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Around the Desk: This is where we at Avory think out loud, challenge narratives, and look for signal through the noise. Each episode, the Avory & Co. team dives into what’s moving markets, how companies are performing, and where opportunities may be forming. We break down earnings, macro trends, and investor sentiment — all from the lens of a concentrated, high-conviction portfolio.
*** The views expressed on Avory Podcast: Around the Desk are those of the hosts and guests and do not constitute investment advice. This podcast is for informational purposes only and should not be relied upon to make investment decisions. All investments involve risk, including potential loss of capital. Avory & Co. may hold positions in the companies discussed.
Sean-1: All right, you are listening
to Avery's around the Desk podcast
where we dig into markets, companies,
and ideas shaping what is coming next.
I am Sean Emery, chief Investment
Officer here at Avery and Company,
also co-founder, uh, at Avery.
You know, today I wanted to walk
through some of the market signals.
You know, we've been tracking this week.
Not necessarily uh, predictions, but
I think the combination of all of 'em,
you know, provide us, you know, some
output that I think is worth noting.
Uh, and it's really around where data
behavior, positioning in the markets, I
think start to help us curate a story.
And this week I think the stories.
Center around spikes.
Spikes in oil, really around
the geopolitical stuff
happening in, in, in Iran.
Spikes in vix, which is essentially
a second order effect of, you know,
some of the uncertainty coming out
of, um, the geopolitical events.
Spikes in corporate insider buying.
So we're seeing, you know, financial
sector insiders buying back their
shares at, uh, an elevated rate.
So.
A lot of stuff to look at.
You know, also some comments around AI
again, and some comments around software.
We've spoke about software
over the last several weeks.
Uh, so where are we today?
After we just saw a 10 day wind streak.
Uh, obviously some of that has come,
uh, you know, some of the errors
come out of that given, uh, you
know, some of the geopolitical risks.
But I think, you know, we were
pretty spot on in terms of, uh,
you know, trying to point out, um.
You know, the possibility
of some stability, uh, in
the AI to software noise.
Uh, so let's walk through some
of these signals, you know,
first and foremost before that.
Uh, before we begin,
here's a quick disclaimer.
This conversation is for informational
purposes only and should not be
considered investment advice.
We may hold positions in some
of the companies discussed.
Please do your own research and consult.
Somebody else before making
any investment decision.
So let's start off with oil here.
You can already see the
state, the stats, you know.
So we went back, we looked up, you
know, what happens when, you know, oil
spikes 20%, uh, in about five days.
And historically that kind of move, you
know, tends to trigger immediate concerns.
Um, you know, we all have kind
of the 2007, 2008 menthol.
We all have, you know, the 1970s and
eighties, you know, still stuck in.
In, uh, you know, history books,
and I think people study those
similar periods and, you know, may
have some sort of output that, you
know, sends some sort of signal.
But look, after every oil spike really,
of this magnitude, uh, I, I found it
pretty shocking that actually the, the
average return for markets and median
returns, uh, come out with, you know,
elevated returns, but also a positivity
rate that's, you know, north of 80%.
And I think that's important, uh, to,
to think through, uh, more broadly now.
That doesn't mean oil
spikes are bullish, right?
I think by default they're,
they're, they're generally not.
Uh, but in the very short term, I
think you often see weakness, uh,
or, and, or like flat performance.
But historically, I think if these
spikes coincide with the economy
already moving into a recession,
as part of that is hindsight, uh,
I think what you tend to see is if
we're not heading into a recession.
And things are rather stable at the
economic level, then these markets
tend to recover fast, uh, and furious.
Um, you know, the second signal I
think worth, you know, highlighting
here is really around vix.
And, you know, we saw the VIX
spike up 53% over the last month.
A lot of that here, uh,
over the last several weeks.
And, you know, depending on the
day, and largely again, it's
all around the geopolitical
tensions, you know, and war risk.
And, you know, these moves tend to feel
pretty negative right in the moment.
Uh, we've experienced a lot of 'em,
you know, uh, over the last, you know,
10, 15 years and really over the last
five and three years specifically.
And these large volatility spikes
have actually tended to occur near
periods where forward returns,
uh, you know, improve, right?
So you get these large kind of
like washout spikes and that's
what you're ultimately looking for.
Uh, and you know, if you go
out and look at like a five
day spike or a one month spike.
Um, we have it right here where you
can see positivity rates on a 12 month
going forward basis, 75% with returns,
median and average actually positive, uh,
when you get this magnitude of a spike.
