How We're Trading Interlocked Macro Trends: Reindustrialization, Embodied AI, Energy, And Crypto

Positioning For The Next Phase: Reindustrialization, Embodied AI, Energy, and Crypto—And How We're Trading It

Big picture: I'm constructive on U.S. equities. Multiple structural, policy, and technological currents are converging—reindustrialization, AI infrastructure → embodied AI, an energy build‑out (including nuclear), and pro‑crypto policy clarity—while near‑term macro fears (tariffs reigniting inflation, "AI bubble" narratives, etc.) have not derailed earnings or capex. I'm leaning into the secular winners and keeping "safety first" hedges on while they're inexpensive.

The Interlocking Macro Themes

1. Reindustrialization & Strategic Reshoring

Two motives reinforce each other: (a) the political focus on "bringing manufacturing back" (jobs, innovation spillovers from working with atoms, resilience), and (b) strategic / national‑security logic—reducing dependency on geopolitical rivals for critical components (advanced manufacturing equipment, energy technologies, defense electronics). This catalyzes incremental demand for power systems, precision components, industrial software, and localized supply chains.

2. AI Infrastructure → Embodied AI

Phase 1 of the AI trade was "who can secure GPUs / networking / power" (capex arms race). We're now in an early transition to Phase 2: operationalization, application layer ROI, and embodied deployments (sensors, robotics, edge compute). Capital is still flowing into data centers—liquid cooling, power distribution, interconnects—but incremental alpha increasingly comes from companies leveraging that stack (or supplying the specialized hardware that lets it escape pure commoditization).

3. The Energy (and Nuclear) Build‑Out

AI + reshoring = structural electricity demand uplift. That underwrites new gas peaking plants, grid hardening, distributed generation, and a reopening bull case for nuclear (modular reactors, fuel cycle bottlenecks). Industrial electrification and datacenter cooling both amplify this. We position in names that (i) supply critical gear to data centers, (ii) sit in the nuclear fuel / technology chain, or (iii) ride natural gas compression & infrastructure.

4. Crypto Policy Tailwinds & Institutionalization

Crypto backed the winning political coalition last cycle; we're seeing regulatory clarity and friendlier postures (appointments, rhetoric, enforcement direction). That's most immediately bullish for network beta (BTC, ETH) and platform rails / on‑ramps. Additionally, "BTC / digital asset treasury" angles (companies holding or staking) create hybrid narratives—operating businesses with embedded crypto leverage. We took entries in April's correction on select "treasury" names while sentiment reset.

(Not exhaustive; these illustrate thematic "nodes" we're emphasizing.)

Market & Macro Stance

Inflation & Tariffs: Thus far, tariff incidence appears partly absorbed by foreign exporters (limited pass‑through), while tariff revenue has supported a recent fiscal surplus print.
Fiscal & Policy Tailwinds: Tax adjustments, targeted industrial incentives (e.g., energy & manufacturing credits), and sustained public sector demand in defense / infrastructure.
Monetary Inflection Potential: Market probability of rate cuts later this year remains a potential catalyst for duration assets and equity multiple resilience if growth cools without a profit recession.

Result: Constructive bias—but we insure against adverse fat tails while implied volatility (IV) allows.

Process: How We Execute

1. Safety First (Systematic Hedging): We regularly scan for optimal puts index ETFs via the Portfolio Armor app and maintain a core hedge sleeve while IV is relatively cheap. This lets us press thematic longs without outsized left‑tail anxiety.
2. Objective Entry Confirmation:
   
   • Internal Quant Signal: Appearance in Portfolio Armor's top names (ranked by historical return / option market sentiment) gives green lights for names that already ran and "feel expensive."
   • External Expert Confluence: When respected traders on our curated Market Watchers X list publish bullish setups that overlap with Portfolio Armor top names (recent example: Ouster), we treat that as double‑confirmation.
3. Structure Selection & Time Horizon:
   
