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1 Step Forward, 3 Steps Back THE DAILY --- H.E.A.T. Torching Wall Street’s Obsolete Playbook. Delivered straight to your inbox 5 days a week. Subscribe Home Posts 1 Step Forward, 3 Steps Back 1 Step Forward, 3 Steps Back The 🔥 --- H.E.A.T.🔥 Formula : AI Driven Insights to Spark Your Portfolio Matthew Tuttle Apr 16, 2025 Subscribe now Share In Today’s Issue: H20 HALTED: U.S. Export Ban on Nvidia AI Chips & What Comes Next Gold is the most crowded trade out there, it’s also working Powell speaks today 1 step forward, 3 steps back and more…….. Announcements Our Next Webinar Trump’s Plan For the Economy and How It Impacts Your Investments Thursday April 24, 2-3pm EST Register — # (# ) News & Noise 🧠 News: Nvidia to take $5.5bn hit as US clamps down on exports of AI chips to China Trump administration’s curbs send chipmaker’s shares sliding in after-hours trading www.ft.com/content/66e6abfa-2b79-407c-bda6-d04d19b3b814 ASML, a key microchip bellwether, disappoints on orders Dutch semiconductor equipment group ASML Holding reported disappointing orders for the first quarter and flagged growing uncertainty surrounding U.S. tariffs on Wednesday. www.marketwatch.com/story/asml-a-key-microchip-bellwether-disappoints-on-orders-704eeb1b?mod=home_lead Gold hits fresh record as fund managers say it's the most crowded trade Gold futures trading on Nymex rose above $3,300 an ounce for the first time early Wednesday. The yellow metal has risen 26% already in 2025, as trade and geopolitical uncertainty encourage investors and central banks to buy the bullion. However, a survey produced by Bank of America shows that fund www.marketwatch.com/livecoverage/stock-market-today-nasdaq-leads-dow-and-s-p-500-lower-as-trump-trade-policy-hits-nvidia-asml-warns/card/gold-hits-fresh-record-as-fund-managers-say-it-s-the-most-crowded-trade-1nuLM22CxemiSpzhnYpX?mod=home_lead Why the bond market is the Achilles’ heel of Trump’s ‘big, beautiful’ budget bill President Donald Trump’s budget plan come reignite tumult in the U.S. bond market www.marketwatch.com/story/bond-market-is-the-achilles-heel-of-trumps-big-beautiful-budget-bill-say-investors-3392c77a?mod=home_lead Powell Speaks: Federal Reserve Chair to Discuss Economy; Tariffs, Higher Inflation, and What Else to Watch Follow here for live coverage and analysis of Federal Reserve Chair Jerome Powell's speech at 1:30 p.m. Eastern on Wednesday. www.barrons.com/livecoverage/jerome-powell-speech-economy-fed?mod=hp_SP_A_1 China Open to Talks If US Shows Respect, Names Point Person China wants to see a number of steps from President Donald Trump’s administration before it will agree to trade talks, including showing more respect by reining in disparaging remarks by members of his cabinet, according to a person familiar with the Chinese government’s thinking. www.bloomberg.com/news/articles/2025-04-16/china-open-to-talks-if-trump-shows-respect-names-point-person?srnd=homepage-americas ❌ Noise: Wall Street predicts a 10% stock rebound by the end of 2025. Why investors shouldn’t buy the hype just yet. Wall Street strategists still think stocks will recover by the end of 2025 — just not as dramatically as they had once predicted. www.marketwatch.com/story/wall-street-predicts-a-10-stock-rebound-by-the-end-of-2025-why-investors-shouldnt-buy-the-hype-just-yet-a6af922b?mod=home_lead What Wall Street Is Saying Jonathan Krinsky, BTIG…. ❝ Markets are working on their third straight green day with solid breadth. There is room to push a bit higher, but we see firm resistance in the 5500-5600 range. Conversely, if we turn lower, risk could be back to the bottom of the trading range (5k-5100). We don't love that risk/reward as it provides ~2-3% upside vs. 6-8% downside. Semis are into resistance, and despite the overall bounce in risk, high-beta has been unable to make much progress relative to low-vol. Overall, we continue to see a wide choppy trading range, and therefore would look to lighten up risk north of ~5500 Mike O’Rourke, Jones Trading ❝ The bullish argument is that the President has already unveiled the worst-case tariff scenarios and final trade deals will be far superior. The supporting argument is that the President will blink any time markets get jittery. In short, this is the multidimensional negotiation, and the President’s actions are largely posturing. It is the take him seriously but not literally environment approach. The bearish argument is that if the President is successful in achieving his goal of significantly onshoring U.S. manufacturing, profit margins will be squeezed. Note, that is the “ successful ” scenario. The unsuccessful bearish case is that structural disruption in trade results in dangerous unintended consequences. One could interpret last week’s Dollar and Treasury weakness as potential foreshadowing those dangerous unforeseen consequences. Mohit Kumar, Jefferies…. ❝ How should we trade