'Be Long The Makers & Short The Takers': Goldman's Delta-One Desk-Head Warns "Pace Of Change Is Astounding"

Markets remain heavy (in the US) but Asia remaining firm and the structural winner in this global reallocation.

Japan and Korea are emerging particularly strong with Goldman's Delta-One desk-head, Rich Privorotsky, suggesting the thematic remains clear: be long the makers and short the takers.

"Hyundai Motor shares jump as much as 11% after the automaker said it will invest 9 trillion won ($6.3 billion) in artificial intelligence and robotics center...

Hanmi Semiconductor shares soar as much as 19%, following local media report that the firm has launched a new bonder and is supplying to global memory customer" (BBG)

Capital is, at the margin, flowing from West to East toward those economies that will benefit most from the enablement of AI spending.

Macro

he curve is flattening and rates are dropping with the 10yr now back <4%...

It is ironic to see the same breadth in commodities/cyclicals ie copper, energy and industrial metals bid, while rates compress.

The parallels are not many. It feels like a capex spending boom occurring alongside a meaningful bout of disinflationary outcomes.

Commodities price today’s imbalances, perhaps with supply nationalism playing a heavy hand, while rates and equities price the probabilities of forward outcomes.

Block/Jobs

Worth paying attention to what Jack Dorsey’s company Block Inc. did overnight.

They reportedly cut around 50% of their workforce, citing AI efficiencies.

As Dorsey framed it:

“I don’t think we’re early to this realization… I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes. I’d rather get there honestly and on our own terms than be forced into it reactively.”

Important not to over extrapolate, XYZ did also release strong numbers.

But the stock jumped more than 20% on the news.

Larger companies are unlikely to move this aggressively for obvious political and optical reasons, particularly into a US election cycle, but it is a clear signal of what is possible.

If Block holds gains, other CEOs will notice.

Risk

West to East, asset heavy to asset light. The pace of change is astounding.

It is genuinely difficult to keep up with how rapidly new use cases, products and plugins are being created.

The progression over the last two months arguably exceeds that of the prior two years.

The result is extreme dispersion.

The rules that defined the last 20–30 years of markets are being rewritten.

Some of the best businesses on the planet are being structurally challenged, while some of the worst suddenly look like winners because they own scarce, hard assets or irreplaceable inputs.

For today, there may also be some month end dynamics creating demand in Europe.

Equities look stretched versus credit, which has refused to meaningfully tighten at all (might have something to do with chart below)...

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