Just the other day, CEO of Nvidia told the media, “China is not behind...This is a country with great capabilities. 50% of the world's best AI researchers are Chinese.”
So it’s not a surprise that Huawei is about to debut a new AI chip and will continue to foray into higher value-added products and stand toe-to-toe with the United States for technological supremacy.
Remember Huawei?
They were brutally banned from installing the best American chip technology, but like a boomerang, they have come back with even more ferocious ambition.
The Huawei chip called the Ascend 910D is still at an early developmental stage, and a series of tests will be needed to assess the chip’s performance.
Huawei hopes that the latest iteration of its Ascend AI processors will be more powerful than Nvidia’s H100.
Huawei has emerged as China’s champion in a technology field where the U.S. remains ahead. The Shenzhen-based company has developed some of the country’s most promising substitutes for Nvidia’s AI chips. It is part of Beijing’s effort to groom a self-sufficient semiconductor industry.
This year, Huawei is poised to ship more than 800,000 Ascend 910B and 910C chips to customers, including state-owned telecommunications carriers and private AI developers such as TikTok parent ByteDance.
Despite manufacturing bottlenecks, Huawei and several Chinese chip firms have already been able to deliver some products comparable to Nvidia chips and are inching closer to Nvidia’s level of expertise.
Old versions of Huawei chips have struggled to live up to their hype. The 910C was marketed to clients as comparable to Nvidia’s H100, but engineers who have used the two chips said Huawei’s performance fell short of its rival.
Huawei faces challenges in producing such chips at a significant scale. It has been cut off from the world’s largest chip foundry, Taiwan Semiconductor Manufacturing. China’s closest alternative, Semiconductor Manufacturing International, is blocked from purchasing the most advanced chip-making equipment.
Even though Chinese chips have been overhyped and fail to deliver, I do believe it is only a matter of time before they reach the same level of Nvidia.
If you remember what the first Chinese smartphones looked like, and compare them to what they are now, and you will understand that once the weight of the government supports these goals, many of them are met.
Just look at another example like EVs, Chinese EVs are some of the top EV products in the world, and they produce them for just a fraction of a Western-made EV.
This trend is here to stay, and with the Chinese government subsidizing the operation to push it over the line, many Western countries will have a hard time beating the Chinese on price and performance.
Silicon Valley innovation has slowed down considerably, and one of the obvious side effects is the Chinese catching up on the latest cutting-edge tech.
Some of this is reflected in the price of Nvidia’s stock, which has zig-zagged sideways for around the year.
Naturally, some of the stock’s weakness has to do with the volatile foreign trade policies, but a big portion of this is Chinese competition in high-end tech products.
There is a chance that we will continue to see this sideways price action in the stock, and at the very minimum, the era of breakaway growth is over for Nvidia.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2025-05-02 14:02:002025-05-02 15:06:52Chinese Chip Makers Closer Than You Think
Below, please find subscribers’ Q&A for the April 30 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, NV.
Q:Why is the Australian dollar not moving against the US dollar as much as the other currencies?
A: Australia is too closely tied to the Chinese economy (FXI), which is now weak. When the Chinese economy slows, Australia slows. Australia is basically a call option on the Chinese economy. So they're not getting the ballistic moves that we've seen in, say, the Euro and the British pound, which are up about 20%. Live by the sword, die by the sword. If you rely on China as your largest customer for your export commodities, you have to take the good and the bad.
Q: I see we had a terrible GDP print on the economy this morning, down 0.3%. When are we officially in a recession?
A: Well, the classical definition of a recession is two back-to-back quarters of negative GDP growth. We now have one in the bank. One to go. And this quarter is almost certain to be much worse than the last quarter, because the tariffs basically brought all international trade to a complete halt. On top of that, you have all of the damage to the economy done by the DOGE cuts in government spending. Approximately 80% of the US states, mostly in the Midwest and South,are very highly dependent on Washington spending for a healthy economy, and they are going to really get hit hard. So the question now is not “do we get a recession?”, but “how long and how deep will it be?” Two quarters, three quarters, four quarters? We have no idea. Even if trade deals do get negotiated, those usually take years to complete and even longer to implement. It just leaves a giant question mark over the economy in the meantime.
