Raw Transcript
Hey everybody. I'm going to put parts of these out uh a little earlier. Obviously, there's a couple reasons for this. So, what I'm going to do is try to get the research piece out ahead of everything else. Um and I'm going to tie some of the CTA levels in just because of what's happening in Iran. And for those that are watching this that aren't aware, we're about ready to go through it all. So, the news is fluid and I put it all together. So, I'm just going to read it and leave the ES up here. That's why you're not seeing anything. This is a CTA level which would trigger a sell level. When we open in an hour, you want to make sure that that's defended if we gap down to there. And if we get down to this level as well, uh there's a lot of news here and there's a lot of moving parts. So, do I expect us to gap down like this? I'm not entirely sure if I expect a 1.6% gap down or what I'm expecting, but better to be safe than sorry because I do think you have the the chance to gap down at least off the open and then reset. Um so what you have is you have what they are referring to as uh operation epic fury and we knew that we were gearing up towards this with the the way it was moving over here but a joint operation with the US and Israel and they did some real damage in uh Iran some real damage um the Ayat their Ayatollah Kmeni was killed that is been confirmed apparently uh they also have gone after the top commander-in-chief of the IRGC which is a big deal. Um, there is a lot going on here and there's a lot of moving parts. It's not stopping and there's already been retaliation. So, you're seeing a lot of this. I'm just going to go through some of the highlights with it. Uh, the goal is to eliminate Iran's nuclear and missile threats and foster a regime change. So, I think it's really important to get that. That's the goal. The goal is regime change. Um, you know, for those of us that grew up in the ' 80s, we remember this or this late '7s ' 80s, uh, we remember this. Um, and remember, we remember the change and it is what it is. This is what's happening. All we can do is just try to figure out as it's going along. Um, there's a lot here. There's a lot of moving parts and there's a lot of things that are going to be connected. I'm just going to read some of the highlights that I think are important. We you do already have US casualties, which is a a very large deal. Uh, you have a lot of casualties in Iran, which is a very large deal. Uh Iran knew that this clearly was coming because immediately they re they retaliated. Um and they didn't retaliate retaliate just against US military bases. Um they went after nations other Gulf nation states uh Bahan, Kat, Qatar, Jordan, uh UAE. So they're attacking outside just not the US military bases. They're going after civilian infrastructure. Drones hit major commercial hubs in the Gulf. Damage to Dubai's international airport. Dubai is shutting down its stock market for two days. Uh I also think it's important to note that uh commercial hubs across the Gulf, there is damage at Dubai's national at their international airport and at the Burge Al Arab which is obviously a really big hotel there. Um you're hitting residential areas in Israel, direct hit on a public shelter. There is a lot going on there. IO have a complete leadership vacuum in Iran. Is there going to be US backlash here? I I'm sure there will be between did he get congressional approval, did he not? We've seen this go back and forth a thousand times. I'm not going to go down that rabbit hole with everybody. Um, but it is what it is. This we're not going to get a doover, right? So, this is what we're dealing with. Uh, the conflict definitely triggered emergency UN Security Council meetings widespread from international leaders, the closure of major airspace across basically all of the Middle East, and you have disruption of global travel. So, it is a highly fluid situation. But I think the important thing to understand, and I'm just leaving this chart up because I really don't have a lot more to show you except going through clip by clip. So I'm just going to reiterate that's why you're staring at a chart for the first 5 minutes of this, that you have the Gulf in complete chaos right now. And it's also the fact that they are outside and that Iran is stepping outside and attacking the some other places like the UAE is is getting the brunt of this with drones and missiles hitting huge landmarks, hitting the Palm in Dubai. uh some of the these towers. I it's a lot. And you know, you're seeing people that are actually in Dubai and and in the UAE that are actually being killed from falling debris. So, they're shutting things down there. And you're seeing this in Qatar and Bahan as well. You usually don't see things like this. You usually don't see Kuwait or Saudi Arabia actually attacked by Iran. So, this is um this is way heavier than it's been in the past. And I think you're going to see some kind of movement down on this. Uh but you're seeing the UAE and you're seeing Dubai and all these places come together against Iran for what's going on there. And I don't think that that's going to make oil prices go down to say the least. And that's what we have to focus on the stock and and the market, what we can do about it. Obviously, there's more uh going on here, but this is what we do. So, we have to focus on it. From my standpoint, we can put all the moving averages in. We can go through everything. I just think you have to think about the knee-jerk reaction. And then I think you have to think about is the knee-jerk reaction going to be the low. I don't know that because I don't know what's going to happen in the next 24 hours. At the time of recording this, I don't have a clue, but it's important for me to get out all the headlines and how I see it. What's going to happen during the week? You're going to have arguments with Congress. Should we have, shouldn't we have? Well, it's you can't unring a bell. So, here we are. Uh, you can argue about that all you want. Uh, the issue Iran, should they have attacked outside or should they have attacked outside? Should they have attacked Dubai? Should they have attacked UAA? You cannot ring the bell. They did. So now that whole can of worms cannot have the lid put back on it. So you're going to see repercussions from that. It's going to drive oil