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

Macro: Regional Banks Second A Resilient Consumer; Businesses Are Borrowing Again

Markets: Thematics Are Back; Burry is betting on Microsoft; Make A Safe Bet; China's Berkshire; Owner Of QQQ; The Vacation You Already Paid For; Value Accretion Through M&A

Lumida Curations: Memory Is the AI Bottleneck; Wall Street Runs on Patterns; Doctor Copper Is Flashing Red

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Find all details here. 

This week I did a live session covering the state of markets, where the real opportunities are, and why markets can go higher from here.

Here's what we covered:

Watch the Lumida Non-consensus investing podcast here.

There's a song I played for my kids this .

I can see clearly now, the rain is gone.

If you want a one-song summary of where this market is, that's it.

When the clouds part, and the sun shines thru, asset prices recover.

Meanwhile, I saw in the New York Times that people have a strong belief that this time is the end times.

That headline is matched by the Univ of Michigan Consumer Sentiment surveys which are at lows.

Note: The forward returns one year out from such readings are quite positive. Why? At these levels, whoever wanted to sell already sold.

Back to the Apocalypse.

My guess is most people thru history assumed that their period of life was also the end times.

The Civil War, the Vietnam War, the Great Depression, and so forth.

The fact it - things are better now than they've ever been before.

Not it’s not perfect, not everywhere, and not for everyone, and not evenly…

But the best time to be alive is now.

Personalized medicine has real promise, Opus 4.7 I’m convinced is smarter than me, Costco has solved abundance.

All segments of markets have bounced strongly from the lows.

And yet, sentiment hasn't still lifted from the bearish levels we got a few weeks earlier.

The Bank of America flow show indicator is at 6.3. It was 8.5 in January. It has not budged week over week, despite the market being up significantly.

That’s bullish. There are a lot of bears shorting on the way up, just like post-Tariffmageddon. 

I spoke with a friend this week whose ex-wife — a CFA — is thinking about buying puts right now. 

Hedge fund net exposure is sitting at roughly 50%. That is not elevated by any measure. 

I believe the S&P can get to 8,000+ by year end, and it’s not really a stretch.

Earnings growth is the primary driver of stock prices, and earnings growth is intact.

Of the 250 companies that have reported so far this earnings season, 77% have beaten EPS forecasts and 69% have topped sales estimates — with 5% raising guidance against only 4% lowering it.

That positive guidance spread, in the middle of a war in Iran, is notable. The energy shock isn’t hitting American business as it might have in the past. Also, don’t forget - in the 1970s - we had energy production cuts - that’s not happening now.

How about valuations?

Valuations have come in and are reasonable.

A few weeks ago, on March 26th, I shared this chart in our newsletter on Tech valuations.

Are they at all time highs? Nope.

Here’s where we are now.

How about S&P valuation as a whole?

Reasonable. No screaming bargain, but not insane pricing either. (If you want to see insane pricing, spend an hour looking at valuations in Industrials.)

Big tech companies report this week. I’d expect Cloud businesses report strong numbers.

How about buybacks? Buyback authorization has increased by 36% YoY, up 176% from 2020.

We are on the track to see $1Tr in share buybacks this year. 

How about Kevin Warsh? Well, he wants to cut rates despite elevated inflation. He’s pointing to AI. That’s bullish for small caps and rate sensitive names - provided oil prices come down from here. 

The federal government, time and again, has demonstrated that no matter who is in power - it will spend, spend, spend.

That’s also bullish from a 12 month perspective.

We have the American 250th anniversary coming up this Summer.

Trump will not be at war then. (That’s around the time where it might make sense to shift from Growth stocks to more Value and healthcare stocks.)

My view?

Growth will outperform value in the near term. Industrials are at full valuations. Semis are going thru a euphoric parabola now. There’s a real story in semis - but it’s not wise to chase that here.

So many charts in semis are identical to one another now. Is Texas Instruments doing the same earnings growth magic as Micron for example?

I think I can see clearly now that the rain is gone... 

Here’s the way to think about markets.

Imagine a set of dominoes where each domino represents an investment theme.

In early October, all the Dominoes were standing firms.

If you take a step back, the market weakness started on 10/10/2025. 

That was the top in crypto, quantum stocks, and AI datacenter names and all sorts of ‘thematics’. 

Dominoes started knocking down other dominoes.

Then the disastrous Sam Altman interview added more pressure on 10/31. More dominoes start falling. 

In December, Mag 7 names started showing yet more weakness under the surface. 

