&ldquo;I&rsquo;ve been a Democrat my whole life.&rdquo;
I&rsquo;ll give Alex Karp one thing: he&rsquo;s got brass balls.
The cold-blooded Palantir CEO uttered that quote to Politico on Wednesday. He added that he knows more about being a progressive than almost anybody on the planet. Then he said every one of Palantir&rsquo;s products is &ldquo;essentially progressive.&rdquo;
By one count, Karp used the word &ldquo;progressive&rdquo; eight times in a single interview, as if he were a man practicing a new word in the mirror.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6bQZ00SVOVMkfpq1xPFsqV/b2daaa4eb93848313f8da872314bbe86/mr-issue-11-12-26-img-2.gif" alt="" width="300px" />
And how&rsquo;s that timing? The corpse of the Republican Congressional Majority isn&rsquo;t even cold yet.
Just over a year ago, the same reptile told his shareholders Palantir was &ldquo;the first company to be completely anti-woke.&rdquo; On that call, he bragged, &ldquo;We power ICE.&rdquo; In 2024, he called wokeness a &ldquo;thin pagan religion.&rdquo; In 2025, he told his Democratic friends to &ldquo;grow a spine.&rdquo;
Really.
<h2 class="subhead nbp">The Stock I Loved</h2>
In October 2023, I told you to love Palantir the stock, not Palantir the company. PLTR traded in the teens back then. Yesterday, it closed at $172.40. If you bought then and held on, you&rsquo;ve made about ten times your money.
My thesis was about the Cantillon Effect. Newly printed government money lands in a few lucky spots first. Those spots get rich before everyone else. Palantir sat right at the Congressional committee crossroads of spy and defense budget allocations.
So I&rsquo;m not angry with Karp. I&rsquo;m grateful. In fact, I stupidly sold the stock once it doubled, so I missed a bunch of the upside.
But he just proved my thesis all over again, and with a straight face, too!
<h2 class="subhead nbp">The Vicar of Bray</h2>
Karp isn&rsquo;t the first man to find a new faith right after a change in government.
In 1662, an English churchman named Thomas Fuller told the tale of the Vicar of Bray. Bray is a small parish near Windsor, west of London. Legend says its vicar served under four Tudor monarchs: Henry VIII, Edward VI, Mary, and Elizabeth.
England changed its official religion almost every time the crown changed hands&hellip; and so did the vicar. He was Catholic, then Protestant, then Catholic again, then Protestant once more.
Fuller explained that the vicar had watched martyrs burn at the stake a couple of miles away in Windsor. He decided that fire was too hot for his delicate constitution.
When a critic called him a turncoat, the vicar objected. He said he&rsquo;d always kept one principle, and only one: to live and die as the Vicar of Bray.
Historians now think the legend blends two or three different men, but that doesn&rsquo;t matter. The English liked the story so much they wrote a ballad about it. The chorus boils down to a single vow.
Whatever king may reign, I&rsquo;ll still be the Vicar of Bray.
<h2 class="subhead nbp">Losing His Religion</h2>
Palantir has one giant customer: the U.S. government. NPR reports the company holds about $2 billion in federal contracts. Last quarter, Uncle Sam paid Palantir $953 million. That&rsquo;s a lot of moolah to put at risk over a few old sound bites.
And in January, the parish gets new management.
Senator Ron Wyden will chair the Senate Finance Committee. He&rsquo;s already demanded answers about Palantir&rsquo;s work for Homeland Security. His office says forced testimony is on the table if the company doesn&rsquo;t cooperate.
So on Monday, Palantir hired former Democratic Senator Jon Tester of Montana as an adviser. Tester served 18 years in the Senate as a loud critic of the Patriot Act. He didn&rsquo;t want Big Brother watching anybody. Now he works for a company whose software helped ICE track deportation targets. He told NPR the firm &ldquo;believes in privacy.&rdquo;
Does anyone have any shame anymore?
Then Karp gave Politico his favorite line about his political giving. He said it&rsquo;s split evenly between Democrats and Republicans.
Who needs conviction when you can hedge your bets so easily?
<h2 class="subhead nbp">Why the Vicar Always Wins</h2>
In January, the group that controls Palantir&rsquo;s purse strings changes. A company that lives on government money has no choice but to please whoever holds the purse.
The vicar didn&rsquo;t care about doctrine. He cared about the income that came with the parish. Karp doesn&rsquo;t care about &ldquo;woke&rdquo; or &ldquo;anti-woke.&rdquo; He cares about contract renewals.
That&rsquo;s the real lesson of a Cantillon stock. You&rsquo;re not betting on the party, but on the spigot. It doesn&rsquo;t matter who turns on the spigot.
<h2 class="subhead nbp">What It Means for Your Shares</h2>
In one sense, this is good news if you own PLTR. Management just showed you it will say anything to keep the government money flowing. That&rsquo;s the bet you may have made in 2023.
But the price is another story. PLTR trades at more than 100 times earnings. It sits about 20% below its 52-week high of $212.94. A vicar can switch churches, but can&rsquo;t make the collection plate grow forever.
However, the biggest risk to PLTR&rsquo;s stock may be a general tech stock dump, due in no small part to <a style="font-weight: bold;" href="https://rudeawakening.info/posts/jensen-huangs-himself">Jensen Huang&rsquo;s extramarital activities.</a>
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1dxLPzjMuNhfTMRLRX36Lu/46e8fa44a648e051792b7248ca5d941d/mr-issue-11-12-26-3.jpg" alt="" />
PLTR&rsquo;s Weekly Chart, with our buy call back in October 2023
Remember Richard Maybury&rsquo;s rules for riding a government money cone. Find it. Tap into it. Don&rsquo;t expect it to last. Always look for the next one.
<h2 class="subhead nbp">Wrap Up</h2>
One more Tudor story before I go.
Another man served those same four monarchs. His name was Thomas Tallis, a composer and organist in the royal chapel. He wrote music for both Catholic and Protestant services. But most accounts say he stayed Catholic his whole life, at great personal risk.
More than 400 years later, choirs still sing Tallis. The vicar is a punchline.
Still, you don&rsquo;t have to admire the vicar to profit from the parish.
Have a great day ahead.

