(Any views expressed below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
Good morrow,
It was just 8 months ago that I wrote the first, and at the time I was hoping the last, No Chill newsletter...or whatever this thing is. The vibes weren’t great back then and unfortunately, not much has changed since. You can click the excerpt below if you want to feel what I was feeling 8 years months ago.
It doesn’t happen all that often but unfortunately, I was right.
Whatever the now lame-Donald-duck president Trump says, the Iran war is still on-going. It doesn’t matter how many times he says otherwise… “Hey grok”…
Aside from making this an unbelievably difficult stretch to be invested through, the war was a major factor in the Republicans getting their asses handed to them in the midterms. A blue tsunami is what they’re calling it, and it’s not what the market expected.
The country came out and voted like their wallets depended on it. When people can’t afford to put gas in their car or food on the table (their parents’ table, because they can’t afford to move out), they’re going to vote for change. It didn’t matter how much Elon & Co. spent. Even Texas changed its colors (I’m still getting used to not including the “u”). My home state of Florida stayed red...but it was uncomfortably close.
There are real implications for markets here. A big contributor to US growth over the last two years has been the massive data center buildout, funded by the Mag 7 and increasingly through debt. A lot of money has been committed on the assumption that we’re going to keep building, and that the productivity gains will follow.
Democrats and data centers mix worse than oil and water. With calls for moratoriums and a slowdown in AI development, a blue West Texas ain’t good, y’all.
I’ve been told by people in the know that Gina Hinojosa has softened her stance since winning Texas, and that previously green-lit projects should proceed somewhat as planned, albeit with more checks and balances. That’s encouraging, but the US needs a heck of a lot more power to come online to keep up with demand. Keeping existing projects alive only gets us so far.
A slowdown in the infrastructure buildout could mean slower AI progress and fewer of the productivity gains the market has been counting on. We’ve talked about this many times in these missives: the government needs a “productivity miracle” to help grow its way out of the debt spiral.
But, I guess we can’t always get what we want. And the bond market is noticing. The vigilantes smell blood.
Then there’s Jensen.
…no chill.
On top of everything else, the reports this week culminated in Jensen Huang’s resignation from Nvidia. As if the AI trade needed something else to worry about.
This is bad. Jensen spent 33 years building Nvidia and was involved in seemingly everything, with something like 60 direct reports. He’s been moving the chess pieces globally in AI and chips, building relationships that don’t just transfer over with the CEO’s office keys. The company still has extraordinary people and technology, but replacing that kind of founder is a hell of an undertaking.
The downstream effects could take months to understand. And with Nvidia so central to the AI race, they extend well beyond its share price.
So, who benefits?
If the Dems make good on their promises to slow AI development, while Nvidia is dealing with the loss of its founder, I’d say China has reason to be pleased.
And then there’s Anthropic, preparing for its IPO.
Let me put my tin foil hat on for a second. Jensen joins X, starts advocating for open models, and a few months later he’s out of the company he spent 33 years building. Meanwhile, Anthropic, which has been on the other side of that fight, is preparing to go public.
Do I have evidence that any of those things are connected? No. Am I raising an eyebrow at the timing? Yes.
So what does this mean for that market? If the extraordinary growth everyone has been counting on becomes less likely, the debt problem gets a whole lot harder. Borrowing costs are elevated, the infrastructure buildout faces more obstacles, and the company supplying much of the hardware just lost its founder. None of that means AI is over. It does mean there’s more room for disappointment in a market that was counting on a lot going right.
This, ladies and gentlemen, as my good friend and market wizard said to me the other day, is the unwinding of the Trump era.
So, how am I feeling about all of this?
My first reaction to the blue tsunami, if I’m honest with you, was that things were going to get scary. I pictured the Dems feeling empowered enough to run an AOC type in 2028 and win. Socialism, mass immigration, eat-the-rich views, etc...I guess I could’ve just stayed in Canada :(
But I’ve been thinking about it since, and I think I’ve stumbled on what makes America awesome.
Two years ago, Trump won in a landslide victory with a mandate to Make America Great Again. Depending on who you asked, people were either excited or scared shitless that the Republicans would control the country for the next decade. Then came a war he said he wouldn’t get the US into, more pressure on people’s wallets, and a whole lot of other disappointment. Voters didn’t give him a decade. They gave him a bloody nose at the first opportunity.
You F up badly enough, and no matter how much power you were handed two years earlier, the country can take a big chunk of it back. The pendulum swings back and forth, and I don’t have to like where it’s heading to appreciate that nobody gets to assume they’re untouchable. The Dems might put up a crazy in 2028, but if they’re too crazy they won’t last long.
Over time, I think this pulls policy closer to the center than either extreme. The checks and balances seem to work. I’ve been thinking about why, and maybe the Second Amendment has something to do with it. Harder to get too comfortable in power when the population has a whole lotta firepower. But what do I know.
Finally, onto BTC.
This is a brutal bear market. In my 9 years in this space, it’s right up there with the worst of them. If you’ve made it this far in the letter, you probably don’t need me to tell you that. It can go on longer, of course, and you might even feel like giving up. But I think you’ll look back on these moments and thank yourself for gritting your teeth, holding through it, and ideally adding to your stack no matter how painful it is to see that account balance.
A strong dollar, an elevated 10-year, inflation concerns, and a stock market looking toppy would be enough to deal with on their own. Throw in everything else we’ve discussed and it’s hardly surprising that bitcoin is struggling. Even gold is getting smoked.
I think Luke might be right. It feels like another shoe is going to drop. Which shoe? I’m not sure. We’ve covered a fairly unpleasant selection.
I don’t have a crystal ball telling me when bitcoin will rebound, but I’ve been through enough of these to recognize approximately where we are today. It’s all pretty feels-based: the exhaustion, the second-guessing, the temptation to stop paying attention just to make the discomfort go away.
I’ve felt all of that before. I’ve also looked back and wished I’d spent less time staring at the screen and more time taking advantage of what was in front of me.
My view is that if growth disappoints and something breaks, there won’t suddenly be an appetite in Washington for years of austerity. There will be pressure to bring borrowing costs down, support the economy, and come to the rescue the way they know how.
With a money bazooka.
That’s when we win.
For now, I’m staying calm and stacking sats at these levels. Under $70K this morning. Yummy!
Have a great weekend.