On May 4, I told you to keep your eyes on one thing above everything else this quarter: the changing of the guard at the head of the Federal Reserve, from Jerome Powell to Kevin Warsh.
The reasoning was simple. Whoever runs the Fed decides how cheap or expensive borrowing will be for the whole economy, and that single decision ripples into the dollar, gold, Bitcoin, smaller US companies, the giant tech stocks — basically everything you’d want to invest in.
Nine days later, on May 13, the Senate confirmed Warsh by a vote of 54 to 45. It was the closest Fed Chair confirmation in modern American history.
Powell stepped off the chair on May 16. The event I called the pivot of the quarter is now in effect, six weeks earlier than I expected.
That speed matters, because it stress-tests the framework in real time. I thought we’d have until July before the new Fed era began shaping the data. Instead it began the moment Warsh’s vote cleared, the Iran war re-escalated on May 11 (oil briefly back above $100 a barrel, Netanyahu warning that “the conflict is not over”), and four of my twelve Q2 predictions are visibly off-trajectory.
This is when a newsletter has to earn its keep.
So here’s what I’m doing: a public mid-quarter scorecard, with directional verdicts on every prediction, what I got right, what I got wrong, and what I’m updating.
Not in August at the next quarterly. Now.
Because writing predictions in public is easy.
Owning them while they’re bleeding is the part that actually matters.
The two-week read on Issue #1
These aren’t final verdicts — Q2 doesn’t close until June 30. They’re directional reads as of the close on May 18.
At this stage, which way the needle moved matters more than whether the target was hit.
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ISSUE #1 — Q2 PREDICTIONS · MID-QUARTER VERDICT
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TIER 1 — HIGH RISK / HIGH REWARD
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#1 Big tech AI stocks crash -25 to -40% ✗ FADING
Microsoft, Google, Amazon and Meta confirmed
roughly $700 billion of AI investment for 2026 —
higher than expected, not cut. The crash trigger
I was waiting for hasn't fired.
#2 Uranium price to $130-150/lb → IN PLAY
Spot price at $86.55, long-term utility contracts
at $90 (highest since 2008). Going the right way,
just not as fast as needed.
#3 Yen rallies hard against the dollar ✗ WRONG (so far)
Yen is at 158.90 per dollar — the wrong direction.
The Iran war pushed investors back into dollars,
and the Fed is now expected to raise rates instead
of cutting them. Full reset of this thesis below.
#4 Private credit / mid-market lender crisis → IN PLAY
No big lender has had to freeze withdrawals yet.
Credit spreads are widening though, and the wave
of corporate debt that needs refinancing is still
ahead of us — just not in this 14-day window.
TIER 2 — MEDIUM RISK / STRONG REWARD
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#5 Copper price to $13,000 per tonne → IN PLAY
LME at roughly $10,000/t. Goldman thinks supply
will catch up; JPMorgan still sees $12,000+. The
call is delayed, not dead.
#6 European defense stocks lead the market ✗ BADLY WRONG (so far)
The main European defense ETF (EUAD) is down 4%
this year, and the wider sector has lost as much
as 25% in some measurements. Rheinmetall fell 9%
in a single day on May 8. Full rework below — this
is the prediction that's hurting most.
#7 US dollar weakens, DXY index below 95 → IN PLAY
Currently at 97.84 (peaked at 99.35 when Iran
flared up). The trend is right, but the Iran war
interrupted the timing.
#8 Gold to $5,000 an ounce ✓ ALREADY HIT (then retraced)
Hit $5,589 in January — well above target. Now
back to $4,694. Target was met; thesis now shifts
to whether gold defends the new floor.
#9 Bitcoin breaks $130,000 → IN PLAY
Trading around $93,816 on the latest rally. ETF
inflows are back ($700 million in a single week).
Still well below target, but the trend is intact.
TIER 3 — LOWER RISK / MODERATE REWARD
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#10 Russell 2000 (small caps) beats S&P ✗ FADING
Russell up 14% year-to-date, S&P up 17%. So small
caps are *underperforming*, not leading. Goldman
has gone publicly negative on the trade.
#11 Chinese stocks (MSCI China) up 15-25% → IN PLAY
Tracking. The Iran shock pushed money into safe
assets in April, slowing the rally.
#12 US utilities beat S&P by 5+ points ✓ ON TRACK
The thesis (data centers need massive electricity)
was reinforced by the hyperscaler earnings. The
trade is working quietly.
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Score so far: 2 hit / on track · 5 in play · 4 wrong-so-far · 1 fadingA 17% hit rate at the two-week mark. Not great. But here’s why I’m publishing it anyway: the predictions that are wrong are wrong for identifiable reasons — the Iran war reshuffled the deck, and the Fed is now expected to raise rates instead of cutting them.
