I continue to view financials/banks as a benefit of market rotation (possibly away from technology).

* Financials, on average, are about  25% off of their 52 week highs. 

* Valuations are now reasonable.

* Major money center banks and brokers have spent massive amounts on technology – a lot of which is already “sunken costs. This provides the “best in class” and largest banks (as first adopters to AI) to be differentiated against the broad universe of smaller sized banks (who will not be able to catch up and compete). 

* As I see it, the yield curve will be normalizing – benefiting net interest margins and income.

* The slowdown in AI spend (which I anticipate) should elongate the domestic economic cycle – improving the credit outlook and asset growth.  

* An improving equity augurs well for capital market activity.

* Finally, while the unrealized losses on their investment portfolio is underwater – the likelihood that interest rates may have peaked augurs well for that line item to appreciate in the time ahead. 

Positions: Long MS M GS S BAC M C M WFC S

9:10 a.m.: Fed Bank of Boston President Collins (Non-Voter) gives opening remarks before the “Residential Realities: Understanding Challenges and Considering Solutions in the U.S. Housing Market” 70th Economic Conference hosted by the Federal Reserve Bank of Boston, Boston, MA (Embargoed text available. No Q&A. Livestream at https://www.youtube.com/@BostonFed/streams; and at 

10:35 a.m.: Fed Bank of Boston President Collins (Non-Voter)  participates in live interview with Bloomberg Television; 

9:40 a.m.: Fed Bank of Dallas President Logan (Voter) gives opening remarks before the Bank Funding Conference 2026: “Bank Funding in the Age of Instant Finance” at the Federal Reserve Bank of Dallas, Dallas, TX (Text and livestream available. No audience Q&A); 

10:50 a.m.: Fed Vice Chair for Supervision Bowman (Voter) participates virtually in “Supervision and Regulation” discussion before the Connecticut Bankers Association Annual Meeting and Conference 2026, Washington, DC ( No text. Q&A from moderator and audience. Livestream available, details forthcoming); 

12:00 p.m.: Fed Bank of San Francisco President Mary Daly (Non-Voter) participates in moderated discussion before the University of Nevada, Las Vegas Center for Business and Economic Research (CBER) Forecast event, Las Vegas, NV (No prepared remarks. Livestream and in-person attendance details forthcoming. No group media interview); 

7:00 p.m.: Fed Vice Chair Jefferson (Voter) speaks on “New Technology, Old Questions: Assessing Productivity Puzzles and Their Implications for Macroeconomic Activity” before the University of California San Diego Economics Roundtable. (Text available. Audience Q&A expected); 

https://www.cfasociety.org/sandiego/events/eventdescription?CalendarEventKey=02350250-0739-478a-a213-01a0c45bdea0&CommunityKey=4307dcbb-c44e-4e8d-888a-0185e47c07a0&Home=%2Fcommunities%2Fcommunity-home%2Fmanage-events

The S&P Short Range Oscillator shifted to an oversold at -1.26% vs. 1.03%.

I have no index positions.

Position: None

* It’s been a good week for China hawks

* As the plot thickens…

I have now written 280 columns on Nvidia (NVDA) (in my “More Tales” series) covering a broad list of concerns including Nvidia’s aggressive revenue/profit recognition, roundtripping, double/triple ordering, circular financing, the efficacy of AI (and contribution to society), whether the AI capital spending spree would yield an adequate return on the invested capital (and net productivity gains), deals with China, etc.

I even coined the phrase Central Bank of Nvidia (now routinely used by CNBC but without attribution!), which described the wide-ranging global influence of the company and of Jensen Huang.

The Most Powerful Banker in the World? The Central Bank of Nvidia

The newest allegation that Jensen Huang has been having an extended affair with a Chinese spy raises the ante as it could be a national security issue.

With a change in Washington leadership, scrutiny of Huang’s multi-dimensional relationships to others (including President Trump’s inner circle and leadership) will likely commence. There will be numerous questions about the Jensen Huang situation and the Administration’s oversight and protocol — including but not restricted to:

* It is believed that Secretary of State Marco Rubio knew about the relationship for over a year.

*  Was President Trump informed of the relationship?

*  Despite the supposed existential war between China and the U.S. regarding the AI race, after knowledge of the affair with a possible Chinese spy why was Jensen Huang invited on a state visit to China — on Air Force 1?

*  Why did Commerce Secretary Lutnick ignore the relationship and look the other way?

*  Was there a coverup and, if so, why — and did anyone benefit?

*  Was the breakdown in our government’s reporting of the relationship willful and intentional?

*  According to AI and industry reports Jensen’s Huang’s paramour worked at Megaspeed, a Singapore-based company that is an empty storefront with only 2-10 employees. 

It seems to me that as soon as Secretary Rubio got the information and had reason to believe she was a spy, President Trump, the Congress, the Intelligence Committee and others (including Jensen Huang) should have been informed. Who knew and when?

Did Secretary Rubio (who apparently has his eyes on the Republican Presidential nomination) sit on the information? If he did, why? 

This week, President Trump has said he knew nothing about the spy. When did he find out and more importantly, what did he do with the information? 

Did the president just want to hang out with Huang or did anyone in Trump’s sphere benefit from Nvidia and the company’s relationship to China? (There is precedent).

Position: None