Authored by Stephen Manuszak via The Mises Institute,

The first piece of legislation passed by the new Congress of the United States of America after the ratification of the Constitution included a tariff on the import of foreign sugar. Although this tariff was passed as a means to raise the funds needed to pay the debts accrued during the Revolutionary War, coincidentally it also provided elaborate protections to the nation’s wealthiest farmers of sugarcane and sugar beets.

The indirect subsidies afforded to the sugar producers by the Tariff Act of 1789 have been reapproved and signed, now via the Farm Bill, every five years by every available president up to and including Donald J. Trump. For more than two hundred years, these sugar producers in America have been able to sell their product at prices higher than what the market would normally allow. Later this year, President Joe Biden will get the opportunity to put his signature on the bill as well.

In the late 1960s, the National Institute of Advanced Industrial Science and Technology in Japan discovered an enzyme that effectively and easily converted cornstarch into fructose. This technology was ultimately sold to American companies, and in 1983, the Food and Drug Administration approved high fructose corn syrup as safe for consumption. In short order, the food industry took advantage of this cheap, new form of sweetener in extraordinary amounts. Supply of this ersatz sugar became abundant. The market, as you would expect, used this opportunity to undercut the historically high prices of sugar generated by the aforementioned tariff.

Due to this market opportunity, a new agricultural policy was pushed at the highest levels of the federal government. From 1971 to 1976—under the auspices of Richard Nixon—the secretary of agriculture, a loud, boisterous man named Earl Butz, became famous for conjuring up a new “fencerow to fencerow” policy: maximum production for corn and soy, as the demand for these crops were now high. He pushed farmers to take on debt to buy more land and machines to drive production. Henceforth, lavish government subsidies (by way of the same Farm Bill mentioned earlier) were doled out to corn farmers. Production of these crops skyrocketed, and given the increased supply of corn, sweeteners such as high fructose corn syrup became cheaper on the open market.

To fully understand how governmental policies lead to adverse health effects, it is important to understand how the human body metabolizes different types of sugar. The most abundant sugar on earth is glucose, a six-carbon hexagonal sugar, which has been what our bodies have mainly adapted to and utilized for energy production. Fructose, a five-carbon pentagon, is another sugar found in nature, natural to many foods and another source of energy for the body. Similarly, both glucose and fructose are broken down in the body during metabolism by a biochemical pathway called glycolysis.

However, due to its shape, fructose happens to bypass a key early enzyme in the biochemical pathway that can serve as a check on energy production. Therefore, a fructose molecule entering glycolysis becomes metabolized and stored faster and easier than glucose. Overall, excess fructose ingestion leads to excess fat in the body.

That is precisely what we have seen scaled up from the molecular level all the way to the population level: soaring rates of obesity driven primarily by excessive sugar consumption. Today, Americans consume an average of 130 pounds of added sugar per year, much of that coming by way of fructose. This is a sharp uptick from the 1970s, when average yearly consumption was closer to eighty pounds.

Likewise, obesity has skyrocketed since the 1970s. The obesity epidemic continues to worsen, quickly approaching a 50 percent prevalence in the country.

Obesity can increase one’s chances of developing diabetes, heart disease, peripheral vascular disease, renal failure, serious infections (e.g., worse covid outcomes), osteoarthritis, stroke, blindness, different forms of cancer, and depression, and the list continues on. Obesity not only shortens life expectancy but also decreases quality of life, especially by putting financial strain on the individual. The Centers for Disease Control and Prevention (CDC) reports that the annual medical costs for adults with obesity were $1,861 higher than medical costs for people with healthy weight.

Obesity is also putting financial strain on the society writ large. The CDC reported the annual medical cost of obesity was nearly $173 billion in 2019 dollars; in all likelihood, this is an underestimate. Looking at the US fiscal year budget as a pie chart, one of the largest slices of the budget goes to Medicare and Medicaid. It is no surprise to find the national debt increasing to unfathomable heights.

Policies put forth by the national government have real-world consequences, sometimes taking decades or even centuries – if you care to draw cause and effect back to the Tariff Act of 1789 – to fully manifest. It is both sad and almost comical to have the American taxpayer subsidizing the sugarcane and sugar beet industries—which puts upward pressure on the price of sugar—to then subsidizing the corn industry in order to undercut these high sugar prices, only later for the taxpayer to be taxed again to fund Medicare and Medicaid in the government’s attempt to curb the health fallout from obesity.

Many will cheer the president, from both the high-spending Left and profarmer Right, as he places his John Hancock on the Farm Bill that is due for renewal this year. Understand, however, that subsidizing farmers to mass produce corn is one of the largest drivers of health and economic decline in our nation.

Via The Cradle,

Mysterious foreign military cargo flights, potentially carrying equipment for use against Hezbollah, continue to land at the Beirut and Hamat airports, Al-Akhbar reported on Tuesday.

Between the 14th and 20th of November, nine planes from various NATO countries were recorded landing at Beirut and Hamat airports, including several flying from Tel Aviv, according to IntelSky, a website monitoring aircraft movement in the region.

Sources speaking with Al-Akhbar said the cargo included devices used for jamming, which raises questions about the reason for their transport to Lebanon and whether they will be used to disrupt the communications network of Hezbollah in the event of an escalation of the fighting with Israel in Lebanon’s south.

Since the October 7 Hamas attack on settlements surrounding Gaza, in which 1,200 Israelis were killed and 240 more taken captive, Israel and Hezbollah have engaged in deadly tit-for-tat clashes on the Lebanese-Israel border area.

Hezbollah’s communication network played a key role during the July 2006 war against Israel, which later led to US pressure on the government of then-Lebanese Prime Minister Fouad Siniora to call for dismantling the resistance group’s communications network in 2008.

