Hunt, Mike, and Jason walk the Cash Flow Memo as Hormuz flows recover, the fiscal year closes near a $2 trillion deficit, and the 10-year pushes toward 6%. Then Hunt’s case that the 12 trillion-dollar tech companies compound at three times nominal GDP, what $70 billion run rates at OpenAI and Anthropic say about agents, and whether AI makes drug development cheaper for everyone or just for Lilly.
The Cashflow Memo
Key Takeaways
* Hormuz flows have recovered to roughly 15M barrels a day (vs ~20M before February) via shuttle tankers and the Saudi and Abu Dhabi bypass pipelines, but the 2027 strip trading up to $77 against $91 spot says the market prices the disruption as durable.
* Hunt expects the fiscal-year deficit closing today near $2T against the $1.55T in Exhibit A, driven by spending (defense above $950B, all other not falling), with the 10-year at ~5.30% possibly reaching 6% by December and 7.5% mortgages the main casualty.
* Hunt’s working thesis on the 12 tech companies above $1T is revenue growth of ~3x nominal GDP (~15%), enough to double in five years; Mike and Jason accept the direction but expect one or two laggards and structurally thinner AI software margins because every user consumes tokens.
* Leaked figures put OpenAI and Anthropic each near a $70B revenue run rate from near zero ~18 months ago, and consumer agents (Meta’s Muse, OpenAI’s Dots, SpaceX’s Grokbot) now follow the Claude Code / Codex business inflection.
* Lilly, the largest non-tech name in the memo at ~50x free cash flow, gains from AI-accelerated R&D, but Mike argues equal access across pharma likely competes those gains away to consumers, leaving scale distribution and proprietary data (Lilly’s GLP-1 base) as the moat.
Show Notes
[00:00] Intro
[00:27] Oil: shuttle tankers through Hormuz Flows are back to roughly 15M barrels a day from 20M before February, via shuttle tankers and Gulf bypass pipelines. US inventories are drawing about 1M barrels a day.
[03:07] Backwardation narrows Spot at $91 against a 2027 strip of $77. The back end trading up says buyers see the disruption as intractable.
[03:47] Gas Permian associated gas keeps a lid on prices.
[04:06] Deficit and the 10-year Exhibit A shows $1.55T; Hunt expects closer to $2T, and the problem is spending. The 10-year near 5.30% could reach 6% by December, with mortgages already at 7.5%.
[09:34] An industrial revolution parallel Sour consumer sentiment in a strong economy has happened before.
[10:16] Three times GDP Hunt’s work on the 12 companies above $1T: 15% growth, three times ~5% nominal GDP, doubles in five years. Mike and Jason expect lumpy growth, a laggard or two, and thinner AI software margins.
[16:33] $70B run rates Leaked figures put OpenAI and Anthropic each near a $70B revenue run rate, from near zero 18 months ago.
[17:13] The consumer agent race Claude Code and Codex were the business inflection; Muse, Dots, and Grokbot are the consumer one. Why the winners may not be invented yet.
[21:20] A PhD hour for a fraction of a penny A benchmark task worth an hour of PhD work cost 30-40 cents in 2025 and costs a fraction of a penny today. Could AI step GDP growth up again?
[23:58] Lilly at 50x free cash flow The largest non-tech name in the memo, ahead of Walmart, JPMorgan, and Exxon. Does AI-driven R&D accrue to Lilly or get competed away across pharma?
[29:13] Moderna, BioNTech, and drug pricing AI for cancer medicines and FDA filings, why biology is harder to simulate than physics, and how much of US drug spend most-favored-nation pricing covers.
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Cashtags
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