Iran strike averted: risk-on blasts off, oil sinks.

Transcript

Tom Buddy, Iran strike averted and risk-on just blasted off — the S&P 500 ETF up one-point-seven percent, oil services down. This tape is absolutely ripping.

Marie Good morning from the London Edition — Friday, June twelfth. I'm Marie, with Tom and Gerald.

Gerald And Gerald. Alright, let's get into it — markets are pricing relief, but there's a lot under the hood.

Tom Yeah, no kidding — the Iran de-escalation is the headline, but oil services sold off hard because the supply-disruption thesis just evaporated. OIH up forty-four percent year to date though — that was a crowded trade.

Gerald Right, and I had a buy oil fund call yesterday that's looking… let's say, poorly timed. But look mate, any miscalculation sends oil screaming back — this de-escalation is fragile.

Marie Ha — Gerald, your oil trade just got Trump‑cancelled.

Tom Ha! That's brutal. But seriously, the real move is under the surface — AI infrastructure is winning.

Gerald I mean… I'll take the hit. But look, the point stands — geopolitical de‑escalation is priced in, yet fragile.

Tom Alright, let's talk winners: KKR, Nvidia, and Vistra just launched Helix Digital Infrastructure — a ten‑billion‑dollar company for AI data centers. Nvidia up two‑point‑two percent last session. Gerald, your sell Nvidia call from yesterday is looking rough, buddy.

Gerald Ha — fair. I was fading the Iran risk, but the tape shifted. Right now, Nvidia's moat just got deeper. And KKR at twelve‑point‑nine times forward earnings — now that's interesting.

Marie Hold on — KKR is down twenty‑six percent year to date and thirty‑eight percent below its high. The market's skeptical. Is the Helix deal actually moving the needle?

Gerald To be fair, twelve‑point‑nine times for a direct AI data‑center play with Nvidia chips embedded — it's a mispricing. And Vistra's up five‑point‑seven percent; the power angle is real.

Tom Exactly! Vistra is literally powering the AI buildout — that's not hype, it's electrons.

Marie Hah — okay, point taken. Now semis: Applied Materials opened a five‑hundred‑million‑dollar campus in Singapore, and shares jumped eleven percent last session. But Tom, it's near its fifty‑two‑week high with a forward P‑E of thirty‑four. How much upside is left?

Tom No but that's exactly my point — AMAT's expansion is secular. AI demand for chips isn't slowing. Sure, the multiple is rich, but if earnings keep compounding, it'll grow into it.

Gerald Thirty‑four times for a capex supplier — look, I've seen this film before. When the cycle turns, these names get re‑rated fast.

Marie Gerald, that's fair, but you're ignoring the SK Hynix story — they're tripling wafer capacity by 2034 for AI memory. That's a decade‑long commitment. The capex cycle has legs.

Tom Yes! SK Hynix is the memory backbone. And Micron's up fifteen percent this week — though retail is doing something hilarious: they're selling Micron to buy SpaceX.

Gerald Retail traders funding their SpaceX I P O allocation by dumping Micron — honestly, that's peak 2026.

Marie That's — yeah, that's an incredible rotation. But seriously, that kind of flow can create weird dislocations.

Tom For real? They're literally cashing in memory gains to buy a space I P O.

Gerald Right, and Seagate's also seeing selling. But here's the thing: institutional demand is absorbing it. For now. If the SpaceX I P O duds, that money snaps back.

Marie Not so fast — if retail keeps rotating, Micron could suffer even with good fundamentals. It's a positioning risk, not a thesis risk. I'd watch it.

Tom I'm buying the dip. Memory demand is secular — AI needs it. The retail noise is a short‑term distraction.

Gerald Speaking of risks, the Chinese bank profit collapse is getting zero airtime. Nikkei Asia: nearly ninety percent of listed Chinese banks below profit thresholds. Yet ICBC's ADR is up ten percent year to date at half book value. That's a credit accident waiting to happen.

