If you are brand new to Capital Flows, my goal is very simple: map the macro regime so that I am on the right side of it, and find the few large, asymmetric bets that become home run trades.

Since the beginning of the year, I have been focused on building out a full suite of agentic macro models that quantify the macro regime and identify asymmetric bets in alignment with how I think about markets. I will be sharing some of the outputs below.

Let me set the context before diving into the report:

• My geopolitical framework for the current situation is laid out here: LINK. If you feel like there are a lot of confusing and conflicting opinions on Iran and Trump, read this. It is about the larger structure, not predicting coinflip news events.

• My AI report explaining how the supply chain, adoption, and labor market impact breaks mechanically into three distinct phases: LINK

• All of the educational primers I have written on macro and markets, with a full suite of free models if you do not have a Bloomberg: LINK

With these as context, the positioning note below is going to make a lot more sense, and the market is going to become a lot clearer.

S&P500: How much is geopolitical risk, and how much is the economy?

Notice that on a YTD basis, ever since the negative rolling returns in ES gained persistence, 30% has been driven by geopolitical risk premium.

As I laid out in this video, there are multiple factors causing positioning unwinds in equities from crude, to STIR, to FX (link):

Now here is where we can quantify the STRENGTH of these macro moves even further. This gives us insight into HOW PERVASIVE these forces are, which sets the stage for identifying WHEN divergences take place and how that creates opportunity.

Read more

I have laid out my view on the geopolitical risk and crowded positioning levels in all of the livestreams this week:

• Sunday Livestream: LINK

• Monday Livestream: LINK

• Today’s Livestream: LINK

The implication is that I believe all of the premiums that have been aggregated in markets are likely to unwind and push risk assets higher as we move through FOMC. I laid out the logic for this in the regime dashboard that I shared today.

Full PDF of the dashboard is here:

Regime Dashboard (2)

2MB ∙ PDF file

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The misconception about FOMC and inflation here is that we are moving into a 2022 type of environment where inflation is going to crush equities.

I don’t believe this

In fact, I believe there is so much of a premium in equities that if we don’t have further escalation in the geopolitical side of things, traders will have to unwind their hedges to buy back equities, sell the DXY, and likely sell crude.

Notice that we are already moving in lockstep with what I laid out on Sunday (link): SPX is bidding, crude is hitting a ceiling, and the DXY just got sold for two straight trading days.

We are already seeing the Nikkei begin to find a bottom despite Japan being net short oil as a country.

The risk-reward for crude is likely lower in the absence of any further escalation. Here is how I view the risk-reward moving into tomorrow:

The amount of exhaustion and unwind that has taken place in Bitcoin is likely beginning to help set a bottom in the spot price:

MSTR specifically could see a significant short squeeze since it has been so aggressively sold during the last year:

Vol already blew out when we were at the lows a month ago, so we likely have limited downside moving into the next 2 months.

With this being said, I think the intensity of rotations in equity markets is only going to get more aggressive. Tech has so aggressively dragged on the index as the energy sector is melting up:

But it is clear that the dispersion in the AI and tech space is beginning to be THE largest factor to understand over the next 2 months. Notice that all of the private credit concerns are being priced, but that the AI chips and AI power themes are remaining resilient. The hardware side of the market is literally the only thing keeping the S&P500 from going off a cliff right now: (chart from: https://www.liquidationnation.ai/)

This is why I would encourage you to review the video and connected reports I published on how the AI endgame is playing out. This is still the most important playbook I have published YTD.

Risk and Opportunity:

My view on the global economy is that recession or stagflation is not an imminent risk. However, we are not seeing a massive injection of credit or liquidity yet in the cycle that would smooth over all skeletons hiding under the floorboards.

The implication of this is that you really need to choose your spots. This is why I have talked about my two highest conviction plays being and

• Oracle bet (still at a great entry spot): LINK

• Hyperliquid Strategies - PURR (up almost 100%): LINK

I am working on the next big bet that I am taking and will be sharing a comprehensive breakdown of the FX market this week as well, with the new AI tools I am running.

