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Another BRIC in the Wall ?3

18:09 11-Aug-25

Trump seems to have changed tone on Intel's CEO, thus generating some relief among investors.  Although the visit got a mention this morning, I have even less interest in such sentiments.  The closest thing to an economically relevant statement from the White House today was another 90 day delay on tariff policy with China, which is also in line with this morning's commentary.

The main news this morning is Nvidia and AMD agreeing to pay 15% of their sales in China in order to get export licenses to the country.  It's one more way in which America is behaving like a banana republic, and there's nothing like it in modern business history.  Even so, NVDA & AMD are only down fractionally in early trading, even though China has questioned the appeal of the former products.  We should also get an update on the status of Intel's CEO after a White House visit today.

To my mind, the real takeaway here is that both companies were willing to take this step at all.  It shows that decoupling from China isn't really practical for many businesses, and America has yet to reckon with that in many respects.  Almost two years ago, in Harbingers of a Multilateral World, I kicked off an extended series of updates about the BRICS and their efforts to de-dollarize.  That concluded that we would only see a gradual decline in American influence and global dollar use, and currency movement this morning tells me that markets are going to continue ignoring the process for the time being.  Nonetheless, I think we can expect the White House to have a tougher time with this set of tariff negotiations than it did with its supposed allies.

One stock that hasn't been spared is AI, which gapped down almost 30%.  Late Friday night, c3.AI released preliminary results that were well below expectations and restructured its c-suite, but hasn't replaced its CEO, yet.  The stock has recovered about a third of those losses in the first hour of trading.  However, I think this will linger as another data point fostering doubts concerning the bubble status of AI in the market.  Nvidia has scheduled its quarterly update for the evening of August 27th.  My view continues to be that its trailing results should be well supported by the transformational specific use cases that I've cited, but that genAI is dangerously overvalued by markets for the medium to long term.

More immediately, we'll see CPI & PPI the next two mornings.  The former could get a big reaction, but keep in mind that it will only capture the effects of relatively minor tariffs that were in place before this month.

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