mr-issue-11-12-26-1

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Hard-hitting economic news and market commentary. Each issue features biting market coverage, expert commentary, and in-depth analysis… along with a warm dose of humor and some skepticism.

Daily Reckoning

Morning Reckoning

The Vicar of Palantir

Last week, the voters took the car keys back. Damn! Now we won&rsquo;t get that $5,000 payoff from Donald J. Trump.
Like everyone else, we are trying to figure out what the mid-term elections might mean for the country. Most likely, the Democrats will soon have us all in the ditch; they&rsquo;re at the wheel now.
Our political parties squabble over trivia. But when it comes to the essentials, they are both tossing out the same loaded dice. They pretend to solve problems by passing laws, spending money, and bombing foreigners. But in America, as in Europe, the model is exhausted. They have run out of money. Interest rates are going up. Populations are no longer growing. And bombing has never produced much more than enemies &mdash; dead or alive.
In Europe, students, workers, and wreckers are taking to the streets. In the US, they went to the polling stations. One route was marked by rank violence and chaos. The other by solemn claptrap and soothing lies.
What put the Trump Team back in the saddle in 2025 was the Democrats&rsquo; foolish focus on culture war issues &mdash; DEI, they-them, bathroom policies, racism and other claptrap.
In this election just passed, the Democrats wisely avoided mentioning those things altogether. It was as if, in 24 months, they had forgotten the sacred tenets of their faith. They had all been coached to stay on message with a single word: affordability.
And now that they have won, they must recall their promises...and dodge their own treachery. They knew perfectly well that they couldn&rsquo;t do anything about &lsquo;affordability.&rsquo; The only real solution is to cut back on the very thing both parties lust after most &mdash; government power.
The initial skirmish will probably be on the tariff issue. Grosso modo, the feds put a 10% tariff on imports...the price of imports goes up 10%. Logical implication: cut out the tariffs and prices will go down.
Foreign Policy:
<blockquote>
Trump&rsquo;s Next Trade War Could Be with Congress
Trump&rsquo;s tariffs are unpopular, and lawmakers want to claw back their authority.
Dissatisfaction with U.S. President Donald Trump&rsquo;s disastrous, expensive, and self-defeating trade policies were a big reason for the sweeping Democratic victory in the U.S. midterm elections&mdash;and may turn tariffs and trade into one of the crucial battlegrounds of the next Congress.
</blockquote>
Tariffs were always a rookie mistake. They are essentially a tax on US consumers. Like inflation itself, tariffs give the federales more money without exposing any of them to an embarrassing vote.
It was France&rsquo;s First Minister of State, Jean-Baptiste Colbert, who described taxation as similar to plucking a goose. The idea was &lsquo;to get the most feathers with the least squawk.&rsquo;
Tariffs produced relatively little squawk because people thought someone else paid them. But the only correct measure of the burden of government is how much it spends. One way or another, it will have to get the money. The Democratic lawmakers will try the usual potions and panaceas &mdash; rent control, soak the rich, limit executive bonuses, etc.
None of those measures will improve &lsquo;affordability.&rsquo; They may make their voters feel a sense of malign satisfaction, but unless the real costs of government are reduced, the money will have to come out of the very same pockets the politicians pledged to fill.
Cutting out the tariffs is a good idea; it allows the economy to operate more efficiently and gives consumers more bargaining power and choice. But take away the tariffs and the costs of government don&rsquo;t go down...and they have to be paid somehow.
Those costs include the interest on the $40 trillion worth of stuff the feds bought but didn&rsquo;t pay for. And they get bigger all the time, thanks to $2 trillion of budget deficits coming hot and heavy, year after year.
In theory, the Democrats could make good on their promises by simply spending less. Taxpayers would keep more of their money; affordability would take care of itself. DOGE claimed it could cut enough to balance the budget. If it had actually done so, there wouldn&rsquo;t be an affordability problem...and Democrats might not now be in control of Congress. But the DOGE program was a fiasco.
And now, those Democrats &mdash; big spenders, almost every one of them &mdash; can still make good on their affordability promises, but only by doing the one thing they least want to do...actually cutting the size and scope of federal power.
Ain&rsquo;t gonna happen.

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Solemn Claptrap, Soothing Lies

