NVDA: Bye or Buy?

Good morning!
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The markets are red again this morning which makes sense given the crosscurrents.

Here’s my playbook.

NVDA: bye bye or a buy

What’s making headlines. The US government is restricting chip sales to China because they are concerned that chips made here could power Chinese weapons platforms against us.

Two thoughts. 1) About freaking time and 2) so what. China’s already stolen everything it’s gonna steal and then some. Chips are not even 1/10th of it … engines, fuel tech, data tech, manufacturing techniques, fiber construction and more. Chinese sales or not, this isn’t going to change.

Why this matters. 90% of all the data created in human history has been created in recent years. It’s going to accelerate. Chinese sales or not, this isn’t going to change.

Blood in the water. There is no doubt in my mind that Wall Street will push this stock as low as it can, possibly even under $100 a share using every trick in the book to scare out the weak money. Sharks feed when the meek retreat.

Here come the downgrades. Bernstein is out of the gate already with a trimmed price target. More will follow. Behind the scenes, they’ll be buying.

Trade idea. Buy $100 puts 6 or so months out. Use any profits to pick up more shares as prices drop. Rinse, repeat. Or, chase any upside rebound buying this morning for a quick – and I mean quick – scalp if there is one.

The Fed is a wrecking ball

Powell is as wrong about rates and labor as he was about transitory.

This isn’t a popular opinion as you might imagine. Wall Street fawns all over the Fed and so does the mainstream media which seems to book guest after guest who sings J. Powell’s praises.

I have been consistent from the very beginning ... the Fed does not know what it is doing.

Finally, somebody else is making the same argument. London-based CrossBorder Capital recently made a virtually identical argument to mine saying that the Fed is sucking too much liquidity out of the system too quickly because it does not understand the “asymmetric impact tightening” is having on the economy. (Read)

We’ve talked about that frequently so I won’t repeat the discussion today.

The Fed’s failures are going to be studied for 100 years with two key considerations: 1) how not to wreck an economy and 2) why it continues to make decisions despite overwhelming evidence that the course of action it’s taking is wrong.

No excuses if you’re missing 50% of the profit potential

Stocks go up AND down. So it makes sense to play both sides for maximum gains. You may as well be fighting with one hand tied behind your back if you are “just” buying.

If you can follow a trendline, you can do this. There are dozens of inverse funds tracking every conceivable stock, sector and index. There are also thousands of different options combinations to consider.

No excuses!

BTW: This may come in handy: Your 5 Minute Guide to Hedging.

Get ready to pay even more for even less

What’s happening. Chengdu is a key Chinese manufacturing center filled with nearly 21 million people … who have just been locked down to deal with Covid. (Read)

Why I am bringing this to your attention. These things tend to affect the rest of the world about 6 months after the fact.

On a side note: Seriously, get your holiday shopping done early. And be prepared to pay more for less of everything

CA: Buy EVs, just don’t charge ‘em

You can’t make this stuff up. CA regulators recently pushed to require all new vehicles in the state to run on electricity by 2035. And has been forcefully telling people to buy EVs which it now says “don’t charge” because there’s not enough electricity on the grid. (Read)

Bottom Line

If you wake up every day knowing there's a challenge and you are ready to face it, you WILL!

Profits keep you focused.

Now let’s get out there and MAKE it a great day!

Keith