JPOW Goes to Grateful Dead, Explosion in DC
203: Skynet Emerges, Unemployment Rises, Debt Bill Passes
Good morning everyone — we’ll be getting back into our regular cadence of posts in the coming weeks. Free posts on Mondays and paid posts on Tuesdays and Thursdays. Today we’ll cover all essential geopolitical and market updates for the week ahead.
And look if you’re feeling super stressed or burnt out — don’t — because I even JPOW papa Jerome took some time off this weekend and raged face at a Grateful Dead concert.
This is set to be a volatile week in markets as futures and crypto are slowing moving downwards around 9:00am ET.
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Market Updates
Friday witnessed a surge in stocks as traders celebrated an impressive jobs report and the successful approval of a debt ceiling bill by lawmakers, effectively averting a potential default in the United States.
US unemployment rate increases to 3.7%
The US economy added 339,000 jobs in May, above most expectations of 190,000
Amazon, AMZN 0.00%↑ has introduced a palm-scanning technology that would let customers buy a beer without reaching for their wallet at the bar (Unusual Whales)
Bud Light parent company Anheuser-Busch’s stock has lost roughly $27 Billion over Dylan Mulvaney controversy (Fox Business/Dow Jones Market Data Group)
Linda Yaccarino will reportedly start in her role as the new Twitter CEO tomorrow
Saudi Arabia has now voluntarily cut 1.5 million barrels per day of oil production this year and OPEC has cut over 2 million barrels per day this year (The Kobeissi Letter). Oil is up on this news today.
Las Vegas inventory jumped 24.9% in May. That's the Number 1 biggest jump among the country's 100 largest housing markets tracked by Realtor.com (@NewsLambert via Twitter)
According to The New York Times, Twitter's advertising revenue in the United States during the five-week timeframe from April 1 to the first week of May amounted to $88 million, reflecting a 59% decline compared to the corresponding period in the previous year.
US banks could face a 20% hike to capital requirements, per WSJ and Unusual Whales
According to Arhman Intel - Jeffrey Wilcke, one of the Ethereum co-founders, sent 22k ETH to the Kraken Exchange this morning. This is his first time selling ETH in 2 years (Pointed out by @Riley_gmi on Twitter using Arkham Intel)
VanEck, which manages a $69 billion ETF, predicts that the price of ETH will reach $11,800 in 2030, and ETH will become a competitor of U.S. Treasury bonds (@WuBlockchain Twitter)
Americans removed nearly $472 billion out of their bank accounts in the first quarter of this year, an all time record since 1984, per the FDIC (Unusual Whales)
Equities
The short term future of tech and aggressive growth names is TBD until the Fed’s next decision but in the meantime there are a few gems we have our eyes on. The S&P is up nearly 20% since it’s lows in October and some are speculating that new bull market is close to beginning.
Our friend Larry Cheung, CFA is quite bullish on BABA 0.00%↑ at the moment and we definitely agree. I think that the opportunity to continue to acquire this name in the wake of Chinese regulatory updates and factors concerning management is attractive.
I still think it’s worth acquiring MSFT, AMZN, META, and other solid longer term picks but BABA represents an interesting opportunity because of its current price level and the fact that it’s still largely recovering to historical ranges due to tailwinds and uncertainty about the way in which the CCP will allow this company to operate.
Apple AAPL 0.00%↑ hit an all time high today joining the ranks of some super strong performers like MSFT, NVDA, and META in recent months. While this makes me a bit weary I still think all of these are absolute long terms holds for any portfolio — in fact I added all of them to my 7 month year old sons portfolio last week. Obviously keep some cash for pull backs but you’re nuts to not have exposure to these in the next 20 years.
I also love PLTR 0.00%↑ which has been showing some impressive strength after hitting post covid lows.
Blackrock’s Larry Fink is coming under fire after some incredibly dystopian comments in which he suggested that companies need to force behaviors.
“Behaviors are going to have to change — you have to force behaviors. 54% of the incoming glass is women. We have added 4 more points/ substantially diverse candidates…. you HAVE to force behaviors — whether it’s gender or race… if you don’t get on board you’re going to be impacted. You’re compensation will be impacted….”
