Hey Income Traders,
Last issue I made the case that the election hits AI on the supply side. Demand’s fine whoever wins.
So where does that show up first? In a market that didn’t exist a few months ago.
CME Group (CME), the same exchange where oil and corn trade, has filed to list futures on the cost of renting Nvidia (NVDA) H100 and B200 chips. Each contract covers about a month of renting one chip. Regulators pushed their review out to November 9th, six days after the vote, and Intercontinental Exchange (ICE) and Nodal Exchange have their own versions in the pipeline.
I’m walking through what happens to this market once the votes get counted, live, on day three of Midterm Money Multiplier. Grab a seat at this link before Monday.
Why this matters
Think airlines and jet fuel. The biggest tech companies will use these contracts to cap what they pay when compute spikes. The neoclouds (the smaller cloud providers that rent out GPUs by the hour) will use them to lock in what they earn. Hedge funds will trade AI spending without owning a single chip.
And Wall Street isn’t waiting around. Grayscale, Roundhill and ProShares have already filed for ETFs built to hold these futures, before the futures themselves trade. Nobody builds the wrapper first unless they’re sure somebody wants what goes inside.
Where the election comes in
Data-center pushback is one of the few things both parties agree on. More pauses and permit fights leave demand right where it is and choke new supply. That means scarcer compute and wilder swings in what it costs, and every swing hands somebody a reason to hedge.
So whichever way the vote goes, this market gets bigger. How much bigger, and who collects, is what I’m covering on November 4th. Grab a spot before Monday to make sure you can take advantage of everything Garrett Baldwin and the Option Pit crew is covering for 3 days starting Monday November 2nd at 10 AM ET.
How I’m playing it
My framework hasn’t changed: buy scarcity, avoid abundance. A futures market is the clearest signal yet that compute is scarce.
The exchanges collect a toll whether prices go up or down. And whoever already owns capacity and the scarce inputs, memory especially, benefits once the price of compute gets set in public.
I’ve got a short list of who wins when compute starts trading like crude, and I’m saving it for the day after the vote. That’s day three of Midterm Money Multiplier with Garrett Baldwin and the rest of the Option Pit crew, three days of live sessions, and my piece lands on the one where we finally know who runs Congress.
Next issue: the spenders get squeezed.
Here for a good time AND a long time,
Hans