Another choppy week in markets with a lot of rotational activity under the hood of the equity indices. Despite the surface appearing relatively stable, we are seeing a number of turning points forming across asset classes and data areas we have been following. We believe it is time to sit up in your chair and pay attention. There are a plethora of opportunities we will be looking to take advantage of in the coming weeks so don’t let the summer doldrums lull you into thinking otherwise.

This week’s issue covers:

1. Historic move in gold.

2. MSTR update.

3. BIS annual economic report.

4. First signs of potential BOJ intervention.

5. Asset allocation thoughts.

Historic move in gold.

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Finally some two-way action in markets to liven things up. It doesn’t feel like it but the Nasdaq and S&P 500 are trading back to early May levels despite the tech mania. We’ve been writing for awhile now about the problems plaguing the Mag7 and it remains the worst performing group. If you missed our thought piece from earlier in the week, give it a read below - it’s aging well thus far.

Updates to SOFR long.

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Forward Guidance Chartbook - June 26, 2026 - Lekker Insights

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This article dives into:

1. Summary and trade expression

2. Iran war impacts and inflation

3. What the Fed should do

4. General economic outlook

5. Market and technical factors

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Summary and trade expression

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Despite how bad of a deal Trump took from Iran to reopen the Strait of Hormuz, I think everyone is experiencing a collective sigh of relief that the charade is over (until after midterms). There also happens to be a lot going on in this market outside of that so it’s helpful to remove a big distraction / idiosyncratic noise. Let’s jump in.

FOMC thoughts.

1. So much about this Fed meeting were weird to me. For starters, the timing of the hawkish pivot - why do it now after inflation has peaked? This is another example of them viewing things through a rearview mirror. Warsh is actually correct to question the data they are using because any half decent forecasts would have made them well aware of the inflation spike that was coming back in their March and April meetings and in the same vein, would make them aware at this meeting that inflation is heading back down.

   

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Forward Guidance Chartbook - June 19, 2026 - Lekker Insights

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Moving Lekker Insights to a paid subscription model allows me to go deeper on ideas, share more analysis and provide more of my time and access. It will also help us build the best community of engaged participants and create a more fruitful environment for everyone involved, facilitating both collaboration and debate. It’s one thing to read a trade idea or investment thesis, but it’s another to be able to stress test it, ask questions and contemplate structure/execution to truly learn, understand and action it.

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It’s been a quieter time in the markets for me. There’s a lot of things that don’t make sense, like equities for example. And there are other parts that are just uncertain and unknown at this juncture. I have a number of theses I think will work well over the back half of the year but it’s requiring patience for the right time and entries to put them on and grow conviction behind.

The following week I wrote:

I am excited about what I think are some very actionable opportunities setting up over the coming weeks in my neck of the woods, aka not semiconductors and AI bottlenecks.

I think we are approaching that time. Today’s report carries a lot more actionable near-term trade ideas. Patience in execution is something I am ALWAYS working on.

Recapping recent thoughts.

1. I’m pretty happy with how we’re seeing markets of late. I hope this place has provided you some value and signal.

   1. On May 23rd we warned of caution in the crypto markets and BTC proceeded to dump 20%+ and ETH and SOL even more.

      1. I would largely attribute this idea to understanding the STRC and MSTR dynamics that provided glaring red flags in advance of this decline.

   2. On May 30th we stressed caution around tech stocks and the Nasdaq sold off nearly -10%.

   3. We’ve been bearish oil for nearly a month now due to the rising importance of getting barrels flowing by end of June alongside declining approval ratings. It’s important to play out the policymaker reaction functions which we discussed further last week…other thought processes here and here.

2. I think some of our other recent ideas will start becoming relevant over the coming weeks as well. Let’s make some money off them.

The SOFR long opportunity is imminent.

1. Over the last few months I have been writing a ton about rates and SOFR.

   1. In late April we wrote about our expectations for more hawkish rate expectations.

   2. In May we wrote about the opportunity that is building.

2. I can’t help but keep thinking back to this line…“the optimal entries should come when equities are still trading well but inflation is surprising to the upside.”

3. The Fed is not going to hike into this at a time when policymakers at the White House and Fed are stressing the difference between headline and core inflation more than ever.

   

4. Meanwhile market expectations are reaching extreme levels.

5. I loved Ole’s tweets on this topic because they depict how the market’s current expectations are almost directly opposed to how I view future policymaker actions. Leveraged funds have been getting much longer 2, 5 and 10 year duration Treasuries and much shorter Fed Funds - the exact reason why yield curves have been flattening so dramatically. But I view the ultimate policy response from the Bessent/Warsh camp to be pressure on the front end and a steepening of the curve. The bar for rate hikes is extremely high in my opinion.

6. I think we are reaching local tops in both inflation prints and economic growth. I expect inflation to fall from the most recent readings and the fiscal impulse to soften as the OBBB tax incentives wear off. Q3 earnings season that begins in mid-July may start to show more of the consumer demand destruction that has taken place as a result of the Iran War.

7. In addition to the economic reasoning, I believe a Warsh- (and Bessent for that matter) led Fed will prefer using the rate cut channel over the balance sheet support channel to effectuate monetary policy, a change from the recent Powell years. Ultimately this should lead to a steeper yield curve, healthier banking system and more balanced economy. It may take some time and possible market hiccups for that to play out given the requirement of shifting the committee’s consensus around to those views, but I think it will happen.

Yen shorts are very crowded.

1. Another topic you’re probably sick of hearing about from me, but I’ll only shut up about it when it stops being relevant. What happened this week just before Trump announced the Iran deal on Thursday? USDJPY was pressing above 160. That is not a coincidence.

2. This week USDJPY closed almost exactly where it did last week and it is becoming more and more relevant. Why?

3. There’s a BOJ meeting on Tuesday, just before the FOMC and Warsh’s first press conference on Wednesday.

4. Here’s the big one. Yen short contracts are back to their highest level since 2017, and basically equivalent to the positioning just before the 2024 Yen carry unwind.

   

   

5. So the question is how does this resolve? You have USDJPY sitting at a critical 160 level that Japanese policymakers don’t want to see breached at the same time Yen shorts are at record highs. One would imagine the conditions for a squeeze are there. My view remains that they will be forced to let the 160 level go eventually as the problems plaguing Japan’s fiscal and monetary health are just too great. But that said, I think they will not give record shorts a free ride and instead try to make one last good hard stand first.

