Yesterday, May 21: US Says Huawei Chips are Too Spicy!
Huawei squares off with US in chip war, Coinbase gets hacked and ransomed, and Trump randomly chooses to put South Africa on blast.
May 21 QFR:
U.S. guidelines state that using Huawei's Ascend chips anywhere violates export rules; China claims bullying while US drops “anywhere” line.
Coinbase reported a data breach affecting 69,461 customers, with personal and financial data stolen.
Trump goes hard pushing ‘white genocide’ claims in White House to South African President who refuted the claims.
Notes for May 22:
0530PST: Initial Jobless Claims
0645PST: Manufacturing and Services PMI
0700PST: Existing Home Sales
1245PST: Trump participates in MAHA Commission Event
US Market:
The 30-year U.S. Treasury yield surged past 5.09% today, its highest level this year, as investors fled government bonds amid deepening fiscal worries, a controversial GOP budget bill, and the recent Moody’s downgrade; this spike sent the S&P 500 tumbling 1.61% and tech-heavy QQQ off 1.39%, with borrowing costs for households and businesses set to rise sharply and mortgage rates poised to climb above 7%.
[A 30-year yield above 5% is a psychological and financial pain, raising the cost of capital across the economy, pressuring equity valuations, and threatening to slow housing and corporate investment; expect continued volatility in stocks, upward pressure on the dollar, and pain for rate-sensitive sectors, while Treasury ETFs could see heavy outflows and inverse bond ETFs attract inflows.]
🧥: TLT 0.00%↑, XLRE 0.00%↑; 🌲: SJB 0.00%↑, SHY 0.00%↑
Target (TGT) dropped 5.7% after reporting a 2.8% sales drop to $23.8 billion for Q1, warning of a “low-single digit decline” for 2025 as U.S. tariffs and five straight months of falling consumer confidence hammer demand.
[The market’s sharp drop reflects deepening anxiety over consumer resilience and the fiscal outlook, with retail and growth stocks hammered by tariff fallout and surging yields; the S&P Retail ETF (XRT) and Consumer Discretionary Select Sector SPDR Fund (XLY) both face immediate downside pressure.]
🧥: XRT 0.00%↑, XLY 0.00%↑; 🌲: SH 0.00%↑, QID 0.00%↑
Coinbase reported a data breach affecting 69,461 customers, with personal and financial data stolen between December 2024 and May 2025. The breach occurred due to bribed customer support workers. Stolen information includes names, addresses, phone numbers, ID documents, account balances, and transaction histories. The hacker demanded a $20 million ransom, which Coinbase refused.
[Public trust in cryptocurrency exchanges may erode due to security vulnerabilities, potentially leading to stricter regulatory oversight. The financial sector observes increased cybersecurity risks associated with digital asset platforms. The cryptocurrency industry faces pressure to enhance security measures and transparency to protect user data and funds, impacting user adoption.]
🧥 - COIN 0.00%↑, MSTR 0.00%↑; 🌲 - PANW 0.00%↑, CRWD 0.00%↑
US Politics:
Markets took a dive today as President Trump’s sweeping tax and spending bill faced a critical showdown in the House, with last-minute infighting over Medicaid cuts and coastal tax breaks fueling investor fears about a potential $3–$5 trillion surge in federal debt. Leadership remained optimistic about a possible vote before Memorial Day, but as of today, the bill’s fate is still undecided and the legislative process remains in limbo.
[The political standoff and looming debt expansion directly hammered equities and bonds, triggering sharp losses in rate-sensitive sectors and ETFs like SPY and XLRE, while volatility and inverse bond funds saw inflows as traders hedged against further fiscal deterioration.]
🧥 - SPY 0.00%↑, XLRE 0.00%↑; 🌲 - VIXY 0.00%↑, SJB 0.00%↑
President Trump's "no tax on tips" pledge is advancing, with the Senate approving a provision within a larger tax cuts package. The proposal eliminates federal income tax on tips for workers earning under $160,000 in 2025, excluding payroll taxes. While supported by service industry employers and some unions, critics argue it disproportionately benefits higher-income tipped workers and adds significantly to the national deficit. Experts note that lower-income service workers, who don't owe federal income tax, won't benefit.
