I’ve been a trader and investor for 44 years. I left Wall Street long ago—-once I understood that their obsolete advice is designed to profit them, not you.
Today, my firm manages around $4 billion in ETFs, and I don’t answer to anybody. I tell the truth because trying to fool investors doesn’t help them, or me.
In Daily H.E.A.T. , I show you how to Hedge against disaster, find your Edge, exploit Asymmetric opportunities, and ride major Themes before Wall Street catches on.
Table of Contents
H.E.A.T.
A Presidential stroke of the pen converted three years of transformer shortages into a national security emergency — and handed investors a roadmap to the only supply chain Washington cannot afford to let fail.
THE DETERMINATION
(A note on the headline: the Pentagon is the why. The authority is the White House. Presidential Determination 2026-10 is a wartime tool the executive branch deployed. The Pentagon's infrastructure requirements are precisely what forced the action — and that is exactly the point.)
On April 20, a Presidential Determination landed with almost no fanfare in the Federal Register. Presidential Determination 2026-10 invoked Section 303 of the Defense Production Act of 1950 — a wartime authority last deployed for semiconductor supply chains and COVID vaccine materials — and aimed it squarely at the American electrical grid.
The language is not vague. The President formally classified transformers, transmission lines, substations, high-voltage circuit breakers, power control electronics, protective relay systems, capacitor banks, and electrical core steel as "industrial resources, materials, or critical technology items essential to the national defense."
"The Nation's capacity to design, produce, and deploy large-scale grid infrastructure... is dangerously limited." — Presidential Determination 2026-10
That sentence is doing a lot of work. What it really means: the United States has spent thirty years offshoring its transformer supply chain to China, lead times have ballooned to three to four years on large power transformers, and the AI buildout is about to collide with a grid that simply cannot keep up. Washington has noticed. Washington is now paying.
3–4 Years Large power transformer lead times | $23.9B Korean Big Four combined backlog (Q3 2025) | 5–6 Years Backlog equivalent work | $323M FY26 DPA Title III funds remaining |
WHAT THE DPA ACTUALLY DOES — AND WHAT IT DOESN'T
Let's be precise, because the market will almost certainly misread this. The DPA Title III invocation is not a $323 million check to grid equipment makers. That's the remaining FY26 appropriation — table scraps relative to the size of the problem. The money itself is the least interesting part of this order.
The three mechanisms that matter, in order of investment significance:
1. Priority ratings. The DPA priority system legally routes grid-end customers to the front of every manufacturing queue. Transformer OEMs must now prioritize federal and grid customers ahead of industrial and commercial users. Lead times compress for utilities. They extend for everyone else. This is a transfer of scarcity, not a creation of supply.
What This Looks Like In Practice A utility has a rated order for a 345kV transformer feeding a defense-critical substation corridor. A data center developer has a non-rated order for an identical unit, placed three months earlier. Under DPA priority, one of those orders just became 'front of the line' by law — no matter who pays more, no matter when the order was placed. That's not a policy debate. That's a hard reordering of the manufacturing queue at the factory floor level. For grid-rated utilities: lead times compress. For everyone else: they just got longer. |
2. Crowded-in private capital. Federal purchase commitments and loan guarantees through the DOE Loan Programs Office (a far larger pool than DPA Title III) now carry a national-security imprimatur. That de-risks private investment in US manufacturing capacity. Expect a wave of announced expansions in the next 18 months.
3. The reframe that survives elections. This is the most durable element. The prior administration framed grid investment as climate policy. This administration has reframed it as national security. That framing change matters enormously: defense-justified industrial spending survives administration transitions in a way that clean energy subsidies do not. The political substrate beneath this trade just became bipartisan bedrock.
Republican or Democrat, they'll spend on the same things — just through different justifications. The frame changed. The money didn't stop.
THE MONOPOLY PLAY NOBODY IS TALKING ABOUT
Buried inside the Presidential Determination is a three-word phrase that should light up every serious investor who reads it: "electrical core steel."
Grain-Oriented Electrical Steel — GOES — is the material that makes transformers work. Without it, there are no transformers. And as of today, there is exactly one company in the United States capable of producing it.
