eHack by Meet Kevin

Rules: ✅=data. 😇=kevin’s opinion ➡️=sub notes ⚠️=critical/shock 📝=attachment 🔗=share link 👥=team opinion
=fed/rates. =important. =politics =crypto

Worm ATE Presidential Candidate RFK’s Brain. 05/08/2024 10:42 PT
✅ RFK claims numerous health issues, however the NYT recently claimed that a parasite possibly ate part of his brain. 
✅ This came out during a deposition made during a divorce from his second wife about a decade ago. 
✅ In 2012 a surgeon reviewed his brain scans after RFK claimed memory loss and fogginess. 
✅ The surgeon believes that the issue, “was caused by a worm that got into my brain (RFK speaking) and ate a portion of it and then died.”
✅ “I have cognitive problems, clearly … I have short-term memory loss, and I have longer-term memory loss that affects me,” Kennedy said in the deposition.
✅ Stefanie Spear, the Kennedy campaign press secretary. “The issue was resolved more than 10 years ago, and he is in robust physical and mental health. Questioning Mr. Kennedy’s health is a hilarious suggestion, given his competition.”

🔗 Link to this post

---

Cannabis To Be Rescheduled. 05/08/2024 10:08 PT
✅ Per The Associated Press, The U.S. Drug Enforcement Administration is in the process of reclassifying cannabis from Schedule I to Schedule III.
✅ This is following a recommendation to do so by the federal Health and Human Services Department.
✅ Schedule I substances have no accepted medical value, and a high potential for abuse.
✅ Schedule III substances have low-to-medium potential for abuse.
✅ Although the proposal would acknowledge medical uses and lower potential for abuse, it would not legalize cannabis recreationally.

🔗 Link to this post

---

Polish Counterintelligence Warns of Putin attack. 05/08/2024 10:01 PT
✅ The head of Polish military counterintelligence has warned of Putin preparing for a small operation against Nato frontier states in Northeastern Europe. 
✅ If you ask GPT to give the counties that fall the parameters of “NATO frontier states in northeastern Europe” GPT spits out, “Estonia, Latvia, Lithuania, Poland”.

🔗 Link to this post

---

Assassination Plot Foiled. 05/08/2024 10:00 PT
✅ Ukraine’s Secret Service is claiming to have caught two agents of Russia plotting the assassination of Ukraine’s President Volodymyr Zelensky. 
✅ Ukraine’s Secret Service (SBU) claims that these Russian agents wanted to give Putin “a gift” for being sworn in for his new term which happened on Tuesday. 
✅ The two men were colonels in Ukraine’s state guard who were recruited away by Russia’s Federal Security Service. 
✅ Ukraine claims that these men leaked classified information to Moscow. 
✅ According to Ukraine, the two men who were in the Ukrainian State Guard were tasked to find someone close to the presidential guard who would take Zelenskyy hostage and later kill him. 
✅ “The terrorist attack, which was supposed to be a gift to Putin for the inauguration, was indeed a failure of the Russian special services,” SBU chief Vasyl Maliuk
✅ To be clear, Ukraine alleges this was not an assassination attempt, it was a plot that was foiled.

🔗 Link to this post

---

Druckenmiller: FED and Bidenomics are Broken. AI may be in a bubble. 05/08/2024 08:48 PT
During the interview, Druckenmiller says:
🗣️ The FED should not have pivoted so soon in December since he has ruined expectations and made markets run a little too hot.
🗣️ The markets are realizing that rates are going to have to stay higher for longer despite consensus that they were coming down. 
🗣️ The very act of Powell pivoting and turning dovish has led to these optimistic expectations and a hot economy. 
🗣️ Powell should have never even mentioned cuts. 
🗣️ The FED should get rid of forward guidance because it only complicates things 
🗣️ Forward guidance can cause both the FED itself and markets to get stuck and cause drastic/unnecessary moves in markets
✅ He roasts JPOW at 6:40 saying:
✅ “Don’t go on 60 minutes. You’re not a rock star.”
✅ He rates Bidenomics an F at 0:18
🗣️ The government is spending like we are in a recession despite the fact that the private sector looks nothing like it did in the 1930s
🗣️ Overspending and higher interest rates on debt might crowd out innovation that would otherwise take place and hurt the economy in the long run
🗣️ It’s mainly the treasury that is overspending but the FED is definitely not helping out. 
✅ Despite being early on the AI boom he sees similarities to the .com bubble and the initial onset of the internet boom/bust
✅ In the short term he is more bearish but in the long run very bullish
✅ He thinks AI and companies like Perplexity AI are a game changer.

https://www.youtube.com/watch?v=ByEOyyoMMtc
https://www.youtube.com/watch?v=9f7mJIGMzRM
https://www.youtube.com/watch?v=reQtIkjW4Io

🔗 Link to this post

---

Meet Kevin Market Live 05/08/2024 05:55 PT

Tesla DOJ Investigation
✅ DOJ has been investigating FSD since October 2022. Now, Reuters believes the DOJ is potentially pursuing wire fraud charges against Tesla, which include the intent to defraud investors on the stated capabilities of FSD.

Snapchat
✅ Offers $650m of convertible notes due in 2030.

Shopify
✅ Q1 Rev beats $1.86b vs $1.84b.
✅ Q1 Adj EPS 20c vs 17c.
✅ Q2 gross margin forecast decreases 50bp.
✅ “Weak Q2 outlook eclipses Q1 beat.”
😇 Going from gain last year Q1 to loss now probably contributes to this pain. Though operating income was positive, “other charges” contributed to a net loss.

Affirm
✅ Q3 Rev $576.2m vs $550.90m exp, beat.
✅ Forecast midpoint Q4 $595m vs $582.5m exp.

Phantom Debt
✅ New phrase referenced by Bloomberg for Buy Now, Pay Later (BNPL) and pay in 4, many of which don’t show up as loans on consumer reports.
😇 Consider that Flex lets you BNPL your rent. So it’s everywhere.
✅ Harris Poll found that 43% of those who owe money to BNPL were behind on payments.
✅ Of those households with over $100k in annual income, 42% were delinquent, per the survey.

🔗 Link to this post

---

Midnight News 05/08/2024 00:34-05:00 PT

Toast
✅ We don’t see a reason why Q2 would be different for demand; strong. 😇 Bullish. Consumer still cranking.
✅ No material changes.
✅ On path to break-even GAAP by end of year.

Lyft
✅ 23% YOY growth; strong demand.
✅ Continuation of trend seen at the end of 2023.
✅ Lower total prices YOY (better balance between driver and demand).
✅ We want to lower prices. We don’t talk about that externally. But we want more volume.
✅ Continue to see strong demand.

Disney
✅ Higher cost inflation despite higher per-capita spend.
✅ Health demand, though a moderation from post-covid travel.

Wynn
✅ Demand has remained healthy through April.
✅ Sphere is driving visitation.
✅ We reprice daily, based on demand.

Apple
✅ iPhone China shipments up ~12% in March discounts.

Rate Cuts
✅ 1.69 priced in for the year.

5-Year Breakeven
✅ Slides to 2.32.

Uber
✅ $654m loss vs $474m profit, partly due to investments in other companies.

Used Car Crash
✅ As auto insurance rates are skyrocketing the highest since the 70s, (recall its heavy-impact in the latest core CPI readings), the Manheim Used Vehicle Index is down 14% from a year ago. That’s the lowest since Q1 2021.
➡️ Luxury cars down 12.9%.
➡️ EVs down 17.5%.
➡️ Midsize cars down 16.8%.
➡️ Compact cars down 17.6%.
➡️ Pickups down 15.2%.


What a Surprise then Delinquencies are Rising


🔗 Link to this post

---

Gaza & “Muslim Immigration” 05/07/2024 08:25 PT

Muslim Immigration
😇 Meet Kevin Report #1 received a lot of commentary on Muslim immigration and “diluting UK values.” Having reported from a neutral point-of-view, I can say: Wow. Clearly, based on the commentary, the popular opinion sways anti-Muslim immigration in the United Kingdom. Many referred to immigration expanding from not just 2001-2021, but the expansion from the 1950s or even 70s/80s to today, which has led to a substantial increase in the the Muslim population in parts of Europe, of which many are frustrated by.
😇 This is just an observation from commentary, which — of course — may be provide a skewed perspective. Clearly, though, immigration is a top priority for many voters, and ensuring their voices are heard is important.

Gaza and Israel
😇 Similarly, I’ve received multiple messages suggesting Israel’s deepening incursion is solely to ‘go to the end of the earth’ to find the remaining ~130 hostages. If my family member were a hostage, I’d understand.
😇 I hope the situation ends rapidly so that both the hostages can be freed and death can seize in general. War is terror.

Gaza
✅ Gazans began celebrating after a Hamas’s acceptance of the Israeli deal was announced. Then the tanks rolled in as Israel suggested the deal was different from what Israel had proposed.
✅ Now, the cease fire is unclear.

🔗 Link to this post

---

Evening News and FTX Bankruptcy. 05/07/2024 20:15 PT

FTX Surplus
✅ FTX, per Bloomberg, is expected to payback 118% of claims owed. That’s the original principal plus interest.
😇 Obviously, some tokens are worth more today than they were then, assuming someone would have held through the entire crash. But it’s extremely rare for a bankruptcy to payout anything more than cents on the dollar.
😇 Folks receiving their principal back plus interest is a massive win!
✅ Many, including Taylor Swift – who signed an agreement with FTX, but never executed due to SBF’s delay in signing his portion, were duped by FTX and the “most-generous man.” Tom Brady, Kevin O’Leary, stadiums, referees, etc., were caught up in SBF’s gargantuan Ponzi scheme.
✅ FTX currently owes customers $11b. It will have about $16.3b to pay legal fees, customers, interest, and more.
😇 This is great news. It means losses will be made whole, plus interest. Sure, there’s an opportunity cost, but this beats having invested $420,690 in BlockFi (that’s me; $420,690 in), and lost 100%. That’s on me though! This ends a challenging chapter for crypto and finally opens the door to clean crypto.

🔗 Link to this post

---

Apple & Rivian partnership? 05/07/2024 12:34 PT
✅ Apple is rumored to be in talks with Rivian about a potential partnership. 
✅ This was reported by Taiwan-based Digitimes, who cited supply chain sources.
✅ Apple canceled its “Project Titan” Apple car in February.
✅ It is unclear what a partnership between Apple and Rivian might include, but it is speculated that it would help Rivian with their upcoming R2 and R3 vehicles while giving Apple the opportunity to release some of their technology that was planned for Project Titan.

🔗 Link to this post

---

Boy Scouts of America Name Change. 05/07/2024 12:17 PT
✅ Boy Scouts of America have announced they are changing their name to “Scouting of America” on Feb 8, 2025.
✅ This is meant to “include everyone.”
✅ The Boy Scouts of America has faced a storm of controversy in recent years, including widespread allegations of sexual abuse and misconduct. The organization filed for bankruptcy in 2020 after spending more than $150 million to settle abuse lawsuits.
✅ Last year, the Boy Scouts of America began compensating thousands of victims of sexual abuse through a court established Victims Compensation Trust. The Trust is expected to pay out $2.4 billion to more than 82,000 survivors of abuse, CNN reported.
✅ According to figures provided to The Associated Press, membership for the BSA’s flagship Cub Scouts and Scouts BSA programs dropped from 1.97 million in 2019 to 1.12 million in 2020, a 43% plunge. Court records show membership has fallen further since then, to about 762,000.
✅ The BSA had more than 4 million boys participating in the 1970s.
✅ Boy Scouts 11yr – 17yrs Total Members:
2018: 834,142
2019: 798,516
2020: N/A
2021: N/A
2022: N/A
2023: 392,275

🔗 Link to this post

---

Morning News. 05/07/2024 08:45-12:37 PT

Apple Event
✅ M4 Chip for new 13″ iPad Pro (0.1″ larger, 50% faster CPU, 4x faster graphics).
✅ Ultra Retina, vs just Retina.
✅ New, larger iPad Airs (11″ and 13″) with M2s.
✅ AI capabilities may be released at WWDC on June 10th.
😇 Somewhat underwhelming for current iPad users, unless of course the AI features are exciting enough to drive a new purchase cycle. I one of my current iPad’s in studio is a 2020 model and I haven’t noticed any reason to upgrade it. It’s great!

Ukraine and Assassination Attempt
✅ Ukraine’s Security Service suggests Russia had a plot to assassinate Zelensky by striking his vehicle convoy with missiles/drones based on inside information that was supposed to be provided by plants in the SBU to Russia. Two senior officials, who joined the SBU *before* the invasion of 2022, were arrested.
➡️ Plant sends GPS location of convoy.
➡️ Missile strike.
➡️ FPV drone used to ‘finish the job’ of any survivors.
➡️ Second missile strike (double tap) to cover up the presence of the drone.
✅ Ukraine published a phone call, messages, and photos of the official with his FSB (Russian) handler.
✅ Russia allegedly offered $50,000 for the job.
✅ Targets included Zelensky, SBU Chair Malyuk, and the top military-intel officer Budanov.
✅ The plot was supposed to be a “gift” to Putin for his inauguration today (starting another 6-year term).
✅ Russian progress: gaining ground as Ukraine awaits additional funding/weapons from the US. Eastern territory is gaining ground for Russia. WSJ has a decent look via a video here.


Trump Trial, Stormy Daniels Testimony
⚠️⚠️ Note: The below are notes from Stormy Daniels’ testimony. Her credibility is what’s up for debate here. Will the jury believe her? Or disregard her testimony?
✅ She discusses beginning her career in exotic dancing at 17. She danced for money at Louisiana strip clubs.
✅ Daniels first met Trump at a celebrity golf tournament.
✅ She suggested Trump invited her to dinner through one of Trump’s bodyguards, and she responded with “f*ck no” originally.
✅ She gave Trump a copy of one of her adult films that she wrote, directed, and starred in.
✅ She was 27 at the time.
✅ Judge expressed frustration that the level of detail the prosecution wanted was too much. Color of floor didn’t matter, he said.
✅ Per Stormy, Trump offered her a spot on The Apprentice.
✅ She suggested that Trump wanted to offer her the spot because:
➡️ She could prove “you’re not just a dumb bimbo; you’re smarter than people think.”
➡️ She’s smart and blond and beautiful.
➡️ It would shake things up and “get a lot of attention.”
➡️ She suggested she’s “not a business person; there’s no way I could win.”
➡️ Trump allegedly suggested, “What if I tell you what the challenges are? […] I have control. I can give somebody an edge, to make sure you could at least make a good showing.”
😇 My Tweet on this.

➡️ Stormy never appeared on The Apprentice.
✅ Stormy further testified that Trump, in his hotel room in 2006, was arrogant and would try to steal the conversation.
✅ Trump regularly tried to one-up her and she called him arrogant and pompous.
✅ She said he became much more polite after she called him out and threatened to swat him with a paddle.
✅ In 2006, she says she was invited to Trump’s hotel room, where he was wearing silk-style pajamas.
✅ She joked: “Does Mr. Hefner know you stole his pajamas.” Trump then changed.
✅ Some pictures/screenshots coming from Stormy Daniels shows she had added a contact for Trump’s assistant Rhonna Graff into her phone.
✅ She suggests she first became interested in being paid for the story after she heard someone else might be paid for the story. She’d rather make the money than someone else.
Additions after 11:35 PT
✅ She testified that in 2015, in a Vegas parking lot, she was threatened about staying silent about Trump. She did not report the incident. This is around the same time she was getting a lot of offers for the story on Trump.
✅ She says this wasn’t about the money.
✅ She signed using a fake name to keep the true “nature of the parties confidential.”
✅ Defense is arguing she’s testifying outside the “guardrails” set by the judge.
✅ Judge says a mistrial is not warranted.
😇 Benefit for Trump here is that Stormy’s commentary is difficult to prove. Though she did provide substantial detail, leading to a frustrated judge.
✅ She also alleges she was not paid on time by Trump/Cohen.

Details of the sexual encounter
✅ Trump did not wear a condom.
✅ Judge argues that some of the details that came in were “better off unsaid.”
✅ Stormy said: “He was just up on the bed, like this,” she said, leaning back in her chair and raising her bare right leg above the wooden panels that line the witness box.
✅ Stormy argues “I had my clothes and my shoes off. I believe my bra was still on. We were in missionary position.” -Politico.
✅ The judge shut this down quickly as the defense objected and the judge sustained.
✅ At one point a juror, a female, had her head in her hand.
✅ Blanche argues Stormy once claimed she “blacked out,” and suggests she can’t remember appropriately.
✅ In cross-examination, Trump’s attorney Necheles peppers Stormy: “Am I correct that you hate President Trump?” Stormy: “Yes.” Necheles goes on: “And you want him to go to jail?” Stormy: “I want him to be held accountable.” 😇 They’re trying to make her seem vengeful. Discredit her.

Defamation Case
✅ During Stormy’s discussion of the defamation case, an NYT reporter found Trump to be “solidly asleep.”

Public Perception on Trump Trial
✅ USAToday print edition May 7, 2024 reports Americans on a 3-1 basis predict Trump will be guilty on at least some of the charges in the hush-money case.
😇 Recall, the biggest counterargument is: It’s not illegal to cover up a fake story. That’s why Stormy’s testimony is so critical today.
✅ Of Trump supporters, 44% suspect a guilty verdict. Some due to the trial taking place in New York.
✅ ~86% of Biden supporters believe Trump will be found guilty.

Eric Adams
✅ Rikers is staffed by professionals and “ready” for Trump.
✅ In 1957, Northeast Airlines Flight 823 crashed into the island, after taking off from LaGuardia. Of 57 inmates who ran to help survivors (78 survivors), 30 were released and 16 received a reduction sentence.
✅ Taylor Swift stalking was here in 2024.
✅ Not Epstein. He “died” at the now closed Metropolitan Correctional Center in NYC.

Trump Media Auditor
✅ Trump Media and Technology Group ($DJT) fired the auditor BF Borgers, who was recently charged with “massive fraud.”
✅ DJT only hired BF Borgers 37 days ago, so work related to DJT is not expected to have been effectively touched yet by BF Borgers.
✅ The SEC alleged BF Borgers had “deliberate and systemic failures” in more than 1500 audits. This included:
➡️ Failure to abide by accounting rules
➡️ Fabricating documentation
➡️ Falsely stating audits met audit standards
✅ Owner Ben Borgers agreed to pay $2m. Firm to pay $12m. Both are permanently suspended.
✅ Some allegations suggest the firm would copy documents from a previous year, change dates, then suggest it was current. Or, they’d say they’d do work that was never actually done.
✅ SEC alleges they were a sham audit mill.

European Commission on China
✅ The world cannot absorb China’s surplus production. 😇 Basically, don’t dump on the EU.

SoftBank
✅ Wayve is a UK startup with investments from Microsoft and Nvidia. Microsoft also invested in their 2017 $200m round.

✅ $1b is Europe’s largest AI deal so far.
✅ Wayve uses an AI system that avoids mapping, LIDAR, and allows them to launch in new areas faster. 😇 Sounds a lot like Tesla’s FSD.
✅ Something unique seems to be Wayve’s Lingo-1. This is apparently a chatbot that can explain – in plain English – WHY it made a certain decision, like slowing down for a pedestrian at an intersection.

✅ This LLM transcript is fascinating. Not sure how functional it is. See a full video here: Video.
✅ A second example here.
😇 They’re really a platform that OEMs (other auto companies) can plug into their cars, easily.

✅ Here’s their pitch.

😇 They suggest their platform is camera first, but open to integration with other sensors like radar and LiDar. It appears to give OEMs the ability to choose what sensors to include, or maybe upsell what consumers want.

✅ Note the “end-to-end” AI and “drive by wire.” 😇 These sound like purposeful Tesla comparisons. Note: The CEO of Wayve says Tesla is copying him.

😇 This licensing play is a potential competitor to Tesla. Not from vehicle production, but as a choice for OEMs to license outside of Tesla. It’s a more pure-play, potential white-label, self-driving platform other companies can charge on top of. This does hurt the potential Ron Barron: your car has “Tesla inside” like “Intel Pentium inside.”

Tesla Still Faces Challenges on Deliveries this Year (Especially Q2, per @TroyTeslike)


TikTok
✅ TikTok is suing the U.S. government for requiring ByteDance (parent co) to divest from the app or face ban.
✅ The act takes effect January 19, 2025.
✅ TikTok argues it’s a ban on the voice of the people.

David Einhorn
✅ Upset that ‘passive investing’ has fundamentally broken valuations.
✅ There’s no opinion of value.

Civil War 2
✅ Rasmussen Reports (polling company) just polled and found:
➡️ 41% of likely U.S. Voters believe the U.S. is likely to experience a second civil war in the next 5 years.
➡️ 16% of those view it as very likely.
➡️ 37% believe that war is more likely under Biden.
➡️ 25% believe that war is more likely under Trump.
➡️ 30% say it doesn’t matter who’s President.

Ken Griffen (Citadel) on Gaza Protests
✅ Protests are the result of a failed education system.

Goldman Sachs Supports Bull Run
✅ April showers bring May flowers.
✅ Corporate buybacks may support stock pricing. 3rd highest level of authorizations for buybacks.
✅ Retail traders get active during the summer.

Trump won’t Debate RFK
✅ Why? Trump says RFK’s not a serious candidate. Polls very low.

Dave and Busters (USA Today Print May 7, 2024)
✅ Will soon allow wagers/bets in their app on arcade games to create a “fully immerse” experience at venues.
✅ 18+ and only available in 44 states.

Earnings Today
✅ Rivian
✅ Upstart
✅ Lyft
✅ Wynn
✅ Twilio
✅ Reddit
✅ Toast
✅ Dutch Bros
✅ Joby

🔗 Link to this post

---

Meet Kevin Market Live 05/07/2024 05:25 PT

Disney
✅ Subscriber miss 153.6m vs 155.66m Disney+.
✅ Subscriber miss on Hulu 4.5m vs 4.6 exp.
✅ $2.29b vs $2.27b operating income.
✅ Q2 ADJ $1.21 vs $1.12 exp.
✅ CFO: not seeing struggles with the consumer.
✅ No impact from price hikes.

Celsius
✅ Q1 Rev $355.7m, est. was $390.5m.
✅ Q1 2023 (comp) had plenty of inventory (“inventory buildup”) but Q1 2024 had a shortage of inventory, resulting in an about ~$20m hit.
✅ Note the miss was $34.8m.
✅ Total rev up 37% YOY. International up 43% YOY.
✅ 30% more sales on Amazon this quarter.
✅ Average Wall Street consensus EPS growth is 25%/year over the next 4 years. 2.6 PEG.
😇 Average Wall Street consensus revenue growth 19.4%. So explosive growth may be coming to an end.
😇 Note: I usually like to use 1.67 for a PEG ratio for manufacturing companies and a ~2.6 PEG for SaaS businesses.

✅ Marketing spend up 44% YOY.
✅ 21.8% net income. 😇 Impressive!

Peloton
✅ Up 17/18% on buyout rumors.
😇 Rumors are dangerous and often dump.

Kashkari of the Fed
✅ Questions if policy is restrictive.
✅ Questions if disinflation is still underway.
✅ Not a voter until 2026. 4th most-hawkish member.
✅ Housing resilience makes him question the neutral rate.

AMC
😇 AMC tomorrow needs to prove it isn’t going to run out of money this year. Current assets vs cashflow and current liabilities suggest they will when considering their 2023 annual report from February. To me, I’d want to see: return to profitability on operating income (I’m okay removing depreciation) and positive cashflow. That would be huge for AMC. Removing the bankruptcy risk is critical.
✅ 17.5% implied stock movement for earnings tomorrow. Average movement is 6.47%. 3x the vol implied.
✅ Per BoxOffice Mojo: ticket revenue down 23% year over year, industry wide.
😇 Perhaps this is a setup for low expectations.


🔗 Link to this post

---

Meet Kevin Report #1 05/06/2024 19:25-23:45 PT

Palantir Earnings.
😇 Wall Street greed takes over again. Beats and beats on forecasts, but it’s just “not enough” to please Wall Street.
😇 This is huge.
✅ Q1 EBITA $234.9m vs $204.7m expected (14.7% beat).
✅ FY Guide: $2.695b vs $2.68b expected.
✅ 81.6% gross margin.
✅ 16.7% net margin.
✅ +3% sales and admin growth.
✅ +22% R&D growth.
✅ -1.6% G&A growth.
✅ 20.78% headline growth.
✅ Over $127m FCF.

✅ Strategic commercial contracts, which are revenues from SPAC-related investments (basically, we invest in your company, you use our software), are becoming worth much less to Palantir.



✅ Outside “Strategic Commercial Contracts,” commercial growth is:
✅ U.S. only: 68% YOY and 22% sequentially (😇 very impressive).
✅ U.S. only Government revenue is still dominant at 63% of total US revenue.
✅ Total Government Growth was 16% YOY with 3% sequential growth.
✅ 3% sequential growth suggests 12% annual growth (slowdown vs last year), but 22% sequential “non-strategic” commercial growth suggests 88% annual growth.
✅ Note: US Commercial revenue is only expected to be ~24.5% of total revenue for the year. So despite U.S. Commercial growth, it’s just 1/4th of total revenue.
😇 I LOVE this “move beyond chat” comment. AI being “good chatbots” is so 2023. AI needs to actually become useful. Palantir and Tesla have made AI useful since before the 2023 moment.

Downsides for Palantir
✅ 16% of revenue comes from Europe. Headwinds here with GDP trending towards 0.
✅ Only 10% of companies have AI-ready data.
✅ 94% more deals closed in Q1 2024 than in Q1 2023, but lower monetization upfront.
✅ “A lot of what slows us down is people pretending they’re competing with us.” 😇 Powerful, but comes across as somewhat salty. This may be why the stock is in-part down 8% in after-hours after initially rising.
✅ Some hate fighting:

📝 Palantir Earnings Call Q1 2024.

Manningham, United Kingdom: Gaza, Islam, and Immigration.
✅ Manningham has recently come under virality on X & other social media for Muhammed Ali Islam winning a council seat on the Bradford council.

✅ This is a district in Bradford, the UK’s 10th largest city with a 2021 population of 333,950.
✅ Manningham is just 6% of Bradford.

✅ 59.5% of Manningham residents are born in the United Kingdom.

✅ Manningham specifically is NOT religiously diverse. See the statistics:

✅ Tweets such as this suggest Muslim immigration is transforming the United Kingdom and “dark times [are] ahead” by implying mass immigration has transformed the United Kingdom.
✅ However, Manningham’s population has grown by just 16.5% (~3,400 individuals) in the last 20 years (2001-2021).
✅ Therefore, these are likely mostly citizens of the United Kingdom, over 59% of them likely locally born.
😇 Why does this go viral then?
😇 Immigration issues are viral today and they should be. There are massive immigration and border issues that must be solved. This is agreed upon. Assylum expansion has expanded this.
😇 However, nothing screams “IMMIGRATION IS BAD” more than a) people assuming a small, UK community should be white and b) implying it’s been overtaken.
😇 Frankly, it’s a combination of immigration frustration & Islamophobia.
😇 Which once again, and as usual, fuels hate and misimpressions. This data won’t get nearly the attention of these tweets.
😇 Beyond the data, Gaza *does* also play a major factor and immigration / assylum fears.


✅ The vote for pro-Muslim candidates has grown.

Notes on the United Kingdom from Gerry Baker of the WSJ
✅ Most UK issues are decided at a national level. Local elections have much less power than in the U.S.
✅ Local elections DO affect local law enforcement.
✅ A lack of Gaza empathy has *increased* the vote for Muslim candidates.
✅ Labour Party has lost some seats to pro-Gaza candidates.
✅ Mothin Ali in Leeds, after winning a seat, shouted “Allahu Akbar” (God is great).

ZeroHedge on Anti-Muslim Immigration
✅ Germans fear of “becoming minority.” 😇 I personally hear this fear from Germans (remember, I was born in Germany and have family there).
✅ Junge Freiheit Newspaper Reports
✅ 57% polled believed: “In certain areas of my city or village I have the feeling that I am no longer in Germany.”
✅ 54% are: “afraid that Germans would become a minority in Germany.”
✅ AfD in Germany (Alternative for Germany, political party), has been gaining popularity in 2023, but has since fallen again. See blue line.
✅ Nationwide protests against the AfD might be to blame.
✅ Those protests started after the AfD was accused of attending “remigration” meetings to send asylum recipients back.


Columbia University & Protest “Training“
✅ Main commencement ceremony canceled after weeks of pro-Palestinian demonstrations due to security concerns.
✅ WSJ Piece on Protest Training included:
➡️ “months of training”
➡️ “planning and encouragement by longtime activists and left-wing groups.”
➡️ No centralized command, but “National Students of Justice in Palestine (NSJP) has existed over 20 years and has 300 chapters.
➡️ Talk of “Google Drive” with material on how-to-protest circulating.
➡️ See police as “pigs” interrupting their demonstrations.
➡️ Police have been blamed for debris. Some say it’s the protesters themselves who violate laws by graffitiing and taking demonstrations too far.
➡️ Some blame Biden and call him “Geocide Joe” (Trump has mentioned this as well).
➡️ Columbia had “Resistance 101” training in March, virtually (after being banned for their support of “terrorism and the promotion of violence.”
➡️ Pro-Gaza protesters say: “There is nothing wrong with being a member of Hamas, being a leader of Hamas, being a fighter in Hamas,” “These are the people that are on the front lines defending Palestine.”
➡️ The group is banned in Germany and elsewhere as well.
➡️ Much more organization in protests today than in the 1980s.

Israel Attacks Rafah & Cease Fire
✅ Monday night strikes against Hamas targets took place just hours after Israel warned 10s of thousands to evacuate.
✅ Latest cease-fire proposal, mediated by Egypt and Qatar, was deemed “far from Israel’s necessary requirements,” despite Hamas’s apparent support for the deal.

✅ Per Al Jazeera, the deal would include:
➡️ 3 phases
➡️ Release captives on each side.
➡️ Phase 1: Temporary cessation of hostilities & withdrawal of Israeli forces to the east (less-popular regions).
➡️ Israeli warplanes would also stop flying over Gaza for 10 hours a day. 12 hours once captives are released.
➡️ Phase 2: Permanent end of hostilities. Withdrawl of IDF.
➡️ Phase 3: Exchange of final captives. 3 to 5-year reconstruction.
➡️ Israeli media is suggesting Hamas’s support for the deal is just a ruse to suggest Israel is the side not accepting it while Israel suggests the reality is the Hamas deal isn’t what Israel had agreed to.

✅ Currently, 34000 Palestinians have been killed since the start of the Israeli offensive.
✅ Hamas-led attack caused the death of roughly 1200 on October 7th, 2023.
✅ Rafah is currently sheltering ~1m Palestinians. That’s roughly HALF of the entire 2020 population of the Gaza Strip.
😇 That’s an extremely dense area for Israeli airstrikes and will likely lead to substantially more Palestinian deaths.
😇 Food, water, shelter is lacking for such massive amounts of individuals, especially on short notice.
✅ Egypt is building an 8-square-mile walled camp to accommodate 100,000 refugees, though Egypt has initially denied this.

✅ This is life for refugees, per WSJ.


😇 The tremendous human suffering should break hearts across the world. This is true for the suffering on ALL sides. Governments should prevent the deaths of all innocents, especially children.
✅ As of 21:36 PT, Israel now has control of the Rafah Border Crossing between Egypt and the Gaza Strip. First time since 2005.
✅ Footage of an Israeli fighters on a tank filming themselves running over a ‘Welcome to Gaza’ sign.
😇 War-time footage like this unfortunately serves to amplify hate, intentionally or not.

😇 I think we can also agree this is a crime. That doesn’t mean other wars, deaths, or crimes are not crimes. This is not a mutually exclusive statement and arguing otherwise is a logical fallacy. Causing property damage in America is well beyond the 1st amendment right to speech/protest.
😇 Unfortunately, some view calling this below a crime as saying, “Vandalizing is a crime but the murder of children in Gaza must not be a crime then!”
😇 No. That’s an illogical statement. That sows hate, division, and frustration.
😇 The murder of innocent people can be a crime.
😇 Vandalism can be a crime.
😇 Both should be prevented. If perpetrated, punished. That’s what “law and order” means.
😇 That’s much more straightforward in a non-war region, though, and much less so in a war-torn region. That creates significant frustration.

✅ Protests in NY led to statues being graffitied as the Met Gala was underway.


U.S. Delays Precision Weapons into Israel
✅ Biden admin has delayed selling Joint Direct Attack Munitions to Israel.
✅ U.S. has pressured Israel NOT to go into Rafah.
✅ JDAM kits convert unguided bombs into “accurate, adverse weather ‘smart’ munitions.”
✅ 500-2000 pound warheads.
✅ Boeing Company manufactures.
✅ Each tailkit runs about $22,000, but the Israeli deal may value them closer to $40,000 each.
✅ Current deal includes 6,500 for $260m.
✅ JDAM is specifically the kit that adjusts “dumb” bombs to become “smart” or guided.
✅ State Department may have also fouled notification timelines to Congress on this sale.
✅ Other deals still in the works: $700m for 120mm tank ammo, $500m for tactical vehicles, and ~$100m in mortar rounds.
✅ Most of Israel’s weapon purchases from the U.S. are made with U.S. aid to Israel. Israel is the largest U.S. military aid recipient in the world.


Apple iPad, Chips, and Buffett
✅ iPad event at 7am Tuesday.
✅ Reportedly working on its own chip designs to run AI software in data centers.
✅ Project Apple Chips in Data Centers ACDC.
✅ In works for years. Likely to partner with TSM.
✅ Apple’s focus: inference. Nvidia likely to continue to dominate training (GPUs). Nvidia AI-chip dominance is still ~80%.
✅ Remember, Apple did start including neural-net chips in 2017 M-series chips.
✅ Buffett position in Apple down to just 22% of portfolio for Berkshire.
✅ 13% of stake sold.
✅ Why for Buffett? Tax reasons. Down 11% in Q1, when most sales took place.
✅ Predicted Apple would still be the largest holding for Berkshire at end of year 2024.
😇 I still anticipate Apple to drive a new product-refresh cycle with enhanced, AI-focused chips. Yes, some of this will be branding. But some value should come from on-board AI functions.

Trump vs Biden
✅ Biggest battleground states for the 2024 election:
➡️ Arizona
➡️ Georgia
➡️ Michigan
➡️ Nevada
➡️ Pennsylvania
➡️ Wisconsin
✅ Latest 2 Trump v Biden “General Election” polls:


✅ But in battleground states:

✅ Biden approval rating down to 35% in April. Trump left office at 29% approval.
✅ Financial Times suggests Trump has a 0.8% lead, today.
✅ Financial Times survey on what caused inflation reports:

😇 I’m SHOCKED by this chart. I thought Covid-19 would be the obvious choice here. That “Greedflation” is the driver, I believe, showcases a fundamental misunderstanding for economics. Greedflation is only possible when companies raise prices WITHOUT the subsequent increase in consumer’s willingness to pay. When the consumer’s willingness to pay increases to the point that all businesses feel they can raise prices and not lose business, we have inflation, not necessarily corporate greed. One corporation becoming greedy will be destroyed by competition (sorry Starbucks China; y’all need to wake up).

Howard Schultz (former CEO) Message to Starbucks
✅ Brand is the foundation of Starbucks.
✅ You know it when you feel it.
✅ Starbucks is at an inflection point.
✅ It’s natural.
✅ It’s a reset. An opportunity.
✅ But competition requires looking inward. What’s the soul?
✅ Go work the stores.
😇 I love this. He’s basically saying: Look, if you want to know why you missed on earnings, get your butt on the ground level. Are the stores busy? Are people happy? Are people going to Starbucks as their office away from home, like they used to be? Smart man.

Trump Threatened with Jail Time for Hush-Money Gag Order
✅ If he “continued to harass witnesses and jurors” “this court will have to consider jail sanction.”
✅ The court has already sanctioned Trump 10 times, $1,000 for each violation.
✅ That’s the maximum penalty allowed.
😇 The campaign PR for Trump spending a night in jail would probably skyrocket Trump’s donations. Wild times we live in!
😇 Trump knows this, hence he’s already branded the potential:
✅ “Our constitution is much more important than jail. It’s not even close. I’ll give that sacrifice any day.”

Putin Nuclear Drills
✅ Putin has ordered the military to rehearse “tactical nuclear weapon” use in combat.
✅ Response to Macron (French President).
✅ Macron on the 28th of April suggested nuclear weapons should be “part of [the] European defense” debate, suggesting otherwise “Europe could die.”
✅ Macron also hosted Xi Jinping in Paris.
✅ China promised to help de-escalate.
✅ Anti-Macron activities now call Macron a “national danger.”

Scott Galloway (NYU Professor), TED Talk
✅ If we love our children, why is it so much harder for younger generations to participate in buying cars, going to college, or acquiring housing and income?

✅ Those under 30 years old used to control 12% of U.S. wealth. Today, less than 7%. Wealth is being concentrated amongst the older generations, who build fewer homes to preserve their wealth.
✅ Colleges have become hedge funds offering classes.
✅ We should reduce tuition, expand enrollment, and increase vocational programs.
😇 When I ran for Governor of California, I ran on the promise of creating Future Schools, which would leave every Californian graduating with a trade skill at 18, capable of functioning in today’s economy day 1 after high school WITHOUT college. Practical skills by 18 are highly missing from today’s curricula, including financial education. Is it really that hard? Apparently, yes!
✅ Old politicians are “walking dead.”
✅ Social security forces young to pay for many of those who don’t need it.
😇 Almost IMPOSSIBLE to get entitlement reform (like social security). Why? Older generations VOTE! Scott hits on this as well and says “that’s representative democracy for you!”
✅ Social media is harming children: leading self harm, depression, and a lack of sex to rise.
✅ Mark Zuckerberg is evil.
✅ No child should be on social media under 16.
😇 I find myself feeling more divisive and depressed after using Instagram, TikTok, and X. My goal is to limit exposure to these platforms by forcing myself to only engage with them on a computer and deleting the apps from my phone. They’re time vampires as well.

Economic Data
✅ RealGDP 3.3%.

😇 Cleveland negative CPI Nowcast on headline likely due to a collapse in oil prices.



TS Lombard on Inflation Breakevens
😇 I’ve been complaining about the 5-year breakeven skyrocketing January-March (red line) (finally some relief in April).

✅ Now, TS Lombard is picking up on this – suggesting this increase across developed markets is a sign of the end of “immaculate disinflation.”
✅ Specifically, referring to the UK.

✅ Reiterates looser financial conditions don’t matter to Fed.


SocGen on Rate Cuts
✅ 2025 more likely for cuts.

Why JPM’s Marko Kolanovic is Bearish
✅ U.S. exceptionalism could keep USD high relative to others. 😇 True. Even as yields in the U.S. fall, if others go into recession, our yields will still be higher. That leaves the USD stronger.
✅ Stronger USD could weaken U.S. earnings (FX hit).
✅ Earnings expectations high in the face of crowded positioning.
✅ Consensus earnings expectations too high.

A Note for the Meet Kevin Community
✅ The Meet Kevin Reports begin again. Meet Kevin Report #1 starts May 7, 2024.
✅ New Commitments to the Meet Kevin Brand:
➡️ A Daily Meet Kevin Report live by 5:00 a.m. PT. (Every Day.) on Meet Kevin Channel.
➡️➡️ Neutral
➡️➡️ Unbiased News Summary
➡️➡️ With Commentary from Kevin
➡️➡️ Stocks, Politics, Fed, Israel, Russia, Trump, Biden, Gaza, and More. Daily.
➡️➡️ Daily 20-30-minute segment.
➡️➡️ In addition to any breaking news or single-topic videos.
➡️➡️ NO ripping content from Meet Kevin Report for clip videos.

➡️ Daily Meet Kevin Market Live at 5:25 a.m. PT. (When the market is open.) on Meet Kevin Market Live Channel.
➡️➡️ The sticks.
➡️➡️ Market news.
➡️➡️ Stocks and crypto only.

➡️ The Podcast Returns on Meet Kevin Market Live. (When the market is open.) on Meet Kevin Market Live Channel.
➡️➡️ 1:30 p.m. live crew podcast to discuss same-day news events.

➡️ The Course Member Livestreams on Meet Kevin Market Live. (When the market is open.) on Meet Kevin Market Live Channel.
➡️➡️ 6:45 a.m. live course-member stream.
➡️➡️ Flexible start between 6:45-7:00 a.m.

Meet Kevin App
✅ Notifications available for BOTH channels on the “Meet Kevin” app in your app store (Android/iOS).

eHack
✅ Dramatically more eHack coverage and more reliable coverage.

Personal Commitments
✅ On-time or early 5:00 Meet Kevin Report.
✅ On-time 5:25 Meet Kevin Market Live.
✅ On-time 06:45-07:00 Start Course-Member Live.
✅ On-time 13:30 Podcast (Except the rare times we do breaking earnings during this time).
✅ Daily Fitness Challenge.
➡️➡️ Personal, “get in best-shape-ever by year-end challenge.”
✅ Daily Family Time.
✅ HouseHack time in between these dedicated Youtube priorities, which also benefit HouseHack, and on weekends.

🔗 Link to this post

---

Morning News 05/06/2024 06:26 PT

Palantir
✅ Reports at 1:05pm today.

Rate Cuts as of 06:26
✅ 1.86 cuts.

🔗 Link to this post

Recession 05/03/2024 05:30 PT

Recessions are a Vicious Loop
😇 First, products come into demand in a boom.
😇 Companies over expand the means of production.
😇 Prices and revenues boom as the economy booms, leading to more means of production (Think Starbucks: successful brand DOUBLING store count in China or Lithium refineries).
😇 This induces competition to join. “Want to get rich, get into X!” Literally something Elon Musk said about Lithium.
😇 Then some catalyst disrupts demand. Rates, tastes (range anxiety, politics, whatever it might be), or other competition (other coffee makers, etc.).

😇 Then sales begin to flatline.

😇 Then denial, or ego sets in.
✅ Here’s the Starbucks earnings call from April 30, 2024.

😇 Eventually, denial meets reality. Products & services either need to innovate (provide more value) or reduce their prices.
😇 This leads to layoffs.
😇 This shouldn’t be a surprise. But incase it is:
✅ Here’s what ZipRecruiter says about revenues declining. “When we see demand[…] decrease, we pull back on expenses.”

😇 In other words, layoffs.
😇 This is a complicated chart. But basically, NO recession occurs WITHOUT the line skyrocketing.
✅ The line is now the highest it’s been in 38 years absent a recession.
✅ The yield curve is still inverted by ~27bp.
✅ The Fed is tilting dovish.

😇 Are they seeing something coming and could massive rate cuts be on the table soon?

🔗 Link to this post

---

Morning News 05/03/2024 05:30 PT

Jobs – MISS
✅ 175k jobs vs 240k expected and 12k up revision on prior.
✅ Average time of unemployment is down.
✅ Household survey only ads 25k.
✅ Lowered yields; increases odds of rate cuts.
😇 CLEARLY this is why Jerome Powell was dovish yesterday. We made a video saying the Fed is Afraid yesterday as they removed almost all issues EXCEPT jobs. And here we go: jobs miss just 2 days later. Jpow knew.
✅ Nick T Charts:
😇 Clear lack of wage-price spiral concern, hence Jerome Powell removing that concern.
✅ Smallest gain in the last 6 months.

😇 Q1 heat cools down.


Market Rate-Cut Pricing
✅ Two days ago prior to the FOMC meeting, we were looking at about ~1.20 rate cuts by December. Now, we’re looking at pricing in 2.00 rate cuts by December.

Kevin Sentiment Indicator the last 2 Months (Starting early March)
😇 1 is full bear.
😇 10 is full bull.
😇 10: Covid buy the dip. Kevin refinances all houses in March of 2020 and YOLOs on Larry Kudlow’s V-shape for the stock market.
😇 1: Jan of 2022 would have been a full 10. I was making Titanic sinking videos and suggesting bonds, SPACs, and stablecoins would collapse.
😇 2.5: Early March of 2024. Bear and “Going Cash.” Early March after hot data for Jan/Feb.
😇 5: First tech earnings week (April 22). Confidence in guidance. Also though diversifying (owning more stocks/less concentrated on singles).
😇 6: Second tech earnings week (April 29).
😇 7.5: Now (May 3 after Powell).

Let’s try that with Tesla in the near term.
😇4: March. Hey, the stock will probably be stable to down, but I can tax-loss harvest and offset other future gains (trading or otherwise).
😇2: Early April: Fear margin would collapse under 15% (would send stock to $100). This was downside protection. Hedging. FCF negative FEARS.
😇6: Post earnings. Why? Margins 18%. But FCF still significantly negative and delivery numbers will likely be flat to negative in 2024, BUT that creates a bottom this year and creates potential upside in EPS growth (lower peg ratio) for 2025+.
😇7: Post Powell & Jobs Report: Dovishness would make me more bullish on interest-rate sensitive stocks but obviously Tesla still has its risks (FCF being a serious concern uber-bulls ignore).
😇9-10: When rate cuts start or when data implies phat rate cuts coming.

🔗 Link to this post

Morning News 05/02/2024 05:35 PT

Morning Numbers
✅ 5-year breakeven drops to 2.39.
✅ 2/10 inversion at 32bp.
✅ 10-year at 4.62%.
✅ BTC $58,800.

Etsy
✅ Dropping roughly to the lowest point since the pandemic after reporting sales declines for the entire year will match the Q1 decline they just reported.

Greed and Fear
✅ Drops to 35 (fear).
😇 Market this morning appears poised for recovery.

Richard Clarida, former Fed
✅ Still a bumpy road.
✅ Last 3 months, not good inflation data.
✅ Chair not targeting wage inflation.

TS Lombard’s Two Risks to Jerome Powell’s Bullishness
✅ 1) Early cuts off table. That creates risk that WHEN Powell cuts, it’ll be too late (following job losses).
✅ 2) Increasing risk premium (😇 basically, increasing valuations in the face of the Fed accepting higher inflation for longer). 😇 Maybe that’s what they mean by higher for longer.
😇 Last inflation-moderation cycle took ~40 years to get to inflation lows. Inflation has made substantial progress in just 2 years thus far, hence maybe “higher inflation” for longer may be okay for now.

China per Goldman
✅ Q1 Rising loan demand.
✅ More accommodative monetary policy expected going forward.
✅ Higher inflation expectations.
✅ More negative real estate expectations.
✅ Higher propensity to spend by consumers.

Barclays
✅ Rightly identifies that Powell, unlike prior meetings, did NOT reiterate that rate cuts would begin this year or that hopes were cuts could begin this year.

🔗 Link to this post

---

Fed Jerome Powell FOMC 05/01/2024 10:55 PT

Surprise
✅ Markets were expecting treasuries runoff to go from $60b to $30b. It went to $25b (so less tightening by $35b, $5b more dovish than expected).
😇 Jpow probably has labor market data for Friday already.
😇 This flips my opinion to 60 dovish / 40 hawkish.

Pre Jerome Powell Speech
✅ 1.18 cuts this year expected
✅ 4.63% 10-year



Jerome Powell Speech
✅ Economic progress very good.
✅ However, lack of progress on inflation goals based on recent data.
✅ GDP growth moderated to 1.6% in Q1, private domestic final purchases (excluding exports/inventory) were 3.1% – that sends a clear signal. 😇 CALLED IT!! He just washed Q1’s GDP miss (rightfully so).
✅ PCE 2.7% over last 12mo. 2.8% core.
✅ Data has been higher than expected.
✅ Some measures of inflation expectations have increased in the short-term. Though long-term expectations remain well anchored. 😇 FINALLY he acknowledges the 5-year breakeven moving up since January. Washes it though with long-term expectations.
✅ Will likely take longer than previously expected to lower rates.
😇 Feels 50/50 so far.
✅ Cap on treasury redemptions: reducing potential money market stress.
✅ Remain committed to 2%.
✅ We are restrictive, we believe.
➡️ Labor market softening somewhat. Still higher than prior, but coming down.
➡️ Same is true of quits/hiring rates. Which have normalized.
➡️ Also look at surveys for businesses: back to prepandemic levels.
➡️ Interest-rate sensitive like housing, you can see our rates are weighing on those.
✅ We’re committed to maintaining our current stance for as long as is appropriate.
✅ We’d rather stay at this level; not expecting a hike. “I think it’s unlikely that the next policy rate move will be a hike.”
✅ Policy well positioned. Won’t dial back rates until greater confidence. Example:
➡️ More persistant inflation: hold off on rate cuts.
➡️ Other path: greater confidence on inflation. Cut.
➡️ Other path: unexpected weakening in labor market. Cut.
✅ Economic activity roughly the same as last year.
✅ Wage growth: we don’t want to target wage growth. Last year we saw wage growth AND historic fall in inflation.
✅ Looking back on Q1: strong labor market, strong economic activity, and 3 warm inflation readings. Yes, take some signal. This is a full quarter. The signal we’re taking is: haven’t gained confidence yet.
✅ Second half of year should have lower inflation.
✅ Lag effect of real estate rent (between market and current) will show.
😇 VERY DOVISH
✅ Paths to cutting and not cutting. 😇 NO HIKE MENTION.
✅ “I was around for stagflation.” Stagflation then was 10% unemployment, slow growth, and high single-digit inflation. I don’t see where that’s coming from today.
✅ I don’t see the stag or the flation.
😇 Big weight now on April inflation report May 15.
✅ No “rule” to trigger rate hike. Yes, we need more time though.
😇 JPOW gets heated on if politics affect him: “GO BACK AND READ ALL THE TRANSCRIPTS; YOU’LL NEVER SEE US TALK ELECTION!”

✅ Markets now expecting 1.43 cuts this year.
✅ Market rent barely going up at all.
✅ Those market rents take years to get all the way into rents for current tenants who are rolling over leases. It just takes some time. As long as market rents remain low, this WILL show up. Lags are longer than expected.
✅ Divergent central bank policy may happen. Haven’t seen turmoil yet. Maybe as emerging markets have better policy frameworks.
😇 Very bullish meeting.

🔗 Link to this post

---

Morning News 05/01/2024 06:22 PT

NYCB
✅ Provision for credit losses up 26%.
✅ 2024 is seen as a “transition year.” More ‘normalized’ 2025/2026.
✅ Deposits showing ‘stable growth’ in April. Q1 deposits though came in at a total of $74.86b vs $79.29b expected.

Sell in May, Go Away
✅ Thesis: sell in May, stay out of stocks until October.
✅ Last 8 times (out of the last 10 years): the S&P 500 has returned 4%^ on average, per Bloomberg, over that timeframe.

ADP Report
✅ Beat at 192k vs 183k exp and prior revised up to 208k vs 184k.
✅ Highlight on job-changers seeing wage gains move UP from the 7% range at start of year to 9.3%-10.1% in the last 2 months).


CVS Misses Forecast
✅ 15.7% miss on fiscal year forecast.
✅ Stock down ~18%.

JOLTS
✅ Misses by 192k 8.488m vs 8.680m exp. Prior revised up 57k.

ISM
✅ Prices paid hot at 60.9 vs 55.4 for April.

🔗 Link to this post

---

Catchup News 04/30/2024 14:22-14:45 PT

A Note from Kevin
😇 Sorry for the delay in updates. Our HouseHack Roadshow and Fundraise ends tomorrow. 22 cities in 8 days! NUTS!
😇 Also, coupon for courses expires TONIGHT. Email staff@meetkevin.com if you have questions.

AMD
😇 Forecast misses by a hair.
✅ Hit by weak demand for gaming chips. 😇 Still makes sense. Covid upgrades will take a while to refresh (esp. in this economy).
✅ Q2 Rev $5.72b forecast, came in at $5.7b midpoint. 0.35% miss.
✅ Beats/Meets: 53% margin (match), 21% operating margin (20bp beat), CapEx 142m vs 118.4m.
✅ Q1 EPS 62c vs 61c.
✅ Q1 Rev $5.5b vs $5.45b.
➡️ Down about 6.11% in after hours. 😇 Wall Street AI is EXTREMELY hard to please!!!

SMCI – Super Micro Computer
😇 Beats across the board.
✅ Q3 Adj EPS of $6.65 vs $5.58 est.
✅ Q4 Sales $5.3b vs $4.73b est.
✅ Q4 Adj EPS of $8.02 midpoint vs $6.97 exp.
➡️ Down about 9.7% in after hours.

AMZN – Amazon
😇 Beats, but misses Q2 guidance.
✅ 37.2% AWS margin; highest in history.
➡️ Up about 1.57% in after hours.

SBUX – Starbucks
✅ First sales drop since 2020.
✅ Q2 Adj EPS 68c vs 80c.
✅ Q2 Comp Sales down -4% vs estimate of 1.46%.
✅ Q2 North America -3% vs 2.05% exp.
✅ Q2 China -11% vs -1.62%. 😇 We saw that coming in the course-member livestreams. Starbucks warned in their last earnings call that their bet on China hasn’t been panning out as quickly as they had hoped. Welp, here it is.
➡️ Down about 9.86% in after hours.

Tesla
😇 Odd 500 person layoff at Supercharger team.
✅ Troy Teslike believes the 4680 ramp is too expensive and the company is cutting costs wherever they can. 😇 I partly agree. They’re definitely cutting costs everywhere they can, but they seem to be focused on spending $10b in AI training CapEx, and cutting from everywhere else to support that. They just don’t have the “cash” uber bulls think they do.
✅ Q2 Fremont production is seen as continuing to slow, similar to Q1, 😇 which is odd since the refresh should be complete. However, the model 3 did lose its $7,500 tax credit this year, making it more expensive than the model Y for the same style.
😇 I think it’s unlikely Tesla is going to beat 2023 delivery numbers. ECI, rates, and inflation-important items are not favoring rate cuts soon.
✅ Troy sees a large decline in Chinese deliveries this year as well. Now expecting 418k deliveries for the quarter vs 479k on consensus.
✅ Elon Musk tweeted:
➡️ Tesla will spend around $10B this year in combined training and inference AI, the latter being primarily in car.

😇 This has lead some to say: Oh okay, some of the expense will go into the car and therefore show up as a Cost of Goods Sold (COGS). And Elon is simply adding that together to show how much they’re spending. Eh, maybe Elon is considering the cost of the computers they’re installing in the cars. So assume $2,000 per hardware 4 computer x 1.8m cars. That’s $3.6b. Still, over $6.4b in “training.” And that’s assuming Elon is adding up the cost of all the computers they’re installing in cars. Which seems weird because they do that anyway, so maybe he’s trying to make it seem more impressive. To me, training will be extremely expensive. Much more than I previously suspected.

Elon’s Response:
✅ Tesla still plans to grow the Supercharger network, just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations

End of Month and Day Prior to Jerome Powell
✅ Today was end of month (common rebalance day).
✅ Jerome Powell speaks tomorrow for the FOMC meeting.

FOMC
😇 Expecting 60% hawkish 40% dovish Powell.
😇 Stable rates.
😇 Possibly announce reducing treasury runoff to ~$30b (half the prior monthly).
😇 Likely reiterate peak rate, hopefully, but leave door open to hike.
😇 Reiterate goal to cut rates this year, but needs more confidence. So far, have not gotten.
😇 Possibly reiterate second-half inflation may come in lower, but we’ll have to wait until then to see it. That means July, August, September, so basically pushes rate cuts to November/December.
✅ Markets today betting on 1.25 rate cuts.

White-Collar Job Growth
✅ White-collar hiring has stalled in areas like finance, technology, media, and professional services. ZeroHedge is noting:
➡️ San Francisco, Los Angeles, and Chicago have seen a net -120k white-collar jobs.
➡️ Phoenix/Seattle seeing declines.
➡️ Miami/Austin flat.
✅ White-collar jobs up just 0.6% from a year ago in March.
✅ Some are seeing low job-security in tech. Pressure to replace jobs with AI.
✅ Lowest job openings are in software dev, banking, finance, and media – all below precovid levels.

🔗 Link to this post

---

Trump Defense 04/28/2024 18:20 PT

Common Defense Strategy
✅ A common defense of acknowledge the minor failings or faults of defense clients in trial is normal to simplify and streamline a court case.
✅ However, this doesn’t work well when you’re running for President.
✅ Therefore, the trial has focused on the defense that Trump “might not be a nice guy,” but “isn’t a criminal.”
✅ Defense focusing instead on: Trump is being accused of back-office paperwork that someone like a President or CEO wouldn’t never be involved with anyway.
✅ Prosecution says, Trump directed the coverup.
✅ But, this likely requires the prosecution to prove Trump had an affair (if true, a accusation that would likely be illegal to cover up).
✅ However, this is RISKY. Without accepting ANY responsibility, some say it’s easier for judges to find Trump guilty.
➡️ $83m E. Jean Carroll defamation verdict.
➡️ $454m Trump Organization Fraud Trial (NY).
✅ This is Trump’s first, personal criminal prosecution.
✅ Trump’s defense attorney Blanche has a colleague named Emil Bove.
✅ Both have argued the National Enquirer regularly looks for stories that may seem like a law was violated. In this case, that’s where it stops. It looks like a law was broken — they argue — but that Trump is innocent and no law was broken.
✅ 2nd week of the Trial mostly covered testimony from David Pecker, who testified he was the “eyes and ears” of the Trump campaign.
😇 That reminds me of the days of The Apprentice, where Trump would regularly say people were his “eyes and ears,” like Bill and Carolyn.
✅ Pecker apparently denied buying the Stormy allegation.
✅ Allegations that Trump violated gag orders will be heard Thursday.
✅ Court will be OFF Monday and Wednesday.
✅ Trump contends he simply put in an expense and it was paid by his team. “What else are they supposed to call it?” Referring to whether it should have been considered a legal expense or not.
✅ Prosecutors call it an “illegal campaign contribution” by Trump to his own campaign. 😇 This could probably be defended easily by suggesting such a payment would preserve the reputation of his business and, tangentially, his campaign.

Trump VP Contenders
✅ Kristi Noem.
➡️ Republican Governor of South Dakota.
➡️ Served since 2019.
➡️ First female governor of South Dakota.
➡️ Norwegian ancestry.
➡️ Father killed in a farm-machinery accident in 1994, when she was ~23.
➡️ Worked in South Dakota House of Representatives.
➡️ Then in U.S. House of Representatives.
➡️ Then, after 4 terms in the U.S. House, became governor.
➡️ Co-sponsored a bill to ban abortion at the time of fertilization.
✅ Presently being chastised on social media for killing a family pet (dog) deemed “untrainable” who would “bite people” and other farm animals. This comes from her book release:

✅ She argues she can’t go back to past decisions (obviously), but reiterates it as a legal, painful decision.

✅ Here are a few reactions:


😇 Pets are very dear to humans. Many prefer someone just say, “I made a mistake” or “I F’d up,” vs “I made a decision that was legal.”

Republican Party
✅ Requesting police to keep protesters further away from the Republican National Convention (RNC) in Milwaukee in July.
✅ Arguing that forcing supporters to walk past protesters would create a dangerous situation.
✅ Current plan confines protesters to Pere Marquette Park. 1/4th of a mile from the Fiserv Forum.

🔗 Link to this post

---

Morning News 04/26/2024 05:48 PT

PCE
✅ PCE MoM figures on par with expectations: 0.3%.
✅ PCE YOY figures hot by 0.1% on core 2.8% and non core 2.5%.a
✅ Jan revised up to 0.50% vs 0.45%.


Zerohedge Chart Highlights Core MoM PCE Increase from Last Month


Tesla Washington Post
✅ NHTSA reviewing autopilot system. Did Tesla do enough?

Atlanta Fed GDP


🔗 Link to this post

Morning News 04/25/2024 05:48 PT

GDP Release
✅ 1.6% vs 2.5% exp and 3.4% last 😇 (Stagflationary!!)
✅ Inventories declined substantially. Add back inventories & trade, you get 2.81%. BUT, why are inventories down?
✅ Does this tell the Fed the economy is NOT reaccelerating?
✅ Does this tell the Fed the economy is reinflating?
✅ -0.35% due to inventories.
✅ +0.52% due to construction.
✅ -0.86% due to trade. 😇 Strong dollar?
✅ 3.6% savings rate vs 4.0% prior quarter.
✅ No longer pricing in full rate cut before December.

Hertz
✅ $392m loss from selling off Teslas.
✅ Expect to sell 30,000 EVs this year.
✅ Loss per share $1.28 vs 0.44% loss expected.

Meta
✅ Q2 expectations missed by 1.3% and stock fell 15%+.
✅ Stock expected down due to higher AI spending, but delayed or less revenue recognition.

GDP Components


🔗 Link to this post

---

Morning News 04/23/2024 05:30 PT

Sherwin Williams – MISS
✅ Sales $5.37b vs $5.51b exp. MISS.
✅ Adj EPS for Fiscal Year: $11.10 at midpoint vs $11.45 exp.
✅ Q2 flat to low single digits.
✅ Stock down 3.8%.

Affirm & Walmart
✅ Walmart backs a startup it majority owns called One to start providing BNPL in its stores for larger items.
✅ Affirm down 7.7% in premarket.

Pepsi – BEAT
✅ Q1 Rev 2.7%+ vs 2.27% exp.
✅ Q1 Rev $18.25b vs $18.07b.
✅ Q1 Frito-Lay $5.68b vs $5.72b exp.

UPS – BEAT
✅ Q1 Rev of $21.7b vs $21.83b exp.
✅ Q1 Adj EPS $1.43 vs $1.30 exp.
✅ CEO says average daily volume in US showed improvement and expects a return to volume and revenue growth.
😇 Positive for economy!

Fiserv – BEAT
✅ Q1 Adj EPS $1.88 vs $1.79 exp.
✅ Q1 Rev $4.54b vs $4.57b.

GM – BEAT
✅ Q1 Adj EPS $2.62 vs $2.12.
✅ FY Adj EPS forecast: $9.50 vs $9.00 at midpoint.
✅ EBIT North America $3.84b vs $3.02b.

Jet Blu – FORECAST MISS
✅ Q1 Rev $2.21b vs $2.2b.
✅ Q1 43c vs 52c exp.
✅ Fiscal year rev down low single digits. Saw flat.
✅ Q2 capEx $550m vs $374.3m exp.

Spotify – BEAT
✅ 615m MAU vs 617.89 exp Q1.
✅ 631m MAU vs 637.06 exp for Q2.
✅ Gross Margin 28.1% vs 26.7 for Q2.
✅ Rev Q1 3.64b Euro vs $3.61b Euro.

PMIs
✅ Miss across the board. Slowest in 4 months.
😇 Will send a dovish signal to Fed, as long as inflationary numbers stay restrained.

Instacart
✅ Drops after Amazon introduces grocery subscription.

🔗 Link to this post

---

Morning News 04/22/2024 05:30 PT

Albertsons
✅ Adjusted EPS beats 54c vs 51c exp.
✅ Identical sales up 1% vs 1.17% (slight miss).
✅ Stock up 1% in premarket.

Verizon
✅ Q1 Adjusted EPS $1.15 vs $1.12 exp.
✅ Forecasts 2-3.5% growth.
✅ Operating rev $33b vs est. $33.21b.
✅ Fiscal year forecast on just EPS $4.60, exp $4.57.
✅ Stock up 1.6% in premarket.

Fed
✅ We’re now 9 days away from JPOW. Remember, the last time JPOW spoke he started focusing again on “not having gained confidence” and washed away the idea that the first three months were just bumps. 😇 This a big risk factor – getting a hawkish Powell next Wednesday.

Matterport
✅ CoStar, the commercial real estate company that runs Loopnet.com is buying Matterport for $5.50 per share. $2.75 cash and $2.75 CoStar stock ($34b company). 😇 This is a HUGE data play. Matterport hasn’t been able to monetize their data yet, but they just did.
✅ CoStar sells for ~140 PE / 2.3% with 59% expected EPS growth over the next 4 years after December 2024.

🔗 Link to this post

---

The Global Decline of Democracy and the New World Order 04/19/2024 12:30 PT

The Global Decline of Democracy and the New World Order
✅ The widely held belief that economic globalization would inevitably foster liberal democratic values has proven false. Instead, democracies have increasingly become economically reliant on authoritarian states. The share of world trade between democracies has declined from 74 percent in 1998 to 47 percent in 2022.
✅ The current world order sees Western countries primarily as consumers, while authoritarian countries, particularly China, emerge as dominant producers. China, in particular, holds significant sway over the means of production, posing a sustainability risk for America.

So Why Is Democracy In Decline? Let’s Look At Latin America First
👥 Ideally, the United States could delegate the production necessary to meet the demands of its domestic consumers by engaging neighboring democratic nations in Latin America, rather than relying on adversaries. However, a longstanding issue persists: the U.S. has systematically exploited these Latin American countries for over 50 years through CIA-backed coups that favored American corporate interests, detrimentally impacting the development of Latin American nations. This exploitation has perpetuated instability and poverty in the region, despite its abundant natural resources and access to cheap labor.
👥 China wields significant influence in Latin America, potentially surpassing that of the U.S. China likely perceives the development of Latin American democracies as a threat to its own dominance, hence advocating for authoritarianism instead.
👥 Many Latin American countries harbor resentment towards democracy, often characterized by failed democratic systems resulting from American exploitation. China has initiated efforts to address massive crime issues in these countries through authoritarian governance, as evidenced by El Salvador’s dramatic reduction in homicide rates over a five-year period (2019-2024). While proven effective, these measures are radical and anti-democratic, leading neighboring nations to emulate them, further distancing Latin America from democratic ideals and American interests.
👥 China’s exports to Latin America hold greater significance than those from the U.S. While the U.S. primarily exports energy to the region, which is an easy export get from somewhere else. Conversely, China’s electronic exports play a crucial role, making them harder to replace.
👥 These factors underscore China’s substantial influence in the Latin American region and its efforts to undermine American independence. Democracy in the region faces a decline due to these multifaceted reasons.

American Ally’s Influence is Diminishing While China’s Grows:
✅ China has ascended to the status of a global superpower, boasting an economy over five times larger than that of the United Kingdom (America’s strongest ally). The British economy is stuck in a period of low growth. The British Army’s size is lower than levels unseen since the Napoleonic era.
✅ Reports from the Center for Strategic and International Studies indicate that China’s shipbuilding capacity dwarfs that of the United States by approximately 230 times.
✅ Projections suggest that more than one in four people on the planet will live in Africa by 2050, Africa is becoming a more desirable location to battle for influence. China and Russia are doing better than everyone else (including the U.K. And U.S.) to establish influence there, foreseeing the potential to control a substantial portion of vital goods and commodities’ means of production.
✅ CIA Director William Burns characterizes certain nations as the “hedging middle,” underscoring their role in shaping a new global order by striking bargains and pursuing their agendas in regions like Africa, Asia, and Latin America.
✅ Collectively about two-thirds of the world’s population, has either abstained from or voted against motions to censure Putin. This challenges the perception of Western societal dominance, it must be noted that these countries are not as wealthy as those aligning against Putin’s actions.

“He Who Controls the Means of Production Holds the Reins of Power”
👥 The “means of production” refers to facilities and resources for producing goods, granting significant influence to owning countries. However, the country controlling the “means of consumption” holds leverage over the demand for these goods.
👥 China and its neighbors predominantly control the means of production, while the U.S. and its European allies dominate consumption. However, China’s growing consumption per capita and population size challenge this balance.
👥 China’s increasing control over consumption, coupled with its dominance in production, tilts the global power balance. Meanwhile, the U.S. aims to bolster its production control, but relies heavily on Asian intervention for finished goods.
👥 China and neighboring nations seek to expand their share of consumption through domestic GDP growth and investments in developing regions, potentially reshaping the global order away from Western influence.
👥 The saying “He Who Controls the Means of Production Holds the Reins of Power,” is a concept Karl Marx is adamant about. Controlling the infrastructure and resources necessary for producing goods and services in order to have the power to determine societal power dynamics. China is a communist country and is doing exactly that.

📝 Foreign Affairs Source
📝 China News
📝 Foreign Affairs Source 2
🔗 Link to this post

---

Morning News 04/19/2024 05:30-05:40 PT

Israel
😇 Israel’s strike appeared to have been messaging, much like Iran’s.
😇 Here are my 180 drones and missiles! (Shoot them down!). Okay, we’ll shoot them down!
😇 Here are my strikes against a city that you do nuclear research in. (Shoot them down!). Okay, we’ll shoot them down.
😇 This is a very bizarre form of saber-rattling. It’s moved from verbal to, here are my weapons, (shoot them down), but I’ll show that I can!
😇 Futures & Bitcoin substantially recovering on this.

Tesla
✅ Recalls 3,878 Cybertrucks due to accelerator pedals that can get stuck under the fabric/framing of the Cybertruck, leaving the pedal fully depressed (accelerating). This is due to a plastic cover that can slide off and lead the pedal to jam. This issue has been implicated in 2 non-injury accidents so far.

AMEX
✅ Revenue up 11%.
✅ Beat expectations.
✅ Write offs up, but not as high as consumer banks – likely due to higher-income demographic.
✅ Softness in small business.

Pattern of Earnings So Far
✅ TSM down 4.86% after earnings.
✅ NFLX down 6-7% after earnings.
✅ ASML 7% then another 2% next day.
✅ APX beat and is up ~3% (😇 rare!).
✅ JPM down 6.47% after earnings.
✅ WFC roughly up after earnings.
✅ C down after earnings.
✅ BAC down after earnings.
😇 Trend of earnings not great.
😇 Earnings themselves have not been bad.

Active Investment Managers
✅ Equity exposure dropped to 63% from 104% in March (leveraged) per Bloomberg. That was the highest level since November 2021. Maybe another 4-5% equity exposure cuts coming.

🔗 Link to this post

---

Israel Strikes Back 04/18/2024 19:30 20:00 PT

Earlier Today
✅ Iranian Revolutionary Guard claims to have downed drones around Isfahan.
✅ Today is Ali Khamenei (Supreme Leader of Iran)’s birthday.

3 Potential Strike Cities
✅ Natanz, Iran
✅ Isfahan, Iran
✅ Baghdad, Iraq

Baghdad
✅ Potential Iranian meeting w/ Iranian proxies meeting in Baghdad that was struck.

Iranian Supreme Council
✅ Holding emergency meeting (possible that this news was false)

Airspace
✅ Between Tehran and Baghdad closed.
✅ Multiple flights canceled in Iran – airspace closing.

Isfahan
✅ Isfahan (Esfahan) Nuclear Technology Center (INTC) located in Isfahan.
✅ Iranian state media is claiming all nuclear facilities remain “unharmed.”

✅ Shahid Vatanpour Army Air Base, Isfahan, Isfahan Province, Iran

✅Isfahan International Airport (Shahid Beheshti), Isfahan Province, Isfahan, Iran


Strikes
✅ F35s and other assets can launch missiles that can circle in space until a specific time or command is issued, allowing timed attacks.
✅ Reports from Iranian TV: no explosions on ground in Isfahan.


Surprise
✅ Israel suggested they may not respond until after Passover (ending April 30th). Clearly, it has now taken place BEFORE Passover (starting 4/22).
✅ Potentially shows the power of Israel though to respond without suspicion or notice.
✅ Iran response: IRANIAN SPACE AGENCY: EVERYTHING THAT HAPPENED WAS A FAILED AND HUMILIATING ATTEMPT FOR ISRAELI AVIATION.
✅ U.S. was notified by Israel (per Fox).
✅ An explosion in Tabriz was triggered by air defenses reacting to a suspicious object detected in the sky.
✅ Flights were suspended nationwide as a precautionary measure while the situation continues to develop.

Iran Strike Back (Potential)
✅ Iran has suggested they would respond with a weapon they have never used before.
✅ Iran has promised a more significant response.
✅ Iran now claiming they will target “Israeli nuclear sites” with a counter attack.
✅ Iran claiming 3 strikes in Iranian territory were intercepted.

Iranian-Backed Forces
➡️ Hezbollah
➡️ Hamas
➡️ Palestinian Jihad
➡️ West Bank militants
➡️ Houthi’s
➡️ Syria
➡️ Paramilitary orgs in Iraq

Red Alerts in Israel
✅ Pictured below.


Markets
✅ Brent oil to $90.50.
✅ U.S. stock futures down over 1%.
✅ Bitcoin down to ~$60,000. (Bitcoin recovering back to ~$61,500.)
✅ Ethereum under $2,890.
✅ Japan’s Nikkei down 3.5%.
✅ Taiwanese stocks potentially down as much as 4%.
✅ 24-hour trading on Robinhood appears to be shut down.

🔗 Link to this post

---

Morning News 04/18/2024 05:25PT

TSMC
✅ Stable margin and capex growth expectations.
✅ Bloomberg: likely strong AI chip demand, but weaker-than-expected rebound in PC/smartphones.
✅ Needham: Suggests smartphone revenue will decline. Recovery slow.
✅ Susquehanna: Strong year but with small incremental upward revision.
✅ Q1 margin and revenue beat slightly.

TSLA
✅ DB cuts price target to $123
➡️ Mostly based on losing model 2 and uncertain bet on robotaxi which they believe will face significant operation, technological, and regulatory hurdles.
➡️ Need transition to AI investors, not auto investors; will take time.
✅ Barclays cuts price target to $180
✅ RBC cuts price target to $294
✅ Morgan Stanley sticks with $310 price target
➡️ No credit for AI as long core autos are revised down. Process make take a few more quarters; $100 share price “may be in play.”

S&P 500
✅ First time no sector of the S&P 500 is overbought this year.

Williams
✅ Rate hikes possible if data warrants.


🔗 Link to this post

---

Afternoon News 04/17/2024 13:47 PT

NYT Presidential Survey
✅ Democratic base “coalescing” behind Biden.
✅ Biden and Trump virtually “tied” in latest surveys, compared to Trump’s stronger 48/43 lead in February.

IMF, via FT print.
✅ Beginning of the year saw a lot of optimism in markets, that a recession had been avoided.
✅ Conflicts in the Middle East now are driving a flight to safety.
✅ Risk-on rally could soon be over.

🔗 Link to this post

---

Israel Update 04/17/2024 10:00-10:38 PT

Israel Struck
✅ Israeli community center struck by Hezbollah. 13 of 18 injured appear to be IDF reservists.
✅ 1-way suicide drone.
✅ Israel retaliating with strikes against Hezbollah in Lebanon.

Iran Warning
✅ Do not cross us “The tiniest invasion by Israel will bring a massive and harsh response.“

Gaza
✅ Still have struggles to get aid into Gaza to help end the suffering in Gaza.
✅ Israel says UN is failing to deliver aid.
✅ UN says Israel is objecting to 41% of the UN’s requests.
✅ UN also blames checkpoint delays.

Aid Bill & Trump
✅ GOP has not released its aid package yet. House Appropriations Committee still working on it, per Punchbowl.
✅ Starting to hear potential problems for Johnson. Massie and Taylor Greene both want Johnson removed if he tries to pass Ukrainian aid. The current proposal image leaked suggested $14b for Israel and $48b for Ukraine.
✅ Johnson believes they’ll need Democrats to get this passed in House.
➡️ Johnson has detailed his 4-piece package to Israel, Ukraine, and Taiwan. He says he’s moving ahead with this plan. (4th part seizes Russian assets, forces TikTok sale, and sanctions Iran.).
✅ Trump, who often sways votes here, has been notably quiet on aid to Israel or Ukraine. Though, his states on Israel on April 4th give us some clues of where his mindset is:
➡️ “Get it over with and let’s get back to peace and stop killing people. And that’s a very simple statement,” Trump said. “They have to get it done. Get it over with and get it over with fast because we have to — you have to get back to normalcy and peace.”
➡️ “I’m not sure that I’m loving the way they’re doing it, because you’ve got to have victory. You have to have a victory, and it’s taking a long time,” Trump said.
✅ Trump has regularly indicated unconditional support for Israel, but does support his audience in chanting “genocide Joe” referring to Biden’s monetary support for Israel.L
✅Trump argues this would not have happened if he were in office.
✅ Trump suggests visuals coming out of Gaza lead Israel to appear to lose the PR war.

Ben N. Today.
✅ “They have all sorts of suggestions and advice. I appreciate that. But I want to be clear: Our decisions we will make ourselves.”

Airlines
✅ Airlines like Lufthansa cancelling flights until May 1.

Economist
✅ Iran has a strategy of “war between wars.”
➡️ The idea, driven by the recognition that major wars no longer produced decisive victories, was to maintain pressure on adversaries between such conflicts to deter them from starting one.
😇 That’s the opposite of the Trump opinion: declare victory!
✅ Downside is: this constantly leaves triggers for war to spark.
✅ Iran’s attack against Israel risks turning Palestinians and Iranians into villians.
✅ Biggest question is: when does this end?

WSJ Says Iran is Gambling
✅ For two decades, Iran has remained on the sidelines. Supporting political and monetarily, but not with significant strikes. Now, we’re on the brink.
✅ Iranians need leverage. They have little over the US and its allies.

Some History from WSJ
✅ Israel is believed to have killed Iranian nuclear scientists, having launched airstrikes against Iranian-linked targets in Syria & Middle East, and launched cyber attacks against Iran.
✅ These strikes haven’t stopped Iran’s latest attack.

Hence now, calls exist for BIGGER.
✅ Israel’s Finance Minister Bezalel Smotric says the next strike from Israel should take a “disproportionate toll” and “rock Tehran” to deter Iran.
✅ The Finance Minister is not part of the war cabinet, BUT the war cabinet appears to be for a counter strike. Ben N appears to be vacillating due to external pressures.

🔗 Link to this post

---

Morning News 04/17/2024 05:32 PT

Tesla Circulates Pre-Share Holder Meeting Requests
✅ Elect Kimbal Musk & James Murdoch.
✅ Approve moving state of incorporation from Delaware to Texas.
✅ Approve the 2018 pay pay package.



Two Responses from a Law Professor (via CNBC):
➡️ Wasting corporate resources paying for past work (debate between fairness and value for the company).
➡️ Would a majority of shareholders even be allowed to waste corporate resources or would you need a higher standard of voting. TBD and expect lawsuits.

The Hidenburg Omen
✅ Looks at Nasdaq compares % of stocks making new 52-week lows vs 52-week highs.
✅ More omens have triggered this year than any prior since 2000.
➡️ Forecasts either a sideways Nasdaq or selloff.
➡️ Maybe omen doesn’t matter with no recession coming (say analysts).
😇 Is there truly no recession coming?
✅ Other times this has fired:
➡️ 20 omens in 2024
➡️ 17.54 omens in 2000
➡️ 8 omens in 2022
➡️ 7.5 omens around early 2015
➡️ 4 omens late in 2019
➡️ 4 omens in 2007
✅ This is specifically for stocks on the Nasdaq exchange (more likely tech).

Fed Delay Hurts Global
😇 As Fed delays rate cuts, our dollar likely stays stronger. That, for other countries, weakens their currency. Why? Less people buy your bonds. Consider ECB: lowers rates first, less buy Eurobonds, more buy Treasury bonds, more demand on dollar and less on Euro. So, dollar up, Euro down. Could help Euro exports to U.S. But raises prices for imports. Bigger concern: globally recessionary to keep rates overall higher around the globe.

Layoffs


CPI Trend
✅ PCE forecast is 2.7% for the YOY figure. Lowest since March 2021. However, extrapolating the last 3-6mo has shown a clear uptrend.


ASML
✅ Orders forecast below expectations (3.61b euro vs 4.63b expected).
✅ Net sales to be similar to 2023 (strong, but growth flattening).

Oil per Barclays
✅ Shrugged off latest escalation.
✅ Inventories may explain 85% of the move in oil, not geopolitics.
✅ Tensions aren’t really affecting inventories at this point.

LVMH per Goldman
✅ Weak sales in US, China

🔗 Link to this post

---

Earnings This Week 04/16/2024 12:27 PT

✅ $UNH UnitedHealth Group Incorporated
✅ $JNJ Johnson & Johnson
✅ $BAC Bank of America
✅ $MS Morgan Stanley
✅ $PNC PNC Financial Services Group, Inc.
✅ $BK The Bank of New York Mellon Corporation
✅ $UAL United Airlines Holdings Inc.

Wednesday April 17:
✅ $ASLM ASML Holding
✅ $USB U.S. Bancorp
✅ $LVS Las Vegas Sands
✅ $EFX Equifax
✅ $DFS Discover Financial Services

Thursday, April 18:
✅ $TSM Taiwan Semiconductor Manufacturing Company
✅ $NFLX Netflix (🗣️ canary in the coal mine for tech, typically)
✅ $ALLY Ally Financial

Friday, April 19:
✅ $PG Proctor & Gamble
✅ $AXP American Express

Monday, April 22:
✅ $SAP SAP SE
✅ $VZ Verizon Communications Inc.
✅ $AMP Ameriprise Financial Services

Tuesday, April 23:
✅ $GOOG Alphabet
✅ $TSLA Tesla
✅ $V Visa
✅ $PEP PepsiCo
✅ $LMT Lockheed Martin Corporation

🔗 Link to this post

---

Arab Countries Backstabbed Iran 04/16/2024 12:22 PT
✅ Israeli and U.S. Forces intercepted most of the Iranian drones/missiles. One reason they were able to do this at a nearly perfect rate is because other Arab countries quietly passed along intelligence about Iran’s attack plans, opened their airspace to warplanes, shared tracking radar information, and even shot some down themselves.
✅ The U.S. has a goal to forge closer military ties between Israel and Arab adversaries in an effort to counter a growing common threat from Iran. “It was always going to be gradual, and [Saturday] was an important real-world first step,” said an employee of Saab, a London-based think tank.
✅ Saudi Arabia and the U.A.E. agreed to privately share intelligence, while other countries like Jordan permitted the use of their airspace and employed their own aircraft to intercept missiles/drones. A U.S. operations center in Qatar transmitted information to fighter jets from several countries that the missiles were flying over.
✅ Gulf countries are envious of the assistance the U.S. has provided to Israel and want their share. It’s possible this was a way for these Arab countries to cozy up to the U.S. in hopes of future benefits. “Gulf countries know they still don’t have the same level of support that Israel gets from the United States and see what they did [Saturday] as a way of getting it in the future,” said an employee of a Washington-based think tank.
👥 This was essentially an urgent, non-formal, unlikely alliance that was formed out of fear in the region by the U.S.. Arab countries were warned by Iran that sharing intelligence and airspace would come with severe consequences, but Arab countries acted anyways.
✅ Arab countries quietly disobeyed Iran, whom they normally listen to. These countries could’ve done this for many reasons, but it is likely that this was due to Arab countries’ aligned interests of preventing this conflict from spreading to their country.
✅ The U.S. has successfully found a way to align the interests of Iran’s neighbors despite their animosity toward Israel.
✅ This was the first time Iran directly attacked Israel in 50 years.
👥 Although this launch was a failure. Some could argue that Iran still won. Iran likely paid 1/10th of the amount of money on their offensive aerial attack than it costs Israel/America to defend against it. Iran could be just trying to play the Russia card and piss off the American tax payer into refusing to support a foreign war because it is too expensive.
👥 Despite this argument, it could be believed that this launch was likely more harmful to the Axis of Resistance than the West. The Axis of Resistance looks very weak right now; their neighbors turned on them to side with Israel by helping counter the attack despite Iran’s threats of consequences for doing so. Iran has proved they are no match for Western technology so their allies are fearful of standing by them knowing defeat is imminent. Also, they gave Israel propaganda fuel to justify their war in Gaza and dismiss the civilian death toll because they were directly under attack.

📝 WSJ Source
📝 NBC Source
📝 Al Jazeera Source
🔗 Link to this post

---

Midday News 04/16/2024 12:05 & 17:10 PT

Tuesday Israel Update (Contributes to Update video 5)

US
✅ US Navy “has spent at least $1b on critical munitions in the last 6 months” on Israel, Middle East/Red Sea, and Houthi responses.
✅ Current US funding proposal:


Israel Counter Strike
✅ Israel counter strike plan may be finalized. Targets may have been determined. We are unsure where or when at this point, but most expect these to be military installations inside/outside of Iran.
✅ UK’s Rishi Sunak spoke with Israeli PM. Sunak urged not “significantly retaliating.”
✅ May wait until after Passover (so April 30th at earliest).
✅ War Cabinet reportedly suggested “sensitive targets” within Iran, but were refused (kann_news via @sentdefender)

Axios on the issue
✅ The U.S. assessment is Iran would retaliate against any significant, overt Israeli strike on Iranian soil with a new round of missile and drone attacks.
✅ Regional escalation likely.
✅ Israel has the upper hand (trying to temper).
✅ Iran warned of a 10-fold response.
✅ “We think it will be very difficult to repeat the tremendous success we had in repelling the attack on Saturday if Iran launches hundreds of missiles and UAVs again … and the Israelis know it.” Axios via @MarioNarfal.

NBC
✅ Coalition of Middle East countries have helped prevent this from escalating. They’re in a difficult position, but benefit from stability.
✅ IAEA concerned over potential strike against Iranian nuclear facilities.

Iranian National Security Commission, Speaker
✅ Iran is ready to use “A Weapon it has never before Used”

Sanctions
✅ Western nations with Israel encouraging more sanctions on Iran to isolate Iran.

Strikes
✅ Israel stroke a Hezbollah commander in Lebanon today.

Foreign Affairs on Iran
✅ Risk: two sides trading blows and eventually escalating the situation into a war.
✅ Iran tries to create hostility around Israel:
➡️ Hezbollah
➡️ Hamas
➡️ Palestinian Jihad
➡️ West Bank militants
➡️ Houthi’s
➡️ Syria
➡️ Paramilitary orgs in Iraq.
✅ Biggest Israeli concern is a Nuke.
✅ Iran was slapped in the face after Israel’s attack on a portion of a consulate building in Damascus. A serious intel failure.
✅ Patience has run dry.
✅ But, Iran says it’s done.
✅ If Israel strikes Iran, the situation “could spiral out of control.”

Prior Coverage on Israel NOT on eHack here:
✅ Israel Update 1: Video 1
✅ Israel Update 2: Video 2
✅ Israel Update 3: Video 3
✅ Israel Update 4: Video 4

🔗 Link to this post

---

Fed Jerome Powell 04/16/2024 10:20 PT

Jerome Powell Commentary @ Canada Institute
✅ Recent data shows solid growth in labor growth and a lack of future progress on inflation.
✅ Labor market remains very strong.
✅ Rising immigration.
✅ Rising labor force participation.
✅ Labor market moving into better balance. (Job openings to unemployment, for example.)
✅ Surveys indicate normalizing, albeit gradually.
✅ 12mo core PCE little changed in March over Feb. 3/6mo trend are above that level. We’ll need greater confidence before it’ll be appropriate to ease.
✅ The recent data have not given us greater confidence. It’s likely to take longer to get that confidence. If higher persists, we can maintain higher for as long as needed.
✅ Allow restrictive policy to work longer.
😇 Doesn’t sound like HIGHER rates is the consideration now.
😇 However, longer almost seems certain right now. Jerome Powell’s opening comments were slightly HAWKISH.
✅ He noted recent data show a “lack of further progress on inflation.”
✅ Yields pop on hawkish tone.

✅ We recognize our decisions can affect countries globally.
✅ This is more than just overheated demand (inflation). There are similarities and differences.
✅ The inflation that arose resulted from both elevated demand and constrained supply.
✅ I was beginning to lose hope in 2022.
✅ Enormous supply-side output helped in 2023. That’s made it “different this time.”

Canadian Central Bank Governor Macklem
✅ Central banks have less tools to deal with supply. Our tools work on demand.

😇 Overall, I see this as “slightly” hawkish. Jerome Powell is waking up to higher inflation expectations and hotter reports. This was the first “test” of a bit more hawkish language.

Nick T
✅ Preemptive or soft landing rate cuts are off the table for now. Firmer Q1 inflation reset the confidence clock.

🔗 Link to this post

---

Morning News 04/16/2024 06:15 PT

Stock Declines vs Ups
✅ New 52-week lows (down) vs 52-week highs (worst since Halloween).
Insider Buying
✅More insider selling than we’ve seen since 2015 and that’s only because the chart only goes back to 2015.
Central Banking Timing (PT)
✅ 6am: Fed’s Jefferson Speaks at Monetary Policy Forum
😇 Jefferson said nothing new. Committed to 2%, maybe higher for longer, etc.
✅ 9:30am: Fed’s Williams Moderates Event w/ François Villeroy de Galhau
✅ 10:00am: Fed’s Barkin Speaks on Economic Outlook
✅ 10:15am: Fed’s Powell Participates in Moderated Q&A
✅ 10:15am: Fireside Chat with Tiff Macklem
✅ 1:30pm: Fed’s Collins Gives Speech on Economy

ECB Commentary
✅ April / May data will be very important.
✅ Not Fed dependent.
😇 June felt like a tossup in the interview with Sara Eisen.
😇 3 rate cuts seemed like it wasn’t even possible to speculate on.

🔗 Link to this post

---

Afternoon News 04/15/2024 14:10 PT

Concerns are Growing, not Receding.
😇 I’m getting concerned. Even more so. I’ve been cash heavy for ~7 weeks now. But..
✅ This morning we’re told that retail sales were a blowout. They were, compared to expectations. But wait, “real” (inflation-adjusted) retail sales have just continued their negative trend. Usually you don’t see this outside a recession.

✅ Gold at $2400 has been seen as “snuffing” something coming. Gold, per TS Lombard, 2-3x’d in 1972, 1978, and 2008 recessions (skipped dot-com).


5-Year Breakeven just Shot Up Again.
😇 How long can Jerome Powell keep up the “inflation expectations remain anchored” BS? Expectations up to 2.55%.

2/10 Inversion
✅ The last time we nearly “uninverted” was between June – October. That was a 3-month selloff. Will it happen again?

Speculation on Rates
😇 This morning we speculated stocks were moving on valuations and earnings. That maybe rates/inflation matter less. But, stocks have been flat for the past few months. The S&P just broke it’s 50dma. When all of a sudden markets care about inflation again, we might have a problem.

S&P 500
✅ 50-day moving average and trend line since October are broken.


GDP
😇 Attempts at “leading” GDP (Atlanta Fed) keep suggesting GDP (which is inflation adjusted) is well positive (2.8%) as of 4-15-2024. Jobs are strong and data seems to beat, not miss. But, are we on borrowed time?

Mises Thinks So
😇 (Note: this is a throwback to the Austrian Ludwig von Mises).
😇 f*ck.



LA Warehouse Vacancies
😇 Warehouses in the Port of LA / Long Beach are often a *leading* indicator. When demand skyrockets, such as during covid, warehouses are needed for processing shipments.
✅ Industrial buildings in the greater LA area have now seen vacancies rise to the highest level in a decade. Substantial change in the last 24 months.
✅ 1.5% vacant start of 2023. Now 4.1%.

Global Rebound though?
✅ US has been resilient.
✅ UK already growing out of recession again.
✅ Germany’s industrial sector growing.
✅ Bloomberg GDP forecast for world to be 2.9% in 2024, up from 2.7% forecast last year.
✅ China showing signs of rebounding.
✅ How robust is this?
➡️ Geopolitics may drive oil to $100.
➡️ High rates may not have fully hit yet.
➡️ Direct war between Israel and Iran may drive the world into recession.
➡️ Gaza, Russia/Ukraine not resolved.
➡️ China/U.S. Trade war.

Government Interest Payments
😇 This looks horrible. But is offset by percentage of GDP chart.

Government Interest Payments as a Percentage of GDP
😇 Not as bad, but raising to previous highs rapidly.
😇 WARNING: This is an annual figure. The above chart is quarterly. So we won’t get a new (below) until Q1 2025. May well have blown past the previous high by then.


But Consumers have the Capacity to Repay
😇 This chart shows consumers’ payments as a percentage of leftover money is still relatively low. How does this change? Well, this changes rapidly if disposable income (leftover money) falls.


So, what’s happening to leftover money?
✅ January / Feb 2024 it starts dropping. Suddenly.

What about not Inflation Adjusted Disposable Income?
😇 Uhg


Credit Card Delinquencies (Quarterly Updates):

Auto Loan Delinquencies, per Fed


J.P. Morgan Chase
😇 What… So provision for credit losses was much less quarter/quarter and YOY.
✅ But charge offs were $2b, up $819m.
😇 Remember… if you take big allowances, your EPS plummets. So you can manipulate this and go low on loss allowances going forward. Especially since JPM missed on Net Interest Income.


😇 Look at the charge off trend… nearly double Q1 last year.

✅ Card service net charge off 3.32% vs 2.07% last Q1. That’s an increase of 60%.

✅ In the company earning’s call, their response was, “We continue to expect 2024 Card net charge-off rate to be below 3.5%.”
😇 Oh okay, don’t worry, it’s just expected to be below 69% higher than what it was Q1 last year. Nothing to see here.

Wells Fargo
😇 WTF WTF WTF
✅ Wells Fargo says:

😇 Basically, don’t mind our charge offs. Nothing to see here. Stable from Q4. LOOK AT OUR BUY BACK.
😇 Oh yeah?
✅ Charge offs up 105% from Q1 2023!!!!


Citi
😇 Same story!!
😇 Oh yeah losses are up, but don’t worry we took less allowance! So we’re good!

✅ YOY losses up 77%.


Oh of course!!!

✅ Jamie Dimon sold $32m of Chase Monday.
✅ Concludes 1m share sale this year.
✅ February, sold 820k shares.
✅ Remaining just sold.
✅ First time he’s sold shares since joining the bank 20 years ago.

Wells Fargo Earnings Call
😇 Look, I realize Wells Fargo is trying to be bullish here. Just like JPM. “Don’t worry, it’s all expected!” They allege. But wait. JUST ignore the sales-commentary for a moment. What did they SAY?
✅ “We’re seeing faster growth in new accounts and new balances coming on.” (😇 More debt.)
✅ Charge off “should peak”
✅ Charge off peak “should be coming over the coming quarters.”
✅ “We’ll sort of let you know when we feel like we’re [at peak].”
😇 Ooooook


🔗 Link to this post

---

Trump Hush-Money Trial 04/15/2024 10:40 PT

Trump Trial Updates
✅ Defense arguing Trump violated gag order. Trump Defense will have defense response and hear arguments on it April 24.
✅ 96 jurors in first group.
✅ Trump looks tired and exhausted (says NYT).
✅ Judge warned Trump not to disrupt proceedings.
✅ Trump seeking an excuse from court to attend Barron Trump’s graduation. No response yet.
✅ At one point up to 150 individuals were protesting outside the court house.

Judge Justice Merchan is Presiding
✅ Justice of NY State Supreme Court in Manhattan.
✅ Presiding over criminal trial regarding hush-money payments.
✅ Previously (late 2022) oversaw the 5-week trial against Trump Organization for tax fraud (convicted; 17 counts).
✅ Previously oversaw trial of Allen Weisselberg, former financial chief of Donald Trump. Plead guilty to 15-year-long tax-fraud scheme. Merchan sentenced Allen to 5 months at Rikers Island. Suggested he would have given a longer sentence if not for the guilty plea.
✅ Previously oversaw arraignment of Trump on 34 felony counts (hush-money case).

Monday
✅ Need to review potential jurors today. A lot of this is procedural.

Background
➡️ Nov 2015: Trump, Michael Cohen, and David Pecker (of AMI, publisher of National Enquirer): discussed plan to suppress negative stories.
➡️ June 2016: Karen McDougal “shops” story around alleged sexual encounter with Trump. AMI (American Media Inc, publisher of National Enquirer) pays $150k to Karen.
➡️ September 2016: Audio recordings show Trump and Cohen discussing how Trump will reimburse AMI. Cohen sets up shell company. Pecker doesn’t accept the money, last minute.
➡️ October 2016: Access Hollywood “grab her by the [gentiles]” audio leaks.
➡️ January 2017: Trump allegedly begins repaying Cohen using false invoices for “legal services” over 12 months.
➡️ April 2018: FBI searched Cohen’s home, office, and hotel room.
➡️ August 2018: Cohen pleads guilty that the payments were made at Trump’s direction to protect the campaign.
😇Cohen’s admissions will likely hurt.
➡️ September 2018: AMI makes deal with prosecutors and admits it bought the Daniel’s story to prevent its publication prior to the election.
➡️ Trump indicted by NY State grand jury for falsifying business records.

End of Day
✅ Multiple jurors
✅ Todd Blanche, attorney representing Trump, argued this trial shouldn’t be happening during a campaign.
➡️ Blanche historically has been a federal prosecutor in Manhattan. Helped Paul Manafort avoid state charges of mortgage fraud. Limited experience as a defense attorney.
✅ Trump fundraising email suggested he “stormed out” of court.
😇 Trump looked like he calmly walked out of court. But I do believe Trump isn’t writing these emails – so clearly there’s a bit of a disconnect, but that’s not unusual for mass emails.


🔗 Link to this post

---

Morning News 04/15/2024 05:38 PT

Interest Rates
✅ As rates rose 550bp, QQQ priced in 37.5% of loses ($401 to $251).
✅ Intraday high prior to hot CPI report was $438.56 February 12, 2024.
✅ The QQQ index has moved less than 1% since then as we’ve started unpricing cuts. But, the market hasn’t fallen. Some believes that’s due to multiple expansion and earnings.
✅ Edit 06:49: Bloomberg now reporting that higher rates may be less important for the stock market.
✅ As of 06:50: Markets are pricing in 1.52 cuts by Dec 18. That’s down from ~6-7 cuts at the start of the year. Since then, the market has mostly been flat.
😇 This puts more pressure on earnings.

Williams
✅ Don’t see recent inflation data as a turning point; still see rate cuts this year.
✅ QT can begin before rate cuts. Expected in May or June with about 40% fewer treasury sales. Potentially bring you from $70b of treasury runoff monthly to $35b; unclear over what timeframe.

Retail Sales
✅ Blowout: Big beat.
✅ MoM beat with 0.7% vs 0.4% exp. Prior revised up to 0.9% vs 0.6%.
✅ MoM ex auto beat with 1.1% vs 0.5% exp. Prior revised up from 0.3% to 0.6%.
✅ MoM ex auto/gas beat with 1.0% vs 0.3% exp. Prior revised up from 0.3% to 0.5%.
✅ MoM control beat with 1.1% vs 0.4% exp. Prior revised up from 0.0% to 0.3%.
😇 More commentary now appear about “no-landing” economy.
➡️ Not great for bonds as it doesn’t give you as much cap appreciation. Better off in money markets.
➡️ Rates higher for longer.
➡️ Delays recession bets.
😇 Edit 14:01: Note: these are NOT inflation-adjusted. So consider these “current month to same month last year” comparisons:
➡️ Motor vehicle parts up 1%.
➡️ Furniture up 1.7%.
➡️ Building materials up 1.1%.
➡️ Non-store retailers (online) 0.6%.
➡️ Misc. Store retail (like florists, pet supplies, stuff that doesn’t fit in others) was highest at 2.7%.
😇 BUT BUT BUT: Inflation was 3.5%. So technically, we paid more, and got LESS. That’s a weak economy.

Tesla
✅ Tesla just announced a 10% workforce reduction.
✅ Bloomberg Intelligence thinks this could save 35-45c per share.
✅ Existing-inventory prices moved up overnight for Tesla Model Y’s.
😇 The question now: Is this stock signaling or a legitimate stock bottoming?

Tesla Stock Price Signaling
➡️ RoboTaxi event (unclear expectations) 8/8.
➡️ FSD 12 (is it the leap forward Tesla needed?).
➡️ FSD free trial.
➡️ FSD price cut.
➡️ Model Y price increases on existing inventory.
➡️ Workforce reduction (10% cut).
➡️ Focus is now AI vs vehicle production.

😇 All of these COULD be a sign of STRONG fundamentals.
➡️ RoboTaxi is close!
➡️ FSD is so good! AI is the future.
➡️ Prices have bottomed!
➡️ Pruning the worst employees!
➡️ This is normal!
➡️ This is for efficiency / margin.
➡️ ➡️ Tesla laid off 2% in 2017.
➡️ ➡️ Tesla laid off 9% in 2018.
➡️ ➡️ Tesla laid off 7% in 2019.
➡️ ➡️ Tesla laid off 10% of white-collar staff in 2022 (3% of total).
➡️ ➡️ Today’s 10% layoff is the first in 5 years in manufacturing.
😇 We won’t know until the actual earnings reports come out. These are the first manufacturing cuts since 2019.
😇 Some say if Tesla was planning to announce a compact car soon, we’d be hiring, not firing.


😇 If this is true, it means sales staff are part of the cuts. That’s somewhat odd since we thought more of them would be needed to do the “required” FSD demos, unless demand is offsetting that lower.

Not Ideal for Tesla
➡️ CFO leaving in 2023.
➡️ Drew Baglino, announcing April 15, 2024, that’s he’s leaving. Senior VP of Powertrain and Energy Engineering, with Tesla since 2006. Stanford. Just one of 4 named executives at Tesla. Was on earnings calls.
➡️ Rohan Patel, announcing April 15, 2024, that he’s also leaving. Was the senior global director of public policy and business.

➡️ Ashok Elluswamy (5 years director of autonomy) JUST got his Tesla badge on Twitter/X, suggests Ashok was fake news and Rohan & Drew were correct.
😇➡️ Watch Elon Tweet “all lies.”

DJT Trump Media Group
✅ S-1 filed allowing the company to sell shares.
✅ 21.491m shares.
✅ Shelf offering.

🔗 Link to this post

---

Fed Rate Cut Projections 04/12/2024 16:05 PT

✅ June Rate Cut Projections April 2, 2024 vs April 11, 2024.
😇 Not surprising shift. But shows you how fast “consensus” can change.




🔗 Link to this post

Israel & Gold 04/12/2024 14:05-16:00 PT

Israel & Iran
✅ Red alert issued for City of Sderot in Southern Israel.
✅ Hospital staff put on emergency notice throughout Israel to ensure preparedness, in the event of an Iranian strike.
✅ Recall Israel struck an Iranian diplomatic building in Syria last week. This strike killed “several Iranian military officials,” including a senior member of the Islamic Revolutionary Guard Corps’ elite “Quds Force.”
✅ An attach is expected as soon as Friday or Saturday.
✅ Iranian-backed groups in Syria appear to be preparing for combat.
✅ The United States is repositioning two warships (destroyers).
✅ Biden’s message to Iran is: “Don’t.”
✅ Biden expects a strike “sooner than later.”
✅ Germany, France, and Norway have told their citizens to “immediately depart” from Iran.
✅ U.S. government is restricting its personnel from traveling outside of Jerusalem & Beersheba.
✅ Israeli’s military is telling citizens: “There is no need to buy generators, store food and withdraw money from” cash machines.” – WSJ
✅ Iranian social media has specifically targeted the Ben Gurion Airport. This airport is Israeli’s largest, just 45km from Jerusalem and 20km from Tel Aviv.
✅ Rumors circulating that Iran may launch missiles from Persian Gulf over Iraq.

Concerns regarding Israel & Iran
😇 An Iranian strike could lead to a counterattack by Israel and widen an already out-of-control conflict.

Death Toll Already in Gaza.
✅ Initial strike by Hamas lead to 1200 deaths.
✅ Counter attack by Israel lead to 33,000 deaths.

Yemen
✅ Prime Minister Mubarak of Yemen revealed the country now faced losses exceeding $2 billion due to halted oil exports thanks to the Houthi attacks in the Red Sea.

Gold
✅ UBS Investment Bank cites gold as having substantially more room to run in the face of a recession. They see gold as having 2-3x’d in the recessions of 1972, 1978, and 2008. While this missed the dot-com recession, the recent rise in gold may suggest some are starting to place their wagers.
✅ Gold often falls as real rates turn negative. This may be due to the coincident cut in Fed rates during recessions.
✅ Gold’s latest rise could be due to geopolitical tensions.

🔗 Link to this post

Morning News 04/12/2024 05:35 PT

JPM
✅ Rev beat $42.55b vs $41.64b exp.
✅ Charge offs $1.96b vs $2.2b exp.
✅ ROE 17% vs 15.9% exp.
✅ Prov for credit losses: $1.88b vs $2.78b exp.
✅ Normalization of margin for NII (net interest income) led to a 4% decline in QOQ (sequential) NII.
✅ Excess savings “about done” for lower 50% of consumers.
😇 Competition for savings and moving money into other assets like stocks is likely contributing to banks seeing lower NII.

Jamie Dimon, CEO of Chase
✅ Quiet clear the economy is strong.
✅ No light at the end of the tunnel for commercial real estate.
✅ Not seeing a meaningful improvement.
✅ Credit card charge offs normalizing.
✅ Struggling consumers are starting to cut back.
✅ Loan growth in credit cards is moderating.
✅ Some cracks in subprime autos.

WFC
✅ Prov for credit losses: $938m vs $1.27b exp.
✅ NII margin also a bit lower than expected 2.81% vs 2.84% exp.
✅ Property portfolio still performing well.

Commodities
✅ Gold up 1.68% at $2411.
✅ Silver up 3.59% at $29.27

Bonds & Rates
✅ 10-year down to 4.5%.
✅ Dec 18 pricing in 1.82 cuts.
✅ 2.533% on 5-year breakeven.
✅ $91.12 on Brent.

This is Scary to Me
😇 When forecasters start becoming CONVINCED everything will be fine because we’ll get massive beats, I worry “beats” are priced in and misses are not. Bloomberg reporting that Big Tech giants will “run to the rescue” in the weeks ahead.