6. In an attempt to take the other side, maybe there’s an acceptable outcome here for risk whereby USDJPY is brought down in a managed, non-volatile way via more dovish Fed policy that weakens the dollar relative to the Yen. I also could be wrong about the 160 level and maybe policymakers just let the Yen continue weakening, but that means stronger dollar which could still be a headwind for risk. We will find out more next week after both central bank meetings.

Revisiting the NVDA vs. SOXX vs. Mag7 divergence.

1. We flagged this interesting dynamic back in April as something to watch. I was a bit early at the time but what I highlighted has started to pan out further. Since the late October 2025 Nasdaq high, semiconductors are +90%, NVDA is -3% and MAGS is -6%.

   

2. Last week, we discussed the divergence between the hyperscalers and broader tech (dominated by semiconductors).

3. This blow off top in tech, particularly momentum and semiconductors, is another thing giving me July 2024 vibes. Maybe the strength doesn’t end here and lasts into July, definitely not saying it has to end right this second, but we’re getting closer to a top that is for sure.

   

Gold is starting to look attractive.

1. Given my view that SOFR futures are bottoming, USDJPY is topping and real rates are peaking, that’s about as simple of a summary that’s needed to paint the bull case for gold.

   

2. Positioning data also supports the idea given capitulatory ETF outflows, large decline in futures open interest and option skew reaching extreme put heavy demand (contrarian bearish indicator).

Does Bloomberg read Scouting the Tape?

1. A few weeks ago we wrote about the widening spread in C-rated junkier parts of the credit market relative to B-rated paper. This pasts week Bloomberg has also started to pick up on this trend.

   

2. DB had a report out showing a lot of the carnage is software-related and that if ratings were to adjust accordingly, the share of CCC-rated debt in the US Leveraged Loan index would increase substantially.

   

   

3. It’s no surprise then that private credit redemption requests and fund gates continue to increase.

   

4. The problems are also prevalent across private equity funds, where distributions fell to their lowest levels as a percentage of NAV since 2010 and well below the long-term 20%–25% average.

   

5. The liquidity problems in this corner of the market continue to stack up and there is no foreseeable catalyst that will put an end to this negative trend.

Bitcoin weakness is not done yet.

1. This is a bold statement to make considering the bear market BTC is in, but we having been calling the local tops and bottoms pretty well over the last few months I am okay making it.

2. The drawdown is not over and the big capitulation has not arrived. The volume characteristics compared to previous bear markets also don’t support it.

   

3. I don’t mean to sound dramatic, but there’s one big headwind for the market that is over 4x the size of FTX at its collapse and currently over 1.5x the size of GBTC’s peak AUM. That is Saylor and Strategy.

4. The longer that Strategy doesn’t rectify its over-levered balance sheet, the longer the problems will plague the crypto market.

5. There is blood in the water but no bodies have surfaced yet. In fact he continues to make the problem worse.

6. When an over-levered company sees their balance sheet flipped upside down, it is extremely rare that time solves the problem. What solves the problem is cleaning it up and de-levering and getting back to working from a position of strength.

7. If I were to guess what a Bitcoin bottom looks like, it would be a larger capitulation event that forces Strategy to raise an additional ~$3B in cash that covers its next few years of debt maturities and rebuilds its debt service and preferred equity dividend cash reserve.

8. Maybe the market wants to flush the January 2024 Bitcoin ETF launch date highs and August 2024 Yen carry unwind lows around $49,000? That would also make the symmetry of the chart pretty nice optically speaking.

   

9. Let me paint a very plausible situation to make it clear what I mean. Strategy’s capital structure today is ~$5.7B of net debt and ~$15.5B of preferred equity, for a total of just over ~$21B combined. They currently hold ~845,000 BTC that at a $50,000 price per Bitcoin would equal ~$42B in value. Subtracting the $21B of net securities and obligations senior to common equity you arrive at ~$21B in value to MSTR holders. At a 1:1 value of BTC to market cap, that comes out to ~$59 per share (based on ~354 million basic shares outstanding). MSTR trades above $120 today.

10. I have to commend Saylor’s ability to steer the narrative to have everyone focused on faulty metrics that have retail investors convinced that equity is equal to assets plus liabilities. Some might even call it a crime. But now that he is losing credibility more quickly, first after lying about at what mNAV levels he will issue common equity last year to now lying about never selling Bitcoin, sentiment is changing enough to probably also start making MSTR holders question what they really own. And the truth even today at $64,000 Bitcoin prices ($54B in BTC holdings) and their $21B in net debt plus preferred equity, MSTR liquidation value sits at ~$93 per share. This is why he is still selling it to buy more Bitcoin. I can understand the still selling MSTR part but disagree with his use of proceeds - he should be accumulating cash reserves instead.

Lots going on in markets and a big week ahead with BOJ and FOMC meetings during a US holiday shortened week. I think the back half of June is particularly dangerous for risk assets. Good luck out there.

I continue to believe the coming weeks and months will be rich in opportunity. In the next two weeks alone we have 3 central bank meetings, inflation data and one of the biggest IPOs of all-time. I suggest keeping your head on a swivel as I think there are some trend changes afoot and my gut is telling me to listen to the messages the market is trying to send.

Bitcoin is flashing red alert.

1. Scouting the Tape readers have been alerted of our cautious crypto stance over the last few weeks, noting the DAT problems and large sellers distributing coins. We have been fortunate to be seeing this market’s movements quite well over the past few months.

2. Where do we go from here? Well I hate to say it but I feel pretty confident that the multi-month outlook remains negative. With an onslaught of record IPOs, waning liquidity and deteriorating consumer health, I see little potential for crypto’s struggles to be resurrected anytime soon. Macro aside, the idiosyncratic MSTR and quantum problems are yet to be resolved.

3. I elaborated on my bewilderment with the decisions coming out of the Microstrategy headquarters. Their actions over the last year make absolutely no sense to me. And now BMNR seems to want to go down the same path pursuing a death spiral. Truly unbelievable behavior.

