DHUnplugged #795: Johnny B Good
<p>JCD BACK IN THE HOUSE!<img decoding="async" class="alignright" src="https://www.dhunplugged.com/wp-content/uploads/2026/03/dh_795_banner.jpg" width="370" height="201" /></p>
<p>Correction in some areas and sectors.</p>
<p>Crude oil DROPS after “good” talks and a deal brewing with Iran.</p>
<p>Airports are a mess.</p>
<p>PLUS we are now on <strong><a href="https://open.spotify.com/show/30bQIjH9Gw4es27XYrYKJL">Spotify</a> and <a href="https://music.amazon.com/podcasts/79261e60-0492-43c0-b1a2-708ebeb4bd7e/DH-Unplugged">Amazon Music/Podcasts</a></strong>!</p>
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<p><strong>Warm-Up<br />
</strong>- JCD BACK IN THE HOUSE<br />
- Need a new CTP<br />
- Airports are a mess<br />
- Not Kosher - Futures moves</p>
<p><strong>Markets<br />
</strong>- From the Brink....All is good?<br />
- Correction in some areas and sectors<br />
- US Dollar Rises, Gold, Silver and Bitcoin Drop<br />
- Crude oil DROPS after "good" talks and a deal brewing with Iran - reversing all of the above</p>
<p><strong>JCD UPDATE</strong><br />
- AH waiting by the microphone on a Tuesday in March - - no John... 9pm, 9:05, 9:15pm...<br />
- Health update etc...Can we get the story?<br />
- Thoughts on John S. Dvorak (Mimi on No Agenda) - Family backup!</p>
<p><strong>Market Update</strong><br />
- Small-Caps taking the brunt of the selling<br />
- Russell 2000 small-caps are down 10% from their high - an official correction<br />
-- Interestingly the R2000 is still up this year by about 2%<br />
- Stocks up on Monday after President Trump says intense negotiations over weekend and postpones targeted attacks for 5 days (after giving a 48 hour ultimatum)</p>
<p><strong>Manipulation? Say it ain't so...</strong><br />
- Dateline Monday morning...<br />
- Futures took a leg down pre-market - even after Friday (after close) President Trump said he was looking to wind down the Iran affair<br />
- At around 6:50 a.m. in New York, S&P 500 e-Mini futures trading on the CME recorded a sharp and isolated jump in volume.<br />
- A similar pattern was observed in oil markets.<br />
- Roughly 15 minutes later, at 7:05 a.m., Trump posted a market-moving announcement about Iran on Truth Social.<br />
- Futures on DJ up 1,000 and oil down 89%<br />
--- Were there really conversations and negotiations over the weekend?</p>
<p><span style="text-decoration: underline;"><em><strong>A Few Leftovers that need to be discussed</strong></em></span></p>
<p><strong>Private Credit Again</strong><br />
- All of a sudden they are admitting there is a problem.....<br />
- Blackstone Inc. approved redemptions of a record 7.9% from its flagship private credit fund, totaling about $3.8 billion.<br />
- Redemption requests have increased across multiple private credit funds in recent quarters.<br />
- Investor unease is being driven by concerns over the private credit asset class, particularly exposure to software companies vulnerable to AI disruption.<br />
- According to Hugh Chung, CIO of Endowus, Blackstone’s experience suggests these concerns are asset-class wide, not limited to a small group of managers.<br />
- Apollo Global Management CEO Marc Rowan warned that a shakeout is coming for private credit firms, driven by rising defaults on loans to software companies.<br />
- Rowan emphasized that the shakeout is unlikely to be short-term, calling it foreseeable and predictable, and underscoring the importance of disciplined underwriting and strong risk management.<br />
- He argued that investors should prefer having credit risk reside within private markets firms, rather than on bank balance sheets backed by government-insured deposits, which can amplify systemic risk.<br />
- <strong>LATEST</strong>: Apollo is curbing redemptions from one of their biggest Private Credit funds.</p>
<p><strong>Michael Gayed:</strong> Private credit default rate just hit 9.2%. That's higher than 2008 bank loan peaks. $1.8 trillion in assets, $100B in secondary liquidity. 18:1 mismatch</p>
