Share this page!

Enter URL or ID to Unroll

You can paste full URL like: https://x.com/threadreaderapp/status/1644127596119195649
or just the ID like: 1644127596119195649

How to get URL link on X (Twitter) App

  1. On the Twitter thread, click on or icon on the bottom
  2. Click again on or Share Via icon
  3. Click on Copy Link to Tweet
  4. Paste it above and click "Unroll Thread"!
  5. More info at Twitter Help
QF Research Profile picture
QF Research
@ResearchQf
PM at large institutions over 20Y. Your investments decisions are your responsibility. DYODD. Analyze distributionally but non-deterministically.
3 subscribers
Feb 23 • 10 tweets • 7 min read
1) $MSFT DC scare 🧵. High level with details if have time. Some know all datapoints mentioned. Or more (if you have non-MNPI data pls DM me).

a) Conclusion 1st. Global AI capex next few years went UP recently. Even MSFT.

Is this just the latest AI scare? Again, Trump & co finally began scaring investors. Have pet theories about scenarios but a different thread.

The usual discussion about LT AI variability later in 🧵. Even Satya, Sam, Ilya, Jensen, Dario, Jeff etc don't know > 5-10 year consequences of AI. I have no idea. There's never been a tech cycle like this in human history.

But let's start with MSFT Dec Q & 10Q. Keep in mind, that as of 1/29, MSFT already embedded diffusion rule, DS, @OpenAI, Stargate, Cowen "news" and prob much more we don't know.

- Commercial bookings grew 75% Y/Y (!) but guided flat Y/Y Mar Q. Watch OAI commitments going forward

- Capex ~ flat Q/Q Mar & Jun but rises again F26, which is some info. Lower growth rate? No real info, since range is huge

- Have discussed leases being much larger % of MSFT capex last few years. It helps to analyze lease data in 10Q/K's

- "Expect capex to increase in coming years" in 10Q/K's have been stated forever and is a general statement. Has occurred before down capex years

- MSFT clearly said spend shifts back to "short-lived assets (i.e. infra) which are more correlated to sales growth. That's real infoImage 2) Next elements of Cowen note. International first.

Channel checks "indicate MSFT is also re-allocating a considerable portion of intl spend to the US, which suggests to us a material slowdown in intl leasing."

b) Are we sure?

Mentioned "pre-diffusion" for APAC capacity plans on purpose. This is one estimate (Citi) of APAC ex-China DC capacity. Only months old but it's outdated. Possible new projected would've created GWs of spikes.

Japan, Australia, Korea are Tier 1. Consider Tier 2. India, Malaysia, Indonesia etc. Comb thru diffusion rules. E.g. Malaysia was already higher (but pre-diffusion). Well over 3 GW is nowhere near happening with low GPU limits.

Who's who of hyperscalers and DC developers are involved in some projects. Could this be why capex is being reallocated back to the US or other Tier 1's?Image
Dec 20, 2024 • 6 tweets • 3 min read
1) Robots are making huge strides. Mechanical multiplied by AI 3D vision, physical models etc.

It's only one AI adjacency but its impact alone is enormous coming years/decades.

Imho this alone could be by far largest macroecon driver yet it's being ...
citigroup.com/global/insight…Image 2) generally ignored.

AI eyerolling has faded. Hmm maybe this is real. But with exception of few forward thinkers, macro analysts seem want whole thing to just go away.

Look at Citi report in 1). It's public. Payback could be 29W at $7.25/hour or ~ my earlier back of envelope. Image
Nov 14, 2024 • 4 tweets • 3 min read
1) Holy crap this is gen2 like $GOOGL NotebookLM I've wanted.

Already copy paste and analysing financial data, charts, AI papers. Grad student level. I'm talking to the damn thing and asking questions.

A famous paper by John Bell that ended up disproving Einstein's attempt ... Image
Image
Image 2) to frame an objective reality with his EPR paper (QM is correct but are there hidden variables?).

Bell's inequality was demonstrated by '22 Nobel Laureates. Almost a "what is reality" Nobel. So this sometimes shows up in pop science "what is AI & consciousness" discussions. Image
Image
Sep 15, 2024 • 16 tweets • 7 min read
1) Reasoning/inference and domain knowledge/ability stood out first right?

An interesting but less explored direction? A long thread but worth it. Conclusion first:

AI is on verge of (or at) design & engineering across major industries. Or medical diagnosis etc.

Coding/SW ...
Image 2) Ph.D. STEM problems, agents etc skills are better known and amazing, but here is just one example that combines reasoning, expertise, application (interconnects will be huge + also dear in my portfolio) in a way I haven't seen.

I'll compare Claude later. It's night and day.
Aug 28, 2024 • 5 tweets • 2 min read
1) Fate of markets depends on $1B or $2B difference in $NVDA guide.

There are tons of whisper surveys. Some game them. A bear might answer too high. Or a bull answers too low.

But it seems Asian investors do have higher expectations than US investors. Will Oct guide really ... 2) matter?

After hours prob. Or days or even weeks. But unless BW cycle or LT AI growth outlooks change, is it ultimately that imporant?