I will also be covering the FOMC meeting tomorrow at this livestream link:

Thanks

The information on this website/Substack is for information purposes only. It is believed to be reliable, but Capital Flows does not warrant its completeness or accuracy. The information on the website/Substack is not intended as an offer or solicitation for the purchase of stock or any financial instrument. The information and materials contained in these pages and the terms, conditions and descriptions that appear, are subject to change without notice. Unauthorized use of Capital Flows websites and systems including but not limited to data scraping, unauthorized entry into Capital Flows systems, misuse of passwords, or misuse of any information posted on a site is strictly prohibited. Your eligibility for particular services is subject to final determination by Capital Flows and/or its affiliates. Investment services are not bank deposits or insured by the FDIC or other entity and are subject to investment risks, including possible loss of principal amount invested. Your use of any information which is proprietary to Capital Flows or a third-party information provider shall only be used on individual devices without any right to redistribute, upload, export, copy, or otherwise transfer the information to any centralized interdepartmental or shared device, directory, database or other repository nor to otherwise make it available to any other entity/person/third party, without the prior written consent of Capital Flows.

My entire goal in markets and on this Substack is very simple: map the macro regime so that I’m on the right side of it, and find the few large, asymmetric bets that become home run trades.

I laid out how Hyperliquid is going to disrupt the crypto and tradfi industry, and that the best expression is due to the regulatory arbitrage. I laid all of this out for paid subscribers when we were in the low $3s, and we have almost doubled since then (link). This has been the largest position in my portfolio, and I continue to hold the trade (see my interview with the PURR CEO here: link).

Markets pay you to hold risk and take volatility. The entire industry is set up to suppress volatility, which is why when someone like Larry Ellison decides to take a massive bet and do the opposite of the entire industry, I want to be long.

My next big bet is ORACLE, and I am bullish with the following risk-reward (see my note below about building a position last week at $156):

If you were a paid subscriber, then you got my note last week about beginning to build a position in earnings around the $156 level and are now up after the pop. I have added more, and this is my next big trade.

If you want my entire thesis on Oracle, you can find it here. It is very simple, though. Larry Ellison has taken the entire company and leveraged the income statement and balance sheet to the AI build out, and he is the only major company that is pulling all negative returns into the present in order to have massive returns in the future.

The earnings call is beginning to show the escape velocity of all their capex coming into sight:

Keep a very close eye on the TradingView indicator I provided to map the flows. We need to see continued buying pressure from sector flows and fundamental flows in Oracle: https://www.tradingview.com/chart/2taQ63im/

I am taking a small portion of my Oracle exposure and putting it into ORCL US 12/17/27 C310 Equity:

My Large Cycle View:

I have been very clear that I believe the current macro environment is unsustainable. We have significnat structural risks building under the surface in liquidity, the microstructure of the market, and positioning. However, we are not at a point in the cycle where there is a constraint to unwind it. And this is a global phenomenon.

This is why my recent comment to Burry focused on how to relate the changes in AI with macro liquidity. I believe there is a ton of importance to the risks Burry brings up, and I will always have respect for any risk taker. My larger concern is why all equity indices are sitting at all-time high valuations, and the driver of this:

If you want to understand more of my thought process around these trades and my current framework on the macro regime, I will be doing a livestream tomorrow at 9:15 AM MT.

Here is the link for joining:

The information on this website/Substack is for information purposes only. It is believed to be reliable, but Capital Flows does not warrant its completeness or accuracy. The information on the website/Substack is not intended as an offer or solicitation for the purchase of stock or any financial instrument. The information and materials contained in these pages and the terms, conditions and descriptions that appear, are subject to change without notice. Unauthorized use of Capital Flows websites and systems including but not limited to data scraping, unauthorized entry into Capital Flows systems, misuse of passwords, or misuse of any information posted on a site is strictly prohibited. Your eligibility for particular services is subject to final determination by Capital Flows and/or its affiliates. Investment services are not bank deposits or insured by the FDIC or other entity and are subject to investment risks, including possible loss of principal amount invested. Your use of any information which is proprietary to Capital Flows or a third-party information provider shall only be used on individual devices without any right to redistribute, upload, export, copy, or otherwise transfer the information to any centralized interdepartmental or shared device, directory, database or other repository nor to otherwise make it available to any other entity/person/third party, without the prior written consent of Capital Flows.

