A much awaited SpaceX reported for the

first time. I would call the results

very mixed at best. But Elon Musk, he

has believers, not investors. Palantir

reported. Let me set the stage for the

significance of this report. [music] The

company was caught in the SAS apocalypse

debate. AMD's results were not well

received. AMD is is trying to compete

with Nvidia. Tough job. Until now,

[music] the market has been

indiscriminate in taking down all

software companies. But there are the

beginnings of shift. It will be

interesting to see how the market

digests this.

>> [music]

>> Hi, this is Steve Eisman and welcome to

another episode of The Weekly Wrap. This

is for the week ending Friday, August

7th, 2026, but recorded Thursday night,

August 6th. First, a couple of

housekeeping announcements. After this

wrap, we will do one more wrap for

Friday, August 14th. After that, we will

take a two-week break, so there will be

no wraps on August 21 or August 28. The

wrap will resume on Friday, September 4.

Also, there will be no free interviews

during that period. So, our last free

Monday interview will be released on

August 17th. There will be no free

interviews for two weeks, and our free

interviews will resume on Monday,

September 7. Throughout this period,

however, we will release our Wednesday

premium podcasts. Also, the best way to

support The Real Eisman Playbook is to

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and to YouTube at The Real Eisman

Playbook. Subscriptions are free, and we

really, really, really appreciate your

support. The link to join for free is in

the description. Let me quickly flag

what's in our premium Substack

subscription. On Wednesday, August 12th,

we will release an interview with

Stephen Cook, who was a recurring guest.

Stephen is a Middle East expert and a

member of the Council of Foreign

Relations. We discuss the state of the

conflict with Iran and examine the

various ways the conflict could go. The

link for premium is real is my

playbook.substack.

This week's wrap will discuss one the

war in Iran, two more thoughts on the

demise of the situational awareness

hedge fund, three some thoughts on free

cash flow for AI players, four a word on

private credit, five earnings reports of

course, and six my official TV

recommendation list. Early in the week,

President Trump canceled bombing Iran

and stated that talks had resumed. By

the end of the week, news reports

indicated that the parties were close to

opening the straight, but nothing on

nuclear materials at all. We shall see,

but the market rallied back to all-time

highs and oil prices declined below $80.

Over the weekend, I posted a short note

on Substack in which I stated that the

reasons for the demise of the

situational awareness hedge fund was the

leverage, which was four times, and the

fact that the longs and shorts were

completely correlated. And I'd like to

explain this correlation concept further

cuz I did not make it clear. Imagine I'm

long Goldman Sachs and short Fair Isaac

FICO. I'm long Goldman because I think

the current strong investment banking

cycle will last a long time, and I'm

short FICO because I believe it is going

to lose its consumer scoring monopoly.

That's my thesis. Forget about whether

you agree with these investment cases or

not. The point here is that the two

stocks have literally nothing to do with

one another. The fundamentals of both

companies are completely independent.

The two positions are uncorrelated. If I

could construct a long-short portfolio

with positions like this, I'd have an

uncorrelated long-short portfolio. Now

imagine it's the early 1900s and I

believe that the automobile is going to

conquer the world and replace the horse

carriage. Then imagine that I construct

a portfolio where I am long every public

auto and auto parts company and I'm

short every public horse carriage

company. This portfolio is the exact

opposite of Goldman and FICO. The longs

and shorts are completely correlated. If

autos go up, carriages must go down and

vice versa. Now what's the matter with

that, you say. Isn't the thesis

completely correct? Well, obviously in

2020 hindsight it is. And that is true,

but over what period of time? Imagine

there is a bad car accident. It gets a

lot of press. All of a sudden, people

start to doubt the future of the

automobile and our longs all go down and

our shorts all go up. Every trade goes

against us at the same time. That's what

happened to Situational Awareness. The

fund was long AI beneficiaries and short

companies Leopold thought would get hurt

by AI like certain software companies.

The longs and shorts were all

correlated. In essence, it was all just

one trade and in one month his longs all

went down over 20% and his shorts all

went up over 20%. Now let's factor in

the leverage. Imagine a fund with 100

million longs and 100 million shorts and

50 million in capital. The way hedge

fund leverage is calculated, the longs

and shorts are added together. So, total

positions are $200 million.

The capital is 50 million, and therefore

the leverage is four times, 200 million

divided by 50 million. Now, let's

imagine that all the longs declined by

20%, and all the shorts go up by 20%.

That means that this fund lost 20

million on the longs, and 20 million on

the shorts, for a total loss of $40

million. Since the equity capital was

only 50 million, the fund is down 80%.

