The Fed Is A Sideshow While The AI Trade Implodes | Weekly Roundup

Bitcoin

Across the shows: 16 speakers in other episodes, 11 bullish and 4 bearish calls, past 30 days

• Quinn Thompson · Lekker CapitalBearish

  Gold's new lows after shared monetary-policy rally may be ominous for Bitcoin; fertile conditions not until next year.

  Quinn notes that gold and Bitcoin rallied for largely the same monetary-intervention reasons, but gold has fully retraced and set new lows, which could be an ominous sign for Bitcoin. Bitcoin has just rejected its range highs and sold off, and there are liquidity concerns. His base case is that conditions for crypto are not fertile until sometime next year, possibly Q1, mid-year or Q3. He says he is not long anything, so his view is that patience is the right stance.

  “Gold's now completely retraced and set new lows. Could be ominous sign for Bitcoin as well.”at 57:46

US rates & the Fed

• Quinn Thompson · Lekker Capital

  The Fed is a sideshow, handcuffed by AI, oil and growth risks; a December hike is off the table.

  Quinn says the Fed is a sideshow at this stage and can't do much to help. A hike would throw gasoline on an already precarious situation in AI, commodity supply shortages and soon growth. He also thinks the December hike comes off the table because repeated market down days will eventually hit growth.

  “I think the Fed is sort of a sideshow at this stage. They can't really do much to help yet. Like, if they were to hike, that would just be throwing gasoline on what's already a very precarious situation in AI, in commodity supply shortages, and now soon to be growth.”at 3:37

• Quinn Thompson · Lekker Capital

  Fed meeting cuts and inflation-fight rhetoric are theater that eases the path to financial repression.

  Quinn reads the proposed reduction in Fed meetings as part of a theater where the Fed says it will wait for more information and talks about committing to inflation but never acts. He frames the pattern against a playbook for financial repression: an invisible tax from inflation, fiat debasement, and monetary policy kept too easy relative to demand, with the Fed stepping aside while liquidity is supported and then stepping aside again when inflation returns.

  “I just think that, the meeting reduction, if you were to want to make it easier to enact... and, you know, do financial repression, what would you do? Financial repression, the invisible tax of inflation, fiat debasement, you need one too easy monetary policy relative to demand.”at 7:42

US inflation

• Quinn Thompson · Lekker Capital

  November CPI will mark a fourth straight month of accelerating US inflation.

  Quinn expects the November inflation print, due in about two weeks, to show a fourth consecutive month of accelerating inflation. He gives no detailed mechanism, but ties it to the ongoing energy supply shortage and his view that the Fed cannot respond with hikes.

  “Inflation's gonna rise again in two weeks when we get the print in November. I think that'll be the fourth straight month of accelerating inflation.”at 4:27

• Quinn Thompson · Lekker Capital

  Inflation is an invisible tax squeezing the middle and lower class, fuelling frustration and political change.

  Quinn argues that inflation is an invisible tax that people feel but cannot quantify. They notice they cannot afford steak, family vacations or a second job is needed. Because they cannot identify the cause, the frustration is pointed at scapegoats and bubbles up as antisemitism, crime and violence. He says the middle and lower classes are being squeezed beyond what anyone thought possible, and that the political system is what eventually brings about change. He also says the rich are richer and the poor poorer than ever on a relative basis.

  “Inflation is this invisible tax that you can't see, and therefore, the average person cannot explain, rationalize, quantify, or identify what it is.”at 44:36

Oil & fuels

• Quinn Thompson · Lekker Capital

  A record oil supply energy crisis could push oil prices toward $150 soon.

  Quinn points to a record energy crisis in oil supply and says prices might go to 150 soon. He argues this shock will hurt growth and stocks, which is one reason the Fed can't hike even though inflation is rising.

  “There's a record energy crisis in oil supply and prices might go to 150 soon.”at 7:25

• Quinn Thompson · Lekker Capital

  Oil supply disruption is so severe the US must act, forcing escalation that lifts oil prices.

  Quinn argues that oil has risen for two to three months while there has been no escalation, a peace that he ties to the midterms. Futures positioning is falling and volume is low even as price rises, which he reads as a sign the market is not positioned for a move. He says the supply disruption is so large that the US has to unblock it, so this is a one-way escalation that will happen whether it comes next week or after the SpaceX IPO. He points to military stockpiling as corroboration and advocates longing early-2027 expiries.

  “[The] supply disruption is so great that the US has to unblock it... it will just be a one way train higher if they don't rectify it.”at 41:43

Central banks outside the US

• Quinn Thompson · Lekker Capital

  ECB and other central banks hiking into an energy shock is silly; Europe is an energy importer.

  Quinn argues hiking rates is especially misguided in Europe because it imports energy, while Canada is better placed given its commodities. He notes markets still price about three more ECB hikes even though the Fed is probably done. He says that every decade or so an energy shock leads Europe to hike into it and then reverse about a year later, so central banks are simply late.