prices up, which means names like DHT should open up substantially. What I have found is that when they open up, selling into them is not the worst thing if they're huge gap ups. In other words, if DHT opens up, let's say 20 25% selling into that and regrouping, it's not the worst idea in the world. If you see instability in things like EWY, you know, and they pull back like 13552 is the first level that I would look at tonight. Um, for those that do after hours or overnight trading or tomorrow, 13552, 12836, they are key levels for me with this. We'll get to research here in a second. And I have a ton of research to go over with you, but I really want to get this out that am I just going to go out there and blindly buy the ES when it drops off the open? Maybe for a quick trade near this level if it gets down to here, but am I going to hold that overnight, not knowing where the escalation's going to come from or or what's going to transpire? There was a terrorist attack in uh Austin where the gentleman had a a flag, an Iranian flag. So you're you don't know how this escalates or how this is going to be perceived. Um I did read a piece by UBS where they said that you know these usually lead to 6% drops and we've gotten way too comfortable thinking that these these are not going to be disruptive. So I think that when you start thinking from this standpoint things like HSP um Himalayan shipping we've talked about that if this name comes in because shipping lanes are going to be disrupted. Yeah I do think that you might want to look at those kinds of trades. I do think you're going to want to look at tech names during the day if they get disrupted. I think you need to be really clear to about yourself about what your time frame is going to be. So, I want to get this out of the way and I want to get this out of the way first. We can talk about the ENQ the same exact way and the levels that I think you want to watch here are very similar. The levels that I've talked about before and we really don't want to be outside of our range in here. But I I'd really be remiss if I just don't do us a solid here and clean this all off. And that's right, I said solid. And what I want you to focus on, just give you a couple quick lines for those of you that are going to do this tonight. If you're going to look at this or if you're going to look at this tomorrow, 24605 is going to be that first level, 24605. And that's going to be right where the first CTA is. Um, and I do agree that if everyone knows where the these are, does it matter? It does. I'm going to tell you why it matters. Because if you stay under there and everyone knows where it is, then you know you have a problem. But if you gap down into that and that's all that you do, then you probably don't have as big of an issue as you think. And then the next one is going to be, we're going to go over this in a second anyway, but just to give you the levels here, they are 66066772. So 23 938 and 24605. So 23938 is going to be the next one that we want to focus on. And so again, all we're doing is just going 23908. And I'm going to move that right there. That silence was not for some kind of poetic pause. So if I get down to here, you know, really what you're looking at is just saying 1.7% would get you down to that level. And then of course the next level from there is if you did gap down or get down to there is 4%. Could you get down there? Yeah, you could. You can get down there because of the amount of escalation, not from what just the US and Israel did, but the way that Iran acted based upon that. That is a complete utter desperation move. And it it does happen. So, we're going to get into the research now, but I wanted to really get this out so that you can know my thoughts on what this is. So, as somebody that owns shipping companies and tanker companies, if they spike up, such as DHT or any of these others that I'm in or that you're in, anything that like super spikes up into this, I tend to be a net seller. I don't tend to rush into this for some strange reason because a lot of these have to go through the straight of Hermuz. If for some strange reason they gap them down, I would be all over them. But I don't think that that's what's going to happen. And the names would be STNG, FRO, TNK. You can see how these have been ramping up. They've been talking about it. And we've been talking about that this is coming for some time, this escalation. Um, usually you see the defense names move on something like this, DFN. And we'll get we'll get to the stocks in a second, but I just want to get this out before uh we begin. Hey everybody, this one's going out a little late. I wanted to see how we were going to open after everything and so I just waited a little bit before running the charts. Um, this is really where the ES has opened and we haven't really gone anywhere since then. And do I think it's an issue? Not really. I mean, I don't think it's the biggest issue in the world. If we just see where we're opening right now and I'm going to go right to the today screen and we're just going to look at this really quickly that the NQ is not even down 1%. Gold's up 2 and a half. ES is 94 basis points. Bitcoin's down 2%. So there's not a lot here, but just watch these levels tomorrow for those that are trading futures. That 681125 you seem to are holding that for now. And I think that's why people are just trying to unpack all of this from my standpoint. Again, I'm not going to go through the whole ES because we did it earlier on the chart, but I just want to kind of time lapse uh tonight's video because I think it was important. So if we take a look at the ES and then we look at the NQ here and you see where you're at, you're you're gapping down. So, if we look at this again, you know, we're going to say that that gap down got you to about 1% off the open. Um, if we go to take a look at the cues right here, and then we just do the simplest thing and extrapolate that out and just say 1% from here. Where does that really put us? Uh, you know, shocker. It's going to take you right back down to that 600 level. So, and let's just do that correctly now. And we'll just drop it to 1%. And you're going to see that that's going to take you right back down to where that put wall is, right to 600. So, if we open up, and this will be helpful tomorrow clearly, but I wanted to