HY6

Nasdaq longs are at the 98th percentile and Russell shorts at the 3rd. Do you want with that info

Trump: We can't take care of daycare. We're fighting wars. It's not possible for us to take care of daycare, Medicaid, Medicare, all these things.

Why would $LITE take an all-stock deal? silly

Good Paul Tudor Jones quote from May of 2009 (h/t to GS Tony P). Might as well be from today “These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates an illusion that there is an explanation for everything and that the primary task is simply to find that explanation... I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over”

Desk summary: BofA Flow Show, When AI met ABB (29 Oct) Thesis: The 2020s super trends are ABB (anything but bonds), ABC (anywhere but China), ABD (anything but dollar) and AI. Populism and fiscal excess keep allocators short duration and in steepeners. Higher yields are now hurting the AI equity bull because bonds are policing hyperscaler capex, which BofA sees going from $240bn in '24 to $1.2tn in '27E, and FCF going from +$240bn to -$180bn '27E. Tightening: There have been 42 global central bank hikes in 6 months. The USD and UST yields are up and tech leadership has stalled (NDX capped near 30k, SOX -20%). He calls this painful but not mortal unless jobs or credit break. The release valve he expects in H1'27 is peace, a big drop in oil, and the end of hikes. Levels to hold before a year-end rally: MAGS $70 and SMH $520. AI credit: Hyperscaler bond issuance is $182bn in '26 vs $17bn in '24, and US IG tech bonds are -9% YTD, their 30-year relative low. He says buy the tech-bond "diamonds in the rough" with Mag7 yielding 6-8% (ORCL '66 8.4%, META '66 7.4%, AMZN '76 6.8%, NVDA '56 6.7%). Hyperscaler equity issuance of $89bn means the big buyback era is over, with buybacks running $14bn annualized vs $105bn in '24. Politics: A risk-off DEM sweep is getting priced, but a DEM wave and a bond-yield jump are not. "Affordability" voting is negative for tech, bank and energy monopolies in '27 and positive for consumer discretionary. China: New low bond yields, CQQQ -32% since June, and $25.7bn of inflows (national team). He is short oil for H1'27. If lower oil doesn't lift the EUR and JPY, that's the tell that China deflation is a global negative. Flows: $56.2bn to stocks, $15.4bn to bonds, $3.4bn to cash. Gold saw a $1.7bn outflow, its first since Jul. Tech took in $5.3bn, its 5th straight week of inflows. Japan took in $6.8bn and Europe saw $2.3bn out. BofA private clients posted their 2nd-biggest weekly equity inflow ever (IPO proceeds). The Bull & Bear indicator is 7.1, down from 7.2. YTD scoreboard: Oil +79%, US stocks +12.7%, gold -7.1%, BTC -8.4%, govt bonds -3.3%. BOOK: MAGS $70 and SMH $520 are the line in the sand for AI/semis longs into year-end. Breaks there mean de-risk, and holds mean buy for the year-end rally. Hartnett's credit-over-equity read on hyperscalers fits the neocloud financing watch (CRWV 14% yield). This is context, not a change to positions.

We had everyone screaming about the growth and how low multiples were back in the summer. Now we have everyone screaming because CAPEX got revised by 10%. Perhaps its just best to remind yourself that the market is the most efficient discounting mechanism out there. If you think you can look at top headlines and an earnings report summary and pick the market direction... Good luck. If you trade behind the market each day, driven by consensus views, you'll be the liquidity. I have my views over where we are and the news events still awaiting, but this post is more about the general pain I see out there and losses, mainly coming from players that feel entitled to clean moves like we had earlier this year. People are trading too big, trading B- setups as A setups, not waiting for the quality opps, overtrading... That's the feel I get from the street. Some times are for pressing, some for resting, other times are to gather info.

Everyone who keeps sharing these short interest charts is missing the flows behind them. Most shops are not taking outright short bets. This is another effort to ease margin requirements across the street: banks providing balance sheet for more speculative bets are asking clients to post more short exposure. The sequence on the street looks like this: HF manager: “I want more margin.” Bank: “Things look risky in public AI bets, and we’re already lending a lot against private AI bets. For some clients, we’ll extend more financing, but only if they add more short exposure to improve their collateral scores.” HF manager: “Okay, I’ll short more stock against my main bet.” That is how you end up with short exposures that look astronomically high while many end users remain heavily long tech. The additional shorts are supporting the financing of their main bets. Which also tells the bigger story on why raw equity financing rates haven’t blown out the way they did ahead of the big SpaceX IPO in June, despite the fact that lending is slowing.

Dan Ives: “If you look at $CRWV, their debt relative to their backlog is miniscule.” I think $CRWV is attractive here but if anybody says that its debt is “minuscule relative to backlog”, it means they have never checked the financials.