Stavan Shah, MFin

In a rush to find mispricing somewhere! | Investor | WLU🎓

[Peter Schiff @PeterSchiff]

If precious metals traders are right about how aggressive the Fed will get to crush inflation, the stock market should be crashing. If stock traders are right that the Fed is more bark than bite when it comes to rate hikes, gold prices should be soaring. They both can't be right.

[st1ne @SolSt1ne]

Citadel CEO Ken Griffin explained why generative AI is useless for hedge funds - "it works for the next 5 minutes. The next 2 years it falls apart"

every VC pitching AI right now is selling the opposite of what the $65B fund is actually doing

48-min Stanford lecture and you'll understand what AI actually does inside a tier-1 hedge fund

bookmark & watch - this is the AI take no fund manager will say out loud

[Thorsten Froehlich @FroehlichThors1]

JPY Carry Trade - Misconception

There are some large accounts talking about the Japanese carry trade, but seem to have got it wrong or at least the info is misleading or incomplete.

Explained for dummies:

You borrow short term in JPY (3M rolling typically) and convert into USD and buy 3M T-Bills. The investorr runs a spread in the interest rate differential which frees up capital to be deployed into risk assets, but the actual cash on the carry trade remains in the carry (or should - some may actually bought risk asset outright).

Before the big unwind in summer of 2024 (BOJ's sudden interest rate hike), you had a carry spread of ca. 5.4% - a sharp rise in the JP03MY yield and drop in the US03MY compressed the spread to around 4.5%. At the same time, the JPY appreaciated against the USD, which meant you lost another ca. 13% - in total, your carry trade compressed by nearly 30% and investors had to unwind risk assets to cover their losses.

If you want to monitor the situation, take a look at the spread between JP03MY-US03MY and the USDJPY FX rate.

Chart (spread inverted).

[Thorsten Froehlich @FroehlichThors1]

SCARCITY

The incoming supply shock for long dated treasuries

The $TLT / $SPQ ratio currently sits at 11.5% - in other words, for each dollar invested, the market holds 88.5% in the S&P 500 and 11.5% in longer dated treasuries. The 200M moving average resides at 19.32%.

Rising yields and sticky - indeed, rising - #inflation have by now been so thoroughly absorbed into the market's collective psyche that they no longer constitute a view.

Accepting that premise - which, for the record, I don't - it leads to precisely two outcomes: it breaks the economy, and it breaks the stock market. In that sequence, with the latter arriving first to announce the former.

Consider this:

The TLT/SPX ratio sits at an all-time low. And since the GFC, the share of outstanding US Treasuries with maturities exceeding twenty years has never been as thin as it is today (8%). The long end has been quietly, systematically hollowed out, relative to the stock market - down from the 11.1% at the bottom of the 2022 bear market / correction.

Rotation

Relative to the market capitalisation of the S&P 500, an enormous quantity of capital will find itself competing for a remarkably small pool of the same paper, once the tide is turning.

[Compounding Quality @QCompounding]

Bloomberg killers list

[MOI Global @manualofideas]

A worthwhile new resource for value investors:

The Journal Entry, by Stephen Penman and Peter Pope, supplements Financial Statement Analysis for Value Investing with additional insights on accounting, valuation, and investment judgment.

PDF:
https://t.co/pGzGHXZqAV

[Boring_Business @BoringBiz_]

Finance students when they graduate and realize that no one even uses a DCF model for anything

[Martin Pelletier @MPelletierCIO]

This is a supply shock oil driven rally with wages not indexed. This isn’t inflation but rather deflationary. Watch for my Financial Post piece tomorrow.

[Steve Burns @SJosephBurns]

I’m not just a value guy, I need charts, I need a catalyst.”

— Stanley Druckenmiller

[Toad Capital @rich_toad]

Buy-side reality check: modeling and fundamental analysis are not the job.

[Ricky Ho @rickyho_1989]

Me: What’s your take on Japan in this environment with oil prices rising so quickly?

Millennium PM: I actually think a reverse yen carry trade could be on the cards.

Me: That’s a big call. What’s the mechanism?

Millennium PM: It starts with oil. Japan imports almost all of its energy. When oil prices rise sharply, Japan’s trade deficit widens immediately because the import bill jumps.

Me: Which weakens the yen.

Millennium PM: Exactly. A larger trade deficit puts downward pressure on the JPY, and once the yen weakens the situation actually worsens because oil is priced in USD. So a weaker yen means Japan effectively pays more for the same barrel of oil in yen terms.

