3Fourteen Research
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New report out to 3FR clients. In this edition, @fernavid -Benchmarks the new K3 model against the frontier.
-Discusses the shift from tokenomics to "taskenomics."
-Checks in on the datacenter buildout using granular data.
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The Leopold liquidation pushed semiconductor single-stock volatility up to 75% (SOX Index).
This is only the third time semi volatility has reached this level. The other two instances: March 2020 and April 2025.
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Hyperscaler cloud revenue growth holds the key to this earnings season and is a likely catalyst to normalize low index correlations in a benign way (excerpt from last week's @3F_Research client report).
$MSFT was first step along this path...$AMZN on deck.
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There's much worry that low implied correlations will spike and create a Summer 2024 selloff/vix spike.
True, the Fed + Iran are real macro risks
However, implied correlation almost always rises during earnings season
The key to a benign rise is constituent-level vol dropping
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New report out to 3FR clients examining:
-Near record low implied correlations.
-Can correlations rise w/o index damage.
-Semis enter this earnings season with the second highest constituent-level vol on record...market bulwark.
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Learning - once again - that positioning is everything in the crude market these days.
Positioning dictates direction...fundamentals/news flow dictate the amplitude of the move.
GPU availability tightening back up...
B200 availability was already at 0%.
Post-Kimi K3, GH200 tightening aggressively.
The @3F_Research "Fast" Availability Index heading back below 10%.
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OIL
Managed Money short positions >40% (third highest reading in 15 years + Record crack spreads = recipe for a solid bottom.
The question is how big will the bounce be?
Despite the nervousness around compute demand ($META), B200 rental rates have shot up over the past week ($5.30 to $5.77 - @Silicon_Data ).
This confirms what we have seen in B200 availability, which collapsed back to 0% a few weeks back (excerpt from @3F_Research H2 Outlook).
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Warren is the best macro guy out there right now imho
Best thing for momo semis, neos, memory and semi cap would be to roll over through their 21EMA and chop against their 50SMA until earnings in August.
Think this might be my base case
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Everyone knows that July is seasonally bullish.
But, over the past five years, it is the most negative month for the momentum factor (top 10%/bottom 10%).
Heading into July, momentum has been on a historic tear...makes sense to see the broadening/rotation (excerpt h2 outlook).
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"Being invested in the market right now is constantly having to fight against a deluge of bearish arguments about AI."
Excerpts from @fernavid during last week's retrospective...including a discussion of the OpenRouter data many macro gurus are misinterpreting.
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Amazing charts and analysis as always from Warren and team
"It's early days for 'tokenomics'. But, the general trend from all of our work suggests rising token prices and extremely strong compute demand."
Availability remains low and frontier token pricing is moving UP
Many misreading market index movement for compute pricing
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Open source is taking share from the frontier models on the OpenRouter platform. This has ignited a mini-AI panic.
To us, it seems overblown. First, OR is not a representative sample.
But, more importantly, frontier token pricing on OpenRouter has surged this year.
@fernavid
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Now out to 3FR clients, our H2 Outlook.
-H1 moderately damaged the bull case.
-Fed is the major H2 risk.
-Despite ongoing hysteria, token demand (open and closed) appears strong.
-Holding S&P 500 target steady.
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Historically, semis were priced as a cyclical industry. As margins peaked, P/S ratios would fall.
Over the past year, though, semi multiples have exploded as margins hit all-time highs.
Either the industry has become less cyclical OR it is a sign of exuberance.
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New report out to 3FR clients.
-Why the current pullback qualifies as a buyable dip.
-Identifying the first sign of valuation exuberance (in semis).
-A hike cycle is a true risk to the bull...Not our base case.
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New report out to 3FR clients discussing:
-How the semi trade has influenced broad market structure,
-Loosening domestic GPU availability data BUT tightening foreign availability, and
-Why index price, internals, and valuations fall short of bubble characteristics.
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Nebius ($NBIS) raising on-demand pricing by 29%.
The 3Fourteen GPU Availability Index went from 80% at the beginning of the year to 9%.
GPU availability leads pricing.
B200 still at 0%...GH200 tightening further.
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