The same sources speaking with Al-Akhbar confirmed that the security authorities at Beirut and Hamat airports do not seriously inspect the cargo of the planes that land, with Hamat Air Base lacking even a scanning device. The final destination of the cargo in Lebanon is also unknown.

IntelSky reported that the movement of foreign military aircraft is proceeding at a level that Lebanon had not witnessed in years. Between October 8 and November 10, 32 planes landed, nine of which belonged to the US, Dutch, and British Air Forces and landed at the Hamat base, and 23 planes belonging to the US, French, Dutch, Spanish, Canadian, Italian, and Saudi armies landed at the base designated for military and diplomatic aircraft on the west side of Beirut Airport.

Although Lebanese law prohibits direct flights between Lebanon and Israel, Intelsky monitored three planes landing at Beirut Airport originating in Tel Aviv.

A British Royal Air Force Airbus A400M Atlas landed in Beirut on 14 November, coming from Tel Aviv. The plane carried out a “touch and go” operation (touching the runway and taking off directly without stopping) at a British military base in Cyprus to technically comply with Lebanese law banning direct flights from Israel.

After taking off from Beirut, the plane returned to Tel Aviv after carrying out another touch-and-go operation at the British base in Akrotiri, Cyprus.

On November 16, a US Air Force Boeing C-17A Globemaster III also flew from Tel Aviv to Beirut. The Intelsky website recorded that the plane allegedly landed in Cyprus as well but disappeared from radars before landing and reappeared after the supposed take-off. The plane was absent from radars over Larnaca for 4 minutes at an altitude of 1,264 meters, suggesting it did not land in Cyprus.

On November 21, a British Royal Air Force (Airbus A400M Atlas landed in Beirut after making only a camouflaged landing in Akrotiri, at an altitude of only 375 meters above the base, which means that the flight violated Lebanese law and was in effect a direct flight from Tel Aviv to Beirut.

IDF releases footage of strikes on Hezbollah targets in southern Lebanon, in response to the attacks on northern Israel. It says the sites include a command center and other infrastructure. pic.twitter.com/Lar02yl8CN

— Emanuel (Mannie) Fabian (@manniefabian) November 21, 2023

It should be noted that daily flights between the Akrotiri base and Tel Aviv have been recorded since the outbreak of the “Al-Aqsa Flood” operation on October 7.

Al-Akhbar notes these flights raise suspicions about whether these trips are part of a broader strategy related to the conflict with Israel and may be intended to enhance the military capabilities of some parties in the region working on behalf of Israel and NATO, or to provide them with logistical support that includes transporting necessary equipment and supplies.

The Israeli army has not commented on the flight, except for a statement issued on November 10 confirming that “part of the air traffic at the airport is a routine movement to transfer military aid to the Lebanese army.”

The statement was issued after the Intelsky website monitored the movement of foreign military aircraft at a level that Lebanon had not witnessed in years. Between the 8th of last October and the 10th of this month, 32 planes landed, 9 of which belonged to the American, Dutch, and British Air Forces and landed at the Hamat base, and 23 planes belonging to the American, French, Dutch, Spanish, Canadian, Italian, and Saudi armies landed at the base designated for military and diplomatic aircraft on the west side of Beirut Airport.

Authored by Bobbie Anne Flower Cox, who represented the plaintiffs in this case, via the Brownstone Institute,

I hope you are sitting down when you read this article.

There is absolutely no way I can possibly sugar coat this, so I’ll just be frank… The NYS Supreme Court Appellate Division’s Fourth Judicial Department has issued their ruling in our quarantine lawsuit against Governor Hochul and her Department of Health, and they have ruled against the will of the people!

If you feel like you just got sucker-punched in the gut, join the club, my friends.

The court has dismissed our lawsuit, not because we are wrong in our arguments… no, no, indeed we are dead-right. In fact, the court did not even touch the merits of the case. How could they? Instead, the court unbelievably ruled that my plaintiffs somehow do not have standing to sue! If your brain is racing a hundred miles an hour right now trying to figure this out, don’t worry, you are definitely not alone.

Every single person I have told about this court ruling, from my plaintiffs, to fellow attorneys, to family members, and so on, has been downright flabbergasted. Rightfully so. One of my family members told me I needed to break it down for her, like she was a Kindergartener. I’ll do the same for you now, because this issue is so crucial for you to understand, and then for you to explain to others.

What the Appellate Division court is saying by reversing the lower court and then dismissing our case for lack of standing is that they believe that Senator George Borrello, Assemblyman Chris Tague, Congressman Mike Lawler, and the citizens’ group Uniting NYS did not have the right to bring this lawsuit last year against the Governor and her DOH for their heinous “Isolation and Quarantine Procedures” regulation.

Why not? Because according to this court, my plaintiffs were not injured by the regulation. Why not? Because the court seems to insinuate that the only person with the right to sue is someone who has been forcibly locked in their home against their will, or ripped from their home, taken from their loved ones, and thrown into a quarantine detention center, facility, institution, camp, etc. (pick your noun, doesn’t matter).

The court insinuates that apparently only that person would be injured. Not my plaintiffs. The reason their “logic” is flawed is because we sued pursuant to the separation of powers doctrine, arguing that the Governor and her DOH lacked the constitutional authority to make that horrendous regulation in the first place.

In other words, in short, my legislator-plaintiffs were injured because Hochul and her DOH (Executive Branch) stole the legislators’ power to make law (Legislative Branch) when they created the quarantine reg which was a law (despite the fact that the DOH called it a regulation). The trial court correctly ruled in our favor last summer, and struck the reg down for that exact reason, amongst others.

