MACRO

It has been a relatively quiet week in the bond market as the 10-year hovers around 5%, but there has been little relief in credit spreads, which remain at the wides for all these leveraged AI plays. Even the FED did not move the needle. That was not a surprise: given the state of play, a hawkish hold is all they can really do. It was expected, and bonds acted accordingly.

The real action is in this rotation. It has been gathering speed and volume for months now, but inflation, oil, and credit have facilitated an acceleration. Just have a look at XLV vs SMH or QQQ. The move out of high beta, speculative, and unprofitable duration has been going on for a while; in fact these are all in a bear market. What is new is the moves in the generals. It is rare and difficult taking down MAG7 mega caps, but it is most definitely not impossible. AI fears have been building, but free cash flow is now under the microscope, and GOOG and AMZN are a case in point.

The most interesting thing going on in the bond market right now is not the big moves in yields but the battle between inflation expectations and economic pain. At this moment, annualised US GDP is coming in at about 3.2% and earnings remain strong (albeit VERY crowded into AI-related names). The Domar spread, nominal GDP in the US, China, Japan, and the EU minus the average 10-year rate in those economies, is above 100bps and is providing a lot of support for the broader equity market. Despite this, yields have stopped going up, and support for the bond market remains in place as investors rotate into safety.

Understanding bond market dynamics, and what moves yields up and down, is of critical importance. Rates coming down because inflation expectations are falling, alongside a strong economy, is positive and supports buying small caps and duration. Rates coming down because of economic concerns and a move into safety is the opposite.

For this rotation to stop, TW concludes that oil and crack spreads MUST come down. Even then there are multiple forces at work, but the driving force behind inflation IS energy.

For those of you holding a book that is all long the usual AI and tech suspects, using hope as a strategy, understanding macro, book construction, and position sizing should be a priority now more than ever.

The full note goes deeper: INTC’s day of reckoning after its earnings miss, why memory is at the epicentre of the unwind, the split between value and expensive software after FTNT and NOW, the NeoClouds as ground zero for credit stress, and each of the MAG7 after a week of free cash flow warnings.

Come join Apex, where Piers shares his knowledge from 24 years in markets every day: daily video and voice briefs throughout the trading day, access to the book, the news and research he reads, the educational archive, and the weekly Tech World note, all included in the subscription.

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Capital at risk. Not investment advice.

MACRO

It has been a very long time since macro has been so important to understand and monitor. Bond markets are firmly in charge, and to be more specific, credit markets have essentially taken over the narrative and the price action.

TW has spent the better part of 6 months pointing out the fairly obvious leverage, debt, and crowding in the AI trade, and things finally seem to be under significant scrutiny for very good reason. Broadcom CEO Hock Tan warned last week that many investors in the AI trade are behaving like gamblers, and that the problem is not demand, it is funding and financing.

It is all well and good that the demand side of the AI equation remains intact (albeit there are increasing concerns over the ROI), but what about the funding? There is over US$4 trillion in debt-funded capex on the go, and there has been the usual bubble-like gold rush into the NeoCloud space. But there comes a point, especially with rates and inflation causing a problem, where enough is enough.

That moment was crystal clear. The CPI print last week came in hot in the core and the 2-year ripped higher in a matter of minutes, causing credit spreads to blow out, and in the riskier corners of the market, explode. CRWV bonds yielding up to 16% makes them junk, and they are not the only ones. The issue now is one of solvency and credit, and that is causing risk management out there that has caused, and will most likely continue to cause, volatility in AI-related names. NONE of this is a surprise to TW.

To finish off the macro subject: as it stands, oil and more importantly crack spreads are ripping through the industrial and consumer universe and causing pain. This is month 8 of oil at 100, with diesel cracks at 5x the average. This situation is untenable, and it is reverberating through the bond and now equity markets. There is still a strong(ish) economic backdrop, and of course the big AI-funded EPS tailwind, but TW suggests that oil and cracks MUST come down soon or this problem in credit and equity markets is going to get worse.

There are other problems here beyond oil and inflation, of course. The US fiscal situation and the sheer size of the debt, in both public and private markets, is causing upward pressure on rates. The only thing that can realistically provide some relief to markets in the short term is oil, though. This might only be possible after the midterms, but it is an increasingly uncomfortable subject, and most certainly one that is a waste of time trying to call.

The full note goes deeper: the biggest semis losing streak in years and where memory stands, the split between value and expensive software, why the NeoClouds are now a credit story, and each of the MAG7 heading into a busy earnings week.

Come join Apex, where Piers shares his knowledge from 24 years in markets every day: daily video and voice briefs throughout the trading day, access to the book, the news and research he reads, the educational archive, and the weekly Tech World note, all included in the subscription.

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Capital at risk. Not investment advice.

MACRO

Another very interesting week for markets. That US$70bn 5yr auction last Wednesday really set the tone: the second largest tail on record and the lowest bid since 2018. “Tail”, for those who need a brush up, is the difference between the yield and where the auction settles.

It moved rates up across the curve, most notably of course the 10yr, which ripped through 5% with conviction. As ever, it is just as much, if not more, about the speed of the move rather than the absolute number, albeit 5% is most definitely a psychological level.

Under any normal circumstances the Nasdaq would have had a much bigger negative response than it did. NDX did reverse hard and fast, but it was muted, and there were actually some AI names making 52 week highs while all this was going on. There is nothing remotely normal about these circumstances, whatever that means these days.

In 24 years of doing this for a living and staring at the screens, TW has not seen a situation quite like this. The bond market is NOT to be toyed with, but that seems to be exactly what is going on. The AI capex mega investment theme is propping up this market like never before, and calling it all very narrow would be a significant understatement.

One of the most interesting stats to come to light over the last week: on the day the S&P rallied 1.6% after Warsh, there were 30 new 52 week lows vs only 7 new 52 week highs. The last time the market saw this was December 1999. TW is not suggesting this is December 1999, or trying to be overly dramatic, but the comparison is well worth noting to highlight just how odd this current set up is.

The bond market is screaming at the world that spending is out of control. Inflation is one thing, but sadly it is not the whole thing by any stretch of the imagination, and so the FED does not actually have as much control over this as it would like. Yes, inflation is a problem and remains well above target, and that problem grows each day that oil remains at or near 100 and crack spreads are through the roof. But even with that problem solved, markets are still dealing with a hot US economy and FAR too much spending, both government and corporate.

