Money rotated into all of the areas of the market one would expect when at the precipice of recession: seculars, energy, healthcare, banks. If a recession were really on the table, the only respite would be found in healthcare, utilities and maybe secular. The secular trade is now sort of ruined thanks to all of the ROTUND fat fucks on GLP1s now, curbing their appetites in favor of chic gaunt.<\/p>
So what the fuck is going on?<\/p>
For much of July, the bearshitters defecated all over the internet in regard to the unsustainability of AI capex, an idea which was tossed into the fires during the recent hyperscaler earnings calls. They all said spending was in fact going up and in the case of MSFT and AMZN — the investment was yielding ROI. The way to look at this is via the lens of cynicism. Just like markets de-rated software earlier this year, no longer willing to pay 20x sales for a business that might be disrupted, markets are no longer willing to pay 30x sales for your favorite AI plays — because maybe just maybe in about 2-3 years said capex will moderate. These are all fair assumptions and in the case of software — we now see it trading counter to AI stocks, as if to say the AI threat is abating or at a minimum it was widely exaggerated by the catamites at Anthropic. <\/p>
I think the larger looming threat are US interest rates and their relationship to long duration investments, like AI. If they keep heading higher, it will be increasingly difficult to justify a bullish narrative, lest we believe this pressure is a temporary condition due to the fucking Iranian war. <\/p>
How to proceed?<\/p>
This past week we saw Situational Awareness implode and be forced to sell many of their leveraged AI bets to Citadel. Leo isn’t finished, as his casual 67% monthly drawdown resulted in him “only” being +80% for the year. I have never seen a hedge fund “blow up” being +80%; but we live to see new shit every single day. His leveraged bets, which some say were 4 to 1, were primarily in NBIS, BE and SNDK, amongst other shitcaps like SHAZ. When news broke that Ken Griffin was able to steal a few billion from Leo — markets ripped higher — permitting Ken to acquire another 20 blocks in Miami (probably). On Friday, semis and AI stocks shot higher out from the gates, but later moderated and, if being honest, the close was rather tepid — with most of the umpf occurring in AMZN, GOOGL and MSFT. Ergo, the olde trade of spender v vendor is back on the front burner. <\/p>
What I mean by that is, the established businesses of the hyperscalers are terrific and are only encumbered with their seemingly reckless investments in city sized datacenters. The market seems to be saying both spenders and vendors cannot rally at the same time, a narrative that will probably play out in earnest one day — but I believe it to be short sighted now. The moment one of them are able to show ROIC growth that actually pays for their investments is the moment the entire bear narrative is annihilated. Until we resolve this pressing question, we should expect to see the tug of war between bull and bear continue. <\/p>
As an allocator, this is an especially difficult conundrum, specifically because prior to last month — not many areas of the market performed outside of AI related names. Sure the banks have done well and select healthcare names; but on the whole — if you were not allocated into some of these semis and\/or AI related stocks — performance lacked. As always, I think it comes down to a combination of convictions and common sense. <\/p>
One should not have his entire portfolio in these higher risk assets. Owning a variety of semis isn’t diversification, especially since one trades very similar to the next. The concentrated strategies that worked in May and June were laid waste to in July — a wipe out in the magnitude of -25% for the month. One should never have to go through that sort of tumult, a lifestyle commiserate with wanting to drown oneself in the icy Pacific. <\/p>
And how about those low beta strategies?<\/p> The “broadening out” trade favors the “other stocks” no one really gives a shit about. It’s almost entirely asymmetrical to markets and only does well when growth is lacking. Perhaps whilst we figure out what is going on — having as combination of both strategies and some cash to cushion any blows makes sense — rather than guessing in either direction. <\/p> One last thing, the new Fed Chair is not likely to hike rates in September into the mid-terms, in my opinion. I think the recent freak out during his speech was more related to Leo and Co. unwinding their degeneracy, rather than a legitimate concern about rates. We DO NOT need higher interest rates. In fact, we need them to be lower, but cannot achieve this while oil is elevated due to the fucking Iranian war. <\/p> Good day.<\/p>","protected":false},"excerpt":{"rendered":" This had to be one of the craziest fucking months I’ve seen since COVID. The fact the SPY was barely down made it all the more mocking. First the carnage, just to get an idea what it is I speak of. MTD collapses SPCX -38%, TSLA -25%, MU -28%, INTC -35%, AMAT -30%, CAT -23%, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"template":"","class_list":["post-9935","newsletter","type-newsletter","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/newsletter\/9935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/newsletter"}],"about":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/types\/newsletter"}],"author":[{"embeddable":true,"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"wp:attachment":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/media?parent=9935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/basedcapitalwealth.com\/wp-content\/uploads\/2026\/08\/Screenshot-2026-08-01-at-1.43.56\u202fPM-1024x269.png\")
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