Chips and jewelry are the market's only durable longs.

Transcript

Tom Chips and jewelry. If you had to pick two things to ride out this market, it's those two—and maybe throw in a robot or two. Welcome to Investment Flash, New York Edition, May twenty-second, twenty-twenty-six. I'm Tom.

Marie And I'm Marie, with Gerald. And yeah, the takeaway practically writes itself: chips and jewelry are the market's only durable longs. Let's get into the signals.

Marie First up, Richemont—the Cartier owner—sales growth accelerated last quarter, beating expectations on strong jewelry demand, even with a hit from Middle East conflict. FT and the Journal both confirm it.

Tom Wait—so yesterday we were saying the consumer is in distress, but Richemont's beat tells us the top end is completely insulated? I'm buying Richemont here, buddy. The stock is still down about five percent year to date, it hasn't even priced in this beat.

Gerald Hold on, Tom. The top one percent might be fine, but we held Walmart yesterday for a reason—the broader consumer is squeezed. Richemont's year-to-date move isn't exactly screaming conviction.

Tom Exactly, that's the entry point. The fundamentals are accelerating and the stock hasn't caught up yet. This is a durable long.

Marie But here's the bear case—if Middle East tensions escalate, tourist spending dries up. Rich people travel, and they buy jewelry in Dubai and Paris. That's a real risk.

Gerald True, but Cartier has serious pricing power. In luxury, that's half the battle. The jewelry segment is structurally different from other discretionary.

Tom Exactly. Now let's talk chips. The AI boom is spreading beyond Nvidia—TSMC, Samsung, Kioxia. Memory maker Kioxia surged past thirty trillion yen in market cap on AI demand. AMD's CEO is predicting a five-year CPU demand surge.

Gerald A five-year surge? I've heard that kind of forecast before. AMD is up a hundred and one percent year to date, Tom. Forward P-E ratio of thirty-five. That's perfection fully priced in.

Tom But Nvidia's forward P-E is only seventeen, and it's seven percent below its fifty-two-week high. That's not perfection, that's a discount. I'm buying Nvidia here.

Marie Hold on—investors are diversifying beyond TSMC, that's why the semiconductor ETF is near an all-time high. That diversification is good, but it also means if the cycle turns, the whole ETF gets hit.

Gerald Yeah, and Micron is up a hundred forty-one percent year to date, trailing P-E of thirty-six. If Nvidia's next quarter even hints at a slowdown, Micron's air pocket is massive.

Tom Okay, but Kioxia's market cap surge signals memory demand is real. This isn't two thousand for chips—it's real AI capex. I'm still buying the semiconductor ETF and Micron on momentum.

Marie And now cybersecurity—OpenAI is weighing offering its GPT-five-point-five-Cyber model to Japan, amid growing Chinese cyber threats. This is structural: AI-enabled threats don't just disappear, so demand for security is only going up. CrowdStrike, Microsoft are direct plays.

Gerald Marie, CrowdStrike's forward P-E is one hundred and five. That is not a typo. One hundred and five times earnings. It has to absolutely crush every single quarter.

Tom But Microsoft, as a major OpenAI backer, benefits big here—and its forward P-E is only twenty-two, and the stock is down eleven percent year to date. That's a potential catch-up play.

Marie CrowdStrike's growth justifies its premium. It's up forty-three percent year to date, just two percent below its high. If you're betting on AI cyber dominance, you pay up.

Gerald I'd rather take the cybersecurity ETF. It's at a fifty-two-week high, sure, but at least it's diversified. If one firm stumbles, the ETF survives.

Tom Fair—the ETF momentum is strong, up seventeen percent year to date. I'm in.

Marie Exactly.

Gerald One hundred percent.

Tom That's the whole story.

Tom Now, copper—speculators are piling in. Sulfur supply risk from the Middle East conflict and AI-driven demand are pushing prices near records.

Gerald I actually like copper here. Freeport-McMoRan has a forward P-E of sixteen, Southern Copper has production growth, and the pure copper ETF is only five percent below its high. Not extended.

Marie See, this is what I mean—sulfur shortage could disrupt smelting, that's a real physical bottleneck. Copper isn't just AI hype; it's a structural supply-demand story.

Tom Exactly. Freeport is up twenty percent year to date, reasonable valuation. This is a clean commodity play without the oil war premium.

Gerald Although, if there's a ceasefire, copper might hold up better than oil because of electrification and AI buildout demand. It's the structural play.

Marie Right—copper is the long-term demand story. Buy the ETF, buy Freeport.

Tom Nailed it.

Gerald Ha—alright, fair enough.

Gerald And speaking of oil, G7 finance ministers refrained from discussing a second emergency release. France insists on war clarity before tapping reserves. That keeps supply tight.

Tom Yeah, but Gerald, the US Oil Fund is up a hundred six percent year to date. That's crowded. Any Houthi ceasefire and it craters.

Gerald Until then, it holds. The Energy Select Sector SPDR is up thirty percent year to date, seven percent below its high, and a price-to-book of one point one. That's not expensive.

Marie I'm going to push back here. The oil trade is a war trade. Betting on continued conflict is ethically questionable, and structurally risky if diplomacy breaks out.

Tom That's fair, but the market doesn't care about ethics—it's pricing tight supply. I'll stick with the oil fund and the energy ETF for momentum.

Gerald And France's stance basically telegraphs no near-term release. That's a floor under crude. I'm buying the Brent Oil Fund too.

