Below are some of the most interesting things I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
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Scott Rubner writes, “What has made this rally particularly unusual is the emergence of a persistent ‘spot up, vol up’ dynamic, particularly across Nasdaq and Semiconductor leadership. The chase for tech upside through call options has pushed call volatility higher even as equities continue to rally.”
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“In his book, The Great Crash 1929, Galbraith wrote… ‘At any given time there exists an inventory of undiscovered embezzlement in—or more precisely not in—the country’s business and banks. This inventory—it should perhaps be called the bezzle—amounts at any moment to many millions of dollars.’ …The bezzle is not that AI is useless. The bezzle is that the market is capitalizing the most expensive phase of AI adoption as if it were normal and indicative of future demand,” explains Michael Burry.
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Moreover, as Joachim Klement and Francisa Reis report, “The vast majority of data centre capacity in the US exists only on paper, and the vast majority of that is non-committal to begin with (Fig 23). Of the 811GW in additional US data centre capacity to 2030, only 37GW (4.6%) are currently under construction, and firm commitments back a further 146GW (18.0%). The remaining 628GW of data centre capacity (77.4%) exists only in Excel spreadsheets of investors and businesses.”
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Meanwhile, “Everyone keeps stockpiling. More GPUs and racks collecting dust, waiting for the datacenters that were meant to receive them to be ready for service and powered on,” writes Kakashii.
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Finally, as Tej Parikh reports, “The prospect of blockbuster listings from SpaceX, Anthropic and OpenAI has excited stockpickers… But history suggests the issuance buzz may in fact mark the beginning of the end of the tech rally… ‘IPOs, equity-funded acquisitions and private equity queueing up to sell are all symptoms of an expensive market and signs that insiders want out,’ notes Matt King, founder of Satori Insights.”
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