SHOWNOTES
A fast-moving episode: Hunt opens with Exhibits C/B/A (oil, gas, U.S. finances), then we sprint through a crisp history of AI from Turing to Transformers before closing on healthcare—Berkshire’s UNH stake and how MFN drug pricing pressures PBMs.
[00:00] Intro (—)
Welcome to Telltales with Mike, Jason, and Hunt. Grab the weekly Cash Flow Memo and follow along as we hit energy, technology, and healthcare through a cash-flow lens.
[00:57] Disclaimer (—)
Informational only; do your own work. No investment advice.
[01:22] Exhibit C: World Oil—Supply, Sanctions & the Risk Premium (Exhibit C)
Iranian output is running stronger than assumed while sanctions dynamics on Russia/India/China and “shadow fleet” enforcement remain key swing factors. Hunt frames oil pricing as fundamentals plus a $5–$20/bbl risk premium, shaped by geopolitical uncertainty and sanction compliance pathways (e.g., ship classing, SWIFT visibility). Saudi policy and the restoration of curtailed OPEC barrels are tracked against this risk overlay.
[07:10] Exhibit B: U.S. Gas & Producer Cash Flows (Exhibit B; p. 11)
Strip prices are modest vs last year, and Hunt notes how lower commodity realizations cascade into lower producer cash flow. Capital spending tends to track cash generation; he flags names on p. 11 where production rose despite tighter cash (EOG, Magnolia).
[07:56] Exhibit C (cont.): U.S. Shale & OPEC Strategy (Exhibit C)
U.S. crude peaked near 13.3 mbpd in ’24 and could drift lower if prices hang in the low-$60s. With OPEC+ restoring prior curtailments and Saudi’s voluntary cuts unwinding, non-U.S. and U.S. declines may eventually absorb surplus capacity—unless geopolitical risk fades abruptly.
[10:12] Exhibit A: U.S. Finances—Deficit Path, “All Other,” and Tariffs (Exhibit A)
Baseline shows the deficit improving from ~$1.9T to $1.5T, still elevated vs pre-COVID. “All other” outlays ballooned post-COVID; trimming continues to be the lever. Medicaid ($600B federal share) has been flat; tariffs add revenue at the margin, though sky-high projections are debated.
[13:21] Rates, the Fed, and the Long End (Exhibit A)
Debate: Should the Fed cut soon? Hunt expects policy rates drifting toward ~3–3.25% next year while the 10-year could stay ~4.5–4.75% given heavy Treasury supply and QT runoff. Jason worries about services inflation and sees labor data stronger beneath the surface; rate-cut timing remains contentious.
[18:43] Software History (Part 7): From Turing to Transformers (—)
Jason and Mike trace AI’s arc: 1950s Turing test; rule-based “expert systems”; 1990s machine learning and Deep Blue’s hybrid approach; then 2012’s ImageNet breakthrough as GPUs turbo-charged neural nets; finally 2017’s Transformer architecture underpinning today’s LLMs. Big idea: the future blends deterministic (classical) and probabilistic (AI) programming—knowing when to use each unlocks real productivity.
[31:53] Healthcare Quick Hit: Berkshire Buys $UNH (p. 19)
UnitedHealth pops onto the memo as large investors disclose stakes. The crew riffs on whether a Berkshire position could nudge governance and strategy—even as skepticism about UNH’s model lingers.
[32:48] MFN Pricing & the PBM Squeeze (p. 19)
“Most favored nation” pressure pushes pharma to sell more directly, compressing the gross-to-net gap historically captured by PBM rebates. If PBMs lose take-rate and transparency rises, margin structures across the channel could reset.
[33:50] MAHA, FDA, and Bending the Cost Curve (p. 19)
Positive read-throughs on FDA process changes; big win is healthier inputs (nutrition) that reduce downstream “sick-care” spend. The team sees a potential inflection toward better outcomes per dollar.
[35:14] Next Week & Wrap (—)
Biotech history is teed up for an upcoming 10-minute segment. Keep an eye out for stitched “software history” and “chip history” compilation episodes in the feed.
This podcast and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future.