Not sure I'd present this framework. Implies $43B upside case Jan Q vs $31B cons (DC)! Unless something drastic ...
Jul 8, 2024 • 6 tweets • 2 min read
1) My 2¢ on "AI capex cycle has to pause soon right?" part X.

Even as an AI bull, this is a discussion I had to have with myself and people on and off this site. As soon as right after $NVDA Apr '23 Q blowout.

Conclusion 1st. Outlook improved after every broad overview of data. 2) And that wasn't about next few Q. If cyclical indicators were peaking, would be short today even if thot beat & raise next Q. But even defining cyclicality (inv, B:B, consumption vs shipments etc) needs change for AI. Much more later.

Little doubt ...
May 14, 2024 • 4 tweets • 3 min read
1) Maybe $MP did bottom. May buy more if close at this level.

One of many examples with potentially huge secular story. And is cyclicality reversing to tailwind?

Cyclical. Rare earth prices still edging up from Mar lows after -70% from '22 high (EVs renewables industrial etc).
Image 2) Now the interesting part. There's a chance MP is a robotic+ beneficiary.

What's Neodymium used for? Many applications e.g. Nd:YAG pump lasers. Nd has 1064 nm transition in Yttrium crystal.

More importantly Nd magnets are strongest rare earth magnets. Super important for ... Image
May 11, 2024 • 5 tweets • 2 min read
1) $AAPL has closed in on an agreement with @OpenAI to use the startup's technology on the iPhone, part of a broader push to bring AI features to its devices (BN).

Via @theinformation: OpenAI sees assistants with voice and visual capabilities as potentially transformative as ...
Image 2) the smartphone.

"The technology is another step in @sama's quest to ultimately develop a highly responsive AI akin to the virtual assistant in the film "Her," and enable existing voice assistants like Apple's Siri to be more useful."

OpenAI may preview upgraded AI "at an ... Image
Jan 25, 2023 • 5 tweets • 2 min read
1) $324M of $3.9B of $TSLA OI was FSD recognition.

Most didn't model. +1.5% GM impact. And there goes EPS beat vs "company compiled" consensus.

Inventory $12.8B vs $10.3B Q3 and $5.8B Q4 '21. Big jump Q/Q and huge jump Y/Y in days.

Many ...

$SPY $QQQ $TLT $GLD #Commodities 2) more details ... forward comments usually don't matter much. Especially if Elon says bullish things (just calibrate his past comments).

If he concedes any downside metrics? Pay attention.

Independent analysis with incoming data by far most relevant.
Jan 25, 2023 • 5 tweets • 3 min read
1) Total global ETF holdings of #gold has gone sideways despite gold +19% since early Nov.

System akin to compressed spring. Less pressure?
Spring bounces.

Δ largely $GLD driven. What if US investors traders actually buy?

1 more chart today.

$SPY $QQQ $TLT $GDX #Commodities 2) Cost of $SLV puts vs calls (3M 25 delta) 10D MA not budging despite #silver +33% in several M.

Incredible (to me). And never happened in history of this data.

Whenever silver rose as much since '15 secular low, cost of calls shifted ~8-10 (implied ...
Jan 24, 2023 • 7 tweets • 3 min read
1) Largest day of $SLV inflows (+20M oz) by far since #silver squeeze!

Positioning was more bearish despite #gold +19% #silver +31% in few months.

Little buying power was used. If anything there was large selling vs price reference points ...

$SPY $QQQ $TLT $GLD #Commodities 2) over last few Y, as well as variety of unusual technical readings that just don't occur after significant rallies.

"Yes there WILL be pullbacks, but I've mumbled could be shorter and shallower than one might usually expect."

Data implies unusually ...
Jan 23, 2023 • 4 tweets • 2 min read
1) Leading economic indicators down 10M in a row and -7.4% Y/Y.

In or entering recession (Mar '01) every time since '60.

"Cliché but true - every cycle is different. A few bad job prints would seal the deal."

"This time is different" often ...

$SPY $QQQ $TLT $GLD #Commodities Image 2) dangerous but we're prob not in recession now or entering within a M(?).

Consider LEI components. Shown is 6M change.

Soft component (consumer expectation) largest negative contribution. Employment component almost flat.

I've been watching for sudden weakness in high ... Image
Jan 23, 2023 • 7 tweets • 2 min read
1) Quick comment on #silver.

Silver -5.7% from recent peak. So far normal noise in both bull and bear mkts.

Also 17% below 14D 2 St Dev band. Last time? 6/13/22.

And 6/16/21 when 2 St Dev band was this narrow.

Both were during bear markets.

$SPY $QQQ $TLT $GLD #Commodities 2) So will soon test whether this is that shorter and shallower bull mkt correction positioning and technical indicators now suggest.

Note big differences already today. Miners outperforming vs underperforming (e.g. 6/13/22 6/21/21).

#Gold down small vs -$50 the prior days etc.
Jan 13, 2023 • 4 tweets • 3 min read
1) I respect @garyblack. He deals with facts tho may disagree with analysis.

