Paulo Macro — Happy Fed Day: FOMC, the SpaceX blow-off, copper, and the cracks
"SpaceX is sucking the oxygen out of the equity room." A Fed-day note: a genuinely uncertain Warsh FOMC, an SPCX melt-up squeeze that may end the cycle, a copper wobble as datacenter capex starts to crack, and refiner cracks leading crude.
One-line take: A genuinely two-sided Fed day — Paulo "has no idea how this FOMC will lean": consensus fades new Chair Kevin Warsh into a hawkish "Warsh 2008," but the oil crash hands the Fed a dovish "Transitory / wait-and-see" out (and "the 2yr is the scariest chart in finance" still leads the Fed). The headline act is SpaceX (SPCX) "sucking the oxygen out of the equity room": options listing + Russell inclusion (days away) + Nasdaq (early July) and the "narrowing in" that final tops show set up "something truly acrobatic" — a Volkswagen-2008 squeeze ×10-20 that "doesn't end until SpaceX is the world's largest company." He also hears SPCX coming to the IG bond market with $20-25bn of debt, ~25bps tighter than ORCL ("I would rather lend to SPCX than Larry Ellison"). Semis are rolling over (GPU rental rates "trading heavy" since Mythos); the datacenter construction-delay / cost-explosion story plus index crowding-out is "room for shaking the tree." On copper he's "a bit uncomfortable but sticking with my juniors" — a PBOC liquidity loosening would help base metals, but if datacenter capex cracks (MSFT walked away from a $3bn ORCL cloud-leasing deal) copper longs could shake: "$7.50 or $5.50 from here." On crude he stands by a -8mm commercial draw call at this morning's EIA (API agrees), but "the real story is in cracks" — refiners minting, gasoline/diesel Jul-Aug spreads tightening: "products lead."
1. Stocks & names mentioned
| Ticker | Name | Research | View | What's said | Source |
|---|
| MSFT | Microsoft | QT · SA · STK · FA | Neutral | Evidence, not a stance: "MSFT walking away from a $3bn ORCL cloud-leasing deal last night" is cited as a sign datacenter capex is starting to crack — a risk to a big pillar of the copper-bull / datacenter-rollout case. | note ↗ |
| ORCL | Oracle | QT · SA · STK · FA | Neutral | Reference/comp, not a stance: SPCX's expected $20-25bn IG bond is seen pricing ~25bps tighter than ORCL ("I would rather lend to SPCX than Larry Ellison"); separately, MSFT walking from a $3bn ORCL cloud-leasing deal is offered as datacenter-capex-cracking evidence. | note ↗ |
| SPCX | SpaceX (lists as SPCX) | QT · SA · STK · FA | Negative | "Sucking the oxygen out of the equity room." Options listing + Russell inclusion (days away) + Nasdaq (early July) and the "narrowing in" that final tops show set up "something truly acrobatic" — a Volkswagen-2008 squeeze ×10-20 that "doesn't end until SpaceX is the world's largest company." Also hears SPCX coming to the IG bond market with $20-25bn of debt, ~25bps tighter than ORCL. The supply-wall blow-off top that ends the cycle — near-term violent, structurally Negative. | note ↗ |
"View" reflects how each was framed in this note (Negative = the structural supply-wall top, even as the near-term melt-up squeeze is violent to the upside; Neutral = a reference/comp or evidence, not a stance). The "Source" links open the Substack post (a written, paid note — no timestamps). His copper juniors (ALDE/SURG) and commodity prices (gold/copper/crude) are discussed but not given fresh ticker rows here. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.
2. Talking points
Fed day — genuinely two-sided
- "I have no idea how this FOMC will lean." Consensus fades new Chair Kevin Warsh into a hawkish "Warsh 2008" (only so much leash under Trump). But "they crashed oil just in time for the Fed to put Transitory back on the table and 'wait and see'… which is dovish and starts dipping into policy-mistake territory."
- "Remember the 2yr is the scariest chart in finance — it continues to lead the Fed." Easy to think in circles; "let's just see what happens."
Asynchronized data — and the PBOC ("the Bundesbank")
- US "running hot for months" (retail sales beat this morning the latest) while the PBOC — "the Bundesbank," per Louis-Vincent Gave — tightened liquidity hard in March reacting to the oil spike, now showing up in softer Chinese data.
- "Makes me wonder if the PBOC soon starts to loosen the reins — what do metals do with that?" (A PBOC loosening would put "life in precious and base metals.")
SpaceX is sucking the oxygen out of the equity room
- Options listing + "narrowing in" (what final big tops witness) + Russell inclusion "in a few days" + Nasdaq "early July" = "we are likely to see something truly acrobatic here. It could happen quite fast."