It is quite ironic that Trump is crashing the stock market for the second time at functionally the same time he did last year, but this time into midterms with crude as the catalyst instead of tariffs.

We are seeing crude prices now drag up the VIX and cause bear steepening in the curve as there is a marginal inflationary impulse:

VIX futures are now sitting at the same level they were at when we were at a 20%+ drawdown last year:

Here is the key factor to understand to frame the next move.

Read more

Today I recorded a livestream breaking down how the major shifts in AI are converging, and why Larry Ellison is making a massive bet with Oracle, one that I want to take with him once the signals align.

The stream covers three things: a full breakdown of the AI playbook, a deep dive into Oracle and the bullish case, and a TradingView model that decomposes flows in a single stock into fundamental, sector, and broad beta components. Once you strip those layers apart, the picture gets a lot clearer.

Below you’ll find the livestream recording, the slide deck, and the TradingView models. I’d encourage you to watch the full recording so you can start framing how to take risk.

Slides:

The Oracle slide deck is here:

Orcl Deck

2MB ∙ PDF file

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Tradingview Model: LINK

Here is the Naval podcast slide deck I referenced as well:

Naval Slide Deck

684KB ∙ PDF file

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You can find Naval’s podcast here: LINK

If you haven’t gone through it yet, the AI playbook and connected reports are all laid out here. That includes a full video breakdown of how to map the AI supply chain and position across the companies involved, along with four in-depth reports explaining the key shifts underway.

Finally, last week, I also recorded a podcast with the CEO of Hyperliquid Strategies discussing the opportunity in. This was a very revealing interview about how significant the oppurtunity in Hyperliquid and especially is right now. My full report on PURR can be found here: LINK

We are back below fair value, and this is likely going to be a massive opportunity for Hyperliquid Strategies to both acquire more HYPE and buy back stock, increasing long-term shareholder value. There are a number of bullish catalysts setting up that have yet to be realized in either or HYPE.

The Shift:

The environment is shifting fast. AI is repricing entire supply chains, capital is flowing into new infrastructure at a pace we haven’t seen before, and the opportunities sitting in front of us, from Oracle to Hyperliquid, are a direct result of that repricing. The playbook is there. The models are there. The catalysts are building.

What matters now is how you position into it. The people who will capture the most from this shift are not the ones with the biggest teams or the most capital. They are the individuals who think differently, who see the signal before consensus forms, and who have the conviction to act on it. In a world being reshaped by AI, a single person with a differentiated framework is the most dangerous participant in the market.

The information on this website/Substack is for information purposes only. It is believed to be reliable, but Capital Flows does not warrant its completeness or accuracy. The information on the website/Substack is not intended as an offer or solicitation for the purchase of stock or any financial instrument. The information and materials contained in these pages and the terms, conditions and descriptions that appear, are subject to change without notice. Unauthorized use of Capital Flows websites and systems including but not limited to data scraping, unauthorized entry into Capital Flows systems, misuse of passwords, or misuse of any information posted on a site is strictly prohibited. Your eligibility for particular services is subject to final determination by Capital Flows and/or its affiliates. Investment services are not bank deposits or insured by the FDIC or other entity and are subject to investment risks, including possible loss of principal amount invested. Your use of any information which is proprietary to Capital Flows or a third-party information provider shall only be used on individual devices without any right to redistribute, upload, export, copy, or otherwise transfer the information to any centralized interdepartmental or shared device, directory, database or other repository nor to otherwise make it available to any other entity/person/third party, without the prior written consent of Capital Flows.

If you have been following my work, then you know I have two simple goals:

1. Map the macro regime so that I stay on the right side of it.

2. Find asymmetric bets that function as homerun trades.

This process is what I lay out for paid subscribers every day.

PURR has been one of those bets from the very beginning. I first published the thesis on December 9, 2025, titled “My Large Macro/Crypto Bet,” when Bloomberg Social Monitor showed literally no one was talking about $PURR on any social media platform. There had been one tweet about it. One. I published the full research report (link), spoke extensively on the livestream about how it was trading at a discount to fair value, and laid out why I believed volume for traditional financial assets would outpace crypto volume on Hyperliquid.

