You can sell to China – for 25%... The first $1 trillion trade imbalance in history... The tariff 'shock' is finally showing up... In search of 'working capital'... A warning from Treasury yields... Mailbag: An alternative inflation index...
'Sure, but we'll take a cut'...
This is essentially what the White House has told Nvidia (NVDA) about exporting its top-of-the-line chips to China.
President Donald Trump's Truth Social account had the news after the markets closed yesterday. The president posted that "approved customers in China" can now use Nvidia's highest-end H200 products, that Chinese President Xi Jinping "responded positively," and that the U.S. will collect 25% of the value of each shipment.
Expect more announcements to follow... "The Department of Commerce is finalizing the details, and the same approach will apply to AMD, Intel, and other GREAT American Companies," the social media post read.
China may not be interested, though...
After Trump's post, the Financial Times reported that China would "limit access" to Nvidia's H200 chip. The Chinese government reportedly plans to boost domestic semiconductor development rather than import chips from the U.S.
The market doesn't really care...
This drama is an interesting tidbit in the 2025 trade war. But it didn't budge Nvidia shares today.
Nvidia wasn't expecting much business from China, regardless of what either the U.S. or Chinese governments allow. Wall Street analysts aren't counting on China, either.
Turns out, amid all the kerfuffle of tariffs and retaliations, China moved on without the U.S. Its trade surplus (exports minus imports) just topped $1 trillion for the first time.
That's the highest of any country – ever.
Chinese products remain in demand globally, with exports rising nearly 6% year over year in November.
Meanwhile, the U.S. is imposing an effective tariff rate of 29% on Chinese imports (and a higher rate on certain goods, plus the threat of additional, higher tariffs). The expense and uncertainty cut China's exports to the U.S. by nearly 29% last month, the eighth straight month of year-over-year double-digit declines.
For its part, China has been relying less on U.S. goods. Most notably, it has imported soybeans from other countries instead. Based on today's headlines, it's happy to skip American semiconductors, too.
Meanwhile, at home...
American businesses' balance sheets are increasingly showing the influence of tariffs, as CNBC reported earlier this week...
"We have seen an increase in working capital needs post-Liberation Day due to higher tariffs," said Ajit Menon, head of HSBC's U.S. trade finance business. "The average tariff increased from 1.5 percent to double digits," he said.
Menon said the financial hit varies industry to industry. For example, generic pharmaceuticals and retail/apparel lack negotiating power due to thin margins. "This is why trading counterparties are negotiating payment terms as an alternative, which is where the need for financing emerges," said Menon.
HSBC, which finances more than $850 billion in global trade flows annually, introduced its Trade Pay platform earlier this year, which helps clients monetize receivables, payables, and inventory.
Since Trump's initial April rollout of sweeping global tariffs, Menon says the bank has seen a roughly 20 percent increase in financing flows across all client segments, and use is increasing as the inventory brought into the U.S. in early 2025 as part of a trade frontloading winds down. "The surplus inventory brought in to offset tariffs is now nearly exhausted," Menon said. "That means companies will need more working capital moving forward as terms get renegotiated."
Major U.S. ports, like Long Beach and Los Angeles, have reported drops in Chinese imports as recently as October.
This time last year, businesses were "front running" tariffs... rushing to import goods ahead of new taxes.
That has run its course. Now, imports of at least some items (particularly in retail) are slowing from the world's second-largest economy to its first. And importers are getting creative with financing.
That doesn't sound like a recipe for a flourishing economy.
We're also hearing this from Vizion CEO Kyle Henderson, whose company has a real-time container-tracking platform. As he told CNBC last month...
For the first time since March 2023, we're seeing monthly import volumes consistently fall below 2 million TEUs [a standard container of cargo] – this isn't just a seasonal dip or temporary correction. The data shows this is a structural goods recession driven by the convergence of tariff uncertainty, frozen housing markets, and a fundamental shift in consumer spending away from physical goods.
When furniture imports collapse 33 percent and toy imports – which historically surge 40-50 percent ahead of the holidays – barely rise 17 percent that tells you retailers are betting on the weakest consumer season in years.