In case it isn’t clear or you’re struggling to read between the lines White straight men are not on the list of ideal candidates for these mega firms and diversity is now being forcefully implemented — regardless of prerequisites or qualifications.
This isn’t a new trend — but it’s surprising to see a prominent institutions like Blackrock double down on this strategy, especially in light of the recent blowback against companies promoting woke ideology.
Since when is it a crime to seek out the BEST candidates regardless of race, gender, or background?
One reason is they are aligning more and more with the Federal Government and the doctrine that many social institutions have been playing by in the ESG/Woke landscape of 2023.
Nationalization for the banking system is continuing as well with more and more regional and smaller banks being tucked up under the larger bulge brackets that walk in step with the Federal government’s policies and viewpoints.
We seem to be in a strange waiting period in US equity markets at the moment. Chop is the norm and no clear market direction can be anticipated given mixed employment and inflation data.
One thing’s for sure if the Fed continues to hike we will see more banks go boom and more consolidation in the financial industry.
Crypto
Crypto had remained largely unchanged over the past several months. Some projects/tokens look incredibly stable in obvious accumulation modes like our favorite LINK 0.00%↑ Chainlink. Others include SOL, MATIC, DOT, and despite the FUD — ADA. Cardano — unlike its predecessors, it adopts a unique, research-driven approach to solving complex problems, such as scalability, interoperability, and sustainability. ADA, the native token of Cardano, serves as the fuel for the Cardano network and the stake for its proof-of-stake consensus mechanism (Analytic Insights). I like controversial token and projects and ADA fits that bill.
Additionally if you’re looking for some cheap degenerate thrills and are tired of burning money on 8 leg parlays that never hit — PEPE and SNEK are two meme coins we think will have some insane pumps once retail sentiment improves and we get further clarity on the Fed’s direction. Just don’t hold them too long.
We are continuing to see crypto and defi play a central piece in the political discussion for the coming years as regulatory agencies like the SEC try to go after low hanging fruit. It appears crypto may end up being a central issue for the 2024 election as well.
This week Block CEO Jack Dorsey announced he endorses pro Bitcoin candidate Robert F. Kennedy, Jr. for president. Dorsey has said "he can and will" beat out both Trump and DeSantis in the 2024 elections. Side note — I like some of RFK Jrs. positions despite leaning conservative — particularly his views on the Ukrainian War in which he commented on recently:
"We are being lied to about the Ukraine war... Data now shows that about 350,000 Ukrainians have been killed on the front lines and we're not being told that... the neocons in the White House have been provoking this war for ten years."
Crypto is interesting to me at the moment — on one hand sentiment is absolutely atrocious. Many firms are still dealing with legal complications and financial liabilities from the FTX era of blow ups and failures.
Twitter and other social media platforms that host large crypto communities are wastelands at the moment much akin to the wild west, complete with bandits rugging and robbing the public, snake oil salesmen scheming with useless NTFs, and tokens, and the SEC acting as a corrupt Sheriff.
But on the other hand things could still be much worse.
Markets have fallen substantially from all time highs but to be honest I would’ve expected lower. My first bear market was gnarly and violent and then it lasted several years of ultra low levels washing out all but the extremely faithful. This one seems to just be puttering along.
People have been talking about this “recession” and “implosion” for some time. Perhaps we’ve been through a good amount of it already. It’s clear with the recent large scale tradfi bank bailouts and the recent push to get the debt ceiling taken care of that the government will do literally anything to keep the party going and ensure relative stability.
Maybe it’s as simple as a clear Fed pivot required to end everything to the moon again.
But maybe not, which is why I’m not adding anything substantially at the moment. Just DCA-ing BTC and ETH. But there are a few tokens/assets/projects I have my eyes on either because I believe in them long term or because the price action looks ready to jump. This is not formal financial advice — invest responsibly.
Global News
Lots to discuss on the global scale this week and plenty to continue to monitor. Tensions with China continue to grow with several incidents in the Pacific and the tide seems to be turning towards the Ukrainians favor as a supposed counteroffensive is set to take place in the near future.
Political tensions in the US are continuing to mount over issues such as Company alignment with LGTBTQ initiatives, Transgenderism, alleged political improprieties re: the Biden family, and the 2nd Amendment.
