Dear Trader,

I owe Jensen Huang a thank-you note.

I figured the two weeks after the election would be nothing but recount conspiracies and impeachment chatter.

Instead, the CEO of the most important company in America got caught in a relationship with an alleged Chinese intelligence asset, and the intel crowd in this town hasn’t had this much fun since Eric Swalwell and Fang Fang.

Everybody’s treating this like a tabloid story.

Philandering CEO, mystery woman, same last name, cue the jokes.

I’ve worked in Washington long enough to know a tabloid story from a Congress story, and this one belongs to Congress. That matters because Congress is about to change hands.

The statute nobody’s reading

The Espionage Act of 1917 grabs the headlines because Section 794 carries life in prison and, technically, the death penalty. That’s the Rosenbergs. It’s also about Jensen personally, and I’d put the odds of a 794 charge somewhere near zero.

The law I’d want to understand, if I owned Nvidia (NVDA), is the Economic Espionage Act of 1996. Congress wrote it specifically for theft of American trade secrets that benefits a foreign government, and it carries corporate penalties. A company can be fined the greater of $10 million or three times the value of the stolen trade secret.

Think about “three times the value” when the trade secret is the architecture behind the most sought-after chip on earth.

Nobody’s been charged with anything, and Nvidia says the interactions were routine business. I’ll take them at their word on that. What I won’t assume is that a Congress elected on a promise to investigate corporate America passes up the juiciest case to land in its lap in years.

Who’s holding the gavel

Brian Mast at Foreign Affairs, John Moolenaar at the China Select Committee, and Rick Crawford at Intelligence have asked Jensen to appear for a closed-door briefing on November 18th. That’s the day after Nvidia reports earnings. Those three are Republicans, and they lose the gavels in January.

The Democrats taking over have spent months talking about corporate accountability, and now they’ve got a story that fits the brief perfectly. Silicon Valley and the defense sector have grown so intertwined that a Chinese asset near the Nvidia CEO reads as a national security breach, whatever the actual information flow turns out to be. No company wants Congress giving it a proctology exam, and Nvidia’s about to get two of them from two different parties.

Could the House refer this to the Justice Department for a criminal probe? If they get their panties in a knot, absolutely. The stock dropped on a newspaper story. Imagine what it does on a referral.

Trump endorsed Jensen on Monday morning. I can’t tell you whether that helps him or hurts him with the incoming majority. I lean toward hurts.

What happens between now and January

The lame-duck session itself is going to be pretty lame. The one thing I’m watching is whether leadership tries to push the National Defense Authorization Act to the floor before the new Congress is seated. If they do, there’s room for amendments, and that’s where the drone money gets decided. If they don’t, our drone thesis waits for the new committee chairs, and I’d rather not wait.

For the next eight weeks, the new majority gets to say whatever it wants about what it plans to do, and it can’t do any of it yet. Stocks will trade on those statements anyway. They always have.

That’s exactly what Cycle 11 is built for.

Mark put on the first trade today, and we’ll be trading the gap between what Washington says and what Washington does from now until the new Congress is sworn in.

You can join us here at this link.

Jensen just volunteered to be the test case.

Frank Gregory