Sponsored by
The AI Agent You Can Trust
The best assistants don't multitask their attention across a hundred tools. Neither does Catch. It's an AI agent that focuses on one thing — the admin work you'd rather not touch — and does it exceptionally well.
Scheduling, flights, restaurants, follow-ups, vendors, clients. You hand it over; Catch handles the back-and-forth and comes back with it done.
No context-switching. No dropped balls. Just your admin, quietly cleared — so your focus stays on the work only you can do.
Meet the agent built for admin, and it'll be ready to work before your next meeting.
Get started at catchagent.ai — and give your attention back to what matters.
Good morning partner,
Few things to cover this morning:
Last Week’s Session
The Citadel bailout of Situational Awareness’ assets created a rebound of the AI-related names that the fund held.
A natural reaction, though more of a warning if you zoom out to previous instances in history when hedge funds - Citadel included - had to step in and bail out either hedge funds or other vehicles that had gotten too big and levered.
Bailouts are not limited to the United States, South Korea’s government is considering a $15 billion bailout to some brokerage houses as margin calls rack up to the billions and cannot be met by insolvent customers.
Which is why last week accelerated the rotation back into the real economy, visually appreciated by the sectors that led for the week.
As a result of this rotation,
The Offside Portfolio is now up to an all-time high.
Let’s take a look at yesterday’s leaders and laggers:
Cyclicals, Comms, Energy.
Our consumer sleeve in the portfolio is doing great, leading up to a few earnings releases this month around those names as well.
If anything, this leadership shift works to confirm two of our coming theses:
For communication stocks, the rebound from a deepening bear market can be accredited to the Citadel event, no shift in fundamentals so far as memory demand continues to be met with an accelerating flux of global supply.
My thoughts on energy boil down to the tail risks surrounding Iran, where we seem to have ceasefire then war announcements roughly twice a week at this point.
The reason I say no fundamentals have changed can be pointed to the Utilities, Industrials selloff.
If the AI trade (past the Citadel bailout) really saw a fundamental change for the better, then everything else in the supply chain would see a bid higher as well.
With the infrastructure and energy players not participating, I wouldn’t be too excited about this rebound here.
I would much rather focus on tracking my mid-cap watchlist already proving to be a winner
Seasonality is Coming
BofA High-Yield Credit Spreads, FRED
After the second quarter and early summer seasonality for credit spreads begins to unwind.
I think bond traders now have all the reasons they need to begin bidding these spreads wider, effectively pricing in more credit risk around the United States economy.
Just look at the following credit default swaps (CDS) spikes:
Amazon, NVIDIA, Oracle, Meta, Google
These products - and their traders - are telling markets they have lost confidence on the ability for billions of dollars in new corporate bonds (all going toward AI investments) to get repaid.
The broader bond market, such as the long-end 30-year yield, has crossed levels not seen since the 2007 financial crisis.
Meaning,
The bond market itself is trying to single-handedly break the finance plumbing behind all of this AI mania.
With the plumbing breaking, and slowdowns in the overall investment excess around AI, bonds could help bring AI-induced inflation lower from where it stands today.
News
Iran Strikes Paused again, with Trump now sending markets back into a new round of TACO waves, seeing the AI/tech rebound fade this morning in the pre-market could mean a double-down pressure point for markets.
ASML Supplier says that it can handle current demand for key AI components, a direct hit to the “bottleneck” story explaining some of the lost ground in the materials and infrastructure players of the AI race last week.
Alibaba Adds AI Capacity with its latest Qwen model, proving to be cheaper and just as powerful as most of the American alternatives in the market, which could deepen the effects of token price wars hurting the CDS situation further.
Treasury Secretary Bessent says that the government will borrow less money - issue fewer bonds - now that the interest burden on the country is becoming unsustainable. Strike that off the required catalyst list for our long bond trade.
Movers & ES Levels
Amazon 📈 Rose by over 15% after reporting a strong quarter, though not everything was positive about it. Specifically, the debt and FCF situation along one dangerous accounting choice.
Newell Brands 📈 Gained 8.9% becoming the latest consumer mid-cap name to see stronger sales momentum and rising margins. Effectively this is great news for our mid-caps thesis playing out further.
Reddit 📉 Sold off over 20% after reporting earnings, I thought it was a good result overall with strong sales and FCF. However, people are worried that AI will replace this software name, you know how I feel about that narrative especially as fundamentals show zero evidence of this.
Apple 📉 Sank 7.4% on weaker guidance and strong quarterly results. This divergence between strong balance sheets and cash flows vs “growth at any cost” will deepen the tug-of-war happening in the broader market.
Now let’s get into some ES levels for today.
Sellers ended Friday trapped around $7,530 and got rammed in the overnight session after the Iran news came out unexpectedly.
We all know how this starts though, the back-and-forth in every TACO trade.
Trump says they are back to the negotiating table, Iran says there are no such negotiations, escalations happen, and then it all breaks apart.
I believe Trump’s goal was to get us a close above $7,500 as the cutoff point in the current “P” shaped volume distribution, securing a renewed bull market.
Now that we got it, and no sellers have been present since $7,530…
Chances are there is more room for escalations to spark up again from here, as we have several trapped buyers around the $7,450 and $7,350 levels altogether.
Buyers want to close above $7,530 and $7,500 at all costs today, sellers want to reclaim $7,480 and finish the day (or week) within the $7,450 - $7,480 range here.
Portfolio
Despite the recent bout of volatility last week, the portfolio closed at an all-time high of 8.5% in just two months since inception.
In our month-end portfolio review, I showed you the philosophy and strategy behind this performance, and where I think my risks and opportunities are for the second half of 2026.
The cash position still represents over 50% of the portfolio, leaving us with plenty of room to start implementing additional names in both the mid-caps and Chinese tech theses posted.
It also acts as a major diversifier in terms of DXY swings upon the recent long-end bond yields rising to 20-year highs.
Here’s the positioning update for today’s premium members:
Subscribe to our premium content to read the rest.
Become a paying subscriber to get access to this post and other subscriber-only content.
Upgrade