Q: Is SPDR Gold Trust (GLD) the best way to play gold, or is physical better?
A: I always go for the (GLD) because you get 24-hour settlement and free custody. With physical gold, you have to take delivery, shipping is expensive, and insurance is more expensive. Plus, then you have to put it in a vault. Private vaults have a bad habit of going bankrupt and disappearing with your gold. You keep it in the house, and then if the house burns down, all your gold is gone there. Plus, it can get stolen. There's also a very wide dealing spread between bid and offer on physical gold coins or bars; usually it's at least 10%, often more. So I often prefer the ease of trading with the GLD, which owns futures on physical gold, which is held in London, England. So that is my call on that.
Q: Is ProShares Ultra Silver (AGQ) the leveraged silver play?
A: It absolutely is, but beware: (AGQ) is only good for short, sharp rises because the contango and the storage operating costs of any 2x are very, very high—like 10% a year. So, good if you're doing a day trade, not good for a one-year hold. Then you're just better off buying silver (SLV).
Q: What is more important with the Fed's mandate—unemployment or fear of inflation?
A: That's an easy one. Historically, the number one priority at the Fed has been inflation. That is their job to maintain the full faith and credit of the U.S. Dollar, and inflation erodes the value, or at least the purchasing power of the US dollar, so that has always historically been the priority. Until we see inflation figures fall, I think the chance of them cutting interest rates is zero, and we may not see actual falls until the end of the year, because the next influence on prices is up because of the trade war. The trade war is raising prices everywhere, all at the same time. So that will at least add 1 or 2% to inflation first before it starts to fall. You can imagine how if we get a 6% inflation rate, there's no way in the world the Fed can cut rates, at least for a year, until we get a new Fed governor. So that has always historically been the priority.
Q: Do you think the 10-year yield is going down to 5%?
A: You know, we're really in a no-man's-land here. Recession fears will drive rates down as they did yesterday. I haven't even had a chance to see where the bond market is this morning because. So, rates are rising on a recessionary GDP, which is the worst possible outcome. Rates should be falling on a recessionary GDP print. Of course, Washington’s efforts to undermine the U.S. dollar aren't helping. Threatening to withhold taxes on interest payments to foreign owners is what caused the 10% down move in bonds in one week—the worst move in the bond market in 25 years. So, the mere fact that they're even thinking about doing something like that scares foreign investors, not only from the bond market, but all US investments period. And certainly, we've seen some absolutely massive stock selling from them.
Q: Why won't the market go down to 4,000 in the S&P 500?
A: Absolutely, it could; that is definitely within range. That would put us down 30% from the February highs, it just depends on how long the recession lasts. If you just get a two-quarter shallow recession, we could bounce off 4800 for the (SPX) until we come out. If the recession continues for several quarters, and it's looking like it will, then 4,000 is definitely within range. So, it's all about the economy. And remember, stocks are expensive. They don't get cheap until we get a PE multiple of 16, and even then, that alone, just a multiple shrinkage would take us down to 4,000.
Q: Would it be a good idea to buy the S&P 500 (SPY) as it falls?
A: I'm getting emails from readers asking if it's time to buy Nvidia (NVDA) or time to buy Tesla (TSLA). What I've noticed is that investors are constantly fighting the last battle. They're always looking for what worked last time, and that does not succeed as an investment strategy. As long as I'm selling rallies, I'm not even thinking about what to buy on the bottom. The world could look completely different on the other side. The MAG-7 may not be the leadership in the future, especially with the Trump administration trying to dismantle four out of seven companies through antitrust, and the rest are tied up in the trade wars. So, tech is still expensive relative to the main market, and we're going to need to look for new leaders. My picks are going to be mining shares, gold, and banking. Those are the ones I'm looking to buy on dips, but right now, cash is king unless you want to play on the short side. Being paid 4.3% to stay away sounds pretty good to me, especially when your neighbors have 30% losses. You know, I've heard of people having all of their retirement funds in just two stocks: Nvidia and Tesla, and they're getting wiped out. So, you don't want to become one of them.
