Point Frederick – Spinnaker – June 4, 2026
You never hear the bullet that kills you.
The word of the day is … rotation.
I believe that people are rotating out of all kinds of stuff that isn’t working into stuff that is working.
They’re selling crypto to buy AI, quantum, robotics, infrastructure, semis, SaaS (see Snowflake, for example), some industrials, and now space.
They’re selling India to buy Korea.
Everyone is kvetching about the downside, as they should.
Some people are predicting a top. They point to the IPOs. We’ve been so short of public equities for so long and buybacks continue apace that I don’t think that will be a catalyst. There may be some more rotation out of names and into the newly public companies. Their floats will be small and there will be contractual lockups to get through.
I think the thing that pricks this bubble is going to be a policy mistake. It’s going to be some credible AI regulation or ham-fisted government intervention. We can shrug our shoulders when Bernie says he wants to take 50% of the AI companies for the government. What happens if the progressives control the legislative agenda in the next Congress? Or the one after that?
It’s pretty linear thinking (which doesn’t mean it’s wrong) to extrapolate from the big IPOs a signal of a market top. The ubermensches running these behemoths must know something. Right? Surely Anthropic is Webvan 2.0 by this logic, isn’t it?
For me the straw that broke the camel’s back in 2000 was the Microsoft antitrust decision in which the company was found to have violated the Sherman Act by having a monopoly with Windows and by tying Internet Explorer to Windows.
When we go down it’s going to be a similar policy error. That will be the catalyst. And it could come sooner than we think.
‘Anyone with even vague memories of the dotcom boom and bust is certainly alert to the possibility that IPO hype can lead to market bust. As Dario Perkins at TS Lombard pointed out in a note on Monday, Alan Greenspan gets a fair amount of flak for the crash of early 2000, because of his role in raising Federal Reserve rates at the start of the millennium. But some blame also falls on a rash of late-cycle IPOs at the time, which gave insiders “the chance to dump their stocks on a wildly overexuberant public”. Perkins points to some of the classic top-of-the-cycle IPOs around that time — VA Linux, Pets.com, AskJeeves (which, surprisingly, died only in May this year) and Webvan. Most of those listings came with a lock-up for insiders, limiting their ability to dump shares for six months. Those lock-ups expired from around October 1999 to April 2000, which is suspiciously close to the point at which markets turned. Why might this be the case? Perkins says: I blame info asymmetries. Insiders know when public investors are overvaluing the business and decide to get out when the times are good.
I don’t think people care that much about gold these days. Crypto weakness isn’t helping sentiment, presumably.
‘Gold is sitting right at its 200-day moving average. Yes, the last time we were here turned out to be a great buying opportunity…. but I try not to get too fixated on technical levels alone. What stands out to me is how dramatically sentiment has shifted. Just a few months ago, gold was one of the market’s favorite trades. Today, it feels almost completely forgotten. Not to steal from Buffett, but I’m starting to get greedy while others are becoming fearful.
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Gold Holds Drop as US-Iran Clashes Keep Inflation Risks in Focus
What will make gold resume its climb higher? The alternatives to gold aren’t just instruments that pay interest. It’s tech. Perhaps a big drop in tech names is what will ignite gold’s resume path higher. When does that come, though?
‘Gold held a decline after renewed hostilities between the US and Iran jeopardized talks to end the war, keeping energy prices and inflation risks elevated.’
Crypto Liquidations Top $1 Billion as Bitcoin’s Slide Deepens
Bitcoin isn’t looking too attractive, either. Every dollar the degens have invested in crypto is a dollar they can’t leverage into trades on semis and AI and quantum and space.
‘Souring Bitcoin sentiment has triggered almost $1.5 billion in crypto liquidations over the past 24 hours, as the largest digital asset sank back to a two-month low.
‘This forced deleveraging — the automatic, mandatory closure of high-risk trades by crypto exchanges — is the largest volume seen since February, according to data compiled by CoinGlass. Almost $800 million positions in Bitcoin were wiped out.
‘Bitcoin slipped as much as 7% to below $67,000 on Tuesday for the first time since April as lingering concern about the conflict in Iran and selling by major holder Strategy Inc. continued to dent investor appetite. The price of the token is down almost 50% from an all-time high of around $126,000 reached in October.’
The Crypto Winter Turns Colder as Bitcoin Extends Its Slide
Rotation, dude. This reminds me of talking to people about AI when crypto erupted. The general reaction was dismissal. Dude, who cares about AI. Crypto will re-invent compute. Sure it will. Strategy selling some bitcoin is … interesting.
‘Meanwhile, many of the individual traders who long powered crypto’s wildest bull runs have gotten swept up in the excitement around artificial-intelligence stocks. The PHLX Semiconductor Index, stuffed with highfliers such as Nvidia, Intel and Micron, last week posted its strongest performance through the first 100 trading days of any year on record.
‘“What we need to get people interested in crypto and bitcoin again is probably some of the air coming out of the AI trade,” said Jake Ostrovskis, head of OTC trading at crypto trading firm Wintermute.’
Defense Stocks Losing Steam as Catalysts Fade, Bernstein Says
Defense another sector suffering from rotation blues.
‘Bernstein analyst Douglas Harned said the decline reflects a rotation out of defense stocks rather than weakening industry fundamentals. These stocks’ valuations were near historical highs when the Iran conflict kicked off, leaving the sector vulnerable as investors shifted toward companies offering faster revenue growth.
‘Still, the selloff has been steeper than expected, the analyst said.
‘“While we see the fundamentals as solid for defense, it appears to have become less attractive at these levels when investors are seeking higher top line growth opportunities,” Harned wrote in a note dated June 2.’
This is who you are mocking when you talk about retail being dumb money.
‘Share of Net Worth Held by the Top 1%’
Much of this retail investment is from the top 20%, presumably.
‘Retail investors bought a record $80 billion of stocks in the past two months.@bravosresearch’-
US Business Formation Up on AI
‘”The surge in new US business formation is being fueled by AI and large language models, which are dramatically reducing the cost and complexity of launching a company” -Apollo Slok’
India Is Losing Its Economic Edge
Modi hasn’t realized that politicians presiding over terrible economic outcomes can still be popular with the right spin and the right scapegoat/bogeyman. Other countries love having Trump as a punching bag. So he suffers politically. It doesn’t help that policy has been anti-investor (and anti-foreigner). AI and the war in Iran aren’t helping either.
The speculative impulse that powered India’s equities higher has switched allegiances to Korea, presumably.
‘Much of this stems from hubris about India’s prospects, which led to policies unfriendly to investors. Mr. Bhalla points to a 2015 amendment to India’s model Bilateral Investment Treaty, which forced foreign investors to exhaust remedies in India’s notoriously slow courts for five years before seeking international arbitration. When India reintroduced a capital-gains tax on listed equities in 2018—and raised rates in 2024—it made matters worse. Between 2017 and 2024, the government passed about 700 “quality control orders,” burdensome licensing requirements that stifle import competition.’
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