The US$4.5 trillion of private sector AI capex spending, all built on debt, is no longer just a private sector issue. It is now big enough to be systemically relevant, and it is doing its job feeding through to those bond yields. The pressure is mounting. For the time being the market can remain held up by the endless bid in the go-to AI capex names (now more of a gamma squeeze than anything else), but that cannot last forever, and bond yields will ultimately win if something does not change soon.

This week markets get a look at JOLTS and consumer confidence tomorrow, then ADP and the PCE deflator on Wednesday, followed by the main event, NFP, on Friday. PCE will obviously be critical, but it seems very unlikely to change the picture much with no relief in the inflation complex since the last print.

Jobs numbers have been all over the shop, but one must always average them out over 3 to 4 months to get the full picture, and if that is done it is essentially flat. Goldilocks remains in place. The spread of views for Friday is once again very wide, ranging from -25k to +121k, with consensus at +56k. Who knows what the number will be. It is a pointless exercise trying to guess, and does it even matter? Yet another big miss to the upside or downside will be smoothed out and rationalized away in the aftermath.

One thing is for sure in terms of the very short-term kneejerk reaction: the market will not like a very hot number following the hot one we got last month, with bond yields itching to rip higher again.

MACRO

Tech World is now writing on a Friday so as to capture the entire week of news and action, and this week has been a big one. So much to digest, and quite frankly even the most experienced market veterans are torn as to what is going on and what the implications are.

The facts are as follows. The FED stepped up to the plate and raised rates 25bps, as was the overwhelming expectation priced into the futures market, but they went one step further and penciled in one more 25bp hike this year. Also worth noting, 4 of the dot plot contributors had 2 more hikes in 2026. The net result is a hawkish tilt by the FED, backed up by Warsh in the press conference. He had every opportunity to dove it down a bit given how hawkish the decision, statement and dots were, but he did not.

The bond market reacted as it should. Long rates came DOWN as they acknowledged the action and priced in a slightly less aggressive inflation profile. The FED have been backed into a corner, and Warsh knows the only way he can truly appease the long end is by taking action. All this intervention, both verbal and physical, by Bessent is essentially noise. The US Treasury market has US$30 trillion in outstanding debt, so trying to increase buybacks to US$6bn is not going to make it flinch.

The debate rolls on as to the reasons for the long end rising. There are multiple forces at work of course. The inflation component has been somewhat brought under control with the FED action, but the fiscal and supply side of the equation has not. For now, however, it has acted as a clearing event for the market and a stamp of authority by the FED. The argument that they are not independent, or somehow under the influence of Trump, is utterly destroyed (not that it had any credibility in the first place).

Given the bearish sentiment and options positioning into the event, the market is doing what it always does: SQUEEZE higher. The pain trade remains higher in the short term, but it would be reckless to assume the problems markets were worried about last week have suddenly disappeared this week. That is most definitely NOT the case. As is more often than not the case, positioning is taking control and can push prices higher here. Today is also quadruple witching with US$6.2trn expiring, so strap in for some potentially exaggerated moves. The short gamma situation in names like DELL is getting to that all too familiar stage now. The market will never change. In fact these endless gamma driven parabolic moves are getting more frequent and more aggressive. They all end the same way, however.

The final point to note is the US economy. Putting aside inflation for a moment, after a bout of weaker consumer and labour market data, the last month has totally reversed that. Retail sales and NFP came in hot and returned the 3 month average to unchanged. GDP Nowcast came in at 5.2% yesterday, up from 4.1% the previous month. The FED was absolutely right to do what they did. There was no other choice.

The situation remains unique and complicated. On the one hand, a record breaking investment cycle driving growth, margins and productivity. On the other, an inflation problem that remains at crisis levels in some areas of the gasoline complex. On top of all this, the very thing that is propping up the growth is the very thing that relies heavily on the cost of capital being under control. AI capex remains a critical lynchpin of this market, but for now there is zero evidence it is slowing down.

The book has been cut back from fully hedged and is leaning into some of the higher beta parts of the market that are enjoying the relief at the long end. Lots of extreme oversold conditions in small caps. TW will remain nimble with a healthy mix of longs and shorts and is by no means expecting markets to break through ATHs. For now one must trade the tape and the reality presented.

The full note is available to Apex members. This week: why CRWD on 195x forward earnings is the most interesting short in software, the DELL gamma squeeze and what is actually under the hood, and where TW has landed in the AI infra trade between ORCL, IREN and the NeoClouds. Plus all of the MAG7 and the fibre-optics names, with five-year charts.

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Capital at risk. Not investment advice.

Another week, another extraordinary cocktail of events in macro world. Markets are always complicated and interesting, but the unique nature of what is presented to investors and traders right now is right up there.

Oil at 105. 10yr at 4.94. The US Treasury Secretary actively picking a fight with the bond market. USDJPY collapsing as the carry trade starts to unwind on crowding, intervention and a pending BOJ rate hike. AI capex raging on and taking CDS with it. The US consumer continues to show signs of weakness, inflation remains miles above target, jobs data is all over the shop, and to finish it all off we have the mid terms fast approaching.

Of course, the counter to all these rather concerning facts is the record-breaking investment cycle that is driving not only the SPX EPS but also the US economy, and thus facilitating VIX at 16 year lows and put/call as low as 0.45.

As ever, the only thing that matters is inflation and rates vs the growth in services. For the time being the economy and the EPS is solid enough to warrant support for equities, but this oil and gasoline complex, along with the other bottlenecks and pressure points out there, need to calm down or the broader equity market will start to pay attention.

The index does not tell a particularly complete tale, as ever. Under the hood there are plenty of rotations and volatility in stocks that have leveraged balance sheets or are priced off future growth. Duration is under attack, full stop. The index is being held up, as it always is, by the mega caps who have superior cash flows and valuation support. Within tech and the AI trade the market has become a lot more selective. This is by no means a straightforward one-way trade anymore, and TW would be very surprised to see that relentless blanket buying of the group return.

As mentioned above, the complacency in the market given the litany of risk factors is somewhat alarming, at the very least worth noting. TW has a long position in VIX along with a sizable QQQ short protecting the equity book. It is a moment for risk management and hedging while we enter what could be a volatile week or so for markets.