Q: After a tremendous run in Gold, is Silver a better risk-reward right now?
A: I would say yes, it is. Silver has been lagging gold all year because central banks, the most consistent buyers for the past decade,buy gold—they don't buy silver. But what we may be in store for here now is a prolonged sideways move in gold while the technicals catch up with it. And in the meantime, the money goes elsewhere into silver and Bitcoin. That's my bet.
Q: Is Apple (APPL) a no-touch now?
A: I’d say yes. The trade war is changing by the day, and Apple probably does more international trade than any other company in the world. Also, Apple gets hit with recessions like everybody else. There was a big front run to buy Apple products ahead of tariffs—my company bought all its computer and telephone needs for the whole year ahead of the tariffs. We're not buying anything else this year. And I would imagine millions more are planning to do the same, so you could get some really big hits in Apple earnings going forward.
Q: Should I sell my August Proshares Short S&P 500 (SH) LEAPS?
A: No, I would keep them. If the (SPX) IS trading between 5,000 to 5,800, your $4-$42 SH LEAPS should expire at max profit in August, so I'm hanging on to mine. Next time we take a run at 5,000, you should be able to get out of your SH LEAPS at 80% to 90% of the max profit.
Q: What car company stock will do the best in a high-tariff global economy?
A: Tesla (TSLA), because 100% of their cars are made in the US with 90% US parts (the screens come from Panasonic in Japan). Their foreign components are only about 10%, so they can eat that. For General Motors (GM), it's more like 30% of all components are made abroad, and they can't eat that; their profit margins are too low. (GM) expects to lose $5 billion because of tariffs. By the way, the profit margins on Tesla have fallen dramatically from 30% down to 10% in two years, so it's not like they're in great shape either. Also, Tesla hasn’t had a CEO for ten months, which is why the board is looking for a replacement.
Q: Is it a good time to buy the dip in oil (USO)?
A: Absolutely not. Oil is the most sensitive sector to recessions, because if you can't sell oil, you have to store it, very expensively. It costs 30 to 40% a year to store oil—that's the contango; and once all the storage is full, then you have to cap wells, which then damages the long-term production of the wells. I think at some point you will expect an announcement from Washington to refill the Strategic Petroleum Reserve, which was basically sold by Biden at $100 a barrel. You can now get it back for $60. That may not be a bad idea if you're going to have a strategic petroleum reserve. What's better is just to quit using oil completely, which we were on trend to do.
Q: Will interest rates drop by year-end?
A: They may drop by year-end once unemployment runs up to 5% or 6% —which is likely to happen in a recession—and inflation starts to decline, even if it declines from a higher level. Even if they don't cut by year end, they'll still cut in a year when the president can appoint a new Fed governor. What the Trump really needs to do is appoint Janet Yellen as the Fed governor. She kept interest rates near zero for practically all of her term. We need another Yellen monetary policy.
Q: The job market here seems to be slowing quite fast. Is there any way this will rebound and stave off recession?
A: No, there is not. Companies are going to be looking to cut costs as fast as they can to offset the shrinkage in sales, but also to help cope with tariffs. So no, the job market is actually surprisingly strong now. That means future data releases are probably going to get a lot worse. In April, we saw job gains in Health care, adding 51,000 jobs. Other sectors posting gains included transportation and warehousing (29,000), financial activities (14,000), and social assistance. I highly doubt any of these sectors will show gains next month.
Q: What about nuclear energy plays?
A: I like them, partly because people are buying stocks like Cameco Corp (CCJ) as a flight to safety commodity play, like they're buying gold, silver, and copper. But also, this administration is supposed to be deregulation-friendly, and the only thing holding back nuclear (at least new modular reactors) is regulation. That and the fact that no one wants to live next door to a nuclear power plant, for some strange reason.