4. My recommendation is to avoid the crypto market for the summer as it tends to struggle during the coming months even when there isn’t a barrage of severe headwinds in its way. Pick it back up in late Q3 and see where things stand and my guess is you’ll save yourself a lot of brain damage.

5. We are witnessing one of the largest divergences in Bitcoin and tech stocks in recent history.

   

6. I’ll leave you with two more simple charts that both say exit stage left.

   1. OTHERS underside rejecting the 200wma and putting in a lower high RSI.

      

   2. Alt dominance as a percentage of open interest is at levels that usually coincide with market peaks. Keep in mind this is surge is coming deep into a decisive bear market, a time when selling strength is the most prudent action.

      

The ongoing technology divergence commands your attention.

1. If you take the time to research further or better understand any sections from this post, make it this one. If I may suggest, it may be worth your while to review recent Scouting the Tape issues to set the stage with what’s going on in Japan, recent sentiment data and investor positioning.

2. Also if you didn’t see our thoughts on the upcoming IPO math and the problem it represents for the indices, check it out. As the first IPO of the bunch (SpaceX) comes in the next week, this becomes increasingly important. The following are a few charts I’m finding very interesting going into this event.

3. Let me start with the head scratcher out of the gates. There has never before been a divergence this large in Mag7 relative performance versus Nasdaq and the Nasdaq itself. This makes sense because those 7 stocks represent 37% of the Nasdaq 100 index, which means the other 63% of market cap weight is carrying the index (think semiconductors, chips and memory).

   

4. Technology stocks as a whole have trounced ‘real economy’ or ‘main street’ over the last few months on all measures. Both QQQ/RSP and MAGS/RSP have been very strong. Said another way, tech concentration risks are flashing warning signs.

   

   

5. Now back to this Mag7 and Nasdaq divergence. There may be multiple interpretations of this.

   1. MAGS is dominated by hyperscalers who are spending immensely on AI capex commitments while QQQ has more chip and semiconductor names who are beneficiaries from receiving those capex dollars.

   2. Another interpretation is that the other 93 companies in the Nasdaq 100 are doing the heavy lifting, which is often a classic late-cycle behavior where investors, fearing the top-heavy giants are exhausted, rotate into the "second-tier" or "supply chain" names to keep the rally alive.

6. Historically, the healthiest bull markets have come when the leaders lead. It has often been a warning sign when that is not the case. If the Mag7 generals continue to fall because their capex is too high, presumably they will eventually have to cut that spending, at which point the semiconductor and AI supply chain beneficiary trade will be in jeopardy.

7. I’ll pose a few questions to help you see the side of the thesis you find yourself on.

   1. Given the $3T+ in new IPO supply we discussed earlier, do you think the other 93 stocks in the QQQ have the liquidity to support both those new IPOs and their current outperformance, or is this a top before the dilution hits?

   2. With 3 new >$1T companies arriving to the public markets and competing for Mag7 capital and mindshare, do you think the conditions are ripe for MAGS to start leading to the upside again and carry the whole market with them?

   3. The dilemma I see is how the hyperscalers could regain equity market leadership with declining free cash flow, rising debt levels and lower share repurchases all tied to their capex spending. The only path for that to occur in my mind is a reduction in said capex spending which would put a fork in the semiconductor and AI capex beneficiary trade, thus bringing down the technology complex as a whole. The other consideration is that the gains from the valuation mark ups of the private AI companies are accounting for significant portions of hyperscaler earnings as has been discussing. A reduction in their capex spend would be interpreted negatively for OpenAI, Anthropic, et al and come back to hurt them in this way too.

8. Said another way, the ever increasing capex commitments are creating a prisoner’s dilemma for the hyperscalers. Their balance sheet quality is deteriorating with growing lease and purchase commitments and debt issuance.

   1. Path A (keep spending): They continue to see declining free cash flow and share buybacks, causing their equity to continue lagging.

   2. Path B (cut spending): They regain free cash flow and start to restrengthen their balance sheets but at the direct expense of the broader tech indices due to the recent semiconductor leadership, ultimately hitting their share prices both indirectly, and directly as a result of lower valuations on their OpenAI, Anthropic and other AI company holdings.

9. I think the AI circular reference memes might make a comeback soon.

Policymaker reaction functions.

1. The other week I wrote to a client a similarity I see among both the oil to $200 and AI singularity camps - that is ignoring policymaker reaction functions.

   1. I posited that while at first glance, the shrinking labor force and rising layoffs might be deflationary in a vacuum, but in a political system that relies on stability, increasing the number of adults with nothing to do is destabilizing and the response to AI induced layoffs, and AGI if we get there, are extremely inflationary and require all sorts of stimulus to address politically and socially.

   2. It’s the same thing with perma oil bulls. They are correct that if left unaddressed, the commodity supply problems could cause large price spikes and ruptures throughout the financial system. However, while not ideal, Trump can take a really bad egg-on-the-face style deal to ensure gas prices don’t stymie his midterm odds. At the same time, they have authorized releasing the SPR down to operational minimum levels which will last into midterms. Pair these two aspects with the Iran War being one of the unanimously most unpopular decisions of his 6 years in office while his approval ratings are the lowest ever in those 6 years. This creates a probability distribution that favors oil not being a big deal again before midterms.

2. On this point, there is a clear growing pitch in sentiment and actions opposing big tech and AI.

   1. “Resist and Unsubscribe”

   2. “War on Waymo”

      Prof G Media

      The War on Waymo

      Every year, more than 36,000 Americans die in car accidents. Compared with human drivers, Waymo’s autonomous vehicle (AV) technology results in 92% fewer serious accidents, suggesting it could prevent many of those deaths. But after a year of the company operating eight cars with zero accidents in New York City…

      Read more

      a month ago · 263 likes · 47 comments · Dan Chiolan

   3. Government stakes in AI companies to redistribute profits.

   4. Mounting datacenter opposition has led to 140+ activist groups across 24 states delaying or blocking over ~$64 billion in development projects.

3. It wasn’t long ago that Trump was leaning into this notion to attract voters ahead of midterms. I would expect him to be forced to go back to this well over the coming months.

Weird market moves in the exchange landscape.

1. The recent declines CME, CBOE and ICE have been pinned on the recent CFTC perpetual futures approvals. Peak to trough has been quite dramatic and has me wondering if there’s more to it than what meets the eye. Not my domain though.