Here's $TSLA '23 sales and OP est in same format (no updates for US/EU price cuts yet).

'23 cons rev $109B (+33% Y/Y). Cons OP $19B or 17% OM.

~ 10-20% price cuts ...

$SPY $QQQ $TLT $GLD #Commodities ImageImage 2) flows directly to bottom line (assuming all else equal for now e.g. opex unchanged).

It's tough for OM not to decline 50% or more even if units grow > 50% (and I'm doubtful).

I.e. EPS could easily fall 50%.

After every price cut there's a quick orders spike. Unknowns ...
Dec 5, 2022 • 4 tweets • 2 min read
1) #CPI impact of gasoline alone Jun '23.

Gasoline wholesale lowest since Jan '22.

Avg retail $3.84 in Oct, $3.69 in Nov, and Dec may be ~< $3.4.

Jun '22 avg $4.93 vs $3.08 Jun '21 (or +60% Y/Y).

CPI gasoline was also +60% Y/Y Jun '22 so ...

$SPY $QQQ $TLT $GLD #Commodities Image 2) average unleaded over a month is a very good model.

IF (and we don't know this yet) retail gasoline price were ~$3.4 in Jun '23, CPI gasoline would be -31% Jun '23.

From +60% Y/Y in Jun '22 to perhaps -31% in Jun '23 for gasoline CPI?

That's a 90% delta from gasoline alone.
Dec 5, 2022 • 4 tweets • 2 min read
1) Impressed you can still run monte carlos. Haven't touched one in decades.

If use both data series and propagate errors using certain (think ~ valid) assumptions, get similar statistics last 6M:

165K +/- 64K jobs/M
or
1M +/- 380K jobs/M

$SPY $QQQ $TLT $GLD #Commodities 2) Earlier back of envelope for past 8M was applying 90% CI or 1.65 st dev.

Assumptions incl normal distribution (prob pretty good), uncorrelated data/error (prob ~ ok given data sets) etc.

This is statistical based on BLS data and doesn't adjust for ...
Dec 4, 2022 • 4 tweets • 2 min read
1) Payroll 1st response rate in Nov/annual response rate vs 1st to 3rd (final) payroll revision.

Correlation is 0. Series since '81. If use data only last 15Y, corr still ~0.

Nov often weak due to Thanksgiving. Collection days were 10D vs ...

$SPY $QQQ $TLT $GLD #Commodities Image 2) 10-16D that span business days after 12th of month thru Mon of the report week (BN).

Even taking that into account, Nov '22 response rate △ likely ~10% below prior 40Y low in '05. So seasonal + something else this Nov.

Raw BLS data since '81.

Removing Nov '21 outlier ... Image
Dec 1, 2022 • 9 tweets • 3 min read
1) Posting often about $TSLA for a reason.

LT growth/share/margin assumptions required by valuation were outrageous.

But a LT expectation reset (i.e. blowup outside of lockdowns) seems likely within few Qs.

Book to bill will be << 1 in Q4 ...

$SPY $QQQ $TLT $GLD #Commodities 2) (also in Q3) at this rate.

Backlog = sales-orders. B:B = orders/sales.

I'd guess many TSLA bulls aren't familiar with cyclical risks as bull case is mostly secular.

Have discussed semis as a leading econ indicator for over 1Y. Requires cyclical ...
Nov 30, 2022 • 4 tweets • 2 min read
1) Much to say but just a summary. Rates will go "somewhat" higher?

Peak Fed funds rate now 4.92% vs 5.15% in early Nov.

Or only ~20% prob of 2 more hikes vs Sep dot plot vs ~100% prob few W ago.

Taking under at 4.87% median still looks ok ...

$SPY $QQQ $TLT $GLD #Commodities 2) (btw ignore 4.331 hikes in table - distorted due to 3.83% effective rate vs 3.87% median).

And at least an IT 2Y yield peak on 11/3/22.

Also 3M/2Y inverted today! Correlates with recent 3M 18M forw - 3M "Powell curve" inversion.

Much better than ...
Oct 18, 2022 • 5 tweets • 3 min read
1) BofA Oct Global Fund Manager Survey released today.

Most charts are saying similar things and are at/near '08 extremes. But here's a sample.

Net fund managers % saying overweight cash and underweight equities beyond peak '08 levels.

$SPY $NDX $TLT $GLD #Commodities 2) Close to record levels of investors expect a weaker economy next 12M.

#Inflation expectations at Dec '08 level.
Oct 18, 2022 • 6 tweets • 3 min read
1) SF Fed paper "finds national homeowners’ shelter prices rose 4.3% Y/Y in July 2022, compared with 5.8% in the CPI measure" based on actual payments.

- OER based on the “implied rent” that owners indirectly pay to ...

$SPY $NDX $TLT $GLD #Commodities
frbsf.org/economic-resea… 2) live in their homes. Implied rent cannot be observed, so the CPI uses an estimate (i.e. very imperfect, lagged and difficult to model as I've discussed).

Magnitude of shelter #CPI has surprised most, including Nobel laureates, Harvard professors, GS economists (who today ...