China blacklist, oil glut, but a $35bn AI chip deal.

Transcript

Tom Buddy, thirty-five billion dollars for AI chips? That is not just a fund, that is a small country's entire economic output being funneled into silicon.

Marie It is massive, Tom, and it's exactly where we need to start. Welcome to Investment Flash, New York Edition, for Tuesday, June ninth. I'm Marie, joined by Tom and Gerald.

Gerald Yeah look, we actually called this in the London show yesterday, didn't we? That Apollo and Blackstone bet is already proving to be the signal of the week.

Tom No way, it's the signal of the year! They are raising thirty-five billion dollars specifically for chip financing for Anthropic. This is the hardware build-out finally getting the serious capital it needs.

Marie Hold on, Tom, let's look at the structural shift here. The Financial Times is pointing out that this is private credit stepping into a role that traditional banks simply cannot or will not fill.

Gerald Exactly.

Marie One hundred percent.

Tom That's the whole story.

Gerald Honestly, the thing is, this validates that AI is no longer just a software hype cycle. It’s a capital-intensive infrastructure play, and seeing Apollo at a price-to-earnings ratio of twelve makes it look like a steal compared to the tech names themselves.

Tom Right, and Blackstone is trading at a huge discount, off nearly thirty percent year to date. If they are the ones holding the keys to the AI data centers, that re-rating is going to be violent.

Marie I'm going to push back slightly on the 'steal' comment, Gerald. This is long-cycle capital. If Anthropic doesn't scale as expected, that chip financing becomes a very expensive collection of paperweights.

Gerald Fair enough, but Nvidia is the one laughing all the way to the bank regardless. If Apollo and Blackstone are buying the GPUs, Nvidia's ten percent gain this year is just the beginning of the next leg up.

Tom See, this is what I mean! The semiconductor exchange-traded fund is up sixty percent this year. The momentum is just unstoppable when you have this much private cash hitting the tape.

Marie Wait—wait a second. While we're talking about massive capital shifts, we have to address the Pentagon's absolute whiplash regarding China.

Gerald Oh, here we go again. Alibaba, Baidu, and BYD are back on the military blacklist after being taken off just last February.

Tom For real? They just put them back on? Alibaba is already down twenty-three percent this year. It's like the market is just waiting for the next reason to sell China tech.

Marie Look, the Pentagon's blacklist management is starting to look like my gym attendance—just a constant cycle of joining and quitting.

Gerald ha—fair enough.

Marie No, but honestly, this is a serious regulatory headwind. When you have the Financial Times and Nikkei both confirming the reinstatement, it suggests the political pressure to decouple is only intensifying.

Gerald The thing is, Alibaba and BYD are both trading right near their fifty-two-week lows. You have to wonder how much more of this 'blacklist' risk can actually be priced in before it becomes a deep-value play.

Tom Buddy, I wouldn't touch Baidu with a ten-foot pole right now. It's cheap at one times book value, but those political headlines are a graveyard for momentum traders.

Marie Just a quick reminder for everyone listening—none of what we discuss on Investment Flash is financial advice. Always do your own research.

Gerald Right, so moving from geopolitics to pure pharma, GSK just made a ten-billion-dollar move for Nuvalent. Luke Miels is finally putting some points on the board.

Marie And it's a smart move. Three lung cancer candidates, two of which are under Food and Drug Administration review this year. That is a massive injection of growth for a company like GSK.

Gerald Yeah look, GSK is trading at less than ten times forward earnings. In a world where tech is at thirty times, getting that kind of oncology pipeline for that price is actually decent value.

Tom No way, did you see the biotech exchange-traded fund? It’s up nearly six percent this year. This GSK deal is going to spark a huge wave of 'buy the target' speculation across the whole sector.

Marie Not so fast, Tom. Not every small biotech is Nuvalent. But I agree the sentiment shift is real. It’s the first big M-and-A signal we’ve had in weeks that actually feels like a strategic fit rather than a desperate grab.

Gerald Speaking of strategic fits, Apple finally decided to show up to the AI party. They unveiled 'Siri AI' to challenge the chatbots.

Tom Siri getting an AI upgrade? Finally! Maybe she'll stop telling me the weather in Paris when I'm asking for Nvidia's price target.

