NY Times Bestselling Author, over 1 million copies sold, now published in 12 languages globally. Long-time @CNBC Contributor, founder of the @BearTrapsReport
New York, NY
Joined March 2009
- Tweets91.7K
- Following13.9K
- Followers145K
- Likes25.6K
Got Hard Assets?
It's Happening - Financial Repression
Breaking - LONG-TERM US YIELDS DROP ON TREASURY PLANS TO BOOST BUYBACKS - Bloomberg
A) A SoH effectively closed for 240 days. B) War risk insurance for ships is still 30x normal, C) Saudi oil infrastructure has been hit at least 6x over the last 3 weeks - these events come with long tentacles.
Despite front-month flat-to-lower in the last 6 weeks, Mid-2027 oil continues to grind higher.
$USO /CLM7
No Downgrade Friday - "Moody’s holds steady on France’s credit rating as country grapples with turmoil and higher yields, they kept its credit rating at Aa3." CNBC.
Passive investing is Broken -- There are NO concentation caps on the S&P 500. Where is the point where regulators step in? What if 20-25% of the S&P 500 composition was in two stocks? We have gone from 5 to 15% in 10 years, where is indexation heading? The wrong way!
If you’re a fiduciary putting a 70-year-old’s retirement into the S&P 500, more than 15% of that money now sits in two stocks. Ten years ago? It was 5%. On $1M, that’s $150,000 in Nvidia and Apple alone. The index didn’t just get riskier. Your client’s exposure did.
A five-year-old knows there’s endless demand for compute.
Where are the molecules? The gas, the land, the transformers, the years it takes to build them. That’s what the credit market is pricing, not the apps. The cost of default protection? Nvidia’s five-year CDS just crossed 116 vs 35 a year ago. Oracle’s > 300bps. CoreWeave’s > 1100. All the monkeys in the tree are shouting demand. The bond market is answering where the supply actually is.
Andy Jassy reveals AWS capacity is sold out for 2026, largely sold out for 2027, and a good chunk of 2028 is gone
“If you think about it, there’s only so much data center and power today. There’s only so much memory, and I don’t think that that shortage ends in 2027."
"I believe, one of the reasons, coming back to the capital investment, why I think we could invest a lot more and it wouldn’t be a bad use of capital is that '26 is obviously at this point sold out. '27 is largely sold out. We always leave a certain amount for on-demand in our inference service, Bedrock or EC2, but largely sold out, all the big chunks. A good chunk of '28 is sold out."
"There’s so much demand. If you think about the AI business and what we call core business, which think of core as non-AI, they’re both growing at really rapid rates right now. And if you have only a certain amount of memory, you have to decide how much of the memory you want to allocate to HBM, to the AI accelerators, versus to DRAM, into your core. So these are real trade-offs you have to make.”
Companies that control hard assets (commodities) in a multipolar world.
*$XOM at $183 today — Kicked out of the Dow Jones Industrial Average in 2020 ($42), after being in the index since 1928 (Standard Oil). Replaced by a software company whose shares are off 8% since.
Dear Blackstone’s Pump Master - A five year old knows there is endless demand for compute. The high impact question is - where are the molecules to power compute, and are they in the right place? A meaningful disconnect there = a credit crisis.
I like Blackstone and JG but I don't think this is quite right. While Gray's description of general conditions in spot market for compute is correct, that isn't super relevant to Coreweave since a vanishingly small % of Coreweave's compute can harvest these lucrative spot market rates. 98% of $CRWV's compute is locked up in contracts whose average life is 5 years.
The irony is that if Coreweave was more "speculative" and wanted to build compute before having customers first, they would be gushing cash now. But because they were "responsible" and secured offtake partners that gave Blackstone and other lenders the confidence to lend, they are locked in at "low" compute rates.
The upturn in price pressures was also broad-based: while services inflation edged up to the steepest since August 2022, manufacturers’ selling prices rose at a pace not seen since July 2022, with the rate of inflation accelerating markedly. Higher prices reflected a further sharp increase in companies’ costs. Average input costs measured across both goods and services rose at the fastest pace since November 2022, excluding only the rise seen in September.
S&P comments on inflation "were a complete train wreck: Selling price inflation picked up further momentum in October. The overall rise in prices across goods and services was the largest since August 2022."
Today's Headline
"Apple $AAPL is Wall Street’s Favorite AI Haven as Spending Fears Hit."
*Bloomberg Terminal data.