see how it was going to go. If we were going to gap, like really gap down. Um, if you're at 1% tomorrow and you're gapping into that 600, you would expect the market to be net buyers, not net sellers. And so, you'd be leaning that way. And so, the things that I would focus on tomorrow are going to be relatively simple. So from a new standpoint, the names that I would focus on are the names that they had to own, names that they really had to own going into uh Friday. Dell was one of it and they absolutely crushed. But if you take a look here, I'm just going to give you some key levels on this. I would watch the high of this level, which was that 14379. I'm not going to give option levels here because I want to see how we're going to open. The other thing that you're going to want to watch is 925. We're going to get rid of the pre and the post and we're just going to go to the open because we're through the pre and the post now. So if we go to the open of this that 13735 I don't think we have a shot at that but if we did that would be the bees knees you know opening around 14375 barring any more news over the the evening. Uh that is very very attractive to me. The other name that I'm very interested in is AOI and they absolutely crushed and they're in the right space. uh you look at the volume and the way that people came into this one. This was uh this was a really big deal and it wasn't on anyone's radar. I mean that's about as perfect as you can get. So I do think that you do have the opportunity to gap down here. I do think that these have the opportunity to get weaker. Um from my standpoint any substantial gap down in Dell and AOI I'm going to have a real interest in. Um, I don't know how much overnight stuff I would do because of the gap risk overnight, but if we're able to see any of these levels, you know, 7775, 706, 65,71. I'm trying to give you exact levels in case you gap down and that way you can prep out there. But earnings were absolutely fantastic. Number three that's on my radar would just be Netflix. A lot of people really want to own this after they they stop that debacle. Uh, that 9061 would be optimal. I wouldn't be surprised if we saw that tomorrow because you don't really have an earnings thing here. You have more of a binary thematic event. So, they would be the three that stand out. The fourth, if I had to just get right to it, would be Peace Sky. And I don't think a lot of people remember, you know, that how interested we were at this at 10, came all the way back to 10, held. Now, where are we? And now what what are we dealing with? So, from these levels, if you could come down anywhere in here, I'd be interested in it. I did add to this slightly, not crazily on uh Friday, but really if you can get down to that 1270 level or 1194, I'd be super interested in that. But you have to think about the dips that you're buying, right? You want to look at buying the dip, not buying the rip and then selling back into the gap fill. So for here's like a great example repeatedly. Micron would be another one that will be on my list. And all you have to do is just look at these levels. you know, if you get down to the 92 93 range, anything in here consistently, you are bouncing at very very quickly. So, you you here you are February 13th and you're down here for about 15 20 minutes anywhere between 400 to 94 and then you're doing it again on that Tuesday on the 17th and then here you are on Wednesday the 18th and then they start moving that up still around that 400 putt wall. Here you're on the 26th. So, anytime you're getting down to this level, DRAM's not going away as we just mentioned. So, if I could get down to this 394 level or 401 level off the open tomorrow, that would be very appealing to me from a quick trade stance, which is very different than when I was going through with Dell AOI and there'll be a couple others, Netflix, the Peace Sky, but just from a trading standpoint because this happens very, very fast. So, I wanted to wait again until we saw how we were going to open up. So, I had an understanding of where we're going with this, but I don't know what happens tomorrow. You have people uh talking about this is this is great. We have people that are aren't happy that it happened this way. Uh you know, you don't know what Congress is going to do. You don't know how much rhetoric is going to be there. Uh internationally, so far internationally, what I see is very very positive, which is good for the markets. We don't really have a people split here defending uh this to be quite candid. But if we take a look at how we're this area as well, 605 seems to be a target. Then we would come down to that 585 level. Um could you gap down the 605 tomorrow? Yeah. If someone sneezes at SanDisk, it could be there in seconds and that would be obviously very important to us to look at those levels. And then that's going to take us into some other things that I think are really interesting. Um and then I'm just going to address. So, I'm going to go into Monday night here and just kind of go through this because I think if you prep a little bit more here going into the week that there's going to be more that you can do and I'll explain. So, if you look at something like CRDO coming out with earnings, we already know they pre-announced and when they pre-announced the stock was 140. So, if we do gap down hard tomorrow, which can happen and you came down to this 102 level going into earnings Monday night, you're going to have support down here. You may get support on CRDO for those that want to play it. You already know it's going to be good. We just don't know how much better it's going to be than when they already pre-announced February. And you had a long lead time for it to get better. Uh but what you're going to see here candidly at something like this is if we can get down to that 108 or really the 102 level, you're going to have net buyers tomorrow off the open. And then the other one I really want to cover on tomorrow night is just going to be as I love playing this name. Um do they come out? Do they do some kind of crazy secondary after this? You know, I who knows with them. You never know. And you never know what you're going to get. Candidly, sometimes you're getting these rallies, other times you're getting the pops and the fades. Uh, from a super technical layout, it looks awful with