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May 2026

13 digests published this month.

30 MaySaturday4:50 AM EDT

The AI build is being paid for out of cash flow — and the largest IPO ever is being priced on a prediction

The strongest version of the not-a-bubble case this week was an accounting one: aggregate corporate capex is running below one times free cash flow, against three-and-a-half to four times at the 2000 peak. Two weeks out from a $1.75 trillion SpaceX listing, the largest claim attached to it runs through a merger with no board approvals in evidence.

1The AI build is being paid for out of cash flow, and that is the number the 2000 comparison fails on
2The year's index gain has come from outside the mega-caps, and the small-cap earnings recession has begun to inflect
3The AI power bottleneck is a 2030s build with 2026 tickers attached
4A $1.75 trillion listing is two weeks out, and the biggest claim attached to it rests on a prediction rather than an approval

29 MayFriday4:47 AM EDT

Cloud software's 36% day ran into the case that high margins are not a thesis — and June's biggest listing is already moving prices

Snowflake's near-40% pre-market move led a broad bid across cloud software on the same morning that Adam Parker's highest-conviction call was to avoid exactly that rally, on the argument that a high margin means nothing without accelerating revenue. The other dated event on the page is SpaceX's 12 June debut, which is already pulling money into satellite names and, on one reading, out of the Magnificent Seven.

1Cloud software's 36% day ran straight into the case that high margins are not a thesis
2A contracting multiple is a forecast of a downgrade, not a discount
3The largest listing on June's calendar is already moving prices in names that are not it
4The ceasefire is priced in the commodity tape and contradicted in the policy track

28 MayThursday4:42 AM EDT

The software bear case narrowed to a pricing model — and a Gulf escalation sent gold to a two-month low

The bear case on enterprise software has stopped being about demand and become an argument about pricing — The Compound framing per-seat licensing as terminal-value risk, Felix & Friends arguing consumption pricing is already the escape. A Gulf escalation, meanwhile, lifted oil and the dollar while gold fell to a two-month low.

1The argument over AI and enterprise software has narrowed to whether per-seat licensing survives
2An index rule change can hand a loss-making listing 4% of the Nasdaq 100 within 15 days of its IPO
3A Gulf escalation lifted oil and the dollar but sent gold to a two-month low
4The flagged tail risk is 30-year sovereign yields, not a 9% equity drawdown

27 MayWednesday9:26 PM EDT

Thirty-year yields went vertical in four countries, and software is being priced for zero terminal value

Thirty-year yields in the US, UK, France and Japan are going vertical at once, on a fiscal worry that equity prices are not discounting, and beneath them sits an un-inverted curve whose recession signal is still unsettled. The day's other argument was software, where research cited on The Compound finds disrupted companies keep their revenue long after the market has marked their future to zero.

1Thirty-year yields went vertical in four countries, and the recession signal underneath them is contested
2Software is being priced as if disruption takes the revenue, when the record says it mostly takes the multiple
3A trillion-dollar listing can enter the index in fifteen days, against a float too small to absorb the buying
4Oil rebounded on a strike in the Gulf, and the equity bid stayed in semiconductors

24 MaySunday4:44 AM EDT

The Fed's next move repriced from a cut to a hike, and the biggest float in history is queued behind it

The Fed's own minutes now show a majority prepared to raise rates if inflation stays elevated, futures have moved from pricing cuts to pricing one hike by year-end, and the Cleveland Fed's nowcast has inflation running above 4%. The second headwind Joseph Wang describes on Fed Guy is supply: a SpaceX float at a $1.5–2 trillion valuation, with OpenAI and Anthropic behind it, would drop record amounts of new equity on a market near its highs.

1The next Fed move being priced is a hike, not a cut
2A record IPO calendar is about to put new equity supply on a market near its highs
3The rate path and the oil price both hang on the Strait of Hormuz, with markets shut for two days

23 MaySaturday4:52 AM EDT

The AI bubble question narrowed to a moat test, and the US market's 30-year lead was mostly re-rating

The week's sharpest argument was not whether AI is a bubble but which parts of the chip stack have a moat underneath their earnings — memory's profit surge is price rather than units, while the GPU franchise still has its software lock. Separately, three-quarters or more of the US market's thirty-year lead over the rest of the world decomposes into re-rating rather than faster growth.

