#FinanceDaily Earnings 🏁; $SKHY 🚥; $SPCX ⬇️; $EZJ bid; Warsh testimony

Hosted by @David D. Tawil · 2026-07-13 · Tags: EZJ, SKHY, SPCX

TLDR

The panel previewed a busy earnings and macro-data week as chip volatility, elevated interest rates, and renewed Middle East conflict weighed on equity futures. Discussion also covered enterprise AI infrastructure, OpenAI's legal risks, crypto legislation, New York real estate conversions, venture investing, and disruptions across oil and diesel markets.

Bank earnings begin Tuesday alongside CPI, followed by PPI, retail sales, jobless claims, housing starts, and consumer sentiment data.
SK Hynix reversed sharply after its debut surge, while SpaceX traded below its market debut price, illustrating increasingly fast speculative cycles.
Chip earnings are expected to lift index-wide growth substantially, but speakers questioned whether strong demand and future growth are already priced into valuations.
Brandon argued that enterprises increasingly want AI models and proprietary data kept on-premises, creating opportunities for commercial landlords and technical service providers.
Apple's allegations against OpenAI were viewed as potentially serious, especially claims involving retained devices, continued network access, employee poaching, and prototype disclosures.
The death of Lindsey Graham was said to complicate the Senate vote count for the Clarity Act, while stablecoins were presented as a likely payment layer for agentic AI systems.
A potentially criminal investigation into a buckling New York building could slow office-to-residential conversions and increase scrutiny of previously approved projects.
Anas said conflict around the Strait of Hormuz lifted oil prices and disrupted refined-product markets, while arguing that Iran has not actually closed the strait.
Diesel shortages and high crack spreads were attributed to lost refinery exports, export bans, hoarding, rerouted cargoes, and limited availability of medium-sour crude.
Equity futures remained weak into the open, with the Nasdaq down more than 1% and long-term Treasury yields posing an additional market concern.

Speakers

David D. Tawil — Hosted the market briefing, previewed earnings and economic data, discussed chip and IPO volatility, EasyJet bids, real estate regulation, venture capital, crypto, and the weak market open.
Brandon — Assessed Apple's case against OpenAI, advocated on-premises enterprise AI infrastructure, questioned near-term OpenAI and Anthropic IPO prospects, and encouraged startup and venture investing.
Paul — Explained the investigation into a buckling New York building and warned that the incident could slow or reopen reviews of office-to-residential conversions.
Speaker 1 — Discussed the tighter Senate path for the Clarity Act, the potential strength of Apple's allegations against OpenAI, and stablecoins as infrastructure for agentic AI payments.
Anas — Provided extensive analysis of Iran, the Strait of Hormuz, oil investment, strategic petroleum reserves, OPEC supply, diesel shortages, refinery economics, and geopolitical control of shipping routes.
Dave Nikoski — Highlighted weakening breadth and a possible topping pattern in Korea, elevated technology volatility, reduced tech exposure, and increased allocations to energy stocks based on technical money flows.

Notable quotes

“And their explosive numbers are just going to tilt the average way, way high in terms of earnings growth.” — David D. Tawil
“I mean, it's like these people want to keep their data in house and now they need people with the technical know how to do so.” — Brandon
“And it'll all depend on the discovery because the lawsuit is simply allegations, but the allegations are pretty damning for OpenAI if they are backed up by discovery.” — Speaker 1
“But at the end of the day, anybody can win the race.” — David D. Tawil
“So we need to invest trillions of dollars, whatever the demand is in the future.” — Anas
“But we have to distinguish between closing the strait and attacks in the region.” — Anas
“I'm going to look for money flows because I think this market is much more behavioral towards technical analysis than it is to valuations from any means.” — Dave Nikoski
“But since they are operating near capacity, the demand for crude maxed out, and therefore crude prices will not go up when diesel prices go up.” — Anas
“And the real concern seems to be now around interest rates.” — David D. Tawil

Transcript

Speaker 1: .