Marie Okay, here's the most original take of the day. Japan's top banks are launching growth-based loans for startups, ditching real estate collateral. This could finally unleash Japan's startup ecosystem after decades of risk-averse lending.

Gerald This is exactly the structural shift we've needed. MUFG, SMFG—if they can actually price growth potential, these banks could re-rate big time.

Tom But Gerald, Japan has hyped this kind of innovation before and it fizzled. Remember Abenomics? MUFG is up twenty-one percent year to date, forward P-E eighteen—it's already pricing hope.

Gerald If it works, it's a game-changer. SMFG's trailing P-E is only fourteen, that's cheap. I'm buying both.

Marie And the Japan ETF is up twelve percent year to date, just three percent below its high. This could be the catalyst for a broader re-rating of Japan equities.

Tom Alright, I'm skeptical but I'll watch it. Buying growth stories in Japan has historically been a widowmaker trade.

Gerald Ha—widowmaker, dramatic much?

Marie Speaking of widowmakers, India's rupee is plunging. They're dusting off the twenty-thirteen taper tantrum playbook, says Bloomberg.

Gerald That's a flashing warning. The India ETF is down twelve percent year to date, fourteen percent below its high. And with the Fed still in limbo, EM currencies are under siege.

Tom Could it spread? The emerging markets ETF is up seventeen percent year to date, but if the rupee breaks, contagion could hit. I'm selling India.

Marie Hold on—the Vietnam defense deal might actually support India a bit, but yeah, rupee pressure is real. Watch the dollar.

Gerald The dollar index is barely moving. That's the sleeping giant. If it strengthens from here, all EM trades get rolled.

Tom Exactly.

Marie Yep.

Gerald And that's why the pair trade works.

Gerald Meanwhile, Australia's weak jobs data sparked curve-steepening bets. The RBA is near the end of its hiking cycle. That's bullish for bonds globally.

Tom So buy long-duration Treasuries? The twenty-plus year Treasury ETF is nine percent below its high, year to date down three percent. Asymmetric upside if central banks pause.

Marie And short the Aussie dollar—rate differential narrowing. That trade makes sense.

Gerald The intermediate Treasury ETF is also a buy—four percent below its high, low risk. It's a clean bond play on a global pause.

Marie Now, China autos—a memory chip crunch is squeezing automakers like BYD and XPeng. XPeng is down twenty-three percent year to date, forty-five percent below its high.

Tom Sell XPeng. That's a structural headwind. The China tech ETF is also at risk, fourteen percent below its high.

Gerald China is just a mess of sector-specific crises right now. You can't own it.

Tom But then Vietnam is close to signing a BrahMos cruise missile deal with India. Defense spending is a bright spot in EM. The Vietnam ETF is slightly negative year to date, could pop on this.

Marie And it boosts Indian defense exports—the India ETF could get a sentiment lift from that deal, despite the rupee.

Gerald I'd be cautious. The Vietnam ETF is small and thin. But the geopolitical angle is interesting—I'm watching.

Tom Still, a buy on Vietnam for a short-term catalyst.

Tom And here's my favorite: Kawasaki Heavy is partnering with Nvidia on physical AI, opening a US robot center. The stock surged almost nine percent last session, up forty-nine percent year to date, and still nineteen percent below its high. Buy, buy, buy.

Gerald Tom, buddy, it's up forty-nine percent on Nvidia's coattails. What happens if Nvidia stumbles?

Tom But it's not just hype—they're building a physical robot center. Hitachi, NTT, Fujitsu are all in on AI robotics. The robotics ETF is up twenty percent year to date, three percent below its high.

Marie And Fujitsu is down twenty-six percent year to date—that's a turnaround play if these partnerships deliver. I'd buy Fujitsu here.

Gerald Alright, I'll give you robotics. But NTT is down three percent year to date—not every partner wins.

Tom But the Nvidia halo is real. Kawasaki is a direct play. I'm all in.

Marie It's the real deal.

Gerald Alright, I'm in.

Tom Yes!

Marie So today's signals scream one thing: AI is still the only game in town, luxury has a heartbeat. Commodities are finding a bid on supply fear, while EM cracks appear—India's rupee, Chinese auto choke points.

Gerald But the case against: chip stock multiples demand perfection. AMD thirty-five times, Micron trailing P-E thirty-six, CrowdStrike one-oh-five. If Nvidia's next quarter even hints at a slowdown, the air pocket is real.

Tom Sure, but the AI capex is still accelerating. Nvidia's forward P-E is seventeen, that's not bubble territory. The earnings are real.

Marie And the oil trade is crowded. The US Oil Fund up over a hundred percent year to date—that's pure momentum. Any ceasefire and it's gone. That's not a value play.

Gerald The cleanest cross-expression? Long commodities, short EM. Pair Freeport or the oil fund against the India ETF or XPeng. Negative correlation, strong narrative support.

Tom I love that trade. Commodities benefit from AI buildout and supply constraints, while EM gets crushed by dollar strength and local crises.

Marie But the dollar is the wild card. If the DXY breaks higher, all EM gets rolled—that's the systemic risk nobody's connecting today.

Gerald Exactly. That's why the pair trade works. Buy the strength, sell the stress.

Marie As always, none of this is investment advice. Just three friends talking markets.

Tom We're back for the Weekend Edition, tomorrow morning at ten a.m. London time. Hit follow on Spotify if you're just finding us, or check investmentflash.com for the full digest with charts and sources. For Gerald and Marie, I'm Tom—see you tomorrow.