By January 15, the thesis was playing out exactly as outlined. I reiterated: I AM BULLISH $PURR. Not because of hype or momentum, but because the fundamental evidence was compounding in the direction I had mapped out.

Here is the progression on the chart:

Every step of this was documented in real time for subscribers. The initial report. The livestream breakdown. The follow-up analysis when price action confirmed the thesis. And now, with Q4 2025 earnings in hand, the evidence has only gotten stronger.

Subscribe now

What Just Happened

PURR reported its first set of earnings as a public company. The data confirms everything I laid out in December and then some:

• Management deployed $140 million in 63 days, buying HYPE at an average of $25.94 (well below the listing price and today’s price)

• HYPE token holdings grew 40% from 12.5M to 17.5M tokens

• The company is running at roughly $7M/year in operating costs, and staking revenue alone could nearly cover that

• Zero debt. 95.6% equity capitalization. Fortress balance sheet.

• HIP-3 non-crypto perps (equities, forex, commodities) now represent >25% of total Hyperliquid volume, confirming the decorrelation thesis I outlined from day one

At today’s prices (PURR $4.43, HYPE $29.07), the stock trades at roughly 1.05x Adjusted NAV. That is a 5% premium to liquidation value for a company that is the only institutional on-ramp for the #12 token by market cap, backed by a former Barclays CEO and a former Federal Reserve president, with a $1 billion equity line of credit for further accumulation.

The market is still not paying attention. And that is the opportunity.

What’s Below

Below the paywall, you will find two things:

1. The full Q4 2025 earnings breakdown and updated thesis with scenario analysis from bear to max bull.

2. A custom TradingView indicator that maps PURR’s real-time fair value and mNAV premium/discount using live HYPE prices. Overlay it on the chart and you can see exactly where price sits relative to NAV at any moment.

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Over the last few weeks, “software” has gone from market darling to punching bag.
In this video, I walk through why that’s the wrong headline, how the market is actually repricing growth quality, and what that means for picking winners and losers inside the selloff – plus when these rotations are likely to stop dragging on the index.

Here is the chart deck and referenced articles from the video:

Software Deck

2.61MB ∙ PDF file

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If you want to stop treating “software” as one trade and start separating compounders from capital‑destroyers, the full report below goes deeper on:

• How to distinguish durable compounders from names that cannot fund growth or defend margins in a higher‑for‑longer regime

• Which balance sheet, cash flow, and customer mix traits actually matter for software survival vs multiple compression

• How to read the rotation signals that tell you when sector drags are likely to exhaust or flip from headwind to tailwind for the index

• Specific software names and themes that look mispriced for this macro backdrop, with clear rotation and risk setups

  ---

Main Macro/Tech Ideas:

Software stocks just had their worst month since the 2008 financial crisis. IGV is down 22% from its highs. $1 trillion in market cap has been destroyed. Hedge funds have minted $24 billion shorting the sector. Jefferies is calling sentiment the "worst ever." JPMorgan says the sector is "being sentenced before trial." Bloomberg Intelligence says software is "radioactive."

And yet, the dominant narrative driving this carnage -- that AI is going to destroy SaaS -- is fundamentally wrong.

Here is how I am thinking about the software selloff and what it actually means for the broader market:

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My goal in markets is very simple: stay on the right side of the macro regime and take big bets.

If you can consistently map the macro regime and develop a base of knowledge over time, the big bets will find you.

We are seeing significant rotations in risk assets (read this if you’re trying to understand these risks: LINK), which means you can’t blindly buy beta with leverage and hope for the best; you actually have to pick your spots.

is THE spot I have laid out for paid subscribers, and it continues to be my biggest bet. If you are a paid subscriber on here, you get all of the real time updates and analysis on how I am mapping the regime and taking these bets. The key is developing these bets with foresight, not in retrospect.

This is the original report that I wrote on HYPE and PURR. What I want to do today is update you about some very important changes that are shifting HOW I think about the trade.

