Here’s a preview of what we’ll cover this week: 

Macro: Inflation Is a Choice; A Solid Economy and a Stable Job Market

Markets: The Market Passed Every Test; Rotation Ahead; Where Are Fund Managers Headed?; The Death of Nvidia Is Greatly Exaggerated; What Does It Take To Build Another Silicon Valley?

Lumida Curations: Ken Griffin on What a Portfolio Is Really For; Jeff Gundlach on Why 2% Inflation is Unrealistic; Dario Amodei on Why AI Needs Guardrails Early

There may be no greater investment than having children—and perhaps no greater return.

That return may not show up neatly on schedule. It may not arrive in the early years, when life is noisy, exhausting, and full of sacrifice.

It may come much later.

Perhaps it comes near the end, when you are looking back on your life and asking what truly mattered. It's about whether you loved well, whether you were loved in return, and whether you built a life surrounded by the people who matter most.

That, I suspect, is the real return.

Happy Father’s Day to all the fathers investing in what endures.

Here’s my livestream from 2023, discussing parenting and its role in shaping civilizations. Watch it here.

I read that Andreeson Horowitz is paying a 30x ARR multiple for service businesses disrupting legacy business models with AI.

a16z has been publishing the thesis that AI can expand vertical SaaS by letting software take on work previously done by people in sales, marketing, customer support, operations, and finance.

I did an FSD live stream this week dedicated to this topic - highlighting concrete example of how we are suing to AI in our internal sales operations. Watch it here. Here are some of the highlights. 

1) AI is already managing and coaching our sales team. We have various tax mitigation products to help investors and owners keep more of what they earn.

Let me tell you how our Sales team is leveraging AI.

Selling is a process with clear steps: you generate a lead, build rapport, qualify the prospect, run discovery to understand their goals, and then make a relevant offer if there's a fit. 

And we now have an AI sitting on every sales call they make. The AI takes a transcripts and grades each call immediately after the call.

The AI produces a report card broken out by key dimensions and it is unsparing. It also sends a short three-bullet summary in a slack channel to make it even more digestible.

Here’s a short snippet of the report card if you’re curious:

2) The AI scores how well the rep followed each stage of the process, posts the feedback to a shared coaching channel. Rapid, immediate feedback is more effective than the perfect report.

3) Next, the AI grades the call rather than relying on the rep's own assessment. The AI tags whether the call is qualified and triages.

This fixes one of the oldest problems in sales, where reps talk up their own pipeline. The AI decides whether a lead is genuinely qualified, judges the prospect's intent, and rates the odds of closing.

4) Weekly, the AI creates a ‘cross team analysis report’. It benchmarks the sales team against one another. And you can see that strong sales people have consistently better behaviors (e.g., faster follow-ups, less talking, playing back the client need, etc.).

That kind of immediate evidence encourages sales people to adapt their style to mirror the leader. There’s no secret formula anymore, just inspiration.

Consider what this replaces. 

The old approach was a VP of Sales pulling a few call recordings at random, sitting the rep down, and walking through them line by line. That was considered best-in-class coaching. 

Today, our AI reviews all of the calls and delivers feedback while the conversation is still fresh in the rep's mind — which is when people actually learn from it. Now, we’re working on having the AI benchmark and trend key statistics not unlike plotting your cholestoral levels over time. 

No human manager can match that.

Why this is truly disruptive?

We built these tools on top of Claude, and in days, without relying on any automation platform to do it.

It is abundantly clear to us that AI is poised to upend entire business models, especially those heavy in white collar jobs (e.g., wealth management, tax preparation, etc.).

Now point that lens at the wealth management industry. 

Wealth management is a $140 trillion business resting on hundreds of thousands of financial advisors. Each advisor is backed by client-service staff and research analysts.

Each of those roles is at serious threat of disruptio. 

That is exactly the opportunity Lumida was built to go after. And, it's why we're backed by early investors in companies like Circle, Coinbase, and SoFi.

I am pleased to share, Kenneth Pasternak, founder of Knight Capital, also invested in our community round which wraps up in two weeks.

Kenny is a pioneer in machine learning for market making, and had led Knight Capital to be the largest wholesale market maker in US securities during his tenure.

The future wealth management experience isn’t going to be the traditional semiannual review, paired with a courtesy ticket to the US Open. 

You will be able to talk to a virtual advisor at two in the morning — why did Broadcom fall after earnings?.

Or, better still, enjoy a proactive AI that tells you what you need to know whwn you need to know as a fiduciary. 

You can take a glance at the future through the Lumida Invest app.

You can download it from app store or play store or at www.lumidainvest.com.