the 55 here. To me, if you gap down, is there something there? Maybe. Maybe there's something here. I There's not a lot of room. There's not a lot of room to really gap on this one. So, it really have to be like low7s off the open. And I think that's a pipe dream really for that to get down there on the gap. I don't know how they're going to be overly affected. We're going to get to some affected names in a moment here. But then we'll get to Tuesday morning. You have Target. This usually it's a new CEO, so they usually do a kitchen sink quarter. And I don't think this might have been his first one. So if it is, then this one usually is better. So I have to check on when that new CEO came in. But if this is when the new CEO came in, that might be the kitchen sink quarter. And then this one might be okay. I'll run through that model real quick and double check that. But you're going to be pretty active here for people are going to want to buy this. So if you do gap down, they're going to want to play the long side on this just because of what you're seeing on the earnings. You are holding that after that low earnings and that is something you want to pay attention to. But other than that, from a Tuesday morning, there's nothing there. Crowd strikes where it gets super interesting because even on bad earnings, these names have been absolutely, you know, holding their own at the least. Like if you go through them and you look at workday for example, that was disgusting and it held. And it's no different than coin which was coin which was gross and it held and it's actually gone up and that was an awful quarter. TTD awful quarter and it held. I don't know that crowd strike is going to be an awful quarter. I mean you have to remember Crowdstrike came out here on earnings and completely reversed and it was an excellent quarter with great guidance and they actually increased guidance here. This was not a bad quarter. I mean none of these quarters are bad. So you're way you're really down here. So this has to be a really bad quarter. So for me, looking at something like a crowd strike, if you can get ahead of this tomorrow on the dip on for Tuesday night and you're thinking about trying to stay in that, that one makes a ton of sense to me. Like a ton of sense. So if if they're going to treat workday that way and they're going to treat TDD that missed, you know, crowd's down and we don't even have a huge threat to their business yet, but you do see that com multiple compression. Wednesday, Wix ANF, you know, do you want to play this, do you not want to play this? That's up to everybody. I don't really think that that's the one that I'm most interested in on the Wednesday A.M. I think it's really Wednesday PM when you start watching AVGO and we watch these levels and we're going to have to see how those levels go. But you really want to just see how this plays out down here. Um and then of course what we're going to want to do from there besides saying, you know, do we hold here or do we gap down to that 294? Um if you undercut the 294, that might be an area. I'm trying to get very specific on a gap down tomorrow if you can't see where I'm going with this. AEO if you gap down which I don't know that you would but 2217 22 and 3/4 that would be another one that I would look at and really what we're focused on again is just can we get to this gap down range and is there something worth playing at to hold going into earnings. So again something like Sienna if you came down to 325 tomorrow off the open that would be very attractive for me to take a look at that. Marvel I do not play. I know you guys love this uh guide wire software company that's gotten absolutely decimated with the other software companies. Uh if you really look here, I mean the earnings have been fantastic. So I'm not really sure of it. So if I had to tell you where my head is, it's when I see stuff like this and DHT is trading up and everyone gets giddy. So the big trades that everyone's going to be looking at tomorrow are just going to be the tankers, right? It's going to be everyone's going to pile into Scorpion or FRO or TNK or DHT, any of these names. My sense of this always if you have a huge gap up is to sell into those. So, let's just play devil's advocate. DHT gaps up to 25 tomorrow or something like that. I am hitting the bid. I am 100% getting out of that, not into that. Other names that are very attractive to me at situations like this are where I want to see, how can I say this? Where I want to see where we're going. So like when I see something like NC um NCH and they've already come out and they've already guided higher, right, which they have and maybe they do well tomorrow, maybe they do they don't. But what what we really want to deal with here with something like this is we're buying it because Elliot Management's getting involved and we do very well with their names. Um, you know, you could always get another kitchen sink quarter like this tomorrow. I am long this, but I have a very long-term outlook with them into this quarter. So, that's to me is always something that I have to, you know, be very clear about. If I had to look at this and say, well, what do we do with this? If it gaps down, I'll probably I'll probably take a hard look at it, but I'm more interested in what does this mean? It to me, it means critical mineral name. So, the ALM that we play with looks like an absolute monster. It's going to rip everybody's face off. Um, if we take a look at gold, gold looks like it's going to continue to push, right? like that's obviously a bad wick. Silver, any of these silver miners like SSRM, any of these gap down, AG, I'm interested. So, you can see I'm a net buyer, but it's very specific. It's very specific where I'm a net buyer, and I think I'm better off doing this tonight. EWY, I've spent a lot of time on. I would love for that to gap down $10 to be able to get involved in it uh heavily. So, that's that's really where my head is. I'm very focused on those names and those specific kinds of trades tomorrow. It is very hard to look at the market right now with where NQ is and you have a war going on and it it's spreading. So it's spreading and it's spreading into other Gulf nations. So we are holding here but this is we have headline risk and it it's spilling into countries that have literally nothing to do with this. So