War Drums, Bitcoin Booms, and Buffett’s Big Exit

Disclaimer: This newsletter is for informational and educational purposes only. The content you are about to read reflects our opinions and analysis based on publicly available information. It is NOT financial advice. Investing in the stock market involves significant risk, including the potential loss of principal. We are not registered financial advisors, and you should always conduct your own thorough research and consult with a licensed professional before making any investment decisions. Your financial future is your responsibility.

The past 48 hours have been nothing short of a whirlwind, a chaotic symphony of geopolitical saber-rattling, shocking corporate shake-ups, and wild market swings. We’ve seen tensions in the Middle East escalate to a terrifying new level, a fast-food chain’s stock soar on news of closures, and the Oracle of Omaha finally hang up his hat. It feels like we’re riding a rollercoaster in the dark, and the only thing we can be sure of is that more twists and turns are ahead.

This newsletter is your map and your flashlight. We’re going to cut through the noise, dissect the headlines, and connect the dots to see where the real opportunities—and the hidden dangers—lie. There are events that are shaping our world and our portfolios, from the Pentagon’s AI-driven drone ambitions to Warren Buffett’s surprising retreat from Apple.

Now, let’s get into the thick of it.

In-Depth Market Analysis: Unpacking a World of Volatility

1. The Drums of War: The U.S., Iran, and Israel on a Collision Course

Let’s start with the elephant in the room, or rather, the armada in the Middle East. The situation with Iran has escalated at a terrifying pace. President Trump has deployed a formidable military force to the region, including two aircraft carriers, dozens of warships, and hundreds of jets. Axios reports we are moving closer to a “major war,” and the subsequent Israeli high-level defensive alert and planned Iranian rocket launches only add fuel to this raging fire. The U.S. withdrawal of all forces from Syria is another seismic shift in the regional power dynamic, creating a vacuum that could have unpredictable consequences.

The immediate, knee-jerk reaction has been a flight to safety.

• Gold (XAU/USD): The classic safe-haven asset is glittering. As fear grips the market, investors are piling into gold, driving its price upward. The logic is simple: in times of chaos, tangible assets with a history of holding value become king.

• Oil (WTI & Brent Crude): Oil prices are surging, and it’s a double-edged sword. On one hand, the potential for a conflict in the Middle East threatens to disrupt a significant portion of the world’s oil supply, particularly through the Strait of Hormuz. This supply shock naturally pushes prices higher. On the other hand, a full-blown war could trigger a global recession, which would crush oil demand. For now, the supply-side fears are winning.

The impact on the broader market is profoundly negative. The S&P 500 and the Nasdaq are bleeding red as investors dump risk assets. Uncertainty is poison for equities, and a war with Iran is the definition of uncertainty. Companies with significant international operations, especially those reliant on global supply chains or consumer spending, will be hit hardest.

Defense Stocks: The obvious beneficiaries here are the defense contractors. The deployment of advanced military hardware means billion-dollar contracts for companies like:

• Lockheed Martin (LMT): The producer of the F-35 fighter jets, which are a cornerstone of modern air power. With over 50 jets reportedly arriving in the region, Lockheed’s order books are looking robust.

• RTX Corporation (RTX) (formerly Raytheon): A leader in missile defense systems, like the Patriot missile system. As Iran plans rocket launches and regional tensions soar, demand for defensive technology from the U.S. and its allies like Israel and Saudi Arabia will skyrocket.

• Northrop Grumman (NOC): Known for its advanced bombers (like the B-21 Raider) and drone technology (like the Global Hawk). Their role in surveillance and strategic capabilities becomes paramount in any conflict scenario.

While it feels ghoulish to talk about profiting from conflict, this is the cold reality of the market. Investors are flocking to these names as a hedge against the escalating crisis.

2. The AI Arms Race: SpaceX and xAI vs. The Pentagon

Away from the immediate theater of war, another kind of conflict is brewing: an AI arms race. The Pentagon’s $100 million autonomous drone swarm competition is a glimpse into the future of warfare, and the players involved are a who’s who of technological disruption. Elon Musk is playing both sides of the fence with SpaceX and his AI venture, xAI, competing to develop AI systems that can direct drone swarms with voice commands. This is not science fiction; this is the next generation of military lethality being developed right now.