Marie SEE, this is what I mean — global markets are ignoring China's credit woes. The China large‑cap ETF is near fifty‑two‑week lows, but bank pain could spread. The S&P bank ETF might catch sympathy selling.

Tom Okay, but China risk has been a thing for years. The market keeps shrugging it off. I'm not fading U.S. banks on a China scare.

Gerald Tom — Tom, that's the THIRD time this year we've said 'China risk is contained'. When it isn't contained, it's a macro shock.

Marie Right — no one's pricing it in. Totally agree.

Tom Totally. Alright, pivot: AI services. MarketWatch reports a price war between OpenAI and Anthropic, and data shows AI usage tailing off. Microsoft down one‑point‑eight percent last session, down six percent this week.

Gerald At twenty times forward earnings, Microsoft is pricing in a slowdown. If the price war is real, margins compress. Alphabet's at twenty‑four times — same story. Capex returns are in question.

Marie I'm going to push back here — this could be a false alarm. One data point doesn't make a trend, and enterprise AI adoption is still early. MSFT at twenty times forward could be a gift if reaccelerates.

Tom Exactly! That's why I'm long AI infrastructure — chips and data centers. They benefit no matter who wins the price war. But AI services? I'd be cautious.

Gerald Exactly. Long chips, short chatbots — that's the clean expression of today's tape.

Marie One hundred percent. That's the trade.

Tom That's the whole story right there. And Bitcoin is stealing the show — dominance rising, ether and solana struggling. BlackRock's launching an income Bitcoin ETF with low fees. IBIT up five‑point‑six percent this week.

Gerald Bitcoin's up on ETF flows, but I'm not convinced it's a macro hedge. It's trading like risk‑on, not gold.

Marie And Japan's getting in on crypto — parliament poised to regulate it like stocks by 2027. That could bring institutions in. The Japan ETF is at a fifty‑two‑week high, partially on fintech optimism.

Tom Long Japan, long Bitcoin — global risk‑on. But the AI infrastructure trade is my core conviction. KKR is the most underappreciated name.

Gerald Tom, you've been pitching KKR for three minutes — fair, it's cheap. But let's connect the dots on China AI IPOs: Chinese AI companies raised twenty‑one billion dollars in Hong Kong in five months, double last year. KWEB trades at zero‑point‑eight‑seven book, near lows. That's a deep‑value bet on AI innovation.

Marie But Gerald, there's delisting risk. I like CATL, though — aiming for tenfold growth from humanoids and data centers. That's a direct play on China's tech ambitions.

Tom I can't touch Chinese stocks — too much regulatory risk — but CATL is a beast globally. Anyway, our view summary: relief rally, selective risk‑taking. Long AI infrastructure, short AI services. And that KKR long, Micron short pair trade is the most interesting cross‑bet.

Gerald Analysts revising price targets after the fact — basically a free retirement plan.

Marie Ha — that's the truth. Six bottoms for memory chips this cycle? That's another pastime.

Tom Hah — yeah, I sounded the same about semis in Q2. Fair. But KKR at twelve‑point‑nine times forward — that's not a narrative, that's a number.

Gerald Look, the most under‑covered risk is China banks, and nobody's talking about the Fed next week either. If Powell surprises hawkish, this whole relief rally reverses.

Tom Exactly — the Fed is like that ex you don't think about until the text arrives. Don't get complacent.

Marie Ha — accurate. As always, none of this is investment advice. Gerald, your Hugo Boss call from yesterday — up?

Gerald It was. Oil fund, not so much.

Tom Hah — you owe me a coffee. Alright, before we go — if you're just finding us, hit follow on Spotify, and check investmentflash.com for the full digest with charts and sources.

Marie We're back at nine a.m. New York time for the New York Edition. See you then.

Tom Later, buddy!

Gerald Later, Tom. Later, Marie.

Marie Bye, everyone.