Paradis Labs

Paradis Macro Report [July 8]: US & Iran | AI Trade | Macro Data | Hedges | Catalysts The US/Iran ceasefire has collapsed... Overnight, the US struck >80 Iranian targets e.g. air defences, coastal radar and small boats in response to Iranian attacks on three ships in the Strait of Hormuz, incl. an LNG carrier from Qatar. With Trump saying “it’s just a waste of time dealing with them.” at the NATO summit today. Trump has threatened more strikes tonight, while the Treasury has revoked its waiver on Iranian crude sales. As expected, Brent and WTI crude oil rose today due to 1/5 oil volumes passing via Hormuz. For now, this is a “wait and see what happens” situation rather than actively trading the news. It's all very volatile, as seen with semis names recently w/ ~$2.8T of market cap being wiped out across the ecosystem at the end of June alone. We all know that semis have been selling off aggressively for the past couple of weeks, which hasn't been helped by the broader macro landscape with the war. In my view, it's definitely a risk-off market for the time being with the hyperscaler earnings at the end of July being the next critical catalyst. Maybe good timing to get all this war nonsense out the way beforehand? Korea is certainly the epicenter of the issue here with KOSPI being down over 20% in just over two weeks. Samsung put up staggering earnings earlier in the week where they became the most profitable company globally ahead of the likes of $NVDA. But the stock has sold off over 12% since.... Clearly, nothing is fundamentally wrong with Samsung. They're booming. So when a historic earnings gets sold, that's most likely a combination of de-leveraging / profit taking. Well, tbh, it doesn't really matter what the issue is, fundamentally they're strong and will continue to be strong. Then shifting back to the US, you'll hopefully remember the rates backdrop that we're currently in from my previous reports. Ultimately, the Fed held rates at 3.50-3.75% in June but there's a hawkish undertone with 9/18 participants projecting at least one hike in 2026. Today's FOMC minutes highlighted that the committee is split roughly 50/50, with a few officials seeing a case for a hike. The 10 Year Treasury Yield is currently at 4.571% at the time of writing this. And while the shocking June payrolls miss (just 57k jobs vs 115k expected) knocked Sep'26 hike odds from about 2/3 to roughly 1/2, oil's spike now revives the inflation case. Meaning that every high beta/multiple growth stock lots of us are invested in are caught between a hawkish Fed and a rising oil price. And looking at other data points such as: - VIX at 16.8 - High yield spreads at circa 2.75% - Gold falling nearly 1% Shows that the geopolitical premium that was build since ~Feb has already unwound significantly. In simple terms: we're in a valuation correction environment (as we know) in crowded AI names w/ a war premium bolted on top. Evidenced by the ongoing rotation into sectors like energy, defensives and large caps - away from smaller cap names such as those upstream AI supply chain bottlenecks. In terms of near-term events: - SK Hynix Nasdaq ADR (10 July) - June CPI (14 July) - $TSM earnings (16 July) So to summarise: I'm viewing the current macro picture as a 3 layered cake: 1. Geopolitical shock with US/Iran 2. AI positioning unwinds/deleveraging 3. Hawkish Fed rates environment And in terms of key data points to watch for: 1. VIX spiking above ~22 = more market turbulence 2. High-yield spreads through 3.25% 3. Brent beyond $90 All would mean something worse is going on rather than just a sector rotation that we're in now. Which I view as short term since AI fundamentals will superceed any short term noice. Until then, (NFA) hedges are cheap e.g. energy, defensives which are working right now. Also defensive tech as I like to call it i.e. software.

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