Adding to the intrigue, Saudi-backed Humain has just injected a massive $3 billion into xAI. This is a monumental vote of confidence in Musk’s vision for AI and provides xAI with a war chest to rival giants like OpenAI and Google. Musk is building an vertically integrated empire of disruption—from launching the satellites (SpaceX’s Starlink) that will provide global connectivity, to developing the AI (xAI) that will power autonomous systems, to creating the robots (Tesla’s Optimus) that will operate in the real world.

The court barring OpenAI from using the term ‘Cameo’ is a minor hiccup in the grand scheme of things but highlights the intense legal and competitive battles being fought in the AI space.

From an investment perspective, this is a long-term thematic play. While xAI is private, the ecosystem around it is not.

• NVIDIA (NVDA): The undisputed king of AI hardware. Every single one of these AI companies—xAI, OpenAI, Google—runs on NVIDIA’s chips. The $3 billion flowing into xAI will inevitably translate into massive orders for NVIDIA’s GPUs. They are the shovel-sellers in this digital gold rush.

• Microsoft (MSFT): As the primary partner and investor in OpenAI and the operator of the Azure cloud platform, Microsoft is deeply entrenched in the AI revolution. The Pentagon’s interest in AI will undoubtedly benefit Azure’s government cloud contracts.

The Saudi investment into xAI also signals a broader trend: sovereign wealth funds are desperately trying to diversify away from oil and are pouring billions into future-proof technologies. This firehose of capital will continue to inflate valuations in the private AI market and spill over into the public markets, benefiting the key enablers of the AI boom.

3. The Great Shake-Up: Buffett Retires, Berkshire Sells Apple

This is the end of an era. Warren Buffett, the Oracle of Omaha, has retired. His departure from the helm of Berkshire Hathaway (BRK.A, BRK.B) marks a seismic shift for the investment world. For decades, investors have hung on his every word, and his annual letters have been treated as scripture. Now, the future of Berkshire rests on the shoulders of his successors.

Perhaps even more shocking is the news that Berkshire has reduced its stake in Apple (AAPL). For years, Apple was Buffett’s darling, his single largest holding and a testament to his evolution from a classic value investor to one who embraced the power of brands and technology ecosystems. Why sell now?

The move could signal a few things. Perhaps Buffett and his team see storm clouds on the horizon for the consumer tech giant. With global tensions rising and the potential for a recession, sales of high-end iPhones could suffer. Or maybe it’s a simple rebalancing—the Apple position had grown so large that it represented an outsized risk to the portfolio. It could also be a strategic move to raise cash, anticipating market turmoil and the opportunity to buy distressed assets at a discount—a classic Buffett move.

Whatever the reason, the signal is clear: the world’s most successful investor is becoming more cautious. When Buffett trims his sails, it’s wise for the rest of us to check the weather. This action, more than any forecast, tells us that perceived risk in the market is high.

4. Corporate Chaos and Consumer Trends

Beyond the macro headlines, a series of company-specific stories are painting a fascinating picture of the current economy.

• Wendy’s (WEN): The stock surged +17% after announcing plans to shut down 240-360 locations. This is a perfect example of Wall Street’s sometimes perverse logic. The market isn’t celebrating the closures themselves; it’s applauding a strategic shift towards profitability over sheer scale. By cutting underperforming stores, Wendy’s can improve its margins and focus resources on more profitable locations and its digital strategy. This is a painful but necessary move that investors are rewarding. It shows a market that prizes efficiency and cost-cutting in the face of economic uncertainty.

• Ford (F): Ford is making an aggressive push into the affordable EV market, targeting a $30,000 electric truck. This is a direct assault on Tesla’s territory and a smart strategic pivot. While Tesla dominates the premium EV space, a massive, underserved market exists for affordable, practical electric vehicles. By leveraging F1 technology and crowdsourcing innovation through bounties, Ford is trying to accelerate its development timeline and beat competitors to the punch. This is a high-risk, high-reward strategy. If they can pull it off, it could fundamentally reshape the company’s future. Keep an eye on Ford’s execution here.