2. Maybe it’s nothing, but it does sort of give me private credit sell off vibes earlier this year. I don’t love the omen of key financial market infrastructure breaking down in a big way.

3. There are other weird things going on like the retail sell off we noted a few weeks ago. I don’t have any actionable recommendations here because neither are my area of expertise but it is interesting to me.

USDJPY

1. Let this serve as my weekly reminder to keep Japan on your radar. USDJPY is flirting with its 4th highest weekly close ever in almost 50 years. There is a BOJ meeting the day before the FOMC in two weeks and I would imagine they try to strengthen the Yen. If they don’t use that week as an opportunity, I would expect the market to send a message with a breakout above 160, something I don’t think Japanese policymakers want to see.

   

I continue to believe upside in the recent winning trades will be limited over the coming months. The volatility suppression of the last few months has made it difficult to play the short side in much of anything but I think that will start to change going forward.

In addition to the usual Forward Guidance recording this week, I also joined for an episode of .

Stagflation.

1. As someone who is quite interested in geopolitics and strategy, I wouldn’t say I’m surprised the US is in the situation it is in given Trump’s hubris and the structural problems outside of his control. But I would say there are moments where I find myself in disbelief that this is the chosen path. Back in February I wrote on X: “What if Trump views this conflict as his 2026 Liberation Day equivalent? His confidence must be at all-time highs given the Maduro raid and his belief he can control the US dollar like a yo-yo and pump the stock market whenever he chooses.”

2. Democrat, republican or independent, the Iran War is unanimously unpopular. Real wage growth is firmly negative as inflation pushes higher into the 4-5% range and the average American household continues in a state of distress. And now Iran has control of a key commodity supply chain channel that it never did before. While there have been a number of very positive policy changes throughout the first two years of this Trump administration, there have also been so many self-owns and policy rollout botches that the campaign scripts for Democrats are writing themselves. Since I became an active investor/speculator, I have a strong track record in political outcomes having correctly called the last 3 presidential races. I will be doing more writing on the topic of midterms as we approach them but at this juncture I do not think it will be pretty for Trump.

3. Stagflation is one of the worst setups for risk assets and economic health but that is where we are headed. >4% inflation for the foreseeable future and stagnant economic growth.

The K-shaped economy is taking step function changes in the wrong direction.

1. Similar to the above idea, it sure strikes me as a major problem facing policymakers but given their appetite to ignore and worsen the K-shaped economy over the past few years, it is nearly impossible to predict when it will start to matter more acutely.

2. Everyone knows about the new record lows in consumer confidence and small business optimism. The numbers are so mind boggling that people now just dismiss them as being faulty surveys.

   

3. Walmart earnings takeaways were bleak for the average consumer.

   1. “Increasingly, [consumer strength] depends upon which consumer you’re talking about. We see with our customers that the high income customer is spending with confidence into many categories, while the lower income consumer is more budget conscious and perhaps navigating financial distress.”

   2. “In the most recent period, the number of gallons that customers fill up with when they come to our fuel stations fell below 10 for the first time since 2022. That’s an indication of stress.”

   3. Fuel weighed on Walmart’s profit margin in the quarter, as

      the company absorbed “virtually the entirety” of the increases

      during the period.

4. Real wage growth in the US has been negative for almost a year now.

   

5. Market concentration continues to make new record highs.

   

6. Consumer stocks vs the S&P 500 are below GFC levels.

   

7. But here’s the kicker. Boomers don’t give up their voting majority until at least 2028 and more definitively 2032, so it actually could be quite some time before this resolves itself.

   1. By the 2028 presidential election, the combined power of millennials and gen Z is expected to make up over half of the entire voting-eligible population. However, voter turnout rates are highest among boomers at ~75% and decline from there with millennials at ~60% and gen Z at ~45%. So despite the larger voter eligible younger cohorts, this election will still very much be influenced if not controlled by boomers. Add on top of that the fact that boomers still dominate leadership positions in congress and state governments which we know favors incumbents.

   2. This means that it may not be until 2032 presidential elections that we start to see real change where the younger generations’ raw numbers will be strong enough to significantly outweigh the boomers’ consistently high turnout rate. In other words, you may have to hear about the K-shaped economy from me and many others for another 6 years before any real progress is made in rebalancing it.

Late cycle behavior in Japan.

1. I continue to be fascinated by Japan because it may be the place that has defied more gravity than any other country’s equity market. What do I mean by that?

   1. Japan is the most indebted country in the world by a wide margin across nearly every metric. Debt to GDP and central bank balance sheet to GDP measures dwarf the US and Europe.

   2. Japan has one of the least inflation resistant economies as they import ~60% of their food on a caloric basis and ~90% of its energy supply.

   3. They also have some of the worst demographics globally. They are the oldest developed nation at a median age of 50 years (compared to 39 in the US). For every 2 workers there is 1 retiree (that ratio is 4:1 in the US) and their population is declining -0.25-0.5% per year, effectively losing a city the size of San Francisco every 12 months.

   4. That said, it is ‘better’ at handling these demographic problems. Japan’s social security, medicare and medicaid equivalent spending is ~55% which is identical to that of the US, despite that being spent on Japan’s ~30% elderly population compared to the ~18% elderly population in the US. On the other hand, Japan spends ~25% of its total budget on debt service, whereas that figure is ~14% in the US.

2. Despite all of those problems, the Nikkei has outperformed the S&P 500 by nearly +30% since Liberation Day, and this is without all of the leading AI and semiconductor companies comprising the Japanese index.

   

3. Equity valuations in Japan are not quite what they are in the US, but on a relative historical basis they are becoming more elevated.

   

   

4. Here’s that same SPX/Nikkei chart from above with USDJPY (inverted) added in orange. For the last 20 years, the relationship has been fairly steady whereby weaker yen leads to Nikkei outperformance and stronger yen leads to S&P 500 outperformance. This wasn’t always the case though as you can see that relationship reversing in the late 90s as well as throughout most of 2021. Interestingly, that late 90s period where the Yen weakened while the S&P 500 outperformed the Nikkei in the infamous dot com bubble occurred under Fed chair Greenspan who is often cited by Bessent and Warsh as their model policymaker for today. You can also see that the Yen has been extremely weak since 2022 which makes me wonder how much longer the USDJPY ceiling holds.

