The Cashflow Memo
SHOWNOTES
A fast-moving tour across energy, technology, and healthcare: oil spare capacity looks set to tighten, natural gas loses its backwardation, DC politics and immigration policy enter the chat, we revisit Genentech’s beginnings, and then unpack Apple, Oracle/Broadcom, and NVIDIA through a cash-flow lens.
Stick around for a sailing community shout-out from Oakcliff and a healthcare segment weighing Tylenol headlines against mixed evidence.
[00:00] Intro
[00:19] Disclaimer
[00:26] Exhibit C — Oil: spare capacity on track to shrink
Hunt walks through surplus crude capacity by country (Saudi, UAE, etc.) and argues that by next year the cushion could slip back to ~2.5 mb/d. With demand growth modest, geopolitics (Ukraine, Iran) and the “$62 oil did its magic” supply response suggest the window for sub-$50 oil may have passed.
[03:13] Exhibit B — Natural Gas: futures tone weakens
Backwardation is gone; later-dated gas sits around ~$3.95 (’26), with a ’25 average ~ $2.65 and prompt near ~$3.10. Supply ticked down when prices averaged ~$2.40–$2.75, but rebounds in ’25 (Permian leads; Waha even flipping negative). Despite AI power buzz, gas-fired demand has flattened as coal plants linger and wind/solar come online.
[05:35] Exhibit A — DC budget brinkmanship & policy crosscurrents
House passes a short extension; Senate dynamics keep shutdown risk alive around October 1 and again into Thanksgiving without a broader deal. Conversation turns to a White House move to hike H-1B employer application fees from ~$2,500 toward ~$100,000—raising questions about talent, wages, and whether price hikes would throttle volumes or better filter for “best and brightest.”
[11:12] Biopharma History (Part 3): Genentech, insulin & the tools that unlocked biotech
Jason traces Boyer/Cohen’s 1973 gene-splicing breakthrough and Genentech’s path from somatostatin to human insulin (Humulin) and a blockbuster 1980 IPO alongside peers like Biogen and Amgen. Mike spotlights PCR’s origin story—Kary Mullis’s unconventional inspiration—and how DNA amplification reshaped diagnostics, forensics, and research.
[17:33] Oakcliff Sailing
From Newport’s Sailing Museum to fundraising for sails and a long-term home in Oyster Bay, Dawn Riley shares updates and an invitation to visit, support, and get involved.
[19:52] Healthcare Update — Tylenol headlines vs. mixed evidence
Trump/HHS draw a headline-grabbing link between prenatal Tylenol use and autism. The crew weighs the literature (often ADHD-focused, mixed conclusions), real-world usage since the 1950s, and pregnancy tradeoffs when Tylenol is the only approved painkiller—underscoring how nuance gets lost in big-policy moments.
[22:09] Page 1 — The case for $AAPL
Hunt contrasts hyperscaler CapEx (Amazon ~$90B; Alphabet/Microsoft $65B each) with Apple ($12B) and asks whether Apple can win via on-device/app-centric AI without giant model spend. Jason, a hardware/software skeptic of late, notes a packed Apple Store and a rare OS update that actually feels faster—hinting at green shoots on experience even as security/AI integration remain hard problems.
[25:17] Page 2 — Broadcom vs. Oracle: cash flow, CapEx, and OpenAI exposure
Oracle is running heavy CapEx with negative FCF tied to AI data centers and a massive OpenAI compute commitment; leadership shifts elevate cloud execs. Broadcom, by contrast, throws off FCF with comparatively little CapEx and benefits when hyperscalers deploy non-NVIDIA accelerators. The debate: is Oracle’s risk/reward compelling—or just risky?
[27:57] Page 3 — NVIDIA’s lead & the demand question
NVIDIA’s equity value (~$4.4T) and striking FCF margins prompt the sustainability question. Mike thinks supply execution looks solid—each new chip lowers cost-per-token and sustains ROI—but demand relies on platform wars, funding cycles, and whether value accrues beyond NVIDIA. If financing tightens, who blinks first—and do balance-sheet giants like Google gain relative advantage?
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