Marie pff, okay—but seriously, the Financial Times is saying this could actually drive a massive hardware upgrade cycle. People have been holding onto their iPhones for way too long.

Gerald Alright, but Apple is at thirty-one times forward earnings and only five percent off its all-time high. Is a smarter Siri really worth that multiple when Microsoft is down thirteen percent this year?

Tom Gerald, you and your multiples! Apple has the ecosystem. If they integrate AI into the daily lives of a billion people, that thirty-one times earnings is going to look cheap in two years.

Marie I'm with Tom here. It's about the privacy narrative. Apple is pitching this as 'private AI,' which is a huge differentiator from Google or Microsoft. That is a structural moat that is very hard to cross.

Gerald Fair enough. But while we're on the subject of moats, let's look at the literal ones being disrupted in the oil market. China's oil imports just hit an eight-year low.

Marie And yet crude is still holding below a hundred dollars a barrel. It’s defying every prediction of a summer supply crunch because those import cuts are building up global stockpiles.

Tom Right, but the Iran supply disruptions are still a huge wild card. The oil fund is up ninety-six percent this year! Even with China's demand dropping, the geopolitical floor is solid.

Gerald Look mate, Morgan Stanley is pivoting to the gas side of that trade. They're calling for liquefied natural gas prices to hit three-year highs because of Asian heatwaves and European restocking.

Marie Morgan Stanley calling for a surge while the natural gas fund is down nearly forty percent from its high—that’s what we call 'character building' for the investors.

Tom hah—yeah, yeah. But check out Cheniere. They are a massive exporter, up twenty percent this year, and still only trading at twelve times forward earnings. That's a momentum play with a value safety net.

Gerald It’s a cleaner trade than the leveraged gas fund, certainly. That thing is down thirty-seven percent this year. It's a widow-maker if you're on the wrong side of a warm week in December.

Marie Wait—did you guys see the volatility in South Korea? A sixteen percent market swing in twenty-four hours.

Gerald Right.

Tom Yeah, yeah.

Marie Spot on.

Gerald The 'retail ants' are driving the wheel there, and it is looking dangerously leveraged. The South Korea exchange-traded fund was down thirteen percent last week before that bounce.

Tom That is wild. If that kind of retail-driven liquidity cascade spreads to other emerging markets, the V-I-X at eighteen is going to look very low very quickly.

Marie Look, this is my concern with the whole 'soft landing' narrative. You have these massive pockets of leverage like Korea or the US homebuilders where the floor is much thinner than people think.

Gerald Exactly. Look at the KBW upgrade on Toll Brothers. They are explicitly calling it a K-shaped housing market. They like Toll because they sell to the affluent who aren't feeling the rate hikes.

Tom Yeah, but they downgraded Lennar in the same breath. Toll Brothers is cheap at nine times earnings and twenty percent below its high. It’s like the 'V' in my portfolio—very specific winners and losers.

Marie alright, alright—but if the consumer cracks at the top end, that affluent insulation for Toll Brothers vanishes. It's a high-conviction trade but it carries a lot of macro baggage.

Gerald Speaking of baggage, the Raytheon story in the Journal today is a classic. It takes two years to build a single Patriot missile because they rely on four hundred different companies.

Tom Two years? No way! Raytheon is down five percent this year, but with defense spending where it is, that backlog is basically a guaranteed check from the government for the next decade.

Marie The structural tailwind for defense is undeniable, even with the supply chain mess. It’s why the defense exchange-traded fund is still up despite the Raytheon dip.

Gerald Honestly, the cleanest way to play today's board is probably that 'Our View' synthesis. Long the homebuilder upgrade on Toll and short the China blacklist risk on Alibaba.

Marie I agree, but the real second-order story is still that thirty-five billion dollar AI deal. It proves that private credit and AI infrastructure are going to grow together, regardless of what the broader S&P does this month.

Tom One hundred percent. If you're just finding the show, hit follow on Spotify or check out investmentflash.com for the full digest with all the charts and sources.

Gerald Fair enough. We've covered a lot of ground today from cancer drugs to Patriot missiles. Let's see if the bond market finally wakes up tomorrow.

Marie We'll be watching. We're back with tomorrow's London Edition at seven-thirty a.m. London time. See you then.

Tom Catch you later, buddy!