🔗 Link to this post

---

Apple, Inflation, and Afternoon News 04/11/2024 12:15 PT

Apple
😇 On April 2nd, on this page and on Youtube, I predicted Apple’s AI chips coming. This wasn’t a hard prediction; of course they’re going to brand the new chips this. Yes, the old M chips have NN in them. But BRANDING matters. I said don’t bet against Apple and I’m increasing my position. So, what happened today?
✅ Apple is up ~4%. Biggest gain in 11 months. Why?
✅ Apple is “preparing to overhaul its entire Mac line with a new family of in-house processors designed to highlight artificial intelligence.”
✅ Via Bloomberg: “Apple is aiming to release the updated computers beginning late this year and extending into early next year. There will be new iMacs, a low-end 14-inch MacBook Pro, high-end 14-inch and 16-inch MacBook Pros, and Mac minis — all with M4 chips.”
✅ A large “swath” of new Apple AI announcements are expected to run on device. 

Auto Insurance
✅ Contribution to CPI 2.2 vs 2.571 for everything else.
✅ Insurances in general lag in when they appear in CPI reports. Here’s a chart showing the growing lag (contribution) of autos insurance. A similar pattern was noticed for health insurance, which remember medical costs are also considered for auto insurance.
😇 Eventually, this contribution will wane. However, it’s challenging to discount its contribution, as super core has been elevated since April 2021. Autos took about 1 year longer to show a meaningful contribution. This means other items matter as well.
😇 What’s the point? Point is: Later cuts, but they’re coming.

Trump
✅ Hush money case: no options left to delay trial. Trial expected to begin Monday the 15th.
✅ Attempt 1: Case should be tried outside Manhattan due to “deep blue” politics. Rejected.
✅ Attempt 2: Emergency stay from appeals just. Rejected.
✅ Attempt 3: Sue NY judge over gag order. So far, another appeals court refused to pause the trial due to this.
✅ Attempt 4: Sue over other rulings. So far, another appeals court also refused to pause the trial due to this.
✅ Now, a 5-judge panel will review all claims. BUT, only *after* the trial actually begins.

Abortion Issue & Biden Moves
✅ Biden’s camp has recently been highlighting the country’s abortion divide.
✅ Trump has previously suggested there’s a nation-wide consensus on abortion, likely at 15-22 weeks. 😇 Note: This was mentioned by Trump in a TV interview about a year ago – where he suggested he’d finally find a solution to the issue that everyone could agree on.
✅ However, since the overturn of Roe v. Wade, multiple states have substantially more restrictive policies.
✅ Amanda Zurawski, per NYT, nearly died due to an infection that killed the child in her womb and nearly killed her. She was unable to get access to an abortion, despite being medically necessary. This occurred in Texas. The branding of now a $30m Biden ad features her story and the phrase, “Trump did this.”
✅ “Ms. Zurawski is suing the State of Texas after she was denied an abortion when her water broke at 18 weeks. She developed sepsis and said she nearly died from the infection.”
😇 Note: The earliest I’ve found a hospital willing to admit a child is 22 weeks. Though most are 23-24.
✅ This is an attempt to link Trump’s Supreme Court appointments to the abortion overturn.

🔗 Link to this post

Morning News 04/11/2024 05:40 PT

PPI
✅ Mostly good data swung 10-year from up 2bp to down 2.9bp to 4.531%.
✅ PPI Final Demand 0.2% vs 0.3% exp.
✅ PPI Ex Food/Energy 0.2% vs 0.2% exp.
✅ PPI Ex Food/Energy/Trade 0.2% vs 0.2% exp.
✅ PPI Final Demand YOY 2.1% vs 2.2% exp.
✅ PPI Final Demand YOY ex Food/Energy 2.4% vs 2.3% exp with 0.1% revision of prior UP. (This is the hot part).
➡️ Final demand transportation and warehousing services up 0.8%
➡️ Final demand services up 0.3%.
➡️ Financial services up 3.1%.
➡️ Traveler accommodation services down 3.8%.

Claims At Expectations
✅ Initial 211k vs 215k exp.
✅ Continuing 1.817m vs 1.8m exp.

5-Year Breakeven
✅ 2.54, stable high for the last year after the report.

Cuts
✅ 1.78 cuts priced in by Dec 18, 2024.

🔗 Link to this post

---

Tesla 04/10/2024 12:05-13:00 PT

Jefferies on Tesla
✅ Jefferies drops price target to $165 for Tesla. Sees full-year deliveries down 3% at 1.77m.
✅ Confirmation of cancellation of Tesla’s $25k vehicle would be a “major negative,” but looks unlikely.
✅ Robotaxi may help sentiment, but not business model.

Piper Sandler on Tesla
✅ Price target down to $205.
✅ Lowest-conviction overweight stock.
✅ Growth is slowing. No quick fix.
✅ Demand issues should be overcome with cheaper vehicle in 2026.
✅ FSD accounts for half of their price target.

Musk
✅ Musk to meet Argentina’s President Milei Friday.
✅ Musk to visit India on potential factory.

GigaMexico
✅ Per this drone Youtuber, GigaMexico hasn’t actually broken ground yet.
😇 This aligns with the thesis to spend capex on chips, not new plants, at this point.

Brand Retention
✅ Brand retention strongest for Tesla. 87% brand retention vs Lexus at 68%. All else lower.

12.3.4
✅ Early 12.3.4 FSD rollout now going to employees.

Tesla FSD Survey



🔗 Link to this post

---

Fed Minutes March 04/10/2024 11:00-12:00 PT

March meeting notes
✅ Disinflation continuing on path; expected to be uneven.
✅ Uncertainty about persistently high inflation.
✅ Some participants noted rates may not be as restrictive as desired.
✅ Reduce rates if “unexpected weakening in labor market conditions.”
✅ Hold rates should “disinflation process slow.”
✅ Some argued: do not dismiss recent inflation reports as aberrations.
✅ Others said: seasonality is pushing inflation up in early 2024.
✅ Multiple delinquency notes this time:
➡️ Credit downgrades outpaced upgrades for leveraged loans and corporate bonds in Jan/Feb.
➡️ CRE and credit card deterioration.
➡️ Delinquency rates on FHA picked up slightly.
➡️ Credit card delinquencies above pre-pandemic.
➡️ Increase in auto delinquencies stabilizing.
➡️ Non-farm, non-residential loan delinquencies at late 2014 levels (highest since).
➡️ Commercial delinquencies would have been greater if not for loan extensions received.
➡️ Deterioration in CRE increased concerns about small US and foreign banks.

10-Year Treasury
✅ Now 4.55%.

Notes
😇 The increase in delinquencies if clearly given the Fed heart-palpitations over a desire to cut to help those in pain, yet desire to also bring inflation down.
✅ Goolsbee started suggesting rising Black unemployment is now a concern. Rising black unemployment is a signal for caution, he said.
😇 Is the Fed desperately searching to find a reason to cut here?

Barclays
✅ Reduced to 1 rate cut this year.

Larry Summers
✅ 15-20 chance of hike in rates.

Fed’s Barkin
✅ CRE is not a systemic risk.

Taper
✅ Treasury runoff to start soon. Not MBS though.
✅ Reducing monthly asset runoff by half. (Unclear exactly when.)

Market Implied Rate Cuts Dec 18, 2024
✅ 1.59.

🔗 Link to this post

---

CPI. 04/10/2024 5:30 PT

✅ CPI MoM: 0.3% exp ACTUAL RESULT IS: 0.4%
✅ CPI MoM Core: 0.3 exp ACTUAL RESULT IS: 0.4% (rounded from 0.36%)
✅ CPI YOY: 3.4% exp ACTUAL RESULT IS: 3.5%
✅ CPI YOY core: 3.7 ACTUAL RESULT IS: 3.8%

Market Reaction
✅ First rate cut now fully priced for November (after the election).
✅ Markets pricing just 1.9 cuts this year vs 2.6 yesterday.
✅ January pricing in 2.26 cuts total by then.

Supercore
✅ 0.647 supercore. (7.76% annualized).
✅ Uptrend now since July 2023.
✅ Largest uptrend since mid 2021.


Broadly Hot
✅ Services lead inflation here: transportation, personal care services, pets, medical care services, car and home insurance, financial services, etc.

10-Year Treasury
✅ 4.5% now (highest since the Bill Ackman trade of October 2023 – early November).

2-Year Treasury
✅ 4.9%.
✅ Compare to the FOMC effectrive rate at 5.375%.

Nick T
✅ Core prices on 3, 6, and 12-month basis now all moving up.
✅ Last week, Jpow: recent inflation data hasn’t “materially changed” his view. 😇 He’s going to have to flip on this. How hawkish will be the market’s next guess.


Implications via Bloomberg
✅ Policy clearly isn’t as restrictive as the Fed would like or thought.
✅ Raises estimates again of neutral rate.
✅ Huge political win for Trump with first full cut priced AFTER the election.
✅ “The morbid fear of central banks is call an end to inflation only to see it revive.”

🔗 Link to this post

Morning News. 04/09/2024 5:30 PT

Tesla
✅ Robert Baird analysts.
➡️ Estimating 444,510 in Q2 deliveries.
➡️ Tough comps for Tesla.
➡️ Q2 2023 Comps

➡️ Mostly blaming interest rates.

Roku
✅ Bloomberg Intelligence says the company faces a triple whammy.
➡️ Muted media spending.
➡️ Walmart-Vizio deal.
➡️ Pricing pressure on connected TV due to Amazon Prime.
😇 I suppose Amazon likely substantially increases supply of ads.
😇 Example: Say you have $100m of ads at $1 per ad. That’s $100m ads. If all of a sudden Amazon adds 25,000,000 ad slots, you don’t necessarily have $125m to spend. So maybe companies spend $105m, but ultimately the price just goes down. In this case, you’d be down 16% in ad price (0.84c per ad) – rough numbers example on elasticity of ad demand.

State Street Global Advisors 50bp Cut – 😇 Emergency Cut?
✅ 4th largest asset manager. $3.6 trillion of AUM. Yes, trillion.
✅ 50bp cut coming as soon as June.
✅ 6 cuts by year end.
➡️ Credit card delinquencies and cost of credit for small business will lead to a recession at the end of the year.
➡️ “There’s a lot to suggest that this is still a very fragile recovery despite the fact it continues to look resilient on the surface.”
➡️ Inflation stabilizing at 3% won’t stop the cuts.
😇 If I was to see their argument, I suppose I would say: high rates brought multivariate core down from just over 5% to just under 3%.
😇 And so maybe you can remove 2% of the pressure (so go down to 3.5%) and still have your ‘foot on the neck’ of inflation, so to speak.
✅ Bloomberg responds and suggests this could risk NOT getting inflation under 2% for core PCE.


Arm Holdings
✅ Jim Cramer this morning says “Buy Arm!” (😇 3.25% of today’s premarket gain of about 3.3% can be attributed to Cramer given the timing of the spike).
✅ MorningStar yesterday says Arm can drop 54% to $57.
➡️ “propelled by an exaggerated artificial intelligence narrative combined with excitement about recent increases in royalty rates after the introduction of its newest architecture, Armv9.”

Bonds
✅ Down 3bp on 10-year today at 4.394%.
✅ 5-year breakeven at 2.5%.

Oil
✅ More demand coming from China as China bottoms and stimulus hits (per TS Lombard).
✅ OPEC+ keeping restrictive level.
✅ Hamas, Houthi tensions adding to oil pricing.

🔗 Link to this post

---

Morning News. 04/08/2024 5:30 PT

Intel & “Long-term Investing”
✅ Last week suggested their foundry model may breakeven by 2030.
😇 Long-term investors should be happy. But, the stock is down from $51 to $38 over doubts of how quickly Intel can generate profits.
😇 Unfortunately, I think the same is true for Tesla Robotaxi.
😇 As usual, most stocks are only able to price in the next 18 months. Everything after that gets faded in favor of near-term returns by institutions, pension funds, traders, option traders, etc.
😇 Giga Nevada expansion and Giga Mexico plant.

TSMC
✅ $6.6b from the Chips Act.

Jamie Dimon, CEO of Chase
✅ Warns that interest rates could spike to 8% or more.
✅ Risk of resilient economy leading to sticky inflation.
✅ Bank is “prepared for interest rates of 2-8% or more.
😇 Sounds a bit like a bank sales pitch; it also designed to send a message.
😇 Eerily similar to Bill Ackman’s bet bond yields would spike to “well over” 5%. As bond yields rocketed from 4.3% to 5%, people joined Bill Ackman’s bet. Then Bill covered at about 4.99% and said, ‘okay now bonds are actually a good opportunity to buy and covered his bond short.’

Can Rates Stay Higher or go Even higher?
😇 Warn jobs and CPI data in Jan/Feb is just the start.
✅ TS Lombard suggests the following:
➡️ “Job creation is increasingly in sectors that have been lagging and have higher labor input relative to output (e.g. retail, health, restaurants, construction, and government.”
➡️ The math favors core PCE (very wage sensitive) around 3% YOY. 😇 (Add to this oil over $90.50 for Brent)
➡️ Still face post-covid underemployment versus trend for retail, hospitality, and all private sectors outside tech and business. This creates a jobs tailwind, not a headwind.
✅ WSJ
➡️ Sees just about 58bp of rate cuts being priced in by markets now, less than the 1.45bp at start of year and less than 75bp projected by Fed.

✅ Fed suggests patience or some members outright suggest no cuts this year.
✅ “The last of the economic bears are throwing in the towel,” said Joe Brusuelas.
😇 That exact quote is what I suspected and why I created the nike swoosh idea; that it would take a while for people to unwind their inflation/economic bearishness.
😇 Remember, big April 1 wage increase in CA for fast-food workers likely won’t start showing up in data until mid May. Affects about 0.3% of all workers in the country and could move ECI up 0.2% per Bloomberg Intelligence.
✅ Inflation Breakevens (5 year) over the last year, now at 2.51%.

😇 Over the last year, Powell has regularly mentioned that inflation expectations remain well anchored. With this trend, there’s the downside risk of Powell one day saying that expectations are unanchoring. However, that’s very dangerous because he could self-fulfill even higher expectations. If he’s willing to risk that, we know it’s a big issue.

How should Higher Rates Impact the Stock Market
😇 Likely weighs on small caps and interest-rate sensitive stock (durables, autos, some manufacturing, appliance, certain energy investments).
😇 Remember Microsoft makes somewhere around twice as much money in interest on cash than they spend on interest. This means the richest get richer. AI for example doesn’t care about higher rates, it might even benefit from higher rates.
✅ Bloomberg hinted this morning that “good news is finally good” as stocks move up with rate expectations.

Real Estate
Warrants due today! April 8. Email ir@househack.com with questions.
✅ Blackstone acquiring AIR Communities for ~$10b for a 25% premium to Friday’s close. $39.12 per share.
✅ “We can see the pillars of a real-estate recovery coming into place,” Blackstone President Jonathan Gray said on an earnings call earlier this year. “We are, of course, not waiting for the all-clear sign and believe the best investments are made during times of uncertainty.”
✅ Bought a stake in $17b loan portfolio from Signature Bank.
✅ In December, $7b data center partnership with Digital Realty.
✅ Earlier this year, Blackstone acquires Tricon Residential, owns and operates about 38,000 single-family homes for $3.5b.

🔗 Link to this post

---

Tesla Robotaxi & News. 04/05/2024 14:30 PT

Elon Musk RoboTaxi Day
✅ Elon Musk announces August 8, 2024 as Tesla’s Robotaxi unveiling.
➡️ Tesla stock frequently falls on “Tesla Days,” notably September 30th, 2022, when the Optimus 1 was revealed. The stock was down 8.61% the next trading day.

😇 In typical “buy the rumor, sell the news” fashion, Tesla stuck is UP over 3% in after hours. A direct spite to Reuters by Elon Musk.

Reuters Article
➡️ Alleged the Model 2 has been canceled, per 3 sources familliar with the matter.
➡️ Will continue developing self-driving robotaxis on the small-vehicle platform.
➡️ One source stated, “Elon’s directive is to go all in on robotaxi.”
➡️ A third source confirmed this and said the new plans call for “robotaxis to be produced.”
➡️ 4th person interviewed suggested Tesla’s product plans could change again based on economic conditions.
➡️ The $25k-car project has been called NV91 internally and H422 externally.
➡️ One message sent March 1 said, “suppliers should halt all further activities related to H422/NV91.”
➡️ Messages reviewed by Reuteres showed the project had been canceled.
➡️ The 2025 Model 2 was expected to be produced at less than $25k with 10,000 units of production per week.
✅ Elon Musk said “Reuters is lying (again)”.
✅ Elon did not specify if Reuters “lying” about a part or all of the story.

Tesla Bulls
➡️ Robotaxi is close. Price it in now.

Tesla Mids
➡️ FSD is good, but it’s not close to Robotaxi.

Tesla Bears
➡️ Robotaxi isn’t going to get regulatory approval.

Timing
😇 August 8 timing is interesting.
➡️ It comes after Q2 earnings, which are also expected to be bad.
➡️ Existing Model Y inventory is being priced at lower levels than list-prices on the Tesla website. This is one way of offsetting the “price increase” Tesla set into motion April 1.
➡️ Today’s job’s report pushed fully pricing in Fed cuts from July to September.
➡️ The after hours announcement by Elon occurs during the lower-liquidity, post-Friday trading hours.
➡️ This IS earlier than expected. 😇 Some say this is due to stock performance and pressure on Elon to perform. Some say because Tesla is further along than we realize.

Likely Event
➡️ Conceptional robotaxi. Likely like Zoox.
➡️ Zoox is owned by Amazon.
➡️ DMV regulatory approval to transport passengers at up to 35mph around its Foster City HQ. Also now authorized in Vegas.




Bloomberg Autos Reporter

😇 I do think it’s likely Elon just decided, “let’s do an event,” today.
😇 Also strange; usually these announcements are not made after a quarter closes and before financials are released (quiet period).

Fed’s Laurie Logan Today via Bloomberg.
✅ “In light of these risks, I believe it’s much too soon to think about cutting interest rates,”
✅ “There’s no urgency right now.”
✅ Long-run rate has likely moved up.

Rate Cuts
✅ 53.2% chance of cut in June.
✅ 62.6% chance of cut in July.
✅ 78.6% chance of 3 cuts in December.

🔗 Link to this post

Morning News 04/05/2024 05:43 PT

Historical for Fed
✅ Since the 1970s, the Fed has never started cutting interest rates while economic momentum accelerated.
✅ Fed only cut once when ISM Manufacturing was above 50 and never above 50 at one-year peak.
➡️ Today’s jobs report is an accelerating report. 303k jobs vs 214k expected. 84k beat included -5k revision. ✅ This beat EVERY one of the 74 economists surveyed by Bloomberg.
➡️ Unemployment rate down 3.8%. Fed March FOMC forecast 4.0% end of 2024.
➡️ Household survey exploded 468k. Rate-cut proponents were using the household survey to suggest the Fed was late.
➡️ Wage gains for Feb revised up from 0.1% to 0.2%.
➡️ At expectation wage gains for March 0.3%.
😇 Yesterday, multiple Fed members suggested on weak jobs, we could cut rapidly.
😇 However, we also got Kashkari who said stronger data suggests we might not need to cut at all in 2024.
✅ Note: January revisions came in up 27k vs the usual down. 😇 This feels like one of the first times we’ve actually gotten UP revisions. 😇 This makes January even hotter at 256k jobs.

Former Fed Bullard
✅ You don’t want to move on inflation that’s going in the wrong direction.
✅ But, you did get to peak rates last year. And PCE is done since then. So you should adjust, at some point.
✅ You can make 25bp moves or something defensible.
✅ 25bp won’t move the election; median voter might not be paying attention.
😇 Ehhh but you’ll know that rate cuts “have started” or not.
✅ 13% wage gains in last few years, but prices up 18%. That’s down 5%.

Bloomberg
✅ Economy strong. Strong jobs report didn’t add wage pressure, at this point, likely because participation is up.
✅ Doesn’t suggest near-term rate cut.

Government
😇 Zerohedge leans either skeptical, bearish, or libertarian.
😇 The beat alone (net of revision) more than offsets ALL government employment. Not sure this is an indicator itself.

JPM
✅ More pressure on Fed patience. If PCE and CPI inflation (services specifically so supercore) come in hot, then higher rates might be here to stay. So far, market ignored Jan / Feb. But it can’t ignore higher data forever.

Bloomberg Intelligence
✅ Economic momentum not showing softening to justify dovish action.

Apollo
✅ Sticks with 0 rate cuts.

Principal Asset Management
✅ Powell says strong jobs reports okay as long as wages don’t takeoff unsustainably. 😇 True, but remember the Fed’s target for wages is 3.0%. At 0.3%, we’re at 3.6% annualized.

Nick T dovish response to Wages
✅ 10 weekend days in March vs 8 in February, which could boost average hourly earnings.

More of Average Hourly Earnings


Tesla Note on Deutsche Bank
✅ 2027 EPS target is $4.5. That’s a rapid acceleration of 36% per year from 2024 at $1.80 for their estimate. That puts them at a end-of-2024 PEG of 2.6, if Tesla hits that growth rate.

The Make America Great Again PAC
✅ Multiple job holders up 2.7% last month and up 27% since Trump left office.

Morgan Stanley
✅ Non-inflationary wage expansion does not alter June cut.

Kevin Thought
😇 55% hawkish, 45% dovish.
😇 Problem is: market likely wants to evidence that Jan/Feb were outliers. This report increased Jan jobs and increased Feb wage gains. So staying neutral does potentially more to reiterate Jan/Feb than it does to remove Jan/Feb. Hence, slight hawkish tilt.

R*
✅ Fed neutral rate might be seen slightly higher due to these reports, per Bloomberg.

WSJ Cover


🔗 Link to this post

---

Midday News 04/04/2024 13:30 PT

Fed’s Mester
✅ Wants to see a “couple more months of data.”
😇 So March and April, released April 10 and May 15. This aligns with a June cut, if good data.

Fed’s Kashkari
✅ “If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all.”
✅ January and February were “a little bit concerning.”

Fed’s Goolsbee
✅ Focused on housing inflation. “If it does not come down, we will have a very difficult time getting overall inflation back to the 2% target.”

Fed’s Harker
✅ “We’re not where we need to be.”
✅ “Inflation is still too high.”

Former NY Fed President Dudley
✅ 3 rate cuts isn’t out of the realm of possibility.
✅ But, higher inflation means the federal funds rate will likely be above the 2.6% long-term target estimated in March.
✅ Market is right to discount 3 rate cuts.

Oil
✅ Broke out over $90. Now $90.87 on Brent.

Bloomberg Intelligence Responds to WSJ
✅ Below, we discussed the WSJ’s take on immigration affecting payrolls data.
✅ Bloomberg disagrees. They say the housing data is accurately showing a slowing and running out of capacity.
✅ Nonfarm payroll suggests 160-230k jobs growth in 2023 vs 60-130k before pandemic.
✅ Households shows 157k as an average.
✅ Payrolls does better at counting undocumented.
✅ Households data is likely more accurate, indicating the jobs market is cooling indeed. And do not overestimate the economy’s ability to absorb as a mass set of low-skilled immigration. It could lead to declines in wages rapidly.

🔗 Link to this post

---

Morning News 04/04/2024 05:43 PT

Jobs Claims
✅ Initial 221k vs 214k exp.
✅ Continuing were 1791 vs 1811 exp.
😇 Usually the market doesn’t move much on a claims report, but today the market moved straight up with the Q’s up 41bp right after the nominal report.
😇 This is a weird sensitive to a report that usually doesn’t get attention.
😇 Does this potentially amplify the importance of Friday’s job’s report and Wednesday’s CPI report? Probably.
😇 Market excitedly seeking good news. This is similar to Powell yesterday saying nearly nothing with markets then rallying into the close.


Ford
✅ Delaying all-electric 3-row SUV to focus on hybrid.
✅ “Our breakthrough, next-generation EVs will be new from the ground up and fully software enabled, with ever improving digital experiences and a multitude of potential services.”
😇 Recall about a year ago Ford’s CEO has become infatuated with the idea of selling software due to high margins. This, in my opinion, makes it more likely for them to desire in-housing software dev vs licensing.

Rate Cut Projections
➡️ 59.1% chance of June cut as of 05:49

Coinbase
✅ Receives limited dealer license in Canada.

Palantir
✅ Partners with Oracle cloud to provide AI to government/business.

Bitcoin Flows
✅ ArkB Outflows April 3
✅ Drop in BTC prices late March followed low inflows and high Grayscale outflows.
✅ Rapid rise in inflows from Feb 27 on to mid March led to massive inflows – the largest of the chart.


XRP / Ripple
✅ ⚠️ Launching 1:1 backed stable coin. Backed by cash equiv, govt bonds, and treasuries to compete with USDT & USDC. XRP up about 4.5%.
✅ Consider: Tether hit an all-time high profit in Q4, making over $2.85b in just the last 3 months of 2023. $6.2b in income in 2023 in total. Most of this from US treasuries. Tether market cap at $106b and USDC is second at $33b.
✅ Mind you, outside of BTC and ETH, XRP and BNB are the only assets to ever hit a $100b market cap.
✅ Tether has also been reducing its exposure to secured loans and reports over $5b in excess reserves due to profits.

Background On Ripple
➡️ July 2023 win in court: ruled XRP as a digital token is not in and of itself a contract, transaction, or scheme. AKA, not a security.

Dell
✅ Social media volume rising. Heavy $130 call volume. Stock up 8.56% yesterday and up 1.21% in premarket.

Citi Group Pure Momentum Fund
✅ Buys winners, sells losers.
✅ Best quarter in decades.
✅ However, usually hits a rough patch beginning mid April.
✅ This is possibly due to the US tax deadline. Sell winners and buy laggards to fund tax payments.
✅ Momentum on a roll for 6 months.
😇 Usually, these funds get burned – that’s why they’ve had their best quarter in “decades” which implies they rarely have great quarters.
😇 Usually get caught holding the bag.
😇 Not this cycle. Question now is, when does momentum flip?

🔗 Link to this post

Evening News 04/03/2024 06:45 PT

Vehicle Deliveries Q1
✅ ⚠️ Many are claiming Tesla’s delivery figures are excusable because BYD had a -40% quarter. Is this accurate? A good summary sits at CNBC, here’s a glimpse:
➡️ BYD sales YOY were 13.4%. Yes, quarterly sales fell 43%.
➡️ Tesla sales YOY were -8.5%. Quarterly sales down 20%.
➡️ Nissan sales YOY were 7.2%.
➡️ Toyota sales YOY were 16%, up 20% in the Q.
➡️ Honda sales YOY were 17.3%.
➡️ Kia sales YOY were -2.5%
➡️ GM sales YOY to retail customers were up 6% (though due to fleet customer declines of 23%, total sales declined 1.5%).
➡️ Ford sales up 6.8% YOY / Q1 EV sales up 86.1% (includes hybrids, up 42%).

Why BYD Fell
✅ Heavy price cuts in Q4 led to a surge of volumes in Q4 for EVs, but that surged waned in Q1 (😇 potential pull forward issue).
✅ Hybrid sales rose 56.4% YOY in March alone.

BYD Pickup
✅ BYD is now planning a pickup truck competitor.


Tesla FSD
✅ Elon is resurfacing claims that Tesla is ready to license FSD to other autos. He’s made this claim in at least 2 prior earnings calls in the last year, though there is no evidence any automaker has actually engaged Tesla yet. Here’s a mention from July 2023 when Elon suggested this licensing. That was nearly 9 months ago.
✅ Keep in mind, the Cybertruck (maybe due to steer-by-wire) does not have FSD yet.

Deutsche Bank on Tesla
✅ Price target $189 based on 2027 estimates.
✅ Expecting a flat 2024 in terms of volume.
✅ Estimating $1.80 for 2024 EPS.
✅ Estimating $2.15 for 2025 EPS.
✅ Estimating 1.84m vehicles in 2024 (2% growth).
✅ At $170, we’re at about a 94 PE ratio. Use 20% growth and you’re at over a 4 PEG.
✅ Gross margin down to 13.8% for the year.

Gold
✅ Broke $2,300. Bloomberg thinks this is because the Fed continues to signal it expects to cut rates year.
✅ Historically, gold rallies when rates are very low. Is gold trying to preprice that today?
✅ Or, is gold a harbinger of negative sentiment? Either could be true, per Bloomberg.


Trump Media Group
✅ It appears Trump hired Litinsky and Moss, whom he’s now suing, to help setup the business combination to take DJT public. There were included and specific service agreements, outlining limits for reimbursements for economy flights and hotels at $150/night. Yet now, they claim 8.6% of $DJT. This is what Trump is suing for.
✅ Trump owns about 53% of $DJT.

Oil
✅ OPEC+ confirmed it would continue to restrain production through at least June.

🔗 Link to this post

---

Assessing the Risk of a Wage Price Spiral 04/02/2024 16:30 PT

A Wage Price Spiral
✅ Occurs when increasing prices lead to increasing wages, which lead to increasing demands for higher pay (think union strikes or job changing), which leads companies to demand higher prices (to the extent the economy continues to pay). Since higher real wages give a potentially higher capacity to pay higher prices, a spiral could occur, where prices and wages perpetually move up more rapidly than is sustainable.
✅ This could lead to uncontrolled inflation, which is a currency destroyer.

Today vs the 1970s
✅ Inflation expectations are substantially more anchored than inflation expectations were in the 1970s.
✅ Inflation expectations were running away prior to the Fed’s “lift off” in 2022, as evidenced below. The 5-year breakeven rose to over 3.5%. Today, it sits around 2.5%.
✅ Prior to the pandemic, inflation expectations sat below 2%, around 1.5-1.8%, leading the Fed to continue QE and support the economy (to prop up inflation).
✅ Now, the Fed believes inflation will take a while to return to 2% and our expectations for inflation may settle above 2% for some time.
✅ This has been Powell’s latest positioning: Lumpy, slowly path to 2%, but eventually getting there, without returning to the lowest interest rates we had prior to the pandemic (absent a recession).
✅ So 2.5% on a 5-year breakeven does not signal broken expectations. However, monitoring this chart is critical. The trend in 2024 has been up.
😇 Why might breakevens be rising?
➡️ Tensions in Red Sea / Middle East (evidenced also by rising gold prices).
➡️ Hot January / February inflation data.
➡️ Hot wage growth in January, but low (0.1%) in February.
➡️ Rising oil prices (Iranian strikes, Israel, Russia, etc.).


😇 However, we have real risks now.
➡️ February’s ADP report was the first report in trend to show an increase in job-changer wages. 7.2% to 7.6%.
➡️ March’s ADP report was the second report to show an increase, rising “dramatically” (their word) to 10%.
➡️ These are the seeds of a price spiral.

What’s worse, is California.
✅ California’s share of workers could increase the employment cost meaningfully, but we won’t see this until July 31. That’s the day of the July FOMC meeting. A substantial movement in ECI upward in July could affect the FOMC’s decision to cut or not, per Bloomberg. California’s fast-food chain workers represent 0.4% of the national workforce and alone could increase ECI by 0.1% in Q2. Additionally, what happens to other wages, those for plumbers, electricians, teachers, and police officers, who all have wages starting in the $20 range, when an unskilled worker can earn $20? Likely, additional wage increases will spread.
✅ Bloomberg expects this will increase ECI, combined, to 4.5% annualized (just over 1.1% for the quarter).
✅ This risks further proponement of Fed cuts.

ECI
➡️ April 30, 5:30am.
➡️ July 31, 5:30am.

Wage Competition
✅ Something else to note is Elon Musk just mentioned he’s had to boost pay for workers in AI due to Microsoft offering massive bonuses to join Microsoft. While a small slice of the economy now, this is something else that could drive wages up longer.

To be Clear
😇 Wage growth is great. Especially wage growth above inflation. However, unsustainable rises in wage growth risk an uncontrolled resurgence in inflation. Some suspect gold’s latest rise evidences exactly this concern.
😇 This reiterates what Powell said earlier: PATIENCE. Unfortunately, that patience likely means at least 2-3 more quarters of pain for interest-rate sensitive stocks. The “bottom” is being created now for interest-rate sensitives. How low likely depends on how the overall economy does, since “low” will become relative.
😇 A correction in the stock market combined with bottom forming could be post painful for IS stocks.

🔗 Link to this post

Midday News 04/02/2024 14:12 PT

WSJ Election Poll

Swing States
✅ Biden is falling behind in 6/7 swing states, if the election were held today.
✅ Biden does lead in Wisconsin.
✅ These 7 states helped decide the 2016 and 2020 election.
➡️ Arizona: 5-point Trump lead.
➡️ Georgia: 1-point Trump lead.
➡️ Michigan: 3-point Trump lead.
➡️ North Carolina: 6-point Trump lead.
➡️ Nevada: 4-point Trump lead.
➡️ Pennsylvania: 3-point Trump lead.
✅ Biden won Pennsylvania, Wisconsin, and Michigan in 2020.

Issues
✅ Trump leads on mental fitness and physical fitness.
✅ Trump leads on economy, inflation, and immigration.
✅ Biden leads on abortion.

Amazon
✅ Web Services team is slashing hundreds of jobs.
✅ Removing “just walk out” cashier-less technology – instead using some form of scan-at-cart checkout.
✅ Streamlining its expenses.
✅ Invested $4b into Anthropic, who committed $4b in AWS spend.

Jobs
✅ Surging immigration may explain why jobs’ data is so inconsistent.
✅ This suggests the jobs market may be adding productivity and labor supply, rather than suggesting we’re in an economy overheating.
✅ The household survey has frequently been off from the payrolls survey, possibly because the labor department calculates the share of the population working and applies that percentage to the Census Bureau. The Census counted a 0.5% increase in workers last year, but the CBO estimated the increase was 0.9%, the difference possibly due to migrants crossing the border and being under reported.
✅ This suggests the labor market is growing well, without the economy overheating and therefore requiring higher rates to restrain.

This has happened Before.
✅ In the last 90s, illegal immigration rose.
✅ Similar gap in establishment / household survey.
✅ Household survey deterioration may be misleading.

Hotels
✅ Marriott: Selling the brand. 8700 hotels; 139 countries/territories.
✅ Most, like Marriott, Hilton, and Hyatt don’t actually operate the hotels.
✅ Instead, smaller owner-operators run the businesses and hire employees.
✅ These are just brands.
✅ Owners lease the names, known as “flags.”
✅ Larger brands just take a franchise fee.
✅ Marriott & Hilton own about 1% of their hotels.
✅ Hyatt owns 2%.
✅ Why?
➡️ Economic cycles can limit growth with an asset-rich model
➡️ Asset-light model can just focus on the brand.
➡️ Franchise fees are usually 5-15% of revenue.
✅ Hotel Loyalty Programs
➡️ Keeps people inside the hotel chains.
✅ 2/3 of hotels are flagged.
✅ Depends though. Franchising works in lower-amenity hotels.
✅ Luxury, with higher touch points, requires much more. The brand here tries to control each aspect.

Israeli Settlements in the West Bank
✅ Settlements are illegal under international law, but legal under Israeli law.
✅ Outposts are illegal under both.
➡️ Outposts are not attached to already legal settlements.
✅ The use of outposts are expanding in the West Bank per the WSJ, where frequent new roads are formed connecting illegal outposts to settlement. This increases tensions between Palestinians and Israeli’s.

🔗 Link to this post

---

Fed Speech Jerome Powell 04/02/2024 09:10 PT

⚠️Note: Next Meet Kevin course coupon expires Friday at 11:59pm. Briefly extended from Easter Sunday. Includes course lives & trade alerts in stocks & psychology. ⚠️

Stanford Business Event
✅ Expected to begin at 9:10am. Event started 2-3m late.
✅ Jerome up at 9:11.
✅ Fed has time. Job of sustainably restoring 2% is not quite done.
✅ Too toon to say whether recent inflation readings are more than just a bump.
✅ Healing of global supply chains has helped.
✅ Labor supply increased significantly; rising participation. As well as immigration.
✅ Recent job gains have come in higher than expected; a faster pace than we’ve seen since June, and January / February readings were higher than the second half of 2023.
✅ We do not expect to lower our policy rate until we have greater confidence.
✅ March projections: we continue to believe the policy rate is likely at its peak if the economy evolves as we expect.
✅ That outlook is uncertain.

Historical Lesson. What Caused Inflation, per Powell
✅ Collapse of supply side.
✅ Shortages of semis, couldn’t make cars, and major labor shock. Severe labor shortage.
✅ Fueled then by overheated demand at a time when rates were low and fiscal policies were very supportive.
✅ So we needed to unwind supply and demand side.
✅ Today, we see those working together.

Going Forward
✅ Inflation expectations: having the public expect inflation will return to 2% is very important.
😇 Highest 5-year breakeven in 13 months.
✅ There could be more supply gains to be had, like immigration, which was strong in 2023.
✅ Monetary policy is tight. Weighing on interest-rate sensitive spending in the economy.
✅ Would be a concern if inflation expectations unanchored.
✅ We originally thought inflation would be transitory. We thought supply would recover more quickly and demand would wane. That started in 2023.
✅ Very unusual though: conditions are loosening and inflation is coming down now.
✅ How much more will we get out of the supply side? We don’t know.
✅ Still seeing businesses find it too difficult to hire.

Rate Cut Data
✅ 57.9% chance of June cut at the moment (9:27 PT).
✅ 10-year back to 4.36% after weaker ISM prices paid.

Interest-Rate Sensitive
✅ If you’re a household with a low-interest mortgage, a company with a low-interest rate, or otherwise low debt, you’re not too affected. Durables are much more affected.
✅ Does lead us to wonder: How could the economy grow 3% when we’re at a quarter-century high on rates?
✅ Supply-side recovery. It’s not just demand and rates.
✅ Supply-side recovery is helping a lot.

Problems
✅ If we cut too soon and have to raise, we’d likely cause significant disruption.
✅ Without price stability, you can’t achieve either mandate.

AI
✅ It should increase productivity. That’s not what we’re seeing now though. It’s too soon.
✅ Will it augment or replace labor? Hard to say.
✅ Neutral rate going forward doesn’t matter for today.
✅ It’s unknowable right now and it doesn’t really matter that much for now.

🚀Catalyst is clear. Pamp it.

🔗 Link to this post

---

Morning News 04/02/2024 05:32 PT

ADP Report
✅184k jobs vs 150k expected.
✅⚠️ Job changer wages jump for the second month. February job changers jumped from 7.2% to 7.6% wage gains.
✅⚠️Job changer wages jumped for March jumped from 7.6% to 10% wage gains, a “dramatic” jump. 😇 YIKES!
✅ Job stayers down from 5.2% to 5.1%, it’s continued trend.
✅ The only industry to lose jobs (-8k) was “professional/business services.” 😇 AI?
✅ Friday’s job’s report is expected to show 0.3% MoM wage gains and 214k job gains.
✅ “Inflation has been cooling, but our data shows pay is heating up in both goods and services.”
😇 A wage-price spiral is the most-dangerous thing that could occur. This is when wages move up, then prices move up, then wages move up, then prices move up. It’s an almost certain way to see interest rates move UP, not down.
✅ Gold up again: $2291.

Rafael Bostic
✅ Economy is maintaining its strong pace.
✅ I’m not hearing things are getting faster or stronger.
✅ Economy does need to slow. Otherwise, you’ll see upward pressure on prices again.
✅ With an economy moving like this, we’ll have to slow when we talk rate cuts. We’ll have to be more patient than many have expected.
✅ Still seeing just 1 rate cut. That’s where I was 6-8 months ago.
✅ We’ve seen inflation become much more bumpy.
✅ Q4 target for first cut. End of the year.
✅ If employment starts to degrade, I’ll have to take that on board. I’m not getting that outside of highly interest-rate sensitive sectors.
✅ Bostic is a voting, more hawkish member.

✅ 10-year now breaking 4.41%
✅ Doomberg expects we’ll be at 4.50-4.51% soon with last broken resistance level at 4.35%.

5-Year Breakeven


Ford Sales Q1
✅Q1 EV sales up 86.1% (includes hybrids, up 42%).
✅Q1 total sales up 6.8%.

Data
✅ S&P Service PMI 51.7 expected, comes in as expected. 14 months in a row of expansion. But
✅ ISM Services exp 52.8 DATA OUT: 51.4
✅ ISM Services Prices Paid 58.4 DATA OUT: 53.4 (4-year low)
✅ ISM Services Employment 49.0 DATA OUT: 48.5
✅ ISM Service New Orders 55.5 DATA OUT: 54.4

Ulta
✅ Now trades at a ~17fPE for Jan 2025
✅ Growth expected to be about 10%
✅ Around 1.7 PEG.
✅ Warning of a “broad-based slow down across product categories.”
✅ ULTA down 12%
✅ ELF Beauty down 10.6%

🔗 Link to this post

---

Tesla China 04/02/2024 21:24 PT

✅ China deliveries recovering, via Bloomberg.
✅ However, market share down from 10.5% in Q1 2023 China to just 6.7% Q4 2023.


🔗 Link to this post

---

Evening News 04/02/2024 18:30-18:44 PT

JPM
✅ Outright short positions in US treasuries rose the most since the start of the year.
✅ Manufacturing and jobs are holding up.
✅ 65bp of cuts are priced into markets now, vs 75bp just 2 weeks ago.

Bloomberg Economists, on Trump’s 60% Tariff from China
✅ A 60% import tariff from China and 10% on the rest of the world, per BE, would raise PCE inflation (headline) to 3.7% in 2025 and reduce US GDP by 0.2%.

Dave and Busters
✅ -7% comp sales
✅ 88c EPS vs $1.09 estimated for Q4.
✅ $599.1m vs $606.2m revenue estimated for Q4.

TSM Lombard
✅ US tax liabilities deposited by corporations in Q1 were up 31% Y/Y, compared with 0% in 2023 and -13% in 2022.
✅ This evidences growth to jobs, ordering, and the economy.
✅ With real wage growth now positive, households might be able to keep spending.

Goldman Sachs on Tesla
✅ April 1 price increase on model Y and future growth will be the focus of debate.
✅ $25k Tesla can’t come soon enough.

Goldman Sachs Momentum Stocks Cracking
✅Down 350bp in week. Still up 35% ytd.
✅China seeing more greenshoots. 😇 Bottoming process?

Bitcoin
✅Followed nearly to a T on 5m chart a support trend connecting Feb 9, Feb 26, and March 20 lows. Now, we’ve broken below it.

Taiwan Earthquake
✅ Strongest earthquake in 25 years hits Taiwan. TSMC evacuated.
✅ 87k households without power. TSMC evacuated “some fabs.” 18:44 PT update.
✅ “All staff are safe and factories are operating normally; some machines were shut down but we are working to restart them.” 18:53 PT update.
😇 Does seem we will face any significant longer-term impacts on chips here.

Tomorrow’s data
✅ADP employment report 5:15am (150k estimate)
✅ISM Services/Prices Paid.
✅S&P PMIs.

🔗 Link to this post

---

Microsoft vs Apple AI 04/02/2024 13:05 PT

Microsoft
Microsoft has 3 Main Segments
✅ Productivity & Business 31.0%
➡️ Office 365
➡️ CRM Apps

✅ Intelligent Cloud 41.8%
➡️ Azure

✅ More Personal Computing 27.2%
➡️ Windows
➡️ Gaming & Xbox
➡️ Bing

➡️ 52% United States revenue (Microsoft).
➡️ $62 Billion Total Revenue Q4 2023.
➡️ 35.3% net margin.

Apple
Apple has 5 Main Segments
✅ iPhone 58.3%
✅ Mac 6.5%
✅ iPad 5.87%
✅ Wearables, Home, & Accessories 10%
✅ Services 19.33%

➡️ 42% United States revenue (Apple).
➡️ $119.5 Billion Total Revenue Q4 2023.
➡️ 28.4% net margin.

Initial Comparison.
✅ Apple makes more money than Microsoft. They net $21.87b vs $33.916b for Apple. That means Apple net about 55% more than Microsoft.
✅ Microsoft market cap is about 20% higher than Apple.

Why?
😇 Services are a substantially higher margin business. Microsoft is mostly services (less say Xbox).
😇 About 70% of Apple’s bottom line comes from products, not services.
😇 A slowdown in iPhone sales weighs on Apple heavily. Whereas a slowdown in say PC sales — for Windows installations — can easily be offset by growth in Azure.
😇 Apple has, thus far, squandered their AI solution. It’s been 13 months now since the GPT revolution.
😇 Therefore, Apple is anchored under the weight of falling iPhone sales, especially in China. Microsoft does not have this anchor. Instead, it strategically gobbled up a near controlling interest in OpenAI (technically 49%). Therefore, along with Azure, Microsoft really became an AI-proxy play.
😇 Apple, without AI in sight, did not.


Apple Hinted at the Future of AI in a 📝 Research Piece just Out.

✅ Reference Resolution as Language Modeling (ReALM, pronounced realm).
✅ Large language models have problems:
➡️ They lack device context (what’s on your screen).
➡️ They require large prompts.
➡️ They take a lot of power.
✅ Apple’s potential breakthrough:
➡️ Use visual references both on screen and within other apps.
➡️ BUT, run the LM (language model) on device for security & privacy.
➡️ Which also helps preserve power and minimize compute, important for mobile devices.
➡️ Then, provide answers that the user can visually interact with.
✅ Apple’s examples:
➡️ Show me pharmacies around here. Pick the bottom one (this might be challenging for a voice assistant without visual understanding.”
➡️ Make it brighter. Chat assistant may open settings for your phone. Realm may adjust the lighting in your room because it knows you have your lights controlled via a smart-home dimmer.
✅ Apple’s problem:
➡️ This takes time, it’s expensive, and understanding text can be challenging with AI tools today. 😇 Note how long it’s taken MidJourney to get text in AI image generation.

What’s Next
✅ Apple is planning their “AI Day” for June 10, 2024.
😇 I expect the following announcements:
➡️ Siri with AI (on your phone, private, secure, and can control / understand your other apps).
➡️ Dictation with AI (gone are the days of embarrassing dictation errors!).
➡️ Siri with AI in Mail, Pages, Numbers, Keynote, etc.
➡️ HomeAI. This could be HUGE for future products. Smart home tech today is limited to rigid schedules, usually). A true smart home requires AI.
➡️ VisionAI. Much further down the road, but adjusting your windows on VisionPro with AI would substantially increase quality of life.

Apple Valuation
✅ September 2024 Projected EPS $6.58, that’s 25.68x 2024 eps.
✅ Wall street projects 13.22% growth 4 years out from September 2024.
✅ Peg ratio therefore is 1.94.
😇 For a high cashflow business, this is a potential steal for AI, if Apple nails it.
😇 How could they? Simple. An Apple One AI tier.

✅ Apple has 2.2 billion installed devices.
✅ Apple has 1 billion paying subscribers.
✅ Around 180.5m users use GPT. 😇 Let’s say 20% pay for the service. That’s potentially $722m in monthly revenue.
😇 Let’s project this for Apple. 20% upgrading to Apple AI for, say, $19.95, is $3.990 billion an potential additional revenue per month. In one quarter, this would increase Apple’s services revenue by over 50% and likely contribute 52c in EPS per quarter. That’s an extra $2.04 of EPS per year or a 31% beat over current projections.
😇 Now, let’s be real: This is complete “shot in the dark” numbers. We don’t know what Apple will announce. We don’t know what the competition will do to innovate. But running AI on your own devices, integrating it into Siri, could drive a complete product refresh cycle.
😇 Especially if only new M-AI chips are capable of this.
😇 Therefore, in my opinion, Apple is priced as an anchor. But it’s true potential is likely much larger than the market gives it credit for.

📝 MSFT 10k
🔗 Link to this post

World News 04/02/2024 10:40-12:15 PT

China
✅ Joe Biden and Xi Jinping held a call. First since November when Xi visited San Francisco. Topics included:
➡️ Taiwan
➡️ Trade
➡️ Chips
➡️ Warned about selling lethal equipment to Russia.
➡️ China dumping “green tech” 😇 (Chinese solar is helping plummet panel prices)
✅ ⚠️ FT Reports solar prices have fallen so dramatically some europeans are now using solar panels to act as fencing. Solar panels can be installed more cheaply as fences, but capture much less light. Solar panel prices are down to 11 US cents per watt, less than half of the price they were one year ago. Below 15c a watt, investing in solar manufacturing becomes limited. 😇 Give that a Google.

➡️ Illegal fentanyl manufacturing


UK
✅ Manufacturing activity finally back to growth. First time since Mid 2022.

Israel
✅ Airstrike killed several ‘World Central Kitchen’ aid workers, including one American.
➡️ Per Politico, the IDF claims and armed man was in the convoy. Turns out, he was not found on the convoy. He likely stayed at the food warehouse. 3 missiles hit the World Central Kitchen convoy.
➡️ Vehicles were clearly marked for aid.
➡️ Israel PM: “It happens in war; we are fully examining this. We are in contact with the governments, and we will do everything so that this thing does not happen again.”
➡️ 196 aid workers suspected dead since the start of the war.
➡️ Convoy DID coordinate movement with IDF.
➡️ The roof of the vehicle was purposefully marked too.

✅ “Australian Jewish Association” cites that Hamas is responsible for all casualties in Gaza.
😇 This is debated. Some argue the continuation of war exacerbates and amplifies casualties.

✅ Two pictured here among the dead.

Consequences of Israeli Strike
✅ 240 tons of aid diverted to Cyprus as World Central Kitchen pauses efforts in Gaza.
✅ UAE suspended its involvement in aid.
😇 ⚠️ Some argue this was the intention: to limit food aid and further punish Gaza.

Syria & Damascus
✅ Per FT print: Iranian embassy in Syria’s capital (Damascus) killed 3 senior members of the Iranian Revolutionary Guard.
✅ Fear that this could escalate tensions in the Middle East.
✅ Iran vows retaliation.

Trump Media Group $DJT
✅ Per FT print: just $751,500 revenue in Q4.
✅ Annual report shows:

➡️ ~$1m per quarter of revenue, or just over $4m per year.
➡️ Cost of revenue only $164,900.
➡️ But $9.7m in R&D with $8.8m in G&A.
➡️ Interest expense was $39 million. 😇 ⚠️ Wow! This is oddly high.
➡️ Appeared to be “accreted interest” on convertible notes. 😇 Basically, debt owed on debt and not paid yet.
➡️ Over $45m in convertible debt ($42m of it current).
📝 Annual 10k Filing is Out.

Gallup Research on the Politics of EV Buyers (Important for Tesla).
✅ 4% of surveyed Americans own an EV.
✅ 41% will not buy an EV.
✅ 71% of Republicans would not consider buying an EV.
✅ 6% of Democrats own an EV.
✅ 1% of Republicans own an EV.
✅ 4 Republicans for Every 1 Democrat refuse to consider an EV.
✅ 53% of those over 55 refuse to consider an EV.
✅ 55% of Republicans believe EVs do not help the environment at all. Only 4% of Democrats believe this.


Caliber Consideration Scores for Tesla
✅ 70% considered a Tesla in November 2021.
✅ In February 2024, only 31% did. Less than half.
✅ CEO of Caliber believes Musk is creating reputation harm to the company.
✅ Sees “strong associations” between the reputation of Musk and Tesla.
✅ Mercedes/BMW sit around 44-47% consideration.
✅ Trust in Tesla has fallen from over 80% to just under 60%.


GM Auto Sales
✅ Up 6% with 594,233 deliveries. EV down 20% YOY at GM.
😇 So, either EVs are more “interest-rate sensitive” than gas cars, OR a) they’re just as interest-rate sensitive and b) EVs are receiving less adoption than hoped. It appears to be the latter is more likely.

Gen Z report by DanFromHR.com (Dan Space study):
✅ 68% found Gen Z to be “least reliable.”
✅ 71% found Gen Z to be the most-likely to have a mental-health issue in the workplace.
✅ 62% said they were the most-likely generation to create division and toxicity in the workplace.
✅ Another anecdote found gen Z is “expecting promotions for simply showing up every day.”

😇 Note: This appears to be a study by small-business owners, who are more likely to be older than Gen Z. It seems older generations frequently look down on younger generations. I’ve personally hired workers from each generation and have found unreliable workers in each, but am blessed to say I’ve found many more (like 5:1) reliable workers than unreliable workers. I do believe Gen Z prioritizes a (potentially unrealistic) lifestyle promoted by social media, involving a disproportionate focus on passive income, fewer work hours, and more leisure time.

Gold at All Time High
😇 Likely due to fear in Middle East, oil prices, stabilizing inflation (at higher levels than hoped).


Trump at Press Conference Today
✅ Electric cars; they’re very bad cars. Many of them from China; they’re very bad.
😇 Elon should sponsor Trump to flip this narrative.
🔗 Link to this post

---

Fed News 04/02/2024 09:33-11:58 PT

Mester
✅ Sees neutral rate at 3.0% rather than 2.5%.
😇 This is a big deal. It suggests inflation needs to get to 2.0% to get 2 rate cuts. Remember: Neutral rate + inflation = FOMC rate for balanced market. Tightening market would require higher FOMC rate. Loosening = lower. If more committee members see a 3% vs 2.5% neutral rate, rates will likely stay a chunk higher than we previously anticipated.

Market on Rates
😇 Market seems convinced in a June rate cut. It could be very disappointing to markets to UNPRICE June with this uniformity. If next inflation reads are warm, these estimates will change rapidly.


Multivariate Core Inflation
✅ Multivariate core normalized to roughly the same height as the peak in September 2023.

✅ Atlanta Fed GDP now estimate up to 2.8%.


Tesla
✅ MegaPack & energy deployment up 4.2% YoY (😇 low. Megapack was expected to be less interest-rate sensitive as usually municipalities/utilities buy them.).
✅ Note: GM Saw retail sales rise 6% YOY. So even though they are also interest-rate sensitive, they are growing slightly.
😇 Tesla bullish sentiment still seems strong, hence 5% adjustment today. If sentiment worsens, the stock’s decline will be more rapid.

🔗 Link to this post

Morning News 04/02/2024 05:33. PT

Tesla
✅ IR Email with Analyst Consensus Delivery Estimates
➡️ 449,080 Wall Street estimate
➡️ 443,027 average estimate
➡️ 431,125 median estimate


✅ Last Year 2023 Q1 Numbers
➡️ Production 440,808
➡️ Deliveries 422,875

Reminder on Tesla China Numbers
✅ China January 2024: 39,881 (100,246 for Jan+Feb 2024)
✅ China January 2023: 66,051.
✅ China February 2023: 74,402 (140,453 for Jan+Feb 2023)

⚠️ Tesla Q1 Results
✅ About a 13.9% miss on Wall Street’s expectation.
✅ Troy missed by 5.4% (😇he’s usually within 3%).
✅ Both median and average surveyed deliveries missed as well.
✅ Note: The new CFO dumped some shares right before after his option exercise. 😇 I’m sure that wasn’t preplanned.
✅ Earnings April 23.

😇 Giga Berlin shutdown more likely affected production rather than deliveries, IMO.
😇 Red Sea previously was only mentioned as affecting parts supply. Now they are blaming deliveries on the Red Sea as well.
😇 Highland refresh would also affect production, not deliveries.
✅ Only delivered 89% of the cars you produced.
✅ 386,810/422,875 is a 8.5% YOY decline in Q1.

Rivian Beats on Delivery Numbers Q1
✅ Estimate 11,893. Actual 13,588 delivered and 13,980 produced vs 13,817 estimated production.

Oil
✅ Brent international $88.57; 5-mo high.
✅ WTI (US blend) $84.89

Yields & Rates
✅ 4.40% on 10-year.
✅ 2 year essentially flat second day in a row. 😇 Bear steepener is what we saw in July of last year which started the 3-month selloff.
✅ 58.7% chance of a June rate cut.
✅ 72.4% chance of a July rate cut.
✅ 55.1% chance of 3 cuts by December.
✅ 2.483% on 5-year breakeven. Highest since March 2023 banking crisis. 😇 People thought the Fed would cut and stoke inflation.

JOLTS Today 7am PT
✅ 8,730k job openings expected.
✅ DATA OUT. 115k negative revision for prior release.
✅ DATA OUT. 8,756k job openings.😇 Bang on.

Jobs Report Comes Friday. Estimates are:
✅ 208k jobs expected.
✅ 3.8% unemployment expected vs 3.9% prior.
✅ 0.3% wage gains expected MOM vs 0.1% last month.

ISM Data
⚠️ ✅ Cameron Crise: 50.3 on ISM is nothing special. But “the fact that it bounced back into expansion for the first time in 18 months actually suggests that the impact of high interest rates is waning, not strengthening.”
✅ Fed has NEVER cut with ISM at one-year peak above 50 and unemployment below 5%.
😇 In English (😇 translated by Kevin) Yo, dis market be YOLO FOMO bubble-mode while yields be skyrocketing and data say no cut dawg. Dat stupid. No cap.
✅Actual text: “That equities have shrugged off rising long-dated real yields by increasing P/E multiples is another example of how the event horizon of an investment bubble distorts the normal functioning of not only trading, but the transmission of monetary policy. That is an important break in the usual chain of how real interest rates translate into policy restriction.“
😇Bottom Line: Bad.

🔗 Link to this post

---

Morning News 04/01/2024 06:45. PT

Catalysts Today
✅ S&P Manufacturing PMI exp 52.5 DATA OUT AT 51.9.
✅ ISM Manufacturing exp at 48.3 DATA OUT AT 50.3.
✅ ISM Prices Paid exp at 53.0 DATA OUT AT 55.8.
✅ ISM New Orders exp at 49.8 DATA OUT AT 51.4.
✅ ISM Employment exp at 47.5 DATA OUT AT 47.4.

Catalysts Tomorrow
✅ JOLTS, expected at 8,770k
✅ Durable Good Orders, expected at 1.4%
✅ Tesla delivery numbers

Bloomberg Argument on Bonds
✅ 10-year up 8bp today possibly as up to another $20b of corporate bonds come out to compete with treasuries this week.
✅ Concerned over Slowing Savings & Real Incomes.


🔗 Link to this post

---

Morning News 03/30/2024 10:35. PT

😇 Yesterday’s PCE report was mostly benign, with a 0.1% fall from expectations on headline, a match elsewhere, and upward revisions of 0.1% to January figures, the report felt nominal. This likely puts more pressure on March’s CPI report releasing April 10, 2024.
😇 Even though markets were closed yesterday, Bitcoin traded around $70,000 without much volatility.
✅ One potential reason, per Barrons:
➡️ The treasury market is finally becoming a source for calm, not stress, with prices stabilizing and yields on the 10-year around 4.20%.
➡️ Barrons sees value in trimming AI and moving into names like Block, Visa, Etsy, Bank of America, RTX, and GE Healthcare.
✅ Another Barrons Option:
➡️ Hershey.
➡️ Price of cocoa has skyrocketed. Makes up 1/5th of the company’s costs. Cocoa is now more expensive per ton than copper ($10k per ton for Cocoa).
➡️ Company still grew sales 7% in 2023 to $11.2b. Expects growth of around 2.5% this year. Real growth? Overseas. Just 10% of the company’s growth now.
➡️ Trades at 20.2x 12-month expected earnings.

Fed Rate Cuts
✅ Barrons thinks “this may be as good as it gets” for inflation, settling at 2.8% on PCE.
✅ Barrons cites JPM’s Marko Kolanovic (😇 similar to Morgan Stanley’s Mike Wilson):
➡️ Loose financial conditions like this usually lead CPI to rise.
➡️ Speculation in crypto & equities could lead to a firming of consumer prices, leading to just “one and done” in terms of rate cuts.
✅ Powell spoke yesterday and reiterated most of the same: two-sided risks, hope to be in a position to cut later this year.
✅ Powell did reiterate that if jobs data started coming in weak, monetary policy would rapidly adjust.
✅ But, as Barrons says: signs of labor market weakness are “scant.”

A note on School from NYT
✅ 26% of students are now chronically absent vs just 15% before the pandemic.
✅ Some parents take children on trips assuming kids can make up work online.
✅ Others blame social anxiety post pandemic.
😇 I have a serious concern that Zoom, AI, and online-only will hamper some children’s ability to operate in the non-AI world. In a future where the only way to be competitive as a human is outside AI (assuming AI/computers/robots challenge human efforts), skills in sales, negotiations, in-person meetings, and other social skills will become exceptional, rather than normal. That creates a competitive advantage for children/adults who focus on interpersonal skills today.

🔗 Link to this post

---

⚠️REMINDER ⚠️
Warrants from fundraise ending March 2023 are due April 8.
Share certs for fundraise ending October 2023 and full audit due April 30.
HouseHack will be present at the Millionaire Symposium event June 21-23 in Vegas.
Current fundraise for HouseHack is live here: https://househack.com/2024. Ends June 30. Read the PPM there.

---

Morning News 03/28/2024 09:33 PT

GDP Q4 Annualized; Third and Final Release.
✅ GDP: 3.4% vs 3.2% expected.
✅ GDP Price Index: 1.6% vs 1.6% expected.
😇 Q4 is old news though.

Waller of the Fed
✅ Voting member for 2024: recent inflation figures “disappointing.”
✅ Progress in inflation has slowed.
✅ I see no rush to lowering the target rate.
✅ Should delay or reduce rate cuts this year. Retail sales and some other indicators suggest softening demand, “but the evidence for a significant slowdown is sparse.”
✅ “Risk of waiting a little longer is significantly lower than cutting too soon […] and risking a rebound in inflation.”
✅ Need at least a couple of months of better inflation data. 😇 So June cut at earliest. Next Fed meeting will only get March data.
➡️ March CPI comes out April 10th.
➡️ Next Fed meeting is May 1 (so only 1 report between now and then).
➡️ Next CPI for April comes out May 15.
➡️ Next CPI for May comes out June 12.
➡️ Next Fed meeting thereafter is June 12.
✅ Strength of economy makes it easier to wait a little longer.

Odds of Rate Cuts
➡️ June 70.4% for at least 1 cut
➡️ July 76.8% for at least 1 cut
➡️ September 93.5% for at least 1 cut.
➡️ December is pricing 66.6% for 3 cuts.

Restoration Hardware
✅ Q4 adj EPS $72c vs $1.69 exp.
✅ Enthusiasm in earnings call.
✅ Demand to accelerate in second half.

AMC
✅ May sell up to $250m from time to time (shelf offering). Stock down 14%.

Tesla
✅ Dan Ives drops Q1 forecast for deliveries to 425k vs 475k.
✅ Price target $300 vs $315 prior.
✅ “Tesla has been haunted by both demand and supply-side issues,” via Benzinga.
✅ Perfect storm of demand issues.
✅ Chinese competition.
✅ China deliveries might be negative YOY 3-4%.
✅ Bears are justified this time.
✅ Elon needs to commit to being CEO of Tesla for the next 3-5 years.

FTX
✅ Sentencing today.

Xiaomi Smartphone Maker
✅ Undergoing “premiumization” strategy.
✅ Will sell its cars for a loss to compete.
✅ Just introduced its SU7 vehicle for $30,408, $4,000 less than Tesla’s model 3.

🔗 Link to this post

---

Impact of Bridge Disaster. 03/27/2024 09:33 PT

Bloomberg Intelligence
✅ Port of Baltimore affects about 2-3% of US imports.
✅ Mostly affects auto parts into/out of the region.
✅ Even though autos are declining in price, auto parts and auto insurance could boost year-end inflation by 0.2% and keep core PCE above 3%. This delays the Fed cut (base case by BI) from June to September. 😇 September is my base case, in spite of the unexpected March FOMC we had.
✅ Autos Affected:

✅ Autos already subject to higher wages due to strikes / UAW negotiations.
✅ Auto parts still 20% more expensive than before pandemic.

CCL
✅ Reported a $10m expected hit from cruise terminal being behind the bridge (stuck).

Why did the Ship Crash
✅ Per Andrew Tate, a Cyber Attack. 😇 He has 0 evidence or insight into whether this is actually true.
✅ BI reports this very ship (The Dali; Singapore flag) had a few other issues
➡️ Hit a stone wall in 2016.
➡️ June safety inspection found issues with gauges related to propulsion and mechanical systems.
✅ Now reported, per Post via The Hill, the Pilot ordered left rudder and left anchor to drop to stop swinging the ship to the right. 😇 Clearly some steering issue.
✅ WSJ reports “dirty fuel” may have been an issue for stalling power/generators.
✅ Issue is: How long will this affect supply chains?

NYT Report
✅ 6 presumed dead (fixing potholes on bridge).
✅ Ship suffered a complete blackout and issued a mayday.
✅ Gace Ocean Private Ltd. (owns Dali) cited in recent years for labor violations, underpaying, and holding crew members for months past their contract expirations.
✅ No diversion/buffers around bridge foundation.
✅ Buttigieg argues there was a debate in engineering whether or not buffers would have made a difference, given the weight of the container ship.

✅ Harbor master and apprentice were ON BOARD the ship, but the complete blackout led to a failure of propulsion.
✅ US Army Corp of Engineers is activating 1100 engineering, construction, and contracting operations.

Bloomberg on Red Sea
✅ Speaking of supply chains: The US Navy has still been unable to fully contain the Houthi threat in the Red Sea. Shippers are mostly still avoiding the route.
✅ Admiral Marc Miguez, commander of the flotilla in the Red Sea, argues “we have reduced some of their capabilities,” but shippers respond with, “It’s either safe or it’s not.”

Coast Guard & White House Press Conference
✅ No hazmat fell into the Patapsco River.
✅ 13 containers / fell. None of these hazmat.
✅ 56 of the 4,700 containers still on the ship contain hazardous materials.
✅ 8000 jobs affected.
✅ Reopening the port: likely quickly compared to bridge reconstruction as it’s clearing vs rebuilding.
✅ Supply chains: Tracker equipment likely more affected than cars.
✅ Effect “will not be trivial.”
✅ This is more localized than 2020.

🔗 Link to this post

Fisker slashes Ocean prices up to 39% as bankruptcy looms 03/27/2024 09:33 PT
✅ The NYSE has delisted Fisker.
✅ Fisker was in talks with Nissan for assistance, but it is now clear that Nissan is not interested.
✅ During these talks with Nissan, Fisker hired bankruptcy consultants. It then halted production of its vehicles after missing an $8.4 million interest payment, which caused the stock to drop.
✅ Due to the significant drop in price per share, the NYSE announced that it would be delisting the stock.
✅ Since Friday, Fisker stock is down an additional 80%, to roughly $0.02 per share.
✅ Fisker is now trading on the OTC market as “FSRN.”
✅ Fisker cut the MSRP of all 3 of its Ocean trims, attempting to liquidate its inventory for quick cash.
✅Ocean Ultra $38,999 ➡️ $24,999 (reduction of $14,000)
✅Ocean Sport $52,999 ➡️ $34,999 (reduction of $18,000)
✅Ocean Sport $61,499 ➡️ $37,499 (reduction of $24,000)
✅ This would not be CEO Henrik Fisker’s first company bankruptcy, as his previous company “Fisker Automotive” filed for bankruptcy in 2013.

📝 Electrek Article
🔗 Link to this post

---

Morning News 03/26/2024 05:45 PT

S&P 500 Five-Month Win Streak
✅ First time we’ve seen the S&P grow for 5-straight months November – March since 2013. This has happened 11 times since 1950, and for the rest of the 9 months, the S&P 500 rose in all cases and advanced an average of 12%.

Apple
✅ iPhone shipments are down 33% in February.
😇 Likely cart of a Chinese counter attack for US-chip bans.

Tesla 12.3
✅ Tesla up 3% to $178 resistance level on this news.


🔗 Link to this post

---

Tesla FSD Requirement and Updates. 03/25/2024 05:55 PT

Tesla
✅ Elon Musk now requiring FSD test drives at delivery.
😇 Practically: Increases labor costs & reduces streamline of delivery.
➡️ Cameras need to calibrate.
➡️ More staff will be required.
➡️ It’s an upsell opportunity. But does that increase “sales pressure” on consumers, turning them off? Then again, they’ve already bought. Would they u-turn due to this? Probably not. But allowing consumers to waive should be allowed. I’d be upset if I was forced to tour FSD before taking delivery. Practically, it’s likely an extra 30 minutes per delivery.
➡️ Tesla has about ~160 delivery centers in the United States. At 400,000 vehicles per quarter, we’re delivering 4,444 cars per day, or an average of 27 cars per day, per location. Adding 30 minutes to 27 deliveries is an additional 13.5 hours of labor required. So realistically, 2 staffers. 2 staffers at ~$25, with comp/taxes/benefits = roughly $520 per day extra per location. That’s $83,200 per day in labor or $7,488,000 per quarter. To offset this, Tesla would need to upsell, at full price, 624 more FSD packages than it would have otherwise. That’s about an additional conversion rate of 0.156%. This seems doable. I don’t question this logic.
😇 Note: This overassumes the deliveries in the United States since fewer vehicles are delivered in the US per quarter. So if anything, this is a conservative breakdeven estimate.
😇 (Using 30m due to assuming this will now include: stand here and wait for your driver/assistant. Now go to car. Introduce user to car. Overview features. Set mirrors, seats, etc. Create destination (assume 8m one way). Return. Close out. Etc.)

😇 However, is this an alternative to reducing the price of FSD? That’s likely the case here. Why reduce the price? Just sell better, bro.
😇 Ironically, the opposite of the vehicle-pricing strategy. Yet frankly, to me, the opposite would have been better. Include the software and minimize total price reductions. People buy cars ALL of the time with “bells and whistles” they don’t need or use. I’m unconvinced in the “twist arm” technique on a $12,000 package.
😇 Also, would this be before or after the sales contract is completed? Ideally before, so you can add in the $12k into your financing.

This is a bit of a Flip
😇 Previous goal was <15 minute deliveries.
😇 Most of the work was done before you ever got there. Then you just unlock the car with your app.
😇 Now, you have to give people a heads up they need to plan for a likely 30-slot for an FSD demo. This dramatic shift will take some adjusting for the sales crews.


Calibration Time
✅ Elon acknowledges calibration time risk.


Future of FSD Adoption
😇 FSD is fantastic. 12.3 is MUCH better than 12.1. When will the “mass driving community” realize this? MUCH later than we think/hope.
😇 Will this changes Q1, or even 2024 dynamics? Probably not. 2025 and on? Maybe. But do allow an opt out for FSD if you’ve already paid.

Others’ Commentary
➡️ Maybe delivery staff have more time available to sell.
➡️ FSD is very-high margin.
➡️ Upfront FSD demo’s for sales might be better.
➡️ You’re not being sold. You’re just being shown a feature.
➡️ Some will feel pressured. Should have opt out.
➡️ Comes at the same time as Tesla moves to Facebook ads emasse. Educating a new demo.
➡️ People are afraid to try it alone.

Pros
➡️ More believers.
➡️ More adoption.
➡️ More network-advertising.

Kevin’s Bottom Line
😇 Long-term bullish. But will take 1-2 years to materialize in EPS.

TroyTeslike
✅ Again lowered his delivery estimate 03/24. See his Patreon for full details.
✅ We’re now 13% below the average street’s estimates.
✅ Probably closer to 6-7% below analyst expectations.

Barclays
✅ 420-425k Q1 (😇 lowest I’ve seen from the Street).
➡️ Seasonality is tough Q1 vs Q4. And growth between 2019-2022 masked this.
➡️ Subsidy roll off in Q423 hurts. Germany phased out 6,750 Euro in Dec, France Model 3 lost subsidy. US model 3 lost $7,500. But point of sale credit exists now.
➡️ Chinese price wars (BYD *again* cutting prices on 100+ models)
➡️ Berlin disruptions.
➡️ Q1 rate puts us at 1.7mn units for the year. That would be “quite negative” compared to the 2.1mn unit ambition.

Goldman Sachs
✅ In between growth curves.
✅ Should stay positive FCF.
✅ Monetizing software is key.

🔗 Link to this post

---

Trump Appeals Court WIN 03/25/2024 09:05 PT

Big Trump Win
✅ Appeals court SLASHES Trump bond requirement for $464m in disgorgement (bond requirement of over $550m or 120%) down to just $175m.
✅ Ruling📝Here shows $175m bond payment and staying Trump and associates bar from acting as directors or from borrowing in NY.
✅ $175m due April 4-5.
✅ Trump expects to pay in “cash or equivalent securities.”
😇 Might try to post some DWAC ownership shares (I would!).
😇 Unexpected life safer for Donald Trump.

Trump Arguments
✅ We’ll “get rid of the electric car mandate.”
✅ We didn’t have inflation.
✅ We’ll handle crime in our cities.
✅ ‘I have cash but I don’t want to use it all on a bond; I want to use it to get elected. That’s what they want to stop.’
✅ The brand value is very valuable; Trump! I became President in part due to this brand.
✅ They’re creating a fraud.
✅ ‘Reporter: are you going to start putting money into your campaign? You haven’t since 2016.’
✅ Trump: I might!
✅ I should have the option to spend my cash however I’d like.
✅ No company will come to New York if I don’t win that case. That case is a sham, a scam, and a hoax.

🔗 Link to this post

---

Morning News 03/25/2024 05:55 PT

Boeing
✅ CEO Dave Calhoun to step down at the end of the year. “I plan to retire.”

Lucid
✅ Convertible Bond (preferred) investment by Private Investment Fund of $1b helping boost LCID double digits today.

Tesla Downgrade
✅ Mizuho downgrades Tesla to neutral suggesting delivery and demand pain in 2024/2025.
✅ BYD & Xiaomi cutting price again in China.

Fed
✅ Goolsbee: 3 cuts in line with my expectations.
✅ Goolsbee: In a murky period of inflation.
✅ Goolsbee: Leftover inflation is mostly housing 😇 and insurance and personal care services.
😇 See below annualizing of Jan/Feb data on a 3/6-month basis; resurgence. BUT, that was noticed in Jan/Feb last year too.

✅ Bostic: “Cutting rates too soon coul dbe more disruptive.”
✅ Bostic: CRE risks not broad based.
✅ Bostic: Expects just one rate cut this year.
✅ Bostic: If economy performs as expected, Fed can be patient.

Olive Garden
✅ Expects inflation in the mid 3’s in 2024.
✅ Last year saw inflation:
➡️ 1.5% commodities inflation.
➡️ 4.5% labor inflation.
➡️ 3.5% restaurant pricing.

5-Year Breakeven
😇 Rising to a scary level! Highest level since the banking crisis.


Rate Cut Pricing
➡️ 8.6% chance of May cut.
➡️ 69.8% chance of June cut.
➡️ 83.5% chance of July cut.
➡️ 72.8% chance of 3 cuts by December.

🔗 Link to this post

---

Trump Bond & Bankruptcy 03/24/2024 22:25PT

✅ Leticia James is ready to seize Trump assets (plane, real estate, etc.) if Trump doesn’t post his $464m bond Monday (3/25/2024).
✅ Trump declares he has “$500m in cash available.”
😇 The problem is, even if this is true, cash at businesses is often used for current liabilities, not for free spending. The Trump Organization needs operating cash to pay: payrolls, golf course staff, hotel staff, kitchen staff, administration staff, lawyers, contractors, etc. So the real question is: What is Trump’s “free cash” – which is a finance phrase for, “free and available cash.”

Bankruptcy
😇 I believe Trump will file Chapter 11 Bankruptcy for his “business fraud” case. This is in quotes because Chapter 11 is a corporate bankruptcy chapter. It enables corporations to “stay” debtor’s ability to ‘seize’ your assets.
✅ Trump has filed for bankruptcy 4 times in the past. He is not unfamiliar to this.
😇 Downside? Bankruptcy trustee eventually gets assigned. But that takes TIME. Trump needs TIME. It would likely take months to get a bankruptcy trustee involved. During that time, Trump would act as a Debtor in Possession, able to operate his businesses and pay other debts, while preventing seizure of his assets.
😇 Some argue another downside is the waiver of attorney-client privilege, but this is neither automatic nor does it necessarily apply – waiving such priviledge privilege only occurs in the “furtherance of a fraud,” not in defense of it.

Why does Trump need Time?
➡️ Appeals on his business fraud case. Winning an appeal would eliminate the need to pay the bond. He has already secured a bond on his $83.3 million payment required to writer E. Jean Carroll for defamation following allegations of sexual assault against her. So this is specifically on his New York City fraud case.
➡️ The Truth Social SPAC. Ticker DWAC (blank check company) merging with the Trump Media Group (Truth Social) may allow Trump to liquidate his ownership on the public stock market, likely 6 months AFTER the merger completes (post lockups). However, this is risky as the valuation of the company may be substantially lower come that time, as markets anticipate Trump’s exit.
➡️ Becomes President and pardons himself (which is untested legally, but will likely be attempted).

What about the Political Impact
😇 Democrats say filing bankruptcy would be politically horrible for Trump. I disagree. I think it would be very powerful. Think of the slogan: American entrepreneur, businessman, and your former President goes bankrupt trying to fight for America! #MAGA – We’re declaring this as a tool to fight Leticia James! #ElectionInterference”
😇 Please consider that phrase in as unbiased a manner as possible, which I acknowledge is challenging. I’m just trying to predict what I believe is likely.
😇 This, I actually see as quite A) likely B) beneficial.

Alternate
😇 A third-party backer, or a group of them, could come together to pull this off tomorrow. I doubt that. It’s A LOT of money.

If the Seizures Occur
😇 Expect rents and businesses across Trump’s portfolio to be frozen. It’s horrible. The reality is: Bankruptcy is way better. AND, Chapter 11 can be dismissed. Trump needs to buy time. By filing bankruptcy, he wins TIME. He can continue to fulfill all of his obligations except paying for the bond. That fight alone will get him through the election, at least. It likely could take 1-2 years.

🔗 Link to this post

---

Sam Altman’s Involvement in Reddit + OpenAI Investigation. $RDDT 03/22/2024 10:06PT
✅ Sam Altman’s Reddit stake is worth over $600 million after first-day pop on NYSE.
✅ Altman owns 12.2 million shares of Reddit stock, according to the company’s IPO disclosures, leaving him with a stake worth around $US615 million ($936 million) after the opening day of trade.
✅ Altman is restricted from selling Reddit shares for six months during the so-called lockup period.
✅ Altman, 38, is among the biggest Reddit shareholders, with control of 7.6% of outstanding shares after the offering, according to the company’s prospectus.
✅ Altman’s investment portfolio includes past or present stakes in Airbnb, Uber, Instacart, Stripe and Asana.
✅ In 2014 Altman led Reddit’s $50 million Series B funding round, after using the service every day for nine years.
✅ In 2021, as the tech market was booming, Altman invested a combined $60 million in Reddit over two financing rounds. Those investments have yet to bear much fruit as Reddit’s valuation, even after Thursday’s rally, is below its private market peak. Reddit’s filing shows Altman invested $50 million at $42.47 per share and $10 million at $61.79 per share.
✅ However, the money he pumped in a decade ago has multiplied many-fold.
✅ Earlier this month, OpenAI said Altman will rejoin its board following the conclusion of an internal investigation by U.S. law firm WilmerHale into the events leading up to his ouster.
✅ Altman told U.S. senators in a hearing last May that he’s not in his current gig for the money. Filings show he made about $73,500 in total compensation in 2022.
✅ “I’m paid enough for health insurance, I have no equity in OpenAI,” Altman said, when asked by Sen. John Kennedy, R-La., if he makes a lot of money in his job. “I’m doing this because I love it.”

📝 CNBC Article
📝 Reddit Windfall
🔗 Link to this post

---

US Resolution for Gaza Ceasefire Gets VETOED 03/22/2024 09:54PT
✅ On Friday the US proposal for an immediate ceasefire in Gaza was vetoed by Russia and China.
✅ Algeria also voted against it, and Guyana abstained.
✅ This ceasefire was supposed to start immediately and last for approximately 6 weeks to help get humanitarian assistance in.
✅ Russia’s ambassador to the UN, Vassily Nebenzia, said the resolution was “exceedingly politicized” and proposed an alternative instead, claiming it was a more balanced document.
➡️ The US says that unlike the Russian proposal, the US proposal was created by consulting other members of the UN Security Council to come to a consensus.
➡️ The US criticizes Russia’s draft for lacking consensus and not reflecting the realities on the ground, claiming Moscow’s approach was further dividing the Council rather than addressing the needs of Israel and Palestine.
✅ China’s ambassador to the UN also supported the alternative proposal from Russia, and voted against the US proposal.
➡️ China criticized the US proposal for not including an Israeli military evacuation order.
➡️ China also highlighted the draft not addressing asymmetrical use of force, the root causes of the crisis, and emphasized the need for independent statehood for Palestinians.
➡️ As China vetoed the proposal, the ambassador to China claimed if the US was serious about a ceasefire, it would not have vetoed multiple previous Security Council resolutions.
✅ The US has defended its previous vetoes, stating that they could have jeopardized ceasefire talks.
➡️ The US wants a ceasefire to require the release of the hostages held by Hamas in Gaza. Gaza’s invasion of Israel in October 7th, 2023 involved the kidnapping of 253 hostages.
➡️ Israel says 130 hostages remain in Gaza, though 34 have died in captivity.
✅ The US ambassador to the UN, responded to this by suggesting Russia and China “simply did not want to vote for a resolution that was penned by the United States,” adding that Russia and China would “rather see us fail than to see this council succeed even after inclusive consultations over weeks and weeks.”
➡️ The US ambassador also said that Russia and China had opopsed the resolution because they could not bring themselves to support the clauses condemning Hamas.
✅ US Secretary of State Antony Blinken said on Thursday that he believes an agreement can still be reached among mediators in Qatar, which would also include a 6 day ceasefire, as well as the return of 40 Israeli hostages and hundreds of jailed Palestinians.

📝 Reuters Article
📝 NBC U.N. Security Council fails to pass U.S. resolution
📝 The Guardian Ceasefire Fails
🔗 Link to this post

---

Morning News. 03/22/2024 05:40PT

Tesla China
✅ Giga Shanghai production has been reduced.
✅ Model 3 and Y reduced to 5 days of production instead of the usually 6.5 days.
✅ 2x 11.5-hour shifts per day, which remains unchanged.
✅ This changed early March; no indication of when back to normal.
✅ Some battery workshops or other lines are subject to longer shutdowns.

Fed Jerome Powell Discussion 6am PT
✅ Nothing on monetary policy yet.

Apple
✅ Apple consulted with Baidu for AI.
😇 Apple has about 12,000 engineers, designers, marketers (not counting store/support staff). In Q3, Apple spent $7.69b on Research and Development. That’s $641,000 per employee in 3 months .That’s $7,000 per employee per day. And they still can’t figure out #AI.

Dutch Bros
✅ 8m share offering; $285m.

Lululemon
✅ “US consumer environment somewhat challenging.”
✅ Q4 ADJ EPS $4.40 vs $5 expected.
✅ FY Net Rev to be $10.75b vs $10.96 expected (about ~2% less).
✅ Slower start to Q1; US traffic slowed.

FedEx
✅ Q3 ADJ EPS $3.86 vs $3.46.
✅ $500m buyback expected in the next quarter.
✅ New $5b buyback authorized.
✅ Lower structural costs.
✅ Cost per package flat.

🔗 Link to this post

---

⚠️REMINDER ⚠️
Current fundraise for HouseHack is live here: https://househack.com/2024. Ends June 31.
Warrants are due April 8. ⚠️
For DST information, email ir@househack.com (1031-exchange into HouseHack properties with 0 fee).

---

Organ Transfer Breakthrough Using Genetically Modified Pigs 03/21/2024 15:06 PT
✅ For the first time ever, surgeons have transplanted a kidney from a pig into a living person.
✅ 62-year-old Richard Slayman, suffering from end-stage kidney disease, received the organ over the weekend.
✅ The procedure took 4 hours.
✅ He is recovering well and is expected to be discharged soon.
✅ The pig that was used is a part of pigs specifically genetically modified by companies like eGenesis that are used to provide organs such as kidneys, livers, and hearts to humans.
✅ In the case of Richard Slayman, he already had a human kidney transplant after being on dialysis for seven years, but his transplanted kidney showed signs of failure after about 5 years, so Slayman had to resume dialysis in May of last year. He’s 62
✅ This is the third organ transfer from a pig to a human; the first two were hearts transplanted into living patients that had run out of other options. David Bennett was a 57 year old who got a pig heart; length of time these last isn’t great. 2 months for David.
✅ These transplants were allowed by the FDA as part of a “compassionate use” program used to help patients with little to no other options.
✅ This is due to the shortage of organs for people who need organ transplants.
✅ Over 100,000 people are currently on the waiting list for organs.
✅ About 17 people die every day because they can’t get an organ transplant.
✅ The pigs are genetically modified so the organs won’t get rejected by the human body, spread viruses, or cause any other complications.
✅ The eGenesis pigs are bred with 69 genetic modifications.
✅ According to the Organ Procurement and Transplantation Network, roughly 27,000 kidneys were transplanted last year, but nearly 89,000 people were on the waitlist.

📝 NPR Article
📝 Pig Transplant
🔗 Link to this post

---

El Salvador’s Crime Crusade May Be a Gateway to Authoritarianism 03/21/2024 14:26 PT
✅ El Salvador has experienced one of the most spectacular declines in violent crime anywhere in the world. A decade ago, El Salvador was ranked among the most dangerous countries; now, it has a homicide rate of only 2.4 per 100,000 people. For reference, according to Statista, the U.S. homicide rate was 6.3 per 100,000 in 2022. El Salvador now holds the lowest homicide rate of any country in the Western Hemisphere other than Canada.
✅ This decrease is credited to President Nayib Bukele’s crackdown on street gangs, including MS-13 and Barrio 18. He declared a state of emergency in March 2022, allowing the government to suspend basic civil liberties and mobilize the armed forces to carry out mass arrests.
✅ These measures and results made him widely popular, and he won the February 2024 election by a landslide. Many other politicians in countries facing similar issues in Central America are trying out the “Bukele model.”
✅ Ecuador declared a state of emergency in January, giving the armed forces free rein to detain suspects and take control of the prisons. This is working; in only a month, the average daily homicides have fallen from 28 to 6.
✅ These Bukele-style crackdowns come at the cost of democracy and human rights. The military no longer needs probable cause or arrest warrants, and excessive use of force is no longer a concern. The state also no longer needs to present convincing evidence in court before putting someone in prison. Inmates are banned from any contact with individuals outside the prison, including lawyers and family.
✅ The result has been the imprisonment of around 77,000 people in El Salvador.
✅ Human rights organizations have pointed to signs of underreporting of homicides and questioned the reliability of El Salvador’s statistics. They have reported 190 deaths and over 5,000 abuses related to the crackdown. Although the testimonies of Salvadorans have clearly stated there is newfound freedom to enjoy public spaces now.
✅ The U.S. has stated that encounters with Salvadoran migrants dropped from 97,000 in 2022 to 61,515 in 2023. This indicates that violent crime is receding as fewer people feel the need to flee.
✅ This mass normalization across Central America of declaring states of emergencies and the militarization of public life will likely result in these countries using this option more frequently, even when it is not the last resort. This could lead to more authoritarian leadership in Central America and less democracy. The government is proving to its citizens that democracy is not working and things only go well when they take control. This can be a Trojan horse that leads citizens to cheer their way to oppression.

New York Times Journalist Vouches That El Salvador Is Indeed Safer
✅ “Walking the streets of the capital, San Salvador, in the days before the election, we saw firsthand how families with children have returned to parks. People can now cross formerly impassable gang-controlled borders between neighborhoods. The city center, which for years was largely empty by sunset, is now lively late into the night.”
👥 This is anecdotal evidence from the New York Times that there is a visible impact on the decrease of crime in El Salvador
✅ El Salvador is veering off the path of Democracy. El Salvador transitioned to democracy in the 1990s, but this could change.
NEW YORK TIMES LINK: https://www.nytimes.com/2024/02/08/opinion/el-salvador-bukele-election.html

HOW MUCH OF A ROLE DID CHINA PLAY IN THIS GOVERNMENT TRANSITION?
✅ In October, State Department’s top Latin American diplomat, Brian Nichols, visited Bukele in El Salvador to, “give a message that democracy is the most important form of government,” the U.S. embassy said.
✅ Bukele has been able to take advantage of the tug-of-war for influence between the U.S. and China. Bukele opened talks and is accepting of investment ($500M for infrastructure projects) from China as a negotiation card with the U.S.. Milking both sides for funding is a common trend right now as both the U.S. and China compete for influence.
✅ Bukele still needs to be on America’s good side as they gave $629B in aid from 2019-2022 (which is much higher than Chinese investment).
✅ The tactics used in reducing crime by Bukele more so align with the Chinese government than U.S. government.
✅ It is possible that Bukele is bluffing but American diplomats are fearful that El Salvador could abandon democracy, “El Salvador will look to work as closely with China as possible in the coming years. China is an economic partner that is willing to look the other way on human rights and other issues,” said Margaret Myers, from Inter-American Dialogue.
REUTERS LINKS:
1️⃣ https://www.reuters.com/world/us-mends-fences-with-el-salvadors-bukele-china-lurks-2024-02-06/
2️⃣ https://www.reuters.com/world/americas/el-salvador-says-murders-fell-70-2023-it-cracked-down-gangs-2024-01-03/

TRADE STATS
➡️ As of 2022 According to OEC World, the U.S. exports $4.94B of goods from El Salvador and imports $2.87B of goods from El Salvador. This was the all-time high of trade between the U.S. and El Salvador; in 2023 U.S. exports to El Salvador fell 14%, and U.S. imports from El Salvador fell 15%.
➡️ During the last 27 years, the exports of United States to El Salvador have increased at an annualized rate of 5.03%, from $1.31B in 1995 to $4.94B in 2022.
➡️ Most of the exports from the U.S. to El Salvador are energy (Refined Petroleum and petroleum gas alone) and make up about 43% of all exports to El Salvador. The rest is mostly food and raw materials (like cotton).
LINK: https://oec.world/en/profile/bilateral-country/usa/partner/slv
➡️ As for China, in 2022 according to OEC World, China exports to El Salvador were $2.61B and imports from El Salvador were $70M which is nominal.
➡️ During the last 27 years, the exports of China to El Salvador have increased at an annualized rate of 16.9%, from $38.5M in 1995 to $2.61B in 2022. This is a much higher growth rate but still only about half the size. 
➡️ Most of the exports from China to El Salvador were computer components such as broadcasting equipment, computers, and raw components which make up about 35% of all exports to El Salvador.
LINK: https://oec.world/en/profile/bilateral-country/chn/partner/slv
👥 Energy is obviously critical for a country, but it is much easier for El Salvador to replace the U.S. as an energy provider than it would be to replace their supplier (China) of critical components for computer equipment. Chinese exports are much more important to El Salvador than U.S. exports, despite U.S. exports being nearly double Chinese exports.
👥 China has significant influence in South/Central America; supplying critical components enhances their standing. This government transition resembles tactics employed by authoritarian leaders in Asia. In Vietnam, they accept U.S. military security while relying on China for internal regime security, avoiding the side effects of democracy and human rights. This ensures the Vietnamese regime can oppress opposition and maintain a communist single-party state while benefiting from security provided by the U.S.
👥 It is possible that El Salvador and other Central/South American countries are starting to believe that democracy simply doesn’t work. They see significant results by abandoning democracy and emulating China’s government. With China’s assistance, these countries could become entrenched trade partners. If this occurs, other failed democracies around El Salvador are likely to follow.
👥 The U.S. needs to find a way to prevent El Salvador from undergoing this change, as it poses a threat to democracy worldwide. This could involve becoming less replaceable in their supply chain and paying more attention to their needs.

🔗 Link to this post

---

Commercial Real Estate Trouble 03/21/2024 14:20 PT
✅ Short sellers are pilings into betting against commercial real estate at an unprecedented rate
✅ REITs are currently some of the most shorted stocks around the world
✅ Office property values on average have fallen 15.2% over the past year
👥 This trend only looks like its going to get worse
✅ People are realizing that rates are staying higher for longer and the pain is still to kick in
✅ Many people were betting in 2023 that rates would come down so they bought up RE assets through financing
✅ Now they are also going to left holding the bag along with all of the previous owner who thought the FED was going to bail them out
✅ Not only are people becoming bearish about commercial office space, but multi family is also becoming more and more bearish
👥 This may and will probably effect smaller lenders and banks as owners walk away from their loans once their 5 year low rate becomes due
👥 Lots of opportunity to buy great multi deals in the next couple of years
✅ For commercial real estate, CMBS office delinquency rates are projected to reach almost 10%, which is higher than the GFC peak
✅ 40% of fund managers surveyed now view US commercial real estate as the most likely source of a systemic credit event
✅ Many buy side private equity firms are waiting on the sidelines to begin deploy capital once more loans come due and defaults rise
✅ Hindenburg just did a piece exposing a data center REIT called Equinix 
✅ They have around 76bil in Market Cap and are recently down 10% since the piece came out 
✅ Hindenburg is alleging that the company had accounting fraud and tricks to boost Adjusted Fund From Operations (AFFO)
✅ They were apparently doing this through misclassifying “maintenance CapEx” as “growth CapEx”
✅ This made it look like the money being put into maintenance was really for expansion and buying new properties.
✅ This allowed them to increase the AFFO artificially
✅ Since AFFO was also a key metric for determining executive bonuses this made sense.
✅ A 47% drop in maintenance Capex led to a boost of around 19% in AFFO

📝 Bloomberg Article
📝 Hindenburg Research
🔗 Link to this post

---

Apple DOJ Suit 03/21/2024 09:50 PT
✅ The Justice Department is Suing Apple ($AAPL) by accusing the tech giant of engineering an illegal monopoly in smartphones that boxes out competitors and stifles innovation.
✅ $APPL shares are down as much as 3.7% today
✅ The lawsuit alleges that Apple uses its control over the iPhone to “engage in a broad, sustained, and illegal course of conduct.”
✅ This lawsuit was also filed with 16 state attorney generals.
✅ According to the AP, this is the latest example of the Justice Department’s approach to aggressive enforcement of federal antitrust law.
✅ The AP reports that Apple called the lawsuit “wrong on the facts and the law” and said it “will vigorously defend against it.”
✅ Apple said the lawsuit, if successful, would “hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect” and would “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”
✅ Apple continues to say, “At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users,” the company said in a statement. “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.
✅ This comes from a Biden initiative in 2021 to crack down on enforcing competition laws. https://apnews.com/article/joe-biden-technology-business-federal-trade-commission-fb6913615c7122579a4795f5c3f457c0
✅ Attorney General Merrick Garland said in a statement. “We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

📝 Anti-Trust Lawsuit
🔗 Link to this post

---

Trump’s $500M+ Bond Full Details 03/21/2024 09:42 PT
✅ Trump has been ordered to pay $454M + interest for a fraud cause relating to the overstatement of his net worth to qualify for real estate loans by $2.2B.
✅ This amount was originally $350M + $100M in interest, growing everyday.
✅ This amount increases by $111,000 everyday, as the interest is set at 9%.
✅ Trump’s attorneys have asked the state appeals court to pause the judgement, filing an appeal this past Monday.
✅ His attorneys have stated the world’s largest insurance companies have been unable to provide him an appeal bond for the full amount.
✅ Trump recently posted a $91M bond for a 2019 defamation case.
✅ Forbes has estimated Trump’s net worth to be $2.6B.
✅ Trump testified last year that he had $400M in cash.
✅ Trump’s stake in Truth Social is worth roughly $4B. 
✅ He will be able to start selling 6 months after the merger is complete, of which vote will take place tomorrow.
✅ They claim cost bond companies do not support loans as big as what Trump needs and do not accept real estate as collateral, especially commercial real estate at this time.
✅ They have approached 30 surety companies, all of which were unsuccessful in accepting real estate collateral.
✅ Trump’s attorneys estimate Trump would have to collateralize $557M+ to secure a bond, of which he claims he does not have collateraliz-able assets to do so.
✅ The attorneys have asked the court to reduce the bond to $100M, but the NY Attorney General Letitia James has asked the court to not reduce judgement.
✅ It is not clear when the appeals court will decide on this Trump’s request.
✅ Trump claims that a $450M+ bond is unnecessary because the court already oversees his finances and he can’t make any transactions without the court-ordered monitor’s approval. Essentially saying he’s good for the judgement.
✅ The AG’s Office is expected to attempt to enforce the judgement by March 25, potentially seizing Trump’s buildings if bond is not paid.
✅ They claim Trump’s claims that he cannot secure the bonds are “based on a false premise,” as he could secure multiple smaller bonds to cover the amount.
✅ They claim it is not unusual for surety bond insurance companies to provide bonds for even larger than the full amount.
✅ They cite four examples:
1️⃣ Sony Music vs Cox: $1.2B bond using 3 surety companies.
2️⃣ Apple vs Samsung: $1B bond using 4 surety companies.
3️⃣ Oracle vs SAP: $1.3B bond using 10 surety companies.
4️⃣ Carnegie Mellon University vs Marvell Technology: $1.5B bond using 17 companies.
👥 The majority of Trump’s assets are commercial real estate related, so it may not be a total fair comparison. 
✅ Trump’s attorneys have not provided an explanation for why they cannot split the bonds between multiple companies or if they have even tried that approach.
✅ Rumors arise of Trump filing bankruptcy to delay the judgement.
✅ Trump has stated he is not considering this.
👥 Although people say this would damage his reputation as a business man, Trump has been able to spin his 6 previous bankruptcies before, not letting them get in his way of running.
✅ Trump’s companies have previously filed for bankruptcy including Trump’s Taj Mahal, two Atlantic City casinos, Plaza Hotel, Trump Hotels and Casino Resorts, and Trump Entertainment Resorts.
✅ Trump’s options are narrow. He is forced to either post bond, of which he has been struggling to do so, file for bankruptcy to delay the judgement, or have his assets seized including his banks accounts, brokerage accounts, real estate, and more.

📝 Reuters Trump Testifies
📝 Trump Lawyer’s Appeal Judgement
📝 NY AG on Trump’s Appeal
📝 NY AG Gives Examples of Big Bonds
📝 Trump Bankruptcy
📝 Trump’s Options
🔗 Link to this post

---

GPT-5 Info Leaked 03/21/2024 09:38 PT
✅ GPT-5 is expected sometime mid-year, likely during summer (according to Business Insider’s sources).
✅ OpenAI has given some enterprise customers demos of the latest version.
✅ ➡️ Enterprise customers are OpenAI’s main revenue stream.
✅ One of these customers said the new version is “materially better” and suggested it has new features, such as the ability to call AI agents to perform tasks autonomously.
✅ OpenAI says that it “will be a state-of-the-art language model that makes it feel like you are communicating with a person rather than a machine.”
✅ From a recent conversation between Microsoft CEO and OpenAI CEO, Sam Altman revealed that GPT-5 is expected to receive major updates to speech, images, and even video capabilities.
✅ ➡️ Video tool Sora has been incredibly impressive so far: https://openai.com/sora.
✅ Sam Altman highlighted GPT-5’s ability to understand emails, calendar details, appointment scheduling preferences, and integrate with external data sources.
✅ OpenAI is still training GPT-5, after which it will need to be safety tested before public release.
✅ OpenAI doesn’t yet have an official release date, so everything is subject to change.
✅ The last major change was from GPT-3 to GPT-4, which is faster and more accurate.
✅  ➡️ OpenAI hopes that GPT-5 will be more reliable.
✅ Because a lot of training data for AI models is owned by others (copyright holders), OpenAI have argued against new federal rules dictating how LLMs are able to access this material.
✅ Business Insider’s parent company (Axel Springer) has a deal to allow OpenAI to train its models on their reporting.

📝 OpenAI’s GPT-5
📝 GPT-5 Release Date & Price
🔗 Link to this post

---

Texas Border Law & SB 4 (Short Story) 03/21/2024 09:30 PT

SB 4
✅ Makes it a crime to cross into Texas from a foreign country other than a legal port of entry.
✅ This would give local authorities the power to arrest suspected migrants.
✅ District court stayed the law (not able to be enforced).
✅ U.S. Supreme Court allowed the law to go into effect until the 5th Circuit could hear the appeal.
✅ 5th Circuit Court heard the appeal and put the law on hold.
✅ No official ruling was made yet – just that it’s on hold.

Issues at Hand
✅ Can a state court decide to jail or deport a migrant, or does that power rest with the Federal Government?
✅ Is it the State’s duty to support the Federal Government, if the Federal Government is failing?
✅ If so, who determines that failure and subsequent action?
✅ If the Fed is failing, does a State have the right to step in?
✅ Usually, this is ONLY possible through “concurrent jurisdiction” (when both the State and Fed have legal rights to enforce).
✅ However, Federalists argue only the Federal Government has power over immigration.

🔗 Link to this post

---

Fed 03/21/2024 09:05 PT

✅ Bloomberg: Fed was thought to LEAD the globe in rate cuts. Swiss National Bank just cut, ECB and BOE may cut before the Fed as well. BOE/ECB aiming at June – Fed seen as 75% likely to cut in June per futures currently.
✅ Fear present that this may get delayed.
😇 If data stays February-style for March/April/May, we’re almost certainly delaying cuts to September/November.

Financial Conditions
😇 I’m surprised Jerome Powell punted an opportunity to constrain financial conditions, which are as loose as they were in 2014 and 2018, excluding covid. It sounds as if Jerome Powell thinks we’re hit mission-accomplished, hence brushing off Jan/Feb and ignoring the stagnating wage-gains progress.
😇 Will he be forced to flip? TBD the “data,” though the last data was ignored.


😇 Frankly though, IF financial conditions are looser BECAUSE we expect inflation will be resolved, then from an economic point of view, this is good. We would not want tight financial conditions driving us into a recession. So perhaps, this is Powell’s entire MO.
➡️ Rates psychologically keep the Fed “fighting inflation.”
➡️ Financial conditions loosening keep the Fed propping up the economy & jobs.
😇 It’s basically shadow cutting. It’s the perfect psyop.
😇 Just like the slowing of QT coming soon. Slowing QT and looser financial conditions aren’t noticed by people, so they perceive the Fed is still fighting for them, just as financial conditons loosen (more lending, more stock buying pressure, more bond buying pressure, more business spending, more credit / debt). These items all support GDP, for now.
😇 So as they say, don’t the Fed. The Nike Swoosh can hold. That doesn’t help interest-rate sensitives at all, but it does support the big 6 and other non-interest-rate sensitive stocks.

The Next Catalysts
😇 03/29 PCE, looking for MOM Core 0.3%.
😇 04/02 JOLTS, last 8,863k.
😇 04/05 Jobs.
😇 04/10 CPI.
😇 05/01 Fed FOMC.
😇 Hot jobs and CPI again in March, if, will be hard for JP to ignore May 1. This enhances the importance of CPI/jobs reports for March, as they’ll either:
1) Prove JP was right to dismiss Jan/Feb.
2) Prove JP was wrong to dismiss Jan/Feb.


✅ Momentum stocks are well outperforming those with negative earnings (or forecast negative earnings. Heads up TSLA / ENPH).

🔗 Link to this post

---

⚠️REMINDER ⚠️
Current fundraise for HouseHack is live here: https://househack.com/2024. Ends June 31.
Warrants are due April 8. ⚠️
For DST information, email ir@househack.com (1031-exchange into HouseHack properties with 0 fee).

---

$RDDT Reddit IPO Today 03/21/2024 07:52 PT
✅ Late this afternoon, Reddit priced its shares at $34 for its IPO.
✅ This was the high end of expectations (between $31 – $34 per share was the expectation).
✅ The offering brought in $519 million, according to a press release.
✅ This values Reddit at $6.4 billion.
✅ This is below the $10 billion valuation it fetched in a private fundraising round in 2021.
✅ The shares will begin trading on Thursday on the NYSE under the ticker RDDT.
✅ Revenue increased 20% last year to $804 million from $666.7 million in 2022.
✅ Its net loss in 2023 was $90.8 million, marking an improvement from the $158.6 million net loss it recorded the previous year.
✅ The company has said in filings that data licensing could become a big moneymaker and that it plans to recognize about $66.4 million in such deals in 2024.
😇 IMO, this is the AI “clickbait” that’s needed in today’s realm. I’m not enthusiastic as this represents a fraction of their income (less than 10%).
✅ The company recently entered an expanded partnership with Google, allowing the search giant more access to Reddit data to train AI models and other tasks.
✅ Last week, Reddit said the Federal Trade Commission sent a letter to the company inquiring about its data-licensing practices.
✅ As part of the initial public offering, Reddit gave some of its leading moderators and users, known as Redditors, a chance to buy stock through a directed-share program.
✅ It’s a model that was previously used by Airbnb, Doximity, and Rivian to reward their power users and customers.
✅ Reddit sold 15.28 million shares in the offering, while existing shareholders sold another 6.72 million.

📝 NYT Article
📝 CNBC $RDDT Opens at $34ps
🔗 Link to this post

---

Morning News 03/21/2024 06:30 PT

✅ Darden Miss 1% on forecast, stock down 5.49%.
✅ Micron beat yesterday; memory chips enter the AI rally.
✅ Barclays, BofA, and Goldman all see June as the first rate cut and count on 3 cuts this year. Barclays sees 4 next year too.
✅ VIX is breaking trend down. Now under 13 at 12.73.

🔗 Link to this post

---

The Dangerous Politicization of The U.S. Military 03/20/2024 15:58 PT
✅ Politics can affect someone’s odds of getting promoted (per Foreign Affairs).
✅ 10 months, Senator Tommy Tuberville (an Alabama Republican) blocked promotions for 440 senior military officers if they took paid sick leave and travel reimbursements for abortion services. Travel reimbursements were intended for personnel based in states where abortion is illegal so they could go to a different state. This was a Biden Administration policy, and Tuberville’s effort was designed to undermine it, taking it into his own hands.
😇 Senate gives a lot of power to individuals on committees, like Armed Services or VA (he’s on both).
✅ This could get worse. It wouldn’t be unreasonable to see a future where those who get promoted have to be loyal to one party over another.
✅ Consolidating power into one party, say the GOP, is dangerous.😇 Hurts checks and balances.
😇 This could politicize use-of-force decisions. This is dangerous because historically, it ends up being used to forcefully silence opposition or effectively turn the country into a single-party state.

