Title: Haymaker Daily — Lies, damned lies, and earnings
Show: Haymaker (Substack) — written post, paid
Author: David Hay / The Haymaker Team
Date: 2026-07-15
URL: https://haymaker.substack.com/p/haymaker-daily-cac
Note: Written post — no timestamps. Verbatim body captured via logged-in session; standard Haymaker legal disclosure block omitted.

Hello, Haymakers:

Gerard Minack, publisher of the Downunder Daily, is this newsletter's favorite Aussie financial analyst. Actually, he's one of our regular must-reads regardless of national origin, notwithstanding the vast amount of market-oriented and economic research we receive.

In his July 14th missive, Gerard warned U.S. investors about the true extent of the present overvaluation. This is despite Gerard's innate bullish predisposition. Yet, he's picking up on some of the same themes a number of our other preferred research sources have been covering. Note that these are facts, not opinions.

In that regard, in the paragraph right above the following chart he pithily observed: "Earnings are an opinion; cash is a fact."

Considering the high level of creative accounting going on these days — with significant expenses, like share-based compensation, often being excluded from Wall Street earnings estimates — rarely have opinions and facts so dramatically diverged.

[Downunder Daily chart]

The primary reason America's stock market is far more highly priced on a cyclically adjusted cash-flow basis is because of the enormous capital spending occurring in its tech sector. The hyperscalers are, of course, the prime example of this, as they are projected to spend some $750 billion this year alone, largely on AI build-out initiatives.

The capital outlays are depreciated over time but the hit to cash flow is immediate. As we have previously conveyed, there will be a time of reckoning as this unprecedented cap ex starts hitting corporate income statements.

An additional profits-inflating factor has been booking massive non-cash gains on investments in loss-generating entities like Open AI. In reality, the red ink from it and its peers, several of which are vectoring to go public, is astronomical. Making this accounting treatment even more aggressive, these companies, all recent start-ups, are often major customers of companies such as Microsoft.

[Downunder Daily chart]

Fortunately, there is a long list of reasonably priced U.S. stocks that are not playing such earnings augmentation games. The financial and energy sectors are particularly bargain rich.

The Haymaker Team