David D. Tawil: Christopher's Christopher's Christophers. Hey folks, good morning to everybody. Hope everyone had a enjoyable weekend. For those in the Northern Hemisphere, hopefully a good summer weekend. And the intro music courtesy of Brandon's request in tribute to Sam Neill, the Jurassic Park star that untimely passed away at 78. We also have Lindsey Graham's passing as well, which has shaken up the Senate and may change some dynamics. inside of the Senate. We have earnings that begin in earnest on tomorrow. Sorry. Tomorrow is the big bank earnings day, but then really earnings season is kicked off and it just gets pretty hot through the end of the week and over the next couple weeks. So we'll be there for that. We also have macro data coming out this week, nothing today, CPI tomorrow, PPI Wednesday, retail sales, jobless claims on Thursday, housing starts on Friday, consumer sentiment on Friday. So lots of action. Tomorrow, Kevin Walsh is testifying before Congress, so that will add to discussion points on Wednesday. And we are back and forth with Iran. We will wait to hear from Anas about anything changing, or we will just be in a constant state of limbo from here on out. Friday's activity in the market largely focused on SK Hynix. out of the gate jumped and closed up in the teens percent for the day in terms of gain on those ADRs that were issued, 26 and a half billion SpaceX stock down on Friday below its $150 market debut, closing at 145. The big story of today is the reversal on SK Hynix first, which began in Korea on the COSPI and now pre-market here in the United States. I think it's down double digits in pre-market trading. And so the fast money continues to get faster, I would say, on the in and on the out, taking quick gains. Same with SpaceX now, a short end, more compressed cycle with SK Hynix, and still expecting lots more IPOs to come, not only in the tech sector, but all around expecting expecting IPOs for the rest of the year, at least if current circumstances hold and as plans by companies hold. And we are getting ready for an earnings season, even though it starts with the financials, an earnings season, the likes of which we have not seen in a very long time overall in the market. And it really boils down to the expectations around chip stocks, because their sales have exploded, and because they are such a large part of indices, they are expected to more than outweigh the mediocre results by lots of companies. And their explosive numbers are just going to tilt the average way, way high in terms of earnings growth. on a quarter over quarter and year over year basis for the entire index. And so folks are very geared up for that, generally an aberration in terms of growth in the history of indices. Not that we haven't seen these types of growth percentages in the past, but they don't happen very often, so don't get used to it, folks. Apple has sued OpenAI, alleging the theft of trade secrets. Polymarket is letting Americans trade on leverage. And we have a bidding war for EasyJet, which is interesting because we've spoken about the difficulties around the the budget carriers, particularly airlines generally. Castle Lake made a bid for EasyJet, not listed here, listed on the London Stock Exchange. And Apollo has now bid higher. And it could set up a nice bidding war for the second largest budget carrier and one of Europe's largest airlines. And the thing to keep in mind is, for the first half of 2026, EasyJet's losses have widened. Granted, the expectation that the price of jet fuel has come down and will find its way through. The earnings of EasyJet certainly is part of the mindset. In addition, some sort of operational turnaround is certainly in the mind of Castle Lake and Apollo. But the airline, as of most recently, is losing more money. And that is oftentimes, frankly, where at least distressed-focused private equity funds look. They look for a very difficult liquidity position of a company that is due and owing to a one-time event, and they expect that at a certain point not far into the future, things will get back to normal. Again, not to say that everything is hunky-dory without that one-time event, but certainly they can look past that and maybe turn the airline around more easily and generate some pretty quick rebound in the value, in the metrics and then in the valuation of the company. So there we're at for Monday morning. Brandon, well, first of all, you can give your ode to Sam Neill. And secondly, why don't we jump into Polymarket, I mean, Apple and OpenAI and anything else you'd like to discuss?