[Public debate centers on tax equity and the impact on working-class individuals, potentially influencing voter perception of economic policy. The service industry faces possible labor market adjustments due to the tax incentive, with varying impacts on different wage brackets.]
🧥 - AGG 0.00%↑, HON 0.00%↑; 🌲 - XLY 0.00%↑, MCD 0.00%↑
Defense Secretary Hegseth accepted a luxury Boeing 747 from Qatar for President Trump's use as Air Force One, citing cost savings. Critics argue this violates the Constitution's prohibition on foreign gifts and would require costly retrofitting. Democrats, led by Sen. Schumer, express outrage, threatening to block DOJ nominees. Sen. Duckworth claims it's a "dangerous course of action." The Air Force is planning modifications, but details are classified. Trump defends the gift, stating it's for the Air Force, not him.
[This will intensify partisanship and public scrutiny and of presidential ethics and foreign influence, impacting trust in government. The aerospace and defense industries face increased attention regarding procurement processes and foreign transactions.]
🧥 - SPY 0.00%↑, BA 0.00%↑; 🌲 - ITA 0.00%↑, LMT 0.00%↑
Global Politics:
In a tense Oval Office meeting today, President Trump forced South African President Cyril Ramaphosa and a room of media, business leaders, and Elon Musk to watch videos promoting baseless claims of “white genocide” against Afrikaner farmers. Ramaphosa firmly rejected the narrative. This comes after the US accepted Afrikaner farmers as refugees and as Ramaphose seeks to negotiate lower tariffs and trade barriers.
[This unprecedented confrontation sharply raises the risk of retaliatory trade measures and market volatility for U.S. and South African equities, with Africa ETFs likely to face immediate pressure while defense and surveillance tech firms could see speculative interest.]
🧥: EZA 0.00%↑, MTN 0.00%↑; 🌲: ITA 0.00%↑, WPM 0.00%↑
Canadian PM Carney confirmed discussions with the U.S. regarding Canada's potential participation in President Trump's $175B Golden Dome program. Carney acknowledges potential missile threats to Canada and the necessity of protective measures. He emphasizes the importance of Canada's involvement in discussions due to its partnership in NORAD. Trump has indicated willingness to collaborate with Canada, expecting a "fair share" contribution.
[This may influence the debate on Canada's defense policy and its relationship with the U.S., impacting national security perceptions. The aerospace and defense industries anticipate growth in demand for advanced missile defense technologies. The political landscape experiences shifts in international alliances and defense strategies.]
🧥 - XAR 0.00%↑, CNI 0.00%↑; 🌲 - LMT 0.00%↑, RTX 0.00%↑
Technology:
China's Commerce Ministry threatened legal action against those enforcing U.S. export restrictions on Huawei's AI chips, responding to U.S. guidelines stating that using Huawei's Ascend chips anywhere violates export rules. China accused the U.S. of undermining recent trade talks and engaging in "unilateral bullying." The U.S. Commerce Department has since revised its guidance, removing the "anywhere in the world" phrase.
[Geopolitical tensions between the U.S. and China escalate over technology, potentially impacting international trade and supply chains. The semiconductor industry faces uncertainty due to export restrictions and potential retaliatory measures. Companies using or considering Huawei's AI chips may face compliance risks and legal challenges. The technology sector observes increasing government intervention in trade and technology development.]
🧥 - BABA 0.00%↑, BIDU 0.00%↑; 🌲 - NVDA 0.00%↑, AMD 0.00%↑
SafeMoon (SFM) CEO John Karony was found guilty of securities fraud, wire fraud, and money laundering after orchestrating a scheme in which he and other executives looted over $40 million from investor liquidity pools that were falsely marketed as “locked” and secure, triggering a 5% plunge in SFM and sharp declines in crypto-linked tech stocks like Coinbase (COIN) and Marathon Digital (MARA), with blockchain ETFs such as BLOK dropping 3.2%. The conviction signals a new era of aggressive U.S. enforcement against crypto fraud.
