the next 72 hours...
Overall Thesis
Market volatility over the next 72 hours presents buying opportunities as historical patterns suggest markets recover post-midterms, despite near-term headwinds from geopolitical tensions, potential rate hikes, and oil price pressures.
Narratives
Kevin expects near-term volatility from a possible Fed rate hike, Iran negotiation delays, and the Anthropic IPO, but believes the Nasdaq will recover into and after the midterm elections. He frames the current dip as a buying opportunity ahead of a historically strong post-midterm period.
Key Arguments
- JP Morgan data shows markets are green 100% of the time 6-12 months after midterms historically
- Much of the current red futures reflects priced-in risk (rate hike odds, Iran delay, Anthropic IPO uncertainty)
- He expects a market 'rocket' post-midterms
Kevin sees the S&P 500's current red futures as temporary noise driven by Fed rate-hike odds, delayed Iran talks, and Anthropic IPO jitters, expecting recovery into the midterms and a historically strong stretch afterward. He frames current weakness as a dip worth buying.
Key Arguments
- JP Morgan's historical data: markets green 75% of the time 3 months after midterms, 100% at 6 and 12 months
- Worst-case rate-hike scenario is largely priced in
- Volatility from Iran/Fed/Anthropic creates buying opportunities
Predictions (1)
Kevin believes oil prices have found a near-term floor around $107 a barrel following the Saudi pipeline pumping-facility strikes, suggesting limited further downside for crude in the near term.
Key Arguments
- Oil already spiked to $107 after Saudi pumping facility strikes
- He views $107 as the 'worst case' near-term level, implying a price floor
Predictions (1)
Kevin highlights selling at-the-money puts on Meta as a way to capture elevated implied volatility premium heading into the Fed decision, implying comfort owning Meta at current levels. He also floats a longer-term thesis that Meta benefits from AI companies' advertising spend.
Key Arguments
- At-the-money sold puts on Meta currently yield about 8%
- Meta could benefit long-term as AI companies like Anthropic and Google pour money into advertising
Kevin argues Apple is an 'ultimate beneficiary' of AI companies like Anthropic and Google running competing ads against each other on the App Store, viewing this as a longer-term positive thesis for Apple's advertising and platform revenue.
Key Arguments
- Anthropic and Gemini are running ads against each other on Apple's App Store
- Apple benefits regardless of which AI platform wins the ad spend war
Hedges & Caveats
- No guarantees provided
- Cannot give personalized advice
- Acknowledges worst-case scenarios for rates and oil are already priced in
- Volatility expected between now and rate hike decisions
- Dependent on Federal Reserve policy decisions and geopolitical developments
- Historical midterm patterns do not guarantee future results