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TACO Tuesday THE DAILY --- H.E.A.T. Torching Wall Street’s Obsolete Playbook. Delivered straight to your inbox 5 days a week. Subscribe Home Posts TACO Tuesday TACO Tuesday The 🔥 --- H.E.A.T.🔥 Formula : AI Driven Insights to Spark Your Portfolio Matthew Tuttle Jun 3, 2025 Subscribe now Share In Today’s Issue: Model Portfolio Changes—-Adding to Pre Merger SPACs Our Next Webinar— - Cash from Corruption: Profiting Off Washington’s Grift Machine Talking Markets and Covered Call Strategies With Mr. Cash TACO Tuesday The AI Cold War Heats Up: How Nvidia Could Lose China—and Why That’s Only Half the Story Under the Radar Screen Deal Could Open Up the SPAC Floodgates and more…….. ETF Model Portfolio Change We are upping our pre merger SPAC allocation to 20% (SPCX) and decreasing TBIL to 10%. This is due to the asymmetrical potential of pre merger SPACs that have an NAV floor and the ability to play a lot of our favorite themes, especially Trump’s inner circle. ETF Model Portfolio June 2025 UPDATE.pdf 41.21 MB • PDF File Download — # (# ) Cash from Corruption: Profiting Off Washington’s Grift Machine Thu, Jun 26, 2025 2:00 PM - 3:00 PM EDT - Two strategies to tap into Washington's grift with limited risk and unlimited upside - How to use AI to recognize the next top themes before the "smart money" does. - My simple hedging strategy that takes advantage of the real "dumb money" on Wall Street To register: register.gotowebinar.com/register/8214490301707453020 Talking markets and covered call strategies with Mr. Cash TACO Tuesday — # (# ) A few things were interesting about yesterday, first the bears tried to sell it off on tariff fears, but the market closed well into the green. As I have been thinking for the past few days the market seems to be over the tariff back and forth, or they just believe Trump will chicken out in the end (TACO). Second was the move in precious metals and miners….. I don’t talk a lot about trading techniques here as I assume I have a mix of readers from day traders to swing traders to long term buy and hold. I am by and large a counter trend trader. I prefer to buy pullbacks not breakouts. The difference hit me yesterday as I was taking profits in my gold mining stocks while at the same time a breakout trader who I know and respect was advising his readers to buy gold miners. I firmly believe that the breakout methodologies like CANSLIM do not work as well these days as they did when they were first taught. I also believe that the people who are successful breakout traders today have some sort of extra skill set when it comes to reading charts that allows them to be successful. Either way, I much prefer psychologically to buy a stock when it’s down then when it’s up. The third thing I noticed, which is where I spent my time, was the move in the AI biotech names. Tempus AI (TEM) is a name I have been active in for a while, and I bought the dip on the short report the other day. Yesterday it almost completely retraced that move….. I did not take profits here as it doesn’t look extended. It did seem to stir up positive sentiment in some other AI biotech names though…… Meanwhile, don’t say I didn’t warn you about the Trump Inner Circle trade and pre merger SPACs…. My entire X feed is full of CLBR tweets so this won’t last forever, but judging by some other memey SPACs you never know. So far a red start to begin the morning but wouldn’t be shocked to see the bulls come back in at some point. I still think the market, and a lot of names, are overbought and at a minimum we need to go sideways for a bit. In other news…. — # (# ) OECD chops U.S. growth forecasts, cites risks to the downside as tariffs bite The Paris-based global policy forum now sees U.S. growth at just 1.6% this year, and global growth at 2.9%. www.marketwatch.com/story/oecd-chops-u-s-growth-forecasts-cites-risks-to-the-downside-as-tariffs-bite-42be736c?mod=home_lead — # (# ) China’s AI industry is booming. Can Nvidia and other U.S. companies still get in on it? Chinese cloud providers have been big buyers of U.S. artificial-intelligence hardware. Jefferies analysts are upbeat that the trend can continue despite trade-war pressures. www.marketwatch.com/story/chinas-ai-industry-is-booming-can-nvidia-and-other-u-s-companies-still-get-in-on-it-c4a3decd?mod=home_lead The AI Cold War Heats Up: How Nvidia Could Lose China—and Why That’s Only Half the Story What if