Q: What do I think about natural gas (UNG)?
A: Don't touch. Don't buy the dip. All energy plays look terrible right here, going into recession.
Q: What are your thoughts on manufacturing returning to the U.S? And how will that affect the stock market?
A:I think there's zero chance that any manufacturing returns to the U.S. Companies would rather just shut down than operate money-losing businesses. You know, if your labor cost goes from $5 to $75 an hour, there's no chance anyone can make money doing that, and no shareholders are going to want to touch that stock. That is the basic flaw in having a government where no one is actually running a manufacturing business anywhere in the government. They don't know how things are actually made. They're all real estate or financial people.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com , go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, then WEBINARS, and all the webinars from the last 12 years are there in all their glory.
Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
I am not saying that Google’s (GOOGL) earnings report will save the market; the market isn’t just GOOGL.
However, the company demonstrated there is still some positive performance out there in the tech sector when many out there are having a hard time.
It is clear that we are about to embark on a journey where big tech actively pulls the levers of shareholder returns to get over the low bar of expectations.
It is true that Google has not innovated for years and is still relying on its cash cow called the Google search engine, to drive ad revenue.
At some point, there will be competition as proprietary technology becomes beatable.
Competition is prompting the company and its rivals to spend heavily on infrastructure, research, and talent. While Google benefits from AI startups spending on its cloud and business tools, it’s also racing to present an answer to popular conversational AI chatbots, which consumers are beginning to think of as an alternative to using Google Search.
Google’s beginning of the answer to that threat — its “AI Overviews” and “AI Mode” in search, in which summarized responses are drafted by generative AI and highlighted ahead of Google’s web links — have seen mixed success. Meanwhile, Google’s AI changes to search have decimated traffic to independent websites across the open web.
Google Cloud brought in an operating profit of $2.18 billion, indicating that Google may be nudging out more profits from Cloud even as sales slow.
The cloud unit is so far the clearest indicator of how the AI boom is contributing to the company’s sales, as startups that require more computing power for their work become customers. Though Google Cloud still lags in third place behind Amazon and Microsoft offerings, it’s one of Alphabet’s most important growth areas.
Alphabet’s board authorized a $70 billion share buyback and boosted its dividend by 5%, to 21 cents a share.
With Google’s search business still holding up at a tough time in global business, I must conclude that Google is doing better than expected.
I believe that we will see a consolidated trend in 2025 of big tech dipping into their huge cash reserves to give back returns to shareholders. Google increasing its dividend by 5% is just the beginning, and we expect bigger returns as we move to the latter part of the year.
There is nowhere to invest in innovation right now in technology, which is why management is quick to buy back stock.
If there is some great project out there, management is keeping it close to its vest.
The long-term problem is that when you fire all the Americans with high wages who secured the company’s success to this point, replacing Americans with cost-cutting employees from India won’t deliver the same amount of innovation as the past in a mature environment.
American tech is supposed to set the bar in innovation, and now they are no,t which is why China is rapidly catching up to Americans on all cutting-edge technology, whether it be EVs or chip manufacturing.
Google is no longer a growth company, and that hurts the stock price.
We could experience a bear market rally that could propel Google along, but that depends on the whims of global politics, which Google has no control over.
If you look at the risk/reward scenario, Google is worth a bullish trade after the wild pullback.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2025-04-28 14:02:182025-04-28 16:07:26Google Gives Us Some Good News
Last week, a concierge customer asked me an excellent question. Having correctly called the top in this market to the hour, what would it take for me to go all in on the long side and get maximum bullish?
With everyone now laser-focused on downside risks, which was really a last February game, I thought I’d take the opportunity this morning to examine the upside possibilities, if there are any at all.
Let’s say that the trade war ends before the ninety-day deadline is up on July 9, and the Chinese tariffs are reduced from a trade embargo of 145% to, say, only 20%. Markets will instantly rally 10%, with possibly half of that move happening at a market opening, so you can’t participate.