EXAMPLES OF WHEN MILITARIES BECAME POLITICIZED AND A PARTY CONSOLIDATED POWER
➡️ Nazi Germany – Politicized Military Leading to Totalitarianism (1933-1945): In Nazi Germany, Hitler’s regime politicized the military, purging dissenting officers and replacing them with loyalists. The military became a tool for aggressive expansion which led to genocide.
➡️ Pakistan – Military Rule under Zia-ul-Haq (1977-1988): After seizing power in a military coup in 1977, General Zia-ul-Haq imposed martial law and established a repressive military regime in Pakistan. Zia-ul-Haq’s government cracked down on political dissent, curtailed civil liberties, and implemented strict Islamic laws. The military became heavily politicized, leading to widespread human rights abuses, including arbitrary arrests, torture, and censorship.

Problems
👥 Silence opposition
👥 Loss of trust.

“The Rise of ‘Wokeness’ in the Military” – The Heritage Foundation
✅ Veteran soldiers have always complained about a younger generation lacking discipline and traditional values. This was prevalent among veterans of the Greek phalanx, Roman legions, and Napoleon’s elite corps. The Heritage Foundation argues that veterans aren’t worried about lazy soldiers but rather about radical woke policies.
😇 Seems like older generations always think this, eh?
✅ In 2015, then Secretary of the Navy Ray Mabus rejected a Marine Corp study that women were twice as likely to suffer combat injuries as men and that gender-integrated combat formations do not move as quickly or shoot as accurately. The Heritage Foundation argues that this is ignoring evidence to accomplish a political agenda.
😇 Well, the study — if true — would create an unpopular dataset for Democrats. Ray Mabus is a Democrat.
✅ That same year, the Department of Defense (DoD) opened all combat jobs in the military to women. The Secretary of Defense ensured that the standards for women would not change to ensure the quality of soldiers. Women struggled to physically compete with men in these tests, and under pressure from advocacy groups, the Army discarded the tests that determine whether a soldier can meet fitness requirements for combat specialties.
✅ The Obama Administration initiated a change to allow transgender individuals to join the military in 2015. Before this took effect, Trump became president in 2016 and determined that because transgender individuals attempt suicide and experience severe anxiety at nine times the rate of the general population, he restricted transgenders from joining due to concerns about their fitness for the military. In 2021, The Biden Administration allowed active members of the military time off to get sex changes at taxpayer expense.
➡️The Pentagon has spent $15 million in the past five years to treat 1,892 transgender troops, including $11.5 million for psychotherapy and $3.1 million for surgeries, according to Defense Department data provided to Military.com
✅ Many parts of the military are required under the Biden Administration to display training videos to service members and recruits about how to properly use pronouns.
✅ The Biden Administration has strict DEI standards the military must meet. These standards include building DEI offices to produce DEI plans and report on all progress made.
✅ The Biden Administration has also signed an executive order requiring a transition to all-electric non-tactical vehicles and carbon-free electricity for military installations by 2035, and net-zero emissions from those installations by 2050.
✅ The piece above illustrates a lot of cultural shifts in the military put in place by Democrats, mostly recently by the Biden Administration.
👥 There is a battle between Democrats and Republicans to politicize the military.
👥 While there is an argument that this is an attempt to politicize the military, it only impacts the actual soldiers and stops before getting close to the top of the pyramid. I would argue that this is more cultural indoctrination than the actual politicization of the military. Democrats are trying to work from the bottom up, which hasn’t yet threatened the consolidation of power among a political party in the military.
👥 The GOP, on the other hand, is taking the top-down approach. This is potentially more dangerous, as the senior officials and heads of three-letter military agencies are the ones who advise leaders to make decisions about large military campaigns and uses of force. If a loyalty test is put in place to be a decision maker, then the consolidation of power is much more imminent.

📝 Foreign Affairs Article
📝 The Heritage Foundation
🔗 Link to this post

---

Neuralink Human Trials Have Begun 03/20/2024 15:20 PT
✅ Today at 2:30 PST, Neuralink conducted a live stream showcasing the first-ever human trial of its device.
✅ The patient, Nolan, dislocated his C4 & C5 in a freak diving accident, which made him a quadriplegic and paralyzed him from the shoulders down.
✅ He can now play chess with his brain. (see video).
✅ He can also control a cursor on a laptop. (see video).
✅ Nolan stayed up until 6 am playing Civilization 6 the first time he had access to the implant.
✅ It sounds like there was a post-operation delay before they activated the device (it would be interesting to learn more about this process).
✅ He couldn’t play before because he needed his parents’ help and could only use an iPad. It sounds like he could only play sitting up.
✅ With the implant, he can play lying in bed, so it prevents pressure sores, etc.
✅ The biggest restriction is waiting for the implant to charge after playing for 8 hours.
✅ Nolan said it is not perfect, and they have run into issues (he didn’t explain the issues). He doesn’t want people to think it is the end of the journey, but it has already changed his life.
✅ Nolan explained if you want to apply for the human trials or help out in some way, he encourages people to do their part – “there is nothing to be afraid of.”
✅ He claims the surgery was super easy, and he was released from the hospital a day later.
✅ No cognitive impairment was caused by the surgery.
✅ Planning to release more info in the following days —> follow on Twitter [@neuralink](https://twitter.com/neuralink).

✅Since the live event, Elon has chimed in:
✅ Elon said, “Blindsight is the next @Neuralink product after Telepathy”
✅ Elon followed this up by saying, “ I should mention that the Blindsight implant is already working in monkeys. Resolution will be low at first, like early Nintendo graphics, but ultimately may exceed normal human vision. (Also, no monkey has died or been seriously injured by a Neuralink device!)”
✅ Elon also had this to say. “Optimus limbs, replacing lost human limbs, could ultimately be controlled with superhuman dexterity by an implanted Neuralink. Deus Ex / Cyberpunk irl.”
✅ Elon also said via X, “Long-term, it is possible to shunt the signals from the brain motor cortex past the damaged part of the spine to enable people to walk again and use their arms normally”

📝 Neuralink Tweet
🔗 Link to this post

---

US Government Both Provides & Pulls Funding From Intel 03/20/2024 15:10 PT
✅ Biden visited Intel’s Chandler, Arizona plant to announce a deal with Intel of $8.5B in grants and $11B in loans.
✅ The CHIPS Act, passed back in 2022, seeks to push $52.7B into chips development and manufacturing in America.
✅ Intel intends to invest more than $100B, looking to offset $25B of that via investment tax credits.
✅ Intel will build 2 new plants in Arizona, 2 new plants in Ohio, and modernizing 1 plant in Arizona.
✅ Intel’s new projects are predicted to create 30,000 new construction and factory jobs.
✅ Commerce Secretary Raimondo wants to see 20% of advanced chips (3nm and below) made in the US by 2030.
✅ Intel’s CEO says his goal is to ensure 50% of the world’s semiconductor production comes from the US and Europe within a decade.
✅ The US currently has a 0% marketshare in advanced chip production.
✅ The US’ global semiconductor manufacturing market share has fallen from 37% to 12% from 1990 to 2020.
🗣️ “We rely on a very small number of factories in Asia for all of our most sophisticated chips. That’s untenable and unacceptable. It’s an economic security problem. It’s a national security problem. And we’re going to change that.”
✅ This news comes as the Pentagon pulls $3.5B of funding to Intel.
✅ Intel was supposed to only receive $1B of $3.5B from the Department of Commerce. The rest was going to come from the Pentagon.
✅ With the $2.5B shortfall, the company and shareholders were worried about how committed the US government actually was to this project.
✅ Tech companies may start bringing their designs over to Intel’s fabs to manufacture.
✅ In February, Microsoft announced it would be one of Intel’s first 18A (18 Angstroms) customers.
✅ Intel’s CEO has said he is betting the entire company on the 18A production process.

📝 Biden Announces Deal With Intel
📝 Intel’s $20B Awards
📝 Pentagon Pulls Out of Intel Deal
📝 Intel 18A Node
📝 Intel CEO’s Big Bet
🔗 Link to this post

---

Biden Rolls Out New Tailpipe Rules Boosting EVs 03/20/2024 13:37 PT
✅ The Biden administration has finalized new tailpipe rules for cars and trucks aimed at pushing the US auto market towards electric vehicles (EV’s) and hybrids. The Environmental Protection Agency (EPA’s) new rules spoken about 03-20-24 gradually push for majority EV sales by early next decade, allowing time for EV acceptance, charger expansion, and development of affordable models.
✅ Originally proposed to ensure two-thirds of vehicles sold were electric by the end of the decade, the new rules allow for plug-in hybrids to be implemented to reach this target.
✅ EV’s accounted for just 7.6% of new car sales in 2023; the new rule targets 35% to 56% for EV’s and 13% to 36% for plug-in hybrids by 2032.
✅ “The EPA’s original proposal last spring, which effectively called for 67% of light-vehicle sales to be EV’s by model-year 2032, hadn’t factored in plug-in hybrids. An optimal path to that same level of emissions could be 56% of the market being full EV’s, along with 13% plug-in hybrids, a senior administration official said.” – WSJ
✅ Conservative groups see this rule as restricting personal freedoms, fearing pressure on automakers to eliminate gas and diesel cars – limiting consumer choice as the shift towards EV continues to evolve. 
✅ Automakers like Toyota, who are favoring hybrids and plug-in hybrids, shifting into EV focus, could be big benefactors of new addition to the rule, “Toyota’s position is that the best way to reduce carbon is by giving consumers a choice of powertrain options, including hybrids, plug-in hybrids, fuel cells, fuel efficient ICE vehicles, and BEVs,” Ciccone wrote.” – CNN
✅ Wednesday’s rule “requires a precipitous shift from around 8% market share of battery electric vehicles today to more than half by 2032 – an aggressive, sixfold increase over just eight years.” – CNN
✅ Ultimately, the decision is to allow time for Americans to warm to EVs, as more chargers get installed and automakers work to develop supply chains and more-affordable electric models. 
✅ The targets for model-year 2030 now require 31% to 44% of new light-vehicle sales to be electric, down from the original 60% proposal.

📝 WSJ Article
📝 Speaker Johnson on X
📝 Biden EPA Rules
🔗 Link to this post

---

Goldman Sachs & Morgan Stanley on NVDA’s GTC Event 03/20/2024 13:37 PT
✅ Jensen Huang, at Nvidia’s Global Tech Conference, says that he believes we may reach AGI (Artificial General Intelligence) within 5 years.
🗣️ “If we specified AGI to be something very specific, a set of tests where a software program can do very well – or maybe 8% better than most people – I believe we will get there within 5 years.”
✅ AI will see major Saudi funding, according to the NYT, “Saudi Arabia plans $40B push into Artificial Intelligence – The middle eastern country is creating a gigantic fund to invest in AI technology, potentially becoming the largest player in the hot market.”
✅ Goldman Sachs, “While we are still unclear on the company’s go-to-market, we appreciate the attractiveness of the opportunity given nation states’ desire to manage data and develop and run AI models domestically.”
✅ Goldman believes that governments around the world are going to continue to support the AI industry, as we have seen with China’s race against Biden’s IRA.
✅ During the Nvidia GTC event, Huang announced the new B100, B200, and GB200 chips along with their supporting systems.
✅ These new chips offer over 2x the transistor counts to the H100.
✅ Nvidia claims 3x faster training speeds and 15x for inference.
✅ These chips are proposed to be only available at cloud providers such as Microsoft Azure, Amazon Web Services, Google Cloud, and others.
✅ This would make it more difficult to self-host stronger AI models, forcing reliance on cloud providers.

📝 TME $NVDA Analysis
📝 Morgan Stanley $NVDA Analysis
📝 21 Technologies Revealed at Nvidia GTC
🔗 Link to this post

---

SEC Subpoenas Ethereum Foundation 03/20/2024 12:23 PT
✅ The Ethereum Foundation has been subpoenaed for the first time in its history by a government entity.
✅ This usually requires a gag order, which may be why the Foundation has not made any announcements.
✅ The discovery of this subpoena was through a GitHub repo.


👥  Did insiders know of this news earlier? This might be a potential reason why $ETH has been lagging $BTC and sold off harder.
✅ The Ethereum Foundation has stated it will comply to hand over data.
👥 What information does the EF have that isn’t already public? This most likely has to due with ICOs and funding of the EF itself. 
👥 The SEC may be looking to find evidence to reject/delay $ETH ETF approval.
✅ Forensic researchers have reported that Chinese investors may own the majority of $ETH through various entities. 
✅ They suggest the majority of ETH’s supply was pre-mined by Ethereum’s co-founders on its ICO.
👥 The identities of such wallets and entities may be stored with the Ethereum Foundation.
✅ The soonest an ETF decision would have been made is May 23.
✅ Bloomberg ETF analysts see little chance of spot $ETH ETFs being approved by the SEC in May, down to 35% from 70% a few weeks ago.

📝 Github Repo
📝 Chinese Ownership of $ETH
📝 SEC to Reject $ETH ETF
📝 SEC to Investigate $ETH as a Security
🔗 Link to this post

---

Fed FOMC Meeting 03/20/2024 11:00PT

✅ Rate unchanged 5.25-5.50
😇 WOW. 4.6% 2024 (unchanged), 3.9% next year (up 0.3%), and 3.1% (up 0.2%) for 2025.
😇 So still 3 cuts this year. TBD when.
😇 WOW, BAD THOUGH! Long-term trend moved up to 2.625%, first move off 2.5%!



Powell Comments
✅ Powell was late about 15 seconds. First time ever!
✅ Inflation is still too high.
✅ 265k job gains per month.
✅ We’re prepared to retain the current rate for longer.
✅ Slow the pace of QT runoff “fairly soon.”
✅ Inflation data coming in a little higher was a separate matter.
✅ Continue to make good progress on inflation.
✅ Lower market rents should show up in housing; some confident it will. Some uncertainty around when. But confidence it will.
😇 He’s dovish today. Cold water on inflation last few months being warm. “Others” revised up their numbers.
✅ Two-sided risks.
✅ January numbers were quite high. Reason to believe seasonal. Don’t want to be completely dismissive. February was high, but not terribly high.
✅ Yes uptick in longer run rate. I don’t see rates going back down to that previous level.
✅ Higher year-end number reflects data so far.
✅ Rate cuts will depend on incoming data. We’re looking for data to confirm the low readings we had last year.
😇 They’re trying to lap 2023 with data. That may mean no cuts until Oct/Nov/Dec area. We really didn’t see inflation come down until Q3/Q4 2023 meaningfully.
✅ Significant progress on inflation last year.
✅ Stronger inflation in the first half usually, less strong in second half. We don’t know if this is a bump or something more. In the meantime, economy is strong. So we can approach this carefully.😇 AKA slowly.
✅ Slow down QT to avoid turbulence.
✅ Goal is slower, smoother QT transition. Much less risk of liquidity problems, which can grow into shocks.
✅ Fairly soon.
✅ Wage increases are coming down gradually to a more sustainable level over time. Wages, we don’t think, led to this inflation we had. But will be required to see lower increases to get to 2% target.
✅ January/Feb data suggested we were right to wait until we were more confident.

😇 Powell suggesting they’re prepared to keep rates at this level “for longer” implies rate cuts aren’t imminent (not May, June, or maybe not even July). If we lap the 12-month solid inflation progress with better progress this year in June, July, August, September, we might see a cut right before the election: September 18. Then 2 more: Nov, Dec. That way NO PAUSE required. You avoid cutting once in June, pausing, then again in November. That’s too Arthur Burns’ish. 😇 Instead, they’ll slow QT “fairly soon.”

🔗 Link to this post

Morning News 03/20/2024 05:30PT

Fed Day
😇 Watch for SEP (summary of economic projections) AND how Jerome Powell either waters it down or talks it up. He usually waters it down.

Fed 2024 Rate
😇 Bloomberg/BOFA expecting 4.6% (still 3 cuts).
😇 Kevin thinks 4.8%, so slightly unpricing 3 cuts (rug tug).
😇 Not expecting 5%+ (rug pull).
😇 I’m also expecting a revision up of 2024 GDP from 1.4% to 1.7%.
😇 PCE numbers slightly up. How much they adjust PCE vs rate will matter. For example, PCE 2024 might go 2.4% to 2.8%. That’s 0.4% up. But FOMC rate might still only be up 0.2%.

Fed 2025 rate
😇 BOFA expects an increase here from 3.6% to 3.9%.
😇 I agree.

Fed 2026
😇 I think we’ll go from 2.9% to 3.3%.

Fed Longer-Term
😇 I think steady at 2.5%.

Bitcoin
✅ 01:34 am bottom is hit at $60,800.35.

Intel
✅ $8.5b in grants (almost 22% of Chips Act).
✅ $11b in loans from Biden (Biden Bucks; corporate stimulus).
✅ Chips Act had $39b in grants.
✅ Still expecting $3.5b of funding for military/intel chips, even after the Pentagon-scrapped deal.

BOFA Fund Manager Survey
✅ Change over time: Money managers moved highest risk being geopolitics in January to higher inflation in March.

➡️ 40% of fund managers say AI is a bubble.
➡️ Consensus of fund managers also indicates 2 cuts vs 3 this year (😇 so 2 may be consensus).


🔗 Link to this post

---

Israel’s Plans Of Occupying Gaza 03/19/2024 17:00 PT
✅ Since the beginning of the war, the U.S. has repeatedly stressed how important it is to reform the Palestinian Authority (PA) to govern the post-war territory.
✅ The U.S. and its allies want neither Hamas nor Israel to govern Gaza once the war is over. That leaves the default candidate as the PA.
✅ The problem is the PA has no credibility. Palestinians widely distrust them, and opposition/friends see them as corrupt. Part of the problem is the PA is a government without a sovereign state to govern due to the constant changing territory lines due to Netanyahu’s expansion into the West Bank through his multiple building developments and establishing Israeli occupation in the West Bank.
✅ Netanyahu has worked hard to make life hard for Palestinians by enforcing the divide and conquer tactic. This has been done by Israel setting up an unbearable amount of checkpoints for Palestinians while Israeli citizens expand into Palestinian land that was established as theirs during the Oslo accord.
✅ It is very difficult to revitalize the PA due to both Israel and Hamas’ intentions. Israel wants to occupy the region entirely and so does Hamas. This creates a very difficult landscape for the U.S. two-state solution to be sustainable and not undermined by one side.
✅ This video, taken during an interview by TRT World in 2001, where he tells the cameraman to “turn off the camera so we can elaborate on this,” the cameraman turns the camera back on a few minutes later without Netanyahu knowing and shows Netanyahu admitting to breaking the Oslo Accords (state lines drawn by the UN for Palestine and Israel) and his intention of making a Palestinian state so unbearable that revolt is imminent, and Israel can justify expansionism to America under the guise of national security.

Here are 2 videos from the TRT World interview in 2001 that show Netanyahu describing this in detail
2 minute video: https://www.facebook.com/trtworld/videos/strike-themnot-once-but-several-times-so-painfully-netanyahu-in-a-2001-video/1423118978249848/
5 minute video:  https://youtu.be/mvqCWvi-nFo?si=qF8Vn8MkdNrp-rNt

✅ Netanyahu gloats that America will not bother with his intentions of expansionism because 80% of Americans support Zionism. He states that he wants to return to complete control of the region. The way he can do this is by making life unbearable for Palestinians so they outburst with violence and then respond to Palestinian violence with greater violence and occupation. This occupation is done through checkpoints and building developments in the West Bank for Israeli people.
✅ This plan creates an incentive to oppress Palestinians so they respond violently to justify expansion to America and its allies. They justify this by saying the occupation is necessary for peace.
✅ Peace in Palestine undermines Netanyahu’s goals..

Israel Views Hamas As An Asset
Netanyahu Undermining The Palestinian Authority By Propping Up Hamas – Times of Israel & The National News
✅ Various governments led by Netanyahu took an approach that divided power between the Gaza Strip (run by Hamas) and the West Bank (run by the PA). This was done to prevent anyone in the PA from advancing towards the goal of a Palestinian state.
✅ Hamas was upgraded from merely a terrorist group to being included by Israeli government organizations in negotiations and allowed to receive cash from abroad.
✅ Netanyahu also increased the number of work permits for Gazan laborers, which kept money flowing into Gaza.
✅ Since 2014, Netanyahu-led governments have ignored rocket fire from Gaza.
✅ Israel has allowed suitcases holding millions in Qatari cash to enter Gaza to maintain a ceasefire with Hamas rulers.
✅ All these things in tandem allowed Hamas to grow powerful, which would benefit Netanyahu upon the inevitable retaliation towards Israel. Once this occurred, Netanyahu knew he could respond strongly and attempt to occupy the region under the guise of security.
✅ “Most of the time, Israeli policy was to treat the PA as a burden and Hamas as an asset,” – Israeli Finance Minister Bezalel Smotrich.
✅ Netanyahu said something similar in a meeting in early 2019, stating that those who oppose a Palestinian state should support the transfer of funds to Gaza because maintaining the separation between the PA in the West Bank and Hamas in Gaza would prevent the establishment of a Palestinian state.

SEE THIS NEWS REPORT BY FIRSTPOST
https://youtu.be/fBdn2gyRR_g?si=41rce9IrjF-jkVHB

✅ Netanyahu permitted the Qatar government to deliver millions of dollars to Hamas in Gaza for almost a decade.
✅ Netanyahu lobbied Washington in 2017 when the U.S. was not happy with Qatar’s link to Hamas. Washington wanted to sanction Qatar, but Israeli lobbyists told Americans that Qatar is not a problem and it is part of the solution. They claimed they needed Qatar for a peaceful Gaza.
✅ In 2018, Netanyahu supported the active transfer of money to Hamas, and Israel would ensure that the money is not used for military purposes but instead for Gazans. Israeli military would escort Qatar diplomats to Gaza with suitcases of money. Hamas worked around Israel’s blocks for buying weapons easily. Qatar was giving $30 million a month to Gaza.
✅ Reports from spy agencies suggest that Israel provided little oversight of where the money was spent and very little action was taken to prevent Hamas to buy weapons

📝 Reviewing the Palestinian Authority
📝 Israel Says Hamas is an Asset
🔗 Link to this post

---

Looking Back On Tesla 03/19/2024 14:34 PT
✅ Elon began the Twitter acquisition on April 14, 2022, and closed it on October 27, 2022.
✅ Since April 14th, 2022, $TSLA is down 47.82%.
✅ Since April 14th, 2022 SPY is positive 17.8%.
✅ Over that same period, Meta is up 136.10%. (During this period, Elon tried to fight Zuck; fair to say, Zuck might have won with the shareholders.)
✅ Ford is down 20.54% (American car company comp).
✅ Amazon is up 15.6% since April 14, 2022.
✅ Jeff Bezos stepped down as CEO of Amazon on July 5, 2021.
✅ Amazon is down 5.4% since Jeff has left to focus on Blue Origin.
✅ On November 29, 2023, Elon told Bob Iger to “go F*** himself.”
✅ Since then, Disney is up 23.69% (as of Dec 1), and Tesla is down 28.27%.
✅ Elon’s acquisition of Twitter may have been good for humanity and democracy, but it has been the worst thing Tesla has gone through since IPO.
✅ Since the beginning of Elon’s acquisition of Twitter, it has been 697 days. Below are all the 697-day stretches since Tesla has IPO’d.
✅ Here are the historical returns for Tesla from the IPO to today over the span of 697 days:

1) July 2, 2010, to May 4, 2012: Tesla’s stock increased by around 65.63%.
2) May 5, 2012, to March 5, 2014: Tesla’s stock soared, increasing by around 669%.
3) March 6, 2014, to January 4, 2016: Tesla’s stock decreased by around 8.6%.
4) January 5, 2016, to November 2, 2017: Tesla’s stock rose by around 45%.
5) November 3, 2017, to September 1, 2019: Tesla’s stock fell by around 26.3%.
6) September 2, 2019, to June 30, 2021: A significant rise, with stock going up by around 1,389%.
7) July 1, 2021, to April 29, 2023: A decrease in stock value by around 27.39%.
8) April 30, 2023, to March 19, 2024: A slight increase, with stock going up by around 4.27%.

✅ This has been the worst 697 days (Twitter acquisition) since the IPO that Tesla has ever faced. Even “Production Hell” was better for the stock than the Twitter Deal.
👥 While Tesla shareholders and many others can be grateful for what Elon has done for Tesla, it appears that Elon’s priorities have shifted to SpaceX and X (including politics).
👥 This is not a bad thing. The fight for democracy and freedom of speech needs to be fought. Perhaps if it wasn’t at the expense of Tesla shareholders, the fight would be better supported.
👥 Some say it is time for Elon to thank shareholders for allowing him to fight for what he believes will extend human consciousness and step down as Tesla’s CEO.

📝 Bezos Leaves Amazon For Blue Origin
🔗 Link to this post

---

Commercial Real Estate Loans Under Major Stress 03/19/2024 13:45 PT
✅ Commercial real estate collateralized loan obligations (CRE CLOs) are under stress as borrowers struggle with repayments, with troubled assets surging “four-fold” in the past seven months to over 7.4%.
✅ Delinquency rates are in double digits for the hardest-hit CRE CLOs, causing major players in the $80 billion market to rework loans and short sellers to target publicly-traded issuers.

✅ Challenges in CRE CLOs reflect broader stress in the $20 trillion US commercial real estate market – with warnings from Janet Yellen and Jerome Powell – “yet few products are more exposed than CRE CLO’s.”
✅ This is said to be because CRE CLOs primarily consist of short-term, floating-rate loans for properties undergoing renovations or expansions, leading to major financial struggles for borrowers amidst rising interest rates and low demand for office space. This is what is leaving a number of CRE CLO issuers absorbing losses. 
✅ Matter at hand explained through Bloomberg quote, “The CRE CLO market is the first shoe to drop in terms of defaults in the CRE debt markets,” said Mark Neely, director of alternative investments at GenTrust, a money manager. “The loans inside CRE CLOs tend to be for transitional properties, so the borrowers are counting on reselling them before the loan matures. But today many borrowers can’t sell properties for anywhere near where they bought them.”
✅ Issuers are extending maturities, allowing interest payments with additional debt, and making other changes to loans to encourage borrowers to stay current – all to help this case. 
✅ The origins date back to pre 2008, where collateralized debt obligations (CRE CDO’s) were a routing financing tool. During 2008, this changed the whole game which caused their attention to be stagnantly low up until 2019, pre pandemic times. During the period between 2019 and 2021, Issuance of CRE CLO’s leaped from $19 billion to $45 billion respectively. 
✅ Record buyouts of delinquent loans occurred in 2023 as issuers sought to protect CRE CLO structures.

✅ Blackstone Mortgage Trust faced credit rating downgrades on CRE CLO bonds primarily backed by office properties, with short seller Carson Block expressing bearish sentiments.
✅ The stress in CRE CLOs serves as a significant test for a relatively young market, highlighting the need for issuers to demonstrate resilience.

📝 Bloomberg Article
🔗 Link to this post

---

Coinbase CEO Brian Armstrong Interview & Base Chain 03/19/2024 13:35 PT
✅ Brian Armstrong says there has been over $12B of inflows into crypto.
✅ He claims Coinbase is the custodian for ~90% of the Bitcoin ETFs
✅ He says Coinbase has positive inflows in both their direct and institutional services.
✅ Does not see Coinbase obtaining banking license, doesn’t believe in fractional reserve banking.
✅ Coinbase App fell from Top 53 on March 5 down to Top 218 today.
✅ Coinbase’s Blockchain, Base, currently has $695M in onchain value.

✅ Base launched August of last year, taking just one month to hit ~$400M TVL (Total Value Locked, a metric of recording value onchain)
✅ Base currently generates $216,523 in revenue a day from $176M in daily volume.

✅ Base is an Ethereum L2 that’s integrated with Coinbase and Coinbase wallets.
✅ This is as Blackrock creates a $100M institutional digital assets fund. BlackRock deposited $100M to mint USDC on the Ethereum Network ERC-20.

📝 Brian Armstrong Interview
📝 Coinbase Appstore Ranking
📝 Base Chain Analytics
📝 Blackrock Launches Institutional Fund
📝 Etherscan Blackrock Wallet
🔗 Link to this post

---

TME Tesla Analysis 03/19/2024 12:35 PT
✅ Tesla has been in a 861 day drawdown.
✅ This is the second longest drawdown the stock has had, only behind its Sept ’14 to Sept ’17 drawdown.

✅ TME claims Goldman Sachs’ downgrade is not “thought-leadership” but instead just catching up with how the stock has been trading.
✅ Goldman Sachs states production and market headwinds, rising from downtime in Berlin, Red Sea conflict, and ramp pacing along with higher interest rates killing consumer affordability.
✅ Goldman Sachs reduces EPS estimates from $4.4 to $3.8, a 13.6% drop.
✅ GS 12-month price target of $190, down from $220.
✅ Their downside scenario puts $TSLA at $65-85.
✅ Wells Fargo downgraded from neutral to underweight, cutting price target from $200 to $125.
✅ Ford announced 2 months ago that they would be reducing EV production due to weak demand.
✅ TME claims brand new Ford F-150 Lightnings are selling $15K, 25%, under MSRP with trucks sitting on dealer lots for over 150 days.
✅ Bernstein points out how long it takes for Tesla to launch a new product, most recently the Cybertruck which was announced 5 years ago.
✅ $TSLA and $BTC were previously very correlated but are now inverted. This potentially shows how Tesla’s narrative has broken down.

📝 TME Research
📝 Wells Fargo Cuts Tesla
📝 Major EV Headwinds
🔗 Link to this post

---

Supreme Court Allows State Police to Arrest Migrants 03/19/2024 12:02 PT
✅ Per the AP, “A divided Supreme Court on Tuesday lifted a stay on a Texas law that gives police broad powers to arrest migrants suspected of crossing the U.S.-Mexico border illegally while a legal battle over immigration authority plays out.”
✅ The Biden administration is suing to strike down the measure.
✅ The Biden administration claims that it’s a clear violation of federal authority and will hurt international relations.
✅ According to the AP, “The law allows any police officer in Texas to arrest migrants for illegal entry.”
✅ Per CNN, Texas is able to start implementing this “immediately.”
✅ CNN also cites the Liberal Justice Sonia Sotomayor saying that the order “invites further chaos and crisis in immigration enforcement.”
✅ According to Axios, the Supreme Court voted 5 – 4 on the law.
✅ Per Axios, those arrested can be charged with a misdemeanor which carries 6 months in jail and could face felony charges and up to 20 years in prison for subsequent offenses.
✅ It also requires law enforcement to collect ID information for those they arrest, such as fingerprints, photographs, and grants the judges the power to order an undocumented person to return to Mexico.
✅ Per The Hill, “The three liberal justices publicly dissented from the court’s order clearing the way for the controversial statute, SB4. The order is not a final decision, and the case could return to the high court.”

📝 AP Supreme Court Lifts Law
📝 Court Allows Enforcement of Illegal Immigration Laws
📝 Supreme Court Allows Arrests
📝 Judge Quotes
🔗 Link to this post

---

Mark Cuban Weighs In on Trump Liquidity Issues 03/19/2024 11:37PT
✅ Yesterday, we learned that Trump is having issues posting his $464 million bond.
✅ People (like this user on X) are accusing Trump of lying about his “billion-dollar net worth.”
✅ Mark Cuban chimes in to defend his adversary.
✅ Cuban starts off by stating that he is no supporter of Trump.
✅ Cuban explains that net worth is different from cash in the bank.
✅ Cuban explained that when we were in a zero-interest-rate environment, keeping cash in the bank or even money markets was a stupid idea.
✅ Cuban claims that small banks’ search for yield is what led to the banking crisis last year.
✅ Cuban takes a jab at Trump by saying that it was dumb to keep interest rates that low for that long and it was something that he (Trump) advocated for.
✅ Cuban says that an argument can be made that Trump put himself in this situation by “making sure that the only way to grow his net worth was through non-cash investments.”
✅ Cuban claims that Trump lied to banks about his assets and that he lied on his loan application because he had to.
✅ Cuban states that few people are keeping more than 45% of their assets in liquid assets.
✅ Cuban says that no bond company will give Trump a loan collateralized by his commercial real estate in this commercial real estate environment, “if ever.”
✅ Another X user says that even if “30 or 40 percent of his wealth was in cash, he would still have enough money to cover the bond, right?”
✅ Cuban says you can go back to his “Federal Election Commission candidate report to get a sense of his cash.”
✅ https://x.com/mcuban/status/1770125120381587945?s=20
✅ As of 1/31/24, Trump has roughly $30 million of cash on hand from his campaign; this isn’t a sign of his net worth. However, you can get an idea of what he is working with to pay for both legal fees as well as campaign advertising.
✅ https://www.fec.gov/data/committee/C00828541/?cycle=2024
✅ To compare, Biden has $55.9 million of cash on hand as of 1/31/24.
✅ https://www.fec.gov/data/candidate/P80000722/?cycle=2024&election_full=true
✅ Both parties are trying to stockpile cash in what will be an extremely expensive election.
✅ The NYTimes also shared that, “Just a single union this week announced plans to spend $200 million, ten times what the main Trump super PAC had on hand. A cash edge can help Democrats tilt or expand the battleground map in their favor.”
✅ Mr. Trump recently posted a $91.6 million bond in a civil case in which he was found liable for sexual abuse and defamation of the New York writer E. Jean Carroll. He also must summon the resources to post a roughly $450 million bond, the judgment in a New York civil fraud case against his businesses, in the coming days. And he has mounting legal bills as his first criminal trial nears.
✅ The NYTimes predicts that Trump’s fundraising reserves will run dry by the end of the summer.
✅ https://www.nytimes.com/2024/03/16/us/politics/trump-finances-money-fundraising.html
✅ Hillary Clinton also takes a jab at Trump by saying that, “Multiple indictments and half a billion dollars in civil liability later, pretty much the only person who can say they were better off four years ago is Donald Trump.”
✅ https://x.com/HillaryClinton/status/1770075033693491242?s=20

🔗 Link to this post

---

Fed Issues… 03/19/2024 10:30PT

Wage Growth Decline SLOWING (📝Moderation in Wage Growth Decline (Annotated)).
✅ This is the New York Fed. They see “persistent” wage elevation that may have “repercussions for price inflation.”
✅ This is based on annualized monthly data over the last few months.


Average Hourly Earnings
✅ 12-mo changes leveling off above 4%. Fed target is 3%.

Jolts
✅ Job openings at levels 22% above pre-pandemic.

Concentration in the Stock Market
✅ Great Depression levels of stock market concentration.


Chinese Imports and Structural Inflation
✅ Chinese imports were 2% in the late 1980s.
✅ Chinese imports were 22% in 2017.
✅ Chinese imports were 14% in 2023.
😇 Fewer Chinese imports could mean less benefits from Chinese disinflation.

Junk Bankrupcies
✅ Up 80% in 2023. High debt, low cashflow companies are filing bankruptcy more. 153 in 2023 vs 2022 of S&P Globally Rated Companies.


Bloomberg Economists & BofA
✅ Both Bloomberg and Bank of America think the Fed will keep the SEP mostly in line.
✅ Goldman argues the long-end could rise more than expected.
😇 Long-end rising is a risk that echoes 1979-1981.
😇 Visualize the risk on the right: Notice how not everyone at the Fed is convinced we’re going back to 2.5%? These dots could move up, shifting treasury yields up with them, pressuring real estate and markets sensitive to interest rates.



Fed 1981, March.
✅ The following 2 screenshots come from the Fed Marcy 1981, just as rates were in the 14% range and just months before the Fed entered their final push: driving rates up another 5% to over 19%.
✅ The yield curve was also approximately as inverted as it is now: ~ -0.40%.





🔗 Link to this post

---

Morning News 03/18/2024 05:55 PT

SMCI
✅ 2m share offering: $900-1000

Fed Argument
✅ Fed keeping rates high hurts business investment, hurting supply chains, and encouraging more fiscal spending, which hurts inflation. Both hurt inflation. (CNBC interview w/ Judy Shelton.)
✅ Best forward is stable money, low taxes.

🔗 Link to this post

---

Putin Warns of World War 3 03/18/2024 13:39 PT
✅ Putin warns of “full-scale World War III” if Western troops enter Ukraine.
✅ This was his reaction after hearing Macron’s statements on the possibility of sending troops to Ukraine.
😇 Finnish PM also said this over the last week.
✅ His stance remains the same for U.S. troops as well
✅ If U..S troops enter Putin has stated that Russia would be prepared for nuclear war if necessary. 😇 This is so overused at this point by Putin and media.
✅ NATO military personnel are reportedly already present in Ukraine.
✅ Macron has proposed a Ukraine ceasefire during the Paris Olympics.
✅ Putin open to peace talks, and not just for a temporary break. He wants Ukraine with no strings attached. 
✅ Putin’s election victory has been presented as a mandate from the Russian people supporting his stance on Ukraine.
✅ Western nations have criticized Putin’s reelection, while China and India have congratulated him.
✅ He has contrasted Russia’s unity with perceived chaos in American politics, mocking the U.S. state of affairs.
✅ He has been criticizing the state of democracy in the United States and using it to justify his war in Ukraine as well
✅ Putin suggests a possible “sanitary zone” in Ukraine to protect Russia against the declining state of the US

📝 Reuters Article
🔗 Link to this post

---

Elon Musk Claims Multiple Attempts on His Life 03/18/2024 13:26 PT
✅ In an interview with Dr. Gad Saad, a marketing professor at Concordia University’s John Molson School of Business in Montreal, Elon Musk discussed that 2 people with schizophrenia have attempted to kill him in Austin with guns.
✅ See this 1 minute audio clip: https://x.com/Teslaconomics/status/1769775990362739039?s=20
➡️ “I have had two cases in the last six months of two people who are unfortunately very mentally ill…They have come to Austin to try to kill me … with guns.”
➡️ “One guy thought I put a chip in his head, like a Neuralink or something. Basically, just an extreme schizophrenic,” Elon said about the first man
➡️ The other would-be assassin had stopped taking his medication and suffered from “total detachment from reality,” Elon said.
NOTE: We are unable to find any police reports validating these 2 assassination attempts or any police reports. There are only stories about death threats, but nothing about actual attempts with firearms.

📝 NYSun Article
🔗 Link to this post

---

$545M Bond for Trump May Mean Liquidation 03/18/2024 13:26 PT
✅ Trump seeks a $454 million appeal bond in a New York civil fraud case, but insurance companies demand cash instead of accepting real estate collateral. 😇 Probably hard to value at the moment and not liquid.
✅ If the bond isn’t waived, Trump faces the possibility of a forced sale of his properties to raise enough cash to cover the bond amount, the appeal bond is due March 25 – assuming the requirement is not put on hold. 😇 That’s 1 week from today.
✅ Trump argues that selling his properties in a down market would cause great harm to him and his business.
✅ New York Attorney General Letitia James opposes Trump’s request for a waiver, expressing concerns about his reliability in meeting financial obligations.
✅ Despite approaching approximately 30 insurance companies, Trump has failed to secure a bond agreement under favorable terms.
✅ Trump testified to having around $400 million in cash, which is insufficient to cover the fines imposed by the verdicts in his legal cases.
✅ James insists on a full bond to ensure that Trump cannot evade payment if his appeal fails.
✅ Justice Arthur Engoron presiding over the trial orders Trump to pay a $454 million fine and imposes a three-year ban on him from running any New York-based company.
✅ Additionally, Trump’s sons, Eric Trump and Donald Trump Jr., are ordered to pay nearly $10 million collectively and are also appealing the decision.

✅Trump’s Reaction:
➡️ Magnificent businesses
➡️ Unlawful bond size (Trump’s claim)

➡️ Rare use of statute (Trump claim)


🔗 Link to this post

---

Bernie Sanders Lashes Out On Military Industrial Complex 03/18/2024 16:06 PT
✅ Over the past decades, there has been a ‘bipartisan consensus’ on foreign affairs. This holds true for wars in Vietnam, Afghanistan, and Iraq, as well as the overthrowing of many governments to benefit American interests around the world. This trend during the WWII era when intelligence agencies came to power (first the OSS, which was dissolved and turned into the CIA during the Cold War) and when the military industrial complex was created when the government switched the means of production from public to private.
✅ Bernie Sanders is the author of this article. He argues that often these bipartisan consensuses were almost always the wrong decisions.
✅ Bernie cites historical evidence of ‘wrong decisions’ that were made as bipartisan consensus:
1️⃣ War in Vietnam – Americans propped up an anti-communist dictator in a Vietnamese civil war under the domino theory, which stated that if one country fell to communism, the surrounding ones would follow.
2️⃣ War in Cambodia – the Vietnam War expanded into Cambodia, where Americans bombed hundreds of thousands of people and fueled the rise of the dictator Pol Pot. His subsequent genocide killed 2 million Cambodians. Both of these conflicts cost the U.S. lots of money and many lives, damaging its credibility both foreign and domestic.
3️⃣ Overthrowing Governments in other countries – Coups in Iran, Guatemala, Democratic Republic of Congo, the Dominican Republic, Chile, Brazil, and others were established in the name of combating communism and the Soviet Union. These interventions often supported authoritarian regimes that brutally repressed their people. These actions resulted in corruption, violence, poverty, and resentment in these countries today.
4️⃣ War on Terror – Bush committed about 2 million troops and $8 trillion dollars to wars in Afghanistan / Iraq and the war on terror. These wars were built on an ‘outright lie.’ This lie being that Iraq had weapons of mass destruction – which they did not. American allies opposed this war, but congress took the go-it-alone approach.
👥 The examples listed above all hurt U.S. credibility and caused immense harm to many people both domestically and foreign. Often these conflicts were entered with many alternative motives due to the privatization of the means of production for military weapons and equipment.

✅ From 1797 to 1941, the government owned its own shipyards and weapons manufacturing facilities, which they relied on through World War I. With World War II came a massive shift. President Franklin D. Roosevelt established the War Production Board to coordinate civilian industries and shift them into wartime production. Throughout World War II, arms production in the United States went from around 1% of annual GDP to 40% of GDP. Various U.S. companies, such as Boeing and General Motors, maintained and expanded their defense divisions.
✅ Bernie claims that bipartisan consensus stems from corporate American interests. He says that when U.S.-based multinationals learned they could outsource labor to authoritarian countries very cheaply, bipartisan support and cheerleading from the corporate world and mainstream media followed for these wars. The U.S. then established free trade agreements with China and Vietnam which gave corporate America access to cheap foreign labor.
✅ Bernie says, ‘Economic policy is foreign policy. As long as wealthy corporations and billionaires have a stranglehold on our economic and political systems, foreign policy decisions will be guided by their material interests, not those of the vast majority of the world’s population.’

✅ CURRENTLY: The U.S. is essentially alone in supporting the Israeli military and defending Benjamin Netanyahu’s government. Many other governments, including American allies, are on the opposite side of this war and have deemed Israel’s actions as breaking rules of war due to the massive civilian and child deaths.
✅ Bernie suggests that this war is just another example of the failure of bipartisan consensus to actually meet the interests of the people. In this war, the defense contractors such as Lockheed Martin and Raytheon would be ‘corporate America,’ as well as many small contractors run by friends and family of politicians to sell supplies to Israel paid for by the U.S. taxpayer at a heavy premium.
✅ Bernie argues there should be more checks and balances when entering price agreements with defense contractors. It is very common for defense contractors to charge extremely high prices due to their entrenched relationship with government organizations or individuals in government. For example, Raytheon has increased its prices for its Stinger missile 7x since 1991, which cannot be explained by inflation, increased costs, or advances in quality. This ends up resulting in fewer weapons on the battlefield, wasting taxpayer dollars, and bigger margins for these defense contractors.

📝 Foreign Affairs Article
🔗 Link to this post

---

Sam Altman Defends Against Elon Lawsuit and Claims 03/18/2024 16:03 PT
✅ OpenAI started as a research lab and there was no grand plan for its massive success today
✅ There was no product to market and once it was clear there were in need of more capital the structure had to change
✅ Elon apparently though OpenAI was going to fail and wanted TSLA to acquire it
✅ Since he wasn’t given control, he withdrew from OpenAI 
✅ Sam agrees that looking back he would change the name of OpenAI
✅ Elon half jokingly has stated that if they change the name to ClosedAI that he will drop the lawsuit
✅The lawsuit has no real grounds, but more of a public statement about Elon’s views of OpenAI
✅ For Sam, the “Open” in the company name means powerful tech in the hands of the people for free (ChatGPT 3.5)
✅ Many see the Elon lawsuit towards OpenAI as a bitter outcry for himself and TSLA not being apart of its giant success

📝 X Post
📝 OpenAI Article
🔗 Link to this post

---

Nvidia GTC Event 03/18/2024 13:05 PT

Intro
✅ Self driving cars mentioned twice in the first 5 minutes. 😇 This is Nvidia’s time to compete against Tesla.
😇 FSD 12.3 is pretty good; I will say.

Intro Cartoon
✅ DGX One was a connected chip of GPUs. The first one. Jensen hand delivered it to OpenAI in 2016.
✅ We’re now using computers to write software that never existed before.



Shoutouts
✅ Amazon and Apptronic get robotics gets a shoutout.
✅ Self driving (non Tesla) gets shoutout.
✅ Connecting Ansys to digital twins gets shoutout (a lot of ‘digital twin’ talk).
✅ Synpsys shoutout.
✅ TSMC partnering with Nvidia for pushing geometry in manufacturing.
😇 No Intel shoutout yet (Max mention!).
✅ Taylor Swift shoutout: that she prepped her performance on a treadmill.

B100 – Code Blackwall
✅ Full stack Cuda. Massive performance boost (lots of numbers).
✅ ARM cores.
✅ 130TB/s comms infrastructure.
✅ Giant cuda GPU.
✅ 208b transitors.
✅ Two dies (semiconductor block) connected to make it act as one chip.
✅ Two Blackwell dies conencted by Grace CPU (ARM).
✅ Chips running 24/7 can’t function all of the time (utilization downtime beyond obvious restarts). We are working to detect an engine to see when chips need to be replaced (cell tests) on every bit of memory on the Blackwell chip. Built in tester. First time we’re doing it.
✅ We can encrypt data in the chip now; while it’s in transition in the chip.
✅ Data moves into/out of these computers at 20x the speed. We don’t want them to be idle.
✅ 2.5x the FPA training performance of Hopper.
✅ Old school was 10x every 5 years. 100x every 10 during PC revolution.
✅ In last 8 years, we’ve gone 1,000x.
✅ NVLink Switch Chip
➡️ 72-Ports Dual 200Gb/Sec SerDes (full speed, GPUs talking to each other).
✅ 2016: 0.17 PFLOPS. This machine? 720 jPFLOPS. Floating point operations per second.
✅ More than enter computation bandwidth of the internet. So we can send everything to everyone in one second.
✅ Optics to do this would be insane. Instead, we do it over Infiniband. Liquid cooled machined. Room temperate in, jacuzzi temperature out. It’s a beast.

✅ Old: 90 days to train a GPT (early model). 8000 GPUs.
✅ Now: 90 days to train, but 1/4th the power with 2000 GPUs.
✅ ChatBots need massive amounts of inference computer power.

Tokenomics
➡️ 3 tokens = 1 word.
➡️ Tokens are super critical.
➡️ Need trillions.
➡️ Need token generation across MANY GPUs. Connecting them all together.
➡️ Need more throughput. More computations per second. But also need quality.

Inference Comparison (Hopper vs Blackwell)
✅ Now: 30x stronger for LLMs like ChatGPT.
✅ 10 Times Faster. It’s great for generative AI.

Future Data Centers
✅ AI factories.
✅ Goal is generate revenue. Intelligence.
✅ Compares generating electricity in factory to intelligence today.

Buying
✅Amazon
✅ Secure AI GPU setup being built.
😇 Go Amazon!
✅ Microsoft, Oracle & Google partnering on Blackwell.
😇 Obv. people will buy the B100; that’ll offset the H100. Keeps Nvidia ahead of competition. Not clear the revenue needle moves on this more than expected. Seems as expected so far.

Omniverse
✅ Digital Twins helped increase worker efficiency 51% at Wiston.
😇 Eh, were they that unproductive before? Look, omniverse is great for manufacturing. I’m a big fan. But that seems like a stretch.

Earth 2
✅ Predict weather at extremely high resolutions; predict super storms.
✅ CorrDiff is trained and can bring analysis down to 2km vs 25km accuracy.
✅ 1/3 the power usage. Much more accurate.
✅ Only available for Taiwan right now.
✅ The Weather Company will integrate.

Healthcare
✅ Gene sequencing, robotics, genomics.
✅ Screening molecules, protein folding, binding, docking etc.
😇 Basically, can we make better medicines faster.

Nvidia Inference Micro Service (Pre-trained AI Models with CUDA installed).
✅ These packages will be on a website, you can download it, take it with you, run it at any cloud or your office, etc.
✅ ai.nvidia.com.
✅ We call these NIMS. Nvidia Inference Micro Service.
✅ Productivity of our chip designers and engineers going up.
😇 Basically an AI foundary. We’ll do for you what TSMC does for us.
✅ Everyone can make their own LLM.

Chatbots
✅ Once they understand context, they basically immitate you.
✅ Next phase is physical.

Physical
✅ Robotics & cars.
✅ AI needs to understand the physical world.
✅ The GPT moment for robotics may be right around the corner. We’re building the systems for robotics.
✅ Producing the world’s first robotics processor: system on a chip.
✅ High-speed sensor processing & AI.
✅ We have the jetson: the autonomous processor. The GPU did the training.
✅ Need simulation engine. That’s Virtual World Omniverse. OVX runs that.
✅ Imagine robotics building: warehouse with autonomous systems. Some systems will be humans. Some will be forklifts. These will interact with each other. Overlooked upon by the warehouse.
✅ Warehouse is the air traffic controller. It will redirect traffic.
✅ You can talk to the warehouse.
✅ Think google sketchup to track everything in a warehouse. Route planning, risks, etc.
✅ And alerts if there are issues.
😇 Great for Amazon.
✅ Industry is the last step in tech.
😇 Likely no where near as perfect as the “ad” / pitch yet. This IS the future though. Just not sure how fast.

Omniverse Streams to Vision Pro
✅ Starting today.
😇 Through Safari or what? “Streams on.”

Robotics & Autos
✅ Self driving application: We’re shipping in Mercedes and GLR starting next year.
✅ BYD is adopting THOR. 😇 That’s Tesla’s remaining moat!! But only GLR early 2025 and no demonstration of its ability – doesn’t seem like a mega threat but it’s a threat that’s coming. BYD partnership is most concerning.
✅ Robotics computer: Jetson.
😇 Segment on autos very short.


Humanoid Robotics
✅ We can imagine it today.
✅ Probably easier since we can immitate ourselves.
✅ Very productive to deploy in the future. We’re creating the entire stack.
✅ Nvidia Project GR00T (General Robotics 003).
✅ Showing off 2 Wall-E style robots.

5 Things:
➡️ Industrial data centers
➡️ Blackwell platform
➡️ NIMs
➡️ NEMO & Nvidia Foundry
➡️ Omniverse and Robots

One More Thing
✅ Little spaceship flies around the Nvidia chip announced at start.

🔗 Link to this post

---

Bank of America FOMC Preview 03/18/2024 12:47 PT
✅ March FOMC meeting expected to revise outlook for stronger growth, firmer inflation, and low unemployment.
✅ Cutting cycle anticipated to begin in June, but potential for deferral due to increased confidence in economic outlook.
✅ Discussion on balance sheet plans expected, focusing on tapering Treasury run-off caps.
✅ Minimal changes expected in FOMC statement; growth described as “solid,” unemployment “remains low,” —> despite the uptick in U3-unemployment to 3.9%.
✅ Since last June, there has been an average gain of 265k in nonfarm payrolls which has been the fastest pace since this period.
✅ Press conference likely to express less confidence in inflation outlook, balanced by overall confidence in economic projections.
✅ Projections indicate faster growth and slightly firmer inflation; stable unemployment rate expected through 2026.
✅ Median of three rate cuts forecasted for 2024, but risk to fewer cuts due to increased confidence in economic outlook.
✅ Debate on balance sheet composition, with focus on tapering and preferred securities holdings. Governor Waller’s preference for larger share of bills in balance sheet highlighted, though challenges to achieving this persist.

🔗 Link to this post

---

Race For AI: Elon’s xAI, OpenAI, Apple, and Google. 03/18/2024 11:34 PT
✅ This weekend, Grok, Elon Musk’s OpenAI chatbot competitor, had its repo open-sourced.
✅ xAI is reportedly valued at $25B. Earlier this year, it was in talks to raise $6B at a $20B valuation.
✅ OpenAI is reportedly valued at $80B as of last month.
✅ Both OpenAI and xAI are offering comp packages up to $900,000 a year. 
✅ This leaves smaller AI companies struggling to hire talent, as compensation is so competitive.
✅ It’s even getting difficult for big tech companies like Apple.
✅ Apple and Google are rumored to be in talks about integrating Google’s Gemini AI into the iPhone.
✅ Apple has supposedly considered OpenAI’s Chat-GPT as well.
✅ This comes at a surprise, as Google recently received major backlash after the launch of Gemini’s image-generation release.
✅ Google paused and removed the tool late February, saying an improved model will be released soon. This was as Gemini generated inaccurate historical images and consistently had a preference to generate non-white characters in such settings.
✅ Musk commented, “I’m glad that Google overplayed their hand with their AI image generation, as it made their insane racist, anti-civilizational programming clear to all.”

📝 Business Insider Article
📝 X Post on Woke Google AI
🔗 Link to this post

---

MrBeast Deal With Amazon 03/18/2024 09:36 PT
✅ The show will be called “Beast Games”.
✅ Largest game show in history.
✅ 1,000 contestants.
✅ Per Mr. Beast, this is the most contestants in game show history.
✅ $5m in prizes.
✅ Per Mr. Beast, this is the largest cash prize in the history of game shows.
✅ Mr Beast said that Amazon gave him the most creative control of any other streaming platform.
✅ This deal with Amazon is reportedly worth $100m (source: IGN).
✅ Mr. Beast made the announcement via the Colin and Samir podcast: https://www.youtube.com/watch?v=4FRYox-sPP8
✅ Mr Beast expects the game show to be ready in November or December but isn’t guaranteeing anything.
✅ He is going to create a prelude video on his main channel to funnel his audience to Amazon for the remainder of the series.

Outside of the Amazon deal, Mr. Beast mentioned a couple more interesting things:
✅ Mr. Beast is slated to generate around $700m per year in revenue this year.
✅ This was reported on by CNBC but Mr. Beast confirms in this interview.
✅ When asked when he will hit $1b in revenue he said that he doesn’t like talking about money because people just don’t understand that he really throws everything back into making these videos.
✅ To drive his point home, Mr. Beast said that at one point this year his net worth was negative because of a tax bill he personally had to pay.

📝 CNBC Article
📝 IGN Article
🔗 Link to this post

---

$MSTR Microstrategy Premium 03/18/2024 09:18 PT
✅ $MSTR Microstrategy currently trades at 2x its BTC holdings value.
✅ Microstrategy holds 205,000 Bitcoin, currently valued at $13,725,379,350.
✅ $MSTR is currently at $27.55B market cap.
✅ Some argue for the premium due to the company’s ability to raise debt, creating a leveraged position on BTC.
✅ Last week, increased convertible senior notes offering to $525M at .875% due 2031.
✅ The premium between $MSTR stock and $BTC has been growing.
✅ North Rock LP, a crypto hedge fund, pointed at the premium when it was 20% in January this year.

✅ They pointed to a spread trade, longing BTC while shorting MSTR.
✅ Rumors report the MSTR-BTC $1B spread trade blew up for a hedge fund (potentially North Rock LP).
✅ This would lead to selling of Bitcoin and a repurchase to cover MSTR shorts.
✅ MSTR currently has $3B of short interest, roughly 20% of its float of 15M.

✅ Saylor has recently sold $2.5M of stock. There have been 97 insider sells and 0 buys.
👥 Insiders are taking advantage of this premium, but the market can become more irrational than anyone can think, making this a difficult short.

📝 NorthRock LP Tweet
🔗 Saylor Tracker
🔗 Link to this post

---

Morning News 03/18/2024 09:00PT

Don Lemon vs Elon Musk.
✅ “After months of begging me; wooing me to offer some exclusive content, Elon Musk decided to scrap the deal.”
✅ GigaTexas was the fastest construction project since WW2.
✅ X is useful for real-time news and now long-form content (up to 4-hour video segments).
✅ We want a wide variety of people on X. Centrists, left, right. Different opinions.
✅ Tucker deemed to be on right. Fox on right. CNN left.
✅ Don: Why do you say that?
✅ Elon: Uhh, am I missing something here? 😇 Yeah this started the awkwardness right away. What a weird question; to debate if CNN is considered left.
✅ Seeing record usage on X.
✅ Audio/video calling out now.
✅ Old school Twitter censored the right 10x the level of left.
✅ 99% of donations by Twitter were to the left.
✅ Twitter employees, that is. Clearly a left-leaning group.
✅ Went to a breakfast at a friend’s house and Trump came by.
✅ Let’s just say: Trump did most of the talking.
✅ Nothing groundbreaking. He likes to talk.
✅ Did not ask for a donation/money.
✅ Would you loan him money? No.
✅ I may endorse a candidate, but I don’t know yet.
✅ Are you leaning towards anyone?
😇 Lemon’s interview styles is very “20-questions’eque”
✅ Cybertruck is a once-a-decade product. I think it’s our best.
✅ Roadster will be a collaboration between SpaceX and Tesla. Don: Flying car? Elon: maybe? Will have some rocket technology in it.
✅ SpaceX and Tesla collaboration. 0-60 in <1s. Does not have wings or propellers. Does have wheels. Has a yoke. 😇So far, that’s already been known.
✅ I like to play video games. Diablo. I used to be semi-good at Quake.
✅ I enjoy using using Twitter. I call it the PVP platform. PVE are the video games I play. Twitter is PVP.
✅ I am almost always sober. Don’t drink much.
✅ Ketamine prescription: there are times I have a negative state of mind. Go to the doctor; consider ketamine.
✅ Rare for me to take a day off.
✅ I take it once every other week or so. Several weeks no use.
✅ Some are wired to be happy all of the time. Some are not.
✅ What matters at Wall Street is execution.
✅ House seats are proportioned by people. Same with electoral votes.
✅ Debate over electoral college.
✅ Elon: we’re both right here. Electoral College amplifies blue states vs red.
😇 Elon is trying to reference a Fox Article from memory here. The article argues:
➡️ Illegal immigrants are counted in the census.
➡️ 761,168 residents per House seat.
➡️ That works out to 22 seats in the House, thanks to illegals.
➡️ Could this potentially support states like California / sanctuary areas more? The argument is yes.😇 This does seem logical, though not certain/fact. Again, seems reasonable to assume this is true, but difficult to fact-check beyond finding what Elon is talking about.
We can fact-check what the Census counts. Here’s a piece in Connecticut: “The Census counts every person living in the country — citizens, noncitizens and those holding permanent resident cards. Excluding the immigrant population from the decennial count only cheats them out of the resources and representation they deserve and are entitled to.”
➡️ Argues not counting illegals “cheats them out of the resources and representation they deserve.” 😇 Well, many will argue this.
😇 Okay Don here is quite passive-aggresive: “I don’t think you’re right [then reads next question right away].” Harsh for an interview!
✅ Elon: Democrats have the incentive to let immigrants in.
✅ Elon: Some groups that Jewish groups fund are anti-Semetic, in my opinion. (Debate on Great Replacement.)
✅ Don: Massive shootings against Hispanics to fight Great Replacement, cites a quote Tweet by Elon: I don’t endorse everything I quote Tweet.
✅ Elon: Media is a terrible judge of character.
✅ Don: Don’t you have a responsibility to moderate the truth?
✅ Elon: I do care: that’s why we have community notes. 😇 These are pretty solid, most of the time. I’m a Community Noter.
✅ If it’s illegal, we’ll take it down. If it’s illegal, we’ll remove it. The laws are created by democracy. We don’t go beyond the rules.
✅ Elon: You agree in censorship more than we do. Content policy saying hate speech doesn’t mean we have to remove it if it’s not illegal.
✅ Elon: We can’t shutdown the internet.
✅ Elon: You want censorship and I don’t.
✅ Don: No, I want you to take responsibility.
✅ Elon: Then the law should be changed.
✅ Don: There should be guard rails.
✅ Elon: Standards via DEI should not be lowered. That increases the chances of medical mistakes in medicine or elsewhere.
😇 Okay let’s jump in here: There was a big opinion piece in the WSJ 6 days ago: “THE NIH Sacrifies Scientific Rigor for DEI.”
➡️ Cornell University Example: funding proposals emphasize applicants’ “contribution to diversity” and will “receive significant weight in the evaluation.”
➡️ “That rubric penalizes job candidates for espousing colorblind equality and gives low scores to those who say they intend to “treat everyone the same.””
➡️ The records underscore that scientists simply can’t get hired in the program without an outstanding DEI score. 
➡️ The latter example raises questions about compliance with anti-DEI laws.
😇 I’m unsure if Musk has read this piece, but this is a common fear: Worse doctors may be hired because of better DEI scores. I have not yet seen that test scores accepted are lower for DEI though. That may be happening, though, especially if DEI receives “significant weight,” which implies weight over other factors.
✅ Don: There is no evidence of lowering standards.
😇 Argh, unfortunate. That’s exactly what I just wrote out as the likely issue. The implication is lower scores may be accepted – that implication clearly exists. Can we say with certainty someone got in with a lower score because of their DEI score? No. Has it likely happened? Very likely, yes.
✅ Elon: Yes, people do reply without evidence.
✅ Don: Shouldn’t you factcheck before you post something that isn’t true?
✅ Elon: Well other people factcheck me. 😇 Uhg that’s a bit of a cop-out Elon.
✅ Elon: DEI *could* become an issue if we lower standards.
✅ I didn’t say it’s happening. It could/will.
✅ Don: Why respond to something if it hasn’t happened?
✅ Elon: It could happen, though. That’s dangerous and more people may die.
✅ Don: do you think female pilots are less skilled than men?
✅ Elon: No, but we should not lower the standards for them.
😇 (Don a bit speechless here.)
✅ Don: Facts?
✅ Elon: See replies on X.
✅ Don: Are those facts?
✅ Elon: Boeing includes DEI in compensation review. That should be removed.
😇 Boeing does have DEI goals, but most companies do.

✅ Elon: All I’m saying is: don’t lower standards.
✅ Don: 5% of pilots are women, and 4% are black.
✅ Elon: All I’m saying is treat people based on their skill.
😇 This is annoying. Don is pushing for diversity. 14% of the United States is black. So why are only 4-5% of pilots/doctors black?
➡️ Don is arguing systemic racism
➡️ Elon is arguing same standards
😇 They’re both arguing about different things. Yes, there is a relationship between the 2. Mid-1950s racism probably led to poorer families and less access to quality education, as example. That could accelerate achievement by white/Asian, yes.
😇 But again, this is a pissing contest between Elon and Don. It feels like Don’s trying to pin Elon as a racist and Elon’s just saying: don’t lower standards.
✅ Elon: Skills and talents only.
✅ Don: What do you say to allegations that Tesla is racist following lawsuits?
😇 Yup, exactly what I felt earlier. This is Don’s agenda. Catch Elon on episode one and call him racist. Uhg Don! (I write these as I watch.)
✅ Elon: Did I ever see improper situations? No.
✅ Elon: Trying to blame everything on race/gender is unfair. We should move on. Make it about people.
✅ Don: You don’t agree this country was founded on racism?
✅ Elon: Every country was racist at some point. Let’s focus on the future. Everyone was a slave in history. We’re all descendants of slaves; what history do we want? Let’s move on and treat everyone equally.
✅ Don: But evidence shows we’re not? Different opportunities. 😇 This is leading into white privilege talk.
✅ Discrimination is real.
✅ Elon: You’re putting words in my mouth. I’m saying we should move beyond this.
✅ Don: I’m just saying it’s not happening.
✅ Elon: You’ve been successful.
✅ Don: So?
😇 This is frustrating. Little progress.
✅ Don: Why is trans woke mind?
✅ Elon: When you stop caring about integrity and skills. The oke-mind virus would be fundamentally evil.
✅ Elon: You can ask anyone to call you whatever; do we mandate that though?
✅ Elon: Censorship in advertising is unacceptable.
✅ Elon: Just saying we won’t censor for advertisements.
✅ You can absolutely choose what to advertise next to. You have great controls on X.
✅ Elon: “I have to say: choose your question carefully; there’s 5 minutes left.”
✅ Don: You said advertisers are killing the company. Isn’t that your problem?
✅ Elon: If we bring free speech and make less money, so be it.
✅ Don: I’m not trying to “get you.” “I’m just surprised you would blame other people for killing the company.”
✅ Elon: You’re upsetting me; the way you’re phrasing questions is not clear. If given a choice: you must censor for us to advertise. We reply and say no. Binary. You can’t censor the entire platform for an advertiser. Almost all of our advertisers are coming back. Very optimistic.
✅ Don: Where does your intensity come from?
✅ Elon: Born that way. Only a couple minutes left. 1-2 questions.
✅ Don: I’m not meaning to upset you.
✅ Elon: I have a room of people waiting for me.
✅ My goal is to extend consciousness and make life multi-planetary.
✅ I care about the reality, not the perception of it. I care about civilizational risks.
✅ Elon: I’ve made many mistakes; If I had a time machine, I’d fix them.

🔗 Link to this post

---

Morning News 03/18/2024 05:33PT

Apple in Talks to Partner with Gemini on AI
😇 Sad. A) Gemini isn’t that good. B) So much for Apple making their own. Embarrassing. Suggests they have nothing.
✅ Google up 5%. Apple up 0.93%. Microsoft down 1% ~5:53 PT.

AI Melt Up & Nvidia Event (GTC)
😇 Buy rumor sell the news. I went into this week with ZERO shorts expecting some rush prior to the “sell the news.” We’ll see.
✅ 1pm keynote for Nvidia today livestream event 😇Will likely livestream it; stay tuned!
😇 Great for Google because it offsets fears of Google’s search losing revenue, as Google could pickup licensing revenue from companies like Apple. Huge Apple failure if this is the ultimate result (not a done deal yet).

Tesla
😇 FSD 12.3 release is actually pretty good (I have it). Just started releasing.
😇 Problem though: Does that help sales in near term? No.
😇 $1k Model Y price increase threat is misleading. Trying to pull forward Q2 sales for a weak Q1.

Financial Conditions
😇 Ticked up Friday as stock market fell a bit and yields popping a bit. That helps Powell be able to soften his potential hawkishness, but not if we rally going into the Fed meeting.


🔗 Link to this post

---

BLS Revisions Reveal Weakness in Labor Market 03/15/2024 14:15 PT
✅ The monthly jobs reports are corrected every March to match actual payroll records.
✅ Normally, the annual March correction is nominal and does not materially change the outlook of labor markets.
✅ California’s Legislative Analyst’s Office notes that during economic downturns, or recessions, monthly surveys often overstate the number of jobs which is what has just recently happened.
👥 This potentially signals that California’s LAO sees a recession coming, or one is already here.
✅ The actual job count in California was 1.5% lower than the monthly estimates.
✅ The monthly estimates showed the labor market adding 300,000+ jobs between September ’22 and September ’23.
✅ In reality, only 50,000 new jobs were added. 

✅ California is the world’s 5th largest economy, at $3.37T GDP in 2022.
✅ Major labor corrections were concentrated in higher paying industries, including law, accounting, engineering, tech, consulting, and other professional services.
Image
✅ Job growth for government and healthcare was understated in the monthly jobs report – it grew much more than reported.


📝 California LAO
🔗 Link to this post

---

Biden Feuds with Netanyahu over Gaza Conflict 03/15/2024 13:30 PT
👥 For a long time, there has been no political benefit and a lot of risk in being tough on Israel. This is due to Israel’s extremely strategic position (and likely possession of nuclear weapons, though this is unconfirmed) in the Middle Eastern region. The U.S. gathers a significant amount of intelligence by being stationed in Israel and can wield influence in the region because of this relationship. 15% of Israel’s population speaks Russian, and if the U.S. were to ever abandon Israel as a partner, they might turn to Russia – this is the risk.
✅ The unwavering support for Israel isn’t as straightforward now as it used to be. Biden describes Netanyahu’s response to October 7th as “over the top” and the IDF’s actions as “going too far.” This is evidenced by Israel’s significant civilian casualties, lack of humanitarian aid, and bombing of numerous UN humanitarian groups providing food and supplies to Palestinians in Gaza.
✅ On March 10, Biden stated that Netanyahu’s military strategy was “hurting Israel more than helping Israel.” This likely refers to the surge in support for Hamas among Gaza citizens as the conflict has progressed. This is supported by current and pre-war polls, indicating a significant increase in Israeli opposition in Gaza, the region, and even worldwide.
✅ Biden’s rhetoric towards Israel only shifted from support to criticism in February. This change stems from Netanyahu’s reluctance to comply with U.S. demands for humanitarian assistance to Gaza, amidst the imminent famine facing the region due to Israel shutting down ports, removing cell service, bombing humanitarian groups, and blocking critical supplies from reaching Gaza.
✅ Biden’s frustration is not directed at Israel itself, but rather at Netanyahu and the far-right-wing party. Most Israelis would not vote for Netanyahu again, favoring a more moderate politician like Benny Gantz, who could end the conflict. It is politically more feasible for Biden to express frustration with a specific party and its leader than with the entire nation.
✅ Netanyahu is aware of his unpopularity among secular Jews. His only path to remaining in power is by prolonging the conflict, creating a dangerous conflict of interest.
✅ The U.S. has consistently blocked any meaningful international criticism of Israel through the UN Security Council. In February, a resolution demanding a cease-fire in Gaza gained the support of nearly all members but was vetoed by the U.S.
✅ One way for Biden to express his dissatisfaction and facilitate humanitarian aid to Gaza would be to change this voting policy. However, this might be seen not only as opposition to the far-right-wing Israeli party but also as opposition to Israelis as a whole, which carries the risks mentioned earlier.
✅ If Biden seeks a U.S.-brokered deal between Israel and Saudi Arabia, including the establishment of a Palestinian state, he would need to offer a mutual defense pact. Such a pact would involve putting U.S. troops at risk to defend Saudi Arabia, known globally as a cruel autocracy, making it a tough sell to voters. Biden’s security adviser acknowledged, “We will have to do things for Saudi Arabia that will be very unpopular in this country and in our congress.” It would make sense for the U.S. to take a different approach to peace to avoid this.
✅ The Senate approved a $14.1 billion military aid package to Israel on February 13th. Biden could threaten to veto any further aid unless Netanyahu aligns with the administration’s goal of creating a “Palestinian state living side-by-side in peace with Israel.”
✅ Biden might be legally obligated to stop funding Israel. The Humanitarian Aid Corridor Act prohibits the U.S. from providing aid to any country that restricts the transport or delivery of U.S. humanitarian assistance. Additionally, the Conventional Arms Transfer Policy states that the transfer of U.S. arms is prohibited if they are likely being used to commit serious violations of international humanitarian law. Biden could use these laws to halt funding if certain rules are breached.


✅ Netanyahu has defied U.S. interests by refusing to end the war or meet humanitarian requirements.
✅ This has compelled Biden to reconsider his unwavering support for Israel.
👥 This creates a risky situation for the U.S. if they cannot remove Netanyahu from power, as he is likely to seek a new partner, such as Russia, if U.S. support for Israel falters.
👥 The U.S. must handle this situation carefully, focusing criticism on the far-right-wing party rather than the entire country, to avoid losing a strategic ally.
✅ Kamala Harris has already met Netanyahu’s political rival Benny Gantz in Washington for a meeting to undermine Netanyahu. They discussed preventing famine in Gaza, providing humanitarian aid, and a cease-fire. Netanyahu has repeatedly shown that he will continue disobeying U.S. wishes. The Biden Administration is starting to see that Netanyahu does not want to accommodate them, so they want to work with someone who will (like Benny Gantz). The U.S. needs someone else in power of Israel to have their demands met.

📝 Foreign Affairs Article
🔗 Link to this post

---

NAR National Association of Realtors Lawsuit Settlement 03/15/2024 13:27 PT
✅ On Friday morning the legal counsel for the National Association of Realtors settled on an agreement.
✅ The original lawsuit was filed in April 2019 by a group of Missouri home sellers.
✅ Americans have been paying about $100 billion in real estate commissions annually.
✅ NAR will pay $418 million in damages.
✅ NAR will also eliminate its commission rules, getting rid of the 6% commission, which experts believe will drive down housing costs.
✅ Economists believe commissions can drop by 30% as agents compete against each other for cheaper commissions, driving down home prices.
✅ The interim chief executive of N.A.R., Nykia Wright, said “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals.”

📝 NYTimes Article
🔗 Link to this post

Deutsche Bank Tesla Experience 03/15/2024 11:49 PT
✅ Deutsche Bank (DB) recently got a tour of Tesla Fremont with the head of Tesla IR.
✅ They toured it on 03-14-24
✅ They drove the Cybertruck, tested FSD 12, and spoke with the head of IR, Martin Veicha.
✅ Tesla wouldn’t comment directly on Q1 progress.
✅ However, they did highlight that Tesla has faced unforeseen volume and cost headwinds in the quarter with 2 shutdowns of its Berlin Factory due to supply issues from the Red Seas conflict and a recent arson attack.
✅ It did not confirm or deny any issues with the ramp-up model 3 (M3) refresh in Fremont for the Cybertruck/4680 in Austin, which Deutsche Bank believes is ongoing and impacting Q1.
✅ Tesla attributed the slow Cybertruck ramp to its focus on quality.
✅ Tesla acknowledged a cooling of the EV Market.
✅ Tesla blamed this on misconceptions about EVs and Tesla which they believe they can try and address through public education.
✅ Tesla now believes in spending more on advertising and marketing, to address range anxiety around EVs and publicize how affordable Tesla’s vehicles.
✅ Tesla reiterated next-gen only launching late 2025.
✅ Once FSD v12 is widely released Tesla is open to experimenting with different FSD pricing once available.
✅ Beyond this year, company focus remains on next-gen vehicle.
✅ Tesla wouldn’t comment on where it stands with this development process.
✅ Deutsche Bank is leaving estimates unchanged, as they see deliveries showing a steep Q/Q decline, and continue to see risks to earnings for the quarter.
✅ DB modeled Q1 revenue of $22.8bn, well below the Street’s $25.1bn due to lower expectations for volume, and auto gross margin of 14.5% which is down 270 bps QoQ, this is driven by price cuts that took place on the M3 and MY in China, MY price adjustments in the US, price cuts in Europe, and targeted inventory discounts and incentives, but partly offset by continues improvements in raw materials and logistics costs.
✅ All in, DB lowered their 1Q EPS to $0.49 below the current Street EPS of $0.65
✅ Looking at FY 24 DB continues to see considerable risk to earnings expectations, due to continued downside to volume and pricing expectations.
✅ DB bakes in a ~8.5% price decline Y/Y
✅ All factors including DB see a gross margin decline of 240 bps Y/Y equating to an auto gross margin of 14.8% for the year and EPS of $2.25, below the current consensus of $3.05 volume of 2.3m units, as we think 2025 will look very much like 2024, given next-gen vehicles are not likely to come until 2H or end of 2025.
✅ DB gross margin estimates are 15.8% leading to 2025 EPS of $2.90 vs Consensus currently at $4.05.
✅ DB’s final thoughts: they warn that worries over demand, pricing, and earnings could further squeeze consensus estimates and put additional pressure on the stock especially considering the meaningful downside risk they see to next year’s earnings as well.
✅ Long term, however: DB continues to believe much of the stock trajectory will remain about the highly anticipated next-gen platform, the company could deepen its competitive moat and maintain it’s lead in the EV space for years to come.


🔗 Link to this post

---

Choosing Between The US & China, China Fires Multiple Military Generals 03/15/2024 10:41 PT
✅ In late February, China and Hungary established a new security arrangement to cooperate on law enforcement/counterterrorism despite Hungary already being a member of NATO. Soon Hungary’s streets will see Chinese police patrols. Countries using the U.S. for external security and China for internal security is becoming a global trend.
✅ Countries such as Papua New Guinea, Sierra Leone, UAE, and Vietnam are taking advantage of both US and Chinese security.
✅ The reason for this phenomenon is as follows: The U.S. and China are offering different products. The U.S. can provide a country with external security by protecting its partners with the backing of its military and allies. On the other hand, China provides internal security tools to combat social disorder and political opposition (this secures power of a regime, oftentimes CCP friendly). This makes sense if you pay attention to what China and the U.S. are both built on.

✅ Both the U.S. and China are dueling for influence by offering these products to nations.
✅ The U.S. or China in the past would throw the relationship with a country out the window if they found that they were being played, as it displays disloyalty and opportunism.
✅ This is not the case currently; both the U.S. and China are allowing it because it is not exactly direct competition. The U.S. is providing military capabilities to a country to provide peace and stability against threats by China, North Korea, Iran, and Russia, while China offers foreign governments domestic security and regime security. This is done through digital surveillance, police training, and riot management.
✅ Essentially, China is ensuring the national security of a U.S. military ally. They aren’t doing this foolishly; China gains influence within the internals of that country. They have access to their digital surveillance and are actively structuring the internal regime of a country similar to itself.
✅ There is only a little overlap between these product offerings, which is why this has gone on without consequence.
✅ The overlap that occurs is as follows: both the U.S. and China will provide a country with arms, joint military exercises, humanitarian/disaster relief aid, and military aid.
✅ This overlap has been small enough to not spark any major issues because they mostly operate in completely different paradigms.
✅ Smaller countries can continue to exploit this U.S. – Chinese security competition as long as both powers do not demand an exclusive arrangement.
✅ Hungary has been playing both countries for a while. Hungary was the first EU participant in China’s Belt and Road initiative. Hungary obstructed European aid to Ukraine and delayed Sweden’s NATO accession, all to benefit Russia & China while enjoying NATO security.
✅ Countries do NOT want to have to choose between the U.S. and China because the U.S. provides security and China provides economic prosperity; one isn’t worth giving up the other. Most countries still believe the US to be the world’s leading economy power, but there is still vast opportunity with China.

✅ So far China and the U.S. have mostly avoided stepping on each other’s toes, but as they work increasingly, it is likely their interests will clash.
✅ For example, authoritarian leaders welcome U.S. regional security assistance, but they know this comes with unwelcome side effects such as human rights and political liberties, which are a threat to authoritarian rule. A country like this is now incentivized to partner with China to secure their political control upon accepting a U.S. partnership. This is a conflict of interest and this is what happened in Vietnam.
✅ Situations like the previous one intensify the rivalry between the U.S. and China. This is only more likely to continue in the future. Countries like Vietnam will eventually face an ultimatum and have to choose a partner instead of playing both sides.
✅ Authoritarian countries may prioritize their rule to avoid being overthrown or killed by domestic opposition over protecting their regional security. This would mean choosing China over the U.S. as a partner.
✅ The U.S. needs to develop a product for countries to provide internal security while still promoting democracy and human rights. This could sway these countries stuck in limbo when the ultimatum comes due.
✅ This is just one example of tensions rising between China and the U.S. A battle for influence is what happened during the Cold War.
✅ As countries are forced to choose a side over the next few years, this will shape the new “axis vs allied forces.”


✅ China has been firing many military generals. This is extremely common when a country is preparing for war over the course of history. China is doing this under the guise of removing corruption from its military.
✅ Countries before a war try to eliminate visible corruption among generals to boost moral of soldiers and increase confidence among allies. They want young men to be patriotic about their country, because patriotism creates good soldiers.
✅ An example of corruption in China during non-war times could be a general taking fuel that is used for military vehicles and selling it to another country as they are not at war, so there are not many questions about where supplies are. These generals are being replaced by generals whose pockets will get lined only if there IS war. This creates a common incentive.
✅ This is further evidence that a war is seeming more likely.

📝 Shocking Chinese Military Corruption Exposed – Video from Task & Purpose
📝 Foreign Affairs Article
📝 PEW Research Favorability of US vs China
🔗 Link to this post

The Economy at Glance 03/15/2024 10:34 PT
✅ BOA CPI Trajectory

✅ According to BOA these were the weekly flows:
✅ $55.7b to stocks, $49.7b to cash, $7.8b to bonds, $3.4b to crypto, $0.4b from Gold.
✅ Cash: big $49.7b inflow… MMF annualizing $1.5Tn inflow YTD.
✅ Crypto: record weekly $3.4b inflow to crypto funds… annualizing $54bn YTD

✅ IG Bonds: $6.6b inflow $135b IG inflows past 5 months strongest since ‘21

✅ US stocks: record $56.1bn weekly inflow (prior record was $53.0b in Mar’21)

✅$55.7bn inflow ($62.4b inflow into ETFs, $6.7b outflow from mutual funds)
✅ Tech: $6.8 inflow, rebound from record $4.4b outflow last week

✅ BOA: The Fed keeps 3 rate cuts but just barely.
✅ BOA says two questions have dominated sentiment recently: 1) is the US economy re-accelerating? 2) will inflation allow the Fed to begin an easing cyber later this year as we, and they, expect?
✅ BOA thinks that they have enough information from Feb to determine that the economy is not reaccelerating.
✅BOA says, “Turning to the second question, the jury is still out.”
✅BOA says, “The January Consumer Price Index (CPI report) caused a lot of anxiety in markets – and likely the Fed – given the strong 0.4% m/m rise in core inflation and the surprise 0.6% m/m increase in shelter inflation.
✅ BOA recalls the following:
✅ Powell testified to Congress that the Fed needed “a little” more data and “a little more evidence” to validate its outlook for this year. Powell said the evidence didn’t need to get better but instead, they just needed to “see more of the same.” He had the January data in his hands at this time.
✅ Does this mean we can conclude the Fed was happy with the January numbers?
✅ Interesting data points outlining Fed cuts and S&P 500


🔗 Link to this post

---

SpaceX Starship Launch 03/15/2024 9:59 PT
✅ Yesterday, March 14, SpaceX launched Starship and its Super Heavy Booster, the world’s largest rocket at 5000 tons from South Padre Island, near the southern tip of Texas.
✅ Propellants make up 4500 tons of this weight.
✅ This was the largest flying object ever made.
✅ Compare this to Saturn V which was only 3100 tons.
✅ SpaceX plans to make the rocket even bigger by 20-30 meters and increasing the max payload from 200 tons to 400 tons. 
✅ This was the third fully stacked Starship test. The first two exploded before reaching mission objectives.
✅ Starship is designed to be fully reusable, but during this flight, the Super Heavy Booster was not able to successfully relight its engines and failed while Starship lost contact, burning up and falling into the Indian Ocean.
✅ SpaceX was still able to gain very useful data, as they do with every launch, to improve on their systems for future launches.
✅ SpaceX needs to rapidly develop this platform to meet NASA’s Artemis 3 deadline in 2026. This mission plans to land humans on the moon, the last since December 19, 1972, over 50 years ago.
✅ This mission is said to require dozens of Starship launches per lunar landing.
✅ Media coverage of the event was very mixed, with many outlets claiming this was a failure, often citing negative sentiment when the mission objective was finally achieved after multiple prior attempts.

📝 X.COM SpaceX Launch Video
📝 Space.com Article
🔗 Link to this post

---

Alarming Financial Conditions 03/14/2024 18:35 PT

😇 Financial conditions are as low as they have been in 2018 and 2014: Note: this image is purposefully manipulated to cover the hole of covid.
😇 See below for without the hole of covid (where stimulus money was distributed, driving financial conditions straight down.
😇 The point is to show: Financial conditions are as loose as the lows of 2014 and 2018, when the Fed was trying to prop UP inflation, not down.
😇 That’s bad!


Unmanipulated Image


What does this mean?
😇 In our opinion, the Fed is likely to hawk substantially to prevent the continued fall in financial conditions, especially since inflation progress is moving backwards. Here’s my estimate on the Fed Funds Rate being revised UP to show only 2 cuts (Wells Fargo still thinks 4 as of this week). This could get chopped down to 1 rate cut projected in the June SEP.
😇 GDP is likely to get revised up as well.



🔗 Link to this post

---

Apple buys startup DarwinAI, adds staff to its AI division 03/14/2024 15:35 PT
✅ Apple has bought artificial intelligence (AI) startup DarwinAI and added dozens of the Canadian company’s staffers to its AI division
✅ The deal value is private.
✅ Neither company has spoken on the acquisition
✅ Alexander Wong, an AI researcher at the University of Waterloo who helped build DarwinAI’s business, has joined Apple as a director in its AI group as part of the deal, the report added.
✅ DarwinAI has developed AI technology for visually inspecting components during the manufacturing process and serves customers in a range of industries, Bloomberg said.
✅ The report explains that DarwinAI’s systems will help Apple in its efforts to run AI on devices instead of in the cloud. The company also focuses on AI technology for manufacturing and supply chain uses.
✅ Apple is expected to announce a host of AI features for iOS 18 at WWDC in June. According to rumors, these new features will include an upgraded version of Siri as well as new AI features in Messages, iWork, Apple Music, and more.
✅ Apple is also integrating AI technology into Xcode as well as its customer service operations.
✅ During Apple’s Q1 earnings call last month, Cook said that Apple will share details on its AI work “later this year.”
✅ During Apple’s shareholder meeting a few weeks later, Cook teased that Apple will “break new ground” in generative AI this year.

🔗 Link to this post

---

BREAKING: Judge DENIES motion to dismiss Trump’s charges in classified documents case 03/14/2024 15:03 PT
✅ Trump was in attendance.
✅ Trump nominated this judge to the bench.
✅ Judge Cannon made it clear that she was skeptical of his attorneys’ arguments that the Presidental Records Act bars his prosecution.
✅ Trump’s legal team contended the bulk of the charge should be thrown out because of the 1978 law that governs the preservation of information during the following presidency.
✅ Here is the law Trump’s legal team is referring to: The law in question is the Presidential Records Act (PRA) of 1978.
✅ In 1978, partly in response to questions around the ownership and disposal of President Richard Nixon’s presidential papers, Congress enacted the Presidential Records Act. (PRA)
✅ The Presidential Records Act of 1978 ensures that all records created by a president during their term belong to the U.S. government, not the president personally. These records must be preserved and transferred to the National Archives for public access after the presidency ends.
✅ “It’s difficult to see how this gets you to the dismissal of an indictment,” the judge said at one point.
✅ According to NBC this was Trump’s Legal Defense: Special counsel Jack Smith has called on Cannon to reject Trump’s claim that he should be shielded from prosecution because classified presidential records “can be transformed into ‘personal’” records by removing them from the White House. Trump has said that he designated the materials he took to Mar-a-Lago as personal records while still in office. A president’s personal records are excluded from the act’s requirements.
✅ David Harbach, a prosecutor from Smith’s office, told the judge, “The documents charged in the indictment are not personal records. Period. They are nowhere close to that.” 
✅ According to NBC, Cannon at times seemed more sympathetic to Trump’s arguments and noted that no other former president has faced criminal charges related to the law. “There has never been a situation remotely similar to this one,” Jay Bratt of the special counsel’s office responded.
✅ NBC also included the second motion to dismiss: The sides also argued a second motion to dismiss the case on the theory that the main statute used against Trump is unconstitutionally vague as it applies to presidents and can’t be used against him.
✅ Trump did not speak to reporters at the courthouse but took his social media platform, Truth Social, afterward to thank his supporters outside. “Big crowds in Fort Pierce, Florida, for the Biden induced Witch Hunt against his political opponent, ME! Thank you, a great honor to have you there,” he wrote. 
✅ A lot of people point at Biden and the documents that were found at his home. The opposing counsel addresses this: He pointed to other instances in which presidents were found to have retained classified information and mentioned special counsel Robert Hur’s decision not to charge President Joe Biden for classified material he had in his possession dating from his time in the Senate.
✅ In his report explaining why he declined to charge Biden, Hur said that there were “clear” distinctions between the two cases and that unlike “the evidence involving Mr. Biden, the allegations set forth in the indictment of Mr. Trump, if proven, would present serious aggravating facts.”
✅ A prosecutor told Cannon that there are “all sorts of reasons” that Trump’s argument is wrong. Prosecutors said the files Trump is charged with possessing are presidential records, not personal ones, and that the statute does not apply to classified and top-secret documents, like those kept at Mar-a-Lago
✅ According to the AP, Trump is accused of intentionally holding onto some of the nation’s most sensitive documents at Mar-a-Lago — only returning a fraction of them upon demand by the National Archives. Prosecutors say he urged his lawyer to hide records and to lie to the FBI by saying he no longer was in possession of them and enlisted staff to delete surveillance footage that would show boxes of documents being moved around the property.

📝 AP Article
📝 NBC Article
🔗 Link to this post

---

French President Macron Warns of War With Russia 03/14/2024 14:30 PT
✅ PARIS (Reuters) -French President Emmanuel Macron said on Thursday Europe should prepare for war if it wants peace, calling President Vladimir Putin’s Russia an adversary that would not stop in Ukraine if it defeated Kyiv’s troops in the two-year-old conflict.
✅ Macron caused controversy last month after he said he could not rule out the deployment of ground troops in Ukraine in the future, with many leaders distancing themselves from that while others, especially in Eastern Europe, expressed support.
✅ Speaking on TV, Macron says there no point in negotiating with Putin: “We negotiated as much as we could, but there is nothing to talk about with Putin anymore. Ukraine must win. There will be no red lines for France. I’m the President of France and I decide.
✅ Macron brushed off Russian nuclear threats, claiming, “Our own nuclear weapons give us security.”

📝 Reuters Article
🔗 Link to this post

---

$DLTR Dollar Tree Falls 16% on Earnings 03/14/2024 14:29 PT
✅ Closing 970 of its Family Dollar stores as they look to revamp their grocery business in the $3 to $5 range.
✅ CNBC reports that Dollar Tree is facing competition from Walmart and Chinese e-commerce platform Temu.
✅ “Our biggest problem right now is getting enough merchandise into the stores fast enough so the consumer can respond,” said CEO Rick Dreiling.
✅ The company operates around 16,774 stores, and it said it would close about 600 Family Dollars in the first half of fiscal 2024 and 370 more over a period of a few years along with 30 Dollar Tree outlets and their lease terms expire.
✅ The company took a $594.4m charge for a portfolio optimization review and incurred a goodwill impairment charge of $1.07 billion as well as $950 million in other asset impairment charges in the reported quarter.
✅ Dollar Tree reported a net loss of $1.71B in $7.85 per share in the quarter ended Feb 3.
✅ Dollar Tree expects 2024 sales between $31B and $32B.


🔗 Link to this post

---

$ADBE Adobe Falls 10% on Earnings 03/14/2024 14:27 PT
✅ Barely beats earnings and revenue expectations on $4.48 per share/$5.18B vs expected $4.38 per share/$5.15B
✅ This is a beat of 2.28% on EPS and $30M on earnings.
✅ Revenue saw 11% growth while just last year they had negative net income growth.
✅ Last quarter, they abandoned their $20B Figma acquisition, yet still paying the company $1B as a termination fee.
✅ The company has announced a $25B buyback – I guess they have some money to give back to shareholders now that the deal fell through.
✅ Guidance for Q2 is $5.25-5.3B on revenue, expected $5.31. Guided EPS of $4.35-4.4 on expected $4.37
👥 The market seems to be punishing heavily for not having above-and-beyond earnings and guidance.



📝 CNBC Article
🔗 Link to this post

---

TikTok Ban: Update 1 03/14/2024 13:00PT
✅ On Wednesday the House of Representatives passed legislation giving Beijing-based TikTok owner and developer – ByteDance – an ultimatum: sell TikTok to US company within 6 months, or have the app banned from US.
➡️ The bill passed 352-65.
➡️ The legislation would make it illegal for app stores to offer TikTok, and ISPs would have to make TikTok inaccessible on browsers.
✅ Talks about banning TikTok have existed for years, with US lawmakers fearing the Chinese government could use TikTok to spy on American citizens, interfere with elections, and spread propaganda and misinformation.
✅ Biden said he would pass the law if it landed on his desk.
✅ It all depends on the Senate now.
✅ Even if the legislation passes, there will still workarounds.
➡️ This would not affect users who have already downloaded TikTok, which is over 170 million American users, however they will not be able to receive any updates.
➡️ VPNs should be able to bypass these restrictions.
✅ There are few companies that would be able to afford to purchase TikTok, and most would bring in potential antitrust issues.
✅ The sale would also have to be approved by China, which has said it would oppose any such forced sales.
✅ Although the bill has bipartisan support, not everyone agrees.
➡️ Rep. Sara Jacobs (D-CA), said “Not a single thing that we heard in today’s classified briefing was unique to TikTok. It was things that happen on every single social media platform.”
➡️ ~30 TikTok influencers showed up with signs and chants ahead of the vote, holding signs that read things like “TikTok changed my life for the better” and “TikTok helped me grow my business.”
➡️ TikTok CEO Shou Zi Chew, believed to be visiting Washington this week, said in a video that the legislation would “lead to a ban on TikTok in the United States… and would take billions of dollars out of the pockets of creators and small businesses.”

📝 AP Article
🔗 Link to this post

---

Andrew Tate’s Escape Plans Exposed 03/14/2024 10:54 PT
✅ Andrew Tate’s legal team has suspected that a streamer friend of Tate’s (Adin Ross) led to Tate’s arrest. 
✅ The clip that allegedly leads to Andrew Tate’s arrest – see the clip here: https://x.com/schizarella/status/1767550882735136885?s=20
✅ You can see further evidence of that through Ross’s apology video. Here: https://x.com/DailyLoud/status/1767917278736110046?s=20
✅ Adin acknowledges that he had a role to play in the Tate brothers getting arrested.
✅ To be clear, these are 4 NEW women with 4 NEW allegations that accuse Andrew Tate of rape, physical, and sexual abuse. He was detained in Romania with a UK arrest warrant. 
✅ Here is the press release from the firm representing the 4 alleged rape victims. According to the release, they received information that led them to believe that Tate was going to flee Romania. It is widely believed that this information was obtained through Adin Ross’s stream. Here is the press release: https://x.com/DramaAlert/status/1767550522817458253?s=20
✅ The Tate Brother’s made a response video sharing their side of the story: https://x.com/TateNews_/status/1767663068341780616?s=20
✅ In this video the Tates joke about how the process is backwards for them. They get sent to jail, then the evidence is searched for, then they get a trial.
✅ Tristan Tate also makes clear that this is not the fault of Romania. He says the UK had Romania do the UK’s dirty work by locking the brothers up again but they were released by a Romanian judge soon after.
✅ Allegedly the Tate’s don’t even know the names of the women they are being accused of abusing. Meaning the names have not been published.
✅ According to the Washington Post: “The Bucharest Court of Appeal on Tuesday approved an arrest warrant by British authorities to extradite Tate, 37, and his brother Tristan Tate, 35. The Romanian court also ruled that the two brothers should be immediately released from detention.”
✅The Washington Post Also shared a statement from the Tate’s: “Tuesday’s statement from the Tate brothers said they reject the U.K. charges and “express profound disappointment that such serious allegations are being resurrected without substantial new evidence,” years after being dismissed by Britain’s Crown Prosecution Service. The service did not immediately respond to a request for comment early Tuesday.”
✅ The AP also had something to say about Britain’s Crown Prosecution. “Four women had reported Andrew Tate to the U.K. authorities for alleged sexual violence and physical abuse, but the Crown Prosecution Service decided not to prosecute him. The alleged victims then turned to crowdfunding to cover their legal costs as they pursue a civil case against him.”
✅ The Crown Prosecution Service is equivalent to the District Attorney’s Office in the USA. 
✅ The District Attorney of the UK didn’t want to prosecute the Tates so the girls went to a crowdfunding source to fund a civil campaign against the brothers. 
✅ Here is a link to the crowdfunding page by the 4 girls. https://www.crowdjustice.com/case/hold-andrew-tate-accountable/
✅ They have raised a little more than $45,000 at the time of writing this article.
✅ Interestingly enough, the AP also said, “It wasn’t immediately clear what Tristan Tate is accused of in the U.K.” 
👥 So why was he arrested too? 
✅ Eugen Vidineac, a lawyer representing the Tate brothers, said in a statement: “We appreciate the Bucharest Court of Appeal’s decision to postpone the extradition of Andrew and Tristan Tate.
✅ The lawyer also said that they “unequivocally deny any accusations that Andrew or Tristan Tate intends to abscond from Romania to evade the judicial proceedings.”
“We believe this rumor has originated from a popular online influencer who misconstrued a text message from our clients while streaming live. There is simply no truth to it.”
✅ The legal counsel of the girls was quoted as saying: “ ‘Today’s news is very welcome as it had been a significant concern to many that Tate would seek to avoid justice in Romania and abroad,’ said Matthew Jury, a managing partner at the firm.”

More to come as the case progresses.

📝 AP Article
📝 Washington Post Article
🔗 Link to this post

---

David Sacks Blows up on Biden & Ukraine 03/14/2024 10:54 PT
✅ Sacks criticizes the Ukraine War as a major failure on all fronts, including economic, military, geopolitical, and humanitarian.
✅ Sacks claims economic failure as the West believed sanctions would squeeze the Russian economy out of the war.
✅ Sacks claims that the Russian economy outperformed the G7 by 2023.
✅ This is true as Russia’s GDP grew by 3.6% while the US and EU grew by 3.4% and 1% respectively.



✅ Sacks said this economic warfare has led to destabilized supply chains, only making life for Europeans more expensive.
✅ Regarding the military, Sacks points out how Western media always shows Russia in a weak light, when in reality Russia has significantly ramped up industrial war production. He says it’s the West that cannot keep up with military production, with inventory stockpiles depleting faster than expected.
✅ He claims the prolonging of the war has made Russia stronger, more battle hardened, while draining the West of its supplies. The rest of the world has just sat back and watched as the US loses influence, creating BRICS and other alliances.
👥 Although BRICS has not been a success, the mere existence of it shows a lack of US leadership and agreeance among the international community.
✅ On the face of diplomacy, Sacks claims the war has damaged US reputation and further pushed away countries as they have refused to sanction Russia.
✅ He points out that major resistance to the US is growing, evidenced through BRICS.
✅ Finally, he talks about the humanitarian crisis, of which Biden claimed the aid would help the Ukrainian people. Citing the UN, Ukraine’s population has decreased from 44 million to 28 million. Over 10 million of those people are pensioners (over 60). Sacks claims, “This is a recipe for demographic collapse.”
👥 This is potentially a misleading statement, as there have been an estimate of 30,000 Ukrainian soldiers killed. There have been ~14m+ migrants that have left their homes at one point, but more than 5 million of them have returned home.

🎥 David Sacks Speaks at American Moment Conference
📝 David Sacks Twitter Post
📝 PBS Article 14 Million Ukrainians Displaced
📝 IMF World Economic Growth Projections
🔗 Link to this post

---

America’s Labor Imbalance is Showing 03/14/2024 10:13 PT
✅ It’s estimated the US will be short 550,000 plumbers by the next 3 years.
✅ The mean annual salary for plumbers, pipe fitters, and steamfitters was $65,190 in 2022.
✅ The average national wage is $61,900.
✅ Salary varies depending on where you are – Plumbers in San Jose can make over $100,000.
✅ The plumber shortage is estimated to have cost the economy $33 in 2022 along with other headaches and problems as jobs aren’t being done.
✅ Plumber apprenticeships last around 5 years and only cost $1500, due to funding from apprenticeship funds.
✅ CEO of Home Builders Institute says this is a generational problem, as young people do not want to work in physically demanding jobs
✅ We may be seeing a labor rebalancing as tech layoffs and hiring are freezing rapidly.
✅ In February alone, Rivian cut 10%, Cisco cut 5%, Microsoft lays off 2 gaming subsidiaries, Snapchat cuts 10%, Docusign cuts 6%, Mozilla cuts 5%, Instacart cuts 7%, EA cuts 5%, Sony cuts 8%, Bumble cuts 30%, Expedia cuts 8%, and more.
✅ 182 tech companies laid off 46,066 workers so far in 2024.

📝 Bloomberg Article
📝 Big Tech Layoffs
🔗 Great source to view layoffs
🔗 Link to this post

---

Boeing 03/14/2024 09:15 PT

Whistleblower Death
✅ John Barnett, worked for Boeing for 30 years – retired in 2017. He began working for Boeing around 1987.
✅ He was assigned to the North Charleston plant as a “quality manager” in 2010, working on the 787 Dreamliner.
✅ In 2019 he reported that workers were under pressure to purposefully fit “sub-standard parts to aircraft on the production line.”
✅ Felt the assembly process was rushed.
😇 My understanding regarding the Boeing bolt disaster we covered below relates to a possible production-process flaw. Basically, someone at – let’s call it, stage C of the production process notices missing bolts. The bolts are the only piece missing. The entire assembly line stalls for the bolts. So, the plane is moved to stage D without the bolts. Now, someone should document the missing bolts from stage C so they don’t get covered up and forgotten. Well, that may NOT have happened. ✅ This is called “traveled work.”
✅ Boeing, in early March, announced 60% of worker bonuses will now be based on reducing traveled work.
😇 Hence why some discuss the possibility of rushing the production line.

Production Issues
This is great spot to remind everyone of Toyota’s “Andon Cord” system – something popularized in Japanese manufacturing, but not so much in American manufacturing. Take a read of this from Six Sigma Daily:

If any human being in the manufacturing plant wanted to totally halt production, they were free to pull the Andon Cord. Once all production was halted, a team leader would immediately go ask why the rope was pulled. Then, together, the leader and the team could work to solve the problem and restart production. It might sound crazy and unproductive, but Toyota realized that unaddressed problems on the assembly line create huge complications if left unattended. The Andon Cord was an abrupt (and effective) way of dealing with manufacturing issues at the source, before they festered into something much worse.
😇 I suspect Boeing’s pressures to deliver for earnings may be pressuring production lines and preventing halts. But that can be short-sighted.
✅ Sometimes work gets done in what’s known as a “flight line,” which is essentially the parking lot where planes wait to get delivered, but those create poor workstations for best resolving issues.
✅ The FAA spent 6 weeks this year investigating Boeing and found “noncompliance issues in Boeing’s manufacturing process control, parts handling and storage and product control.” They found:
➡️ Issues at both Boeing and Spirit Aerosystems (fuselage manufacturer that Boeing is now trying to buy again).
➡️ Hotel key cards were used to check door seals
➡️ Dawn dish soap was used to lubricate a door seal.
➡️ FAA reported employees had a lack of protection for flagging issues.
✅ Boeing has since stopped providing guidance on earnings.

Boeing Max 9 with Missing Bolts
➡️ An early-warning system indicated the plane should be downed for a detailed inspection (likely with an AI system). However, manuals called for more warnings before a mandatory downing; only 3 warnings occurred, so Alaska decided to keep the plane flying, but above land only and with shorter-haul flights.
➡️ Some passengers complained of a whistling noise, which could “have been an indication that the aircraft had some small leaks around the seal and that it wasn’t keeping pressure properly.”
➡️ Remember, Brett from Ark Invest suggested there was about a 1/400 chance that no one would sit next to that blown door plug. And sure enough, now we know that issues with the plane were known.
➡️ This also came after the plane “spent nearly three weeks shuffling down an assembly line with faulty rivets in need of repair.“
➡️ Boeing says they still don’t know who worked on the door plug and security camera footage was on “auto delete.”


Whistleblower Death
✅ John specifically mentioned that workers “failed to follow procedures intended to track components through the factory” 😇 basically as described above.
✅ BBC: “He also said he had uncovered serious problems with oxygen systems, which could mean one in four breathing masks would not work in an emergency.”
✅ Died in Charleston County, in a hotel parking lot, after a “coworker” called police to conduct a welfare check.
✅ Barnett was in the middle of a deposition in a federal whistleblower lawsuit against Boeing (FAA Air21 Whistleblower process).
✅ Barnett argued the 787 and 737 were “ticking time bombs,” calling it “not a 737 problem – this is a Boeing problem.”
✅ “My concerns are with the 737 and 787, because those programs have really embraced the theory that quality is overhead and nonvalue added.” via DailyMail.
✅ Barnett discussed visiting Spirit Aerosystems, a supplier – with 4 inspectors. “We found 300 defects.”
✅ Next trip, they were limited in time and then kicked off the plane during their inspection – and made comments suggesting suspension over how quickly problems were resolved.
✅ Found dead in a hotel parking lot (Holiday Inn) in his pickup truck. Finger on the trigger of a silver handgun with a note his hand. Many are suspicious this was staged.


Despite all of this, Tesla still managed to outperform Boeing in its underperformance.


😇 Boeing Financials
➡️ Boeing’s earnings call mostly suggests they’re confident in their recovery and expect investigations to conclude soon. Net losses for 3 years in a row, though the operating loss has narrowed significantly in 2023. These latest issues may create a new setback for them.
➡️ Trades for 60x earnings as folks hope the company turns out from losses.

🔗 Link to this post

---

Morning News 03/14/2024 05:47 PT

Stagflationary Concerns
✅ Retail sales weak; control group completely flat vs 0.4% expected increase.
✅ PPI higher than expected across the board.