PPI yesterday came in at 5.4 vs 5.3, which was not well received, but it is worth noting the fuel and gasoline component made up about 80% of that strength. Core remains somewhat under control. CPI today is the next hurdle to jump over, but that is all a preview for the FED and BOJ next week.

The unique thing about this situation is of course the fact that oil prices could collapse at any moment due to a reversal of sentiment from either side, and that would give the market its excuse to squeeze higher again, taking out the shorts once again. Round and around we go!

There are too many unknowns and risks to have a lot of conviction right now, so TW is trading accordingly. The only certainties are that Scott Bessent needs to come with a LOT more than US$6bn to a fight with the US Treasury market, inflation remains too high, oil up here is going to cause real pain if it persists, the entire US economy and SPX EPS is being propped up by debt which is costing more and more each day with rates up here, and the Japanese situation is the elephant in the room.

Once the market has got through inflation and central banks perhaps there will be more clarity, but I doubt it. Strap in for a volatile and tricky moment for markets until such time that oil comes down and stays down.

The full note is available to Apex members. This week covers why semis are no longer a blanket trade and have to be taken name by name (memory, ASML’s High NA EUV contracts, INTC raising prices, AVGO and the Google ASIC problem), whether software can make it back to the highs after the IGV rally, ORCL’s earnings and what actually matters in the AI infra trade, all seven of the MAG7 with five-year charts, and where the fibre-optics and photonics names stand after the selloff.

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Capital at risk. Not investment advice.

MACRO

Tech World was in NYC last week and didn’t get a chance to publish, but sometimes it is nice to have two weeks of new information to digest. What a two weeks it has been. Scott Bessent intervening in the bond market, after intervening in the currency market two weeks prior, makes him without doubt one of the most activist treasury secretaries in history.

There is a LOT to unpack here. The bond market is the only boss in markets, and when it wants to make its point it will go ahead and do that regardless of what is said or done by politicians, or in this case treasury secretaries. The long end is the most important price in the world and there is very little one can do to change what it is doing in the absence of a change in the underlying fundamentals. The bond market is telling us there is a fiscal spending problem in conjunction with an inflation problem. These problems may well seem under control each time the market gets a data dump that is slightly better than expected, or when one looks at the stock market and sees how bullish everyone is. But the bond market will always tell the truth, and the truth is things are not as fantastic as the stock market would suggest.

The market rotation has been anything but linear, but it sure has been consistent. The move out of AI favorites and into areas which get far less attention but have far superior FCF and valuation support has been ongoing for a while now. Trading the market requires laser focus and a very nimble approach. TW has enjoyed trading the volatility long and short in the AI names, but the core is elsewhere, in consumer and biotech names. In macro land the debasement trade has somewhat come back to life, with gold and bitcoin rallying while USD comes back. TLT is also starting to look interesting if one assumes that long rates will, one way or another, have to come down, either via Warsh being forced to respond with a rate hike, or the bond market doing it for him and causing enough pain to bring it down.

To say that the state of play in markets, and particularly macro, is interesting would be a gross understatement. It is a great market in which to learn how this game works for those who are keen to further their understanding. Macro driven markets are 10x more interesting and educational.

Bessent has warned that further action may well be taken using the USTR, but the bond market has made its thoughts on that crystal clear, so all eyes on Warsh (as this is actually his job) on Friday at Jackson Hole. This is his first address at a Jackson Hole symposium, and his new silent strategy is unlikely to go down too well. This is what is so beautiful about bond markets, they will humble everyone and everything in their path. TW looks forward to watching Warsh try and stay silent on the rate path in the face of this market.

The full note is available to Apex members. This week covers the semiconductor unwind and the 200dma gap, the memory picture and INTC’s foundry turnaround, the AVGO/AMD/MRVL ASIC shift after Google’s announcement, the software rotation with APP and the SMH versus IGV spread, ORCL and the leveraged AI infrastructure names NBIS, CRWV and IREN, every MAG7 name into NVDA’s print and Jackson Hole, and the fibre-optics and photonics names AXTI, LITE and ALMU with the rare earth overhang.

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MACRO

BIG week this week with CPI tomorrow and PPI on Thursday. The macro is becoming more interesting by the day, with Scott Bessent making it relatively clear he is getting nervous about the long end. Intervening in the Yen for the first time since 1998 was enough to get the market’s attention, but talking about reducing bond sales makes this rather more serious. On the subject of the Yen, it is most definitely easier for him to spend some money helping the Japanese with their currency than to have them dump treasuries to defend it on their own. Bottom line is this needs a lot of attention, albeit not quite at the red flag moment yet.

The situation markets are presented with right now is unique. There is a record breaking investment cycle underway which is quite literally running the US economy, not to mention pushing SPX EPS up to a 29% growth rate. On the other hand there is a clear and present danger of rates having to be hiked to spoil the party, especially given this entire thing is built on borrowed money and it is ALL hinging on the assumption that ROI is off the charts for all these guys. The appetite for risk and debt funding is at fever pitch, however. NVDA’s deal yesterday with KKR, GS and Blackrock is testament to the conviction on Wall Street that this is going to pay off. For the time being there is no real evidence it will not, and there are signs it is starting to work, but it is early days and many potential road bumps to come.

The big question is can markets broaden out. The AI capex trade has done so much of the heavy lifting, and accounts for such a large portion of SPX EPS assumptions, that the market is very exposed to one thing. The rotation into value has been consistent over the last couple of months so there is evidence this broadening is working, but that must continue, as the AI capex trade cannot be relied upon to hold it all up. Remember, the guys who are spending all this money, and therefore have the major question marks over their ability to deliver enough ROI to justify it, are the ones who move the indexes.

The bulls are out in force calling the S&P to 8k, and in some cases beyond this year. That is the pain trade for sure, but TW remains nimble at this level and juncture. Next hurdle is tomorrow’s CPI. The war in Iran is essentially being ignored given the overwhelming EPS growth coming from the investment cycle, but oil remains uncomfortably high and still no deal. Even with a deal there is meaningful damage that has been done to supply lines, and refiners are operating at MAX capacity risking shutdowns and blowouts. The Diesel crack is well documented and needs to be kept an eye on as Europe in particular absorbs sky high prices. Oil may well remain somewhat under control but structurally higher for longer seems inevitable given the set up.

TW has had a great year of trading and PnL, so there is no need to take too much risk from here to the finish line, but remain engaged and opportunistic of course.