By now you all know about Nvidia CEO and founder Jensen Huang&rsquo;s situation.
This is the biggest story in the world, so we won&rsquo;t rehash it. Instead let&rsquo;s explore the why now.
Back in May of this year, a short seller reported much of the same story in a widely-read report.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1deKq90U9InsuzAo0w6e3q/94309bc506daac5efe67ecfab128fa55/dr-img-11-10-26.jpg" alt="image 1" />
<a href="https://x.com/CulperResearch/status/2054623784452120917">Source: X</a>
They nailed most of the story back then. The relationship with Alice Huang, smuggling GPUs to China, etc.
And few mainstream outlets picked it up.
So why is this suddenly breaking news right now?
To explore it properly, we first need to cover some key aspects of Jensen&rsquo;s relationship with China.
<h2 class="centered subhead" style="text-align: center;">One Chipmaker to Rule Them All</h2>
When an AI company builds a model, they do it on a specific piece of hardware. Nvidia GPUs are the most popular worldwide.
Nvidia has constructed a powerful software system around their world-leading hardware. This is a big part of their moat against competitors.
Builders become experts in the entire Nvidia ecosystem.
Nvidia has become the industry standard. And Jensen doesn&rsquo;t want anything to interrupt that. Ever. It&rsquo;s the most profitable product in history.
Nvidia&rsquo;s greatest fear has always been China building their own competing system. Because we&rsquo;ve seen what happens when China runs this playbook.
Chinese hardware giant Huawei was one of the first companies to begin building 5G telecom equipment at scale. They rolled it out throughout China first, then began exporting it to the world. Today Huawei is now the largest 5G network equipment provider in the world, by far.
Huawei is doing the same thing with AI hardware. As Jensen said in June of 2025:
<blockquote>
&ldquo;Once [China] has built that entire complete [AI] stack, they&rsquo;ll export it as quickly as you could imagine.&rdquo;
</blockquote>
China&rsquo;s AI hardware, mostly made by Huawei, is still not as good or efficient as Nvidia. But they&rsquo;re cheaper, and improving rapidly. They are set to become an extreme threat to American chip dominance.
Nobody else in the world builds at the scale China does. So now that they&rsquo;ve entered the AI hardware race, Jensen is concerned. He should be.
For many years, China was happy to buy American equipment. But when Biden cut China off from Nvidia GPUs in August of 2022, they started a Manhattan-Project-scale effort to accelerate their own chip ecosystem.
And they&rsquo;ve made a disturbing amount of progress.
<h2 class="centered subhead" style="text-align: center;">Discrediting Jensen</h2>
Fundamentally, I believe Jensen was right. The American economy would have been better off if we never stopped selling GPUs to China. Sure, a bunch of Nvidia GPUs were smuggled into China, but millions more would have been sold without the ban.
The world&rsquo;s AI developers would have stayed loyal to Nvidia. It&rsquo;s a great system, and it works. We forced them to focus on their own.
Without the Nvidia export restrictions, China wouldn&rsquo;t have had such a strong incentive to build their own. Now they&rsquo;re building their own advanced chips, which work well, and will be selling them to the entire world within a few years.
The goal was to cripple China&rsquo;s AI progress. It didn&rsquo;t work.