😇 Not great for consumer stocks – may hit Atlanta Fed GDP today and show a lowering. March/May rate cut almost completely unpriced.

Tesla
✅ China February 2024: 60,365 in February, down 19% YOY. Lowest volume since December 2022.
✅ China January 2024: 39,881 (100,246 for Jan+Feb 2024)
✅ China January 2023: 66,051.
✅ China February 2023: 74,402 (140,453 for Jan+Feb 2023)
✅ BYD sales were down 37% in February YOY.
✅ UPS cuts Tesla to $165 today
✅ Deutsche Bank has a price target of $218, but cuts deliveries to 427k on the 11th.
➡️ Expecting 1.96m vehicles for the year. That compares to 1.81m for 2023. That’s 8.2% growth.
➡️ They see 2024 EPS at $2.25 (WS currently sees $3.05).
➡️ They see 2025 EPS at $2.90 (WS currently sees $4.05).
✅ Current WS corecast of deliveries suggests 471k deliveries. New estimates are coming in between 410-427k though. Last year delivered about 422.8k Q1.


BofA Hartnett
😇 BofA version of Mike Wilson.
✅ Growth slowing, inflation re-accelerating, yet no damage yet to risk assets: “symptomatic of a bubble.”
✅ Markets are front running the Fed.
😇 Yes, that’s why we came up with the Nike Swoosh!

Yields
✅ 5.9bp up on 10 year AND 2 year.

Palantir
✅ Thiel dumps $174m of Palantir.
✅ Karp dumps $4.8m.


Bitcoin
✅ Bounces at $72k; edit falls through.
✅ Coinbase increases offering to $1.1b from $1.0b.

Blackstone
✅ Real estate bottom is in; buy real estate now.
This has been true since October – we agree!

🔗 Link to this post

---

Yellen Calls For Even Higher Rates 03/13/2024 16:33 PT
✅ As the deficit and government debt levels rise, the odds of rates leaning towards the upside are increased.
✅ Yellen argues that it’s “unlikely” that interest rates will even return to pre-Covid levels.
👥 This is probably true except for the case where there is a deflationary crash, but she would not be calling for that since it is political suicide.
✅ White House projections for fiscal spending are now assuming higher rates over the next three years.
✅ White House projecting the US to spend around $890 billion, or 3% of GDP this year on interest alone.
✅ For reference, the cost of interest in 2023 was $659 billion, meaning interests outlays will have increased 35% for just this year if the White House Projections are correct. 
✅ The Congressional Budget Office projects that this increasing trend in interest outlays as a percentage of GDP will only increase going forward
✅ The level of spending, debt, and interest rates are projected to rise to the highest levels in U.S. economic history
✅ With all of this increased spending and interests costs as a percentage of Federal Revenues, investors will more likely demand higher returns in the long run due to both the inflation and default risk from Treasury backed bonds.





📝 PGPF
📝 Bloomberg Article
🔗 Link to this post

---

$FSR Fisker stock plummets as company considers bankruptcy 03/13/2024 13:09 PT
✅ WSJ reports that EV startup Fisker ($FSR) has hired restructuring advisers to assist with a possible bankruptcy filing.
➡️ Fisker hired financial adviser FTI Consulting and law firm Davis Polk to possibly work on a bankruptcy filing.
✅ Fisker is down over 45% in afterhours as of this post.
✅ Last month Fisker issued a warning that there was “substantial doubt” about whether or not they’d stay in business.
➡️ Fisker also reported having $273 million in sales and over $1 billion in debt.
➡️ They stated last month it would lay off 15% of its workforce, mostly from its service and retail-sales divisions.
➡️ They said they were working details to raise cash from investors.
✅ The founder of Fisker, Henrik Fisker, had a previous EV company called “Fisker Automotive,” which filed for bankruptcy in 2013.
✅ The news of a possible bankruptcy comes 3 weeks after popular tech YouTuber Marques Brownlee (“MKBHD”) reviewed the car in a video titled “This is the Worst Car I’ve Ever Reviewed.”
➡️ That video already has over 4.5 million YouTube views as of this post.
➡️ This was a very negative review of the Fisker Ocean, and seems to have caught the attention of Fisker executives.

🎥 MKBHD Video
📝 WSJ Article
🔗 Link to this post

---

US House of Representatives Moves Forward with TikTok Ban 03/13/2024 11:15 PT
✅ US House of Representatives passed ,with overwhelming majority, a bill to ban TikTok unless it is sold to an American owner.
✅ The vote was passed 352-65.
✅ This was a bipartisan issue.
✅ Biden has stated he will sign the bill into law if it lands on his desk.
✅ This bill would prohibit Apple and Google from offering TikTok on their stores unless TikTok is sold within 180 days.
✅ 170 million Americans use TikTok – this is essentially half the country.
✅ Trump, who initially pushed for a TikTok ban during his presidency, wasn’t pushing too much for this as he believes Meta would gain too much power from this.
✅ Trump said, “There are a lot of young kids on TikTok who will go crazy without it.”
✅ During Trump’s presidency, TikTok was forced to use Oracle for database hosting and other services for the American side of their business.
✅ Oracle would be responsible to review TikTok’s software, host user data, and more.
✅ US officials, including FBI Director Wray, say that this agreement with TikTok did not go far enough.
✅ TikTok claims they are free from Chinese influence and does not share personal data with the CCP.

🔗 Link to this post

---

CPI Move 03/13/2024 05:25 PT
✅ CPI flip was unusual.
✅ 4/11 times core CPI comes in hotter, the SPY rallies. So 36%.
😇 Was this a Monday QQQ flip or a sign a greater regime change?


Regime Change
✅ Bostic, who doesn’t vote this year, “Fed’s first interest-rate cut, which he has penciled in for the third quarter, will be followed by a pause the following meeting to assess how the policy shift is affecting the economy.”
😇 Theoretically, you could slow QT or end QT, which is a form of loosening, rather than cutting rates.
😇 The question at hand: Are we facing regime change? Where markets expect interest rates to be 4%+ for 18+ months and cashflow/earnings from compute, AI, consumerism takeover instead.
✅ On QT: Bill Duley: Fed will consider QT discussion in March Fed meeting. Could QT become the priority or primary tool over rate cuts?
😇 Rate cuts reduce your ability to respond in a recession.
😇 Whereas stopping QT slowly stimulates, while preserving your ability to cut when you need to.

Cyclical vs Structural Inflation
😇 Structural getting stuck is likely: personal services, insurances, pets, car rentals, and a very slow decline in rent inflation. Only about 3% of households move each year. Realization of lower rents is very slow because you usually have to move to get your rent lower. But, if rents go up, it’s much easier to get your rent increase.
😇 Cyclical would be more like your consumer goods, manufacturing, durable goods like appliances, etc. Cyclical likely more rate sensitive.


Interest-Rate Sensitive
😇 Will interest-rate sensitive stocks actually benefit if rates are 4.25% vs 5.25%? The goal is a tailwind of rate cuts would help, but what if rate cuts stop absent a recession?

Intel
✅ Lost a $2.5b defense grant w/ Pentagon, whereas TSMC just won a $5b grant for a US chip plant.

Coin
✅ $1b offering; convertible note.

Apple
😇 When Apple nails AI, could it be the most-profitable software AI company?

Tesla
✅ Elon Musk is visiting the Berlin Gigafactory following the arson attack.
✅ Wells Fargo downgrades Tesla to $125, citing EPS that could come in as low as $2 this year.
✅ Some analysts say this is short-term minded and volumes for Tesla deliveries are just “stabilizing.”
✅ Others say no, this is a long-term issue and Tesla’s valuation as a growth company is threatened. Wells Fargo thinks growth could be negative for 2025 as well, especially if rates stay higher.
✅ PE of Tesla with $2 EPS 2024 is 86.5.
😇 PEG of Tesla with -2% growth 2025, 30% growth for 3 years there after: 22% average growth 86.5/22 = ~3.93
😇 Near-term risk factors for Tesla:
➡️ More incentives on top of existing price cuts now showing up on Chinese inventory.
➡️ More incentives in America on top of recent 5k super charging miles + Cybertruck shareholder incentives.
➡️ Lower margin.
➡️ Stock comp plan.
➡️ Still-slow energy sector.
➡️ Twitter financing.
➡️ Political weight.

🔗 Link to this post

Apple Rumors to Acquire Rivian 03/12/2024 10:21 PT
👥 During the highly-anticipated launch of Rivian’s R2 the CEO, RJ Scarnige, did some interesting things.
✅ Scaringe invoked the famous “one more thing” from Steve Job’s presentations. He did it twice actually.
✅ Scaringe also held his hands in the prayer pose, a nod at one of Jobs’ most oft-used mannerisms and is sometimes used by Tim Cook.
👥 Rivian needs funding help if they want to compete with Tesla.
✅ Rivian also announced they are canceling their plans on it’s Georgia manufacturing plant.
✅ Apple is also sitting on one of the biggest cash piles in tech. It is sitting on out $41 Billion in cash and equivalents.
✅ Amazon currently owns 158.4 million shares of Rivian. It is has already invested into their electric delivery van fleet.
✅ This also does come just weeks after Apple canceled it’s electric car plans.
👥 Would it be easier to back an already popular brand like Rivian rather than build your own?
👥 It would do Apple good to break into a new sector and create a new S curve.
👥 This is all speculation but the stars are oddly lining up for what would be, in my opinion, a brilliant partnership for both companies.

📝 Gary Black on Twitter
🔗 Link to this post

---

$BA Boeing Whistleblower Found Dead 03/12/2024 10:21 PT
✅ Boeing whistleblower John Barnett was found dead in his truck in a parking lot this weekend.
✅He was 62.
✅The cause of death is currently being investigated.
✅ He worked at Boeing for over 30 years.
✅ He retired in 2017.
✅ Has been vocal about lack of Boeing safety since.
✅ 2019 alleged that Boeing intentionally used defective parts in its planes.
✅ Warned that 787 passengers might face lack of oxygen upon depressurization because a lot of masks don’t work.
✅ He had been part of the investigation against the Alaska Airlines door failure.
✅ He had been staying in a hotel to provide a deposition, but was found dead in that hotel parking lot.
✅ His attorney has doubts about the circumstances of his death.

📝 Independent Article
🔗 Link to this post

---

CPI Inflation 03/12/2024 05:30 PT

CPI Projection
✅ Expected: ACTUAL: 0.4%, MoM 0.4% vs 0.3% prior read.
✅ Expected: ACTUAL: 0.4.%, MoMc 0.3% vs 0.4% prior read.
✅ Expected: ACTUAL: 3.2%, YoY 3.1% vs 3.1% prior read.
✅ Expected: ACTUAL: 3.8%, YoYc 3.7% vs 3.9% prior read.
✅ Supercore 0.47% down from 0.85% in January, 😇 but still hot.
😇 These figures unprice May, IMO.
✅ Yields unchanged.
✅ Average supercore prior to pandemic waas 0.2%. Now, 0.47%.
✅ Supercore below, via Zerohedge.
😇 Best case supercore previewed below: sideways trend. But since mid 2023, it looks like an uptrend.

✅ Both, per Nick T, 3-month and 6-month are trending up. 12 still trending down, but when the 3/6 move up, the 12 may follow. Danger for the Fed. This is what Jerome Powell warned us of.

✅ Only 10 out of 70 economists expected a 0.4% core CPI gain.

🔗 Link to this post.

---

$RDDT Reddit IPO 03/11/2024 11:30 PT
✅ Reddit plans to IPO at between a $5.8B-6.4B valuation.
✅ This is a significant drop from their last funding round in August 2021 at a $10B valuation.
✅ Out of the 22 million shares to be sold, 15.3 million will be from the company while the other 6.7 million will be from investors and employees.
✅ This will raise ~$748M for the company.
✅ Reddit plans to allocate 1.76 million shares for its moderators and users to purchase in IPO.
✅ Redditors will be able to take part in the IPO in a 6-phase priority tier system, based on their karma (reddit points system)
✅ Reddit lists r/wallstreetbets as a risk factor in their S-1, warning of increased volatility of its own stock.
✅ Reddit has entered a 2-3 year $203M contract to license its data, opening a new revenue stream of monetizing its content.
✅ Reddit’s annual sales in 2023 were $804M.


🔗 Link to this post.

---

Morning News. 03/11/2024 05:30 PT

Michael Saylor Says:
✅ Lack of selling. Miners can only sell 900 btc per day. After that, 450.
✅ No earnings cycle, no companies, no people: no selling catalysts.
✅ $16k shook out the tourists.
😇 The driver of demand from ETFs, FOMO, and enthusiasm is absolutely outweighing demand over supply. Who’s selling?
👥 Grayscale $GBTC sells about ~$300M of Bitcoin a day, mostly absorbed by other ETFs.

😇 To me, the only way Bitcoin’s explosive growth slows is simple. It slows. It slows/tapers off (for some reason), leading to less inflows as folks choose other assets, FOMO slows, ETFs slow, enthusiasm slows. Outside of a panic, or fatal flaw in the protocol, it seems you’d really have to see Bitcoin returns turn into gold-like or flattish-like returns.
✅ Michael Saylor says Bitcoin is the best way to preserve capital. It’s a billion-dollar property in digital.
✅ It doesn’t need to be a currency. No one wants to buy a cup of coffee with a fraction of their 5th Avenue building.
😇 Great argument.
✅ Medium of exchange is a distraction.
✅ Bitcoin competes with risk assets and store of value.
✅ MSTR owns 193K Bitcoin. Blackrock’s $IBIT holds 196K+ Bitcoin in less than 2 months of buying, compared to Microstrategy’s 3.5+ years.

😇 Two Reasons Bitcoin Falls
➡️ 1) Expectations by investors are higher than actual YOY returns, in the future, leading to competition with other risk assets for higher returns.
➡️ 2) The issue of low float. Since little Bitcoin actually trades out of the complete amount outstanding, slight increases in selling demand can lead to significant, rapid swings in price for those who desire to sell immediately (accepting lower prices rapidly).
➡️ This is ironically compounded by the likelihood that, in my opinion, 50% of Bitcoin is lost forever. This is the Great “Spite’ing.”


🔗 Link to this post.

CPI Expectations this Week. 03/11/2024 00:30 PT

Stock Run
✅ S&P Up 16/19 last weeks.
✅ Hasn’t been this good since 1964.

CPI Projection
✅ Expected: MoM 0.4% vs 0.3% prior read.
✅ Expected: MoMc 0.3% vs 0.4% prior read.
✅ Expected: YoY 3.1% vs 3.1% prior read.
✅ Expected: YoYc 3.7% vs 3.9% prior read.

For MoMc:
✅ Median 0.3%
✅ Average 0.3%
✅ High 0.4%
✅ Low 0.2%
✅ Estimates 53

🔗 Link to this post.

---

Apple & Tesla Laggards. 03/10/2024 11:10 PT

Apple’s Electric Car
✅ Bloomberg suggests Apple’s electric car failed for 3 reasons:
➡️ Corporate indecision / bad leadership around the car
➡️ Tech challenges
➡️ Manufacturing challenges
✅ Tim Cook and other executives disagreed over the interior, whether to produce the car at all, what level of autonomy to use, etc.
✅ The vehicle was expected to look like Canoo’s Lifestyle vehicle. Canoo has a $2.6b market cap and has been rumored an as an acquisition target. Now, Apple is pivoting to generative AI.

✅ Features
➡️ 4 seats. Giant TV in the middle to hand Facetime.
➡️ Other variations featured iPad-sized displays hanging from the roof.
➡️ “Private Jet” inspire.
✅ Spring Releases
➡️ M3 MacBook Air.
➡️ New iPads (still coming).
➡️ Updates to Vision Pro.
😇 I wouldn’t bet against Apple. Though, Apple’s “sell the news” event on the Vision Pro and the “sell the news” event on the Apple Car, along with a delayed roll-out of critical updates to Siri in the world of AI have left the company mispositioned for near-term gains.

😇 This is quite similar to the Tesla problem.
➡️ Near-term AI stagnation (FSD 12 feels like 2 steps forward, one back).
➡️ Long-term “FUD” over EVs, especially in winter.
➡️ Fears over Elon Musk being “distracted.”
➡️ Fears over Elon Musk needing to sell to fund X.
➡️ Fears over Elon Musk needing to negotiate a new stock-comp plan potentially “at a local bottom.”
➡️ Sell-the-news Cybertruck release.
➡️ Lack of company guidance.
➡️ Slow Chinese deliveries for Feb/Jan combined.
➡️ WS forecasts for 490k vehicles Q1 expected to be potentially as high as 20% OVER reality. (Note: A read of less than ~423k would put us negative YOY.).
➡️ Paint and interior upgrades offered for free March 8 (demand lever). This follows the 5k free supercharging miles level March 2. Note: most people will charge, in my opinion, 10-20% of the mileage at home. That means 5k is nearly the equivalent of 25-50k miles, so perhaps ~5 years of vehicle driving.
➡️ Tesla’s 60 PE ratio requires realistically 30-35% growth. A negative year may increase Tesla’s PEG to relatively expensive levels.
➡️ Tax loss harvesting before earnings may be a strategy many employ. Sell now, sell Nvidia/BTC, offset the gains to wash taxes, rebuy before/after Q1 earnings.
➡️ GigaBerlin shutdown dates: End of December 2023, End of January due to Red Sea, now March 5 through March 15th, a bit longer than expected due to the climate attack. However, limited production could resume March 11th.

🔗 Link to this post.

---

Saturday Morning News 03/09/2024 11:10 PT

TikTok
✅ White House is supporting a ban on Chinese-owned TikTok.
😇 Practically, I doubt it will actually get banned. Mostly because the concern is “Chinese-owned.” This is likely some corporate structuring away from being solved.
😇 From a personal efficiency point of view, deleting all social apps from my phone has substantially improved productivity. I keep Audible/YT for runs and the rest has to be viewed on a computer. Surprise surprise: less time is spent on TikTok when you’re vertically scrolling on a computer.

Skiing
✅ WSJ reports some ski resorts, like Loppet Foundation, have seen ski revenues drop 60% thanks to low snow fall and warn winter temperatures. Frustration exists across the country. The Teton Pass Ski Area closed Feb 8, operating for just 4 days as snowpack was 0% normal.
✅ One plowing service suggests they plow 20 times in a typical season. Now, just twice.
✅ The winter industry for snow-related industries works out to a roughly $7b industry.

Funding Package
✅ $460b funding bill to keep government operating passed in Senate: 75-22.

Lara Trump, WSJ.
✅ 41, wife of Eric Trump
✅ Seen as Trump’s “secret weapon.”
✅ Just elected co-chair of RNC
✅ Goal now: raise millions to help Republicans win, especially in the face of Trump’s cash deficit.
✅ Per Telegraph: Mr Trump’s campaign had $30.5 million of cash, vs Biden at $56m.
➡️ Trump spent ~$50m on legal expenses last year.
➡️ $92m bond was posted in his defamation case (he technically owes $83.3m here) and separately owes $455m in the NY fraud case.
➡️ Some estimates of Biden’s war chest are in excess of $280m.
✅ Technically, the RNC is prohibited by law from paying Trump’s legal bills. 😇 But perhaps they can cover other expenses, such as marketing, events, etc. 😇 This could mean closer to 100% of Trump’s legal bills are paid for by donors to Trump, as the RNC covers marketing.

Broadcom
✅ Per WSJ, business is surging for their “networking chips” which connect Nvidia’s popular GPU chips together with data centers.
✅ A problem may be that some of the other parts of these businesses are slowing: like Broadcom’s wireless segment, supplying parts for new Apple phones.
✅ Marvell’s non-AI segments, also missed projections.
😇 While Dell had an incredible shoutout from Nvidia, just about 3% of the business is booming contributing to its latest run.


🔗 Link to this post.

$NET Cloudflare – Team Analysis 03/08/2024 08:48 PT
✅ Cloudflare Q4 revenue: $1296.7M, up 33% YoY.
✅ Beating own forecast and consensus estimates: $1290M.
✅ Paying customers increased by 17% YoY.
✅ Large Customer cohort growth: 35% YoY, contributing 64% to total revenue.
✅ FY24 revenue growth projection: 27%, reaching $1.65B.
✅ Gross margin FY23: 78.3%.
✅ Non-GAAP operating margin expansion FY23: From 3.7% to 9.4%.
✅ Forward price-to-sales ratio: 25 based on FY24 revenue projections.
✅ Long-term operating margin improvement goal: From 9.5% to 20%.
✅ Revenue projection by FY28: Approx $4.3B.
✅ Current stock valuation: Still pricing in perfection with a multiple above 150 and PEG around 5-6.

🔗 Link to this post.

---

Bitcoin Hits 70k 03/08/2024 08:10 PT

✅ Bitcoin just broke its $69k fib retracement, jumping to $70.207k. It did not hold and presently sits at $67k.
✅ Price volatility is expected, per chart below. We are at the highest level of Bitcoin volatility since FTX’s collapse.
✅ Of 9 spot Bitcoin ETFs, BlackRock and Fidelity have collected nearly $1b on inflows on Tuesday alone. $287.4m the next day.
✅ This may be due to intuitional allocation finally opening up, per Bloomberg.
✅ Halving to 3.125 token reward occurs in April.



Rallies have Been Intense. 7 day gains:
✅ 9% BTC
✅ 14% ETH
✅ 27% Doge
✅ 138% Shib
✅ 21.5% DOT
✅ 23% Uniswap
✅ 35.4% NEAR
✅ 131% Pepe

Ethereum Dencun Upgrade
✅ Possibly near-zero fees for layer 2 blockchains.
✅ Dencun upgrade is set for March 13
✅ Could attract more usage and tokens.
✅ Should not affect Ethereum base fees. Basically, “rollup” protocols will enable processing transactions separately from the main network, then rollup the resulting hashes into the main network, reducing the theoretical cost per layer 2 transaction.
😇 This is what you need to contribute to practicality, and shouldn’t reduce security if rollups are frequent enough. Lower fees should beget more transactions, and hence hopefully rapid rollup batches at low costs per.

Contrarian Breather
✅ Forward premiums are quite high, suggesting a potential breather coming.
😇 IMO, the stock market is due for a breather as well. Nvidia just hit a solid rejection at $968 that may signal profit taking opportunities – the same is true in Bitcoin – both occurred at almost the same time.


Chart of Fidelity Inflows:


Inherent Risk:
😇 It’s obvious that Bitcoin is supply limited. This is known and a well-made thesis for investing.
😇 However, at what point is that supply “priced in?” Some suggest that once the terminal supply is “priced in,” the rate of change of Bitcoin’s price upward may slow substantially. Some argue there’s a risk of Bitcoin eventually trading sideways for a substantial period of time, leading to underperformance versus other assets.
😇 Most, however, do not hold that belief, arguing Bitcoin demand will increase in perpetuity and, with stable supply, must go up.

🔗 Link to this post.

---

Morning News 3-8-2024 03/06/2024 14:34 PT
✅ Jobs Household Data: 150k person increase in the labor force, but household survey shows a loss of 184,000 workers.
✅ Jobs Payrolls Data: 275k jobs vs expectation of 200k.
✅ January: revised down 124,000
✅ December: revised down 43,000
✅ Average hourly earnings MOM: up 0.1% vs 0.2 expected vs 0.6% January, which was also revised down 0.5%.

Rates
✅ Swaps pricing in June for the first cut.
✅ 72.3% chance no cuts in May.
✅ Roger Ferguson, former Fed governor in the late 1990s.
➡️ Inflation pressures coming down. Keeps us on the path.
➡️ “We’re not far from it.” Probably means June.
😇 The suits think if we get a benign CPI report next week, rate cuts will come in June.

Costco
✅ Morgan Stanley, Jefferies, and Raymond James all raise price targets on Costco to $780, 905, and 820 respectively.
✅ Q2 EPS beat $3.92 vs $3.62.
✅ Q2 total revenue missed by 4.4%.

Rivian
✅ R2 revealed yesterday at $45,000 launch 1H of 2026.
✅ Cost of revenues growing at about 35% for YOY 2023/2022.
✅ Revenues growing ~167% YOY 2023/2022.

Financial Conditions Index Last Year:
✅ 1-year Goldman Sachs Financial Conditions Index
✅ Lowest level in one year.
😇 Fed in short-term wants to stabilize this collapse, likely.

✅ 5-year Goldman Sachs Financial Conditions Index.
😇 Obviously up but so is inflation.
😇 Fin Conditions as loose as 2019 might lead Fed to hawk March 20th.

My Short-Term Outlook:
😇 I’m nervous going into March 20th (Fed meet) in the short-term as well sell-the-news on Nvidia’s 18th event. I think the summary of economic projections from the Fed will suggest a cautious/hawkish stance. So less quick rate cuts than previously anticipated.

My Long-Term Outlook:
😇 Interest-rate sensitives get tailwinds: low comps, low relative valuations, and obviously lower rates.
😇 Real assets like real estate should win long term. #NotPersonalAdvice.

Tesla
✅ 20/59 analysts have buy ratings.
✅ One buy analyst Adam Jonas of Morgan Stanley thinks the company could “lose money in its auto business this year.”
✅ Could have red margins in Q1.
✅ Recall the M3 did lose its $7,500 tax credit Jan 1.
✅ Tesla is the biggest decliner in the NASDAQ 100 this year.
➡️ Price cuts
➡️ FSD slowness
➡️ Valuation at 59x forward PE.
➡️ If average growth for Tesla for 4 years after this year is 20%, then PEG is: about 3.
➡️ If average growth for Tesla for 4 years after this year is 30%, then PEG is: about 2.
😇 If PEG should be around 1.67, and assume 30% growth even if this year ends up being flattish: price should be $152 at $3.05 EPS and peg of 1.67. That aligns w/ downtrend that began July of 2023. That might be a quick bounce though.

🔗 Link to this post.

---

State of the Union 03/07/2024 18:07 PT

Biden
✅ Chat & comments turned off on White House livestream of event.
✅ Begins at 18:26 discussing 1941 with Franklyn D. Roosevelt facing an “unprecedented moment.”
✅ Freedom and democracy are under attack: at home and overseas.
✅ “If anyone in this room thinks Putin will stop at Ukraine, I assure you he will not.”
✅ But Ukraine can stop Putin.
✅ A former President (Trump) said “do whatever the hell you want” to Russia. That’s dangerous and unacceptable.
✅ NATO prevents war.
✅ Minister of Sweden is next to Jill. Welcome to NATO, he says.
✅ (Sweden became a NATO member March 7, 2024. Finland joined April 4, 2023.”
✅ History is watching – just like on January 6th, when insurrectionists stormed our Capitol.
✅ We all saw they were not Patriots.
✅ January 6th supporters promoted lies about the election. But they failed; America stood strong.
✅ “You can’t love your country only when you win.”
✅ Political violence has NO place in America.
✅ Biden talks Latorya Beasley, 37. She could not get her embryo transfer (IVF) on March 4th due to the Alabama Supreme Court decision on Feb 16th determining frozen embryos were children.
✅ Gives example of mother who had fatal fetal anomaly and couldn’t get abortion in Texas. This is likely true. Texas does not appear to have an exception for fetal anomaly’s. However, risk to mother’s health WOULD allow an exception to the abortion ban.

✅ I will restore Roe V. Wade as the law of the land again.
✅ 16m new startups! 50-year new low in unemployment.
✅ Racial wealth gap is the lowest its been in 20 years.
✅ 😇 See below. Yes, household wealth has expanded. Still substantially white.

✅ Inflation went from 9% to 3% and it’s trending lower.
✅ Wages are up.
✅ It takes time but Americans are starting to feel it.
✅ Expanded affordable internet
✅ 😇 This has to do with a $14.2b funding program under the Affordable Connectivity Program – providing $30/mo subsidies or $75/mo for tribal areas on internet services for lower-income areas. Some argue Starlink may have been cheaper.
✅ UAW President is here.
✅ Unions built the middle class.
✅ When America gets knocked down, we get back up!
✅ Cost of housing is coming down. I want to provide an annual tax credit: $400/mo when you buy or upgrade a home.
✅ Get rid of title insurance on refinance for federally-backed mortgage.
✅ We want to build two million new affordable homes; bring those rents down.
✅ Crack-down price fixing landlords.
✅ Get builders federal tax credits.
✅ Preschool for 3/4 year olds.
✅ Reduced debt for nearly 4m Americans. Student loan.
✅ 😇 Yes, about $138b has been forgiven on 3.9m borrowers.
✅ Increase taxes on billionaires / corporations. A fair tax code.
✅ There are 1000 billionaires in America. Their average tax rate is 8.2%.
✅ 😇 Washington Post Disagrees: “if you check Treasury Department calculations for what the richest Americans already pay in taxes, you would see that the top 1 percent pay in excess of 20 percent in income taxes and more than 30 percent in all federal taxes.”
✅ Too many corporations are raising prices charging more for less.
✅ Refers to shrinkflation.
✅ Need more people processing asylum claims, judges, and authority to temporarily shut down the border. Border Patrol enforced the bill. My bill does that.
✅ I’m told Trump called folks to kill the bill; it’d be too much of a win for him.

✅ Marjorie Taylor Greene shouts about Laken Riley, killed by an ‘illegal.’ Biden pulls up a button Marjorie gave him, pitching his bill.

✅ Send me the border bill.
✅ 😇 Manchin talked about the border bill being a reason he didn’t want to run again. He supported the border bill and was upset the Senate killed the bill.
✅ Raise the federal minimum wage.
✅ Pass the Pro Act: expand labor rights to collectively bargain.
✅ Triple the number of people working on climate change.
✅ Biden says Trump said “just get over it” after a shooting in Iowa. Trump was quoted saying:
✅ “It’s just horrible, so surprising to see it here. But have to get over it, we have to move forward.”
✅ Pledges we will bring hostages home from Hamas.
✅ Hamas hides like cowards.
✅ Coast of Gaza will receive temporary pier to enable the flow into Gaza. Authorizing this. No American military will be on the ground but we will support it. Israel must do its part.
✅ Our trade deficit with China is at the lowest in over a decade.
✅ 😇 TRUE: see chart.

✅ Goal to end cancer as we know it.
✅ I’ve been told I was too young. Now I’m told I’m too old.
✅ I won’t walk away from the idea we are created equal.

Trump
✅ Trump claims Biden let in 15m illegals. Pew research indicates there are 10.5m illegals in the United States as of 2021.
✅ Trump argues NATO is strong because Trump made them pay.
✅ Trump fact checked that IVF **just** got approved in Alabama. This is true. See here: Governor just signed IVF into law restoring access to IVF.

✅ Stable to down during Trump 2016-2020. Slight up by 2021 (unclear if that’s the end of start of 2021, which would make a difference).

✅ At 6:02, Trump blamed Biden for being substantially late, saying “he’s just now getting int the car.”
✅ Calls climate work “The Green New Scam.”
✅ Trump says “don’t shake people’s hands going out – he keeps coughing into his right hand!” 😇 Trump has been considered a germaphobe previously, preferring not to shake hands.

Tucker Carlson Response
✅ Epidemic of suicide, murder. Biden’s top priority is aid for Ukraine. This is insane.
✅ Lie after lie. Ukraine can stop Russia. No it can’t. NATO is on its way to collapse. As is the economy of Western Europe. 😇 Ehhh that’s unbalanced. Let’s be real: Russia might be in eastern Ukraine, but they haven’t gotten much further.
✅ Mike Johnson nodded. He’s on board with supporting Biden’s agenda.
✅😇 Johnson was promised by Democratic leadership that he’d be protected if they bring the $60b military bill to the floor.
✅ We’re close to nuclear war today than ever before.
✅ Suggests its ridiculous that some politicians want to limit voter ID requirements. The justification is: Somehow minorities don’t have an ID, so you shouldn’t need an ID to vote.
😇 Strong argument here from Tucker.
Then, Tucker’s guest:
😇 Tucker’s guest spouts hyperbole’s – waiting for facts. Suggests Biden is an angry reptilian.

🔗 Link to this post.

---

Morning Research 03/07/2024 05:34 PT

ECB
✅ Wage comparison of United States YOY vs Eurozone.
✅ Target is 3% for wage growth to meet a 2% inflation standard.
✅ June cut for ECB priced in.
✅ Dovish on inflation, bearish on growth. Growth dropping to 0.6% vs 0.8% for 2024.
✅ Expectation is that inflation will hit 2% in EuroZone in 2025.
✅ “Economy is weak.”




United Multivariate Core Inflation
✅ Core services on multivariate core at 0.7% for January which annualizes to 8.4% and core trend has begun to reaccelerate.


Kashkari
✅ Fed Minneapolis President, voting as alternate in 2025 and NOT in 2024:
✅ Sees 2 rate cuts in 2024, maybe just 1.
✅ Hard to see data that says more cuts than projected in December. Less more likely.
✅ Why do anything if eco is strong?

Catalysts
✅ Costco 13:15 PT after the bell today.
✅ Jobs report tomorrow 5:30 PT: 200k jobs expected.
✅ Average hourly earnings of 0.2% projected vs 0.6%.
✅ Broadcom, Marvell, DocuSign also report after the bell.

Kroger
✅ Adj EPS beat $4.40 vs $4.28 for 2024.
✅ “Plans to balance investments including lowering prices.”

Tesla
✅ Average price on Tesla’s in 2024 stable sans the Model 3, which fully lost its tax credit in 2024.

✅ No power expected through end of week.

🔗 Link to this post.

---

Institutional Bitcoin Inflows Break Records 03/06/2024 14:51 PT
✅ Yesterday, March 5th, saw $648M of net inflows into Bitcoin which was the highest so far.
✅ BlackRock alone accounted for $788M of inflows. GBTC saw $322M of outflows as the trust has been liquidating over time ever since the ETFs launched.
✅ There has been a total of $8.546B+ net inflows into BTC over 13 days since the ETFs launched.
✅ The average net inflow is $231M a day. This is substantial buying pressure on Bitcoin as there are only ~900 mined Bitcoin a day, equivalent to ~$60M. 😇 Wow, an excessive supply shortage at a time of increased demand.
✅ Yesterday, during the sudden flash crash in which BTC dropped nearly 12%, a wallet that mined Bitcoin from 2010 sold 1000 BTC at once.
✅ Open interest for BTC reached over $31B, breaking historical records. Almost all of this leverage was wiped out during the flash crash yesterday.
✅ Crypto markets quickly recovered as both long and short leverage positions were reset due to the volatility.


🔗 Link to this post.

---

$CRM Salesforce Analysis – Team Research 03/06/2024 14:34 PT
✅ 22% Market Share of enterprise software, MSFT at 5.7%, ORCL at 4.7%.
😇 Trying to push an AI narrative with their Einstein model. This helps with predictive recommendations for sales, marketing, service, etc.
👥 Salesforce is trying not to fall into legacy-tech company status, IPOing in 2004 with their growth shrinking ever since. They have failed to generate more S-curves for growth. Einstein is their attempt for this.

✅ What actually is Einstein AI? Practically on the consumer end, it just looks like an advanced chat-bot for response automation. They say it helps with predictive analytics, personalization, and insight provisions (😇 which basically means summaries).
✅ Einstein helps make recommendations for sales reps, support agents, and marketers. Users can use voice-to-text to update records.
😇 This doesn’t sound like a ground-breaking S curve that will save their company’s growth. It seems marginally useful which may improve efficiency but not anything earth shattering. It barely sounds like AI.
✅ 3.47 PEG Ratio, Forward PE of 73, Annual Growth of 20% next 2 years
😇 They are generating a LOT of cash and without anywhere to spend it, they’re buying back stock. They’ve authorized $30B in buybacks, of which they have $18.3B left. They have also announced their first-ever dividend.
😇 To the markets, this is a heavily correlated AI-play. It should have risk exposure if NVDA/Chips were to fall.

🔗 Link to this post.

---

$PLTR Palantir Analysis – Team Research 03/06/2024 14:30 PT
✅ The use of AI in the defensive space is very niche and almost exclusive to PLTR. The Artificial Intelligence Platform (AIP) utilized is called Gotham. They are currently selling this platform to the IDF, and the US military and its allies are actively using it.
✅ Gotham effectively addresses various intelligence problems. It has access to data such as satellite imagery and can provide intensive surveillance automatically. For instance, it can automatically locate Chinese warships, and when they undock, it notifies its administrators that they have left. Gotham can then project the most likely path these warships have taken. Additionally, it can identify and notify where military exercises are occurring.
✅ The AI can perform more complex tasks, such as monitoring ship density in certain areas. For example, Gotham located a high concentration of fishing boats outside a port of Taiwan and notified its operator that there could be a potential blockade.
✅ The AI also recommends courses of action for solving a problem, such as a missing enemy warship. It can ask the operator for permission to notify a nearby allied airbase to launch a drone to locate it. The drone reports data back to the AI for decision suggestions, each with risk scores and likely consequences of the decision.
😇 This AI is very useful, making it significantly less likely that intelligence is missed.
😇 Lots of AI companies have AI that doesn’t provide that much value to its customers. PLTR’s commercial and defensive products are really high tech and really increase efficiency.

🔗 Link to this post.

---

$ENPH Enphase Analysis – Team Research 03/06/2024 14:29 PT
✅ Enphase’s Q4 earnings call on 02/07/2024 showed a significant reduction in revenue (from $551.1M in Q3 ’23 to $302.6M in Q4 2023). This represents a 45% decline in revenue in a single quarter.
😇 The stock still went up after this!
😇 Shareholders didn’t view this earnings report as bad. HERE’S WHY:
– ENPH has a big problem: oversupply of inventory. This can result in inventory obsolescence, essentially lighting inventory on fire.
– ENPH has been under-shipping for many quarters to solve this inventory mismanagement. This has been done by reducing production to sell what’s on the shelves while reducing prices (they haven’t really reduced the price of inverters much like they did batteries – if they did this would’ve been really bad news).
– ENPH gave guidance on when they expect these inventory issues to finally be over. Keep in mind they have been pushing their guidance on a bottom further and further down the road, but the market is starting to believe them because the stock actually went up instead of down post-earnings.
– ENPH said that Q1 will be a terrible quarter, but it will be the BOTTOM.
– This is what caused the rally. ENPH is priced like a growth stock but has actually been shrinking! This is due to high rates. Solar sales are highest when the financed monthly payment for them is cheaper than regular utility bills. With high rates, the interest payment puts solar much more expensive than traditional utilities.
😇 The question is: if rates are going to be higher for longer, does this mean that this ENPH rally has been made under the impression that rates are coming down soon? Also, how much of ENPH’s guidance of Q1 being the bottom of poor earnings is based on rates coming down in H2 2024?
✅ ENPH’s demand is driven by interest rates like a lever. If that lever is pulled and rates go to 0, demand will increase significantly. That is not happening.
😇 If rates stay the same, it is very possible that Enphase’s earnings will grow very slowly or stagnate. This means that Q1 is not the bottom and there is NOT massive growth ahead.
😇 Since Enphase stock is so dependent on rates coming down, Jerome Powell’s non-rush to cut rates speech that occurred on today (03/07/2024) should have sent ENPH stock down, but it has remained unaffected.
😇 It is possible that Enphase guidance of Q1 2024 being a bottom and H2 2024 starting to show growth was predicated on rates coming down more dramatically than what be realistic. If this is the case, the stock will likely trend down until there is confirmation of significant cuts ahead.

🔗 Link to this post.

---

Israel-Gaza Ceasefire Negotiations & US Intervention 03/06/2024 12:54 PT
✅ Delegations held a third day of talks with no sign of a breakthrough.
✅ Negotiators Hamas, Qatar and Egypt are in Cairo trying to secure a 40-day ceasefire in time for Ramadan, which begins early next week.
✅ Israel did not send a delegation to the latest round of talks.
✅ The deal requires Hamas to free some hostages and provide a list of all hostages held in Gaza. In exchange aid to Gaza would be increased and an immediate ceasefire implemented for a minimum of six weeks.
✅ Hamas official Osama Hamdan stated that said any exchange of prisoners cannot take place except after a ceasefire.
✅ Biden says the deal is in Hamas’ hands, however Senior Hamas official Bassem Naim said Hamas had presented its own draft deal, and the ball is now in the Americans’ court.
✅ Hamas has refused to release the estimated 100 hostages, and the remains of about 30 more, unless Israel ends its attack, withdraws from Gaza, and releases a large number of Palestinian prisoners – which include fighters serving life sentences.
✅ Senior Hamas official Osama Hamdan said on Tuesday that his group wants a permanent ceasefire, not just a six-week pause, and a “complete withdrawal” of Israeli forces.
✅ Israeli Prime Minister Benjamin Netanyahu has publicly rejected those demands and repeatedly pledged to continue the war until Hamas is dismantled and all the captives are returned.

✅ A political rival of Benjamin Netanyahu, Benny Gantz, met with Kamala Harris on Monday (03/04/2024). Netanyahu was angered by the trip, seeing it as an attempt to undermine him.
✅ Gantz’s visit followed the wartime cabinet of Israel’s demand for the government to pass legislation to permit drafting ultra-Orthodox men into the army. This strategic move aims to weaken Netanyahu, whose coalition relies on two ultra-Orthodox political parties. The intent is to involve their children in the conflict, potentially influencing them towards a more peace-oriented stance, which would remove Netanyahu from power. 
✅ Most polls indicate that Gantz would likely win an election against Netanyahu if held today.
✅ Benny Gantz and Kamala Harris discussed ways to improve the humanitarian situation in Gaza and efforts to normalize relations between Israel and countries in the region.
✅ Former U.S. Mideast negotiator Aaron Miller stated, “In inviting Benny Gantz to the White House, the administration is sending an unmistakable signal of unhappiness with Benjamin Netanyahu, concerns that he may no longer be the reliable, predictable partner that the U.S. needs.”

Ultra-Orthodox Jews Significance And Privileges In Israel – New York Times
✅ Ultra-Orthodox Jews (or Haredim) were guaranteed benefits, including exemptions from military service and various subsidies. Haredim constitute about 13% of Israel’s population, rapidly growing from 40,000 in 1948 to over a million today. Only about half of them work and pay taxes.
✅ While most Israelis have mandatory military service, Haredim are exempt to focus on religious study, and their schooling is funded by the state.
✅ These privileges and the lack of employment in the Haredim community have caused resentment from secular Jews.
✅ The ultra-Orthodox view the workforce and the military as threats to their lives of religious devotion.
✅ More Arab-Israelis join the military than ultra-Orthodox Jews, and the latter strongly supports Netanyahu. Any reduction in privileges of the ultra-Orthodox, such as removing draft exemptions, could negatively impact his polling.

Kamala Harris Meeting With Benny Gantz – New York Times
✅ The impending famine in Gaza prompted a swift response from the Biden Administration. Kamala Harris invited Netanyahu’s rival to the U.S. to plan strategies aiming to undermine the prime minister, with the goal of achieving a six-week cease-fire for humanitarian aid to flow back into Gaza.
✅ The U.S. is currently airdropping food, but it’s deemed insufficient.
✅ Kamala directed her frustration towards Hamas, reiterating the U.S.’s commitment to Israel’s security, but her actions put a lot of pressure on the prime minister. 
✅ Kamala’s role in creating a cease-fire could enhance her reputation and foreign credentials at a crucial time for her party.
✅ Kamala emphasized, “The Israeli government must do more to significantly increase the flow of aid. No excuses.”

📝 Reuters Article Ceasefire
📝 WSJ Israel War Cabinet Issues
📝 Harris Pushes for Ceasefire
🔗 Link to this post.

---

Nikki Haley Drops Out 03/06/2024 12:54 PT
✅ After an underwhelming Super Tuesday, Haley suspends her campaign.
✅ Trump is the last major Republican candidate.
✅ Haley lost all but two of this year’s nominating contests.
➡️ She made history as the first woman to win a Republican primary contest.
➡️ She beat Trump in the District of Columbia on Sunday and in Vermont on Tuesday.
✅ Haley did not immediately endorse Donald Trump, instead saying that he must earn her supporters’ votes.
➡️ “It is now up to Donald Trump to earn the votes of those in our party and beyond it, who did not support him, and I hope he does that.”
✅ Biden is also trying to win the support of Haley voters.
➡️ “Donald Trump made it clear he doesn’t want Nikki Haley’s supporters. I want to be clear: There is a place for them in my campaign.”
✅ Haley has been clear that she does not wish to become Trump’s VP should he win.
✅ She also has stated that she has no plans to run under a third-party bid.

🔗 Link to this post.

---

Fed Congressional Testimony – Yikes. 03/06/2024 07:20 PT

JOTLS mostly as expected: 8863k vs 8850k expected. Prior was revised down 137k.

Jerome Powell
✅ Increase in supply of workers 25-54. Strong pace of immigration.
✅ Jobs to workers gap has narrowed, labor demand still exceeds the supply of available workers.
✅ Demographic earnings spreads are narrowing.
✅ Inflation has eased but still above target.
✅ Long-term inflation expectations appear to have remained well anchored.
✅ FOMC target range 5.25-5.5%.
✅ Restrictive stance is putting downward pressure.
✅ Policy rate is likely at its peak. It will likely become appropriate to cut rates “this year.”
✅ Reducing too soon or too much could result in a reversal of inflation and ultimately require even greater constraint.
✅ Not expected to reduce until it has gained stronger confidence.
✅ Restore price stability.

Forced to cut rates?
✅ Rate cuts will depend on cuts.
✅ Well, we’d like to see more data to confirm inflation is moving sustainably to 2%.
✅ We’re at 2.4%; we want to see a bit more data.
✅ We will do so sometime this year.

BASAL 3:
✅ Expect broad material changes to BASEL 3 proposal with consensus.
😇 Remember the more they talk about BASEL 3, the less they’re talking about AMERICANS. This complaining is driven by bank lobbyists and corporations trying to limit the expansion of new bank regulatory requirements.
✅ Jerome Powell: We’ll be thoughtful and welcome commentary.
✅ 4 Fed governors has issues with BASEL 3. Jerome Powell was one of the 4.

Housing
✅ Housing pricing is part of the story. Goods prices are negative.
✅ Housing services on new leases suggest the increases will be smaller. 😇 I’m actually concerned that highly single-family prices remaining so stable could contribute to higher rent inflation for longer. And this is usually realized if people move.

FAIT
✅ Well we made that because inflation was low. It was a way to anchor inflation expectations at 2% and keep them from sliding down. The pandemic may have changed that in a significant way.
✅ End of this year we will review this framework. Will take a year.
😇 F*$k. Jerome Powell literally just killed FAIT. He admitted it was just a manipulation when inflation was too low. That it’s not really a consideration now. F*$kF*$kF*$kF*$kF*$kF*$k

Economy
✅ I would say our economy is doing better than other parts of the world.
✅ US growth was in excess of 3% last year. We’re seeing continued solid growth now and we expect to continue to see that. There’s no reason to think the US economy is in a short-term risk of falling into recession. Obviously, there’s a possibility that the economy will fall into recession. I don’t think that possibility is elevated at this time.
✅ We want labor market to stay strong, inflation to move down to 2%, and economy to remain strong.
✅ We want to continue those conditions. We’re using our tools to support strong growth.
✅ We’re on a good path.

Commercial Real Estate
✅ Manageable issue.
✅ A lot of downtown real estate with too much office supply.
✅ And downtown retail that isn’t as profitable anymore.
✅ So we’ve looked at banks that have significant concentrations to ensure these banks have a plan. There will be losses.
✅ I am confident we’re doing the right things.

Immigration
✅ Played a notable role in 2023.

Other
✅ McConnell endorses Trump for President.
✅ NYCB seeking to raise equity capital. Stock drops 7%+ and gets halted while Jerome Powell says the crisis is manageable. Update: Down 22% and halted again. Third halt. Now down 41%.

FOMC Rate
✅ We write down projections. The projections were not 4.1% by end of 2024. They were 3 cuts. But those projections are 3 months old now.
✅ It is appropriate for rates to come down significantly over the years.
✅ The economy will differ from this; that’s what will happen.
✅ We want more confidence.
✅ “Just a bit more evidence.”
✅ What if 6-mo inflation data wasn’t a good signal? We should be careful because the economy and labor market is so strong.
✅ Likely we’ll begin to reduce this year.

Jerome Powell is asked about Scott Rechler’s White Paper, reported in Fortune, calling for “500 or more” bank failures coming:
✅ Jerome says he hasn’t seen this paper. Doesn’t think the real estate problems are unmanageable.
✅ Scott sees a “slow-moving train wreck” coming as a wave of commercial real estate loans mature over the next few years.
✅ They’re not going to all fail… but be forced into consolidation.
✅ “They don’t have a business model that’s going to enable them to stand alone, and be competitive, and retain deposits and service customers the way that they have.”
✅ Fear’s a “doom loop” by lowering the availability of commercial loans, hurting the industry, and exacerbating the crisis.
✅ As much risk in CRE as in residential in 2008-2009.

Housing Market
✅ Ideally will go back into a more normal phase.

Fed Now
✅ Very slow adoption. Fewer than 500 in there now. It’ll take some time.

Atlanta Fed GDP Tracker
✅ 2.5%, up from 2.1%.


AI Productivity Boom
✅ Hard to say. Productivity boom is probably due to going back after covid.
✅ AI could augment or replace labor. We’re not sure. It’s likely to drive significant productivity.
✅ Could lead to a rise in startups, which could increase productivity.

📺 7am Jolts & Jerome Powell Stream.
🔗 Link to this post.

---

Morning News 03/06/2024 05:50 PT

Palantir
✅ Palantir up ~9% on $178.4m contract from US Army.
✅ Develop and produce 10 prototype ground stations that use AI / ML to process targeting information from “space-based, airborne, and ground sensors.”
✅ TITAN: Tactical Intelligence Targeting Access Node.
😇 1.5 years ago, we would have called this a ‘big data’ agreement.

😇 Overvaluation Concerns by Kevin
➡️ Costco
➡️ WingStop
➡️ Nvidia based on WS 4% 4-year forward growth starting Jan 2025 (just 4%)
➡️ ARM

✅ ADP Report
➡️ 140k jobs vs 150k expected
➡️⚠️ Job changers: 7.6% YOY vs 7.2% in last reading, first increase since November 2022.
➡️ Job changers 5.2% YOY vs 7.1% in last reading.

😇 Recession vs Interest Sensitive
➡️ In recession come rapid rate cuts: great for interest-rate sensitive stocks.
➡️ No recession, and maybe some sticky services despite goods deflation and a bit of labor pressure (like ADP): You get maybe 2 cuts this year vs 3 or the 7 the market was pricing in in December of 2023.
➡️ Delays the love for interest-rate sensitive.
✅ Current Q1 GDP estimate sits at 2.1%.


✅ Morgan Stanley on Tesla
➡️ Cut to $320 PT from $345
➡️ “Barrage of price cuts” in China
➡️ Hybrid sales increased 5x faster than EVs in February.
➡️ Tesla could post a loss.

✅ Goldman on Tesla
➡️ Expects additional price cuts to Model 3/Y will be negative to profit in the short-term.
➡️ Warning: Don’t cut to where you can’t introduce a lower-cost vehicle, like a $25k vehicle that would have lower costs.
➡️ Current 8% EV sales of light-vehicle sales could double to 16%.
➡️ Arguing: A Tesla car is more affordable today than it was in 2019. Considering credits, service, fuel, etc., even w/ higher rates, Tesla’s are more affordable today. 😇 Yet sales are declining or flat.

📺 7am Jolts & Jerome Powell Stream.
📺 Stock Market Open Stream.
🔗 Link to this post.

---

Super Tuesday 03/05/2024 16:00 PT

Intro
✅ Nikki Haley watching from her home in Charleston.
✅ Trump expecting 1000 guests at Mar-a-Lago, “several hundred” actually expended there. Cash bar for alcohol.
✅ ⚠️ REMEMBER: Joe Biden State of the Union address Thursday. 6pm PT.

Virginia
✅ Trump wins Virginia, per MSNBC & CBS.
✅ Virginia called for Biden.
✅ Haley winning close to DC in Virginia.
✅ Virginia went to Biden in 2020. 😇 Will Trump flip it?

Tennessee
✅ AP calls Tennessee w/ just 2% of the votes in for Trump.

Virginia
✅ Called for Donald Trump.

North Carolina
✅ Trump wins North Carolina, per CNN & NBC.
✅ WAPO: About 9 in 10 voters in the Virginia and North Carolina Republican primaries Tuesday were White (preliminary exit poll).
✅ WAPO: In NC specifically, 7 in 10 white voters supported Trump and half of non-white voters supported Trump. North Carolina LT Governor Mark
✅ Robinson won Republican primary for Governor, with Trump’s endorsement. Stein won the Democratic ticket (would be the first Jewish Governor). Says that Stein “doesn’t understand what it’s like to be at work.” – NYT. Stein calls Robinson “disturbing.”
➡️ CNN exit poll in NC: 81% Trump vs 16% Haley. Trump won 49% independents vs 45% for Haley.

Maine
✅ Called for Trump.
✅ Called for Biden, per AP.

Arkansas
✅ Called for Trump/Biden.

Oklahoma
✅ Called for Trump.
✅ Called for Biden.

Texas
✅ Called for Trump.
✅ Called for Biden.

Massachusetts
✅ Called for Biden, per Edison Research.
✅ Called for Trump, per AP.

Vermont
✅ 36% of votes in and there’s a 206 vote spread between Trump and Haley with Haley leading.
✅ Nikki Haley finally wins Vermont.
➡️ If she gets 50.1%, she wins all 17 delegates. Otherwise, proportional split.

Alabama
✅ Called for Trump.
✅ Called for Biden.

Colorado
✅ Called for Trump, per Decision Desk HD.
✅ Called for Biden, per AP.

Minnesota
✅ Called for Biden.
✅ Called for Trump, per ap.

California
✅ Prop 1 is the only statewide Prop.
➡️ Bond to build treatment facilities and supportive housing for people with mental health and addiction challenges.
➡️ Proposes spending $6.4b to build 10,000 treatment units and supportive housing (that’s $640k per unit, if divided straight).
😇 Sorry, I will call out my bias when I recognize it: I do NOT trust Newsom to do anything other than WASTE money on “housing projects” in California. They regularly fail. They are a rip off – they don’t know what they’re doing. Sorry, rant over.
➡️ Prop 1 then goes on an moves Mental Health Services Act spending to more supportive housing (redirection; forcing local governments to move spending how Newsom wants it).
✅ Trump wins California.
✅ Biden wins California.
✅ Also voting to replace Dianne Feinstein, who passed away in September.
✅ Adam Schiff (D) spent over $11m promoting republican Steve Garvey (R), former Dodgers player, so that he could face off against Garvey, whom he thinks he can more easily defeat than Katie Porter (D).

Utah
✅ Biden wins Utah.

Biden
✅ No comments tonight.

Nikki Haley
✅ No comments tonight.

American Samoa
✅ 44,620 pop as of 2023 estimates
✅ Biden loses to an entrepreneur.
✅ Jason Palmer wins with 51 votes vs Biden 40. Michael Bloomberg won here in 2020.
✅ Territories don’t vote here.

Dean Philips, Representative Minnesota.
✅ ‘told The Post he is assessing the results and other data to make a decision “in the coming days” about how he can help Democrats defeat Donald Trump.’
😇 OUCH Nikki!


Representative Hakeem Jeffries
✅ Trump is a danger.
✅ Democratic leader in House.
✅ Trump turns back the clock.
✅ Did McConnell call it the worst Congress ever? (MSNBC live report around 17:36).
✅ Jeffries calls it chaos, dysfunction, and extremism.

Elon Musk
✅ Elon Musk has apparently had talks with Donald Trump on fundraising, per NYT via Bloomberg
✅ Trump had $30.4m in February vs $130m Biden.
😇 Consider the massive difference in campaigning style though: Trump in-person events vs Biden ads.

Trump
✅ USA Today January / Suffolk poll: Trump support by black voters at 12%. In 2020 12%. In 2016: 8%.
✅ RNC resolution to prohibit paying Trump’s legal bills is ‘dead’, per Politico.
✅ NYT shot of Trump


Biden Approval Ratings per Gallup Polls:
✅ Second worst in post WW2 era.


Lindsey Graham
✅ Sen. Lindsey Graham (R-S.C.) told CNN on Tuesday night that he is “pretty confident” that Nikki Haley will ultimately back Donald Trump for president. Via Bloomberg, a quote states Graham saying: “I hope sooner rather than later where she will realize that this is not her moment and there is a lot at stake.”

Kevin McCarthy
✅ Would hope she’d be part of the future administration. She can help unite this party.

Trump Speaking (✅ = Trump statements below as primary source, but not necessarily true or fact checked)
✅ Should be inspiring; we’re going to do something that no one’s been able to do for a while.
✅ Country has taken a great beating:
➡️ Russia attacking Ukraine.
➡️ Israel.
➡️ Strong Iran.
➡️ Inflation is destroying the middle class.
➡️ Inflation is called a country buster.
➡️ Stock market is doing so well because our poll numbers are doing so much better than Joe Biden’s. 😇 Earnings have beat expectations substantially.
➡️ 320k migrants flown in.
⚠️😇 Reference to Custom’s CBP One app allowing migrants to apply for asylum in their country and then be flown in by the US, given two years to obtain legal status.
😇 That likely means they don’t get counted as an encounter. Remember, encounter is:✅ “The sum of U.S. Border Patrol (USBP) Title 8 apprehensions, Office of Field Operations (OFO) Title 8 inadmissibles, and noncitizens processed for expulsions under Title 42 authority by USBP or OFO.”
✅ We’re importing oil from Venezuela.
⚠️😇 True: OFAC in October lifted sanctions on Venezuela’s energy sector in October 18th for 6 months, allowing heavy, sour crude oil into the country / gulf for refinement.
✅ We’re a third world country at the border.
✅ Nov 5, Election Day, will be the single-greatest day in our Country.
✅ Country is run as a joke.
✅ Argues China was paying billions to the United States. 😇 This is a reference to tariffs and many argue American consumers have to pay this.
✅ My personality was going to keep us out of wars. It did. I defeated ISIS in 4 weeks.
✅ Covid came out through incompetence of the Wuhan Labs. $60t in death and destruction.
✅ Largest tax cuts, largest regulation cuts, rebuilt our military, etc.
✅ Horrible surrender in Afghanistan [by Biden].
✅ We’re going to take back our country.
✅ We’ll have the greatest economy ever.
✅ Ready to become energy dominate.
✅ We’re going to pay off debts and second phase of tax cuts.
✅ Get the criminals out.
😇 No mention of Nikki Haley or a VP.

✅Some states allow open primaries, which mean you can vote in either party primary without without registration.


Tim Scott
✅ Next iteration of tax cuts. Grow economy without inflation.

Michelle Obama
✅ Not running, per her office.

📺⚠️ Livestream of Results.
🔗 Link to this post.

---

Raises and Jobs Decreasing 03/05/2024 16:49 PT
✅ US companies are hiring for AI-related roles, but not in other position.
✅ Over 12% of U.S. workers across various sectors are experiencing wage freezes, highlighting a disparity in income growth.
✅ Despite AI jobs increasing, the general workforce faces a slowing wage increase rate, with a high percentage not receiving wages.
✅ The slowed pace of wage increases has not been seen since 2010.
✅ This wage trend could also inducement the real estate market, with unaffordable prices becoming further distant for monthly payments.

📝 WSJ Article AI Demand Layoffs
📝 Bloomberg Article Atlanta Fed Report
🔗 Link to this post.

---

US 2024 Elections Update 03/05/2024 16:38 PT
✅ Frontrunners come down to Trump and Biden. Biden has no serious competitor for Biden has emerged which is typical for an incumbent present. And as for Trump’s position, republicans thought having multiple opponents against Trump would make it easier for him to win – and Trump remains in a dominant position over Nikki Haley as Trump has grown his presence in the South Carolina primary.
✅ While Trump remains deeply unpopular amongst the electorates, Biden’s current approval rating is nearly equally as poor. Though at this time, Trump is leading not only in national polls, but in most key swing states as well – Trump is in line to re-take the White House; in fairness there is a distant factor however that may be a brick in the road for securing nomination – legal issues
 ✅ Trump is seen as a modest favorite.

 ✅ “Current reading of approval rating from RealClearPolitics (RCP) is 6ppt lower than Trump’s approval rating at the equivalent point of his Presidency, not to mention around 15ppt below where it was when he began his term.”

✅ “66% believing the country is on the wrong track compared to only around 24% seeing the country as heading in the right direction, according to RCP.”
✅ Sentiment takes into account factors beyond the control of the president-elect at said time, such as inflation where people compare current prices to pre-COVID levels and are quick to associate problems with a name. Another relevant factor that is taking place in this period’s sentiment is Isreal-Gaza conflict – and applying this to other conflicts (potential conflicts).
✅ According to Ballotpedia.org – we see a comparison in opinion polling during the administrations of Trump and Biden.
Biden’s approval rating is higher in this point than Trump’s was at this same point into his term. Respectively, when looking sentiment, there is a decrease of 7.5% points lower comparing an average of 29.1% in Biden’s term now compared to Trump’s average of 36.6%.
✅ Potential Scenarios ranked:
-Trump with a Republican Congress: 55%
-Biden with Republicans controlling at least one chamber of Congress: 25%
-Trump with Democrats controlling at least one chamber of Congress: 5%
-Biden with a Democratic Congress: 15%

🔗 Link to this post.

---

San Francisco Market Update 03/05/2024 16:38 PT
✅ Value investors like Ian Jacobs are now starting to buy the dip on San Francisco downtown office buildings.
✅ Despite challenges such as high crime rates and homelessness, investors are starting to take a second look at at San Francisco real estate as its tech industry and AI sector remains entrenched.
✅ Many AI companies are still leasing office space in SF, notably OpenAI.
✅ In the fall of last year, OpenAI announced a 500,000 square foot office lease.
✅ This potentially presents an asymmetric play and a place to invest in the AI industry at a discount.
✅ Still Bay Area office occupancy rates remain low, with workers in San Francisco going into their offices at less than half the pre-pandemic rate.
✅ Neighboring Bay Area cities like Oakland are also still feeling lots of pain as riots, civil unrest, and homelessness plague the streets.
✅ Should political power and policy eventually change though, San Francisco could be a great long term investment opportunity.

📝 OpenAI Opens New SF Office
📝 WSJ Article
🔗 Link to this post.

---

---

AI Servers and Autonomy. 03/05/2024 11:30 PT
✅ 2 new product launches just showcased at the 2024 Commodity Classic show. Trying to get a fully autonomous system in by 2030.

Amazon
✅ Won’t charge users to move their data if they move to a rival cloud service anymore.
😇 What really impresses me about Amazon is their North America sales going Operating Profitable in Q4 2023. This is a huge deal; it means in spite of Temu/Alibaba, they pulled off a 4% profit margin. AWS still growing at 13% YOY as well. You’d think AI would have driven more of an AWS boost here, though. Is it just taking time for these chips to come online? Per the earnings call, they have multiple layers of GenAI online.
✅ AWS operating income was up 5% YOY and flat Q/Q. 😇 A LOT of spending – where’s the revenue.
✅ Expecting to increase CapEx in 2024.
✅ Revenue did accelerate to 13.2% from 12% expected.
✅ Adding AI to different regions. Consider their last earnings call.
✅ “Customers, particularly at enterprises, … are still thinking through which layers of those three layers of the stack I laid out that they want to operate in.” “We’re building dozens of generative AI applications.” “Summary of reviews” Inventory management, Q&A, etc.
😇 I think AI is exceptionally good for existing companies to help improve their efficiencies with. But, when does that really accelerate server revenues?
✅ Bloomberg Intelligence thinks so. They expect AWS sales to hit $200b in 2028-2030. Today, they’re at $90.7b. That would require growth of 11-17% per year.

😇 Let’s consider Microsoft & their last earnings call.
✅ Intelligent Cloud crew by 20%, to 4.4b. Intelligent Cloud represents 46% of Microsoft operating income. Azure specifically growing 22-30%.
✅ Going forward: “Azure commitments should drive healthy growth” “Cloud gross margin will be relatively flat as improvement in Office 365 and Azure will be offset by sales mix shift to Azure as well as the impact of scaling our AI infrastructure to meet growing demand.”
✅ For intelligent cloud, we expect growth of 18-19% YOY.
✅ Training is minor. Most is inference.
✅ CoPilot, GPT, all very helpful. “But now, AI is just redefining what it means to have, what the cargo looks like, both at the infrastructure level and the app model.”
✅ Are you GPU constrained? “We feel really good about where we have been in terms of adding capacity.”
😇 What I’m gathering is the AI infrastructure build is yes expensive, but the software / server revenue side is at normal growth rates. 13-20% at Microsoft/Amazon. This is surprising to me. There’s a huge loss between server spend and immediate server revenue. That might make sense though: Servers don’t pay for themselves year one. At some point, do companies say: hey let’s make sure these pay for themselves?
✅ Bloomberg Intelligence also thinks Microsoft will do well: 28-30% revenue gain in 2024, with no dent to profit.
😇 It seems analysts are convinced the era of generative AI compute / cloud compute is here.
😇 Amazon sits at a 1.79 PEG today vs Microsoft at 2.09.

---

Apple Losing Its Growth Narrative. 03/05/2024 11:27PT
✅ Apple’s China iPhone sales fell 24% this year.
✅ China’s mobile market shrank 7% this year.
✅ This is as China purports a 5% growth for 2024.
✅ China accounts for 20% of Apple’s sales.



✅ Chinese-recession contagion may finally be breaching into US equity markets.
✅ In the last earnings call, Apple warned that Q1 may see a return to weak growth again.
✅ Q4 saw Apple break out of a 4-quarter straight decline in growth.
✅ Apple has not shown any progress in AI and recently abandoned Apple Car plans. This is dangerous for the company’s growth narrative.
✅ Apple has lagged the NASDAQ and the Magnificent 7.



📝 Statista Chinese Importance to Apple
📝 Bloomberg Article Chinese iPhone Sales
📝 Bloomberg Article Apple Falls Behind in AI
🔗 Link to this post.

---

Ukraine Needs To Make Progress To Negotiate Peace 03/05/2024 11:12PT
✅ The only thing Putin and Zelensky agree on is that the war will end through negotiations, despite there being no sign that these will start soon.
✅ Mutual mistrust makes the first step towards the negotiation table the hardest. The West sees Moscow as a front of propaganda and lies, evidenced by Russian representatives swearing that an invasion would not happen. Moscow feels this way about the West due to their promise not to expand NATO eastward while doing so.
✅ Both the West and Russia see each other with bad intentions of installing a puppet government in Ukraine, which would adversely affect the loser.
✅ It is possible that each side is right, but neither side can know for sure without talking, which they currently are NOT doing. 
✅ In 08/2023, US officials estimated that there have been about 500k Ukrainian and Russian troop casualties.
✅ Ukraine worries that a move towards negotiations will mean an end to military assistance. This has created an incentive for Ukraine not to negotiate.
✅ The West thinks it is too early to negotiate with Russia because Ukraine is not in the lead. Ukraine needs leverage to negotiate. If Ukraine can make some progress on the battlefield, the US should ensure that they will continue backing Ukraine even during negotiations to avoid disincentivizing negotiations.

War Update – BBC
✅ Ukrainian forces have withdrawn from the eastern town of Avdiivka. This is Russia’s biggest victory since the fall of Bakhmut in 05/2023.
✅ Avdiivka has been a battlefield town since 2014, and almost all of the pre-war population has left, and the town is almost completely destroyed.

✅ Russia has made significant progress in Ukraine, taking the decent land on the eastward side, which has rich resources. Russia is likely to try to push the Northeast parts to capture more oil and gas fields before negotiation.

✅ Ukraine is continuing sea drone attacks on Russia’s naval fleet in the Black Sea, reportedly sinking a Russian ship called the Caesar Kunikov.

✅ Ukraine has shot down several Russian planes over the last few weeks.
✅ Russia is seizing more land. Much of this land is rich in resources. Does Russia stop the invasion if they gain control of most of the oil/gas fields in Ukraine?

📝 Foreign Affairs Article
🔗 Link to this post.

Ukraine Sinks Russian Patrol Ship in Black Sea 03/05/2024 11:12PT
✅ Ukraine said Tuesday it had sunk a Russian patrol ship called Sergey Kotov near the Kerch Strait, off the coast of occupied Crimea.
✅ The ship is believed to have cost about $65 million, and was only launched in 2021.
✅ The ship is capable of holding cruise missiles.
✅ Ukraine claimed to have attacked overnight using high-tech Ukrainian-made Magura V5 maritime drones.
✅ Ukraine’s military intelligence agency published a video showing the ship exploding and getting engulfed in flames.
✅ The authenticity of the video has not been confirmed.
✅ The Russian Defense Ministry has not commented on the attack, however Russian social media has also been reporting that the ship is indeed destroyed.
✅ No word on how many souls were on board nor their fate.
✅ Ukraine said it had also sunk two other Russian warships in February, a missile corvette called the Ivanovets and a landing vessel called the Caesar Kunikov.
✅ In total Ukraine claimed its forces have disabled ~33% of Russia’s warships, or 24 ships and one submarine.



📝 NBC Article
📝 CBS Article
🔗 Link to this post.

---

What to Expect for Super Tuesday 03/05/2024 07:40PT

Winning the Nomination
✅ You need 1215 republican delegates to win the nomination.
✅ You need 1968 democratic delegates to win the nomination.
✅ Trump has 273
✅ Nikki Haley has 43

Primary vs Caucus:
✅ Think anonymous vote = primary.
✅ Think discussion, debate, and physical grouping of people = caucus.

Who votes today?
✅ Republican Primaries
➡️ Alabama
➡️ Arkansas
➡️ California
➡️ Colorado
➡️ Maine
➡️ Massachusetts
➡️ Minnesota
➡️ North Carolina
➡️ Oklahoma
➡️ Tennessee
➡️ Texas
➡️ Vermont
➡️ Virginia
✅ Republican Caucuses
➡️ Alaska
➡️ Utah
✅ Democratic Primaries
➡️ Alabama
➡️ Arkansas
➡️ California
➡️ Colorado
➡️ Maine
➡️ Massachusetts
➡️ Minnesota
➡️ North Carolina
➡️ Oklahoma
➡️ Tennessee
➡️ Texas
➡️ Vermont
➡️ Virginia

Dem Caucus:
✅Iowa

Haley
✅ Attempting to use Trump’s story to hurt Trump: that he recalls implying Russia should “invade “do whatever the hell they need to do” and NATO members should not defend a non-paying member; pay your bills.

North Carolina Governor Race
✅ Will be watched. Robinson would be the first black governor of North Carolina. Stein would be the first Jewish governor of North Carolina.

California
✅ California’s Rep Race could Contribute to House Control.

North Dakota
✅ Trump won 84% of the vote here Monday.

🔗 Link to this post.

---

The Morning of Super Tuesday. 03/05/2024 05:10-06:45 PT

Amazon Humanoid Robots
✅ Amazon is now using a humanoid robot called Digit. The robot is in its testing phase.
✅ Bezos was a participant in the $675m raise (over $2b valuation) in Figure AI, closing just a couple of weeks ago.
✅ Agility Robotics is working with Amazon on Digit.
✅ Agility is in testing now.


Apple iPhone Sales
✅ Down 24% over the first 6 weeks of the year.
✅ Consumer causes & Huawei, now at 16.5% market share vs 9.4%. Apple now below 16% market share.
✅ China’s mobile market is down 7% in total, which Honor, Xiaomi, Vivo, Apple, Oppo all declining. Huawei is up 64% YOY.

TheMarketEar.com Sell Case in Tech
✅ Below is a percent-growth chart of EPS in tech. This is why today, Nvidia sits at a PEG ratio of over 7. Nvidia is expected to double EPS in January 2025, but thereafter, only grow at an average of 4-5%, skyrocketing its PEG.


✅ The last time we saw this PE premium in Growth vs Value, we were in the tech bubble of 2000.

✅ In flows are rapid – nearly as high as what we’ve seen into semi’s in November 2021. These are two semiconductor indices:

✅ Tech fund inflows:


Target
✅ aEPS $2.98 vs $2.40 exp.
✅ Q4 Sales $31.47B $31.35B.
✅ Q4 Sales -4.4%.
✅ Q1 Adj EPS $1.9 vs $2.07 exp
✅ Q1 Comp Sales -4% vs -3.36% exp

Tesla
✅ Tesla Berlin sending factory workers home after arson at a high-voltage pylon caused power failures.
✅ The Volcano Group claimed responsibility saying “we sabotaged Tesla today.”
✅ “We sabotaged Tesla today. Because Tesla in Grünau eats up earth, resources, people, labor and spits out 6,000 SUVs, killing machines and monster trucks per week. Our gift for March 8th is to shut down Tesla. Because the complete destruction of the Gigafactory and with it the sawing off of “technofascists” like Elon Musk are a step on the path to liberation from patriarchy.”

(More Allegations in Letter)
➡️ Tesla contaminates ground water
➡️ Gentrification
➡️ Supports forced labor in China
➡️ Politicians are in bed with Tesla
➡️ Symbol of green capitalism
➡️ Lithium batteries are toxic
➡️ Violates people’s rights
➡️ If you buy a Tesla you support Elon’s weapon of war and imperial way of life 856 HP vs 9mm bullet.
➡️ Starlink is used by Russia via third-party countries for attacks.
➡️ X supports hatred for foreigners, fascists, authoritarians, etc.
➡️ Our goal is the largest possible blackout of the Gigafactory.
➡️ Damaged 6 110kV cables and purposefully burned the streel structure to delay repair efforts.
➡️ Call themselves antifa.


Sofi
✅ Down 8.9% on a $750m convertible offering. About 10% of their market cap which is 7.75b.

Non-Mortgage Debt Payments:
✅ Now as high as mortgage payments (also about $578.b), even when adjusting for inflation, per Bloomberg.
😇 But household debt burden is still below prior years, especially as real incomes are rising again.


🔗 Link to this post.

---

China Projects Growth, The West Doesn’t Buy It. 03/04/2024 17:09PT
✅ China set GDP expected growth to 5% for 2024.
✅ They are raising expectations to increase stimulus and increase consumer confidence in the slowing economy. 😇 Though still not as much as markets expect, given their desire for “high-quality growth.”
✅ Despite the fact that Chinese leaders are attempting to curtail slowing growth, they have maintained their stance to not rely on massive stimulus.
✅ Goldman Sachs is still warning of investment into China despite decreased valuations.
✅ Goldman expects for a steady slowdown in the economy over the next decade along with a general uncertainty of policymakers and monetary/fiscal policy.
✅ Major Chinese indexes like the Hang Send Index and the CSI 300 have hit historic lows.
✅ Despite the potential cheap valuations, the Chinese economy is still feeling pain and doubt over projected / current data still remains.
✅ At the same time as their economy has fallen, China’s defense spending has only grown.
✅ Defense spending will grow by 7.2% this year, the biggest in 5 years.
✅ This has shown investors that Xi and the CCP care more about their military than their economy.
✅ This is evidenced by the fact that China is willing to raise $139 Billion in debt to support the fiscal spending of the CCP. At the same time it’s not willing to give out any stimulus.

🔗 Link to this post.

---

Gaza Famine & UN Humanitarian Deaths. 03/04/2024 17:09PT
✅ The UN stated on February 27th that famine is imminent in Gaza. If steps are not taken to prevent this over the next few weeks, the civilian death toll in Gaza from famine alone will surpass the roughly 30,000 reported Palestinians killed by the IDF.
✅ Humanitarian intervention would stop this, but they can only operate if they have the space and safety to do so. As of now, they do not have the safety to operate.
✅ On February 5th, a clearly marked UN relief convoy waiting at an Israeli military checkpoint was bombarded by IDF naval forces despite having cleared the movement with the IDF prior to arriving. The UN was then forced to halt food deliveries to Northern Gaza for weeks.
✅ UN and NGO relief groups have been repeatedly struck in IDF bombardments.
✅ The US is likely the only power that can prevent a famine from ensuing due to the leverage they have because they are supplying all the aid and weapons for Israel. Actions must be taken now to address this though before it is too late. The best way to do this is by pausing arms sales.
✅ 15% of children in Northern Gaza are malnourished. Clean water is also scarce in Gaza, which is spreading disease.
✅ A peace deal would be ideal, but with Netanyahu in power, this is unlikely. A cease-fire is a more likely solution to allow humanitarian groups to prevent famine, but still nowhere in sight.
✅ More than 160 UN staff have been killed by Israeli strikes.
✅ According to Aljazeera, Issam Al Mughrabi, his wife and children, and 70 others have been killed by Israeli strikes. Issam was a UN official who worked for the UN development program for over 30 years.

🔗 Link to this post.

---

Tucker Carlson Interview Breakdown. 03/04/2024 15:48PT

Tucker’s Answers on the Lex Friedman / Tucker Carlson Podcast.
✅ Thought Putin was nervous; went into the interview as a nervous student.
✅ Was not afraid of dying going to Russia; but did not drink the tea offered.
✅ Seems odd to suggest Ukraine is on the verge of winning.
✅ Side Note: NYT did a piece March 2nd arguing Ukrainian defenses in Avdiivka were woefully bad, disorganized, and weak.

Especially compared to Russia’s:

✅ Tucker: ‘I wanted to interview Boris Johnson, but he demanded $1m (paraphrase).’ Feels unfair that other countries are preventing Zelensky from striking a deal because he’s pressured by outside forces.
✅ I didn’t do this interview to prove I’m a good person. I did this to get Putin’s point of view.
✅ “I’m a dick by nature” so sure I could have asked tougher questions.
✅ Sad Navalny died. Sad the opposition leader being in jail is normal; that’s not freedom.
✅ My attorneys, which cost thousands to get to, said: You could get arrested by the U.S. when you come back after doing this for sanctions violations.
✅ NSA admitted that they were in my Signal account.
✅ Met Snowden for dinner in Tucker’s hotel room.
✅ Semafor runs piece breaking Tucker met Snowden. Tucker: How did they know? They’re still spying on me.
✅ Nothing is secure. Can you keep the mafia from reading your messages? Sure. The government? No way.
✅ Too much spyware on your phone leads the battery to die faster, which is annoying.
✅ Facts on the ground matter more than moral victories. How many black people benefited from BLM? That’s a lie. What matters is how things on the ground work: suicide, standard of living, etc. Beauty, safety, cleanliness matter most.
✅ People pooping on the sidewalks is not freedom. You don’t need to step over druggies.
✅ Sanctions are not destroying Russia. Sanctions haven’t crippled them. They seem fine! Why are we doing this? We’re organizing BRICS against us.
✅ I don’t trust the internet; I trust what I see.
✅ Direct experience with most people makes most people seem way less evil than the media makes them appear to be.
✅ I think most media in America is just a tool for the US Government.
✅ Things said online live forever; like clips on YouTube. That’s great, but wow.
✅ Tax loopholes are gross: like carried interest. And we’re creating chaos in the world; not fair.
✅ I hope the war in Ukraine ends with a reasonable settlement.
✅ Russia is afraid of NATO. I don’t think we should be part of NATO. It’s a pocket liner.
✅ Businesses are using Ukraine to line their pockets and take from tax payers.
✅ I found it totally contemptable that George W. Bush left while our country was attacked. You’re the boss “bitch,” not the Secret Service. You stay! Like Zelensky. But Zelensky has been abused and used by others.
✅ Boris Johnson extending this war is unacceptable; you extended war and death.
✅ What about De-nazification? That’s dumb; that was a movement. We’re anti Nazi. I get it; you’re calling people evil. But this is childish.
✅ Lex: It’s a way of pulling emotional strings; many in Russia consider Nazi’ism a sign of racism and evil. Yes, there are small neo-Nazi movements. But do those affect Zelensky? Probably not.
✅ Tucker: Right, let’s define Nazi.
✅ Let’s negotiate the Nazi’s. Okay, which?
✅ Putin was too isolated in Covid. You get weird when you’re alone too long.
✅ Russia tried to join NATO. Russia has enough land.
✅ This war has enriched a lot of people; to the tune of billions.
✅ Kamala Harris told Ukraine they could join!
😇 Just to show the other side, here’s the White House’s version. They certainly didn’t deny Ukraine’s ambitions, but suggested Ukrainian membership would be a process. This does lean towards implying Ukraine could join – this clearly wasn’t a hard no. So Tucker is, at least based on the White House’s account, more right than wrong.

✅ There’s a massive lag. We had our own translator, two of them, and our own cameras.
✅ You miss so much through a translate though. You need a translator.
✅ The chemistry of conversation; whit, etc.
✅ Much is lost in translation; yes.
✅ The desire for money and power will kill you. But the desire to be liked by those who don’t know you will also do that.
✅ I love Elon, but I don’t spend time on social. I spend time with family, nature, and my values.
✅ Western technology may not be liberating. It could actually be bad. What technology has conclusively improved people’s live?
✅ I love that idea. Are they more informed or more misled?
✅ Lex: But more information is accessible.
✅ Tucker: Yes, you can access information more readily. True. But are we ignorant or smarter?
✅ Reproduction. Sobriety. Life expectancy. That’s how you objectively measure society.
✅ What happened to South Korea? They’re rich. What happened?
✅ WHY?
✅ Lex: Distrust in science. That worries me.
✅ Tucker: Yes, but if technology is so great, why would people with this access use fentanyl? Or life expectancy going down? Or fewer kids? I felt that in the 90s: I thought this would be good. Has it been?
✅ If there’s even a 15% chance of AI running away from us and killing us: do we wait until we’re shot? Or do we shoot first?
✅ The key to wisdom is knowing what you don’t know. And I’m not sure the Wikipedia culture provides that.
✅ Tucker on Trump texts: I was mad. Trump’s making all these claims. I wanted to substantiate these claims. The people around him were so incompetent. Bring me evidence. It was insane how incompetent people around Trump were.
✅ Prove dead people voted.
✅ So I got 6 names; of them, 2 were still alive. Information directly from their campaign! Tucker’s frustrated. So yes, I was mad.
✅ I have lied; I don’t want to be a liar.
✅ The election was rigged: information was censored (covid) and the way people voted was changed right before the election.
✅ People need access to all information to have a fair election. Once you don’t, it’s an unfair election.
✅ This election is the referendum. Biden is senile. He won’t win, unless the election is rigged.
✅ If Biden is reelected, the election is rigged.
✅ Lex: What if he’s just getting old?
✅ Tucker: He’s the leader of America. It’s important a leader can speak.
✅ Raiding Mar-a-Lago over a documents charge? That’s crazy.
✅ A vote for Trump is a vote that you’re frustrated in the way the system has changed; bring back what we had.
✅ Sitting President had the same document’s charge.
✅ We can’t have a political system run by the justice department.
✅ Nikki is transparently weak.
✅ Society wouldn’t let her advance.
✅ I have enormous interest in interviewing Xi Jinping.
✅ Rogan changed media. He’s got a résumé I admire. From Fear Factor to forefront of media.
✅ Larry King was very curious. I see that in Rogan.
✅ If I had a wife that was interested in what I did, I’d be an insufferable megalomaniac checking Twitter replies all day. No way. I’ve been together for 40 years with my wife.
✅ We’ve never been happier. Why? I have no idea. Luck.
✅ Humility is a result of reality: we are not the authors of everything that happens to us. There are larger forces acting on us.
✅ Everyone knows there’s a power greater than themselves.
✅ Have children immediately.
✅ Nothing else matters but your family.
✅ Men: You will not achieve until you have to.
✅ Have children and you’ll make it work.
✅ Men will do nothing unless they have to.
✅ Do not seek money for the sake of money. Seek creation. Children are the most pure expression of creation.
✅ I’m not a commerce guy. I like what I’m doing.
✅ I’m committed to only doing what I enjoy.
✅ Don’t use technology to tamper with the human brain. That’s God’s creation; don’t mess with it.

🔗 Link to this post.

---

Trump Wins. 9-0 in Supreme Court Ballot Case. 03/04/2024 10:00 PT

Trump
😇 In the post below, we broke down why Trump was likely to win this ruling. The Supreme Court hit on many of the items we broke apart, including:
✅ States may disqualify people from state office, but not Federal. Risk of patchwork of candidates.
✅ Risk of states applying law differently: which evidence is included, which burden of proof to use, etc.
✅ If Biden today said he was an insurrectionist, could States remove him? No, section 3 is for Congress to enforce, not States. The 14th purposefully removes rights from States. Section 5 gives Congress power to enforce the 14th.
✅ 14th / Section 3 does not prevent someone from being a candidate.
✅ Should not nullify the votes of some due to the decision of some states.
✅ Section 2383 exists to prohibit insurrectionists.
✅ Risk of undoing presidential action (double jeopardy) if this passes.
✅ 9/9 Justices supported ALLOWING Trump to remain on the ballot.
✅ 4/9 Justices thought the “majority” went too far in suggesting only Congress can decide on section 3’s enforceability; they sought to let that be decided in the future.

📝Annotated Trump Ruling
🔗 Link to this post.

---

Saturday Morning. 03/04/2024 05:25-06:45 PT

JetBlue and Spirit terminate partnership
✅ Jet Blue agrees to pay $69m termination fee to Spirit.

Apple
✅ First time Apple has been punished for breaking EU law. $1.8b fine for “stifling” music-streaming competition. Third-largest fine in EU Commission history & Apple will appeal.
✅ At about the same time, Apple just announced it’s MacBook Air M3’s.

China
✅ Lower expected stimulus output again.
✅ Why? Per Financial Times: ‘Xi sees China’s current economic wobbles as the short-term pain necessary to achieve the long-term gain of his vision of ‘high-quality development’.”’
😇 This hurts companies with China-related sales, such as Apple, Starbucks, Tesla. Nvidia used to be on this list but their AI boom has more than offset China pain.

✅ Fewest contributors to S&P 500 gains; lowest level since dot-com.


🔗 Link to this post.

---

Monday Morning. 03/04/2024 04:41 PT

Politics
✅ Congress faces a partial shutdown by Friday. $435b funding package (this portion) is out. Vote setup for Wednesday. Per Punchbowl, this is basically a spend freeze with a boost for Vets.
✅ Johnson pushing for more cuts such as 7% to FBI.
✅ State of the Union occurs Thursday.
✅ Super Tuesday will likely solidify Trump’s strength.

Fed
✅ Jerome Powell speaks in Congress Wednesday / Thursday 7am PT.
😇 I see 4 significant risks here.
➡️ First, stocks are part of financial conditions. As financial conditions loosen (stocks rise overall – just one of the contributor to financial conditions), Powell will be more equipped to tilt his speech hawkish vs dovish.



➡️ Second, the “jobs recession” is not panning out. Yes, cuts are still happening. Such as the cuts by certain automotive companies or companies that face structural challenges, such as Xerox. The economy is too strong. See Feb layoffs 2024 vs 2023: just 39%. And, a downtrend on WARN notices.



➡️ Third, even though issues at NYCB are swelling due to office and commercial real estate loans (CRE), small banks face significantly more CRE risk than large, highly-important banks. Yes, we had a banking crisis last year, but that was heavily driven by the cryptocurrency rout and failure of Terra Luna and VC reductions. There are about 50% fewer VCs today than there were in 2021. That helped whack Silicon Valley Bank, and may hurt startups going forward. Signature Bank failed heavily due to cryptocurrency. These banks led to runs at First Republic and a basic, almost universal guarantee that the Fed will swoop in and insure all deposits at banks. That ended the banking crisis. Now, yes, NYCB is a problem, but even at a bank like NYCB, they’re not facing a run. So they have valuable, acquirable assets, and the toxic ones will be discounted.
➡️ Fourth, even Jerome Powell expected real estate prices to settle as he warned first-time home buyers to “wait for more balance.” That has yet to occur, mostly thanks to the 30-year lock-in creating substantially low inventory in singles. There’s much more distress in multi, but that doesn’t affect CONSUMER prices.

Now, to balance this, the Atlanta Fed GDP tracker DID just fall, thanks to a negative construction-spending print Friday (-0.2% vs 0.2% expected). BUT, even with that drop, we’re still above 2% at 2.1%. Jerome Powell seems to want us to grow “below potential,” which you could really define anyway you want.



😇 I’d love to scream, ‘Powell is likely to be dovish,’ but that seems highly unlikely this week, especially following the January core CPI/PCE disaster. Yes, those might be a “one off” and yes, they might be concentrated in higher, lagging categories like rent and insurance, but what if when those stop lagging, others start popping UP? Powell will consider this.

🔗 Link to this post.

---

Saturday Morning. 03/02/2024 06:45-07:30 PT

NYCB
✅ Fitch and Moody’s took another downgrade to the bank.
✅ “Moody’s believes NYCB may have to further increase its provisions for credit losses over the next two years” with “substantial repricing risk on its multifamily loans.”

Sentiment
✅ UofM Sentiment declined To 76.9 from 79 in January.
😇 (This is relatively nominal; very volatile.)

Options Retail Trading
✅ Back to 2022 levels.
😇 FOMO is back.


Stop Gap Funding
✅ We’re now funded through March.

Fed Commentary
😇 I’m convinced Jerome Powell knew January’s inflation data and adjustments would lead to a hot report, leading him to suggest future inflation reports “do not even have to be as good as they have been.”
😇 Without this, market reactions may have been much worse to the hot CPI/PCE core figures, some of which were likely due to up-weighting single-family homes in CPI.

Autos / Goldman Sachs
✅ Seasonally adjusted annualized rate (SAAR) of car sales in February hit 16m. Consensus was 15.44. The Feb result is up 10% YOY (light vehicle sales under 8k lb).
✅ EV mix was 8%. EV sales in February up 15% YOY.
😇 Could the car bottom be in?
✅ Ford up 11% YOY
✅ GM up 6% YOY
😇 Tesla numbers will come out the first few days of April for Q1.

Goldman on Colgate
😇 I don’t care much about Colgate, but Goldman thinks they could beat due to “stepped up advertising spending” which might kick up sales. I think strengthen exposure to advertising could be a way to counter-balance the strength of AI. I expect a lot of companies will face flat to negative sales as their ability to raise prices has evaporate.

Note on Pricing Power
😇 Regarding the Colgate note, remember what everyone thought pricing power was in 2021? “The ability to raise prices.” I personally don’t view pricing power as that. I view pricing power as this:
➡️ Within your industry, can your product or service demand higher margins relative to your intra-industry competition?
😇 That’s very different from just “prices go up.” That’s not sustainable. But making more, while growing, can be sustainable, especially in the face of boom or bust macro cycles.
😇 Here are some examples:
➡️ Why buy an iPhone over a knockoff? Both make calls and have apps.
➡️ Why buy Restoration Hardware over Target furniture?
➡️ Why buy a Mercedes over a Civic?
😇 Now don’t get me wrong, I prefer Target furniture and Civics. In fact, I won’t be caught dead with Restoration Hardware furniture. But who’s furniture has more pricing power?
😇 If both Target and Restoration Hardware drop their prices 25%, do they both have a lack of pricing power?
😇 No, Restoration Hardware arguably has substantially more pricing power. Why?
✅ Furniture makes up 17% of Target’s sales at $4.4b for furniture/decor alone. Target discloses their margins on private-label products (Target-branded). 😇 This makes sense.
✅ Target’s total gross margin (revenue – cost of goods sold) is 27.4%. So on $100 of furniture, they have $27.4 to pay OpEx, taxes, distributions etc.
😇 Let’s pretend their furniture is above average, even though not private labeled, and therefore 30%. Doubtful, but let’s pretend. That’s $30/$100.
😇 Keep in mind, I think it’s ludicrous to argue Target makes 30% gross on their furniture. It’s heavy to ship, expensive to maintain in inventory, and gets damaged easily.
😇 Either way, now, let’s consider Restoration Hardware.
✅ Gross margin Q3 2023: 45.3%.
😇 Now yes, down from 48%, but still 50% greater than Target’s optimistic figure.

😇 The point is, clearly, Restoration Hardware products have a higher appeal, enabling this higher margin. We could argue that Restoration Hardware products are produced at scale better, but this would not be logical. Target’s Furniture & Decor sales are 5.8x what Restoration Hardware does in a quarter. Target almost certainly has stronger, more efficient supply chains. Instead, it’s logical to conclude RH can charge substantially more for their products. The market has decided, for whatever reason, it’s willing to pay RH a higher margin. Some of that could be status, prestige, exclusivity, brand, whatever. THAT is pricing power.


✅ Restoration Hardware is 5x the price for these products. BUT, you also need to pay a $175 annual “membership fee.”


😇 So, what are some pricing-power style companies? Premium over others?
➡️ LVMH
➡️ Nvidia
➡️ Apple
➡️ Tesla
➡️ Enphase
➡️ Mercedes/BMW
➡️ Restoration Hardware
➡️ Intuit
➡️ Simpson Manufacturing
➡️ Procore
➡️ Palantir
➡️ Eli Lilly
➡️ Microsoft
➡️ Google services (less so for ads)
➡️ Toll Brothers
➡️ ASML
➡️ TSMC
➡️ Good contractors, the doctors, the best news sources
➡️ Premium goods & brands

😇 What typically doesn’t have pricing power?
➡️ Commodities
➡️ Currencies
➡️ Groceries
➡️ Retailers
➡️ Cruiselines
➡️ Airlines (almost the definition of 0 pricing power; perfectly competitive industry)
➡️ Shippers/Freight
➡️ Most Financial Services
➡️ Discount products / inferior goods

😇 Let’s be clear: having pricing power, via this definition, is NOT associated with “stock will go up.” It is solely one factor in evaluating a company.

Trump WSJ
✅ Trump’s populist wave is dominating. From Haley, to McConnell, his popularity is growing, not shrinking.

Oregon 2020 WSJ
✅ Decriminalized all drugs.
✅ Now, the impression after this just 3-year experiment is: the drug problem became worse.
😇 Wow, really? Allowing people to freely use heroin, cocaine, fentanyl may not have been a good idea.
✅ The idea was: Don’t punish, treat.
✅ Well, without the threat of imprisonment, the WSJ reports: few people have proved willing to take advantage of expanded addiction services.
✅ Instead, drug use in public “became rampant.”
✅ Fear is these programs will unfairly target people of color.

🔗 Link to this post.

---

Bitcoin ETF Huge Net Inflows. 03/01/2024 15:46 PT
✅ Yesterday, February 29th, $GBTC Grayscale Bitcoin Trust saw $598M of outflows.
✅ Total $GBTC outflows since Jan 11, 2024 are now $8.4B+, with still $28B AUM.
✅ $BTC price has been steadily rising this week, stable around the low $60Ks
✅ Blackrock’s $IBIT took in $603M alone, currently standing at $10B+ AUM.
✅ This is the fastest AUM growth an ETF has ever seen.
✅ There were net inflows of $92M into Bitcoin ETFs.
✅ ~$3.5B of volume was traded today, $IBIT accounted for $1.2B of it alone.





✅ $IBIT makes up for 42% of BlackRock’s net ETF flows. $FBTC makes up for 64% of Fidelity’s net ETF flows, for this year.

🔗 Link to this post.

---

The Future Of AI In Warfare – The US & Russia Are Bound To Have A Face-Off . 03/01/2024 15:24 PT
✅ A Ukrainian drone company, Saker, claimed it had created a fully autonomous drone called the Saker Scout. This drone uses AI to make its own decisions on whom to target. 😇 Whom to target does not imply whom to “launch” on. However, does AI targeting, training and confirming AI decisions manually, make AI bizarrely powerful?
✅ Saker officials stated that the Saker Scout has been used on a small scale, but this has not been independently verified.
✅ The technology exists, but regulation does not.
✅ Autonomous weapons have been used since the 1980s, though mostly interception and defense systems, rather than offensive. 😇 This makes sense. Time is of the essence in defense.
✅ Drones have led to a rise of counter measures, such as jamming equipment.
✅ The only counter available to autonomous drones now is to find and destroy them, which is difficult. It is easier to interrupt the operator or kill the operator.
✅ Over 250 NGOs, including Human Rights Watch and the Nobel Women’s Initiative, have formed the campaign to “Stop Killer Robots,” calling for a legally binding treaty to preemptively ban autonomous weapons.
✅ The US and its Allies are currently developing (and perhaps have already developed) stealth combat drones for autonomously targeting air defenses and missile launchers.
✅ The counter-argument to a ban would be that autonomous weapons could significantly reduce civilian casualties due to the ability to precisely kill targets with no risk to their military personnel.
✅ The counter-argument to THIS would be that a state that cares little about civilian casualties or wants to target civilians could use these autonomous systems to harm people very effectively. 😇 As always, weapons in the wrong hands are weapons in the wrong hands.
✅ The most extreme risk of autonomous weapons comes from integrating AI into nuclear weapons. In 2022, the US stated it would always retain a “human in the loop” for decisions about nuclear weapons. Russia and China have not adopted this policy.
✅ This is not surprising. After the Cold War, the Soviet Union built a semi-automated retaliatory nuclear strike system called “Perimeter.” The purpose is to use automated sensors to detect a nuclear attack on its own soil. If one was detected from these sensors and the system received no response from one of the country’s leaders—presumably because they were killed in the attack—the system would automatically transfer launch authority to a junior officer in a secure bunker. This system is still used and has been upgraded since.
😇 Wow.
✅ Adoption of autonomous weapons systems would create an AI arms race, resulting in an escalating spiral of greater automation and less human control. The end result of this arms race is likely war.
✅ Here is a very interesting comparison: In the stock market, the widespread use of high-frequency trading has led to stocks being traded autonomously at superhuman speed. When the stock market reached the point where machine autonomy surpassed human decision-making, humans ceded control of certain functions to machines and sat on the sidelines, relying heavily on these machines.
✅ People have theorized this phenomenon could translate to autonomous weapons. Machines will outpace human decision-making, forcing humans to cede control to machines. Machines would no longer just be used to select targets, but they would plan/execute entire campaigns. Humans would be left with little ability to control or end the wars.
✅ Other countries are on board with banning autonomous weapons through the UN Convention on Certain Conventional Weapons (CCW). The US and Russia strongly reject this stance and argue that there are enough rules of war.
✅ The CCW will have to compromise on a staunch stance on a ban to get the US and Russia on board because a treaty would mean nothing without the superpowers on board.

📝 Foreign Affairs Article
🔗 Link to this post.

---

Morning News. 03/01/2024 05:30 PT

✅ Inflows into small-cap ETFs up 23/24 weeks; possible sign of riskier stocks starting to outperform – something commonly seen during an economic bottom. (Bloomberg.)

Fed Barkin
✅ Certainly having some impact with higher interest. Look at interest cost as a percentage of revenue: it’s come up to 2019 levels. So many refinanced.
✅ Economy will tell us what to do. Rate hikes? Well, that would be inflation starting to spiral and economy growing. Not what we’re seeing.

Elon Musk sues OpenAI and Sam Altman
✅ Argues the company, upon discovering artificial general intelligence (AGI), the company should be open and non-profit.
✅ Argues the company is closed, with secret code, and has reached AGI via ChatGPT 4.0.

SEC
✅ Investigating OpenAI as to whether investors were misled.
✅ SEC investigating, may not find anything wrong, but an initial subpoena has been sent.

NY Mayor Eric Adams
✅ We’re required to feed homeless.
✅ We need to find a way to limit food waste and feed homeless efficiently, but giving individuals a debit card that allows them to buy food or baby supplies. And those funds go into our local economy.

NYCB
✅ Delaying their 10k/annual report.
✅ Reported material weakness in accounting and requires more time to file.
✅ Cut to junk by Moody’s last month.
✅ New CEO.
✅ Some building write downs have focused on NYCB’s rent-controlled apartment buildings, some of which selling at a discount of 50%.
😇 Write downs appear to be related to transactions prior to 2007, but it’s unclear if those are transactions acquired from Signature Bank or that were underwritten by NYCB. Either way, they wrote down goodwill ~$2.4b. This is a non-cash expense, but signals that there may be more underwriting issues / balance sheet issues than we’re aware of.

Dell
✅ PT raised from $100 to $128 at Morgan Stanley
✅ PT raised from $75 to $105 at Cowen
✅ PT raised from $53 to $94 at Barclays
✅ Still at 1.62 Q1 2025 PEG given EPS revisions with $7.44 expected by January 2025 and ~9.8% growth from there.
😇 Went from shrinking to growing. Over all growth projected just 5.7%. AI portion of biz up 40% in the quarter with backlog doubled.
✅ $400m revenue in AI servers in Q4. $725m projected per quarter in 2024.

Mohamed El-Erian
✅ The Fed’s data dependence is what created the idea of “transitory” inflation.
✅ The Fed needs to start using forward-looking data to prevent overtightening and making the same mistake in reverse.
😇 I believe the Fed knows they can cut really rapidly, if necessary. Therefore today, their goal is messaging: Keep the economy tight enough to prevent inflation from resurging.

5-Year Breakeven Inflation
✅ 2.45%.


📝 Elon’s Lawsuit against Sam.
🔗 Link to this post.

---

Fed. 02/28/2024 11:30 PT

Fed Daly
✅ Not urgent to cut given the strength of the economy.
✅ “Ready” to cut when data demands it.
✅ “There is no imminent risk to the economy faltering.”

Bostic
✅ “there are going to be some bumps along the way” to 2%.

Goolsbee
✅ Cautioned against reading too much into a single month’s inflation data.

🔗 Link to this post.

---

Over 100 Gazans killed by IDF crowd shooting. 02/29/2024 10:59 PT
✅ On Thursday Israeli troops fired on a large crowd of Palestinians who swarmed an aid convoy to grab food.
✅ IDF said that “dozens were killed and injured from pushing, trampling and being run over by the trucks.”
✅ 104 killed, ~760 wounded.
✅ Death toll now over 30,000 per health officials.
✅ AP News reported on Kamel Abu Nahel, who is being treated for gunshot wound at Shifa hospital.
✅ Kamel said he went to the distribution point in the middle of the night because they heard there would be a delivery of food.
✅ Kamel: “We’ve been eating animal feed for two months.”
✅ He said Israeli troops opened fire on the crowd and people pulled boxes of flour and canned goods off the trucks.
✅ The shooting caused them to scatter.
✅ When the shooting stopped, they went back to the trucks, and the soldiers opened fire again.
✅ Kamel was shot in the leg, fell, and then had his leg run over by a truck as it sped off.
✅ Israeli military says Gazan residents surrounded trucks and “looted” supplies.
✅ The details of this story are still being investigated.

🔗 Link to this post.

---

Trump Hackers & Immigration. 02/29/2024 09:50 PT

✅ A hacker group known as LockBit, a Russian ransomware group , is threatening to release Fulton County Court docs unless the Trump team makes a ransom payment today.
✅ They argue the documents contain election-impacting material.

😇 The last immigration bill attempted died within 2 days, likely due to Trump’s influence over GOP politicians – suggesting instead:
✅ “Within moments of my inauguration [in 2025], we will begin the largest deportation campaign ever.”

On yesterday’s Supreme Court decision to hear the Trump immunity claim:
✅ Some see this as a Trump win as there is a chance no decision will be reached before the election, during which the then President could pardon themselves.
✅ A decision, however, could be reached before the election, though timing is getting tight.
✅ Many thought the Supreme Court would have declined to hear Trump’s appeal. By picking it up, some wonder if all criminal cases should pause until Trump’s immunity claim is decided by the Court.
✅ Democrats want to see the trial complete prior to the election.
✅ Republicans/Trump supporters want to see the trial delayed until after the election.

Trump Properties
✅ Office spaces are currently trading for 20-52% less than prices seen 5 years ago. The Trump Organization owns office towers in NY to San Francisco. In 2015, 40 Wall Street was valued at $540m. Today, just $270m.

🔗 Link to this post.

---

Morning News. 02/29/2024 05:30 – 07:58 PT

✅ PCE matches expectations across the board.
➡️ 0.3% MOM, 0.4% cMOM, 2.4% YOY, 2.8% cYOY.
➡️ .1 revision down on both MOM figures for last month.
✅ Personal Income jumps to 1% vs 0.4% expected.
😇 ^ Income jump was huge.

✅ WARN notices, which are a 60-day heads up of layoffs, suggest rising unemployment claims in March (😇January notices would take effective the start of March to likely early April).
😇 So expect unemployment claims to rise the second week of March into April, at least for January’s spike.



Snowflake
✅ Roughly 9m shares added over the last year – at $200 contributing $1.8b to the company (diluting investors). The company DOES generate positive cashflow, but loses money thanks to stock comp and other noncash expenses. Revenue grew 39% vs OpEx growing about 29.6% YOY.

IPO
✅ IPO market still about half of prior to Covid.

Credit Availability
✅Auto credit availability AS BAD as during Covid.


Dell Reports Today
✅ Over 9% expected vol.
✅ Dell up 130% since start of 2023.
✅ Optimism over AI could be overshadowed by a slowdown in client solutions.
✅ Data center makes up just 20% of Dell’s 2023 revenue and 60% comes from Client Solutions, which include PC sales.
✅ Expectations are low. Revenue is expected to drop 12%; its 6th-straight quarter of losses.

Apple
✅ iPhone discounts up to $180 now in China vs $120 last year.


🔗 Link to this post.

Housing. 02/28/2024 20:30PT

Bloomberg Intelligence on Housing
✅ Inventories are starting to loosen for both existing and new homes.
✅ Better affordability may be “elusive… unless rates fall materially again.”
✅ New construction continues to absorb market share.
At HouseHack, we expect single family inventory to rise substantially in April/May. With rates still high, there should be plenty of opportunities to buy single-family homes with relatively stable prices (we don’t see a near-term skyrocketing of prices). Current fundraise for HouseHack is live here: https://househack.com/2024.

