Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>DC company share prices are rolling over, foreshadowing increasing pressure on their hyperscaler customers.  Since the July swoon in semiconductor stocks, the DC sector has underperformed both hyperscalers and semiconductors.</li>
<li>DC players face strong headwinds on multiple fronts, including high leverage/circular financing, supply chain delays, public opposition, and questions about aggressive forecasts of future compute demand.</li>
<li>Leverage is the most prominent risk in the DC sector, with questions looming about completion dates and customers' ability to meet their contracted offtake agreements.</li>
</ul>


DC company share prices are rolling over, foreshadowing increasing pressure on their hyperscaler customers.  Since the July swoon in semiconductor stocks, the DC sector has underperformed both hyperscalers and semiconductors.
DC players face strong headwinds on multiple fronts, including high leverage/circular financing, supply chain delays, public opposition, and questions about aggressive forecasts of future compute demand.
Leverage is the most prominent risk in the DC sector, with questions looming about completion dates and customers' ability to meet their contracted offtake agreements.


DATA CENTER SECTOR: From the Tip of the Spear to Canary in the Coal Mine

Smartkarma AI Primers, Smartkarma

αSK Primers

Smartkarma AI Primers

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

<ul>
 <li>Specialized NPL Holding Vehicle: <a href="https://smartkarma.com/entities/cairo-mezz-plc">Cairo Mezz</a> PLC is a Cyprus-incorporated, publicly listed holding company established to hold and manage subordinated mezzanine (75%) and junior (44.9%) notes issued under Eurobank's €7.5bn gross book value (GBV) 'Project Cairo' securitisation, the landmark transaction executed under the Hellenic Asset Protection Scheme (Hercules I).</li>
 <li>Mark-to-Model P&amp;L Volatility: The company's reported revenues and earnings reflect synthetic IFRS 9 fair value adjustments on financial assets rather than conventional operational sales, generating sharp non-linear swings—from €122.7m net income in 2023 and €60.9m in 2024 to a net loss of -€94.3m in 2025—driven by mark-to-model recovery curves and discount rate recalibrations.</li>
 <li>Asymmetric Optionality vs. Structural Subordination: While <a href="https://smartkarma.com/entities/cairo-mezz-plc">Cairo Mezz</a> offers deep value optionality on Greek real estate collateral and macro recovery (Smartkarma Value score of 5/5 at a P/B of ~0.54x), equity value realization is strictly subordinated to the full repayment of €2.4bn Senior Class A notes and servicer expenses, locking up distributable cash flows in the near-to-medium term.</li>
</ul>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.


  Specialized NPL Holding Vehicle: Cairo Mezz PLC is a Cyprus-incorporated, publicly listed holding company established to hold and manage subordinated mezzanine (75%) and junior (44.9%) notes issued under Eurobank's €7.5bn gross book value (GBV) 'Project Cairo' securitisation, the landmark transaction executed under the Hellenic Asset Protection Scheme (Hercules I).
  Mark-to-Model P&amp;L Volatility: The company's reported revenues and earnings reflect synthetic IFRS 9 fair value adjustments on financial assets rather than conventional operational sales, generating sharp non-linear swings—from €122.7m net income in 2023 and €60.9m in 2024 to a net loss of -€94.3m in 2025—driven by mark-to-model recovery curves and discount rate recalibrations.
  Asymmetric Optionality vs. Structural Subordination: While Cairo Mezz offers deep value optionality on Greek real estate collateral and macro recovery (Smartkarma Value score of 5/5 at a P/B of ~0.54x), equity value realization is strictly subordinated to the full repayment of €2.4bn Senior Class A notes and servicer expenses, locking up distributable cash flows in the near-to-medium term.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Director, Sentiment Matters

Lars Kreckel

Director

The mood of the market, mapped and decoded

Sentiment Matters

Investor sentiment is the overall mood of investors - how bullish or bearish they are on a market or asset.

Sentiment is part of every investor’s investment process. Whether for macro investors, stock pickers, or thematic investors, it matters whether a position is consensus or contrarian.

<ul>
<li>
Buy Side Sentiment Tracker: we aggregate asset-allocation views from 54 top asset managers across 73 assets, based on 1,400+ individual views.</li>
<li>
Bullish, but not extreme: Risk appetite is high and rising, yet equity downgrades and resilient sovereign demand show the Buy Side is far from universally risk-on.</li>
<li>
Max Contrarian: Infrastructure, Industrial Metals and Gold are most popular; Swiss Franc, Cash and Consumer Staples are least popular.</li>
</ul>



Buy Side Sentiment Tracker: we aggregate asset-allocation views from 54 top asset managers across 73 assets, based on 1,400+ individual views.

Bullish, but not extreme: Risk appetite is high and rising, yet equity downgrades and resilient sovereign demand show the Buy Side is far from universally risk-on.

Max Contrarian: Infrastructure, Industrial Metals and Gold are most popular; Swiss Franc, Cash and Consumer Staples are least popular.


Sentiment Matters: Buy Side Sentiment Tracker - October 2026

<ul>
<li>
Treasuries Sentiment has turned sharply bearish, but not extreme. The SMA sits around the 30th percentile, still above its historical buy threshold.</li>
<li>
The underlying picture is mixed. Momentum and some speculative positioning are very bearish, while buy-side sentiment, options, analyst expectations and flows remain closer to neutral.</li>
<li>
This is not broad capitulation. Price action has been persistently poor rather than disorderly, leaving room for sentiment to deteriorate further before a stronger contrarian signal emerges.</li>
</ul>



Treasuries Sentiment has turned sharply bearish, but not extreme. The SMA sits around the 30th percentile, still above its historical buy threshold.

The underlying picture is mixed. Momentum and some speculative positioning are very bearish, while buy-side sentiment, options, analyst expectations and flows remain closer to neutral.

This is not broad capitulation. Price action has been persistently poor rather than disorderly, leaving room for sentiment to deteriorate further before a stronger contrarian signal emerges.


Sentiment Matters: US Treasuries Bearish, But Not Capitulation

Equity Long-Short

Mo Aziz

<ul>
<li>
The bond sell-off is global, not rerouted: 10-year yields are up 66-141bp in 12 months across Japan, Germany, the UK and the US. No developed market bond market gave refuge.</li>
<li>
The cash pile is a myth. US money funds are down US$90bn from their 2 Sep peak; equity funds took in US$79bn in the week to 16 Sep.</li>
<li>
Payrolls missed (+29k vs 90k), yet the 10-year closed at 5.27%. Gold broke the US$4,200 kill switch: NEUTRAL. Own TIPS in thirds; hedge dollar exposure if DXY fails at 102.13.</li>
</ul>



The bond sell-off is global, not rerouted: 10-year yields are up 66-141bp in 12 months across Japan, Germany, the UK and the US. No developed market bond market gave refuge.

The cash pile is a myth. US money funds are down US$90bn from their 2 Sep peak; equity funds took in US$79bn in the week to 16 Sep.

Payrolls missed (+29k vs 90k), yet the 10-year closed at 5.27%. Gold broke the US$4,200 kill switch: NEUTRAL. Own TIPS in thirds; hedge dollar exposure if DXY fails at 102.13.


Asset Allocation Strategy: Bond Sell-Off, No Cash Pile, Gold Stopped Out, TIPS Over the U.S. Dollar