🏠Housekeeping Note: While some of this episode is free for everyone to watch, the full episode is for paying subscribers only. Thank you as always for your support. If you’d like to pull up a chair, you can join right here.

CONSUMER PAIN, BOND MARKET REACTION?

Per the University of Michigan Consumer survey, “consumer sentiment has never been lower,” said Erik, who dug into the survey in his Killer Charts pack here.

“It’s negative about people’s current prospects, negative about how they feel a year from now, negative about how they feel about their job outlook,” he said.

He also flagged what the survey says about one year forward price expectations. Back in the 70s, when the survey began, it was up at 12-14%, and bond yields were high. “And then interestingly, consumer price expectations dropped relatively rapidly in the early 80s to 3-4%,” Erik said. “That number stayed roughly in the 3-4% range for 40 years, until 2020.” While expectations came down pretty quickly in the 80s, Erik pointed out that it the bond market moved more slowly - “It took several years to come down to 5-6%,” he said.

So, then in 2021 we saw a sharp jump in consumer inflation expectations with COVID. “They are now making a new all time high and the consumer is expecting 8% inflation,” Erik said. And if the bond market follows the same pattern, “it’s suggesting that we should imminently have a high move up in the 10-year, to 5-6%.”

What Erik thinks is “the biggest disconnect in the market right now” is that, the chart is saying “bond yields are going up,” while the Fed is signaling that inflation is going to decline.

He compared the situation to Zimbabwe, where there was very high nominal inflation and the stock market going through the roof, while the central bank didn’t react. In the US, if the Fed keeps saying everything’s under control and the bond market agrees with it, that would mean “equity investors having our cake and eating it too.” Other reasons he thinks the Fed may be slow to react is, Trump doesn’t want rate hikes, and the Fed is trying to get through to the midterms.

💡The risk that Erik is keeping an eye on is that the 10-year doesn’t buy what the Fed’s selling, and say “hey, wait a second here. 4.5% isn’t the right number here. This should be closer to 6%.”

Note: This conversation was recorded the morning of the Fed meeting on July 27 - there was no rate change.

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S&P: “INSANELY GOOD” PICTURE ON THE META LEVEL

If you step back and look at the S&P at the meta level, “the index level earnings are insanely good,” Erik said. “The estimates for next year are another 17% growth. And that’s with energy supposed to decline next year. The analysts have heard the bubble story, and yet they are going back to their model and having to raise numbers quarter after quarter after quarter. And now we’re looking at $400 a share EPS estimate for 2027 on the S&P.

Last year, after the tariff tantrum, Erik made the brave call that the S&P would go to 10,000 by the end of 2027, up 40% from where it was then. “I thought that by the end of 2027, you’d be looking ahead to 2028 earnings and that the 2028 EPS estimate on the S&P could easily be $400. And that $400 estimate that I expected to be happening in 2028 is [now expected to happen] in 2027.”

What’s fueling it is “everything,” Erik said, including government spending, the fact that the bond market is not freaking out about government spending, corporates “are spending their brains out,” and an underappreciated factor, which is that banks are now being pushed to lend and take risk again.

💡”Every lever is pumping,” Erik said. “The government is spending money, the companies are spending money, and the banks are spending money, and that’s also why I have a really hard time buying these credit crisis arguments.”

That’s the end of part 1. Part 2 of the conversation continues for our paid subscribers below, where Erik shares the biggest themes he’s watching now, and why we could be underestimating the AI trend. Thank you for your support.

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joined us on For the Record, taking a break from delaying baseball at Yankee Stadium to share his thoughts on what lies ahead for the rest of 2026:

🏠Housekeeping Note: While some of this episode is free for everyone to watch, the full episode is for paying subscribers only. Thank you as always for your support. If you’d like to pull up a chair, you can join right here.

Recorded July 22.

WAITING FOR GODOT

The Squirrel “took down risk quite aggressively ahead of the war, and then took that risk down even further once the war started,” he said. “And I set myself a self-imposed ban on adding risk until the Strait was reopened.”

The problem is, “that’s a bit like waiting for Godot right now,” he said. “I think we’re due for ambiguity around the Gulf for some time to come. This could be an open sore for quite some time.”