If you are still scratching your head wondering how on earth is it possible that the Executive Branch stealing a power from the Legislative Branch does not constitute an injury to the members of the legislature, then join the club! Of note, it was so obvious to the trial court judge last year that my plaintiffs had standing, that he didn’t even discuss it in his decision. You can read that decision here if you’re interested.

Q&A…

I’m sure you have a thousand questions, so I’ll try to predict and answer some here:

• Which court issued this decision?
  • It is the New York State Supreme Court, Appellate Division, in the Fourth Judicial Department. It is the middle court in the three levels of NYS courts, meaning, we began last year at the trial court level (NYS Supreme Court in Cattaraugas County). We won there. Then the Governor appealed to the next court which is the Appellate Division, and that is who reversed the trial court, and dismissed our lawsuit.
• Who were the judges?
  • It was a panel of 5 judges that decided the appeal. They are all appointed by a governor. On my panel I had 2 Hochul appointees, 2 Cuomo appointees, and 1 Pataki appointee. You can watch the oral arguments from September here. The Attorney General’s office argued first and starts at 48:00 minute mark. Then I was next, and that starts at 1:02:35 mark.
• Is there another court above this one that I can appeal to now?
  • Yes. The final and highest court in New York State is the Court of Appeals. It sits in Albany, and is presided over by a panel of 7 judges. They, too, are all appointed by a governor. They do not hear all cases that apply to the court (similar to the US Supreme Court), so I would have to draft a motion to try to convince the high Court to hear our case!
• Now that this court overturned the lower court’s decision, will Rule 2.13 (the quarantine regulation) be reinstated?
  • Unfortunately, this court has opened the door and paved the way for Hochul and her DOH to reissue this anti-freedom, anti-American regulation. Fire at will, is what the court has proverbially told them. There is nothing stopping the tyranny of the Executive Branch now.
• Does Rule 2.13 allow Hochul and her DOH to set up actual quarantine camps?
  • The reason the public has dubbed this regulation the “quarantine camp regulation” is because the language in the reg makes it crystal clear that the DOH can pull you from your home (and your life) and, with the force of police, hold you anywhere they deem appropriate, including “other residential or temporary housing”… Remember, the reg says they don’t have to prove you are sick, they can hold you for however long they want, and there is no way for you to get out of lock up or lock down (unless you get a lawyer and sue them)!!! You can read articles I’ve written and interviews I have done about the reg and the lawsuit on my Substack here, or on my website: www.CoxLawyers.com
  • By the way, I fact-checked the Associated Press’ phony “fact check” article they ran shortly after my oral arguments in September, and I determined their article to be FALSE. It’s particularly surprising because that AP reporter contacted us (my plaintiffs and me) for clarification prior to publishing her false article. Clearly she ignored what we said! Anyway, this dystopian regulation absolutely allows Hochul and her DOH to institute quarantine locations, whether you call them facilities, institutions, halls, or camps, it matters not. It’s still unconstitutional!
• What do my plaintiffs think?
  • Obviously, they are very upset by this decision. An official press release will go out shortly.

Hope is not Lost!

There is no denying that I have had to dig very deep these past 48 hours since I received the ruling. My family and close friends who I have shared the horrible news with have all asked me the same question, “What are you going to do now? Stay and fight? Or let it go?”

This has been a true David v. Goliath battle for the ages, as described in a recent Brownstone Institute article on this epic legal battle, and my family and close friends know the immense sacrifices I’ve endured to bring and fight this case these past almost 2 years now. As you may imagine, I have had to do some significant soul searching the past couple of days. Here is what I have come to…

I can tell you this with certainty, I will never stop fighting for you, New York! I believe that we can take back this state, and as we do, we will liberate the rest of this country which has fallen into very dark times, as our Constitution, and thus our freedoms, are tossed aside by the ruling class elites without a second thought. And then, once our nation is back to being that shining beacon on a hill, then the rest of the world can follow. New York is the key. And I have hope and faith. I will share it with you now…

I am going to appeal this case to the Court of Appeals, our highest court in New York. The Court of Appeals is a court of constitutional integrity. The Court will understand the magnitude of this lawsuit and the Appellate Division’s erroneous decision. I believe the high Court will not fall prey to the tyranny and corruption that goes on in the halls of our capitol in Albany.

The Constitution is on our side. The case law is on our side. Truth is on our side. And most importantly, the will of the people is on our side. Remember Thunderstruck? Remember Reverberating? Remember the hundreds upon hundreds of you who showed up to oral arguments in Rochester back in September? Remember the thousands of you who have come to hear me speak in-person at events across the state, and in states outside our New York borders? Remember the tens of thousands of you who have shown me your support in emails, social media posts, letters, cards, phone messages etc.?

Indeed, I have faith.

Republished from the author’s Substack

Bobbie Anne, a 2023 Brownstone Fellow, is an attorney with 25 years experience in the private sector, who continues to practice law but also lectures in her field of expertise – government over-reach and improper regulation and assessments.

MyPillow CEO Mike Lindell has vowed to ‘expose everything’ following last week’s massive ruling by an Obama-appointed judge in Georgia, Amy Totenberg, who agreed with Lindell’s legal team that electronic voting machines used by the state of Georgia have substantial flaws.

According to Totenberg, there is sufficient cause to believe that there may be “cybersecurity deficiencies that unconstitutionally burden Plaintiffs’ First and Fourteenth Amendment rights and capacity to case effective votes that are accurately counted.”

What’s more, in a footnote within her 135-page ruling, Totenberg said the evidence in the case “does not suggest that the Plaintiffs are conspiracy theorists of any variety.”

