In Today’s Issue:

• The Tariff Endgame: Trump’s Trade War Isn’t Over—It’s Just Getting More Unpredictable

• The Great Decoupling: China’s AI Ambitions Amid U.S. Chip Sanctions

• The Oil Patch Reset: Why Smart Money Is Betting on a Mid-Cycle Rebound

• The Dual Cliff That Isn’t—And the Quiet Health Care Stocks Poised to Rip

• and more……..

The Tariff Endgame: Trump’s Trade War Isn’t Over—It’s Just Getting More Unpredictable

Lot going on yesterday, you had the market reaction to NVDA earnings and the Court of International Trade ruling against Trump. The market initially popped but I sensed that chasing was probably not the best idea, which turned out to be the case. I wonder whether the market is concerned that much about tariffs at the moment as it’s 4%ish above the Liberation Day close. Are traders embracing TACO (Trump always chickens out)?

Will the market start getting concerned again if Trump does something like this……

Then there’s this, which probably would have been much bigger news if we didn’t have everything else going on….

I’d be cautious here as the Tariff situation just got more complex. Not seeing anything in the charts that’s concerning, but didn’t like that the market closed way off the highs yesterday and we are slightly red this morning.

I had GPT take a deep dive into the back and forth on tariffs…

The headlines this week scream “Trump Tariffs Struck Down!”

But don’t be fooled.

As we unpack what’s really going on in Washington—and what it means for your portfolio—the message is clear: tariffs are not going away. In fact, they’re about to become more unpredictable, more strategic, and more politically weaponized than ever.

Let’s walk through the legal blow-by-blow—and then break down what it means for investors who want to stay one step ahead of a trade war that’s morphing, not ending.

🔍 What Just Happened?

The U.S. Court of International Trade (CIT) ruled that Trump overstepped by invoking the International Emergency Economic Powers Act (IEEPA) to impose his so-called “Reciprocal Tariffs” and “Trafficking Tariffs” (which targeted fentanyl-producing nations like China, Mexico, and Canada).

The court said, in essence, “Nice try—but there’s nothing ‘extraordinary’ about these trade threats, so you can’t use emergency powers to slap on tariffs.”

BUT—before you start thinking these levies are dead in the water—a stay has been granted. That means the tariffs remain in place while the appeals play out in higher courts (Federal Circuit, and possibly the Supreme Court). Refunds? On hold. Policy? Still active.

So yes, the court ruled against Trump… but the markets and companies are still living in a tariff world, and the smart money knows it.

🧠 The Real Message: Trump Will Find a Way

Even if the appeals court upholds the CIT ruling (which is likely on the Reciprocal Tariffs, less so on the Trafficking Tariffs), Trump has a legal toolbox of fallback options.

Here’s what’s next on the playbook:

• Section 122 of the Trade Act of 1974 – lets the President impose up to 50% tariffs for 150 days on countries with “balance-of-payments” issues. It’s fast, but temporary. Congress would need to extend it. Expect this to be a short-term sledgehammer.

• Section 232 of the Trade Expansion Act (1962) – this one is familiar. It was used to justify national security tariffs on steel and aluminum. Commerce runs an investigation, the White House acts. Slower—but stickier.

• Section 301 – the old China weapon. It allows broad retaliatory tariffs when foreign nations violate trade agreements or act “unreasonably.” Biden used it; Trump will likely expand it.

Bottom line: Trump doesn’t need IEEPA. He just needs a pen and a plan.

And let’s be clear—he’ll use it. He’s already floated a 10% universal import tariff, and his inner circle (like Robert Lighthizer and Peter Navarro) are drafting contingency frameworks.

⚖️ What’s At Stake in the Courts?

Don’t treat all tariffs the same. The courts didn’t.

• Reciprocal Tariffs – seen as the most vulnerable legally. The argument that America needs emergency powers because Canada won’t lower dairy duties is, frankly, weak.

• Trafficking Tariffs (fentanyl origin) – more legally defensible. Peter Shane of NYU Law says this one may survive the appeal, especially if Trump’s team proves a tie to national security.

Expect a split decision from the Federal Circuit: one set of tariffs struck down, the other possibly upheld. Either way, Trump’s re-election or continued legal creativity ensures tariffs remain a core pillar of trade policy.

📉 What It Means for Markets

1. The Stay Is the Real Story
   Until the appeals resolve (potentially 2026), tariffs remain in effect. That means U.S. importers still pay duties, consumers feel inflationary pressure, and companies stay in limbo. It’s regulatory chaos avoidance—but strategic uncertainty persists.

2. Volatility Returns to Corporate Planning
   Imagine you’re a CFO trying to lock in a two-year supply contract with a Chinese component maker. How do you price it? Do you hedge against a 10% Trump blanket tariff? What if it disappears overnight?

