Push Your Chips.

Chip stocks were on the move Monday, propelled (like everything else) by the US-China trade detente. In fact, the opening gap in the SOX was the largest in history, according to Bloomberg’s Andrew Cinko.

Although the opening euphoria faded a bit, semis are still on track for a blockbuster day.

Micron is up for a fourth consecutive session. The shares are on an absolute tear, as conciliatory Huawei rhetoric from Donald Trump over the weekend added fuel to a rally that was sparked last week when, during the company’s earnings call, CEO Sanjay Mehrotra said shipments of some products to China’s corporate crown jewel had resumed.

Read more: How Micron Beat Trump’s Huawei Ban

Long story short, US tech companies found a way around the Commerce department’s Huawei ban, leading to renewed optimism in the chip space ahead of the Osaka G20. The momentum continued on Monday as Trump’s surprisingly dovish comments on Saturday suggest the restrictions on supplying Huawei will be loosened going forward.

Trump demurred when pressed for a definitive answer on exactly what the administration’s policy towards Huawei will be, but it was abundantly clear that whatever the new approach ends up looking like, it will be a softer touch.

Read more: ‘He’s Rolling In A Trojan Horse’: Trump’s Huawei Relent Draws Jeers From Schumer, Rubio, Kyle Bass

The president’s apparent backtrack was met with jeers from some lawmakers, most notably Marco Rubio, who suggested that any rolling back of the Huawei restrictions would be “catastrophic”.

Larry Kudlow was dispatched to try and do some political damage control on Sunday. The president “isn’t offering general amnesty” to the company, Kudlow insisted. “All that is going to happen is Commerce will grant some additional licenses where there is a general availability”. Here’s the clip:

Suffice to say that’s not going to cut it on Capitol Hill, where there’s bipartisan support for cracking down on Chinese tech that potentially poses a security threat.

But it’s welcome news for the market, where money is all that matters. Remember, the Huawei ban was in no small part responsible for the SOX logging its largest monthly decline since the crisis in May.

Semis rebounded in June along with the broader market and assuming Huawei is off the proverbial hook (at least in terms of not being subjected to the kind of ban that would pose an existential crisis for the company and imperil US business interests in the process), July could be another solid month.

Let’s not kid ourselves. The bottom line is that Trump has no set beliefs on national security. He uses the “national security” excuse whenever it’s convenient (e.g., to justify tariffs) just like he uses tariffs when they’re a convenient way to advance national security (e.g., threatening to slap duties on Mexico to try and curb illegal immigration).

The reason it’s all so confusing is that on any given day, Trump goes in whatever direction he thinks is expeditious in terms of plugging a leak in the MAGA ship. People are worried about a trade escalation? Ok, roll back the Huawei ban. The border crisis is getting worse? Ok, threaten to slap tariffs on Mexico. People are saying the North Korea deal is dead? Ok, invite Kim Jong Un for a photo op at the DMZ.

While that might fool his base, everyone else sees this for exactly what it is. “Trump’s decision to restart sales of US technology products to Huawei may ease tensions with China, and even help end the trade war, yet as far as deals go, this is set to be one of Trump’s worst”, Bloomberg’s Tim Culpan wrote, in an opinion piece published Monday. Culpan’s assessment is scathing. “It doesn’t stop the technology cold war underway, and weakens the US stance that Huawei isn’t just a political pawn”, he goes on to write, adding that “if anything, the president’s comments from the G20 meeting… indicate he’s just ready to be done with this trade war, even as threats to national security continue”.

As the anonymous official who penned the infamous September Op-Ed in The New York Times put it, “[Trump] engages in repetitive rants, and his impulsiveness results in half-baked, ill-informed and occasionally reckless decisions that have to be walked back”.

The Huawei kerfuffle is just another example.


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One thought on “Push Your Chips.

  1. Talk about panic pumping narrative (or, how the algos learned to propaganda-purchase the fiddle for Nero Powell and Scummotrump as the smoke rises from the socialist Rome CB racket…)

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