The full note is available to Apex members. This week covers the semiconductor picture with INTC’s $20bn raise and QCOM’s value case, the new chapter in memory with CXMT and SNDK, the software rotation now that MSFT, NOW, TEAM, PLTR and the rest have reported, the SMH versus IGV spread, ORCL up 30% and the AI infrastructure names NBIS, CRWV and IREN, every MAG7 name into the current tape including the MSFT and AAPL swap, the SPCX trade, and the fibre-optics and photonics names AXTI, LITE and ALMU with the rare earth overhang.

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MACRO

Little has changed in macro land since last week’s Tech World (outside USDJPY of course). Semi-goldilocks remains in place and the oil spike has once again reversed itself as the painful nonsense back and forth between the US and Iran continues. The obvious update is Kevin Warsh’s press conference and the aftermath. Markets are entering a new era with a new Fed who are not showing their hand as has been previously expected.

The bond market did not buy his attempt to dove down the mildly hawkish tone from the statement and three dissenters. The long end traded back above 4.7 and forwards are now pricing in a 63% chance of a hike in September. Nobody knows yet whether this new strategy of less communication is going to create more or less volatility, but the knee-jerk selloff has been put in the rearview mirror for the time being while the market focuses back on earnings and growth.

On the subject of growth, Atlanta Fed GDPNow for the third quarter is miles higher than street economists’ estimates, currently calling for 6.18% versus the street at 2.03. GDPNow is notoriously all over the shop but the point here is that GDP remains solid. AI capex is most definitely changing the game in America and having a profound impact on growth. Having got through the bulk of the capex guides, it is now clear there is no change to this demand story yet, so risk is to the upside in the next GDP print.

It is definitely a case of threading the needle right now on growth data though. The market does not want it too hot, right now bad (or lukewarm) is good. Jobs data on Friday will provide the next critical labor market read, but unless there is some shock to the upside or downside the focus remains squarely on inflation. Inflation remains well above target but also surprisingly under control given all the supply shortages out there. CPI and PPI are showing the heat but core, and most importantly wage growth, remains under control. Markets will need to watch this space very closely but for the time being the macro is supportive of equities.

USDJPY has been fun to watch, what a turn of events. The last time the US got involved was in 1998 during the Asian FX crisis. Tech World has been highlighting the intervention risk and the extended and crowded positioning in this trade for weeks. Cannot say they did not warn you. Scott Bessent has made his support for the Yen clear, which is very rare for a US treasury secretary. The fragile macro relationship between these two countries cannot be overstated. The more the Japanese import inflation via their weak Yen, the more risk there is to the upside in rates, and the more risk there is to the upside in rates the more risk Japanese pension funds will repatriate funds back into their own bond market. This is one of the biggest risks to markets as ever and just sits there at all times requiring close attention. Watch this space.

The full note is available to Apex members. This week covers the semiconductor washout and the Situational Awareness blow-up, the case on INTC, QCOM and the memory names, the software rotation finally kicking in with NOW, PLTR, SAP and MSFT, the SMH versus IGV spread, ORCL and its balance sheet at the centre of the AI infrastructure debate, the AI infra names IREN, NBIS and CRWV, every MAG7 name into earnings, and the fibre-optics and photonics names AXTI, GLW and ALMU.

Join here: www.apex-trading.co.uk

MACRO

Well well well, what a beautiful market. Since the last Tech World very little has changed in the macro universe as the market awaits Kevin Warsh this evening and core inflation has remained somewhat under control. But the rotation in equities has kicked into 6th gear, with semis destroyed and software, restaurants, staples, apparel and pharma (essentially anything with lots of cash flow and valuation support that is not crowded and has nothing to do with AI capex) roofing it.

It has been truly wonderful to watch the market take out all the leverage and gambling that had been priced into it. Normally these equity stories do not spill over too much into the macro world, but this one sure does. Not only is AI capex a pillar of this market, but the size of these companies that are being levered up with single stock ETFs are moving indexes. No better example than Korea, it is a disgrace what has been allowed to happen there. The entire nation’s stock index has fallen 43% from its high in four weeks. These are people’s pensions at stake, and if they do not do something about the retail gambling and single stock leveraged ETFs now, then when will they?

Tech World will drill down into these semis and stories more below. In terms of pure macro, things are still strangely quiet and goldilocks in feel. Yes there has been another spike in oil on the Iran flare up, and yes CPI remains miles higher than target, but wage growth and core inflation (what truly matters) remain lower than expected. The supply disruptions that have resulted from the war are finding their way into PPI and CPI, but not the core yet.

Warsh is on deck tonight and no doubt has a task on his hands navigating the press conference, but his messaging is crystal clear. He has not waivered from his core inflation fighting stance and it would be very surprising if he did. Hawkish hold is the order of the day, anything less is not enough, anything more is too much. Warsh and the Fed are embarking upon a new era of less communication, task forces and a more modernized Fed strategy. Time will tell if this creates more or less volatility, but there is little doubt the market has their strong independent Fed functioning as it should be.

USD and carry trades this year have been a lot of fun for macro guys, more so the latter, but these are now getting to the stage where the easy money has been made. USDJPY to 165 seems to be the major call, some calling for it higher, but intervention risk remains front and center. The rate differentials remain such that this trade has significant support, but watch this space as the BOJ are on deck on Friday and they have made clear they are open to raising rates sooner. MoF have been very vocal about it all, but it is really only the BOJ and rate structure that can stop the bleeding. Will be very interesting to see how this plays out over the coming weeks, USDJPY pushing its luck a bit short term.

The full note is available to Apex members. This week covers the semiconductor collapse and whether the de-leveraging is done, the case on INTC, MRVL, QCOM and the memory supercycle debate, the long-awaited software rotation with SAP, NOW and TEAM and the SOX versus IGV spread, ADBE after the Morgan Stanley downgrade, ORCL and its balance sheet, the AI infrastructure names IREN, NBIS and CRWV, every MAG7 name individually into earnings, and the unwind in the fibre-optics and photonics retail names.

Join here: www.apex-trading.co.uk

MACRO

It is awfully quiet and goldilocks like in the macro world right now, hence the endless support for equities. Inflation prints have been market friendly, both CPI and core and PPI came in below estimates last week. The labour market remains solid and resilient despite the lower number the other day. This is all in the face of oil prices back in the 80s, supply chains being disrupted across multiple industries, and rates with the new Fed remaining firm on their hawkish stance.

