To The Moon

Hello, Tigers!

This week, global attention is focused not only on tech stock earnings but also on the ongoing trade war. Tariff increases are fueling inflation concerns, affecting global markets every second.

As investors, the short-term market has become increasingly unpredictable, with policy shifts creating uncertainty. In such a volatile environment, how should we position and adjust our assets?

Let’s dive into this week’s Weekly Wealth Trends analysis:

1.How Do Tariffs Affect the Market?

1.1 U.S. Tariffs on Mexico and Canada

On February 1, the Trump administration officially announced a 25% tariff on imports from Canada and Mexico, including an additional 10% tariff on Canadian energy resources, set to take effect on February 4. The White House warned that if these countries retaliate, the U.S. might escalate the tariffs further.

In response, Canada and Mexico swiftly countered, vowing to protect their economies, escalating the trade war further.

However, the situation quickly took a turn. Soon after, Trump confirmed he would delay the tariffs on Mexico for one month after a phone call with President Sheinbaum. This news immediately triggered a rebound in U.S. stocks.

Similarly, Canadian Prime Minister Trudeau also announced a delay in tariff implementation after a positive conversation with Trump. Canada has agreed to deploy 10,000 frontline personnel to tackle the fentanyl crisis, appoint a “Fentanyl Czar”, and invest C$200 million to strengthen border law enforcement in collaboration with the U.S.

Markets are still digesting the potential impact of these tariffs, and opinions are divided. For instance:

• Goldman Sachs remains optimistic, predicting tariffs will be a short-term issue with minimal long-term economic impact.

• Deutsche Bank is much more bearish, arguing that these tariffs affect 44% of U.S. imports, making them five times larger than Trump’s entire first-term trade policy, marking the biggest trade policy shock since the collapse of the Bretton Woods system.

1.2 U.S.-China Tariff Battle

On Wednesday, gold prices hit a record $2,849.05 per ounce, after Trump imposed a 10% tariff on Chinese imports, prompting a swift but targeted retaliation from Beijing.

Compared to Trump’s first term, China’s response has been more measured, matching U.S. tariffs almost equally. However, markets remain cautious about the broader economic impact and the potential inflationary effects, which could influence U.S. monetary policy.

Key Takeaway: Tariffs are unpredictable, and investors should avoid panic or rash decisions. Historically, while tariffs have impacted markets, they are typically absorbed quickly.

From a strategic standpoint, Trump’s policies aim to strengthen the U.S. economy, and if the economic impact worsens, he is likely to adjust. As seen in Mexico’s case, resolving key U.S. concerns can ease tariff pressures.

At this stage, it’s best to monitor developments closely rather than turn overly bearish on U.S. stocks. Investors should also watch for undervalued opportunities created by negative tariff news.

2.Deepseek Disrupts the AI Hardware Game

2.1 The Deepseek Shakeup in Silicon Valley

By now, most of you have heard about the Deepseek event, so we won’t go into too much detail. Instead, let’s analyze how it’s changing the market logic for tech stocks:

The biggest shift is that investment capital is moving from hardware to software.

Previously, the AI investment thesis was “scale is king, compute power first”, making NVIDIA (NVDA) the core beneficiary.

However, Deepseek’s open-source release has fundamentally changed the AI paradigm. Now, many software companies can deploy their own AI models without relying on centralized AI providers like OpenAI. This drastically lowers costs and accelerates AI adoption.

Additionally, from a market perspective, hardware stocks have been the dominant theme for two years. Every niche in the hardware sector has been deeply explored, so investors are now looking for the next big story—and that shift is happening in software.

So far, this trend is consistent in both U.S. and Chinese markets, suggesting a global capital movement.

2.2 Morgan Stanley’s Bearish Call on NVDA

Over the past two days, Morgan Stanley (MS) released a research report slashing its shipment forecast for NVIDIA’s GB200 chips, sparking widespread debate on social media. Key highlights:

• Lower GB200 shipment forecast due to Microsoft’s CapEx slowdown:

  • MS cut its 2025 GB200 NVL72 shipment forecast from 30-35K to 20-25K, with a worst-case scenario below 20K units.

  • Microsoft’s capital expenditure growth is slowing, which could put pressure on high P/E tech stocks.

• Diverging signals between cloud CapEx and supply chain expectations:

  • Microsoft’s spending guidance and AI efficiency improvements suggest a less optimistic supply chain outlook.

  • Meanwhile, Meta has provided strong 2025 CapEx guidance, creating market divergence.

• MS’s 4×4 risk-reward framework:

  • Stocks highly reliant on NVDA CapEx (e.g., Aspeed, KYEC) face poor risk-reward dynamics.

  • Stocks with lower NVDA CapEx exposure (e.g., Alchip) are more attractive.

Conclusion:

Deepseek has sparked doubts about AI hardware spending. Combined with MS’s bearish NVDA call and AMD’s weaker-than-expected earnings, investors may shift focus from hardware to software stocks in the short term.

That said, historically, big bank downgrades often serve as contrarian indicators. While the market narrative around Deepseek is evolving, NVDA’s long-term moat remains strong. However, in the near term, further volatility or pullbacks are possible.

3.Investment Strategy for the Week

Investment Logic:

Whether it’s the U.S.-Canada/Mexico tariff disputes or the ongoing U.S.-China trade tensions, tariffs remain a market-moving factor. If inflation rises, it will directly impact Fed policy and alter rate cut expectations.

However, for now, the impact of tariffs seems manageable. Trump’s tariffs are more of a negotiation tool rather than an end goal.

Thus, while tariffs may cause short-term volatility, they are unlikely to spiral out of control. Short-term traders can look for undervalued stocks affected by tariff-related news.

On the tech sector, Deepseek’s impact suggests a temporary shift from hardware to software stocks. Given AMD’s weaker-than-expected earnings, hardware stocks may face near-term pressure.

Since early this year, we’ve emphasized not over-predicting short-term market moves. This week’s outlook remains the same: a balanced multi-asset approach is still the smartest strategy.

Asset Allocation Recommendations

That wraps up this week’s key trading insights! What’s your take? Drop a comment below! 🚀