   • When IV Elevated: Finance convexity (risk reversals, bull put spreads, diagonals) → harvest rich premium to cheapen directional exposure.
   • When IV Muted: Straight calls / vertical debits where delta efficiency > premium received.
   • Bias Toward Duration: We've repeatedly seen "right thesis / wrong tenor" losses in short‑dated contracts (HOOD, OKLO, OUST weeklies). Extending expiries captures post‑consolidation trend continuation and allows fundamental catalysts (licensing, contract wins, policy decisions) to materialize.
4. Documentation & Feedback Loop: Every exit—winner or loser—is archived. We explicitly annotate cause of loss (direction vs timing vs structure) to refine sizing & tenor conventions.

Case Study: OUST – Two Paths, Two Outcomes

• Short-Dated Weeklies: Bought 6/27, expired 7/3 → -100%. Direction didn't resolve quickly enough; pure theta decay.
• November Risk Reversal (Opened 6/25): Long Nov $28 Call @ 4.50, Short Nov $20 Put @ 3.77 → Net debit 0.80. With OUST at 30.65 and current midpoints (Call: 8.35, Put: 1.925), position marks at 6.425.
  
  • Unrealized P/L: +5.625 → +703% on initial debit (≈+27% of worst‑case assignment exposure at 20.80).
  • Lesson: Financed convexity + time harness structural trend; short tenor = pure timing bet.

Representative Realized & Open Trades

Below are select trades (not the entire book) illustrating approach across winners and losers. (Open positions marked to 7/18/25 close or latest mid quotes.)

Process Lessons Reinforced

• Duration matters: Short-dated contracts punished otherwise correct direction (weekly OUST, Feb OKLO calls).
• Financed convexity scales: Risk reversal transformed modest debit into multi‑hundred percent paper gain with moderate underlying move.
• Partial exits: Scaling out (HOOD, BTBT) crystallizes edge while retaining upside.
• Documentation deters narrative drift: We can isolate whether a loss was thesis, timing, or structure and adjust only the causal element.

Current Playbook Going Forward

1. Continue Core Hedges: Maintain rolling QQQ put layer sized to dampen portfolio risk without neutralizing upside.
2. Rotate Into "Phase 2" AI Beneficiaries: Focus on data moats + workflow integration (PLTR, DDOG) and embodied / sensor layer (OUST) rather than chasing late‑cycle pure GPU beta.
3. Add on Constructive Pullbacks: Use volatility spikes / corrections (like April's crypto‑adjacent drawdown) to scale into treasury‑levered or nuclear names rather than chase vertical moves.
4. Favor Time & Structured Optionality: Default to 4–8+ month expiries; use verticals, risk reversals, or diagonals where IV skew compensates.
5. Selective Cash / Stock Ownership: For microcaps with limited option depth (e.g., TGEN), maintain disciplined position sizing and pair with index hedges to manage gap risk.

Transparent Risks

• Policy Shifts: Tariff escalation or less benign pass‑through could rekindle goods inflation → "higher for longer" repricing.
• AI Capex Saturation: A steeper second‑derivative slowdown in hyperscaler spend would compress multiple expansion bets; we mitigate by tilting toward application & efficiency plays.
• Crypto Regulatory Curveballs: Tailwinds could reverse (enforcement pivots, adverse court rulings). Concentrate treasury names accordingly.
• Financing Risk in Microcaps: Names like TGEN can still require capital raises; we size per liquidity and pre‑earnings volatility.
• Volatility Regime Shift: Sudden IV spike makes new hedges costlier; we prefund hedge inventory early.

Bottom Line

The rails (infrastructure) are largely in place; now the trains (embodied & applied AI, re-industrial processes, energy expansion, crypto rails) begin to run. Our approach: insure first, then press curated secular winners using time‑advantaged option structures and objective signals to stay engaged even when valuations feel intuitively "too high."

Expect incremental refinements, more granular performance breakdowns, and continued radical transparency on losers (because that's where process sharpens fastest). 

Image Source: Author

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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