The dust is slowly settling on the presidential election and it’s time to get back to business.
We witnessed a monumental red wave wash over the country. The people craved a break from a largely frustrating norm and they sure have spoken. However, with any kind of power comes responsibility. Trump now has to govern.
As Americans, we have to hold who’s in office accountable to their promises. Like it or not, whoever’s in power gets the blame for anything bad that happens.
Here’s a taste of what’s brewing beneath the surface:
- In October, the delinquency rate office CMBS jumped to 9.4%. That’s the highest it’s been in 11 years. Right now, office CMBS delinquency rate is on track to blow past 2012’s all-time high of 10.3%. The overall US CMBS delinquency rate rose to 6.0%, the most since the 2020 pandemic.
- Our country’s budget deficit is currently in crisis mode. It’s now above all prior recessionary levels except 2008, 2020, and both World Wars. If our economy is so strong, why isn’t deficit spending at a low?
- Big tech is under fire as scandal continues to run through some of the Mag 7 darlings (which we’ll cover a bit later).
Yes, Bitcoin and stocks may be rallying, but when the market euphoria wears off, we’ll have to face reality.
In this edition of our newsletter, we’re zooming in on big tech in particular and an important question for us as Factors.
We’ll tie it all together for our heroes on the journey with an anecdotal story to drive it home.
Tech Support
For big tech, Trump’s reign could mean significant initiatives, especially around defense. He may also make revisions to Biden’s Inflation Reduction Act, which could impact companies like Intel who saw big benefits from the related credits.
On the EV front, multiple provisions could be targets for appeal. Fuel economy and emissions regulations could undergo rewrites, which could limit revenue from car makers who cashed in on incentives.
Regulation and the FTC have been a big thorn in big tech’s side. Under the influence of Elon and like-minded others, Trump may remove the current FTC head. This might be good news for Google and Apple in light of the antitrust issues they’ve been facing.
In our last newsletter, we addressed the accounting scandal at Super Micro Computer and its ties to NVIDIA. SMCI’s Q2 sales and profit fell below Wall Street’s expectations as they await the latest chips from NVDA to be delivered.
However, rumor has it that NVDA isn’t sending them the chips, diverting them to Dell and other customers instead. Trouble in paradise?
If you’re wondering just how intertwined these two tech giants are, NVDA currently has $14B of AR on their books. How much of that money is owed by SMCI?
As a Factoring company, would you buy NVDA? If their third-largest account debtor just suffered an accounting fraud, would you look the other way?
If you’ve been around long enough to remember the Enron days, this may sound like a familiar story. Side note: Enron was replaced by NVDA on the S&P 500 in 2001.
You can’t make this stuff up.
Anecdotes and Allies
Back in the Enron days, we had a factoring client that was 100% concentrated in Enron.
I went to his office to express my concerns and he told me (and I quote): “Cole, this is a $100B company. You think they can’t pay my accounts?”
My client was in the security guard space and I responded, “Sir, if you don’t immediately go down to those towers and threaten to pull your security guards immediately, I will…and demand they write you a check for the entire balance.”
Eventually, he agreed. Then, he got priority status and made a small fortune during the wind down. Of course, he graciously thanked me for doing the hard thing.
In our industry, unknowns may not only hurt us, they could be a matter of life or death. It’s up to us to know which unknowns to look out for.
Because we can’t always see the answer right away, it helps to have allies on our side to gain more perspectives. True allies also keep us honest with ourselves.
All success comes with risk. All heroes step into the unknown to take a chance. The odds of having a positive outcome often depend on who’s around us on the journey.
It can be tough to know which moves to make next and who to trust, especially when it comes to capital. At Dare, our job is to guide you in the right direction, a role we take with every ounce of seriousness.
We’d love to be your ally on the next leg of this crazy journey, wherever that may lead.
Through Dare’s Back Room Service, you’ll get:
- Greater Income (like a lot more)
- Owning assets instead of commissions
- Zero investment down
- No personal liability
- Fifty-fifty split on risks and profits
- Portfolio management software from NN6, LLC
Want to learn more about how we can help? Give us a call.
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Until next time,