Mrs Fly Goes to the Farmers Market

Mrs Fly is terrified of bugs. She used to scream at the top of her lungs upon seeing them when we were younger; but now she just screams a little and calls for my help.

Over the past several weeks we’ve been visiting the local Farmers Market, a denizen of hipsters dressed in rags selling organic produce and meat. I of course don’t mind high quality food, locally sourced, and also because I’m sick of giving Whole Foods all of my business for produce that tastes like water.

She had a wonderful time shopping in what was described to me as a “super cut place filled with nice people.”

At any rate, we bought salad, greens and some chicken and prepared dinner. As she was cleaning the salad and rinsing it as she always does, she noticed small bugs crawling around. But they were small and posed little threat, so she rinsed some more. And then a scream let out, the sort of scream one hears during a tragedy. I rushed to the kitchen to see what the hell was happening and she pointed to the salad with her hand over her mouth, “there’s a big bug in the salad.” I looked over to it and it was a stink bug who had just let out his stink into her salad. I removed and flushed it and she tossed the salad into the trash.

She then cooked two chicken quarters for us and about an hour later served. We cut into the chicken and it was as hard as a rock, clearly not the same type of young chicken she’s accustomed to at Whole Foods. This chicken was bigger and tougher, likely much older and had acquired some fucking muscles roaming around in its free range denizen of ethically responsible farming.

We tossed the chicken too and declared it to be “inedible.”

We ended up having some roasted potatoes and carrots for dinner, with a little side of ethically farmed green beans.

If you weren’t quick on your feet or in a diversified portfolio, you had trouble last week, as markets shifted away from the usual cool stocks and into nuclear/airlines/gold/silver/retail and out from EVs, semis, oils, China and solar.

It is clear to me we have several prevailing trends:

1. Denigration of the dollar, buoying precious metals/$BTC
2. Data center expansion caused by AI adaptation, powered by $NVDA, creating a scarcity of power, leading to massive demand for nuclear energy.
3. With the expansion of the data centers, traders are positioned into every aspect of this trade, from the server makers to the HVAC companies who cool these buildings to the construction companies who are building power plants and/or in the process of converting antiquated coal facilities to nuclear.

I am speaking of names like $CARR and $TT, who are old school HVAC but also help cool datacenters and have a massive tailwind in creating electric heat pumps for the EU, who is mandated to move away from fossil fuel generated heat by 2030. I am also talking about construction firms like FLR and J, or little known datacenter plays like $IRM who have been expanding feverishly into the space and using their decades of experience in archiving documents for Fortune 1000 companies and upselling them for hyperscale services. You also have companies like $POWL growing at a 50% clip, who are servicing both the power generation and datacenter markets.

I almost feel like this story is too good to be true and that it might be late; but then I view the numbers and listen to the conference calls and it becomes apparent that electricity demand is soaring and not coming down and machine learning technologies are quite literally ‘just getting started.’

Inside Stocklabs, I am building extensive lists to help me better understand the gravity of this shift and I feel this theme will be longer lasting than most people believe, which of course will be helped by a reduction in the cost of capital thanks to the FOMC.

Gold and silver stocks took off today, with silver jumping an outrageous 6.5%. Some of you might view this as a temporary phenomena, but you’d be wrong. What this speaks to on more of a macro level is the lack of confidence people have in the dollar. Do not look at the $UUP vs other fiat currencies, but instead look at the buying power of that currency and what is can buy you in terms of food, housing, healthcare, insurance, tuition etc.

Back in 2000, $250,000 in income registered at the 39.6% tax bracket. Today the 37% bracket is for income more than $578,000. That should tell you all you need to know about what the value of the dollar has done since then.

To offset this obvious denigration, we must invest, whether it be stocks, real estate, or collectibles. If we do not invest, our money loses value and the buying power diminishes, tossing us into the poor house.

Today’s move in silver is especially interesting but I will not make predictions, because we’ve seen this play out before, with speculators trying to squeeze JP Morgan and causing them to cover their alleged shorts. But at the same time, $BTC is near RECOURD highs and we have stocks at RECOURD highs and the values of real estate are unmoored, in spite of the higher rates that have racked American over the past 2 years.