As a result, Nvidia and the entire American AI sector is about to get a lot more competition.
Huawei and other Chinese companies have tens of thousands of their top hardware engineers working nonstop on this. Huawei is a particularly strong up-and-coming competitor. They have global scale, and compete directly with:
<ul>
<li>Nvidia</li>
<li>Cisco</li>
<li>Apple</li>
<li>Dell</li>
<li>Tesla</li>
</ul>
And the disturbing part is, their products are really good. Huawei is a dangerous company to American interests. And all our efforts to kill them have failed. They just keep getting stronger and leaner from the hardship.
The current plan, hatched by the Biden admin, is failing miserably.
<h2 class="centered subhead" style="text-align: center;">Spycraft?</h2>
Was the woman Jensen cheated with a spy? I&rsquo;m skeptical. He&rsquo;s too smart for that, and even if she was, he&rsquo;d never reveal secret info to a potential competitor.
The only source on the claim she was &ldquo;passing information to Beijing&rdquo; is the New York Times, citing unnamed U.S. officials.
I think she was probably just a middleman, out to make money. Her company, Megaspeed, bought Nvidia GPUs supposedly for use outside China, and made them available to Chinese companies.
Black markets are highly profitable, after all.
Everybody knew GPUs were being smuggled into China, or bought by Chinese companies and operated overseas.
But officials looked the other way, because it was great for Nvidia and the broader U.S. stock market.
At one point, the tiny island of Singapore accounted for 22% of Nvidia sales. Nobody believed a country of 6 million people was buying 22% of global GPUs. That would be completely ridiculous.
Lots of us noticed this fact, and next quarter, guess what? Singapore was no longer listed as a separate line item on Nvidia reports. So the data disappeared.
The smuggling was still happening, of course.
<h2 class="centered subhead" style="text-align: center;">The Real Purpose</h2>
Jensen was the biggest advocate for selling U.S. chips to China. He can no longer do that.
They&rsquo;ll accuse him of being a Chinese plant, a spy, contaminated by exposure.
So it looks like somebody wanted to stop Jensen&rsquo;s advocacy for tech trade with China. And they probably have, for now at least.
The question is: What&rsquo;s the plan? China is building their own AI hardware, and it&rsquo;s pretty darn good. Roughly equivalent to Nvidia&rsquo;s H200, which was released 3 years ago. That&rsquo;s still a very capable piece of AI hardware. And China has none of the electricity shortage concerns we do.
So once Huawei and other Chinese players scale up&hellip; It&rsquo;s going to be ugly. They will drive hardware prices into the dirt (like they have with steel, cars, solar panels, and much more).
All because we thought we could cut off China, and cripple their AI efforts. Mission status: failure.
Yes, China is a threat to our AI companies. But attempting to stop them from buying our products has backfired spectacularly. And it will only get worse if we do it again.
Unfortunately, I think the Jensen cheating/spy scandal is an attempt to further restrict exports to adversaries.
It will be bad for American AI companies. Especially Nvidia, which may eventually lose 10% or 20% of its sales. As a result of these policies, NVDA has gained a massive, powerful competitor in Huawei.
In China, a new AI hardware ecosystem is being born. Mostly thanks to short-sighted American trade policies which backfired.

