PREPARE FOR 3 RATE HIKES | Why I'm Buying.
Overall Thesis
The creator expects three rate hikes between now and April 2027 and views current market conditions as a potential buying opportunity despite near-term headwinds to AI capex spending.
Narratives
Kevin argues that a confluence of attacks on the East-West pipeline, Houthi control of the Red Sea, and peak rate-hike fears has pushed oil prices to a near-term peak, but he expects a pre-election Iran deal to bring oil prices back down. He frames this as bullish for the broader market even though it implies a near-term drop in oil prices.
Key Arguments
- Strikes on the East-West pipeline and Houthi control of the Red Sea have squeezed Saudi oil export routes, pushing Brent higher
- Trump has incentive to leak a prolonged-war narrative now so he can announce a deal before the election, dropping oil prices
- He estimates an 80% cumulative chance of a positive Iran outcome before the election that would drive oil and inflation down
Predictions (1)
Kevin believes the Nasdaq-100 has been consolidating due to war-related uncertainty and rate fears, but sees a setup for a breakout once those fears peak and resolve. He frames the current price action as a bottoming process ahead of a potential rally.
Key Arguments
- AI capex boom and economy still show strength per Atlanta Fed GDP tracker
- Consolidation is attributed to war/rate uncertainty rather than deteriorating fundamentals
- Peak rate fear, peak Iran fear, and political uncertainty could align for a breakout
Predictions (1)
Kevin names Apple as one of the stocks he expects to benefit as a recovery play if the broader bullish scenario around a Middle East de-escalation and eased rate fears plays out.
Key Arguments
- Listed as a 'big beneficiary' in a scenario where oil/rate fears subside
Predictions (1)
Kevin groups Meta with Apple as a recovery-play beneficiary in his bullish scenario tied to easing geopolitical and rate fears.
Key Arguments
- Listed as a 'big beneficiary' alongside Apple in the recovery scenario
Predictions (1)
Kevin sees Nvidia as a beneficiary of hardware names being undervalued relative to the current AI capex cycle if a new Iran memorandum of understanding materializes.
Key Arguments
- Believes hardware has gotten 'too cheap' for this phase of the AI cycle
- Names Nvidia among stocks that 'win' in the next memorandum of understanding scenario
Predictions (1)
Broadcom is grouped with other hardware names Kevin expects to benefit if his bullish Iran-deal scenario plays out.
Key Arguments
- Named among hardware beneficiaries of a potential Iran deal scenario
Predictions (1)
AMD is grouped with other hardware names Kevin expects to benefit if his bullish Iran-deal scenario plays out.
Key Arguments
- Named among hardware beneficiaries of a potential Iran deal scenario
Predictions (1)
CoreWeave is grouped with other hardware/AI infrastructure names Kevin expects to benefit if his bullish Iran-deal scenario plays out.
Key Arguments
- Named among beneficiaries of a potential Iran deal scenario
- Also mentioned as a name Leo is reportedly buying options in, though Kevin views that leak skeptically
Predictions (1)
Oracle is grouped with other hardware/infrastructure names Kevin expects to benefit if his bullish Iran-deal scenario plays out, despite being flat after its recent earnings.
Key Arguments
- Named among beneficiaries of a potential Iran deal scenario even though shares were flat post-earnings
Predictions (1)
Hedges & Caveats
- Acknowledges rate hikes will create challenges for AI capex buildout
- Notes uncertainty about when AI spending will roll over and trigger recession
- Warns that worst-case scenario (three rate hikes) is already priced into markets
- Emphasizes reliance on AI earnings as canaries in the coal mine for market direction
- Recognizes new Fed chair may hike sooner to establish credibility
- States 'we just don't know when it's going to roll over' regarding AI bubble