we really have to be very cognizant of that and aware that we have headline risk. So we something could look great and then you come in the next day and it's not great anymore. Uh, for example, anything travel related right now is probably not going to do so well, is it? So, we have to kind of keep that in mind. All right, everyone. We have a lot to go over here, so I'm going to do this fairly quickly, but software shorts are the highest since the great financial crisis. This was a really good piece. I just wanted to put that out there. Um, the plunge in software has seen it them fall 25% below their 200 day moving average, worse than the self in 22 and the March 2020. You've not had this big of a panic in software since the great financial crisis. The past large sell-offs were associated with earnings growth plunging within one to two quarters. In 22 software earnings growth fell to zero why 2028 21 um it sold off and then year and a half culminating short interest for energy kept rising. I thought that was interesting. Um I really do think a couple things here. Further sell off needs signs of a weakness in earnings. I agree with this and I just want to get this out. I don't know when this when we bounce, but you need really big weakness in earnings to get these names down further from here. So, what you had was a re just a good oldfashioned repricing of risk and software. Some of these earnings are just god off on some of these companies in my opinion. TTD workday. They were bad. They held even though they were really bad. So, you're going to really need to see them get hit. Consensus has a slowing pencled growth in 25 came back twice as much in 26. I wouldn't be surprised to see some kind of rebound in that. I do think that there's things here with it and I'll get to it, but the imminent weakness in earnings, you better be imminent going forward. Um because it really wasn't that bad. Some of them were really awful, but across the board it really wasn't. So you could see if that gets hit tomorrow, you could see that dip in software getting bought. Next, geopolitical shock could have a bigger impact after subsu response in the last two years. Unrelated to AI and software, fears of geopolitical shock, Middle East also rising. That is very poignant that that we're going through that right now. They tend to have sharp sell-offs, six to eight% 3 weeks down, three weeks back up. I think you could see something like that with this and you know that initial drop is probably going to get bought, but as it prolongs it might become a real issue. Um S&P and service prices uh the software were comparable 22 but not as deep as 29 and 2002. And I thought that this was poignant, so I wanted to just get it out there. And you could see very clearly what we're looking at here that the drop, while it is big, it's not, you know, great financial crisis. It's not.com, but you really don't have anything that's similar to that. So, it is what it is. Now, the last ones, this is where consensus is. Now, they're expecting consensus to come down on the software services name, but this is this is predicting a lot a lot worse. I mean when you look at where we were in services here in 15 and 16 as you came down you hardly did this. So you know they're they they are preparing for you know AI Armageddon here. Like it it is factored into these names and I'm not so sure that we're going to lose Oracle and Oracle's going to be a zero here guys. I don't know that Microsoft's going to be a zero because of anthropic something that can't even tell me what day it is. Uh SMB software services median shorts. You're at the 93 percentile for people being short. More people are short now software than they were at any time besides the great financial crisis. Just think about that for a second. So that's how bad this is. I'm not saying that software is fine, but I think that this was an overreaction. I think Deutschbank does a really good job of pointing that out. Across sectors and positioning, overweight, energy, and utilities near neutral, MCG, tech underweight, the rest positions in energy fell this week but remain overweight. Utilities as well. So we have defensive positioning coming into what was happening this weekend. Among the dedicated sector funds, industrials continue to see those inflows. Tech and energy are seeing those inflows again. So just keep that in mind. We are seeing that discretionary investor positioning versus the S&P earnings growth. So how are people positioning versus the earnings growth? And I thought that this was really telling. The earnings growth is up where it is and positioning is down. So people are just assuming that the earnings growth is going to come in and that's just not really what's happening here and I think we really need to be cognizant of that. That's really not what's transpiring here and this is what we have to pay attention to. I do think that this is telling us that there is could could be some kind of bounce here if this holds. Now if it starts to fall down that's a different story but this is a huge gap from where we usually are. You're usually in tandem here and you're way off and you've been off for some time. They keep waiting for something. I guess if you wait long enough something will happen. CTA is bolstered by Japan and EU equities as US markets fall. Trend followers remain long global equities with gains in Japan and Europe markets supporting CTA performance. Contrast US equities were a drag. S&P NASDAQ declined AI related disruption fears. Our models indicate uh US price index. Anyone notice that as AI disruption becomes fear, everyone's fearful of AI disruption, but even the companies that are causing the AI disruption like Nvidia, they're selling. So, are they worried about the disruption or are they not worried about the disruption? It's pretty interesting. You you really are have a cat on a hot tin roof scenario here where they are just selling everything that they can because they just don't know. And I think what you have here is a good oldfashioned re-risking meaning they're just selling everything getting out of the way and wanting to buy back at cheaper prices. Our model indicate US indexes could weaken further this next week, particularly faster models. A sharper pullback could trigger more aggressive CTA derisking with our models near five 1.6 below Friday's close. So