1The AI bubble argument narrowed from a demand question to a moat question
2Most of the US market's 30-year lead over the rest of the world was re-rating, not growth
3The long bond is back at a 2007 high, and the rate argument has moved from cuts to hikes
4The coming mega-listings are a supply event before they are a growth story

22 MayFriday4:49 AM EDT

The bubble playbook is less leverage, not a short — and gas prices are already shaping the retail outlook

A late-stage bubble is an argument for cutting leverage rather than shorting, according to Andy Constan on Excess Returns, who has taken his own maximum exposure from 130% down to 110% on the view that momentum keeps paying while mean-reversion trades get burnt. The other live question is energy, where a warning that oil enters a supply 'red zone' by July sits alongside a big-box retailer's gas-price warning.

1In a bubble regime, momentum keeps paying while mean-reversion trades get burnt
2The late-cycle signals are in the IPO queue and the single-name tape, not in the index level
3A summer oil squeeze is the shared risk behind both the energy and the consumer outlook

21 MayThursday4:46 AM EDT

The bear case now runs through the 30-year bond, and defence stocks keep falling through a widening war

The most bearish argument of the week was built from the long end of the bond market rather than from what companies earn, and it named no position to hold it in. Defence stocks, meanwhile, are down 30-40% this year while checkpoints, a bypass pipeline and a Patriot deployment all say the war is widening.

1The bear case for equities is being argued from the bond market, not from earnings
2Defence stocks are down 30-40% this year while the war they trade on keeps widening
3The same war is being read as escalation and de-escalation in the same session

20 MayWednesday4:44 AM EDT

AI capex outran its forecast by 60 points — and the names that beat their quarter got sold anyway

AI capital spending was forecast to grow 10% in 2025 and grew about 70%; the published forecast for 2026 is 10% again, and Gene Munster expects 20 to 30. The tape has been less generous — seven AI names that beat their last quarter are all below recent highs, and stocks and gold fell together as the 30-year yield pushed toward 5%.

1AI capex is forecast to grow 10% again in 2026 — last year that forecast missed by 60 points
2Three AI names beat their quarter and sold off anyway
3Stocks and gold fell together while the dollar firmed — the pressure is coming from the long end, not from fear
4Crude priced a de-escalation the policy track has not delivered

19 MayTuesday4:43 AM EDT

Oil gave back its war premium overnight, and the crash case moved to the bond market

A paused strike on Iran took about 2% off crude overnight and stranded the $110 headlines, though the inventory tightness underneath the price never moved. The chip complex, meanwhile, is being written up as the rally's engine and as its bubble in the same place, and the day's one piece of deep research puts the danger in a 30-year Treasury yield above 5% rather than in earnings.

1Oil gave back its war premium overnight, and the inventory squeeze underneath it did not move
2The same chip rally is the index's engine and its bubble, and Wednesday night's print picks one
3This week's crash case rests on the long end of the bond market, not on earnings

18 MayMonday4:45 AM EDT

The war premium showed up in the long bond, not in stocks — and the AI profit boom runs on a depreciation clock

A weekend of Gulf escalation left equity futures close to flat and the VIX at 19, but pushed the 30-year Treasury yield above 5.1%, its highest in nearly a year. The other argument worth the day came from Jeremy Grantham on Excess Returns: the AI build-out is flattering aggregate profits through the depreciation schedule, and that effect has an expiry date.

1The war premium is being paid in the bond market, not the stock market
2The AI build-out is flattering profits through the depreciation schedule, and that flattery expires
3An executive order created an FDA priority category, and every way to own it is pre-revenue

17 MaySunday10:33 PM EDT

An executive order made psychedelic therapy investable, and the AI bubble case moved from price to accounting

A US executive order fast-tracking psychedelic-assisted therapy turned a research field into three listed, pre-revenue tickers whose only real catalyst is an FDA decision late this year or early next. The sharper argument of the day was about depreciation: stretching GPU lives from three years to six and a half flatters today's profits and defers the cost to later income statements.

1An executive order turned psychedelic therapy into a listed equity trade with an FDA date attached
2The bubble argument moved from price to accounting
3The index barely moved while single names swung more than 20% on their own news
4Private credit's risk moved from the banking system to the retail saver

17 MaySunday8:11 AM EDT

A closed strait is now showing up in school-bus diesel bills, and bonds are repricing faster than stocks

The cost of a shut Strait of Hormuz has reached US school-district diesel budgets, and the diplomacy that could reopen the lane went backwards at three separate tables. In the same tape, one-year-high yields, a 2.44% fall in small caps and gold down on a risk-off day say the inflation print is being repriced through rates before it touches earnings.

1The cost of a closed Strait of Hormuz has reached school-district diesel budgets
2The bond market took April's 3.8% inflation print harder than the stock market did
3The chip rally's bull case and its bubble case both point at the same earnings report