Markets Are Trapped Between Geopolitical Chaos and AI Productivity Boom | Weekly Roundup
Summary
- Felix Jauvin is structurally bullish on AI compute demand, arguing the market underprices it, citing SMH near all-time highs and constrained GPU supply.
- He is correspondingly bearish on traditional software (IGV), which is breaking key technical levels as AI disrupts the sector and compresses premiums.
- Tom Dunleavy is bearish on the broad equity market (S&P 500), stating fundamentals (closed Strait of Hormuz, inflation, poor liquidity) don't justify prices 3% from highs.
- Core disagreement: Felix sees a bullish setup from extreme defensive positioning (CTAs short $37B, projected to buy $45B), while Tom sees weak fundamentals overpowering a temporary positioning squeeze.
- Michael Ippolito is bullish on gold as a necessary debasement hedge against market manipulation, noting strong miner margins and M&A activity (a junior miner bought at a 79% premium).
- Tom Dunleavy advocates a long oil futures trade in the back months (e.g., Dec '26, Mar '27), targeting convergence to ~$90 from ~$70, preferring it to the congested front month.
- Felix Jauvin suggests Bitcoin is sniffing out potential global liquidity relief from anticipated Trump policy responses to boost his midterm prospects.
- The group notes a puzzling dollar weakness despite an oil price spike, potentially signaling structural shifts in dollar hegemony or active manipulation.
- Non-US equities (e.g., Latam, China) are mentioned as a potential opportunity after a severe positioning rinse earlier in the year.
- The regime favors dispersion: AI/compute and certain commodities are seen as leaders, while consumer and software sectors face significant headwinds.
- Geopolitical risk is not resolved; the "ceasefire" is questionable, and the Strait of Hormuz situation remains a critical, unresolved variable.
- Fed policy is a major uncertainty, with near-term cuts seen as "wishful thinking" against a backdrop of impending hot inflation prints.
Trade Ideas
Speaker said, "If you were told you could short the S&P 500 3% from all-time highs when the strait has been closed for 45 days, you would take that blindfolded." He later reiterated, "The fundamentals and macro outlook to me don't justify us being 3% off highs." Critical fundamental risks (Strait of Hormuz closure, looming hot inflation prints, poor liquidity) are not reflected in index prices, creating a poor risk/reward. SHORT because the index is overvalued relative to the deteriorating macro and geopolitical backdrop, despite recent positioning-driven strength. A durable ceasefire, Fed policy pivot, or continued systematic buying (CTA flows) drives the market higher despite fundamentals.
Speaker stated the IGV software ETF "looks like death," breaking its daily, weekly, and monthly moving averages. He explicitly said "AI is actually eating software's lunch." The disruptive force of AI is causing premium compression and anticipated earnings deterioration in the traditional software sector, which is not yet reflected in earnings numbers. AVOID because the software sector faces structural headwinds and de-rating as capital and value shift toward AI infrastructure and compute. Software sector earnings surprise to the upside, triggering a short squeeze and reversal in the downtrend.
Speaker stated, "Bitcoin's diverging from software now... Bitcoin's actually sniffing out maybe some global liquidity relief." He tied this to Trump needing to "pull some rabbits out of his hat" for the midterms. The anticipation of stimulative policy actions from the Trump administration to improve economic/political prospects could boost global liquidity, which Bitcoin is perceived to benefit from. LONG Bitcoin as a tactical bet on forthcoming policy responses that increase liquidity and risk appetite. No policy materializes, liquidity conditions tighten, or Bitcoin fails to act as a liquidity proxy.
Speaker stated "SMH is less than 1% from an all-time high" and "anything associated with this compute demand is just breaking out right now." He also said "the market is underpricing the demand for compute here." AI scaling is real and creating a nonlinear surge in demand for compute (GPUs, semiconductors), while supply is constrained (GPU availability collapsing). LONG because semiconductor exposure (via SMH) is a direct beneficiary of a sustained, underappreciated AI-driven compute boom. A broad equity market downturn that drags down all sectors, including semis, or a sudden slowdown in AI infrastructure investment.
Speaker is "long the December and March '27" oil futures, loving the trade entries. He argues the back month (~$70) offers better value than the congested front month. Front-month prices are in a demand-destruction zone (~$110-$120) with heavy speculation, while back-month prices are significantly lower, offering a favorable convergence trade if the situation persists. LONG back-month oil futures (e.g., Dec '26) for a potential 20-25% gain on a convergence toward ~$90 later in the year. A swift resolution to Middle East tensions causes oil prices to collapse across the curve.
Speaker is "getting pretty bullish on gold again," noting it's "holding up phenomenally." He highlighted a junior gold miner being taken out at a 79% premium as evidence of underlying sector strength. Gold acts as a necessary hedge against currency debasement and financial market manipulation. Miner margins are expanding dramatically with spot gold prices well above break-evens. LONG gold as a diversifier and store of value in an environment of suppressed free markets and potential dollar weakness. A sharp rise in real yields or a major strengthening of the US dollar.
Up Next
This Forward Guidance video, published April 10, 2026, features Tom Dunleavy, Felix Jauvin, Mike Ippolito discussing SPY, IGV, BTC, SMH, USO, GOLD. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Tom Dunleavy, Felix Jauvin, Mike Ippolito · Tickers: SPY, IGV, BTC, SMH, USO, GOLD