“Indeed, some of the nation’s leading cybersecurity experts and computer scientists have provided testimony and affidavits on behalf of Plaintiffs’ case in the long course of this litigation,” she wrote.

Historical ruling by Judge! Anyone questioning elections or election machines are not conspiracy theorist!https://t.co/Q58TGWgEwW

— Mike Lindell (@realMikeLindell) November 16, 2023

“This is going to expose everything,” Lindell said during a Monday appearance on Steve Bannon’s War Room podcast, where he ripped off a tinfoil hat.

Mike Lindell was right about the corrupted voting machines. pic.twitter.com/tH4zavMnIf

— Freedom 🇺🇸🦅 (@PU28453638) November 21, 2023

“The public’s going to demand that this amazing trial is going to go forward,” he added.

He also appeared on Real America’s Voice with Human Events’ Jack Posobiec to celebrate:

.@MikeLindell celebrates his recent legal victory with @JackPosobiec after being granted a bench trial for his lawsuit in an effort to replace Georgia’s electronic voting machines with paper ballots.

Watch @HumanEvents: https://t.co/gufbGC9rsx pic.twitter.com/WE0FVkvpXQ

— Real America’s Voice (RAV) (@RealAmVoice) November 21, 2023

.@realMikeLindell tells @JackPosobiec: “We’re going to paper ballots, 30 million people did an election with paper ballots and they got done and the results in the same day of the election. What a concept!” pic.twitter.com/BA8bzLIDwp

— Human Events (@HumanEvents) November 21, 2023

Lindell, appearing on the Lindell Report, also discussed the recent election in Argentina.

“Argentina Bans the Machines and the People Finally Win.” Click here to watch the full episode: https://t.co/iLk7opRdEr pic.twitter.com/H3ZidsyhrS

— Mike Lindell (@realMikeLindell) November 21, 2023

Lindell’s trial is scheduled to begin on Jan. 9, 2024. 

BREAKING: MIKE LINDELL VINDICATED IN GEORGIA COURT RULING ON ELECTRONIC VOTING MACHINES https://t.co/dazdib9VQx

— Jack Poso 🇺🇸 (@JackPosobiec) November 21, 2023

As we wrote in our preview of NVDA’s Q3 earnings, it is safe to say that more were paying attention to today’s earnings report from Nvidia than did to all of the other giga caps or frankly any other company this quarter, thanks to the thunderous, impact Nvidia has had on the broader market in general, and the AI bubble in particular. And while the excitement may not have been as palpable as last quarter when JPM trader Stuart Humphrey said “The anticipation is LITERALLY killing us!” (clearly he was LITERALLY wrong since he is still alive), UBS said that while positioning has come down from a scale of 10 in last print to 9 now, expectations remain stratospheric and while sentiment is better than last print, it isn’t as strong as the Goldilocks scenario into May Print that saw a +25% move (spoiler alert: they were right).

Well, the anticipation is finally over, and moments ago NVDA reported Q3 earnings that crushed estimates, but warned of a “significant” slowdown in China sales and gave Q4 guidance that while also above consensus, at best matched the top end of the whisper range, which may have disappointed some as it shows that even NVDA may have finally hit limit to its growth.

Here are the Q3 results that NVDA just reported (press release link; CFO commentary link).

• Adjusted EPS $4.02 vs. 58c y/y, smashing estimate $3.36
• Revenue $18.12 billion vs. $5.93 billion y/y, blowing away estimates $16.09 billion
  • Data center revenue $14.51 billion vs. $3.83 billion y/y, beating estimates of $12.82 billion
  • Gaming revenue $2.86 billion, +82% y/y, beating estimates of $2.7 billion
  • Professional Visualization revenue $416 million vs. $200 million y/y, beating estimate $409.2 million
• Automotive revenue $261 million, +4% y/y, estimate $266.9 million

Some more details on the revenue breakdown:

• Data Center revenue was a record, up 279% from a year ago and up 41% sequentially. Strong sales of the NVIDIA HGX platform were driven by global demand for the training and inferencing of large language models, recommendation engines, and generative AI applications. Data Center compute grew 324% from a year ago and 38% sequentially, largely reflecting the strong ramp of our Hopper GPU architecture-based HGX platform from cloud service providers (CSPs), including GPU-specialized CSPs; consumer internet companies; and enterprises.

The chart below shows all you need to know about the company’s main revenue driver

• Gaming revenue was up 81% from a year ago and up 15% sequentially. Strong year-on-year growth reflects higher sell-in to partners following normalization of channel inventory levels. Sequential growth reflects strong demand for our GeForce RTX 40 Series GPUs for back-to-school and the start of the holiday season.
• Professional Visualization revenue was up 108% from a year ago and up 10% sequentially. The year-on-year increase reflects higher sell-in to partners following normalization of channel inventory levels. The sequential increase was primarily due to stronger enterprise workstation demand and the ramp of notebook workstations based on the Ada Lovelace GPU architecture.
• Automotive revenue was up 4% from a year ago and up 3% sequentially. The year-on-year increase primarily reflects growth in sales of auto cockpit solutions and self-driving platforms. The sequential increase was driven by sales of self-driving platforms.

Going down the line:

• Adjusted gross margin 75% vs. 56.1% y/y, beating the estimate 72.5%
  • R&D expenses $2.29 billion, +18% y/y, higher than the estimate $2.21 billion
• Adjusted operating expenses $2.03 billion, +13% y/y, beating the estimate $2 billion
• Adjusted operating income $11.56 billion vs. $1.54 billion y/y, beating the estimate $9.67 billion
• Free cash flow $7.04 billion vs. negative $156 million y/y, missing estimates $7.17 billion

Gross Margin:

• GAAP and non-GAAP gross margins increased significantly from a year ago and sequentially, driven by improved product mix from Data Center revenue growth and lower net inventory provisions and related charges.

