason why in the old industrial economy growth was transport heavy and combustiondriven oil intensity fell from 1973 to 29 2019 we've seen that so the AI industrial economy putting intelligence into everything the 91 trillion buildout it is now compute heavy it is electricheavy and it is infrastructured driven data centers could are the massive build so we're rebuilding building the grid. Everything in that shifts from barrels burned to molecules engineered. All of these places, semiconductors, advanced packaging, data centers, grid and power, robotics, those major themes, they're all part of chemicals. They're all part of different thing. You can go through all of these if you want. This is a massive shift and you need to be ready for it. And trust me, this is a late cycle part and once it gets going, I don't think it'll start stop and I think you're going to have issues.
Now, one of those names is Entrogress, which I highlighted back in here. I wrote a paper on it, and it did its pullback. It's still near all-time highs without broken out, without breaking out. But on Friday, or and last week, it had a massive rip, and I think something is changing on it. I think people are starting to get on board. Again, spotlight piece I did on it, which was out about a month and a half ago. You can go read that. But then also this week you're going to be able to read something else which I'll highlight. This is why I'm saying it's now starting to become clear. So remember Vera Rubin and the roll out is becoming a focus for people. So everyone focused on memory. Everyone focused on power semis. Everyone focused on all the semiconductors but at some point you stop missing well for all those semis we're going to need. And you start going through the shortages in the places. And so now what's starting to show up is hey this is getting more complex and we need a lot more NAND these are the ones reportedly set to supply the materials to SKH. So when you're looking for the suppliers and the derivatives this is where you want to go to show how important NAND has been as people start to go up to speed on it and Integra's calls. How often did they say the word NAND on their call? 39 times in the last two quarters. uh the best NAND quotes. You guys can read them on your own. They frame NAND as a 2026 transition tailwind. This is the paper that I'm writing and again not writing. It will go out probably Sunday in the afternoon. Ver Rubin confirms the missing chemical layer of the AI complexity. It's an update on it and this is getting through why the trigger point now is Ver Rubin which is increasing the complexity that's going on for the next phase of the AI infrastructure. You're looking for places that are cheap. This is a perfect way to look at this is enigress relative to my thematic portfolio? Over the course of last years it had been a lagard as of June and then last week we got the bump. I believe as we break out on this, people will start to shift their focus to the bonding and all the component parts as they go. Why do I feel comfortable about that? Well, let's start with the technical sheet for this week. When you go through the top 12 names and you realize that five of the 12 of the hundred with the scores of 95 to 100 are chemical names. Entrogress is one of them. Um, if you go through and start reading about what we have in frontend WFE for wafers, go through and read, upload that particular one into uh an LLM and ask what the benefits are for Integris. When you go through where we are technically overall right now for the thematic portfolio, chemicals are the third best on an aggregate basis. I just think
At this point, when you're looking for it, you're looking for names. Now, percentage above the 50-day, 82%. Percentage above the 200 day, 88%. I just think this name has lagged behind. We have no breakdowns. We have nine breakouts. So, it has held in there extremely well, and I think that's a place that you want to focus on.
In terms of the exhaustion scores, right now, the whole thematic portfolio has reset. So, we don't have anything too exhausted. So, from a trading perspective, if you're looking for entry points on names, you can go through.
Now, we've also seen breath breakdown. So, let's go through, uh, a way that you guys can just upload, if you haven't done this yet, upload every one of those sheets, the fundamental peg ratio sheet, the exhaustion sheet, and the technical sheet into one folder on your computer. Go to Claude Co-work, click on add folder, and go have it connect to that folder. And then just go ask it a question of, "Okay, go through the technical sheet first and show me what the breath has been." And so in this case, I wanted to look at what was, how many, what percent were above the 20-day, above the 50-day, above the 200 day, and then what percentage of these were rising. And so again, as you go through this overall, now I could have done this for any one of the themes.
Also, we've seen a breath breakdown. All of a sudden, we bump back up on the 20-day. The 50-day, we're still making lower. There's more names below the 50-day every week. This is why I think it confirms the consolidation that's happening. But from a bull market perspective, 84% are above the 200 day and 87% have a rising 200 day. This is a pullback with inside a bull market in any way, shape, or form.
Now, next time go in, you're an expert and a hedge fund analyst. I want to use these three folders for your information. I believe we are in a place where this basket of names is going to consolidate. Go through the themes first and give me an analysis of ranking the themes for an investment now based on the information. Then give me the top two names within each theme. If you want to use the best models, GBT5. This was done with Fable 5, which is no longer available to you. But regardless, use 4.8. Use whatever you're using. Just use the best model. Have it go through. It'll spend 10 minutes and it'll come back and say, "With inside here are the rankings that it says the whole rack. Chemicals and materials as a second one." You get to go through it. And then with inside these for chemicals, it says ENTG, MKSI, MU, TSM. Just go through and do that type of work and have a superb analyst go through.
Then you can take those names and then you can go put them in your knowledge brain and say, "Hey, based on what Jensen Yuang has said this year, and again, if you don't know what a knowledge brain is, this is every transcript so far this year." That's the way I created it. That's what I gave you guys of every single transcript that Jensen Yuang has done that was at least 30 minutes long. So, this is from YouTube. I used the YouTube API key. It goes in, it brings them all in. So all of that, let's assume that there's 15 of them. They're an hour on average an hour long, which is shorter than they are because I'd say they're more like an hour and 30 minutes. You're getting a lot of interview on interviews. Jensen Yuan speaks more freely. He talks about things. He doesn't specifically name companies maybe, but he talks about all themes. If you go in there and say, "Does Integris fit what Jensen Yuang has said in his progression on this point more now than it was at the beginning?" You'll get an answer from the brain. I use the brain for everything like that.
Mythos 5 again, our internal protein design experts, accelerated acid. This is all on the drug discovery and all on the benefits of biology. I highly recommend this startup company, which is Chai. Chai Discovery. Look how young these guys are. You have to go look that where they spun out of in terms of the LLM models and go realize why again, Pfizer and Eli Lilly have invested into this one as well. Go listen to the interviews. Just go into podcast, type in Chai. I listened to a bunch of them this week. You'll get to hear the advances that have gone through.
David Sinclair, one of the first people I read on longevity and had a huge influence on me in terms of believing that we were going to solve the problem of aging. After 25 years of brave and brilliant work by hundreds scientists in my lab to understand and safely reverse aging for the first time, it was moving to witness the first human dose being delivered. We are at the point with the eyes where he is putting in a therapy to make cells young. And if you haven't read about this, read it. Huge implications again for this. What a better place to get into Eli Lilly and the entire health care sector which should benefit. Look how much it's underperformed. And if you go look at the way it's traded and how it's done recently, it's starting to outperform. I just think healthcare is a great place to be looking at this point, guys.
And Bitcoin still hanging on the 200 week. I will say it again and again. We are below the 200 day. We are in a bare market in Bitcoin. There's no way to look at this and think we're not until we get above the 200 day and eventually above this level. I personally continue to buy little bits in here. I already have some. I just continue to go through this. I'm fully aware that it may break through and come down here and then come back up. It did that back here. I just want to highlight to you guys that I fully believe that crypto is a major part of the application layer of AI benefiting from Aentic. I've said it before, I'll say it again and again.
That's it for this week, guys. I'll see you next week. Gonix.