That is what happened to Situational

Awareness. Besides [snorts] the

leverage, the lesson here is that when

managing a hedge fund, you should always

be aware of how correlated your longs

and shorts are. Too much correlation can

create a disaster. Let's move on. Now,

for a discussion on CapEx and free cash

flow. Last week, Meta, Microsoft, and

Amazon all reported. As we discussed

last week, the market liked the results

of Microsoft and Amazon because of the

strong growth of their cloud businesses.

The market really disliked the fact that

Meta missed numbers and increased its

CapEx. I just want to add one thing to

these results. For all three, free cash

flow has evaporated. Meta's free cash

flow was a mere $784 million.

Amazon had negative 7.6 billion of free

cash flow for its fiscal year that ended

in June. The best was Microsoft, which

was 19.6 billion positive for the

quarter, but down 23% versus last year.

Yes, Microsoft and Amazon had strong

revenue growth, but the stress of the AI

build-out is showing, and it's really

hurting Meta, whose revenue grew 28%,

but whose expenses grew 55%.

Moving on. In private credit news,

things seem to have calmed down for now.

Gallop Capital's $10 billion private

credit fund saw redemption requests fall

below its 5% quarterly limit. In the

prior quarter, 8 and 1/2% redemptions

were received, and the fund capped the

redemptions at the 5% level. Now, I

think we are still in the early stages

of the private credit story. The bigger

issue is overexposure to software and

refinancings of software loans won't

start until sometime next year. Only

then will we have a clearer picture of

the credit quality of the industry. This

week, I'll highlight a few of the

companies that reported earnings.

Palantir reported. Let me set the stage

for the significance of this report.

Prior to Monday night, Palantir was down

29%.

The company was caught in the

SaaS-pocalypse debate, but as Gil Luria

pointed out in my recent interview of

him and Dan Ives, AI will not impact all

software companies equally. Some have

real franchises that are deeply embedded

in enterprises, and they also provide

real value-added services. Other

software companies are much more

vulnerable. Until now, the market has

been indiscriminate in taking down all

software companies, but there are the

beginnings of shift. Last week, the

market rewarded the strong result of the

hyperscalers, as I said, Microsoft and

Amazon, and punished the margin

compression at Meta. Palantir's results

may indicate that the market is starting

to discriminate between winners and

losers in software. Palantir's results

were very powerful. EPS was 41 cents, up

156%

versus last year, and obviously a beat.

Revenue of 1.93 billion was up 93%

with the US commercial segment up 149%.

US government revenue grew 90%. The The

raised adjusted income guidance for the

year by 10% and the stock was up 12%

after hours. My main hesitation with

respect to the stock at these prices is

that the 2026 and 2027 estimated PEs are

85 times and 60 times respectively.

Moving on. Apollo reported. Now, Apollo

is probably the least exposed to

software amongst the alternatives. The

quarter was fine, but I have to say a

bit mixed. On the negative side,

adjusted net income was 211, which was

up 9.9%.

It's okay, but short of the 215

estimate. On the other hand, assets

under management reached 1.05 trillion,

fee related revenue was up 25%, but

spread related revenue was up only 7% as

spread compression is still hurting. All

in, I'd say it's a decent quarter, but

not one that would cause investors to

plow into the stock. Caterpillar

reported. Now, you might think that CAT

is not an AI play and you'd be wrong.

Earnings per share was $8.17,

up an amazing 73%. Revenue increased

24%. The company's power and energy

division manufactures generators,

engines, and gas turbines for, among

other things, data centers. And this

division is what's powering CAT's

growth. Tuesday night, the much awaited

SpaceX reported for the first time. On

Tuesday, prior to the report, the stock

rallied 9% to 125, which is still below

the IPO price of 130. Now, I would call

the results very mixed at best. On the

positive side, the company reported

revenue of 7.8 billion, which was up 92%

and a beat. Earnings per share was a

loss of 9 cents, which was better than

the 24 cent loss that was expected. So,

so far, so good. But, big butt, CapEx

jumped to 18.4 billion for the quarter

versus 10.1 billion in the March quarter

driven by higher than expected spending

in the of course AI unit. And Musk

called for capex to climb even higher.

Another negative data point occurred in

SpaceX's Starlink satellite internet

service, the only profitable business.

Subscribers reached 12 million, which

was lower than the 12.19 million

expected. The stock was down double

digits after hours. One more thing. If

we take the second quarter's revenue of

7.8 billion and annualize it, we get

31.2 billion. SpaceX's market cap is 1.6

trillion. So, the market cap to revenue

is 54 times. A tad expensive. In the

end, the issue with SpaceX is what

exactly is this business model about? Is

it a satellite and rocketry company that

has monopolistic characteristics

or is it an AI company that trails way

behind Anthropic AI or just a weird

combo? For any other company, I'd say it

matters because the market will value

the stock differently depending on the

characterization. But Elon Musk has a

moat built by his personality. He has

believers, not investors. So, who knows

what it is and does it matter anyway?