Expenses:

• GAAP operating expenses were up 16% from a year ago and up 12% sequentially, driven by compensation and benefits, including stock-based compensation, primarily reflecting growth in employees and compensation increases.
• Non-GAAP operating expenses were up 13% from a year ago and up 10% sequentially, primarily reflecting growth in employees and compensation increases.
• “We are monitoring the impact of the geopolitical conflict in and around Israel on our operations, including the health and safety of our approximately 3,400 employees in the region who primarily support the research and development, operations, and sales and marketing of our networking products. Our operating expenses in the third quarter of fiscal 2024 include expenses for financial support to impacted employees and charitable activity.”

The financial results in a nutshell:

Commenting on the results, CEO Jensen Huang said that “our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI…. Large language model startups, consumer internet companies and global cloud service providers were the first movers, and the next waves are starting to build. Nations and regional CSPs are investing in AI clouds to serve local demand, enterprise software companies are adding AI copilots and assistants to their platforms, and enterprises are creating custom AI to automate the world’s largest industries…. NVIDIA GPUs, CPUs, networking, AI foundry services and NVIDIA AI Enterprise software are all growth engines in full throttle. The era of generative AI is taking off,” he said.

Maybe it is… but China is starting to stumble, because as the company admitted, sales to China “will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions” to wit:

Our sales to China and other affected destinations, derived from products that are now subject to licensing requirements, have consistently contributed approximately 20-25% of Data Center revenue over the past few quarters. We expect that our sales to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions.

The market did not like that. It also did not like that the guidance (which handily beat consensus) was only inside the top end of the whisper range, which recall according to JPM, cash trader Stu Humphrey was $18.5-21.6bn, with the company guiding $20BN, or about $1.6 billion below the top end of the range. Here is NVDA’s Q4 guidance:

• Revenue is expected to be $20.00 billion, plus or minus 2%.
• GAAP and non-GAAP gross margins 74.5% and 75.5%, plus or minus 50 basis points.
• GAAP and non-GAAP operating expenses $3.17 billion and $2.20 billion, respectively.
• GAAP and non-GAAP other income and expense $200 million
• GAAP and non-GAAP tax rates 15.0%, plus or minus 1%.

So how did the market react? Well, the solid Q3 earnings were certainly good news… but the warning about declining China sales and especially the Q4 guidance which was inside the top end of the whisper guidance, was not quite as exciting as the last two quarter and as a result the stock initially dumped as much as $30 after hours, before recovering most of its losses, but has since resumed drifting lower again…

… setting up the stock for its first post-earnings drop since the advent of ChatGPT almost exactly one year ago.

Which begs the question: now that Nvidia performed only in line, was this it for the tech/Mag 7 rally?

For those who missed it, here is Nvidia latest investor presentation from October (pdf link)

Authored by Hayden Ludwig via RealClearPolitics.com,

The true danger to American democracy comes from the radical left. Just don’t expect to hear it from the mainstream media…

On Nov. 9, Americans learned that law enforcement intercepted a handful of fentanyl-laced letters intended for election offices across at least five states, including Georgia’s Fulton County. While alarming, fentanyl isn’t like anthrax – briefly touching it isn’t deadly. But ingesting it is – just ask the families of the 74,000 Americans who died from fentanyl in 2022 alone, much of it produced in China and smuggled in through President Biden’s wide-open southern border.

But dozens of media outlets used the poison letters to peddle the left’s favorite new “crisis”: Death threats to election workers from angry Republican voters.

I’ve tracked this myth since it was hatched in early 2021 as a sequel to the now-infamous “Zuck bucks” scheme, in which partisan billionaire Mark Zuckerberg effectively privatized the 2020 election in swing states with $420 million. After Biden’s victory, activists pivoted to solidifying that funding, only now from the federal government.

But there’s a price: With more federal funding comes even more federal control over our elections.

The scheme works because sympathetic reporters never have to prove that election officials are at a greater risk of threats from kooks post-2020 than they were pre-2020 – they simply assert it, as virtually all did with the fentanyl letters.

Except this time, the media buried a problematic detail: The fentanyl letters apparently came from the far left, not the far right.

Pictures of one letter mailed to the elections director of Pierce County, Wash., was adorned with an LGBTQ pride flag; the “anti-fascist” Three Arrows symbol marking Antifa, a violent extremist group; and an inverted pentagram, often used to denote Satanism.

The letter reads:

END ELECTIONS NOW

STOP GIVING POWER TO THE RIGHT THAT THEY DON’T HAVE

WE ARE IN CHARGE NOW AND THERE IS NO MORE NEED FOR THEM.

The FBI has since seized the letters and has yet to announce any suspects, so take the story with a grain of salt (we certainly are). But true or false, the media’s response is enlightening.

While 177 outlets covered the fentanyl letters story, just 60 stories quoted their demand to “stop giving power to the right,” according to data from Lexis Nexis.

Yet almost all referenced “terrorism” or “domestic terrorism,” a key phrase in the threats-to-election-workers narrative.

Neither the Guardian nor Oregon Public Broadcasting bothered to comment on the letters’ hateful political symbols in the rush to push their preferred narrative: election worker harassment.

New York Magazine glossed over the overtly partisan symbols, noting blandly that “authorities are still uncertain as to the political leanings or particular motives of the sender.”

The Washington Post admitted that “the symbols in the letter are associated with left-leaning politics” – an astonishing euphemism when describing Antifa – before adding that the sender’s political views “remain unclear.”