✅ Note here: Existing Homes (not new construction): At levels we haven’t seen since 2010/2011 in terms of actual transactions.
😇 This is when I started. Back then, we were SATURATED with inventory – but people weren’t buying.
✅ New home sales are actually at 2016-2019 levels.

✅ This has left home improvement “down, not out” per BI.
✅ “Our constructive longer-term thesis is predicated upon the view that housing transactions appear to be finding a bottom, particularly as the lock-in effect slowly loosens; homeowners are sitting on record equity, which they’ll be more inclined to tap as rates moderate and the oldest housing stock on record is primed for updates. The industry may find its footing in late 2024 before rebounding to more normalized growth in 2025.” 😇 Agreed. Near-term spending likely remains pressured, especially on solar, until rates come down. Sorry Enphase! It’ll take a bit longer!

🔗 Link to this post.

---

Bitcoin. 02/28/2024 20:20 PT

Bitcoin Flows are Wild this Week. Halving excitement? Coinbase “demand” and glitches leading to, ironically, more demand? A frenzy? Here’s the data:

✅ Bitcoin ETF trade volumes are UP: 224, 269, 81, 140, 131, 328, 175, 231, 211, 312% each ETF. The average this week? 210.2% increase in volume.
😇 WOW!
✅ Largest 3 new ETFs by volume
➡️ 1. $IBIT
➡️ 2. $FBTC
➡️ 3. $ARKB

Note: GBTC is an ETF now, but not a new ETF and still maintains the high pricing of 150bp.

✅ Blackrock pulled in $520m on Tuesday alone ($IBIT).



Morgan Stanley:
✅ One of the largest investment advisors is considering adding Bitcoin ETFs to their platform and investment advisor network.

Bitcoin Halvening
✅ Reward for new bitcoin entering circulation (ever 10m) dropped from 12.5 to 6.25 in 2020, now halving to 3.125.
✅ This occurs every approximately 4 years (210k blocks).
✅ This limits supply (newly mined Bitcoin).
✅ Historically, Bitcoin moves up both before and after the halvening.
😇But then again, Bitcoin’s history is just about 14 years. And frankly, the entire time, it’s averaged up. Was it the halvening each time or something else? Or both?


🔗 Link to this post.

---

Trump, Trump, Trump. 02/28/2024 19:00 PT

Supreme Court
✅ Supreme Court expects amicus briefs (third-party legal opinions) due by April 8, 2024 as the Supreme Court prepares for oral arguments the week of April 22, 2024 on Trump’s immunity claim.|
✅ Bloomberg: There is a risk that a full trial would be delayed until after the election.
✅ This is the second case The Supreme Court will hear of Trump’s. The first was on whether or not Trump could remain on the ballot in Colorado (note: he was also just removed from the Illinois ballot).

✅ Here’s how Illinois voted in 2020 (😇 mostly Democrat).



Trump’s Prior Supreme Court Case (Being on Ballot):
😇 Kevin’s summary of listening to all oral arguments:

1: “Officer” vs “Office Of”
➡️ The cure for someone holding “the office of” is impeachment.
➡️ The cure for someone who is an officer is removal.
➡️ President is an “office” 😇 which likely favors Trump as the solution should be “impeachment,” which failed in Senate.

2. “Hold” Office
➡️ This section does not prohibit “running” for office. It states “no person shall … hold any office.”
➡️ So where does it say someone can’t be on the ballot?
➡️ The Supreme Court questions this. Argues, is being an insurrectionist a ballot requirement or an a disqualification of office?
➡️ If the case is about being on the ballot, then what are the ballot requirements?
➡️➡️ 35 years old
➡️➡️ Natural-born citizen
➡️➡️ Have lived in the US for at least 14 years
➡️Does not say “not be an insurrectionist” to be on the ballot.
😇This likely favors Trump.

3. States vs Federal Right
➡️ Should each state be able to decide who’s on the ballot? Serious state’s rights issue as few states could affect the ability of someone in a different state to choose their leader.
😇 This likely favors Trump.

4. First-Amendment Right
➡️ Colorado Secretary of State literally steps on landmine, suggesting being on the ballot is a first-amendment right.
😇 This likely favors Trump.

5. Democracy
✅ Powerful quote: “In trying to figure out section 3… we should think about Democracy: the right of the people to let the people decide. Your position has the effect of disenfranchising voters.”
😇 This likely favors Trump.

6. Section 2383
➡️ Prohibits insurrection by disqualifying anyone from office. Why was Trump NOT charged under this section?
😇 This likely favors Trump.

7. Trump’s Statements
➡️ The court punted the Secretary of State’s arguments that Trump’s statement had heavy weight on this. The court didn’t seem to consider those at all.
😇 This likely favors Trump.

8. Double Jeopardy
➡️ If Trump is disqualified, could anyone just argue anyone previously was an insurrectionist, therefore all of their cases are void?
➡️ Consider 1869 Griffen Case, which had to do with prior insurrectionists for the South potentially working as judges or otherwise for the Union (North/South combined).
😇 This likely favors Trump.

😇 Illinois’s ballot decision will likely hinge on the Supreme Court ruling in Colorado. Let’s just say: it feels like a slam dunk win for Trump. This is based on hearing the case, not any personal interest or motivation. Remember, and I recognize this sounds “CRAZY,” but think of this: If EVERYONE in America voted for the same person for President, call them “Joe Blow,” and Joe Blow was a self-admitted insurrectionist, should America be allowed that choice? To elect someone who self-admits they’re an insurrectionist. Many would say YES, because that’s what the people want. Obviously, this case isn’t as clear cut – but it’s an interesting consideration.

April Court Date
✅ Last of 3 scheduled argument sessions in the current Supreme Court session, ending late June.
✅ Trial could be delayed to September / October.

Trump $450,000,000 Case ($450 Million):
✅ Trump requested the appeals court allow Trump post a $100m bond that he’ll eventually pay his $450m judgment, saying it would be impossible to quickly secure the full $450m).
✅ Single appeal’s court judge, Anil Singh (appointed by Democrat Chief Judge Rowan D. Wilson), denied Trump.
✅ The same question will go before a 5-panel appeal’s court next month.
✅ Trump will now have to post a bond for the full $450m.
✅ If this does not occur, Trump’s accounts could be seized starting March 25th (after a 30-day grace period), and possibly take control of Trump properties in NY.
✅ Some speculate Trump’s stake in Truth Social could be worth about $4b.
😇 That’s probably assuming DWAC’s post SPAC price will maintain its current valuation and provide such liquidity to Trump without crashing (unlikely). DWAC trades with a 30-day average volume of just $1.782m per day. On a very popular day, January 26th, $3 BILLION of shares traded hands as the stock shot up 69%. Would this be sustainable to provide Trump liquidity? Maybe. Maybe not. For now, the merger has not yet completed.

McConnell
✅ Plans to end his term in the Senate in 2027, and likely step down as Senate leader after November.
😇 He’s been a proponent of funding Ukraine more, which he now suggests puts him “out of view” with his party.
✅ NYT: “Mr. McConnell became the longest serving Senate leader in history at the start of this Congress.”

Edit 02-29-2024 07:42 PT:
✅Joe Biden has committed to spend nearly $700m to beat Trump. That’s on top of the $130m they are already expected to have on hand. Trump faces $540m in combined damages from rulings in his defamation case and NY case.

🔗 Link to this post.

---

BLS Email on CPI / Prices. 02/28/2024 17:52 PT
✅ Rent and US CPI have diverged, significantly.
😇 US CPI is heavily based on “owners’ equivalent rents (OER)” – unfortunately these can lag by 12-18 months as 1) it takes time for rental units to “turnover” and 2) some may not turnover, they may just not see rent increases. So rather than showing actual deflation YOY, some rentals may appear flat.
➡️ Example: Pre-covid rent, $2800. Post covid rent, $3500. That’s a 25% rent increase. New market rent is $3,395. Will the tenant move to realize that decreased rent? Not necessarily. Locking in the impression of higher rents vs market.
At HouseHack, we absolutely see rents falling in each market we’ve been competing in. We’re purposefully lowering rents in some areas, but only buying properties with that assumption already in place to prevent substantial vacancy.

😇 This explains why “new rent” indices are in the toilet (New Tenant Repeat Rent, Apartment List, Zillow.
✅ (Right side is OER, left is the other data set).
😇 Point is: Current measures show rental inflation in 2024 between negative 5% to +3.9%. OER shows it at 6%!!!


😇 Well, the BLS JUST released a BOMB shell email:
✅ The weights for single-family detached homes increased “materially” from Dec 2023 to January 2024.
😇 The email suggests they’ve been bombarded with emails wondering what happened (” all of you searching for the source of divergence have found it.”
😇 Single-family is problematic. Why? Significant lack of inventory in both rentals and sales thanks to the lock-in effect of the 30-year fixed rate mortgage. So, OER for single is EVEN HIGHER than that of multifamily, which is more appropriately adjusting.
✅ Housing represented 0.2% of the monthly CPI data. We had an 0.39% read.


✅ Yes, supercore was still hot, driven by medicare services, vehicle insurance, vet services – without which inflation would have been around 0.1% for the month.
✅ Supercore removes housing.
So 0.39% was made up of:
➡️0.20% housing
➡️0.14% medicare services, vehicle insurance, vet services
➡️0.1% other core services
➡️-0.6% goods deflation

😇 But, the housing figure was just skewed up by an adjustment to weights.
😇 What a mess!

✅BLS indicates they’re “looking into this data and we may have additional communication regarding the rent and OER data soon.” 😇 Any adjustment here will be a big negative to inflation readings.
😇 So is this good news? Not necessarily. If the weightings stay high, it could continue to boost CPI for the coming months.

🔗 Link to this post.

Elon Drops Hints About New Tesla Roadster. 02/28/2024 10:09 PT
✅ None of these points are confirmed, however all of this information comes from Elon Musk’s posts on X last night.
✅ Tesla “radically increased” the design goals of the new Roadster.
✅ “There will never be another car like this, if you could even call it a car.”
✅ Targeting 0-60mph in <1 second, which is “the least interesting part”.
✅ “It may fly a little”
✅ It will be a collaboration between Tesla & SpaceX.
✅ Production design is complete.
✅ It will be unveiled end of this year.
✅ Aiming to ship it next year.
✅ It has a shot at being the most mind-blowing demo of all time.

🔗 Link to this post.

---

Mitch McConnell to Step Down After Election. 02/28/2024 09:49 PT
✅ McConnell has been Senate Leader since 2006, winning 9 elections straight.
✅ He was the longest serving Senate leader in history, stepping down this November after the election.
✅ He first became a Senator in 1985, 39 years ago.
✅ McConnell is 82 years old.
✅ This describes the shift in Republican ideology from Reagan to Trump.
✅ He will endorse Trump this election, even though they supposedly have not spoken since December 2020.

🔗 Link to this post.

---

How The World Is Profiting Off Of The Sudan Disaster. 02/28/2024 08:37 PT
✅ The Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) are currently engaged in a civil war, which has resulted in a humanitarian disaster and displaced approximately 11 million people. This conflict has caused the most extensive displacement of people globally, with the majority of the population facing severe famine. More people have been displaced by this conflict than in the war in Gaza.
✅ Middle Eastern countries see numerous opportunities to exploit Sudan’s natural resources, access its ports along the Red Sea, use it as a base to combat the Houthis in Yemen, undermine pro-democracy efforts with violence, and strengthen the hand of Islamist or anti-Islamist groups, whichever side benefits them monetarily.
✅ This creates monetary and power benefits for the international actors when they successfully contribute to violence and then provide solutions to resolve the violence they created.
✅ Illicit exporting of gold is funding the civil war in Sudan. Sudan’s army controls mines and sells it to Egypt, Wagner Group, Iran, and the UAE.
✅ This creates incentives for these gold-buying countries to create ideal conditions for the Rapid Support Forces (RSF – a Sudanese military group that sells the gold) through destabilization and violence or their rival, the Sudanese Armed Forces (SAF).
✅ Countries that buy gold send missiles and other weapons to both sides to enhance violence. A side is normally favored as power shifts between the groups.
✅ It is theorized that countries funding the civil war will favor one side of the Sudanese civil war, and that side will gain control of the mines. This then gives the funding countries power over the losing side, and they can promise more military funding (resulting in a shift in power) for cheaper gold once the losing side takes control of the mine. This way, it is in the gold buyer’s best interest for power to shift between the two, which it has been.
✅ A ceasefire can only happen with the U.S. putting financial pressure on these arms suppliers/gold buyers to the point where they are losing money off their efforts in Sudan.
✅ The United Nations has found that the UAE aids the RSF by receiving gold that sanctioned firms illicitly smuggle out of Sudan – often partnered with Wagner-affiliated companies – and injecting it into the international gold market. In exchange, the UAE bolsters the RSF militarily, enabling the RSF to change the balance of power in many parts of Sudan.
✅ The SAF does this as well; instead, they shifted their smuggling destination from the UAE to Egypt. This attracts a lot less attention.
✅ Gold is easy to launder because it is basically cash but even harder to identify that it is illicit.
✅ If Sudanese leaders’ ability to smuggle gold was cut off, it would significantly reduce both sides’ ability to continue fighting while also hurting Russia in the process by cutting off access to billions of dollars of gold, which is helping them fund the war in Ukraine.
✅ The U.S. could issue sanctions on Emirati and other companies involved, especially the Wagner-affiliated firms. This would need to be followed by sanctioning all networks of these companies which are vast. If networks are not targeted, these companies will be able to get around these sanctions through shell companies in other countries.

📝 Foreign Affairs Article
🔗 Link to this post.

Morning News 02/28/2024 05:28 PT

✅ GDP 2nd estimate annualized: looking for 3.3% for Q4. 3.2% actual.
✅ Personal Consumption read: looking for 2.7%. 3.0% actual.
✅ GDP Price Index: looking for 1.5%. 1.6% actual.
✅ Retail inventories: looking for 0.4%. 0.5% actual. January inventories.
✅ Whole inventories: looking for 0.2%. -0.1% actual. January inventories.
😇 2nd GDP estimate is for the 4th quarter of last year, so a 0.1% beat on prices seems relatively benign. January will be the key.
✅ Atlanta Fed Q1 aligns with Q4 second estimate: 3.2% estimate, out yesterday.

✅ 70% of listed stocks trading above their 200-day moving average. Common for a bull market, per Barclays.
✅ Barclays argues the market does not seem over-extended, with the potential for the rally to broaden out even more.
✅ BofA thinks the trend will stay up for stocks, saying “stay bullish.” They suggest inflation’s surprise in January will fade, we’re trending out of recession with data (ISMs/manufacturing/trucker deliveries, etc.), and there’s still some movement possible for stocks, especially as stocks broaden out. Similar to Barclays.


Beyond Meat
✅ 2024 guide misses by 3.4%
✅ 2024 guided opex $180m, vs $221.7m expected.
✅ Q4 net rev beats at $73.7m vs $66.8m expected.

🔗 Link to this post.

---

The Apple Car is Cancelled. 02/27/2024 11:57 PT

✅ The Apple car is cancelled.
✅ 10-year project
✅ Shifting to generative AI.

Why?
Apple is used to:
✅ 36.5% gross margin on products.
✅ 70.9% gross margin on services.
✅ 25% net profit.

✅ Nio Gross Margin: 8-11% with contract manufacturing 😇 Apple generally contract manufacturers. Enphase does as well and earns a gross margin around 50% on solar inverters. Nvidia uses contract manufacturing as well (TSMC). Enphase’s inverter margins are better (on a gross basis) than Apple’s product margins. Nuts!
✅ Tesla gross margin is <20%. Net closer to 8%. 😇 A fraction of Apple, especially as Tesla cut prices 40% and still maintains these prices.
✅ Rivian: 50k deliveries in 2023. $2b loss. Lost $40,600 on a gross basis per car delivered. Costs $120k per vehicle to manufacturer a ~$80k car (on a gross basis).
✅ Lucid: 1.7k deliveries in Q4 2023. Cost $410m to make. That’s $240k per vehicle in COGS to manufacturer the car. On a net basis: you’re spending ~$500k per vehicle delivered in Q4 2023.
✅ BYD Net ~8%. 😇 Similar to Tesla; propped up by hybrids.


🔗 Link to this post.

---

Israel. 02/27/2024 08:30 PT

😇 The bottom line issue for Israel and Palestine at this point is: can Palestine and Israel co-exist? Viral interactions exchanged over the “death” of the 2-state solution. Can it come back? A Foreign Affair’s piece by Martin Indyk thinks so.
✅ There are few alternatives. The destruction of Israel. Or the destruction of the Palestinian Authority, annexation of Gaza/West Bank, and deportation of Palestinians to other countries.
✅ Israel is reluctant to agree to a two-state solution for now – will take substantial leverage from the West, to be led by Biden.
✅ Israel has occupied Palestine before. After the 1967 Six-Day War, millions of Palestinians came under direct Israeli control, with limited rights.
✅ PLO (Palestine Liberation Organization) terrorist attacks and an uprising of Palestinians forced Israel and the PLO into the Oslo accords: Separated Palestinian and Israeli lands and shared control of Jerusalem’s Holy Basin.
✅ Control of this land is extremely emotional; tied to thousands of lives throughout history.
✅ Lack of trust on both sides. Both sides feel forsaken.
✅ Hamas would do away with Israel if it could.
Questions Now:
✅ Would Israel actually allow the rebuilding of Palestine under Palestinian leadership, even if without military?
✅ Power vacuum and leadership issue also creates substantial issues for governing/policing Gaza.
✅ Egypt and many states in the region want stability.
✅ Israel is dependent on United States military support.
😇 Challenge here is neither side will likely be satisfied with a compromise. Though a compromise will be necessary for at least some period of peace.

🔗 Link to this post.

---

Morning News. 02/27/2024 05:30-06:45 PT

Data
✅ Durable Good Orders -6.1% vs -5% expected with -0.3% revision of prior from 0%.
✅ Durable Good Ex Transportation -0.3% vs 0.2% expected with -0.1% revision of prior from 0.5%.
➡️ Think beds, computers, cars, motorcycles, washers/dryers, fridges (not consumables).
✅ Cap Good Orders Non-Defensive, ex-air 0.1% vs 0.1% expected with -.6% revision of prior from 0.2%.
✅ Cap Good Shipments Non-Defensive, ex air 0.8% vs 0.1% expected with 0.1% revision of prior from 0.0%.
➡️ Think machinery to make other things. Think servers, John Deere tractors, CNC machines, etc.
😇 Somewhat weaker than expected with durables and prior cap goods revision.

G20
✅ Increasing likelihood of soft landing
✅ Upside risk of FASTER disinflation

Lowe’s
✅ Misses fiscal year guide: $12.15 eps vs $12.6 exp.
✅ Sales of $84.5b guide vs $85.61b exp.

Fed
😇 Fed might prefer to cut slowly, but history disagrees. Best example was the mid 90s.


Earnings Q4
✅ S&P 500 companies YOY EPS growth expectations WERE 1.2%. With 90% reported, we’re at a beat of 7.7% YOY. -BI

Barclays
✅ Raises S&P 500 price target to $5,300 base case; that gives it a 4.3% year upside to go.
✅ Shadow recession bear case: $4,500 mild recession.
✅ Bull case $6,050, 19% upside to go.
😇 This tech valuation chart as well as the Cisco one vs Nvidia shows how early we are. Not sure if that’s exiting or scary. IMO $QQQ target is $525 inflation adjusted and $654 to complete the Nike swoosh before bigger downside risks.

✅ Nvidia vs Cisco as of Feb 22 valuation.


🔗 Link to this post.

---

Morning News. 02/26/2024 05:30-06:45 PT

Catalysts this Week
😇 Bank Term Funding Program ends in 2.5 weeks. No large spike noticed yet.
✅ New Homes Sales today 7am.
✅ Durable / Capital Goods tomorrow 5:30am.
✅ S&P home prices tomorrow 6am.
✅ Consumer Confidence tomorrow 7am.
✅ GDP Q4 second read Wednesday 5:30am.
✅ PCE January Thursday 5:30am.
✅ UofM Sentiment Friday 7am.

Nvidia
✅ March 18 GTC event – commonly announce new datacenter products.

Risks JPM Sees to Rally
✅ Negative jobs report
✅ 2-3 consecutive negative retail sales reports
✅ YOY/QOQ declines in S&P earnings
✅ An

🔗 Link to this post.

---

Goldman Sachs on Nvidia. 02/25/2024 08:10-08:25 PT

Nvidia
😇 As expected, Nvidia beat. What wasn’t expected was that their (Kevin adjusted) forecast growth (9% plus their usual 10-15% beat) works out to 19% quarter-over-quarter growth, showcasing the growth story isn’t dead yet.
😇 Remember, Nvidia prints cash. They generate in ONE DAY as much free cash flow as Square/Block does in one year.
😇 The question is: How long can the stock run? That’s anyone’s guess / gamble.
😇 One thing is certain: Higher interest rates DO NOT hurt Nvidia, apparently. If anything, they help – as investors continue to flee interest-rate sensitive stocks.
😇 Does that create an opportunity on interest-rate sensitivities or just a falling knife? Probably both, for now.

Goldman Sachs on Nvidia.
✅ Many saw Nvidia as mostly competitive in training, not inference. Yet 40% of Data Center revenue was driven by inference. 😇 Remember, training is: Here’s are 50 million miles of self-driving footage. Learn from it. That takes power/computer. Inference is: Given the training you’ve done, now you’re at an intersection with traffic. What do you do? (Infer what to do, vs train = learn what to do).
✅ Broadening of AI to healthcare, financial services, and automotive is seen as an additional catalyst. 😇 Not just meme-generation.
✅ 9% Q/Q OpEx increase seen as positive momentum catalyst by management.
✅ Risks: Cloud buildouts are very lumpy. Spending patterns come in waves. Will Nvidia’s customers monetize their AI investments? What about competition? 😇 Ironically, while I’ve warned about the actual software monetization of AI, I have to consider Tesla’s FSD is essentially monetizing software AI, and that has not gone well for Tesla.
😇 Remember, not all server stacks need to be rebuilt or upgraded to AI. Data storage, for example, does not need to be rebuilt to AI. For now at least. Instead, companies need to provide generative AI solutions that are profitable to the end user (drivers, financial analysts, doctors, drug-makers, etc.).

🔗 Link to this post.

---

Morning News. 02/25/2024 07:40-08:00 PT

Ukraine
✅ Zelensky Sunday morning said “we need support within a month.”
✅ Ukraine’s victory depends on Western support.
✅ The Economist sees Europe’s best defense against Russia/Putin as a strong Ukraine.
✅ Ukraine considering inviting Russia to a future peace summit hosted by Switzerland. 😇 Putin presently has a position of strength.
✅ TS Lombard believes the border crisis in America has caused a delay of weapons to Ukraine.
😇 TS Lombard provides a connection: they suggest the rapid rise in immigration has led to more frustration with immigration, especially during inflationary / more challenging economic times. Folks may come to resent the support for immigrants while their personal struggles increase. This had led to more political contention around immigration and funding for others. Thereby, it’s no surprise Congress’s last attempt to fund Ukraine was blocked by border negotiations.
✅ Department of Homeland Security definition of Encounter: Encounters: The sum of U.S. Border Patrol (USBP) Title 8 apprehensions, Office of Field Operations (OFO) Title 8 inadmissibles, and noncitizens processed for expulsions under Title 42 authority by USBP or OFO.

✅ Title 42 expulsion during Covid, which Trump invoked, made up the majority of “encounters” until about mid 2021, and Title 42 expulsions today are 0. This means encounters are mostly “apprehensions.”

✅ This issue from Mexico hit its worst month in December 2023.

✅ 54% are single adults, per Pew.
✅ 45% of Americans see the border as either a “Crisis” or “Disaster.”

Israel / Hamas
✅ While peace talks continue, Israeli forces are planning an expanded offensive against Hamas.
✅ We’re now in month approaching month 5 of war.
✅ CBS Face the Nation: Netanyahu remained uncertain about whether or not a deal would emerge.
✅ Egypt holding talks in Cairo.
✅ First pause in November saw the release of 253 people Hamas seized (Reuters).
✅ Biden not yet briefed on Israel’s Rafah operation. 😇 Surprising. This operation has been in talks for weeks.
✅ More intense European rearmament.

Fundraise live for HouseHack with Income Update.
Reminder, the original warrants HAVE been called due.
Q&A Video for HouseHack is out.

🔗 Link to this post.

---

Morning News. 02/24/2024 08:15-08:35 PT

General Election Update
✅ 02/21 Marquette: Trump 51, Biden 49
✅ 02/21 Marquette: Haley 58, Biden 42
✅ 02/20 Quinnipiac Trump 45, Biden 49
✅ 02/19 Rasmussen Reports Trump 47, Biden 41
😇 Some polls showing Haley beating Biden are exhilarating likely some “Never Trump” voters.

Trump on IVF
✅ After Embryos were deemed “persons” by Alabama’s Supreme Court, Trump called for IVF to remain legal (in-vitro fertilization).

Haley on Fair Tax
✅ Haley has supported a “fair tax” of a 23% sales tax instead of income/payroll/estate taxes.
😇 Usually these taxes aren’t as “fair” as they seem, as lower-income individuals spend more on sales tax and less or sometimes zero on income tax. These are consumption tax models, rather than progressive-tax models (not to be confused with “liberal/progressive” – instead, not, “regressive” or flat). Progressive just means: you pay a higher rate as you make more.

Trump 10% Tax
✅ Trump has proposed a 10% import tax on all imported goods.
✅ Tax Foundation argues this would cost American’s $300b per year.


🔗 Link to this post.

Morning News. 02/23/2024 06:14-07:00 PT

✅ Goldman makes case for June cut (😇possibly July).
✅ Bostic refers to summer for the first cuts. (Summer is technically June 20 – Sept 22.)
✅ The only Fed meetings this summer are:

✅ (Fed meetings are 2 days; presser on day 2).
✅ Goldman and Barclays see January’s inflation report as an outlier.
😇 SocGen still worries about evaporating consumer excess savings. This hasn’t been true so far.
😇 Carvana liquidated nearly $800m in inventory to create cashflow in 2023. Ignoring the burning of bond holders in 2023, the company lost money, still. However, by beating expectations, their stock is up substantially today.

Fundraise live for HouseHack with Income Update.

🔗 Link to this post.

Morning News. 02/22/2024 05:44 PT

BNPL
✅ Walmart added Affirm to 4,500 checkout locations December 20, 2023. 😇 As real wages rise, even though this feels bubbly, the bubble can continue to support consumer spending for much longer than we might expect. (A decade of bubble building? Not shortable.)

✅ Delinquencies higher than pre-covid, but not higher than pre-Great Recession.
Great Chart by Nick T:
✅ 12 banks see June
✅ 6 banks see May
✅ 0 see July.

✅Atlanta Fed real GDP is 2.9% as of Feb 16. Next update Feb 27.


Alabama Supreme Court
✅Embryos are Persons.

🔗 Link to this post.

---

Big HouseHack and Fundraising Update: 02/21/2024 14:41 PT

✅ Full update on Meet Kevin’s real estate startup, HouseHack, and the next accredited-investor fundraise.
✅ IPO Plans.
✅ MiniFunds.
✅ Latest assets and updates.
✅ Next fundraise.

---

Restaurant Earnings Uncertain. 02/21/2024 17:24 PT
✅ The cost of eating continues to rise, even though overall inflation has eased. Prices at restaurants and eateries were up 5.1% last month compared to January 2023, while grocery costs only increased 1.2% during the same period.
✅ Relief isn’t likely to come soon. Executives from restaurants and food companies have mentioned that they are facing rising labor costs, and ingredients are becoming more expensive.
✅ “Historically, after periods of inflation, there really isn’t a period you can point to where food prices have decreased,” said the chief executive of snack company Kellanova.
✅ In 1991, U.S. consumers spent 11.4% of their disposable income on food. In 2022, that figure was 11.3%. We’re re-approaching highs of un-affordability. 

✅ Denny’s, Wendy’s, and other public chains have informed investors this month about a decline in guest counts in 2023 compared to 2022 levels, particularly among lower-income consumers.
✅ Chipotle has expressed concern over the increase in California’s minimum wage for fast-food workers. Wages for these workers in California restaurants will be raised by 25%, making food more expensive.
✅ Companies like Darden (which owns chains like Olive Garden) are projecting higher earnings this year. However, other companies, like Starbucks, are lowering their earnings estimates for 2024.

🔗 Link to this post.

---

The Case For US Development of Latin America to Combat China. 02/21/2024 15:05 PT
✅ China possesses 85% of the critical materials that go into high-tech devices.
✅ Additionally, China holds 77% of the world’s battery-manufacturing capacity, producing half of the EVs sold worldwide.
✅ Biden’s attempt to address Western dependence on China involved US manufacturing subsidies and bolstering relationships with Asian countries. However, these solutions neglected the US’s backyard: the countries in Latin America.
✅ Latin America is rich in materials and oil that the US needs, as well as access to cheap labor, similar to China. Venezuela has the largest single country share of oil in the world. They have 18.2% of the world’s reserves, Saudi Arabia’s is 2nd with 16.2%. 
✅ While American car makers rely on Mexico, incorporating Latin America into chips and EV production through critical material mining and fracking would make these industries less reliant on China and more competitive.
✅ US leaders often overestimate the value of alliances in Asia and Europe. Neither can reliably provide sustainable solutions to the threats to the US supply chain.
✅ Europe can’t be a strong source of critical minerals, nor are they affordable. Few allies in Asia even have critical mineral reserves, and for those who do, it is uncertain whether western influence can free them from Chinese influence in the long run. 
✅ The US has a trade advantage in Latin America. Most of these countries have government similarities to the West; they are mostly democracies, and the West has more influence there because they are neighbors.
✅ There are also cultural similarities to the US in Latin America. About 20% of the US population is Hispanic.
✅ China has been increasing trade with Latin America, raising trade from $12 billion in 2000 to $500 billion in 2022.
✅ If the US fails to integrate Latin America substantially into US supply chains and continues to look for Indo-Pacific allies, it will only bring more Chinese influence to the U.S. doorstep.
✅ Even with the Inflation Reduction Act (IRA) and CHIPS Act subsidies that have brought a lot of manufacturing of green energy and chips to the U.S., there is still reliance on China for the completion of the chip. These chip facilities send their chips once manufactured domestically to China for assembly, testing, and packaging.
✅ Full back-end chip manufacturing in the US would be too costly to be commercially viable; the US needs to outsource this to countries with access to cheap labor and plentiful resources.
✅ Even with subsidies for EVs, the technological advances and economies of scale for manufacturing anodes, cathodes, and battery cells in the U.S. lag behind China. In 2023, Ford announced building a $3.5B EV factory in Michigan, stating they would bring Chinese engineers to the plant and license Chinese tech rather than develop their own.
✅ Latin America offers the US the best hope to diversify and relocate its extremely vulnerable supply chain for critical materials, semis, pharma, and batteries. Latin America has 60% of the world’s lithium reserves, 23% of the world’s graphite, and over 15% of the world’s manganese and nickel. They also have a substantial amount of copper, all essential for chips, renewable energy, pharma, and batteries.

✅ There is a significant infrastructure deficit in Latin America. Transportation is expensive within Latin American countries due to a lack of paved roads, railroad lines, deep commercial ports, and flights. This requires serious US investment to bolster logistics systems.
✅ This is becoming more urgent for the US, as China has been undermining the US by coercing Latin America with their influence. Some examples of this include China coercing countries to withdraw diplomatic recognition of Taiwan. In 2020, the Brazilian President aligned with Trump and said that Huawei would be excluded from Brazil’s 5G network. China then threatened to withhold COVID-19 vaccines from Brazil, causing the president to backtrack. China is also now one of the only sources of outside financing available to Argentina, Ecuador, and Venezuela.
✅ China has become a significant builder and funder of infrastructure there too, constructing highways, ports, hydropower dams, solar power plants, and electricity grids in over 20 countries. They are involved in energy and mining projects, including an $8 billion nuclear power plant in Argentina and a $10 billion copper mine in Peru.
✅ This Chinese investment in the region has influential consequences. These countries have become less diverse, less sophisticated, and less equal. China would like to incorporate this region into its sphere of influence by sandbagging them to ruin the U.S. exit Asia strategy to create more dependence. China’s ultimate goal would be to own all means of production to transition power from the US to China, leaving the US as merely consumers.
✅ Growth in Latin America is extremely poor, partly due to the incredibly unfavorable terms Chinese financing offers them, making it difficult to make money when lending. Perhaps China is intentionally bogging down their growth.
✅ Chinese loans often feature high-interest rates and provisions for immediate repayment if China or its companies desire. These loans are secured by natural resources as collateral at fixed and very high rates.
✅ Western development of Latin America would clean up a lot of corruption in Latin America and provide people with a more stable economy and jobs.

🔗 Link to this post.

---

FOMC Minutes, Nvidia Earnings & Earnings Call, Rivian. 02/21/2024 13:50-15:00 PT

Big HouseHack Update is Out Here – IPO Update & Fundraising.

FOMC Minutes
😇 Cautious FOMC minutes. No indication of hike.
😇 More focus on foreign deflation and China. This was interesting and notable.
✅ Financial conditions eased.
✅ Foreign headline inflation continued to fall.
✅ “In China, a property-sector slump and depressed consumer confidence continued to weigh on domestic demand.”
✅ (Last FOMC minutes): “China […] economic growth remained modest.”
😇 Big shift on foreign here.
✅ Commercial real estate continued to decline, “especially in the multifamily and office sectors.”
✅ 10 governors worried about cutting too soon.
✅ 2 governors worried about too tight.
✅ “Various participants noted that housing services inflation was likely to fall further as the deceleration in rents on new leases continued to pass through to measures of such inflation.”
✅ Low and moderate income categories were increasingly coming under pressure. 😇 Same comment as last time.
😇 Didn’t seem to adjust this report to make it seem hawkish. If they were worried about the January CPI data, they would have adjusted this to be more hawkish. They did not. Stay cautious.

Nvidia Earnings
😇 My expectation was $21.562b-$20.8b. WS was at $20.4b. Guide was $20.0.
✅ Q4 Revenue $22.1b.
✅ Q1 Guide $24b +/- 2%.
😇 Likely means Q/Q growth rate slowed from 34% to Q2-Q3 to 22% in Q3-Q4 and (projected) 19.4% (my projection) for Q4-Q1. That’s staying power! <<< This is very important.
😇 Eventually, the supply coming online will likely be quite deflationary. But we’re not there yet!
😇 Guide proves staying power.

Nvidia Earnings Call
✅ Supply of hopper production improving. Next-generation will be supply-constrained though as next-generation demand “far exceeds demand.”
✅ ~40% of data-center revenue was for AI reference (roughly).
✅ Bio, LLMs, Google, Microsoft, etc., to accelerate AI on Nvidia GPUs.
✅ Significant adoption: automotive, financial, fraud detection, robotics, etc.
✅ Nvidia automotive data-center processing demand expected to grow significantly.
✅ Deep expertise in healthcare.
✅ BioNeMo: pre-trained drug discovery AI models.
✅ American Express improved fraud detection by 6% using AI.
✅ Financial services are using AI in trading.
✅ Mid single-digit contribution from China. Expect that to remain the same.
✅ H200 to ship in Q2. 😇 B100 after.
✅ InfiniBand up 5x year over year.
✅ SpectrumX will enable us to operate in ethernet as well. 😇(Vs InfiniBand).
✅ Dell gets shoutout as partner with SMCI.
✅ Nvidia Drive Thor integrates intelligence into a single AI compute platform including autonomous driving and parking. Geely, Li Auto, etc. all announced vehicles built on Nvidia.
Q&A
✅ Calendar 2024/2025 Expectations: Fundamentally the conditions are excellent for continued growth for calendar 2024, 2025, and beyond. At the start of 2 industry-wide transitions. General to accelerated computing.
✅ Creating new AI-generation factories.
✅ Large cloud-service providers still building out.
✅ Supply is improving overall. Power regulators, transceivers, networking/cables, you name it. NVDA Hopper GPU has 35,000 parts; weighs 70 pounds. Very complicated.
✅ Demand expected to be stronger than supply provides through the year. ⚠️ Cycles times are improving.
✅ New generation of product ramping. We’re ramping 200. We can’t go from 0 to demand in short-term as we ramp. We’re ramping SpectrumX.
✅ We try to avoid allocating unnecessarily with restrained supply.
✅ Surgical, humanoid, agricultural robotics all use Nvidia.
✅ We can often allocate to a CSP and bring the customer to them.
✅ Analyst: Inventory + purchase commits, down a touch. Lower lead time or closer to filling order book or what? How should we read that?
➡️ Trying to ship as inventory comes in right away.
✅ Mid 70s margin for rest of 2024. Mix will be the largest driver. Peak Q4 Q1 margin (76.7%).
✅ Reset our product offering in China and testing that out.
✅ Leasing GPU’s at $4500/year.

SMCI:
✅ Just launched $1.9b convertible offering due 2029 😇 Smart. I’ve been calling for them to raise! (Not that incredible of a call; it’s just smart for them to do).

Rivian
✅ Lays off 10% of salaried staff.
✅ 2024 production down to 57k vs 80k expected.
✅ Q4 deliveries 13,972 vs 14,302 expected.
✅ Cash equiv at $7.86b vs 8.74b.
😇 Probably down to 12-18 months of cash left, again. Raised $1.5b in cash last year. Q4 did lose $600m on the gross side, which was greater than the average $500m loss per quarter previously.

Etsy
✅ Q4 rev was $842.3m vs $827.3m.
😇 Plenty of cash to cover short-term obligations ($1.1b vs ~$400m short-term obligations).
😇 Margin a bit weaker though advertising didn’t seem much higher. Generated about $700m in cash flow last year.
✅ Sees modest active buyer growth in US; strong for international.
✅ Q4 EPS did miss 62c vs. 78c.
✅ GMS for the first quarter of 2024 is currently estimated to decline in the low-single-digit range on a year-over-year basis.😇 Ah this explains the stock pain. Need growth!

Full stream on earnings & Nvidia:

🔗 Link to this post.

---

FOMC Minutes Preview. 02/21/2024 08:55 PT

What we’re Looking For:
😇 The minutes are a messaging tool and can be manipulated / massaged to “suggest” exactly what the Fed wants. Will the Fed hawk them thanks to January’s CPI, stay neutral, or play down January’s CPI?
✅ Barkin this morning downplayed January’s CPI as heavy on “seasonal” adjustments.
✅ Will the Fed UNPRICE May?
✅ Will the Fed PRICE June?

Current Expectations:
➡️ 94% NO cut March 20.
➡️ 65.7% NO cut May 1.
➡️ 73.3% cut June 12.
➡️ 56.4% 4 cuts Dec 18 (this was nearly 100% in early January).

Fed FOMC Minutes Livestream

🔗 Link to this post.

---

Morning News. 02/21/2024 05:25-06:45 PT

PANW
✅ 2.7% miss on FY guide.
✅ “Customers are facing spending fatigue.”
✅ “Demand is no different from prior quarters.” 😇 No growth?

SEDG
✅ 4Q Rev $316m vs $323m exp.
✅ 1Q Guide $200m vs $373.2m exp -46.4%.
✅ ADJ Gross may be negative Q1.
✅ Gross margin was -17.9% in Q4. Lost money on sales. Gross profit -$56,425 vs OpEx: $181,156. 😇Ouch!
✅ Cash flow -$139,910m

ENPH
✅ Gross margin was 48.47% positive in Q4. Gross profit was $146,662 vs OpEx: $1656,83.
✅ Cash flow $35,450
😇 Much like Tesla in EVs, ENPH is the winner of the losers.

🔗 Link to this post.

---

Morning News. 02/20/2024 05:25-06:45 PT

✅ 37.8% chance of cut in May.
✅ 61.9% chance of 4 cuts by December.
✅ 87.7% chance of 3 cuts by December.
😇 Speculation over “rate hikes” circulating in the media. No indications of this from the Fed at all. Remember, Jerome Powell suggested future reports “don’t even need to be as good” as prior reports to get to cutting. Later cutting though? Getting priced in.

✅Softbank’s Masayoshi son “seeks to build $100b AI chip venture.” 😇 Likely hitting ARM stock given Softbank’s position / control of the outstanding float.

Tomorrow
✅ 16:20 PT NVDA earnings after the bell tomorrow.
✅ 11:00 PT FOMC minutes tomorrow.

😇 Potential for more credit expansion is still ahead. This helps contribute to consumption and GDP in the short term. In the longer term, someone will have to pay up.



🔗 Link to this post.

Bad Real Estate Debt. 02/19/2024 23:40 PT

Financial Times on Property Debt:
✅ Sharp increases in office, shopping, and other real estate loan late payments.
✅ Reserve at JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley are down to 90c for every dollar of commercial real estate debt on which the borrower is at least 30 days late. That was as high as $1.60.
✅ Sharp deterioration in the last year.
✅ Value of delinquent debt is up to $24.3 billion, from $11.2 billion.
😇 Has this been “swapped up” like 2008 where $24.3b turns into $240.3b? In 2008 we had about $10t leveraged up to $100t.
✅ “There are banks that may have looked fine six months ago, that are going to look not so good next quarter,”
😇 Yikes. This IS getting worse.
✅ Remember the WSJ last week? 9.18% of multi-family loans are 30-days late vs less than 0.50% January 2023.

🔗 Link to this post.

---

Wall Street Over the Weekend 02/19/2024 15:50-16:20 PT

Academy Securities:
✅ “Hot” inflation likely due to seasonality, though UofM expectations did rise.
✅ Greed and Fear Index has turned to “extreme greed,” a contrarian indicator.
✅ Most investors seem long; a risk?

Super Micro Computer ($SMCI)
😇 We discussed – on channel – the insane RSI levels of SMCI, levels not reached since Gamestop 2021, and successfully shorted the stock for a slightly more than 3x gain Friday.

Barclays on SMCI, for Fundamentals:
✅ Sees sustained AI demand for H100 and B100 line ~Q2 2024.
✅ Usually 8xH100, B100 brings that to 4 per stack.
✅ B100 likely to be liquid cooled, which plays into SMCI’s advantage.
✅ SMCI is partnered with Nvidia for total solutions. Price target of $961 at 32x 2025 EPS of $30.04. 😇 Yikes! SMCI just reported Q2 2024, so they’re looking 18 months ahead and giving a 32x multiplier to this server rack company. If they settle at 10% EPS growth at the end of 2025, that’s a 3 PEG. Seems unsustainable.

Abercrombie vs Nvidia:
😇 Wow.


🔗 Link to this post.

---

Bloomberg on Prices. 02/19/2024 11:55 PT

Earnings, Layoffs, and Prices (Comments by Bloomberg Odd Lots).
✅ Layoffs during January/February last year were substantially higher. Tech hired more than consumables and were able to layoff more. Consider consumer package goods, like Coca-Cola. Can Coca-Cola really lay people off right now, especially when they want to increase volumes? Probably not. They didn’t go on a hiring binge like tech did. They haven’t really added employees like tech.
✅ Unilever pricing change (Ben and Jerry’s, Popsicle, mustards, Magnum ice cream, Bru instant coffee, Best Foods, etc.)
➡️ Q4 2022: +13.3% pricing, -3.8% volume.
➡️ Q4 2023: +2.8% pricing, +1.8% volume.
✅ Volumes are returning after prices adjusted up.
✅ Margins up 2%. 100 bp of that into marketing to get volumes.
😇 Clearly, the ability to continue to grow pricing is restrained.
✅ Kimberly Clark: We are going to spend on marketing to get volumes back. Supports $META and $GOOG.
✅ Price and Marketing shift really supports $META, $AMZN, $GOOG. So revenues are up, giving them more to spend on AI.
✅ Would there be price cuts? Probably not. Not going back to 2020 price.
✅ Kroger: Massive data on consumers. Companies like this have had data for a very long time – but haven’t been able to use it. AI helps them unlock the potential: when to offer a coupon, when not to offer a coupon, etc.
✅ UPS has had its lunch eaten by Amazon 😇 (Wow see UPS since May 2021: down 26.80%.)

✅ Coca-Cola mentions hyper-inflationary markets like Argentina. But then say, they don’t think pricing is going to be as strong this year. They’re guiding for lower pricing in 2024.
✅ 2024 is not going to be the year of price increases. It’s 2-3% on pricing, and 2-3% on volumes. Now they’re all competing on volume.
😇 The price up is useful for boosting revenue, now back to more stable growth absent recession.

🔗 Link to this post.

---

Monday Morning News. 02/19/2024 08:50-10:25 PT

eHack Content
😇 Apologies from Kevin for the last 10 days of sparse or missing content. We attempted a transition to a new system, which while having its benefits, created some drawbacks that removed some of the beauty of what we had. We’re back to our original for now and will fill in the missing 02-07 to 02-16 content this week, as well as bring more content as a priority daily

Morning News
Ukraine
✅ Avdiivka, Ukraine has fallen – as of Saturday.
✅ Russia aerial bombardment contributed (😇 Ukraine’s air defenses are likely lacking following the slower pace of weapon support to Ukraine).
✅ Surface to Air Missile (SAM) defense battery (Patriot system) costs around $400 million for the launch system, without missiles.
✅ Each SAM (the actual missile) costs around $4,000,000.
✅ Russian’s purposefully targeted a coke-processing plant (charcoal) using incendiary munitions to blow up fuel takes and release toxic smog (NYT).
✅ 900 civilians had remained in the city (30,000 prewar).
✅ Fate of those 900 is unknown.
✅ City likely hit with 800 bombs.
✅ Avdiivka is in the Donetsk oblast (😇 think province).

✅ Video here appears to show Avdiivka February 2024 from X reuploaded to share:

✅ Church picture from this blog appears to show the same church with Avdiivka as the caption as well.

✅ Biden blamed Congress for failing to supply aid.

Present Map of Ukrainian Control:

Ukrainian Weaknesses
✅ 2 years of combat.
✅ Now fewer aerial defenses, leaving them more vulnerable to bombardment.
✅ Lack of shells to respond.
✅ CFR echoes these concerns.

Council on Foreign Relations on Ukraine, February 17:
✅ “While the war has taken a heavy toll on Ukraine’s people and its economy, the country continues to function with a surprising degree of normalcy outside of the front-line areas.” 😇 This is likely where the posts on social media of folks partying in Ukraine come from – mis-contextualizing the horror that’s occurring in war-torn regions.
✅ Ukraine has attacked and taken down a third of the Black Sea fleet.
✅ F-16 jets are expected this summer.
✅ “without U.S. aid, Ukraine is likely to lose the war.”
😇 This weakening likely reduces the desire for Putin to negotiate. It certainly reduces the pressure on him.

Economist: Can Europe Defend itself Without Ukraine?
✅ The question is not whether the U.S. will abandon Ukraine, but whether it will abandon Europe. 😇 Keep in mind, The Economist is openly anti Trump. Citing Trump’s rhetoric to not support delinquent NATO members. My analysis on the NATO comments are below this section.
✅ The Economist also cites: ‘“It cannot be ruled out that within a three- to five-year period, Russia will test Article 5 and nato’s solidarity,” warned Denmark’s defense minister, citing “new information”.’
✅ Germany is promoting a war economy, encouraging unity with a “European Sky Shield Initiative.” In this, 21 European countries buy air-defense systems together. Many of them are American, Israeli, and German weapons (which bugs France). Consider Poland, spending heavily on equipment, does not have the intelligence to target without America or European support.
😇 A strengthening military in Europe makes sense, following the weakening of Ukraine – in-spite of Putin’s promises not to attack NATO. The Economist then continues on with nuclear fears.



Israel Bans
✅ Israel is weighing restrictions for the Aqsa Mosque in Jerusalem.
✅ Some may be barred from attending prayer during the holy month of Ramadan (Mar 10, 2024 – Tue, Apr 9, 2024)

Israel’s Economy, per Bloomberg.
✅ Economy contracts nearly 20% after war outbreak.
✅ 19.4% annualized decline in Q4. Expectations were -10.5%.
➡️ Government spending up 88%.
➡️ Exports down 18%.
➡️ Imports down 42%.
➡️ Private consumption fell 27% (all annualized figures).
✅ Some data shows signs of growth again in December.

Goldman Sachs on Biden Economy via Bloomberg.
✅ Consumer sentiment up, Biden approval not.
✅ Feb 5 Goldman Report:
➡️ Growth in consumer spending helps president’s win again (Reagan, George W. Bush, Clinton, Obama).
➡️ Consumer spending grew under George HW Bush, Trump, and Carter, but much less thank Regan, George W, and Clinton.
✅ A risk here is a lot of consumer spending has relied on credit growth.

➡️ Inflation, job growth, and GDP matter as well.
😇 The unsurprising conclusion of this article? If we enter a recession, Biden probably loses.

🔗 Link to this post.

---

Israel Taking Reputational Hits 02/16/2024 15:15 PT and updated February 19 at 09:40 PT
✅ The war in Gaza has resulted in the death of more than 28,000 Gazans and the destruction of over 70% of the territory’s homes, without coming close to the goal of “eradicating Hamas.”

😇 Remember, Israel is critically opposed to a two-state solution at this point, despite that desire by the West.
😇 A lack of a two-state solution suggests the eradication of Palestine entirely – or at least Gaza. With some form of rebuilding likely to come under Israeli control.

✅ Israeli media portrays a different picture. Israeli newspapers and broadcasts are filled with images of destroyed tunnels, captured weaponry, and high-profile Hamas commanders killed. One headline in The Jerusalem Post reads, “Israel Defeats Hamas in Khan Yunis, over 10,000 Gazan Terrorists Killed.”

✅ An opinion survey conducted by the Palestinian Center for Policy and Survey Research during the weeklong ceasefire in November revealed that 57% of Gazan respondents and 82% of West Bank Palestinian respondents supported Hamas’s October 7th attack, equivalent to 3.5 million people. 
😇 Consider the source though.

✅ Even if Israel eradicated Hamas, they would certainly face armed resistance from a percentage of the opposition surveyed. Hamas only had 30,000 members pre-war. Now, with 3.5 million people supporting them, Israel has created a net-positive amount of opposition that can translate to armed insurgency during their retaliation.
✅ Israel estimates that “finishing the job” may require a year or more of fighting. 😇 Wow.
✅ Support for Hamas has also grown substantially across the Arab world and even in the US, particularly among younger Americans. Israel is clearly losing the public relations war internationally.
✅ Israel needs to turn to providing credible humanitarian relief to protect their reputation or come to a peace deal by partnering with Arab states who have decent relations with Palestinians to sustain credibility.

Problem:
✅ No post-war vision by the Prime Minister of Israel.
😇 Israel is unlikely to be serious in negotiating a Palestinian solution while military and monetary support continues to flow to Israel. The incentives are skewed: continue war, the flow continues. Stop war, the flow stops. Of course, Israel argues the mission of eliminating Hamas is not complete. Hence their latest incursion plans in Rafah.

Rafah Plan in Israel: Aljazeera Take.
✅ Goal is pressuring Egypt and depopulating Gaza.
✅ CIA chief William Burns visited Egypt’s capital Cairo to discuss a temp. truce allowing Hamas and Israel to exchange hostages.

🔗 Link to this post.

---

What Happens if China Takes Taiwan 02/16/2024 15:10 PT
✅ As of now, in geographical matters, a self-governing Taiwan anchors Japan’s defense and denies China the ability to threaten US allies such as Japan and South Korea.
✅ The world is highly dependent on Taiwan as the primary producer of advanced microchips. A war over Taiwan could easily cause a global depression due to the negative growth of many western tech companies as they establish their own supply chains.
✅ A Chinese seizure of Taiwan could also substantially damage US credibility. The US has guaranteed Taiwan’s security, and losing the territory to China would lead many countries under the security of the US to develop their own nuclear arsenals to protect themselves, viewing the US as less fit to do so.
✅ Japan would be the first country to move toward making its own non-US-controlled nuclear weapons if Taiwan is captured, as they are at the greatest risk of being invaded next. South Korea would proceed shortly after.
✅ This nuclear arms race would spread to China, Russia, the US, India, and Middle Eastern countries.
✅ If China annexed Taiwan, they would likely reduce reliance on the USD as the reserve currency and force Asian neighbors to do the same.
✅ Over the past 20+ years, democracy and western culture have flourished in Taiwan. Taiwan ranks 6th in the world for gender equality. In 2019, Taiwan became the first society in Asia to legalize same-sex marriage. Three-fourths of Taiwanese people believe that democracy remains the best system of government.
✅ Many Chinese citizens draw inspiration from Taiwan’s political transition from martial law to democracy, which they see as a model for what China can become. The CCP fears these views and has propagated that Taiwan is merely imitating Western forms of governance.
✅ The world now produces approximately $600 billion worth of chips each year. These chips then end up in consumer goods and defense systems that are worth many TRILLIONS annually. Taiwan now accounts for roughly half of the global production capacity. A war would halt or significantly decrease production, thereby destroying trillions of dollars of GDP globally, resulting in a depression.
✅ It would take many years to replace this production capacity and set back technology substantially.
✅ Ken Griffin has estimated that losing access to Taiwanese semiconductors would shave 5-10% off the US GDP. “It’s an immediate Great Depression,” he said in 2022.
✅ China’s economy would suffer setbacks if Taiwan’s chips disappeared from global markets, but much less than the West. China has much to gain if successful.

📝 Earnings Call Transcript
🔗 Link to this post.

---

North Korea Stirs Trouble 02/15/2024 15:52 PT
✅ North Korea consistently serves as an arms supplier to US adversaries, despite their attempts to deny it.
✅ North Korean weapons are distributed to different areas around the world, ranging from artillery shells to Russia, RPGs to Hamas, and various arms to Sudanese paramilitary groups.
✅ North Korea has significantly benefited from its resurgence in the arms trade. Without intervention, they may continue financing further weapons testing and development, gaining access to dangerous modern technologies.
✅ China and Russia have shifted their stance on North Korea, moving from semi-agreement with the West to openly supporting Kim’s regime.
✅ Russia, in the past, voted in favor of suppressing North Korea in the UN but has contradicted its own vote by supporting North Korea’s nuclear submarine ambitions and space/missile programs.
✅ The US government reports that North Korea seeks fighter jets, surface-to-air missiles, armored vehicles, and ballistic missile production equipment in exchange for the munitions they supply to Russia.
✅ Russia has unfrozen $9 million of North Korean dollars for purchasing crude oil. This is a small amount, it’s the only known sum to the US so it’s likely more. North Korea has also been allowed to open a bank account in Russia, an action restricted by the UN.
✅ North Korea has shifted its focus from seeking sanctions relief or improved relations with the US to helping its new allies weaken the US and reshape the world order.
✅ North Korean arms sales not only generate revenue but also undermine the current international order, challenging the US and supporting the authoritarian axis.
✅ North Korea has successfully stolen over $3 billion through crypto hacks.
✅ The West’s primary tool against North Korea, sanctions, has become less effective due to North Korea’s new alliances and evasion techniques.
✅ UN sanctions on North Korea have not been updated since 2018, mainly due to Chinese and Russian opposition. Russia and China are 2/5 permanent members in the UN.
✅ The US can put pressure on North Korea by condemning the purchasing of North Korean arms. This can be done through the UN, which China and Russia are a part of. This likely wouldn’t cause any change of course for Russia’s purchases, but it would put more pressure on Russia and China’s reputations. This pressure is historically met with some form of compliance. This could serve as a deterrent to other countries too.
✅ The reason there is some compliance is due to foreign investment. North Korea has a horrible reputation, but China gets a lot of foreign investment.
✅ Joint patrols by the US and allies (Australia, Canada, France, Germany, Japan, New Zealand, South Korea, and the UK) can monitor illicit North Korean transactions seen in satellite images, raising global attention and costs for uncooperative behavior.
✅ North Korea plays a significant role in the authoritarian axis. China doesn’t want to be the one supplying lethal aid to preserve its reputation for foreign investment. China would receive fewer inflows from EM funds if it provided lethal aid to Russia. Instead, China has been economically supporting Russia by purchasing oil and gas from them. North Korea takes on the less favorable tasks because their reputation is already tarnished, and they receive no Western foreign investment. If North Korea were to be halted, lethal aid would be substantially limited.
✅ North Korea often evades sanctions and money laundering through China. The US has been hesitant to scrutinize these Chinese entities for fear of worsening US-Chinese relations. However, unchecked North Korean activities may lead to inevitable conflict.

🔗 Link to this post.

---

Why Russia Is So Close With Iran 02/14/2024 11:50 PT
✅ Since Russia invaded Ukraine in 2022, it has deepened relations with Iran. Russia had joined a sanctions regime against Iran in the 2010s to restrict its nuclear program, but these were removed as their relationship evolved.
✅ Deepening relations with Iran includes support for Iran’s proxies such as Hamas, Hezbollah, the Houthis, and Iraqi/Syrian militias, collectively referred to as the ‘axis of resistance.’
✅ Iran supplies Russia with drones, while Russia aids Iran’s propaganda war against the West, blaming Hamas attacks on Israel and the U.S.. Russia also supports Iran’s proxies with antiship missiles, funding, and intelligence sharing.
✅ Deepening relations with the axis of resistance was a ploy by Russia to undermine American interests in Israel. This makes Russia in confrontation with the U.S. in not only Ukraine, but also in Gaza. 
✅ Iranian general Qasem Solemani was assasinated in 2020. He was the network’s founder. This helped form the axis of resistance by increasing the autonomy of the countries in the region to seek out international partnerships. Almost all of them turned to Russia. 
✅ After his assassination, regional governments became very weak and disorganized. This caused them to turn to Russia. This shows a potential exploit to undermine the axis of resistance. The United States could fund the rebuilding and help strengthen formal state structures to make middle eastern countries disengage from Russia.
✅ Russia is trying its best to maintain plausible-deniability in regard to supporting attacks on Israel. The purpose of this is to maintain civility with them, Israel has a sizable Russia-speaking population. This aims to ensure potential support from Israel in the future for Ukraine, should the U.S.-Israel relationship be compromised.
✅ Ukrainian intelligence indicates that Russian drone operators, using Iranian drones, were trained by Hezbollah commanders in Syria, where Russia has a base.

📝 Foreign Affairs Article
🔗 Link to this post.

---

Robinhood $HOOD Earnings Report 02/13/2024 15:07 PT
✅ Launched brokerage in the UK and crypto in the EU.
✅ Robinhood gave back 1% on each account transfer, attracting average transfers with balances over $100k and substantially changing their customer base.
✅ 2023 recorded revenues of $1.9 billion, up 37% year-over-year.
✅ 24% year-over-year increase to $471 million, driven by higher net interest, transaction, and other revenues.
– Net Interest Revenues: increased 41% year-over-year to $236 million, driven by growth in interest-earning assets and higher short-term interest rates.
– Transaction-Based Revenues: increased 8% year-over-year to $200 million, primarily driven by
1) crypto revenue of $43 million, up 10%,
2) equities revenue of $25 million, up 19%,
3) partially offset by options revenue of $121 million, down 2%.
– Other Revenue: increased 30% year-over-year to $35 million, primarily driven by higher revenues from Gold subscriptions (grew 25% YoY) and Shorewood Media.
✅ Rolling out a credit card with the acquisition of credit card company X1, which offers cash back on stocks. X1 has an ARPU of $300 per user, significantly higher than Robinhood’s $81 ARPU. Vlad said that there will be special benefits to gold customers to drive user growth.
✅ Basic and diluted share count decreased by roughly 5% due to buybacks.
✅ Now has an international customer base with tens of thousands of users.
✅ EPS for Q4 2023 came in at $0.03, beating expectations of $0.01.
✅ Net deposits grew to $4.6 billion in Q4 2023 from $4.0 billion in Q3 2023.
✅ Assets Under Custody (AUC) grew to $103 billion in Q4 2023 from $87 billion in Q3 2023. $103 billion in AUC has broken all-time highs set in Q4 2021 of $98 billion.
✅ Robinhood now has 490,000 retirement accounts, translating to $1.7 billion in AUC or $3,500 per account. This is expected to grow over time.
✅ Robinhood believes that falling interest rates are a tailwind for the company, despite fears that they perform better in higher-rate environments due to net interest revenue.
✅ Customer growth was phase 1, and phase 2 is asset growth. Robinhood has been in phase 2 for over a year.

🔗 Link to this post.

---

LYFT Earnings Report Rollercoaster 02/13/2024 14:35 PT
✅ Lyft earnings release sends the stock up over 60% in after-hours✅ This was mostly due to Lyft’s earning release showing adjusted EBITDA margin expanding by ~500 basis points
✅ Lyft’s CFO Erin Brewer has now issued a correction, indicating they meant to write ~50 bps of expansion (0.5% growth) rather than ~500 (5% growth)
✅ “This is actually a correction for the press release”
✅ The stock immediately dropped from +60% to +15% in after-hours

🔗 Link to this post.

---

Should The US Return To Its Manufacturing Roots? 02/13/2024 13:49 PT
✅ Some believe that Trump’s tariffs will reduce imports, but they will also decrease exports because domestic factories will focus more on domestic consumers.
✅ This shift would benefit the US labor market by providing Americans with higher-paying jobs.
✅ The US has little comparative advantage in most areas of manufacturing, but advantages have been created through industrial policy with subsidies and trade restrictions.
✅ South Korea is competitive in steelmaking, but it lacks access to cheap power, iron ore, or other natural advantages in this sector. South Korea’s advantage is entirely the result of government policy, achieved through various subsidies and infrastructure/R&D grants.
✅ About two-thirds of American workers do NOT have a college degree. For this group, a manufacturing job is a ticket to the middle class. These jobs generally pay better and offer more benefits than service sector jobs (such as healthcare, tourism, and hospitality).
✅ Maintaining a strong domestic manufacturing sector is important for the US labor economy due to this reality. If domestic manufacturing starts to fade more due to further outsourcing, not only does the US become more dependent on China, but median wages will decline.
✅ The US has been in a trade war for six years with China. Trump initiated it, and Biden has continued it. China hasn’t bowed to US pressure. Under the Biden administration, the US has incentivized companies to bring manufacturing to the US through subsidies from the IRA.
✅ Since this trade war began, the CCP has undermined the US in many aspects, most notably its support for Russia during the Russia-Ukraine war and providing oil revenues to Iran that end up funding Hamas recently.
✅ Subsidies have proven they can be a strong enough moat to enable a country to sustainably manufacture, even if that country is not naturally ripe for it in the sector. This is what the US is doing now and should likely continue to do.

🔗 Link to this post.

---

Media Lashes Out at Tucker Carlson 02/10/2024 17:12 PT
😇 The lashout by the mainstream media at Tucker Carlson’s interview is intense. Especially considering Tucker spoke for only roughly 5 minutes of the slightly over 2hour video.
😇 Our opinion: Much of the anger against Tucker Carlson for conducting the interview feels misplaced. Viewers should have the right to choose to watch Putin’s point of view. Suggesting Tucker “platformed” or “amplified” Putin, I believe, is a mistake and a clear form of censorship. Individuals should have the right to decide what to view/listen to and make up their own mind.
😇 That said, a neutral breakdown of falsehoods or accuracies is broken down below.
✅ Politico said
✅ “Tucker… aligned himself with the enemy”
✅ Carlson lied “that Western media have not even bothered to try to speak with Putin.” They just chose a “useful idiot.”
✅ Al Jazeera said:
✅ Carlson did not pressure Putin the way he used to sandbag the proDemocrat guests on the Fox News show he was fired from last year.
✅ Carlson did not even try to refute Putin’s outlandish and ungrounded claims.
✅ “Tucker goddamned Carlson served very well as a microphone stand for the crazy maniac who for two hours rambled about how he loves to kill Ukrainians.”
✅ NYT: Ukraine’s Response: “Carlson’s interview with Putin is a twohour marathon of delusions and fakes,” the Center for Strategic Communications, a Ukrainian government organization, said in a statement.”
✅ Chris Wallace claims Carlson didn’t interview Putin. Carlson just sat there as an “eager puppet.” He “cashed in” on Putin and asked “Nothing about invading a sovereign country, innocent deaths, war crimes, etc.” “Calling him a useful idiot is an insult to useful idiots.”
😇 As an interviewer myself, there’s a real risk of offending your interviewee to a substantial degree that they A) cancel the airing of the interview (Putin could have done that), B) Ruining the potential for other world leaders or those with stronger opinions C) Preventing the free flow of someone’s thoughts, even if they are wrong.😇 I believe interviews are best analyzed and criticized AFTER the interview and followup interviews are very useful for this as well. Fighting/arguing in an interview is usually unproductive. Consider the BBC reporter who famously interviewed Elon Musk while drilling Musk. The confrontation turned into a spouting match of “who lied” rather than about Elon’s free flow of ideas. That BBC reporter James Clayton probably won’t be landing many new interviews.
✅ Boris Johnson calls this interview a “tissue of lies.” “[H]e betrayed his viewers and listeners around the world.” Tucker was just a “sewer” for Putin’s message. Boris suggests Putin lied about the UK blowing up the peace deal negotiated in Istanbul 18 months ago.
✅ Boris Johnson: “After all, he lied barefacedly about his intention to invade Ukraine. He told the world, he told me personally, that he wasn’t going to invade Ukraine, only weeks before giving the orders for the tanks to roll in.”
✅ John Kirby (NSC Strategic Communications Director): “There is bipartisan support for Ukraine.” “Don’t take at face value what Putin has to say.”
✅ Senate leaders just failed to lockin another $7.9b amendment for Ukraine (Punchbowl New today).
✅ Trump in 2019 encouraged Zelensky and Putin “work things out.”
Collaboration of Poland with Nazi’s.
✅ Poland presents itself as a “noble victim” during WW2. Poland did suffer. Poles resisted Nazi occupation. Poles helped hide Jewish neighbors.
✅ Collaboration argument from Putin comes from the other point of view:
➡️ Half of European jews murdered in the Holocaust were killed in what was Poland.
➡️ Some argue Polish, whether collaborating out of fear of death or otherwise, supported the Germans in finding Jews.
😇 Reality is probably both. Some probably did collaborate with the Germans to save themselves.Imminent Strike
✅ Politico suggests Tucker lied saying: “It’s not that America was going to launch a surprise strike on Russia. I didn’t say that.” They quote Putin saying: “We know who the main adversary for the U.S. and NATO is — it’s Russia. In NATO documents, our country is officially and directly declared the main threat to EuroAtlantic security. And Ukraine will serve as the advanced foothold for such an attack.”
😇 Eh, those are different. Preparing for a preemptive strike (in response to a threat of hostility from Russia) is different from the US launching a surprise attack on Russia). Putin is right, the US could have been preparing a foothold. But that, as Tucker says, does not mean the US wanted to surprise attack Russia.
Economic Size
✅ Russia the largest European Country by Purchasing Power Parity (PPP)
➡️ PPP is a theory that compares the cost of a “basket” of goods (think CPI) between countries. Basically, how much does it cost to buy tooth paste, bread, apples, a hotel room, and a rental car as an example in different countries compared. However, PPP is criticized because it does not consider taxes, local fees, tariffs, competition, or other factors that may make goods cheaper/more expensive in different areas. It’s also difficult to compute.
➡️ Currencies can also be manipulated, which make PPP more desirable.
➡️ Let’s say basket 1, described above, costs $400 in America, and $500 dollars in Europe (converted from Euros). Now, we can “weigh” the GDP of each country by a basket ratio. This would LOWER the GDP of Europe by dividing GDP by 1.25 to get PPP GDP. Let’s say the same basket costs $200 in China. That would DOUBLE the GDP of China by dividing by 0.50.
✅ Is it true? Yes. In PPP it is. Remember though, this can be very inaccurate due to the complexities of adjusting these costs.
Zelenskyy Decree Banning Negotiations with Putin
✅ Politico quotes “The president of Ukraine has legislated a ban on negotiating with Russia.” They call this a lie because the ban is on negotiating with Putin, not Russia.
😇 This seems like a stretch to claim a line. Putin is the President of Russia. If someone said negotiations are banned with Biden, like him or not, negotiations with the U.S. would be dead.
Collapse of USSR
✅ Politico claims the USSR fell apart due to economic and internal political struggles. They complain Putin said the collapse was “initiated by Russian leadership.”
😇 Both can be true.
Propaganda
✅ Politico counterclaims Putin’s argument that the US controls the world’s media.
✅ Politico argues media are privately owned.
😇 Yes, media are mostly privately owned in America. Though the Twitter files releases have created substantial doubt in the independence of media and the integrity of “mainstream media.” This does not make all journalists bad or all media companies bad. However, Putin here hits on American doubts. It’s twisting the knife in a wound. Yes, Putin’s claim factually may be incorrect, but it’s also an interpretive claim. Some will agree with Putin. Some won’t.
NATO Expansion
✅ 1990: France24: US secretary of state James A. Baker made to former Soviet leader Mikhail Gorbachev during a meeting on February 9, 1990. The two men agreed that NATO would not extend past the territory of East Germany, a promise repeated by NATO’s secretary general in a speech on May 17 that same year in Brussels.
✅ 1991: NATO Secretary General Jens Stoltenberg was asked by SPIEGEL about NATO expansion and if they promised NOT to expand eastward:
✅”That simply isn’t true, such a promise was never made, there was never such a backroom deal. That is simply wrong.”1999
➡️ 1: Czech Republic
➡️ 2: Hungary
➡️ 3: Poland
2004
➡️ 4: Bulgaria
➡️ 5: Estonia
➡️ 6: Latvia
➡️ 7: Lithuania
➡️ 8: Romania
➡️ 9: Slovakia
➡️ 10: Slovenia
2009
➡️ 11: Albania
➡️ 12: Croatia
2017/2020
➡️13: Montenegro (2017)
➡️14: North Macedonia (2020)
✅ US representative Raymond Seitz:
✅ “We have made it clear to the Soviet Union in the Two Plus Four as well as other talks that we will not take advantage of the withdrawal of Soviet troops from Eastern Europe… NATO should neither formally nor informally expand eastward.”
✅ NATO claims it never promised it would not expand. NATO quotes Gorbachev, who’s quoted above by France24 in the opposite manner, saying: “Mikhail Gorbachev said in an interview in 2014: “The topic of ‘NATO expansion’ was not discussed at all, and it wasn’t brought up in those years. I say this with full responsibility. Not a single Eastern European country raised the issue, not even after the Warsaw Pact ceased to exist in 1991. Western leaders didn’t bring it up either.”
✅ NATO’s response to “encircling Russia” fears is this:
Zelensky’s Father in WW2
✅ Zelensky’s father did not fight in WW2. Putin alleged this. This was false as his father Oleksandr Zelensky was born in 1947.
✅ However, his grandfather, did fight in WW2. The grandfather was cited as fighting for the Soviet Union. He was an “awarded comrade.”
Putin Claimed Ukrainians and Russians are one.
✅ Probably false.
✅ EURAC: In the 2001 census 67.5% of Ukraine’s population declared Ukrainian as their native language and 29.6% declared it was Russian. However, a comparison of the data on “nationality/ethnic origin” and “native language” reveals a rather wide discrepancy between declared ethnicity and language. Overall, 77.8% of Ukraine’s population self-identified as ethnically Ukrainian and 17.3% as ethnically Russian.Putin’s Health
😇 Claims of Putin’s death, cancer, ailments, or otherwise are certainly much less credible following this interview with Tucker.
Where do we Stand Now?
😇 Ukraine will likely have to rely on IMF loans and budget cuts to fund its defense, as progress to fund Ukraine is stalled in Congress and likely may be until January 2025.
😇 This interview will spotlight talk of resolutions for Russia/Ukraine, though I suspect a resolution is unlikely imminently. Some Russian speakers say Putin’s negotiation language was mistranslated.
✅ The quoted/translated line from Putin was: “What’s there to work out? If you want to stop fighting, stop supplying weapons. Then it’ll be over in a few weeks. Then we can negotiate.”
😇 Obviously that’s not very negotiable. There likely is a better solution. The lack of dialogue between Biden and Putin, though, is concerning. Putin digs in as “they can call me” and apparently the Biden side isn’t. Stalemate of stubbornness.
Canadian Parliament Trudeau Responds.
✅ Former Nazi was invited to a reception at Parliament. Trudeau punts response: saying the invasion was unjust. No mention of Parliament.
Russell Brand’s Commentary:
✅ Russia sees this as a regional war.
✅ Is the goal to pump more money into this?
✅ Of course sympathetic to Ukraine. But what’s the best way to solve this? When does Biden provide a resolution other than ‘we need more money?’
✅ The fact that we could see the interview is important.
✅ Could we force peace by reducing funding and use that funding for American purposes?
✅ Is it fair to compare Putin to Hitler?
✅ Is this all about the military industrial complex?
Minsk Agreements “Valuable Time.”
✅ Series of agreements started in 2014, followed by Minsk 2 in 2014.
✅ Cease fire / monitoring agreements.
✅ Some suggest that Merkel and Europeans KNEW Minsk was just a tool to “buy time.”
✅ Merkel, in a call with pranksters, said the Minsk agreement “bought Ukraine valuable time.” 😇 This does not indicate a lack of sincerity in the agreements.
Russia tried to Join NATO
The Soviet Union tried to join NATO before the Warsaw Pact was signed.
NATO rejected it citing a lack of democratic and defensive aims of Russia.
Warsaw pact was a collective defensive established by the Soviet Union and other satellite states, many of which ended up joining NATO.

🔗 Link to this post.

---

Putin Interview 02/08/2024 13:12 PT
✅ Tucker: Why do you think the US might strike Russia?
✅ Putin:
✅ Centralized Russia State began to strengthen in the past: single territory, same language, same faith after Baptism of Russia, same economy. Centralized Russia State.
✅ The fragmentation of Russia State was happening in Europe too.
✅ Refers to the Horde: Mongol invasion of Kievan Rus’ (1223 & 1237-1241)
✅ Russia slowly centralized after parts broke away, like to Poland. Their language. Their ideals.
✅ 1200s. Today, 94% Polish see Russia as a threat.
✅ 1654: 13 year end to war w/ Russia.
✅ Right bank of Dnipro was Russia (Dnipro River central to Ukraine).
✅ 1939 Hitler demanded Poland give back parts of Ukraine to Russia.
✅ Certain territories collaborated with Hitler in partitioning Czechoslovakia.
✅ Tucker asks twice: why is this relevant? WOW.
✅ Poland was uncompromising in 1939. USSR behaved honestly.
✅ We call WW2 the “Great Patriotic War” and the contested territories were part of the USSR.
✅ Poland received parts of Eastern Germany (now Western parts of Germany). Poland got access to Baltic Sea.
✅ 1922 when USSR was being established, the Bolsheviks established Ukraine, which had never existed before. Stalin wanted those as USSR.
✅ Lenin permitted them to leave the USSR.
😇 Putin seems to disagree with Lenin’s support for Ukrainian independence.
😇 Bolsheviks were deemed very independent and sought autonomy. Putin seems disagree heavily with this; promoting national languages and cultures. Which he says isn’t bad in principal.
✅ Victor Urban: we don’t talk.
✅ Early 80s, I went on a road trip to Ukraine.
✅ Kevin: Hungarians are the Third largest minority group in Ukraine.
✅ Tucker: Many are upset about “redrawn borders.”
✅ Putin: 1991 Soviet Union Collapsed. Everything Russia had generously bestowed on Ukraine was dragged away.
✅ Collapse of Soviet Union was led by Russian leadership.
✅ Regions were deeply interconnected economies, fundamental elements made relationships and connections inevitable.
✅ Former Russian leadership seized to exist. No longer dividing lines.
✅ Russia was expecting cooperation while it was weak.
✅ Egon Bahr, Germany Social Democratic Party: A new system should be established without expanding NATO. But should include US, Canada, UK, Central European Countries. He was wise but no one listened to him.
😇 Putin is REALLY distancing himself from the decisions of prior leadership in Russia. He’s getting to something here.
✅ Tucker: What about China?
✅ Putin: China has already passed the US. Maybe in growth rate, but not in economic size.
✅ US is to blame. They expanded NATO 5 times.
✅ I’m not bitter. This isn’t about resentment. See map below on expansion.

✅ NATO members just vote the way US wants.
✅ US should not support separatism in the Middle East.
✅ CIA responded to Putin’s FSB request saying CIA was supporting Russia’s opposition.
✅ Then came missiles.
✅ In August 2007, Putin DID make an offer to Bush on a planned U.S. Missile Shield.
✅ Bush called the plan “very innovative.” THIS IS TRUE.
✅ Putin suggested: we can drastically change the world if we can work together.
✅ April 2007 Gates met with Putin.
✅ Presidents make deals, but then the underlings break apart the deals, like Gates.
✅ Well deal fell apart, we had to develop our own missiles, hypersonic missiles.
😇 (Kevin): In 2008, Kosovo declared independence from Serbia with the support of the United States. Russia supported Serbia. NATO summit in Bucharest supported US and giving Ukraine and Georgia a “Membership Action Plan” to joining NATO.
✅ Putin: Ukraine is supposed to be a neutral state. Why weapons? Not what we agreed? And weren’t supposed to be part of NATO!
✅ Viktor Yushchenko, third President of Ukraine from 2005-2010: supported the West.
✅ Viktor Yanukovych, fourth President of Ukraine from 2010-2014: considered open borders with Europe for free flow of goods. Russia saw this as an unfair flood, and would have to close our border.
✅ Yanukovych then flipped and withdrew from signing a deal with the EU.
✅ Coup d’etat in 2014 against Yanukovych, likely backed by the CIA.
✅ Slams Tucker for wanting to join the CIA, but suggests it was probably a good thing he got denied. WOW!!
✅ We took Crimea under our protection.
😇 (Kevin) Russian forces occupied Crimea to quell protests.
😇 (Kevin) Russian-organized Republic of Crimea formed and declared independence from Ukraine.
😇(Kevin) Russia then annexed Crimea.
😇 (Kevin) Many countries today still see Crimea as Ukrainian.
✅ Putin: The US backed coup caused this.
😇 (Kevin) 2014 War in Donbas: Phase in Russia-Ukrainian war. Started April 12 2014. 14,000 killed, 6500 Russian. 4400 Ukrainian. 3400 Civilians.
✅ Putin: For decades we kept asking: don’t do this, don’t do this. Bases in Ukraine. Weapons. ETC.
✅ Plan for peaceful settlement in Donbas was set via Minsk Agreement.
✅ Zelensky refused to implement it.
😇 (Kevin) Ukraine responded to this allegation and said: “Ukraine has always been committed to implementing Minsk. It is Russia who is not implementing it, and worse yet trying to use the process to sow instability in Ukraine.”
✅ Putin: We were ready to implement it! 😇 (Kevin) Wait, so you hadn’t yet?
✅ I believe if we managed to bring the residents of Donbas back to Ukraine, maybe the wounds would heal.
✅ We have no achieved our aim yet.
✅ We must complete the denazification.
✅ We discussed this in Istanbul.
✅ We pulled back from Kiev as part of negotiations. Then they threw all of our negotiations into the bin. 😇 (Kevin) Wait: Did Ukraine push Russia out? Or did Russia pull out? Many differing opinions here.
✅ Tucker: What is denazification?
✅ Putin: Yes, very important.
✅ There are seedlings. We uproot them.
✅ Ukraine is not the case. Ukraine makes monuments. Ukraine supports them.
😇 (Kevin) Ukraine does have a history of collaboration with Hitler and there have been neo-Nazi groups. Zelensky though is Jewish. About 56-140k Jews now live in Ukraine. Yes, Ukrainian historical figures had ties to Hitler.
✅ Tucker: Would you be satisfied with the territory you have now?
✅ Putin: Wait – not ready for that yet. We have to talk Nazis. There are proponents of Nazi’ism still today. We have to get rid of those people.✅ Consider Zelensky clapping for Yaroslav Hunka, a 98-year-old who spoke in Canada’s parliament. Zelensky and all clapped and stood for him. That person worked for the Germany Nazi SS. 😇 (Kevin) This occurred September 22, 2023. Putin is correct.
✅ I haven’t spoken with Biden since prior to our Special Military Operation.
✅ Tucker: Why don’t you just call Biden and work this out?
✅ Putin: What’s there to work out? If you want to stop fighting, stop supplying weapons. Then it’ll be over in a few weeks. Then we can negotiate.
✅ Tucker: Is NATO worried?
✅ Putin: That’s what they’re saying. They’re trying to intimidate their own population with an imaginary Russia threat.
✅ Tucker: Can you imagine a scenario where you send troops to Poland?
✅ Putin: Only one case: They attack us. We have no interest in them or their land.
✅ Tucker: Well some say you have goals for more territory.
✅ Putin: It is absolutely out of the question. It goes against common sense.
✅ It would be ridiculous to engage in a global war; it would be bad for humanity. This is just how they extort more money from US tax payers.
✅ American mercenaries and Polish mercenaries should not be in Ukraine. If someone brought troops, that would bring humanity to serious global conflict. Why? Doesn’t make sense. What for.
✅ You have issues with the national debt and border. $33t in debt! You have nothing better to do? Would it be better to negotiate with Russia? Return to common sense. Respect our country. 😇 (Kevin) Big slam here.
✅ Tucker: Who blew up Nordstream?
✅ Putin: You (US).
✅ Tucker: Do you have evidence?
✅ Putin: Look at who’s interested and capable. There are many interested, but few capable of doing that at the bottom of the Baltic Sea. Connect those two dots.
✅ Tucker: If you had evidence, NATO/US/West did this, why not present it?
✅ Putin: In the war of propaganda, it is very difficult to control the media. The US controls it. American financial institutions benefit from the media. 😇 (Kevin) Big slam here.
✅ There’s another Pipe available we could use, that’s not damaged.
✅ We can deliver through Poland. But routes are closed for natural gas. Why?
😇 (Kevin) CORRECT. Pipe A of NS2 is inoperable. Pipe B is undamaged.
✅ Putin: Using the dollar as a weapon is one of the biggest mistakes of US political leadership. Dollar is the cornerstone of US power.
✅ Inflation in the US is minimal. But they won’t stop printing. What does that tell us? It is the main weapon used by the US.
✅ As soon as it was weaponized, that tool was hurt. 😇 (Kevin) Still obviously the dollar is supreme, but yes, eventually the dollar will fail. 10 years? 100 years? No one knows. We won’t stop printing money anytime soon though. This gives the US a massive advantage; Putin’s right about that.
✅ It was a stupid thing to do.
😇 (Kevin) Likely leading to BRICS currency here: Brazil, Russia, India, China, South Africa.
✅ Putin: Sanctions cause a great concern for whole world. You’re killing the US dollar.
✅ Tucker: What’s next? Could BRICS be dominated by Chinese?
✅ Putin: We have heard those boogeyman stories before. We’re neighbors with China. You can’t choose neighbors just like you can’t choose relatives. We share a border of 1000km. We have a century’s long policy of partnership. China seeks compromise. We can see that.
✅ Y’all should cooperate more with China.
✅ United Nations is illegitimate. 😇 (Kevin) USSR joined UN in 1945. Soviet Union in 1991. US tried to expel Russia from UN after Russia invaded Ukraine. However, Russia is a P5 member (China, France, Russian Federation, the United Kingdom, and the United States) – Permanent 5 of the UN Security Council. Each have full veto power. 😇 (Kevin) Probably why Russia stays in it.
✅ Bush made mistakes. But he’s not some country bumpkin. He was no worse than any other politician. I assure you he knew what he was doing. I had that relationship with Trump too. It is not about demeanor. It is about their goal: is it domination or adaptability?
✅ Tucker: Who runs the country?
✅ Putin: I have no idea. Not possible to know. Someone can be excluded from the system at a state level? Certainly two parties that are dominate. The centers that prepare decisions exist too. NATO expansion is pressure. PRESSURE PRESSURE PRESSURE.
✅ Dragging Ukraine into NATO: pressure. Why?
✅ We have repeatedly proposed solutions. They declare they won’t comply with Minsk. We try.
✅ Tucker: Does Zelensky have the ability to negotiate this?
✅ Putin: I don’t know. I asked him. I will not tell you what he answered. Maybe he realizes it’s better not to clash with neo-nazi’s. They’re strong. And align with the US. He should be able to. He won the election.
✅ We have never refused negotiations. We have not refused. 😇 (Kevin) Ehhh, in the same interview Putin says he will only negotiate once the US stops supply weapons, then the war will be over in a few weeks, and then we can negotiate.
✅ Tucker: How can you justify killing?
✅ Putin: It comes down to protecting one’s homeland and family. We’re protecting ourselves.
✅ Religion in your heart; not about slamming your head against the floor.
✅ Difference today? Change is happening faster.
✅ It’s not possible to create a genetically engineered human. There are reports Elon Musk already had a chip implanted in the US. There is no stopping Elon Musk. I think he’s a smart human. 😇 (Kevin) Likely referring to chip in first Neuralink patient.
✅ Humanity needs to consider AI / genetics.
✅ Eventually, like with nukes, we will ban it or regulate it.
✅ Then asks about release of WSJ reporter. 😇 (Kevin) VERY SMART MOVE BY TUCKER. If Putin says no, Tucker tried and MSM may respect Tucker more. If Putin says yes, Tucker is a hero. Brilliant move by Tucker.
✅ Well, if person gets secret info and uses, it’s espionage. That’s against the law. He was caught red handed.
✅ We are ready to talk. He doesn’t need to be in a Russian prison forever. Talks are underway. This will probably be a success.
✅ Just like Ukraine: we are willing to negotiate.
✅ Tucker: Why not talk directly with Biden then?
✅ Putin: If Zelensky refuses to negotiate, they probably did that under the instruction of Biden. Let them come and negotiate. They started it. We were ready to finish it in Istanbul. But Prime Minister Johnson talked them out of it. We’re not opposed to resolving it. Endless mobilization: sooner or later it will result in agreement. This is like a civil war. Elements of a civil war. We will be reunited. The unity is still there. Why Ukrainians dismantling Orthodox Church? It brings together our souls.

🔗 Link to this post.

---

Enphase $ENPH Earnings Report 02/07/2024 13:50 PT
✅ Total revenue for Q4 2023 was $302.6 million, down from the revenue of $551.1 million in the previous quarter (Q3 2023).
✅ ENPH is guiding Q1 revenue lower than Q4; they’re projecting revenue between $260 million to $300 million due to under-shipping and continued under-shipping in Q2 (at a much-reduced level, though).
✅ “We think Q1 could be the bottom quarter. Europe is already showing early signs of recovery, and we expect non-California states to bounce back quickly. California is expected to face challenges as NEM 3.0 is having some hiccups in the near term. However, we remain very bullish about NEM 3.0 in the long term.”
✅ ENPH stock is rallying off the hope that Q1 is the trough and then production can expand instead of contract resulting in revenue growth like the stock once had. 

More specific notes:
✅ ENPH reduced inventory by $147 million in Q4, in line with their projections made in Q3.
✅ Out of the 1.6 million microinverters shipped in Q4 2023, approximately 913k (roughly 57%) were produced domestically, making them subject to tax credits from the IRA.
✅ They are restructuring their factories in Romania and Wisconsin for use at other facilities. Once they’re done restructuring in H1 2024, they will have global capacity of 7.25 million microinverters per quarter, of which 5 million will be produced in the US, making them subject to tax credits from IRA. This is four times what they did in Q4 due to their reduction in production from inventory and demand issues.
✅ ENPH only expects to ship 500k microinverters to customers from US facilities in Q1. This will be the trend in H1 2024 as they continue to reduce factory and channel inventory.
✅ The sell-through is beginning to show a trough is in sight. For non-California states, overall sell-through was only down 1% in Q4 compared to Q3. In California, the sellout-through was down by 7% in Q4 compared to Q3. Non-California states are showing a trough first it seems.
✅ In California, the sell-through for microinverters was down 27% in Q4 due to the NEM 3.0 transition; HOWEVER, the sell-through of batteries increased by 58% in Q4 due to the high attach rate of NEM 3.0 systems. It will take a few quarters for installers to fully transition to NEM 3.0 and normalize sales.
✅ In Europe, revenue decreased 70% sequentially due to under-shipping because of waning demand. Despite this, ENPH has entered new markets such as the UK, Sweden, Denmark, Greece, Switzerland, Austria, Italy, and Belgium.
✅ The utility rates are going up steeply on an annual basis. “Demand is going to eventually bounce back up in California as well.”
✅ ENPH expects to lower microinverter shipments to US customers in H1 2024 as they continue to reduce inventory in the factory and the channel.
✅ ENPH expects to increase microinverter shipments in H2 2024.
✅ ENPH expects non-California states to bounce back in Q2; California sales are expected to go “sequentially higher” in Q2 as well.
✅ ENPH is expecting to have reduced OpEx from $99 million in Q3 to $75-80 million in Q1-Q2 due to reducing worldwide headcount by 10%.
✅ The gross value of their inventory is roughly $210 million, which is too high; that is 110 days of inventory. They are reducing channel inventory and production until they have the ideal number of 30 days of inventory (which is roughly $57 million based on these numbers).

🔗 Link to this post.

---

Supreme Court to Decide on Trump Ballot 02/07/2024 15:44 PT
✅ The Supreme Court is having a hearing on Thursday (02/08/2024) whether Colorado’s decision to apply a post-Civil War provision of the Constitution to order Trump off the ballot after the Jan. 6, 2021, attack on the Capitol amounted to insurrection.
✅ The hearing is starting at 8:00 a.m. Mountain Time (MT). Arguments are expected to last about 80 minutes total, meaning they will likely be done by 9:30 a.m. MT
✅ Trump’s status as a candidate will depend on what the Supreme Court decides.
✅ No matter the decision, there is a risk of political instability not seen since the Civil War if the court were to overturn or uphold Colorado’s ruling.
✅ If the Court were to overturn Colorado’s ruling and allow Trump on the ballot, it could lead to political chaos and protests. 
✅ On the other hand, if the Court upholds Colorado’s decision and disqualifies Trump across all 50 states, it will probably result in even more political instability.
✅ The key question is whether Trump is disqualified under Section 3 of the 14th Amendment, also known as the disqualification clause.
✅ The disqualification clause was intended to guard against former Confederates returning to positions of power post-Civil War. It states that no person who previously took an oath “as an officer of the United States” to “support the Constitution” and then violated that oath by engaging in insurrection or rebellion can “hold any office, civil or military, in the United States.”
✅ The text doesn’t specify who is supposed to enforce the clause or when it should be invoked, leading some people to believe that Congress could try to prevent Trump from being sworn in even if he is elected.
✅ Trump’s lead lawyer told the court that Section 3 doesn’t apply to Trump for a few reasons.
   1) Trump is not an “officer of the United States,” which is the terminology used in Section 3 to describe the insurrectionists.
   2) Congress, not state courts or state officials (like Colorado), enforces the disqualification provision.
   3) Trump did not engage in insurrection.
✅ A counterargument that Colorado is using is, “A state’s legitimate interest in protecting the integrity and practical functioning of the political process permits it to exclude from the ballot candidates who are constitutionally prohibited from assuming office.”
✅ The justices are also set to review the validity of a law that was used to charge hundreds of people connected with the Jan. 6 riot.
✅ The court has a conservative majority, so the decision will have a tilt that favors interpreting the words of the Constitution as they were understood at the time they were written.
✅ Three of the sitting justices were nominated by Trump, cementing a supermajority that has upheld many of the former president’s policies but NOT in favor of his financial records and a few other instances.
✅ The United States Supreme Court has not released information about how long after the oral arguments it will take to issue a ruling.
🔗 Link to this post.

---

Morning News 02/07/2024 05:25 – 06:45 PT

Kashkari
✅ Construction employment is growing
✅ I see two – three rate cuts.
✅ How cut is monetary policy actually compared to neutral?
😇 This guy went from Dove to Hawk in 2022.
✅ Does NOT vote in 2024.
✅ Paying attention to NYCB
✅ It’s mainly the office sector. Not all commercial.
😇 Eh multifamily has some real opportunities right now.
✅ Higher growth rate due to higher productivity of AI, which isn’t inflation, then you’d see: higher growth, supportive monetary policy, and low inflation.

NYCB
😇 Down 22% yesterday as Financial Times piece of Chief Risk Officer leaving before plummet contributed to the stock down again. Up in premarket 8%.

Why Guidance Matters:
😇 BABA: massive buy back and nearly matches estimates. But guidance says “challenging market” with no guide on end of that. Stock down.
😇 SNAP: beats, but 2.3x loss on EBITA guide: stock down.
😇 PLTR: beats, and excited guidance: stock up 30%.
😇 ENPH: Big miss. But Q1 may be the bottom. Stock up 17%.
😇 RBLX: Rev slightly down, users beat. Beats on guide. Stock up 11%.
😇 TSLA: No guidance. Stock way down.
😇 See the point? Always remember, “securities are sold, not bought.”


🔗 Link to this post.

---

Trump and European Independence 02/05/2024 16:56 PT
✅ Europe has relied on the US to be the ultimate guarantor of its security since WWII ended. After the Cold War ended, Europe has slashed defense spending significantly.
✅ When Russia annexed Crimea in 2014, Europeans responded very lightly and actually increased their dependence on Russian gas. In 2022, they responded much differently.
✅ Europe had to painfully decouple from Russian gas and impose strong economic sanctions on Russia. This is a sign of strength despite temporary pain. Perhaps Europe’s actions were partially made in fear of a Trump presidency in 2024, as a Trump presidency is not friendly towards Europe.
✅ European leaders are hoping for a Biden re-election to protect them with funding. However, Europe understands that they can’t rely on big brother forever; they need to grow up.
✅ Last year, the US Senate passed a measure to make it harder for Trump to pull the US out of NATO. Putin is likely to interpret the slightest hint that Trump may not fully honor the US commitment to NATO’s Article 5 as an invitation to push boundaries and potentially move into the Baltic states for conquest.
✅ Culturally, European leaders have always gotten along better with Democratic presidents over Republican ones. Trump seemed more at ease with rulers such as Putin and Xi Jinping than European leaders such as German Chancellor Angela Merkel.
✅ Trump’s term in 2016-2020 helped motivate European leaders to strive for independence.
✅ Under Trump, the US-China relationship could likely further deteriorate. Trump can threaten sanctions on European companies if they accept Chinese investments or engage in certain deals with Chinese companies.
✅ Trump has also promised to impose a 10% tariff on all imports if he’s re-elected, which would be felt economically in Europe.
✅ Europeans want to preserve the transatlantic relationship but are preparing for a weaker one. Ukraine’s outcome has much more impact on Europe’s security than the US’s; they need to be prepared to defend themselves.
✅ In 2022, EU member states and NATO allies spent $350 billion on defense. This is the minimum sustained effort to reduce Europe’s dependence on the US.
✅ Trump could threaten sanctions on major telecom operators who use Chinese equipment. The EU must be ready to reduce its dependence on Chinese goods/services to minimize backlash.
✅ The EU is very slow at approving policy; they will need to find a way to speed things up to mitigate the Trump effect.

🔗 Link to this post.

---

Morning News 02/05/2024 05:25-07:10 PT
✅ Less risk of too-tight derailing economy.

Snap
✅ Cutting 10% of jobs. Stock up ~2.4%.

Estée Lauder
✅ Up 16% after cutting 3-5% jobs and earnings.
✅ Q2 Adj EPS 88c vs 55c
✅ Q3 Forecast Adj EPS 35c to 46c vs 80c.

Caterpillar
✅ $5.23 adj eps vs $4.73.
✅ Q4 $17.1b rev vs $17.2b est.

ISM Services
😇 YIKES! Bad producer data on prices paid!
✅ Prices index up in January with inventories contracting. 10 industries reported growth. 13 consecutive month of prices growth and at a faster rate in January. 3 sectors reported declines (agriculture, forestry, fishing/hunting).
😇 ISM data doesn’t necessarily mean consumer prices up, but wow that’s a bad report. Could it just be “January increases?” Who knows.
😇 Services usually very labor dependent.

🔗 Link to this post.

---

Jerome Powell 60 Minutes. 02/04/2024 16:00 PT

My thoughts going into this?
😇 Will Jerome Powell comment on how strange of a decline we had in average hours worked / week? The largest decline since March 2020 and the Great Recession prior.
😇 Path to rate declines.

60 Minutes.
✅ 11 interest rate hikes.
✅ Employment near 50-year high.
✅ This was filmed Thursday (😇 but Powell likely knew the results).
✅ Job not done. Committed to restoring price stability. Wouldn’t say inflation is dead; great progress on 6mo.
✅ Why not done? Well, strong economy. Labor market is strong. With the economy is strong, we feel we can approach “when” to reduce, carefully. We want more evidence.
✅ Rates being a bit higher give us room to cut in downturn.
✅ Move too soon: You may settle inflation “well above our 2% target.”
✅ Move too late: Could easily weigh on economic activity and labor. Could be recession; right.
✅ “We pivoted Dec 21.”
✅ Not likely March.
✅ New data doesn’t even have to be as good as it has been. Just needs to be good.
✅ Prices of some things will go down, some up. We don’t expect to see prices decline except in very negative circumstances.
✅ People are dissatisfied with high inflation, clouding opinion on strong economy.
✅ Bank balances “manageable problem.” Some smaller regionals have concentrated exposure. Not much risk of a 2008.
✅ Some banks will close and merge out of existence.
✅ Bank runs can occur faster today.
✅ Projection of debt by CBS: $144T debt in 30 years. $1m per household.
😇 Jerome Powell isn’t concerned about the debt, but for future generations, he is. His body language clearly screamed that. Inflation and no recession NOW.
✅ Rate cut “middle of year.” (CBS voiceover.) May-July would be middle.
✅ 20% chance of cuts in March per markets.
✅ 73.2% chance of cuts by May.
✅ 97.5% chance of cuts by June.

Doomberg Freaking Out about “middle of year” voiceover comment:
✅ *CBS TRANSCRIPT DOESN’T SHOW POWELL COMMENT ON MIDYEAR CUT
✅ *CBS REPORTER SAYS POWELL SUGGESTED FIRST CUT AROUND MIDYEAR

🔗 Link to this post.

---

Hungary Gets Steamrolled By EU To Support Ukraine. 02/02/2024 14:35 PT
✅ Today, on 02/01, it took only one hour to approve 50 billion dollars in aid for Ukraine.
✅ Viktor Orban, the autocratic Hungarian prime minister, had promised to block further EU support for Ukraine. Hungary, as part of the EU, had previously blocked an agreement for Ukraine to receive aid in December.
✅ Frustrated with Hungary’s obstruction, diplomats hinted at potential reprisals against Hungary if they blocked another Ukraine funding package. They discussed the possibility of all EU members voting to deprive Hungary of its vote in EU bodies and to cut off Hungary’s revenue stream from EU transfers (which constitutes 3-4% of Hungary’s GDP).
✅ Viktor Orban took these threats seriously, as he softened his staunch position, allowing the aid package to proceed.
✅ Viktor Orban has long been an advocate of Putin, with some accusing him of being Putin’s puppet. While there is no concrete evidence that this influenced Hungary’s decision, it does provide a potential motive for the Prime Minister’s actions.
✅ Once the money starts flowing in a matter of weeks, it will avert a Ukrainian budget crisis.
✅ This is beneficial for the US, as it eliminates the need for the US to send $50 billion, even though the US has been the primary contributor to the funding.

📝 The Economist
🔗 Link to this post.

---

Ukraine’s Fiscal Dilemma. 02/02/2024 14:30 PT
✅ NATO member states perceive relinquishing the Ukrainian eastern flank to Russia as bringing Russia, a hostile state, closer to the borders of Hungary, Poland, Romania, and Slovakia—territory within NATO’s purview that Russia still regards as part of its sphere of influence.
✅ Ukraine found itself a victim of its own success, achieving substantial military milestones in the first year of the war that exceeded expectations. The head of the Wagner group went rogue, further diminishing Russia’s position. Due to this, the West reduced funding, in fear that an overwhelming Ukrainian triumph might push Russia into desperation and potential use of nuclear weapons. Now Russia is winning partiality because of these decisions. 
✅ The United States may or may not continue its support for Ukraine, and Europeans won’t be able to bridge the gap if the U.S. withdraws. It is highly likely that Russia will maintain control of the territory in 2024. This has created hopes for a peace deal where Ukraine exchanges land for peace. However, this negotiation poses challenges given Russia’s stronger position and lack of necessity for a peace agreement.
✅ China, Iran, and North Korea have replenished Russia’s drone and missile stocks, diminishing the feasibility of a peace deal. President Biden stated that NATO would not formally invite Ukraine to join at the July summit. Critics argue that Ukraine’s NATO membership could increase the risk of a significant attack on NATO, prompting the invocation of Article 5, which obliges all member states to intervene. This argument is flawed, as Ukraine would not join NATO while at war, and Article 5 would only apply to the territory held by Ukraine at the war’s end. In such a scenario, NATO would need to bolster its military presence on the eastern flank.
✅ NATO must devise a strategy to deter Russia from continued threats against Ukraine in the long term. NATO’s reluctance to admit Ukraine during wartime may incentivize Putin to prolong the conflict until all territory is under Russian control, leading to a shared border with NATO territory. NATO membership has proven to be an effective deterrent during the war, as Russia refrained from attacking member states to avoid triggering Article 5.
✅ NATO membership emerges as the most viable long-term deterrence against Russian aggression for Ukraine. The 2024 Summit offers President Biden an opportunity to solidify his Ukraine policy before the election. Rather than immediately extending NATO membership to Ukraine, Biden could initiate accession talks with an invitation at a future date, contingent upon Ukraine meeting specific requirements. However, this plan could be reversed by Trump if he wins.
✅ Ukraine possesses one of the most capable armies in Europe, this was shown through its resilience against a superpower over the course of this war (even though they’re losing now). The conflict in Ukraine is likely to stay in Russia’s favor, presenting adverse consequences for the West, including a potentially long front with increased fiscal spending by the U.S. Diverting funds to Ukraine could impede the U.S. focus on domestic issues. Resolving the situation in Ukraine is imperative to provide flexibility for U.S. funding. The US could use those dollars toward bolstering the U.S. economy through domestic R&D grants and other initiatives if the West can bring peace to the region.

📝 Foreign Affairs
🔗 Link to this post.

---

Jobs Report & Morning News. 02/02/2024 05:30-06:45 PT

✅ 4 Sigma beat on jobs data.
✅ Blew every estimate away.
✅ 20% rate cut for March. Rate cut for May starting to unprice.
✅ 353k Job Gains via Payroll (calling employers) < potentially double counting.
✅ -33k Job Losses via Household (calling employees).
✅ Avg hourly earnings 0.6% MoM, exp 0.3%
✅ Avg hourly earnings 4.5% YoY, exp 4.1%.
✅ Deeper into inverted territory by 4bp.
✅ May’s jog up on the right of this chart (white line) shows the unpricing of May’s 25bp cut.
✅ 2-year biggest jump since March 2023.
✅ 10-year biggest jump since July 2023.

✅ Nick T posted this chart showing revisions vs initial estimates. 😇 Generally inline, except for today!



Tesla
✅ Recalling 2.19m vehicles for software update on steering column.
✅ Model Y in Canada reduced $4,000 plus it comes with $12,000 in rebates if you live in Quebec.

Atlanta Fed GDPNow
✅ 4.2% up from 3.3%.
✅ In the last 3.3% read:
➡️ inflation adjusted personal consumption up 3.6%.
➡️ inflation adjusted gross private domestic investment down -0.3%.
✅ DOES NOT INCLUDE JOBS FRIDAY.


2/10 Yield Curve.


Part-Time Workers for Economic Reasons (Non Ag and Ag are similar):
✅ Normalizing back to trend on part-time workers, not necessarily a giant surge. 😇 Wow….

✅ Average Hours Worked per Week
➡️ Biggest drop since March 2020. Before that 2009.
➡️ “Bad weather” blamed for fewer hours worked.
➡️ Which when you divide payrolls (mostly stable thanks to salaries) by lower hours worked, you get higher “wage inflation.”

😇 Weather could be to blame for the drop in hours worked, which props up the wage gains figures.

📺 Market Open Live Stream.
🔗 Link to this post.

---

Apple, Meta, Amazon Earnings. 02/01/2024 13:00-13:50 PT

Amazon
✅ Q1 Forecast 140.75b net sales vs estimate of 142.01b for Q1 (miss).
✅ Q4 op inc $13.21b vs $10.49b (26% beat).
✅ Q4 op margin 7.8% vs 6.17%.
✅ Q4 $1 eps vs $0.78 exp.
✅ Q4 AWS sales $24.20b $24.22b exp.
✅ Q4 North America $105.51b vs $102.88b.
😇 NA consumer still strong.
✅ Regionalization of US warehouses = lower cost to service & faster.
✅ Highest retail operating profit since 2019.
✅ Q4 AWS $7.2b in operating income vs $5.2b in Q4 2022, which is 38.4% growth in AWS.
✅ $36.8b in Free Cash Flow in 2023 vs $11.6 in 2022.
✅ Black Friday 11 days of sales: 1 billion items sold.
✅ Rufus AI bot to roll out in coming weeks.
✅ Amazon and Nvidia partnership on “world’s fastest GPU-powered AI supercomputer.”
✅ Using AI to inspect amazon trucks to determine issues with tires and body issues.
✅ Marketing spend roughly flat.

