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☕️ Markets, tariffs, Nvidia and China’s AI… oh my

Feb 28, 2025

Howdy! 👋

The markets are still closed as I type but that doesn’t mean we can’t get our day rolling.

Futures are green which makes sense given how many folks have been scared out of stocks they’d rather own in recent weeks and how many shares Wall Street has purchased while the fear fest was underway.

I’m not sure that’ll stick by the time you read this, but no matter.

The sooner you learn to think like a shark, the sooner your portfolio can thank you.

Here’s my playbook.

1 – Markets, tariffs, and China’s AI… oh my

I began my day at 0300 with the savvy Maria Bartiromo who very kindly invited me back for a wide-ranging conversation on a number of topics roiling markets right now. Enjoy! (Watch)

2 – The real problem with tariffs is one nobody’s talking about

The ongoing narrative is that tariffs stink but as we talked about a few weeks back there’s a good case to be made throughout history that the opposite is true.

So why are the markets so upset about ‘em?

Two reasons:

People fear “what might happen” but almost universally fail to see what likely happens when tariffs are lifted and why investing in companies that can succeed anyway is the way to go as they bite.
The current generation of go-fast traders doesn’t know how to model tariffs so they’re going to hit the “sell” button first and ask questions later.

Keith’s Investing Tip: History is very clear that the best time to buy stocks is when they’re put on sale, regardless of reason and sure as heck regardless of how you and I feel about the situation personally.

You know what to do.

And if you don’t or would like to up your game, I’ll be here if you need me.

3 – Nvidia v China: the real story behind the headline hype

The media is having a field day over Nvidia CEO Jensen Huang’s acknowledgement that Huawei is a viable competitor in the AI chip space. (Read)

Sigh.

First, every smart CEO studies the competition - it’s Business 101. The idea that Huang just now realized Huawei is a threat? Puuuuuullllleeeeeaaasssseeee. Nvidia dominates AI chips precisely because he keeps a close eye on challengers. Contrary to what the press would have you think, this isn’t the first time he’s said that, though. That happened on December 6th, 2023 during a presser in Singapore.

Second, Huawei’s chips aren’t in the same league because they’re “low inference,” meaning they handle basic AI tasks in contrast to Nvidia’s high-end offerings that are the industry standard for training and running the most powerful AI models on the planet. But they will at some point… my guess is after they reverse engineer Nvidia’s top tier stuff but that’s a story for another time.

And third, competition fuels innovation. The stronger Huawei gets, the harder Nvidia will push to stay ahead—investing in better chips, more efficient architectures, and new AI capabilities.

Huawei may be a contender, but Nvidia still owns the ring imho.

Invest accordingly.

4 – Meta: hey everyone, me too

Meta plans to debut a standalone Meta AI app in Q2 2025 to compete with OpenAI’s ChatGPT and Alphabet’s AI offerings. (Read)

I loved OpenAI CEO Sam Altman’s sly response via X, “ok fine maybe we’ll do a social app.”

What gives and why now?

CFO Susan Li tipped the company’s hand last January noting that while the company’s Meta AI efforts are focused on “building a great consumer experience,” there are “pretty clear monetization opportunities here over time, including paid recommendations and including a premium offering.”

Yep, once again Meta wants to make you and your information the product. Then, presumably laugh all the way to the bank (again).

Naturally, no comment from Meta. 🤦‍

Gimme $600… then things could get interesting.

5 - The AAII sentiment indicator shows a new level of bearishness.

Should you worry?

Perhaps only if you're not buying.

Studies show that buying when AAII bullish sentiment is extremely low and selling when it is extremely high can yield superior returns.

It's a near perfect contrarian indicator.

The herd is rarely right at market extremes which brings to mind an old Wall Street saying I learned early in my career... when the crowd agrees, run the other way.