“I had to take a deep breath and add back some risk towards the end of May, beginning of June,” he said.

RISKS BUILDING

“There’s a lot of brush building up on the forest floor in terms of risk,” 🐿️ said. He listed:

• Potential credit problems on the sidelines

• The “unbelievable” move in equities with respect to implied correlation and the very crowded dispersion trade

• Bonds yields pressing higher worldwide

💡”Ultimately, I think we’re looking at the second half of this year [as] an environment of rising energy prices, rising interest rates, possibly a lower dollar,” the Squirrel said. “It’s going to be quite tough to navigate.”

ENERGY EQUITIES

Rupert is long energy, both oil and energy equities. “Ultimately, I’m with the barrel counters on this one,” he said. “I’m not betting the ranch on it, but I do see energy prices and energy equities higher into the balance of the year.”

Rupert says China has “turned into a monopsony player in energy markets,” as in, they are the single buyer for many sanctioned countries; and China is “the swing price maker” in global energy markets.

China has massive domestic reserves and the ability to withstand price spikes, a concept he calls "The China Collar,” which functions as a long-term put and call on crude, allowing companies to underwrite E&P capital expenditures “with confidence.”

“That is pretty good news for energy equities,” he says. “I feel pretty bullish about where energy equities are right now.”

🪢The Blind Squirrel on The China Collar

CHINA EQUITIES

Longtime viewers will remember Rupert’s been bullish on China for a while:

“You’ve had a green light from the authorities as a Chinese investor to buy equities.” - Blind Squirrel, 2024

This year, there’s been a “phenomenal” AI hard tech bull market within China’s onshore A-share market, Rupert said, pointing out that that much of the A-share outperformance this year is directly tied to this trade.

He cites specifically CXMT, saying China is “serious about creating a national champion in DRAM.” While CXMT is currently smaller than global leaders like Samsung or Micron, Rupert believes China could become a “major market share taker” over the next few years.

❗“China is where margins go to die,” he said. “And if China’s coming into the memory trade, I think you need to sort of think about where those earnings revisions might be in 12-18 months’ time.”

However, the Squirrel remains cautious, citing “silly numbers” regarding valuations for pure-play AI names and warning that if the global AI trade cools, Chinese stocks will likely follow.

The conversation continues for our paid subscribers below, where the Squirrel digs into the need to find the right sectors rather than just buy the China index, why Turkey is on his radar, why it’s the “end of the McKinsey economy,” and of course Latin America. Thank you for your support.

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“The truths Phaedrus began to pursue were lateral truths; no longer the frontal truths of science, those toward which the discipline pointed, but the kind of truth you see laterally, out of the corner of your eye.” — Robert M. Pirsig, Zen and the Art of Motorcycle Maintenance

Earlier this month, we caught up with and the conversation took some very interesting turns, as it always does with our favorite chicken. So we decided to split it into two; part one covered his thinking around energy, geopolitical risk, and market expectations. If you haven’t watched it, you should check it out:

Part 2 is really fascinating conversation about lateral thinking, which he’s currently writing a book about. Suffice it to say, we can’t wait for that book to come out.

🏠Housekeeping Note: While the first few minutes of this special bonus episode are free for everyone to watch, the rest is for paying subscribers only. Thank you as always for your support. If you’d like to pull up a chair, you can join right here.

THE POWER OF BRAINSTORMING AROUND “GARBAGE”

The core distinction between these two ways of processing the world lies in how one handles assumptions. Linear thinkers, Doomberg says, are bound by the search for truth, whereas lateral thinkers are bound only by utility. He elaborates on this fundamental difference:

“A lateral thinker can brainstorm around an assumption, even if that assumption is not true and they know it. And that is the big difference. So a linear thinker goes in search of assumptions that must be true and then brainstorms around those. Whereas a lateral thinker has no emotional attachment to the correctness of an axiom that is used for brainstorming.”

