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1 Step Forward, 3 Steps Back
The š„H.E.A.T.š„ Formula : AI Driven Insights to Spark Your Portfolio
Matthew Tuttle
April 16, 2025
In Todayās Issue:
H20 HALTED: U.S. Export Ban on Nvidia AI Chips & What Comes Next
Gold is the most crowded trade out there, itās also working
Powell speaks today
1 step forward, 3 steps back
and moreā¦ā¦..
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News & Noise
š§ News:
ā Noise:
What Wall Street Is Saying
Jonathan Krinsky, BTIGā¦.
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 OāRourke, 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 Presidentās 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 āsuccessfulā scenario. The unsuccessful bearish case is that structural disruption in trade results in dangerous unintended consequences. One could interpret last weekās Dollar and Treasury weakness as potential foreshadowing those dangerous unforeseen consequences.
Mohit Kumar, Jefferiesā¦.
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.
UBSā¦.
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 itās likely that the bottom is in (that view can change in a heartbeat) that doesnāt 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 āslightlyā.
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 alongā¦.
My biggest position is in gold miners, which I bought on the dip a few days ago. Thatās also the most crowded trade on Wall Street right now. I donāt mind being in something crowded as long as itās 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 Bitcoinā¦.
As some of the same aspects of a falling Dollar that help gold, should help Bitcoin. Itās also way more of a risk on asset and itās still in a downturn.
š« H20 HALTED: U.S. Export Ban on Nvidia AI Chips & What Comes Next
š What's Happening?
The U.S. government has imposed new export restrictions on NVIDIAās H20 AI chips, targeting sales to China, Hong Kong, Macau, and other D:5 countries. This is a direct escalation of the Trump administrationās strategy to curtail Chinese AI and supercomputing capabilities ā reversing recent signs of softening.
š Why H20?
The H20 was a purpose-built ācompliantā AI chip for China ā less powerful than Nvidiaās 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.
š What it means for NVIDIA:
š« $5.5B in write-downs on inventory and commitments
š« ~$10B in revenue wonāt be recognized
š« Major Q2 sequential growth headwind (~$5B impact)
ā ļø GB200 ramp concerns remain unresolved
ā ļø Diffusion limits could further restrict AI chip exports
Bottom line: The H20 ban is a severe blow to NVDAās China strategy, creating both earnings risk and investor uncertainty.
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
š» Secondary Losers: Supply Chain + Collateral Exposure
1. AMD (AMD) ā 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) ā 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) ā 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) / SĆSS MicroTec (SUSS.DE) ā Rating: 5/10
Exposure to Samsungās HBM roadmap and long-term AI-related capex
Slower orders from Korea ā weaker demand for EUV, deposition, bonding tools
Particularly exposed in late 2025ā2026 order flow
5. Amkor (AMKR) & KYEC (2449.TW) ā 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 ā 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
š§ Strategic Wildcards / Watchlist
Company | Note |
|---|---|
Inspur | Already on the entity list ā this confirms full blockade on top-tier AI servers in China. |
SPIL | Tester for AMD MI308 ā 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. |
š¢ 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
š§ Strategic Implications
NVDA is dead money short term until clarity emerges. Avoid adding.
AMD likely next ā 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.
š® What to Watch Next
Will MI308 be banned? Expect confirmation within weeks.
Does Singapore get caught in diffusion limits?
Chinaās AI retaliation? Will Beijing impose its own tech export bans?
Next-gen U.S. restrictions: Watch for ādiffusionā export rules (e.g., knowledge transfer, software)
ETF implications: SMH, SOXX, FXI, and AI thematic ETFs will feel the ripple effect
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ā
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The views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal. Trade notifications are for informational purposes only. TCM offers fully transparent ETFs and provides trade information for all actively managed ETFs. TCM's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades.TCM is not a commodity trading advisor and content provided regarding commodity interests is for informational purposes only and should not be construed as a recommendation. Investment recommendations for any securities or product may be made only after a comprehensive suitability review of the investorās financial situation.Ā© 2025 Tuttle Capital Management, LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.