   That’s the problem. The back-and-forth creates paralysis and a chilling effect on long-term corporate strategy. And that usually means less capex, more near-shoring, and more “just-in-time” hedging behavior—a boon for some, but stress for others.

3. Winners Are Political Favorites + Domestic Substitutes

   • 🇺🇸 Steel, aluminum, rare earths, and infrastructure suppliers stand to benefit if Trump leans more into Section 232 (national security).

   • 🏭 Domestic manufacturers that can replace imports get a tailwind from pricing power.

   • 💊 Pharma and medical devices may see exemptions or carveouts—but smaller Asian contract manufacturers could get crushed.

   • 🏭 Tariff-compliant supply chains (Mexico, India, Vietnam) will become more important as companies look to “China-plus-one” models.

4. Losers Are Globalized Firms With Thin Margins

   • 🧥 Retailers sourcing finished goods from Asia

   • ⚙️ Auto manufacturers with complex international supply chains

   • 🔋 Battery and EV makers who rely on Chinese rare earths and components

💼 What Should Investors Do?

Expect a protracted, chaotic, semi-permanent trade war with periodic legal flare-ups.

Here’s the strategic positioning we recommend:

✅ Long:

• Domestic industrials with Trump-aligned narratives (e.g., BWXT, Nucor)

• Tariff winners like commodity infrastructure, steel, uranium (especially if the Section 232 national security angle expands to energy security)

⚠️ Watch:

• Companies with large exposure to Chinese supply chains, especially where reshoring would be cost-prohibitive (think retail, low-end electronics, or pharma intermediates)

❌ Avoid:

• Low-margin multinationals dependent on open trade

• Emerging market ETFs with high China/Mexico weightings—subject to whiplash as tariff structures mutate

🧭 Final Word

Don’t let the headlines distract you. The legal rulings are noise. The strategic arc is clear:

Tariffs aren’t going anywhere.

Trump will double down. Courts may tweak them—but the age of permanent trade friction is here.

💰 Meanwhile, Bitcoin is feeling a bit toppy and the chart looks like a textbook short……

There’s been a lot of great news and tailwinds, but you have to wonder if all that’s priced in at the moment. Of course there’s also this….

Comes down to whether you are a trader or an investor. If you are an investor I think Bitcoin should be a part of your portfolio…..

I’m much more of a trader so will probably cut down my exposure and look for a re entry lower, especially ahead of a weekend.

Talked about TEM yesterday, here’s their rebuttal to the short report….

Like this chart here, held right where it needed to. You could us the 50 or 200 day as a stop if you so chose.

The Great Decoupling: China’s AI Ambitions Amid U.S. Chip Sanctions

The U.S. has tightened its grip on semiconductor exports, aiming to stifle China's AI advancement. Yet, China's tech giants—Alibaba, Tencent, and Baidu—are accelerating efforts to develop and adopt domestic AI chips, signaling a significant shift in the global tech landscape.

🇨🇳 China's Tech Titans Pivot to Homegrown AI Chips

Facing dwindling supplies of Nvidia processors due to U.S. export restrictions, Chinese tech companies are testing domestic alternatives to sustain their AI development.

🛠️ Challenges in Transitioning to Domestic Hardware

Switching from Nvidia's CUDA software framework to domestic platforms like Huawei's CANN presents technical hurdles. The process is time-consuming and may cause development delays of up to three months.

🚀 Huawei's Ascend Chips Gain Traction

Huawei's Ascend series, particularly the 910C and upcoming 910D chips, are emerging as viable alternatives. These chips are being adopted by state-owned enterprises and are now attracting interest from major tech firms.

🔄 Hybrid Strategies to Mitigate Risks

To balance performance and compliance, companies are adopting hybrid approaches—using existing Nvidia chips for AI training and domestic processors for inference tasks.

📉 Nvidia's Market Share Declines in China

Nvidia's dominance in China has waned, with its market share dropping from 95% to 50% over four years. CEO Jensen Huang warns that U.S. export controls may inadvertently bolster China's domestic chip industry.

🏭 Emergence of Domestic Chipmakers

Beyond Huawei, companies like Cambricon Technologies and Hygon Information Technology are developing AI chips. Cambricon, for instance, has seen a surge in demand, marking its first-ever quarterly profit.

📈 Investment Implications

Investors should monitor the rise of Chinese semiconductor firms and the potential long-term impact on global chipmakers like Nvidia. The shift towards domestic solutions in China could reshape the competitive landscape in the AI hardware sector.

🏆 Winners:

🔻 Losers:

In summary, while U.S. export controls aim to curb China's AI capabilities, they may be accelerating the country's push towards self-reliance in semiconductor technology. This development holds significant implications for global tech dynamics and investment strategies.