Hyperliquid and Hyperliquid Strategies (PURR)

There are two significant gaps in how the market understands Hyperliquid and Hyperliquid-based strategies. Understanding both of them is the key to framing when short-term tops and bottoms occur.

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As we head into a new week, it’s essential to understand WHY macro changes are happening, not just that they’re happening. Buying and selling pressure constantly flows through asset classes, and making sense of these moves requires the right context. Right now, the biggest question is how the new Fed chair will reshape equity market rotations across AI, interest rates, and global FX.

Are we witnessing a rotation or a risk-off environment in the S&P500?

And how does the new Fed chair factor into positioning for major trades? That’s exactly what I’ll be breaking down in today’s report for paid subscribers.

I laid the groundwork for this analysis in Saturday’s livestream for paid subscribers. We’re setting up for a larger macro bet that takes advantage of multiple converging factors.

If you missed the livestream, the recording is available at the bottom of this report along with the accompanying slide deck. Use these resources to integrate this framework into your redundancy planning and risk management.

I also recently published a short article on differentiating yourself in markets and in life, linked below. If you’re serious about generating exceptional returns, it’s an important one. How to Become So Differentiated That No One Dares Compete With You (4 min read)

This is going to matter because we’re at a point where macro forces and equity rotations are converging to create clear trade setups.

AI, Interest Rates, and The Earnings Cliff:

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Here’s the replay of the livestream on the credit cycle and the macro “endgame.”

In the session, I walked through how credit cycles actually progress, what typically breaks at each stage, and the set of paths that are still open from here. The goal is simple: give you a clear, actionable map so you’re not guessing which regime you’re trading or investing into.

Below the video you’ll find the slide deck and the Credit Cycle PDF so you can work through the framework at your own pace or revisit specific sections.

For paid subscribers, I’ve added a full written report below the paywall that applies this framework to today’s data and lays out the key scenarios, positioning implications, and risks I’m focused on now.

The Macroeconomic Framework Of Capital Flows A Comprehensive Playbook (2) (5) (9)

633KB ∙ PDF file

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The Credit Cycle And Macro Endgame

4.58MB ∙ PDF file

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Positioning Risk and Macro Flows:

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This update is split into two parts.

First, for all subscribers, I recorded a short video walking through the current state of Bitcoin, US equities, and the liquidity cycle. If you just want the big picture on how liquidity is driving the BTC / equities relationship right now, start there. It will get you oriented in a few minutes.

Second, for paid subscribers, I’ve included today’s full Flows Report below. In it, I go into the actual plumbing: how dollar liquidity, basis, futures positioning, and cross‑asset flows are evolving beneath the surface, what that’s meant for recent price action in Bitcoin and equities, and how I’m thinking about the forward scenarios from here into FOMC.

Watch the video to get the framework. Read the flows section if you need the positioning map behind the framework and want help translating it into risk decisions.

Macro Flows Report (The underlying signals that determine risk)

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I am going to explain WHY equities have been chopping in a range for months now and HOW my strategy is indicating the skew (bullish/bearish/neutral) as we move into 2026:

If you are a free subscriber, you can review the credit cycle video I recorded here:

As we progress into 2026, this would be a great time to become a paid subscriber, as all of the macro forces are aligning and increasing volatility. The decisions you make amidst volatility matter A LOT more than in periods of stability.

Equity Strategy and Inflection Point: (Paid Subscribers Section Below)

Read more

For free subscribers, those prior pieces are your playbook: they explain why the environment looks the way it does and which forces I’m watching most closely. If you’re new, start there so the positioning that follows doesn’t feel like a set of disconnected trades.

• Interest Rate Strategy: Macro Liquidity Risks/Reward

• Macro Report: A Storm Is Coming and The Coming Storm Playbook: Replay, Resources, and Next Livestream

• Geopolitical and Cross-border drivers of liquidity:

  • The Battle for Influence and Capital: How Modern Information Flows Shapes Global Capital Flows

  • Operating in the Information Arena: A Redundancy Playbook for Geopolitics and Macro Risk

For paid subscribers, today is where we connect that framework directly to equities and interest rates right now. I’m going to move from “big picture” to specific implications: which parts of the equity market are most exposed or best positioned under this regime, how I see the path for policy rates and the long end, and what that means for risk-taking over the coming quarters.

