☕ 17 days from now, AI investing could get turned on its asteroids

Howdy! 👋 

It’s Friyay and the markets are hanging on by a thread while the situation in Iran seems to be moment by moment. 

Makes sense. 

Many fear the next shoe if it drops. 

My view is different. 

History shows very clearly that being invested in markets that may not be perfect beats waiting to invest in perfect markets.  

Here’s my playbook.  

1 – Doh!– Consumer prices up 3% due to energy price spike/Iran 

The Bureau of Labor Statistics — aka the Ministry of Whitewash — released its latest inflation numbers this morning. (Read) 

Consumer prices rose 3.3% in March. 

Like that’s a surprise.  

Gasoline surged 21.2% — accounting for nearly three-quarters of the entire headline number. Energy costs spiked 10.9%. The Iran war didn't just rattle markets — it showed up directly in your wallet at the pump. 

But strip out food and energy and core inflation — everything the Fed reportedly actually cares about — came in at just 2.6% annually.  

Below forecast. 

The Iran war is an energy story masquerading as an inflation crisis – they’re two very different problems with two very different solutions. And that’s why you want to invest accordingly. 

The next question will be WWJPD? (What Will Jerome Powell Do?) 

Probably nothing. He's almost out the door anyway — his term as Fed Chair expires May 15th and Kevin Warsh is waiting in the wings.  

My guess is that the Fed and the legions of PhDs who work there and who have no actual experience with real money will look at this report, note the energy spike, note the contained core number… and sit on their hands while pretending they have a plan.🤦‍ 

Keith’s Investing Tip: Invest in companies making “must have” products and services that are so dominant, so profitable and so essential that it doesn’t matter who’s in the White House, what the Fed does next nor how Wall Street tries to hijack markets in its own interest. It’s a short list, imho and btw. 

2 – TSMC just rang the AI cash register. Again

The world's largest chipmaker just posted another record quarter — and revenue up 35% to a new all-time high is proof positive that AI demand isn't slowing down. (Read) 

The numbers speak for themselves: 

• Q1 revenue: $35.6 billion — up 35% year on year, a new record 
• March alone: up 45.2% year on year 
• Analyst forecast for Q1 gross margins: 64% 
• Full year growth target: 30%+ 

Monster numbers and a big tip o’the hat to everyone who owns it! 💯 

Reminds me of the Gold Rush of 1849.  

Headlines at the time were full of doubt. Skeptics called it hype. But the folks selling the shovels, the whiskey and the blue jeans made bank — proving definitively that the rush was very, very real. 

Should you buy it? 

Lots of people do and they’ve done just fine. I prefer to do “better” if I can, which is why I own a few other top tier names – but that’s neither here nor there. 

What you want to think about is that – despite what the media and people like His Excellency Michael “Big Shortimus Maximus” Burry think – AI is real and pulling its weight. 

Watch ASML next. 😀 

3 – BlackRock caught up to what I’ve been saying for years 

I am often asked why I don’t include “more bonds” in my research and the OBA Model Portfolio and the answer is simple… because my research shows that a) bonds are riskier than ever and b) the 60/40 portfolio is dead because of it. 

The 60/40's great run was a product of one specific era: falling interest rates from the early 1980s through 2021. That era is over. Bonds "zigged when stocks zagged" because rates were falling for 40 straight years. And, again, that tailwind is gone. 

That’s why I wasn’t surprised to see news this morning that BlackRock was taking a page from its hedge fund playbook to bond markets. (Read) 

To be fair, I’m not the brightest bulb in the bunch and never will be but it’s always great to be vindicated. 

My point is as simple now as it was years ago when I first raised this issue. 

The trick with investing – or any other subject – is to know enough about it to recognize when you’re wrong if presented with facts that contradict your thinking. 🧐 

Keith’s Investing Tip: If you really want to get ahead, you’ve got to think differently and, of course, invest differently. 

If you need any help with this, I'll be here.  

4 – 17 days from now, AI investing could get turned on its asteroids 

The jury trial of the century – possibly of all time – starts in 17 days. 

At issue? 

Whether OpenAI founders Sam Altman and Greg Brockman lied about maintaining a non-profit structure when Unka Elon donated $38 million to seed it. 

Everybody's trying to make it about Musk and his money or a billionaire grudge match. 

It’s not either of those things. 