these markets. Our strategy would be four-fold. First is to be humble and nimble. There is no point to get married to ones positions as markets are likely to be driven by headlines, often on social media. Timing of trades would thus be extremely difficult. Second would be to focus on avoiding losses rather than trying to produce high short term returns. Market volatility will create ample dislocations in the coming months, but one would need to remain solvent (and have dry powder) to take advantage of these dislocations. Third, focus on positioning and stay away from crowded trades. Lastly, we would be to be focussed on long term implications of the trade war, and use headline driven market volatility to add or take away from these positions. UBS…. ❝ European baskets remain strong with EU Defense Spending and EU Listed Eurozone Exposure remaining at the top of our thematic rankings. EU Defense Spending continues to score very well across our metrics, especially following the large fiscal announcements earlier this year. The one detractor may be that the basket overall is starting to look a bit expensive but Dassault Aviation and Thales SA are both among the higher ranking names that still appear attractive on our Valuation score. Within EU Value , Engie , Credit Agricole , and Lloyds Banking Group score well across the REVS framework. US AI Winners and AI-exposed Semis were previously hurt by stretched valuations. These themes have jumped up our rankings following recent multiple contraction. While we continue to have concerns over the capex to sales of hyperscalers (~19%) over the long-term, these names score as attractive in the near-term according to our quantitative framework. Broadcom , Meta Platforms , and Marvell Technologies are the highest scoring names within the theme. US Low Income and US Housing are among the worst scoring themes this month hurt by Regime, Earnings, and Sentiment scores. In the event of a recession being priced (albeit not the base case at present), we think these themes could run risk of becoming value traps as margin pressure from tariffs could impact earnings. Comm Services and Utilities remain the highest ranking sectors broadly across regions according to our scorecard. Media & Entertainment , HC Equip & Srvcs , and Telecoms are among the most attractive Industry Groups in the S&P 500. Construction Materials , Consumer Dur & App , Chemicals , and Transportation are among the worst scoring Industry Groups driven by Earnings, Sentiment, and Regime scores. What else is there? We also include a a country ranking in this report based on ACWI stock representation. Spain , Italy , and Germany screen as attractive country exposures this month broadly across scoring metrics. Spain has the strongest earnings scores across our country aggregates. In Emerging Markets, Singapore screens attractive while Mexico and Ireland score weakest 1 Step Forward, 3 Steps Back The NVDA news is likely to dominate trading today (deep dive below), which is why I will keep highlighting that the odds of success are not in your favor at the moment. While I do think it’s likely that the bottom is in (that view can change in a heartbeat) that doesn’t signal clear sailing ahead for the bulls. There are a ton of tradeable patterns out there now, but I continue to think you should be very careful with your overall equity positioning. I have been steadily adding exposure, but that is only because I was net short and I prefer to move to a slightly net long position. Key word being “slightly”. TLT interests me again. After getting stopped out I have gotten back in with much smaller size. I think the bond market and rates are key here, and nobody from the administration or the Fed wants to see interest rates spike, or anyone big carried out on a stretcher. 85 is a good spot for a stop if you wanted to play along…. My biggest position is in gold miners, which I bought on the dip a few days ago. That’s also the most crowded trade on Wall Street right now. I don’t mind being in something crowded as long as it’s working, with the understanding that I can, and will be nimble about it. Up big this morning so I may trim today and look to add back on dips, if we get them. I am watching Bitcoin…. As some of the same aspects of a falling Dollar that help gold, should help Bitcoin. It’s also way more of a risk on asset and it’s still in a downturn. 🚫 H20 HALTED: U.S. Export Ban on Nvidia AI Chips & What Comes Next 📉 What's Happening? The U.S. government has imposed new export restrictions on NVIDIA’s H20 AI chips , targeting sales to China, Hong Kong, Macau, and other D:5 countries. This is a direct escalation of the Trump administration’s strategy to curtail Chinese AI and supercomputing capabilities — reversing recent signs of softening. 🔐 Why H20? The H20 was a purpose-built “compliant” AI chip for China — less powerful than Nvidia’s top-tier models (like A100, H100), but still potent. Why the ban? Aggregated H20 clusters can simulate nuclear weapons or create massive LLMs rivaling U.S. infrastructure. National security risk flagged. 