Equity Dispersion and the Rotation: Mag7, Oracle, and OpenAI
How AI CapEx, implied correlation, and the ceasefire rally are reshaping the equity landscape
Equity Dispersion and the Rotation: Mag7, Oracle, and OpenAI
The geopolitical risk premium is coming out of markets faster than most people expected. Crude went from 117 to 95 overnight, ES gapped up, and the Russell outperformed everything. If you were following the positioning breakdown I laid out yesterday (LINK) and last week, none of this was surprising. What matters now is what comes next -- and that is an entirely different question. Below are the main talking points from today's stream. The slide deck is embedded below those. Paid subscribers get the full equity dispersion breakdown and attribution model output tonight.
LIVESTREAM RECORDING FROM TODAY:
Today’s Livestream: Main Talking Points
1. Implied correlation spiked because the selloff was geopolitical, not fundamental. Stocks moved together because they were repriced on the same risk input. When that correlation rolls back over, fundamental dispersion returns -- that is where the opportunity is now.
2. The ceasefire rally confirmed the positioning read from last week. Macro covariance between stocks, bonds, and the dollar was already weakening before the Iran news. The Russell outperforming, EURUSD bidding, gold and silver catching -- all exactly what the positioning setup was pointing to.
3. The selloff was a valuation story, not an earnings story. Geopolitical risk repriced the multiple and the equity risk premium. It did not touch Mag7 earnings, tech earnings, or industrial earnings. If you bought the dip, you bought a valuation compression that is now unwinding.
4. AI CapEx is still accelerating and it is now a GDP story. Microsoft +82% CapEx year over year. Alphabet +140%. Meta +75%. Oracle +100%. AI CapEx is now contributing over a point to US GDP growth. Without it, US corporate CapEx would likely be negative.
5. The five layers of AI infrastructure tell you where flows are going. GPUs, networking, power and cooling, data center REITs, and memory. DLR just hit an all-time high during a geopolitical selloff. Map these layers and you map where the CapEx dollars actually land.
6. Oracle is the most mispriced asymmetric bet in the AI trade. Cloud infrastructure up 84% year over year. 500 billion dollar backlog. Down 54% from all-time highs. CDS spreads pricing more default risk than 2022. Larry Ellison owns 40% of the company and has leveraged the balance sheet to swing for the fences. The fundamental attribution in the model is about to flip (see tradingview model below).
7. The OpenAI IPO is one of the biggest potential melt-up catalysts for equities. 852 billion valuation, 2 billion a month in revenue. If they go public this year, expect a wave of model releases into the IPO window that pulls capital into everything in the AI stack. Watch Polymarket on the IPO timeline -- that is the leading indicator.
8. The dollar makes another leg lower from here. The geopolitical bid is reversing. A weaker dollar means real rates fall faster without a Fed cut. That is the passive liquidity injection that pushes gold, silver, and the equity melt-up scenario forward.
[SLIDE DECK]
All charts and models from today’s stream are in the deck below.
Tradingview Models From Livestream: LINK
Tomorrow’s Livestream: Capital Flows | PCE, Real Rates, and the Melt-Up Setup
CPI prints Friday. PCE prints tomorrow. These are the macro clearing events that will tell us how much of the crude shock transmitted into core inflation -- and therefore how much room the Fed has to let real rates fall. Tomorrow I am mapping the exact levels to watch, what a soft core print means for the dollar and gold, and how the equity melt-up scenario develops from here if the data cooperates.
I am doing a livestream daily at 8:30am MST. TOMORROW’S LIVESTREAM: LINK
Equity Dispersion and Attribution Report:
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