The bottom line is global growth remains solid, fiscal support keeps coming, and inflation, despite all the risks to the upside, remains under control. That leaves corporate earnings. The fear going into this earnings season was that estimates had been hiked too far and the bar would not be cleared. Thus far, and it is relatively early days, 88% of S&P 500 companies have beaten. In Europe that number is slightly lower but still high. Europe is of course particularly sensitive to oil prices and the war implications, but thus far companies have been resilient.

It is a fascinating battle between the obviously strong macro and earnings profile, the big AI capex driver, and the pending inflation and growth issue the market may or may not face due to higher oil, inflation and rates. That wall of fear is on the highs at the moment with protection rife, the put/call is at .7 and books are being hedged up all over the place. The more protection there is, the more squeezing there will be if earnings continue to deliver and oil prices remain somewhat under control.

It is impossible to overemphasize the importance of the next two weeks of earnings and guidance calls from the big hyperscalers. Google kick us off tomorrow night, then the rest of the big boys follow suit next week.

The AI trade has been called into question during this much needed correction and rotation. There are multiple forces at work here. First and foremost it is an unwind of crowded and LEVERAGED positions in the semis and AI related names. Secondly, there are a number of developments in this arena that are drawing attention, notably Moonshot’s Kimi 3, which has surprised everyone with its performance.

Tech World will discuss this in more detail below, but as it relates to the macro, the market is watching this space very closely for signs that capex is going to slow due to reduced ROI expectations as cheaper open source models change the landscape. As it stands there is no evidence of this happening anytime soon, and based on what TSMC and ASML told us last week it would be a shock if capex was cut this quarter or next. Tech World anticipates that this is a 2027 event.

The full note is available to Apex members. This week covers the semiconductor de-leveraging and whether the unwind is done, the case on INTC, MRVL, QCOM and AVGO, the memory supercycle and cyclicality debate, the long-awaited rotation out of semis and into software with the SMH versus IGV spread, ORCL and its balance sheet problem at multi-year lows, the AI infrastructure names IREN, NBIS and CRWV, every MAG7 name individually including the AAPL sell downgrade at Keybanc, and the unwind in the fibre-optics and photonics retail names.

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MACRO

Tech World took a brief holiday last week, back in action. What a week it has been. Finally, the world of leverage and greed is facing its moment of truth. There is no better example than what is going on in Korea.

Tech World has been flagging this for weeks as the pressure mounted. The ultimate canary in the coal mine was an unemployed retail trader taking out a $70k loan to buy the triple-levered SK Hynix ETF and posting on social media that it was impossible to lose money. The Korean regulators only have themselves to blame. It is not just retail playing this game, it is institutions, investment banks, and governments too.

The pattern always ends the same way, no exception. Parabolic charts, excessive leverage, and retail-hyped options momentum are a recipe for disaster. It happens time and again across countries and asset classes, and will keep happening until regulators act. The good news is that those paying attention can identify these setups and profit from them, the caveat being strict stop losses, since timing is notoriously difficult.

The Korea blow-up is being covered in the macro section because, for the first time, it has become a genuine macro issue. The leverage and greed evident in Korean equities, particularly the Korean memory makers, is mirrored in the US. The problem is more acute in Korea, where SK Hynix and Samsung represent 55% of the market and leverage is more aggressive pound-for-pound. But make no mistake, the same dynamic is playing out in America. Given the weighting of these names in the major indices and the importance of the AI trade to global equities, the effects are reverberating across markets.

On top of this, markets are once again grappling with the prospect of higher inflation and rates, as oil moves into the $80s on the back of Iran re-escalation. Today’s focus is CPI. Waller said yesterday that a rate hike at the next meeting is very possible, and forwards are currently pricing a 50% chance of that on 29th July. More clarity is needed on several fronts, and a clearer picture on rates should emerge by the end of the summer.

In the meantime, uncertainty remains front and centre, and volatility with it. Earnings season kicks off today with the big US banks expected to report record trading revenue. Unlikely to move the needle much, and most likely solid, but question marks over broader market earnings assumptions have resurfaced given the very optimistic scenarios pencilled in against an ongoing inflation and supply-chain backdrop. Economically sensitive regions, Europe in particular, are on high alert this earnings season.

The full note is available to Apex members. This week covers the semiconductor de-leveraging and why NDX vol versus the VIX is at tech-bubble highs, the case on INTC, MRVL, QCOM and AVGO, the memory cyclicality debate, the long-awaited software rotation and the SMH versus IGV spread, ORCL and its balance sheet problem, every MAG7 name individually including the AAPL sell downgrade, and the unwind in the fibre-optics and photonics retail names.

Join here: www.apex-trading.co.uk

A working document... the kind of thing that would have circulated internally on a desk at JP Morgan or Bear Stearns before markets opened. Macro, earnings, individual names, sectors, what he is long, what he is short, what he thinks is dangerously overheated and why.

APEX NOTES: TECH WORLD

Piers Buckworth · 29th June 2026

MACRO

The professionals are back in charge of this market and it is a welcome change. Kevin Warsh has settled the nerves around his credibility and Fed independence. He and the voting members addressed inflation running well above target head on, and signalled an intent to modernise the Fed on guidance and data delivery. The bond market has responded, bringing down the long end and enabling the long-awaited rotation into rate-sensitive and economically sensitive areas that had been forgotten. Home builders, retailers, apparel, restaurants, pharma and biotech all led last week and the trade closed on its highs Friday.

The market has been rotating out of MAG7 and the hyperscalers for some time, but now the semis have hit their much-anticipated resistance and volatility. Narratives shift fast. Leverage, crowding, expensive IPOs, lack of visibility on ROI, regulation, Chinese competition, price wars and margins, newly raised capex for the big memory players, and AAPL and MSFT raising prices, with AAPL reportedly looking to buy memory from a blacklisted Chinese player. The list goes on. At a moment when euphoria in the picks and shovels trade, memory especially, had run out of control, the market has been handed a number of new things to price in. This is flagged in the macro section deliberately. The AI capex trade has become a core pillar of the macro world, propping up indices and acting as a form of private market fiscal stimulus.

The macro needs close monitoring. The extent of this cost-push inflation is not yet determined. Warsh and the Fed have a delicate needle to thread, and with markets at all-time highs pricing in very optimistic scenarios for the rest of the year, the risk reward is not particularly attractive. That said, there are plenty of companies on sale to focus on.