Politico and NPR were the worst offenders, suggesting – without evidence – that it could be a conservative hoax:

While the symbols have sometimes been associated with leftist politics, they also have been used by conservative figures to label and stereotype the left, and the sender’s political leanings were unclear.

It’s hard to imagine those same outlets describing an alt-right symbol – say, Pepe the Frog – as “sometimes associated with far-right politics.”

All but one quoted David Becker, a political operative who runs the Washington, D.C. advocacy group Center for Election Innovation and Research, on the “sad reality” of “threats” “terrorizing” election officials. Here’s what they don’t mention about Becker: He’s a far-left elections activist working to turn states blue.

At the Justice Department, Becker earned a reputation from colleagues as a “hardcore leftist” who “couldn’t stand conservatives” – an image he’s since tried to obscure. Then he led election policy for the partisan group People for the American Way, a connection he’s also attempted to downplay or hide.

Becker accuses his political opponents of threatening election officials and spreading “election denialism,” as if well-intentioned skepticism is a disease.

We can guess why: Becker’s group, CEIR, is the source of that unproven theory through its front group, the Election Official Legal Defense Network, which was formed in early 2021 to label Republican voters a threat to democracy.

CEIR took $70 million from Mark Zuckerberg to register and turn out Democratic voters in swing states as part of the 2020 Zuck Bucks scheme, which NPR later celebrated for “saving” the 2020 election. Shamefully, the mainstream media continues to bless CEIR as “nonpartisan.”

In May, Becker hosted a conference at the D.C. Spy Museum where Colorado’s Democratic Secretary of State Jena Griswold declared that there are six election-denying secretaries of state, six U.S. senators, and 150 congressmen who are “desecrating the halls of Congress as we speak” – all Republicans.

“This is part of the national Republican strategy to cause chaos to [win] elections,” she blasted, later intimating that these conservatives ought to be prosecuted for their opinions.

Arizona Democratic Secretary of State Adrian Fontes went further, labeling all conservatives “fascists” and “election deniers” for questioning the contested 2020 election. Elsewhere, he’s called Republicans “MAGA fascists” and “authoritarians” who spew “lies” in order to “destroy our democracy.”

Does that sound like someone who should be in charge of Arizona’s elections?

We’ll doubtless learn more in the coming weeks from the FBI about the source of the fentanyl letters. Or then again, Biden’s agents may bury the story completely; it wouldn’t be the first time. You be the judge of what Uncle Sam reports to the public.

But what we can’t do is fall for another conspiracy theory that has one objective: weaponizing the federal government against the Democratic Party’s enemies. The clues are all there. Will Americans pay attention before it’s too late?

Oil prices were flat today as traders anxiously await OPEC+’s decision later this week.

Crude slipped after President Joe Biden said that a deal to free some Israeli hostages held by militant group Hamas is imminent.

Later on, oil regained some ground on news that Federal Reserve policymakers are united around a strategy to “proceed carefully” on future interest-rate moves.

An expected buildup in US stockpiles, as well as the contango structure of WTI’s front-month spread, “are keeping a lid on prices,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities.

“But its mostly a choppy trade until we see what OPEC+ is going to do.”

After four weeks of builds crude is once again expected to see stockpiles increase, as Cushing builds off tank bottoms

API

• Crude +9.05mm (+100k exp)

• Cushing +640k

• Gasoline -1.79mm (-600k exp)

• Distillates -3.51mm (-600k exp)

A dramatically larger crude inventory build than expected (+9mm vs +100k exp!)a long with another rise in Cushing stocks. But, on the product side, API reports significant draws…

Source: Bloomberg

Additionally, crude inventories at key Cushing, Oklahoma, storage hub rose by 8k barrels in week ending Nov. 17, according to AlphaBBL data.

WTI was hovering around $77.80 ahead of the API data and barely shrugged at the large crude build…

In a Tuesday note, Carsten Fritsch, commodity analyst at Commerzbank, said the main question ahead of the OPEC+ meeting is whether Saudi Arabia “would leave its oil production at the currently reduced level beyond the end of the year or would raise it back to the agreed level of 10 million barrels per day from January.”

“This speculation is likely to continue until the OPEC+ meeting at the weekend, with the result that oil prices could well rise further in the coming days,” Fritsch wrote.

“That said, this also raises expectations of the meeting: if Saudi Arabia’s voluntary production cut, and possibly Russia’s reduced oil exports, were merely to be left in place beyond year’s end, which had been regarded as the most probable scenario until a few days ago, this could meet with disappointment on the market and trigger a renewed oil price slide after the meeting.”

Meanwhile, although gas prices are down significantly from their summer highs, we note they are still 21% above average for Thanksgiving week…

Get back to work Mr.Biden!

Ahead of today’s Nvidia earnings, which according to many will be the most important number of Q3 earnings season because, as DB’s Jim Reid reminds us, “Nvidia’s Q1 earnings in May was probably the event that catapulted AI into the stratosphere in terms of being an important macro topic so the pace of their success will be a key driver in how rapidly AI infiltrates our daily lives“, positioning is extremely high… so are expectations.

Below we excerpt several trading desk previews of what to expect, starting with UBS trader Ryan Cobb:

Nvidia Set Up And Positioning Ahead Of Earnings

Nvidia earnings are due Tuesday after the bell and the stock remains a favorite in tech and equities altogether, up 230% year to date. From my conversations, investors still skew very positive on the name as the story remains unchanged. It feels like buyside bogey higher here than sell side around $17 bn for quarter and $20 bn for guide. Stock has been working ahead of print (something that typically happened last 3-4 quarters as sell side analysts put out bullish previews) coupled with some positive news on incremental China revenues.

