Worth a Read
A Melt-Up Built on Earnings — With One Foot Out the Door
OnlyFin’s Wilfred Lim argues May’s rally is a real, earnings-backed boom rather than a belief-driven bubble — and that the thing most likely to end it is equity supply, not macro.
Source: OnlyFin (Wilfred Lim, CFA) (Substack) Read the original →
Lim’s monthly read separates two words people use loosely. A bubble, in his telling, is price decoupling from earnings and then snapping back — his example is Cisco, which fell roughly 90% from its 2000 peak on flat fundamentals. A boom is price and profit compounding together, which is how he characterises NVIDIA through this cycle. On that distinction he calls the current melt-up real: it rests on earnings, not belief. He is careful to add that real and permanent are not the same thing.
What he watches most for the second half is not a macro catalyst but a supply one — of equity, not oil. The coming SpaceX, OpenAI and Anthropic listings are, by his read, the largest wave of new mega-cap supply in a generation, and the mechanism by which even a genuine boom can correct: institutions sell the incumbents that led the rally to fund the new issues. Around that he is trimming where the crowd is most concentrated (AI), leaning toward cheaper ground (China near 9.5x against a US market closer to 27x), and citing the pendulum sitting at its optimistic extreme.
The core idea The discipline is holding two ideas at once: the melt-up deserves respect because the earnings are real, and it deserves caution because the marginal dollar is about to have somewhere new to go. Real earnings do not protect the price when the supply arrives.
Where it fits
It is a clean macro-positioning companion to our Money Temperature regime read — and it lands on the same equity-supply risk that Tiger relays from BofA this week, reached from the opposite desk. Featured for the framing, not as our own call.
Worth a Read points you to another writer’s published work; the synthesis above, and any errors in it, are Closelooknet’s, not the source’s. Closelooknet publishes a market diary, not investment advice — circumstances differ; consult a licensed advisor before acting.