You can find all the details of our community raise here. We haven’t really talked about this outside of our newsletter, but will be starting to do that soon and wrap this up.

Also, we will be hosting the Lumida Tribe monthly meetup in New York on 30th June - Tuesday. We’d love to have you there.

You can sign up for the event using this link.

We have capped guests at 70, so if you’d like to come, be sure to sign up today.

Here are a few snapshots from the last penthouse event. We had a retired basketball player, family offices, founders, and all sorts of investors. Was a lot of fun!

Community is a powerful moat in the age of AI and social media. People genuinely want human connnection.

I did an FSD livestream this week shortly after Warsh’s first press conference.

Warsh is on a mission to lower long-term interest rates — and the way he does it is by raising the Fed's credibility.

Overall, I was impressed by Kevin Warsh. Look, the guy cited Milton Friedman, discussed adding accountability to the Fed, the need for more alternative forward looking data, and the need to get inflation back down to target.

We’re going to see less forward guidance. Markets will focus less on parsing the FOMC tea leaves (notice how short the press release was) and focus on pricing market data.

His main message was ‘Inflation is a Choice’ and the Fed has failed to deliver its goal over the last 5 years.

My take is he is going to modernize the Federal Reserve.

I believe Warsh intends to talk down the long-end of the curve. He will not re-introduce QE. On the short-end, the FOMC will not raise rates.

Listen to the FSD clip if you want a deeper take.

The FOMC meeting was fairly confident on the economic resilience and job market. 

The median FOMC participant sees real GDP at 2.2% this year and 2.3% next. 

Warsh: "Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are both strong."

We agree.

This expansion is built on business investment and the promise of productivity growth.

If we’re seeing improvements by investing in AI, imagine how many other businesses are in the process of embracing AI.

We are the tip of the spear of this change, many others will follow.

You don't get a bubble in earnings when every component of the GDP equation — investment, consumption, government — is constructive at once. 

The job market tells the same story. Initial jobless claims remain low and healthy.

Warsh also took a dig at the Non-Farm Payrolls report. It was music to our ears - we’ve been consistent critics on the data the Fed and markets use (they are lagging, subject to wide confidence intervals so as to be noisy).

Markets ended another week in green, recording 11 up weeks of the last 12.

The Nasdaq 100 led, up 3.3%, with the S&P up 1.4% and the Russell at 2.0%.

Animal spirits in semis were the driving force again, with semis gaining 8.3%.

Airlines also joined the party after the latest US-Iran MOU, gaining about 7% last week.

Airlines ETF (JETS) return has now surpassed SMH in the last 1M. This is more evidence of rotation to names with higher earnings yield and better valutions.

We also like travel and leisure - boomers won’t stop travelling. 

If you think about it, in the past few weeks, markets have had every excuse to break. 

We have gone through multiple potential clearing events: the SpaceX IPO, a hot CPI, a hot PPI, the Iran war, and Warsh's first FOMC, but markets still continued to go higher. 

Markets are rising on the back of fundamentals: consistent high earnings growth, and AI investments.

Rotation Ahead

There's growing evidence that we should expect a rotation ahead.

Many of the factors we track are simultaneously at extremes. That usually marks an upcoming rotation. 

See animal spirits, growth, volatility factors performance in the following snapshot – they are all trading at extreme highs. 

On the contrary, factors associated with quality (EPS yield, profit, Hedge fund crowding) are trading at their lows. Notably, Earnings Yield was one of the strongest factors this week.

It’s natural for factors to mean revert. We’ve had a dizzying retail led animal spirits led rally fuelled by IPO speculation.

Real money investors should be looking around at the significant value in quality stocks. You can throw a dart at an industry and find a number of names trading at multi-year lows that are not subject to AI disruption: ratings agencies, data infrastructure companies, etc.

Quality stocks are being oversold, making fresh new lows against high-spirits, high-beta junk.

This has been the defining story for the 1H of 2026. 

The most speculative names are beating the safest ones by a widening margin, which is what the late, giddy stage of a move looks like. 

Investors are piling into the same handful of names, while rotating from other quality sectors. 

See how BoFA’s bull/bear indicator has gone deeper red on the back of a tech rally alone.

It suggests a high likelihood of a mean reversion from here. 

To add to it, the semis ETF received the largest weekly inflow on record this week. 

This is a textbook evidence of a frenzy: record price, record volume, record buying all in the same week, which is what the last buyer rushing in looks like.

At the same time, we continue to hold our positions in Micron, DRAM, Nvidia, and South Korea. You can make the case that valuations are reasonable.

