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The Cashflow Memo
SHOWNOTES
[00:00] Intro
The episode kicks off with Hunt teasing Tesla’s potential for a step change via autonomous driving, followed by Mike’s welcome to the Telltales podcast and an overview of the Cash Flow Memo. Key points include the focus on energy, tech, and healthcare, with a disclaimer about the informational nature of the discussion. The hosts set the stage for a 30-minute deep dive into macroeconomic trends and investment ideas.
[00:41] World Oil Supply and Demand (Exhibit C)
Hunt analyzes the 2025 oil supply and demand outlook, noting potential shifts due to U.S. sanctions on Russia and Iran, alongside OPEC+’s planned production increase of 130-140,000 barrels per day starting April 1. He highlights a weak demand picture—up only 1 million barrels daily from 2024 to 2025—and speculates that lifting sanctions could lead to a surplus and lower oil prices. Key stat: Russia and Iran are curtailed by 600,000 and 800,000 barrels, respectively, in current estimates. The discussion underscores the speculative nature of these forecasts, with a likely hold on current projections for another week.
[03:01] US Gas Demand and Supply (Exhibit B)
The focus shifts to U.S. natural gas, where cold weather has boosted demand, but dry gas production is already at 105.5 Bcf/day, potentially rising further. Hunt notes LNG feed gas increases might offset this, with futures prices at $4 for 2025 and 2026—up from $2.40 in 2024—though he suggests $3.50 as a more realistic estimate. This segment highlights the delicate balance between production and price stability in the gas market.
[03:41] US Government Revenues and Expenses (Exhibit A)
Hunt discusses the fiscal situation, referencing the President’s address on waste and fraud but skepticism about spending cuts. He flags March 12 as a deadline for a continuing resolution to avoid a government shutdown, doubting bipartisan support in the House. Key insight: Balancing the budget may hinge on Republican unity, a daunting task given political divides. Jason adds a critical view of the address’s professionalism.
[04:47] Step Changes: Defining the Concept (Page 3)
The hosts introduce “step changes”—dramatic revenue leaps like NVIDIA’s from under $10 billion to $130 billion annually—positioning it as a key investment strategy amid macro uncertainty. Hunt questions whether NVIDIA’s $3 trillion valuation can double again (unlikely), and explores Intel as a long-shot candidate. The discussion emphasizes finding companies with exponential growth potential in a volatile market.
[06:48] Step Changes: NVIDIA 2016-2025 (Page 3)
Mike reflects on NVIDIA’s rise from $6 billion to $130 billion in revenue, attributing it to early GPU adoption beyond gaming. He stresses buying at a fair price and holding long-term as a winning strategy, cautioning against overvaluation risks. This segment underscores the importance of timing and valuation in capturing step-change opportunities.
[07:41] Step Changes: Level 5 Self-Driving (Page 1)
Hunt pivots to Tesla, suggesting autonomous driving—not car sales—could drive a step change, despite softening demand in Germany and China. Jason and Mike explore the revenue potential of retrofitting 5-6 million Teslas for ride-sharing, estimating cash flows if costs drop to 25 cents per mile, though regulatory hurdles loom large. Key quote: “It’s inevitable that people are going to be using self-driving cars” (Mike). The trio debates whether Tesla could match Uber’s $40 billion revenue run rate with higher margins, projecting $20 billion in free cash flow by 2028.
[19:03] Step Changes: Netflix, Meta, & Spotify (Page 4)
Hunt previews next week’s focus on Netflix’s $9 billion free cash flow leap, Spotify’s $1.5 billion shift via AI-generated content, and Meta’s recovery from a $150 stock low to nearly $700. Mike explains Netflix’s post-COVID cash flow surge from scaled-back spending, while Jason notes Spotify’s royalty challenges. This segment teases broader step-change examples beyond tech hardware.
[23:17] Oakcliff Update
Dawn from Oakcliff Sailing provides a brief interlude, updating listeners on a foiling camp in Pensacola and an April 5 art show, encouraging newsletter sign-ups at oakcliffsailing.org. This break offers a community touchpoint amid the investment focus.
[24:27] DOGE & Medicare/Medicaid (Exhibit A)
Jason tackles healthcare, citing a proposed $880 billion Medicaid cut over 10 years and $210 billion in unnecessary care plus $100 billion in fraud annually (2019 data). He suggests modern tech, like banking’s fraud detection, could offset cuts without slashing services, spotlighting Marty McCary’s FDA nomination focus on waste. Hunt ties this to Exhibit A, noting healthcare’s $1.8 trillion share of federal spending demands reform.
[28:48] Can DOGE Balance the Budget? (Exhibit A)
Hunt questions whether the DOGE initiative can close the $2 trillion deficit gap (revenue $5 trillion, spending $7 trillion), with debt at $37 trillion exceeding GNP ($30 trillion). Defense ($900 billion) and “all other” spending ($1.3 trillion) offer limited savings, reinforcing healthcare as the key lever. Key stat: Interest on $37 trillion debt costs $1 trillion at 3.5%. The hosts frame this as a Herculean task requiring step-change investments to offset macro volatility.
Tune in next Wednesday for more on step changes and market insights—download the Cash Flow Memo at telltales.us to follow along!
TSLA 0.00%↑ NVDA 0.00%↑ INTC 0.00%↑ NFLX 0.00%↑ DIS 0.00%↑ META 0.00%↑ SPOT 0.00%↑ HROW 0.00%↑
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