The week is holiday-shortened for 4 July, but NFP drops Thursday and JOLTS job openings are worth a look. Labour market data matters, but it is playing second fiddle to inflation right now. Oil is back under control, as is the bond market, the Fed is on top of it, and a healthy rotation is in motion. It would be prudent to stay very nimble. It would be surprising if the rest of the year, and summer in particular, is smooth sailing. Look at Korea, where 60 percent of the KOSPI is now Samsung and Hynix, with positioning both crowded and leveraged like no other time in history. Regulators have acknowledged that authorising single stock leverage ETFs on memory names was a mistake. Watch this space.

The full note is available to paid subscribers. It covers the semiconductor complex with the SOX sitting 70 percent above its 200 day moving average, Intel, Marvell, Arm and the memory debate, the historic rotation from semis into software, every MAG7 name individually, and the fibre optics, photonics and retail themes.

Sign up here: www.apex-trading.co.uk

A working document... the kind of thing that would have circulated internally on a desk at JP Morgan or Bear Stearns before markets opened. Macro, earnings, individual names, sectors, what he is long, what he is short, what he thinks is dangerously overheated and why.

APEX NOTES: TECH WORLD

Piers Buckworth · 22nd June 2026

MACRO

It would be inappropriate to open this week’s macro section without immediately acknowledging that Kevin Warsh surprised almost everyone in his first press conference by sticking firmly to his core inflation playbook. There was much speculation that he would be swayed by the White House and talk down the inflation situation, opening himself up to a telling off by the bond market. It is all a game of reality versus expectations, of course.

With the Fed’s majority voting members leaning in the direction of rate hikes this year, Warsh standing in front of the world media and explaining how they want to reduce the noise and communication from the Fed, hold back guidance, and tackle the inflation subject head-on, was refreshing. He made it abundantly clear that inflation above target would not be tolerated and that the priority was to maintain price stability.

The move in the bond market was initially very clear, with the 2s10s coming in, but it has since relaxed a little. Net net it was a positive start for Warsh and the Fed. They have stamped their authority on the situation while maintaining credibility and putting independence concerns to bed.

The question now is what this market is going to do with it all. The rotation into cyclicals and economically sensitive value has been in fits and starts. Metals, in particular precious, rallied into the event as real rates drifted back, then reversed on the news. Banks have been quietly outperforming for a while, with European and US banks at all-time highs, while the rest of the market in Europe and the US is struggling for direction.

The market immediately grabbed for semis, as it seems to be the only safety blanket time and time again. AI capex is providing a new level of economic resilience and earnings growth that can be used as an excuse in a time of economic uncertainty. It is clear that this market is incredibly difficult to trade right now. From a professional perspective, building a book that can gain traction outside of some overheated banks and semis on the long side is next to impossible.

The bottom line is that it is going to take some time to get a grip of exactly where things stand on inflation. There is clearly some relief in motion as oil prices pull back aggressively on the back of this peace deal, and it is clear the market is looking through the noise over Lebanon and Israel and the endless misinformation being reported on both sides. But questions remain over the sustainability of the deal in the absence of a full ceasefire between Israel and Lebanon, not to mention the Strait of Hormuz traffic.

All of this is taking place at a time when market leadership in semis is in a state of euphoria, banks are well owned and arguably expensive in some names, and liquidity events are going to remain an ongoing issue over the summer. On top of the mega-cap IPOs sucking in large amounts of capital (note what has happened to the Mag 7), there is now the evolving issue of the Fed’s balance sheet and rate structure. Even Mike Wilson at Morgan Stanley, a substantial market cheerleader in recent times, has this morning warned that the summer months may well be testing for equities as balance sheet support fades, with reserve management purchases down 75% from peak. Liquidity conditions have tightened and may remain a headwind for stocks through July.

The full note covering the semiconductor complex at new all-time highs with the KOSPI now 70% leveraged, Intel back at 120x forward after another Trump headline took it through BAML’s recently raised price target, Marvell’s volatile price discovery, ARM at 180x forward, the critical Micron earnings on Wednesday with Stifel expecting 80% quarter-on-quarter revenue growth and 350% year-on-year, Broadcom’s post-earnings selloff now offering valuation support, the software dislocation with Adobe collapsing to multi-year lows at 10x forward after losing both its CEO and CFO, Oracle’s attractive risk and reward, every MAG7 name individually including Google as the consensus long with AI advertising-moat concerns resurfacing, Meta cheap and out of favour with AI monetisation now live, Nvidia’s CPU pivot challenge, Microsoft on sale, Apple’s AI strategy question after WWDC, Tesla versus SpaceX, and the reality check now hitting fibre-optics and photonics stocks is available to paid subscribers. Sign up here: www.apex-trading.co.uk

Apex Notes are for educational purposes only and do not constitute financial advice or a recommendation to buy or sell any financial instrument. Capital is at risk. Apex Trading is not FCA authorised and does not provide regulated financial services. The author and Apex Trading may hold long or short positions in the securities discussed. Nothing in this publication constitutes a personal recommendation. Readers requiring investment advice should consult an FCA-authorised financial adviser.

A working document… the kind of thing that would have circulated internally on a desk at JP Morgan or Bear Stearns before markets opened. Macro, earnings, individual names, sectors, what he is long, what he is short, what he thinks is dangerously overheated and why.

APEX NOTES: TECH WORLD

Piers Buckworth · 15th June 2026

MACRO

FINALLY, a deal between the US and Iran looks like it is going to get signed. It took a LOT longer than anticipated but the outcome was somewhat inevitable given the stakes for both sides. The market has essentially ignored oil prices and rising inflation throughout this entire saga, somewhat justified given the inevitable outcome and the earnings-growth distraction offered up by AI. The machines are OF COURSE all over it despite the rather absurd nature of this V-shaped market recovery. All-time highs in sight for US indexes. Japan already cleared the highs given the obvious relief they feel with lower oil.

The question is now what? Market strategists and commentators are really very pathetic these days it has to be said. Why do they not just admit that they are no longer strategists and analysts and are in fact now momentum and price-action followers. Oil coming off OF COURSE relieves pressure on inflation expectations and rate pressures, but to assume that this is the end of the matter and the market can go back to business as usual with no cares whatsoever for higher inflation and a more hawkish Fed than anticipated is borderline absurd.