SPOTLIGHT: Cleveland-Cliffs (CLF) — The Only Game in Town Cleveland-Cliffs, through its Butler, PA and Zanesville, OH electrical steel operations, is the sole domestic producer of GOES — including the only domestic high-permeability GOES product, TRAN-COR H. There is no domestic competitor. Foreign GOES faces a stacked tariff regime reaching 50% on derivative products. The Trump administration's 2024 transformer efficiency rule explicitly preserves GOES use in distribution transformers. Cliffs called it out as likely to increase demand at Butler. Cliffs is also restarting its idled Weirton, WV facility as a $150 million transformer plant — consuming more of its own GOES and further tightening the merchant market. Now that the DPA has formally named 'electrical core steel' as a national defense priority, Cliffs gains direct access to DOE Loan Programs Office capital. We are not aware of another publicly traded security where a single national security determination maps so directly, so cleanly, to one company's monopoly position. The stock has dramatically underperformed the grid infrastructure complex. The market is pricing Cliffs as a cyclical steel company. The DPA just reclassified it as a defense supplier. |
THE BOTTLENECK THAT MONEY CANNOT FIX
Here is the investment insight that separates the traders from the long-duration holders: the DPA can fund factories. It cannot fund people.
High-voltage transmission line construction is a skilled trade that takes years to develop. The industry has been losing veteran linemen to retirement faster than apprentice programs can replace them. GEV can expand its transformer capacity with capital investment on an 18-month timeline. A journeyman lineman takes four to five years to develop, and there is no federal program — and no amount of DPA money — that compresses that.
This is why EPC contractors, and specifically the labor-intensive transmission builders, are positioned to outperform the OEMs on a two-to-three year view. The OEM bottleneck eventually relieves itself through capacity additions. The human capital bottleneck does not.
Quanta Services (PWR) sits at exactly this intersection. Backlog at all-time highs. Pricing power intact. Irreplaceable skilled workforce that has been accumulated over decades. The DPA priority system sends more project work to grid construction ahead of other industrial users — and Quanta is the company that builds the grid.
18 Months Typical transformer factory expansion timeline | 4–5 Years Journeyman lineman development timeline | 765 kV Max voltage — only one US plant capable (Memphis, TN) | ~$150M Cliffs' Weirton transformer plant restart investment |
THE KOREAN FOUR: THE WEST'S PRE-BOOKED FACTORY SYSTEM
Here is the thesis in one sentence: if you want transformer exposure without waiting on US capacity to be built from scratch, the Korean Four are effectively a pre-booked factory system for the West. The backlog is already sold. The question is only whether the DPA accelerates their customers' position in queue — and it just did.
The marginal supplier of large power transformers to the US grid is Korean. While American OEMs like GE Vernova and Eaton dominate the headlines, the companies actually clearing the backlog are four Korean manufacturers who have spent the past three years quietly building US production capacity.
Hyosung Heavy Industries (298040 KS) operates the only US facility capable of producing 765 kV ultra-high voltage transformers — in Memphis, Tennessee. HD Hyundai Electric (267260 KS) is expanding its Montgomery, Alabama plant to 150 units per year by 2027. LS Electric (010120 KS) just opened in Bastrop, Texas. Iljin Electric (103590 KS), the smallest of the four, just landed a record $333 million order from a US energy company.
Their combined order backlog sits at $23.9 billion as of Q3 2025. That is five to six years of work at current production rates. The DPA priority system now formally elevates their US grid customers ahead of competing industrial demand. These are not speculative positions — they are compounding order books protected by a Presidential Determination.
THE NAMES THE MARKET IS SLEEPING ON
Most of the re-rating in this complex has already happened at the household-name level. GEV, ETN, HUBB — those charts speak for themselves. The asymmetry now lives in two places the market has almost entirely ignored.
Worthington Steel (WS) sits one step downstream from Cleveland-Cliffs in the electrical steel supply chain. Worthington is a steel service center — they take raw GOES from the mill and toll-process it into the precision slit coils and lamination blanks that transformer OEMs actually bolt together. Unglamorous work, which is exactly why it hasn't re-rated with the rest of the complex. But if DPA priority ratings are pulling more Cliffs output toward grid applications, someone processes that steel. Worthington's electrical steel volumes move directly with transformer production schedules.
Hammond Power Solutions (HPS.A CN) rarely appears alongside GEV and ETN, but the company is North America's largest manufacturer of dry-type transformers — a category that is equally capacity-constrained and, critically, faster to deploy than liquid-filled units. Dry-type transformers don't require oil, making them the default choice for data centers, industrial facilities, and commercial build-out. HPS has expanded aggressively into the US market through its Monterrey manufacturing footprint, which provides a nearshoring angle genuinely differentiated from European OEMs scrambling to stand up American capacity.