• Tesla (TSLA): Speaking of Tesla, the company narrowly avoided a 30-day suspension in California related to its Autopilot system. This is another bullet dodged, but it highlights the persistent regulatory and legal overhang that follows the company. Every “Full Self-Driving” update is scrutinized, and any accident involving a Tesla becomes a national headline. While the company continues to innovate at a blistering pace, these regulatory battles are a constant drag on resources and sentiment.

• eBay (EBAY) to Acquire Depop: eBay is making a bold move by acquiring Depop from Etsy (ETSY) for $1.2 billion. This is a fascinating play. Etsy, which is trying to refocus on its core marketplace of handcrafted and unique goods, is shedding an asset that never quite fit. eBay, on the other hand, is buying access to a younger, trendier demographic. Depop is the king of secondhand fashion among Gen Z. This acquisition could reinvigorate eBay’s stale brand image and tap into the booming circular economy. For Etsy, it’s a cash infusion and a return to its roots. For eBay, it’s a gamble on capturing the next generation of online shoppers.

• Figma’s Blowout Earnings: The design software maker Figma (privately held, but this news is crucial) saw its stock jump 20% in extended trading after crushing earnings expectations. Revenue hit $303.8 million versus the $293.15 million expected. This demonstrates the incredible resilience of the Software-as-a-Service (SaaS) model. Even in a shaky economy, companies are unwilling to cut spending on mission-critical software that enhances productivity and collaboration. This is a bullish sign for the entire SaaS sector, especially best-in-class platforms like Figma.

5. Bitcoin’s Bullish Roar

Amid the chaos, Bitcoin (BTC) is having a moment. Eric Trump’s stunning prediction that it will hit $1 million is the kind of headline-grabbing hyperbole that defines the crypto space. While that price target seems astronomical, the underlying sentiment is what matters: “I’ve never been more bullish on Bitcoin in my life.”

This sentiment is being echoed, albeit more quietly, in the halls of power. The CEO of Goldman Sachs (GS) admitting he owns Bitcoin is a watershed moment. It signals that the asset has moved from a fringe obsession to something that the titans of traditional finance are taking seriously.

Bitcoin is benefiting from the same flight to safety that is lifting gold, but with an added dose of anti-establishment fervor. As geopolitical tensions rise and trust in governments and traditional financial systems wavers, the appeal of a decentralized, non-sovereign store of value grows stronger. The narrative of Bitcoin as “digital gold” is gaining powerful traction. The combination of institutional curiosity and geopolitical fear is creating a potent cocktail for a new bull run.

Finding Opportunity In The Mayhem

In a market defined by fear, finding growth is challenging but not impossible. The key is to look for companies riding undeniable secular trends that can thrive even in a volatile environment. Here are a few names on our radar:

1. Palantir Technologies (PLTR)

• Why We’re Watching: Palantir is at the nexus of AI and defense. The company’s software platforms, Gotham and Foundry, are designed to help government agencies and large corporations make sense of vast, complex datasets. In a world of escalating geopolitical conflict and an AI arms race, Palantir’s services have never been more relevant.

• The Catalyst: The Pentagon’s push for AI-driven warfare and drone swarms is right in Palantir’s wheelhouse. Their software is built for exactly this kind of complex, real-time data analysis. As the U.S. military modernizes, Palantir is poised to win significant contracts. The company has been aggressively pursuing commercial clients as well, but its government business is its bedrock, and that foundation is looking stronger than ever. The increasing tensions with Iran and the focus on advanced military technology put Palantir in a prime position for growth.

• Statistics & Context: Palantir has a history of lumpy, large-scale government contracts. While revenue growth can be inconsistent quarter-to-quarter, the long-term trend is upward. The company recently achieved GAAP profitability, a major milestone that makes it eligible for inclusion in indices like the S&P 500, which could create significant buying pressure. With the current geopolitical climate, we expect to see an acceleration in government contract awards.

