LOCKED MacroCapture: On Our Radar | 1/26 – 2/1

My interaction with Harry has been very educational for me . I want to share my interaction

Below is email thread

Ashwin, MSFT makes me very sad, because I had a short in it (like my personal short in bitcoin) and closed it (bad stop) just before it collapsed. I had the position because technically it had broken down, and because I have found Copilot to be near useless. The bigger thesis is that rent extractive low capital intensity businesses like MSFT (and Google, Amazon AWS etc) are going to become much more capital intensive as they compete to control the AI future. That means RoE must fall (arithmetically). So, we will see stresses on the equity market which will intensify as credit spreads widen.

I have talked about it but I did not recommend it for a trade because we do Macro not Micro. But I think Bitcoin is destroying capital, and that investors in Bitcoin overlap investors in Uranium, or Silver or Rare Earths. In a post a few weeks pack I said that maybe the selloff was over. I regret that now that it is approaching the technical target (60k) I think you can’t destroy the kind of market cap that existed in Bitcoin (and the other plays I mentioned) without having collateral effects on its investors leveraged positions.

So, we entirely agree. Bear in mind that there is a capital rotation component of all this. Investors want safe plays to avoid the capital destruction. Check out the performance of Union Pacific through all this.

I think a factor analysis shows this rotation very well. I sort of hope it is done for now so I get another bit at this cherry, but I think you are looking at precisely the right thing. And hope is never a strategy.

It’s a really interesting time, but I would suggest we derisk a tad. There is no telling what might happen and it won’t pay to get hurt in a liquidation. I’m not necessarily saying bring your risk to zero. I am saying bring it down a tad, and as Bitcoin falls, edge it down some more. Personally, I don’t think this move is the final “denouement”. I think the Trump admin still has levers to pull. But what kind of idiot would bet a lot on that hypothesis? Conditions could certainly deteriorate, no matter how badly Trump wants to win Midterms.

One more thing. I find your thoughts very useful and replying to you clarifies my thinking (a college friend one said if you can’t explain something clearly, you don’t really understand it). I want to encourage more MI2 readers to share thoughts on our comment section. Can you post this email as a comment under the “On our Radar” section (or in Youtube) and I will post this reply? I would really appreciate it so we can share with other subscribers.

Best
Harry
From: Ashwin Narasimha
Sent: Thursday, February 5, 2026 7:12 PM
To: Harry Melandri
Subject: Re: Questions for AMA with Harry

Hi Harry ,

Another thing I noticed is MSFT price at bottom of this cycle trend line . I know it has Open AI exposure but didn’t expect it land here while other in MAGS are not quite there . It’s odd .

If MSFT breaks below 390 for a week . I assume it’s break is confirmed . BTC & crypto are already broken below this cycle trend line .
MI2 trades have been very good & spot on . I still wonder how to really read this price action. Oil/metals/ industrial /banks have traded very well in spite of turbulence . I wonder how long before selective software & crypto liquidation starts affecting rest of sector .

Lots of options is that global liquidity is going down . I don’t fully believe that , there is something else market is signaling ( as you said it might be market signals for Fed ).

Stocks which have backing of US govt have held up in this sell off .

Sent from my iPhone
Thanks,
Ashwin
On Feb 4, 2026, at 11:06 AM, Harry Melandri wrote:


Im just writing about the thing which is causing the BDCs to revisit lows for TFTD. It’s important. The market is starting to realise that SAAS may be seriously impaired by AI, and is starting to worry that private credit and shadow banking may be about to lose a lot of money due to impairments. Is the market right to worry? Yes. Is it obvious that there will be big loses. Not yet. It will depend on the Fed.
From: Ashwin Narasimha
Sent: Wednesday, February 4, 2026 1:16 PM
To: Harry Melandri
Subject: Re: Questions for AMA with Harry

Hi Harry,

Thanks for very timely on Radar session .

KO breakout chart was very helpful for me .

I took small long position in KO it’s doing well .

I am curious on BDC (BIZD) is testing November Low s . Can help me with your take on this

Interestingly regional banks are doing very well well compared to November .

Thanks,
Ashwin
Sent from my iPhone