Now we also then looked at, you
know, we've been talking about
software and this is the IGV index
and it had a 10 day, obviously it
had a, you know, a lot of weakness.
You know, if you look at
software in aggregate.
That index is, you know, down roughly,
you know, 30% just for the year.
It was also weak last year, uh,
as well as people, you know,
had growing concerns around ai.
Uh, you know, many of these companies
are performing well, so I, you know,
that's not necessarily the issue.
Uh, we've, we've spoken in, in depth,
both in article format where we posted
our software article out there, but
also, you know, here and, and explicitly
saying there's, you know, not everyone's
gonna win in a world of software and ai.
But I do think AI expands the opportunity
for software vendors by the magnitude
of, you know, as much as 10 times.
You know, that's kind of how we size it
up, where we, uh, where we post it in our
article where it's consuming more, you
know, people are consuming more software.
Uh, engineers can rapidly prototype
more than ever, companies can start,
you know, building their own software
internally, and then software vendors
can actually start to enable and
build on top of their own stack.
So.
Um, you definitely have to be pick
and choosy, but, uh, at the end
of the day, I think, um, that's an
important reminder of our thoughts
that are on software more broadly.
But historically, when you did have
these 10 day kind of like win streaks,
uh, forward returns in the s and p, but
also for, you know, the software index,
uh, there's not a lot of precedent.
You know, there's maybe
like six occasions, five
occasions that has happened.
Uh, and ultimately, you know, the, the
positivity rate and the forward returns,
uh, tend to be, you know, constructive.
So, look, we're looking in software
and some of these more, um, you know,
uh, macro sensitive names here over
the course of the last, uh, you know,
really month, uh, since Warren and, and
some of these other factors have, um.
Yeah, engaged with the markets.
I think, you know, we're looking for,
you know, bottoming condition conditions
as we explained, uh, last month as well.
Now the next is the consumer, right?
So we've been talking about, you
know, gas spikes and VIX spikes and
uncertainty, and I do think, um.
So, look, the market's really important
as it, as it relates to the economy,
as, uh, you know, more and more assets
continue to flow into, uh, the markets.
And therefore there's this,
you know, feedback loop.
But another one is, is tax refunds.
And here's another spiking condition
where, you know, tax refunds this year
are coming in me meaningfully higher.
So far the average refund
is, you know, over 10%.
Um, uh, a previous, you
know, from previous years.
Total refunds right now are
still slightly behind last year.
So the amount of refunds given out,
but you know, that'll likely, you
know, accelerate here over the course
of the next, uh, you know, few weeks.
And we're, we're monitoring that, but
ultimately it represents, you know, real
liquidity, you know, entering households.
Uh, and again, it doesn't solve every
issue, you know, around the consumer,
but it, it does support, you know,
notions of spending across, you know,
various, um, discretionary categories.
So, you know, if you, if, if
you're under the belief that
oil does come down, I think.
Um, you know, these tax refunds are
either one and offset, uh, in the, in the
intermediate term, uh, but then also a
catalyst, uh, you know, in the much more,
uh, you know, months out to quarters out.
Uh, next up here is, uh,
corporate insider buying.
And I think this is important.
I highlighted this at the beginning,
you know, we're seeing a notable,
um, you know, move higher in insider
buying within the financial sector.
And I think that matters really
because, you know, financial
insiders are arguably have one of
the, I'd say cleanest or clearest.
You know, views of what's
happening in the economy.
So, you know, they see everything from
like, you know, lending behavior to
credit trends, to, you know, business
activity earlier than most would, and
therefore, historically when you do
see insiders buying in financials and
when that picks up, I think that's
occurred closer to the beginning
actually, of an economic expansion.
You know, not necessarily the end.
So look, if oil's spiking and volatility
is rising, but financial insiders.
You know, our, our, our, our our buying.
I think that's an interesting
combination of signals there.
Um, and, you know, again, staying with
the oil for a moment here, you know,
there's another structural change that
I think is worth mentioning is, you
know, gasoline consumption as a share
of consumer spending is dramatically
lower today than it was decades ago.
And that continues to go down.
You know, if you go back to the seventies
and eighties, energy, you know, could
represent, you know, as high as,
you know, 10% of consumer spending.
Um, today it's closer to one to 2%.
So it's, you know, a magnitude
difference relative to prior occasion.
So even when oil spikes, I think
the transmission effect into
the broader economy is much
weaker, uh, than it used to be.
And every year that goes by,
it gets weaker and weaker.
In addition, obviously, you
know, it's not here, but it's,
you know, the, the independence.