The detailed positioning, sector, and factor views, and rate curve analysis begin in the next section, which is available to paying members only. If you want the full trade implications – not just the story – you’ll find the step‑by‑step equity and rates workup behind the paywall below.

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When I look at the trajectory of the Hyperliquid ecosystem, the HYPE token stands out as one of the few assets in the digital-asset landscape where usage, revenue generation, and on-chain activity are compounding at the same time. Hyperliquid has moved beyond the phase of theoretical adoption. It is now processing billions in daily trading volume, attracting some of the deepest derivatives liquidity in the space, and consistently ranking among the highest-revenue blockchains. That combination is rare in crypto, and it is even rarer when the underlying token is still early in its institutional discovery process.

This is exactly why the Hyperliquid Strategies structure was built: to establish a single, publicly listed treasury vehicle designed to hold, accumulate, and manage HYPE at scale. Institutions cannot access HYPE directly with the same ease and compliance infrastructure that they access public equities. PURR exists to solve that problem. It provides a regulated wrapper, audited financials, a defined governance structure, and the capital-markets tools needed to convert equity demand into HYPE accumulation. In other words, it is the bridge between the traditional capital pools on Nasdaq and one of the fastest-growing ecosystems in digital finance.

I view this treasury as the foundational on-ramp for institutional participation in the Hyperliquid economy. As HYPE liquidity deepens, on-chain activity increases, and the exchange continues expanding globally, PURR is positioned to become the largest concentrated holder of HYPE accessible to pension funds, allocators, RIAs, and public-market investors. This was the intention from the outset: to create a scalable institutional vehicle that captures the long-term appreciation of HYPE while maintaining the transparency and governance standards required for adoption at size. In many ways, this moment resembles the earliest phase of MicroStrategy’s transition into a Bitcoin treasury company, when public equity became the only compliant channel for institutions to gain exposure to a rapidly emerging digital asset. PURR serves that same role for HYPE.

Investment Thesis: Hyperliquid Strategies (PURR)

Hyperliquid Strategies (PURR) is a newly listed digital-asset treasury vehicle created through the merger of Sonnet BioTherapeutics and Rorschach I. As disclosed in the SEC filings, the combined entity now holds approximately $299.9 million in cash and 12.5 million HYPE tokens, establishing a starting treasury value of roughly $666 million at current HYPE prices. The strategic intent is clear: PURR exists to give public-market investors direct exposure to the Hyperliquid blockchain through a professionally governed, publicly traded structure.

Progression of the Idea

The merger transformed a legacy biotech company into a crypto-treasury vehicle backed by institutional sponsors and a high-profile board. PURR now operates as a pure-play holder of HYPE, with additional staking and ecosystem yield potential as Hyperliquid expands. The company also controls capital-market tools including a $30 million buyback authorization and a shelf to issue up to 160 million new shares to acquire additional HYPE when advantageous. The value of PURR stock is therefore tied directly to (1) the value of its HYPE holdings, (2) its cash balance, and (3) how effectively management uses issuance and buybacks to grow NAV per share.

Fair Value Model

SEC filings confirm the following structure at closing:

• Cash: $299.9 million

• HYPE tokens: 12.5 million

• Basic shares outstanding: 127.0 million

• Fully diluted share equivalents: up to 183.8 million (preferred + warrants)

Using current HYPE pricing, treasury assets total roughly $666 million.
This implies:

• NAV per basic share: ≈ $5.25

• NAV per fully diluted share: ≈ $3.63

With PURR currently trading around $3.60–$3.70, the market is offering:

• A 30 percent discount to basic NAV, and

• A valuation roughly equal to fully diluted NAV.

This means subscribers are effectively buying HYPE plus cash below liquid asset value, so long as future dilution is disciplined and accretive.

Risk–Reward Profile

The upside stems from three forces:

1. NAV accretion if HYPE appreciates, with treasury value rising dollar-for-dollar.

2. Potential re-rating toward or above NAV, similar to other publicly traded digital-asset holding companies.

3. Optionality from staking yield, ecosystem expansion, and the ability to use equity capital to acquire additional HYPE during periods of strength.