- The 2020 analog: "this insanity does not end until Elon is the world's richest man" → now "this doesn't end until SpaceX is the world's largest company." "If you lived through Volkswagen in 2008, but multiply it by 10-20x."
SPCX coming to the IG bond market
- "I hear SPCX is expecting to come to the investment grade bond market (yes, IG) with $20-25bn of debt in the next few weeks… expected to come tighter than ORCL by 25bps or so."
- "I suppose I would rather lend to SPCX than Larry Ellison at this point, but still…"
Semis / GPU rental rates rolling over
- "For all the attention GPU rental rates were getting since Mythos, the stuff is rolling over / trading heavy."
- Bull case: cheap Chinese LLMs stress closed US models but Jevon's Paradox = adoption, and the "Fable clampdown" by the US means other countries must build their own → "we need more." "Perhaps."
The datacenter-capex-crack risk
- "The datacenter construction delay / cost explosion story is a problem for the bull narrative into the teeth of weakening pricing and rental rates" — and with index crowding-out from new paper issuance, "there's room for shaking the tree between now and the fall."
- The concrete tell: MSFT walking away from a $3bn ORCL cloud-leasing deal "last night."
Copper — uncomfortable but holding the juniors
- "A bit uncomfortable but sticking with my juniors because drawdowns are a part of life." If the PBOC loosens now that oil is down, "we should see some life in precious and base metals" (side note: gold's Gulf/Turkey sell-off "was PBOC liquidity tightening all along").
- The other side: "quite a lot of length in US copper futures," and if datacenter rollout/capex cracks (the MSFT/ORCL tell) "copper could shake longs" — "a big pillar of the copper bull case is driven by datacenter rollouts." China builds its own too; the sulfur issue. "Don't color me surprised if we go to $7.50 or $5.50 from here." Gold and base metals "starting to feel a little invisible" despite copper near all-time highs.
Crude — the draw, but the real story is cracks
- Stands by the weekend note's call: a -8mm commercial crude draw last week (plus SPR) at this morning's 10:30 EIA release; "the API data last night seems to agree." "Probably good for a -$3 drop in oil in the Great Upside Down knowing this market."
- "The real story is in cracks… refiners are minting again, and if they aren't buying crude with both hands, they really should be." Products "acting reeeaaalllly interesting" — gasoline and diesel July-Aug spreads tightening (a Gulf tropical storm, but "it is tightening all the same… sneaky"). "Remember: products lead." "Stay frosty."
3. In plain English
A jargon-free summary of the thesis behind each name — what it actually is and why that view. (Plain-language companion to the table above; renders on each ticker's consolidated page.)
SPCX — SpaceX Negative
SpaceX is Elon Musk's rocket-and-Starlink company, now trading under the ticker SPCX. Paulo thinks it is about to go vertical in a violent "short squeeze" — a melt-up forced when people who bet against a stock (or who simply don't own it) are made to buy it back at any price. The fuel: options on the stock have just started trading, it is about to be force-bought by every fund that tracks the Russell index (within days) and the Nasdaq (early July), and the price action is "narrowing in" the way it does right before a final blow-off top. His comparison is Volkswagen in 2008 — briefly the world's most valuable company on a squeeze — "times 10 to 20." Half-joke: "this doesn't end until SpaceX is the world's largest company."
So why is the stance Negative rather than bullish? Because to Paulo this is the top — the giant new supply of stock that finally "sucks the oxygen out of the equity room" and ends the whole cycle. The melt-up may be real and fast, but it is the last gasp, not a thing to chase. He also hears SpaceX will soon borrow $20-25 billion in the high-quality ("investment grade") bond market at a rate about 0.25% cheaper than Oracle's — astonishing for a young company, and a sign of just how frothy credit has become ("I would rather lend to SPCX than Larry Ellison").
ORCL — Oracle Neutral
Oracle is a big enterprise-software and cloud-datacenter company. Paulo doesn't give it a buy/sell view — he uses it two ways as a reference point. First, as a yardstick for how cheap SpaceX's coming bond deal is: SpaceX is expected to borrow about 0.25% cheaper than Oracle does, which says more about credit-market froth than about either company. Second, the news that Microsoft walked away from a $3 billion deal to lease Oracle cloud capacity is, to him, a small crack in the AI-datacenter building boom.
MSFT — Microsoft Neutral
Microsoft is the software-and-cloud giant behind Azure and a backer of OpenAI. Paulo isn't rating the stock — he flags one data point: Microsoft reportedly walked away from a $3 billion deal to rent datacenter capacity from Oracle. He reads that as an early sign that the enormous spending on AI datacenters ("capex") may be starting to crack. That matters beyond tech: a chunk of the bullish case for copper rests on all that datacenter construction, so if the building boom cools, one of copper's demand pillars weakens.
Key points extracted from the public Substack post (in transcript.txt) for personal study. Not investment advice. © Paulo Macro for source material.