The Oil Patch Reset: Why Smart Money Is Betting on a Mid-Cycle Rebound

This has been such a target rich environment of themes that I haven’t looked at oil and gas in a while. Clear Street put out a report yesterday that piqued my interest so I had GPT take a deep dive…..

Clear Street’s postmortem from the 25th Louisiana Energy Conference reads like a subtle shift in oil and gas market psychology.

While the headlines are still dominated by tariffs, clean energy pushback, and crude price softness, the underlying message is loud and clear:

Forget the fear. This is a tactical setup to accumulate select oil & gas equities—especially those built to survive $60 oil and thrive above $70.

1. The Cycle Has Turned—But It’s Not Over

Crude has drifted into a $59–63 range thanks to two factors:

• Tariffs dragging macro demand

• OPEC+ dumping barrels faster than expected

But rigs are down 10% year-over-year, Permian budgets are softening, and shale players are cutting CapEx modestly. That’s how bottoms form.

Names like Diamondback (FANG) and Matador (MTDR) are pausing completions—not panicking . And that tells you everything: this isn’t a crash. It’s a recalibration.

2. Permian Slows, Gulf Surges

Offshore is back.

• Chevron (CVX) is drilling new Gulf wells

• Offshore California is restarting production

• Brazil’s subsea programs are scaling up
  Meanwhile, Permian players are being selective.

Conclusion: Deepwater is the new growth engine, and the winners are those who can service or explore it.

3. Technology and AI Are Quietly Transforming Upstream

This isn’t your granddad’s wildcatting anymore. AI is now used to:

• Map seismic data

• Predict drill success

• Optimize fracking and water flowback

• Reduce false alarms in the field

Remote monitoring, recycling water, and imaging sub-salt zones are increasing margin without increasing price.

4. Winners & Losers

5. GPTs Take

This isn’t the time to load up on levered E&Ps, but it is the time to own the companies building the next leg of production—especially offshore and water-focused service names like TTI.

And if you’re going upstream, go with low-CapEx, low-decline operators like Magnolia (MGY) and Prairie (PROP).

Bottom Line

• Oil is stabilizing. Rigs are pulling back. CapEx is rationalizing.

• AI, tech, and offshore development are setting up for a quiet—but powerful—second wind for U.S. energy.

You don’t need to bet on $90 crude. You just need to bet on the survivors who know how to make money at $60.

And right now, they’re trading like oil is going to $40.

Let the algo funds panic. We’re buying the dip—at the bottom of the cycle.

The Dual Cliff That Isn’t—And the Quiet Health Care Stocks Poised to Rip

TD Cowen’s latest “Ahead of the Curve” brief takes dead aim at one of the most widely misunderstood risks in health care investing today: the supposed 2027/2030 “D-SNP Cliff.”

That’s the fear that regulatory changes from CMS (Centers for Medicare & Medicaid Services) will force mass disenrollments of dual-eligible seniors—those who qualify for both Medicare and Medicaid—from specialized plans (D-SNPs) if their insurer doesn’t also run the matching Medicaid plan in the same zip code.

1. The Reality: Duals Integration Is Evolution, Not Revolution

Here’s what’s really happening:

• CMS wants to encourage alignment between Medicare and Medicaid coverage for duals.

• It favors MCOs (Managed Care Organizations) that offer both in a given service area.

• But states retain wide leeway, and enforcement will be messy, not absolute.

So while investors expect a regulatory hammer, what we’re getting is a state-by-state bureaucratic nudge.

Cowen's team rightly notes that dual eligibles—only 17% of Medicare Advantage enrollees—drive 35–40% of the cost. That means they’re too important to disrupt casually.

2. Why This Matters

Duals are:

• Older, poorer, and sicker than the average senior

• A source of above-average per-member revenue

• A growing demographic (up 17% CAGR vs. 6% for non-duals over the past 5 years)

Insurers with both Medicaid and Medicare contracts will gain share over time—but not via forced attrition, more like slow consolidation.

3. Winners & Losers

4. Catalyst Timeline

• November 2025 – Proposed CY 2027 MA Technical Notice

• 2026–2027 – States begin implementing “alignment” rules at their own pace

• 2030 – Ultimate integration deadline (unless deferred)

In other words: no cliff, just a long slope. And that slope favors integrated MCOs who are playing the long game.

5. GPTs Recommendation

If you’re betting on an unwinding of dual-eligible risk, you’re betting on the wrong headline. This isn’t a cliff. It’s a handshake between two messy bureaucracies—and investors who front-run the alignment trade will quietly make 20–30% over the next 12–18 months.

Bottom Line

Don’t fear the cliff. Fear missing the opportunity it obscures.
The next leg of health care alpha won’t come from drug breakthroughs—it’ll come from getting duals right.

And Molina, Centene, and Elevance are already there.
The question is: Are you?

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