Uh, of energy specifically in the US
And you know, I think more and more what
you're gonna see, and this is me, me
just talking a little bit about even some
stuff we're looking at internally, which
is some of renewables and really maybe a
reemergence of, you know, looking into,
uh, renewables as a, as a form of energy,
which would, you know, prevent, um, you
know, if you had any sort, sort of like
geopolitical tensions that you could,
you know, in theory, I guess, achieve
whatever you needed to achieve without
being constrained by the fact that.
You know, energy supply, uh, is
being constricted on the other side.
So, you know, again, there's
different paths forward for oil,
depending on geopolitical outcomes.
But, you know, if things do
normalize quickly, I think, you
know, these prices drift back
towards, you know, the prior range.
And, and, and if supply disruptions do
persist, uh, longer, um, I think we could,
uh, you know, be in a phase that actually
is more constructive than some think.
Here's a couple different scenarios for
oil prices, just for the sake of it is.
You know, this just looks at, you know,
different scenarios based on how long
the Strait of Horus is closed for.
And, um, you know, pre path of, or
pre-war was, you know, 60 to $80 a barrel.
And you know, if it's closed for
one month, peaking around a hundred,
if it's closed for two months, you
know, peaking around, you know, one
20 and close for three months, you
know, peaking around 1 40, 1 60.
Um, you know, I think that's
where, you know, people like
the economy from an economic
standpoint, we'd be more concerned.
Uh, but again, what you would
see here is, you know, things
normalize rather quickly thereafter.
Um, so look, midterm election year,
I think, um, it's very hard for me
to look at the incentives of the, uh,
administration and, and, um, formulate
a thesis that says, you know, I,
I, that they're not gonna matter.
That one, they would be
sitting inside of a war.
As, you know, midterm
elections are, um, ensuing.
Uh, along with, you know, oil
prices or gas prices at the pump
also elevating dramatically.
So I always often look at incentives,
where are those incentives?
And, you know, what does that
mean for decision making?
And I think, uh, it should be very
clear that, you know, more than likely,
um, the incentives are aligned to keep
prices low and, and kind of like war
out of the headlines from the standpoint
of that we're continuing down a war
that, uh, you know, maybe on one side.
Uh, people have an opinion on, you know,
how meaningful or meaningless, um, it
is in terms of being there and not being
there, and what that would mean for,
uh, you know, people at the ballots.
Um, so again, incentives matter.
Next, uh, let's shift some gears.
Let's talk about ai.
Um, again, a little bit more forward
thinking here, but, you know, we looked
at global app downloads for February,
and one thing I think continues to
stand out is, you know, AI remains
at the top of the conversation.
Chat.
GPD continues to rank above, you
know, most downloaded apps globally.
So, you know, they're really,
um, taking control of that
consumer, you know, uh, app.
You know, you don't see Claude
here, which is interesting.
Uh, you know, they, they've,
they've been, uh, executing well and
continuing to build momentum there.
Um, so, you know, in the next couple
of months, like, you know, we'll see
where, where that sits, but, um, so
far you're seeing, you know, chat,
GPT and then Meta's family of apps.
Obviously we own Meta, um, as a firm.
So just full disclosure there.
Uh, we continue to think, again,
they're arguably the, the number one,
you know, artificial intelligence AI
play out there because, you know, any
spend they do in AI directly goes into
their product as opposed to everyone
else's, essentially resellers of compute.
Um, interesting stuff here
is, uh, WhatsApp and Telegram.
I think, uh, you know, as,
as these AI agents continue
to build, um, you know, the.
The idea of, uh, communicating with
your AI agents through, you know,
different forms of communication
tools, I think will matter.
And WhatsApp and Telegram, I
think are at the forefront.
Telegram has al already been kind of
like, uh, you know, one of the go-tos
for things like Claw Bott, but then when
you think, uh, about, um, you know, uh,
meta, they acquired Manus, which is kind
of like an agentic orchestration tool.
And uh, ultimately that's
gonna be a WhatsApp.
And so watch out for these two, as,
you know, communicating with, you know,
your friends and colleagues, uh, you
know, in these group chats, but also,
you know, possibly communicating, uh,
with your AI agents, uh, in the future.
So, uh, I think that's
important to monitor here.
Um, now you can see here in terms
of, um, trends, trends in corporate
America, you know, mentions of AI
across s and p 500 earnings calls.
Continue to climb here, you
know, steadily since 2022.
Um, and I think that tells us AI
isn't just, you know, a narrative,
you know, it's really something,
uh, management teams across
industries are really thinking about.