   

5. With USDJPY trading back into its heavily defended 160 area, it really boils down to a policy decision as to what happens from here. This is one of the reasons why Trump has come to the table with Iran to reopen the Strait of Hormuz despite no success in the war. If he continues to disrupt commodity flows and keeps prices elevated, it would force the BOJ to turn hawkish and do more to strengthen the Yen to fight inflation. This would not be good for risk assets and would go against Trump and Bessent’s goals of keeping markets propped up into midterms.

   

6. The only way to durably defend the 160 USDJPY level outside of temporary currency interventions is for the BOJ to adopt a more restrictive policy stance. Short-term rates in Japan are 250-300 bps lower than in the US and have been since 2022.

   

7. This loose monetary policy is causing a record yield curve steepening in the JGB market. Presumably this starts to matter at some point, but given the lack of reaction thus far when they’ve been breaking out to record levels for the past year, it is difficult to say when.

   

8. Yen speculative short positioning is present but its just over half of what it was in the summer 2024 peak.

   

9. Unfortunately I don’t have many answers for you at this juncture, but I do believe this area of the market will become increasingly relevant over the coming months so it remains top of mind. The yen was a good short 3 weeks ago when one of the largest BOJ currency interventions in recent years yielded one of the smallest magnitude movements, but now that USDJPY is back to the 160 area and Japanese yield curves are screaming for the central bank to tighten policy, I am inclined to look for Yen strength / dollar bearish bets here. The invalidation becomes more attractive the closer it gets to 160-161 because if they want to defend it again they’re going to have to send a stronger signal and really bat it down with more than just talk. On the flip side, if they continue to stand pat and USDJPY closes above the 161-162 area, it is unlikely to stop there.

BofA fund manager survey highlights.

1. There weren’t many surprises in the recent Bank of America fund manager survey but I thought I’d share a few charts. Investors are pretty bought into the economic reacceleration and overheating risks given the looseness of financial conditions, and rightfully so. This has helped to influence both the hawkish shift in rate policy expectations as well as the upside chase in equities.

2. Investors cash allergies are flaring up again as the administration's loose financial conditions have people avoiding the sidelines at all costs.

   

3. Equity buying has started to become more intense in recent weeks.

   

4. Unless you live under a rock you could guess that semiconductors is the most crowded trade.

   

5. Expectations for the economy are back to where they were before the Iran war - understandable given how intertwined the equity market wealth effect is with AI capex driving earnings driving higher stock prices driving consumer spending.

   

6. I was a bit surprised by this one but given how backwardated the oil curves are it makes sense. The Trump administration also has given themselves 170 million barrels of SPR drainage to work with which should be more than enough for them to manipulate prices lower ahead of midterms. Whether that is prudent longer-term policy is a different question.

   

Let’s call it “late cycle” so as to not scare away any tech bulls.

1. The term bubble has become so divisive. It’s never a good thing when emotions are triggered on any side of investing. At the end of the day we’re just clicking buttons on a computer and trying to make money. These market conditions will cause even the most experienced market participants to lose their marbles. Try to stay sane and open minded.

2. A few weeks ago I elaborated on my belief that the bubble is in corporate profits, which creates more ‘sustainable’ stock prices optically but is not all that different in long-term durability from other types of bubbles.

3. I spent a lot of my earlier years in finance working in various energy and commodity sectors so this tweet from Milton resonated and is something I’ve been talking about on numerous occasions. At the end of the day semiconductors are extremely cyclical and while historically the Mag7 names haven’t been, their transition into capex heavy business models will very likely make them or at least their cash flows much more so. This has important ramifications.

4. This chart is sure to ignite emotions on both sides of the aisle.

   

5. October 2025 was the most recent local peak in the broader tech sector relative to the rest of the market. Something to be mindful of when thinking about where to position the long side of your portfolio over the coming months.

   

6. Mega-cap tech and AI is where all the vol is. Said another way, the benign volatility at the index level is masking the upside chase into tech and AI, where it has been spot up, vol up. Some great charts from Nomura on this below.

   

   

7. In one report they wrote “US tech skew suggests 100% probability of reversal”. Timing remains highly uncertain because these moves often end with unrelated macro catalysts rather than a fundamental lights out to the narrative. Moral of the story is that it’s time to have your head on a swivel. Bubble or no bubble who really cares - reading the data for what it is just says to be careful, not when or what is going to happen next.

   

   

8. Upside panic is back, reminiscent of 2021, which we’ve been pointing to as a corollary for a few weeks now.

   

   

9. Record levels of dispersion (lows in correlation) is something to watch given earnings season is now behind us which is a big driver of idiosyncratic moves. If you can find longs in unloved and uncrowded sectors that are performing well, that is the ideal setup.

   

10. Momentum has been the engine of this market.

    

11. “Momentum” is basically just tech and semis.

    

12. And one of my favorites which is a few weeks old that we covered on the podcast but figured it was a relevant place to share it again. Semiconductor leveraged long ETF AUM has grown from <$50B to >$100B in <2 months. Truly remarkable stuff. The other day someone asked me if I think everything is priced into semis. I chuckled because when the main drivers of stock movement start coming from leveraged ETFs and retail gambling, I would say the answer is a resounding yes that everything is priced in. But on the other hand, when was the point everything was priced into 2021? The answer to that is many months before the peak.

    

    

Record Bitcoin ETF sale.

1. Last week I wrote about the problems plaguing the crypto market. BTC and ETH are in the process of putting in their 3rd straight losing week and I don’t expect a drastic improvement in the outlook anytime soon.

2. This week there was a $1.26 billion, single block sale of IBIT, the largest Bitcoin ETF. It gives me similar vibes as last year when the whales were unloading into the late summer price pumps. This seller took a 2.3% discount on their coins, costing them ~$30 million to cleanly transact in one go.

3. A trade like this makes everyone ask the age old question, “does someone know something?” It’s not a surprising data point to me given I am seeing more and more people starting to understand the dilemma facing MSTR and BMNR, the two DATs who have been the largest buyers of crypto this year.

4. Strategy in particular is in a precarious spot given their more complex capital structure that includes convertible debt and high dividend rate preferred equity securities that dilutes the MSTR common stock. The moral of the story is Saylor has some balance sheet fortification to do before leaning into BTC buys again.