That is in effect, as what happened last week, with investors willing to look through the trade war to a less onerous business environment sometime in the future. A 20% tariff still takes the US growth rate down to zero, but it at least takes a recession off the table. Problem number one: Zero-growth economies don’t command high earnings multiples.
The problem with that scenario is that we hit a wall of selling above 5,800, where the late entrants came in but are now trying to get out, at close to cost. To get above that level, we need a really powerful fundamental bull case, which is now nowhere on the horizon. That’s why it’s unlikely that the stock market will see any positive returns for 2025.
The reality is that the trade war is not the only place where the economy has been driven off the rails. Even a 20% tariff brings substantially higher prices. International trade is falling off a cliff. Massive cuts in government spending are highly deflationary. Deporting large numbers of immigrants reduces demand and shrinks the labor supply. Unless Congress can pass a budget bill soon, we are on track to see an automatic $5 trillion tax increase by yearend. The budget deficit will hit a new record for this year.
Needless to say, companies will continue to sit on their hands with this amount of uncertainty and wait for the many unknowns to play out. None of these commands higher multiples for equities, let alone the near record S&P 500 multiple at 20X that prevails now.
To really get maximum bullish like I was for most of the last 15 years, the economy would have to return to the conditions that took stocks to record highs like we had until three months ago. That would be a globalized free-trading economy with the US playing a dominant role. That’s an economy that deserves high earnings multiples.
We won’t see that for at least four more years, but markets may start to discount it in only three years as we run up to the next presidential election in 2028. Imagine a future presidential candidate who campaigns on a zero-tariff regime and a return to globalization.
To get a sustainable multi-year bull market in stocks, it would help a lot if we started from a much lower base first. New bull markets don’t start at 20X multiples. A 16X multiple is much more likely, or 20% lower than we are now. We may get that.
The government is currently trying to break up three of the Magnificent Seven with antitrust actions, which led the march to higher stock markets for years. Corporate earnings are now rapidly shrinking, but we won’t see the hard numbers until August. Until then, we only get forecasts. Lower earnings command much lower multiples. That leaves on the table my 4,500 forecast low for the (SPX).
We could well be stuck in a trading range for years. Stocks could continue to bump their heads up against a (SPX) 5,800 ceiling but also get talked up by the administration whenever it collapses towards 4,800. Some 1,000 (SPX) points is quite a wide trading range to play with and plenty enough to make money on.
I did it only last week. You have to ignore the news flow and use the volatility index ($VIX) for your market timing. When the ($VIX) hit $54 last week, I piled on longs in (NFLX), (NVDA), (MSTR), and (JPM). By Friday, I gained 8.12% in new performance, my best weekly return in the 17-year history of Mad Hedge Fund Trader.
What if you just want to take a long-term view and not have to check the ($VIX) in between every putt on the golf course?
Gold (GLD) is looking pretty darn good right now. With the collapse of the US dollar ongoing, flight to safety assets is in short supply. American economic conditions will get worse before they get better. Central bank accumulation has continued at its torrid decade-long pace. And gold seems to have broken the link with interest rates that held it back for so long, eliminating opportunity cost as an issue. Even ultra-cautious JP Morgan expects the barbarous relic to reach $4,000 an ounce this quarter. The great mystery in the sector has been the lagging performance of the gold miners. While gold doubled, the shares of Barrack Gold (GOLD) went nowhere.
Gold miners have yet to be taken seriously by mainstream institutional investors, as they are often the subject of excessive promotion, scams, and outright fraud. Token or non-existent dividends are another impediment. Millennials have clearly gravitated towards crypto instead. Miners also got a bad rap from the ESG investment trend as they are considered a “dirty” industry. Anything US dollar-denominated is being dragged down by the weak greenback. That’s why gold only accounts for 0.54% of global portfolios today, versus 2.48% in 1998.
That may all be about to change.