In January, we hit peak goldilocks with indices at ATHs even though under the surface there was considerable weakness. 

Then in Feb and March, the Iran conflict accelerated - pulled forward - a market bottom. 

That’s 6 months of weakness that market participants endured - as a result of a market crowded in KOL led thematics. 

Now consider this…

The average duration of a bear market is 9 months. 

We just exited 6 months of ‘go nowhereness’. 

That’s a long, long time.  

That frustrated buyers.

That cleaned up positioning and sentiment quite a bit. 

(Guys like David Einhorn remain offside.)

This is contrarian bullish. 

Thematics are back. 

Focus on the larger arc. 

Notice how important it is to be contrarian.

I expect we get a multi-month rally much like we did in the aftermath of Tariffmageddon last year.

The dominoes are building back up again…

Last week, we noted large banks highlighting a strong consumer against most survey readings. 

The regional bank earnings, coming in this week, also second the same thesis.

Consumers are spending, borrowing, and are overall stable. 

That’s bullish for the American Economy which is fuelled by a U.S. consumer that always finds a way.

On spending, USB's John Stern noted ”Despite sentiment, spend patterns are strong across consumers. Discretionary versus nondiscretionary looks similar — broad-based strength." 

PNC's Demchak echoed the same strength: "What we see day to day in our business is almost at complete odds with the surveys you see on confidence…Spending has accelerated."

On credit, payment behavior is clean and the trajectory is positive. 

USB's Kedia noted that "consumer spend, core loan demand, and credit delinquency trends all indicate relative stability." 

CFG's Van Saun confirmed the direction: "Credit trends continue to be favorable across our portfolios." 

On deposits, consumers are spending and saving simultaneously. 

Most banks posted record consumer deposit inflows.

Citizen’s Coughlin says the average deposit across categories was up ~50bps for the industry, and 2x the number for CFG.

Consumers don't open new credit lines when they feel stressed. That is a behavioral data point the surveys cannot capture.

The composite read: consumers are spending broadly, paying consistently, and borrowing again with confidence.

They may believe we live in the end times. I guess they are spending like there’s no tomorrow? :)

How about Commercial Lending? Looking good… Banks are lending.

Across prominent regional banks (USB, PNC, CFG), commercial loan growth hit multi-year highs this quarter.

Bank lending growth is a major economic signal for me. When banks are lending, the credit cycle is still working. And, those borrowers will spend that money.

Why else are they borrowing?

So, every element of the GDP equation is working: the consumer, business capex, and (sadly) government.

And, we are also seeing a renaissance in domestic manufacturing.

I was never a fan of tariffs, outside of China, but there is a legitimate US manufactuing re-build taking place. It’s not just an AI story.

When CapEx borrowing leads the cycle, it tends to be self-reinforcing.

I mentioned Microsoft a few times. There are quite a few good ideas out there, and we’ll share more below and in upcoming newsletters.

Michael Burry initiated a long position in Microsoft, following our earlier call.

We were a little early on Microsoft. But, at the lows, we added a significant overweight when it was around ~20x PE.

Microsoft is funny. It was the Consensus AI name in 2023 to 2024 because it backed OpenAI.

Then it was the Consensus losses in 2025 because it backed Open AI.

(RPO obligations went from asset to liability.) 

On to some fresh ideas.

We like Nu Bank here.

As an investor, I like this setup a lot. Right below the 200 Day, re-test with higher lows, dominant market leader in a growing economy.

30% EPS growth, and still trading near the lows of its 10Y P/E valuation. 

NuBank is the largest digital bank in Latin America — 131 million customers across Brazil, Mexico, and Colombia, with an 83% activity rate. That last number matters more than the headline customer count. These aren't dormant accounts. People are actually using it.

Q4 2025 numbers were strong across the board. Revenues hit $4.9 billion, up 45% year-over-year. Net income reached $895 million — up 50% year-over-year — delivering a record 33% return on equity. 

The efficiency ratio (expenses/revenue) fell below 20% for the first time in company history, to 19.9%. Most incumbent Brazilian banks run at 40-50%. Nubank is operating at half that.

The profitability metrics are at the highest levels in the company's history. Net income margin sits at 41%, ROA and ROE are similarly at peak levels. The business has never been more profitable.

And yet the valuation tells a completely different story. 

Forward P/E sits at 16.6x — near the lowest levels in the stock's history. You are buying the best operating performance the company has ever delivered at one of the cheapest prices it has ever traded.