  “I do think it's silly for any of these central banks to be hiking, particularly Europe because they're an importer of energy.”at 10:30

Gold & precious metals

• Quinn Thompson · Lekker Capital

  Gold is being hit by energy-short sovereigns selling reserves to defend currencies; step aside until it recovers.

  Quinn says gold is getting hit as energy-short nations try to defend their currencies while the dollar is very strong. He describes a liquidity crunch in which central banks and portfolio managers are told to sell what they can, so gold is caught in the selling. He thinks it's sensible to step aside and only start caring again once gold regains the summer lows and a positive trend forms.

  “gold is probably getting hit here as the energy short nations are trying to defend currency. The dollar's been super strong.”at 11:00

US dollar

• Quinn Thompson · Lekker Capital

  The dollar's strength should roll over as the Fed is forced to ease, though it may take months.

  The dollar has been super strong as energy-short nations defend their currencies. Quinn expects the AI trade to unwind and higher oil prices to hurt growth, forcing the Fed to be more accommodative than inflation would suggest. That should dampen the dollar and eventually reverse it, but the timing could be anywhere from a week to several months.

  “And I think that will end up, kind of dampening this dollar [and] eventually getting it to roll over. But it could, like I said, take months.”at 11:54

Europe's economy

• Quinn Thompson · Lekker Capital

  Europe's gas costs at 11 times US levels undermine its industry, reshoring and defense production.

  Quinn says the same natural gas molecule costs about 11 times more in Europe and Asia than in the US. Gas is a huge input to electricity, manufacturing and industrial production, so this undermines reshoring, defense, shipbuilding and munitions production in Europe. He also cites Europe still buying Russian gas while supplying weapons to Ukraine as evidence of how deeply the continent has damaged itself.

  “the price of natural gas for the same molecule in Europe and Asia is 11 times the price of the same molecule in The US.”at 15:00

AI bubble & tech valuations

• Quinn Thompson · Lekker Capital

  AI trade is a leverage-fuelled bubble unwinding; the rinse-out will take as long as the boom.

  Quinn argues the AI boom was driven by leverage rather than fundamentals: 3x levered semiconductor ETFs with hundreds of billions outstanding and a hedge fund levered four times on $45 billion. He says real rates have risen to GFC-level or higher, and credit spreads have widened especially for AI capex spenders. Hyperscalers' falling cash flow has pushed them to debt and equity issuance, and rising capital costs make the spending less profitable, forcing cuts. Like oil and other cyclical commodities, overinvestment leaves excess capacity that takes about as long to clear as the bubble took to build, so it's interesting on pops and to short but not pretty for a very long time.

  “This was the largest leveraged, like, bubble possibly in history with the [SOX 3X] ETFs were in the hundreds of billions... Now the bubble popped... the time it takes to rinse it out is usually equal to the amount of time that the bubble was being blown.”at 25:23

AI pricing & unit economics

• Quinn Thompson · Lekker Capital

  Compute commoditising like oil would drive AI margins to zero; very bearish for investors.

  Quinn argues that bulls calling compute the next traded commodity are describing the most bearish outcome for the industry. A commodity has no differentiated pricing power, so margins go to zero. He says open models are already showing this, and that profits attract competition, so the sector will face a sorting-out period in which only some players survive. He calls this very bearish from an investment perspective.

  “That's like the most bearish thing you could want for your industry is to be commoditized like oil because that means the margins go to zero.”at 36:48

AI chips & semiconductors

• Quinn Thompson · Lekker Capital

  Semiconductors are not yet at a buying point; first bullish call on the sector may come in 2027.

  Quinn says the market should be selling strength and buying weakness, and that semiconductors are not yet at a buying point, though one will come. He says he may make his first bullish semiconductor call in 2027. This is a contrarian view built on the same cycle logic he applies to Bitcoin, where the market hates an asset when it is falling and loves it when it rises.

  “I don't think we're at buying point yet, but we will be at some point. And then maybe I'll say my first bullish thing about semi... Semiconductors in 2027.”at 38:13

US elections & politics

• Quinn Thompson · Lekker Capital

  Democrats likely win the House in a bloodbath; Senate probably split, with GOP favoured by seat map.

  Quinn draws on anecdotal evidence and early polling data to conclude the midterms will go badly for Republicans. The House will be a bloodbath, while the Senate map is favourable to Republicans because the seats up for grabs are in deep red states. He expects a split Congress whatever happens. He also cites the 2024 immigration, economy and foreign-policy themes that won Trump the election, arguing that these are now failures or no longer priorities, so voter priorities are shifting.

  “The house is gonna be a bloodbath, but the senate... The composition of the seats up for grabs is so favorable, like, in deep red states.”at 45:43