Last week, Barrack Gold, which mines gold at a cost of $1,600 an ounce and sells it at the recent $3,500, completed a monster 23% move in the shares. Newmont Mining (NEM) completed an incredible 32% move. Gold attractiveness is such that only a 5% decline was enough to pull me back in on the long side last week.
High prices atone for a lot of sins.
April is now up by a spectacular +10.31%. That takes us to a year-to-date profit of +24.14%so far in 2025. My trailing one-year return stands at a spectacular +84.47%. That takes my average annualized return to +50.61%and my performance since inception to +776.03%, a new all-time high.
It has been another wild week in the market. I used the 1,200-point meltdown in the Dow Average on Monday to add longs in (NFLX), (JPM), and (MSTR). I also quickly covered a short in (MSTR). After the market rallied 2,000 points, I added shorts in (TSLA), (SPY), and a new long in (GLD). That leaves me 40% long, 30% short, and 30% cash. If everything goes our way on the May 16 options expiration day, we will be up 30% on the year.
Some 63 of my 70 round trips in 2023, or 90%, were profitable. Some 74 of 94 trades were profitable in 2024, and several of those losses were really break-even. That is a success rate of +78.72%.
Try beating that anywhere.
Stock Market Suffers the Worst Start to a Year in History. April was the worst since 1932, and lower lows beckon. The Real “Trump Trade” was a “Sell America” trade, with stocks, bonds, energy, and the US dollar all collapsing.
Fed Beige Books Point to Stagflation. Prices are rising and economic activity has begun to slow across parts of the nation as businesses and households try to adapt to Trump’s erratic rollout of sweeping tariffs aimed at reshaping global trade, a report Wednesday from the Federal Reserve showed.Uncertainty around international trade policy was pervasive across reports, the U.S. central bank said.
Leading Economic Indicators Plunge, published Monday by research group The Conference Board, fell 0.7%, to 100.5, in March, following an upwardly revised 0.2% decline in February. Economists polled by The Wall Street Journal had expected a 0.5% decline for March. The recession is here, you just don’t know it yet. Europe Lowers Interest Rates, down 0.25% to 2.25%, to head off a recession caused by Trump tariffs. The bank’s rate-setting council decided at a meeting in Frankfurt to lower its benchmark rate by a quarter percentage point to 2.25%. The bank has been steadily cutting rates after raising them sharply to combat an outbreak of inflation from 2022 to 2023.
Netflix Earnings rocket, setting the stock on fire, as an indication that the stock may be recession-proof. Netflix reported first-quarter adjusted earnings of $6.61 a share on revenue of $10.54 billion. Analysts surveyed by FactSet expected earnings of $5.67 a share on revenue of $10.5 billion. The stock climbed 3.4% in after-hours trading. As of the market close Thursday, it has risen 9.2% this year. Buy (NFLX) on dips. IMF Cuts US GDP forecast for 2025 from 2.8% to 1.8%, and they are a deep lagging indicator. The prediction is part of a wide-ranging reduction in global growth. Tariffs are to blame. US Dollar Hits Three-Year Low, as the flight from American trade accelerates. No trade with the US means no need to buy the greenback. Gold Tops $3,424, the 1980 inflation-adjusted all-time high. A shortage of “Sell America” trades is driving everyone into gold all at once. The (GDX) gold miners ETF hit a 13-year high. Gold imports are now a major contributor to the US trade deficit.
JP Morgan Targets Gold at $4,000 in Q2, as the “Sell America” trade gathers steam. Central banks are the big winners here, which have been hoovering up the barbarous relic for years.