To illustrate this, he offers a “garbage assumption” currently in his book draft: the idea that Vladimir Putin is a puppet of Western intelligence. Doomie doesn’t believe it’s true. But the exercise of kind of pretending it is allows him to view the world through a different lens:

“What would that mean? What would that look like? How plausible is that? If that were true? Does that explain the world? Maybe it doesn’t quite explain the world, but it lets you think about the world in a different way, and then certain events replayed through that new axiom look a little different... a linear thinker views brainstorming around knowingly false axioms as a waste of time. We’ve got to get to the right answer quickly.”

💡Basically, just because an assumption is garbage, “doesn’t mean all of the outcomes from brainstorming around it are garbage,” Doomberg said. “Occasionally you need somebody to connect weird dots, and one of the ways that lateral thinkers connect weird dots is they’re very comfortable brainstorming around false axioms.”

MENTAL MODELS: UTILITY OVER EGO

From lateral thinking comes the concept of the operative mental model. For Doomberg, a model isn’t a statement of moral or factual “truth,” but a predictive tool that is kept only as long as it works:

“A mental model is a set of axioms, no matter how wrong you might think they are, that predicts. And as long as it keeps predicting, it’s working, and it’s what we would call operative. It’s an operative mental model.

If your mental model is predicting accurately, you keep it, and the moment it stops, you discard it. And having no emotional attachment to it in the first place makes it easy to discard.”

🪢Last year, the Doomberg team did a presentation for their Pro tier, Mental Models: Six Axioms That Explain the World as It Is (For Now).

One example they brainstormed around was the fact that “the US has started arresting former presidents”:

“Once you brainstorm around that axiom, you come to the conclusion real quick that the odds of Trump not leaving are pretty high. Because in a world where former presidents get arrested and you’ve busted through that taboo, existing incumbents don’t want to leave. They certainly don’t want to turn it over to their political enemies... And so we asked in that presentation, whatever your partisan views are, did we see the last peaceful transfer of power in 2024, in the US?”

Sure, it’s provocative. But again, if you’re thinking about it laterally you get to skate around and connect some of the “weird dots” and maybe some of those weird dots will end up being very useful indeed.

One of the main ingredients for effective lateral thinking is having “no emotional attachment to the way you think the world works,” Doomberg said.

Doomberg’s interview continues for our paying subscribers below, and in the full video above. Doomie keeps his philosopher’s hat on to discuss AI and lateral thinking, the problem with emotional attachment to axioms, some classic lateral thinking examples, and how to try it out yourself.

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The crux of this For the Record is the idea that every mental model of the oil market broke this year. When war with Iran didn't send crude spiking above $150 or $200 (as virtually everyone had assumed it would), it forced a reckoning: either prices were being manipulated, or they were telling us something we didn't yet understand. Doomberg is firmly in the second camp. In this conversation, recorded July 1, he lays out what he thinks prices are actually saying, and follows the thread outward into into Europe's energy self-harm, a Russia that emerges from sanctions stronger, an underappreciated war risk on NATO's doorstep, and why AI may just be the next commodity headed lower.

🏠Housekeeping Note: While the first c. 15 mins are free for everyone to watch, the entire 50 minute episode is for Market House full subscribers only. If you’d like to pull up a chair, you can join right here.

“EVERYBODY GOT OIL WRONG“

“Anybody who said they didn’t anticipate oil would spike above $150 or $200 is lying to you,” Doomberg said. “Everybody assumed, including us, that oil would spike. And when it didn’t, then [it became clear that] something is wildly inconsistent with everybody’s mental model of how the oil market is currently working.”

When it became clear that $125 was going to be the peak, there was a split into two camps, Doomberg said:

• Camp 1, including Doomberg, , and a few others, said “Wow, prices are telling us something we didn’t know, let’s pay careful attention and try to understand it.”

• Camp 2 argued that “prices are being manipulated and the oil spike is just around the corner.”

Doomberg argues that Camp 2 are clinging onto a narrative and therefore missing what’s going on underneath the surface.”

So, what were prices actually saying?

Doom says price was shouting that “China has made fungible the entire suite of hydrocarbons,” making crude oil is far less important than it was before. The volume of natural gas liquids (NGLs) is “exploding,” Doomberg said: “People who are clinging to the ‘I want the price of crude oil to go up’ narrative don’t like to count NGLs as oil, but it is oil.”

