Episode 56 was recorded at 5.45pm EST on Sunday 31st May.
I am not able to publish paywalled commentary on a billing pause - so for the next 3 weeks, enjoy the show notes for free! Pod summary, show slides and audio edition are downloadable below.
Today’s Slides
Audio only version (for paid subscribers)
Pos Summary
Q2 Performance Review & The Semis Trade
Squirrel confesses to a poor Q2 — sat on his hands and missed the market rally
The one dominant trade of Q2: semiconductors — Korea, Taiwan, and SOXX (SMH) all parabolic
Everything else either flat or dragged higher by semis; EM is now effectively a semi ETF in disguise
Micron & Valuation Concerns (Minute 2)
Micron trading at price/ sales levels last seen at the peak of the prior tech boom
Debate on nominal vs. log charts for properly contextualizing valuations
Key question: what multiple do you put on peak semi earnings?
Darius Dale’s point cited: earnings expectations are a lagging indicator — analysts chase stock price narratives
Risk of an earnings bubble (analogous to 2006–07 housing, not a 1999-style price bubble) — multiples aren’t crazy, but earnings may be over-earning
“Amnesia” Theme Explained (Minute 5)
The episode title explained: Squirrel’s portfolio has “amnesia” — no memory (stocks)
He closed the call leg of his SMH strangle, cheapening September puts by ~15%
Congrats to those who rode the memory/semi bull - time to take chips off the table
~54–55% of the market is passive — non-thinking participants
Shorts (like Benny in April with SMH) got run over, leaving few on the other side
The “shoot it in the back” strategy discussed — warned it’s harder than it looks (silver analogy: down 37% in one day)
Momentum vs. mean reversion trade styles debated — both hosts identify as inherent mean reversionists
Institutional buyers of Hynix/Samsung running into single-name concentration limits
Marginal buyer now coming from structured products — leveraged ETFs/ETNs
Downside leverage works twice as aggressively — asymmetric risk building
Portfolio Performance & Energy Positioning (Minute 10)
Squirrel’s YTD performance chart shown: outperformed S&P through Q1, now behind after the semi rally
Only 30% equity weighting in multi-asset portfolio; over half of equities is energy
Watching BNO ETF (front-month Brent) — oil inventories have been decimated
“Barrel counters” all came into 2025 bearish and are now really worried about supply
AI CapEx Sustainability & Valuation Sanity Checks (Minute 14)
Ben currently doing deep work on Coreweave and the broader AI CapEx numbers
Free cash flow yield on Russell/QQQ is thin — market in “rare air” across multiple valuation metrics (Q ratio, Buffett indicator, trailing P, forward P)
Combined with potential earnings bubble = “very interesting situation”
Stocks as claims on the economy’s assets vs. actual income/GDP — market stretched at historic extremes
References Michael Pettis’s “bezel” concept: paper wealth exists only if you can actually exit
Post-GFC we’ve been in persistent overvaluation; 2022 was a small drawdown but “we’re back”
CapEx Funding Waterfall (Minute 18)
Nomura chart referenced: decomposing AI CapEx into cash-flow-funded vs. debt-funded portions
Capital markets funding sequence: cash flow → term loans → high-yield/IG bonds → equity
Warning: if Mag 7 start issuing common equity on top of IPOs, that would be a serious red flag
Cancellation of buybacks = first sign of equity dilution coming
$36B private credit deal done to fund Anthropic chip purchases cited as example of debt-funded CapEx
SpaceX IPO Valuation Sanity Check (Minute 24)
Compared SpaceX pre-IPO valuation vs. revenue multiples of prior major IPOs (Meta/Facebook, Google, etc.)
Facebook IPO anecdote: priced at $38, closed at $38 (Morgan Stanley used the whole shoe), then dropped to $17
Pre-IPO SPV deals with big front-loaded fees now circulating for SpaceX — reminiscent of Facebook retail frenzy
Day-one IPO returns historically poor for hot names; mechanics mean insiders are waiting to sell
Coreweave / Magnetar / CDO Parallel (Minute 26)
Magnetar made $10B+ on Coreweave trade; drew parallel to their CDO trade pre-GFC — same characters, same playbook (get in early on the debt-funded boom, get out)
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