5. NYDIG had a good write up examining the trade closer that I encourage you to read if interested.

Over the coming weeks, I expect I’ll have more trade ideas and actionable thoughts for you than the last few weeks. It’s been difficult for me to achieve the same level of conviction that I was playing with in Q1, but that’s normal. Market environments ebb and flow and it’s important to know your style so you can recharge and preserve capital to maximize returns when your systems work best.

I hope everyone has a great weekend!

Tyler and I recorded our first round up with the new haircuts. We missed Felix as he couldn’t make it this week. Thank you to everyone who helped raise $10,500(!!!) to support an amazing cause. You guys are the best.

Ethereum implied volatility falls to nearly 2.5 year low.

1. Crypto tends to struggle during summer months as volatility, a core attraction of the asset class, dissipates. It looks like that process is beginning as we head into the first holiday weekend of the summer as implied volatility metrics are plummeting.

   

   

2. Looking at daily exchange volumes, the data tends to align. I’m not sure what resuscitates this over the coming months.

   

   

3. MSTR and BMNR trading volumes paint a similar picture. Lack of volume is problematic for them because it inhibits their ability to sell stock and buy more.

   

   

4. Below is the YTD charts of Bitcoin and Ethereum. Not a pretty picture considering MSTR has acquired over $13B of BTC and BMNR has acquired over $2B of ETH.

   

5. There have been a few pockets of strong performance across altcoins like HYPE, ZEC, VVV and NEAR for on the back of a variety of narratives ranging from traditional finance adoption, privacy and AI. Overall, OTHERS (total industry market cap excluding top 10 coins) and TOTAL3 (total industry market cap excluding BTC and ETH) are both still below their yearly opens and appear to be putting in a higher low.

   

6. Measures looking at altcoins as a percentage of total trading volume and open interest are often good signals for frothiness and both are fairly elevated.

   

   

7. Maybe the passing of the Clarity Act, if it happens, can provide some relief. Whether that potential move sticks or is used as exit liquidity will likely be a good indicator of what’s to come over the summer months.

   

Warsh’s new Fed leadership is as clear as mud.

1. Is he going to be a hawk or dove? Where is the committee at? How will he navigate such a conflicting balance of Trump’s loose policy goals with a worsening inflation picture?

2. We know from Warsh himself that he is in favor of “improving” the Fed’s data tools and analytics. In particular he has a preference for using trimmed mean inflation measures as opposed to Powell’s favored PCE. That notion is oddly convenient given the discrepancy in the metrics of late and significantly lower readings using the trimmed mean methodology. The old running joke was that the Fed was going to start using CPI ex-everything as their benchmark inflation guide, but as we know in today’s world, there are no jokes and conspiracy theories any longer because they all come true.

   

3. The situation is actually quite complex because of how interventionist Fed policy has become over the years, which has helped lead to one of the largest inequality problems ever witnessed in the nation’s history. There’s never been a bigger divergence between consumer sentiment surveys and the stock market.

4. This trend is becoming increasingly problematic for Trump as well because it’s coming from independents and republicans too, not just democrats.

5. Warsh can actually help fix the problem by reducing the duration of the Fed’s balance sheet and let long end yields rise, thus steepening the yield curve and rebalancing the economy in favor of main street and small businesses who have been directly hurt by policies of the last few years. The problem is that rising yields is at direct odds with Trump and Bessent’s goals of propping up stocks.

6. History would also be on Warsh’s side as during many midterm election years, the policy focus tends to follow that path to help main street in attempt to win over the hearts and minds of voters and stocks tend to lose. Thus far this administration has bucked that trend, which may come as a headscratcher to many because it continues to benefit the same few same mega cap tech and AI winners while coming at the direct expense of the many across main street.

   

   

7. Not too long ago Trump was announcing credit card interest rate caps and housing market stimulus measures aimed at the lower and middle class. With under 6 months until November’s midterms, it remains to be seen whether declining ratings and approval data will trigger a shift back in that direction.

Rates and bond market.

1. If you’ve been following our writing for the last few weeks you know we were shorting bonds on the basis of rising inflation amidst still okay growth and increasing pressure on central banks to turn hawkish. Last week I wrote about when it might be time to think about other parts of that trade and then this week I elaborated on that idea which got some pushback on X.

2. I really liked this post from Variant Perception that does a good job of highlighting some key differences between 2022 and today. It is a much more two sided equation this go around given already higher real rates and a weaker economy.

3. If the Fed and Treasury weren’t juicing markets so heavily via bond and currency market intervention, I think there is a case to be made to look through the energy price shock assuming it calms over the coming months. As I was mentioning earlier, if they removed the balance sheet accommodation and let the long end properly reprice 50-75 bps higher, that would help restrict policy enough to slow inflation and possibly allow for a looser Fed Funds rate. The problem is they are very unlikely to do that given the negative implications it would have on the market. But as of now, the 2s10s curve seems to me to be saying more of a growth problem than runaway inflation.

   

4. I haven’t pressed this position hard yet because I still think there is some wood to chop over the coming weeks as inflation prints will still show acceleration and the market is not showing many signs of being concerned about growth. I do think that changes though as we head into Q3. If the market gets to pricing in 2 hikes, I think that becomes a really attractive entry. There may also be better trades to express this view, like gold for example.

   

5. Hawkish vibes from an otherwise Trump ally in Waller is also along the lines of what you want to start seeing for this view to become increasingly priced in.

6. Thus far, credit spreads remain subdued, particularly in the higher rated parts of the market - which makes sense given the favorable policy conditions. There is a growing gap between the C rated junkier parts of the market and B rated paper that may be something to watch over the coming months. Historically this widening spread has preceded broader tightening conditions.

   

Oil market dynamics continue to chop up both bulls and bears.

1. When I look at the weekly chart of WTI I just chuckle to myself. Just like the chart says, what a calm, cool and collected last 12 weeks it’s been.

   

2. Jokes aside, I continue watching Brent-WTI spreads that have come in meaningfully as the US has ramped up the exports of its crude reserves overseas to be the marginal supplier of last resort to Europe and Asia.

   

3. Time spreads have also come in for largely the same reasons as global physical shortages have been alleviated to some extent.