I told you the biggest risk to Nvidia’s trillion-dollar market cap isn’t AMD, isn’t supply chain hiccups, and isn’t even the next GPU cycle? What if the real threat is this: the Chinese are building an AI empire—and Nvidia might not be invited. This isn’t the first time we’ve written about the tech cold war. But this is the first time we’re seeing the numbers, scale, and urgency behind China's response to U.S. chip sanctions. And it’s not just saber-rattling from Beijing. It's a coordinated blitz of state-backed capital, strategic pivots, and shockingly fast hardware innovation. Let’s unpack the real implications of the Jefferies report, and what it means for investors chasing the AI gold rush. 🇨🇳 China’s AI Push: Bigger Than You Think China’s top tech firms—Baidu, Alibaba, Tencent (aka “BAT”)—just doubled their capex year-over-year . Their AI infrastructure spend has now outpaced U.S. hyperscalers for six straight quarters. That’s not a rounding error. That’s a regime-level shift. Why? Because the U.S. government handed China a mission: “You can’t have our chips.” And China heard something else: “It’s time to build our own.” So they’re stockpiling Nvidia chips. They’re deploying H20s and H800s for now. But they’re also engineering workarounds: Using gaming GPUs for inference Tuning LLMs to run on less powerful hardware Developing local 7nm chip manufacturing Ramping Huawei’s Ascend AI ecosystem Investing billions in domestic foundries And it’s working. 🧠 DeepSeek and the Parallel AI Universe You might remember December 2024, when a Chinese company called DeepSeek released an AI model that shocked the market. It was competitive with GPT-4 — and it didn’t even use top-tier Nvidia chips. That triggered a one-day $600 billion drawdown in Nvidia’s market cap. Now DeepSeek has done it again with its “R1” reasoning model. And once again, it’s being powered by Nvidia-light hardware , tuned and optimized by Chinese engineers who aren’t waiting around for Washington’s export licenses. 🔌 Nvidia’s New China Gambit: Blackwell Lite? Nvidia knows the threat. That’s why it's preparing a new, less powerful version of its Blackwell GPU architecture to sell into China. It's an attempt to skate around U.S. sanctions and retain some market share. But let’s be clear: this is not a growth product. It’s a damage-control product. CEO Jensen Huang recently said he has “no immediate plans” to build new China-specific products — but he’s “thinking about it.” That’s a polite way of saying: the road ahead is muddy and politically fraught. 🔮 --- Winners and Losers: What the Market’s Missing Let’s lay it out: ✅ Winners Company Rationale Alibaba, Baidu, Tencent AI buildout = long-term national priority. Cloud arms race is real. Huawei Their Ascend chips and CANN software stack are gaining traction, especially in state-backed verticals. TSMC & ASML (indirectly) Even if China can't access them directly, global demand for advanced nodes continues to surge. Strategic U.S. suppliers (e.g., SMCI, AMAT, KLAC) Short-term pain, but reallocation to U.S. and Middle East demand will continue. ❌ Losers Company Rationale Nvidia (partially) $8B+ China revenue hit this quarter alone. Trying to backfill with downgraded product SKUs. U.S. export policy May end up accelerating Chinese independence rather than restricting it. Western AI startup ecosystem If China develops full-stack LLMs without Nvidia or OpenAI, the global lead narrows. 📈 --- The Bottom Line for Investors There are two ways this plays out: 1. Nvidia adapts, builds new channels, and dominates AI globally (ex-China). That’s the bull case — and it’s happening now with the Blackwell rollout, sovereign AI projects, and hyperscaler wins. 2. China forges ahead independently, and Nvidia becomes a cold war casualty. That’s the bear case — not fatal, but enough to cap multiple expansion and force investors to reevaluate TAM assumptions. Most likely? Both are true. Nvidia wins big in the West and loses market share in the East. Investors need to adjust their risk lens accordingly. 🧭 What to Watch Next July : Nvidia’s rumored “China-compliant” Blackwell chip could be revealed. Q3–Q4 2025 : Huawei’s 7nm capacity should start ramping. This is key to domestic chip independence. Regulatory risk : Trump or Biden could escalate export restrictions again. Monitor the Commerce Department. 