This Time, the Hare Beat the Tortoise

Hunt, Mike, and Jason go more than half healthcare this week: Moderna’s Merck-partnered mRNA cancer vaccine cleared phase 3 in melanoma and the stock doubled. Plus Hormuz at a standstill, $7 trillion of federal spending with only one line left to cut, and xAI putting agents on the shelf.The Cashflow MemoKey Takeaways* Hormuz traffic has gone from 15-20 ships a day to effectively zero and Hunt sees an indefinite stalemate, so with WTI at 82 last Thursday against a 2027 strip at 73, the backwardated 2027 price is the number to underwrite because it is the number operators use for their own capital decisions.* Gas printed under $3 front-month while the 2027 strip holds near $3.40, and with the Permian supplying two-thirds of US supply growth, new Gulf Coast pipelines narrowing Waha to roughly 50 cents under Henry Hub, and LNG feedgas above 18 Bcf/d this year, the 108.5 and 110.5 Bcf/d supply estimates for ’26 and ’27 both look too low.* On Exhibit A’s $7 trillion of FY26 federal spending, healthcare is the only line with real money in it (Medicaid alone is $600 billion, half federally funded), because defense is heading to $1.1-1.2 trillion and interest is locked at a 3.5% average rate with the 10-year at 4.6% - and Jason put Medicare improper payments near 6% with fraud between 3% and north of 10%.* Moderna doubled on a Merck-partnered phase 3 melanoma readout (Keytruda alone versus Keytruda plus a personalized 34-antigen mRNA vaccine) that met all endpoints on a press release with no data attached, validating a decade of platform work rather than a single drug.* The capital-allocation scoreboard flipped: BioNTech was the safer steward and still holds roughly $15 billion of COVID cash to Moderna’s $3 billion as of the March balance sheet, but the hare reached the cancer readout first, and Montana’s read is that the trial proves the technology rather than the drug, which is what makes Moderna’s nine other cancer studies matter.* xAI shipped off-the-shelf Grok agents that cut agent build time from months to about a day, 64% of OpenAI’s tokens are now consumed agentically rather than through human prompts, and that demand curve widens the compute gap further just as Nvidia backstops the physical shell of an OpenAI data center in Ohio and the governors of Pennsylvania, New York, and Texas impose one-year delays or audits on new projects.Show Notes[00:00:30] Exhibit C: Iran, Hormuz, and the Stalemate Traffic through the strait has fallen from 15-20 ships a day to near zero on projectile risk. Hunt sees no path to resolution and argues the 2027 strip at 73, not spot at 82, is the price that should drive investment decisions.[00:04:03] Exhibit B: Natural Gas and the Permian Problem Front-month gas under $3 against a 2027 strip near $3.40. New pipelines have pulled Waha to roughly 50 cents under Henry Hub, and rising associated gas means the published supply estimates are almost certainly too low.[00:05:51] Exhibit A: $7 Trillion and One Place to Cut Long rates are rising worldwide on deficits, not just in the US. Hunt walks the spending columns and finds healthcare is the only category with real savings available, with Medicaid at $600 billion the specific target.[00:10:58] Moderna vs. BioNTech: Page 15 The two mRNA COVID winners diverged on capital allocation - BioNTech kept roughly $15 billion, Moderna ran cash down to $3 billion. Then Moderna announced results and doubled.[00:12:44] The Phase 3 Melanoma Readout Jason lays out the Merck joint development study: stage 3 and 4 melanoma patients, surgical resection, then Keytruda alone versus Keytruda plus an mRNA cancer vaccine. All endpoints met, though no data was released with the press release.[00:13:51] How the Cancer Vaccine Actually Works Montana explains antigen identification via genetic sequencing, the 34 most prominent antigens per tumor, lipid encapsulation, and priming the immune system to catch recurrence before it becomes a tumor.[00:17:48] Nine More Cancers: Does the Platform Travel? Mike asks how investors should handicap the same approach across Moderna’s nine other studies. Montana’s answer: this proves the technology, not a drug - the question is whether the antigen flags stay identifiable.[00:20:07] MRD Testing and the Sequencing Layer Minimal residual disease testing as a monitoring tool, reading cell-free tumor DNA from a blood draw to guide treatment protocols before an end-of-treatment scan.[00:22:06] xAI Ships Agents Off the Shelf Grok agents cut build time from the months Mike and Jason spent to about a day. Jason’s read: AI is just software, and the endpoint is a personal assistant that ships on every phone.[00:25:25] The Token Gap Widens Agentic consumption is now 64% of OpenAI’s tokens versus human prompts. If an agent ships native on every handset, demand steps up again against compute that already cannot serve it.[00:27:43] Nvidia Backstops a Data Center Shell Nvidia is guaranteeing the building, not just the GPUs, on an Ohio site with OpenAI as end customer. Ben Thompson frames it as discounting by taking risk instead of cutting price.[00:28:48] Governors Hit Pause One-year delays in Pennsylvania and New York, an audit requirement in Texas, and a public-sentiment problem that Jensen Huang himself is flagging as a constraint on where the chips can go.Get the Cash Flow Memo at telltales.us and subscribe for a new episode every Wednesday.Cashtags$BNTX $MRK $MRNA $NVDA $PFE This post 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. 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