Tesla Bombs, with Q1 earnings down a gob-smacking 71%, a four-year low. Sales are in free fall globally. Tesla’s cost of making and selling vehicles dropped over 17% year over year, driven by lower raw material prices and reduced expenses of ramping up Cybertrucks production.Automotive gross margin for the period, excluding regulatory credits, was 12.5%, down from 30% a year ago, compared with expectations of 11.8%. Tesla short sellers have earned $11.5 billion so far this year, including myself, with the stock down 55%. The shares rose $10 on news that Elon Musk will spend significantly less time with DOGE. Buy only the biggest dips in (TSLA). Record Funds are Pouring into Japan. Overseas investors have bought a net ¥9.64 trillion ($67.5 billion) of the Asian nation’s debt and equities so far in April, according to preliminary weekly figures released by the Ministry of Finance on Thursday. That level is already the most for any month on record, based on balance-of-payments data going back to 1996. What was the only thing Warren Buffett was buying last year? Japanese trading companies. Existing Homes Sales Hit 16-Year Low. Sales of previously owned US homes fell 5.9% in March to an annualized rate of 4.02 million, the weakest March since 2009. The median sales price increased 2.7% from a year ago to $403,700, a record for the month of March and extending a run of year-over-year price gains dating back to mid-2023. Apple to Move All iPhone Production to India. It is a move that has been underway for some time due to China’s soaring labor costs. Since I began covering China in the early 1970s, China's average annualized income has risen from $300 a year to $16,000, up 5,300%. Alphabet (GOOG) Beats, after the company topped Wall Street estimates and showed growth in its advertising and search business. The company suggested that it’s too soon to tally the impact of Trump’s tariffs, but the ending of the de minimis loophole could create a “slight headwind” to its advertising business. The really interesting number was Alphabet’s estimate of a potential market size of 4 billion rides a year for its Waymo autonomous driving taxi service. My Ten-Year View – A Reassessment
We have to substantially downsize our expectations of equity returns in view of the election outcome. My new American Golden Age, or the next Roaring Twenties, is now looking at multiple gale-force headwinds. The economy will completely stop decarbonizing. Technology innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old. My Dow 240,000 target has been pushed back to 2035.
On Monday, April 28, at 8:30 AM EST, the Dallas Fed Manufacturing Index is announced.
On Tuesday, April 29, at 3:30 AM, the S&P Case Shiller National Home Price Index isreleased.We also get the JOLTS job openings report.
On Wednesday, April 30, at 8:30 PM, the Q1 GDP growth rateis published, as is the CPI for April.
On Thursday, May 1, at 8:30 AM, the Weekly Jobless Claims are disclosed.
On Friday, May 2, at 8:30 AM, we get the Nonfarm Payroll Report for April.
As for me, when I was shopping for a Norwegian Fjord cruise a few years ago, each stop at a port was familiar to me because a close friend had blown up bridges in every one of them during WWII.
During the 1970s at the height of the Cold War, my late wife Kyoko flew a monthly round trip from Tokyo to Moscow as a British Airways stewardess. As she was checking out of her Moscow hotel, someone rushed up to her and threw a bundled typed manuscript that hit her in the chest.
Seconds later, a half dozen KGB agents dog piled on top of Kyoko. It turned out that a dissident was trying to get her to smuggle a banned book to the West. She was arrested as a co-conspirator and bundled away to the notorious Lubyanka Prison.
I learned of this when the senior KGB agent for Japan contacted me, who had attended my wedding the year before and filmed it. He said he could get her released, but only if I turned over a top-secret CIA analysis of the Russian oil industry.
At a loss for what to do, I went to the US Embassy to meet with Ambassador Mike Mansfield, whom, as The Economist correspondent in Tokyo, I knew well. He said he couldn’t help me as Kyoko was a Japanese national, but he knew someone who could.
Then in walked William Colby, head of the CIA.
Colby was a legend in intelligence circles. After leading the French resistance with the OSS, he was parachuted into Norway with orders to disable the railway system. Hiding in the mountains during the day, he led a team of Norwegian freedom fighters who laid waste to the entire rail system from Tromso all the way down to Oslo. He thus bottled up 300,000 German troops, preventing them from retreating home to defend from an allied invasion.
During Vietnam, Colby became known for running the Phoenix assassination program. It was wildly successful.