Brandon: Yeah, good morning. Hopefully everybody had a great weekend. Happy to be here again. Yeah, I mean, the Sam Neill, you know, sorry to hear about his passing. I think he was a He was a hero to a lot of us that grew up on Jurassic Park and the Jurassic Park series. So, you know, I'm glad that we got to play the theme song for the beginning. Thank you for that. Yeah, the the OpenAI one in this Apple case, I think it's just it's tough. I think it's pretty is is cut and dry. You know, I'm not an attorney, so for the attorneys in the room, they can speak on it, but it's it's hard. To say that OpenAI was in the right here, I think that they got a lot wrong. Keeping your laptop and keeping network access and doing all of that is pretty, it's pretty blatant, pretty wild. I think that they're gonna go after the individuals a little bit more than OpenAI as the company. but tough to argue against there. So that's what I would say with that. The other big story, I think that maybe we've talked about a lot here in the space, but I think it's starting to get a little bit more traction in general is owning your own data, especially, you know, as an enterprise company, you know, those of you that, listening to the show daily are probably tired of hearing about it, but it's really not talked about mainstream is that, you know, these enterprise customers, they don't want models to be trained, these frontier models from AI companies, to be trained off their data. They wanna keep their data in-house. And so now we're, you know, Satya from Google's CEO came out with a great piece over the last, over the weekend. talking about it and saying that this is, you know, what kind of the future is. So I'm gonna give everybody a little bit of alpha here in a money-making opportunity. One, if you're a commercial real estate owner, if you own any commercial real estate, I would start getting that infrastructure set up for your customers now. Like if you service any type of, you know, enterprise customer, if you service any type of startups, that maybe rent out your space, I would be on the phone with somebody who can get that infrastructure set up for you ASAP because you're going to be able to charge more. You're going to be able to attract those type of customers who are usually pretty solid customers and pay their bills on time because a lot of them are venture backed or they're just straight up enterprise customers. I would be doing that ASAP. And the other money making opportunity here is if you're somebody who understands this, who understands stacks and, you know, how to get these, the AI infrastructure in place, man, I'd be setting up a small business today to go ahead and, you know, work with those types of customers to get their data on premise, you know, whether, you know, open, open source, open weight models and, and working with them. to to do that. And those are anybody that has like proprietary data or it could be law firms, it could be health care agencies, it could be anything. I mean, it's like these people want to keep their data in house and now they need people with the technical know how to do so. And that's such a tremendous money making opportunity. And it's like you're in you're you're on day zero of that now because these people are moving away from the large language models from the from the open AIs of the world and the anthropics of the world. And now they want to keep their data to themselves. So, you know, if you're looking for a way to make some money, there's big money in that right now, and especially for the commercial real estate owners. I mean, I just think you'd be you'd be foolish to not get that infrastructure set up right now. for your buildings. It's just, it makes sense and that's the way to do it. And I think that, you know, if we're talking about stocks and stuff and IPOs, again, this just gets really difficult for anthropic and open AI right now to IPO anytime soon when the narrative is everybody wants to keep their data to themselves because how do you, people are going to stop paying for these huge monthly subscription or token, you know, the token costs to those companies when they can do everything in-house and open way. So it's gonna make it really difficult for Anthropic and OpenAI to IPO anytime soon. In my opinion, I think it's gonna get pushed back at least till 2027, and there's gonna have to be some major narrative shifts for that to work out. So that's my two cents for the morning, but happy to answer any questions. that may come up throughout the time.

David D. Tawil: Super, Brandon. Thank you very much. I did want to note, because I didn't at the outset, futures largely in the red this morning, S&P down a half, Dow down just marginally, NASDAQ down a full percentage point in the pre-market owing to, we think, the conflict in the Middle East getting all fired up again, and Also in sympathy with chips trading off along with SK Hynix, the Cosby, Samsung. But however, we did have one report this morning out of Taiwan Semi reporting quarterly sales rising 36% on a quarter over quarter basis. Again, there's no doubt that the demand is there, that the expectation for growth is there. Question is, how much do you pay for it? How much of a hangover is there going to be? When is this train going to stop? Has it all been priced in already or is there still room to run? And the gains by stocks in this sector, we've chronicled them, but on an overall basis for the first half of the year were incredible in some ways creating fortunes for people that either own those stocks because, you know, they're employees or that traded and invested into those stocks. Good morning, Paul. Since Brandon mentioned commercial real estate, let's go back to New York City and the buckling building. Anything new on that front?

Paul: Yeah, the only thing. that I saw that was new was they were opening up a criminal, potentially criminal investigation across the board. So I guess the internal. Internal review of the of the plans of the modification, I guess the actual contractor work that was done, the work that was said it was done. It sounds like they what they had said is that it just was overloaded. You know, I don't know if they have official testing of the steel or anything like that, but, you know, the plans go through a lot of hands before they actually get in implementation. Then the plans may be right, but then they get implemented incorrectly. I don't think it's clear what the answer is yet, but it's there's going to be a lot of investigation. And, you know, they're kind of saying a criminal. you know, potentially criminal investigation. So if there was any kind of, I mean, mistakes are made. And so, you know, no one got hurt. That's the good thing. But, you know, like, I'll see. We'll see where this goes. This is going to take a long time to really get any answers, you know, exactly what happened. If the plan said A and then B was built, then, you know, that's it could be a mistake and mistakes have been made, or it could be, you know, someone was trying to save money and did it intentionally.

David D. Tawil: Yeah, I don't, I'm sure that there are many investors or developers around New York City that are trying to calm their investors and their lenders about what this means for their office to resi conversion. There are more going on in New York City than there are combined everywhere else in the United States when it comes to this activity. Go ahead, Paul.

Paul: Yeah, I was gonna say just one thing. Under the Adams administration, they had this program or I guess methodology called the City of Yes, which is what they were fast tracking developments and conversions. And so I think that there's definitely going to get looked at. So anything new is definitely going to get slowed down and any conversion that's in in how that's been approved is likely going to get reviewed, but. The City of Yes plan is also going to get some scrutiny. Mandami, fortunately, could say, hey, this was the previous administration's program. We inherited it. And we're going to review it. So that's something that I think you're going to hear more about the City of Yes and how that's going to change.