2. CrowdStrike Holdings (CRWD)

• Why We’re Watching: In an era of hybrid warfare, the first shots are often fired in cyberspace. The cyberattack on Germany’s national railway, Deutsche Bahn, is a stark reminder that critical infrastructure is vulnerable. CrowdStrike is a leader in cloud-native endpoint security. Its Falcon platform uses AI to detect and prevent breaches in real-time.

• The Catalyst: Escalating geopolitical tensions almost always lead to a spike in state-sponsored cyberattacks. Nations use cyber warfare to disrupt adversaries, steal intelligence, and cause chaos. As U.S., Iranian, and Russian tensions mount, corporations and governments will be forced to bolster their cyber defenses. CrowdStrike, with its best-in-class technology and subscription-based revenue model, is a primary beneficiary of this trend. The recent data breach at fintech giant Figure further represents the constant and evolving threat landscape, driving more customers to premium security providers like CrowdStrike.

• Statistics & Context: CrowdStrike has consistently delivered stunning growth, with revenue often increasing by over 30% year-over-year. Its high dollar-based net retention rate indicates that existing customers are not only staying but spending more over time. The company’s focus on a single, lightweight agent makes it easy to deploy and scale, a key advantage in a market where speed is critical.

3. Kratos Defense & Security Solutions (KTOS)

• Why We’re Watching: While giants like Lockheed and RTX build the big-ticket items, Kratos is a more speculative and agile player focused on the future of warfare: unmanned systems, drones, and next-generation satellite communications.

• The Catalyst: The Pentagon’s drone swarm competition is the headline, but it’s part of a much larger strategic shift towards autonomous and attritable (i.e., affordable and expendable) aircraft. Kratos is a leader in this space, developing jet-powered target drones and tactical drones like the XQ-58A Valkyrie, designed to act as a “loyal wingman” to manned fighter jets. This is the exact type of technology that will be essential in a potential conflict with a near-peer adversary. The company is a pure-play on the future of unmanned aerial warfare.

• Statistics & Context: Kratos is a smaller, more volatile company than the major defense primes. Its revenue is in the hundreds of millions, not tens of billions. However, its growth potential is arguably higher. The company has secured key developmental contracts and is moving from a development-focused phase to a production-focused one. A significant production contract for one of its tactical drone programs could cause the stock to re-rate significantly higher. It’s a higher-risk, higher-reward way to play the defense theme.

4. NVIDIA (NVDA)

• Why We’re Watching: We’ve already touched on it, but it bears repeating. NVIDIA is the single most important company in the AI revolution. It is the gatekeeper, the tollbooth operator, and the primary beneficiary of the trillions of dollars being invested in artificial intelligence.

• The Catalyst: The $3 billion investment from Saudi-backed Humain into Elon Musk’s xAI is a perfect microcosm of the trend. That capital doesn’t sit in a bank account; it gets spent on the computational power needed to train large language models. That means buying tens of thousands of NVIDIA’s H100 or next-gen GPUs. Every new AI startup, every new government initiative (like the drone swarm project), and every company looking to build its own AI capabilities must go through NVIDIA.

• Statistics & Context: NVIDIA’s financial performance has been nothing short of breathtaking. The company’s Data Center revenue has exploded, growing by triple-digit percentages. Its gross margins are industry-leading, giving it immense pricing power. While the stock has had a monumental run, the demand for its products continues to outstrip supply. As long as the AI arms race continues—both in the corporate and military spheres—NVIDIA will remain the ultimate growth stock.

Brace For Impact

Looking at the confluence of these events, our forecast for the broader market is decidedly bearish in the short term, with pockets of extreme volatility and opportunity. The dominant factor is the rising risk of a major military conflict in the Middle East.

The Bear Case (Short-to-Medium Term):

A full-scale war between the U.S./Israel and Iran would be catastrophic for the global economy and the stock market. This is not a contained regional conflict; this is a conflict that would draw in global powers, disrupt a third of the world’s seaborne oil trade, and send shockwaves through every market on the planet.