We believe avoiding the names that are over-priced makes a lot of senese.

The big risk factor to the market is

(1) What % of Datacenter buildouts are going to be cancelled? I’m surprised no one is talking about this.

(2) How many politicians bash datacenters in the mid-terms?

See what happened after each spike historically – we saw the record inflows turn into big outflows. The spike marked the exact top for the ETF.

We also see support for a rotation as pressures on other categories are starting to loosen. 

Oil prices have started rolling down.

We're back to $75/ barrel, which means inflation expectations start to roll off from their peaks. Semis are not dependent on oil. Most of the rest of the market depends on oil.

You can see it in rate-sensitive names. 

Multiple names in Consumer finance offer compelling value, and are exhibiting high momentum – exactly where you’d like to position. 

In the super tactical multi-day short-term these and other consumer names are over-extended, so mind your entries

Here are few stocks that we own in this category.

Bread Financial (BFH) 

BFH is the deep-value play in the group. It trades at 9.4x forward earnings with a 52.8% FCF market-cap yield. 

(Yes, that number is real, and it tells you how little the market is paying for the cash this business throws off. )

Bread offers private-label and co-branded credit cards, so it's a direct play on the resilient consumer, which keeps beating expectations. 

Revenue growth is modest at 2.7% as credit normalizes, but you're being paid an 8.8% buyback yield to wait while management shrinks the share count into the recovery. 

Cheap, cash-generative, and levered to the consumer holding up. 

Synchrony Financial (SYF)

The bigger, higher-quality version of the same trade. 

Synchrony trades at 7.8x forward earnings, a 38.9% FCF yield, and a 12.8% buyback yield — one of the most aggressive capital-return stories in the sector. 

The lower-end of the U.S. Consumer is also strong, and this is not widely appreciated. We know that by going thru earnings transcripts of lenders to this category.

Synchrony powers store-branded cards for a huge roster of retail partners, so its growth tracks consumer spending directly, and revenue is compounding at 13.6%. 

EPS is flat year-over-year as the credit cycle resets, but at this multiple with that buyback, the market is handing you a high-quality lender at a distressed price.

Dave (DAVE)

Dave is the growth name in consumer finance and the numbers show it. 

Revenue is compounding at 29% and EPS is growing 26% — Dave is a neobank built for the underbanked consumer, and it's scaling fast. 

It's pricier at 17.8x and there's no buyback yet because every dollar is going back into growth, but you're paying a reasonable multiple for one of the fastest growers in the group. 

The FCF yield of 8.2% says the unit economics already work — rare for an early-stage fintech.

Goldman Sachs (GS)

Goldman is the blue-chip anchor. It trades at 18.3x earnings multiple, which is lower than the broader market, with a 15.7% EPS growth. 

Goldman is the quality way to play the capital-markets recovery: as deal-making, trading, and IPO activity reaccelerate, Goldman's earnings leverage kicks in. 

A 4.7% buyback yield and a 1.7% dividend round out a name that's already up 36% over three months and still reasonably valued for the growth.

Stay tuned for other themes that are quietly gaining momentum. 

I generally like to get in early on emerging themes, and avoid crowded late momentum ideas.

You can use the market color feature in Lumida Invest app to guide your positioning. 

We have divided market color in three segments: macro, sectors and sentiment. For each segment, the AI produces a 2-min read to give you an instant market view.

We noticed that all sectors of the S&P have lagged the S&P over the last 3 months except semiconductors. Mean reversion should be in store especially as we get past Bicentennial and mid-July.

One of BoFA’s most insightful reports is the Global Fund Manager Survey. It tells you where the professionals are positioned, and by extension where they're headed next.

The report came out this week, and here’s the most important chart from it.

This month, fund managers started trimming technology: the sector dropped to net 26% overweight, down from 33% a month ago. 

That's the single biggest move in the survey, and is further evidence on why the rotation is close. 

When the most crowded sector in the market starts getting sold by the people who are usually early, you pay attention to where the money goes next.

The fund managers are going into the parts of the real economy that are cheap and starting to work. 

Two stand out, and interestingly, these are the two particular sectors we highlighted in our last two issues: financials and health care. 

Fund managers are now net +26% overweight on financials, up from +19% a month ago — the allocation is climbing fast. 

We wrote about financials in our newsletter on 7th June. 

The thesis was simply about value. Banks are cheap and under-owned while everyone is crowded into tech. 

Now the money is rotating in, and the names are picking up momentum on top of the value. You can look at the consumer finance names we shared in the prior section for exposure in financials. 