“China was able to make fungible 4 million barrels a day of crude demand, and one of the ways they were able to do that is because the US NGL production exceeded all expectations and plugged a big hole for China, thereby keeping the price of crude under wraps.”

(🪢For more on this, see Doom’s ‘Peak “Not Oil”’)

That all means that now, “we have a glut of crude oil, and a very temporary shortage of refined products,” Doomberg said.

So, the situation has changed, and “unless Iran blows up the Middle East, which could happen, that spike is not around the corner,” Doom said. “The risk premium in oil is not how long it will take for the Strait of Hormuz returns to normal volumes. The risk premium in oil is whether Iran blows up Saudi Arabia.”

“LONG TERM, THE REAL PRICE OF ALL COMMODITIES IS LOWER”

The reason Doomberg and team think that long term, the real price of all commodities is lower, is because “to assume otherwise is a giant short bet on human ingenuity - and ingenuity in supply chains logistics, innovation, engineering, finance… All of those things converge to make the lifeblood of the economy ever cheaper,” he said.

We’re seeing it already, he thinks, with not getting that $150-$200 oil spike. Because there's such an abundance of hydrocarbons in the ground globally, and China has made the whole suite of hydrocarbons fungible, supply isn't as dependent anymore on any single route. If one passage gets blocked, producers just push more volume through another.

Problem is, all the metrics in the oil and gas space “are backwards looking, and they don’t correct for technology,” Doomberg said.

*Important caveat: Doom doesn’t consider gold a commodity here.

“WORLD WAR III IS NOT DONE”

Iran is still getting most of the headlines, but Doomberg thinks the “US-Israeli attack on Iran is just a separate battle in a broader World War III.”

The Doomberg team is keeping a close eye on the rest of its political risk board:

• Russia recently closed rail connections with Finland, Estonia, Latvia, Lithuania: “That’s something you do before you attack them,” Doom said.

• President Trump met with Ukraine’s President Zelensky to discuss a drone attack campaign into Russia, and a “profound psy-op information war against Russia, to try to destabilize Putin.”

Doomberg’s interview continues for our paying subscribers below, and in the full video above. In it, our favorite chicken talks about the infinite demand for energy, the risks around Russia, why it was a “catastrophic” decision to go to war against Iran, and more.

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JJ calls it exactly like he sees it, often breaking from the crowd when he identifies a false narrative circulating on platforms like X.

Overall, he said: “Don’t be too afraid of the future. I never made any money betting on the end of the world. Ever.”

THE MISINFORMATION BONFIRE

When JJ looks across the current landscape, he sees a massive gap between what the charts are saying and what the internet is shouting. He is particularly focused on two major themes: the narrative around oil and the profound effect AI is already having on capital markets.

On oil, JJ says people are getting very worked up about it but there’s low volume and falling open interest. “A tremendous amount of energy is put into the idea that we’re going to run out of oil, and we’re going to run out of oil really quickly. So I push back very, very hard on that.”

He argues that while markets can be algorithmically modeled, oil remains a “human market” where money is currently bored with the misinformation being peddled. He points to the rally in April as proof that “real money” isn’t validating the panic: “We had a vertical rally for about two weeks where you just had to hold your nose and buy. Just put your head down and get something... Money is bored with misinformation and it’s not validating anything that’s going on in terms of prices.”

THE ENERGY FORTRESS

JJ is dismissive of the idea that we are in a “red zone” crisis regarding oil shortages. He views the US as a powerhouse that is largely misunderstood by those who trade on headlines.

“America has become an energy fortress, the largest producer, exporter, refiner, with a massively well-managed industry,” JJ said. “Some of the best management of any companies anywhere in the world are right here in Houston and Louisiana and they really know what they’re doing.”

While many pundits predicted oil would rocket to $120 and stay there after the closure of the Strait of Hormuz, JJ notes that the market felt different. He explained: “The entire move high to low occurred in 24 hours... I know what markets feel like when they want to go higher. It’s never felt like it wanted to go higher. It still doesn’t feel like it wants to go higher.”

THE INVENTORY MATH

A key pillar of JJ’s thesis is that global oil inventories are much higher than the “tank bottom” narrative suggests. He cites EIA estimates of roughly 8.2 billion barrels in late January and February.