📊 What it means for NVIDIA: 🚫 $5.5B in write-downs on inventory and commitments 🚫 ~$10B in revenue won’t be recognized 🚫 Major Q2 sequential growth headwind (~$5B impact) ⚠️ GB200 ramp concerns remain unresolved ⚠️ Diffusion limits could further restrict AI chip exports ❝ Bottom line : The H20 ban is a severe blow to NVDA’s China strategy, creating both earnings risk and investor uncertainty . 🩸 Primary Loser: NVIDIA (NVDA) – Rating: 4/10 Massive exposure to China (up to 25% of data center revenue) Inventory overhang + order collapse Sentiment reversal after hopes of policy softening $500B U.S. AI infra buildout helps, but is long-duration and non-revenue-generating near term Stock unlikely to work until export policy and tariff framework are clarified 🔻 Secondary Losers: Supply Chain + Collateral Exposure 1. AMD (AMD) – Rating: 5/10 MI308 likely next on the chopping block (similar AI profile) Potential 200K unit China shipment now at risk Uses TSMC + SPIL for packaging, similar to NVDA 2. TSMC (TSM) – Rating: 6/10 H20 and MI308 are fabbed at TSMC Revenue hit possible via reduced wafer starts from NVDA & AMD However, diversified customer base + domestic AI buildout = buffer 3. Samsung (SSNLF) – Rating: 5.5/10 Major HBM supplier for H20 (not yet qualified for HBM3E/Blackwell) Inventory glut risk if H20 volume dries up Likely to slow equipment purchases for HBM lines 4. ASML (ASML) / ASM International (ASMI) / SÜSS MicroTec ( SUSS.DE ) – Rating: 5/10 Exposure to Samsung’s HBM roadmap and long-term AI-related capex Slower orders from Korea → weaker demand for EUV, deposition, bonding tools Particularly exposed in late 2025–2026 order flow 5. Amkor (AMKR) & KYEC ( 2449.TW ) – Rating: 5/10 Provide CoWoS and testing services for H20 chips Will see Q2 impact from canceled orders and supply chain disruption 6. Lenovo ( 0992.HK ) , HH Data Systems – Rating: 5.5/10 Took over H20 server builds after Inspur was sanctioned Immediate demand shock from halted shipments Potential reallocation of server build capacity needed 🧠 Strategic Wildcards / Watchlist Company Note Inspur Already on the entity list — this confirms full blockade on top-tier AI servers in China. SPIL Tester for AMD MI308 — indirect exposure to same risk as KYEC. Cadence / Synopsys Could be pulled into future restrictions if EDA tools are linked to supercomputing workflows. Singapore suppliers Monitor for potential spillover as the U.S. targets indirect exports via third-party hubs. 🟢 Possible Winners 1. U.S.-based AI Infrastructure Players (Cloud + Buildout) Supermicro (SMCI) : Could benefit from redirected demand CoreWeave / Lambda Labs (private) : Attract data center build capex NVDA in the U.S. : Longer term, the $500B infra plan helps anchor U.S.-based demand 2. U.S. Government Defense Cloud/AI Contractors Palantir (PLTR) , Anduril (private) , C3.ai (AI) U.S. government AI contracts could accelerate with repatriated demand 3. Non-U.S. AI chip startups Tenstorrent, Groq, Cerebras : May pick up investment as U.S. looks to diversify from Taiwan/China AI silicon dependency 4. China-Domestic AI Ecosystem Hygon, Biren, Moore Threads : Short-term disruption, but long-term push for Chinese independence accelerates Could be investable via Hong Kong/China AI thematic ETFs, though geopolitical risk is high 🧭 Strategic Implications NVDA is dead money short term until clarity emerges. Avoid adding. AMD likely next — preemptive trimming or hedging may be prudent. TSMC exposure OK but expect softer guidance in Q2. Look to U.S.-centric AI infra names that benefit from domestic chip redirection. Position for further tightening : Biden & Trump both appear aligned on restricting high-end AI exports. Be wary of European equipment names with Samsung and HBM exposure. 🔮 What to Watch Next Will MI308 be banned? Expect confirmation within weeks. Does Singapore get caught in diffusion limits? China’s AI retaliation? Will Beijing impose its own tech export bans? Next-gen U.S. restrictions: Watch for “diffusion” export rules (e.g., knowledge transfer, software) ETF implications: SMH, SOXX, FXI, and AI thematic ETFs will feel the ripple effect Before you go: Here are ways I can help ‍ ETFs : We offer innovative ETFs that cover all aspects of The --- H.E.A.T. Formula, Hedges, Edges, and Themes. Consulting: I'm happy to jump on the phone with financial advisors at no charge. I've built a wealth management firm and helped other advisors grow their practices through the use of substantially differentiated investment strategies. If you want to talk just send me an email at [email protected] Monthly investing webinars Rebel Finance Podcast https://www.youtube.com/@TuttleCap Wealth Management-Coming Soon Paid Newsletter Service-Coming Soon All rights reserved. Keep Reading No posts found View more caret-right 0