Another major rotation outlet was healthcare. Fund managers moved to net +14% overweight, up from +9% last month, and the allocation has been building constantly for months. 

We talked about healthcare in our last newsletter. You can read about our picks in healthcare here. If the Dems take the house, they will spend more on Medicare Advantage reimbursement as well.

These are value sectors — cheap, under-owned, ignored while capital piled into the AI theme.

The one-sided positioning in tech meant capital flowed out of these sectors, and now, it is making way back in. 

You can already see momentum in financials and health care.

Markets are doubting Nvidia. The stock is underperforming the sector index, while junk semis are going higher.

It’s the second cheapest Mag 7 stock.

Funny enough, the AI investment driving these animal spirits names benefits Nvidia more than anyone else.  

We believe the name, along with Microsoft, are significantly mispriced.

I’ve shared our thesis before so won’t spend much time here.

Investors are doubting that custom silicon is going to displace Nvidia’s GPUs, Inference is going to commoditize, and hyperscalers are going to build their own chips and walk away.

The latest numbers say the opposite.

Nvidia's most recent quarter shows it took nearly three-quarters of the entire AI inference market — roughly 74% of market share, up from 66% a year ago. 

As the AI workload shifts from training to inference — the part everyone said would be Nvidia's vulnerability — Nvidia is gaining share, not losing it. 

Nvidia’s Inference revenue went from $18B against $9B for the rest of the market a year ago, to $41B against $15B today. 

Nvidia is the rare case where you get dominant market leadership, accelerating share gains, and a reasonable valuation at the same time.

Nvidia trades at 21.2x forward earnings — essentially in line with the S&P 500's multiple. 

You are paying a market multiple for the single most important company in the most important technology of the decade.

And you're getting roughly 3.5x the market's earnings growth for that price. 

When the fastest-growing mega-cap in the world trades at the same multiple as the average S&P constituent, that's a mispricing.

Global data center power demand is on track to more than double by 2030 with AI as the primary driver.

The appetite for compute is going vertical.

And, this means more demand for data centers — you can't run the models without the buildings full of chips.

But, right now, those buildings can't come online. 

The constraint isn't money or chips. It's electricity. There aren't enough electrons, transformers, or turbines to energize them.

More than 60% of US data center capacity expected for 2027 hasn't even broken ground, with another 7% already delayed. 

The delay is due to a lack of energy — these projects can't get powered. 

The winner amongst compute providers isn't whoever has the most chips. It's the compute provider with the cheapest power. 

A provider tethered to the grid pays the going rate and waits in line. A provider that owns cheap, off-grid generation runs the same compute today, at fatter margins, with no queue. 

This is exactly the theme we've been building toward in private markets.

We're actively working on a private investment in a company sitting right at that intersection — producing datacenter compute using energy generated from almost-free natural gas.

We know the team, and have invested with them before, and I am re-upping personally.

If you're an accredited investor or qualified purchaser and want the details on this one, email [email protected] and he'll walk you through it.

Alternatively, you can also get on the distribution list for our private deals through lumidadeals.com.

1. Founder Formation

Universities that concentrate talent and enable founder formation. 

The goal isn’t education per se. 

Stanford’s greatest contribution may have been talent density and accidental talent matching. 

 2. Mythological Creation Event

Every epoch has a catalytic moment that spawns further growth: 

Fairchild Semiconductor and Hewlett Packard are good examples. 

3. Founders who recycle capital and knowledge. 

The first generation must become angels, mentors, advisors, and LPs. 

It’s a ‘Pay it forward’ mindset. 

Silicon Valley compounds because founders become investors in the next generation.

4. An active M&A ecosystem. 

Acquisitions are not just exits - they are ecosystem fertilizers.

Cisco’s acquisitions in the 1990s is a good example. 

Rather than build everything internally, Cisco acquired dozens of emerging technology companies, providing liquidity to founders, employees, and investors. 

Those proceeds were recycled into new startups and venture funds. 

The mutually reinforcing relationship between Sequoia and Cisco is a great case study. 

5. A capital conveyor belt connecting early stage to public markets

Pools of risk capital willing to fund the future at successive stages. 

6. Founder Role Models

Every great innovation hub has founder heroes. 

Steve Jobs is a cultural icon. He is a role model for Founders. 

There is a lore around great startup founders and the Hero’s Journey. 

The real product of Silicon Valley is the Founder and Capital Formation.

Griffin argues that the right portfolio is not the one with the highest possible return, but the one built around what your life actually needs the money to do.

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Amodei warns that AI is becoming too powerful to manage casually, and argues that serious checks, audits, and accountability need to be built before the technology moves further ahead.

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