   

4. I’ve been writing about this stuff for the last few months and continue to believe there is attractive value in the internationally exposed parts of the oil and gas complex. Regardless of which direction the Iran War goes in the meantime, I think higher for longer oil prices are here to stay. Eventually the Strait of Hormuz will have to open up to some degree and why I think Trump is so confident in his ability to get gas prices down is because he will still keep throttling the SPR drains when that eventually happens to put as much downward pressure on crude as possible. Last time they did that though, XLE (as a proxy for oil and gas stocks) made higher lows in every consecutive year from 2021 through 2024. Equity investors will can look through the short-term flow dynamics better than the physical market can.

The markets ebb and flow. Sometimes they make perfect sense to you and no sense to your neighbor, and vice versa. It’s important to know your style and what environment you’re operating in. Flat is always a position. There will always be more opportunities and shots on goal.

I hope everyone has a great holiday weekend. If you get a chance, try a MURPH workout on Monday.

As for the markets, I have a lot of different thoughts this week so some will be quick hitter ideas more so than usual. Maybe over the coming weeks a few of them will really tug at my attention and I will go deeper. As a reader, I would suggest that is something to be on the look out for - when I write about sectors or trades consistently week over week, odds are my conviction and interest in them are growing.

S&P 500 Retail index is saying something much different than Nasdaq.

1. This chart is bat shit crazy to me and is the K-shaped economy in a nutshell.

   

Continued fascination with the oil market dynamics.

1. The magnitude of the SPR release is not getting enough attention in my opinion. Once again we have another example of Trump and Bessent doing the exact same thing they criticized Biden and Yellen for doing. Exact same thing.

2. This may be one of those instances I mentioned in the introduction where your antennas should perk up because I keep writing about something. The oil complex has been in just about every Scouting the Tape for weeks on end now. Last week I noted the XLE/XLK divergence. In April I discussed the risks of a US export ban and the bull case for long dated Brent oil futures.

3. A quote of my recent tweet put it very succinctly.

4. Inflation is here to stay and your portfolio best be positioned for it. You can entertain yourself with the table game of the day at the semiconductor casino but getting really long critical commodity infrastructure and national energy security plays will probably net out the same if not better returns over time with a lot less stress.

FX and the dollar.

1. On Monday I tweeted the following arguing for a rise in the dollar. I got lucky on the timing.

2. I will leave you with just one chart which is the weekly DXY with RSI and MACD indicators. The technical setup here looks unbelievably bullish to me.

   

3. In recent weeks I’ve been writing about the setup in USDJPY and what policymakers can do about it. This is all related to the dollar. I continue to believe FX and the dollar are integral to understanding the direction of global macro right now.

Taiwan.

1. Watch this recent Trump interview. It is the most soberly I’ve heard him speak on the Taiwan issue and he seems a bit shook about it.

2. It got me thinking about this tweet I wrote last December where I called NVDA a national security threat.

3. It has me thinking, has the Trump administration been blowing the bubble in the AI sector (purposefully, they aren’t stupid) because they need these companies to have cheap and large access to financing to re-shore the semiconductor and chip industry to the US as quickly as possible before Taiwan loses its independence? Outside of national security or strategic imperative, there aren’t many great reasons why you’d want both your stock market and economy so levered to one extremely cyclical sector while negatively impacting the majority of the population.

4. I’ve been noodling over this line of thinking for a few days and it won’t go away. Then I see this Chamath clip of him talking about Taiwan’s declining relevance which has me thinking he got this narrative from his buddy and podcast mate David Sacks who happens to be Trump’s AI czar.

When do SOFR futures become interesting?

1. The recent change in the Fed Funds rate market has been dramatic. We’ve been playing the rates market well this year having made money from both the long and short side.

   

2. Since early April we have been bearish on SOFR futures under the expectation that inflation was going to keep surprising to the upside. In late April we continued to expand on this idea, detailing the worsening inflation picture and the negative outlook for SOFR futures.

3. Here we are weeks later and you have almost 2 rate hikes priced into 2027 and I' find myself asking what is an attractive entry, if any, to get back into the trade from the long side. I’ve been focusing a lot on the June 2027 contract.

   

4. In that April 10th post I wrote “the optimal entries should come when equities are still trading well but inflation is surprising to the upside”. I think that could come over the coming 1-2 months. I think we still have a few more worsening inflation prints to get through but there will be a time to get long SOFR again as cheap insurance. I want to fade the rate hikes happening but do so from a great price.

Agricultural commodity futures are ripe for speculation.

1. I started writing about ags in a few March editions of Scouting the Tape. Initially laying out the high level trade and then simplifying it further. I believe this is an area to be seeking attractive risk/reward setups and trading around the complex.

2. One of the trades I am currently long are live cattle futures (LE). What if I told you that since the March 2020 COVID bottom, the asset has matched the S&P 500 return with a smaller max drawdown (-17%) and lower volatility. Suffice to say live cattle prices are in a secular bull market which is why you’re reading about the cost of beef hitting new highs every 3 months. I like the 5:1 risk/reward setup out of this head and shoulders on the daily chart. I’ve been long for a few weeks now so have a better entry than the current level but still really like it.

   

3. Live cattle are cows that have reached their finished weight (1,200-1,500 pounds) and are ready for slaughter. This is the primary point of price discovery for the beef industry, meatpackers and grocery chains, creating for a large and liquid market. There are also feeder cattle futures (GF) which constitute younger calves (700-900 pounds) that are sold to be fattened up for eventual slaughter. There is a concept that simplifies the supply chain known as “cost of gain” where essentially feeder cattle + corn + time = live cattle. The cattle crush spread is a profitability or margin calculation that = live cattle - (feeder cattle + corn).

4. From here you can understand that when the cost of corn and other agricultural commodities rise, it has a serious impact on the supply chain. It can cause the cost of feeder cattle to drop as they can only charge the market rate for the finished beef and thus their cost inputs must rebalance. Live cattle on the other hand are more resilient to broader ag inflation because their price includes all of the costs throughout the supply chain. I am drastically simplifying things here but maybe I will try to elaborate each week on a new aspect of the agricultural commodity complex as I assume most of my readers did not grow up in Wisconsin and have no familiarity with this stuff.

Capital vs. labor.

