I’m still firmly on the side of being long AI infrastructure and long crypto if you have an investment time frame more than a few months.
And I’m still firmly on the side of seeing a choppy market for the near future as negative macro sentiment pushes the market down whilst an ongoing stream of incredibly bullish micro news continue to hold the market up.
The market looks like it’s creating a bit of a double top here but we still sit firmly above all important moving averages and support zones so until that changes my bias does not shift.
We’re in this period where everyone is focused on 10Y and 30Y yields and pointing towards that being the key reason for a bear market just like 2008.
It’s a fair point but it continues to err too much on the side of history rather than what actually is happening in AI right now.
We’re in the middle of the biggest technological revolution of all time (and likely that we’ll ever see).
Being bearish here is being too careful on a couple of macro worries vs what’s actually happening in the world.
Investors need to zoom out and realize that this next decade is likely going to be very different from the last three decades…and if that means yields head higher then that could become the reality for a few years.
We’ve been through a period of high yields in the 8-12% range before and the SPY averaged returns ~14% between 1982 and 1995 which is evidence high yields does not necessarily equate to weak market returns.
Also to put it into perspective, we saw rising yields in 2022 (granted from ~2%) but there was endless bearish narrative back then regarding the effects on the market.
So to put it into perspective…yes yields are high and yes this will likely add continued pressure to the upside in the near term but basing an entire bear case of rising yields misses the bigger picture entirely.
If yields start to stabilize in the 5-6% range over the next 6-12 months that’s not bearish at all in the middle of a strong economy and the greatest tech revolution of all time.
Macro Update
Chief Economist at Apollo outlined a world where agents could cause a bank run by sweeping household cash into accounts paying 3-5% instead of the 0.1% national average.
I outlined this agent usage in my COIN Deep Dive from last week. Everyone will focus on the clear bear narrative around banks but instead investors should focus on what this means for agent usage and the technology revolution we’re entering. Just more evidence to be bullish crypto and bullish AI infrastructure as agentic usage multiplies.
Meta’s Muse showed that broader consumer AI adoption is coming fast.
It had 642,000 daily active users in the first 12 days post launch vs 231,000 for ChatGPT.
Goldman Sachs put out forecasts of $1.2 trillion in hyperscaler CapEx in 2027 with $1.4 trillion in 2028. This is in a similar ballpark to NVDA’s near term forecast but Jensen believes we can hit $3-4 trillion by 2030.
US 30 year yields just hit their highest level in more than 22 years. A noteworthy macro point but one I still believe is just a small part of the wider narrative as I spoke about above.
The price of tokens is collapsing faster than any other technology in history. This should continue to drive more and more token usage across the supply chain from AMZN, GOOGL, META, and NVDA to the memory players like MU and SKHY.
The big macro news I want to focus on this week is what we’re seeing in the stablecoin and tokenization world as things are moving very quickly over the last two weeks since the CLARITY Act failed. Here’s a very brief overview of what’s happening…a longer piece will be a tokenization specific article (later this week):
SEC now allows limited on-chain trading of tokenized US stocks and the SEC chair said that tokenization rules are moving towards a longer-term framework.
CFTC outlined plans for 24/7 on-chain tokenized financial markets.
Federal Reserve has now proposed rules for stablecoin issuers under the GENIUS Act.
SEC staff released new guidance on how securities laws applies to crypto.
This all happened in 7-10 days post the failing of CLARITY Act. It’s a great sign that even though the bill failed…crypto regulation is coming and it’s coming a lot quicker than most think.
Stablecoins are already a $300 billion market with very limited laws and regulations and with very few agents acting economically yet.
We’re still incredibly early and today remains the time to stay long.
Commodities
I remain bullish on gold & silver miners, copper, solar, and scandium.
If the Fed hikes rate it will worsen the interest expense problem and if the Fed cuts it will worsen the inflation problem. That means the Fed are in a sticky position and makes a clear argument that allocating a % of your portfolio towards hard assets is sensible.
Gold & Silver:
We’ve seen continued consolidation below the 200D MA for SLV and GLD and there’s mounting pessimism in the trade as yields rise which makes for a contrarian buy/hold signal for me.
For reference, I’m a current owner of HL which I’m just up 7% on and SLV which I’m down 2% so both sit around my DCA average cost still.
There’s also mounting divergence between silver and copper over the last year as copper continues to lead the market which makes the silver trade much more interesting.
The reason there’s a lot more bullish sentiment around copper is that people understand the direct link between copper and the industrial buildout. With silver it’s less well known but still incredibly correlated to the industrial buildout.
Silver has the highest electrical and thermal conductivity of any metal so as AI shifts from training to inference, the game changes from raw power to efficiency which is why silver becomes an incredibly important part of connectors, switches, relays, packaging, and thermal interfaces.
And secondly, we’re in a period of record buybacks for silver and gold miners. Historically miners have been heavy on dilution whilst also suffering huge losses. We’re now in a completely different period and EPS results for miners over the next 12-18 months will likely be very strong.
Copper:
Copper has held up much better of late but I’m still sitting around my average cost on both TMQ and COPX. I think this holding up relative to other commodities tends to be a bullish signal.
Supply is still massively underappreciated with nations like Chile experiencing output slipping even despite heavy investment during to falling ore grades and rising project costs. This has essentially created an environment where the mining industry simply can’t ramp up production quickly enough for the demand we’re seeing from data centers and grid expansion.
The only answer is higher prices.
It’s a simple supply and demand equation and I think people are beginning to forget just how tight this is getting / will continue to get.
I remain long both COPX and TMQ.
Crypto
Bitcoin and Ethereum continue to perform well and both have broken their bear market structure as the agentic wave continues to accelerate. We’re seeing a lot of momentum in the stablecoin and tokenization regulation world as well which is improving sentiment.
Historically, crypto prices are generally a good indicator for the higher beta equity market so if history repeats this is another reason to stay bullish.
Micro News
Citi partnered with Coinbase (COIN) to bring stablecoin payments to instituional clients. This is a prime example of “first you fight them, then you join them.”
SoFi (SOFI) became the first national bank to bring settlement live across Mastercard’s global payments network. It’s migrating its entire $25B card program to blockchain-based settlement.
MongoDB (MDB) CEO CJ Desai just left his role effective immediately to run Meta (META) Enterprise Platform and said META has a “rare advantage” across models, infrastructure, and agents.
NuBank (NU) is rumoured to be acquiring UK’s Monzo which put the shares down 8% on trading today on potential of share dilution and a hit to earnings over the near term.
Truist just estimated that AI cloud ARR could rise from $310 billion (2025) to $2.1 trillion in 2030 which is a CAGR of 47%.
What’s Mispriced?
This is a section looking at the potential opportunities I’m seeing at the moment. I’ll split them by how I see the risk profile (high risk → low risk).
I’ll tend to aim for at least 3+ opportunities in every article I publish here…but that depends on what the market is offering.
You’ll also likely see overlap week to week. I am not a trader that changes his mind every few hours, days, or even weeks. If I see an opportunity, that opportunity sometimes stays around for weeks.
Coinbase | COIN (Low Risk)
COIN is sitting just below a 5% allocation in my portfolio right now but I’m actively looking to make it above ~6% in the near term assuming prices stay around this level which is a level I’m more than happy to buying at.
You can see my COIN Deep Dive here and all the valuation work too. It’s open to all subscribers for the next week.
Bloom Energy | BE (Medium Risk)
I recently made a starter position in BE and have set out levels (as per chart below) where I will look to significantly increase my position size.
