Anthropic’s AI Standoff Could Trigger Historic Software Short Squeeze
Anthropic, creator of Claude, is at the center of a clash between AI ethics and U.S. defense policy. After winning a $200M classified contract, the Pentagon demanded compliance with a broader AI doctrine, conflicting with Anthropic’s safety guardrails. Tensions escalated following Claude’s military use, threatening contract cancellation and supply chain pressures. With Software & IT Services at record short levels, resolution, either compliance or Pentagon compromise, could spark a massive short squeeze, highlighting the battle over control of frontier AI. Source: ZeroHedge
Korean stock market FOMO risks crash
"The Bank of Korea noted rising market volatility and investor anxiety, with VKOSPI spiking to levels typical of market crashes" It's very unusual for implied options volatility to rise during a rally unless there is extreme reach for call options. Normally volatility spikes at the lows not the highs. Imagine what volatility will be like at these lows... Source: Mac10
Why Software Valuations May Drop Despite Earnings Growth
BofA highlights that software stocks could see lower P/Es even with strong earnings. Market disruption is priced before profits, low-multiple tech tends to lag, and EPS growth can compress valuations when equity supply rises. Post-ChatGPT, IT Services lost their premium, reflecting repricing rather than sentiment. Rising asset intensity, weaker leverage, and private market issues add risk. Valuations fall not from failure but from resetting expectations, meaning even strong software companies aren’t immune. Source: BofA, Neil Sethi @neilksethi
South Korea’s KOSPI hit an all-time high
(+175% YoY), led by semiconductor giants like Samsung and SK hynix, driven by soaring chip exports (+134% YoY) fueled by global AI demand. Retail investors are shifting from crypto to domestic AI and semiconductor stocks, as the “Kimchi Premium” shrinks. Source: Bull Theory
Goldman Sachs Winner and Looser
Goldman Sachs sees AI winners in hardware, cloud, infrastructure, and security (e.g., Nvidia, TSMC, Microsoft, Cloudflare), while traditional software and consulting (e.g., Salesforce, SAP, Accenture) lose as AI commoditizes code and cuts billable hours. The key: compute, power, and security beat software and platforms, reshaping the tech stack. Source: Michael Fritzell (Asian Century Stocks) @MikeFritzell
JPMorgan's Bob Michele compared the move in CLO equity to ABX indices from 2005 through 2007.
Two decades ago, traders dismissed some of those ABX moves as noise. Some are doing the same today with this move in CLO equity. (1/2) Source: Lisa Abramowicz @lisaabramowicz1
This chart is fascinating, not only because of where the number stands today, but also how it has changed over time in these countries.
Which one stands out most? Source: Michel A.Arouet
Silver scores as the number 3 "bubble" according to BofA's Bubble Risk indicator (data per last week).
Source: BofA, TME