What's actually on the table – and what a jury will decide - is whether Altman pulled a fast one when he converted OpenAI — founded explicitly as a nonprofit — into a for-profit entity worth hundreds of billions of dollars. 

Things are definitely getting spicy. 

Musk wants to be clear what’s at stake and says he'll donate every last cent of his winnings to charity if he prevails – which effectively neuters Altman's assertion that what he’s done at OpenAI is all for the better good. 

Altman, meanwhile, seems to be on a charm offensive for the past few weeks in an attempt to reassure investors that OpenAI is the real deal. Press tours, policy blueprints, "super-intelligence agendas" whatever those are, even accusing Musk of anticompetitive behaviour – which strikes me as a con man who knows he's now cornered. (Read) 

I also find it interesting that he's apparently taking a page from Musk's own playbook — OpenAI is reportedly planning to allocate IPO shares directly to retail investors. (Read) 

MyPOV: Real companies with a winning case don't hand out free candy to placate the masses let alone talk trash about the folks suing 'em and go whining to the courts as Altman appears to be ahead of the trial. Instead, they present their case and let the courts prevail. 

What I'm still trying to sort through is what this means for OpenAI's biggest investors — Microsoft, SoftBank and Amazon — who've shelled out $13 billion, $64.6 billion and $50 billion respectively for a seat at Altman's table. 

Do you bet prices rise or fall? 

And how? 

The clock is ticking. 

Hmmm.🤔 

5 – Xi just blinked. Here's what it means for your money

I almost can't believe it and not because it’s a surprise or the Western press has largely missed what’s happening, as usual. 

I’ve spent decades in global markets including a lot of time in and around China over the years… what catches my attention is that moves like this don’t happen at random. 

And what exactly is “this?” 

For the first time since 2016, Chinese President Xi Jinping just sat down with Taiwan's opposition leader. (Read) 

The official readout from Beijing was pure diplomatic mush — "peaceful development," economic exchanges, keeping communication channels open. 

Translation: Beijing chose dialogue over naval exercises. 

So why the sudden change of heart from the guy who's spent the better part of a decade rattling sabers at Taiwan? 

Simple.  

China still can't build the chips it needs — and they know it. TSMC's most advanced nodes remain out of reach. ASML's EUV machines aren't crossing that border anytime soon. And no amount of state money has closed that gap fast enough to matter.  

In other words, I think Xi has had a woodshed moment and realized that when you're still dependent on the island you've been threatening, you don't get to throw your weight around quite so freely. 

Xi didn't go soft… just practical. 

And, not for nothing – which is the dangerous part – he returned to pages straight out of Unrestricted Warfare — a 1999 book penned by PLA Senior Colonels Qiao Liang and Wang Xiangsui that lays out how China defeats a technologically superior opponent without firing a single shot… trade leverage, economic pressure, diplomatic maneuvering. It's been required reading in Beijing for years and, for that matter, at West Point.  

I think it should be required reading for every investor, too for that matter – but I digress. 

Here’s where the rubber meets the road. 

A calmer Taiwan Strait is good for markets in the short run — semiconductors especially. But don't mistake a pause for peace. Beijing plays a very long game, and investors who confuse a temporary thaw with permanent détente are going to get caught badly offside. 

MyPOV: The smarter play isn't betting on geopolitical goodwill — it's owning companies that win regardless of whether Xi's smiling or scowling. Chipmakers with diversified supply chains, defense contractors with Indo-Pacific exposure, and anyone helping the West reduce its Taiwan dependency. That thesis doesn't change whether Beijing is shaking hands or shaking fists. 

I hope to heck you’ve got a few of the best names in your portfolio and, if not, that you consider checking out One Bar Ahead® which does because that could be helpful. 

Keith's Investing Tip: The Dragon is coming to dinner. The only decision you've got to make is whether you want to be at the table or on the menu. 

Bottom Line 

And with that, I’m off to the One Bar Ahead® Options Boot Camp which starts this afternoon in Seattle and continues tomorrow with a full day session. 

I’m super excited because I believe that options are one of the few advantages for individual investors left in today’s financial markets. So, it makes sense to learn how to use a few important high-probability strategies as part of the investing process. 

Which reminds me… 

Markets reward knowledge, not guesswork. 💯 

As always, MAKE it a great day and finish the week strong. 

You got this – I promise! 

Now and as always, let's MAKE it a great day and finish the week strong.  

Keith 😀