David D. Tawil: Yeah, look, everyone has a housing shortage in the United States. It's particularly acute in New York City. There's a lot of interesting nuances to it in New York City, especially as it relates to rent-controlled units and those being many of them, lots of them being vacant for various reasons. Difficulty in getting building permits, sure. The commercial real estate market in lots of cities around the country has taken a destructive hit on the chin. Denver, downtown LA, Chicago. New York City has been particularly buoyant. There's been a lot of building. Class A buildings have been amazing. And folks that are staring at Class C buildings are saying, what a good way to make money. perform these conversions? Well, now there may very well be a concern around conversions, a large speed bump, if you will, around conversions. And so they may not happen as quickly. And like I said, I am sure there are many developers talking to their lenders, to their investors about what this means for their anticipated conversion. On the regulatory front, As well, we'll go ahead and mention the fact that we've have a bunch more states that are joining the state AGs that are suing over the sale of Warner Brothers to Paramount. Connecticut, New York, and Washington are joining California now in that lawsuit to stop Warner Brothers from being sold to Paramount. We've discussed at length the federal government's sitting hands pat on a lot of these big issues and state AGs and foreign antitrust authorities picking up the slack. Carlo, good morning. I'll give you the mic for whatever it is that you'd like to discuss, but I was wondering if Lindsey Graham's passing means anything with respect to the passage of the Clarity Act.

Speaker 1: Good morning, David. Yes. Can't ignore the fact that his passing triggers a shortage of votes in a vote that is already so critically tight with respect to the Senate. I think this brings the count now up to eight Democrats that are going to need to cross the aisle in order to get this done. So it definitely creates a challenge for passage of the Clarity Act. As I understand it, a revised draft of the bill is supposed to be released today. And the hope is that this is going to get done the beginning of August. The House is apparently holding a hearing on it today as well, or I should say this week. So this is the final push to get this thing done. And the loss of Senator Graham, although there probably will be an interim appointment, it will just depend because this is a very, very narrow lane for clarity. And I don't know whether the governor of South Carolina will be able to seat a replacement for Graham in time to be sworn in for this vote. So to be determined, The AI lawsuit with respect to Apple and OpenAI is interesting. I think, Brandon, it's going to go beyond just the employees because the allegations in the lawsuit go not only to the employees who kept laptops, were continuing to access Apple's proprietary information through those laptops, through some kind of an exploit, but also the interview process at OpenAI where they were poaching Apple employees and then bringing them in for interviews and encouraging them to bring in prototypes and demos and talk about what they were working on while at Apple, I think opens this up to a really strong argument for Apple to make that injunctive relief should be granted. The bottom line in this case appears to be that OpenAI wanted to create a competitor to the iPhone and wanted to have an AI device that would be equivalent to the iPhone as far as slick and ease of use and innovative, because they're probably tired of relying on their platform having to run through other hardware devices and being dependent on other providers. So I think there is teeth to this. And it'll all depend on the discovery because the lawsuit is simply allegations, but the allegations are pretty damning for OpenAI if they are backed up by discovery. The CEO of Circle put out an article yesterday, which I think is worth reading, and I will pin it up for anyone who wants to read it. I published a copy of it. as well as my thoughts on it in my newsletter. And it basically discusses and confirms what I've been saying about the AI agentic economy being run over crypto rails and that stablecoins will be the currency of that. Allaire makes a very compelling case. It is his opinion. It is not the policy or direction of Circle, but he makes a very compelling case and really confirms what I've been saying, that stablecoins are going to be the monetary layer of this AI agentic payment economy. And this economy is coming fast and furious. And I think people are not counting just what a disruptive thing this is going to be. His thesis essentially is that as businesses continue to introduce agents to take over the mundane, tedious work that humans traditionally do, These agents are going to need money and authority to act on behalf of these companies, and that's going to all be built over crypto because that's the only way you can run something this complicated. And since it's going to be built over micropayments, fully regulated stablecoins are the obvious choice. That is what I'm looking at today, David. Back to you.

