The Neocloud Trade Is Breaking - Except for One Stock

Martin (0:00)

We might have enough GPUs, we might have enough demand, we just do not have enough power. And so, if you combine all these pieces together, it actually led me to study IREN.

LGDUSET (0:12)

What's up, everybody? It's LGDUSET here, and welcome to Milk Road Stocks, the daily market show that is here for you in uncertain times whether it's up or down, or there's raid hikes or whatever, this is your home to feel some comfort and care and know that long-term things continue to go up. Today is Thursday, September 17th. A lot has happened this week in the economy, and we have one of our best analysts on the show today to break it all down, and also to break down where there may still be value. Listen, the macro is not looking good. There is going to be most likely another raid hike coming this year, and as a result, things are going to get more expensive, and that puts a lot of companies, some companies especially in the AI bottleneck trade, in trouble. There are some that are really over-leveraged, like some of the Neocloud companies that may have to adjust to this new reality. But Martin is here to tell us that there is maybe one company who is well positioned for this and might hold up value way better than the others as this downtrend maybe continues or accelerates. I'm going to leave it to him during the episode to reveal what that is, and I want to remind you, if you want to see what is in his portfolio, and when or if he's going to buy this company and what else he's going to buy, if we do dip lower, all that is in Milk Road PRO. You can test it out for just a dollar for seven days, so you can go and test it out and see if you like it, see what kind of cool stuff we're posting in there. All that is at the link below in Milk Road PRO. And a reminder that our podcast today is free, and that it wouldn't be possible without our partners at Nexo, the digital asset platform that lets you trade, earn and borrow all in one place. So keep an ear out for more information about them later in the show. All right, Martin, it is early on Thursday, September 17th. The news that everybody expected rates did go up yesterday. There are rumors that they will go up again this year.

Markets are kind of all over the place today. Crypto is up and down. A lot of crypto is up. Stock markets, some things are up, some things are down. I think a lot of people are wondering what to do from here.

I feel like you've been looking into what might happen to some companies in some areas, especially in the iTrade. So I'll throw it over to you.

Martin (2:15)

Yeah, I think obviously hiking rates is not super constructive for the whole bull market because basically the price of the money, the costs are going to be higher. And so it might benefit some companies, like let's say hyperscalers, because they have so much cash, so they don't really need to go and borrow money from someone else. But then there are Neoclouds, which are actually pretty interesting because I really like their businesses, but obviously when the costs of money are increasing, that's not good for their businesses because they are very capital intensive businesses. And so I want to talk about Neoclouds. And also in terms of what is going to happen with the hikes going forward, because I think there are some signals that we might even see higher rates in the future.

And also I want to talk about Aricard, which is an electricity provider in Texas. And they made some announcements last week, and then I want to bring everything together, and I want to present the company that I think is really interesting here, and it's part of Neocloud category.

LGDUSET (3:30)

Good teaser. We'll let people listen through the episode to see which company that is. But I'll throw it over to you, man. This is great. This is why I wanted to plan this one for Thursdays. I wanted your take early after all this is good and gone down. So tell us how you view it from here.

Martin (3:45)

This chart shows what happens when FED do hikes. And so you can see the returns for S&P 500 one month after. And so this is not really like...

People should not be super bullish from here. That's what I want to say. And because you can see the returns that, especially on the short term, like one, two, three months, pretty much like in all these years before, those were negative returns. So I'm not saying this is going to happen again for sure, but this is just the probability. If you look back, what happens in the history, that's what's telling you.