In this scenario, we would expect:

• A Sharp Market Correction: The S&P 500 could easily enter a deep bear market, falling 20-30% or more as fear and uncertainty paralyze investors.

• Energy Price Shock: Oil prices would likely spike to well over $150 a barrel, triggering a global energy crisis and fueling rampant inflation.

• Global Recession: The combination of sky-high energy prices, shattered consumer confidence, and broken supply chains would almost certainly tip the global economy into a severe recession.

• Flight to Quality: Capital would pour into U.S. Treasury bonds, the U.S. Dollar, and gold, as investors abandon all forms of risk.

Even if a full-scale war is averted, the current level of tension is enough to create a significant headwind for stocks. The uncertainty alone will cause companies to delay investment, consumers to cut back on spending, and investors to demand a higher risk premium for holding equities. The market hates uncertainty, and we are swimming in it. Warren Buffett’s move to trim his Apple stake is a canary in this coal mine. He is raising cash and reducing exposure, a classic move when anticipating a storm.

Pockets of Bullishness:

Despite the gloomy outlook, this is not a time to sell everything and hide in a bunker. This market is a tale of two cities.

• Defense and Energy: As discussed, defense contractors and oil & gas companies will likely outperform in this environment. They are a direct hedge against the primary geopolitical risk.

• AI and Cybersecurity: The secular trends powering AI and cybersecurity are too powerful to be derailed entirely. Companies like NVIDIA and CrowdStrike may see their stock prices pull back with the broader market, but their fundamental business growth will continue. A market downturn could present an incredible buying opportunity for these long-term winners.

• Bitcoin and Gold: These assets will continue to act as “chaos hedges.” Their performance will likely be inversely correlated with the broader stock market. As fear rises, so will their prices.

Our Forecast:

We predict a period of intense volatility and a downward trend for the major indices over the next 3-6 months. The market will be on a knife’s edge, reacting violently to every headline out of the Middle East. We anticipate a 10-15% correction in the S&P 500 from its recent highs is highly probable, with the risk of a much deeper decline if the situation escalates to open conflict.

The best strategy in this environment is to be defensive and selective. Trim positions in high-beta, economically sensitive stocks. Consider raising some cash to be able to capitalize on opportunities that will inevitably arise from a market panic. Focus new capital on the sectors that are resilient or stand to benefit from the current chaos: defense, energy, cybersecurity, and the core enablers of AI.

This is a trader’s market, not a passive investor’s market. Agility and a stomach for volatility will be your greatest assets in the months to come.

A Market at a Crossroads

We are at a critical juncture. The world is holding its breath as war drums beat louder in the Middle East. The AI revolution is accelerating, creating a new arms race with unfathomable implications. And one of the greatest investors in history has stepped aside, signaling a potential changing of the guard.

These are not normal times, and this is not a normal market. The risks are immense, but so are the opportunities for those who can see through the fog. The surge in defense stocks, the relentless demand for AI infrastructure, and the flight to digital and physical gold are not random events; they are the logical consequences of the world we live in.

Your key takeaways should be:

1. Geopolitical Risk is Paramount: The Iran situation is the single biggest driver of the market right now.

2. Be Defensive: The overall market trend is likely downward. Prioritize capital preservation.

3. Be Selective: Focus on the sectors that thrive on chaos and innovation: defense, cybersecurity, and AI enablers.

4. Watch the Safe Havens: Gold and Bitcoin are acting as barometers of fear. Their price action will tell you a lot about market sentiment.

Stay vigilant, stay informed, and be prepared to act decisively. The coming weeks and months will test the resolve of every investor.

Final Disclaimer: All information contained in this newsletter is for informational purposes only. It does not constitute financial, investment, legal, or tax advice. The stock market is inherently risky, and you should not invest money that you cannot afford to lose. Always perform your own due diligence and consult with a qualified financial advisor before making any investment decisions. The opinions expressed herein are our own and are subject to change without notice.