David D. Tawil: Outstanding. Before we get to Anas, I wanted to highlight a story for the benefit of the audience. Ashton Kutcher, who I assume everybody knows to some extent, the actor, is launching a second venture capital fund called Decimal Capital. They're going to launch with expectations of raising a half a billion dollars. Ashton Kutcher has had a very long venture capital career. I don't know his overall return. He's been involved in open AI. He's been involved in anthropic, stability AI. He's been part of lots of funding rounds. The reason I mentioned this, oh, and he's been in Uber, Airbnb, Spotify, okay. The reason I mentioned this is I am sure Ashton Kutcher is A, a smart guy, and B, a savvy businessman. But that is not his greatest claim to fame. His greatest claim to fame is being an actor. And he took the time, whatever time was necessary, and the experience of investing in venture capital. And he is now a real venture capital maven that will probably go on to be you know, a partner in a very successful venture capital firm. And it's just about putting in the effort. You don't need to be born into anything. You don't need to be trained in anything. There's no rules for the game, right? There are none. Please, let me, you may have a leg up. You may have some more formalized either training or pedigree or access. But at the end of the day, anybody can win the race. Anybody. It's wide open, folks. And the sooner you get at it, and the more experience you have, and the more tries, right, the more times you get up at bat, the better you're going to be over the long haul. And the more at-bats you take, the sooner you'll get to batting a pretty high batting percentage. I think everybody, I mean, I'm sure we have some gifted people on this space. I am not a gifted person. I am one of those guys that has gotten up to bat a lot of times and continues to get up to bat in strange and zany projects. And it's because I'm just intellectually curious. I enjoy the hunt. And I just is just point of encouragement. I don't mean to sound I don't mean To sound like Tony Robbins, I just want to make it clear that there is no special ingredient to any of this. Brandon, go ahead.

Brandon: Yeah, God, do I love this topic. And I could just speak on this for hours, obviously, as a founder of a venture capital fund myself. One, I will say that I am easily the least intelligent person on this panel and likely in this room. And yet I was able to go ahead and raise millions and millions of dollars to invest in great startups. And I have 0 formal education, never went to college. It was not in the cards for me. I barely graduated high school. Like, it's a blessing that I even graduated high school. I'm pretty sure the teachers pushed me through just because they didn't want to deal with me another year. And so, you know, if I went ahead and got a lot of this done, trust and believe anybody could. Ashton Kutcher is, it's so funny, like, people think that he probably made most of his money and, you know, acting and whatever shows and movies, whatever, false. The overwhelming majority of his money that he's made comes from investing in startups. And this is why I talk about the private market so much and venture capital investing and startup investing. It doesn't take a lot to get started. It really doesn't. You can angel invest in friends or different startups or companies with very small amounts of money. And forget the accredited investor rule. Doesn't matter if you're an angel investor, it simply doesn't matter. You can go ahead and make that. Nobody's going to come and pull your gains from you because they said you weren't an accredited investor. Has never happened once in the history of startup investing or venture capital and whatever. So go ahead and just like make the jump and do it. Obviously be intelligent about it. But anybody can do this. It's like, and it's fun to do. Like you get to talk to. what may be the future of the next trillion dollar company. You may get to talk to the next Elon Musk and find them early. And now even the high school kids or very young kids are going out and starting companies. So I just encourage everybody that will listen to me to go ahead and do this because A, it makes no sense that I make any money doing any of this. It's the passion of my life. And also, I just put out a video on this. yesterday actually talking about how I had, I had, and a substack post talking about how I had no reason at all, like nobody should ever let me in any of these rooms, but yet I just. did it out of pure ignorance because I had no idea that what I was doing was something and it worked out. You know what I mean? And so, believe me, if my **** *** can do any of this stuff, everybody in this room can and should, you know, take that swing at bat. So. That's my two cents. David, I'm so glad you mentioned that because it is just such a huge opportunity. You don't have to go to college. You don't have to come from wealth. You don't have to have some Ivy League degree. It just doesn't matter. It's the greatest equalizer in the world is the startup game, the venture capital world. It is the greatest equalizer. As long as you're willing to go out there and hustle and get **** done, that's it. You can go ahead and do it, take as many swings as bat as you want. I failed way more times. I've created so many companies that just went to zero, went to nothing, but then all it takes is one and you're off to the races. That's my two cents for everybody. Hopefully, I didn't sound too much like Tony Robbins or Grant Cardone here, but those are people I've learned from. I hope that you guys take the advice from a **** *** like me.

David D. Tawil: Outstanding. Anas, are you with us? I am. OK, give me one second. Just want to break a piece of news strategy. Michael Saylor sells a half a billion dollars worth of Bitcoin last week. That's double what we saw the week before that, which was 200 and something million. Crypto is steady on that news. Yes, crypto is steady on that news. All is good in the world. MicroStrategy and Michael Saylor do not control the direction of Bitcoin. OK, Anas, go ahead. Good morning.