TTF-issue-111026-1

Nvidia’s Worst Fear is Here

I stared at my phone in shock. The numbers didn&rsquo;t change. A simple Southwest Airlines flight from Jacksonville Florida to Baltimore Maryland cost more than $1000.
I checked United&hellip;$990 with a connection. I jumped up and down and said a few four-letter words. Outrageous. Piracy. Theft and mayhem.
That&rsquo;s more than double what I expected to pay. It turns out, this is just where we are today. Airline ticket prices are up 22%+ year over year. Holiday travel for Thanksgiving is up 30%+ according to a CNN report.
I think they are underestimating it. I expected to pay $400&hellip;maybe $450 for that flight. It&rsquo;s 2 hours, straight up the coast. I&rsquo;ve done it four to six times per year since 2005. But I&rsquo;ve never paid anywhere near $1,000 for that flight&hellip;until now.
And that&rsquo;s because flights in general are near all-time highs, according to the St. Louis Federal Reserve data:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1JRmCp3LBMkpswioMQuIp5/796368ad2483c49d334c13e487b453bf/dr-img1-11-12-26.jpg" alt="image 1" />
The root cause of the massive ticket inflation is jet fuel. Ticket prices roughly track the cost of jet fuel. And with the wave of destruction of refining assets in the two wars, the cost of jet fuel spiked. That has impacts in the U.S. because refiners can load jet fuel on ships and send it to markets that will pay. That drives up the cost of jet fuel here, even though we&rsquo;re thousands of miles away:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2WG1Wa87WTvh1cv9sPxw8d/e641fe06131890d18e297c279205ba07/dr-img2-11-12-26.jpg" alt="image 2" />
Southwest Airlines (LUV), my carrier of choice because it&rsquo;s direct, spent an extra $821 million on jet fuel in the third quarter, compared to 2025. That&rsquo;s a 62% jump in cost for the same flights. That&rsquo;s why they pass it on to us.
The four largest airlines saw a $6.3 billion increase in fuel costs, year over year. That&rsquo;s $69 million a day.
In theory, the &lsquo;official&rsquo; inflation number captures that increase. Inflation calculations include airfare, but not energy prices. So, the airlines and passengers pay massive price hikes for the same flights we did last year. But that doesn&rsquo;t really get reflected in the inflation report.
And these higher prices are a challenge for both households and businesses alike. Make no mistake, these higher costs are going to be a drag on the economy. I fully expect to see fourth quarter numbers down on consumer discretionary spending.
I know my college age kids are shopping at Walmart instead of Target now. And the airlines are getting hammered in the same way. Folks aren&rsquo;t flying. Delta Airlines reported a 47% decline in net income in the third quarter. They still turned a profit, but fuel costs cut it way down.
American Airlines lost $114 million in the second quarter and that grew to $269 million in the third quarter. Most of that loss came from much higher fuel costs. Even United Airlines saw its earnings fall $100 million from the second quarter to the third quarter.
Those higher ticket prices are going to blunt travel. Most Americans already locked in travel plans for the holidays this year. But if we don&rsquo;t get a huge reprieve in fuel prices soon, I expect to see a massive backlash in 2027.
And it won't be limited to just airfare, either.

dr-hero-img-11-12-26

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