The underlying framework didn’t break.
The order in which things were supposed to happen did.
That’s a fixable problem, not a fundamental one.
The full update on each of the eleven still-active calls, the three new predictions I’m adding for the back half of Q2 in light of Warsh’s arrival, and the specific stocks, options, and instruments I’m using to express each view — that’s behind the wall.
But before the paywall, I want to do one thing I think nobody else in this space does: I’m going to walk you through my worst-performing prediction in full, for free. Not the spin.
The whole analysis, what I missed, and what I’m doing now. Because if you’re considering subscribing, you should see exactly what depth looks like — including on the trades that hurt.
Revisiting Prediction #6 — European Defense
The pain. EUAD, the main exchange-traded fund that tracks European defense companies (Rheinmetall, BAE Systems, Leonardo, Thales, and similar names), opened 2026 at roughly $46 a share. It closed May 16 at $41.
That’s an 11% decline at the same time the S&P 500 is up 17%, meaning Europe defense has lagged the broader market by about 28 percentage points. The pain in individual stocks is sharper: Rheinmetall dropped 9% in a single session on May 8, hitting its lowest level in a year.
When you call a prediction with 70% confidence and it loses 28 points to the market in four months, you owe your readers a precise account of why. So here it is.
What I missed. Three things.
First, I didn’t take seriously enough how much investors would pay attention to every rumor of a Russia-Ukraine ceasefire.
Every time President Trump suggests a framework, European defense stocks lose 4 to 6 percent. I knew that risk existed. I didn’t size it correctly. A “70% confidence” call should have been closer to 55% given how loud the political noise has been.
Second, I underestimated the way the Iran war (which started February 28) pulled defense investor money toward American companies — Raytheon, Lockheed Martin, General Dynamics — and away from European names.
Those US contractors outperformed their European peers by 8 to 11 percentage points in the first quarter alone.
The story “Europe is rearming” got drowned out by the more immediate story “America is fighting in the Middle East right now.”
Third, and most importantly, I confused signed contracts with stock prices. Germany’s €108 billion defense budget for 2026 is real. The €50 billion in procurement approved last December is real. McKinsey’s projection of roughly €800 billion in annual European defense spending by 2030 is real.
None of those numbers have changed. What changed is that investors are now willing to wait six to twelve months for that demand to show up in actual company earnings, and they’re selling the rally in the meantime.
Why I’m not closing the trade.
The order books haven’t moved. Rheinmetall just reaffirmed it expects sales to grow 40 to 45 percent in 2026, with profits per share growing roughly 30 percent. When real growth like that arrives, stock prices eventually catch up — sharply, once the consensus turns.
The shares now trade at 18 times next year’s expected earnings, down from 28 times at the February peak. The reset has already happened. We’re paying a much more reasonable price for the same growth story.
What I am doing differently is changing how I get exposure. Instead of buying the broad EUAD basket — which moves up and down with every ceasefire headline — I’m focusing on companies that sell sensors and electronics rather than tanks and missiles.
Those names benefit regardless of which conflict gets prioritized, because they sell capability (radar systems, electronic warfare) that any modern military needs. The specific tickers, the price levels I’m targeting, and the option structures I’m using on Rheinmetall — that’s behind the wall.
Revised parameters.
Confidence: 55% (down from 70%). Asymmetry — the ratio of potential gain to potential loss — now 2.5 to 1 (up from 2 to 1, because the price has fallen while the thesis hasn’t broken).
What would force me to close the trade entirely: a signed and durable Russia-Ukraine framework before June 30 plus a German coalition crisis that re-opens the debate over Germany’s strict borrowing limits. Both have to happen. Neither has, yet.
Verdict.
I was wrong on the timing. I’m not yet wrong on the thesis. That difference is what separates a bad trade from a bad analyst — and which one you are is something readers should be able to judge for themselves.
The three catalysts I flagged on May 4 — now active
Warsh is in.
The 54-45 vote was the tightest Fed Chair confirmation in modern history. The political drama around it (a Department of Justice investigation into the Fed that was later dropped) signals a Fed Chair who’ll have less political space to maneuver than markets initially priced.
His first major appearance is the June meeting of the Federal Open Market Committee — the eight-person panel that sets US interest rates. As of today, the market is no longer expecting any rate cuts in 2026, and some traders are pricing in a non-trivial chance of a hike by December. That’s a complete reversal from where expectations were when I wrote Issue #1, and it explains why my yen prediction (#3) failed and my dollar prediction (#7) is delayed.
Iran is not over.
Ayatollah Khamenei was killed in the late-February strikes. The Strait of Hormuz — the narrow waterway through which roughly 20% of the world’s oil supply moves — remains contested. Brent crude (the global oil benchmark) crossed $104 a barrel on May 11 after Netanyahu’s “not over” warning.