INVESTMENT TABLE: WINNERS
COMPANY / TICKER | TIER | THESIS | 90-DAY CATALYST | 3-YEAR TAILWIND |
Cleveland-Cliffs (CLF) | TIER 1 | Sole domestic GOES producer. DPA names electrical core steel as national defense priority. Monopoly meeting a government mandate. | DOE loan application / Weirton restart announcement; any OEM commentary on GOES sourcing | GOES demand structurally tied to every transformer built in America for the next decade |
Quanta Services (PWR) | TIER 1 | Irreplaceable human capital moat. Transmission backlog all-time highs. Labor bottleneck structurally unfixable by any federal program. | Q2 earnings backlog update; new DPA-rated transmission contract awards | 4-5yr lineman training gap means pricing power persists well after OEM supply normalizes |
GE Vernova (GEV) | TIER 1 | Electrification backlog quarterly additions now nearly equal full-year 2022-2025 combined. Backlog growth accelerating, not abating. | Next electrification segment backlog print; any DPA priority order disclosure | AI capex supercycle with no demand ceiling visible on current forecasts |
Hyosung Heavy Industries (298040 KS) | TIER 1 | Only US plant (Memphis) capable of 765kV ultra-high voltage transformers. Irreplaceable near-term. | New US utility contract announcements; DOE loan crowding-in for Memphis expansion | 765kV US capability monopoly — no domestic competitor for highest-voltage units |
HD Hyundai Electric (267260 KS) | TIER 2 | Montgomery, AL expansion to 150 units/year by 2027. Capacity ramping into confirmed demand. | Montgomery expansion completion milestones; backlog update | Allied-nation supply preference under DPA national security frame |
Worthington Steel (WS) | TIER 2 | Ignored downstream GOES processor. Volumes move directly with transformer production schedules. Zero re-rating vs. complex. | Any OEM commentary on lamination sourcing; Cliffs GOES volume pull-through data | If CLF GOES output grows, someone processes it — and Worthington is that someone |
Hammond Power Solutions (HPS.A CN) | TIER 2 | North America's largest dry-type transformer maker. AI data center default spec. Monterrey nearshoring angle. | US data center order disclosures; Monterrey capacity utilization commentary | Dry-type is faster to deploy than liquid-filled — structurally preferred for data center buildout |
Eaton (ETN) | TIER 2 | Diversified grid infrastructure, strong US manufacturing. DPA priority and DOE loan crowding-in beneficiary. | Utility backlog update in next earnings; any Title III procurement award | Broad grid exposure across switchgear, distribution, and power management |
LS Electric (010120 KS) | TIER 3 | Bastrop, TX facility just opened. Growing US presence in DPA-prioritized supply chain. | First US facility production ramp update; any rated-order contract win | Greenfield US capacity aligned with DPA priority manufacturing preference |
Iljin Electric (103590 KS) | TIER 3 | Record $333M US energy company order. Breaking into Western markets from small base. | US contract pipeline updates; follow-on orders from record energy company deal | Smallest of Korean Four with most room to grow — early innings of Western market penetration |
PRESSURE POINTS
COMPANY / TICKER | RISK | EXPOSURE |
Chinese Transformer Exporters | HIGH | DPA priority system and existing 50% tariff stack on derivative products systematically excludes Chinese supply from US grid applications. Revenue at structural risk. |
Industrial/Commercial Customers (Non-Grid) | MEDIUM | DPA priority ratings route transformer supply to grid customers first. Industrial and commercial buyers move to the back of the queue. Lead times extend. Project timelines slip. |
Utilities Without DPA Priority Access | MEDIUM | Priority rating system creates haves and have-nots. Utilities slow to navigate federal procurement process may find supply allocated to better-positioned competitors. |
European OEMs Lacking US Footprint | LOW-MED | ABB, Siemens Energy benefit from demand but lag Korean manufacturers on US manufacturing investment. Supply prioritization may favor domestically produced units. |
BEAR CASE
What Could Go Wrong The $323M in remaining FY26 DPA Title III appropriations is genuinely small relative to the infrastructure gap. If Congress does not appropriate additional Title III funds, the direct federal dollar support is a rounding error. Margin compression is the inescapable endpoint of this trade. If the DPA priority system successfully accelerates capacity additions — which is the whole point — it will eventually relieve the bottlenecks that have driven OEM pricing power. Eaton, GEV, and HUBB have already guided to margin normalization. The question is timing. The Korean Four trade carries FX and geopolitical risk. Korean won volatility, South Korea's own political turbulence in 2025, and the remote but non-zero risk of peninsular escalation are real considerations for investors accessing these names directly. Cleveland-Cliffs' steel cycle exposure is still real. GOES is a growth product for Cliffs, but the company carries significant legacy flat-rolled steel exposure to auto and construction cycles. The DPA narrative doesn't eliminate that cyclicality — it just provides a higher floor. Labor shortages may delay project completions even with transformed supply chains. Quanta's backlog is real; converting it to recognized revenue requires workers who are not currently available in sufficient numbers. |