Kevin Warsh will be fascinating on Wednesday, his first press conference as Fed chair. Chances of movement on rates are essentially zero, but listening to him speak for the first time in that presser will be interesting. He is a well-known inflation hawk and it seems incredibly unlikely that he will ignore CPI at 4.2 and core at 2.9. Oil rolling over and the war ending is definitely going to help the narrative for the doves, but this situation remains complicated. It is going to take many more weeks if not months before the market gets a better idea just how much supply infrastructure has been damaged and whether oil can make its way back to the 60s. There is going to be a structurally higher oil price for a while longer. This is not to mention the other supply issues that have been a byproduct of this situation.

The elephant in the room here is how much has been priced into this market and how this AI trade is going to play out. The relief in oil prices and rates most definitely facilitates a rotation into the economically sensitive and beaten up and left behind pockets of the market, but the AI trade has an increasing amount of questions over it at this juncture. Most of the top names are pricing in perfect scenarios out till 2029 and 2030 and in many cases are well over their skis from a valuation perspective. The machine- and positioning-driven reversal from last week’s lows will take these stocks through almost ALL recently raised price targets, and the exuberance and froth that was flagged extensively over the last couple of weeks is front and centre. In addition there is a budding price war and regulatory issues. This news over the weekend on the US government stepping in to restrict Anthropic’s latest Fable model needs to be paid attention to. Regulation is the natural next stage of this story and one that opens a whole new set of questions.

The bottom line is semis are now back to euphoric and parabolic levels and markets are pricing in goldilocks perfection while there are still an alarming amount of red flags in play.

The full note covering the semiconductor complex still sitting miles above its 200-day moving average, Intel’s re-rating to 115x forward and BAML’s dramatic capitulation, Marvell and SPX index inclusion, Broadcom’s historic post-earnings selloff now offering attractive risk and reward at 33x forward with 65% revenue growth, the memory debate ahead of Micron earnings on 24 June, the software paradox with names trading as if the SaaS apocalypse is upon us despite zero evidence, Oracle’s standout risk and reward profile, every MAG7 name individually including the SpaceX IPO funding trade, Apple’s WWDC disappointment, Meta at 19x forward with 35% revenue growth, and the latest on fibre-optics including China’s move to increase rare-earth supply is available to paid subscribers. Sign up here: www.apex-trading.co.uk

A working document… the kind of thing that would have circulated internally on a desk at JP Morgan or Bear Stearns before markets opened. Macro, earnings, individual names, sectors, what he is long, what he is short, what he thinks is dangerously overheated and why.

From this week, that note comes to you every week.

APEX NOTES: TECH WORLD

Piers Buckworth · 8th June 2026

MACRO

Each week that ticks by, this situation becomes more and more unique and interesting. The labour market continues to surprise on the upside. The magnitude of the beats is somewhat ridiculous, 172k versus 88k last week, once again demonstrating just how little idea anyone has about the incoming data. Hard to take it seriously.

The all-important wage growth number was in line, so net net the data was supportive of a strong macro backdrop and in theory facilitates a continued rotation into the banks and value and consumer parts of the market. As it stands there is a case for this rotation to continue, albeit most likely in fits and starts, as the one element that is missing is the Iran war and oil prices that have been brushed aside. The market cannot properly rotate into consumer and cyclicals without oil under control. Healthcare is back on the agenda as it covers two bases, notably value and defensive. The unwind in the duration and crowded and euphoric parts of the market is MUCH needed and much anticipated.

Worth noting that the market has now priced in a full 25 bps rate hike this year, which is a 180-degree turn from the 25 bps cut that was priced at the beginning of the year. Goldman Sachs stepped away just this morning from their rate cut call. I do not know how anyone can be calling for rate cuts in the face of the situation being presented, especially with incoming Fed Chair Kevin Warsh, a well-known inflation hawk. His first press conference on the 17th is going to be fascinating.

The big macro event this week, of course, is CPI on Wednesday afternoon. It is probably too early for this number to shock the market but there is a decent chance it starts with a 4. The nature of this beast is that it will take months for the oil shock and supply chain pressures to truly impact the data, so making calls on the macro environment right here with conviction seems somewhat reckless.

Note Mike Wilson over at Morgan Stanley, who has abandoned his traditional approach to looking at markets and is saying all clear ahead, buy the dip. JPMorgan, Citi and Goldman Sachs all joining him. It is no coincidence that they are all bringing the biggest IPO in history to market this week at 110x sales. No doubt this dip will get bought, including semis, but then what? The only thing that makes any sense is that volatility is likely to remain elevated for the foreseeable future. Rotation is the only rational way this rally can continue, as the AI trade has become very crowded and is essentially pricing in perfection out to 2029.

The full note covering the semiconductor collapse (SMH and SOX finally having their big selloff on Friday), Broadcom’s biggest post-earnings drop in history, Marvell’s surge and SPX index qualification, the memory debate and de-leveraging risk, the software rotation into names like ORCL and ADBE ahead of earnings this week, every MAG7 name individually including Apple’s WWDC, Meta’s AI monetisation push, Tesla’s analyst capitulation, and a detailed breakdown of the fibre-optics and photonics space is available to paid subscribers.

Sign up here: www.apex-trading.co.uk

Apex Notes are for educational purposes only and do not constitute financial advice or a recommendation to buy or sell any financial instrument. Capital is at risk. Apex Trading is not FCA authorised and does not provide regulated financial services. The author and Apex Trading may hold long or short positions in the securities discussed. Nothing in this publication constitutes a personal recommendation. Readers requiring investment advice should consult an FCA-authorised financial adviser.

• Piers Buckworth - former JP Morgan and Bear Stearns.

• Rich McDonald - former Brevan Howard and Credit Suisse.

• Will Nutting - 30 years in equities.

Together on stage for one afternoon covering how professionals actually think about markets, risk and opportunity.Bond markets are at 1997 highs. Semiconductors are at 1999 levels. Inflation is running hot. AI capex is rewriting the rules of the entire global equity market. There has never been a more fascinating moment to be in a room with people who have lived through cycles like this before.People are flying in from the US, Canada, Spain, Dubai, the Netherlands, Italy and Germany to be there.

Networking starts from 1pm, presenters on stage at 2pm and you can also join us for evening drinks at Langan’s Brasserie in Mayfair from 9pm. This is as valuable as anything that happens on stage.

