Pre Market Thoughts - 25 Sep 26 A very happy Friday to everyone! Yields surged to fresh highs yesterday into the US NY session. ES had a knee jerk move lower. Kris Sidial covered it on X - (https://x.com/Ksidiii/status/2103077516281778658) but there has been a sizey and relentless seller of ES futures whenever yields make a move up. This has been the precursor for the choppy action in ES seen thus far (Markets micro nuking and then v-reversing up). There are some speculation on the identity but suffice to say, a huge part of the pressure on the equities market come from this hedging activity. The NY session was characterised by Energy and Info Tech performing. META let a strong move up near to prev ATHs. I think this will lead a strong break out move for META. Incidentally, the rest of the hyperscalers should perform as well - pushing QQQs to ATHs. Given the record low positioning by money managers, i suspect that we will have another spot up, vol up move as people start to chase. IVs remain relatively low in context and i think this would be a great way to play for upside. In asia trading, NKY is up 1.3% while KR markets remain closed. On the memory names, we had weakness in MU and SNDK early in session, though MU subsequently recovered while SNDK lags. I mentioned in the terminal yesterday that i was adding SNDK exposure at 1740s. For real time updates to what trades i am making - monitor the terminal. I will post there first. (http://terminal.gambit.zone) Neoclouds, led by NBIS had a decent showing yesterday with NBIS up almost 10%. The revival of the AI trade will bring about Neocloud Autumn. I have talked enough about Neos so i wont be pushing the bull case here. Feel free to ask me any questions however. On yields - my stance is that high yields are a symptom of the massive amount of capital expenditure going into the AI build out. There has been a lot of fear but it is interesting to note that Zerohedge posted a picture of Meta's hyperion data center bond RPLDCI 6.581 49s trading at a new ATL. However, this is the effect of rates. The bond price at 260s over 10y and now trades at a spread of 220. The credit spread has in fact tightened by 40bps. The move in alot of bond prices is coming from the risk free rate repricing. Who is best suited to weather high borrowing costs? Profitable companies. Preferably those earning high gross margins. This is why i believe semis will become the cleanest sheet in the room and capital flows will consolidate there. Meanwhile, who are the worst contenders? Ironically, its the private equity companies backed by high debt loads with low growth and low margins. Incidentally, Matt Lewine's money stuff today said - "embarrassingly: banking has become an increasingly attractive alternative....pay and bonuses appear more predictable than the money in private equity, and regulatory pressure has eased...."yeah maybe i'd be better off at a bank". PE is toast when you realise that bankers are preferring to remain bankers rather than jump over into PE.... Also, more write downs in private credit and alternative lending.... objectively, semis ARE the cleanest sheet in the room. More chatting on tickers on the terminal... Good luck and a happy friday!