Well, those things are about to change and rates will come much lower, which should lend credence to the precious metal, Bitcoin, and stock trade for the foreseeable future.

For the session, I managed just a 15bps gain, mostly due to being positioned in some of the outlier pockets of the market; but closed strong and fully long into what I believe will be a Monday rally.

Ciao.

Often times traders look for “the next $NVDA” or “the next $AAPL” instead of buying the actual stocks that have done well, leading to wanton disappointment.

Today we have a move in the nuclear and AI sectors, with multiple stocks running at the same time. People are tripping over themselves trying to find “the next SMR” play when the stocks of $OKLO and $SMR are the actual plays. That’s not to say these are the eventual winners; but the point remains: when trading around the periphery looking for the next $SPOT or the next $HOOD what you’re actually doing is being a retarded ape.

Let me just say this to you: fuck days like this. I bore witness to my portfolio withering away, slowly but surely, without respite and without reason. It was akin to what dying must feel like, executng triage to it to no avail and keeping PINNED TO THE FUCKING LOWS like a loser.

There was a pivot point in all this and I will show you on my fucking chart.

(takes a deep breath)

I was already down before my fucking sojourn to my ornate toilet because I had some bad moves yesterday. I was hedged via $TZA at 11% of assets and got bored with it and covered the hedge BEFORE my bathroom excursion, mostly because there were so many wondrous SHIT STOCKS gapping higher by 500%, like $NUZE. I was looking at what could get next, making me 500%, and at the same time they fucking RUGGED the market beneath me, taking down high beta stocks and anything with a modicum of trend in it 2% off the highs. In other words, if you bought in earlier this morning, you left completely bogged.

I’ve had sessions like this before and normally my timing is always off, so instead of hedging into the pits of hell I decided to hold firm and do nothing. That complacency earned me another 30 fucking bips to the downside, capping off my session from hell off by 1.3%.

On a macro level, I am still +4% for October and FLAT for the week. As much as I feel like I am down 50% YTD right now, I am in line with the fucking indices, a feeling that I do not enjoy.

I realize the markets showed UP today for the broader indices and you fucking buy and hold robots cannot commiserate with what I am ranting about right now; but trust me it was baaaaad.

I ended fully long with merely a ceremonial $UVIX position of 2.8% weight, because I like to use it as a sacrificial lamb to pave the way for my egregious gains to come.

Know this, no matter how down I appear and bedraggled by the market, The Fly will always come back with spear in hand, vengeance in his heart, breaking the faces of his enemies en route back to recourd highs.

I was positioned wrong at the open and have attempted to correct that throughout the morning session, to no avail. But placing myself aside at the moment, off by 60bps, the market looks fine, if looking at it as a consolidation day.

After big moves it’s important to rest before legging up again. The earnings out of $TSM calmed the market down regarding semis. But once again we have rates climbing, now up 7bps for the session. The fact that rates are climbing so much only means the Fed has more work to do to convince people they’re serious.

If you bought this morning you’re likely down for the session, since breadth collapsed and we are well off the highs. Today the weakness is focused in the small caps and that’s where my hedge is, in $TZA.

Since I haven’t figured today’s tape out yet I have very little to offer other than to suggest the selling off the highs isn’t that big a deal.

I want to word this blog carefully, so pardon the lack of prose. I’ve mentioned the rally in AI Energy related names before and discussed datacenters and the private deals these nuclear plays are cutting with large corporations. But I don’t think you understand the gravity, since you’re all largely retarded.

Here is the growth in electricity the past decade.

The projected growth into 2027 is between 8 to 10% per annum, driven by AI applications. How are these applications processed? Datacenters, such as $DELL, $AMZN, $MSFT, EQIX, $GOOGL, $SMCI and others.

Who facilitates this?

$NVDA and $AMD chips, amongst others.

Which form of energy is the best for these companies?

Nuclear. The plays there include $CCJ, $SMR, $BWXT, $NXE, $UEC, $UUUU, OKLO amongst others.

Which utilities are in play?

$CEG $TLN $PEG $AES $D $ETR $DUK $NEE $WEC and $VST

Who builds these plants?