The International Energy Agency has called this the largest oil supply disruption in market history. Until the Strait fully reopens — and analyst estimates of when have slipped from “end of May” to “no clear date” — energy prices stay elevated, inflation stays uncomfortable, and the Fed stays on hold. Which is the engine behind most of what’s wrong in my Issue #1.
Hyperscaler earnings split the market.
(”Hyperscaler” is the industry term for the four biggest cloud-computing companies: Microsoft, Amazon, Alphabet/Google, and Meta.)
Their combined 2026 spending on AI infrastructure came in at roughly $700 billion — higher than I’d projected. AI-related revenue is also scaling: Microsoft’s Azure cloud grew 40% year-over-year, Google Cloud 63%, Amazon Web Services 28%.
Meta dropped 6% on its earnings print, Microsoft and Amazon slipped slightly, but Alphabet rallied on cloud strength. The single-day collapse I was watching for in prediction #1 didn’t arrive. The thesis now pushes into the second half of 2026, depending on what the next earnings cycle shows.
The Decoder — terms I’ve used in this issue
A short reference, in case any of these felt unfamiliar.
The Fed. Short for the Federal Reserve, the central bank of the United States. Sets interest rates, which determines how expensive it is for everyone (businesses, banks, consumers) to borrow money. The Chair is the most powerful unelected economic position in the world.
FOMC. Federal Open Market Committee. The eight-person panel inside the Fed that actually votes on interest rate decisions. Meets eight times a year.
Hyperscaler. The four biggest cloud computing companies — Microsoft, Amazon, Alphabet (Google’s parent), and Meta. Called “hyperscaler” because the scale of their data centers is unprecedented in business history.
DXY. The US Dollar Index. A measure of the dollar’s strength against a basket of six major currencies (mostly euro, yen, pound). When DXY goes up, the dollar is strong. When it goes down, the dollar is weak.
EUAD. The ticker symbol for the Select STOXX Europe Aerospace & Defense ETF — a fund that owns shares of the major European defense companies (Rheinmetall, BAE, Leonardo, Thales, Airbus, Saab, Hensoldt, Dassault). Buying EUAD gives you exposure to the whole sector with one trade.
Asymmetry (in this newsletter). The ratio of what you could gain if you’re right to what you could lose if you’re wrong. An “asymmetry of 5 to 1” means a winning trade pays five times what a losing trade costs. The higher the asymmetry, the less often you need to be right to make money.
Confidence (in this newsletter). My subjective estimate of the probability the prediction lands within its time window. A 70% confidence means I think there’s a 70% chance it works.
Mid-market / private credit. Loans made to mid-sized companies (think $50M to $1B in revenue) by specialized lenders, outside of the public banking system. The market has grown to over $2 trillion in assets and is largely untested in a real downturn.
What’s behind the wall this issue
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PREMIUM ACCESS — Issue #1.5 deep-dive
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→ The 3 new "Warsh-era" predictions I'm adding for the
back half of Q2 — including one bet on US bond yields
rising sharply and one pair of sector trades with a
potential 5-to-1 reward-to-risk profile
→ Full revised analysis on each of the 11 active Q2
predictions — what's updating, what's holding,
what's getting closed
→ The exact stocks I'm rotating into for the defense
thesis: 4 names focused on sensors and electronic
warfare, plus the specific option structure I'm using
on Rheinmetall, and the hedge against further EUAD weakness
→ The Hormuz playbook: how I'm positioning for both
scenarios — Strait reopens (oil could drop 25% in
ten days) versus prolonged closure (which sectors win)
→ Entry levels, stop levels (where I'd exit if wrong),
and the conditions that would force me to flip each thesis
→ A live verdict tracker (Notion link) — updated weekly
with each prediction's status, not just quarterly
→ Bi-weekly mid-quarter updates between now and June 30
─────────────────────────────────────────────────────────────The honest math, written out.
A 12-month subscription is $X. If even one Tier 1 prediction lands inside its reward-to-risk range — and you express it with, say, $5,000 — the gain at a 5-to-1 ratio is $25,000.
You’d need to be right one time in four to recoup the subscription cost roughly five times over.
That’s the calculation I’d run on any newsletter before subscribing. I’m running it on mine in public.
What you won’t get.
I won’t tell you what to buy.
I won’t tell you how much to put on the table.
I won’t tell you when to take profits.
What you’ll get is the working hypothesis, the instruments I’m watching, the price levels that matter, and the conditions under which I’d change my mind.
Translating that into your own portfolio is your work.
That’s the deal — and it’s what makes this newsletter serious rather than promotional…