WHAT TO WATCH NEXT
Five Signals That Will Confirm or Derail This Thesis 1. Priority-rated grid orders appearing in OEM earnings commentary. The first time GEV, ETN, or a Korean manufacturer discloses a DPA-rated order in a press release or earnings call, the institutional money starts moving. 2. New Title III appropriations beyond the ~$323M remaining in FY26. Congress's willingness to fund a second tranche is the clearest signal of bipartisan durability for the national security reframe. 3. Transformer factory expansion announcements with commissioning timelines. Capacity additions are the margin compression clock — each new factory announcement starts a countdown on OEM pricing power. Watch the dates carefully. 4. Utility rate case filings citing DPA access. Utilities that successfully secure DPA-rated priority will begin showing compressed lead times in their filings. This is when the have/have-not divide becomes visible in data. 5. Any tariff or trade policy changes affecting GOES and transformer components. The 50% tariff stack on derivative transformer products is a structural pillar of the CLF monopoly thesis. Watch for any trade negotiation language touching steel or electrical equipment. |
FIVE TAKEAWAYS
1. The DPA invocation is not primarily about the $323M. It's about the priority rating system, DOE loan access, and the political reframe from climate policy to national security — the latter being the most durable and most underappreciated element.
2. Cleveland-Cliffs is the single most direct beneficiary of the DPA's explicit naming of 'electrical core steel.' There is no other public security where a single Presidential determination maps so cleanly to a domestic monopoly position.
3. The labor bottleneck is structurally unsolvable. EPC contractors with skilled workforces — Quanta first among them — will outperform OEMs on a two-to-three year view as OEM supply expands and labor scarcity persists.
4. The Korean Big Four combined backlog of $23.9 billion represents five to six years of work. The DPA now formally protects their US grid customers' position in queue. These are compounding order books, not speculative momentum.
5. The market is sleeping on Worthington Steel and Hammond Power Solutions. The re-rating in the grid complex has been concentrated in household names. Downstream processors and dry-type specialists offer the asymmetry that OEMs no longer provide.
The grid doesn't care who's in the White House.
It just needs copper, steel, and time — and Washington just decided it's running out of all three.
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Distributor: Foreside Fund Services | Investing involves risk including possible loss of principle.
News vs. Noise: What’s Moving Markets Today
I went on Tasty Live yesterday to give my market thoughts…..
Nobody really seems to care about the Strait of Hormuz stalemate. Oil is up another 2.3% this morning, closing back in on $100. I’ve been telling you to buy dips in oil stocks, looks like an undercut and rally on XLE today…..
Speaking of news, I can’t help but think this is a big deal…..
OpenAI recently missed its own targets for new users and revenue, stumbles that have raised concern among some company leaders about whether it will be able to support its massive spending on data centers.
What Iran Tells Us About UFO Disclosure
When governments confront unknown threats in their airspace, defense budgets surge
and the same aerospace and surveillance companies move hardest. On March 2nd,
Northrop jumped 6% and Lockheed 3.3% on the Iran news — and President Trump has
since ordered the formal release of government UAP files, with the Pentagon confirming
compliance. So if a conventional conflict can move these stocks this fast, what happens
when the bigger story breaks?
See the UFOD holdings: [thetruthisoutthereufod.com
ETF News
$MEMY Holdings Update:
We replaced $CRCL ( ▲ 1.28% ) $FNV ( ▼ 1.69% ) $PPTA ( ▼ 4.55% ) $TTD ( ▲ 4.91% ) and added $MITK ( ▼ 3.2% ) $P ( ▼ 0.87% ) $POET ( ▼ 17.81% ) $NOK ( ▲ 10.27% ) All 5% positions.
For a full list of MEMY holdings, visit:
https://incomeblastetfs.com/etf/memy
Distributor: Foreside Fund Services, LLC
A Stock I’m Watching
This was PSTG, undercut and rally at the 200 day moving average yesterday.
In Case You Missed It
I’m joined by Michael Gayed to talk about why the 60/40 portfolio doesn’t work, and what does…..
The H.E.A.T. (Hedge, Edge, Asymmetry and Theme) Formula is designed to empower investors to spot opportunities, think independently, make smarter (often contrarian) moves, and build real wealth.
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