WEEKLY
ALPHA

Two-part market analysis on the Iran-war drawdown and recovery. The S&P 500 just completed a –9.1% drawdown (Jan 27 → Mar 30) and has already printed a new ATH of 7,126 on Apr 17 — the shallowest and fastest-recovering of any major S&P drawdown since 1987. Part I builds the base-rate framework: non-recessionary corrections (median 4–7mo recovery, +27–30% 12m fwd return) vs. recessionary bears (measured in years). The distinguishing variable isn't drawdown depth but whether forward earnings break — here they did the opposite, rising through the drawdown. Part II quantifies the asymmetry: win rate at 7,126 is 85% but the payoff ratio has collapsed from 1.43x (at trough) to 0.60x, compressing EV from +9.4% to +5.0%. The easy money has been made — edge has shifted from direction to dispersion. Specific trades: long beaten-down software / short energy pair, scale-in adds at 6,800–6,900, cheap VIX tail hedge, trim energy/defense winners.

The market has split the AI trade in half — paying record multiples for the picks-and-shovels (SOXX, NVDA, AVGO) while pricing the diggers (MSFT, META) as if their AI strategy is broken. This deep-dive walks the actual cash-flow math: combined MSFT+META+GOOGL capex went from $53B in 2020 to $226B in 2025 (+4.3x), revenue is accelerating at every name (NVDA +73%, META +24%, MSFT +17%, GOOGL +18%), and the FCF squeeze is a capex-timing issue, not business deterioration. META and GOOGL issued $59B of net new debt in 2025 — a regime change in capital allocation. NVDA is now 90% data center; customer concentration has never been higher. Includes bottom-up TAM/ROI bridge showing the math closes by 2028-2029. Positioning: add to MSFT and META on weakness, hold GOOGL through the print, half-size APP at $385, do nothing in SOXX/NVDA/AVGO until a real pullback.

Our bearish-dollar, long-commodity, and selective-airlines conviction validated. NFP headline +178K masks an underlying ~100K pace after adjusting for Kaiser strike resolution, weather rebound, and birth-death bias. DXY overvalued ~2.5pts as US rate advantage erodes to Feb 2022 levels. LATAM Airlines (LTM) highlighted as the most compelling asymmetric opportunity — down 30% on sector contagion despite zero Hormuz exposure, domestic fuel sourcing, 28.6% EBITDA margins, and 41% upside to analyst targets. Includes Japan bankruptcy surge, central bank divergence (ECB/BOJ hawkish vs. Fed on hold), and the futures-curve arbitrage case for airlines.

The S&P 500's fifth consecutive weekly decline, with the 200-DMA broken for the first time since 2023. Our book outperformed: +2.1% YTD vs. S&P -5.8%, driven by energy overweight (PBR, FCX, XLE). Full PBR entry thesis — five-part deep dive covering the macro setup, Brazil's pre-salt advantage, EM valuation discount, dividend yield, and key risk. Includes the gold paradox signal, FCX copper supply disruption update, MSFT re-underwrite, and Iran ceasefire tail risk framework. Closes with Liu Yuxi's Ode to Autumn.

The 2026 Iran War represents the largest oil and gas supply disruption in recorded history. This issue covers the Strait of Hormuz blockade, destruction of Qatar's Ras Laffan LNG complex, and cascading Gulf energy infrastructure damage removing 10M+ bpd from global markets. Full portfolio repositioning: overweight Energy & Defense, reduce long-duration bonds, small caps, and international DM. Includes scenario analysis across ceasefire, protracted war, and escalation cases.

A difficult week — the Hormuz shock exposed a flawed instrument (SCO) and the absence of a true short book. This issue covers the full portfolio post-mortem, our exit of SCO and the rationale for replacing it with defined-risk USO put options, FCX's ATH rejection, the LTM thesis update, and our forward strategy for building a real long/short book. Also includes the Weekly Alpha macro note on US stagflation risk, the oil variable, and why we remain long B2C software.