$FLR $GEV, J, $GE

There are also ancillary plays, such as $FSLR proving solar to utilities, or $AMSC making chips geared for smart grids, or $VRT and $ETN for liquid cooling at data centers, and to a smaller extent $SMCI. There is a daisy chain of companies in play due to this new paradigm, which is saving the semis from a large pullback, judging by the abysmal numbers out of $ASML yesterday.

I covered my shorts and upped cash to nearly 70%, watching from the tall grass. My longs consist of non tech stocks, financials and REITs, mostly immune to the volatility present in the tape. But if we get a rout, nothing will be immune.

A few thoughts

Amazon inked an energy deal for nuclear today and we are seeing these deals almost non stop. As a result, nuclear plays like $CCJ and $SMR are taking off. This is a long term bullish trend of note.

Anything related to energy and the efficiency by which the energy is handled and maintained is a good play. This spills over into data centers and who cools them, namely $ETN and $VRT.

On the Orwellian front, I’ve been looking into $YOU recently and learned they’re expanding past the TSA pre clear checkins to facial recognition in retail stores to fight shrinkage, casinos to fight cheats, and have targeted financial services to combat fraud. In other words, identity via your face is being used to reduce friction and combat crime. This is the brave new world and it’s extremely profitable .

Last thing I’ll touch on is $HOOD. Many only view this as a low brow brokerage play, but it’s much more than that. They have more millennial and gen z clients than all other online brokers combined. What this means for when the boomers pass on and pass down their wealth is a tailwind. They’re also getting competitive in the credit card biz, margin lending and subscription services via their gold package. Naturally this all works in a strong market environment, which I think for the most part is a safe bet.

All was well up until the CRIMINAL leak of $ASML bookings, which displayed a less than extravagant environ for the AI chip world. This led to a sharp and deleterious COLLAPSE of the semis, closing the day down 5.4%.

Now you can view this as an isolated event, instead pointing to $NVDA and $AMD who are both operating better. Or, you can view this as a canary in a coal mine. The truth is no one really knows and the fact that markets had already been up so sharply has led me to hedge and place my avarice for greed on the backburner. I am short the semis via $SOXS at 13% of assets and also long some $UVIX at 3%, with about 28% cash. My beta is fairly neutral and I only lose if markets trade down tomorrow but semis bounce.

My conviction for remaining cautious was buttressed by the fact that nearly every long I bought since going to cash this morning is down, with special emphasis on the fucking collapse in the regional banks. Pardon me if I suggest that maybe, just maybe, we are in for some volatility in the next few days. You can’t just post DISASTROUS numbers out of $ASML and then pretend like it never happened.

All in all, I managed my risk fine today and outperformed the indices, so not much to complain about. I am a little more than concerned about potential BROKEN ELEVATOR pin action tomorrow, should the semis gap down again. However, I am renowned for exaggerating the circumstances around the market, often leaning towards doom casting as a form of catharsis. Should markets behave well tomorrow, I will most likely be just like you, pretending as if $ASML never happened today.

Let me preface this blog by stating some facts, particularly about myself:

I was 100% cash heading into this $ASML leak and felt it was necessary to allay any fears some of you might have about my person being adversely affected by this most unfortunate slide.

Early this morning these fucking numbers leaked online:

3Q bookings EU 2.63B, est. EU 5.39B

ASML CUTS 2025 NET SALES, GROSS MARGIN GUIDANCE

ASML CEO:

“It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness. Regarding Logic, the competitive foundry dynamics have resulted in a slower ramp of new nodes at certain customers, leading to several fab push outs and resulting changes in litho demand timing, in particular EUV”

Umm, excuse me but that’s a 50% drop in bookings. On that news, the $SMH is down over 4% but the overall market is taking it in stride. The NASDAQ is down 150 and WTI is off by 5%, because Israel said they’d bomb Iran, but would spare their oil facilities.

How dare they!

Part of my wants to dismiss these $ASML numbers and continue to pretend all is fine. But what the fuck is this all about? Those aren’t small drawdowns in bookings, but disastrous. I went to cash because I was +32bps and +5.4% for October, feeling as if I was being greedy by keeping my money exposed. I was hoping for a severe pullback to buy into, casting myself as a financial super hero in the process.

Let me think about these numbers and see if anything else comes out and get back to you later.