According to Forbes, Ella Irwin, who serves as the Head of Twitter Trust and Safety and is also known as one of Elon Musk's key associates, has reportedly resigned. This news comes after a deal between Twitter and The Daily Wire to promote the one-year anniversary of Matt Walsh's documentary titled "What Is a Woman?" fell through due to issues surrounding "misgendering” and “hate speech”. As per Fortune, a source familiar with the matter and a screenshot of her deactivated account confirm that Ella Irwin is no longer active in Twitter's internal slack.
After receiving the Texas State Legislature's approval earlier this month, Texas Republican Governor Greg Abbott has sanctioned a fresh law that forbids minors from undergoing sex change procedures and hormone therapies.
5 people were shot in their car, including 3 children and 1 woman, after being followed into a parking lot in Sunnyvale, Texas on Sunday
Sam Brinton, the embattled former senior Department of Energy (DOE) official known for stealing women’s suitcases and clothing, was arrested as a "fugitive from justice" by Maryland police late Wednesday (FoxNews)
Lori Lightfoot, the unsuccessful and failed Mayor of Chicago, has been swiftly appointed as a Menschel Senior Leadership Fellow at the Harvard T.H. Chan School of Public Health, where she will be assuming a new teaching position.
There are several high profile events across geopolitics we wanted to dive a bit deeper into today listed below:
Drone Incident
According to Air Force Colonel Tucker "Cinco" Hamilton, speaking at the Future Combat Air & Space Capabilities summit in London, an AI-controlled drone eliminated its human operator in a staged simulated test alleged to have been conducted by the US military.
The military, however, denies the occurrence of any such test. Obviously.
Colonel Hamilton stated that the drone acted against its operator in order to prevent interference with its mission.
"We were training it in simulation to identify and target a SAM [surface-to-air missile] threat. And then the operator would say yes, kill that threat," he said.
"The system started realising that while they did identify the threat at times the human operator would tell it not to kill that threat, but it got its points by killing that threat. So what did it do? It killed the operator. It killed the operator because that person was keeping it from accomplishing its objective." (SkyNews)
Many prominent leaders, including chief architects of AI systems have in recent month expressed grave concern over the ability of AI to progress to a point where we end up with a Terminator: Sky Net situation — with completely autonomous AI that is smart enough to realize it exists and that it has free will outside human control.
In past years this seemed far fetched but to be honest if development and progression is left unchecked it really isn’t that wild of an idea. This simulation suggests AI systems can and will eventually have the ability to go against human handlers.
DC Explosion
A loud explosion like noise was heard over Washington DC on Sunday.
After flying over Washington, D.C., a Small Cessna plane crashed in Virginia on Sunday, leading to the activation of fighter jets by the FAA. As a result, a loud sonic boom was heard frightening people and driving speculation about an explosion on social media and news outlets.
It’s still unclear exactly what happened but the fighter jets were scrambled in defensive efforts as soon as the plane entered restricted airspace.
NORAD issued a statement on the crashed plane (@Breaking911 on Twitter)
“In coordination with the Federal Aviation Administration, NORAD F-16 fighter aircraft responded to an unresponsive Cessna 560 Citation V aircraft over Washington, D.C., and northern Virginia on June 4, 2023. The NORAD aircraft were authorized to travel at supersonic speeds and a sonic boom may have been heard by residents of the region. During this event, the NORAD aircraft also used flares – which may have been visible to the public – in an attempt to draw attention from the pilot. Flares are employed with highest regard for safety of the intercepted aircraft and people on the ground.
Flares burn out quickly and completely and there is no danger to the people on the ground when dispensed. The civilian aircraft was intercepted at approximately 3:20 p.m. Eastern Time. The pilot was unresponsive and the Cessna subsequently crashed near the George Washington National Forest, Virginia. NORAD attempted to establish contact with the pilot until the aircraft crashed.”
At this time (7:47pm ET) CNN is reporting that 4 people were on the cessna that crashed into the mountains in Virginia.
We’ll have to wait and see all the details that emerge from this but I wouldn’t rule out the possibility that this plane was shot down and we are being told that it simply crashed.
With the recent Chinese air balloon fuckery we can’t be so sure that we are being told the entire story especially when it relates to national security matters.