Meta
✅ 50c per share cash dividend on March 26, 2024 as of Record date Feb 22, 2024. Expect regular dividends.⚠️ First dividend.
✅ Mark Zuckerberg, owning ~347M shares, will receive ~$173M from this cash dividend.
✅ $50b buyback boost.
✅ 2.11b daily active users vs 2.07b expected .
✅ Q1 forecast: a bit over $35.5b expected for forecast Q1 Rev. Estimate was $33.64b.
✅ Q4 EPS: $5.33 vs estimate of $4.91.
✅ Q4 Rev total: 40.11b vs 39.01b.
✅ Q4 Ad Rev: $38.71b vs $37.81b.
✅ Q4 Reality labs: $1.07b vs $812.6m.
✅ Q4 Reality labs loss: -$4.65b vs -4.1b expected.
✅ Reducing payroll “underrun” – aka will start hiring again.
😇 So much income you can pay dividends and go back to hiring despite uncertainty.
✅ Headcount fell to 67,317 down 22% in 2023.
✅ YOY revenue up 25%.
✅ YOY cogs down 8%. 😇 Extremely impressive.
✅ Price per ad up 2% Q4 vs Q4.
✅ Price per ad 2023 vs 2022 was down 9%.
✅ Bought back $20.03b of stock in 2023.
✅ More losses and capex expected (😇 NVDA boon?).
➡️ META clarifies AI and no-ai hardware and data centers (😇 also likely helps SMCI then).

Apple
✅ Q1 total rev $119.58b vs $117.97b est.
✅ Q1 service rev $23.12b vs $23.37b est.
✅ Q1 product rev $96.46b vs $95.14 est.
✅ Q1 EPS $2.18 vs $2.11 est.
✅ Q1 iPad $7.02b vs $7.06b est.
✅ Q1 iPhone $69.70b vs $68.55b est.
✅ Q1 Greater China $20.82b vs $23.5b est.
✅ Q1 Wearables $11.95 vs $12.02b est.
✅ 2.2b active devices
✅ Services margin to 78.9% from 70.9% 😇 WOW
✅ Product margin to 39.4% from 37% 😇 WOW
✅ R&D flat

Apple Segments YOY (for calendar Q4)
✅ Americas up 2.3%
✅ Europe up 9.8%
✅ China down 12.1%
✅ Japan up 14.4%
✅ iPhone up 6%
✅ Mac flat
✅ iPad -25.2%
✅ Wearables down 11.3%
✅ Services up 11.3%
✅ VisionPro not expected to meaningfully impact revenue anytime soon.

Sketchers
✅ 2024 Rev Estimate: $8.7b guide vs $8.93b expected.
✅ Q4 Adj EPS: 56c vs 55c.
✅ Q1 eps forecast miss $1.075 vs $1.23.
😇 More costs, slightly fewer sales.

Clorox
✅ 2024 FY adj eps $5.40 vs $4.55.
✅ Q2 ADJ EPS $2.16 vs $1.09 expected.
✅ Q2 net sales $1.99b vs $1.79b expected.

📺 Earnings Livestream.
🔗 Link to this post.

---

Japan Economic Revival Potential. 02/01/2024 11:33 PT
✅ Japan’s GDP growth has stagnated, remaining no higher than five years ago. China has recently surpassed Japan as the world’s top auto exporter, primarily because Japanese automakers have been hesitant to transition to EVs.
✅ The belief that this economic slump is reversible is low. Since the 1980s, bursts in stock prices led brokers and politicians to proclaim that “Japan is back,” yet the resurgence never materialized. This unenthusiastic tone has been reflected in Japanese stock prices. 😇 Though they are buying more iPhones!
✅ The average real wage of full-time workers has barely increased since the 1990s, while Social Security benefits have been cut by 20% since 1996.
✅ A vibrant Japan could serve as a significant counterweight to China by aiding other countries in the region to resist China’s economic threats. A Japanese economic revival is in the West’s best interest. 😇 U.S. to promote Japanese growth to increase our “sphere of influence.”
✅ Healthy economies require a continuous influx of high-growth companies with fresh ideas. However, powerful companies in Japan fear this prospect, preferring the old-school technology. Government support prevents the displacement of legacy companies, as it would cause considerable disruption. 😇 Anti-innovation is common amongst old guard.
✅ In the US, Silicon Valley’s 2000 high-tech firms represent a small percentage of new firms but drive innovation that compels older companies to adapt. In contrast, traditional companies in Japan have been insulated from disruptive innovation.
✅ One reason for this is Japan’s lifetime employment strategy. Large legacy companies hire new graduates, train them to fit the firm’s needs, and retain them for their entire careers. Workers were hesitant to join startups due to the high failure rate, and big companies rarely hired individuals who switched jobs. This strategy stifles innovation in Japanese big companies, which benefits them.
✅ A potential shift has emerged in Japan. Workers now have greater leverage in the tight labor market, and established firms are more open to hiring individuals who have switched firms.
✅ The last hurdle for Japan to initiate this revival is securing outside financing. Japan has few angel investors, largely due to the government’s failure to incentivize them through unique tax advantages.
✅ Japanese banks make loans for startups contingent on physical collateral instead of future profits, which is safer for banks but hampers growth. Entrepreneurs often seek financing overseas, such as in the US, where it is more accessible, leading to a drain in Japanese GDP growth.
✅ Japanese banks also don’t afford the same liability that US banks afford to US companies. Japanese banks REQUIRE the owners personal guarantee to turn over their personal assets if their company fails.
✅ The Japanese government currently favors legacy companies over startups in government grants for R&D. The Prime Minister promised to reform this system as part of the 2022 “new form of capitalism” program, aiming to increase the number of startups from 10,000 to 100,000 by 2027. However, no concrete steps have been taken to fulfill this promise.
✅ The government must alter its strategy for a successful revival. Reforms, such as effective tax incentives for angel investors and a shift in government grants favoring startups over large firms, are essential. Without these changes, Japan’s economy and global influence will erode.
✅ As one of the US’s main partners in the region, it is in the US’s best interest to assist in incentivizing this transition for Japan to counter China. While a risky bet to invest in a stagnated country’s economy, relying on the US to serve its own interests is typically a sound strategy.

📝 Foreign Affairs Article
🔗 Link to this post

---

Politics 02/01/2024 10:58 PT

Bipartisan Tax Package
✅ House passed 357-70 Wednesday night. Expanded child tax credit and business tax break (covered below).
✅ Needs to pass Senate, which is stuck on supplemental funding for border, Israel, Ukraine, and Taiwan.
✅ Next shutdown deadlines are March 1 and March 8.
✅ SALT deduction may move up to double, $20k for 2023, as long as AGI is under $500k.
✅ Additional bills for credits or help for affordable housing for low income being discussed.

Economist on Biden
✅ 60% disapprove of Biden on economy.
✅ Trump ratings are considerable better.
✅ But the economy is improving fast. Inflation is falling. Growth is strong. Stock market at all time highs.
✅ 3 Considerations with Research from Economist:
➡️ 1. Impressions of economy matter more than actual economy.
➡️ 2. People hate inflation.
➡️ 3. Voters have a short memory.
✅ First two hurt Biden. #3 could save Biden.
😇 Hence why I believe the state of layoffs around the time of the election may swing the election.
😇 Cathie Wood thinks the economy will deteriorate under the weight of high rates, leading to a more likely Trump win – based on the economy.

Israel’s Hospital Raid in Disguises
✅ 3 walk in, one with wheel chair. Woman also walks in carrying a baby.
✅ Moments later, take out rifles and kill 3 Palestinians.
✅ 10 minutes later, they’re gone.
✅ Israel says 3 terrorists were killed (Jan 30).
✅ International law prohibits “perfidy” (deceit).
✅ Leading an enemy to believe they’re safe is considered illegal, but this is usually when you fake surrender only to pull out a weapon. Other examples:
➡️ You can’t pretend to be a medical transport plane, but you can pretend to be a friendly plane (on the other side).
➡️ Can’t dress up as a UN peacekeeper.
➡️ Can’t dress up a command post as a Mosque.
➡️ Can’t pretend to be wounded to lure an enemy.
➡️ Can’t use ambulances to move fighters.
➡️ Weapons should be visible – concealed would lead to confusion with civilians.
✅ Disguise is not prohibited. 😇 Honestly, a full raid would have likely been much more deadly.
✅ Dressing as a doctor is illegal.
✅ Was this an assassination?

😇 This was likely an illegal use of medical-dress to conduct a raid.
✅ Israel argues this was in the West Bank. NOT a war zone. Therefore exempt. Questionable defense.


📺 Israel War Crime Video.
🔗 Link to this post

---

Crypto 02/01/2024 10:06 PT

Polygon
✅ Fired 60 employees / 19% of workforce.
✅ Right-sizing for sake of enhanced performance, they say.
✅ MATRIC token ~$7b market cap.

Celsius Network out of Bankruptcy:
✅ Distributing $3b of crypto to creditors.
✅ Ionic Digital will be the new mining company and may be publicly traded.

Binance
✅ American mother taken hostage by Hamas sued Binance for facilitating the violence in Israel.
✅ First civil case related to kidnappings.
✅ Takes aim for allowing Hamas on Binance.
✅ Lawsuit claims Binance facilitated 1.1m transactions valued at $899m, conducted by people living in Iran, in violation of trade sanctions.

FTX
✅ Each claim needs to be reviewed, but restructuring advisors hope they can start repaying FTX customers who can prove they lost money.
✅ Goal is to repay all in full.
✅ Company is just starting to evaluate claims.
✅ Claims MAY be pegged at late 2022 pricing, which means those assets would have missed out on the 2023 rally.

🔗 Link to this post

---

Regional Banking Crisis 02/01/2024 09:58 PT

✅ Cameron Cruise of Bloomberg warns NYCB issues are part idiosyncratic (bank specific) and part systemic.
✅ Price discovery is missing in commercial real estate.
😇 Quick explanation: When inventory plummets, it’s very difficult to trade (buy/sell) real estate and underwrite (value) it appropriately. Especially since rents are falling, underwriting needs to consider the risk of 10-30% rent declines – particularly as new construction adds substantial inventory in multifamily. We already know office is in the toilet, but the question is: how much do you discount by? Is a building worth -30%, -40%, or -60%? Well, the fewer “trades,” the less accurate your valuations will be (more risk).
😇 That risk doesn’t just sit at the investors – it sits with banks financing the buildings.
✅ NYCB considers itself the #2 portfolio lender for multifamily in the United States. 😇 Portfolio means they keep the loan on hand; they don’t securitize (sell) it.
✅ NYCB absorbed Signature Bank.
✅ Now it’s over the threshold for new capital requirements.
✅ NYCB may try to “kitchen sink” issues in write offs, charge offs, and credit-loss provisions. However:
✅ In 2007, many banks took “kitchen sink” provisions against structured credit. However, those losses were substantially smaller than they should have been, leading to a “spill over” and true crisis when the real numbers became known.
✅ Cameron warns: The real numbers may still be ahead – and “beware of banks that have grown their balances sheets too aggressively over the last few years, because chances are that that entailed the acquisition of assets at terrible prices. If those prices prove to be too terrible, then perhaps some of that aggressive Fed rate cut pricing will be justified after all.
✅ “No other bank in the KBW Regional Banks index has increased its provisions as much as NYCB in the fourth quarter from a year earlier — and they’ve all reported.” 😇 Is it catchup or a warning?

New York Community Bank Corp $NYCB
➡️ Parent of New York Community Bank.
➡️ Parent of Flagstar.

Current Rate Expectations:
✅ 41% 25bp March 20.
✅ 96.2% at least 25bp May 1.

🔗 Link to this post

---

Morning News Part 2. 02/01/2024 09:14 PT

JPM Econ Event
✅ Economy in rolling recessions. Tech/chips first, then freight, then manufacturing, etc. 😇 Agreed.
✅ If long outlook, invest in stocks and treasury bonds. Money markets will tank soon.
✅ China is worse than 2008 in the U.S., which was much more isolated to U.S. housing and banking/derivatives than the entire economy.
✅ China un-investable. 😇 Very intense anti-China!
✅ Soft landing.
✅ “This time, everything is the exception.” 😇 Yikes.
✅ Jamie Dimon thinks meeting people in person is critical. 😇 Agreed.



Mastercard
✅ Positive outlook for economy going forward.
✅ Commentary in earnings: Base case is more growth.

Starbucks
✅ China up 21% in comp transactions (😇 as they opened more stores) ✅but average ticket down 9%. 😇 Weak consumer.
✅ 6,975 stores in China.
✅ 16,466 in the US.

ISM Report on Business
✅ 49.1 vs 47.2 exp Manufacturing
✅ 52.9 vs 46.9 exp Prices Paid 😇 This shocked markets.
✅ 52.5 vs 48.2 exp New Orders
✅ 47.1 vs 47.0 exp Employment
✅ ISM report shows “prices paid index climbed into expansion territory as new pricing levels for 2024 went into effect.” Note: This is a month-over-month change for January.
😇 The report appears to be seasonally adjusted, which means the amount of firms increasing prices in 2024 was greater than the seasonal adjustment. That doesn’t mean they’re raising prices a lot, it just means more firms are raising than cutting – which could be a nominal 1%. Who knows. But this did hit the NASDAQ 100 for about 30 basis points at release.

Comments from the report included:
➡️ Start of 2024 looks good. Sales are above expectations.
➡️ Only major escalation now being transit through the Red Sea.
➡️ Business continues to stabilize. Cashflow will be tight in 2024.
➡️ Demand continues to slow (electrical equipment/appliances).
➡️ Downward price movements in the coming months (metals).
➡️ Remarkable slowdown in business in December. January has picked up, but not to previous-year levels. (Textile).
➡️ Challenging year ahead (metal fab)
➡️ December sales very strong but slower for first part of January (machinery).

📺 JPM “This time is Different” Video.
📝 ISM Report on Business Annotated.
🔗 Link to this post.

---

Morning News. 02/01/2024 05:33-07:00 PT

Job Claims
✅ Continuing Claims: 1898k vs 1839k exp. Prior revised down 5k.
✅ Initial Claims: 224k vs 212k exp. Prior revised up 1k.
✅ Largest continuing claims number since November.
✅ Unit labor costs 0.5% vs 1.2% expected in Q4. That’s 2% annualized, below 3% target. 😇 Less labor pressure.
➡️ “Increases in hourly compensation tend to increase unit labor costs and increases in productivity tend to reduce them.” BLS
✅ Nonfarm Productivity: 3.2% vs 2.5% expected.

Layoffs


Bank of England
✅ Does not need to see inflation at target to cut rates.
✅ “Evidence that it is getting there.”
✅ Bloomberg Econ sees first cut in May, but may move to June.
✅ “How long do we need to maintain this position.”
✅ Keep rates steady.

Esther George (previously at Kansas Fed / retired).
✅ Once the Fed starts, they want to be ready for a series of cuts.
😇 Looking at prior FOMC cuts, we can see the Fed frequently cuts slowly, then rapidly.

FTX
✅ Objective is to repay all customers.

NYCB
✅ Drops another 11%. Cameron Cruise thinks the issue could be part systemic; lack of price discovery means write downs on commercial loans may be much smaller than they should be.
😇 Banking crisis may force rate cuts.

Rates
✅ 38.0% chance of March cut.
✅ 34.2% chance of 50bp cut in May.
✅ 93.8% chance of 25bp cut in May (at least).

📺 Market Open Livestream
🔗 Link to this post.

---

Fed FOMC. 01/31/2024 11:00 PT

✅ Fed rates unchanged
😇 REMOVES COMMENT THAT US BANKING SYSTEM IS SOUND AND RESILIENT

✅ Clarida at mid 2s on Dallas Fed mean trimmed.
✅ Clarida I thought March would be too soon.
✅ Clarida Left Fed end of last year.
✅ Clarida: given what I know now, the Fed did what they needed to do. This doesn’t appear to be systemic, but it’s on their radar.
✅ Pre-speech 56% chance of cut March 20, 2024.

Jerome Powell Speech
✅ Policy rates “well into restrictive territory.”
✅ Past months 156k job gains, well below prior pace.
✅ Nominal wage growth has been easing.
✅ Labor demand still exceeds supply of workers.
✅ Dodges 6mo PCE reads.
✅ Inflation expectations well anchored.
✅ Likely at peak.
✅ Likely appropriate to begin dialing back the policy rate this year. Uncertain though.
✅ Prepared to maintain the current rate for longer, if appropriate.
✅ Reducing too soon could result in a reversal.
✅ But too late could weak economy and unemployment.
✅⚠️We have confidence in economy and it has been increasing. We want greater confidence on inflation. We don’t need better data, we want to see a continuation of the good data. We have a 6mo set of good inflation data. Is that sending us true data?
✅ Answer will come from some more data. It’s not that that data isn’t good enough. It is.
✅⚠️We thought we needed a softening economy; we might not.
✅⚠️We don’t want a weaker labor market.
✅ It seems to be the likely case that we will achieve that case. It’s a good story. We have 6 months of good data.
✅ A lot from goods inflation though, of course.
😇 This lines are quite bullish so far. Basically, inflation low enough over last 6mo and we’re good – but need to reiterate that 6mo trend.
✅⚠️We don’t want to see the economy turn down; that would be too late. We’re in risk management.
✅ Almost everyone is in favor of moving rates down this year. Timing of that TBD.
😇 REFUSES TO TALK ABOUT 6MO INFLATION. Very interesting.

😇 Jerome Powell USUALLY talks 3-mo and 6-mo inflation. Today, NOPE! Would reiterate we’re too close. Would be too bullish to bring it up!
✅ We’re not looking for sliding unemployment, but yes that would drive rate cuts.
✅ If we saw an unexpected weakening in the labor market, that would certainty weigh on cutting sooner – absolutely.
✅ Wide disparity of views.
✅ Rent declines are in everyone’s forecast. But good’s inflation has been giving a lot of disinflation, but may have more time to run.
✅ Supply chains still not fully healed so there may still be a tailwind.
✅ Not declaring victory.
✅ Supply side healing while less layoffs is “different from prior cycles.”
✅ You’ll be materially above long-term estimates of neutral rate if you subtract inflation from FOMC rate. You will. But supply and labor still has more work to do.
✅ When those peter out, the restriction will show up more sharply.
😇 That’s the overtightening risk.
✅ Labor market at or nearing normal. May take 2 years to come all the way back.
✅ The evidence is that wage increases are healthy but gradually normalizing.
✅ Labor getting back into balance.
✅ More likely risk is 6 good months of inflation reads, but what will really shake out now. Will it have dipped and come back?
✅ Is a hard landing off the table? Executive summary: growth is solid to strong. Labor market indicates labor market is strong. 2 years now of labor market under 4%; that hasn’t happened in 50 years. 6 months of good inflation data. This is a good situation. Let’s be honest. This is good. Outlook? Growth to moderate. But that hasn’t happened yet. Labor market is rebalancing. No guarantee that 12-month inflation will come down. Those are the risks/questions. Overall, pretty good.
✅ Could you get inflation below target? We don’t want to touch 2%. We don’t want inflation to anchor below 2%.
✅ Language in statement to signal: Based the meeting today, I don’t think it’s likely we’ll be confident in March.
✅⚠️ Not the base case. Didn’t even punt it. Just pushed back on it.
😇 Now markets need to unprice March cuts – that will be a bit bloody.
✅ We’re not talking the cost of housing. That’s not my job.
✅ QT slowing talk will start March 19-20, 2024 Meeting.
✅ You can still cut rates while conducting QT.
✅ Not putting a number on how many months is right.
✅ $615b Reverse Repo doesn’t have to go to 0 necessarily.
✅ Dec meeting is 3mo old now, data-wise. New data March.
😇⚠️ Ahhh they want to use the March SEP to guide before cutting.
✅ If the 6-mo inflation numbers were where we’d thought we were, then yes our policy would be in a different place.
😇 THAT’S WHY HE DIDN’T MENTION 6-MO. 6-MO LITEARLLY SAYS “YES, OUR POLICY WOULD BE IN A DIFFERENT PLACE.” WOW.
✅ Starting to hear that things are picking up again.

😇 Not mentioning the Bank crisis at NY Community Bank is VERY strange! No questions at all. Very sus!
😇 Nothing on geopolitics.
😇 Nothing on BTFP.
😇 Nothing on China.
😇 Nothing on Red Sea.
😇 Nothing on financial conditions.
😇 Nothing about GDP trends.
😇 Almost ALL about PCE 12mo and punting to May by weaponizing the March SEP to delay.

EXPIRING COUPON.
😇😇😇Meet Kevin coupon code for course lives, stocks, real estate, AI, entrepreneurship, and Q&A expire TODAY Jan 31, 2024 at 11:59pm. https://meetkevin.com

🔗 Link to this post.

---

Regional Banking Crisis Part 2. 01/31/2024 09:04 PT
✅ $NYCB is down 35% today, recovering from -43% this morning.
✅ New York Community Bankcorp owns New York Community Bank and Flagstar.
✅ Early last year, NYCB agreed to purchase nearly $40B of Signature Bank’s assets while the remaining $60M remained in receivership with the FDIC.
✅ Signature Bank experienced a bank run of over $10B in deposits – the 3rd largest bank failure in US history.
✅ This comes right after the announcement that the Fed’s Bank Funding Term Program will close March 11th.
✅ Odds of a 25bp rate in March rose to 65%, previously at 35% yesterday, January 30th.
✅ NYCB Q3 to Q4 saw income decline:
➡️ -9% noninterest revenue
➡️ -33% fee income
➡️ -16% net interest income
➡️ -$1.3b in outflows
✅ Roughly $20b in cash/short-term investments vs $20b on credit line (😇 feels like surviving only w/ credit line).
✅ Allowance for credit losses well up ($552m vs $45m market expected).
😇 Some say this is due to the bank becoming a $100b bank, but other say that’s even more pressure to break the bank’s books.
🔗 Link to this post.

---

Biden Responds to Jordan Drone Attack 01/31/2024 08:39 PT
✅ Drone attack happened in US base in Jordan (near border of Iraq and Syria) on January 28, resulting in the death of 3 American service members, and at least 34 others wounded
✅ There have been about 165 attacks on US and coalition forces since October 17
✅ This was the first to result in US deaths
✅ Joe Biden stated that the attack was carried out by “radical Iran-backed militant groups operating in Syria and Iraq”
✅ The Islamic Resistance in Iraq (umbrella group of Iran-backed armed groups) claimed responsibility for the attacks
✅ A Telegram channel close to pro-Iranian militias said the attack was a retaliation for a US strike in the south of Baghdad last week against Hezbollah
✅ Iran has denied any link to the drone strike
✅ Biden says he does blame Iran for the drone strike “in the sense that they’re supplying the weapons”
✅ Biden has said he has decided how to respond to the drone strike, though details were not shared
✅ US officials have suggested that it would be a phased response rather than all at once
✅ Biden added “I don’t think we need a wider war in the Middle East. That’s not what I’m looking for.”
✅ US Secretary of State Antony Blinken said “We are intent on doing both – that is, standing up for our people when they’re attacked, while at the same time working every single day to prevent the conflict from growing and spreading”
✅ Blinken added “We will respond, we will respond strongly, we will respond at a time and place of our choosing. And obviously, I’m not going to telegraph what we might do in this instance or get ahead of the president, but I can, again, tell you … we will respond”

🔗 Link to this post.

---

Morning News. 01/31/2024 05:40-06:45 PT

Starbucks CEO on CNBC
✅ Our brand gives us a competitive advantage. 7000 stores in profitable location. Coffee-forward innovation.
😇 Biggest sales pitch ever. Exhausting interview.

Mastercard
✅ Q4 Adj EPS $3.18 vs $3.08
✅ Payment vol at expectations

Boeing
✅ Suspends forecast for 2024

Rockwell Automation
✅ FCF -$35.3m estimate was $356.5m.
✅ Q1 sales $2.05b vs $2.1b exp
✅ Q1 EPS $2.04 vs $2.66 exp

New York Community Bank
✅ Cut dividend down to 5c per share from 10c.
✅ Stock down over 40%
✅ $740 Net Interest Income (NII) vs $791.8m
✅ Q4 Provision for Credit Losses: $552m vs $45m estimate.
✅ Much of that from 2 commercial loans that NYCB underwrote that they are moving to “held for sale.” 😇 Implies they need to raise cash. They have roughly $20b on a wholesale line of credit and $20b in near-term cash and short-term securities.
😇 With stock down 40%, deposit outflows risk a new banking crisis for a bank with over $80b in deposits.
😇 With BTFP closing March 11th, the bailout machine will be gone.
😇 Fed probably needs to cut to avoid another banking crisis.

🔗 Link to this post.

Tesla Overtakes Toyota as Top Selling Vehicle Worldwide. 01/30/2024 16:20 PT
✅ In 2022 the top selling model worldwide was the Toyota Corolla, followed by the Toyota Rav4
✅ In 2023 for the first time, the best-selling car in the world was the Tesla Model Y
✅ The Toyota Corolla is 58 years old
✅ The Rav4 is 30 years old
✅ The Tesla Model Y is 4 years old
✅ 1.23 million units were sold last year
✅ Elon Musk accurately predicted this would happen back in 2021
✅ In California specifically, the Tesla Model Y surpassed the combined sales of the Toyota Rav4 and the Honda CR-V

🔗 Link to this post.

---

Neuralink’s First Human Brain Implant. 01/30/2024 16:14 PT
✅ Musk has said that the first product will be called “Telepathy,” with its initial users being people who have lost the use of their limbs
✅ The goal is for them to be able to control smartphones or computers by thinking
✅ In May 2023 Neuralink received FDA clearance for human clinical trials
✅ Shortly after Neuralink began recruiting patients with quadriplegia caused by cervical spinal cord injury or amyotrophic lateral sclerosis (ALS)
✅ Trial patients will have a chip surgically placed in the part of the brain that controls the intention to move
It will be installed by a robot
✅ Neuralink is not the first company to gain FDA clearance and have trial patients, however it’s the first to implant directly inside of the brain tissue

🔗 Link to this post.

---

Elon Musk Loses $55.8 Billion Stock-Comp Plan. 01/30/2024 15:11 PT

✅ Judge ruled in favor of plaintiff, suggesting the stock-comp plan was “unfair.”
✅ Judge appointed by Democratic Governor, John Charles Carney Jr.
✅ Ruling judge was: Kathleen Saint Jude McCormick.
✅ Judge evaluated the “time” Elon Musk spent at Tesla, including whether time commitments were part of a Board consideration/negotiation. Elon’s time at Twitter and SpaceX came up.
✅ Tesla painted the case as 6% for $600b. Judge argued it was 21.9%+6% for $600b, since he already owned 21.9%.

Likely path forward:
😇 Lower stock comp plan for Elon Musk ALONG with a new, future path for forward targets. Probably LESS pay going backwards though.
😇 Elon’s ownership in Tesla would probably go DOWN as a result of this.
😇 Elon *may* be able to earn more ownership back via a new stock-comp plan, but shareholders would likely have to approve it again.
😇 It will likely be difficult to justify $55.8b again, given the downtrend of Tesla’s stock for approximately 3 years.
😇 The stock is likely trending down due to the risk of Elon Musk responding with a rash reaction, such as taking AI away from Tesla, as he has suggested.
😇 Elon should rapidly clarify that a new, fair comp plan will be established and that he won’t strip any AI from Tesla.
😇 Shareholders PROBABLY benefit from this in the long term.
😇 The near-term uncertainty will likely weigh the stock down, though.

📝 Legal Opinion by Judge (Annotated by Kevin)
🔗 Link to this post.

---

Market Close News. 01/30/2024 01:05-01:32 PT
MSFT
✅ Cloud $33.7b vs $32.21b exp.
✅ EPS $2.93 vs $2.78 exp.
✅ Productivity $19.25b vs $19.03b exp or about 1.1%.
✅ Personal Compute: $16.89b vs $16.8b
✅ LinkedIn up 9% YOY
✅ Office 365 Commercial up 15% YOY
✅ Cloud up 24% YOY
✅ Windows up 9% YOY
😇 Watch earnings call on MSFT for Activision profitability
✅ Gross Margin at 68.4% gross profit vs 66.8% last year

GOOG
✅ Cloud services $76.31b vs $75.97b
✅ YT ads $9.2vs $9.16b
✅ Miss on operating due to severance charges of $2.1b. Last 3mo write down of $1.2b (so more than half concentrated in Q4).
✅ Ads $65.52 Est. $65.80b, 43bp miss.
✅ Google Search up 12% YOY
✅ OpInc: $23.70b vs $23.82b
✅ Down ~8000 employees YOY
✅ 23.9% margin last year vs 27.4% this year
😇 Watch earnings call for damage from GPT in search

SBUX
✅ Net rev $9.43b vs $9.6b exp
✅ China comp sales 10% vs 16.1% exp
✅ NA comp sales 5% vs 5.54% exp
✅ International comp sales 7% vs 11.6% exp
✅ Adj eps 90c vs 93c exp
✅ Check-size growth slows
😇 Watch earnings call for China
✅ China: up 21% in comp sales (😇 which is probably store building), ✅ but within the stores tickets are down 9% YOY.
✅ North America: up 1% in comp sales YOY & 4% in ticket 😇(Stronger American consumer)

EA:
✅ 3Q adj EPS $2.96 vs $2.93 expected

AMD
✅ Q1 gross margin forecast 52%; est 51.8%
✅ Q1 Rev forecast $5.4b vs $5.77b exp
✅ CapEx higher at $139m vs $120.8m
✅ Data center to be flat sequentially
✅ Q4 EPS 77c, est 77c
✅ Q4 Rev $6.2b, est $6.13b
😇 Watch guidance on AI / any slowdown
✅ 47% gross margin in quarter, up from full year of 46%
✅ “AI reshapes virtually every part of the computing market”
✅ Gaming down 17% YOY and 9% since last quarter
✅ Embedded down 17% compared to last year (😇 Intel said that too roughly)
✅ Expecting seasonal decline in server sales

🔗 Link to this post.

---

Nancy Pelosi’s Profitable Trade. 01/30/2024 12:05 PT
✅ On 11/22 the Pelosi’s bought up to $5M on Nvidia Calls
✅ As of 1/29 $NVDA was up 28% back in November
✅ Since the Pelosi’s have purchased the $NVDA call options, $NVDA has announced: government approval to sell chips in China, a new AI partnership with the United States government. 
✅ The call options have made her +$700,000 in under two months, more than triple her annual salary of $223,500. 

🔗 Link to this post.

---

Have We Seen The Bottom of X? 01/30/2024 12:02 PT
✅ Fidelity marked up the value of its shares in X Holdings by more than 11% during the month of December. 
✅ It is estimated that Fidelity still holds X at around a 68% discount to its per share purchase price in the fall of 2002. 
✅ Fidelity hasn’t given access to how it values shares of private companies 
✅ One possibility on the valuation raise relies on comps from other publicly traded companies like $snap that was up 23% and $meta that was up nearly 9% in December
✅ It is unclear how The Kobeissi Letter is calculating this but they are reporting that X is reporting an all time high of 384 billion user seconds per day.
✅ X is also number two on the App Store under the “news” category behind reddit.
✅ The more X can be “marked up” the less likely it is that Elon will sell $TSLA to support X

📝 Axios Article
🔗 Link to this post.

---

Morning News Tuesday. 01/30/2024 06:00-07:00 PT

UPS
✅ UPS just laid of 2.2% of its over $560,000 workforce; 12,000 workers.
✅ This occurs just months after the July 25th deal was finalized following historic UPS strikes: “On July 25, the Teamsters union reached a tentative contract agreement with UPS, securing wage increases for the 340,000 workers it represents and narrowly averting a nationwide strike.”
😇 Quick note: A $4.4 increase on 340,000 Union workers roughly costs over $3b/year. This 12k layoff saves roughly $1b/year. UPS slowly taking back the give. Also, this $4.4 is an assumption based on the difference of what the low-end is paid now at UPS and the negotiated rate. ~$4.4 increase at higher end may only be about 10% over 5 years. But let’s say that’s accurate. UPS likely only raised 20% of this per year. Which means costs of around $750m for year one. Well, UPS just shaved off $1b. Essentially, they fully paid for their negotiation.
😇 Layoffs will continue, IMO. Daily. Stay tuned.
😇 Stock down, but did also miss on 2024 forecast at $93.25 of estimated rev vs $95.66b expected.

JOLTS
✅ Estimate is 8750k jobs vs 8790k prior (40k decline). 😇 I believe the decline will be 400k (10x).
✅ Results…
➡️ 9026k.
➡️ Prior was 8790k revised UP to 8925k.

SCMI
✅ $14.5b 2024 revenue estimate. Previous $10.5. 38% beat.



Lamborghini
✅ Lambos sold out until 2026. Sold 10,000 cars last year and launched a plug-in hybrid: the Revuelto.

Roblox
✅ Revenue up 39%.
✅ R&D spend up 36%.
✅ Loss from operations flat yoy.
✅ Operating free cashflow $59m.

🔗 Link to this post.

Government’s Coronavirus Research Documents. 01/29/2024 15:22 PT
✅ Government documents exposed by the “US Right to Know” group suggest scientists purposefully amplified coronavirus development in bats to spray bats in caves with vaccine-like particle mist to prevent soldiers, in the future, from getting sick in the area.
✅ Document shows debates over pay, wages, funding, tricking the funding system, lowering-safety standards to save costs, and risks.
😇 This was a quite wild look into how coronavirus research is/was conducted in 2018. It’s also scary.

📝Documents Shown in Video [16 Pages].
📝Document set from Video [1400+ Pages].
📝Article Sourcing Info
🔗 Link to this post.
📺 My Video on This.

---

Iran. 01/29/2024 09:55 PT
✅ When Israel was attacked, the Iranian Supreme Leader Ali Khamenei gave a speech and argued the defeat of “The Zionist regime” was equally “the defeat of the U.S.”
✅ In January, Iranian foreign ministry spokesperson declared Iran’s “axis of resistance” is more “coherent, resilient, and united than ever.”
😇 Iran seems to desire becoming the Middle East’s dominant power. Iran’s GDP is ~$359.7.

✅ However, Iran is in 5th place GDP wise within the Middle East.
✅ Chaos caused by Iranian backed forces, such as the Houthi’s in the Red Sea disrupting shipping lanes or the deadly drone attack on America’s Tower 22 outpost in Jordan just this weekend. Tower 22 is used by special forces to fight ISIS.

Tower 22
✅ Iraqi militia groups claimed responsibility for a drone attack, killing 3, wounding 34 (12 critically).
✅ WSJ now reporting enemy drone was spotted, but it was unclear whether it was a U.S. or enemy drone – leading to confusion.
✅ The drone struck the living quarters / barracks for troops.
✅ Biden admin. is now weighing strikes In Iraq and Syria.

Options include
➡️ Strike Iranian Ships
➡️ Strike Iranian oil platforms
➡️ Strike Iranian paramilitary Quds Forces in Syria, Iraq, and Yemen.
✅ U.S. has not struck on Iranian territory yet.
✅ Iran denied involvement.

✅Bases along the Syrian-Iraqi border have regularly come under attack.


US Strikes
✅ Even if the U.S. strikes back, strikes have been hard pressed at actually preventing further attacks. This is heavily due to the ease of launching rockets and drones from relatively mobile, small-unit attack groups. 😇Think pickup truck and rocket launcher or drone slingshot.

Funding of Militant Groups
✅ Funding from Iran (weapons and money) has flown to militant groups for decades. Hamas, Hezbollah, Houthi’s, etc. are all implicated.

6 Billion
✅ The U.S. agreed to a $6b prisoner swap deal between the Biden administration and Iran in September.
✅ After the attacks on Israel early October, the money – held by the Qatari government, was frozen.
✅ Iran claimed in December the money was not frozen and they actually do have access to it.
✅ Sanctions removal came as, since 2021, Iran and the U.S. held negotiations to reduce regional tensions.

Biden Pressed for Action
✅ Nikki Haley: Biden shouldn’t have lifted sanctions on Iran. Biden still hasn’t increased sanctions; that’s lunacy. Countries need to see we’re tough and serious. -CNBC interview.
✅ Trump: Horrible day for America. “Another horrific and tragic consequence of Joe Biden’s weakness and surrender.” -Truth Social
✅ POTUS Account on X: “We will hold all those responsible to account at a time and in a manner [of] our choosing.”
✅ Ross Gerber calls for “shock and awe.”

Iran’s Nuclear Program
✅ Government of Iran has an “advanced” nuclear program subject to “limited international oversight.”
✅ Attacking Iran directly risks nuclear retaliation. However proof of their capabilities is not fully known.
✅ The risks are two sided: Iran going Nuclear would likely upset China, Iran’s largest oil customer and a diplomatic partner.
✅ Diplomacy may be preferred, but ended with the attacks on Israel – which Iran claims it knew nothing of.

Path Forward
✅ Foreign affairs suggests 1) a viable path for a sustainable Palestinian state. 2) Constrain Iran and nuclear ambitions. 3) Stay involved. Today’s pain in the Middle East may have been promoted by the U.S. draw down in the Middle East while ignoring issues in Palestine.
✅ Some argue Iran has little time left to make a deal, as the prospect of a Trump Presidency may end Biden-deal hope as political observations of Biden’s actions become more scrutinized.

Hostages
✅ On the note of Israeli hostages: Egypt and Qatar have progressed in talks with Hamas to release hostages. Discussions are expected to continue this week and are considered “constructive.”

🔗 Link to this post.

---

International Court Ruling Against US & Israel. 01/29/2024 9:46 PT.
✅ The International Court of Justice (ICJ) has ruled in favor of South Africa’s claim that Israel’s actions in Gaza can be characterized as genocide. The court ordered that Israel must take measures to prevent acts of genocide and ensure immediate humanitarian aid in Gaza.
😇 Essentially allows claims to continue that genocide could have occurred
✅ The ICJ emphasized that Hamas is also bound by humanitarian law and called for the immediate release of the remaining Israeli hostages.
✅ This marks just the initial phase of the ICJ case, and it will require years of litigation to determine the court’s future actions. The U.S.’ response to today’s ruling (Jan 26th, 2024) holds greater significance than the decision itself.
✅ In the weeks leading up to the January 26th ruling, the U.S. aligned with Israel in dismissing the South African case as lacking merit.
✅ While this may appear unfavorable for the U.S., it has presented an opportunity for the U.S. to demand that Israeli Prime Minister Benjamin Netanyahu hold those accountable within his coalition.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Evergrande’s Liquidation in Hong Kong. 01/29/2024 05:25 – 07:30 PT.

✅ China’s “3 red lines” were financial rules established by China in August of 2020 which required more stringent ratios for debt to cash, equity, and assets.
✅ This change came after China long encouraged more borrowing to support the Chinese property market, which can make up 25% of the Chinese economy.
✅ In China, private land ownership is not allowed. Instead, real estate purchasers accept 70-year land leases.
✅ In part due to changes to the 3-red lines policy, Evergrande failed to make payments on hundreds of billions of dollars in debts in September 2021. Its losses exceeded $66b in 2021 and $14.7b in 2022 and sought to restructure the remainder of its debt.
✅Discussions, which lasted 19 months, failed.
✅China planned to relax these in early 2023 after developers began facing trouble in 2021.
✅ A Hong Kong Court’s order may be the final process in the collapse of Evergrande, depending on whether a Chinese court agrees with Hong Kong.
✅ Preliminary offshore-debt plan involved a total of $19.1b.
✅ Founder was arrested in September.

What happens now in China:
✅Alvarez and Marsal is the liquidation company that will have the power to seize Evergrande’s assets in Hong Kong, such as their office tower in Wan Chai. Evergrande paid $1.6b for the tower in 2015.
😇 This is another blow to the Chinese housing sector. Chinese culture is already very debt-resistant. The burn of the housing collapse, with prices down over 25%, adds insult to injury.
✅ 78% of household wealth comes from real estate in China. That’s double the U.S. rate.
😇 This could affect consumption in China for an entire generation.
✅ Question now is: Will liquidation also occur in mainland China? 😇 Probably, but just another big burn for Chinese real estate investors.
😇 Trust in developers has already been shattered.
✅ Sales picked up in Beijing and Shanghai in January, but data continues to show sharp falls for other cities.
✅ Developers need funding to continue building and prevent further defaults. Without a stabilization of demand, the pain of the housing sector is likely to continue.
✅ Bloomberg Intelligence believes construction needs to drop another 10% to align demand/supply.
✅ Residential sales now down 37% in 2022/2023 nationwide.
✅ So far, most government policies have failed to slow the housing pain.

Global Impact:
✅ Likely drags on global GDP as consumption in China drops following the drop in household net worth.
✅ China’s $60 trillion dollar economy could drag the world into recession.

🔗 Link to this post.

---

Monday Morning News. 01/29/2024 05:25 – 07:30 PT.
Iran
✅ Geopolitical turmoil intensifies with a deadly drone attack on a U.S. base in Jordan by resistance groups potentially backed by Iran. Iran suggested the argument Iran was involved is “baseless.”
✅ 3 US troops died. ~12 are in critical condition. Another ~16 are injured.
✅ US now weighs a response.
✅ ZIM up 8.7% in premarket on Middle East tensions.

SOFI
✅ ~4.4% miss Q1 revenue forecast.
✅ ~10.3% miss on Q1 “adjusted” EBITA forecast.
✅ ~3.6% beat on Q4 Net Rev
✅ ~29.5% beat on Q4 “adjusted” EBITA.
😇 No “glaring” change in adjustments, so street estimate seemed off.
✅ SOFI offering 4.6% on interest while likely earning around 5.5%.
😇 This compares to 5.0% at Wealthfront/Robinhood and up to 5.5% at the Fed. SOFI is making a substantial arbitrage play on savings rates right now – that profitability is attracting customers. Marketing budget flat with net revenue up about 34%. Very impressive; 4.6% savings yields are marketing for them.
✅ First quarter profitable.

iRobot deal cancels
✅ Stock fell 50% in the last 18 days
✅ Stock down 22% premarket now as Amazon partnership terminates.
😇 Smells like insider trading. Warnings of this happening did circulate last week though.
✅ 31% of staff laid off. CEO and chairman of board step down.

JOLTS January 30th
✅ Forecast is 8709k vs 8790k prior. 7am PT Jan 30.

Fed January 31st
✅ Expected to keep rates flat.

Atlanta Fed RealGDP
✅ 3.0% estimate for Q1 to start off the estimates for Q1 2024. Q4 ended with a 3.3% estimate.



🔗 Link to this post.

---

Fed’s Real Rate is A New Risk 01/29/2024 04:53 PT
✅ Nick T, considered by some the “Fed Whisperer” argues the Fed is now struggling with whether to cut rates in March or not.
✅ The largest concern: Has the level of inflation fallen so rapidly, that rates are significantly more restrictive now than what the Fed intended.
✅ Consider: The Fed’s June and September FOMC Core PCE inflation projection: 3.9% and 3.7% (Sept SEP below).
✅ Consider: The Fed’s June and September FOMC NON CORE PCE inflation projection: 3.3% and 3.2% (Sept SEP below).
✅ The Fed’s last rate hike was in July, when expectations for core and non core inflation were around 3.8%/3.25% for the end of 2023.
✅ What was inflation at the end of 2023?

✅ PCE Non Core: 2.6% (.625% lower than expected).
✅ PCE Core: 2.9% (.90% lower than expected).
✅ This signals, already, rates may be 25-50 basis points higher than what the Fed projected.


😇 A sketch here roughly exemplifies this. If you think core PCE will be 4.0% and you want R* (level of restriction) to be 1.5%, you’d have a total FOMC rate of 5.5%. If core PCE falls to 3.0% and you do not want to add restriction, you should reduce rates to 4.5% (3.0+1.5) to maintain the same level of restriction.
✅ Note: core PCE using just the last 6-months of data sits at 1.9%, annualized.
😇 NOT reducing is otherwise akin to hiking.
✅ Esther George, who left last year as Kansas City Fed President, argues: “there is potentially ‘a lot of room’ to cut rates before they are in neutral territory again.
✅ Hiring in the U.S. dropped to its lowest level in 10 years in November.
✅ The greater risk now is that taking too long to cut rates causes damage to the labor market that is hard to repair.
✅ “Before a downturn, it always looks like it’s not that bad, and then it goes south quickly.”

✅ Shocks are increasingly looking like one-off price surges, many around the same time. Not persistence.
😇 Fed should cut in March. With the Fed BTFP ending March 11, just days before the next Fed meeting March 20, the Fed seems more likely to cut in March than not.

📝Annotated Data & WSJ Nick Timiraos Article.
🔗Link to this post.
📺Video on This.

---

The End of US ‘Brain Drain’. 01/26/2024 15:08 PT.
✅ In the arena of global competition, Xi Jinping emphasizes that ‘technological innovation has become the main battleground.’ Since 2015, he has implemented policies to elevate China into a high-tech manufacturing hub, reducing reliance on Western technology.
✅ The US mirrored China’s ambitions, with the 2022 CHIPS Act allocating $52.7 billion for semiconductor research, development, manufacturing, and workforce training. Simultaneously, the US employs export controls to limit Chinese companies’ access to AI chips, a move dubbed by China as a ‘transfer blockade.’
✅ In response, China has imposed export restrictions on crucial materials for semiconductor and electric vehicle production.
✅ The domestic semiconductor industry faces a personnel challenge due to a shortage of Americans with a STEM education. Compounded by difficulties retaining international students, who opt for countries with more accessible talent visas, the US experiences a ‘brain drain’ due to visa requirements.
✅ The US needs to make talent visas for STEM majors much more assessable.
✅ Recognizing that the US cannot confront China alone, efforts must extend beyond domestic subsidies. The US may build resilient supply chains domestically and with allied nations. Corporations in Germany, India, Israel, Japan, Mexico, Saudi Arabia, and South Korea need strengthening to accomplish this.
✅ This plan demands substantial investment. China, realized this first, and funds its global consumer market by offering incentives like loan guarantees and subsidies for tech purchases, enticing foreign governments across Africa, Central Asia, and the Middle East to adopt Chinese tech. Thereby making them dependent and loyal Chinese consumers. The US must compete on a comparable level.
✅ To counter this, the US may incentivize private investment instead of solely providing subsidies. This approach would foster dependency on American technologies and equipment, jumpstarting AI development among partner nations.
✅ Achieving self-sufficiency or maintaining technological dominance requires collaboration. To stay competitive, the US must encourage pooled private investment, not only for its benefit but also for its key partners.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Illegal Crossings Spike As Trump Reelection Fears Loom. 01/26/2024 15:05 PT.
✅ 160 million adults around the world say they would move to the US if they had the chance.
✅ In 2016, Trump capitalized on ‘border chaos’ to secure the Republican nomination and subsequently the presidency.
✅ There were nearly 250,000 attempts to cross the southern border in November 2023.
✅ Republican governors have paid to send migrants to cities run by Democrats, spreading the issue northward.
✅ Voters trust Republicans over Democrats to deal with border security by a margin of 30 points. It is the Republicans’ lead on any issue.
✅ Tight labor markets often correlate with increased illegal crossings, explaining the surge in attempts since Biden took office.
✅ Since the midterms in 2022, Biden has quietly adopted some of Trump’s border policies. Asylum seekers must apply before showing up; those who try to cross undetected will have their applications rejected. Biden has also agreed to fill some gaps in Trump’s wall. The Biden administration has not drawn any attention to this.
✅ Most border crossers must locate a border patrol agent, present an asylum claim, and pass a ‘credible fear’ interview. Republicans aim to raise the threshold for what qualifies as ‘credible fear,’ citing concerns about including gang violence as grounds for entry— a classification rejected by other countries like Spain.
✅ After passing the interview, immigrants face extended waits for court dates due to overwhelmed courts. Democrats advocate for increased funding to expedite claims processing.
✅ There could be a deal here. The problem is Republicans say they will not give more money to an administration they cannot trust to enforce immigration laws.
✅ Both parties choose campaigning over dealmaking.
✅ Biden faces a challenging election. Should individuals from Mexico, Venezuela, and other nations perceive a likely Trump victory (as many do), a surge of people may rush into America before the election starts. This will increase border crossing under Biden and make it harder for him to win the election. Biden’s best bet is to try to fix the border chaos now.

📝 The Economist Annotated
🔗 Link to this post.

---

How Russia Views The US.01/26/2024 15:00 PT.
✅ The myth that Russia believes about the US is that, instead of being allies, the US exercises manipulative control over countries in exchange for obedience. Essentially, they perceive the US as power-hungry, with the public under the elite’s thumb. This belief consistently drives the Kremlin to make decisions tilted towards harmful belligerence.
✅ The myth that the US believes about Russia is that the Kremlin is the ultimate autocratic power, acting maliciously and prioritizing its own desires over the people’s will. This belief leads policymakers to misread the Kremlin and miss opportunities to weaken the regime or find compromises.
✅ A better understanding of the United States’ own myths and those of Russia will help the US anticipate future changes in Russia more effectively to be able to exploit them.
✅ Russians view US international norms, laws, and partnerships as imperialistic, forcing its influence down others’ throats. This belief originated after WWII when the US shaped politics in Japan and Germany, pushing them into an alliance that heavily favored US national interests. Russia felt threatened and responded by building its own network of “friendly countries” in Eastern Europe.
✅ Russians believe that the US seduced European countries into a partnership through false rhetoric, especially infuriating Russia when done to its neighbors like Poland, Romania, and the Baltic states because they perceive this as puppet states of their enemy close to their border.
✅ When governments resisted US influence (in Afghanistan, Iraq, Libya, Serbia, and Syria), regime change was the American preference. Russia perceived this as hegemony by invitation or hegemony at the barrel of a gun: the means may vary, but the result is compliance.
✅ These views led Russia to believe that the CIA staged a regime change in Ukraine – even if Putin and the Kremlin knew it was a lie, it was easily believable to the people due to their perception of US foreign policy.
✅ Using this logic, Ukrainian hostility is seen as the puppeteer’s hostility (with the US being the puppeteer). Therefore, American hostility towards Russia deserves equal Russian hostility to the US. If power is the only language Russia believes the US understands, then negotiation and compromises signify weakness. This explains why misconceptions on both sides have had dire consequences.
✅ Americans mostly believe that Russia is an evil and ambitious tyranny, with comparisons of Putin to Hitler used to shock people into action. Putin’s larger-than-life persona has exacerbated this view.
✅ Americans believe that the Russian president dominates everything. However, Putin still faces dilemmas. History shows us that no “evil dictator” is as all-powerful as portrayed; they aren’t responsible for every problem in their policy, and even after their removal, many problems persist. Dictators also never operate alone; they always have many people behind them.
✅ The Russian government aims to claim victory; if Russia loses the Ukraine war, public outrage could topple the government.
✅ The US struggles to interpret and successfully predict Russian decisions. For example, in mid-2022, Putin publicly mocked his intelligence chief for suggesting an annexation of Ukraine. Putin then did exactly that a few months later. Putin’s invasion baffled US analysts.
✅ These myths are challenging to undo. If the US were to try to change Russian perceptions, it would only reinforce their belief that the US is manipulative and trying to control their country. These myths may persist in both countries for a long time.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Iran’s Only Way Out. 01/25/2024 12:50 PT.
✅ Iranian Supreme Leader stated in a speech last month that the Israeli setbacks are, ‘also the defeat of the US.’ Iran later stated that the whole world can, ‘see Iran’s power, and the whole world knows its strength and capabilities.’
✅ Iran wants to be the Middle East’s dominant power but has not yet been willing to open new fronts with other members of the axis of resistance. They have largely kept Hezbollah at bay (Iran’s most capable partner). Doing so would spark an all-out war on Israel’s northern border.
✅ The Houthi attacks have been effective at disrupting Western trade but have done little to pull Israel out of Gaza. Iran can clearly cause chaos, but it’s not willing to spend allied forces on an offensive because then they will not be available to defend its own territory.
✅ This hesitation shows the opposite of strength. It shows weakness and vulnerability.
✅ The ultimate deterrent for Iran would be nuclear weapons. This might provide them immunity like North Korea has. Having nuclear weapons would lessen the Western response to their affairs in fear of escalation.
✅ Iran’s nuclear program is quite advanced and has little oversight. It seems a nuclear Iran is inevitable; US strategic military strikes on nuclear sites would help delay this.
✅ Iran was seen as the flag bearer for the Palestine cause on October 7th for being able to successfully infiltrate Israel and penetrate their previously thought to be impenetrable intelligence and military. This bolstered Iran’s reputation in the Middle East, but their reputation shortly came back down after the humanitarian disaster in Gaza persisted.
✅ This conflict has delayed the normalization of relations between the Saudis and Israel, benefiting Iran. This may have broken the Chinese-brokered Iranian & Saudi peace agreement made in March 2023.
✅ Iran’s hesitation may show weakness, but it makes sense. Iran’s strategy, in part, is simply to deter Israel and the US from attacking Iran itself. This is working because Iran hasn’t been attacked yet.
✅ Iran’s reluctance to sacrifice members of its network (Hezbollah) for the sake of Hamas shows that Iran prioritizes its own safety over massive destabilization.
✅ As of today, it would take about a month for Iran to produce enriched nuclear material for 4-5 nuclear weapons – these could be functional bombs a few months thereafter. These estimates are based on limited intelligence.
✅ If Iran is able to construct a few nuclear weapons undetected, it can create an arms race in the region (mainly with Saudi Arabia). It would also anger China, Iran’s main oil customer.
✅ The only way to stop a nuclear Iran is through diplomacy. Iran has suffered for years economically from sanctions – if they stop a nuclear program, then the West relieves sanctions. However, after October 7th, it’s unlikely Iran will go for this.
✅ Iran sees acquiring nuclear weapons as the only viable option to avoid getting attacked by the US or Israel. And as Iran’s actions have shown, Iran protecting itself from attacks is their main goal, making nuclearization incredibly likely.
✅ Iran views now as the perfect time to militarize with the West distracted with many wars and focusing on competition with China. If they can assemble an undetected functional nuclear bomb, it would be in the works now.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Private Equity’s Latest Plan. 01/25/2024 12:41 PT.
✅ After the economy rebounded post-2008, private-equity firms took off. Considerable capital flowed into credit, infrastructure, and real estate, with Blackstone and KKR emerging as major beneficiaries of this boom.
✅ Since then, Apollo, Blackstone (listed on NYSE in 2007), and KKR (listed on NYSE in 2010) have seen their Assets Under Management (AUM) surge from $420 billion to $2.2 trillion.
✅ Currently, private equity giants are engaging in extensive acquisitions and partnerships with insurers. The primary focus is on the approximately $1.1 trillion in fixed annuities, a retirement-savings product offered by life insurers.
✅ Morgan Stanley anticipates that if this trend persists, asset managers could acquire $30 trillion of insurance assets globally. Regulators are growing concerned that such a trend might be elevating the risk profile of the insurance industry.
✅ While some view the liquidity infusion into the insurance industry as beneficial, others express concerns. Defined-benefit pensions, plans that guarantee a specified amount upon retirement, have been dwindling for decades. Private credit liquidity postpones addressing underlying issues.
✅ However, risks loom for policyholders and financial stability. The insurance industry is predominantly regulated by individual states, lacking the agility of private equity firms and leaving room for vulnerabilities.
✅ Unlike bank deposits, annuities cannot be withdrawn quickly or inexpensively by policyholders. Withdrawals are subject to surrender fees, making a run on a life insurer improbable but not impossible.
✅ Due to the illiquidity of policyholders’ assets, private equity firms restructuring acquired insurers’ portfolios are shifting away from freely traded government and corporate bonds (constituting the majority of America’s debt market) toward “structured credit” backed by a pool of loans.
✅ Morgan Stanley’s $30 trillion estimate stems from the assumption that private-equity acquisition of illiquid retirement portfolios persists, incorporating structured credit into portfolios.
✅ As of the end of 2022, the NAIC reported that 29% of bonds on the balance sheets of private equity-owned insurers were structured securities, about three times the industry average of 11%.
✅ These illiquid assets are challenging to sell in a panic and difficult to value, raising concerns about potential malpractices.
✅ Private equity firms are not only acquiring private debt; they are actively creating it by expanding lending activities to fill acquired insurers’ balance sheets.
✅ Essentially, these acquisitions serve as a means for private equity firms to finance exit liquidity for them to generate revenue through commissions, management fees, and origination fees. 
✅ There are concerns regarding potential rating changes to this debt, leading to increased capital charges and high-profile defaults, possibly triggering a run by policyholders.
✅ The structuring of insurance company balance sheets in this manner renders them quite illiquid.
✅ Regulators must catch up and impose stricter restrictions on insurance products, mirroring actions taken in the banking industry, to prevent potential issues.

📝 The Economist Annotated
🔗 Link to this post.

---

Continued War May Mean Bankruptcy For Middle Eastern Countries. 01/25/2024 12:30 PT
✅ Since October 7th, more Arab states have become involved in the conflict. This month, Iran, Israel, and Jordan all carried out bombings on Syria. Additionally, Iran unexpectedly bombed Pakistan.
✅ The Israeli army has not yet located the top leaders of Hamas or the Israeli hostages held by Hamas. It has been five months, and there is currently no end in sight.
✅ As the Gaza conflict drags on, the messier the regional conflict gets. 
✅ On January 20th, Iranian-backed militias in Iraq launched numerous rockets and ballistic missiles at America’s al-Assad base in western Iraq. The base’s Patriot defense system intercepted most of them, but some missiles hit, causing injuries to Americans and Iraqis.
✅ Iran has been establishing networks of militias in the region for decades to project power. However, deploying them without getting involved in conflicts has proven challenging for Iran, which has been facing many jihadist terrorist attacks recently.
✅ Iran hasn’t yet released Hezbollah yet, as Hezbollah is Iran’s most effective proxy. They have instead relaxed the Houthis a few months back to target American commercial ships. 
✅ Iran wants to force a ceasefire in the region and drive America out of the Middle East for good so they can continue their power expansion. 
✅ The Biden Administration has been cautious, avoiding getting entangled in another Middle East war, especially with an upcoming election.
✅ Saudi Arabia would agree to normalize relations with Israel if there is a commitment to create a Palestinian state. However, the Israeli Prime Minister, a long-time opponent of Palestinian statehood, and has enforced policies preventing it for over a decade, is unlikely to agree to this. 
✅ The war has not significantly affected Israel’s economy, as most of its sea trade goes through Mediterranean ports. Egypt, on the other hand, has experienced a 40% reduction in revenue from the Suez Canal, raising fears of default.
✅ Egypt believes that American strikes on the Houthis will not stop the Houthis. The only way for Egypt to restore its canal’s functionality and not default is through a ceasefire in Gaza.
✅ Egypt is actively promoting a two-stage deal for peace in the region because it’s in their best interest to create peace:
Phase 1: Release of civilian hostages on both sides in return for a truce that could last several weeks
Phase 2: Hamas frees Israeli soldier hostages in exchange for a full ceasefire and Israeli withdrawal from Gaza.
✅ The Israeli government is divided on this proposal. The left-wing coalition supports the terms but insists on adding a condition that Gaza needs a new government, considering leaving Hamas in power a deal breaker. The right-wing coalition, led by the Prime Minister, opposes any ceasefire.
✅ Hamas is also divided on the deal. While they agree to the first phase. Hamas insists that Israel must release militants involved in the October massacre, creating another deal breaker. 
✅ The Prime Minister faces a decision soon, as protests in Israel, primarily led by hostage families, call for a ceasefire and the Prime Minister’s resignation. These families believe that a ceasefire is the only way to see their kidnapped family members again.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Fed Cut Miss-pricing: The Hairy Chart 01/25/2024 08:10 PT
😇 The Economist has a fantastic piece on “the hairy chart.”
✅ The Hairy Chart shows estimates of the Fed’s policy rate. Each “hair” (faint line) is a market estimate of where rates will go. The DARK line represents what rates did.
✅ Look at the bottom by the 2022 area and notice markets thought rates would rise much more slowly than they actually did.
✅ This was true for almost every estimate on the way up.
✅ The market has, this cycle, essentially been wrong every time.
✅ This creates a risk the market is wrong again about rate cuts (the upper hairs).
😇 Without the BTFP, I’m concerned the Fed may need to cut sooner. I’ve been bearish on a March cut, especially with today’s GDP data, but I’m not sure another potential shock to the banking sector (banking crisis 2.0) is worth the risk of not starting in March. Either way, if the Economist is right, rates will stay “higher for longer.”


🔗 Link to this post.

---

BlackRock, Boeing, Microsoft, & Other News 01/25/2024 08:00 PT
✅ BlackRock fears Geopolitical fragmentation is worsening and we are not heading back to the “old regime.” Instead, fragmentation throughout supply chains may lead to “persistent inflation.” 😇 Note: BlackRock, in their weekly commentary, does not differentiate between producer inflation (margin hit) and consumer price inflation (Fed concern).
✅ “Geopolitical volatility – and the rising number of violent conflicts worldwide – increase the risk of more disorderly and less predictable path.”
✅ The risk of escalation is high.
✅ “Expect a surge of investment into advanced tech, clean energy, defense and other sectors as critical to a country’s economic and geopolitical goals.”
✅ Neutral view of domestic stocks, however still positioned underweight. See disappointing outlook for rate cuts and/or soft landing.
✅ Overweight Japan, neutral China, overweight short-term treasuries, neutral long-term treasuries.

China (Bank of America commentary)
✅ None of these 4, which occurred in 2015, have occurred today:
➡️ monetary policy easing
➡️ major shareholders at listed companies increased holdings
➡️ margin financing regulation loosened
➡️ market support by direct purchases
✅ Instead, Chinese equities have recorded 9 consecutive quarters of earnings misses.
✅ PBoC delivered a surprise reduction of 50bp to reserve requirement ratio. However, deflation has lead economists to believe “this may need to be followed up with more aggressive easing”.

Iran (WSJ)
✅ US intel warned Iran of an ISIS-K (Khorasan) attack was inbound on the funeral suicide bombings that killed more than 80.
✅ Some in Iran have suggested the bombers had links to the U.S. and Israel.
😇 It’s unclear how soon prior to the attack Iran was warned or if it was through a channel actually expected to receive attention.

Israel Buffer Zone (WSJ).
✅ Starting in November, Israel began plans to clear a 1-km wide border, wherein no Palestinians would be allowed. Here’s what that looks like.


Microsoft / Blizzard
✅ 1,900 Activision / Blizzard employees laid off, about 8% of the 22,000 in gaming (about 17,000 came from Activision Blizzard).

Boeing Hole (NYT)
✅ Alaska Airlines Flight 1282 took off Jan 5. What looked like a normal portion of the plane without a door was actually a “door plug,” or a manufacturing option to have an emergency exit in a particular position – required if the plane had more total seats. The 737 Max was delivered just 2 months prior.
✅ At 14,830 feet, cabin pressure began declining (warning lights in cockpit).
✅ At ~16,000 feet, “pilots heard a loud boom” and the plug was completely torn off.
✅ The stop pins and door plug were recovered.
✅ The bolts, were not.


✅ The bottom bolts prevent vertical lift of the entire plug.
✅ The top bolts prevent outward tilt of the entire plug.

✅ It’s unclear if the bolts were missing entirely or slowly loosened via vibrations from being too loosely tightened.
😇 Tighten your bolts! I feel like this occurs in construction as well. Compliance with checking bolts seems like a no-brainer though, especially in aviation. Poor management work.
😇 I suspect multiple loose bolts, maybe just “placed, hand tightened, and never mechanically tightened” could occur as easily as: Place the bolts, go on a lunch break, someone else puts a cover panel on, bolts never get mechanically tightened. The bolts would have, in this case, appeared installed, but never checked for tightness. As bolts loosen, they become increasingly more reliant on the leftover bolts. If they’re all loose, they’ll just rattle out of place. It’s unlikely anyone finding random bolts on the ground would ever link them to this flight. So I personally don’t believe the bolts were never there (though that has a 10% chance, in my opinion). Instead, I believe no one checked their actual proper install, but visually saw them installed. This is a management / compliance / supervision issue. The scariest type! Mistakes always get made, but supervision is designed to catch them; to break the chain reaction of mistakes.
✅ Middle bolts may have also been entirely missing or too loose.
✅ Spirit AeroSystems manufactured the plug in Malaysia. 😇 Their stock has suffered ~17%, but they may not be at fault here.
✅ Boeing installed the plug in Renton, WA. 😇 This appears to be the likely culprit.

✅ Prior warning lights about pressurization had gone off on earlier flights.
😇 As usual, aviation disasters follow MULTIPLE failures. Early warnings appear to have been IGNORED.
✅ 170 737 Max 9 planes are grounded until they can be inspected.

Red Sea Inflation
✅ JP Morgan Estimates that if shipping costs stay high, “global goods prices could be raised by 0.7%, adding a third of a percentage point to the global inflation rate that excludes energy and food.” 😇 Wow! That’s a high estimate! Especially since I believe there will be an absorption of these costs into producer prices without necessarily raising consumer prices.
✅ WSJ suppliers delivery times (under 50 = longer delivery times) show the Eurozone and U.K. already experiencing a hit to delivery times.


🔗 Link to this post.

---

Fed BTFP & AM News 01/25/2024 05:15 PT
✅ Bank-term funding program
✅ Rate of 5.4% on Fed Funds Rate vs 4.88% cost on BTFP created a .52bp spread for an arb. Fed forced BTFP rates to MATCH Fed Funds Rate, ending arb.
✅ Program stops funding new borrowing March 11, 2024.
✅ Program is designed to help banks collateralize treasuries and certain assets at 100%, even if they have market losses. However, the extra $40b of borrowing in the last essentially UNDID 1/2 of a month of QT. The program entirely removed about 2 months of QT (~$150-160b) of tightening from markets (by essentially flowing that money back into markets).
😇 My concern is what happens with banks AFTER March 11th who need a rescue loan?
😇 Banking Crisis 2.0 is possible.
😇 For me, this tilts me in favor of a March rate cut. It would signal that it’s okay to start loosening.



ECB
✅ Held rates as expected at 4.5% main refinancing rate.
✅ Declining trend in underlying inflation has continued
✅ Information broadly confirmed prior inflation assessment.
😇 Mostly along expectations.
😇 ECB unlikely to lead the Fed.

Tesla & Enphase
😇 Tesla and Enphase are a call option on rates, IMO. If you hold them, they’ll be volatile, just like options.

GDP Advanced Estimates / Annualized (Remember Advanced > Revised > Final)
✅ 3.3% vs 2.0% expected GDP annualized. (😇inventory building?)
✅ 2.8% vs 2.5% expected personal consumption.
✅ 1.5% vs 2.2% expected GDP price index. (😇stronger economy, weaker inflation.) Prior read was 3.3% in Q3 final.

Claims
✅ 214k vs 200k expected initial claims largest since December.
✅ 1833k continuing vs 1823k expected.

Rate Monitor
✅ 43.2% chance of March 20 rate cut.
😇 I believed there was a 20-30% chance prior to the BTFP announcement. I thought they’d extend the program.
😇 Now I believe this creates a 70% chance of a March rate cut.

🔗 Link to this post.

---

Tesla Earnings 01/24/2024 14:10PT-15:30 PT

Big HouseHack Update is Out Here – Scary but Exciting!
✅ Production costs down 3.2% sequentially (from last quarter).
😇 This is incredible! Prior declines were around 1%, 1.9%, and 2.5%. Tesla is bringing DEFLATION to manufacturing.
✅ Gross Vehicle Margin: 17.6%, last was 17.9% (😇still no bottom)
✅ Gross Vehicle Margin ex Credits: 17.2%
✅ Lithium prices have fallen substantially from their peak in November 2022. Lithium costs down 84% from peak.
✅ NO PRODUCTION ESTIMATE FOR 2024 GIVEN.
✅ Free Cash Flow of $2.1b in Q4. Q1 usually drops.
✅ Some commenting that “next gen” investments may lead to LOWER production (negative) in 2024 vs 2023. Production grew ~37% between 2022 and 2023.
😇 This could be due to project Redwood.
✅ Operating Margin bottom was Q3: 7.6% vs 8.2% in Q4.
✅ Solar deployed down another -16% Q4, -26% Q3, 0% Q2, -33% Q1.
✅ Storage grew 2.25x in 2023, but fell 19.5% in Q4 from Q3.
😇 FSD take rate still seems to be quite low given “lower FSD revenue recognition YOY” comparing to FSD Beta release in Q4 2022 (high comp comparison means the take rate has not exceeded the high comp, which was kind of low anyway).
✅ Slower Cybertruck Ramp than Prior Models.
✅ Roughly $29b cash vs ~$24’ish debt/payables.
✅ 6.3% growth in Supercharging stations.
✅ “Current Installed Annual Vehicle Capacity” FLAT from Q3 2023. ~2.350m. At max, that would represent 28.9% adding no production, just completing what’s indicated now as “installed capacity.” Fremont indicates installed capacity at 650k but actually did 530k.


Earnings Call
Elon Musk:
✅ Q4 annual run rate at “almost 2m cars.”
✅ Model Y best selling vehicle of any kind, not just EV.
✅ “Between two growth curves.”
✅ FSD 12 will be available for anyone who requests in the weeks to come.
✅ Probably the most efficient AI company in the world for efficient. 300k lines of C++ replaced with neural nets. We’re quite far ahead in terms of AI inference efficiency.
✅ Giga Factory Texas will manufacture next-gen. This is not a product announcement though. Second Mexico, then potentially third location by end of 2024/early 2025 to identify.
✅ Path to be the most-valuable company in the world (per Elon).

CFO – Taneja
✅ Predicting gross margins is out of our control.
✅ Demand front: getting creative to bring in new customers and educating them, especially total cost of ownership.
✅ Credit is now offered at point of sale for model Y ($7500 reduction at time of purchase).
✅ Continue to offer attractive lease rates. Sales are recognized as upfront revenue.
✅ CapEx 2024 expected to be $10b ($2.5b/quarter).

Elon Musk
✅Current schedule says start production end of 2025 for next-generation vehicle. Revolutionary manufacturing technology here.
✅ We’ll be sleeping on the line.
✅ Predicting this s-curve is hard to say. Hard to say unit volume 2025.

Drew Baglino
✅ 4680 Production is ahead of the ramp; inventory available.

Elon Musk
✅ I see a path to creating an AI and robotics juggernaut. I don’t want to control it but if I have so little influence in a company at that stage, I could be voted out by some random shareholders. A lot of people with strange ideas of what should be done.
✅ If we could do a dual-class stock, that’d be ideal. I’m not looking for additional economics. 😇 Big mention; no additional economics necessary. Just wants voting rights / “strong influence.”
✅ If rates come down quickly, I think margins will be good. If they don’t come down quickly margins won’t be good.

CFO – Taneja
✅ We’re between 2 major growth waves.
✅ 2024 Production will be “lower.”
😇 Lower than what?

Drew Baglino
✅ Will demonstrate success at Giga Texas first before we expand to Mexico.

Elon Musk
✅ Model 3 was 3 years of hell.
✅ Model Y much easier.
✅ A lot of car companies should be asking for FSD licensing. Some tentative conversations, but I think they don’t believe it’s real.
✅ Optimus is a very new product. Extremely revolutionary.
✅ Potential to far exceed the value of everything else at Tesla combined.
✅ AI technology developed for car translate quite well to a humanoid robot. Cars are just a 4-wheeled robot.
✅ I was in the Optimus lab until midnight last night.

Drew Baglino
✅ But gotta get it to do something useful. Elon: It already can! Drew: Well, millions. Elon: yeah. Runs the same technology as car.

Exec
✅ If conversion rate continues on Cybertruck, we’ll sell out 2024 Cybertrucks.

Elon Musk
✅ Cybertruck is production constrained, not demand constrained. Demand is off the hook.
✅ See us delivering ~250k Cybertrucks per year.

Execs
✅ Ad conversions: Ran targeted digital campaigns. These campaigns were to drive awareness. Biggest issue is affordability. Messaging though was to try to address the misconceptions of EVs: safety, affordability, etc. One campaign in Texas hit 10m targets and 500k visitors to site. This traffic behaved similarly to organic reach. But don’t want to overspend.

Elon Musk
✅ Friends in Japan unaware of Tesla.

Baglino & Execs
✅ The Lathrop facility is adding a new production line and will double its capacity from 20 gigawatt-hours to 40 gigawatt-hours this year.
✅ In-bound logistics costs down 20%.
✅ Optimizing and negotiating.

Elon Musk
✅ Friends in Japan unaware of Tesla.
✅ Don’t see an obvious opportunity to partner with Chinese automakers, but they’re very good.
✅ Happy to partner with Superchargers and FSD though.
✅ 48v dramatically reduces copper use.
✅ Ethernet-level communication; much faster.
✅ Hedging our bets with Nvidia GPUs. Or neural-net processing unit.
✅ The more effort in training, the less effort in inference. 😇 In other words, the better the training/experience, the less power for guessing solutions to new issues/experiences.
✅ Dual path of Nvidia and DOJO. Think of DOJO as a long-shot worth taking. Not high probability. Plans for DOJO 1.5, 2, 3. Has potential, but can’t emphasize enough: high risk, high payoff.
✅ About to complete version 3 of Tesla hardware (hardware 5). Version 1 was Mobile Eye. Version 2 was Nvidia. Version 3-5 are Tesla.
✅ Interesting play: when cars are not in use, in the future, the in-car computer can do generalized AI tasks. Run a GPT-4 or something like that, even in a robotaxi scenario, the other non-used hours are available computer hours.

🔗 Link to this post.
📺 Video Stream Earnings & Earnings Call on Tesla
📝 Annotated Earnings Deck
Big HouseHack Update is Out Here – Scary but Exciting!

---

ebay Lays Off 1000 Employees. 01/24/2024 12:03 PT.
✅ eBay is laying off 9% of its full-time workforce.
✅ CEO Jamie Iannone says they will be scaling back other employees’ contracts as well, potentially meaning pay cuts.
✅ They admit to over-hiring, scaling their expenses beyond their business growth.
✅ These layoffs would put Ebay back to 2021 employment levels.
✅ Ebay will report Q4 holiday earnings Feb 21, 2024.

📝 WSJ Article
🔗 Link to this post.

---

Wells Fargo Bearish US Consumer. 01/24/2024 11:50 PT.
✅ Wells Fargo believes the US consumer is tapped out after Q4’s holiday spending.
✅ Retail sales came in higher than expected, up 5.6% YoY.
✅ Small business optimism has stayed below its 50-year average for over 24 months, yet there still has been no recession
✅ Although the “incoming recession” keeps being pushed back, Wells Fargo says this time is different as unemployment has started to tick up.
✅ Wells Fargo cites the draw down of excess savings (from the pandemic). Consumers did not have excess savings prepandemic. Quarter after quarter, the consumer is supposedly running out of money any time soon.
✅ Wells Fargo forecasts the economy to “noticeably slow” mid 2024.

📝 Bloomberg Article
🔗 Link to this post.

---

Wednesday Morning. 01/24/2024 09:20-09:33 PT.
✅ Princeton Economist indicates that now the Iowa caucuses are over, perceptions on the economy lag, and grumpiness over politics may relax, more optimism could support the economy.
✅ However, as the USA Today indicates, falling inflation could lead to layoffs. As consumer demand falls and margins decline, companies will look to shave expenses.
✅ 24 days into January and here are the layoffs:

---

Ukraine & Geopolitics. 01/24/2024 08:00-09:12 PT
✅ Ukraine is expected to run out of money “within months” if Europe and the US don’t come through with funding.
😇 I believe this was Putin’s plan all along. He expected the US and Europe would aid, but the aid would not last forever. Russia can support itself. Ukraine can’t. Interesting move.
✅ Ukraine faces as $40b+ financial short fall in 2024 (similar to last year). US and Europe were expected to cover $30b of that shortfall.

Dean Philips
✅ Running as an alternate to Biden with what he views is a “better chance to beat Trump.”
😇 I feel like I was the Dean Phillips of California in 2022’s Recall Election, though. And from experience, if the party doesn’t officially back you, you’re cooked. This is nothing against Congressman Phillips; I see it as more of a realization of party politics.
✅ The Dem Party just rescheduled the party’s nomination schedule to the request of Biden.
✅ Some polls show him at between 6-28% vs Biden.
✅ Says Biden is “a man of good character in decline.”
✅ Calls his campaign an “intervention” for the Democratic Party.
✅ Runs on Medicare for all.

Red Sea
✅ 8 more strikes against Houthi targets Tuesday.
✅ Vessel traffic down 34% in Red Sea.
✅ Why are the Houthi’s so strong? The NYT argues it’s because Houthi’s are using commercial radar equipment, available at boating stores. With this, they can spread their munitions – the Houthi’s are not centralized. Making it more challenging to strike core locations or weapon depots. Instead, they’re launching missiles from pickup trucks. Example: Halo24 radar, $3,000, available at Bass Pro Shop.
✅ They’re also believed to manufacture / assemble their rockets underground, likely with support from Iran.

Hamas Tunnels
✅ Expected to be 350-450 miles long. London’s Underground is 249 miles (the Tube). Tunnels run around $3m/tunnel per WSJ/NYT.

Palantir
✅ Revenue growth from government contracts “has slowed in recent quarters.” Revenue growth in 2023 was just 16%; slowest annual growth since public. Current PE ratio of 69.4 vs 28.6% EPS growth projected for the next 4 years = ~2.4 PEG.
😇 Big push here needs to come from Commercial, not government.

Taylor Swift
✅ US Today believes Taylor Swift could be a big influence on the 2024 election to mobilize younger voters. Swift’s fan base trends younger and more liberal.
✅ In 2020: 48% of eligible voters 18-29 voted. 73% of 65-74 voted.
✅ In 2016: 40% of eligible voters 18-29 voted. 80% of 65-74 voted.
😇 Most say “my vote doesn’t matter.” The reality is more, votes in your district usually lead to more political spending in your district. Votes matter for more than just the office.
✅ Some speculate Swift is a “Pentagon operative.”

🔗 Link to this post.

---

Wednesday Morning. 01/24/2024 05:40-06:00 PT
✅ Apple expecting level 2 autonomy for their car in 2028, down from level 4 autonomy.
✅ Tesla’s “project Redwood” is expected to be a “new mass market vehicle” that would start production “mid 2025,” per Reuters.
✅ ASML orders tripled from Q3 to Q4. AI orders having significant impact. 2023 saw 30% growth. 2024 was expected to be flat. Numbers are beating expectations on large orders for chip manufacturing equipment (TSM, Intel, Samsung, etc.).
✅ Texas Instruments 12% revenue decline in Q1 forecast compared to expectations w/ miss on Q4 EPS and Rev citing industrial production slowdown.
✅ See Texas Instruments segments below from 2022 annual report.


✅ PMI beats suggest finally manufacturing may be exiting its “recession” with a read over 50.
➡️ S&P Manufacturing 50.3 vs 47.6 expected and 47.9 prior.
➡️ S&P Services 52.9 vs 51.5 expected and 51.4 prior.
😇 Texas Instruments suggested in their earnings call as well that they are looking for macro improvement in 2024, suggesting a possible bottoming process in the non-AI manufacturing side.

✅ Netflix earnings call suggested no more price increases for now.
✅ 3M and PG were reserved with price-increase suggestions, focusing more on margin.

📝 Reuters Article
🔗 Link to this post.

---

Chinese Stimulus Package. 01/23/2024 15:45 PT
✅ China is in talks to move $278 billion from offshore Chinese companies to buy shares on the Hong Kong Exchange
✅ Essentially China is forcing institutions to start buying Chinese Stocks
✅ China’s stock market recently hit historical lows and leadership aims to ease investors. 
✅ The plan is not fully confirmed to happen yet and Chinese officials are still discussing other options to support the economy/markets. 
✅ This shows that Xi Jinping and other top officials aren’t as opposed to stimulus as previously thought. 
✅ Many investors are still too scared to be touching Chinese companies and are skeptical that this proposed stimulus will help the fundamentals of the economy.

📝 Bloomberg Article
🔗 Link to this post.

---

How Other Countries Are Preparing For a Trump Victory. 01/23/2024 15:40 PT
✅ Other nations are preparing for the upcoming US 2024 presidential election, considering the “Trump put” or the “Trump hedge” to assess how Trump’s presence in office could either disadvantage or advantage their countries.
✅ Take Russia as an example of the “Trump put.” Putin is poised to end the war, but with Trump leading in polls, there’s a possibility that this could be more advantageous for Russia than Putin ending the war now.
✅ Trump’s statement, “I would tell Zelensky, no more aid. You’ve got to make a deal,” suggests that Zelensky will have to concede more than he and the Biden Admin are currently willing to, in order to end the war. Putin is likely to wait for this opportunity.
✅ Ukraine’s allies in Europe are contemplating a “Trump hedge.” The Ukraine war has reignited enthusiasm for the NATO alliance. Trump being in office is creating a fear among these NATO countries for the future of NATO leading them to hedge in the event of this. 
✅ In 2016, Obama referred to Europeans as “free riders” for having the US fund NATO. Trump went further in a 2019 meeting, stating, “I don’t give a sh9t about NATO” and discussing a serious withdrawal. While these threats were part of a bargaining policy to push European countries to meet their spending commitments on defense 2% of GDP), they still carry significance in Trump’s view of the NATO alliance.
✅ Trump’s re-election will also influence global trade. If re-elected, he is likely to adopt a tougher stance on China. During his first term, he imposed 25% tariffs on $300 billion worth of Chinese imports—a policy largely maintained by the Biden Admin.
✅ Self-proclaimed as the “tariff man,” Trump has vowed to impose a 10% universal tariff on imports from ALL countries, matching countries that impose higher tariffs on US goods—an “eye for an eye, a tariff for a tariff.”
✅ China, perceived as the biggest threat, will be the primary target of protectionist US trade measures under Trump’s goal to “eliminate dependence on China in all critical areas,” including electronics, steel, and pharmaceuticals.
✅ Trump has also expressed intentions to close the border, advocating for the roundup and deportation of millions of illegal immigrants.
✅ Mexico is preparing for the potential influx of millions of people across their northern and southern borders in the event of overwhelming numbers.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

China’s Anti-Democracy Plans Revealed. 01/23/2024 15:27 PT
✅ China’s grand strategy focuses on dominating the Indo-Pacific and controlling the development and production of the most advanced tech, thereby making China the hub of the global economy.
✅ Many foreign power realists and isolationists argue that supporting democratic governance distracts the US from hard-power competition.
✅ President Thomas Jefferson argued that supporting well-governed republics in the Pacific Northwest would be the best way to prevent European imperial expansion there.
✅ President Ronald Reagan concluded that weak democratic governance was making US strategic partners in Asia vulnerable to hostile influences, encouraging him to strengthen them and expand to the Philippines and South Korea. This helped contain the Soviet Union from spreading its influence.
✅ These lessons are very relevant to what we’re seeing today. Most of Asia’s one-party states still support a free and open Indo-Pacific rather than a Chinese international order. Many of these countries fought for and want to protect their independence from authoritarian interference.
✅ When US foreign policy has focused on encouraging democratic governance as a means to national resilience, the impacts on the balance of power abroad have rebounded to the US’s benefit.
✅ After WWII, the US made sure to pave a democratic path for Japan in Tokyo to ensure that communism did not take root there. Making Japan an economically flourishing democracy helped contain Soviet expansion.
✅ Joe Biden believes that the global fight for democratic values is crucial; however, he hasn’t framed democracy as part of the United States’ Asia strategy. He has become too focused on the great power competition with China, which reinforces overseas fears that the US is only concerned about its own rivalry and not how China’s ambitions affect threatened regions.
✅ The most powerful states in China’s region have more values in common with the US than China. Japan and South Korea are now spending money committed to support the democratic development of other countries in the region.
✅ When Australia, India, Japan, the Philippines, or South Korea have refused to support China on territorial or diplomatic disputes. China has in turn put import bans on them for key sectors.
✅ Asian countries that have never fought for independence have a major disconnect from American culture. Asian countries that have a similar fight as a part of their history are much more likely to resonate with the US. Taiwan and South Korea, for instance, speak much more urgently of democracy as a universal value.
✅ China is very afraid of democracy. The CCP sanctions pro-democracy groups, politicians who stand up for human rights, as well as those who support transparency and accountability. This is because these values UNDERMINE China.
✅ An Asia that is more free and democratic would be harder for China to manipulate and rule.
✅ A US retreat from overtly supporting democratic cavaliers would make China’s quest for dominance easier. This would open many corruption doors for China – bribery to secure new investments, military access points, and influence over infrastructure and key geographical locations in Asia.
✅ Japan and South Korea notice this, and that is why they’re funding democratic expansion in the region.
✅ Ensuring countries have programs to help combat corruption could hurt Chinese influence too. This can be done by giving sanctuary to persecuted political dissidents.
✅ Supporting democracy in the Indo-Pacific doesn’t mean stopping collaboration with non-democratic partners like Vietnam. Both Vietnam and the US share many interests in the environment of a free and open Indo-Pacific.
✅ India’s media has become more restrictive, and politicians threaten minority rights. Prime Minister Narendra Modi remains popular with the Indian public despite this. The US needs to work closely with nations that are straying further from democracy to prevent handing China new allies.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Trouble in Developing Countries’ EVs. 01/23/2024 15:15 PT
✅ Electric vehicles are expanding rapidly in developing countries due to their cost-effectiveness compared to gas-powered vehicles.
✅ A common form of transportation in urban India is the use of 3-wheeled taxi cars called tuk-tuks. India is now using electric tuk-tuks to replace gas-powered ones; taxi drivers can cut costs by switching to electric.
✅ The problem with these electric tuk-tuks is that each of them runs on 5 batteries containing about 300 lbs of lead in total. The battery life on these cars is about 1.5 years, and these batteries need to be replaced and recycled every time.
✅ Recycling of these batteries in India is commonly done at small-scale unregulated smelters; about 60 of the 300 lbs of lead per car ends up leaking into the environment in the process.
✅ Lead is a dangerous neurotoxin, and exposure can be harmful. Estimates suggest that lead kills between 1.6 – 5.5 million people per year. For comparison, if the highest estimate of 5.5 million is true, then that would make lead a bigger global killer than AIDS, malaria, diabetes, and road traffic deaths COMBINED.
✅ In the US during the 1920s, oil companies added lead to gasoline to increase engine efficiency; when car ownership increased after WWII – lead emissions grew. People were also using lead paint and lead pipes during this time. By the mid-1960s, nearly every child in the US had higher than normal blood lead levels – leading to babies born from 1960-1970s losing on average 5 IQ points from lead exposure.
😇 This is wild – directly linking lead exposure to IQ.
✅ In 1970, the US passed the Clean Air Act to stop mass lead poisoning in the US, which banned leaded gasoline.
✅ Exposure continues to happen because even though lead is toxic, it is a very useful metal due to it being very malleable yet very strong. This is why it is used in pipes, ammunition, fishing weights, paints, glazes, jewelry, etc.
✅ However, the largest use of lead by far is in batteries. Lead-acid batteries spark the engines of gas cars, and now they’re being used for green energy storage, which is very counter-intuitive. In developed countries, though, recycling is very efficient and safe. In Bangladesh, it is not, and often a lot of lead leaks into the environment.
✅ Tesla does not use lead-acid in any of their batteries, switching out their 12V lead acid to lithium ion in 2022.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Russia The Drone Wars. 01/22/2024 17:00 PT
✅ Russia has Iranian “Shahed” drones assembled in both Russia and Iran, with new capabilities used for targeting expensive Western-supplied defenses in Ukraine.
✅ In the beginning of the war, Ukraine had the upper hand with drone tech. However, Russia has recently started investing more in drone technology.
✅ The Ukrainian military has been largely dependent on drone warfare; as of 11/17, they claimed to have destroyed 15 Russian naval vessels with drones.
✅ Destroying naval vessels keeps sea lanes clear for grain shipments.
✅ As of now, drones are most concentrated on the frontlines in eastern Ukraine – this is Ukraine’s best anti-tank defense.
✅ This drone vs. tank strategy has made tank vs. tank a thing of the past.
✅ Drones are one of the most accurate forms of attack. They’re better than artillery because drones drop bombs precisely, while artillery has more variance. This is especially important if you have friendly infantry a few yards away from the target.
✅ Russian forces have copied many Ukrainian drone tactics. Firstly, a mother drone – for intelligence and surveillance – hovers well above most drones.
✅ These drones then relay the info to low-flying, highly maneuverable precision drones armed with explosives.
✅ After low-flying drones eliminate initial targets (take out tanks or large groups of infantry), a ground assault follows with military vehicles.
✅ Russians have jamming devices to stop Ukrainian drones from working. Russian electronic warfare often disables Western equipment.
✅ Ukrainian officials estimate that Russia can now produce around 100k drones per month, while Ukraine can only produce half that.
✅ Russia has also doubled tank production from 100 a year to 200 a year. They also have much cheaper munitions than the West.
✅ A 152-mm artillery shell costs $600 to produce in Russia, whereas a 155-mm shell costs up to $6000 in the West.
✅ Ukraine’s focus has shifted from offensive tactics to defending their current positions and keeping forces intact.
✅ Russian troops have planted many landmines in Ukrainian soil.
✅ Russia has enough ammunition stock and production lines to continue fighting for at least another year; Ukraine will need more funding to last that long.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

DWAC soars upon DeSantis’s exit from Republican Primaries. 01/22/2024 16:30 PT
✅ Digital World Acquisition Corp, the Trump-linked SPAC, rose 88.36%.
✅ This is the day after DeSantis leaves the Republican Primaries.
✅ The rally had started prior to DeSantis’s exit; up 167.87% in the last 5 days.
✅ This is still down 49% from all-time-highs in March of 2022.

🔗 Link to this post.

---

Elon Musk requests new compensation package. 01/22/2024 16:25 PT
✅ Elon Musk wants a new compensation plan from Tesla.
✅ Musk says he is “uncomfortable growing Tesla to be a leader in AI & robotics without having 25% voting control”.
✅ Musk says this is “enough to be influential, but not so much that [he] can’t be overturned”.
✅ He added “Unless that is the case, I would prefer to build products outside of Tesla”.
✅ Musk emphasized that this is not about the pay, but rather the voting rights. “I would be fine with a dual class voting structure to achieve this, but am told it is impossible to achieve post-IPO in Delaware”.

🔗 Link to this post.

---

Mr Beast’s first video on X. 01/22/2024 16:20 PT
✅ Mr. Beast posted a video directly on X for the first time
✅ It’s not a brand new video; this video titled “$1 Car vs $100,000,000 Car!” was originally uploaded to YouTube on Sept 16, 2023
✅ As of this update, there have been over 158 million views for this video on X
✅ The same video has received over 215 million views on YouTube
✅ According to Mr. Beast, the video has generated him over $263,000 in revenue from X so far
✅ It is unconfirmed whether X helped boost this video, beyond Elon Musk sharing it
✅ Mr. Beast calls it “a bit of a facade” suggesting advertisers piled in after seeing the attention the video was receiving

🔗 Link to this post.

---

Monday Morning. 01/22/2024 05:25-06:45 PT
✅ Big Earnings this Week
Monday
➡️United Airlines (pm)
➡️Logitech (pm)
Tuesday
➡️Verizon (am)
➡️3M (am)
➡️GE (am)
➡️Proctor and Gamble (am)
➡️Johnson and Johnson (am)
➡️Lockheed Martin (am)
➡️DR Horton (am)
➡️Synchrony (am)
➡️Netflix (pm)
➡️Texas Instruments (pm)
Wednesday
➡️AT&T (am)
➡️ASML (am)
➡️Tesla (pm)
➡️IBM (pm)
➡️ServiceNow (pm)
➡️Las Vegas Sands (pm)
Thursday
➡️American Airlines (am)
➡️Southwest Airlines (am)
➡️Alaska Air Group (am)
➡️Blackstone (am)
➡️Sherwin-William (am)
➡️Intel (pm)
➡️Visa (pm)
➡️T-mobile (pm)
➡️Western Digital (pm)

😇Most important watch points: Mentions of “right sizing” or anything implying layoffs coming. I expect pricing comments to be nominal; most can’t raise prices right now. Most want volume growth / unit growth.

Catalysts this Week
Tuesday
➡️Philadelphia Manufacturing index 8:30 ET.
➡️Richmond Manufacturing index 10:00 ET.
Wednesday
➡️S&P PMIs
Thursday
➡️GDP Annualized
➡️GDP Price Index
➡️Initial claims
➡️ New Home Sales MOM: exp: 10.1%.

Friday
➡️PCE MOM exp: 0.2%
➡️PCE YOY exp: 2.6%
➡️PCE Core Deflator MOM exp: 0.2%
➡️PCE Core Deflator YOY exp: 3.0%
➡️Pending Home Sales exp: 2.0%.

Change in Freight Costs 1-3 Months 😇 Remember these affect producer prices (PPI).

✅Inverted yield curve at -.29 today.

Housing
😇Risk here is inventory explosion NOT from homeowners with rate lock in, but rather institutional liquidations in 2020-2022 “covid markets,” specifically the easier-to-build-in Sunbelt region (TN, FL, TX, etc.).

Fed
😇Fed is now in a Blackout Period until Jan 31’s FOMC meeting. I’m expecting March’s cut to be unpriced. At that point, it may make sense to short the dollar (after the unpricing).

🔗 Link to this post.

---

NY State Business Conditions Drop. 01/19/2024 14:06 PT
✅ General Business Conditions: The index dropped sharply to -43.7, the lowest since May 2020, signaling a major decline in business activity.
✅ New Orders and Shipments: Steep falls in these indices (-49.4 for new orders, -31.3 for shipments) suggest substantial decreases in both incoming orders and outgoing shipments.
✅ Employment and Work Hours: There was a slight reduction in employment and work hours, indicating workforce contraction and fewer working hours.
✅ Prices: Input prices rose somewhat, but selling price increases remained modest.
✅ Future Outlook: Despite the downturn, optimism persists. The future business conditions index rose to 18.8, with an increase in the capital spending index, hinting at better investment plans ahead.
✅ Inventories and Delivery Times: Inventories decreased modestly, and delivery times shortened further.



📝 NY Fed Empire State Manufacturing Survey
🔗 Link to this post.

---

UofM. 01/19/2024 07:03 PT
✅ UofM 1 Year Inflation: 2.9% vs 3.1% expected.
✅ UofM 5-10 Year Inflation: 2.8% vs 2.9% expected. 😇 This is what you want. Weaker inflation expectation; stronger economy.
✅ UofM Sentiment: 78.8 vs 70.1 😇 big beat.
😇 Asterisk as preliminary and will be revised.

🔗 Link to this post.

---

Friday Morning. 01/19/2024 05:25-05:32 PT
✅ Container rates are up by more than 300% through or around the Red Sea. In 2021-2022, they spiked 700% and contributed to 7-8% inflation in the Eurozone and UK.
✅ Bloomberg estimates, with 100% passthrough to consumers, will add 0.42% to headline inflation in the UK and 0.33% to the euro area from late 2024 to early 2025.
✅Volatile, but up on the 5-year breakeven now at 2.31%.

😇 BG is dreaming if they think this will be 100% passed through. I see this as a Producer Price Inflation hit. But PPI is already lower than CPI, dramatically, and I expect less than 20-30% of these freight costs will be passed on. Companies will have to take this in the “margin.”
😇 More concerning is the level of Iranian support for terror groups: Hamas, Hezbollah, the Houthi’s, and rebel groups throughout the region, acting as proxy combatants for Iran – contributing to regional instability. This is a tinderbox that could lead to an escalation of war between the U.S., Israel, and Iran.
✅ NATO sees the potential for “all-out war with Russia in the next 20 years,” implying people need to be ready to enlist.
😇 But recall, if you’re Admiral Rob Baurer, your job is to PREPARE and RAMP your NATO forces.

Spirit.
✅ Spirit thinks it “continues to believe that a combination with JetBlue is the best opportunity to increase much needed competition and choice.”
😇 Novel argument – suggesting the deal is still on.
✅ Remember a federal judge’s ruling agreed with the US Justice Department that the combination would hurt consumers.

Bank Discount Window.
✅ Regulators may FORCE banks to us the discount window to “reduce the stigma” associated with it, ensuring banks are ready for troubled times.
✅ Banking crisis response to add more cushion.
😇 If everyone uses the discount window, no one can criticize another bank for using it.
😇 Sometimes, getting loans or partnerships is hard as a bank if you publicly show you use the discount window (which you would if you did).

Wayfair Job Cuts.
✅ Stock presently up 15.27% on 13% of global workforce being cut. 1,650 employees to be affected. Focus is annual savings of over $280m.
😇 I expect this will continue throughout industries.

Goolsbee of the Fed.
✅ Seen surprising progress on services inflation.
✅ Need to see more progress on housing inflation.
✅ “Fed not facing imminent threat to labor market.”

🔗 Link to this post.

---

European Central Bank Signals Rate Cuts Summer. 01/18/2024 10:15 PT
✅ ECB President Lagarde believes there could be majority support for cutting rates in the summer.
✅ This happened the day before the beginning of the “quiet period” before policy meetings.
✅ She still tried to dampen dovish-ness, saying “But I have to be reserved, because we are also saying that we are data dependent.. still a level of uncertainty.”
✅ She says the market aggressively betting for or against rate cuts are distracting to monetary policy
✅ Markets are now pricing in a less chance of 6 cuts this year, now leaning more towards 5.
✅ Rate cuts are also being priced later into the year, after April now.

📝 Bloomberg “Lagarde Says It’s Likely ECB Will Cut Rates in Summer”
🔗 Link to this post.

---

Ukrainian Life Under Russian Occupation. 01/18/2024 09:45 PT
✅ Russia has taken control of roughly 18% of Ukrainian territory.
✅ Initiating cultural indoctrination, Russian education, and implementing economic/legal systems, Russia aims to firmly tie the occupied territories to itself.
✅ In these annexed territories, three million Ukrainians have received Russian passports, necessary for running a business, receiving welfare, and opening a bank account — essentially leaving them with no choice but to become Russian citizens.
✅ Living under Russian occupation means no independent media and heavily censored social media.
✅ Locals in occupied territories have resisted the Russian presence.
✅ The Ukrainian military is mounting armed resistance, with reports of car bombs targeting Russian officers and local collaborators. Reports of attacks every few weeks.
✅ Russia prefers not to deal with opposition, suggesting that opponents can always relocate to Europe — a move that requires money.
✅ Upon reaching a new town in Ukraine, Russian forces quickly switch the towers from Ukrainian news broadcasts to Russian ones.
✅ The most significant indoctrination is occurring in schools in occupied areas, where children are forced to sing the Russian national anthem, and the Russian language has become the primary language
✅ Children are taught that Ukraine is run by neo-Nazis, justifying Russia’s invasion due to Western aggression.
✅ Pre-war Ukrainian citizens working for local Russian organizations risk collaboration presumption by Ukraine. Ukraine has launched at least 6000 cases against supposed collaborators.
✅ Legal penalties imposed by Ukraine for being a “local-collaborator” range from bans on future government employment to significant prison terms.
✅ The broad language of Ukrainian law puts many business owners and local government employees at risk of being labeled as “local-collaborators” if Ukraine regains control of the territory.
✅ Since the territories have been under Russian occupation, visual reminders of Ukraine, such as monuments, have been destroyed, and street names changed to honor Russian heroes.

📝 Foreign Affairs Annotated
🔗 Link to this post.

---

Can The Fed Alleviate The Pain Of Commercial Real Estate Debt? 01/18/2024 09:00 PT
✅ In 2023, $541 billion in debt backed by office buildings, hotels, apartments, and other types of commercial real estate came due. The highest amount ever for a single year, according to the data firm Trepp. 
✅ There is $2.2 Trillion coming due between now and the end of 2027. 
✅ Fitch Ratings projects the delinquency rate of commercial mortgage loans that have been converted into securities will increase to 4.5% in 2024 and to 4.9% in 2025—more than doubling the 2.25% rate in 2023 as of November.
✅ The decline in inflation and interest rates in recent months has eased the pain. But most borrowers still have to refinance at much higher rates than those of their maturing loans.



📝 WSJ “The Bill Is Coming Due on a Record Amount of Commercial Real Estate Debt”
🔗 Link to this post.

---

The American Consumer’s Impact On The Recession. 01/18/2024 08:50 PT
✅ Commerce Department reported on 01-17 that retail sales rose a seasonally adjusted 0.6% in December from an another earlier.
✅ This put retail sales of December 5.6% higher than a year earlier. 
✅ WSJ reminds us that in October of 2022 forecasters put a the probability of a recession at 61%. Basically reminding us that the consumer was expected to be weaker by now. 
✅ WSJ claims cooling inflation is one of the drivers of consumer spending. 
✅ Since last May average hourly earnings have been rising faster than consumer prices from a year earlier. This has boosted consumer’s spending power. 
✅ The Labor Department counted 2.7 million MORE jobs this December than a year earlier.



📝 WSJ “How the American Shopper Silenced Doubters”
📝 WSJ “Economists in WSJ Survey Still See Recession This Year Despite Easing Inflation”
🔗 Link to this post.

---

Thursday Updates. 01/18/2024 05:20-06:00 PT
😇 Fed Beige book is the worst of the cycle. Many districts are likely already in recession.
😇 This report lays the groundwork for a significant wave of layoffs, a high-debt cycle affecting lower income individuals, and larger rate cuts sooner. 😇 Only indicator of lagging inflation appears to be insurance. Which frequently lags 12-18 months.

Red Sea
✅ US-owned ship struck near Red Sea (MV Genco Picardy).
✅ India scrambled warships in response.
✅ US attacked Yemen for the 4th time now in retaliation striking missile targets among others.
✅ Third carrier strike in 3 days.


Israel
✅ The Telegraph is reporting Hamas is rebuilding its north battalions, reorganizing where Israel has “already completed the fighting.”

Pakistan Strikes
✅ Pakistan Counter Attacks Iran after Iranian forces attacked militant camps in Pakistan.
✅ Pakistan struck terror hideouts in Iran.
😇 (Geopolitical situation is deteriorating across the Middle East).

TSMC
✅Q4 Gross Margin 53%, beating 52.9% estimate. Expect that to hold in Q1.
✅Q4 Operating Margin 41%, beating 39.4% estimate.
😇Spend driven nearly solely by cash-rich, massive companies not wanting to become irrelevant.
😇Chips will likely represent the opposite of what’s going on in the real economy. Much like covid: misery in the economy with euphoria in stocks as folks race to find the best, most-useful AI software.

Biden
✅Biden speaks at 11:15 am PT on Bidenomics.

Fed’s Bostic Atlanta Fed
✅“My outlook right now is for our first cut to be sometime in the third quarter this year and we’ll just have to see how the data progress,”
✅ Open to cutting earlier if inflation falls “well faster.”
✅ Expecting bump.

Atlanta Fed RealGDP Now as of Jan 17:
✅2.4% on GDP estimate for Q4.
😇IMO, Q1 GDP approaches 1% or lower, rapidly.


Jobless Claims
✅ 187k, lower than 205k expected. Lowest since September 2022.
😇 This can flip rapidly.

📝 Fed Beige Book Annotated December 2023.
🔗 Link to this post.

---

SEC vs Coinbase. 01/17/2024 07:30-12:35 PT

Judge Katherine Polk Failla


✅ SEC argues Coinbase = unregistered exchange. Bringing together buyers and sellers. There’s a conflict between broker dealers also being an exchange and also being a clearing agency (settles transactions).
✅ Judge: is that against law?
✅ SEC: Not illegal per say, we just have never approved an exchange that was also a broker dealer. ⚠️ SEC later uses this in their closing arguments.
✅ SEC argues there are at least 13 tokens offered on Coinbase that are securities, making Coinbase an unregistered broker/dealer, securities exchange, and clearing/settlement agent.
✅ Judge wants to know why these are securities not assets.
✅ SEC argues tokens are securities because they’re associated with developers and an ecosystem. Purchases of tokens are investments that “depend on the efforts of others” for profit (a key component of Howey test on what a security is).
✅ SEC: Developers need startup capital and via ICOs and SAFT (simple agreement for future tokens). Developers pitch their bios. Developers broadcast info to increase the value of the token. We view this as a value proposition. You invest in that platform.
✅ Judge: Is development stage and expansion both a security? On CHZ (Chiliz) token example.
✅ SEC: Yes, doesn’t make a difference. Same value proposition. That’s why we disagree with Ripple case (Judge mentions Ripple case).
✅ Judge: I would have thought everyone buying a token hopes it appreciates in value. Are there tokens without an ecosystem?
✅ SEC: Yes, Bitcoin.
✅ Judge: Is that because it’s a replacement for fiat?
✅ SEC: No ecosystem behind it. If no one is inducing anything, you can’t be buying it.
✅ Judge: Is that a security?
✅ SEC: The commission has found no. ⚠️ This comes up later.
✅ Judge: You’ve alleged at least someone can buy it just to buy, because they like the name or whatever. But I get your allegation of ecosystem.
✅ SEC: To access in a securities transaction, you need a wallet. You don’t need a wallet in life. Enabling swapping/wallets enables securities exchanges. Coinbase acts as an exchange by comparing DEX prices. Those are brokerage functions. Goes further than eTrade. And no one suggests eTrade isn’t a broker.
✅ Judge: Does the fact they don’t charge for it?
✅ SEC: No.
✅ Judge: Staking seems to be the weakest argument you have. ⚠️
✅ SEC: Coinbase operates the nodes for the validators. We disagree.
✅ Judge: What is ministerial (do not require discretion; follows a plan) and what is managerial.
✅ SEC: Investors give up money to make a return.
✅ Judge: Isn’t staking just like making interest on a bank account? ⚠️😇 Critical blow to SEC here.
✅ SEC: The risk is the underlying bank of the CD go under.
✅ Judge: What does Coinbase do that makes staking a security undertaking?
✅ SEC: Coinbase retains third parties and operates its own validators to setup infrastructure. Provides increased server uptime. That increases validating and odds of success of enterprise. Investor asks are staked at a protocol and not able to be pulled out. Then investors receive a return after Coinbase takes a fee.
✅ SEC: When Coinbase supports uptime, they reduce slashing likelihoods and help the ecosystem. 😇 Anytime the SEC argues the ecosystem is benefited, they argue Howey Test: profiting off the efforts off others.
✅ Judge: Should buyers of tokens have recourse if they’re securities?
✅ Judge: Let’s say I agree. Certain, at least some of them are securities. Does that mean every crypto asset purchaser, can – if they decide they don’t like something – can bring a fraud action? I want to understand how this applies broadly.
✅ SEC: Your finding says the purchaser bought a security. If it’s a security, it’s a security.
✅ Judge: If you find these are unregistered securities, wouldn’t the asset purchasers have a right of rescission?
✅ SEC: Yes, that’s correct. 😇⚠️ Uh oh! Doesn’t look good for SEC on this one. Howey tests have to do with INVESTMENT CONTRACTS. No rescission in tokens!
✅ Judge: Okay that’s what I thought.
😇 Rescission is the cancellation of a contract. A rescission may be unilateral, as when a party rightfully cancels a contract because of another party’s material breach.
😇 This is a big deal! She’s basically saying look: there’s no contract, per say, to make a purchaser an investor. They’re just buying something with the hope it goes up. That doesn’t make it a security, which would be something sold by an issuer with a subscription agreement or contract that would give a right to cancel or sue the issuer.
😇 REMEMBER: Trading “securities” between private parties is an EXEMPT transaction – you can sell me your Apple shares in my garage and it’s an exempt transaction / not subject to SEC. So argument by SEC is the initial sale is an inducement into an investment.
😇 SEC argues well it’s part of an enterprise! They’ve argued this over and over.
✅ SEC: You can have the full set of expectations that embody the inducement of returns (😇 without above basically).
✅ Judge: Are there post sale obligations on issuer? Is there profit sharing between issuer and holder? Do you disagree with Coinbase?
✅ SEC: We don’t allege there are contracts between purchasers and developers. 😇 Uhhh
✅ SEC: We content they’re not getting a share of the ecosystem. 😇 Uhhh
✅ SEC: Those aren’t necessary though per Howey test.