Anas: Good morning. First, before I talk about energy, I would like to reply to Brandon. Brandon, we are really proud of you. I'm proud of your accomplishment. But being an educator who taught at prestigious universities, et cetera, we got to be extremely careful with your advice. Yes, some people can make it their life, can make money, can establish companies. et cetera. My grandfather never went to school and he was one of the richest in the region. He was in Argentina. So this is not really the major here. We still need the education. We still need the college. We still need the universities. We still need to study history and geography and everything else. And one of the things that I learned over the years that geography basically is really one of the most essential knowledge that we have to have because people who have no sense of direction, they will never make it. But thank you very much for telling us the story. I think it's an incredible story. To go back to energy, we have many issues today. First of all, oil prices rose by almost 4% on the flare-up around Hermes. We did not see any jaw-boning from the Trump administration on Sunday when markets opened as usual. The explanation is prices are already low. Even after they increased by 4%, Brent remains below $80. So there was no reason to try to lower them more. And probably the administration is busy with other things. And the news of the death of Lindsey Graham and others, basically, they kept them busy. The flare-up that we've seen basically was expected, sometimes more tense than other times. But one thing is clear, the Iranian regime is not unified. and the U.S. is after the IRGC group that wants to derail negotiations. And the group, this group in particular, does not think in a strategic way. They do not act like statesmen. They hit anyone. They act like militia or like a drug cartel, not as revolutionaries who want to build a nation. Looking at the map of U.S. attacks in the last two days, you can see where the attacks are. The attacks were mostly in the southern part, in the southwestern part of Iran. That's where they are, and they are based, and they hit ships from that area. So it is very clear that the U.S. is after this group. As a result of this flare-up, we have power outage in Kuwait, and this is For those who do not know Kuwait, I know some of the audience basically served in Kuwait before. The temperature yesterday, the highest temperature was 114. So when you lose power in a place like Kuwait, you can see what the problems are. In another news, when you talk about AI, and energy consumption, the cost of gas power in the United States is at 17-year high and climbing, according to Lizard. The IEA, the International Energy Agency, changed its stance completely regarding oil from no need to invest as they claimed in 2021, to we must invest in oil, so a complete change in attitude from the IEA. For those who are looking at the oil business or investing in the oil business, I can make the case easily by saying the following, that whatever the demand in the future is, whatever it is, if you believe that is going to continue growing, or it is going to decline, No matter what, any way you look at it, whatever the demand is in 2050, about 85% of that does not exist today. It doesn't because of the decline rates. So we need to invest trillions of dollars, whatever the demand is in the future. Now, if you believe demand is going to grow, there is even a bigger case to invest in oil. Today, we will get the SPR, the Strategic Petroleum Reserve number for last week from the EIA, and we are expecting a decline, but seems that we are going to see a wind down of that. And here, I would like to explain a few things based on the questions I've been getting in recent days. The International Energy Agency Any member who joined the IAA must keep 90 days of strategic reserves, and listen to this, of oil, of net imports. So it is oil and net imports, which means that it does not have to be crude. It could be any petroleum products, of net imports. Why this is important? This is important because those who are saying, oh, well, the government is going to stop releasing oil from the SPR for various reasons, one of them is the IEA. No. And the reason why, because the IEA mandates this 90 day of net imports, and the US is the net exporter. And therefore, the US can drain the whole SPR without any requirements from the IEA. because it is the net exporter, and the condition is for net imports. And some people are saying that the SPR cannot go below a certain level, and therefore we are approaching that level and it has to stop. They are making ignorant statements by saying these are operational minimums. We don't know what the operational minimums are. And for those who are waiting for this statement, it's a complete nonsense. Why? Because, first of all, we don't know what the operational minimum is, and the idea that there is a limit is absolutely correct, but it's a legal limit mandated by the Congress. The Congress said you cannot go below this limit unless there is an emergency, and therefore, there is no limit. And you can go down, you can take another 100 million, and let me explain what that 100 million is. The plan was to release 172 million barrels from the SPR. We already released about 100. We still have about 72. But people are saying, well, we are not going to be able to release the 72 because of that limit. That's not correct. We can go even another 100. So we can release 272 million barrels without any problems. Those who are raising questions about the integrity of the caverns, by saying that withdrawing oil from the SPR will leave an empty space full of air, et cetera, and that will lead to collapse of the caverns, et cetera. They are missing two points here. The first point is, why did we use those caverns in the first place? Because they've been there for millions of years. So if they can't handle millions of years, they can't handle us and Trump. The other issue is, it's not filled with air when we take that oil, we fill it up with water. So there is, again, complete nonsense there when they talk about the integrity of the coverings. Yeah, there could be some problems, but not the way they are describing it. OPEC released its monthly report this morning, and they reduced their estimates of growth in global oil demand from 970,000 barrels a day to 780. The IAA the International Energy Agency think that demand is going to decline by a million. So while OPEC expected growth by 780, the IEA think it will decline by a million. So the difference is about 1.8 million barrels a day between the two, and we will know what's going on later. Here, I would like to emphasize the point that demand is one thing, consumption is another. So when we talk about demand, when companies and countries store oil, that is part of demand, but it's not consumption. So when we talk about OPEC numbers and IA numbers, we are talking about demand, which include storage. Another piece of news out of that report, OPEC members' production, that crude production, increased by 3 million barrels a day last month. So we do have a major increase in supplies as a result of that. And looking at the details of it, Iran's production increased by 155 million. Remember, that was during the exemption that Trump gave Iran. We have Iraq increasing production by 446, and Kuwait increased production by 880. Saudi production declined by 100,000. The UAE number basically shows a massive increase of 1.6 million. I doubt that this is a correct number. I think there is a double counting. There is a double counting there. The main thing to watch this week, since we are at the beginning of this week, is we are going to see leaks out of Hermuz. So we are going to see those ships basically going or leaving Hermuz. What we got to watch for in this case is whether we are going to see other attacks on LNG carriers. Because the red line last week that's been crossed was the attack on LNG carrier, and that's why the United States responded within like four hours after the attack. Any attack on LNG carrier basically is the red line, unlike the oil tankers. So whether the IRGC will continue doing this or not, we will see what will happen. But those attacks on those LNG carriers are extremely serious and considered a red line. Back to you.