CEO David Velez laid out the growth vectors clearly. 

ARPAC — revenue per active customer — is only $15 today versus roughly $40 for incumbent Brazilian banks. That gap is the runway. 

The super core segment (customers earning BRL 5,000–12,000/month) grew 100% in 2025. The high-income segment grew 40%. Neither is close to penetrated.

The US optionality is free at this price. Nubank just received conditional OCC approval for a US national bank charter. Velez was characteristically disciplined: "there are opportunities for us to create a meaningful business in certain subareas of the United States." 

Here are the risks.

Timing: The headline country for Brazil (EWZ) is moving lower as oil prices receede. That pressures Brazil’s country ETF as a major oil exporter.

Credit Risk. Nu Bank is a bank, and they make loans. Should credit deteriorate, they will price more like a specialty finance lender.  

But the setup is getting interesting. We bought this on Friday. 

China has started to look good… Many names are interesting. The index is interesting, PDD is interesting for a mean reversion idea, and Ping An for a one year momentum idea.

China was especially hurt by high oil prices. That made stock prices cheap. Oil prices will go down.

Also, Trump will meet Xi Jinping in May.

They are going to announce some kind of deal. Trump loves a deal.

They likely have already worked out the deal. Don’t forget the Bicentennial coming up.

Trump wants to do a victory lap there like he did in the SoTU.

Ping An is like a Berkshire for China. (There really is no other Berkshire, so bear with my analogies.)

The P/E NTM valuation sits at 6.8x. It’s sporting higher lows.

Free cash flow yield is at the highest levels of its history. I don’t have any addiction problems. Not to Cannabis, not alcohol (I avoid both).

But I am addicted to free cashflow. Free cashflow solves a lot of problems and, although no metric is perfect, it is a reliable investment metric.

The bear case?

China macro risk, property sector overhang,

But at this price, you are being paid quite handsomely to worry about them, and the business keeps compounding regardless.

We initiated a position in PNGAY on Friday. 

Why not own a piece of the QQQ? Isn’t QQQ AUM going higher?

For 26 years, Invesco owned one of the most famous ETF in the world. 

The QQQ sat on Invesco's balance sheet earning them licensing fees but not a dollar of management revenue.

That finally changed in December 2025.

After receiving the necessary shareholder votes, Invesco completed the conversion of the QQQ into a proper ETF structure, now earning 18 basis points on every dollar in the fund. 

On $407 billion of AUM, that adds ~732M (~45% of 2025 EBIT) in annual revenues.

The rest of the business is quietly executing well. 

Invesco repurchased $1.5 billion in preferred stock in 2025. CEO Andrew noted they delivered the highest total shareholder return among all publicly listed peers in 2025. 

The valuation sits at mid-range versus its own 10-year history on earnings multiples and price-to-sales, which feels about right for a business mid-transformation. 

Free cash flow yield sits at higher levels of its 5Y history at 12.7%. 

I warned you.

I’m addicted to free cashflow. Put it inside a growth story and a dominant leading business, and I get excited.

The risks? Margins have compressed due to various initiatives.

The core thesis is simple.

You are buying the owner of the QQQ at 10x forward earnings, just as they started getting paid for it. 

We bought it on Friday.

Last year in February, I wrote this newsletter called ‘The Bubble in Quality’.

I pointed out how Berkshire, FICO, Axon, Costco, and all these wonderful business models were over-priced. Now they are all on sale. (Well, except for Costco.)

If you are a long-term investor, you can lock in great bargains…

I will have more ideas to come next week…

In our Friday mood, we also got TNL, which was trading at a discount post-earnings. 

Travel + Leisure is the largest vacation ownership — or timeshare — company in the world. 

The way the business works is simple: they sell you a membership to a club of resorts. You pay upfront, or finance over time, and then vacation at those resorts for the cost of annual maintenance fees for the rest of your life. 

No booking hotels. No hunting for deals. Your vacation is effectively prepaid.

80% of their owner base has already paid off their loan. They're not deciding whether to take a vacation this summer. They're deciding which resort to book. 

The macro doesn't really touch them. And, by that I mean, they have a 97% retention rate on owners who are current or paid off. 

Iran conflict, market volatility, consumer sentiment surveys — none of that moves a person who has already paid for their vacation five years ago. 

Q1 2026 validated it. 

Revenue grew 3%, EBITDA grew 11%, net income grew 22%, and EPS grew 31% — compounding down the P&L exactly the way a recurring revenue business should. 

