How to Navigate Lockdown 2.0
216: COVID is back, Russian Hit Jobs, US Election
Today is one of those days that I love following financial markets and geopolitics. We are living in some truly wild times with unprecedented developments and volatile outcomes — anything can happen instantly.
A rogue private military contractor can get shot out of the sky, pandemic lockdowns can come flying into view for yet a second time, riots over the upcoming election could surface overnight, markets could god dump or god pump — fueled by overvalued semiconductor companies benefitting from a global supply crunch and heightened geopolitical tensions.
It’s becoming clear that many of the predictions and concepts we cover in Arb Letter are in fact coming to fruition.
Things are accelerating quicker than even I thought was possible — the times we live in are unlike anything even our parents have seen in their lifetime. Corruption at mass scale, plain distractions and diversions in plain sight, and propped up markets and systems that are becoming more erratic by the day.
So — lockdowns are coming back. It’s true — if you’ve been paying attention you’ve picked up on it’s beginnings however subtle. More and more people wearing masks in public, media coverage starting to ramp up again, new updates from federal organizations and honest transparent ones like the CDC.
They’re going to run it back folks.
How did you fare the first time around?
Were you fully onboard with the “thing” or were you questioning it the whole time?
Were you able to see past the fear and hope towards what the true motives and end goals of tyrannical mandates was?
Difference this time — and I mean the second time — is more people have woken up. Even more people are fed up with the government and the way the pandemic was handled. Throw on top of that the spice and controversy surrounding the 2020 election and current state of the US and there are quite a few potential catalysts for an explosive rest of 2023 and the year ahead in 2024.
Pivotal stuff is going to happen — fortunes will be made and lost — eyes will be opened, allegiances will shift, and the country may just see a jarring economic pullback or domestic crisis fueled by either political fervor or rage against unjust policies.
Today we’ll cover:
Lockdown 2.0s and the Resurgence of Covid
Stock Market Action (Crypto, NVIDIA, Tech, etc.)
Putin’s Revenge on Wagner Commander Prigozhin & Global Implications
Political Overview - Tucker Carlson/Trump Interview & GOP Debate
The goal of the post is to provide useful context for you to make up your own mind on how things are trending. The prospect of potentially having another series of lockdowns due to Covid 19 could be an enormous opportunity to get ahead or it could prove to be a detrimental to people who choose to get caught up in the hysteria and hype that is once again being ruthlessly shilled.
We’re entering a new phase in the “grand deceit” stage we’ve been in for 3 years. Those who managed to see the light during the last lockdown and years of political strife, will be better prepared to succeed in the new coming environment.
Regrettably those who didn’t and those who refuse to pause and reflect on what their environment is telling them — will fall far behind in most disciplines of life. You simply cannot operate your day to day life efficiently if you refuse to acknowledge the absurdity of the times we live in.
Being a normie has never been more dangerous.
Nvidia Absolutely Melts Faces
Markets have been highly volatile over the last two weeks with crypto softening substantially and equities losing some of their steam — particularly tech names.
But our favorite semi company just saved global markets from implosion yet again.
NVDA 0.00%↑ Nvidia decided to absolutely melt faces with blowout record earnings yesterday after hours sending the stock up between 6% and 9% in after hours trading.
NVIDIA (NASDAQ: NVDA) today reported revenue for the second quarter ended July 30, 2023, of $13.51 billion, up 101% from a year ago and up 88% from the previous quarter.
GAAP earnings per diluted share for the quarter were $2.48, up 854% from a year ago and up 202% from the previous quarter. Non-GAAP earnings per diluted share were $2.70, up 429% from a year ago and up 148% from the previous quarter.
“A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and CEO of NVIDIA.
We put on some call options towards the end of the day (they were expensive) so should see some solid money in the morning alongside my core position I have held since 2020 — which is something I have talked about in Arb Letter before.
My calls won’t be in ITM (in the money) this morning as my strikes are quite high — around $540/$550 and some absolute YOLO send degenerate ones at $700, but with any luck I will make some decent coin on the lower strike options. Outside the options I have a large position in common shares that is now up well over 220%.
For more ideas and “picks” check out our deep dives — while I am not a formal financial advisor, every now and then I cover a huge winner like NVDA 0.00%↑ Bitcoin, Ethereum, Olin, etc. at the time when you should be getting in — more to come on that front as I look to build out our markets research team at Arb Letter.
Ignore for a minute all of the absolute craziness surrounding markets right now - fed policy, China, inflation, consumer trends, deleveraging, etc etc. In a vacuum is it really that surprising that one of the largest semiconductor companies is outperforming all other assets? That their chips and GPUs are some of the most sought after commodities in the world right now? Sure guns and bullets are valuable to Ukraine but who’s going to power next generation technology? Next generation fighter jet consoles or HUDs? New supercomputers to aid AI? During a time when there are shortages from supply chain bottlenecks and from regulatory embargoes or sanctions?
Definitely not Luckin Coffee!
It’s funny - and I’ve seen this opinion online many times before - I genuinely do think games like Age of Empires or Empire Earth (along with my upbringing/schooling/professional experience) formed an inherent sense of where value lies during times of conflict.
What happened when you cut off your opponents or Allie’s access to uranium or gold during times of conflict? The price skyrocketed and engagements occurred around unfettered domination of those very resources and locations on the map. Nothing else mattered because not only did those resources power your economy — but they also allowed you to slowly starve out your opponents and competitors — denying them long enough access and you win in the long run
Forget technical analysis, charts, DCFs, comps, forex guru takes, CNBC opinions, etc etc. it’s basic supply and demand:
Annual semi sales grew from $139 billion in 2001 to $573.5 billion in 2022, an increase of 313 percent. Over this same period, unit sales of semiconductors increased by 290 percent, reflecting the increased demand for semiconductors throughout the economy (Semiconductors.org)
Countries and companies can’t get enough.
Forget all the other junk - just think simply - in a world where countries allegiances are shifting, minerals/resources are being hoarded, cut off, or monopolized, AI and automation are growing, social unrest is stewing, war is raging, and fiat economies are shaky — what has value?
Well clearly chips that drive computing ability, advanced technology, and entire economies.
Nvidia was an obvious play from the beginning of all the global madness we are seeing — those in denial or those calling it a ponzi, fail to grasp the seriousness of geopolitical relations right now. Expect other stocks to perform similar mind bending pumps despite deteriorating macro.
Tech is crucial, gold and other stores of value will continue to appreciate, crypto is interesting since it offers advantages that tradfi vehicles do not (scarcity/security), and companies like Nvidia that play a central piece to the changing world order will continue to thrive.
Covid Is Back
Lockdowns are coming back baby — and so are new rounds of vaccines and boosters. It’s pretty mind blowing watching this play out while so many people are falling back into the same trance.
If you missed it the first time fine — but twice?!
“There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again.”
―George W. Bush