Flows have been slightly better for sale into the print which is a mix of long only and hedge fund trimming, as investors allocate money out the risk curve into the small and midcap space. The desk has seen a couple short tickets here and there surprisingly, but significant in terms of size.

Tim Arcuri, UBS semis analyst, is more bullish than most of the sell side on NVDA – he says it should solidly clear investor bogeys for guidance, but don’t expect much new to sway the main stock debate on the direction of C2025. Tim adds that it will be important to hear commentary on H200 GPU, change/increase in purchase commitments or allocations, and commentary on China restrictions.

Key Metrics:

• Q3 Revs: UBS estimate $16.3 bn (above street) – Segment: UBS estimate Data Center $13 bn (in line with street) – (DC Compute $11.1 bn vs. Networking $1.88 bn), Gaming $2.56 bn(below street)
• Q3 GMs & Op Margin: UBS estimate GMs 72.6% and Op Margin 60.3%
• Q4 Revs Guide: UBS estimate $19.6 bn (well above street) – Segment: UBS estimate Data Center $16.2 bn (well above street) – (DC Compute $13.9 nn vs. Networking $2.26 bn), Gaming $2.61bn (below street)
• Q3 GMs & Op Margin Guide: UBS estimate GMs 73.3% & Op Margin 61.5%
• FY24 & FY25 Revs Guide: UBS estimate $56.6 bn FY24 & $97.4 bn FY25

Positioning came down from a scale of 10 in last print to 9 now, though Nvidia (NVDA) remains favorite in Tech & Equities altogether as the stock is up 240% year-to-day and up 20% month to date into print. From my conversations investors are still skewed very positive on the name as the story remains unchanged – though some taking profit in early fall as YTD winners lagged and stock didn’t quite work immediately on last print. That being said it feels like sentiment is better than last print, though isn’t as strong as the Goldilocks scenario into May Print that saw a +25% move.

From UBS we turn to JPMorgan, whose equity analyst Harlan Sur has an OW rating and a $600 target price (+18.3% upside from yesterday’s close… just in time for NVDA new all-time high). But instead of listening to the sellside which is usually an echo chamber of penguins where nobody dares to stray from the flock, we hand the mic to JPM’s trading desk, starting with Stu Humphrey, in equity cash trading:

As we approach earnings, I have seen folks get a touch nervous that any upside surprise to numbers might be currently being priced in- hence we have been better sellers. And from current levels, it will take more than just a beat and raise to break $500. We can debate what we think 2025 growth will look like, but this quarter is not going to be able to tell us that. For this Q, folks feel there will be upside to prior guide, and they will have some sort of remedy for China demand. But who the heck knows what exit run rate will be for 2024? Have spoken to many a HF that are much more bearish on what the eventual normalization will look like after the big spurt of 2024. No idea if DC biz will be $40-50B biz or $80-100B biz. Reports after the bell 11/21.

BUYSIDE BOGEYS

• FQ3 revenue (guide $16.0b +/-2%): $17.5b (range $16.2-18.2b)
• FQ4 revenue guide (consensus $18b): $19.6b (range $18.5-21.6b)
• F25 (~C24) EPS (consensus ~$17.2): $20.7 (range $18.5-22.0)
• F26 (~C25) EPS (consensus ~$20.4): $23.2 (range $19.5-27.5)

And here is some color from JPM’s TMT Sector head Jack Atherton:

The stock has been +21% MTD; NVDA’s earnings this week will be critical for Semis Outlook and near-term trajectory for MegaCap-Tech. If $500 remains a psychological ceiling for the stock, I am struggling to see mega cap tech making fresh highs short term.” Some additional color:

• Sentiment: Positive … though not to the same extreme as FQ2 earnings with incremental fears over “peak” earnings risk, visibility into C25, competition from AMD/hyperscaler custom silicon, and the stock trading ~ATHs. The ~$100/sh move from $400 caught most off-guard and has come from a combo of restored AI sentiment, China clarity, and rates coming down from the highs.
• Positioning Score (1 = max short/UW, 10 = max long/OW): 9
• Buyside Bars: FQ3 revenue $17.5b (guide $16b +/-2%), FQ4 revenue guide $19.5-20.0b (St $18b). My buyside survey suggested investors are at ~$21 C24e EPS, and ~$23 C25e EPS.
• Debates for the Call: 1) Sustainability of DC growth in 2025, 2) Supply constraints, 3) China uncertainty and new GPU releases to evade export restrictions, and 4) Competitive threats.

We end with two previews from Goldman, first S&T specialist Michael Nocerino:

• NVDA reports post close on 11/21 and it will be the most important event of the week in regards to overall risk sentiment (even more focus than usual after Sam Altman’s dismissal from OpenAI).
• We currently have NVDA positioning at an 8 on 1 – 10 scale (1 max short and 10 max long).
• NVDA’s massive EPS/revenue outperformance vs. expectations over the last several quarters has created a VERY HIGH bar.
• On Tuesday the street is looking for EPS +478% to 3.35 with total revenue +170% to $16B (including Data Center revenue +232% to $12.73B).

And finally, here is Goldman TMT trader Peter Bartlett

• NVDA reports post-close… The desk has positioning as positioning as 8 out of 10 (down from a 10 out of 10 last quarter when a blow-out print only saw the stock trade up ~10 bps on a T+1 basis).
• While most investors do not expect the debate around CY2025 earnings power to be settled on this call (easily the #1 debate on the stock), investors are looking for another clean beat-and-raise set of results (as a benchmark for ‘magnitude’, Nvidia beat DC consensus revs by 10-25% the last two qtrs – this qtr, cons sits at ~$12.7bn for Oct DC revenues), coupled with i) color around China policy impacts (and ‘flexibility’), ii) customer demand patterns (Cloud vs Enterprise), iii) Networking momentum and supply constraints (GSe TSMC’s CoWoS capacity to increase to >25k and 30-35k WPM by 2Q24 and 4Q24, respectively, from 10-12k WPM in 2Q23 and 15-16k WPM in 4Q23).