I asked Colby what to do about the Soviet request. He replied, “Give it to them.” Taken aback, I asked how. He replied, “I’ll give you a copy.” Mansfield was my witness, so I could never be arrested for being a turncoat.
Copy in hand, I turned it over to my KGB friend, and Kyoko was released the next day and put on a flight out of the country. She never took a Moscow flight again.
I learned that the report predicted that the Russian oil industry, its largest source of foreign exchange, was on the verge of collapse. Only a massive investment in modern Western drilling technology could save it. This prompted Russia to sign deals with American oil service companies worth hundreds of millions of dollars.
Ten years later, I ran into Colby at a Washington event, and I reminded him of the incident. He confided in me, “You know that report was completely fake, don’t you?” I was stunned. The goal was to drive the Soviet Union to the bargaining table to dial down the Cold War. I was the unwitting middleman. It worked.
That was Bill, always playing the long game.
After Colby retired, he campaigned for nuclear disarmament and gun control. He died in a canoe accident on the lake in front of his Maryland home in 1996.
Nobody believed it for a second.
William Colby
Kyoko
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
https://www.madhedgefundtrader.com/wp-content/uploads/2023/06/colby.jpg16661325april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2025-04-28 09:02:492025-04-28 11:45:53The Market Outlook for the Week Ahead, or Here’s the Best Case Scenario
The U.S. appears to have made a massive blunder in its chip control blocking of China.
The U.S. Commerce Department said last week that Nvidia’s H20 graphics processing units — designed to comply with previous U.S. restrictions — would now require export licenses, as would additional chips from AMD. Nvidia says it has already halted exports of the GPUs, resulting in a quarterly charge of approximately $5.5 billion.
Could this be an example of the government getting in its own way?
Examples of these local AI chipmakers include tech powerhouse Huawei and the partially state-owned and publicly listed Cambricon Technologies, which designs GPUs.
Shares of Cambricon were up over 10% in the past five trading days amid news of the latest Nvidia controls. The stock is up over 400% in the past 12 months.
Can China fill the gap?
Huawei is the clear leader in China’s race to find an Nvidia competitor. The U.S.-blacklisted company has been working on its own improvements to compete with the leading technology.
Huawei remains about a generation behind in chips, but that won’t be the case for long.
Because TSMC’s chipmaking equipment includes U.S. technology, the company has complied with U.S. trade restrictions on Huawei and the shipment of advanced chips to China. That has left Chinese companies increasingly reliant on domestic foundries like Semiconductor Manufacturing International Corporation.
Nevertheless, SMIC is under its own export controls, which prevent it from accessing some of the world’s most advanced chipmaking equipment.
Are export controls working?
Chinese chip makers won’t need to immediately fill this H20 demand thanks to stockpiles and previous export exemptions and loopholes.
The U.S. government’s aggressive policy against the semiconductor industry is backfiring.
It is interesting that the Federal government never takes into consideration that loopholes and workarounds are possible and what the aftereffects are.
Sanctions can usually be subverted by using a third country to move the goods, and that is what we are seeing.
The end result is higher prices for all.
In general, an increase in the price of semiconductor chips would result in anything tech-related going up in price, and that is after a generation of deflation made devices cheap.
This also raises the price of doing business in AI. The GPUs needed for AI data centers will become more costly.
I could envision the future where harnessing AI software might be reserved for the well-off, because it won’t be cheap to use.
Each pressing day, the cost of business goes up as the globalization trends from post-World War 2 are being ripped to shreds by the existing administration.
Deglobalization is painful for the average person, but when you add on a tech sector in dysfunction, it really turns the screws on the investors.
What’s the end result?
In the short-term, semiconductor stocks will cool off because government obstruction means it is way harder to do business, let alone at profitable prices.
This restriction, this tariff, this rule, this forced export control, and the circus keep going with corporate management wishing one day to operate in a stable business environment.
Nothing is stable about the business environment now, forcing investment dollars to the sidelines.
In the short-term, sell any bear market rally in chip stocks.
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