David D. Tawil: Anas, if you wouldn't mind, on behalf of our audience, I will ask you their question and not to bother you with this question. Don't get frustrated with it, but Trump came out this morning saying that we now control the strait, we will keep the strait, we will probably run the strait, we being the United States, we will become the guardian in the strait, and we should be reimbursed for that. What is your reaction to all of this rhetoric?

Anas: Yes, so part of it is retract, part of it is truth. I strongly believe that Iran did not close the strait, and have not closed the strait, and does not have the capability to close the strait. A year ago, on this show and in writing, I wrote that China believes that Iran will not close the Hormuz Strait, but the United States will. And the United States basically have the ability to do that, and they've done it through the insurance companies, et cetera. So yes, there is US control of that, but the United States basically, the Iranians take the reputation for it because they know it serves the US interest by doing so. The issue here is we do have those attacks, these are real. We were expecting these things to happen, that there will be attacks, et cetera. But we have to distinguish between closing the strait and attacks in the region. These are completely two different things. And for Iran to announce closing the strait, yes, this is propaganda, just like Trump propaganda. And if you look at just what happened during the attacks two nights ago, when the US attacked Iran and Iran said, oh, we are closing the Hormuz Strait, 20 ships passed. under US protection. So there is some truth to what Trump is saying. In terms of controlling the strait and wanting to control the strait, this is the US plan from day one. They wanted to control the strait either by US force or kind of a proxy power to do that. So this is expected, and this is part, again, please allow me, I just need two more minutes here.

David D. Tawil: You take as much time as you want.

Anas: Oh, thank you. Thank you. Either you look at this as a war against Iran and its nuclear program, or you take it as part of this global change that we've seen in Panama, Venezuela, Red Sea, Russia, China, trade wars, sanctions, tariffs, Greenland. If you put Iran within this concept of changes, you get completely different results from this is a war about Iran. So if you put it within this concept where you want to control the Panama Canal, the Red Sea, you control the Suez Canal, and you control Babel Mandeb, and then you control now the Hurma Strait. The only one that is left basically are the Northern Route and the Malacca Strait. So you put it within that concept. You see where Trump is heading. That's when he said we will control the Hormuz Strait. I think that is part of the plan, and that's what they are doing. Back to you.

David D. Tawil: Excellent, Anas. Thank you. On behalf of the audience, I thank you. Dave Nikoski, good morning, sir. What is on your screen today?

Dave Nikoski: Well, I've noted that the COSPI looks like a rounding top pattern. Only 21% of their names are above the 200-day moving average. You know, everyone is, you know, there is, you can fundamentally go through and say the market is this valuation or that valuation. You know, sometimes that doesn't matter. It's all behavior. And behavior is absolutely king. In a market environment like this, I wanted to to ask honest, I'm seeing, you know, diesel crack spreads are are are significantly higher and you know that that seems to be the leak, the weak point in the energy cycle, including the refiners are all, you know, at 52 week highs and all, you know, multi decade highs, I think in most cases. So it's but anyhow, if honest can touch on that after I'm done. You know, there's a lot of rotation. You know, if you take the VXN, which is the volatility of the NASDAQ versus VIX, you know, you're at, you know, close to 20-year highs going back to, you know, the movement that you saw back in 2000, to be exact. So, you know, you have a lot more volatility taking place in, obviously, high beta stocks. I I I tend to, you know, run into them before that escalates. I I'm like I said, for the last couple of months, I'm just less of a buyer in tech. It doesn't mean I don't own any tech, but I've, you know, reduced my positions. I I grabbed some energy stocks last week as I notated on my timeline, you know, with many of them pulling back to the 200 day moving average. I I in my view, the paper market is. is not gonna give me justification to, you know, what's happening in oil prices to buy energy stocks. In other words, I think there's a lot of, you know, correlations that are significantly off. I'm gonna pay attention to the stock prices because I think behavior in this market has been that, you know, you just buy tech and let it sit. You know, I caught energy in July of August of last year, well before the war. Those far outperformed up to the war. I sold some energy names as prices of the equity side started rolling over. And I started adding back last week. So I'm going to stick with that thesis. I can't tell you where oil prices are going. I'm not going to spend my time there. I'm going to look for money flows because I think this market is much more behavioral towards technical analysis than it is to valuations from any means. And that alone, I think, will help aid me in guiding, you know, at least my clients into the right areas at the right time. So back to you.