🧠 Final Thought The future of AI is now a geopolitical chess match. And in this game, the next kingmaker may be the one who can build great models on second-tier chips — whether that’s DeepSeek in Shanghai or Elon in Texas. Invest accordingly. Diversify. And always remember: the battle over silicon is also a battle over sovereignty. Under the Radar Screen Deal Could Open Up the SPAC Floodgates I’ve been talking a lot about SPACs the past couple of weeks and this caught my eye last week but I forgot to write about it. It’s about acquiring already-launched, quietly fading shells — and injecting them with fresh narrative (and fresh money). That’s exactly what just happened with M3 Brigade Acquisition V Corp (MBAV) . On Tuesday, a low-profile filing revealed that two major SPAC players — Chinh Chu and Reeve Collins — bought out MBAV’s sponsor stake . But unlike the typical sponsor swap, this one was done at a significant premium , signaling urgency and intention. 📌 What Happened: Chinh Chu (ex-Blackstone, founder of CC Capital, a major SPAC sponsor) and Reeve Collins (co-founder of Tether) acquired: 7.2M Class B shares (originally bought for $25K) 5.1M private placement warrants (originally priced at $1 each) For $6.47M total , over 2% of trust — unusually high for a secondary sponsor deal. They plan to rename the SPAC CCRC Digital Assets Corp , making their target sector clear. 🧠 Why This Matters: In a market where most SPACs are floundering , the sponsors here are paying a premium for a shell with only 14 months left — rather than filing a fresh IPO, which they could have done easily. Why? Speed . If they have a live deal in hand — especially in the digital asset space — then this is a faster, cleaner, and potentially less regulated path to market . 🔍 Strategic Implications: The SPAC asset class is evolving from "IPO vehicle" to "reverse public shell auction." SPACs with unspent trust cash but fading sponsor motivation are now acquisition targets . This turns inactive shells into M&A opportunities , especially for crypto, AI, and digital infrastructure firms looking to bypass SEC delays. Digital assets remain a hot endgame : The sponsor group here includes the former CEO of Tether — suggesting potential stablecoin or blockchain-adjacent M&A. Chu + Collins could be eyeing a crypto-native company with an existing treasury and the ability to survive regulation. We're likely to see more of these “premium sponsor swaps” — especially where sponsors are time-constrained but have capital or targets ready. 🏆 Potential Winners Company Why MBAV / soon-to-be CCRC Obvious beneficiary — shell value just appreciated, and sponsor group could bring major deal credibility Cantor’s Twenty One Capital SPAC Sets precedent for crypto-backed treasury deals — validates the model Collins was part of Other underutilized SPACs Opens a resale market — expect buyers to emerge, especially for shells with time left and strong trust-per-share ratios Digital asset firms with treasury holdings They become acquisition bait — especially if they offer credible on-chain revenues or token-linked equity Reputable SPAC sponsors Those with dry powder (e.g. Gores, Chamath if he returns, Chamoun) could repeat this playbook faster than retail investors can blink ❌ Possible Losers Company Why Empty shell SPACs with weak branding or poor capital markets ties If you don’t have a compelling sponsor, you’re not a buyer, you’re just a zombie Companies without existing digital treasuries If you only plan to acquire BTC, you’re no longer competitive — the narrative edge goes to those who already hold The SEC These types of transactions allow sponsors to sidestep long IPO review pipelines — and regulators may not be thrilled 📌 Final Takeaway This isn’t just a clever trade. It’s a signal : The SPAC structure isn’t dead. It’s just evolving into a vehicle for fast-turnaround liquidity arbitrage . What was once a “blank check” is now a “fast pass.” In a world where timing is everything — especially in crypto, AI, and energy-linked digital infrastructure — speed to public markets matters. Expect more elite sponsors to buy time by buying shells . And with the Trump administration now aggressively promoting digital asset-backed finance , this won’t be the last time you see a SPAC change its name — and its future — overnight. How Did You Like Today's Newsletter Love it It's Okay Not Great Login or Subscribe to participate Before you go how 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. 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