I marked those off for you already on the chart before and we'll find out at six o'clock. You know when where where we're going to wind up there likely be driven by VA with trends prediction stay elevated for the week to come. TA gaining gold logs makes sense. They're going to buy silver. They're going to buy gold. They're going to buy commodities. They were not buying Bitcoin but I did think that that was interesting. And then of course we already went through this uh a little bit earlier but you just want to watch these low levels here. And of course you can always watch the sell levels in gold. I think that's the least of your concerns right now. single stock moves to watch on the week. Uh this did change and I do think it's worth bringing up. So you're going to see some of these names and they're definitely going to uh they're definitely going to move with something like a Netflix which again some of these suckers will be gapping down on uh you know tonight and tomorrow based upon what's happening in Iran. I would think that you see some buying in Netflix um on something like that. But if you take a look coming across it's the 100%s on the 1 percentiles. So on the dips, you're going to be looking at like Micron, the Google, it looks like Microsoft's on the list now, which is kind of interesting. Um SanDisk is on the list, and you're looking for the 99s, the Netflix, and now you also have A that's on there. So you will see those with the rebalancing. They are the ones that you tend to buy. And again, it is the 1% moves here on a percentage basis on a 1% move, but also you have to take into that 100% of what what size of the company is too. And you can see here and QQ 18% will be rebalanced of that in the last 5 minutes of notional. So expect Q into the end of days now to be pretty active and that's how you should use this chart. I thought this was interesting. On Friday, US global equity strategies downgrade US equities to a benchmark. They didn't go underweight. They just moved it to an average and beta of EPS global EPS IP region US's lowest operational leverage of all the major markets. Okay. Uh so they show the US here of all the major markets beta of EPS to global EPS and global IP by region. The US has the lowest operational leverage of all major markets. And then they show us here and they show Taiwan, Japan, Latin America, Korea. Uh hyperscalers have been underperforming and semis outperforming. This is unsustainable in the long run in their opinion. So what are they showing you here UBS? And really what they're saying is it's not realistic to assume that the people that these guys are buying from are going to outperform them. Eventually either these guys, the big six, they're going to take Tesla out of this, I believe, um are going to have to outperform and if they don't then these guys are going to start rolling over. That's what they're saying. Pardon the voice. And what they say is telecom operators and suppliers relative to performance TMT bubble 98. And so what they're saying is telecom operators were running up and then when telecom operators start getting outperformed by the suppliers that's when it ended. It's very interesting but it does make sense if you think about it. So is that the case? H I'm not so sure on that because you're also talking about Microsoft, Amazon and Google as the outperformers and the hyperscalers. Isn't OpenAI a hyperscaler? Isn't Anthropic and Gemini? Aren't they hyperscalers? Didn't they just increase their capex? How are you going to put them into your model? And I think that's where UBS is falling. I do think it was worth pointing out. I do think it was worth showing you. This was something that I thought was troubling. I don't know why these are so so lousy, these photos. I apologize. I got to figure out what I did wrong. They shouldn't be this bad. Uh hyperscaler capex to sales. I thought this was neat. So you are expecting capex to sales to drop for the first time next year. Meaning the capex is going to be greater than the percentage of their sales. That's not great. Now how long that goes on for do sales kick in remains to be seen. the percent of returns from AI exposed stocks in the US, Japan, Europe and the emerging markets. Emerging markets, think Taiwan, think Korea, think China. So, and think India. Uh AI stocks percentage contribute to this sense. First is in this weird brown color from Jan 25 and then from April 8th on from when you had liberation and winning. So, from Jan 1st over to now, you can see something that's pretty interesting. From Jan 1st over, you underperformed from April 8th on. From Jan 1st over to April 8th, you're outperforming. So what they're showing here is the percentage of returns of AI exposed stocks from January on, some of them kept ripping. You have a disparity. Potential adopters a percentage of market cap. US verse the rest of the world. AI potential adopters a percentage of market cap. The world versus the US. So this is one of the reasons or some of the reasons that UBS is telling you to lean into emerging markets. US is crowded than other regions. Zcore relative to historic norm. That's showing you from a Zcore how crowded the US is versus other regions on a comparative analysis basis. EM emerging markets is my focus. The PE is clearly cheap for the MAG 6. So, one of the things that they do touch base on here is do should you be selling the mag 6 or MAG 7? They take Tesla out and if you should, why? And what they're doing is they're giving you a green line above right here, which is your one standard deviation off and then your one standard deviation below. And really what they're doing here is that's the plus or minus one standard deviation right there. Right? So there's your average then plus up one plus down one. So when you get to the PE is cheap, right? Here's your average PE since 2010. When you are above, you're expensive. When you are below, you're cheap. So should you be getting out of them? That's not what they're saying at all. Matter of fact, they actually are making the argument that you should be looking at those names, which I thought was kind of interesting. Just because they went to the benchmark doesn't mean that they're telling you to get out of the Mag Six and Mag 7. And this is pretty cheap. I mean, if you look at it, this is the 10-year cheapest that you have in a forward 12 PE