1. Shout out to for the updated capital vs. labor chart. I wrote about what I think is a bubble in corporate profits last week and used their chart to illustrate the divergence between the two camps of the economy.

Thank you all for reading and I hope everyone has a great week. On the next Forward Guidance episode I will have a shaved head courtesy of our wonderful fundraiser donors.

Chartbook:

Forward Guidance Chartbook - May 15, 2026 - Lekker Insights

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The bubble in US corporate profits.

1. It’s interesting how divisive the topic of whether or not stocks are in a bubble is. Bears point to high P/E multiples on record profit margins while bulls point to record EPS growth. Both are correct. Where I shake out is that the bubble is in corporate profits as a result of both fiscal and monetary policy supporting corporates and capital over labor for many years running. This explains why it is such a heated debate, because both camps are technically correct. With bulls arguing that stock prices are supported by record profits and earnings and bears belief that this imbalance is unsustainable, both can be true.

   

2. All-time high profit margins corroborate this view. Dissidents will point to rapid technological innovation as the driver of a structurally higher corporate profit plateau, I would point to the government policies that allow that to be the case - mega cap tech monopolies, the rise of duopolies/oligopolies across every sector and continued tax/fiscal policy that favors the large at the expense of the small.

   

3. Notice something changed after 2020 when the US government doubled its money supply on the spot and started putting corporate debt on its central balance sheet. No wonder corporate profits exploded.

   

Divergence between oil prices and XLE/XLK.

1. Looking back over the past number of years, it is not normal to see such a large divergence between the price of oil and the ratio of oil stocks (XLE) to tech (XLK). A large gap has opened up between the two and I would bet it closes, but trade structure and timing are obviously critical.

   

2. I am a believer that the lasting impacts of the supply shock will keep oil prices elevated for longer than the market currently has priced in.

3. The long December oil futures trade we wrote about in the beginning of April played out well and I still like it.

4. Lately I have been focusing more on the oil and gas equities, particularly international exposure, which I also wrote about a few weeks ago. XOM is an example of an international focused major that has pulled back -18% off its highs back to February 4th (pre-Iran War levels) right into the 100dma. I’m long it among a basket of names.

   

Divergence between equity indices and stock and bond volatility.

1. A potential divergence between equities moving higher while stock and bond volatility measures bottom out is also worth watching over the coming weeks. We’re now inside of 6 months from midterms so it is not surprising volatility would find a floor soon. Thus far nothing conclusive here but something to keep an eye on.

   

NVDA - the bull / bear battle ground.

1. I am infatuated by the NVDA chart. I’m not sure if it’s because it makes up 8% of the whole S&P 500 index or that its market cap fluctuates a few hundred billion each week without anyone batting an eye. Either way, the $5.3T behemoth is an important one to watch.

2. I would say bulls are currently in the driver’s seat as it closed at new weekly closing highs.

   

3. That said, the current ‘double top’ pattern is not new for the stock. Most notably it did this in November last year, closing at a weekly high but then not revisiting those levels for 6 months and testing a -22% peak to trough drawdown in between. January 2025 saw something similar. We’ll watch it play out together.

   

Financial conditions, monetary policy and gold.

1. Over the last few weeks I’ve been frequently writing about the ongoing risks of overheating in the economy and how policy is too loose. A number of trolls on X have wrongly interpreted these ideas as me being bearish when I specifically compared the environment to 2020-2021. The reality is that this behavior should make you less bearish in the immediate term, but more bearish on longer horizons. When governments enable above trend growth and a worsening secular inflation environment, it feels good upfront but makes the ramifications harsher on the back end because they are forced to slam on the brakes harder than they would if they took the pain sooner. Literally 2022 to a tee.

2. You don’t have to look further than the Fed’s own website to see that its baked in the cake that inflation will rise above 4% this year. There are many ways to play this environment, sometimes it makes sense to grab a seat at the casino table and play along, and other options include patiently playing the inflation protection trades that will work at a slower pace now while speculative fervor is high and work even better when it dies. Everyone has a different style.

   

3. What’s clear, however, is that the market is saying it has no clue what is going to happen to the Fed Funds rate. I’d imagine without a Trump hand picked Fed chair, the odds of hikes would be higher, but most market participants believe the bar for this to happen is much higher under a less independent Fed. Unfortunately we won’t really get much more insight into the thinking here until June’s FOMC which is still over a month away.

   

4. One relationship I am paying close attention to is dollar and yields, which in normal, healthy functioning times are often positively correlated. While too early to declare just yet, the recent dollar down, yields up has been interesting. Japan has been ground zero for what happens to a currency and sovereign bonds when policy is way too loose - yields up and currency down. If we listen, the market will tell us what it thinks about the current policy stance.

   

5. Given this is a global phenomenon happening across developed markets as everyone is allergic to hiking rates into a commodity supply shock, fiat to fiat crosses might not provide as much insight as normal. For this reason, keep an eye on gold too as it will continue to benefit from this globally coordinated ‘run it hot’ approach to growth and inflation. I am long.

Declining tariff revenues heading into 2026’s first Trump-Xi summit.

1. Among the list of failures the Iran war has made mainstream media forget about (eg Epstein files, Pam Bondi, affordability crisis), tariffs is one of them. Monthly tariff revenues are down over -30% since October 2025.

   

   

2. This decline in tariff revenues is ongoing despite a 7% increase in the monthly import volume which means the effective tariff rate has fallen even more.

   

3. This past week the Supreme Court struck down Section 122 tariffs which were the Trump administration’s replacement for the IEEPA tariffs which were previously struck down. It’s a nuanced headline because it only blocks the tariffs for two private importers and the tariffs remain in place for all other importers while the appeals play out. These tariffs expire in July and are likely to be replaced by Section 301 tariffs after that, with appeals and court cases dragging out well into 2027.

4. In 2023 and 2024 the US collected ~$80B in tariffs per year, that rose to $260B in 2025 and is likely to end 2026 somewhere in that same neighborhood. While it is nothing novel to say peak tariff hysteria is behind us, taking that one step further it may be the case that from here the majority of tariff risks lie to the downside which equates to upside growth / increased trade. Additionally, with supply chains now having over a year to adjust, it seems to me that the Trump-Xi meetings carry much lower stakes this year than last.

   

Hope everyone has a great week ahead. Tell your mom you love her today!