Chip stocks surge to new highs on soaring profits, while oil stays elevated on Iran war and European carmakers absorb €8bn in Trump tariffs.

Transcript

Tom SMH at a fifty-two week high, up fifty-two percent year to date — and AMD just surged thirty-three percent in a single week. The chip juggernaut shows no signs of slowing. But is it too late to join the party? We're breaking it all down on this Saturday edition.

Marie Bonjour and welcome to Investment Flash Weekend Edition, May tenth, twenty twenty-six. I'm Marie, with Tom and Gerald. Today we're navigating a market stretched between tech euphoria and geopolitical gridlock.

Gerald Yeah look, Tom's already buzzing like an overclocked processor. SMH's trailing P-E of forty-six point six is the kind of number that makes me reach for the antacids.

Tom Buddy, the profits are real! Nvidia's forward P-E is only nineteen times, and Micron is trading at seven point three times forward with memory demand exploding. Micron at seven point three times is practically a value stock in this group.

Marie Tom mon trésor, you are chasing a fifty-times multiple again. Remember when you said Cisco was undervalued?

Tom That was years ago, Marie. This AI cycle is different. The fundamentals are actually holding up.

Gerald To be fair, AMD's thirty-five times forward is spicy but not insane if they keep delivering. The problem is any guidance stumble, and this whole house of cards collapses. If Micron weren't so cyclical, I'd almost be tempted.

Marie Exactly. The risk is that next week's AI product updates become a trap rather than a catalyst.

Tom Alright, fair. But even you can't ignore the momentum — the Wall Street Journal says the juggernaut shows no signs of slowing. I'm staying long the semiconductor ETF and Nvidia. But even value hunters have to respect this run. Micron's numbers are undeniable.

Tom Speaking of recovery plays, the box office is back. IMAX is being called the prime beneficiary by the Journal, twice. At eighteen times forward P-E, it's not stretched.

Gerald I'll admit, IMAX is one of the few reopening trades that still looks reasonable. Cinemark at eleven times forward is even cheaper. Even I enjoy a good popcorn from time to time, so I see the appeal.

Marie But AMC is a mess, non? Too much debt.

Tom Hold AMC, yeah. But Imax and Cinemark have clean balance sheets. The studio slate is thickening.

Marie Ah, but now we go to Europe and it is less cheerful. The Financial Times reports European carmakers face eight billion euros in Trump tariff costs. Volkswagen at two point six times forward earnings — that is not a price, it is a distress flare.

Gerald Yeah look, until there's a trade deal, these are value traps. BMW at six point eight times isn't much better.

Tom Come on, Gerald, at two point six times, don't you get even a little tempted? You once said Ford was a value trap at three times earnings in twenty twenty-two, and it doubled.

Gerald Fair point, but Ford wasn't staring down a twenty-five percent tariff hike threat. The overhang is too real. I'm selling Volkswagen and BMW.

Marie Mais bien sûr, Gerald is right. No catalyst, no buy.

Gerald The only thing cheaper than a VOW share right now is a used diesel Golf in Brussels.

Marie But perhaps a deal comes next month? The political pressure is intense.

Tom If that happens, Volkswagen could double overnight. But it's a bet on politics, not business.

Gerald Exactly. I'd rather miss the first ten percent than get caught in a twenty percent tariff surprise.

Tom And yet United Airlines is up nearly eleven percent this week. Travel demand must be roaring.

Gerald Hold on, buddy. The FT warns jet fuel costs could spike, making tickets much more expensive. You saw what happened to margins in twenty twenty-two — same story.

Marie Only Gerald could turn a rally into a fuel warning.

Gerald I'm just reading the tea leaves, Marie. Delta at nine point two times forward — if fuel surges, those earnings estimates get slashed. I say sell United and Delta.

Tom Alright, you've cooled my jets. I'll watch fuel prices closely.

Marie Airlines are basically a fuel derivatives play at this point.

Tom Ha, true. But the demand picture is still healthy.

Marie Now something more positive — Hong Kong. The SCMP reports first-quarter investment jumped seventeen percent, GDP grew five point nine percent, the fastest in nearly five years. West Kowloon is becoming a second Central district.

Tom I'm buying Hong Kong equities via the ETF, and property developers like Sun Hung Kai and Henderson Land. The momentum looks solid.

Gerald I'm wary. Not all residents feel the recovery evenly. And the property market still has structural issues. But I'll give you that the data is improving.

Marie Hong Kong has always been resilient, non? But keep an eye on the Link REIT — retail may not benefit equally. The ETF is up eleven percent year to date, so momentum is indeed there.

Gerald Now let's talk oil. Aramco says even if the Strait of Hormuz reopens, normalization would take months. And Qatar just sent its first LNG shipment since the war started, but Russia's dark fleet keeps supply flooding.

Tom That's why I'm buying the energy sector ETF, XLE. It's up twenty-two percent year to date but still twelve percent below its high. Better risk reward than betting on oil directly.

Marie And the oil fund USO? Up ninety-four percent year to date but down nine point five percent this week.

Gerald Exactly, Tom. The peace dip risk is real. If a deal emerges, oil could plunge, and natural gas would rally on demand hopes. I'm actually selling natural gas here — UNG is at a fifty-two week low, but Qatar and Russian supply keep pressure on. Sustained oil above eighty changes rate cut calculus, which keeps bonds edgy.

Marie The ECB warns about everything, including breakfast, but they are particularly worried about sustained oil prices.

Gerald And speaking of rates, the thirty-year mortgage hit six point three seven percent. That tells you the bond market is still pricing in higher yields. Sell seven to ten year Treasuries and long bonds.

Tom Wait, Gerald, TLT is heavily shorted already. That's a powder keg. If the Fed even hints at a pause, shorts get squeezed violently.

Marie Gerald chéri, you want to short bonds after they've already been crushed?

Gerald Look, I get the crowded trade argument, but the trend is your friend. Mortgage rates rising means yields aren't topping yet. I'm just selling IEF and TLT with low conviction — I see the risk.

Tom Okay, but I'm watching that TLT short like a hawk.

Gerald And mortgage rates at six point three seven percent aren't historically high, but it's the direction that hurts housing. Refi activity is dead.

Tom Nikkei Asia reports Japan is pursuing an economic pact with South American countries to secure energy. That's bullish for Brazil — the ETF is up twenty-one and a half percent year to date — and for hedged Japan equities. Mitsubishi trading houses are direct beneficiaries.

Marie This is interesting, because it shifts energy supply dynamics. Japan hedged equity ETF is near a fifty-two week high.