He broke down the reality of those billions: “3 billion of the 8.2 billion is downstream of crude. And crude has no value until it’s refined. So that’s 3 billion that’s in the secondary tertiary supplies, so you’ve got to get it to the refinery first. The 5.5 billion of that, there’s 3 billion of commercial stuff. And the reserves, about 2.5 billion barrels, is sequestered in fault-like circumstances, readily deployable because it’s ‘break the glass’ type of stuff.

JJ says the market is far more elastic than people realize. He believes supply can easily last longer than the Iranian Republican Guard can hold out, especially as drilling continues. “Rig count has been going up... if rig count goes up 20, you probably have 60 wells,” he said, adding that these properties are highly profitable at current prices.

The full depth of JJ’s analysis on the Saudi/Aramco “lies,” the deflationary trap of AI, and why he likes silver is available to our paid subscribers below.

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We met Robert at ’s TG Macro Conference back in February, and quickly realized we had to chat to him on camera. Robert’s boots-on-the-ground data shows that tech’s digital footprint is starting to be held hostage by old-school geopolitics, supply chains, and Joe Public.

Let’s get into it…

THE FERTILIZER CANARY IN THE GEOPOLITICAL COAL MINE

When it comes to the Strait of Hormuz crisis, the market’s focus on oil is far too narrow, Robert said. The real, immediate threat of the blockade in the Strait of Hormuz isn’t just about oil tankers; it’s about the vital inputs that keep the global agricultural sector from collapsing.

“A lot of the public and media focus on the Strait of Hormuz has been about oil. And I’m not saying that’s not important, but don’t forget sulfur, sulfuric acid, which is important in petrochem, urea, phosphate fertilizer. Depending on which one we’re talking about, we’re talking about 10, 20, 30% of the global supply of those fertilizers coming through the Strait.”

Robert read data from a recent Senate hearing on fertilizer from a developer building a fertilizer complex in Nebraska, highlighting the exact on-the-ground cost pressures :

“Since February... We have seen a 33% rise in anhydrous ammonia prices, 55% rise in urea, 25% in liquid nitrogen and 5% in DAP, 3% in potash . Same time, farm diesel prices are up 72% increasing the cost of field work, fertilizer, transportation and irrigation. So those are massive increases in farming, which of course is a difficult business to begin with.”

The anxiety from people directly affected by this is real. Robert just got back from addressing rural electric cooperatives in Wyoming:

“I was speaking to Wyrulek, which is a rural electric cooperative in Southern Wyoming. The audience, 300-400 people, all ranchers and farmers. And to hear them talk about what’s happening with fertilizer prices, diesel fuel prices, they are very, very concerned.”

THE PERMIAN PARADOX: NEGATIVE GAS PRICES

While the rest of the world (TTF in Europe and JKM in Asia) deals with natural gas prices ranging from $17 to $19, the US remains insulated by the shale revolution, with Henry Hub sitting near $3. In fact, in the Permian Basin, an overwhelming surplus that has occasionally led to negative prices.

“At the beginning of this month, the natural gas prices in the Permian Basin here in Texas, in some cases were as low as... minus $5 per million BTUs,“ Robert said. “In parts of Texas... natural gas prices were not selling. They were giving them away. So if you have a fertilizer plant in West Texas, you were getting natural gas suppliers to pay you to take their fuel because there’s so much gas.”

Quite extraordinarily, Permian is producing more gas than the entire country of Canada, and yet there is not a single gas rig running in the Permian Basin. The gas is a byproduct of oil drilling, creating a massive, low-cost supply that serves as a deflationary shield for the US economy, at least for now.

Robert’s thesis:

“My hunch is that those European and Asian prices are going to pull Henry Hub higher, but how much higher is the question... Because the drillers are so good at responding to price signals.

The US is sitting atop galaxies of natural gas and they just keep and the drillers keep getting better and better at producing it. So could we see $4, $5 natural gas? Yes, we could. And I think that would be good for the drillers. But I think still this differential between the US and Asia, US and Europe is going to continue because you got to put it on a ship. You got to freeze it, put it on a ship, unload it. And then that adds, you know, depending on what number you’re five, six, seven dollars per million BTUs.”