4 Components on Howey Test:
➡️ An investment of money
➡️ In a common enterprise
➡️ With the expectation of profit
➡️ To be derived from the efforts of others
⚠️ Critical here is the importance of including an “investment contract.” If the Judge wanted to side with the SEC, she could use the lack of “investment contract” in the 4 prongs above to side with SEC. However, that would seem very broad and risky – as the judge herself alluded to.
📝 SEC vs Howey Co 1946.

✅ Judge: Sure, but how is that different from beanie babies / collectibles? Or commodities? Your concern could sweep in all of those. I think you’re arguing the “collective undertaking.” My real “fear is your argument is sweeping too broadly.” No one is suggesting you are; we’re just afraid your interpretation is too broad. 😇⚠️ BIG CHALLENGE TO SEC HERE. NEXT PART WILL MATTER.

✅ SEC: Well, you’re buying a thing. There’s no enterprise involved in a baseball card. You’re not buying into the enterprise/team. That’s not a securities transaction. You can’t make a baseball card more valuable. The value of the card depends on passage of time and customer taste. There’s no way to make that more valuable.
✅ Judge: What about like burning in crypto? Isn’t that like a limited edition collectible? 😇 Judge REGULARLY dodges “common enterprise” arguments by SEC – she’s not liking the SEC!!!
✅ SEC: Token would be worthless without the enterprise.

✅ Judge: Analyzes sophistication or not of investors. 😇 Again, she backs right off common enterprise. That’s the CORE argument of the SEC, yet she really isn’t focusing on that core argument at all.

✅ Judge: On Reasonable Expectation of Profit from Third Party: is your point having these on the platform alone the problem?
✅ SEC: Yes.
✅ Judge: Here, we’re not talking about issuer. We’re talking about platform listing. We’re a level removed here. 😇 YIKES SEC!!
✅ Judge: Senator Lummis says “Don’t do this!” [Fight Coinbase].
✅ SEC: Well, respectfully, Lummis is wrong.
✅ Judge: Can we just stop saying respectfully? 😇 OMG…
✅ Judge: They’re designed differently. I think we’re saying we just don’t know what category this instrument.
✅ SEC: We disagree. The intent of congress via the Howey test is to capture the ‘countless ways’ people may think to raise money for their project. That’s the point to the Howey test. It’s flexible.

⚠️😇 Summary of Issues for SEC so Far:
➡️ What makes crypto not “it’s own thing” versus a security.
➡️ What makes crypto not a collectible or commodity.
➡️ Do we risk beanie baby lawsuits? That the SEC will call beanie babies lawsuits if I say crypto is?
➡️ Is it illegal to have an exchange also be a broker-dealer/clearing agent? SEC says no, just a conflict of interest and we’ve never approved one.
➡️ Secondary transaction: SEC does not have authority due to them being “exempt transactions.” (That’s like me handing you a stock in exchange for donuts. That’s allowed; private-party transaction – possibly like wallet transactions.)
➡️ Primary issuer transaction: Is there a contract with the buyer? No. Is there a right of rescission in crypto? No. But there is a right of rescission in a primary securities contract, right? Yes.
➡️ Judge asking: isn’t me putting my money in a savings account kind of like staking? Big blow to SEC.
➡️ Judge asks if there’s anything wrong with the DeFi Amicus Brief. SEC does not indicate there is. Breaks down wallets and staking.

✅ Coinbase: These assets are not securities. Sure, there could be some transactions that make them, but that’s not our issue.
✅ Coinbase: Maybe in the secondary market someone will buy for investment gain.
✅ Coinbase: Assets alleged are NOT investment contracts.
✅ Coinbase: We’re not saying they can never be investment contracts. But it requires allegations of fact that are missing.
✅ Judge: What does a purchaser get? SEC says you buy into the ecosystem. Developer better apps/blockchain etc.
✅ Coinbase: Isn’t enough evidence to prove that’s the case.
✅ Judge: But they say the purchase of an asset with knowledge of the statements of intent (to benefit the blockchain), could lead people to want to be a part of that. Your token might change the world, I agree, I want a part. You say that’s not enough to say it’s part of an ecosystem. What’s missing? Are they joining the common enterprise with the hope of gain? Can’t you pick a token though because you think it sounds cool? Or your friend picks that token like a Fantasy Football team? It seems like you should be saying there’s a missing contract. 😇 Judge is literally handing them a winning argument.
✅ Coinbase: What’s required is the holding out of an offer with a statement meant to convey to the offeree with some sort of enforceability.
✅ Judge: If SOL goes belly up, do I have any right?
✅ Coinbase: Purchaser of SOL would have claims in fraud, were there fraud. ⚠️😇 BRO!!! THE ANSWER WAS NO!!! OMG COINBASE LAWYER!!!!
✅ Judge: Wait, you just said there’s no contract. How could you have a fraud claim???
✅ Coinbase: Supreme Court found sufficient holding out to not need an implicit or explicit contract.
✅ Coinbase: We think the complaint (of the SEC) is completely devoid of any promise. ⚠️😇 Smooth recovery from Coinbase.
✅ Coinbase: We thought the SEC would present a scheme of contracts claim.
✅ Judge: We weren’t presented that.
✅ Coinbase: Exactly. Stunning silence. 😇 Strong alignment with judge.
✅ Coinbase: We have slides too!
✅ Judge: I’d love to see your slides! I’m sure someone stayed up through the night making them. 😇 OMG she loves Coinbase.
✅ Coinbase: First principles argument: Every single case around securities involves an investment contract.
😇 Frankly the judges argument on buying into a football team’s jersey or Fantasy Football doesn’t mean you’re involved in a common enterprise with them is huge.
😇 Securities Act of 1933 generally requires an “offer” and a “sale” to have a security’s offering.
✅ Judge: My concern is that simply looking at promotional activity is an investment contract. Coinbase says no. My sense is there’s more. 😇 Sides with Coinbase.
✅ Judge: Is the judge right on Terraform case?
✅ Coinbase: I don’t know.
✅ Judge: I thought he found the asset itself wasn’t an investment contract.
✅ Coinbase: Yeah.
✅ Coinbase: UST: Token could be deposited into anchor protocol. That investment was in the ongoing enterprise. In Luna, company alleged proceeds coming from enterprise. Lira: court found fees were earned from asset trades. We have a lot to review here, but the decision ultimately recognized: there must be a contractee/contractor relationship. NOTHING alleged here.
✅ Coinbase: On Ripple: digital assets aren’t securities. Then goes into investments being contracts. Applying Howey to secondary market trades does not give rise to an investment contract. Ripple can’t apply contracts because it doesn’t know who the people are.
✅ Coinbase: Stock trade in blind bid-ask all the time. But a stock represents an interest in permanent capital of corporation. A participation in capital structure. Attached are: right to sue, dividends, votes, etc. All those rights transfer. They all hold the same rights and claims. Does the legal obligation transfer with bond or stock? Yes. Tokens don’t transfer that. ⚠️😇 Strong argument.
✅ Judge: So you’re saying you need MORE than just the asset? Some kind of essential, additional attribute?
✅ Coinbase: Legal entitlement is carried with normal securities. NOT true with tokens. Difference between buying Beanie Baby inc vs Beanie Babies themselves.
✅ Judge: I thought it was difficult for a crypto asset purchaser has merely a hope for increase in value. You’re arguing there’s no additional engagement?
✅ Coinbase: Yes fair.
✅ Judge: Where is this in Howey? The actual definition doesn’t speak of this contractual relationship or need for ongoing engagement. 😇 This helps the SEC.
✅ Coinbase: Howey only applies to contracts though. 😇 That’s been my understanding too that the Howey test EXISTS to determine if something is an investment contract.
✅ Judge: Acknowledging Howey potentially suggests there’s a void in your argument.
✅ Coinbase: No, Howey repeatedly says shares are evidenced by contracts which determine future payouts.
✅ Read SEC v Howey Co case. It almost fully talks about investment contracts.
✅ Coinbase: Wallets don’t act as brokers. Third-parties carry out the actual trades/activities (what happens in wallets). Wallets are like a browser. Once a technical connection is made, customers direct the swaps or trades.
✅ Judge: Yes, but the SEC says you providing access is the concern.
✅ Coinbase: We’re not soliciting investors.
✅ Coinbase: SEC has no claim that staking is anything more than an IT service. SEC’s allegation: staking customers give up control of tokens to Coinbase. Wrong: This is contradicted by our user agreement. “You the customer control the digital assets in your wallet… whether or not your asset is staked.”
✅ Judge: My reaction was I thought Coinbase argued the risk of loss was tiny (in staking). But all of those sounded defensive, which suggests there’s a possibility of loss. Is the risk of loss enough? The fact that there’s a risk of loss, I’m not sure gives me a full answer.
✅ Coinbase: There is no risk of loss THROUGH Coinbase. Can’t have an investment without risk of loss. Our agreement is crystal clear: title of staked assets belongs to users. 1) no investment into capital structure 2) no risk of financial loss regarding staking.
✅ Judge: Is it ministerial or managerial?
✅ Coinbase: We group the activities for “efforts of others.”
😇 Major Questions Doctrine =The idea that Congress doesn’t give major decisions to agencies.
✅ Judge: The fact you asked for guidance and didn’t get it doesn’t suggest major questions. Instead, let’s look at statements of SEC officials.

😇 SEC needs a better link between investing in a token and the expectation of profit in a project, in developers, etc. If the SEC can LINK that the benefits of development move WITH the asset, the SEC will have a stronger case.

✅ Coinbase: SEC is expanding its jurisdictional authority here.
✅ Coinbase: A lot of cases filed around the same time targeting exchanges here. A decision here affects the whole industry.
✅ Judge: What says the SEC doesn’t have authority. We don’t want to implicate major questions doctrine here – not sure this is on par.

😇 Additional Summary of Issues for SEC so Far:
➡️ Overbroad risk of calling everything a security. If you call tokens a security, do you also call beanie babies, Fantasy Football, and trading cards as security?
➡️ SEC *should* argue, IMO, a very clear comparison between owning 1/100th of a company and owning 1/100th of a crypto asset / eco system. And then compare that to owning 67/100 of that company or eco system and what kind of control that would or could bestow.
➡️ Strong Coinbase counter though: well, with a stock and a bond, your ownership rights include rights to dividends, lawsuits, and they basically represent a contract. However, in a token, a token doesn’t necessarily represent your right to dividends, profits, or the right to sue.
➡️ There’s no cap table – you just have a bunch of wallet addresses. Okay, but are wallet addresses people who get rights?
➡️ Do tokens give rights in liquidation like shareholders of record? No.

SUMMARY ARGUMENTS BY EACH SIDE

✅ SEC: Prior cases are focused on issuers, and Ripple, all sold on platforms. Yes, this is a lawsuit against an intermediary (Coinbase). But there’s no meaningful difference between selling through an intermediary and issuer. Big difference between us selling at this table and Coinbase pitching tokens. 😇 Yikes. Weak/muddy argument! The WEAKEST point Coinbase has is any comparison to stocks. And they’re not making that argument. Weak argument by SEC IMO.
✅ SEC: An issuer is selling on a platform.
✅ SEC: We think Coinbase is making up a new test. We use Howey test. Howey test gives the answers. 😇 Mostly ignores the nature of an investment contract missing – dances around suggestion that crypto may have been written to purposefully dodge investment contracts.
✅ Coinbase: No promises travel with these transactions (stock comparison). Therefore, case fails.
✅ Coinbase: Bitcoin is an ecosystem JUST like all the others! And SEC that’s not a security.
✅ Coinbase: Where’s the contract that shows the interest in the enterprise?
✅ Judge: Wait say that one line again?
✅ Coinbase: Can’t have an investment with at least the appearance of a contract.
✅ Judge: What’s “appearance of”? 😇 She’s writing her decision IMO.
✅ Coinbase: Must be an intent for a contract. If not, you just have an investment, not a contract.
✅ Judge: I have some questions left. I will not decide this today.

Alleged securities by SEC:


😇 Kevin’s take: 90% shot Coinbase wins this. I went into this short Coinbase (due to ETF sell the news hype) and thinking Coinbase would lose. I believe I was wrong to have that opinion based on the 4.5 hours I listened to here. I CLOSED my short before the arguments were over and posted the alert in the stocks and psychology of money group.
😇 Bottom Line: IMO, no guarantees: Coinbase wins & Crypto community wins this one.

📺 Video Stream
🔗 Link to this post.
📝 DeFi Amicus Brief on Wallets/Staking.
📝 SEC vs Coinbase Lawsuit.

---

Wednesday Morning. 01/17/2024 05:40 PT
✅ Retail Sales beat across the board with gains in building material & garden stores, clothing, sporting goods, merchandise/department stores, and nonstore retailers (ecomm). 0.8%
✅ 10-year yield up to 4.10%
✅ 2-year yield up to 4.32% (22bp inverted)
✅ Tesla cuts prices 1900-5000 Euro in Europe and offering 0% financing.
✅ China indicates less stimulus.
✅ Beige Book hits today.
🔗 Link to this post.

---

Fed Waller & Rapid Rate Cuts. 01/16/2024 13:40 PT
😇 Pretty detailed commentary from Chris Waller today.
✅ Fed Governor Chris Waller today said the US “should take a cautious and systematic approach when it begins cutting interest rates, a process that can start this year absent a rebound in inflation.” (Bloomberg)
Notes here from Waller’s Zoom call with Brookings, 01-16-2024.
✅ “PCE of 2% is our goal; cannot be achieved for just a moment in time. It must be sustained.”
✅ Focus now NOT on pushing inflation down, but rather on maintaining a balance between inflation & jobs. 😇 This is a big shift.
✅ Based on the cooling labor market, “I’m becoming more confident we are within striking distance of achieving 2% PCE.”
✅ But will need more reports.
✅ Risks to dual mandate are more balanced. Do not want to harm the economy.
✅ Policy is restrictive.
✅ Timing and number of cuts will depend on the incoming data.
✅ Moderating from Q4 may not play out as continuously moderate.
✅ Reversal in supply chains could reverse though. 😇 Red Sea warning. Red Sea is a big issue hurting Germany substantially as well.
✅ Annual update to seasonal factors comes out in mid-February. That will be a big moment for confirming the “progress we have seen” on inflation.
✅ Last year, these revisions washed away some of the progress we had made on inflation.
✅”As long as inflation does not rebound.”
✅ Lower rates “methodically and carefully.”
✅ In many previous cycles after shocks to the economy and recession, the FOMC cut reactively and largely.
✅ This time, “I see no reason to cut as quickly or as rapidly as in the past.”
✅ The healthy economy enables us to lower the nominal policy rate at a sufficient level of tightness.

😇 Note here the rapid cuts during Covid pictured as the “lower bound” rate.

😇 Note here the rapid cuts during Covid pictured as the *change* in EFFECTIVE rate (see sharp down).

😇 Note here the rapid cuts during 2008/2009 pictured as the *change* in EFFECTIVE rate (see sharp down).

😇 Note here the rapid cuts during 1982 pictured as the *change* in EFFECTIVE rate (see sharp down).

😇 This cut cycle would be very unique. Dare I say “different.”
😇 Waller is implying we can “step down” rates slowly and methodically. That implies gradual 25bp cuts. I don’t think that will be possible.
✅ IMF already reports 75% of impact of rate hikes is being felt (low lag or lag has arrived).
😇 This increases the danger of rapid cuts becoming necessary to save the economy from a joblessness recession (I’m quite worried about this).
😇 EXPERIMENT: Go to the chart below. Try to find one period when the Fed was able to cut rates for more than 12 months ‘slowly and methodically.’ The best case was in April 1989, but they couldn’t sustain the slow rate cuts for 12 months before pausing. And then, oops, recession. The Fed is unsurprisingly good at SLASHING rates very quickly. I expect this time will NOT be different: rate cuts may start gradually, but will accelerate, likely before the election. Call it political manipulation or not, I think the economy will need them.

😇 Fed may miss the boat for a March cut. Odds are 65.1% now. Missing March will probably just demand large, more substantial cuts in the future.
✅ Waller called the Dec jobs report “largely noise.” He expects it to be revised down.
✅ Need to be cautious of overtightening.
✅ Waller last spoke Nov 28.
📺 Video on this Topic.
🔗 Link to this post.

---

$78 Billion Dollar Tentative Deal. 01/16/2024 09:15 PT

Note: This bill has NOT passed yet.

$78 Billion Dollar Deal
✅ $78b tentative agreement between Jason Smith (House Ways and Means Committee Republican) and Ron Wyden (Senate Finance Chair Democrat) – have negotiated for “months.”
✅ Goal is to finalize it by January 29.
✅ Child Tax Credit remains $2,000 (vs $3000-3600 in 2021). However, the cap of refundability would grow.
✅ Would lift the $1,600 cap on refundable credits slowly (benefit to lowest income).
➡️➡️ $1,800 in 2023
➡️➡️ $1,900 in 2024
➡️➡️ $2,000 in 2025
✅ Possible inflation bump of the underlying credit to a $2,100 credit in 2025.
✅ Would let filers have the option of using prior year’s income if that enables a large benefit for 2024 and 2025.

American Rescue Plan from March 2021:
➡️ Increase child tax credit to $3,000 from $2,000 with $600 bonus for kids under 6 in 2021.
➡️ Established monthly payments starting in July 2021 for $300/mo for children under 6 and $250 for those 6-17. Monthly payments ended December 2021 and have NOT been present since. Moved to claims on tax returns instead (large refunds, essentially).
➡️ Before 2021, refundable limit was $1,400.
➡️ PHASE-OUTS: Qualifying families with incomes less than $75,000 for single, $112,500 for head of household, or $150,000 for joint returns are eligible for the temporarily increased credit of $3,600 for children under 6 and $3,000 for children under 18. Above these income amounts, the credit is reduced by $50 for each $1,000 over these limits.

2017 Child Tax Credit Doubled the Child Tax Credit.
➡️ Each qualifying dependent child under the age of 17 at the end of the tax year.
➡️ $1,000 extra non-refundable tax credit that reduces taxpayer liability.
➡️ Many called this “Ivanka Trump’s” contribution.
✅ Covid “Additional” Child Tax Credit
➡️ Refundable portion (which means you get the credit even if you don’t owe taxes for that portion).
➡️ Revised to 16 years or younger by end of tax year.
➡️ Citizen, national, or resident alien only.
➡️ Must have lived with taxpayer for 6mo of the tax year & be claimed as a dependent.
➡️ Cannot have provided more than half of their own financial support.
📝 2023 Credits for Qualifying Children IRS Worksheet

Other Inclusions Expected:
✅ Expand Taiwan tax breaks.
✅ Employee Retention Tax Credit timeframe may be cut. This is how they expect to pay for roughly $70b of this plan.
✅ Disaster Tax Relief.
✅ Low-Income Housing Tax Credits.
✅ Potentially greater deductions for business interest expenses & machinery & equipment deductions.
➡️ Probably for 179 deduction being expanded at 100% write down. Retroactive changes.
✅ $600 IRS W-9 Requirement may Raise to $1000 (Venmo Tax) for independent contractors.
✅ Potentially larger R&D credits.
➡️ Potentially 100% deduct R&D versus a 5-year write off. Retroactive changes.

Shutdown
✅ Awaiting continuing resolutions to delay funding deadlines to March 1 and March 8.
✅ Current deadlines: January 19 and February 2.

Employee Retention Tax Credit
✅ If you had a business paying payroll, you were eligible for up to 50% of qualified wages paid to an employee up to $10,000 in wages for 2020. This was expanded to 70% of qualified wages up to $28,000 per employee in 2021 (big boost).
✅ Businesses needed to show a decline in income during 2020 or the first 3 calendar quarters or 2021 or qualified as a recovery startup in Q3/Q4 2021 or (the big one) were shut down by the government during 2020 or the first 3 quarters of 2021.
😇 Essentially big stimulus checks that people are just now more commonly cashing in on by going back and asking for credits from 2020 and 2021. This plan would start killing the ability to go back and request that funding.
✅ Likely end claims January 31, 2024 versus April 2025. IRS has currently paused new claims.

📺 Video on This Topic.
🔗 Link to this post.

---

Tuesday Morning. 01/16/2024 05:25-05:50 PT

😇 Trump’s landslide in Iowa and subsequent dropouts, like Vivek, was unsurprising yesterday.
😇 More surprising is that the Red Sea turmoil is worsening, not getting better. We were very surprised by this.
✅ Royal Dutch Shell just suspended shipments after Houthi Concerns.
✅ Greek Ship hit by Missile Tuesday with damage to its cargo hold.
✅ Elon compensation drama at Tesla. Elon Musk expressed frustration of a lack of control for Tesla as it develops AI products if he doesn’t have at least 25% voting control, however this is restricted by existing class action lawsuits.
✅ Worst Empire Manufacturing Report JUST out since May 2020, but if you remove May 2020, we’re at March 2009.
✅ “New orders and shipments also posted sharp declines. Unfilled orders continued to shrink significantly, and delivery times continued to shorten. Inventories edged lower. Employment and the average workweek declined modestly. The pace of input price increases picked up somewhat, while the pace of selling price increases was little changed.”
✅ Apple offering iPhone discounts of up to $70 in China this week. Up to $110 on other products ahead of the Lunar New Year.

📺 Video on Elon Musk.
🔗 Link to this post.

---

Tesla Shuts Down Giga Berlin for 14 Days. 01/12/2024 00:28 PT

✅ Tesla is shutting down factory production at GigaBerlin for 2 weeks starting January 29th due to Red Sea disruptions caused by the Houthis.
✅ This could lead $TSLA to produce 1027*14 = ~14,400 fewer cars in Q1 2024.
✅ Tesla’s last shareholder deck indicated 375,000 of annual model Y production in Giga Berlin.
😇 Margin and interest rates are the current primary drivers for Tesla stock. This type of disruption is unfortunate, but unlikely highly meaningful for the stock. Price cuts in China announced today are unsurprising as well, given China’s weak economy.
😇 Expect Tesla to test $222. Disappointment at earnings could drive Tesla back to ~$198. Optimism could help us test $258’s breakout.

📝 Reuters Source.
🔗 Link to this post.

---

Yemen Airstrikes. 01/11/2024 15:57-16:55 PT & 01/12/2024 00:18 PT

✅ Dwight D. Eisenhower nuclear-powered aircraft carrier, US fighter jets, and US submarine (Ohio-class missile sub USS Florida) attacking targets within Yemen.
✅ Houthis state they will “confront America and make it kneel down.”
✅ Hodeidah, Taizz, and Zabid as well as the Capital of Sana’a.
✅ Targeting storage units for drones and rockets.
✅ Targeting anti aircraft and anti ship launch centers.
✅ Attacks started around 15:38 PT.
✅ White House reportedly gave Congressmembers a 15-minute heads up.
✅ This US and UK response to 27 attacks on ships in the Red Sea.


Guardian Reported Earlier Today:
✅ Experts believe the US, UK and other western allies are most likely to target coastal radar and launch sites in a calibrated attempt to halt the three-month spate of Houthi missile and drone attacks in the busy Middle Eastern waterway.
✅ Any strikes – likely to be from air and sea – would have to be enough to act as a deterrent, the analyst added, but a wider bombing campaign added to the risk of civilian casualties and could inflame public opinion in an already volatile Middle East. 😇 Escalation risk.



16:15 Update
✅ Reports of Houthi forces launching anti-ship ballistic missiles towards US ships. Possibly one US ship hit.
✅ Air Raid Sirens at U.S. Embassy Compound in Baghdad, Iraq Green Zone.
✅ Pentagon says they’ve bombed 10 targets in Yemen, including a UAV production facility.
✅ Oil almost up 2%.

16:22 Update
✅ Airstrikes reported to have ended.
😇 Buckle up for a response now in Israel, Iraq, and Saudi Arabia.
✅ US Official: “We Hit them pretty Hard, pretty Good,”
✅ The U.S. and the U.K., with support from Australia, Canada, the Netherlands and Bahrain, conducted the strikes. Politico.

16:30 Update

✅ Air Defense Batteries such as MIM-104 “Patriot” Surface-to-Air Missile Systems in Saudi Arabia and near other US assets now on High Alert for retaliation.
✅ Goal is to end Houthi strikes.
✅ Houthis took control of capital in 2014. Biden removed them as a terrorist organization when he took office.

16:35 Update
✅ Biden: “will not hesitate to direct further measures after airstrikes on Houthi targets in Yemen.”
✅ Biden: Strikes are in direct response to Houthi attacks.
✅ Houthis “We will respond forcefully to the American and British battleships in the Red Sea.”
✅ Royal Navy will stay in the region. Royal Air Force participated.

Bloomberg map:


16:40 Update
✅ Houthi leaders state they will “confront the American aggression.”



01/12/2024 00:18 Update
✅ The United States claims no attacks have hit US Warships or Embassy’s. 😇 It’s unclear who’s commentary is propaganda vs reality. However, time will tell if this will provide peace and stability in the Red Sea or not.

~NOTE: this is breaking news and information may change or be inaccurate!
🔗 Link to this post.

---

Epstein Files Drop January 8, 2024. 01/08/2024 11:01-11:48 PT

✅ Case Lookup: 1:15-cv-07433-LAP
✅ Jen (Jenna or Jen Araoz – unclear): Possibly sexual involved with Trump, alleged by Sarah Ransome.
✅ Ransome apparently worked for Epstein in 2006.
✅ Jenna would have been 22-23 around 2006.
✅ Jen Araoz would have been around 19 in 2006 (1987 birthdate).
✅ Ransome alleges she has video of Clinton, Richard Branson, and Prince Andrew having intercourse.
✅ Ransome lashes out at reporters for not running with her story.

📝 Case Documents Annotated [Drive link as its larger this time.]
🔗 Link to this post.

---

Classic Chartism. 01/06/2024 08:33 PT – 08:57 PT

😇 We apologize for cliff-hangering Jefferies “Debt Recession” chart in this post below. Here is more detail, conveniently left out by Jefferies.
😇 Jefferies’ debt post accurately shows a substantial rise in the level of Federal interest outlays as a percentage of GDP. However, there are two factual items to note in their chart versus the chart by the St. Luis Fed (immediately below).
😇 Jefferies’ chart “annualizes” recent interest payments. This accelerates the right side of the chart.
😇 Additionally, Jefferies’ chart cuts off in 1994, which was below the historical peaks (back to 1947) in both 1991 and 1985.
😇 However, they do clearly show – as does the St. Luis Fed, a substantial increase in debt outlays as a percentage of our GDP. Yes, if this continues, eventually the U.S. may be printing money simply to pay interest. This is not a long-term sustainable path. However, it is likely less of an immediate problem than Jefferies suggests.


😇 Edit 08:45: It’s also worth noting the highest period on this chart was quite a strong period for growth in America, with even the early 90s recession relatively benign.
😇 Edit 08:57: Note: The St. Louis Fed chart is interest/GDP. The Jefferies chart is interest/revenues (we assume they would align in a similar ratio, if taxes as a percentage of GDP are roughly equal). The bigger point though: What happened during that time.
✅ See Dow Jones Industrial Average stock index chart below for the 80s to early 90s, to roughly align with the height of debt payments as a percentage of GDP above.

📺 Video on this Topic.
🔗 Link to this post.

---

Spot BTC Approval likely within 5 Days & Coinbase Analysis. 01/05/2024 15:03-16:27 PT
✅ Bitcoin ETF approvals are made up of two parts, the 19b-4 exchange rule proposals and the S-1 prospectus.
✅ The SEC has told issuers to submit their final 19b-4s by today.
✅ Since spot Bitcoin ETFs are new products, the NYSE/NASDAQ/CBOE have to make new rules regarding trading, listing requirements, authorized participants, and more.
✅ The SEC is expected to hold a vote on these exchange-rule proposals next week. The deadline is Wednesday Jan 10.
✅ Multiple S-1s were submitted by BlackRock, Fidelity, and others last week.
✅ The SEC has no additional comments on current S-1 filings.
😇 This generally indicates a positive outcome as they have no further criticism.
✅ Bloomberg Intelligence predicts a 90% chance of SEC approval of a spot Bitcoin ETF by Jan 10.
✅ If not approved, the next deadline would be March 15.



Coinbase.

😇 Note: We believe Bitcoin ETFs risk reduced Bitcoin trading volumes, a critical component of Coinbase’s revenues. Balanced trading in ETFs can be done by trading the actual ETF shares, rather than the underlying Bitcoin. Unbalanced (buy-heavy / sell-heavy) would likely create more Bitcoin trading. Therefore, becoming a custodian of the underlying Bitcoin will be a new potential source for Coinbase’s revenues. At 10bp of custody fees, assuming Fidelity or Wisdomtree don’t compress the market, every $100m of Bitcoin Coinbase custody’s would be worth $100,000 of income. Each billion, 1 million.
✅ Coinbase’s last 10Q showed $674m in revenue.
✅ Coinbase’s last 10K shows that trading represents 73% of their revenue.
✅ Of that, Bitcoin represents roughly 29%.

✅ Using 2022 percentages, if 100% of Coinbase’s Bitcoin trading went to an ETF (674,000,000*.73*.29), ~$149m in revenue would be lost per quarter. That’s an annual loss of $596m. This would require ~596 Billion of Bitcoin ETF in custody to offset.
😇 Obviously, 100% of Coinbase’s trading revenue won’t go to an ETF, which technically Coinbase can’t trade since they’re not a broker.
✅ Over 94% of Coinbase’s trading revenue comes from RETAIL customers.
😇 We believe retail customers are more likely to prefer an ETF over institutional customers, for trading purposes.
😇 Therefore, a loss of 50% of their retail trading volumes in Bitcoin trading (674000000*.73*.29*.94*.5) would lead to a loss of roughly $67m per quarter.

✅ In the 9 months ending September 2023, Coinbase lost $277,275,000, or $92m/quarter.
😇 This suggests Coinbase’s net losses could rise by 73%, unless offset by Bitcoin custody.

😇 Bottom line: This could take years to play out. However, to us, a Bitcoin ETF – which may remove less sophisticated traders from using retail (profitable) Coinbase trading, is bearish for Coinbase.

📝 Coinbase Q3 2023 10Q Quarterly Report.
📝 Coinbase 2022 10K Annual Report.
📝 Bloomberg Article
🔗 Link to this post.

---

Jefferies Labor & Debt Recession. 01/05/2024 14:40 PT
✅ Jefferies Greed & Fear Columnists see their base case as the U.S. heading into recession thanks to a collapse in M2 money-supply growth.
✅ They see a bearish U.S. dollar as bullish for Asia & emerging-market stocks.
😇 This makes sense. The dollar tends to weaken as rates fall. This is often due to less demand on dollars from foreign buyers, who need to buy dollars to buy U.S. bonds. We’re regularly watching for signs of the “Chinese Bottom” with no directly exposure to Chinese equities now. Investing in China’s rebound could be an interesting play IF U.S. labor starts faltering while China bottoms. A weak dollar makes foreign currencies relatively more powerful and often helps profits at foreign companies.
✅ Citi Bank argues China needs 3 things to bottom: 1) The non-property sector outpacing the real estate drag 2) Will any of the Government’s policies be effective? 3) Can confidence resurge? Citi argues the first two would likely be necessary to induce the third, led by advanced manufacturing, tech innovation, and infrastructure. However, these could foster deflation if demand doesn’t rise.
😇 Remember, deflation supports waiting to spend or invest. Waiting lowers GDP and rewards savers, while punishing debtors, buyers, and investors. The US government prefers rewarding debtors, buyers, and investors. So the best deflation for America would be stable pricing at home (low inflation) and deflation abroad (higher profits for America, leveraging deflation abroad). However, the effects of deflation could hurt the Chinese consumer via rising unemployment.
✅ Which brings us back to Jeffries’ concern. “If only private workers, excluding the healthcare sector, are counted, the payroll data has been growing by only an average of 40,000 in the past six months.”
😇 We added the green arrows. Look how low the “private sectors” portion is outside of Government or Healthcare/Assistance.
⚠️ This is an alarming trend. The Fed MUST pay attention to this. We suspect they are.

✅ Viewed slightly differently, Jefferies shows the declining trend of private non-farm payrolls excluding healthcare and social assistance.
✅ Jefferies warns “it would seem only a matter of time before there is more tangible evidence of labour market weakness”. Thomas Simons, an economic at Jefferies (not the author of this commentary), sees 225bp of cuts in 2024 and GDP shrinking 2.5% (annualized) in Q124.
✅ “[I]f and when labour weakness does come, it is likely in ‘Greed and fear’s’ view to be quite sudden.
✅ This is “due to a marked tendency to hoard labor”
✅ Prime-age labor participation was 83.3% in November vs 83.1% in January 2020.
✅ “It is also worth noting again that the NFID small business survey shows that small businesses have been reducing hiring plans.”
✅ If companies are getting more cautious about hiring, the key decision to cut employees will only likely occur if top-line revenue growth comes under downward pressure.
😇 Jefferies argues, like we have argued here: As top line revenues fall or stagnate, margin comes into focus – which can mean rapid layoffs. Companies do not want stocks to collapse: so appeasing investors on low earnings by announcing “restructuring” should not be unexpected.
😇 A slow-to-react Fed is VERY bearish here, especially as we view Jefferies as current: job pain can come suddenly and becomes an often self-fulfilling vortex.

✅ Jefferies also sees government spending growing 18% YoY while revenues rose only by 9%. Their concern is amplified by “the alarming deterioration” of US Federal Government annualized Net Interest Payments as a % of Federal Government Receipts.


🔗 Link to this post.

---

Job’s Data Dangers: 01/05/2024 08:04 PT
✅ Container rates 61% over the last 2 weeks. $2,670 per 40′ as of Jan 4. World Container Index. 99% higher since bottoming in Oct. Container volume is expected to rise 9.3% YoY as economies trough out.
😇 Red Sea very disappointing. Were were right on deployment but wrong on execution hope of the US military. I suspect political involvement to slow expanding tensions in the Middle East.
✅ Jobs report headline 216k beat over 175k. 2-mo revisions -71k.
✅ Wage gains of 4.1% YOY, continuing a downward trend.
✅ 0.4% MoM job gains came in higher than expectations of 0.3%.
✅ Bloomberg blames ‘warm weather’ vs last year. 😇 Think snowfall last year versus this year.
✅ Households data fell 683k, extinguishing the prior month’s gain, and participation fell from 62.8% to 62.5% (more jobs for fewer people).
✅ Current CPI projects are YOY 3.2%, YOY core 3.8%, MOM core 0.2% (0.24% average), MOM 0.2%.
11% of fleet coming online, but spot prices up double in some cases.
✅ Fed Now real GDP estimate of 2.5% Jan 3 will update next on Jan 9th to incorporate jobs data.

✅ ISM Services Employment large miss: 43.3 vs 51 expected and 50.7 prior.
😇 The headline job’s number is dangerous to view on its own. Consider the following:
➡️ Paychex warned in their last earnings call: While we haven’t seen any normal signs of a recession in our data, we started to see some softening in seasonal hiring in the quarter, particularly in our large client segments, including our HR outsourcing businesses, many of which typically add seasonal employees at this time of year.
➡️ ISM employment went from expected expansion to heavily negative.
➡️ Business are struggling to raise prices, so margin cleanup can come in the form of layoffs and lack of hiring. Note most current hiring is healthcare, government, and leisure/hospitality, and last month leisure/hospitality was nearly flat.
➡️ JOLTS shows just 1.4 job openings per unemployment. Well down from the 2.0.
➡️ The Fed should wakeup to these warnings ASAP, as once the headline jobs numbers show negative figures, it’s probably too late. We could be in a recessionary cycle.
➡️ We believe the Fed realizes and sees these warnings. The Fed will look past this headline number and more weight will be on CPI/inflation reports.

✅ Fed Rate cut Expectations as of this post:
➡️ 75.9% chance of a cut in March (fell to 58% after jobs, but rose after ISM).
➡️ 26.6% chance of 7 rate cuts by December 2024.
➡️ 65.6% chance of 6 rate cuts by December 2024.
➡️ 90.6% chance of 5 rate cuts by December 2024.

😇 We maintain bullishness on rates trending down substantially, not only over the next year, but throughout the rest of the decade as the Fed tries to prop up frugal companies and induce them to hire.

📝 Paychex Warning.
🔗 Link to this post.
📺 My Video on this Issue.

---

Epstein Files Part 2: 01/04/2024 17:23-18:00 PT

✅ Mark Epstein [Jeffrey Epstein’s brother] spoke with Tucker Carlson and expressed suspicion that Jeffrey Epstein killed himself.
😇 We question how sincerely Mark Epstein was involved or knowledgeable of Jeffrey Epstein. Mark says he did not speak with Jeffrey after Jeffrey went to jail. This implies a level of distance between the two. Is Mark someone who’s been an avid watcher of this case, excited to do a show with Tucker, rather than someone who truly has insight? We don’t know.
✅ Mark’s interview refers to multiple third-party accounts. 1) suggesting a lack of pooled blood in the lower portions of Jeffrey’s body, implying he couldn’t have been hanging that long 2) “it’s a scary thought that you could be killed in prison by the government.” 3) 3 fractures in Jeffrey’s neck are quite rare for “soft hangings.” 4) “It’s obvious someone killed him.”
✅ Mark says: “I had not seen Jeff for 7 years prior to his death.” “We lived separate lives.”
✅ Page 97: “Epstein’s purposes in ‘lending’ Jane Doe (along with other young girls) to such powerful people were to ingratiate himself with them for business, personal, political, and financial gain, as well as to obtain potential blackmail information.”
✅ Page 75: “it does concern me what they could want to write about me considering that B. Clinton walked into VF and threatened them not to write sex-trafficking articles about his good friend J.E.” (Vanity Fair)

📺 Jeffrey Epstein Files [Part 2 Livestream]
📝 Jeffrey Epstein Files [Part 2 Not Annotated]
🔗 Link to this post.

---

Israel’s Potential Second Front War: 01/04/2024 014:57 PT
✅ Israel’s border with Lebanon, usually a tourist attraction, now faces naval ships in preparation for an invasion.
✅ Israel targeted a Hezbollah stronghold, killing Hamas leaders, prompting a warning from Hezbollah.
✅ Following Hamas’ attack on Oct 7th, concerns arose about a potential Hezbollah invasion.
✅ Israel intended to preemptively strike Lebanon on Oct 7th, but Biden admin advised against it, deploying an aircraft carrier off Lebanon’s coast as insurance.
✅ Israel and Lebanon engaged in tit-for-tat strikes, resulting in mass evacuations and ghost towns along the border in both countries.

✅ Casualties from missile strikes are relatively light; Israel killed 146 Hezbollah militants, while Hezbollah killed 15 Israeli fighters.
✅ Hezbollah, a self-described “resistance movement,” possesses around 150k missiles, with only a few hundred capable of reaching deep inside Israel. They have 50,000 fighters despite boasting 100,000.
✅ Israeli forces are focused on locating and destroying Hezbollah’s missile arsenal to prevent an offensive.
✅ Western officials assert Israel can handle another front, Israel, already at war, fears weakening by opening another front, despite its potential to win. Similarly, Hezbollah is cautious, aware that an invasion into Israel would expose Lebanon to substantial civilian casualties and infrastructure devastation, reminiscent of past Israeli airstrikes in 2006 and ongoing actions in Gaza.
✅ America is finding it hard to maintain its massive deployment; on Jan 1st, the US said they will be returning one of the two carriers to base. They will leave the second one there for now.
😇 The ongoing conflict between Hezbollah and Israel has remained relatively subdued since the invasion, likely influenced by the shared historical adversity both parties faced during Hezbollah’s raid on Israel in 2006.
😇 The presence of the US has exerted considerable pressure, dissuading Hezbollah from initiating an invasion. However, as this influence diminishes, as observed recently, the likelihood of Hezbollah resorting to invasion appears more imminent.

📝 Economist Article
🔗 Link to this post.

---

High Stakes Taiwan Election Next Week: 01/04/2024 014:35 PT
✅ Taiwan’s Presidential Election will happen on Jan 13, next Saturday. We will know the results by the end of that day.
✅ This will dictate Chinese-Taiwan-US relations for the next four years.
✅ There are three major candidates/parties. The DPP is pro-Taiwan independence, though they claim to just support the status quo, presumably to avoid further tension with China. The KMT is pro-Chinese. The TPP is an attempt at a middle ground, although still against Taiwan independence.
😇 Some may argue that DPP election would keep tensions high or potentially escalate the situation. They see KMT election lowering risks of escalation. This might mean China would gain access to more advanced chips, thus putting the US at geopolitical risk.
✅ The pro-independence DPP is leading by a ~5% average over the pro-Chinese KMT in the presidential election. DPP is expected to win.
✅ The KMT is predicted to win over a majority in legislature over the current DPP majority.


📝 Taiwan Election Adam Crook
🔗 Link to this post.

---

US Latest Chip Production Boost: 01/04/2024 012:44 PT
✅ As part of the $39B grants + $75B loan/guarantees package in the 2022 Chips Act, $2B will be allocated to “legacy chip” manufacturing.
✅ Legacy chips are very much still important, being used for cars, household appliances, defense systems, and more.
✅ Micron, which makes up 26% of the DRAM (memory chip) market, received their second round of funding of $162M. This will help triple its US chip production.
✅ Micron is banned in China, supposedly failing security examinations, claiming they pose cybersecurity risks.
✅ This is nothing compared to how much they’ve received in tax credits – $5.5B from the State of New York.
✅ They’ve also requested $100B to build more fabs (chip manufacturing plants).
✅ Microchip, another “less advanced” chip manufacturer, recently received $162M for construction and expansion of manufacturing plants.

📝 Bloomberg Article
🔗 Link to this post.

---

Jobs ISM vs ADP: 01/04/2024 05:49 PT
✅ Monday ISM employment came in stronger at 48.1 vs 46.5 expected. At the same time, ISM Prices Paid came in at 45.2 vs 49.5, a faster deceleration.
✅JOLTS came in at 8.79m vs 8.821m expected.
✅ Today, ADP numbers came in stronger: 164k vs 116k while pay growth for job-stayers fell to 5.4% vs 5.6%.
✅ Today, continuing claims came in stronger: 202k vs 216k.
😇 These numbers reiterate: less inflation, stronger or stable jobs. This is what you want. We do not want to see the economy collapse via a joblessness recession.

📝 ADP Report
🔗 Link to this post.

---

Rates to Rise Substantially, per Jim Bianco. Inflation Response: 01/04/2024 00:00 PT

✅ Jim Bianco, Wall Street forecaster, sees 10-year yield rising to 5.5%. Doesn’t “think the economy is hurt by 5% interest rates.” Before middle/end of year, we might see new highs on yields. No soft landing. This will be a no-landing. 2’ish percent expansion. Sees inflation sticking at 3%. He quotes YoY core inflation at 4%.
😇 This is the classic “higher neutral-rate argument.” Missing on inflation reality, though.
😇 NY Fed’s Multivariate Core Trend is presently at 2.04% annualized on the monthly figure for services ex-housing, the part he suggests might be “sticky.” Yes, year-over-year numbers are still higher. Inflation in the last 6 months is moving much slower.

😇 6-month Dallas Fed “Trimmed mean” inflation rate is 2.6% on an annualized basis.
😇 1-month Dallas Fed “Trimmed mean” inflation rate is 1.5% on an annualized basis.

✅ Ford is increasing the price of some 2024 F-150 Lightning Models. Starting price will be $54,995 for an entry level or $92,995 for Platinum Black. Price excludes a mandatory $2,095 destination fee. Some models eligible for $7,500 tax credit.

🔗 Link to this post.

---

Epstein Files: 01/03/2024 23:15 PT

✅ Virginia Giuffre was likely under 18 during her work for Epstein. Maxwell met Virginia (Jenna) at Mar-a-Lago as Virginia was working by the spa lockers. Was asked to fly around the world to provide services to Jean Luc Brunel (model agent), Alan Dershowitz (Harvard Law Professor / Criminal Defense attorney). Prince Andrew. David Copperfield. Bill Richardson. Glenn Dubin. More names expected to be unredacted. Discusses meeting Maxwell at 16 and eventually was required to “go down on” Maxwell as well as ‘showing them a good time’ in reference to her assignments.
✅ Allegation that Stephen Hawking attended an “underaged orgy.”
✅ Johanna Sjoberg was hired to take messages from phone calls. Then trained to give massages. She was over 18 during his work. “Clinton likes them young,” she recalled hearing. She would provide massages naked 25-50% of the time. Alleged younger girls were groomed.
✅ Police reports from Epstein’s residence in Palm Beach allege under-aged and older would provide massages to Epstein. Common payments for massages were $200, during which Epstein would pleasure himself. He frequently requested girls to undress. On occasion, Epstein would use sexual toys on the girls. He reported paid up to $350 if additional services, like intercourse, were offered.

📺 Jeffrey Epstein Documents | Video Breakdown [Full Breakdown]
📺 Jeffrey Epstein Documents | Video Breakdown [Summary Breakdown].
📝 Epstein Case Docs [Full Set; No Annotation].
📝 Jeffrey Epstein Files [Annotated Only – 95 Pages]

🔗 Link to this post.

---

The US -Middle East Houthi Paradox: 01/03/2024 16:00PT
✅ Houthis, an Iran-backed rebel group in Yemen, are attacking western ships in the Red Sea to show solidarity with Gaza and disrupt western supply chains.
✅ Since mid-November, the Houthis have carried out 24 attacks on commercial ships. The escalation occurred when Houthi fighters in four small boats fired on a US helicopter enroute to a flagged vessel in the Red Sea, resulting in the sinking of three of the boats.
✅ The US military has issued an ultimatum to the Houthis: cease ship attacks or face airstrikes.
✅ Potential US-led airstrikes would target launchers for anti-ship missiles, drones, coastal radar, and munitions storage facilities.
✅ Rerouting ships around the Red Sea, which facilitates global trade by allowing vessels to bypass Africa, would stretch shipping times, thereby imposing inflationary pressures on the global economy.
✅ Approximately 15% of global sea trade passes through the Red Sea, and continued attacks could drive inflation upwards.
✅ The Houthis attribute their attacks to war between Israel and Hamas, starting with the launch of cruise missiles at Israel on October 19.
✅ About 18 shipping companies have opted to reroute vessels around the Cape of Good Hope instead of transiting the Suez Canal and the Red Sea, as reported by the Wall Street Journal.
✅ Iran is using the Houthis to impose economic costs, hoping to pressure the US to de-escalate the conflict in Gaza.
😇 This was a strategic move by Iran, putting the US in a very difficult situation as it has to choose between protecting trade or escalating tension in the Middle East.
😇 An increase in inflation would be incredibly unpopular for Biden.
😇 Once CPI reports are released, and if there’s an increase in inflation, it could lead to a shared interest between Iran and the US in finding a resolution to the Israel & Hamas conflict.
😇 Currently, US-based defense contractors, such as Lockheed Martin, are profiting from the war. This contributes to the military-industrial complex, on which the US economy relies.
😇 If the Houthis’ attacks on US ships result in more economic damage through supply chain pressures and inflation than the US benefits economically from the Israel & Hamas War, it could potentially prompt the US to engage in a conflict with Yemen OR push for a CEASEFIRE in Israel.
😇 A US-initiated ceasefire seems unlikely to hold – though some suggest supporting Gaza on a humanitarian basis.
😇 It’s in Israel’s best interest to address the Houthis’ actions to avoid any potential shift in US support.

📝 Annotated WSJ Article
🔗 Link to this post.

---

The Key To Demilitarizing Gaza: 01/03/2024 14:52PT
😇 Gaza, with immense historical significance, is the heart of Palestinian nationalism. Demilitarization is challenging, but essential for the Western world, including Israel. 
😇 Achieving this requires rebuilding through foreign investment to incentivize economic development. See PDF page 2 to see examples of this.
✅ Throughout history, Gaza faced power struggles, from medieval conflicts to Ottoman rule and Napoleon’s brief conquest. In the early 1900s, Zionist settlement consolidated Palestinian nationalism in Gaza.
✅ After the 1947 UN plan for a two-state solution, conflict between Jews and Arabs ensued. In 1949, Israel’s victory displaced 750k Palestinians, flooding Gaza’s then 80k population with 200k refugees. 
😇 The unresolved refugee reparation situation became an incubator for Palestinian nationalism, leading to inevitable rebellion in the region.
✅ In 1949, Israel’s leader proposed allowing 100k Palestinian refugees into their former homes, causing outrage. Instead, UNRWA provided services and established refugee camps. 
✅ This fueled Palestinian aspirations for reparations and caused a lot of anger. 
😇 The 1950s saw Gazan guerrilla fighters (Fedayeen) infiltrating Israel, catalyzing terrorism. Israeli efforts to eradicate them escalated tensions.
✅ The Yom Kippur war further fueled Palestinian nationalism, giving rise to groups like Hamas. 
😇 Israeli policies contributed to the conditions where terrorism could thrive in the region over the years. Despite several opportunities, compromises with the initial refugees in Gaza were not reached.
😇 While not excusing terrorism, frustration among displaced Gazans is understandable. Israeli politicians attempted reparations, but public resistance hindered progress, causing revolt. 
✅ After Hamas’ attack on Oct 7th, Israel has killed 21,000 Palestinians and the majority of Gazans are displaced from their homes.
😇 POTENTIAL PEACE SOLUTION PROPOSED BY FOREIGN AFFAIRS: Gaza must connect with the rest of Palestine, and efforts should be made to restore its role as the trading hub it once was. Using foreign investment to establish a self-sustaining economy is the key to demilitarizing Gaza.

📝 Annotated Foreign Affairs Article
🔗 Link to this post.

---

Crypto ETFs Turn To JPMorgan & Goldman Sachs: 01/03/2024 14:28PT
✅ Grayscale Bitcoin Trust (GBTC) is in talks with JPMorgan and Goldman Sachs for authorized participant services.
✅ Authorized Participants are responsible for the creation and redemption process of ETF/Fund shares.
✅ January 2023, Jamie Dimon, CEO of JPMorgan, called Bitcoin specifically a “hyped-up fraud” HERE.
✅ Just last month, he again called for the US government to shut down crypto during a Senate Banking Committee HERE.
😇 It will be interesting to see how Coinbase plays a role in the upcoming Bitcoin ETFs as traditional firms are also trying to get a piece of the pie.

📝 Bloomberg Article
🔗 Link to this post.

---

Fed Minutes December 2023 FOMC 01/03/2024 11:54-23:15.

😇 Fed watered down discussions of rate cuts in an effort to weak the latest rally, slow the fall of rates, and encourage a relaxation of wealth by encouraging the market to un-price March rate cuts. ~68% chance the first rate cut in March still expected.
😇 I do not want to see the Fed cause unemployment to skyrocket. I’d rather slower rate cuts than a harsh recession. This, however, will lead to more volatility in the short term.
✅ “The easing in financial conditions reversed some of the tightening that occurred over the summer and much of the fall.”
✅ “Credit quality remained broadly solid but deteriorated further for some sectors in recent months. Delinquency rates on nonfarm nonresidential ✅ “CRE bank loans rose further in the third quarter, and delinquency rates for construction and land development as well as multifamily loans ticked up.”
✅ “After increases over the first three quarters of the year, delinquency rates for loans in CMBS pools edged lower in October, but the large volume of loans scheduled to mature over the next few quarters suggested that delinquencies would likely surge again. The delinquency rate for small business loans continued to tick up in September and was above levels observed just before the pandemic. Credit card delinquency rates also increased further, while delinquency rates on auto loans were little changed in the third quarter.”
✅ “Several participants assessed that healing in supply chains and labor supply was largely complete, and therefore that continued progress in reducing inflation may need to come mainly from further softening in product and labor demand, with restrictive monetary policy continuing to play a central role. “
✅ “Several participants noted the risk that, if labor demand were to weaken substantially further, the labor market could transition quickly from a gradual easing to a more abrupt downshift in conditions.”
✅”Participants generally stressed the importance of maintaining a careful and data-dependent approach to making monetary policy decisions and reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving.”
📝 Fed Minutes [Annotated PDF].

🔗Link to this post.

---

The Fed will Only get Stronger. Or has it always been? 01/02/2024 20:00.
😇 It might seem silly to be considered a “Fed watcher.” But let’s be real. If the Fed sticks this “soft landing,” their role in every single economy going forward will only magnify. They’ll always be able to refer to 2021-2024, the time they were late to the party, but right. Believing in a soft landing right now doesn’t matter. What matters is: IF the Fed is right, their power will be amplified. Their every word will be scrutinized for generations to come.
✅ In fact, Bloomberg Opinion columnist Daniel Moss argues the Fed has always been in control. The war of more employment or balanced inflation will ALWAYS be alive. Daniel Moss argues this isn’t recent, it’s instead common in its history:
➡️ Central Banks (CBs) ended the subprime fiasco with their Feb 2009 bailout.
➡️ CBs ended the euro debt crisis.
➡️ CBs bailed out covid.
➡️ CBs bailed out Indonesia’s Jakarta government.
➡️ CBs helped finance World War 2.
➡️ CBs underwrote Woodrow Wilson’s wartime spending.
➡️ CBs supported the US purchase of the Danish west Indies (U.S. Virgin Islands).
➡️ CBs prevented a collapsing treasuries market in 1958 as Eisenhower sent troops to Lebanon.
➡️ CBs prevented a collapsing treasuries market in 1970 when Nixon invaded Cambodia.
➡️ It’s not just the Fed. It’s the Fed, ECB, etc. who work together.
😇 Basically, the author argues that Central Banks have always been a tool in our economy since the early 1900s. And that today is no different: The Fed will never “declare victory.” They will only continue as “agents of their stagecraft.”
😇 The author essentially argues the Fed and CBs are tools of economic stability, and even if it seems like there’s no Fed backing, there’s ALWAYS Fed backing to help minimize problems. Frankly, it’s a bullish way of saying: The game is rigged, go long, and accept it.
😇 I’d like to add their Black Monday 1987 bailout, March 2003 bailout, and Dec 2018 pivot to the list.

Short term, what does this mean? Well, probably pay attention to the Fed minutes tomorrow at 11:00 PT and JOLTS figures at 07:00 PT.
[Click to set reminders.]
📺 JOLTS & Stock Market Open Livestream & Crypto January 3, 2024 [5:25 PT]
📺 FOMC Minutes Livestream January 3, 2024 [11:00 PT]
📺 Meet Kevin and Mikey Podcast [17:00 PT]

🔗 Link to this post.

---

How To Beat China In The Clean Energy Wars 01/02/2024 16:23 PT.

✅ The US offers subsidies to boost domestic clean energy manufacturing, aiming to “decouple” from China.
😇 However, subsidies are a short-term fix, and the high cost of US labor makes domestic manufacturing unsustainable without them.
😇 In the US, labor is too expensive for companies to continue to manufacture here without subsidies. Well, without significant price hikes on products or services, rendering them less competitive.
😇 To address this, the US should redirect focus to promoting manufacturing in Mexico, leveraging low shipping costs, alliance with an American ally, and access to cheap labor.
✅ Currently, the government covers the cost difference between manufacturing in China and domestically through taxpayer-funded subsidies. This is unsustainable.
✅ The West significantly lags behind China in clean energy innovation, production, and development. Dependency on China in this sector poses a risk to Western interests.
✅ China dominates the production of battery components and has the capacity, production, and development to supply the world for a decade.
😇 Xi Jinping exploits this advantage by imposing stricter export restrictions on minerals essential for batteries. Basically, China has all the supply and they can cut us off whenever they want or charge as much as they want.
😇 Stringent Western regulatory standards contribute to the West’s disadvantage in the clean energy manufacturing race. It may take 3 years to be allowed to start selling electric cars to customers in the US, but in China that same company could’ve started selling quite quickly and is already getting costs down with scale 3 years in.
✅ Companies, instead of “Greenwashing,” are now “China-washing,” falsifying material sourcing to conceal reliance on China.
😇 Only viable solution I see involves creating western manufacturing that complies with strict environmental standards that China cannot meet. When the infrastructure is complete, western industrial policy can mandate that all imports meet environmental friendliness standard.
😇 This is a smart solution, because it would force free market to choose western manufacturer over Chinese despite it being more expensive. It essentially creates a strong moat of bureaucracy.

📝 Foreign Affairs Article
🔗 Link to this post.

---

Putin’s Reelection Run: 01/02/2024 15:11 PT.

✅ Russian elections are coming up in March 2024.
😇 During Putin’s re-election bid, he’s likely to align with US GOP social politics. Expect him to emphasize Russia’s nuclear family, criticize abortions, and denounce the LGBT movement.
😇 Aligning with the GOP allows Putin to undermine the progressive left and lead a social counter-culture, given the GOP’s more isolationist stance.
😇 Putin targets the progressive left due to their support for funding Ukraine, contrasting with the GOP’s likely reluctance to provide significant aid. His preference for a GOP win aligns with this strategy.
✅ In 2012, the Kremlin aimed for a socially liberal middle-class voter base, but this backfired with mass protests. Putin then shifted towards the religious and conservative working class, embracing traditional values.
✅ Russia’s 2013 law banning LGBTQ “propaganda” reflects this shift and contradicts US progressive social policies.
✅ Putin justified the invasion of Ukraine by stating that Kyiv is now a vehicle for the West, spreading its corrupt liberal values to Russia’s sphere of influence. He said Russia was fighting to protect, “our children and our grandchildren” from “sexual deviation” and “satanism.”
✅ While Russia hasn’t formally banned abortion, regional governments limit access despite 65% of Russians supporting it. This shows the disconnect between Putin’s government and its’ people.
😇 The German political party AfD is warming up to Russia, showcasing Putin’s success in building international support. Note: The AfD has garnered significant support from those who are anti-immigration (or anti-asylum) following the inflows of migrants from countries like Syria.
😇 By creating common ground with right-wingers, especially Trump, Putin aims to regain support and alleviate Western pressure.
😇 Putin’s far-right policies serve as a strategic move to navigate international culture wars effectively. If Trump wins in 2024, support for Ukraine may decrease, aligning with Putin’s goals.

📝 Foreign Affairs Article
🔗 Link to this post.

---

Single-Family Homes & Oil’s Shocking Swing. 01/02/2024 14:34 PT.

Single Family Homes
✅ Bank of America today made the argument that American Homes for Rent (a REIT) is one of their 10 best-investment ideas of 2024. They argue “millennials are past peak apartment renting age (32), and the demographic bulge is shifting towards SFR (average renter age of 39).
😇 Wow, this is an argument I had not considered before.
😇 This basically say that older Americans are more likely to own. Many millennials today are unfortunately priced out. As people age, they’re more likely to look for single-family homes (average age of an SFD renter is 39).
✅ “Economists estimate under building of housing in the US between 3-7m units since the financial crisis. We believe the majority of that is in the single-family sector.”
Frankly, this is bullish for single families and HouseHack’s mission. See our latest videos here.



Oil
✅ Iran deployed a warship to the Red Sea. 😇 This is an escalation by Iran, which had previously been promising to remain uninvolved.
😇 An Israeli 5-brigade draw-down could start to help ease tensions in the Middle East as Israel starts pulling some troops out of Gaza. Fighting continues in Khan Yunis and restrictions remain on travel into and out of the West Bank.
✅ Maersk has once again stopped sailing through the Red Sea, despite US military escorts.
😇 This is unfortunate and frankly feels a bit like an American failure. The US promised escorts and safe passage and despite taking out 3 Houthi attack boats this weekend, could not provide the level of confidence global shippers were looking for. Surprisingly, oil declined on the day. It was up and ended red.
✅ Bloomberg suspects this u-turn in prices is due to low volumes and concerns over Chinese growth.

🔗 Link to this post.

---

Bank Term Funding Program 01/02/2024 13:59 PT.
✅ 20% increase in the BTFP in the last 30 days.

✅ Program does NOT allow new draws after March 11, 2024
✅ Advances are allowed for up to one year.
😇 The program is likely seeing an increase in draws as the program is nearing its end. (Get in while you can, so to speak – it’s quick cash for banks looking to turn discounted treasury notes/bonds into 100% cash for 1 year at reasonable rates.)
😇 However, some are seeing it as a sign of further stress of office valuations collapsing hurting smaller/regional banks more. This may be why JPM stock is rising while fears of a “second wave” of bank pain comes up soon.
😇 Fed likely to extend due dates on advances and may even extend the program itself.
✅ 39% of the program is due back by March 22, 2024 (😇 Unless the Fed has extended terms).
✅ 73% of the program is due back by June 7, 2024 (😇 Unless the Fed has extended terms).
😇 My concern level here is low. Fed will not risk a second-wave of a banking crisis.

📝 Terms of Fed Bank Term Funding Program (BTFP).
🔗 Link to this post.

---

Job Market Pain Might Be Coming: 01/02/2024 11:37 PT.
✅ Wells Fargo, Morgan Stanley, and S&P Global all see rising unemployment throughout 2024.

😇 This is still in line with pre-pandemic unemployment rates; as long as employment doesn’t suddenly collapse, this is a normal return to trend.
🔗 Link to historical unemployment rate
😇 Unemployment is a lagging indicator – 2024 will show us the impact of the Fed’s actions from 2023. The Fed seems to be backing off the “Dual Mandate” as it tries to protect against downside risks.
✅ Labor turnover is trending down. Less people are leaving their jobs – people are staying where they are. Temp workers are feeling the pain even more as they struggle to find seasonal jobs. (This is a potential canary in the coal mine for the labor market.)
😇 This could be showing how employees feel – less secure about finding new jobs, no longer euphoric about wage increases, and potentially less optimistic about the macro environment.

🔗 WSJ Article

---

Biden Administration Halts Chinese ASML Pre-deliveries: 01/02/2024 9:09 PT.
📉 $ASML is trading -4.4% this morning
✅ China has recently become 46% of ASML’s sales in Q3 ’23 – it was just 8% in Q1!

😇 Extremely worrying for the US, as it remains in the low double digits/single digits of lithography machine imports.
✅ Biden Admin requested both the Dutch government and ASML to halt 3 shipments of advanced DUV lithography machines to China, effective immediately, even though ASML had the license to sell these machines to China. These were prescheduled orders.
✅ ASML reported that the Dutch government partially revoked licenses to ship to China.
✅ Chinese officials are saying the US is over-reaching and asking the Dutch government to respect their contract and trade deals.
😇 It’s quite incredible how much power the US has over independent companies in foreign sovereign nations – the “request” is just a formality.
✅ ASML’s CEO estimated these order halts may impact 15% of its Chinese exports, but doesn’t expect this to materially impact it’s 2023 financials
😇 Hopefully the US will pick up on its lithography investments as China will definitely progress development themselves.

🔗 Bloomberg Article

---

The Money Market Magnet (Tricky, but worth understanding): 01/01/2024 16:35 PT.
😇 I worry we could face a money-market magnet, which might keep the yield curve inverted MUCH longer than we expect. I’ve been seeing a lot of folks prognosticating that the yield curve will rapidly steepen and we could see pain in stocks quickly, as often happens during rapid steepenings. Consider July 19-October 31st. The yield curve went from nearly -80bp to around -20bp, and stocks dropped for 3 months. Now, the 10/2 yield curve sits at -40. Okay, so what’s a magnet? Well, first, what does it take for the yield curve to go positive or “normalize”?

😇 The 10-year yield must exceed that of the 2-year yield.
😇 That means more people should buy the 2-year bond (driving 2-year prices up/yields down) than people are buying the 10-year bond.

😇 But wait… Why would you buy a 2-year bond at 4.25% right now, when you can make 5-5.50% on money-market funds (the magnet)? It’s not as clear of a calculus. Sure, capital appreciation is one argument. But on a 2-year? Given its relatively short duration, I suspect you’ll find less appreciation on 2s than on 10s. So if you really want capital appreciation, you might be tempted to go for the 10s. And, you are yielding more on money markets. BUT WAIT, money markets won’t last at 5% forever! Sure, but even if the Fed cuts 5 times in 2024, you’re probably still at a 4.00% money market. Again, the choice to buy 2s is way less compelling than 10s, which seem like they could appreciate more as the 10-year yield falls.

😇 Note: The 10-year yield falling (as more people buy 10s) supports lower car and home interest rates.

😇 Okay, so, who cares?

😇 The point of all of this is: We could face an entire 2024 of a still “inverted” yield curve, remaining the classic bear argument all throughout 2024. We could face headlines like “THE LONGEST INVERTED YIELD CURVE SINCE XX” (or ever) And maybe a recession will finally come in 2025, or 2026, or whenever we kick the can down to. Eventually, one will come. But soon? Not sure. Unless of course jobs start weakening rapidly in 2024. If we can make it to mid 2024, though, per yesterday’s manufacturing post, we might see an explosion in jobs upwards, not downwards.

😇 But for now, does it make sense to expect massive buying in 2s and 1s (1-year bonds), probably not. Just hang out in money markets.
😇 Ah, which then has stock implications. Yes, there is a ton of money in money-markets potentially ready for investments into the stock market. But with the Nasdaq 100 and S&P 500 at all-time highs, is moving out of a cushy, risk-free 5.5% yield really that tempting to jump into all-time highs? Probably not. Well, at least not across the board. For what I consider juicy stocks as rates fall, like the usual Tesla, Enphase? Possibly.
😇 While delaying a flood of money-market money doesn’t create a surge of euphoria for markets, it does create – guess what: a slow, volatile nike swoosh up. In fact, I’m convinced that any dips in the market will actually be cushioned by money markets (because finally folks may find valuable investment opportunities again. This means 2024 could be a very slow grind up, with cushioned blows, as we eagerly, every month, wait for more data.

🔗 Link to this post.
📺 The Full Video Breaking this and the Last Post Down in Detail.

💰 Yes, we extended the Gold Course sale to catchup with emails tomorrow morning. Well change the price in the AM. Email staff@meetkevin.com for bundles. Remember, this comes with lifetime access to livestreams, updated content, entrepreneurship/productivity/stocks/real estate insight.

---

The Fed’s Manufacturing Lag & Ubiquiti: 12/31/2023 13:55 PT.
✅ The Wall Street Journal expects manufacturing to rebound as the Fed cuts, following now the largest slump in manufacturing in more than two decades: 13 straight months of decline. The last time this occurred was in 2002, per the ISM purchasing managers index.
✅ “Expect factory output to pick up as the Federal Reserve cuts rates and the lagged effects of the inventory build up of 2022 and early 2023 fade.”
✅ Spending on manufacturing construction, which rose approximately 40% in 2022, has increased by 72% in the first 10 months of 2023 compared to the same period in 2022.
😇 Think about this practically. You’re a business owner selling widgets. You had significant success in 2021, but could have achieved even more if not for supply limitations. Now, you’re almost over-investing in building out your supply chain, so that way the next time business booms, you’re ready. The data above evidences this – massive growth (72%) on top of already large growth (40%), though possibly out of lows in 2021.
😇 Biden is throwing money at manufacturers via the Inflation Reduction Act and Chips Act.
✅ What’s holding back manufacturing now? 1) Rates slow capital orders, which excluding aircraft and military goods, are down adjusted for inflation. 😇 To clarify: capital orders are things like machinery, cars, and trucks. Think of a CNC machine. These usually come *after* construction (think building).
✅ 2) Consumption is focused on services versus goods. 3) Inventory stock piling.
✅ A lot of headwinds around inventory normalization.
✅ When factory pickup? Mid 2024, per the WSJ, as it usually takes “about two years from new investment in factories for manufacturing employment to start growing.”

📝 Wall Street Journal Manufacturing Piece.

😇 This sounds bullish for overall growth, led by government stimulus for manufacturers, essentially.
😇 It’s also quite familiar to what I noticed at Ubiquiti ($UI).

😇 Ubiquiti shocked with substantial negative cashflow in fiscal 2023. At first, this looked concerning. But see page 43 where they explain their negative cashflow (since they are net income positive):

✅ Page 43 10K ”For fiscal 2023 the net cash used in operating activities was $145.4 million, primarily due to a significant increase in inventory and to a lesser extent, increases in vendor deposits and accounts receivable. The key uses of cash resulting in the net cash outflow from operations was a $487.9 million increase in inventory, a $39.5 million increase in vendor deposits and a $48.2 million increase in accounts receivable, partially offset by $407.6 million of net income. The increase in inventories is a result of the strategic decision to secure inventory while components were available in an effort to increase product availability. The increase in account receivable is a result of higher sales.

😇 They essentially stocked up 6 months of goods because they’ve been so frustrated that they haven’t been able to cover orders.
✅ Q1 2024 already shows positive cashflow again with inventory starting to roll off.
😇 That could have created a short-term shock for the stock. The larger increase in stock-based compensation probably didn’t help either (especially as employees may be more tempted to sell those shares during more challenging times). Note the increase of stock-based compensation totals by 56% from 2021, despite revenues barely up over 2%.


😇 See revenues. Likely due to covid spike though.

📝 Ubiquiti Q1 2024 Earnings Report 10Q (Calendar Q3 2023)
📝 Ubiquiti Q4 2023 Earnings Report 10K (Calendar Q2 2023)

🔗 Link to this post.

---

The TradeDesk in 2024: 12/31/2023 13:08-13:30 PT.
✅ Trade Desk: Barron’s sees The Trade Desk ($TTD) as a big beneficiary of what could be a “30% increase from the last presidential cycle and five times the spending on the recent midterms” in political spending.
✅ A potential total of $15.9 billion in political spending.
😇 This seems insane, but you have to consider all the lobbying firms who spend on behalf of corporations to pitch political agendas – not just campaign donations directly to campaigns. It’s corporate versus corporate spend out there!
✅ Barron’s suggests Trade Desk could double its revenue in the next 4 years.
✅ Benefit from transition to digital ad spend.
✅ A “selling point:” “Real-time pricing for ads can help buyers uncover value and avoid waste.”
✅ ”An alternative to industry leader Alphabet ($GOOG) […] and Amazon ($AMZN) ” because it’s a “demand side platform.” That means Trade Desk doesn’t control its own supply of webpages and videos for ad placements.” 😇 That supply instead comes to Trade Desk from sources like Disney ($DIS). Remember, Netflix ($NFLX) partnered with Microsoft ($MSFT).
✅ Recently, “Trade Desk has partnered with companies like Walmart ($WMT) and Target ($TGT) looking to expand in advertising.”
😇 Ah, yes, this is quite literally what I wrote yesterday. The danger here is confirmation bias. But exciting to see the same exact companies mentioned. Unless, of course, that means everyone else is already thinking about this!
✅ Amazon, Disney, and Netflix all going ad-supported.

13:30 PT Update:

📝 Netflix Q3 2023 Earnings Call Viewed 12-31-2023
✅ Sees “ads business” as a “$180 billion opportunity […] and we think we’re in a great position to win some of those dollars.”
✅ “30% of our new sign-ups choosing our ads plan in our ads countries.”
✅ ”We’ve gotten over 95% content parity with our non-ads plans.” 😇 This just means they’ve enabled ads in essentially 95% of content. Someone probably manually goes in and adds ads at cliffhangers.
✅ “This is a multi-year build, a multi-year progress.”
😇 Netflix is very bullish on ads.

📝 Disney Q4 2023 Earnings Call Viewed 12-31-2023
✅ “Ad-supported Disney+ product grew by approximately 2 million subscriptions in Q4 to a total of 5.2 million. In fact, more than 50% of Q4 new US subscribers chose an ad-supported Disney+ product.” 😇 Interesting; more are choosing ads at Disney than Netflix. I mean, selfishly, are parents just resigning to their kids having ads but treating themselves to ad-free versions? Probably.
✅ “Those AVOD subs spent 34% more time watching the service.” 😇 AVOD = advertising Video on Demand. And again, probably kids.
✅ “On AVOD, look, it’s very very clear that the tools that the new platforms provide to advertisers are exactly what the advertisers are looking for. Those platforms are an advertiser’s dream. And we know that the more data, the more detail, the more context, the more targeting we can provide, the better off we’ll be.”
😇 WOW. This is actually pretty wildly positive. I was not expecting them to be THIS bullish.

🔗 Link to this post.

---

2024 Stock Picks: 12/30/2023 16:03 PT.
😇 2024 will, in our opinion, be about PROFIT. Nike was a warning. So, what stocks are we watching for growing PROFIT this year?
➡️ Chips: Profits are likely to grow here before they grow at software stacks. Growing and sustain profits at AMD, Nvidia, Taiwan Semiconductor Manufacturing Company (TSMC), Intel, ASML will be critical to prove investment into AI-technology is not a fad. AI itself might be, for now, but AI-technology likely won’t be.
➡️ Green Energy & Building: If real estate continues to avoid a downtown, we expect solar, inverters, and home-related stocks to do well. Look to Lowe’s, Home Depot, Enphase, Solaredge, Restoration Hardware.
➡️ Rivian survived hell. Rivian, while still not making profitable cars, could explode on vehicles turning profitable. Tesla is a more “sure” bet (piggybacking off returning margins, vehicle sales growth, a successful Cybertruck launch, FSD-court victories, lower rates, and energy (not to mention Dojo/Optimus hopium). “However, in our view, investing in Rivian may become more appealing as the company edges closer to profitability. Rivian could go gross-profitable at the end of 2024 – that would be a game changer.
➡️ Apple’s headset launch in Q1 could either be inconsequential, or it might mark the beginning of a significant new product line, akin to the iPad.
➡️ AI Software Sales will be heavily scrutinized. Winners in 2024 might be Palantir, a company that – in our view – hasn’t quite convinced investors that AI can be profitable. We regard Palantir as the only purely AI-focused company already profitable to finally prove this to markets widely.
➡️ An economy that prevents recession will create an economy of investors DEMANDING sales growth at companies that are more likely to suffer in 2024, facing instead anemic growth at best. We believe companies like this will be consumer stables & discretionary (Walmart, Target, Costco, Nike, Best Buy, etc.). These companies may in turn focus on advertising more to showcase their new “DEFLATION PRICING!” to get people in the door. Who might win here? Trade Desk, in our view.
➡️ We also believes bonds will likely end 2024 under 3% on the 10-year. Another at least 80bp drop.

💰 Note: The Gold Course has a big price expiration for New Years! Get in before the New Year.
✔️ Lifetime access to livestreams.
✔️ New Lectures over Time (big drop 12-31-23, FREE!)
✔️ Brand-New Content on Real Estate Investing, Stock Investing, Entrepreneurship, Startups, Sales, and more ALL Filmed in Q4 2023.
✔️ The best videos we have – covering everything you’ve been asking for on actually building wealth in America.

🔗Link to this post.

---

End-of-Year Research: 12/29/2023 17:30 PT.
😇 Stock declines at year end likely the result of two factors: 1) institutional profit-taking to maximize “end-of-year bonuses.” (There’s less of an incentive to minimize trading for tax purposes when your pay is based on performance near year-end. We believe this is a misalignment with investor priorities).
😇 Traders looking for “breakouts” responding to failed breakouts across the board, leading to less longs/leveraged longs.
😇 Talked to an internal (shall remain unnamed) JPM trader at a restaurant in Park City: their base case is no second wave, but 50/50 on recession. Very interesting.

Recessions
✅ HSBC suggests “the most severe recessions after the global financial crisis [around the world] had also seen the biggest increases in household sector debt before it. Ahead of the pandemic, and the latest interest rate cycle, we didn’t see such a run-up in private debt. That means households and corporates are better placed to cope with interest rate rises.

Europe
✅ President of the Deutsche’s Bundesbank (German Fed) said in an interview: “Inflation is a greedy beast. It would therefore be a mistake to let up too soon in the fight against it.”
😇 This is leading many to refer once again to the Cleveland Fed’s NowCast for inflation, which sits at about 0.33% Core MoM (not great!).
😇 However, indulge yourself in a search for “Nowcast” on X. It’s accuracy, or lack their of, makes it a bit less useful.
✅ HSBC on Europe: “Wage growth in new job postings is already declining fairly rapidly in the eurozone. But in-job pay rises are still elevated and look set to remain so until at least mid-2024.” 😇 This is interesting. During the pandemic and after, the opposite was true and especially has been true in America: quitters have been getting paid more. Could this flip occur in the US?
✅ Germany seen as the weakest for 2024, with -0.1% expected GDP. 😇 Remember, Germany is a manufacturing country. Cheaper manufacturing is deflationary and can be supportive of profit margins for goods providers in a recovery. Some, of course, will say this is how recessions start. And it is true that manufacturing gets hit hard in economic downturns (recessions or not). But does weak manufacturing cause a recession?
(Summary of Recessions)
➡️ 1937 Recession: Cutting debt and fighting inflation with reserve requirements at banks doubled. Sounds Fed-induced.
➡️ 1945: Massive cuts in government spending (private sector actually grew).
➡️ 1948: Post-war inflation due to pent up savings and demand lead to an inflation blowout: 3.3%-11.6% (😇 wow, sounds familiar). Mild recession after policy makers responded late.
➡️ 1953: Wind down of government spending. (😇 Remember today, we’re actually seeing a government spending MUCH more. Think Chips Act, Inflation Reduction Act, debt expansion, etc.)
➡️ 1957: Fed induced tightening.
➡️ 1960: Diminished US demand due to globalization / demand moving to foreign.
➡️ 1969: Debt, inflation, and Fed.
➡️ 1973: Oil embargo, inflation, Fed.
➡️ 1980: Fed & Inflation.
➡️ 1982: Fed & inflation.
➡️ 1990: Oil price shock. Inflation.
➡️ 2001: Dotcom Bubble (mostly a stock recession).
➡️ 2007: Real Estate Bubble
➡️ 2020: Covid.
😇 So based on that history, it seems the winner here of causing recessions is the Fed. Though that may be (likely is) in response to inflation. So what would cause inflation? Well, the other factors: Oil, supply chains, pandemics.
😇 Okay so: Fed, inflation, oil, supply chains, asset bubbles.
😇 NONE of those are manufacturing led. Yes, manufacturing responds, but can it be used to suggest we’re definitely going into recession? No. It’d be a much stronger argument to say: Look how many times high inflation caused a recession. That’s a very strong bear take.
✅ Rising consumer confidence in Europe and the UK. 😇 We’re seeing this in the US as well.

🔗Link to this post.

---

Catalysts: 12/28/2023 05:50 PT.
✅ Jan 3: Jolts (8.85m exp), FOMC minutes (😇rate cut mentions?), ISM prices paid.
✅ Jan 4: ADP (113k exp).
✅ Jan 5: Jobs: (170k exp).
✅ Jan 11: CPI core mom (0.2% exp).
🔗Link to this post.

---

Morning Data. 12/28/2023 05:32 PT.
✅ Bonds just had their best 2 months EVER.
✅ Half of the Red Sea container ships are still avoiding the Red Sea, though the low in shipping traffic was last week.
✅ Nasdaq set for best year since 1999.
✅ Initial claims at 218k vs 210k expected.
😇😇 In Sept of 2022, when Jerome Powell gave an infamously bearish speech at Jackson Hole, unemployment claims had fallen from ~215k down to around 180k. They spiked around 260k this summer. Now, we’re roughly back at average for the last 2 years.
🔗Link to this post.

---

Household Savings & Pricing Power. 12/27/2023 13:10 PT.

✅ “Stocks have room to run with consumers relaxed about savings.”
✅ 1) By some measures, excess savings remain around $900 billion, representing additional cash or savings accumulated during the pandemic.
✅ 2) Even though the savings rate is just 4.1%, a historic low, this may be due to the horde of excess cash available, suggesting “people are likely less motivated to store money away for a rainy day.”
✅ 3) “Homeowners are in particularly good shape. Household wealth in real estate assets is at a record.”

😇 This incredible piece by Bloomberg offers a perspective that’s the opposite of what was commonly said during 2023. In 2023, fears were: 1) student-loan repayments will come due, 2) household savings will run out, 3) consumer spending will crash. Now, that’s flipped: 1) many, likely in the upper echelons of income, still have excess cash. This reiterates what we argued on Nike’s warning below. 2) Those who are homeowners, who generally have 20x the net worth of tenants, didn’t see their property values crater. We saw fluctuations in some covid markets of up to 20% declines with intra-year swings of 5-10% in most markets, but this has been nothing more than some turbulence.
😇 Could housing crash? Sure. If inventory skyrockets in the spring, which it likely will, but will this year be significantly more than any prior years’ inventory spike? Especially as rates continue to fall?
😇 More interestingly, do you know what most forget about real estate ownership? Principal paydown. An average homeowner who paid down their mortgage for 2021, 2022, and 2023 without refinancing, is probably up at least $36,000 in equity solely from principal pay down. Nice. What happens when people go nuts again for refinancing and credit lines? In our opinion, we’ll see a boon in exactly what homeowners spend money on:
➡️ Home improvement (consider Lowe’s / Home Depot).
➡️ Solar (consider Enphase, SEDG, Tesla).
➡️ Cars (Rivian / Tesla).
➡️ Apple products.
➡️ Business startups (Ubiquiti).
➡️ Restoration Hardware.
➡️ RVs.
➡️ Pets.

😇 Yes, it might be surprising to say this but homeowners do not buy a lot of Nvidia chips! They buy stuff that makes them feel like they’re investing (common psychological flaw, but offset by real estate appreciation). “Investing” in your home should payoff, right? Investing in a car helps the business, right? Investing in a boat or RV saves flight and hotel expenses, right?

😇 In our opinion, homeowners car less about:
➡️ Clothing.
➡️ Staples (Costco, Walmart, Target).

Some other Considerations:
✅ Apple temporarily won an appeals injunction to keep their Apple Watch sales going. 😇 This is unsurprising. Apple is an incredibly powerful company and this was probably the best “Christmas sale” they’ve ever had for watches.
✅Lemonade Insurance observes other insurers exiting the industry and has cut its marketing by over 32.9%.” 😇 Squeezing the “lemon” to get margin? Not great for a company with ~5 quarters of cash left. 😇 I’m worried about what the impact of this will be in 2024. Not to mention the Softbank shelf offering (potential share dump of over 17.1% [📝 10Q page 4]).
✅ Carnival Cruise Lines sees stable demand, with “net yields up 8% since 2019.” 😇 That’s an odd way to say you’ve underperformed inflation, but the suggestion that demand is still stable in Q4 is powerful, especially how optimistic they are on bookings into 2024 (a very leading indicator).
✅ Costco is cutting prices to encourage membership growth.

Positioning Notes:
😇 Kevin is substantially underweight home improvement, RH, RVs, and pets. This deserves further evaluation.

🔗Link to this post.
📺My Video on this.

---

Multivariate Core Inflation is Out. 12/27/2023 05:46 PT.
✅ Multivariate core is out.
😇 The trend should not be surprising. It’s what we’ve been covering for a year.

🔗Link to this post.

---

Passive Income with the Tesla Cybertruck. 12/26/2023 12:00 PT.
Note: An earlier version of this story ran assuming essentially unlimited demand at home, which is unrealistic. The revised story is below:

✅ Tesla will be one of few vehicles offering Vehicle-to-home charging, subject to inverter purchase/installation.
😇 Cybertrucks may provide tax benefits above-and-beyond traditional vehicles.
😇 Cybertrucks may provide “passive income” from vehicle-to-home charging.

😇1) Confirm with your CPA, but the 179-deduction for businesses followed by a 7-year straight-line depreciation schedule could save $15,400 year one followed by $5,400 annually in taxes there after.

😇2) Vehicle-to-home charging could help you generate $200+ of passive income per month.
😇 See explanation below, but in the future, all EVs will likely support this – making gas vehicles even less desirable.


😇 For the math, California is usually 27% more expensive than the rest of the country. The weighted average, post-credit utility rate in California is (48*8/12) + (59*4/12) = 51.63c. (winter average is 52, so let’s just go with 51.63c). 27% less for the US average (which is sloppy because peak rates throughout the country could be higher and closer to CA levels) = 37.69c peak rates.
😇 Assuming a stable spread of 17c from peak to super-off peak, and a 40% income tax bracket, and use/availability of the vehicle between 4-9pm, yes we could theoretically average $212 of “passive income” ($127.50 after taxes saved)/month with the V:H charging.
😇 This will likely be a BOON for those who drive less AND are HIGH-ENERGY users. For example, my electricity bill is regularly ~$500/mo WITH solar. I’m also frequently home. I would like save much more and my tax bracket may be higher, so my savings might be as much as double this – closer to $420/mo saved. If you mined crypto at home, I suppose it could be even higher. But let’s be real: for average Americans, yes there’s a savings. Is it worth the CyberBeast? No.
😇 Will this be quite useful when interest rates are say 3% and the Cybertrucks are lower in price? HECK YEAH!


✅ Additionally, the Daily Mail is reporting, while using an Optimus image in its thumbnail, that an exclusive story has broken of a Tesla robot attacking an engineer, “leaving them in a trail of blood” and forcing an “emergency shutdown” while suggesting the “robot had pinned the man.”
😇 This apparently relates to a type of autonomous arm, not an Optimus robot, for an injury sustained in 2021.
😇 The thumbnail on Google, to preview to the world with the “Tesla robot ATTACKS an engineer” byline was likely uploaded/chosen by The Daily Mail.
😇 This leads viewers to think an Optimus attacked an employee. When in reality, it was a programmed arm.
✅ The engineer had “an open wound” on his left hand.
✅ “No other robot-related injuries were reported to regulators by Tesla at the Texas factory in either 2021 or 2022.”
✅ These injuries occur at Amazon shipment centers as well.
✅ The story then reports/suggests Tesla doesn’t report all complaints/issues/injuries, suggesting sickness from chemical exposure and injuries like “sprains, cuts, and fractures.”

✅Yet this is the thumbnail they fed Google, clearing showing the Optimus.

🔗Link to this post.
📺My Video on this and AWS Below.

---

Bulls, Apple, Tesla 12/26/2023 09:50-10:54 PT.

Dan Ives & Tesla.
✅ About 4:10 into this Bloomberg interview, Dan Ives suggests we’re at a new frontier for technology. He calls this a 1995-moment. “The biggest tech transformation in 30 years […] we believe this is the beginning of the next phase of this bull market.” 😇 Wow, this is quite bullish as Dan brushes off iWatch issues (so do we; this is a nothing burger and likely just pushed sales up to 30 days in our opinion for Apple). Wearables + home makes up roughly 10% of Apple revenue with watches like 4-5%. We are quite tech-bullish though, so we need to be cognizant of confirmation bias here.
✅ Dan Ives argues the “bears” are just focused on valuation, that they’re missing the growth “story.”
😇 Uhg – this makes me nervous. Cashflow and valuations matter! Fortunately, the biggest names like Tesla, Apple, Nvidia – all have massive cashflow. I just worry when I hear people using “story” as a pitch.
✅ On Tesla, Dan says the storms of EV price wars “have passed” and next year, demand “starts to accelerate relative to what people thought.”
✅ “This is the super bull in terms of tech markets.” We have “another two years.” “Get the popcorn out.”

Recall Misunderstanding.
😇 By now, we’ve all heard people compare software updates at Tesla to iPhone software updates. However, out of consideration for automotive laws and regulation that exists, let’s step back from Tesla-bull-blindness. The phrase “recall” is very important. It means the government has found a fault that is great enough to warrant large-scale notification to current owners and future buyers. Recalls are like traffic tickets that sit on a car’s history & are searchable via https://www.nhtsa.gov/recalls via vehicle-identification number. They also setup substantial liability for auto manufacturers who don’t solve the issue. This is very different from just an iPhone software update, though let’s be real: the inconvenience is the big differentiator (going into a dealer vs a wireless update).
😇 So, should the branding change? Yes, but not by much. Yes, using “recall” for physical and software updates is misleading. In my opinion, we should simply prepend the word “software” or “hardware” to the front.
➡️ Software Recall (only software)
➡️ Hardware Recall (only hardware)
➡️ Software/Hardware Recall (both)
😇 Now, you have the benefit of maintaining the “recall” compliance (without demanding too much change from the government – which we all know if you push too much, you get nothing). And, you get the benefit of clarity. This should be of critical important to the NHTSA and mainstream media.

✅ Remember. We can be frustrated by the government’s “slowness,” but you can also work within that scheme to simply “add clarity” to something without demanding a complete change. And anytime you’re simply “adding clarity” in government vs “changing” something, you’re probably going to have more success.

Morgan Stanley’s Adam Jonas has an updated Tesla thesis.
✅ Looking for Tesla’s next AI day. 😇 What, for a short? (Sorry, Tesla tends to drop around events.)
✅ What drove AWS to 70% EBIT at Amazon could happen at Tesla w/ Dojo.
😇 Per Amazon’s last 10Q, AWS brings in $20.538b per quarter with $5.4b net, an impressive 26.3% net. Honestly, I’m surprised by that! That’s a fantastic margin. Great job, Amazon! Amazon’s other segments in Q3 LOST over $2.8 billion. Imagine if they were AWS only? This is actually quite an understated consideration for Dojo. Even if Dojo works in conjunction with Nvidia. Remember, Amazon designs chips just like Tesla. Consider the AWS Graviton Processors. But that doesn’t mean they can’t ALSO use Nvidia chips. Really, AWS is about the service for cloud-storage and cloud compute, which includes AI-compute. The question is: How long do these margins last? The biggest moat here? Cyber security. We’ve thought about small-scale cloud-infrastructure startups; the problem is, cyber security is your greatest threat. A smaller-scale company may not be as equipped to fend of substantial cyber attacks. That reduces trust in all but the largest, creating an oligopoly of data centers (think OPEC for oil). Tesla could join that.. dare we say, Operation of Data Exercising Companies (ODEC). Okay, that needs work, but the point is: Companies like Microsoft, Google, Amazon, and Meta have the money to play there. Maybe Tesla will as well.
✅ Jonas maintains $380 price target.
😇 We’ve mostly heard of Jonas’s points previously and little is new here, other than that Amazon mention above I expounded on.
✅ Side note: Pipe Sandler is estimated 507k deliveries for Q4.
😇 This is a quarter Tesla likely faced the highest interest rates EVER in the history of Tesla.
🔗Link to this post.

---

TA Targets: What We’re Watching. 12/26/2023 08:38 PT.
😇 In this morning’s market-open livestream we suggested shorting ZIM on lesser Red-Sea tensions while the stock was down about 6.5% at roughly $10.90. We see a possible retracement back to $8.53. It’s now down 16%.
😇 We see Tesla as a heavily-traded stock, based on how predictably it moves against the longer-term trend line (orange here; weekly from $414.50 down) and the $258.15 retracement (regular failures and failed breakouts, making this a very-sticky level). Tesla may not breakout until earnings prove valuation hope.

😇 Bitcoin sustaining $42.2k will be critical post-ETF approval, which seems poised for early Jan, however we due still face SEC lawsuits vs Coinbase and Binance that are unresolved. It’s unclear if the SEC could delay Coinbase’s ability to custody Bitcoin due to these suits. Additionally, we see Coinbase as heavily downside-prone post ETF approval. Trading in ETFs does not beget trading in Bitcoin, which could substantially and negatively affect Coinbase. For Coinbase to makeup this lost trading revenue, we suspect they’d have to custody – and quickly – over a quarter of a billion dollars in Bitcoin. That’s more than 30% of today’s market cap, which how much money flows into ETFs is heavily unclear. Other institutions will also compete for crypto custody services. Remember, ETF shares can trade without creating Bitcoin volume. This means market makers and brokers may make more trading revenue on Bitcoin ETFs than a company like Coinbase. So ironically, yes a company like Robinhood could make more money than Coinbase on crypto ETFs. Could Coinbase become a broker dealer? Unlikely if they want to maintain the other crypto-asset products they have. They’d have to create a separate company, which may not be owned by the same Coinbase that’s public, if they even ever wanted to.
😇 Nvidia $500 is a critical threshold we’re all watching.
😇 Carnival Cruise lines, with an attractive PEG ratio under 0.70 and refinancing its debt lower, faces a massive breakout potential if it can solidify a position above $19.68.
🔗Link to this post.

---

2024 has the most “People in Countries with Elections” year ever. 12/26/2023 06:05 PT.
✅
✅ Economist Source for This.
😇 I’m not sure this is much of a catalyst for anything – many believe elections are always a massive catalyst for investments. We generally don’t.
🔗Link to this post.

---

Tesla. 12/26/2023 06:05.
✅Tesla China-insured units for the week leading into Christmas Eve coming in at 18,500 registrations, up about ~38% YOY and 1.09% WoW.

🔗Link to this post.

---

Bears Flip & Spending & Iron. 12/26/2023 05:50 PT.
✅ Bloomberg sees Iron-ore and steel demand rebounding globally ex-China, but suggests a rebound in China as well could be even more bullish for iron trades in 2024. Iron up about 8% in the last ~7 weeks.
✅ Mastercard 📝SpendingPulse: US retail sales ex auto increased 3.1% YOY from Nov 1 – Dec 24th. 😇 Basically flat with inflation. This is why Jerome Powell wants to continue seeing jobs growth; it’s one of the only things holding us up.

😇 Surprised to see e-commerce do so well after Nike’s warning on digital we covered here: 🔗Nike’s Warning.
😇 However, those are year-over-year numbers. Nike’s were more nuanced to calendar Q4 and outlooking into calendar Q1/Q2.
✅ Mike Wilson of Morgan Stanley suggests stocks have the “green light” to run higher after the Fed pivot. 😇 The last time he flipped was in July – which marked a near-term top.
🔗Link to this post.

---

US Attack on Iraq & Morning Updates. 12/26/2023 05:40 PT.
✅ US launched airstrikes against terrorist-cell targets in Iraq after a drone from “Iran-aligned militants” critically injured one US service member. 😇 War and instability in a region tends to spread. First Hamas, then Hezbollah, then the Houthi’s, now others in Iran considered “Kataib Hezbollah militants.” ✅ Kataib are considered the Iraqi branch compared to Lebanon’s Hezbollah.
✅ US base Iraq’s Erbil has been the target of many attacks.
😇 May lead to more discussions around EMP’s / directed-energy solutions ($3.5 per drone counter).
😇Example of Lasers in Video (sales pitch by Raytheon).
✅ Intel strikes deal to build $25-billion dollar factory in Israel and receive about 12.8% in credits. 😇 Much lower tax credit than I expected. There has to be more.
🔗Link to this post.

---

Bank of Japan. 12/24/2023 20:40.
✅ Bank of Japan continues their hopes to “emerge from low-inflation environment” and “achieve positive wage-inflation cycle.”
✅ “Crucial for increase in corporate profits to lead to higher household income.”
✅ “Key is whether companies will be able to reflect rising wage labor costs to prices of their goods, services.”
✅ “Risk of economy worsening sharply or returning to deflation will diminish” “when monetary policy functions effectively.”
✅ Maintaining monetary easing.
😇 Japan is frankly deathly afraid of deflation, because deflation creates a savers’ mindset, which slows economy growth. BoJ is frankly trying to induce inflation and is HOPEFUL companies will make enough money in their country to create SOME inflation. Could you imagine a politician saying that in America? ‘We hope corporations make more so they can raise prices and pay their workers more?’ The Fed KNOWS this. They even subtly say it for those who pay attention; which is why we believe in the volatile nike-swoosh.
😇 The fight for “prices to go down” just means workers end up losing more.
😇 It sucks coming out of a period inflation, but a job is better than no job. Let’s be clear: We’re not saying it’s right or fair that prices have skyrocketed 18-30% since 2019. We’re just providing the Fed’s POV. It doesn’t have to be popular to them.
🔗Link to this post.

---

As Expected: Red Sea Stability Arrives. 12/24/2023 20:34.
😇 On December 21, 2023, we predicted stability in the Red Sea would arrive, allowing shipments to resume, once US forces arrived to provide covered escorts. Albeit at the cost of US tax payers, we believed the US Government would not risk 1) giving Houthi’s credit for disrupting supply chains, 2) escalating tensions in the Middle East 3) causing inflation. However, fear was quickly spreading that “other” countries may not be supportive of Biden and would leave the US hanging in the Red Sea. Yesterday, we argued this wouldn’t matter. The US would be dominate.
✅ Now: Maersk reports it is preparing to resume shipping through the Red Sea with US support. Quote: “We are currently working on plans for the first vessels to make the transit and for this to happen as soon as operationally possible,” as the company announced on Christmas Eve.
✅ Politico’s Cost Comparison indicated missiles to fight Houthi drones cost about $2.1m per rocket compared to the $2,000 cost per drone. The missiles frequently used are a Block IV Tomahawk Missile.

✅The Missile Defense Advocacy Alliance reports a “Directed Energy (Iron Beam)” may cost as little as $3.50 per pulse to accomplish the same task. 😇 (We previously reported the DoD is seeking more proposals for such EMP / directed-energy weapons.)
✅ Oil prices (Brent) fell 32 cents or about 0.4% settling at $79.07 after this announcement.
🔗Link to this post.

---

Christmas Eve OpenAI Fundraise. 12/24/2023 11:58 PT.
✅ OpenAI is planning to raise at or over $100m soon.
✅ This is separate from an $86m valuation round where employees were able to sell shares.
😇 Personally, we are very bearish on this valuation. LLMs like OpenAI’s, while incredibly useful and a wonderful propellent for AI, are becoming ubiquitous with relatively low barriers to entry for cash-rich companies (see Elon Musk: 3 months to Grok, a ChatGPT 3.0 level LLM. 3 months to build what took OpenAI 5 years). Part of this is due to the fact that the road is now paved to catchup with GPT 4.0. Now it’s just training and tuning. This is why Google via Bard is also competing.
😇 The risk is: Who will create the next big breakthrough? The answer to that is incredible unclear in software.
😇 In chips, it’s much more likely to be: Nvidia, AMD, TSMC, ASML, and related companies.
😇 The latest “board” drama at OpenAI may have also been orchestrated to suggest or imply the company ahs technology it doesn’t yet. This is a very jaded view and we realized we’re heavily biased against such valuations.
🔗Link to this post.

---

Trump. 12/23/2023 10:20 PT
😇 Many have seemed overwhelmed by the amount of challenges against Donald Trump, so we found this chart very useful for folks wondering “Where does Donald Trump face Ballot Challenges and what is the current status of those.”
😇 Here ya go.
😇 It is apparent to us the Supreme Court will, eventually, step in.

🔗Link to this post.

---

Saturday Morning Geopolitics & Red Sea War. 12/23/2023 09:58.

Russia / Ukraine.
✅ Bloomberg reporting “Putin has been signaling through intermediaries since at least September that he is open to a cease-fire that freezes the fighting along the current lines.”
😇 Frankly, Putin wants Crimea’s gateway to the sea and the Donetsk and Dnipro regions – a freeze seems like it would give him the stability he wants anyway; control of 90% of Ukraine’s oil and natural gas production.
✅ Putin also put out cease-fire feelers in the fall of 2022.
✅ Ukraine has given no indications they’re willing to part with existing territory controlled by Putin.
✅ Some suggest a cease fire would just allow Russia to rearm and reposition. Similar-sided folks are concerned Russia will not honor their agreements anyway. Then, suggest the US and Europe must continue their support for Ukraine.
✅ The director of our CIA and the director of Russia’s foreign intelligence service met in Turkey last year – no success with the US indicating they would not negotiate on behalf of Ukraine.
✅ Russia’s economy relies on oil/gas as a percentage of GDP at roughly twice the rate of the United States. 16% for Russia and 8% for the United States.
😇 For Putin, it appears “freezing” where they are would be a win. That’s what he wanted all along. We believe Putin’s incursion into Kiev was quite literally just “for the show” to distract Ukraine while Russia mines/trenches the land they actually want. Note: Southbound traffic (from Russia to India and China) so far seems less or not at all effected in the Red Sea. So the Red Sea disaster is almost making room for more Russia transports.

Red Sea
✅ Tehran, Iran denies it’s “deeply involved” in Houthi attacks – responding to US allegations.
✅ Tehran denies sending Houthi’s weapons.
✅ Saturday, a Liberian-flagged chemical products tanker was the largest vessel struck yet, per Al Jazeera, who also provides the image below showing 12% of all global trading flowing through this region.
✅ Operation Prosperity Guardian, per the DoD, reiterated Friday that more than 20 nations have signed on to participate. However, some on Twitter/X are claiming the operation has “collapsed as France, Spain, and Italy have all announced their withdrawal.”
✅ Confusion appears to be around a lack of details. For example, France suggests they would support the Red Sea, but their ships would remain under French command. Italy said its operations were not part of the Operation. Britain, Greece, Netherlands, and Denmark said they would participate.
😇 We believe the reality is pretty clear: The US will be the predominate force in the region. Other countries will support in whichever way they please. Those who hear France will operate under their “own flag” will say this is a Biden failure. Others will say: That’s just what France wants and isn’t necessarily a Biden failure.
😇 As usual though, look for facts and bias in everything. We personally believe the easiest consideration for the Red Sea is simply considering the US as the most-viable source of stability. Any extra help would be, well, extra.

🔗Link to this post.

---

Nick T’s Disinflation. 12/22/2023 14:41.
✅ Nick T. just tweeted a Goldman piece suggesting inflation could fall below 2% in 2024.
😇 Goldman has previously suggested more disinflation would be a real potential in 2024. They’re just revising their numbers down even more now.
😇 This is what we believe as well; that inflation will fall much faster than believed. We’ll see though – it could theoretically always bounce again. Remaining watchful will be important.

🔗Link to this post.

---

Trump. 12/22/2023 14:18 PT
✅ Early, for just a few minutes, a story was posted here that the US Supreme Court decided on the Colorado appeal. That was incorrect and removed. Sorry about that.
✅ Instead, Jack Smith had his request to expedite his prosecution against Donald Trump DENIED. That’s a win for Trump as it potentially delays Jack Smith’s targeted March 4, 2024 trial.
✅ A federal appeals court will instead, starting January 9th, hear arguments.
✅ If a federal appeals court quickly rejects Trump, the Supreme Court will be back to deciding soon.
✅ However, every day the appeals court takes is a day closer to delaying the March 4th trial – which is set for just prior to Super Tuesday (March 5, 2024).
✅ Appeals courts have a reputation for being slow. However Politico argues they’ve been moving much faster on Trump issues.
✅ Keep in mind, this is all related to Judge Chutkan’s is the third against Trump of 4. This alleges:
➡️ Conspiracy to defraud the US
➡️ Conspiracy to Obstruct an Official Proceeding (Jan 6)
➡️ Obstruction & Attempted Obstruction of an Official Proceeding
➡️ Conspiracy against Rights
✅ To these, Trump claims immunity.
🔗Link to Original Case #3 Against Trump.
🔗Link to this post.

---

Morning Market Commentary. 12/22/2023 10:10-10:52 PT
✅ PCE this morning fell below 2% for the first time in 3 years.
✅ Government-worker wages are finally outpacing private-sector wage growth.
✅ The last time this occurred was in late 2005. 2.5 years later, we were in recession. 😇 Yes, government hiring is frequently a late-cycle occurrence. Governments are able to compete for labor when the business cycle slows and businesses hire have less job openings. Does this mean a recession is coming? Well, a recession is always coming. Does it tell us when? Not really. 2.5 years out with the last precedent puts us in mid 2026. A lot can happen between then and now, including a lot of euphoria should the money printers come back.