More available to pro subs in the usual place.

Update(1507ET): The Biden White House is threatening to slap an official terror designation on Yemen’s Houthi militia after it seized an Israel-linked cargo vessel in the Red Sea (details below).

On Tuesday, as 25 international crew are still being held hostage after Houthi militants boarded the vessel by helicopter Sunday, National Security Council spokesman John Kirby told reporters that “in light of … the piracy of a ship in international waters, we have begun a review of potential terrorist designations and we’ll be considering other options together with our allies and partners as well.”

Importantly, Kirby also directly alleged that Iran was complicit. The Houthis have expressly said that the seizure was in retaliation for Israel’s onslaught on Gaza, which has killed some 13,000 Palestinians – mostly civilians. Per a White House press briefing:

Mr Kirby added that Iran was “complicit in its material support, and encouragement of the Houthi forces” and called on the group to “unconditionally” release the ship and its crew.

The Houthis earlier this month declared war on Israel, and have sent several drones and missiles toward southern Israel at this point. At least two of these projectiles have been intercepted by warships stationed in the Red Sea.

* * *

Yemen’s Houthi rebels have released dramatic video of their Sunday hijacking of the Galaxy Leader, a vehicle-transport ship whose owner is a subsidiary of a company owned by an Israeli billionaire.

The ship is still in their control, with 25 crew members of various nationalities held hostage and the vessel now in the Yemeni port of Hodeidah.

The Red Sea incident received surprisingly little initial coverage by major media, considering it marked the opening of a new, maritime front in the multilateral regional conflict that erupted on Oct 7, when Palestinian Hamas militants invaded southern Lebanon, killing more than a thousand Israeli civilians and soldiers.   

The Iran-aligned Houthis, who’ve been battling Yemen’s Saudi-backed government since 2014, had already launched multiple drone and missile attacks on Israel in solidarity with Hamas and the people of Gaza. In announcing their seizure of the Galaxy Leader, the group said, “All ships belonging to the Israeli enemy or that deal with it will become legitimate targets.” 

“The detention of the Israeli ship is a practical step that proves the seriousness of the Yemeni armed forces in waging the sea battle, regardless of its costs and costs,” said Houthi chief negotiator Mohammed Abdul-Salam in a separate online statement. “This is the beginning.” About a fifth of the world’s oil must traverse the narrow strait between Yemen and Djibouti.

The professionally-produced, nearly four-minute Houthi video appears to have been shot from multiple cameras in the air and on the sea, including one mounted on the tail of a helicopter used to airlift the attackers onto the ship and others worn by the militants in action. 

It first shows a helicopter pursuing the 600-foot ship as it plows through the sea. Houthis then dismount the chopper atop the ship’s deck, fire AK-47 rifles and make their way to the ship’s bridge, where crew members surrender to them. In the final shot, the ship moving through the water, surrounded by several small watercraft. 

⚡️#BREAKING The Houthi group publishes a video of its seizure of the Israeli ship in the south of the Red Sea. pic.twitter.com/DYZIq2IPKh

— War Monitor (@WarMonitors) November 20, 2023

Maritime security company Ambrey tells the Times of Israel that the helicopter air assault tactic mirrors similar seizures perpetrated by Iran. The Houthis have declared themselves part of an “axis of resistance” against the Zionist state. 

Israeli Prime Minister Benjamin Netanyahu’s office characterized the hijacking as “an Iranian attack.” Iran distanced itself from the incident. “We have repeatedly announced that the resistance groups in the region represent their countries and make decisions and act based on the interests of their countries,” said the foreign ministry’s Nasser Kanani.

It appears there are no Israeli citizens on the ship, which was headed from Turkey to India. The crew includes Ukrainians, Bulgarians, Filipinos, Mexicans and a Romanian, The Times reports. The seized ship is operated by a Japanese company, Nippon Yusen. Japan’s foreign minister says his diplomats are in direct contact with the Houthis, while also “urging Saudi Arabia, Oman, Iran, and other countries concerned to strongly urge the Houthis for the early release of the vessel and crew members.”

The Galaxy Leader is ultimately owned by Ray Car Carriers, which was founded by Abraham “Rami” Ungar. With an estimated 2019 net worth of more than $2 billion, he’s among Israel’s 30 wealthiest individuals. According to wiretaps, Ungar was involved in scheme in which he’d pay an employee of then-Prime Minister Ehud Olmert $10,000 a month in exchange for her refusal to testify against Olmert. 

In a sign that cargo shipping could be significantly disrupted by the Houthi hijacking and their open-ended threat for more to come, two ships affiliated with the same maritime group — the Glovis Star and Hermes Leader — changed course on Sunday, Reuters reported Monday night. 

Ships navigating between the Red Sea and the Gulf of Aden and then the Indian Ocean must cross the Bab al-Mandab Strait. Its name translates to “Gate of Grief.” The waterway is only 20 miles wide, divided into two channels — one is 2 miles wide; the other, 16. 

With its multiple “first-person shooter” perspectives, the Houthi video led many people to think it must be fake…

Wild and terrifying! I honestly thought this was a video game at first. It’s real. Houthi terrorists hijack a cargo ship named “Galaxy Leader” in the Red Sea over the weekend pic.twitter.com/2JT7bo6Bvd

— Justin Hart (@justin_hart) November 20, 2023