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THE MARKET IS RIPPING. BUT THE CRACKS ARE WIDENING. 🫣

It's Monday morning. Our content meeting just wrapped, and as always - we're letting you peek inside the room.

Today, one thread kept pulling us back in: 

Prices are climbing, but the problems underneath are quietly getting worse.

First, the foundation: Iran.

The blockade in the Strait of Hormuz is still on. The IRGC is trying to sneak ships down the coastline of Pakistan to keep some oil moving, but the U.S. is still managing to intercept most of the flow. 

"We swiped like $400M worth of oil yesterday or the day before," John told the team.

With the continued bottleneck, the shortfall has gone from ~200M barrels a few weeks ago to 700M now.

And it's accelerating. Why? Because all the easy reserves (oil at sea, surface stockpiles) have been tapped.

To the extent that Brent Crude Oil is back in the ‘stagflation zone’:

Yet the market mood has flipped. 

A few weeks ago: doom and gloom. Today: Bitcoin's back near $78k, stocks at all-time highs.

(Is the market seeing something we're not??)

John's answer is the spine of how we're thinking about everything right now.

The market has latched onto two scarcity themes: energy and compute.

Prices (and the revenues of whoever's selling the scarce things) go up. That's why Nvidia is pumping, and why Exxon ripped as oil shock fears peaked in late March.

The flip side is ugly. Earnings get revised UP for the suppliers of scarce stuff, and DOWN for everyone who has to pay for it. 

U.S. farm bankruptcies just surged 46% because fertilizer costs are crushing them. That'll show up in food prices eventually - just not this week.

This is what economists call a K-shaped economy - the top arm of the K (energy + AI suppliers) goes up, the bottom arm (everyone paying for energy + AI) goes down. 

And right now, the K is getting more K-shaped.

So where does Bitcoin sit in all this?

THE MARKET IS RIPPING. BUT THE CRACKS ARE WIDENING. (P2) 🫣

John's current read on Bitcoin: structurally bullish, but not breaking out yet.

Short-term holders (people who've held BTC less than a year) sold ~290k Bitcoin in the last 30 days. But long-term holders hoovered up more than that. 

Saylor alone bought another quarter-billion dollars worth today.

Meanwhile, shorts have been piling on near the top of the range. 

So if Bitcoin keeps grinding higher, those shorts could get squeezed and forced to buy - which could then send the price even higher.

His bias: "vaguely bullish." Not full send (not yet, at least).

Which brings us to the real test: this week's earnings.

Roughly 40% of the S&P 500 reports this week. 👇

The lineup looks like a scarcity-thesis stress test:

Many of the companies sitting at the top of the K are all reporting in the same five-day window. If the thesis is right, their numbers could come in hot and guidance may be revised up.

(All while the companies paying for the energy and compute quietly start flashing warnings.)

That's the split we're watching this week.

BITE-SIZED COOKIES FOR THE ROAD 🍪

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Hyperliquid is an insane case study! They have 11 employees and generate ~$80M in fees per employee.

Reframe: the AI market is betting on the wrong layer.

What’s going on over there? French police record 135 crypto kidnapping cases since 2023 as crime wave swells - DL News.

Any soccer fans in the house? Nexo is now the official digital asset partner of the Argentine National football team ahead of the FIFA world cup.**

*this is sponsored content.
**this is partner content.

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