AI IS A NATURAL GAS STORY

Despite the push for “clean” or “alt” energy, the physical reality of powering the AI revolution comes down to one fuel: natural gas.

“AI is a natural gas story, right?” Robert said. “The power for AI is all going to be generated, nearly all of it will be generated by natural gas-fired generation, whether it’s reciprocating engines... or gas-fired turbines. There’ll be some wind and solar and a little bit of batteries... but it’s a gas story”.

However, the “Giant Five”—Microsoft, Apple, Google, Amazon, and Meta—are so cash-rich that they are becoming price-insensitive. They are willing to outbid everyone else for parts and power, which Robert warns will drive up electricity bills for everyone else:

“If the hyperscalers can come in and bid up the price, say, of transformers, what does that do for Wyrulek or a small electric cooperative in Wisconsin or you name it, right? So again, these repercussions, these impacts are felt more broadly in the economy because of this, you know, the market size and market power of the Giant Five.”

THE UNPRECEDENTED POPULIST GRID REVOLT

But the tech sector’s assumption that they can simply buy their way into unlimited grid capacity has ignored a vital variable: local human nature.

A grassroots backlash is starting to get real traction across the country. Local citizens, farmers, and ratepayers are looking at these massive concrete server complexes and realizing that they are consuming their water, ruining their local environments with high-decibel cooling fan noise, and hogging their regional power supply.

The sheer velocity of this resistance is catching Big Tech completely off guard. Robert’s tracking data reveals a trend:

“89 rejections of data centers, rejections or restrictions of data centers in the US... just since January 1st. There were 49 in all of last year and I think four or five in the year before. We’re seeing an unprecedented backlash against big tech, Silicon Valley, the tech elites. I’ve never seen anything like it.”

🔒The conversation doesn’t end here. Below the paywall line, we dive into the details of this populist uprising. Robert takes us directly onto the ground to analyze town hall showdowns where billionaire investors are being shouted out of rural counties, problems on the supply chain side for the US, and reality checks on alt energy and nuclear.

To unlock full access to this and all future editions of ‘For the Record,’ upgrade your subscription here.

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The instinct may be to call it “hopium,” but as 3Fourteen Research Founder and Strategist Warren Pies told us on this month’s For the Record, “the narrative evolves with price.” To understand what’s actually happening, we have to detach from the headlines and look at the underlying data. As Warren puts it, “In the war, it took up all the oxygen in the room... focus on the Strait of Hormuz being closed... focus on oil, focus on demand destruction... and simultaneously, we might have been missing things, bullish things that were happening under the surface.”

THE 99.7TH PERCENTILE EVENT

What some are dismissing as a “relief rally” is actually a historic momentum event. “The thrust we had, 10% in 10 days, it was historic. It was a 99.7 percentile of all 10-day moves that we’ve seen going back to 1950,” Warren said. “Usually it’s the beginning of a new advance. We’ve had 21 of these cases previously, [and] 86% of those cases are higher one year out and the average is a little over 20%.”

THE VALUATION GIFT

While the world was focused on geopolitics, the market was undergoing a massive valuation reset that usually requires a recession to achieve. Warren points out that while forward EPS is up over 9%, the S&P corrected 9%, leading to a “PE ratio [that] came in 18% without a recession without a Fed tightening,” he said. “Very rare to see the multiple come in that much. And so you did get that valuation reset.”

NEW LEADERSHIP

The most critical shift hasn’t been a ceasefire has been who is leading the charge. In February, the market was being led by “bunker” stocks: consumer staples and energy. Warren was wary: “That was an unhealthy leadership... The only path for a sustainable bull market from here is the AI story... We wanted to see leadership shift back into tech.”

That shift arrived with the announcement of the Mythos model, a cryptic frontier AI model that changed the game. Since that announcement, “leadership within the market has changed,” Warren said. This new leadership - “banks, retail, construction engineering, semis” - is, according to Warren, “the perfect leadership profile for what you want to see going forward”.

