💰 5 Fact Friday: Hedge Funds Push All-In

MARKETS
1. Animal Spirits And All-Time Highs 📈

Hedge funds and global fund managers are leaning into the market rally like it’s 2010.

Hedge fund leverage is now at its highest level in 15 years, signaling their confidence in the U.S. economy. At the same time, fund managers are holding just 3.9% of their portfolios in cash, according to Bank of America’s latest survey—the lowest level since mid-2021.

Both metrics suggest institutional investors are betting big on continued market strength.

Stanley Druckenmiller, one of the most successful hedge fund managers in history, echoed this sentiment on Monday. He highlighted the return of “animal spirits”—a term for the excitement and confidence that drive risk-taking in markets.

Druckenmiller noted, “I’ve been doing this for 49 years, and we’re probably going from the most anti-business administration to the opposite... CEOs are somewhere between relieved and giddy.”

This widespread enthusiasm has fueled three straight gains for the S&P 500, which hit a new all-time high yesterday. However, it has also concentrated capital into a handful of crowded trades, including:

1. Long Magnificent 7 (Apple, Nvidia, Microsoft, and others)

2. Long U.S. dollar

3. Long crypto

Depending on your perspective, these positions may reflect the market’s collective confidence—or hubris.

Bears have been predicting a tech correction since at least 2023. Yet the Magnificent 7 ETF ($MAGS) delivered 60%+ returns last year, proving that even crowded trades can pay off—until they don’t.

Bulls, on the other hand, appear to be doubling down—as evidenced by record leverage and dwindling cash allocations.

While we haven’t entered a full market frenzy yet, now is a good time to reflect on your portfolio. Are your holdings grounded in fundamentals, or fueled by speculation?

Optimism can push markets higher, but euphoria blinds investors to risk—and that’s a dangerous place to be.

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ECONOMY
2. The $500B AI Accelerator 🧠

The day after delivering his inaugural address and signing 26 executive orders, 12 memorandums, and four proclamations, Trump came back for more. He kicked off Day 2 by unveiling what he called “the largest AI infrastructure project by far in history.”

Project Stargate promises to pour a jaw-dropping $500 billion into AI infrastructure. For once, it’s not the government footing the bill.

Who’s Funding It?

A star-studded cast: SoftBank, Oracle, OpenAI, and UAE-based MGX have committed $100 billion upfront, with the remainder to come over the next four years. The project includes 10 data centers already under construction in Texas and 10 more in the pipeline.

Meanwhile, Microsoft, Arm, and Nvidia are stepping in as technology partners, supporting the project’s infrastructure. SoftBank, leading the financing, plans to secure additional funding through a mix of equity and third-party debt as Stargate expands.

What’s The Goal?

Trump’s goal is to ensure the U.S. remains the global leader in AI, outpacing rivals like China. Stargate’s focus is on building massive data centers and advancing specialized cloud computing.

While 100,000 jobs will be created “almost immediately,” they’re a byproduct of the larger objective: attracting talent, driving innovation, and solidifying U.S. technological dominance.

Market Reactions

Investors practically launched confetti cannons.

Nvidia soared 4% Wednesday to reclaim the throne of the world’s most valuable company at $3.6 trillion. Oracle spiked 7%, Microsoft rose 4%, and Arm popped a whopping 16%.

This surge lifted the broader S&P 500’s tech sector 2.5%, far outpacing the 0.6% index-wide gain.

The Drama

Elon Musk is fuming—not a shocker. He called out the joint venture’s participants, claiming they “don’t actually have the money.” OpenAI’s Sam Altman clapped back, inviting Musk to visit the Texas data center for proof.

Whether Elon is right or just salty he isn’t in on Stargate remains to be seen. But for now, the takeaway is crystal clear: the AI arms race is on, and it’s bigger than ever.

CRYPTO
3. The War On Crypto Is Over 🎉

Crypto supporters accounted for nearly half of corporate donations in the 2024 election cycle—and they just got their first big return on investment.

On Thursday, President Trump, who has dubbed himself the "first crypto president," signed an executive order laying the groundwork for a more crypto-friendly environment.

Here’s what it includes:

1. Simplifying Regulations: The order provides regulatory clarity and ensures fair banking access for all law-abiding entities—a much-needed reform following the collapse of Silicon Valley Bank.

2. Assembling A Task Force: A team led by venture capitalist and crypto advocate David Sacks will develop a federal plan for regulating digital assets. They’re tasked with creating a framework within 180 days.

3. Exploring A Strategic Crypto Reserve: The group will also evaluate creating a reserve from cryptocurrencies seized in law enforcement actions. The U.S. currently holds $21 billion worth of Bitcoin, Ethereum, and USDT.

4. Banning CBDCs: The order formally bans the creation of a Central Bank Digital Currency (CBDC). While there weren’t active plans for one, this move ensures it won’t happen in the future.

“This is just the beginning of America reclaiming its position as the world’s innovation leader,” said Sacks. He added, “The war on crypto is over.”

ECONOMY
4. Avian Flu Cracks The Egg Market 🥚

Egg prices have soared by 37% over the past year, and if you’re lucky enough to find them, they’re often hiding behind purchase limits.

What’s behind this yolky mess? To start, the U.S. is battling its worst avian flu outbreak in history.

Since February 2022, the virus has wiped out over 140 million birds. In the last quarter alone, 20 million chickens died, slashing the U.S. egg-laying flock by more than 5%.

And it’s not getting better—18 states reported new commercial flocks at risk in just the past 30 days.

Here’s the real problem: farms hit by bird flu lose not just their current flocks but also their future generations. Hens don’t start laying eggs until 4-5 months old, making rebuilding painfully slow.

At the same time, demand for eggs is rising. With meat and dairy prices climbing, families are turning to eggs as an affordable and versatile protein source. But at an average price of $4.15 per dozen, the allure is quickly fading.

Experts are hoping for relief in late 2025—if flock rebuilding efforts go smoothly. Summer offers a glimmer of hope since heat and sunlight help degrade the virus on surfaces.

For now, prepare for more sticker shock and get creative with breakfast. Time to perfect that oatmeal recipe!

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STOCKS
5. Guess That Stock 🕵️‍♂️

This week’s mystery stock has been entertaining audiences worldwide for nearly two decades and just delivered blockbuster quarterly results. Can you name the company?

1. Starting out in the DVD mail-rental game, this streaming pioneer is now valued higher than Disney, Comcast, and Warner Bros. combined, cementing its status as the king of content.

2. From groundbreaking original series to live NFL games, this company has redefined how the world watches TV, with over 300 million paid subscribers globally.

3. Last quarter, it added a record-breaking 19 million new subscribers, with more than half opting for its ad-supported tier—boosting revenue by 16% and profit by 99%.

4. The company’s subscription prices are now set at $17.99 for the standard plan, $24.99 for premium, and $7.99 for the ad-supported tier.

5. After IPO-ing at a split-adjusted price of $1.16 in 2002, this stock recently crossed $1,000. That marks an incredible 35% annual return—3.5x the performance of the S&P 500!

Got a guess? Tap here to reveal the answer → 

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