uh 12 12-month PE. So, if you're not going to correct, they're only going to get cheaper, right? So, when they look at their strategy on how to play the world of the emerging markets, they're saying China, Korea, Brazil, Malaysia, and then they're saying neutral Taiwan, Hong Kong, South Africa, Mexico, Poland, and underweight these and overweight these, which is pretty much what we've been saying for some time. Not China so much, obviously. Um, but Korea was recently upgraded. So they recently upgraded Korea. Welcome to the party. But there's a lot here to unpack. Memory makers. That's what I'm thinking. If if if Iran comes in or we come in on this, then looking at this section makes a lot of sense. The make memory makers we think are best way of playing the AI enablers with free cash flow yield close to 50%. In aggregation 26 27 28 for the SEC, 28% total data center spend is going to semis. Corporate reform one of the most cyclical markets in term of both operational leverage and overweight of cyclicals. still trading at a PE relative to global markets that's 50% versus a norm of 69%. So you're at a still at a huge discount to the global markets. The risk is that the yen appreciates against the one helping areas of manufacturing still trading at a discount. Taiwan long overweight obviously Taiwan semi Taiwan semi remains abnormally cheap clear undervalued currency Taiwan basics payments and there are huge gap discount such undervalue can be associated domestic asset bubble and and then you're really relying on Taiwan semi AI beyond the return of old economy and the path for here I thought this was interesting so we talked about capital intensive and capital non-intensive in Europe highlights show new crop of dependable business models are emerging characterized by halo companies that par substantial physical capital barriers and replicate via cost regulations to build energy energy uh engineering complexity. What's the term the halo effect? You need assets, low obsolescence in the AI era. Think of a plumber or an electrician. Focus on grids, pipelines, utilities, transports, infrastructure, critical machinery, and long cycle industrial. This is why companies like Link or when you look at VOTE, like link, that's why they're, you know, the stock's going crazy. Uh you need more plumbers, you need more electricians. Separately in the US, accelerating revenue growth, decelerating capbacks, and failing 10 wins US economy grow should help boost hyperscaler stocks later in this year. That's interesting. Separately in the US, accelerating revenue growth, decelerating capbacks and fail fading tailwinds in the US economy should help boost hyperscaler stocks. Okay. The broad narrowing AI trade. The flip side of the AI trade has emerged, however, selling application software is unlikely to fade anytime soon as AI disruption fears likely persist. That's interesting. So, we've gone from what UBS has been saying and now we're pushing into some other areas, right? All right. This was uh this starts off with Goldman just FYI. So, all right. So, then we get to here turning semicomponents raise our 26 27 and 28. Okay. So, do you want to slow down? No. We're going to raise our 26 27 and 28 global WFE estimates 136 160 174 billion. We're going up 20% 21% 26 and 27. from those levels respectfully. Recent capex revisions, more constructive outlook, SPE supplier. Why are we doing this? We remain constructive on Europe capex names, ASML, etc. Goldman Sachs WFE revisions separately the memory front. Separately on the memory front, channel check suggests near-term DRAM contract pricing expectations continue to improve. Feb DM sentiment indicator expects the ABF substrate a key semicomponent market to remain tight this year. Supplies remain capacity discipline strong. substrate price hike accelerating with sustainable demand outlook now out to 27 to 30 if the chip guys come down the microns and the SanDisks and the EWI you know in the Samsung's probably a really good area to look considering they're raising estimates as those names would drop I think that this is I tried to do it as quickly as possible to get through this because we have a lot to go over but there's some things to take away from here you have a lot of battling going on in software if you were to read this some people are saying don't touch it with UBS is basically saying that a little bit. Goldman's really leaning heavy on I wouldn't go near it. Georgia Bank's like this is ridiculously cheap versus the earnings. If you're of the camp that hey no one's ever going to use software product again, you probably don't go near it. If you have the camp of this seems like it's a little ahead of itself, you might want to look at some of those names. I would look at the bigger ones, but you should do what you're comfortable with. The Oracles and the Microsofts, etc. But we don't know, we know how they're going to settle. Technically, they look okay. They don't look great. But semiconductors to me make a lot of sense. I do do agree though that you're going to need to start getting the the big dogs the mag the mag six and mag seven have to start participating here but semis you have demand and that demand is not going away because we have geopolitical uncertainty right now didn't go away with 22 it's not going away now data on the week will clearly carry a lot less weight because of everything else going on now and you now we have headline risk obviously with Iran but I do think it makes sense to look at some of the things that are coming out Friday's huge but you have manufacturing PMI tomorrow 10:00 am manufacturing, employment, new orders, pricing. I think all of that is very important. Can it move the market? It's all going to be about Iran, but it's definitely important for us to pay attention to. And that's going to take us into Wednesday. Now, Wednesday, the mortgages, they're of interest, but ADP employment with non-farm payroll coming out on Friday. We definitely want to watch this. Previous was 22. Consensus this time is twice that. Services, we're going to want to watch to see where we're at after we saw manufacturing on Monday. But really the steel the show stealer is going to be the ADP employment change. If we take a look at Thursday, you have import and jobless claims. As long as we're not getting over that 250 level, nobody really cares. It's not it's