Hi YXI friends,
Iran finally responded to the US proposal on the weekend, but Trump firmly rejected it. The US would not favour a deal that effectively leaves the Strait of Hormuz under Iran's control.
This means the two parties remain very far apart in their positions, and the blockade could continue indefinitely, until one party finally blinks.
Service Update:
From this week onwards, we will try a slightly different approach to this article format. On Monday and Wednesday, we focus on the macro view, but on Tuesday and Thursday, we cover the price technicals of all the equity names (including equity indices).
This daily article will serve more as a risk-monitoring piece, as we focus on the in-depth pieces of the individual equities that we think could benefit (or maybe be overhyped) from the AI tailwind.
While Semis are all the rage now, it is important not to forget two things:
In 2021, growth and SaaS names seemed invincible, but the Fed’s rate-hike cycle brought a crushing bear market that wiped out many growth investors (and, to a greater extent, many VCs and PEs). Therefore, even when equities don’t seem to care about macro today, they will do at some point, and we need to continue monitoring that risk.
The AI Infrastructure trade, including memory demand, is cyclical. There will come a point when the hyperscalers rein in their CapEx, even if they are still in an expansionary phase. Chasing names that have gone up 500-600% within a year may not bring in the same reward in twelve months’ time.
With that in mind, I will be as unbiased as possible, from stock to stock, on how we should think about their business models and the key risks or opportunities. I want to leave short-term trading and risk monitoring to our models and to macro monitoring, and focus more on the 12-month horizon for our deep dives.
Speaking of the models, I am still working in the background on a multi-model approach to understand the market through different lenses. We may even get confusing signals at first, but that’s also useful information. Different models may work better in different market regimes, which may save us from the bindspots too. Please bear with me on this - it takes time to train & experiment.
Request:
I have also updated my commentary to link the model outputs vs chart technicals where I can. Please leave your feedback if you have a strong opinion on this change.
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DISCLAIMER: This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
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