Gross sales were up 7%, volume per guest grew 3% to $3,321, and tour growth hit 5% — above the 3% they delivered all of last year. They beat the high end of their guidance range. 

The CEO's read: "I view this quarter as better" than Q1 2025, which was itself a strong quarter.

The valuation is where it gets interesting. 

Forward P/E sits at just 8.9x — among the lowest 16% of all US companies despite gross profit margins at the highest levels of its 3-year history at 50.7%.

Here’s a comparison table putting TNL against other hospitality names — they have the lowest PEG, highest FCF yield, and higher than average earnings growth.

Free cash flow yield sits at 10.5%, with shareholder yield — dividends plus buybacks combined — at 8.45%. 

They returned $128 million to shareholders in Q1 alone through a 7% dividend increase and buybacks.

The risks are worth naming. 

The exchange and travel membership segment — think RCI, where owners can swap their resort weeks with other clubs globally — is in structural secular decline, down 13% in Q1. 

Management is working on it but there is no clean near-term fix. 

Early-stage delinquencies have ticked up in recent loan vintages, though weighted average FICO scores remain above 740. 

Leverage sits at 3.2x, which is appropriate for the model but leaves less room for error if the consumer deteriorates meaningfully.

That deterioration hasn't shown up. 

Overall, this is exactly the kind of quality compounder that gets overlooked when everyone is chasing semis and software.

‘You Make Your Money On the Buy’

Every value investor knows a simple truth. Buying something for less than it is worth creates wealth.

But there is a second layer most miss... when the buyer itself trades at a premium multiple, every dollar of acquired earnings mints equity value on impact.

This is the John Malone playbook.

Recently, QXO announced the acquisition of TopBuild for $17 billion at a ~20% premium.

TopBuild trades at roughly 22x earnings.

QXO trades at a forward P/E north of 50x.

Do the math...

QXO issues paper worth 50x forward earnings. It buys earnings yielding ~4.5% (the inverse of 22x). 

The spread is the wealth creation.

Jacobs said the quiet part out loud. "$50 billion in annual revenues within the next decade through accretive acquisitions."

Accretive. The word is doing work.

Now layer the operating overlay...

TopBuild runs an 18% adjusted EBITDA margin. Best-in-class.

QXO plans to replicate those "special OPS" teams across the combined entity. $300 million of synergies by 2030.

You are not just arbitraging the multiple. You are compounding the underlying.

This is exactly what John Malone did at TCI in the 1980s.

Buy cable systems at 6x cash flow using paper the market valued at 10x.

Lever it. Consolidate the MSO. Strip duplicate overhead. Squeeze programming costs through scale.

Each tuck-in added to per-share cash flow on close. The stock compounded. The acquisition currency got richer. The next deal got easier.

Twin Cities. Heritage. United Artists. Storer. The names changed. The formula did not.

Brad Jacobs is not hiding the inspiration.

Four prior platforms. Roughly 500 acquisitions. 300x cumulative returns.

United Rentals. XPO. GXO. RXO. Now QXO.

The pattern...

Find a fragmented industry. Building products distribution is an $800 billion market, more fragmented than cable ever was.

Use premium paper as currency. 

Buy scale operators at reasonable multiples. Apply operational discipline. Rerate the combined entity.

Beacon. Kodiak. Now TopBuild. $13 billion of deals in 11 months.

The machine is working.

Two caveats worth naming...

Accretion math breaks if the buyer's multiple compresses. If QXO derates from 50x to 25x, the arbitrage evaporates. The whole engine depends on the market continuing to underwrite the premium.

And synergies on paper are not cash. $300 million by 2030 is a promise, not a deposit.

But the structural setup is real. The CEO has done it four times. The target is best-in-class at a reasonable price. The industry is begging for consolidation.

If you want the playbook Jacobs is running, read William Thorndike's The Outsiders. 

The Malone chapter reads like a QXO prospectus written 40 years early.

Do you see how the multiple arbitrage and the operating leverage and the serial acquirer flywheel all reinforce each other... 

and why is the market willing to pay 50x for a distributor of insulation and shingles?

Boring is good. 

You make your money on the buy.

Here are some of the top Lumida Curations from this week – see what the experts are saying. 

DRAM supply is tightening just as AI demand accelerates, and if new capacity doesn’t arrive until 2027, the memory trade may still have major upside.

View Curation 

Most investors chase headlines, but market veterans study cycles, seasonality, and institutional behavior to understand when money is likely to move.

View Curation 

Weakness in commodities…

View Curation 

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