it's not something we really have to concern ourselves with. Continuing claims 1833 and then you get export prices here. It's not something we really have to, you know, really worry about. So, as long as it doesn't get nuts, we're okay. If it starts getting a 250, we have an issue. But continuing claims, stuff like that, we don't really have to worry. And then we get into the big boy day, which is going to be non-farm and retail sales. Now, previous was 130. Consensus this time is 60. Uh the unemployment rate did drop last time. We also have retail sales. Friday is going to be absolutely huge. Hourly uh average weekly hours last time were up. Government payrolls previous were -42 into a 130 number. That is an extremely extremely strong stance. Yeah, there's a lot there. And the manufacturing jobs 172 on the private side. I'm sorry, manufacturing was 5K, but the private side, that's a huge number. Business inventories, people are going to care, but the retail sales year-over-year people are going to look at. But really, the the big thing here is non-farm payrolls. And that ADP number is going to give us some color on that as well. We have a ton of high of of headline risk this week. every every night that we the market closes, we have headline risk with what's going on in the war uh and this new front and how it's expanding or contracting. So, please be aware of that. You're going to have risk to the upside and downside this week on everything because you have headline risk. Should be a great trading week. That is it. All right, we're going to have to go old school with this one. There's a lot going on out there and what we're going to do is circle them and I'll tell you which ones I think are the most important. And you know, Birkshshire Hathway Monday is going to be interesting. So is Norwegian Cruise Line tomorrow morning. I think that's gonna be super interesting. Honestly, I'm I'm kind of curious about those two. Now, you had a big move up and I'm wondering if they're going to talk about that and how that's going to go. But then you start getting in the CRDO which already outperformed. Does Riot do what the investors want him to do or them to do and come out with some new what they went with new data centers. They're all about data centers now. BBAI, I don't really care about software, this will be a fun one. QBT, uh, that can go a couple different ways. Ass. I'm just going to circle the ones that I really care about. Archer might be fun if they talk about their development, how they're expanding, but as will be a really big one. And then you're coming into Target, which usually is a blood bath when you get a new CEO because he wants to do a kitchen sink quarter uh and just reset the strike price. Then you have Best Buy, SE AO. So you've got a lot of names, guys, this week. A lot of individual names. I'm not sure that you have anything O that's really going to move the needle on the market itself. Crowd Strike, GitLabs really hasn't been a big one for me lately. I wish it was, but it's kind of lost its luster for me to pay attention to. Uh, so really Crowd Strike that night and that could be something cuz everyone's expecting all these software companies to do awful and that really hasn't been the case. Amber and Finch, somebody likes their jeans, somebody doesn't. Someone likes American Eagle jeans. Let's see how that goes. Broadcom, that'll be another really good one. Broadcom usually is a a sell the news event, just FYI. Very similar. Uh, even if you pop up, it's still kind of a sell the news event. RGTI is just an absolute dumpster fire, but here we are. Wix, I really want to see how that's going. But that and GoDaddy have been doing nothing but getting smoked. I guess with AI, we don't need websites, but apparently they're not doing as well. But Okto or Okta, another software name we don't want to pay attention to. Weeble has been a pig. And then AEO, do they still like her jeans or do they not like her jeans? Or maybe they're buying Emerie jeans. No, they're going to buy AEO jeans in my opinion. Uh, I think that'll be a fun one. Cracker Barrel. Can they get it together? and remember who their customers are. Maybe, maybe not. Let's see. But you can see that nothing out here is going to move the nether needle. Sienna has just been an absolute monster of a trade. Really on the pullbacks, if you get a pullback, might be something tomorrow to actually look at buying into that quarter because I would expect that to trade up. The way GLW's been going, Light, all those other names, JD, you guys love this name. Uh, we'll watch it. But Victoria Secret, anything like that. Burlington Coat Factory, these kinds of names, they've just been an absolute terror. I don't really care about BI. Marvel always seems to disappoint everybody somehow. Costco talking about the tariffs could be something. Um IoT, that's that's one that you crazy kids trade. You like that one? We'll watch it. Petro Boss definitely could have a really good quarter. But other than that, like Guidewire, that's been one that's been kind of on a tear on and off. And I don't really care about audioi. If if I had to look here, what do I think? I think you have a bunch of names out here that can move, but is there anything here that's really going to drive the market? Broadcom could Broadcom could affect the market the most, but really right now we're just going to be dealing with what's going on overseas and we have a ton of headline and risk associated with that obviously, but a lot of names here could really could really motor, you know, crowdstrike could really get it together and say, "Hey, we don't know what everyone's so crazy about with AI, but this is where we're at." Or Broadcom's been in this trading range for some time and MDB. So you you have some real movers here in ASTS talking about I guess you know how things are going in space. You have some stuff here that could really reverse from where where you're at. I'm laughing because I must say it with the unfolding in Bluebird 6 and Bluebird 7, but there's a lot of different moving parts here. Norwegian Cruise RCL had a great quarter, CCL had a great quarter. So that'll be another one, but should be a fun week. Specifically retail leaning and consumerdriven leaning. And remember CRDO already came out and pre-announced. So and that was pretty early. So there might be more behind