General Admission: £125

Buy your ticket here: https://ApexLiveSeminar.eventbrite.co.uk

We hope to see you there.

Piers and the Apex Trading team

What happens in that room on Saturday afternoon stays in that room. The conversations over drinks at Langan’s that evening will not be captured. The people who are there will remember it. The people who are not will not know what they missed.

This exact room will not happen again. These three speakers will not be on the same stage for £125 again. This moment - bond markets at 1997 highs, semiconductors at 1999 levels, AI capex rewriting the rules of the entire global equity market - will not be discussed in real time by people with 70 years of institutional experience between them again.

I am going to be direct. There are seats that should not be empty on Friday and there are still a few tickets remaining. If you have been thinking about this, stop thinking and join us for a very educational day and a relaxed evening with fantastic group of people who are just as interested in markets as you!

Buy your ticket here: https://ApexLiveSeminar.eventbrite.co.uk

Piers

People started booking flights.

When we announced Inside the Trade we expected a room in Mayfair full of people from London and the surrounding area. What we did not expect is that people would be flying in from the US, Canada, Spain, Dubai, the Netherlands, Italy and Germany to be in that room on the 30th May.

I am not sharing this to impress anyone. I am sharing it because I am genuinely humbled by the support. Importantly it also says something about who is going to be sitting in those seats, that I think matters if you are considering coming.

These are not casual attendees. These are people who have decided that spending a day in a room with Rich McDonald, Will Nutting and me and more importantly with each other, is worth getting on a plane for. What everyone have in common is that they take markets seriously and they value being in a room with people who think the way they do.

If you want to come and join us, there are still tickets remaining: https://ApexLiveSeminar.eventbrite.co.uk

I hope to see you there.

Piers

We are living through history in these markets. The positioning, the rotations, the macro… every part of the fabric of markets right now is extraordinary.

On the 30th May I am presenting alongside Rich McDonald and Will Nutting at Princess Alexandra Hall in Mayfair. Over 70 years of professional market experience between us. But it is not just about what happens on stage. The people coming to this event, people who have built things, people who have made their money inside markets and outside them, people flying in from around the world are as interesting as anything we will say.

I have had this open to my community for some time but I want to give everyone the opportunity to join us in person as well.

VIP dinner is sold out, but there are General Admission tickets remaining.

Buy your ticket here: ApexLiveSeminar.eventbrite.co.uk

I hope to see you there.

Piers

www.apex-trading.co.uk

A working document… the kind of thing that would have circulated internally on a desk at JP Morgan or Bear Stearns before markets opened. Macro, earnings, individual names, sectors, what he is long, what he is short, what he thinks is dangerously overheated and why.

From this week that note comes to you every week.

APEX NOTES: TECH WORLD

Piers Buckworth · 19th May 2026

MACRO

The boss is back in town. Finally the bond market is flexing its muscles and the world is paying attention.

Notes over the last few weeks highlighted the pending economic and inflation data, an almost inevitable outcome given the nature of the situation. Global supply chains are choking up and inflation prints are coming in hot. Those PPI prints last week were of particular concern. Good old cost push inflation is in motion once again.

How this ends is hard to call given oil prices being back in the 60s anytime soon seems a stretch. But the here and now is yields in Japan and the UK back to 1997 highs, the US 10 year through 4.6%, the US 2 year through 4%, and the next CPI print due on June 10th likely to start with a 4. Swaps are pricing in a 60% chance of us seeing a rate hike this year in the US. As Ed Yardeni correctly pointed out over the weekend, if the Fed does not change its message soon the bond market will keep doing it for them in dramatic style. Bond markets will always tell everyone what to do and quite frankly it is refreshing to see.

Trump will soon be forced to tone down Iran rhetoric. Let us be clear… the only thing he cares about is interest rates at the end of the day. With Kevin Warsh, a well-known inflation hawk, about to take his seat, the chances of him getting rate cuts anytime soon are essentially zero. That is of course unless this continues and growth ends up getting clobbered.

China today showing the first real signs of pain - FAI, IP and retail sales all significantly below expectations and commentary leaving little to the imagination regarding the pain being seen as a direct result of oil and Iran. Given the record breaking rally in the parts of the market being priced off future growth it makes for an interesting summer. Duration is on the block here unless rates calm down.

Of course it is not black and white out there quite yet. The speed of the move in rates has been worth paying attention to but the market is yet to get that moment of panic which would cause proper risk-off in equities. This does not mention the fact that there are lots of things out there on sale right now, software is at a discount to semis not seen since 1980.

Whether it is software and KWEB on sale, or strong corporate earnings, or the AI capex acting as a macro support pillar of this market, there are still a number of people who take the view that the market is going to get through this oil and inflation shock just fine. Mike Wilson over at Morgan Stanley stands out. This guy has completely abandoned his traditional analysis of equity risk premiums and inflation dynamics and opted for an all-in momentum-style approach to strategy. This is one of the most fascinating 180-degree turns ever seen by any strategist in history. This guy is by nature a perma-bear and is now the number one cheerleader for the market at a time when it is most definitely a moment for pause and consideration. This is in line with so many other strategists who have become momentum traders disguised as analysts and strategists. Being mown over year after year by tech and momentum eventually breaks you.

The full note covering the semiconductor complex at 64% above its 200DMA (last seen March 1999), Intel at 120x forward earnings, the memory debate, software at discounts not seen since 1980, every MAG7 name individually including NVDA earnings on Wednesday and a detailed breakdown of the fibre optics and photonics bubble is available to paid subscribers.

Sign up here: www.apex-trading.co.uk

Join us in London!

On 30 May Piers is hosting Inside the Trade - a live one-day seminar at Princess Alexandra Hall, Six Park Place, Mayfair. Alongside Will Nutting and Rich McDonald, over 70 years of professional market experience in one room. Presentations, panel Q&A and open discussion.

General Admission · £125

ApexLiveSeminar.eventbrite.co.uk

Apex Notes are for educational purposes only and do not constitute financial advice or a recommendation to buy or sell any financial instrument. Capital is at risk. Apex Trading is not FCA authorised and does not provide regulated financial services. The author and Apex Trading may hold long or short positions in the securities discussed. Nothing in this publication constitutes a personal recommendation. Readers requiring investment advice should consult an FCA-authorised financial adviser.