One more thing on SpaceX. This Thursday,

911 million shares of SpaceX stock came

unlocked from insiders. It'll be

interesting to see how the market

digests this. Moving on. Eli Lilly and

Novo Nordisk both reported and the

results once again prove that Lilly has

won the diet drug wars. All you need to

do is look at the EPS results. Lilly

posted earnings per share of 838, up 33%

and Novo Nordisk reported 475,

down 20%. Now, Novo is trying to catch

up with this new GLP-1 pill, but there

is no indication that this is closing

the gap. Arista Networks reported, and

I've owned this stock for a long time.

It sells cloud networking equipment. Its

chief competitor is Cisco, and both

companies are big beneficiaries of AI

data center construction. EPS was $1.02,

up 40% versus last year, and a beat.

Revenue of 3 billion was up 12% versus

last year. Prior to Wednesday, the stock

was up 45% for the year, and on this

print it was up an additional 5%. One

more thing on Arista. It's a high

multiple stock, and sometimes that means

it is hard to predict how the market

will react to earnings. In the March

quarter, Arista's EPS growth was 34%,

but its guidance was below the whisper

number, and the stock was down double

digits. On this earnings report, EPS was

up 40%, but guidance beat the whisper

number, and the stock was up. This is

why I like to invest for the long term.

I like this story, and I'm holding it,

but trying to trade it in and out of the

quarter for me is an impossible

endeavor. In contrast to Arista, AMD's

results were not well received. AMD is a

semiconductor company trying to compete

with Nvidia. Tough job. The actual

results were fine. EPS of $1.66 was up

246%,

but the guidance only met expectations,

and the stock was down on the print.

Disney reported, and the results were

pretty good, but it's important to point

out that at the current stock price,

which is around 100, the stock has done

nothing for well over 10 years. EPS was

206, up a very nice 28%, and a strong

beat, and the beat was led by strength

in streaming and the parks. Revenue of

25 billion was up 7%, and was a slight

miss. This week, instead of a mailbag,

I'm continuing my recent spate of

recommendations. A few weeks ago I

listed some books I recommend, and the

following week I listed 21 of my

favorite graphic novels. Now, I'm

sharing my TV recommendations. It's a

pretty long list, 150 shows, and the

list is divided into two groups, for

those who dislike violence and those who

are okay with it. I'm putting the entire

list in the show notes, but here are 10

I'm flagging right now. Number one,

Friday Night Lights, an amazing

depiction of a Texas football town. Two,

Shogun, which I have to say, this

version is much better than the original

1970 series. Three, Chernobyl, an

incredible and tragic depiction of the

disaster. Ozark, one of the best series

on Netflix with Laura Linney and Jason

Bateman. Five, The Sandman, my favorite

graphic novel, and the Netflix series

was pretty good, too. Six, Marvelous

Mrs. Maisel, a funny and deep depiction

of a female comedian. Seven, The

Americans, the Russians are coming, the

Russians are coming, nope, they're here.

Eight, Warrior by Jonathan Tropper, best

fight action ever. Number nine, Banshee,

also by Jonathan Tropper. This is where

the actor playing Homelander from The

Boys got his American start. And

finally, number 10, Lioness, just

incredible storytelling by Taylor

Sheridan. This last Monday, August 3rd,

we released an interview in honor of the

250th anniversary of the signing of the

Declaration of Independence. The

interview is about a book entitled

Capitalism in America, an economic

history of the United States. The

authors are Alan Greenspan and Adrian

Wooldridge. Now, obviously, we could not

interview Alan Greenspan as he has

recently passed, but his co-author was

available, and we discussed some of the

major themes of US economic history

including the great debate between

Alexander Hamilton and Thomas Jefferson.

We also touched on the Industrial

Revolution and the role of the robber

barons and also the causes of both the

Great Depression and the Great Financial

Crisis. I think you'll learn a lot if

you listen in. This coming Monday,

August 10th, we will release an

interview with Glenn Schorr of Evercore

and Ken Worthington of J.P. Morgan.

Combined, they cover much of the

financial services landscape and we

explored the controversies surrounding

private equity and private credit as

well as the fundamentals of the overall

financial services sector. So, please

tune in. The best way to support the

Real Assets Playbook is to subscribe to

Substack and to YouTube or your favorite

audio channel. Subscriptions are free

and we greatly appreciate your support.

And that's [music] the wrap.

This podcast is for informational

purposes only and does not [music]

constitute investment advice. The host

and guest may hold positions in stocks

discussed. Opinions expressed are their

own and not recommendations. Please do

your own due diligence and consult a

licensed financial advisor before making

any investment decisions.

>> [music]