As Wall Street prepares for a Biden vs. Trump rematch in November, Lee Munson, president of Portfolio Wealth Advisors, says that while neither candidate is good news for Nvidia, Trump may pose a greater risk. I warned you that there is.
“One thing to remember is that while both Trump and Biden have taken a tough stance on China, President Biden is a little more diplomatic,” Munson said on Yahoo Finance Live. Told. “If you look at Mr. Trump, he might be mercurial and turn off the faucet right away….And tell NVIDIA they can’t sell you anything.”
Munson added: “Trump could turn on China very quickly and all of a sudden it would be a very bad situation for stocks like Nvidia.”
Earlier this year, the Biden administration restricted sales of more AI chips to China, including Nvidia’s advanced A800 and H800 AI chips.
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by Ike Ntekim
video transcript
[AUDIO LOGO]
Sheena Smith: got it. His victory in former President Trump’s New Hampshire state further strengthened his advantage as a likely Republican candidate for the 2024 presidential election. This brings us closer to the possible rematch between Biden and Trump that we predicted in 2020.
And if Trump wins the general election, we can clearly expect major changes in policy. One of these is the US attitude towards China. Let’s talk about this and what it potentially means for investors here. To that end, we would like to bring in Mr. Lee Manson, who is closely monitoring the impact on the market. He is President and Chief Investment Officer of Portfolio Wealth Advisors.
Mr. Lee, nice to meet you. I would like to talk about this overarching theme. And specifically, what we’re talking about with China is, given the attitudes we’ve seen on both sides in the past, is President Trump better for companies like NVIDIA or is Biden better? I mean, is it?
Lee Manson: I don’t think either is good. 20% or 25%. NVIDIA is a little cautious about its data center sales statistics to China. So I think what we need to remember is that both Trump and Biden have been tough on China. The problem is:
Biden is clearly a little more diplomatic. Biden is clearly moving a little slower. And that’s no joke about his abilities. But if you look at Trump, he’s mercurial. Trump could turn off the faucet. Trump may just say he “must not sell anything” to NVIDIA.
Meanwhile, the Biden administration has basically said there is something called the H100 or A100. These are small chips sold by NVIDIA. And last year, they started to see that they needed to publish a smaller, weaker version of that. And so far, the Biden administration, the U.S. government, has no problem letting NVIDIA sell watered-down chips. And if there’s something else you want to do, you have to say, “Mom, can I ask you a favor?”
I don’t think that’s going to work for President Trump. I think Mr. Trump could turn against China soon. Then, suddenly, an embargo is imposed. And that would be very bad for stocks like NVIDIA.
Brad Smith: If we were to see some kind of backsliding, or perhaps patriotism, in our international relations policy, what would that mean for American companies that still rely to some degree, and in some cases significantly, on China for their revenue base? What if Trump returns as president?
Lee Manson: I think it will accelerate what Trump started when he was first president. I think it will accelerate what Biden will continue to do. I think the message here is that Biden has not been friendly to China, but Trump will be even worse. And that acceleration occurs.
I think we need to remember that China has been an issue for about two and a half years. Starting in August 2021, the president – now their leader for life – started talking about common prosperity, and that’s not what hot-blooded American capitalists want to hear. I think in the last seven years we have already started deglobalizing and the world is becoming more multipolar.
Now, not to be too weird about this topic, but I think that no matter who wins, Trump will only accelerate it over the next four years. Relations with China will not improve. And I think companies that rely on China for sales, companies that rely on China for their supply chains will continue to have to adapt and re-land on other shores and find shores other than China. .
Now, the problem is that it is the second largest economic power. No one really wants to do that. We still do billions of dollars of trade. But when you have a president in the White House who’s a sarcastic person who wants to shoot you from the hip or shoot you out of the mouth, that changes the outcome for any company that depends on China. This will cause further volatility. Volatility means that the stock price does not necessarily increase.