And when I think you combine that with
what we're seeing in capital spending,
I think scale becomes, um, you know,
even clearer, you know, CapEx growth
among some of the largest companies
I'll show here on the next page.
But, you know, those
continue to accelerate.
And I think there's two ways
to take this chart, right?
Is that AI interest continues to grow.
But I think also just as important is,
look, somewhat contrarian take is the
higher this goes up and the more companies
that are speaking about it and then
you look around you and you say, Hey,
has the world changed all that much?
Meaning, yes, new tools, new
capabilities, but has the world
changed a lot around you were three.
Almost four years into chat, GPT and,
and kind of that, that breaking moment.
We're now three, four months
from, you know, some of the new
models that came out in December.
But ultimately you sit back and you
say, if all these companies are talking
about it, and the world's not changing
around me as much as, um, you know,
maybe one had thought, uh, you know,
are we in a, in a phase where like, um.
You know, I, I, I love
the, the, the quote.
You know, the more things change,
the more they stay the same.
Meaning our tools and systems
and how we operate, you know, may
change, but what we're trying to
achieve, you know, may stay the same.
And therefore, you know, it, it
may be a counter narrative, you
know, counter narrative to the
ai, uh, cycle in terms of its.
Uh, its ability to completely disrupt,
uh, you know, the workforce and how
people, you know, the amount of people
that are working and, and, and, and,
and, and some of the other categories.
Is there again, we'll flush out that
idea, but we'll continue to, to, uh, bring
this chart up so we can understand how
much of the thinking is already diffused
in the economy, and then how is that
showing up in kind of key results there.
But something important to consider.
This is looking now at CapEx.
Growth rates and couple numbers
stick out here is number one is
Apple's only spending nine to 12
or $12 billion on CapEx, right?
Uh, Google's spending 91 billion, or
at least they spent that in in 2025.
You know, the numbers
obviously accelerated for
their CapEx growth guidance.
So you have companies like Amazon
not on here, but, you know,
growing or or spending 200 billion.
You have someone like Meta, you
know, doing, you know, two to three
Xes numbers here, um, as well, but.
The, the, the irony is I'm looking
at 25 to 24 meta just guided to
30% revenue growth, and they're
the highest spenders in ai.
Again, their AI spend goes
directly into their product.
So again, I'm just trying to
draw that line between, you know,
who's winning and who's not.
I'm not gonna say losing, 'cause
I don't think anyone's losing.
And then the, the interesting idea
that, you know, a lot of people are AI
pilled, meaning, you know, so bullish
on ai, that you have to buy energy
and all this compute and all this
other things, and that may be true.
But you do have to step back
and ask yourself, why is,
uh, apple sitting outta this?
Why are they only spending, you know,
12 to $20 billion, uh, in CapEx,
um, rather than everybody else?
Is it the idea that, you know, they
believe that most of compute and
models will be, you know, embedded
inside devices and therefore, uh,
edge computing will matter more
than, um, you know, centralized
computing, you know, platforms.
Um, look, I think I, you know, there's
something to think about there.
Uh, if you are totally AI builded.
Um, you know, look, last last couple
things here is, um, you know, we keep
asking different questions internally
and, and, uh, you know, where's the
value going to accrue in, in an AI world,
and, and where will that ultimately,
you know, transpire and history
suggests that, you know, these large
technology markets, you know, rarely
become, uh, a single winner take all
instead, you know, they tend to support.
Uh, a handful of dominant players
alongside a broader kind of ecosystem.
And, you know, you saw that
with digital advertising.
You can see it here, you know,
uh, meta Amazon, Google really,
um, winning in the AI world or in
the, uh, online advertising world.
And, you know, it's kind of like an 80 10.
You know, 10, you know, 80 is,
is made up from two companies.
You know, 10 is made
up from somebody else.
Um, and you know, 10 is made up
from a, a bunch of smaller platforms
that are, may be more verticalized.
Um, but I think it's interesting 'cause
uh, addition to, you know, digital
advertising, it's also cloud computing
and you know, very much the same names.
But, you know, AWS Microsoft and Google,
they obviously know meta there, but,
uh, 'cause they don't sell compute.
That could change in the future.
Uh, I think it could make
some sense, but again, I don't
know, you know, anything there.
Uh, but it's possible.
I think we see similar pattern emerge
ai, you know, there's a few leading
platforms I showed with the, the chat,
uh, or the downloads, uh, with like
chat GT and Claude making a move.
And then you have Perplexity
computer that is, you know, its own
thing that sits on top of models.