Anas: David, will you repeat your question so I can, for those who probably joined us?

Dave Nikoski: Yeah. So I'm seeing diesel crack spreads are pretty significant. I mean, that is the backbone of the economy. you know, diesel trucks bringing, you know, supplies to everywhere, right? You you have the shipping industry relies on it. What are you seeing in the diesel market? Is there any constraints that you see or does the crack spread that we're seeing there indicates something happening happening in the, you know, sulfur, high sulfur products?

Anas: Sure. Sure. First of all, I will e-mail you a report we released about 10 days ago about diesel and the cracks and everything else basically is going exactly as we expected on this one. So let me explain it this way. When Hermes, basically when the insurance companies revoked the insurance policies at the beginning of the war, Three refineries, three major refineries, two of them are almost new, one in Kuwait, one in Saudi Arabia, one in the UAE, were not able to export. So all of a sudden we lost all the petroleum products, including massive amount of diesel and jet fuel out of those. As a result, we ended up with panic in the market. The panic led to several countries, including China, to ban the exports of petroleum products for fear of domestic shortages. So that exacerbated the problem. And then we have hoarding by the traders because they expected higher prices. That exacerbated the problem. And then we have ships that are carrying diesel or petroleum products that exchange hands several times. And they change direction. So for example, one going from the United States to Europe, after a few days in the sea, they've been bought by Singapore. And they have to change direction. And by the time they are near Singapore, an Indian company or a Chinese company bought it, then it went there. And then halfway, it was sold to the Japanese. So we have more petroleum products on water and less on the ground. And that exacerbated the problem big time. What made the situation worse is that most of the crude that we lost from Hermes was medium shower crude. And what that means is most of the diesel that we produce in the world comes from medium shower. So even refiners who can produce diesel, they couldn't because they couldn't get the medium shower because its prices went up above $170, so they couldn't even buy it. So it was extremely expensive. And that made the situation for diesel even worse. And the same thing, it made it worse for sulfur. That's why sulfur market is going crazy right now, and Canada is benefiting the most, by the way, out of that on sulfur. But the whole idea here is we have all the reasons why we lost the diesel. And US refiners and those who can refine it, basically, benefited greatly from the releases from the Strategic Petroleum Reserves because most of the releases were medium sour. And as a result of that, they are making tons of money because diesel prices are extremely high because of the shortages. while oil prices basically did not increase along with the price of products. Why? I will end with that. Because the refinery utilization is near its highest, near capacity. Therefore, with high diesel and gasoline prices, we should have higher utilization, which means that higher demand for crude. But since they are operating near capacity, the demand for crude maxed out, and therefore crude prices will not go up when diesel prices go up. I hope this is clear.

Dave Nikoski: Thank you, Annas.

David D. Tawil: Excellent. Thank you, thank you. All right, folks, it's nine o'clock. It's Monday in the summer, no earnings till tomorrow. And so I don't have much more for you this morning. We're starting off solidly in the red, NASDAQ down over a percentage point, Dow flat, S&P down a third, Brent 79, crude 74, gold below 4100, silver below 60. And the real concern seems to be now around interest rates. 10-year, stubbornly high, 30-year, getting close to 5.1%. And the Fed's balance sheet continues to grow, continues to grow. So Harlow, as you said, QE, we will see if we can get to lowering of rates and whether that will have, certainly will have an effect on certain parts of the economy, but on real rates, We'll wait to see, first of all, if we do get rate cuts and B, if they do have an effect on real rates. But with that, I'm going to go ahead and bid you farewell for the day. Thank you to everybody in the audience for joining us bright and early on a Monday morning in the summertime. Please follow our speakers, all of them excellent in their own right. I appreciate the content of today's space. Thought it was great. We'll be back here tomorrow. Buckle in, folks. It is going to be an exciting week. Lots of earnings, lots of data, lots of speaking. We will have a lot to talk about during the rest of the week. I will not undersell it. will be amazing. Take care. Have a great day. See you tomorrow.