Dear Old Friend,
The Swiss lakes are lovely.
But I can’t say the same about this debt deal.
Yesterday, we saw more choppiness, and a large move down in the financial and energy sectors.
This morning, futures are largely flat after the House of Representatives passed a farcical debt ceiling hike that does nothing to prevent the U.S. government debt from barreling toward $50 trillion by the time I turn 50 years old.
Government spending jumped by 40% from 2019 to 2023, and entitlement programs are unsustainable. Prepare for more inflation – with leaders lying about where it derives from.
OPEC Did What on Wednesday?
As predicted, the markets are in turmoil now that I’m abroad and only checking devices in the evening… What a chaotic Wednesday.
Financial stocks are bleeding, and energy names are under even more stress. Imagine my surprise when I looked at the U.S. news and saw that OPEC+ has banned Reuters, Bloomberg, and Dow Jones (owner of Wall Street Journal), from its June Vienna meeting.
Speculation suggests that there might be a lot of testy debate because Russia hasn’t kept up with its voluntary cuts. But there are also rumors (not confirmed but shared among beers in Swiss pubs) that there’s something significant developing in the hedge fund space among short sellers and Saudi/UAE investors. It’s one of those things where you sit back and wonder if there’s a game within a game that we’re a part of… it’s just never televised.
I’m still holding the line and remaining long oil – and I’m expecting a lot of deal making to come from any stress here. I think OPEC will make cuts mandatory and explore more voluntary ones in the future. The Saudis are angry over U.S. energy policies around the Strategic Petroleum Reserve – which is one reason why we’re seeing their name tied to joining the BRICS.
Can ANY Regulator Pick Up the Phone??
Last Wednesday, my colleague Mark Sebastian told me that someone had bought 200,000 $8 calls for October 2023 on Equitrans Midstream Corporation (ETRN). This is what happened next…
Those October calls shot up from $0.25 last week to $1.10 on Tuesday… and then climbed even higher on Wednesday afternoon. It’s a $5 million bet… that turned into $22 million in a week.
It would be easy to suspect a buyout, but the reality is that someone had just bet big on a pipeline deal being a part of the debt ceiling negotiations. So how does that happen? Who from the SEC isn’t looking at this right now… just identifying the party? Maybe asking them why they bought THIS much weight? My bet is on a heavy dose of political intelligence buying, which is legal… and precisely the kind of opportunity we look to capitalize on in Flashpoint Elite.
And Finally… NVIDIA is Back?!
It wouldn’t be market commentary without… chatter about NVIDIA (NVDA). Bag holders were caught up at the $412 mark on Tuesday with the stock’s valuations stretched like weak rubber bands. By the end of yesterday, shares finished down at $378. I’ve told readers how to trade this… by using – during market hours only – the AXS 1.25X NVDA Bear Daily ETF. Yesterday, shares dipped to the second standard deviation line (to the downside) and snapped back (while NVDA hit highs of the day). Using that specific line as a stop-out, traders can simply let it ride to see if it breaks higher. And breakout it did. As NVDA sold off yesterday, the NVDS went from $9.13 (orange circle) to $9.82 at close.
That’s a 7.5% gain… in a day… without having to outright short and borrow the stock.
See you out there,
Garrett Baldwin
Florida Republic Capital (Available on Substack)
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.