Rekt Mkts: Leo-SOLD

Well I think that might be one of the craziest things I've ever seen. Situational Awareness went from being up 450% YTD at the end of June to essentially being bailed out by Citadel on their entire portfolio after not only levered memory longs went against them, but so did their SaaS shorts in things like Adobe. I actually still think that is going ot be an unbelievable trade one day, but the problem is when you're so concentrated and when you have leverage, it's just very easy to get hunted by the big boys and that's exactly what happened. Been chatting to a few mates in tradfi and they seem to corroborate the general colour that Citadel took the opposing side, ran it against them and essentially forced them to liquidate everything. I'll chat a bit more about specific stocks in the equities section.

SPX gained 1.7% yday and NDQ rose 3.4% largely as a relief response to the Situational Awareness overhang. This morning SPX futures are modestly green while NDQ futures are up around 1.1%, so there is certainly some momentum behind this tech bid. Rates on the other hand continue to drift higher. The latest close had the 10Y around 4.66%, up about 4bps, while the 30Y rose roughly 6.5bps to 5.21%. WTI is up modestly near $85, while gold is also slightly higher near $4,110. I feel like my tune is changing quite substantially here and I did deploy quite a bit of risk in the last couple of days. AI stocks getting decimated and trading technically weak were clearly due to SA overhang which has now completely subsided as of yday with Citadel presumably having gotten out of most of the risk/leaving themselves with a position they want to push (if I were them I'd leave myself long the AI stocks and just fucking gun it higher to ATHs). With that in mind, and given we are still sitting in a major dip for these stocks which were ever so coveted just a couple of months ago, I do think it is wise to have some risk on the table.

The reversal in memory was huge yday. MU gained 18.4%, SNDK rose 26% and NBIS jumped 27.1%, while NVDA added 2.6%. Meta still fell 8%, so quite clearly it was an SA book rally. The mkt rewarded Microsoft for showing clearer returns from AI spend and continued punishing Meta after free cash flow fell sharply and guidance disappointed. Amazon has now added to that setup, with AWS growing 37%, which helps explain why NDQ futures are stronger again this morning. Asia then took the move much further today. KOSPI gained nearly 18%, with SK Hynix up 30%, Samsung up 26.8% and Kioxia up 17.7%. After KOSPI lost more than 17% across the prior three sessions, this is a broad reversal led by the exact names that were being liquidated. I now have meaningful exposure across SK Hynix, MU and SNDK, and cash has fallen from around half the book to roughly a third as I've deployed into the selloff. I obviously got some incredible prints on purchases 2 days ago, but I also added risk yesterday despite being up (somewhat frustrated I didn't have more time to deploy) - I just think that there has clearly been a major technical shift here and it will not take much for memory stocks in particular to keep running. In particular I think KOSPI/SK Hynix/Samsung are very interesting given mass liquidations and a much cleaner slate. SK Hynix trades very cheap to the ADR and at some point there is a possibility of compression...but like...when the thing that underperforms gets decimated, and then then the story changes, it will then be the thing that outperforms.

Crypto has certainly the risk rebound. BTC is around $63.8k this morning and down roughly 1.4% today, with ETH near $1,885 and SOL around $73.50. That is a clear reversal from the relative strength we saw while tech was selling off: NDQ gained 3.4% yday and futures are higher again, while the majors are red. I don't think that automatically means crypto is about to collapse, but right now the marginal bid is very obviously in AI and chips instead. My crypto risk remains predominantly in REKT and PONS rather than me trying to force a view across every coin. PONS is around $0.036 and down roughly 12% today, and remains a meaningful position. Still waiting for the V2 catalyst there which feels imminent. Good luck today and touch grass this weekend.