Ross Heart

Straight from momentum trading to corporate governance and skipped over bottom fishing entirely 🤣🤣🤣 This is a new one. You can literally smell fear here. Good luck boys (disc: just got long a little $NVDA sub $160 for a trade in the morning)

What are we fucking doing here guys

Our message to Nvidia's board: Do not fire Jensen Huang. There is no clear replacement for Jensen Huang. We are confident that his departure would ultimately be a net negative for Nvidia, its shareholders, and the AI Revolution. First, take a look at the data. History also suggests that removing a successful CEO will come with a significant cost. A study of 187 forced CEO departures from S&P 1500 companies found that removing outperforming CEOs resulted in negative long-term stock returns. This case would be no different, in our view. Jensen Huang is the definition of an outperforming CEO. Nvidia's board must not make a decision in the heat of the moment. The board should take the time to conduct a thorough investigation and consult with shareholders, with a strong emphasis on the latter. Quite literally, Nvidia's board should convene a special shareholder meeting and hold an advisory vote on this decision. This is the most consequential CEO controversy in world history. Shareholders deserve a say. In addition, Nvidia's stock, $NVDA, is now down -35% in 26 trading days, nearly half of which is a result of the recent scandal. We believe Jensen Huang's potential removal as CEO is now ~80% priced in. Why take an action with massive downside potential when the market has already priced in much of that risk? The downside of retaining Huang may be limited, while the potential upside is tremendous. Lastly, history shows that retaining Jensen Huang could still lead to a favorable outcome. In 2019, Amazon retained Jeff Bezos as CEO after his extramarital affair became public, and the company's stock subsequently surged +108% by 2021. Personal misconduct should not be ignored, but it must also be distinguished from corporate wrongdoing and weighed against the consequences of removing an executive who is instrumental to the company's success. We believe Jensen Huang is an irreplaceable part of Nvidia and the AI Revolution more broadly. Once the dust settles, firing Jensen Huang would prove to be a costly mistake. It is time to pause and consult your shareholders.

The CPI will likely rise 5% in 2026 and by more than 7% in 2027, higher than any calendar year under Biden. The Fed's planned rate hikes are too little, too late to prevent this. The federal funds rate must be raised by at least 200 basis points now to possibly stop this train.

The scale of Big Tech's AI future financial obligations is extraordinary: Alphabet, $GOOGL, Meta, $META, Anthropic, Microsoft, $MSFT, Amazon, $AMZN, Oracle, $ORCL, and Nvidia, $NVDA, have disclosed a combined $4.49 trillion in off-balance-sheet obligations. These include future lease payments that have not yet commenced, data-center commitments, equipment purchases, and other contractual obligations. Alphabet accounts for the largest amount, at $1.08 trillion, followed by Anthropic, at $865 billion, and Meta, at $810 billion. By comparison, their combined on-balance-sheet obligations total just $758 billion, consisting of long-term debt and existing lease liabilities. This means off-balance-sheet commitments are nearly 6 times larger than their on-balance-sheet obligations. In total, these 7 tech companies face ~$5.25 trillion in combined financial obligations. The AI infrastructure race is facing enormous future financial commitments.

Absolute insanity. In just 40 minutes, the S&P 500 has now erased -$2 trillion in market cap. The entire post-Midterm Election rally has been erased in a matter of minutes. This is one of the fastest market cap losses in stock market history.