THE VOLATILITY CO-SIGN

“Bond vol collapsed ahead of equity vol,” Warren said. “That’s another positive thing.” Warren looks for a specific mix: elevated equity volatility (VIX) paired with falling bond volatility (Move Index). “That’s the ideal setup. So you want the bond market to be to co-sign the equity rally... If you buy at that point and hold for a year, you’re basically 100% of the time positive.”

THE HIDDEN FISCAL TAILWINDS

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As you may know, For the Record is a monthly deep dive on one particular sector, thesis, idea, etc. And for this month, given, well, everything, we’re focused on defense. Putting his ideas down for the record is Ian Winer, founder of Center15 Capital.

Ian is a graduate of West Point and spent a career in investment banking working at Goldman, JPMorgan, and others, before launching Center15, which invests in growth stage defense companies. When I first sat down with Ian over a year ago, he told us that the defense industry was undergoing its biggest changes “since Vietnam.” And it seems like the changes have relentlessly continued since then…

🏠Housekeeping Note: The first 17 minutes or so of this conversation are free for everyone to watch, with the full 55 minutes only for monthly or annual members of The Market House. If you’d like to join us or upgrade, right this way.

LESSONS FROM THE EARLY DAYS OF THE IRAN CONFLICT

Zeroing in on tactical strategic defense, Ian has some notable takeaways from the first 10 days or so of the Iran conflict.

1. The Math Doesn’t Work
   There’s an enormous “asymmetry of cost” in “the way we’re defending against the drones and inbound missiles coming at various targets,” Ian said. Essentially, drones are now incredibly cheap, and the missile interceptors to combat them are incredibly expensive. At the same time, Gulf countries have ‘expressed concern’ that they are running short on these interceptors.
   

   

   At a meeting in the White House last week, 6 defense companies (RTX, Lockheed Martin, Boeing, Northrop Grumman, BAE Systems, L3Harris, and Honeywell Aerospace) agreed to quadruple production of certain weapons, including interceptors.
   
   The cost asymmetry isn’t a new problem, but Ian said the Iran war has hurtled it to the forefront.
   

2. Stadiums and Airports Need Protection
   The second big lesson Ian flagged is how critical it is to have counter-drone protection around commercial installations (which brings lesson 1 into even sharper relief). Iran has attacked multiple civilian infrastructure and transport networks, including Dubai International Airport.
   
   “We have always focused on defending military targets, and I think that what this last 10 days have shown us is that commercial targets also need significant layered defense,” Ian said. “Everything from oil installations to potential nuclear installations to airports to stadiums.”
   
   ”We are woefully underprepared for that,” Ian said. “What keeps me up at night is the thought of how easy it is for a bad actor to control a handful of quadcopter drones and attach some kind of munition to them and fly them into a stadium or some kind of high-value target where there’s a lot of people.”
   

3. Space is Now the ‘Tip of the Spear’
   Ian says this is the “first real conflict I’ve seen where it feels like what we were able to do from space has played a much bigger role in the lead-in to all of this than we’ve seen in the past.” The new technology in orbit - everything from radio frequency detection to imagery to communications - has vastly increased “the speed with which we gather intelligence from the battlefield, and the ability to ingest that intelligence and turn it into something actionable,” Ian said. Essentially, the key word now and going forward is latency - just how quickly they can drive the latency of communications and intelligence sharing down.
   

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A “GENERATIONAL OPPORTUNITY IN DEFENSE TECHNOLOGY”

From his position as Center15 founder, Ian says there is a “generational opportunity in defense technology.” He said Center15 is investing in companies they feel are going to disproportionately benefit from 3 aspects of growth.

• First, the overall global pie of defense spending continues to grow dramatically and has no sign of letting up. It will likely be north of $3 trillion this year, driven by large increases in spending in Europe and the Middle East in particular.

• Second, a huge shift within that pie towards new technology - partly because, for example, the large platforms are susceptible to asymmetric damage from small drones.

• Third, a change in acquisition strategy, which is what Ian says the US administration is really pushing. Historically, companies would take 7 years to go from making a prototype to getting a contract to make real dollars. That “Valley of Death” always dampened investment in the sector. “What the administration has done is basically torn up the old playbook,” Ian said. They are going to give dollars to commercial companies and focus heavily on getting stuff made in as fast and as cost-effective a way as possible.