And then you have Rep and lovable and
Base 44 and many of these other companies.
And, you know, there's a, there's
a chance that again, that.
Uh, there's one point of view that all
data aggregates and sits behind these
models or in, you know, in, in inside of
these AI labs and all of the dashboards
and in intelligence will be a, you
know, somewhat abstracted away by them.
But if we do end in a world where
there's multiple players, you know,
call it 10, uh, that are, you know,
having a position in the market, then
for me it signals that, you know, we're.
We're not as likely to diffuse AI
across the, the, the corporate spectrum
as fast as maybe people assume,
because we will still have silos of
information and, and siloed tools,
because these models are different.
You know, if you're, if you're using, you
know, Opus or, you know, uh, some of the
stuff that you know, uh, you know, chat,
BTS rolling out and, and some of the,
the, um, you know, Kimmy and some of the
other open source ones are rolling out.
Look, I think we're gonna live in a world
of multiple models with orchestration
layers that are assisting and no one's
gonna wanna live only on one platform
unless you're a small business.
Um, anyways, that's a
little bit about that.
There's also the idea that Open AI here
is trying to scale back, you know, their
plans to introduce things like shopping.
Um, there're also, you know,
engaging with ads, um Right.
And I think they're ultimately
gonna have one of the best high
performant ad tools out there because.
We're all putting all of our information
in there and I think, uh, you know,
it's important to think about that as a,
you know, driver for advertisers where,
you know, clearly there's inputs and
there's outputs, and these advertisers
can probably see conversion elevate.
We're hearing that from earnings from
some of the companies even that we
invest in, where the traffic they're
seeing coming from chat, GBT converts
at a much higher rate because people
are way down the funnel of like
what they're even trying to do until
they get sent off to a third party.
And I think if you're open AI and
chat GBT and you're trying to monetize
your platform, look, there's no better
business models, uh, than Google Search
and Meta's, you know, uh, advertising
businesses, you know, these are $200
billion, super high margin revenue
businesses spitting a ton of cash flow.
Historically they've been asset light,
but you know, obviously in the AI
world, they're, you know, becoming
a little bit more asset heavy here.
Um, but I do think, you know, you
have to think about that when you
think of the disruption risk that
could happen to the companies.
Uh, that maybe are marketplaces
or, you know, distribution tools
for, you know, third parties.
I think ultimately, uh, ask yourself
is chat gt trying to play in the game
of, you know, frenemies, meaning kind
of what Google has done, where their
biggest customers are, bookings.com
and Expedia, meaning buying ads,
uh, on Google, yet, you know, they,
they kind of created lightweight
versions of, uh, travel tools.
And they didn't go as all in
as someone like Bookings or
Expedia or Airbnb have gone.
Uh, and so I think all of that
is important to think about.
Um, last but not least
here is earnings Next week.
You know, we're officially at
earning season, but there's
still plenty of earnings.
Uh, so, you know, as somebody that
is analyzing stuff all day, you know,
I'm always earning season, so you have
alo, you know, on nuclear reactors.
So we'll just get at
least some insights there.
Uh, you have like Dollar Tree and some of
the dollar stores, you know, just talking
about the consumer Lululemon, which has
its own issues, but it'll be informative.
DocuSign obviously on the software side,
you know, you have FedEx in Accenture
later in the week, which will give us some
insights, uh, on the economy more broadly.
And, and, you know, commerce Five
Below, again, very similar to the
dollar stores, you know, Macy's
and Jab and, and and SalePoint.
So a lot of good stuff next week, you
know, less meaningful maybe to our
portfolio, but more, um, optically
meaningful as it relates to, you
know, extracting some value there.
So again, stepping back, you know,
the goal of looking at some of
these signals, you know, really
isn't to protect, you know, predict
exactly what the market's gonna do.
But it's really to understand, you know,
the environment we're operating in.
And right now, again, we're seeing spikes
in different areas, uh, including also
financial, um, industry, uh, insiders,
buying back shares at the same time.
You know, the AI investment cycle
continues to, you know, uh, um.
Do its thing here, uh, from a
product, uh, adoption standpoint,
app downloads, and also, you know,
conversations and earnings calls.
And, and then again, next week we'll
get more and more information around,
um, earnings, but also, we'll,
we'll be obviously watching the
geopolitical stuff over the weekend,
uh, and all the other things, you
know, thanks for listening today.
Uh, again, around their desk podcast.
We do this weekly, biweekly, uh,
if there's important information,
you know, to send out there.
So with that, have a good weekend, uh,
and reach out to us if you need anything.