[The SafeMoon (SFM) verdict signals a new era of aggressive U.S. enforcement against crypto fraud, increasing regulatory risk for all digital asset platforms and fintech companies. This could lead to stricter compliance standards, higher legal costs, and reduced risk appetite for investors in blockchain and crypto-adjacent tech stocks.]
🧥 – BLOK 0.00%↑, BITQ 0.00%↑; 🌲 – SHV 0.00%↑, BIL 0.00%↑
Klarna CEO Siemiatkowski presented quarterly earnings via an AI avatar, emphasizing Klarna's identity as an AI-driven company. Klarna attributed its fourth consecutive profitable quarter and reaching 100 million users to AI implementation, which streamlined its workforce by roughly 40%, reducing employee count from 5,000 to 3,000. Should be noted, Klarna’s net losses increased by +100% YoY (from $47M to $99M) which far outweighed the 15% YoY revenue increase.
[Public perception may be divided between viewing AI CEOs as innovative or unsettling, influencing trust in AI leadership. The financial sector observes potential for increased efficiency and profitability in companies adopting AI-driven management. The buy-now-pay-later industry faces potential disruption through AI-led initiatives and weak financial performance.]
🧥 - FINX 0.00%↑, COF 0.00%↑; 🌲 - AFRM 0.00%↑, SOFI 0.00%↑
OpenAI is acquiring io, the AI device startup co-founded by CEO Sam Altman and Jony Ive, for $6.5 billion in an all-equity deal. Ive and his firm, LoveFrom, will lead design at OpenAI, aiming to create a new generation of AI-powered computers. This move could position OpenAI to compete with Apple in consumer hardware. Io, with around 55 employees, many former Apple designers, will develop AI consumer devices, with the first slated for 2026. Apple's stock fell 2% following the announcement.
[Public interest in AI-integrated hardware intensifies, potentially shifting consumer expectations for personal technology. The financial sector observes significant investment in AI hardware, signaling a new growth area. The consumer electronics industry anticipates disruption with OpenAI entering the hardware market, increasing competitive pressure on established players like Apple.]
🧥 - AAPL 0.00%↑, META 0.00%↑, SNAP 0.00%↑; 🌲 - NVDA 0.00%↑
Meta is launching "Llama for Startups," offering support and up to $6,000 monthly for six months to U.S.-based startups using its Llama AI models for generative AI applications. This initiative aims to bolster Llama's adoption amid competition from DeepSeek, Google, and Alibaba. Despite past setbacks like delayed model releases and benchmark allegations, Meta has significant revenue ambitions for its generative AI portfolio, projecting substantial earnings by 2035. Building and supporting Llama involves considerable investment in R&D and infrastructure.
[Public perception of Meta's AI efforts may improve through supporting startup innovation, potentially increasing trust in its open model approach. Get ready to see Meta fund hell AI startups as the AI industry faces intensified competition in the open model space, with startups playing a crucial role in ecosystem development.]
🧥 - GOOG 0.00%↑, MSFT 0.00%↑; 🌲 - META 0.00%↑, AI 0.00%↑
Google announced plans to integrate ads into its AI Mode in Google Search, appearing "where relevant" below and "integrated into" AI-generated responses during a test. Advertisers using Performance Max, Shopping, and Search campaigns with broad match will be eligible for ad display in AI Mode for U.S. users on desktop and mobile. This follows Google's expansion of ads in AI Overviews. While crucial for Google's ad revenue, a poll indicates user wariness towards AI in advertising.
[Public reaction may be negative, with concerns about the objectivity and relevance of AI-integrated advertising influencing trust in Google Search. The financial sector observes Google's strategic move to monetize its AI search capabilities, potentially impacting advertising revenue forecasts. The search engine industry faces a shift towards AI-powered search models, with monetization strategies becoming a key competitive factor.]
🧥 - SPT 0.00%↑, SNAP 0.00%↑; 🌲 - GOOG 0.00%↑, META 0.00%↑
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