These 3 drivers mean a lot of new money is now entering defense. But Ian said that this influx is pushing up valuations in the early stage “to a point where it’s making it more difficult to us to find companies where we want to come in and invest.

THE MALINVESTMENT WORRY

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🏠Housekeeping note: The first 12 mins or so and part of this write-up is available to everyone, but the full 40 minut session is reserved for paid-up Market House subscribers. Thank you as ever for your support. And if you’d like to join us, you can do so right here.

THE RUDE BOT AND AI WORKFLOWS

Erik is taking AI far beyond the “chatting” phase. At YWR, he’s building systematic AI workflows where models hand off tasks to one another to analyze narrative evolution over multiple quarters of transcripts.

One of his favorite uses of AI so far is generating the bear case. In an institutional setting, people are often too “polite” to disparage a colleague’s idea, and many are structurally incapable of thinking like a short seller. Erik uses the AI as a “rude” counter-party, prompting it to hallucinate creative ways a trade could fail or to “pull the whole thing apart.” It’s a tool to bypass human weakness and confirmation bias.

One of the tools he's built for YWR subscribers is an AI investment report generator. You type in a ticker, wait two to three minutes, and out comes a full breakdown: bull case, bear case, moat analysis, competitive advantages, and a summary of how the narrative around the stock has evolved across the last three earnings call transcripts.

🪢You can download some samples and get started at YWR Intelligence.

RUNNING TOWARD THE “UNTOUCHABLES”

Erik’s antennae go up when he hears something described as uninvestable or untouchable. The framework took shape during the ESG mania of 2022–2023, when European institutions were abandoning entire sectors on ideological grounds. Energy, tobacco, mining, banks: all institutionally unloved, under-allocated, undervalued, and in many cases paying very high dividend yields. Erik packaged these together into a theme he called “Dirty Dividends,” great cash-flowing businesses that happened to be deemed dirty.

Erik applied this same logic to China in early 2024. In 2024, China was the definition of uninvestable, with regulators going after tech executives, property market in freefall, geopolitical risk everywhere. Erik’s read was different: to him, it looked like the US in 2009. Property had crashed, everyone was bearish, and no one believed recovery was possible. He reminded people: the S&P bottomed at 666. He started buying Alibaba, Baidu, Tencent, and Ping An Insurance.

💡Erik’s rule: Stop listening to the 90%, or the consensus, at the inflection point. When you hear the word “uninvestable,” that’s usually where the most “juicy” bull market pieces are coming together.

THE “DINOSAUR” RENAISSANCE

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Hi everyone,

Energy has become the “center of the universe,” according to Jed Dorsheimer, group head of the energy and power technologies sector at William Blair. In the latest installment of For The Record, Jed discusses why he believes electricity is replacing gasoline as the most critical barometer for US economic growth and why investors need to pre…

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Chinese equities had a strong performance in 2025, and Pietro Ventani, Founder of Swerve Insights, believes that it will continue. In the latest installment of For The Record, Pietro, who is based in Singapore, talks about why he thinks investors are underestimating the China story.

Housekeeping Note:

The first 10 minutes or so of this conve…

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Silver has had a huge run, up over 70% year to date leaving many to wonder, is there more upside from here? In the latest installment of For The Record Tavi Costa, Macro Strategist at Crescat Capital makes his bull case for silver.

Housekeeping Note:

The first 10 minutes or so of this conversation are free for everyone to watch, with the nex…

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Thrilled to bring you the latest episode of For the Record, with the wonderful Warren Pies, founder of 3Fourteen Research. He argues that the market’s focus on long-term debt anxieties is overshadowing the immediate risk posed by cyclical economic slowing.

Housekeeping Note:

The first 10 minutes or so of this conversation are free for everyon…

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In a world seemingly teetering on the brink of perpetual conflict, the notion of “peace black swans” might sound counterintuitive.

But , CEO and PM of Akanthos Capital Management, told us last week that the most disruptive events could stem not from escalating wars, but from unexpected peace breakthroughs.

Of course, that might seem even fur…

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