The risks are equally clear:

• Single-asset exposure: PURR is effectively a leveraged bet on HYPE.

• Dilution risk: The $1 billion issuance facility can grow NAV or destroy it depending on timing and discipline.

• Regulatory uncertainty: Changes in US policy around token treasuries or staking could materially impact operations.

• Execution risk: Governance quality must remain high, especially around capital allocation.

Bottom Line

PURR offers a clean, transparent way to gain exposure to Hyperliquid while currently trading at a material discount to its treasury value. The thesis works if management executes responsibly and if HYPE continues to scale as one of the fastest-growing decentralized trading ecosystems. For now, the stock represents a mispriced asset, where investors are paying less than the value of the cash and tokens already on the balance sheet, with significant upside optionality if the Hyperliquid ecosystem continues to accelerate.

I am bullish PURR and view it as a call option on the HYPE token.

The information on this website/Substack is for information purposes only. It is believed to be reliable, but Capital Flows does not warrant its completeness or accuracy. The information on the website/Substack is not intended as an offer or solicitation for the purchase of stock or any financial instrument. The information and materials contained in these pages and the terms, conditions and descriptions that appear, are subject to change without notice. Unauthorized use of Capital Flows websites and systems including but not limited to data scraping, unauthorized entry into Capital Flows systems, misuse of passwords, or misuse of any information posted on a site is strictly prohibited. Your eligibility for particular services is subject to final determination by Capital Flows and/or its affiliates. Investment services are not bank deposits or insured by the FDIC or other entity and are subject to investment risks, including possible loss of principal amount invested. Your use of any information which is proprietary to Capital Flows or a third-party information provider shall only be used on individual devices without any right to redistribute, upload, export, copy, or otherwise transfer the information to any centralized interdepartmental or shared device, directory, database or other repository nor to otherwise make it available to any other entity/person/third party, without the prior written consent of Capital Flows.

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Bitcoin As A Macro Liquidity Release Valve (8) (1) (6)

420KB ∙ PDF file

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• Bitcoin Indicator From Tradingview: LINK

Bitcoin Risks and Reward From A First Principles Macro Perspective:

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There is a real question emerging in macro around auto loan delinquencies. The implications matter because this could be signaling a deeper underlying issue. The data is unambiguous. Serious delinquencies in auto loans are rising across every age cohort. The real test is whether this stays isolated or whether it starts to bleed into the broader consumer and pull the equity market lower. And if it does have an impact, the real calculation becomes how much.

The auto sector of the S&P500 has led the way to the downside in the recent pullback from all time highs.

Understanding this risk will be critical for identifying where risks might be building in the underlying system.

The Risk:

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I want to maintain perspective about WHERE we are on a big picture basis. Geopolitical risk is ONLY going to increase over the next 5 years.

There is a reason WHY $PLTR and gold have been rallying for years together: Everyone knows the degree of conflict and financial friction in the future will escalate as we move into the macro endgame.

This is THE idea that I explained in the recent geopolitical video: China is weaponizing its industrial base, currency, and exports in order to gain a strategic advantage over the world.

Naive optimists think that we should just let free markets be free markets. This all seems nice until they realize that China is hollowing out the German industrial base. What do you think is going to happen when China can exert leverage over Germany? You think they will use that leverage to help the US?

One of the problems of the modern age of quants is that there is ZERO thought given to how liquidity provision supports malicious actors. This is going to continue to compress volatility until things explode. This is already in the process of taking place.

The Macro Play:

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Over the last 5 trading days, we have been seeing significant changes in equities driven by real interest rates and positioning. This incrementally shifted the probabilities for WHERE equities could trade.

I noted my equity strategy turned neutral:

And understanding rotations was THE KEY for navigating this:

We are entering the next stage of this shift. (This will be a very important time to monitor markets because volatility is likely to increase.)

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Per my note yesterday, we are seeing a marginal rotation. As a result, I am opening a few trades in confluence with the tensions we are seeing.

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