TheBRRR’s GM

Editor’s Note: We deployed the remaining cash in our portfolio this morning - upgrade for $3/month to see the move we made.

Despite a fragile geopolitical and economic environment, markets remain calm.

We’re looking at imminent escalation in the Israel-Palestine conflict that may drag the US into another foreign war at a time the country is at its weakest financial health in decades.

We have debt-GDP at record highs and the rate of new debt issuance is escalating at a time we have the highest interest rates in decades.

The US also remains depleted in several key categories of strategic supplies and assets.

Reports circulated that the military was running low on ammunition to send to Ukraine earlier this summer, while we have yet to refill the strategic petroleum reserve after draining it down to generational lows amidst the president’s effort to suppress gas prices during the 2022 midterm election.

Tech stocks haven’t cared about any of this, as the Nasdaq rests within shouting distance of YTD highs.

Banks are doing just fine as well, as JPMorgan Chase, Wells Fargo, and Citigroup kicked off the earnings season today with impressive third-quarter results, surpassing expectations.

Shares of JPMorgan Chase surged by 1.8%, while Wells Fargo and Citigroup saw their stocks rise by 3.3% and 3% respectively after announcing their revenue beats.

In tech news, Microsoft's $69B acquisition of Activision Blizzard received approval from UK regulators, coming with certain conditions like the sale of Activision's cloud streaming rights to Ubisoft, hoping to ensure competitive cloud gaming prices and choices.

Elsewhere, the EU plays hardball with Elon Musk's platform X over "disinformation" claims, but Musk bats back asking for the receipts. Meanwhile, the EU's new DSA law flexes its muscles, ready to swipe at social media giants.

Should we make any changes to our portfolio, premium subscribers will be the first to know with the actual assets and sizing involved.

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Market News

Palantir's AI: The Magic Behind the Stock's Rise

Palantir Technologies Inc. is making significant strides in its AI ambitions. Their recent AI Platform (AIP) has garnered immense demand, with CEO Alex Karp highlighting its unprecedented demand in his shareholder letter.

The company's recent earnings showcase robust YoY growth, and they've provided an optimistic outlook for 2023. With these strong earnings and potential S&P 500 inclusion, there's a belief that Palantir's stock is undervalued.

• Impressive Earnings Performance: Palantir's Q2 earnings report displayed resilience and growth, with a GAAP net income of $28 million, marking their third consecutive quarter of GAAP profitability. Their GAAP income from operations reported a profit of $10 million, contrasting the $41.7 million loss from Q2 2022. Revenue figures were also promising, with a reported $533 million, a 13% YoY increase.

• Strategic Partnerships: Notable partnerships include a three-year contract with the US Army worth up to $250 million, a collaboration with PwC to accelerate operational transformation, and a 5-year partnership with CAZ Investments to support their growth and innovation efforts.

• Valuation Metrics Indicate Undervaluation: Palantir's current forward P/E and P/S ratios suggest it's undervalued compared to 2021 levels. The company's prospects are brighter than ever, especially with the increasing demand for its AI platform and the potential S&P 500 inclusion. Challenges like data privacy concerns, especially with the controversial UK health data contract, still need to be addressed.

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Macro News

From Silicon Valley to Shenzhen: A Tech Tango

Amidst the technological tug-of-war between the U.S. and China, the U.S. government is strategizing to fortify its technological defenses. By targeting a previously overlooked loophole, the U.S. aims to halt Chinese developers from indirectly sourcing AI semiconductor chips.

As the geopolitical tech chess game intensifies, the upcoming U.S. regulations are set to cast a wider net, ensuring that not just the tech titans but every player in the semiconductor arena is covered.

• Tech Hotspot in Focus: Huaqiangbei, often dubbed the "Silicon Valley of Hardware" in Shenzhen, has emerged as a focal point, with Chinese developers cleverly navigating around U.S. restrictions to source cutting-edge AI chips from this bustling tech bazaar.

• Beyond the Big Players: While giants like Nvidia and AMD have traditionally been the primary focus of U.S. regulations, the evolving landscape demands a more holistic approach. The U.S. is now recalibrating its strategy to ensure that even the smaller, nimble players in the semiconductor market don't slip through the regulatory net.

• China's Chess Move: In this intricate game of technological supremacy, China's decision to control the export of gallium and germanium—two linchpins in AI chip production—signals its intent to safeguard its tech prowess and counterbalance U.S. moves.

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Today’s Reader Poll

For today’s poll, we want to hear your overall concerns about inflation:

Here are the results from Wednesday’s poll, where we asked for your predictions on the CPI print (came in a tad over at 3.7%).

AI Art of The Day

Janet Yellen comments on everything from military spending to social issues with such irrational confidence - there’s nothing she doesn’t think she can do.

Got feedback? Follow the writer on Twitter @frank_locascio and send a message.

The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.