Hunt, Mike, and Jason walk the Cash Flow Memo with oil back near $100, the 10-year above 5%, and the AI labs talking about extinction. Plus notes from the All-In Summit and a Vertex update.
The Cashflow Memo
Key Takeaways
* Hunt holds oil around $90 with the 12-month strip ~$20 lower despite WTI briefly topping $100; the real squeeze is diesel (~$200/bbl globally) from Ukrainian strikes on Russian refineries, Chinese product-export limits, and uninsurable Gulf product tankers.
* Gas has settled at ~$3.50 for both 2026 and 2027 as higher oil prices drive Permian associated-gas supply while power-sector demand stays flat on coal-plant life extensions and subsidized solar.
* With the 10-year above 5% and the Fed’s unanimous 25bp hike to 3.75-4%, Hunt still argues most investable assets belong in equities, about half in the leading dozen names, since the Mag 7 trades ~21x versus ~40x two years ago while growing sales at roughly 3x nominal GDP.
* Jason and Mike frame AI risk as an engineering problem (human gating, cyber rather than physical threat) and read the labs’ public doom talk as fundraising PR and a push for regulatory capture against open-source models; Anthropic told a small group of shareholders it expects positive adjusted operating income (excluding stock-based compensation) for a second straight quarter, per the FT.
* Jason sees the main threat to Vertex’s CF franchise receding after Sionna Therapeutics’ SION-719 missed its Phase 2a endpoint as a Trikafta add-on (Sionna is still advancing a dual combination), while non-opioid pain uptake improves and the FDA let Vertex add a blood-type-O second-generation T1D cell therapy as a new arm in the existing trial.
Show Notes
[00:27] Oil: the diesel squeeze Why the East-West pipeline shutdown and Hormuz headlines matter less for crude than for diesel, now ~$200/bbl worldwide, and why backwardation keeps the strip ~$20 under spot.
[05:15] Gas settles at $3.50 Higher oil prices mean more Permian associated gas, while flat power demand keeps prices anchored for 2026 and 2027.
[07:01] The 10-year above 5% A unanimous Fed hike, $2 trillion deficits, and hyperscaler debt push rates higher, yet the S&P trades 19x and the Mag 7 just 21x.
[10:59] Data center capacity is worth more than book Mike argues existing capacity is undervalued as new builds get harder and demand keeps rising.
[12:01] Engineering, not extinction Jason on why language models are software, where the real cyber risk sits, and why the labs’ doom talk looks like PR and a push to regulate open source out.
[20:08] Tap water, bottled water NVIDIA’s Hugging Face acquisition, Jensen’s All-In analogy for cheap versus premium intelligence, and whether hosted Grok agents replace always-on Mac minis.
[23:00] Healthcare: Vertex Sionna Therapeutics’ Phase 2a miss eases the competitive threat to Vertex’s cystic fibrosis franchise, non-opioid pain uptake improves, and the FDA approves a new T1D trial arm.
[27:10] All-In notes SpaceX and xAI on hiring and turnover, AI-lab monthly revenue as a tracked signal, and Anthropic’s second straight quarter of positive adjusted operating income.
[29:47] Data center politics Meta’s Louisiana case study, and why candidates are running against data centers heading into November.
Download this week’s Cash Flow Memo at telltales.us and subscribe for next week’s episode on the data center jobs debate.
Cashtags
$AAPL $AMZN $GOOGL $META $MSFT $NVDA $VRTX
This post and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit telltales.substack.com