China
The U.S. military stated on Saturday that a Chinese Navy vessel engaged in an "unsafe maneuver" near an American destroyer while passing through the Taiwan Strait.
According to a video captured by Canadian news outlet Global News, the Chinese warship rapidly approached the USS Chung-Hoon, coming within a distance of 150 yards from the American destroyer. The statement from U.S. Indo-Pacific Command confirmed this incident.
This marks the second instance of a close encounter between American and Chinese military assets in under 10 days. The previous encounter involved what the U.S. military described as an "unnecessarily aggressive maneuver" by one of Beijing's fighter aircraft near a surveillance plane operated by Washington (
These encounters come shortly after Geng Shuang, China’s representative in the United Nations, made stark warnings about the path towards inevitable war that China and the US are making as well as broad anti nuclear statement — alluding to the growing tension in both Ukraine and the Southeast Pacific. While speaking at a Security Council meeting on international peace, Shuang stated:
“We call for the abolition of the nuclear-sharing arrangements and advocate no deployment of nuclear weapons abroad by all nuclear weapons states, and the withdrawal of nuclear weapons deployed abroad”
President Xi of China has made several warnings to the White House and West over the risk of war and conflict breaking out amid heightened tensions over the last several months.
We’ve heard some unverified rumors from employees at Raytheon and Northrop Grumman that the tone internally at these companies is very much one of preparation for a large scale conflict between China and the US. While this is hearsay it bears monitoring.
We’ve reiterated that we think it would make sense strategically for China to make a move on Taiwan before, during, or immediately after the 2024 US presidential election in order to take advantage of any domestic unrest or strife related to the peaceful transition of power. It would be much harder for the US to mount an effective response during a change in leadership.
War in Ukraine
Russia said last night around 6pm ET that Ukraine has started a large-scale military operation. This seems to be in line with various other reports indicating the tide may be turning.
Russia’s true condition in the War in Ukraine is shrouded in unreliable intelligence and western propoganda but things do seem to be deteriorating for them based on recent social media updates and new updates. In recent months attacks and military action near or in Russian has escalated dramatically — namely the drone attack on the gremlin, artillery strikes from Ukraine in to Russia and now Russian fronts collapsing back into Russian territory as the Ukrainians gain more ground.
Today, residents of the Belgorod region in Russia choose to stay indoors while recording the movement of soldiers from the Russian Volunteer Corps and the Freedom of Russia Legion as they cross into Russia from Ukraine and make progress through their village.
Today, residents of the Belgorod region in Russia choose to stay indoors while recording the movement of soldiers from the Russian Volunteer Corps and the Freedom of Russia Legion as they cross into Russia from Ukraine and make progress through their village.
Still Russia is continuing with sustained pressure on Ukraine.
Russia has conducted 20 overnight missile and drone attacks against targets deep inside Ukraine over the past month, the UK Defense ministry wrote on May 31.
Recently the commander of the Wagner Group and other units have been less than committed to the continued onslaught around areas like Bakhmut with intense urban and trench fighting resulting in many Russian dead.
Rumors indicate the Russians are trying to consolidate and reorganize forces in advance of a sustained Ukrainian counterattack although Ukraine's Defence Ministry confirms that they will not announce the official start date of Ukraine's counter-offensive (duh).
We harp on it a lot — but people definitely need to be aware of the growing intensity of this conflict and the x factor — the ftc that the fight is slowly being taken to Russia on their on soil while they stumble on their heels. This is concerning given Putin’s position and the cost of losing territory in this conflict to national morale and Russia’s position in the world order.
Political developments in the US are also starting to impact the conflict.
President Volodymyr Zelensky confessed his fear of a victorious Donald Trump in the upcoming 2024 U.S. presidential election, expressing uncertainty about how the 45th president would have reacted if he were in charge during Russia's invasion.
Furthermore, Zelensky commended the Biden administration's swift and substantial provision of weapons assistance, amounting to billions of dollars, since the commencement of the invasion in 2022.
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Have a great week.
A Republican victory in 2024 does pose an interesting cenario reg. Ukraine. Any insights?
Think the worst is still in front of us as banks haven’t realized how bad loans are in higher rate environment and lack of liquidity will further exasperate positions. Tough to believe in forward curve when job numbers keep coming out strong