Me: So the currency depreciation amplifies imported inflation.

Millennium PM: Right. First you get energy inflation, then it spreads through transportation, electricity, and eventually broader consumer prices. At some point the risk becomes a wage–price spiral, which is something Japan has tried to avoid for decades.

Me: But the Bank of Japan can’t control oil prices.

Millennium PM: True, but they can control the currency channel. If imported inflation keeps worsening because the yen weakens further, the BoJ may be forced to hike rates — not to fight oil directly, but to defend the yen and keep inflation expectations anchored.

Me: And that’s where the carry trade problem begins.

Millennium PM: Exactly. The entire yen carry trade depends on ultra-low Japanese funding costs. If the BoJ raises rates, even modestly, it undermines the economics of borrowing yen to fund higher-yielding assets abroad.

Me: Which means positions start getting unwound.

Millennium PM: Yes. Once the carry starts reversing, capital flows back into yen funding markets and leveraged investors are forced to reduce exposure. Those unwinds rarely stay contained — they tend to create volatility across global equities, commodities, and emerging markets.

Me: So rising oil could indirectly trigger a global carry unwind.

Millennium PM: Exactly. Oil → wider trade deficit → weaker yen → imported inflation → BoJ forced to hike → carry trade reversal. That’s the chain reaction I’m watching.

[Not Jerome Powell @alifarhat79]

Me trying to avoid taxes

[Equity Insights Elite @EquityInsightss]

Chris Wood on Why FII's are selling India

“Foreigners have already left the Indian stock market quite dramatically because they were extremely overweight India for many years. We had two major triggers for selling India. First, in late 2024 the Chinese market bottomed at around 7x earnings, and since China is a large part of the emerging market benchmark, foreigners had to sell India overweight positions to invest in China. Second, after the DeepSeek moment in January 2025, there was initially a sell-off in AI stocks, but it soon became clear that AI capex was still surging due to hyperscalers, which led to a huge rally in semiconductor and memory stocks in Taiwan and Korea. That created another wave of selling India to fund overweights in Taiwan and Korea. Many emerging market fund managers who had been underweight Korea for decades are now more overweight Korea than ever and more underweight India than ever. The key question for emerging market investors this year is timing the peak in semiconductor stocks, because if you can rotate out of names like TSMC and Samsung Electronics into India at that point, you will do very well. But for now, all the evidence suggests capex is still surging and semiconductor stocks in Taiwan and Korea remain well bid. From a global equity fund manager’s perspective, India is the reverse AI trade, and on IT services there is a division of opinion on how companies will adapt to AI. The consensus is bearish, but not everybody"

[Sameer Allana @HitmanCricket]

Cricket is a boring game.

Meanwhile somewhere in a domestic game in a lower ranked country.

[Oguz Erkan @oguzerkan]

$DUOL isn’t as undervalued as many people think.

Even if we assume 20% annual growth for the next 5 years and 30% net margin with 20x exit multiple, we get a $13 billion business in 2030.

Discount it back to today at 10% annual rate and we get an $8 billion business.

It’s currently valued at $7 billion, making it 15% undervalued.

Note that I gave it a very optimistic exit multiple. I highly doubt whether a business that’ll be under a constant threat of disruption by AI can get 20x exit multiple 5 years from now.

In short, it’s not undervalued.

It’s fairly valued at best.

[Ben Carlson @awealthofcs]

The S&P 500 is in a 3% drawdown and people are asking if this is the next Big Short

We've been spoiled as investors

[Mr. VIX @yieldsearcher]

For those not familiar to credit, here is some reference:

Implied default prob (over 5Y) for CDS:
- 50bp: 4%
- 100: 8% (ORCL)
- 200: 16%
- 300: 23%
- 400: 29%
- 500: 35%
- 600: 40% (CRWV)
- 700: 45%

Compare this to:
BBB cash spread: ~110bp
BB: ~175
B: ~290
CCC: ~640

[Boring_Business @BoringBiz_]

Here are a list of 52 shortcuts I created during my banking days

Sharing in case any interns or new analysts find them helpful
https://t.co/2Ct7bIX5Xn

[RJ @RuebenJay]

@dividenddude No one actually learns anything on $DUOL

[Boring_Business @BoringBiz_]

Still think about the equity research analyst who ordered 75 Chipotle bowls from 8 different locations to prove that portion sizes were off