New home sales missed massively this morning at a -12.2% MoM figure vs 1.6% growth expected. 690k expected vs 679k prior and a read in November of just 590k. HouseHack, being in the market daily, sees supply growth outpacing buyer growth in Q1 as rates likely remain around 5-6% (a far cry from 2.75% at lows) and likely support patient deal acquisition vs speculation on coming euphoria. New home builders are price sensitive and concessions only motivate buyers so much, especially since we believe most builder concessions are overpriced anyway (example: a $20k concessions for flooring, yet the flooring work only has a market value of $8,000). New homes are also frequently more volatile than existing home sales, especially on price, since new homes are often built in newer/fringe geographies, often leading to less price stability relative to an established neighborhood. 
Stay tuned to the HouseHackHomes Youtube channel or X for a HouseHack before and after video coming today, using our favorite 3D camera.
✅ 9/10 of the last months have seen downward revisions to SAAR.
✅ Seasonally Adjusted Changes by Region MoM:
✅✅ South down 20.9%
✅✅ Midwest up 25%
✅✅ Northeast up 3.1%
✅✅ West down 5.1%.

✅Median home prices off their peak for new construction, though stable.

✅ Iranian intelligence is now reportedly directly assisting Houthi’s with information for drone targeting. 😇 A direct involvement between the US and Israel would be a substantial escalation and represents a near-term risk until US presence in the region escalates (✅ more ships are on their way).
✅ Albert Edwards of Goldman, via Zerohedge, warning of a collapse in IT valuations specifically the magnificent 7. 😇 While we agree there are absolutely companies that will face correction in 2024 (we believe lower 60% consumer-centric), the “outperformance” of the magnificent 6 (7 less Tesla) may seem less wild as the rest of the market “floats up,” barring a shock of course.
🎅 Today is the last trading day before Christmas. Will we see Santa Hedging as traders take off going in the holiday?
✅ Morgan Stanley chief executive James Gorman (not to be confused with bear Mike Wilson) expects financial markets will “take off” once investors are confident the Fed is done raising rates. The Financial Times interview comes just as he finalizes his last days as CEO at Morgan Stanley. He suggests the concerns today are that people don’t know what the actual costs of financing are, creating too much uncertainty.
✅ Pimco’s Chief Executive sees a 40% chance of a “mild recession,” but says: “I think there will be a tidal wave of money coming. Right now you have $5tn in short-term cash in the US, rolling Treasury bills, that can extend in duration and take more risk. It is very hard to predict when, because it’s animal spirits, and predicting animal spirits is not an easy game. But the moment this happens, you will see an enormous amount of money, and it will come in many different ways: in fixed income, in mortgages, in munis, some will go into equities. It will make risky assets of all types appreciate.”
✅LEAST Desirable Trade Predictions for 2024 by Bloomberg.
✅✅ Long China.
✅✅ Short bonds.
😇 Contrarian opportunity?
✅ Atlanta Fed moves 12/22 GDP estimate for Q4 down to 2.3% from 2.7%, incorporating PCE.

✅ PCE visualized by Nick T:

✅ Decline in Hours Worked Seen as Potentially Recessionary.
✅ Declines without recession: 1951, 1956, 1966, 1997.

🔗Link to this post.

---

Nick Timiraos (NikiLeaks) Suggests PCE to come in Low. 12/21/2023 19:20 PT
✅ November PCE consensus is 0.2%. However, Nick T. believes forecasters in the 0.0-0.1% will be more accurate.
✅ Would lower 12-mo PCE inflation to 3.1% and 6-mo annualized to 1.9% (😇 That would be essentially be mission accomplished.)
😇 Market would start pricing in more cuts if this occurs.
📺Link to Live Stream Covering PCE.
🔗Link to this post.

—- Notes from the livestream linked above 12/22/2023 06:00
✅ Nick T. was right. PCE comes in low with:
✅✅ PCE Core MoM 0.1% and prior revision down to 0.1% from 0.2%.
✅✅ PCE Core YoY 3.2% and prior revision down to 3.4% from 3.5%.
✅✅ PCE Headline MoM -0.1%, no revision on prior.
✅✅ PCE Headline YoY 2.6% and prior revised down to 2.9% from 3.0%.
✅✅ Durable good orders over double at 5.4% vs 2.3% expected.
😇Best of both: more growth, less inflation.

Tesla
✅ Chinese media announces Tesla’s acquisition of land and plan to built MegaPack plant capable of building 10k megapacks.
😇At $1.2m per pack (uninstalled) and 30% net margin (might be higher), could increase Tesla’s net income around $333m per quarter. That’s an increase of roughly 50% of today’s numbers from this one facility alone.

Also, my opinion:

---

Economy is Starting to Look Bad. 12/21/2023 15:15 PT
✅ Some on Wall Street believe the faltering economy has lead financial conditions to ease, enabling a quick stock-market recovery.
✅ Struggling manufacturing may need to flip to solidify gains though.
✅ Sahm Rule, Real-time Recession indicator below – which consider the growth in joblessness.
✅ It is positive and it tends to lag the start of a recession (gray bars).

✅ Bear Kobeissi Letter reiterates our pattern of the early-mid 1970s.

😇 Note the differences though:
😇😇 Stable inflation expectations today vs not then. BELIEF was that inflation would return.
😇😇 Just left the gold standard and ended price caps.
😇😇 Unemployment was 8.4% at the ‘”we are here” arrow October 1975. Today it’s 3.7%.
😇😇 Little Fed credibility / Fed was deemed “passive.” No “mandate.”
😇 Similar to 1970s:
😇😇 Supply disruptions.
😇😇 War (Ukraine/Israel today).
Uh oh on Banks:
✅ Bank Term Funding Program (BTFP) just inflected up again.
✅ Increases hopes for rate cuts as bank stress is increasing.
✅ Allows borrowing for ONE YEAR (😇 remember, we started March 2023; coming up).
✅ Markets pricing in 155bp of cuts (6 cuts).
😇 The program is basically an unlimited bailout fund for banks. It DOES suggest more outflows from banks (maybe money is flowing into stocks and bonds and out of bank savings programs). As a result, more stress is hitting banks thanks to outflows. (Makes sense: people want to join the stock-market rally and bond-market rally.) Given the unlimited bailout of the Fed here, this may not matter much in large macro, but it does mean other banks – following withdrawals again – could fail. Banking Crisis 2.0? Note: This IS a form of money-printing and is a tax-payer backed fund.

🔗Link to this post.

---

Red Sea Inflation – Container Rates Warning. 12/21/2023 14:45 PT
✅ Ocean freight prices shot up Thursday afternoon. Logistic managers, per CNBC, now quoting around $10,000 per 40-foot container from Shanghai to UK.
✅ Rates for a 20-foot were $1,900 last week.
✅ Rates for a 40-foot were $2,400 last week.
✅ Truck rates in the Middle East have doubled.
✅ ~$105 billion in trade affected.
✅ 2.1m cargo vessels x about $50k each.
✅ Air freight prices are up 13% as well. $4.45/kg up from $3.95/kg.
✅ Inflationary impact will depend on how long the crisis continues.
😇 I suspect stability will arrive within the next week as American war ships begin escorting cargo ships – likely en masse starting around Christmas. (It takes time for the US war ships to arrive.) In other words, Biden could theoretically use military funding to prevent a prolonged rise in inflation here.
🔗Link to this post.

---

Nike 12/21/2023 14:35 – 14:56. PT
✅ Nike EPS beats $1.03 vs 85c. (21% beat.)
✅ Gross margin 44.6%, beat, vs 44%.
✅ Q2 Rev $13.39b vs $13.46b estimate.
✅ Inventory $7.98b vs $8.64b estimate.
✅ To streamline organization (layoff). Will cost $400-450m.
✅ Sees softer revenue in calendar Q1 / Q2.
✅ Trying to cut expenses.
✅ China misses at $1.86b vs $1.97b with China EBIT at $514m vs $581.5m. (11.5% miss.)
✅ Nike sees 400bp headwind due to supply chain issues.
✅ Revenue rise in low single digits.
😇 Remember when we warned of the lower 60% spending? Might be here.
✅ Stock down about 9%-11%.
✅ Q3 (calendar Q1) to be slightly negative. Slightly positive there after.
✅ Outlook weakens.
✅ Strongest Black Friday week ever.
✅ “We’re seeing indications of more cautious consumer behavior around the world.”
✅ Retail sales short of expectations.
✅ Softness in digital traffic and higher levels of promotional activity.
✅ Restructuring will include manufacturing layers and procurement.
😇 This is the start of the consumer recession. In my opinion, only wealthier segments with true pricing power will succeed here as wealthier consumers see their stocks and real estate trend up.
✅ Expect margin though as costs are cut.
🔗Link to this post.

---

Cathie Wood & Elon Musk Twitter Spaces. 12/21/2023 14:05 – 14:56. PT
✅ X is growing in traffic while traditional media is down. -Elon.
✅ Elon reiterates that funding WAS secured. Cathie suggests keeping Tesla public was a democratization of growth.
✅ Cathie suggests she lead the open sourcing of research on the internet. Suggests its their primary way of sharing research.
✅ Brett suggests there should be a way to reward CORRECT information. Elon isn’t sure how that would work. Suggests that interesting content gets more views. 😇Yes, but interesting content doesn’t have to be correct.
😇 Really, you’d have to reward past predictions for having been correct and amplify that. How do you do that though as a platform? You probably don’t. Otherwise you become a network that highlights selective wins or losses.
✅ Waiting for more money-transfer licenses. We have a majority of the states. Waiting for the rest. Irrelevant until California and New York approve us. We were a bit late though. Not entirely their fault. I thought we had done it and we had not until the middle of this year. Maybe early 2024. Payments to roll out by the middle of next year. -Elon.
✅ Our Venture Fund will be on Sofi soon. Currently on Titan app. -Cathie Wood.
✅ Cathie pitches Venture Fund that doesn’t have a carry (10-20%). Instead, asset management fee is higher at 2.75% agnostic of gains. 😇 Does this change the incentive for gains?
✅ Going public was useful for having access to capital markets for Tesla, which is capital intensive. -Elon.
✅ I’ve never driven someone to a bad outcome when it comes to investing in me. -Elon.
✅ Happy we could create millionaires by giving our employees stock. -Elon.
✅ The more X / Grok focuses on truth, the more others have to as well. -Elon.
✅ NHTSA has been quite sensible. They see the truth in the data. -Elon.
✅ Money is a database for resource allocation. I spend little time thinking about crypto. Fiat currency is fine IF you have a predictable money supply. Rules based. -Elon. Cathie optimistic on this.
✅ We need to be multiplanetary and must do so while we can.
📺Link to Live Stream.
🔗Link to this post.

---

ASML & Intel & Apple. 12/21/2023 13:18 PT
✅ Last week, Bloomberg reported ASML & Samsung agreed to jointly spend $760m on a new South Korean research facility for new semis using the latest EUV technology from ASML.
✅ This week, ASML shipped “major parts” of its latest chip-making machinery to Intel D1X in Oregon, which expects to see production begin in 2025.
😇 We prefer investing in ASML and Intel over chip-adjacent companies like Micron. Though Micron could be a value opportunity (or trap).
😇 Note: This morning’s course-member livestream covered Micron. Micron projects, approximately, 6% revenue growth due to memory systems they’re launching for use by companies like Nvidia in server stacks. Micron appears to be an AI-adjacent opportunity, and these AI-memory support chips are expected to yield a higher margin than normal DRAM memory. However, the manufacturing of these is extremely capital intensive and Micron lost money in their year-end August 31, 2023. If they can return to profit, they could be a quite low-valuation chip play. However, some, including us, see memory as an after thought and essentially a commodity vs a proprietary product. Note: this memory is different from on-chip memory (VRAM). Nvidia also uses Samsung and SK hynix as a memory supplier.
✅ Apple stopped selling the Ultra 2 and Series 9 watch starting today & models out of warranty won’t be repairable. Sales were not expected to end until the 24th, but have already ended as of the 21st per Bloomberg.
😇 Personally I see this due to a rush to buy the new watches following the announcement they may not be available. Looks like the sale worked!
✅ Apple may also launch their Vision Pro headset as soon as February. Production has been running “for several weeks” in China.
🔗Link to this post.

---

The Bear Argument. 12/21/2023 09:25 PT
😇 The strongest bear argument remains the inverted yield curve, about twice as inverted as we saw in 1998 at just over -40 basis points. And even though the mid 90s (with near inversion in 1994) was seen as a soft landing, we were walking into the .com bubble & 2001/2002 recession.
✅ Bloomberg covers the bear arguments from Citigroup, Deutsche Bank, and Wells Fargo.
✅ The bear case: Consumers will be out of excess savings.
😇 “Bear” in mind, prior to the pandemic: excess savings were 0. There were no excess savings from the pandemic because the pandemic hadn’t happened yet. So what sustains spending? Wages *slightly* above inflation.
✅ Real wage growth (inflation adjusted) has just turned positive again, albeit barely at 0.8%

✅ Jerome Powell in his December meeting responded to a question about consumers struggling with inflation with: well, real wage growth has gone positive. 😇 This is a nice way of saying: Yeah, prices aren’t going to go back to 2019 levels – absent a big depression – so work more. HARSH!
✅ Back to Bloomberg, the bears suggest the downturn wouldn’t be as ugly as Covid’s downturn and only 32% project a recession (😇 JPM’s base case is usually 20% chance of recession every year, which means we’re about 12% points above that base).
✅ Easing financial conditions could induce higher inflation.
✅ Some argue the recession may already be here, including Anna Wong, a chief US economist at Bloomberg. She indicates the rapid deterioration in anecdotes from the Fed’s beige book.
😇 I agree with her. This is probably why the Fed pivoted – the Fed realizes government data is lagging and small/medium businesses are suffering. Cash-rich companies like Microsoft, Google, and Apple win in these environments, but small businesses employee around 46% of our workforce. Large firms with over 100 employees employee roughly the other half with medium-sized businesses varying based on definition.
✅ See black line: large employment (over 100 employees) at just under 50%.

✅ Others, like Neil Dutta at Renaissance Macro Research are clearly frustrated. “I think it’s ridiculous. What’s their story? That higher rates have almost no impact at first and then all of a sudden the economy just spontaneously combusts? That’s not consistent with empirical research.”
😇 This is an interesting counter to bears, but to support the bears for a moment: Yes. When unemployment becomes self sustaining, a recession can follow VERY quickly. Unemployment is a self-fulfilling doom loop. The Fed MUST avoid rising unemployment, even at the cost of a stock-market rally.
🔗Link to this piece.

---

Permission to Rally. 12/21/2023 08:55 PT
✅ Wow! GDP’s Q3 *third* & final estimate numbers LOWERED Q3 inflation from 2.3% (2nd estimate) to 2.0. Now, Bloomberg is running headlines that US Inflation Report to Show Fed’s Battle Is Now All But Complete.
😇 This comes on the back of Harker saying yesterday: as inflation comes down, we’ll lower rates. Treasury yields roughly stable since yesterday and issuance (for more debt spending) will put a floor under yields, but the trend is clear: down (yields down, bond prices up).
✅ Tomorrow at 5:30 a.m. PT we will get PCE figures.
✅✅ Personal spending expected at 0.3% vs 0.2% prior.
✅✅ PCE Deflator MOM expected at 0.0% vs 0.0 prior. 😇 Note: This will update multivariate core, usually Mondays but due to the holiday likely mid next week. Negative inflation here could push a rally.
✅✅ PCE Deflator YOY expected at 2.8% vs 3.0%. 😇 A lower read here could push a rally further.
✅✅ PCE Core Deflator MoM expected at 0.2% vs 0.2% prior.
✅✅ PCE Core Deflator YoY expected at 3.3% vs 3.5% prior.

📝 Apollo Global is Shocked.
✅ Argue wage growth could recreate inflation.
✅ Public equities have “stretched” valuations.
✅ Inflation still above 2%.
✅ Consumers getting pinched
😇 Apollo seems to forget FAIT, an August 2020 policy to “average” inflation targets.
😇 Credit card delinquencies above the prior decade levels do show consumer stress. This may hit staples and lower-end consumer discretionary spending. Yet, may also promote more risky credit (BNPL?).
✅ Apollo argues credit is an attractive investment.
😇 This is basically like saying: May as well invest in the loans, bundled up, that people are having to take on at higher interest rates. Think hedge funds buying up Affirm’s BNPL loans. You transfer the risk FROM Affirm TO hedge funds desperate for higher yields. Will credit card debit affect the entire economy?
✅ About 3 out of 5 Americans have Credit Card Debt – likely the lower 60%.
😇 Potentially investing where the upper 40% spend may be insulated from these delinquencies.

🔗Link to this piece.

---

5:30 a.m. Final Read of Q3 GDP & Continuing Claims Numbers (Unemployment) LIVE. 12/20/2023 22:11 PT
✅ Looking for 5.2% for the third and final read of the Q3 2023 GDP read.
✅ Forward looking data would include initial jobless claims: expectations at 215k vs 202k prior.
😇 Under 200k claims likely means rates up and less recession fear.
😇 Under 240k claims likely means stocks down rates down.
😇 Closer to expectations would likely be best for markets. Being able to start relying on expectations again.
✅ Continuing claims expected to be 1880k vs 1876k prior.
✅ Philly Fed Business Outlook: -3.0 vs -5.9 prior expected.
📺 Kevin’s Market Open Livestream 12/21/2023 (Starting at 5:25am).

---

Colorado Ruling Presents real Problems for the Supreme Court. 12/20/2023 19:10 PT
✅ DECISION ONE: 1) The Supreme Court will have to decide to hear the Colorado appeal or not.
✅ Not hearing the case would be a tacit admission the Colorado court was correct.
✅ DECISION TWO: 2) The second decision will be: Is the President an “officer of the United States”?

Case law from the Supreme Court will relate to interpretations of the Constitution, under “Executive Branch” > Powers > Appointments > Officers (Article 2, Section 2, Clause 2):
✅ United States v. Maurice 1823: an officer as one entrusted with a duty that is a continuing one, which is defined by rules prescribed by the government, and not by contract, which an individual is appointed by government to perform
😇 This is very broad; Suggests anyone “entrusted with a duty […] not by contract” is an officer. Does the President sign a contract? ✅ No, they swear an oath.
✅United States v. Germaine 1878: Civil surgeons are employees rather than officers because their positions are “occasional and intermittent” rather than “continuing and permanent.”
😇 Is the President’s position continuing and permanent? Well, for their elected term, subject to impeachment, yes.
✅ Buckley v. Valeo 1976: Officers are those who exercising significant authority pursuant to the laws of the United States and excluded positions that were just “investigative and informative.”
 ✅ Freytag v. Commissioner of Internal Revenue 1990: Trial judges can be officers “because of the significance of the duties and discretion they possessed. Lucia v. SEC 2018 reiterated this case.

By this, the President would likely be considered an officer IF the President:
✅ Is entrusted with a duty via oath (yes).
✅ Has a continuing and permanent position (for their term, yes).
✅ Exercises executive authority (yes)
✅ Has significant duty and discretion (yes).

😇The Supreme Court could find a loophole in continuing and permanent, though, as an elected position isn’t permanent beyond the term of the elected official. HOWEVER, does this risk demoting every Senator/Congressperson/elected official to NOT be required to follow the “officer” standard?
😇 The President will likely be deemed “an officer.”

✅ DECISION THREE: 3) Did Trump “engage in” “insurrection”?

😇For this, the Supreme Court may consider the Trial of Castner Hanway for treason of 1851.

✅ This section is from the Colorado case, quoting the 1851 case. HOWEVER, below are all 922 pages on the Castner Hanway case. Consider the following segments:

✅ Evidence of previous good character of defendant may be introduced in trial for treason.
✅ (Page 921) In order to a conviction of the crime of treason, the defendant must have intended to levy war against the United States, or the overt acts have been committed by himself and others in pursuance of such conspiracy or preconcert for that purpose.
✅ The “levying war against the United States,” is not necessarily to be judged of by the number and array of troops. But there must be a conspiracy to resist by force, and an actual resistance by force of arms, or intimidation by numbers. The conspiracy and the insurrection connected with it must be to affect something of a public nature, to overthrow the government, or to nullify some law of the United States, and totally to hinder its execution, or compel its repeal.

😇 BEST Trump defense is likely NOT fighting “force of arms, intimidation by numbers” or effort to “nullify some law of the United States and totally to hinder its execution.” Those are WEAK arguments for Trump.
😇 BEST Trump defense is likely simple: “He did not intend to levy war against the United States.”
😇 This is the EASIEST out for the Supreme Court to allow voters to decide Trump’s fate. One could argue Trump believed he was fighting “FOR” the United States, rather than “against” the United States.
😇 However, many may argue: “If you can avoid a treason-charge by saying you didn’t intend to levy war, do you lessen the crime of treason?”

✅ Page 922 also provides: “without having any previous knowledge of what was about to take place, and takes no part therein […] is not guilty of treason.” However, the counter argument would suggest that Trump knew or should have known.
📝 What is Treason.
📺 Kevin’s Video on This.
🔗Link to this post.

---

The Fed. 12/20/2023 15:35PT
✅ Harker (Philly Fed President & voting member 2023, but NOT in 2024): Fed should begin to reduce interest rates, though not immediately.
✅ “We should hold rates where they are and start to bring rates down.”
✅“It’s important that we start to move rates down.”
😇 The more they hold rates here, the TIGHTER the effects become as inflation falls.
✅“We don’t have to do it too fast, and we’re not going to do it right away.”
✅ Economy slowing faster than the government data suggest.
😇 Remember, Fed conducts business-contact surveys themselves (with a lot of other research) to not solely rely on the government.
✅ SF Fed just retweeted their President warning of risks to overtightening in the WSJ.

📺 Kevin’s Video on This.

---

The Stock Pullback. 12/20/2023 15:25 PT
✅ Percent of stocks above their 50dma at near 100%. This is a near-term catalyst for a pullback.
✅ Micron (MU) guide beat by 5%. Reminder on what Micron is: Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands […and] “enable advances in artificial intelligence and 5G applications.”
✅ 70% of Micron Revenue comes from DRAM and 27% from NAND (high-capacity, low-cost storage). Per📝 10K.
✅ This morning RSI was cited at 81 on the S&P 500. 0-day options expirys, mostly big put bets at $4755, helped plunge stocks towards the end of the day.
😇 Heavy algorithmic trading likely used as profit taking somewhat disputed by the chart below showing 1-day, 5-day, 1-month, 3-month, 1-year correlations. The way to understand this is consider: Google and Coinbase stocks have performed exceptionally well over these timeframes. Yet those stocks ended green today, despite having rallied so much. This suggests selling was NOT profit taking, rather options/algo execution – likely due to elevated RSI.

✅ SPY RSI down to ~67 now from 81.

😇Very bullish intersection for Tesla IF it can break $258. So far, it has not been able to. Orange trend line goes back to $414 in 2021 and overlaps Fibb.

✅ Vix at LOWEST levels since 2019.😇 Real risk here of a near-term spike.

A Note on HouseHack: We continue to hold a ~$20m treasury position benefiting from these declines in yields. Our JPM team is working a credit line for us to continue deploying on good real estate deals.

📺 Kevin’s Video on This.

---

The Housing Market Forecast – 2 Years Left. 12/20/2023 09:09 PT
😇 Periods of real (inflation adjusted) residential property gains (chart 1; blue), initially appear related to movements in the FOMC rate, especially as prices decline. However, I disagree this is the best fit as the FOMC rate doesn’t help clearly help explain when prices rise. The FOMC rate often falls during periods of recession and higher unemployment, which appears to only support to real housing appreciation after a longer-delay, and without consistency.
😇 For example, rates barely moved in 1976, yet housing prices jumped.
😇 For example, rates barely fell in 1986, yet housing prices jumped.
😇 For example, rates barely moved in 1996, yet housing prices jumped.
😇 In other words, LOWER FOMC (Fed loosening) rates did not necessarily induce higher price.
😇 HOWEVER, it appears HIGHER FOMC rates (Fed tightening) DID lower housing prices (1978, 2007, 2022).
😇 A better predictor appears to be lending standards (by banks, not the fed) tightening (or loosening; below 0). When lending standards loosen the most (see 1994, 2004, 2011, 2021), home prices appear to rapidly experience gains (see 1995, 2005, 2021).
😇 Thus, the greatest potential boon to home-price appreciation may NOT be the fall in FOMC rates. In fact, this expected decline in FOMC rates may simply encourage an increase in volume (more buyers and more sellers), but not necessitate a rapid acceleration in prices.
😇 Instead, pay attention to banking lending standards. When these fall to a reading around -20 (see 1994, 2004, and 2021), let’s just say – you might want to have done your shopping.

A Note on HouseHack: We study the real estate market daily. We don’t just study it though, we also participate in it. As participants in the housing market, we have observed (primarily the last 6 weeks), a substantial uptick in speculation – even in covid markets. There appears to be a true “CONVICTION” that housing prices will “boom like 2021!” again in the Spring. We believe this is a fools errand. We continue to acquire off-market or well-priced real estate, but speculating and overpaying today, removing a margin of safety, is not a good idea. Patience is important. We believe we’re likely at least 2 years away from a true “explosion” of loose lending.

https://fred.stlouisfed.org/graph/?g=1cXop

https://fred.stlouisfed.org/graph/?g=1brCM
😇 Red arrows show when prices start running.

😇 Red boxes show periods of looser credit. Albeit not residential, this is likely a fair proxy for residential.

📺 Kevin’s Video on This.

---

Ikea Delays 12/20/2023 08:07 PT
😇 Unsurprisingly, with the Red Sea critical for China to European shipping, Ikea now reporting potential delays.
✅ “What we can share for now is that the situation in the Suez Canal will result in delays and may cause availability constraints for certain Ikea products.” per email to Bloomberg.

---

Google Ad Changes. 12/20/2023 07:57 PT
✅ Google potentially laying off or “reorganizing” parts of its 30,000-person ad sales unit (per The Information).
✅ More reliance on AI to help customers buy more ads.
✅ AI-inspired ads and suggestions.
✅ Google sees “Dynamic Search Ads” helping Google generate ~$15b in revenue per year.
✅ Yet, Performance Max, a new feature nicknamed PMax, could be 15% more effective than Dynamic Search ads, and eliminates the need for some employees.
😇 Hurting the ad sales team, essentially. Not the developers.
✅ Jan 4, Google disables cookie tracking as a default on Chrome.
😇 Some suggest this makes Google more powerful. Having users signed in as the explore Youtube and websites enables Google to potentially track even more data than cookies would provide, basically providing Google more data, while others receive less.

---

FedEx & Costco. 12/20/2023 06:35 PT
✅ Fedex changes revenue forecast from flat in 2024 to negative by “low single digits.” Stock down ~10%.
✅ Fedex reiterates that manufacturing is weak and growth in freight has been declining for about 10 quarters now. ✅ They suggest shipping could recover in calendar Q3-Q4. So far, they see it not worsening.
✅ FedEx remains optimistic on margin expansion.
😇 This suggest less risk of an imminent “recessionary shock” in a sudden plummet in spending.
✅ CostCo downgraded by Northcoast to Neutral on valuation concerns, calling them a “premium retailer.”

📝 FedEx Earnings Call Q2 2024 (Q3 2023 Calendar) [Annotated]

---

Useful Images & Market Open Data. 12/20/2023 06:13 PT
😇 1) Breakdown of difference between Suez Canal, Red Sea, and Bab al-Mandeb Straight.
😇 2) 5-year breakevens moving up

✅ Note: Going into today, the SPY is at an RSI (relative strength index) over 81. This SHOULD drive a near-term pullback.
✅ 30-year mortgage down to 6.83%.
✅ 10-year falls below 3.90%, first time since July.




✅ Energy, in Bloomberg survey, showing the HIGHEST spread between current price and target price.

📝 JPM on Asset Allocation
📝 BofA Weekly Freight

---

US Weighing Military Strikes on Houthi’s 12/19/2023 21:11 PT
😇 I warned about this (below/earlier today): this could potentially lead to escalations of violence. Worrisome tinderbox.
✅ US+allies, per Bloomberg, considering military strikes against Houthi rebels in Yemen. Protection is not enough.
✅ Actions are intended to “cripple the Houthis’ ability to target commercial ships by hitting the militant group at the source.” 😇 Sounds familiar to the Gaza invasion.
✅Big risks: broader regional conflict.
✅If risk spreads to Straight of Hormuz (per Goldman below), oil could spike 25%+.
😇 Don’t sleep on this issue. It’s a true catalyst.

---

Tesla Slander: The LendingTree Accident Claim. 12/19/2023 20:33PT
✅ LendingTree (which takes applications for car loans and pitches not just lenders but also insurance), suggests Tesla drivers “have the highest accident rate compared with all the brands analyzed” at 23.54 accidents per 1,000 drivers vs Ram in #2 at 22.76 accidents/1000.
✅ The safest, or lowest “incident” drivers were deemed to be Mercury drivers.
✅ The article’s methodology suggests vehicles, when applying for a loan/insurance, are evaluated based on incidents disclosed. “Incidents” do not necessarily have to be accidents, as they appear to also include “claims.” (Say, door damage).
✅ The LendingTree article makes NO references to adjustments for Sex or Age.
😇 Sex or Age are critical adjustments. Consider the following facts.
✅ LendingTree cites Mercury as the safest car. Per TrueCar, Mercury is the third OLDEST car driven with an average age of 57.3, next to Lincolns and Buicks.
✅ Per insurance savings-app Jerry, 70% of Tesla drivers in their data set are younger than 34-years old while Hedges sees Model 3 ownership with an average age of 51. 😇 The data isn’t perfect, but between Jerry, Hedges, and Cox (below), it appears Tesla drivers are younger.
✅ Cox Automotive clearly shows the Tesla buyer as a younger demographic:

✅ Beyond age though, Tesla’s are predominately male driven. 71% of Model S and X owners are male. 84% of Model 3 owners are male. Yet males make up just 49% of licensed US drivers.
✅ Cox agrees, with around 1.7 males per female driver.

✅ Unfortunately for Tesla, male and younger drivers are statistically more likely to face an accident, incident, or fatality.
✅ The top age group for deaths is 25-34, which might be one of the most popular age groups for Tesla drivers.
✅ Per Statista, males also out number females in accident deaths by about 3:1.

Fatalities – Statista

😇 Our take: While we dispute the methodology for evaluating accident rates vs incidents, which is blurry, let’s be clear: Tesla vehicles skew male and younger. That’s a demographic that’s substantially more incident/accident prone.
😇 This does not mean Tesla’s are somehow inherently less safe.
😇 Bashing on Tesla is very popular though and does well on the Main Stream Media, so no surprise: the usual suspects on a Google Search for “Tesla accidents” and “Tesla safety.”
😇 Failing to adjust for age or gender is disgraceful.

📝 LendingTree: Tesla Highest Accident Rate.
📺 Kevin’s Video on This.

---

Colorado Supreme Court Disqualifies Trump from 2024 Ballot 12/19/2023 16:10PT
✅ Here is the critical phrase of the case:

✅ Trump’s team argue he was not an officer.
✅ Colorado’s Supreme Court. disagree and suggest he was.
More Details
✅ 4-3 Decision.
✅ The court consists of 5 democrats, 2 republicans – Justice Samour (R), Justice Boatright (R), Justice Gabriel (D), Justice Hart, (D), Justice Berkenkotter (D), Justice Marquez (D), Justice Hood (D).
✅ 5/7 of them were appointed by John Hickenlooper (D), other 2 were also appointed by Democrats
✅ Trump lost Colorado in 2020.
✅ Trump didn’t need the state to win in 2024, but this could lead to other states to use Colorado’s arguments as a legal precedent to ALSO remove Trump from their state ballots.
✅ This was the first of the lawsuits to reach such a ruling in dozens of efforts to disqualify Trump via Section 3 of 14th amendment.
✅ Republican attorneys argue, “Specifically officers of state swear an oath support the constitution.” Trump’s attorneys says this does not apply since the President is not an officer.
✅ “Qualified to assume duties if elected.” Essentially, break your oath, you lose your qualification.
✅ Judicial counter argument: “Nonsensical to apply that to lower officers but not higher officers.”
✅ Decision is stayed until Jan 4 or until US Supreme Court rules.


✅ Trump supporters say he hasn’t been found guilty of any crime.
✅ He may have lost civil lawsuits, but has not been convicted of a crime.
✅ News broke as Trump was about to take the stage at an Iowa event.
✅ From page 105 of legal decision:

✅ Essentially, even if your involvement in treason is remote, you are a “traitor.”
✅ Supreme Court of Colorado reviewed an appeal of a lower court decision to LEAVE Trump on the ballot. The lower, district court found Trump guilty of insurrection, BUT that this did not rise to the level of disqualifying Trump.
✅Appeals court argued “In treason, there are no accessories [to crimes.]” And essentially, and involvement rises to the level of disqualification from office.

✅ One quote from Trump used in the court case to consider his involvement in “treason.”

✅ People may have seen this as a “call to arms,” said the court.
😇 Quite clear this will incite further divisiveness in America.
😇 Likely voters should just decide this election, and given the right-tilt of the US Supreme Court, voters will likely get that option, in our opinion.
✅ In the mean time, Trump has begun fundraising with this ruling.


🔗Link to this Post.
📝 Colorado Supreme Court Ruling [Full Document].
📺 Kevin’s Video on This.

---

Biggest ETF Divergence in History 12/19/2023 12:14PT
✅ SPY saw $20.8B of inflows last Friday, December 15th.
✅ This was the highest single-day inflow for any ETF in history.
✅ S&P500 has now surpassed its previous 2021 all time highs.
✅ QQQ saw $5.2B of outflows last Friday, the biggest single-day outflow since 2000.
😇 The current divergence of SPY and QQQ is very interesting – is this actually a convergence of the SPY 493 and the Magnificent 7?

---

US Warships Enroute to Red Sea 12/19/2023 10:50PT
✅ US just announced a multinational task force to protect Red Sea traffic. This follows BP & Maersk rerouting shipping around the Cape of Good Hope.
✅ Pentagon announced operation to protect ships.
✅ Houthi rebels have escalated attacks on Suez Canal’s trade route.
✅ Security operation has been established to protect against missiles and drone attacks.
✅ Operation Prosperity Guardian, will include UK, Bahrain, France, Norway.
✅ ~17 box ships (aka container ships) cross the Suez Canal daily.
✅ Below image of 12/19/2023 reroute around Africa vs entrance into Suez near Yemen.
✅ Goldman Sachs estimates:
➡️ $3-4/barrel impact on oil prices.
➡️ Largest effect would be on freight prices, which could rise 25-50%. This is largely inelastic supply.
➡️ Risks are much greater if the Straight of Hormuz is attacked.
➡️ Straight of Hormuz interruption could see oil prices jump 20% in 1 month.
➡️ Mostly Northbound traffic (towards Israel) is affected.
➡️ Of the 7m barrels per day that travel here, about 38% of Northbound. Much of this thanks to Russia shipping to Russia / China.
😇 Highly anticipated and positive development of US, Australian, and additional support in region.
✅ Houthi’s argue this international coalition is illegal. Reject US intervention.
😇 Duh.
✅ BP / Maersk taking a cautious approach, likely leading to international action to limit economic damage.
✅ International task force will “escort” individual ships or groups.
✅ Downside is this is different from escorting against pirates attacking by small boat. These are missiles and drones.
✅ Not all military ships have the defensive weapons required.
✅ Launching Tomahawk cruise missiles at targets in Yemen could lead to significant provocation. Yemen is the second large Arab state / sovereign state. 92.8% Arab. Lead by disputed Chairman & Prime Minister.
✅ Houthi’s have sought to overthrow the government and take control (Shia insurgents).
✅ Egypt relies heavily on revenue here (US provides aid to Egypt and negotiates support for Israel). Secretary of Defense of US suggests economy already been hurt.
✅ China benefits here as well thanks to Russian imports.
✅ “Absolutely inflationary” per Bloomberg Intelligence.

📝 Goldman Sachs Research on Oil & Price Pressure – Red Sea.
🔗Link to this piece.

---

Fed Update 12/19/2023 07:40
✅ Barkin views inflation as stubborner, BUT “if inflation falls nicely, Fed would respond appropriately.”
✅ “Do see some segments of the economy weakening.”
✅ SEP is NOT forward guidance, it’s just a forecast.
😇 Wow that’s literally like saying, “we might cut way more.”
✅ “Data has come in nicely, making good progress on inflation.”
-Yahoo Finance Interview via Bloomberg

---

Fed & Google Update 12/19/2023 05:25
✅ Google settled claim by multiple states with $700m payment that they operated an “illegal monopoly” via the Google Play app store. $70m to states and $630m into a fund to help customers. Google will also allow an alternative billing system to Google Play’s store and allow apps to be directly downloaded from app developers rather than through the store.
✅ Per 10Q quarter 3 report: Google earned on average over $20m of free cash flow in 2023 so far, with over $19b in net income in Q3 alone. In other words, Google makes about $666m PER DAY in free cash.
😇 So basically, Google just got fined THREE DAYS of NET income.
📝 Google Q3 2023 10Q
✅ SF Fed’s Mary Daly says the Fed wants to AVOID people losing their jobs and therefore should consider cutting 3x in 2024 to avoid “overtightening” as we “could overtighten quite easily, and so that’s what I’m mindful of.”
✅ “we don’t give people price stability but take away jobs.”
😇 I agree; I believe Jerome Powell is nervous about overtightening as well. He came across as nervous, not due to high inflation, but due to risks of jobs in the last presser.

–Bloomberg data release
😇 Not a surprise in starts. Some euphoria is coming back to real estate, heavily evident in November.

---

Germany Baiting Russia & Militarization of Europe 12/18/2023 15:25PT
✅ Germany is moving 4,800 troops and 200 civilians within 100 miles from the border of Russia in Lithuania, without tanks.
✅ Germany sent most of its Leopard 2 tanks to Ukraine, so it has to manufacture new ones, sending them to Lithuania.
✅ The unit being sent to Lithuania will cost Germany between 25-30 million euros a month – Germany’s public finances are already stressed
✅ The first elements will deploy next year and a full brigade will be in place by 2027.
✅ Lithuania will build the physical infrastructure needed for the bases – costing 0.3% of its GDP over the next few years.
😇 The goal is to militarize Lithuania and make it war ready .
✅ ”Russia remains the main threat to us and NATO”, Lithuanian minister.
😇 Western Europe’s buffer, Ukraine, has narrowed – The West is now trying to militarize other Eastern European countries to insulate Western Europe from Russia.
😇 Kevin Note: Keep in mind, Germany is in what’s considered a “manufacturing recession.” Government support for this sector is useful for propping up jobs (not necessarily converting factories from butter to guns, so to speak, but helping labor is a priority to prevent recession. At least so goes the economic theory today.

---

Tesla Caught Up In X Twitter Drama 12/18/2023 14:46PT
✅ Over the past few months, advertisers including Apple, Disney, IBM, Warner Bros, Lionsgate, Paramount, and Comcast have pulled from X (Twitter).
✅ Apple spent ~$50M in the first quarter of ‘22, reportedly being X’s largest advertiser.
✅ Advertisers were pressured by “media watchdog group” that pointed out advertisements showing up next to “pro-Nazi content.
✅ X has made cut monetization on these types of posts, per X CEO Yaccarino, but that hasn’t brought back advertisers even though Elon condemned antisemitism and apologized.
✅ Elon specifically called out Disney and Bob Iger – this is now impacting Tesla as Disney+ app is being removed from the Tesla Theatre.
😇 Tesla’s customers are now in the crossfire, but reportedly only customers who haven’t opened the app are impacted so it doesn’t seem too hurtful – this is more of a signal to Disney, albeit at Tesla’s expense.
😇 Note: Some suggest it’s possible to reinstall the Disney app by navigating to the Disney+ page on the Tesla browser, in which case the app may reappear.

---

FTX Bankruptcy Estate Update 12/18/2023 14:42PT
✅ FTX is filing for Chapter 11, meaning it isn’t a full liquidation – they will create a plan to repay creditors over time.
✅ Filings include a provision that claims FTX’s crypto holdings at cash value at time of bankruptcy on Nov 11, 2022.
✅ BTC was $17K at the time, current hovering $42K.
😇 Creditors claim the tokens belong to the creditors, not the cash value – it doesn’t make sense to liquidate creditors’ holdings.
✅ Creditors may still be forced to accept this plan as long as it is “fair and equitable.”
✅ 60% of FTX assets (at time of bankruptcy) were cash/stablecoins.
✅ FTX has sold over $1.8B of crypto as of Dec 8, with a remaining balance of $1B.
Link to Chapter 11 Disclosure Statement

---

Apple Suspends US Watch Sales 12/18/2023 8:49PT
✅ Apple Watch Series 9 and Ultra 2 will no longer be for sale – December 21st on website and 24th in store. Only these two models.
😇 This is a preemptive move from Apple to comply with the ITC.
✅ This is due to a patent dispute between Apple and med-tech company Masimo surrounding the blood oxygen sensor in the watch.
✅ The International Trade Commission upheld the January court’s decision, stating that Apple violated Masimo’s oximeter patent.
✅ The case was sent to the Biden Admin for a 60-day Presidential Review Period.
✅ Biden has not decided to veto the ruling – the review period ends December 25.
😇 Masimo is just looking to make money off of Apple; they accused Apple of over 103 infringements but the ITC only found potentially 5 cases.
✅ If Biden does not veto the decision, Apple plans to file an appeal to the ITC December 26.
😇 Personally, we expect a quick resolution either. Either a software patch to remove the use of those patent-protected features or a negotiated solution. I do not see this as a large issue. In fact, it could drive a sales rush over the next 5 days. Frankly, I was tempted myself to consider the Ultra 2 after hearing of this “removal.” It’s a weird psychological phenomena!

---

Chart of the Day. 12/18/2023 07:42 PT


😇 Elon Musk sold around $24b of Tesla in 2022. The US stock market in 2023 saw inflows of just $95b so far this year. This either suggests Elon sold A LOT or the stock market saw few inflows. Or both. I think more heavily: there has been so much bad news, it has not been popular to buy stocks. Why buy stocks when you can get 5% risk free? Well, absent a labor shock and a continuation of the inflationary trends we’re seeing, the stock market may see substantially larger inflows in 2024, especially following 2023 “gains” that will likely be boasted of in January 2024.
✅ Goldman Sach’s sees core global inflation at 2.2% in the past 3 months and just 1.3% in November.
✅ They literally say “global inflation continues to plummet.” See 3 back-to-back 25bp cuts March, May, June. See similarities to 1995, 1998, and 2019.
✅ However, Goldman is so optimistic about growth (seeing 2% in 2024 vs around 0.7% Bloomberg consensus), that they don’t believe we’ll get more than 3 cuts, even as inflation falls in 2024.
✅ BUT, they see this as a boon for risk assets, especially US stocks – and have raised their S&P 500 price target 9% in the past 4 weeks.

📝 Goldman Disinflation & Growth Piece.

---

Nio. 12/18/2023 06:25 PT
✅ Nio just sold ~$2.2b in more shares, but even though this is dilutive, was offset by a deal from an investor group: CYVN Holdings (Abu Dhabi government backed investor group), who bought the shares to increase their Nio position to over 20%. 😇 Bullish buy the dip on Nio here by the investor group.
✅ Nio had current assets shy of just over $1b of their short-term debts. This financing appears to fill the void.
😇 Nio has a ramp problem. 11% gross margin on EVs isn’t actually bad – especially when Tesla hit a low in the 16% range. The difference is: Tesla has the scale to where more gross profit at these percentages actually covers their OpEx (research, admin, etc.). Nio has catchup work to do having only been founded in 2014, so maybe they’re rushing to be part of the race (likely) and ensure they can keep some market-share gains vs BYD/Tesla.
😇 The problem is: 16k/month isn’t leaving them profitable. JUST to go breakeven, we need to ~4x production (up from 16k/cars per month to 64k ASAP). JUST to get to breakeven. Unless margin pops up or Opex falls.
📝 WSJ Update on Nio.
📝 Annotated Nio Investor Relations Report.

---

Quick Market Updates. 12/18/2023 05:25 PT
✅ Goldman raises its 2024 target for the S&P 500 points AGAIN. Second time in 4 weeks.
✅ Adobe dumps Figma acquisition deal. Adobe up a couple of percent in premarket. Was a $20b deal that UK likely wouldn’t have approved.
✅ US Steel to be bought by Japan’s Nippon. US Steel up 28% in premarket. This is the day after Senator Tommy Tuberville short sales against various US companies via put options expiring June to January 2025, including against US Steel, Microsoft, Occidental Petroleum, Microchip, Applied Materials, Bristol-Myers, were disclosed. 😇 These are all options with a value of $1,001-15,000. This is likely just messaging by a republican against the Biden Presidency. US Steel acquisition tentative around $55 per share, much higher than other offers.
✅ Houthi’s claim multiple more attacks as some oil shippers pull back from the region.
✅ Fed Goolsbee speaking on CNBC now.
✅✅ We don’t speculate about the future. Market hearing want it wants to hear.
✅✅ FOMC collectively thought, via SEP, no recession.
✅✅ Volcker era danger: Our job is to act. The market’s job is to react. 😇 Boy they’re pulling everything to relax the rally a bit here.
✅✅ Market expectation of rate cuts is more than what our SEP was. 😇 Yes, because the SEP has been wrong at every point this cycle.
✅✅ Powell and Williams said we weren’t debating future rate increases. 😇 Yes, but members discussed them as targets for next year. It was not debated, per Powell – this is fair. We know “meeting by meeting.” Got it.
✅✅ Easier soft landings than this have been derailed by external shocks.
✅✅ JPM this morning discusses the late-stage / late-cycle hiring that’s being driven by healthcare, education, and government work. 😇 It’s fair to be concerned about this. The less broad-based job gains are throughout industries, the more vulnerable we are to negative / recessionary job prints. Easiest for government to hire late stage as pay seems more competitive compared to other job openings that may no longer be there.
✅Sunpower down ~26% following an “event default” via their Atlas Credit Agreement. This increases the potential of an acceleration of debt. 😇 Basically, they may have to raise cash from the stock market or someone else to survive.

---

Tesla FSD Criticized by WSJ without Context. 12/17/2023 07:10 PT

😇 WSJ here uses commentary by ONE engineer in a lawsuits against Tesla to describe what they call a less optimistic view on FSD. Though keep in mind, the engineer was testifying in a lawsuit. That’s not the time for optimism.
✅ The engineer’s quote: “The technology so far hasn’t allowed us to remove the driver.” “We cannot face every situation that might appear on the road.”
😇 The WSJ then drones on about the “recall of 2 million vehicles” WITHOUT mentioning the recall is simply a software update, much like your iPhone or Android would get.
😇 Note: The @WSJ does mention that Tesla has developed a software fix, but they don’t specifically say the fix solves the recall. In my opinion, it’s misleading NOT to clarify that the “recall” is solved by the software update. Here’s the paragraph: “Tesla agreed to the recall after the top U.S. auto-safety regulator found the company’s controls around the technology to be inadequate in certain cases, potentially leading drivers to misuse the system. Tesla has developed a software fix to further encourage drivers to remain engaged while using its automatic steering feature and is providing it as an over-the-air update.”
✅ The Journal references “at least a dozen lawsuits in the US related to the driver-assistance system, many of them brought by the families of people who died in crashes allegedly involving Autopilot. Consumers and investors have also sued Tesla, claiming its marketing of Autopilot and an upgrade called Full Self-Driving Capability is deceptive and misleading.”
😇 The Journal conveniently IGNORES Tesla’s November 1, 2023 big win: “Tesla wins first US Autopilot trial involving fatal crash,” where “juries have declined to find that its software was defective. “The 12-member jury announced they found the vehicle did not have a manufacturing defect. The verdict came on the fourth day of deliberations, and the vote was 9-3.”
😇 Tesla detractors repeatedly say that Tesla will end up getting slapped with more regulation potentially banning Autopilot. The reality seems to be the opposite.

😇 In August, the NHTSA requested data on Elon Mode (where nudges for drivers were removed, evidenced by code leaks). The NHTSA specifically asked Tesla for data on this experiment, how that mode could be activated, and what Elon/Tesla had “learned.” The NHTSA and regulators clearly recognize Tesla’s autopilot minimizes death and accidents. Juries and judges, so far, seem to agree.
📝 WSJ article on Engineers Less Optimistic.
📝 Reuters article on Tesla Win.

---

Catalysts 12/17/2023 06:27 PT
12/19 Monday
✅ Housing Starts: looking for 1360k vs 1372k prior. -0.9% vs 1.9% MOM prior.
✅ Permits: looking for 1460k vs 1487k prior. -2.5% vs 1.9% MOM prior.
12/20 Wednesday
✅ Existing home sales: Looking for 3.77m or -0.5% vs 3.79m or -4.1% MOM prior.
12/21 Thursday
✅ GDP annualized Q3 (third estimate). Looking for 5.2% vs 5.3% in prior estimate.
✅ PCE 3.6% vs 3.6% prior YOY.
✅ Core PCE QoQ looking for 2.3% vs 2.3% prior.
✅ Initial Jobless Claims: looking for 215k vs 202k prior.
✅ Continuing claims: looking for 1880k vs 1876k prior.
😇 We’re specifically excited for PCE. PCE data this Thursday usually updates Multivariate Core the following Monday (however, due to the holidays, that may be delayed a few days). As you can see, the trend is strongly disinflationary. This is despite October’s slight “pop.” I expect this to continue to decline.

Houthi Attacks are Intensifying 12/17/2023 05:48 PT
✅ The Houthis are a Shia Islamist military organization who seek death for Americans and Jews. War between Israel and Hamas has intensified attacks by Houthis.
✅ The Houthi’s are specifically attacking ships destined for Israel in the Bab al-Mandab shipping lane, pictured below between Djibouti and Yemen. At its thinnest point, the straight is just 18 miles wide, Ideal for launching attacks against large cargo and shipping vessels as they enter the Red Sea to Israel.
✅ Some suggest they are either Iranian-backed or Iran-aligned.
In December:
✅ Maersk, a Danish shipping company, has been targeted by drone and rocket attacks of Houthi’s around December 15th.
✅ German-owned Al Jasrah ship has been hit, causing a fire with no injuries.
✅ Norwegian tankers have been targeted.
In November:
✅ Israel claimed Houthis seized a British-owned and Japanese-owned cargo ship.
Why does it matter?
✅ This straight ships around 7.8m barrels of crude oil per day. (The US produces around 20m per day itself.)
✅ ~27 tankers pass through daily.
✅ About 12% of seaborne-traded oil and 8% of LNG pass through here.
✅ US military destroyers are in the region and HAVE engaged by shooting own Houthi-launched drones.
😇 Concerns naturally begin to circulate about blockages leading to spikes in oil prices, supply-chain concerns, or anything that can support an inflationary narrative for some. While it is important not to ignore this threat, the capability of the Houthis with American presence seems relatively limited. Following 2 seizures in November, no additional seizures have been made in December – that we’re aware of.

---

Cybertruck Update 12/16/2023 08:07 PT

✅ The $119,990 founder’s edition Cybertruck has an updated “estimated delivery” date of Mid-late 2024. That’s ~6 months back from the original “December to March” range. 😇 Presumably, existing orders under Dec-March will still be honored. And there was a rumor that only 1,000 Founder Cybertrucks would be made. However, this update either implies: 1) production delays or 2) massive demand even at $119,990. I suspect there’s a combination of both here. I also believe Tesla should not limit the founder’s series model. Sell as many of these at a massive premium for as long as possible.
✅ For founders, Tesla is now offering: “Your order is eligible for free Powershare Home Backup hardware-you just cover the installation cost. Take our survey to confirm your interest.** We will reach out to you with more information and connect you with a Tesla Certified Installer.” 😇 Excellent way to increase buzz! This is really likely a ~$1,500 inverter or so. This is not a powerwall, but powerwalls do come with these inverters.
✅ Additionally, check your Tesla account. You will not necessarily get a configure email if you preordered the truck and may already be eligible to configure it. 😇 We checked our original reservation (day 1) and are still hitting an error 403.

---

China vs the United States: War. 12/16/2023 06:58 PT

✅ “China has become increasingly assertive.”
✅ “Xi has asserted, with growing frequency, that Taiwan must be reunited with China.”
✅ The United States may be seen as “distracted by major wars in Europe and the Middle East.”
✅ Attack Plan 1: “PLA employs missiles and airstrikes against Taiwanese and nearby US forces while jamming signals and comms.”
✅ Attack Plan 2: US coalition beats back China’s initial assault on the island thanks to strengthened defenses. This best-case outcome, may cause China to fold. 😇Author of this article in Foreign Affairs works for a non-profit, military think-tank that helps guide US budget decisions. Note: non-profits can pay nice salaries and still be non-profit.
✅ Attack Plan 3: China’s goal may be to start conflict in Taiwan and expand conflict outwards through the Philippines, Indonesia, Kuril Islands, Japan, and down the Ryun Islands. China ultimately wants to dominate Indo-Pacific region.
✅✅US would be compelled to defend allies in region (South Korea, Japan, Taiwan, etc.).
✅✅Three types of war: Annihilation (think Gaza Strip), Attrition (think trench warfare), Exhaustion (think Ukraine/Russia or Vietnam). 😇 Conflict with China would unlikely end quickly. Could be a decade of war, if it occurs. Giving up early on our allies would create likely too much risk for America while China strengthens. The war is likely to be fought in the South China Sea.
✅ This conflict would be uncharted: first war between two great nuclear powers. Risk of Mutually Assured Destruction (MAD).
✅ “War usually takes one of three paths and it usually elects to take the fourth.” 😇War with China would be unpredictable.
✅ Xi Jingping has accelerated Chinese military buildup – he’s becoming more assertive across the Pacific.
✅ Chinese nuclear arsenal is significantly smaller than that of the US, but it is still enough to ensure MAD and they seek to match us within 10 years.
✅ Nuclear Restraint: During the Cold War, both the Soviet Union and the US both had nuclear capability, but still chose to fight war via the conventional way by engaging proxy wars without nuclear weapons.
😇 Many call for nuclear non-proliferation (less nukes). Do less nukes help with nuclear restraint? Or does your enemy having more nukes encourage nuclear restraint?
✅ Nuclear powers in the world: Russia, US, China, France, UK, Pakistan, India, Israel, North Korea.
✅ Previous Nuclear powers who have engaged in wars with non-nuclear countries and have shown restraint (ex: Russia war in Ukraine, US in Vietnam and Korea).
✅ India has a formal alliance with the US, but often undermines the US (ordering of recent assassinations in western countries for Indian political gain).
😇 India plays both sides, but if they were to ever face serious aggression from either the US or China, the counterparty would liekly back them because they’re a major military power with a large population.
✅ In the event of conflict in Indo-Pacific region, it is uncertain who will step in for US defense.
😇 It’s reasonable to assume Australia and Japan would join, not too sure about NATO. Though remember, “an attack on one is an attack on all.” But, blurry when the attack is on Taiwan (not NATO) and US is engaging to defend Taiwan. Is that really an attack on a NATO member? That would be like saying: Anywhere a NATO soldier is, they will be defended by all NATO.
😇 Traditionally neutral countries such as Indonesia, Singapore, and Vietnam could join the resistance against China if China secured it’s objectives quickly in Taiwan.
✅ If China proves effective at using ballistic missiles to attack US air bases in the region, the US may decide to strike Chinese missile sites – these may contain nuclear armed missiles – runs risk of unintentional nuclear disaster.
✅ In beginning stages of war, reaction to initial conflict is most important. As the war progresses, commercial ports, cargo ships, and undersea oil & gas infrastructure become very strategic targets in hindering a country’s ability to sustain a war effort.
✅ One side could impose information blockades on the other by cutting undersea data cables and interrupting satellite communications, or it could use cyberattacks to destroy or corrupt data.
✅ It is very important for the US and allies to successfully defend China’s first invasion (likely Taiwan) or it will only get harder for the West to have any influence in the region.
😇 Xi’s an expansionist and his ambitions are likely to create conflict with the West. Hard for China to expand now and not step on the West’s toes. However, is this a populist move? People are generally patriotic and more supportive of their leadership when their leaders have a common enemy. Think US after 9/11. “Strength” by China is also a negotiation tactic — even if China never expects to fight, pretending they do matters.
😇 China’s economy may be too weak to invade today in Taiwan or other key allies of the West (such as; Philippines, South Korea, and Japan) , and such an invasion would likely begin with the first or second “Island Chains” of the region, but China is purposefully demonstrating their preparations.
😇 Personally, I’m convinced China HAS to posture for war, without having any intention of war. But, that means we have to posture for war too, without actually having intentions of war. Otherwise, the others charade may become too tempting not engage with.
📝 Foreign Affairs: The Long War Ahead with China.

---

Tesla Cyber Truck Copper Demands. 12/15/2023 12:21 PT.
✅ BloombergNEF (the energy research team) just estimated the Cybertruck will use 40% less copper than the Ford F-150 Lightning.
✅ They also believe, if this works, the ENTIRE industry will switch over in 10-15 years. 😇 Remember, Elon sent a manual to other automakers on “how to switch to 48v.” The more automakers indicate they’re going to transition, the more suppliers get in the game. That HELPS Tesla. It’s a brilliant move.
✅ Copper demand probably won’t wane for at least a decade for cars though, as it’ll take around a decade – especially for legacy – to catch up. 😇 Some legacy will likely go BK before they even transition.
✅ HOWEVER, the Cybertruck is still expected to use 3x the copper of an ICE F150 (non-electric).
✅ BNEF believes it’s “highly unlikely the entire supply chain can change dramatically within the next 5 years.”
😇 Bottom line: EV transition still useful for copper. Tesla is making moves that could take up to 10-15 years to really fulfil its potential. Longer-term upside is bad for short-term bulls, great for long-term bulls.

---

Interest-Rate Impact on Election 2024. 12/15/2023 11:54 PT.
✅ GavekalResearch reports weakening poll numbers for Biden in key swing states.
✅ They believe blue collar workers in the Rust Belt disproportionately felt the impact of inflation, and are dumping support for Biden.
✅✅ Especially due in Michigan, Pennsylvania, and Ohio.
✅✅ Despite lowest unemployment rate since 1960s.
✅ Federal government spending ramps up into election cycle, spending over $384BN in 2mo. 😇 This MAY be normal due to the timing of 1) passing legislation in the first half of a Presidential, then executing on it in the second half of a Presidential term.
✅ Not a single question in Thursday’s Fed Press Conference about easing too soon or inflation. 😇 Little worry about inflation.
✅ Instead, media seeking MORE support for economy, especially those suffering the most right now (lower income).
😇 While Trump promises to slash government spending and drain the swamp, he is seen as a populist and would likely expand the government,
albeit in different ways, such as potentially prioritizing the border more.
😇 Market participants are more concerned about a recession than upside risk.
✅ Lowering rates faster than other economies could weaken the dollar. This could encourage manufacturing in the United States, which could boost incomes of those in the Rust Belt, supporting Biden votes (Per GavekalResearch).
😇 Potentially bullish 2024 leading into election year as Biden Admin & Fed try to prop up the economy.
📝Gavekal Research Rate Impact (See annotated notes and highlights).

---

Mr. Beast Loses Lawsuit over Deez Nuts. 12/15/2023 11:41 PT.
✅ In August, Mr. Beast was sued for alleged infringement against a Florida-based company Dee’s Nuts, LLC, using the term “Deez Nutz” while marketing his chocolate company Feastables.
✅ Brian Ditore sells peanuts under Dees Nuts, LLC, named after his grandmother, ‘Mrs. Dee.’ 😇P.S. the dude I bought my plane from was named Dee. He left his nuts on the plane for me. We loved Dee’s nuts.
✅ Ditore’s lawsuit claimed that Mr. Beast’s company ‘Feastables’ was causing confusion and lost sales by selling a chocolate peanut called ‘DEEZ NUTS.’
✅He claimed Mr. Beast’s brand was monopolizing search traffic that may have otherwise gone to Ditore’s company.
✅ 3 months later, the legal battle came to an end with Dee’s Nuts, LLC. Last week, the court granted the permanent injunction and then the parties settled the lawsuit. Payout amount was unclear.
✅ Interestingly enough the phrase “Deez Nutz” can still be found on feastables.com as of late 12/14/23.
😇Attached is the actual lawsuit filed against Feastables, Inc. I have highlighted some sections I thought were interesting. Dee’s Nuts, LLC, is claiming damages. Per the lawsuit their sales were estimated to be between $4 million and $5 million in 2023.
📝Feastables Lawsuit.

---

Pricing Power Stocks. 12/15/2023 10:41 PT.
😇 What is a company with TRUE pricing power vs FAUX pricing power (fake PP).
True Pricing Power
➡️Net income UP as prices of top line, revenue-drivers fall. 😇 Capitalism rewards businesses who can cut prices and grow net income.
➡️Margins increase (resulting in gross profit and operating profit increases) despite competition.
➡️Volumes of sales Grow (Note: volume growth does not need to mean revenue growth).
➡️➡️Point is, you sell more volumes of goods/services more efficiently and end up bringing more to the bottom line.
➡️➡️That’s a win for customers. That’s a win for investors.

Stocks I like/own for pricing power:
😇 Nvidia (own). Pure growth play, likely worth holding through mid $600s.
😇 Intel (own). Still possibly a value play through ~$65.
😇 Enphase (own). Not considering sales until at least $300/$400.
😇 Tesla (own). Not considering sales until at least $400/500.
😇 Apple (own). Less upside, but likely less downside risk. Good stabilizer.
😇 Intuit (don’t own yet; waiting for small biz pain to show up & depress some growth/top line).
😇 Palantir (own). One of the few actual pricing power AI cloud plays with very robust balance sheet.
😇 Rivian. (don’t own and likely won’t). Ironically, they have pricing power. People love them. People will pay a premium for these vehicles. Amazon & AT&T will blow money for “ESG” here. Why I don’t own? Uncertain we can get to true profitability, even at scale. Too big of a risk for me. Until they do, they’ll keep diluting shareholders for another 18mo of cash.

Stocks I don’t like for pricing power:
😇 Google (specifically cloud and ads). Google workspace is incredible and very lucrative.
😇 Amazon. Sales biz isn’t profitable and data centers are likely going to turn into a situation of “perfect competition,” creating massive price wars and a complete removal of pricing power. Chips are better here.
😇 Costco (I’m short; see below why).
😇 ROKU: The Trade Desk is a better connected TV ad play here, IMO, vs manufacturing Roku TVs (likely at a loss) to drive signups.
😇 Coinbase: When a BTC ETF is approved, I expect Bitcoin transaction volumes to plummet and custody services for Bitcoin ETFs to explode. I don’t believe there’s pricing power, unless you’re a monopoly, in custodying Bitcoin.
😇 Opendoor: Leveraging Realtor commissions to make your profits is not a sustainable business model.

Note: I’m not saying theses companies above that I don’t like for pricing power will fail. In fact, Opendoor could rally massively in meme-euphoria. I’m simply making a 10-year argument that I believe pricing power stocks will outperform those that I believe have less pricing power.

I love bigPP.

---

Elon Musk, Tesla, and Giga Mexico. 12/15/2023 10:08 PT.
✅ Delays to Giga Mexico foreshadowed in Elon’s Q3 earnings call due to macro uncertainty.
✅ Nuevo Leon factory just received $153m in infrastructure incentives for roads & water treatment & payroll tax abatements. 😇Yes, that means labor would be EVEN cheaper in NE Mexico. Wages are already around $3.5-$4/hour. 😇 Lower payroll taxes is another form of stimulus.
✅ Tesla has received land-use permit.
✅ Requires additional federal and Energy Regulator Commission permits.
✅ Plant announced 9mo ago.
✅ Unclear if plant will open by 2025. 😇Scaling in Texas/Berlin will take priority.
😇 This is an EXCELLENT negotiating opportunity for Elon to negotiate further credits for Tesla.
–Bloomberg

---

Fed Brainard & Fed Bostic 12/15/2023 10:04 PT.
✅ Brainard:
✅✅ Immigration has helped labor force rebound.
✅✅ Financial markets reflect more positive view about economy’s path.
✅✅ No evidence of wage-price spiral. Rents are bringing down core inflation.
✅Bostic:
✅✅“Still a ways” from 2%, though “progress has been coming “faster than I expected.”
✅✅ Sees 2 cuts in 2024. First cut “sometime in the third quarter.” (Market sees them starting in March.)
✅✅”Now that policy rate is at peak.” 😇Incase peak wasn’t obvious, that helps.
✅✅Sees growth next year at just over 1%.
–Refinitiv
✅Bonds slightly paring gains on this. 10-year at 3.92%. +/- 1-2bp throughout the day so far. 😇Nothing major.

---

Costco’s Deflation 12/15/2023 08:04PT.
✅ Costco previously estimated YOY inflation of 1-2%. This has been revised for the quarter ending the Sunday after Black Friday to JUST 0-1%.
✅ Bigger deflation in “some big and bulky items like furniture sets” and “TVs.”
✅ Lower freight costs have enabled them to lower prices.
✅ Cite they are negotiating with vendors more for better deals.
✅ Warn that they are a “top-line” driven company and will need renewals and new memberships to keep growing.
😇 This is what we warned yesterday after the Costco press release: Even Costco knows that as deflation occurs at the top line, you’ll be okay IF memberships keep growing. But, if memberships stall and deflation reduces OpInc, you have problems – especially as your OpEx stays stable. This makes logical sense. Consider this. If you have $1.984b of operating profit, but you end up facing deflation on the top line, your OpEx (HR, payroll, Costco staffers), doesn’t necessarily decline. This means a 3.4% decline on top-line revenue with, say, stable costs, could wipe out your profit entirely.
😇Consider this: Operating profit is $57,799b. Let’s say costs are flat at 0% deflation/inflation. But, to move items, you cut prices 3.5% (or costs fall 4% and you cut prices 7.5%, right? Same thing). Now, $2b less comes down to operations. Well, Operating Profit was just under $2b. That means operating profit goes to ZERO. A real risk in deflation. Especially as the company sites they’re not looking to cut staff and, if anything, are increasing pay for their staff. ✅They do recognize though that inflationary pressures on wages are DOWN.
✅”Some deflationary items were as much as 20-30%”
✅ They’re starting to grind down vendors on price to get costs down.
✅ They’re daring analysts to start price matching Costco to see how good their prices are. 😇Price war is beginning.
😇 THIS is what the Fed has started seeing. THIS is why Powell is turning dovish.

Full disclosure: I JUST went short ~$13k personally.

---

Fed & Inflation 12/15/2023 06:50PT.
✅ Mr. Williams of the NY Fed briefly spooked markets suggesting it’s premature to think rate cuts.
😇 Frankly, his speech was much the same of Powell’s though – just said slightly differently. Members have the right to speak their opinion of what may happen over the next year during the “board meetings.” As Powell said, rate cuts were mentioned, but we’re sticking meeting-to-meeting. So nothing has changed here.
😇 On inflation: a big question that keeps coming up is: “Won’t a strong economy cause inflation?” For this, consider the correlation between the YOY changes in inflation and real GDP.
✅Examples of negative or weak or no correlation:
✅✅1965
✅✅1970
✅✅Mid 90s
✅✅Mid 2000s
✅✅Mid 2010s
😇 The point is: Just because the red line goes up, does NOT mean we cause inflation. And when the line goes down, inflation doesn’t necessarily come down. Even though we THINK inflation will go up because in 2021 we had a “strong economy,” that economy was one that came with printed money on the backs of broken SUPPLY chains. So ignore covid, and consider the last 70 years of history. 70 years of charted history tell us: NO, a strong economy does NOT cause inflation.
😇 Which frankly, per thesis, makes sense. Kevin’s thesis is: A strong economy encourages deflation, not inflation. Think consumer goods like TVs. Strong economies encourage new makers of TVs like Roku to sell even cheaper TVs with a potentially better service. How do they make money? By competing with cable companies for ad dollars. The consumer then gets a cheaper TV and better experience (deflation with better quality). That’s the point of capitalism: cheaper, better stuff over time. Consider in the 1950s MAYBE we had 1 car and 1 TV per household. Now each room has likely a TV, laptop, iPhone, iPad, you name it.
😇 Why don’t we have deflation though? Because the Fed PRINTS money. They do that to prevent deflation from punishing debtors and rewarding savers. Imagine you bought a house making $100k/year for $500k 100% debt. Then deflation of 30% hit. Your wages would be $70k/year now and your debt is still $500k. Why would you EVER invest in debt? You wouldn’t. That’s bad for the economy. I’m not saying debt is good for you personally, but from an economic and political point of view, you’ll NEVER see the Fed encourage deflation.

---

China Beats 12/15/2023 05:40PT.
✅ Industrial Production YOY November 6.6% vs 5.7% expected
✅ Retail Sales YOY: 10.1% vs 12.5% expected.
😇 Consumption missed in China, unlike America’s retail sales beat. However, the spike in industrial production is exciting chip, car, and solar manufacturers that potentially more demand is coming in from abroad.
✅ “Annual vehicle shipments to hit new high after 27% surge in Nov.” via Automotive News. The China Association of Automobile Manufacturers cited favorable comps and price cuts.
✅Sales in November “surged 30% year on year” per Just-Auto. Exports “surged 58%.
✅BYD Global sales up 65% w/ BEVs up 73%.
✅Geely Auto up 19%
✅Tesla exports down 18% in November.
😇Some suggest this is a start of a longer-term recovery for China. Ken G. of Citadel is reportedly investing heavily in Chinese exposure.
✅MSCI China ETF down at 2016 lows.
✅People’s Bank of China also lowered deposit requirements to buy a 1st or 2nd home in Beijing City (real estate props up a lot of the economy).

---

Costco’s Beat & Special Dividend 12/14/2023 15:56 PT.
✅ Comp Sales Q1: +3.8%, exp: 4.3%
✅ Q1 Revenue: $57.8b, Est. $57.71b
✅ EPS $3.58 vs $3.41 exp.
✅ Announces extra $15 dividend/share (Last special was during covid).
😇 Remember, in the last 2 earnings calls, Costco made it clear: We’d rather cut prices quickly and get more members. Memberships are why Costco does so well – over 90% profit!
✅ ~$3.6b free cashflow in 1 quarter. Wow. Over $1b/mo.
✅⚠️ They included an extra week, which happened to include Black Friday this year. Nice move. That will rig the numbers.
✅ Literally last year was through “November 20” and this year was through “November 26” which happens to include Black Friday, Saturday, Sunday.
✅ Each week memberships amortize to about $20m per week ($1,082m a year). Well, one extra week is about 25% of the increase from 1,000m last year.
😇 Still, adjusting that out, membership revenue is up over 6% (taking out that extra week). That’s not bad!
😇 I guess about 62.5% of their net income comes strictly from memberships. Merchandise only has a gross profit of around 11% and OpEx is pricy for all of the staff (think HR, payroll, worker’s comp, etc.).
😇Memberships costs a small ad team and a few CS reps.
😇They’re shrewd though. All-time high on the stock. Great cashflow. Membership, driven by their “lower cost” approach and willingness to cut (they’re not “proud” like Restoration Hardware, although that could be good for them — separate story,) very impressive. Growing memberships 6% (adjusted) in this economy? Hats off to them.
⚠️⚠️⚠️WARNING⚠️⚠️⚠️
✅2024 expected EPS (ending Aug 31 – Jack’s birthday): $15.55. That’s 40.5x trading with EPS growth in the 8-9% range expected. That’s a PEG ratio of over FOUR!!
😇Yes, a special dividend is nice. That “technically” just gave you an extra YEAR of income. But, is that recurring? Maybe not. And when it’s not, the valuation has major risk. First, it’ll be sitting on a pedestal of a 4 PEG. Yikes. That’s bad enough. Then, if “membership” growth slows OR deflation forces lower gross profit (down from 11%), net income gets hit. Deflation could REALLY hurt Costco unless they can offset with a lot of new customers, especially at this valuation! And they’re embracing it so far.
✅⚠️Dividend record date is December 28, 2023 with a payable date of January 12, 2024.
✅Unless they imply they can keep these dividends up, the stock must adjust down. What’s reasonable for Costco? Maybe a 2 PEG? Is that 50-60% downside? Up to you to decide.
✅Beyond that, how much of Costco has been a safety play? “People have to eat when inflation is high” (probably a chunk of the “fundamental analysis” out there).
I hold no position for or against COST.
Here’s the📝 Costco Earnings Press Release w/ Markup.
[EPS/EPS YOY Growth]
[24/25/26/27/28]

---

Shorting the US Dollar 12/14/2023 15:07 PT.
😇Reasonable argument to short the dollar here.
😇It doesn’t have earnings. So even if things go bearish for the US (say, via a recession), shorting the dollar could win. In theory, the dollar short wins when rates come down and/or confidence in the US economy wanes. But, if the US is the “best of the worst,” the dollar could win. JPM and Fidelity take the view that foreign countries will struggle “more than the US.”
😇Problem: Let’s say Europe, the UK, and China fall into recession and the US avoids a recession. The US may have lower yields, BUT be a safer bet than the others. Hence the risk of FX. Yes, topping out yields should lead to a lower dollar as other countries offer higher yields as they fight higher inflation. But that flips fast (dollar might jump quickly) if those regions go into recession.
😇Example: Legarde spoke and suggested considering a cut in rates was not discussed. The Euro then jumped compared to the dollar.
😇If the Euro now goes into recession and the US doesn’t, that could flip.
😇Personally, I think there’s an easy move down to at least $28.14 (200dma) if not the 100dma here relatively quickly. Shorting UUP or going long UDN could work.
Note: I have no current currency plays.

---

Intel AI Chip. 12/14/2023 13:21 PT.
✅ Intel Meteor Lake family of chips.
✅ First Intel laptop chips using the new “chiplet” design already being used by AMD and Tesla.
✅ Basically you can stack a bunch of chips together to make a chip. Benefits:
➡️➡️ Larger chips costs more.
➡️➡️ Harder to perfect a large chip vs a bunch of smaller.
➡️➡️ Fabrication of smaller is easier.
➡️➡️ Allows manufacturing flexibility for each portion of the chip.
➡️➡️ Harder to make changes or upgrades to one.
➡️➡️ Chiplets allow mitigation of these issues.

Meteor Lake Chips:
✅ 4 parts: GPU, CPU, I/O, System on Chip (Soc).
✅ AI sits on SoC.
✅ Goal: Doing AI via neural nets on your SoC locally rather than only at server. Think Apple NN chips inside A-series chips for iPhones or M for laptop.
✅ Right now, Meteor is setup for Laptops, like the MSI Prestige 16 or Acer Swift Go 14.
✅ Demo basically showed these laptops running LLMs locally. (Imagine running GPT on your laptop, NOT using cloud).
✅The laptop event felt a bit “Apple-attempt’ish.” Camera processing, better blurring, better performance, etc.
✅ Full Liveblog at Tom’s Guide.

Tesla & EV 12/14/2023 12:58PT.
✅ EV inventory in general hits new high at 114-day supply (Cox Automotive).
✅ Nordic investor group of about 15 institutions seeking meeting w/ Tesla over Swedish unionization.

---

Musk must Testify in SEC Case. 12/14/2023 11:40PT.
✅ Musk must testify.
✅ SF judge will require Musk to testify about his purchase of Twitter, Inc. to the SEC.
✅ Musk complained SEC was harassing him and Elon bailed on a meeting he setup with the SEC just days prior, then refused to reschedule.
✅ Judge Laurel Beeler ruled that she sides with the SEC over forcing Musk to testify.
Bloomberg Breaking News.

---

Rising Credit Delinquencies are Likely Hurting Fed 12/14/2023 11:27PT.

✅ Obviously much lower than the 4-5% we saw in the 2000s or even 1990s, but now we’re knocking on the door of 3%, above anything we’ve had since ~2013. That’s a 10-year high.
✅ This hurts consumer’s ability to keep spending and keep the economy out of recession. Remember, the consumer is about 70% of the economy.
😇 We see this as the Fed realizing the lagging impacts of high rates are starting to break pre-covid levels and break trends. That is risky as it puts us into recently unprecedented territory. We know consumers can bear 2.5%~ today. Can we bear 4% again on delinquencies? We have no idea.
😇 This is another reason for Fed caution.
Play with the chart, here:📝 Saint Luis Fred Delinquencies.

---

Putin: Seeking Agreement on WSJ Reporter 12/14/2023 10:57PT.
✅ Putin said he wants an agreement on detailed reporter.
✅ Putin said, “It is not that we have refused to return them, We want to reach an agreement, and these agreements must be mutually acceptable and must suit both sides. We have contacts with our American partners in this regard, and there is an ongoing dialogue.”
✅ Evan appeared in court for an appeal and it was rejected on 12/14. He will wait until his trial on Jan 30th which will be 10 months since the arrest. First American charged w/ espionage since Cold War.
😇 Russia wants something good out of this deal. Putin knows what he can get based of 2022’s precedent. If you recall, on December 8, 2022, Russia and the United States conducted a prisoner exchange, trading Brittney Griner, an American basketball player, for Viktor Bout, a Russian arms dealer. Putin likely wants another “slam dunk” deal.
😇Biden may be vulnerable to Trump attacks here following the $6b Iranian negotiations prior to Hamas’s attack on Israel, which is believed to train in Iran and receive funding from them.
Per WSJ.

---

LAYOFFS at Enphase 12/14/2023 10:20PT.
✅ Reports showing up on TheLayoff.com of a large layoff at Enphase. Potential 300/2260 people or about 13%.
✅ Hearing rumors.
✅ Unconfirmed.
✅ Co-founder of Enphase Raghu Belur says: “However, we could be starting to see some of the bottom”
✅ California 1-2Q from bottom. Euro stabilizing already. France strong. Germany modest recovery. CA down 80% from peak. CA is 80% of US solar market. CA utilities expected to jump prices 13% in 2024; 😇could boost solar adoption.
✅ “2024 will be the year of recovery”
✅ “I don’t see the market getting worse, but I don’t see it getting dramatically better. We won’t be back to the 2022-type growth. That will probably take an extra year. But 2024 you see things starting to turn around and slowly recover.”
😇 Remember, stock market tries to price 18-mo ahead sometimes. If 2025 is suspected to be back to 2022-type-growth, true euphoria for solar may come in Q1/Q2 of 2024, well-timed w/ rate cuts.
😇 Cutting costs while indicating a near bottom w/ a return to 2022 sounds bullish for the stock (sad for employees of course). Unless the 2025 comment is BS, which is also possible.

---

Latest GDP estimate is OUT! 12/14/2023 10:01 PT.
✅ Atlanta Fed Latest estimate: 2.6 percent — December 14, 2023
✅ Up from 1.2 percent on December 7.
😇 Propped up by retail sales this morning. Mostly positive here for continuing to avoid a recession & supporting job growth. Pushed yields up to 3.92% on 10 year.
😇 Did temporarily cause stocks to pull back under the fear that this could pressure the Fed to stay higher. Remember: A strong economy does NOT mean high inflation. They are related, but not linked.

---

On-chain Real World Assets [Crypto] 12/14/2023 9:21PT.
✅ Tether is the 19th largest sovereign holder of US Treasuries, crypto as a whole is 16th.
✅ Tether/Circle pays 0% interest on your stablecoins while collecting 5%+ on treasuries (at the margin).
✅ Major developments are ongoing in DeFi to bring treasury yields on-chain to new stablecoins.
😇 Many crypto projects do not make sense at 5%+ risk free rate.
😇 Bringing treasury yields on-chain to become the base of crypto potentially solves this by offering the yield to competing stablecoins.
✅ ”RWA” only makes up approx. $6B out of $120B+ stablecoin market cap.
😇 Tether and Circle’s core business is at risk due to this financial innovation. But, they have the reputation and track record.
😇 Crypto is looking to be gradually more US dominated as almost all stablecoins are in US treasuries held in US banks.

---

Mortgage rates. 12/14/2023 09:07PT.
✅ Mortgage rates just fell below 7% for the first time since August.
😇 Looks like Q3/Q4 was buy time after all.

---

2nd Update on Crypto Ledger Cold Wallet Exploit 12/14/2023 08:56PT.
✅ Ledger Connect Kit infected, impacting multiple crypto websites frontends.
✅ A malicious popup blocks over the normal wallet connect.
✅ Connecting your wallet to ANY DeFi app may put users at risk.
✅ Exploiter has stolen $500K so far.
✅ Tether has frozen the exploiter’s wallet.
😇 Crypto’s infrastructure is still very juvenile, even cold wallets aren’t always safe.
✅ Ledger is currently replacing the malicious file with a genuine version.
✅ Funds are safe if you did not interact with anything.

---

Rumors of GPT 4.5 12/14/2023 08:49PT.
✅ Rumors of GPT 4.5 thanks to potentially leaked screenshots are circulating.
😇 Some say it’s fake.
😇 Some say OpenAI is trying to pump their private stock sales (some say up to $94b valuation – crazy IMO with the competition they face. I expect access costs to these LLMs to plummet overtime.
😇 That will necessitate innovation. Betting that only OpenAI can innovate is very risky.
🍟 Potentially big benefits of 4.5 though, if it can truly work on new data without training. That type of innovation should be rewarded. We’ll see. I’m cautiously optimistic. And I’ll stick with my chips for now.

---

10-year about to break 3.9% 12/14/2023 08:32PT.
✅ 3.902%
😇 Institutions are waking up to realize the “bottom” in treasuries may be behind us. Money markets would, if true, present a growing/larger opportunity cost. Nearly the same yield could be achieved in treasuries PLUS principal appreciation & locked in yield over time. $TMF rallying (leveraged ETF; risky).

---

SEC Chair Gensler on AI 12/14/2023 08:20PT.
✅ Gensler on CNBC talking.
✅ Keep investor interest ahead of advisor and ahead of brokers. Can’t let AI flip that.
✅ Dominant or single-source models will come. We largely have one search engine we resort to. “I think we’ll end up with a very short list… of models.”
✅ If markets rely on “one base model, that could lead to real problems in finance and a future financial crisis.”
😇 Basically saying there’s a risk of an AI monopoly causing a recession/financial crisis.

---

Chair Gensler JUST responded on $BTC ETF 12/14/2023 08:20PT.
✅ It’s going through the process right now.
✅ We have in the past denied these [ETFs].
✅ But the courts have weighed in, so we’re taking a new look at this taking into account those new rulings.
✅ Protecting the public is key. Anti-money laundering rules are important.
✅ You’re still lacking a lot of fundamentals on these projects and the exchanges/brokers are commingling and doing things we do not allow elsewhere.
😇 Suggests they can only do what Congress or courts authorize them to do. Referring to October, 2023 Grayscale victory against SEC, suggesting SEC was “arbitrary and capricious” in rejection of Grayscale etf.

---

GM Cruise lays off 24% of Workforce 12/14/2023 08:15PT.
✅ Yesterday we heard about 9 Cruise executives being fired. Today, it’s been updated. 24% or 900 staff, fired.
✅ Notified via email. “In a few moments, you will receive an email letting you know whether or not you are affected by this staffing reduction.”
✅ We are ceasing work on the Origin MY24 but not losing sight of our work on future programs. This is very different from our prior plans to expand into more than a dozen new cities in 2024.
✅ Up to 16 weeks of pay for those laid off.
✅ You have 2 hours to say goodbye, then email will be cut.
Full Story on CNBC.
😇 Ending work on MY24 plans signals failure.
😇 Autonomy is hard. Tesla appears 95% of the way there with a highly-functional system in any area, unmapped. Fantastic system. Everyone should try it.

---

The End of “Higher for Longer.” 12/14/2023 07:57PT.
✅ Bloomberg’s Simon White calls the Fed’s decision yesterday “the green light for end to global higher-for-longer.”
✅ Says Fed has “liberated other DM central banks from maintaining higher for longer”.
✅ “The bank must be pretty sure inflation is done and dusted to allow another significant easing in financial conditions.”

😇 Very interesting conclusion on “bank must be pretty sure inflation is done.” I agree. Rising stocks/falling yields would promote growth. If Fed was concerned that would actually induce inflation, they’d hawk. Certainly wouldn’t be this dovish, at least.
😇 ECB disagrees w/ this messaging though, signaling “no” discussions on cuts yet.

Ledger Crypto Hack 12/14/2023 07:42PT.
✅ Ledger USB hardware wallet is sold as a secure, offline environment to give you “peace of mind and complete control over your assets.”
✅ Ledger stores your private keys.
✅ ⚠️New exploit may allow hackers in DeFi to steal your private keys when your hardware Ledger connects to the internet. Then, potentially train your assets.
✅ CEO warns on Twitter “do not interact with ANY dApps until further notice.”

✅ Basically, if you interact with certain websites, a pop-up triggers a token drainer.
✅ Ledger is working on a patch.
😇 This reiterates the beauty of the Bitcoin ETF. Anyone owning the Bitcoin ETF (or any future crypto ETF), would presumably benefit from SIPC protection up to $500k for their assets.

RaboBank Bear “De Groot” Sad over FOMC 12/14/2023 07:31PT.
✅ Fed “seemingly ‘pivoted’ in a dovish direction”
✅ Powell did NOT push back against market expectations of cuts early 2024.
✅ Fed “change their minds halfway through meeting.”
✅ ECB used to rely on the Fed’s hikes to also soften Eurozone. Maybe now, with softer Fed, ECB may have to hike.
✅ Bank of England faces similar challenge.
✅ Market pricing will not necessarily worry policy makers. Real rates are positive and may cause issues IF inflation expectations keep falling.
📝 RaboBank Bear PDF 12-14-2023
😇 Piece felt a bit bitter, but makes fair argument about ECB.
😇 Biased Tweet below.

---

Dec 2024 Rate Projections as of Now 12/14/2023 06:22PT.
✅ Dec 2024 Projection: 5.3% chance of 8 rate cuts.
✅ Dec 2024 Projection: 34.4% chance of at least 7 rate cuts.
✅ Dec 2024 Projection: 71.5% chance of at least 6 rate cuts.
✅ Dec 2024 Projection: 92.6% chance of at least 5 rate cuts.
😇 Wow
Note: These are cumulative. So 8 cuts is the smallest chance. 5.3+29.1% = 34.4 of at least 7 cuts. Updated at 12/14/2024 11:55.

---

Retail Sales & Import/Export Prices 12/14/2023 05:37PT.
✅ Retail Sales Advance MOM beats 0.3%, exp. -0.1%.
✅ Retail Sales Advance Ex Auto MOM beats 0.2%, exp. -0.1%.
✅ Retail Sales Advance Ex Auto and Gas MOM beats 0.6%, exp. 0.2%.
✅ Initial Claims 202k vs 220 exp.
✅ Continuing Claims 202k vs 220 exp.
✅ Import Prices MOM: 1876k, exp 1879k.
✅ Import Prices Ex Petrol MOM: 0.2%, exp -0.2%
✅ Import Prices YOY: -1.4%, exp -2.1%
✅ Export Prices MOM: -0.9%, exp -1.0%
✅ Export Prices YOY: -5.2%, -5.2% exp
😇 Look, if the jobs market rolls over, we’re screwed. Until then, we WANT better sales, weaker prices, and less joblessness. Today’s data gave us ALL THREE of those. That’s GREAT! Stronger economy, less joblessness, and prices that aren’t running away.
✅ 10 year pops about 4 basis points from 3.93’ish at a low to 3.973%
✅ Atlanta Fed real GDP comes out later today.

---

European Central Bank 12/14/2023 05:25PT.
✅ Holds on rates at 4.50%. Inflation “gradually expected to decline” through 2025. 😇Patience in fighting; bullish.
✅ Inflation to average 2.7% in 2024, down from 5.4% in 2023.
✅ Flexibility in QT & growth to remain subdued.
✅ Economy recovering due to growth in real wages.
✅ Did not discuss rate cuts at all; more data coming in 2024. Waiting specifically for wage data.

---

Even Nick T (NickiLeaks) is Surprised. 12/14/2023 02:04PT.
😇 It feels like even Nick T. was surprised by the Fed’s aggressive flip today. It also started w/ projected 3 rate cuts vs 2. (Markets expected 4 rate cuts, but thought the Fed would only tell us about 2. Telling us about 3 was dovish).
😇 I believe Jpow is very concerned about unemployment hitting us hard and fast.
😇 Either way, Nick T is right. Big FLIP by the Fed. Almost feels like the flip we saw in Dec 2021 (bearish flip).

😇 Yes, potentially this commenter is correct. If they mention they’re starting to see joblessness jump, the Fed may self-induce a recession (leading many to quickly cut jobs, leading to a plummet in consumption). Jerome Powell was very careful today NOT to suggest businesses were cutting jobs, just that the supply of workers was finally coming into better balance with demand. However, he clearly reiterated the balance between maximum employment and stable prices. This indicates Jerome Powell is JUST as concerned about inflation as he is about jobs. Which means the concerns are rising for jobs.

---

Krelim & Putin. 12/14/2023 01:33PT.
✅ Russian economy to grow by 3.5% in 2023.
✅ Inflation to grow closer to 8% this year.
✅ “No need” for additional mobilization. 😇Two days ago the WSJ suggested Putin had lost 90% of his prewar army (since then though, they’ve been recruiting/loosening standards, of course).
📝 WSJ 90% Loss.
✅ US 10-year now down to <3.94%
–Refinitiv & Bloomberg & WSJ.

---

Swiss National Bank Drops wording on Future Hikes as Norway Hikes. 12/14/2023 00:36PT.
✅ Outlook remains subdued. Global economic growth was stronger than expected Q3.
✅ Main risk is more pronounced international slowdown. Inflation may rise in coming months. Inflation still too high (😇even though 2023 inflation is expected at 2.1% per their forecast).
✅ Real estate weakened considerably.
✅ 2024 GDP projection 0.5-1%.
✅ Unemployment likely to rise gradually.
✅ Norway may lower sooner than expected, but did raise rates to 4.5% (surprise; expectation was stay at 4.25%).
–Refinitiv & Bloomberg.

---

Taiwan Central Bank sees Slowdown. 12/14/2023 00:24PT.
✅ Keeps rates stable at 1.875%.
✅ Uncertainty around China (biggest trading partner; 25.2% in 2021) adds risk.
✅ CPI 2.46%, core 2.56%.
✅ Chinese slowdown may affect global economic momentum.
✅ 2024 GDP forecast 3.14%.
–Refinitiv

---

6x 25bp Rate Cuts NOW Priced in. 12/13/2023 23:56PT.
✅ 10-year continues to fall. 3.96%.
✅ Gold $2,046.
✅ March 20, 2024 Fed rate cut of 25bp at 92.1%.
✅ 18.6% of that 92.1% prices in 50bp of cuts by March.
✅ 20.7% chance of January 31, 2024 first cut.
😇 IMO January cut may require a negative Dec jobs report (would be odd given the 199k gain; above 187k trend last month).
😇 Note though: On September 18, 2007, the Fed cut rates 50bp, 25bp more than expected. Fed JUST hit first NEGATIVE jobs report and fears were growing about BOTH inflation (running 3.9-4.1%) and a mortgage/credit crisis brewing. 📄2007 Rate Cut Euphoria (PDF).

Jerome Powell suggests this time is different, why?
➡️➡️Then, the dollar fell (same as today).
➡️➡️Gold started rising.
➡️➡️Inflation was a predominant concern.
➡️➡️Only thing propping up economy was jobs. With jobs rolling over in 2007, pain was inevitable.

😇So, can we avoid 2007 again? Yes, if jobs keep growing. Hence, Jerome Powell’s aggressive early signaling of cuts. He’s finally grown concerned the Fed has gone too far. If the Fed doesn’t start relaxing, they heavily risk “overshooting” and “breaking” something.

---

Manhattan Rents plummet 9.1% since record high 12/13/2023 21:20PT.
✅ Rents hit record of $4,400 in July/Aug (average per Douglas Elliman Real Estate & Miller Samuel Inc. via Bloomberg).
✅ Rents up 11% from 2019.
✅ Rents down 9.1% in “beyond season” decline.
✅ 14th-month of declines in rents & increases in vacancy.
✅ Some suspect spring will be more stable.
😇 Some fear that supply may rapidly increase in spring as potentially rates start lowering and supply increases. Will that be offset by more buyers/renters? Who knows.

---

Blackrock alters Bitcoin ETF application 12/13/2023 21:02PT.
✅ Blackrock changed the way its ETF expects to make (create/redeem) ETF shares. Basically, if you want to buy $100 worth of say, 20x $5 stocks, the ETF’s “authorized participant” buys the 20x $5 stocks for you, then takes your $100, and gives you 1x ETF share representing say a $100/share etf.
✅ With Bitcoin, this is problematic. It means smaller “APs” have to trade Bitcoin, which because of its volatility, risks more complexity and volatility.
✅ Instead, Blackrock wants to create a “prebuy” system. This would allow larger market makers to take the risk of Bitcoin volatility and enable smaller APs to create/redeem ETF shares in cash, rather than in Bitcoin.
😇 This is positive. This addresses market manipulation concerns the SEC has. It may not solve them, but markets that trade thinly are ripe for manipulation. If you have, say, 10 Bitcoin market makers, they will all compete to provide the “best” price for Bitcoin and arbitrage down any spreads they can.
😇 This could actually make trading Bitcoin substantially cheaper.
😇 For what that could hurt say Coinbase’s revenue, they might makeup on Bitcoin custody, though. Coinbase is up 347% year to date.

---

UK economy shrinks 0.3% in October 12/13/2023 20:41PT.
✅ Markets pricing in 100bp of cuts by Dec 2024 for UK.
✅ Mild recession being warned.
✅ Growth was 0.2% in Sept.
✅ Weakness “widespread across services, construction, manufacturing.”
✅ Eradicating inflation deemed “worth” a shallow recession.
✅ Bank of England warns 50/50 shot a recession in 2024.
😇 Bolsters case for US exposure.

---

Japanese stocks fall 12/13/2023 20:03PT.
🔴✅ Nikkei 225 Japan down ~1%.
😇 Follows fears that wage growth is not strong enough to support true expansion.

---

Buffett adds to oil. 12/13/2023 19:32PT.
✅ Buffett added $590m of Occidental Petroleum this week. Same week Occidental agreed to buy CrownRock LP.
😇 Interesting Buffett doubling down here. Most revenue still oil even though they’re investing in carbon offset/capture tech. Here are the numbers from 📄10Q 2023 Q3.

Occidental Petroleum.
✅ Oil $3.997b US revenue + 742m International.
✅✅ Oil production via primary production in Texas, New Mexico, and Colorado as well as in Gulf of Mexico. Internationally, UAE/Oman/Algeria.
✅ Natural Gas total $510m
✅ Gas revenue total $308m
✅ “Other” 37m
✅ Chemicals: $1.308b
✅ Midstream/Marketing: $666m
✅✅ Optimize value to Occidental subsidiaries and third parties.
✅ Eliminations -$297m.
😇 Basically, let’s be real: it producers oil and oil-related products. It makes 3x the money they LOSE on “capture tech” simply by making its oil production more efficient.
😇 Implies Buffett does not believe the EV transition or peak-oil fears are a reason to limit exposure to big oil, for now.
Some segment info from 📄10K.

---

Marc Benioff, CEO of Sales Force, has been dumping. 12/13/2023 19:19PT.

✅ Since July, he’s been selling about 15k/stock per trading day.
✅ ~$3m worth PER day.
✅ Zuckerberg at Meta sold $185m worth of shares in November (first in 2 years).
✅ Bezos has not sold since 2021.
✅ AirBnB cofounder sold ~$1b worth by July.

---

Democrats consider Border Aid / Ukraine Trade. 12/13/2023 19:08PT.

✅ NYT reporting Biden & dems are considering restrictive immigration aid and may make “significant compromises” after republicans blocked a $111b spending bill last week, which would have included $50b in security assistance to Ukraine.
😇 Remember DOD funding bill just provided around $800 million; as expected, a drop in the bucket of what’s truly desired for Ukraine by supporters.
✅ R’s demand increasing difficultly to declare asylum and want to return to “wait in Mexico” plans Trump used (forcing people to stay in Mexico while their case pends). Title 42 expedited removal may also come back.
😇 No matter which side you’re on, this is the point of Congress. Dysfunctional until a compromise is reached. Feature; not bug.

---

US Government Seeking Aircraft-Carried EMP Weapon 12/13/2023 18:57PT.

✅ US government 📄posted “request for information” “looking for market research” “for available Electromagnetic Pulse (EMP) solutions towards countering multiple Unmanned Aircraft Systems (UAS). EMP solutions could be ground and/or aerial based that provide effective mitigation against […] groups 1, 2, and smaller group 3 aircraft. 😇Why don’t we already have this.

---

10-2 inversion -37.8bp, getting closer to 0! 12/13/2023 18:52PT.

---

10-year breaks 4% 12/13/2023 17:34PT.

✅ Gold and Silver rallying. 😇Possible as dollar weakens to see precious metals run. Dollar weakens as rates fall, usually.

😇 Note: As treasury find their footing, keep in mind that any rate above 3.1% (you’re over year CPI) is a positive real yield which exerts downward pressure on the economy. Could limit stock growth. Bigger spread, more pressure. Remember CPI around 3.4% with 10-year at 5%? Market wasn’t happy! Check October 2023.

---

Tesla, Crypto, & More. 12/13/2023 17:30PT.
✅ Cybertruck has front, heated bumper camera.
✅ CyberTruck using Wrangler Territory RT tires ($470 each). Part 1250242-00-A. 285/65R20, Goodyear
✅ Parts catalog for CT: https://t.co/TP5CfnUiAW
✅ Crypto to be recognized as net income when fair value changes within quarter. Could bump Tesla net in late 2024 when the accounting rule implements. 😇Nominal, reasonable change. Good for encouraging BTC adoption at corporate level for treasuries.
✅ Uber platform shows $3k discount if you buy a Tesla for Uber driving. Must take delivery Dec 2023. Receive $2k when you complete 100 trips. Diamond Drivers get $3k when you complete 100 trips.
✅ Ford says Cybertruck-stuck-in-snow-video was not staged by Ford.
✅ Yellen says we should have “no reason for investors to feel nervous about US debt.”😇Remember, Treasury Secretary IS a political position. So pro Biden is a must. Eventually, the bill will come due. Soon? We don’t think so. Eventually? Probably. Maybe 100 years out though.

---

Defense Bill Passes. 12/13/2023 16:54PT.

✅ Senate passes Defense Bill
✅ 2022 funding was $740b.
✅ 2023 funding was $856.7b.
✅ $886b just passed.
✅ 5.2% pay raise to military personnel😇Go veterans!
✅ 87:13 vote
✅ Expands funding for hypersonic and nuclear weapons to compete w/ China/Russia.
✅ Extends through 2025 warrantless taps of foreign individuals outside US.
😇😇 May have targeted Americans and been abused by FBI via foreign-contact loopholes (FISA Section 702).
✅ Includes $800m for Ukraine (😇Far cry from their ask of tens of billions)
✅ Josh Hawley (R) was the biggest opponent because it failed to compensate victims of his state for radiation exposure.

---

California orders spending Freeze. 12/13/2023 16:04PT.

✅ Newsom orders spending freeze after $68b deficit.
😇 Remember the stimulus checks he sent to families making up to $500,000 called “inflation relief stimulus checks”? oops.
✅ Original projection was a $14b deficit. This is ~5x that.

---

GM Just fired 9 Executives in Cruise autonomy. 12/13/2023 16:02PT.

✅ Cruise fired 9 top executives at Cruise. Including COO Gil West & head of legal. Trying to regain trust of regulators after dragging person 20 feet in video they allegedly cut up to mislead investigators. 😇We thought Cruise had a shot of being “mapped/lidar” competition against Tesla. We were wrong.

---

Mike Wilson / Morgan Stanley on Fed Rate Cuts. 12/13/2023 15:39 PT.

✅ Mike Wilson releases his bearish response to the FOMC.
✅ Believes market rallying due to rate cut expectations & looser financial conditions.
✅ Earnings revision breadth remains negative for S&P & Russell 2000.
✅ Bearish into 2024.
✅ Weakness in PPI will actually HURT businesses in 2024. Though argues some biz may raise prices in 2024 per surveys.
✅ Small cap value and small cap growth can underperform large cap. Large cap growth is usually the best performing category after the first cut. 😇Apple?
✅ Bumpy inflation.
✅ $800b to go in reverse repos. Will support asset prices in short term (reiterating his bear argument by saying Repo is one of the things propping us up today).
✅ Speculates inflation will reinflate due to surveys that businesses are optimistic again they can raise prices. 😇BUT, that survey does not say how much. 1% raise is not a big deal.
😇 Likely fades into the background of election campaigning in 2024.

📄Mike Wilson’s Full PDF.

---

House vote 221-212 | Open Biden Impeachment Inquiry. 12/13/2023 15:20 PT.

✅ Hunter Biden didn’t show up to testify before republicans today.
✅ Shortly after, Biden impeachment inquiry opened.
✅ Dems say it’s a political stunt to support Trump 😇Many republicans see supporting Trump as an easy way to inherit his voting base.
✅ Johnson: “The impeachment inquiry is necessary now.”
✅ Hunter says Joe Biden wasn’t involved financially.
😇 Likely fades into the background of election campaigning in 2024.

---

Tesla Recall. 12/13/2023 15:12 PT.

✅ Tesla’s 2m-vehicle recall will be a mere software update. 😇I will likely skip that update and stick with less annoying autopilot nags.
✅ Recall a free update to add more alerts and controls “encouraging drivers to remain attentive.”
✅ Ironically bullish for Tesla. Makes it much harder for competitors to have systems people don’t hate or can rely on.
😇 Biased. We own Tesla.
✅ Unclearly exactly how, but mention was made about people having their hands off the wheel.
😇 Likely simply going to require more aggressive eye contact w/ road.

---

Specific Stock Update. 12/13/2023 15:12 PT.

✅ Apple hits new high: $197.96.
✅ Adobe falls.
✅✅ 2024 Rev $21.30B-$21.50B, est $21.74 (1.6% miss).
✅✅ Q1 Rev $5.10-5.15b vs $5.17b expected. (9 basis-point miss). WARNS AI will “take longer” to see results 😇hence servers, IMO).
✅ OpenDoor risk rallying 19.48% on day due to rate cut expectations.
✅ Enphase same at 7.8% on day.
✅ Peloton jumps in at 8.79%
✅ Affirm up 12.35%, 😇odd due to Etsy warning today and 11% staff layoff.
✅ Sofi up 12.45%
✅ Bloomberg Live Pulse thinks S&P will hit 4,877 by year end. That’s up 3.6% more. 12 trading days left in year.
✅ Southwest Airlines cutting ads on X. “Our spend is down significantly.” “We are seeing fewer comments on X from customers as I see more folks just kind of deviate from the platform.” Still evaluating though.

---

Jeffrey Gundlach Bond Kind Prediction. 12/13/2023 14:50 PT.

✅ Treasuries in low 3% (25% upside or more in bond value) in 2024.
✅ Yield curve de-inverting.
✅ Bond rally coming.
✅ “I believe that we’re going to see the yield curve de-inverting, Gundlach said.
“I think we will still have bonds rallying. We’ve broken down the trend lines
and there’s a lot of room below it.”
✅ Predicts recession 2024. 200 basis points of cuts coming in 2024.

OPINION: Half Right maybe Completely.
😇 Fading risk euphoria early 2024 (upon first cuts and money market deployment) may make sense while picking up bond exposure.

---

The Federal Reserves 12/13/2023 FOMC Meeting. 12/13/2023 14:47 PT.

✅ Jerome Powell sees: all 3 categories of inflation falling. 1) Goods, 2) Housing services 3) Services ex-housing.
✅ Sees no recession currently.
✅ Responds to high wages with “real wages are turning positive” so we hope they can start affording the higher prices and their “mood” might be helped (referring to the difference of economic pessimism and improving data.
✅ 10-year edging on 4% at 4.024% down 18.2bp.
✅ Fed HAS started talking about rate cuts.
✅ Fed on average sees 3 rate cuts in 2024.
✅ Market expected Fed to reveal 2 rate cuts in 2024.
✅✅A t the same time, market expects to get 4 rate cuts in 2024.
✅ 2-year at 4.43% down 29.8 basis points.
✅ Market now sees 60% chance of rate cut in March 2024.
✅ Wages growing at roughly 4% per Powell. Need to be closer to 3%.
✅ SEP should not be considered as signaling weakness (per Powell).
✅ Reverse REPO facility has $800b left to contract. Jerome Powell mentioned we will stop QT when we get closer to a level above where we previously were. -$800b would put us around a $7T Fed balance sheet. Unclear if they’ll tighten more than that. If they stop there, QT might end between July-September 2024.
✅ Stronger growth is “good for people.”
✅ Core inflation HAS been sticky, but we’ve seen real progress.
✅ Must cut prior to 2% inflation, otherwise you would way overshoot.

OPINION: What Today’s Meeting Means
😇 Two years ago, at the Fed 2021 December FOMC meeting, the Fed went dirty and dark. So much so, in January 2022 I freaked out for 54 minutes on a livestream reviewing the December 2021 minutes.
😇 Today, the Fed has flipped, a big Merry Christmas.
😇 Money market assets (in excess of $6.1 TRILLION up from $4 TRILLION prior to covid), are likely going to start *considering* a new home.
😇😇 “New home” could be: 60/40 stock/bond portfolio.
😇😇 Speculative assets could see euphoric rally.
😇😇 SOME (mostly non-covid-boom markets – think Austin, Boise, Utah), are starting to see substantial real estate speculation (think California). Buyers w/ hard money loans grabbing ‘deals’ now, hoping for a ‘pop’ in the Spring. DO NOT OVER PAY! Be careful.
😇 Yield curve -45bp, trending towards uninversion. Usually “uninversion” is the dangerous part (as we saw from July through October).