<p style="text-align: center;"><span class="su-lightbox" data-mfp-src="https://www.dhunplugged.com/wp-content/uploads/2035/10/privatecreditwoes.jpg" data-mfp-type="image" data-mobile="yes"><a href="https://www.dhunplugged.com" class="su-button su-button-style-default" style="color:#FFFFFF;background-color:#2D89EF;border-color:#246ec0;border-radius:5px" target="_self"><span style="color:#FFFFFF;padding:0px 16px;font-size:13px;line-height:26px;border-color:#6cadf4;border-radius:5px;text-shadow:none"> PRIVATE CREDIT</span></a></span></p>
<p><strong>More OpenAI Funding</strong><br />
- Amazon invested $50 billion, Nvidia invested $30 billion and SoftBank invested $30 billion in the round, OpenAI said in a release Friday.<br />
- The investment boosts OpenAI to a $730 billion pre-money valuation, which marks a big jump from its $500 billion valuation in a secondary financing in October.<br />
- The will use some of the money to expland and buy more chips and cloud from NVDA and AMZN (? Circular?)</p>
<p><strong>MORE ON THE CIRCULAR SHAM</strong><br />
- OpenAI said it is expanding its existing $38 billion agreement with Amazon Web Services by $100 billion over the next eight years.<br />
- AWS will also serve as the exclusive third-party cloud distribution provider for OpenAI’s enterprise platform Frontier, which it unveiled earlier this month.</p>
<p><strong>AI and Where we stand</strong><br />
- Can we talk about Anthropic? Is the Government going to crush Claude?<br />
- What is our Go-to AI bots?<br />
- What stage are we at right now? LLMs > Infernce>Agentic<br />
- - What comes after Agentic</p>
<p><strong>Netflix OUT</strong><br />
- Last week, Netflix exited the bidding for Warner Bros. Discovery after a competing bidder submitted a superior offer.<br />
- The decision followed pre-planned bidding scenarios, with co CEO Ted Sarandos saying the company knew exactly how to respond once the higher offer emerged.<br />
- Sarandos said the Paramount deal is likely to drive significant cost-cutting, including roughly $16 billion in reductions and thousands of job losses.<br />
- He emphasized that Netflix will continue investing in its business and explore new ways to collaborate with theater owners, rather than pursuing large acquisitions.|<br />
- Stock rose nicely on the news</p>
<p><strong>Tariff Refund Update</strong><br />
- You are screwed....<br />
-- Trump administration seems hell-bent on keeping our money</p>
<p><strong>Airlines</strong><br />
- After a rather bullish commentary from Delta last week....<br />
- United Airlines is cutting more unprofitable flights over the next two quarters as it prepares for a prolonged period of high jet fuel prices due to the Iran war, even as strong travel demand has allowed U.S. carriers to raise fares.<br />
Chief Executive Scott Kirby said in a staff memo the airline is preparing for oil to rise as high as $175 a barrel and remain above $100 until the end of 2027.<br />
- At those levels, United's annual fuel bill would rise by about $11 billion, more than twice the profit it earned in its "best year ever," he said.<br />
- Ticket prices going up!</p>
<p><strong>Gas Prices</strong><br />
- Have you seen diesel prices?<br />
- > $5 gallon on average across the U.S.<br />
-- Implications beyond<br />
--- Let's discuss the similarities to the 1973 oil embargo. (Barry switching license plates)<br />
- 1973–1974 ? Arab oil embargo (the classic “1970s oil embargo”)<br />
- 1979 ? Second oil shock caused by the Iranian Revolution (not an embargo, but another major supply shock)</p>
<p><strong>Even So - Fedex</strong><br />
- FedEx Corp. raised its full-year profit forecast, with adjusted earnings expected to be $19.30 to $20.10 a share for the fiscal year.<br />
- The company's shares climbed after the announcement, with the stock advancing about 23% this year through Thursday's close.<br />
- FedEx does not expect the war in the Middle East to have a direct material effect on its business, but the broader consequences, including higher energy prices and volatile shipping patterns, are adversely affecting the global economy.<br />
- In fact, company raised its full year outlook.....<br />
--- Not a material effect???</p>
<p><strong>Bad People</strong><br />
- SuperMicro Co-Founder Charged!<br />
- Super Micro shares sank 28% last Friday after U.S. prosecutors charged three people linked with the company, including its co-founder, with helping smuggle billions of dollars worth of AI technology to China. (NVDA chips)<br />
- The U.S. Justice Department charged Super Micro co-founder Yih-Shyan Liaw, sales manager Ruei-Tsang Chang, and contractor Ting-Wei Sun with running a scheme to route U.S.-made servers through Taiwan to Southeast Asia.<br />
- The defendants allegedly used a Southeast Asian company as a middleman to place orders for high-end servers containing restricted Nvidia H200 and Blackwell chips. The equipment was then repackaged into unmarked boxes and diverted to China.<br />
- To evade U.S. audits and customs inspections, the individuals allegedly created thousands of "dummy" servers and used a hair dryer to remove and reattach serial number labels from genuine servers to the fake ones.<br />
--- Soooo, only 3 people did all of this?</p>
<p><strong>Amazon Phone</strong><br />
- Amazon's new phone project codenamed 'Transformer'<br />
- Focus on AI integration, Alexa features, and mobile personalization<br />
- Here is what we know:<br />
-------It is a smartphone, not a wearable or accessory<br />
- It is AI-centric, with Alexa deeply integrated<br />
- It is meant to act as a personalized, always-on gateway into Amazon’s ecosystem (shopping, Prime Video, Prime Music, services like Grubhub)<br />
- It is being built inside Amazon’s Devices & Services group by a skunkworks team called ZeroOne, led by former Xbox architect J Allard</p>
<p><strong>OpenClaw</strong><br />
- Nvidia CEO Jensen Huang says OpenClaw could be the next ChatGPT as AI shifts from answering questions to taking action.<br />
- Jensen said : Nvidia is building security around the technology with NemoClaw to enable safe and scalable adoption of AI agents.<br />
- Project OpenClaw: “It is now the largest, most popular, the most successful open-sourced project in the history of humanity,”<br />
- OpenClaw is an open-source autonomous AI agent platform that goes beyond traditional chatbots.<br />
-----Instead of answering questions, these agents can complete tasks, make decisions, and take actions with minimal input from users.<br />
- Use case: Prompt to study images of a kitchen, learn design tools, iterate ideas to learn how to design a kitchen<br />
------- Jensen says: “Every carpenter can now be an architect. Every plumber will become an architect. We are going to elevate the capabilities of everyone”<br />
---- What happens to the architects?</p>
<p><strong>Something....</strong><br />
- One of the hardest hit countries in all of this mess has been South Korea<br />
- ~70% of South Korea’s crude oil imports come from the Middle East - Most of that oil transits the Strait of Hormuz<br />
- Margin calls kicked in as high margin debt with heavy retail participation<br />
- Won weakened sharply (17-year low)<br />
- Korea economy is dependent on global demand and stable energy prices<br />
- South Korea often leads sell-offs as it is the purest RISK ON market in Asia<br />
---- SOOOOO, if this thing ends quickly, there is a potential of EWY to move up again....</p>
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<p style="text-align: center;"><a href="http://twitter.com/THErealDVORAK"><strong>Follow John C. Dvorak on Twitter</strong></a></p>
<p style="text-align: center;"><a href="http://twitter.com/andrewhorowitz"><strong>Follow Andrew Horowitz on Twitter</strong></a></p>
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