As we wrote to you last week, while holiday sales are up from last year, that was on a lower volume of items purchased. We'll keep watching consumer-spending trends, as they're the engine for about 70% of U.S. economic activity.
Waiting for the Federal Reserve...
In other news, the latest two-day central bank meeting began today. As we wrote yesterday, tomorrow the Fed will announce its latest policy decision and quarterly projections. And Fed Chair Jerome Powell will follow with a press conference tomorrow afternoon.
In the meantime, traders like our Ten Stock Trader editor Greg Diamond are "waiting on the Fed," as he wrote to subscribers today. Greg is eyeing a buying opportunity... But he wants to see how the market reacts to the Fed's decision and guidance before making new trades.
Wall Street is widely expecting the central bank to lower its federal-funds rate range by 25 basis points for the third time in the second half of 2025. Traders put 88% odds on this cut. But as we noted yesterday, it's not guaranteed.
Typically, this group has put close to 100% odds on a Fed decision the day before it's due. Not this time...
Fed members have been privately and publicly split on views of the economy and whether rising inflation or a weakening labor market is of bigger concern. And Powell – the decision-maker in the end – gave zero clues about his thinking in a public appearance last week.
Whatever happens, the latest official jobs data from the government that was published today shouldn't change anyone's opinion. The October Job Openings and Labor Turnover Survey – delayed because of the government shutdown – showed job openings holding steady at 7.7 million. Hires, quits, and layoffs were all "little changed."
As we wait, we come back to Greg's thought about waiting on the Fed... We can spend time predicting what the Fed will do. But looking at how the market is reacting to what the central bank does and says is more important...
Peering into the future...
For example, the bond market of late has been suggesting a growing expectation for rising inflation ahead...
On the longer end of the yield curve, the 10-year Treasury yield hit a three-month high yesterday. Similarly, the 30-year yield is up versus the end of October. These are rates that the Fed doesn't influence much.
When Treasury yields are rising, it means that bond prices are falling. That's an inflation indicator. When the market expects dollars to fall in value, folks will only buy bonds at a discount.
And yet, if the Fed cuts rates, it's making the "cost of money" even cheaper... which also fuels inflation.
This doesn't mean that the Fed won't announce another rate cut tomorrow. But if the central bank signals more cuts ahead in 2026 – which may ultimately come after Powell likely departs in May – it could raise inflation expectations more.
In that case, bond prices would take another hit and, as we say a lot, more folks will want to own inflation protection.
That includes real assets like gold and commodities... And it includes shares of high-quality businesses that can make the most of their cash amid economic challenges – and reward shareholders over time. Make sure your portfolio is ready.
In this week's Stansberry Investor Hour, Dan Ferris and I welcome Gary Mishuris back to the show. Gary is the managing partner and chief investment officer of investment firm Silver Ring Value Partners. In the show, he shares lessons on how he's implementing AI to aid his investing strategies...
Click here to watch our entire interview on our YouTube page... or listen to the audio version on our website or wherever you listen to podcasts, like Apple Podcasts, Spotify, or Audible. Just search "Stansberry Investor Hour" and subscribe to get more episodes when they go live.
Also, as Gary explained, he has spent more than 100 hours building an AI investing framework and testing prompts, seeing what works and what doesn't. He has compiled all his research in a free PDF. You can ask Gary to send you a copy here.
New 52-week highs (as of 12/8/25): Alpha Architect 1-3 Month Box Fund (BOXX), Ciena (CIEN), Cisco Systems (CSCO), Freehold Royalties (FRU.TO), Lumentum (LITE), Skeena Resources (SKE), and Zoom Communications (ZM).
In today's mailbag, more feedback on pharmacy benefit managers ("PBMs") and thoughts on inflation data (which we discussed in yesterday's edition), plus a recommendation on where to find more useful numbers than the government's... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Just a quick note. My wife has been a pharmacist for over 50 years. She currently works for three different small locals on occasion when they are desperate. We've seen PBMs as villains for 20-plus years. They generate HUGE profits. They have no interest in the cost for the patient. The insurance company does not care because for them, higher costs just mean higher premiums." – Subscriber Tim P.
"Check out Senator Chuck Grassley. I don't know how many times he's responded to my emails on health care costs with he was looking into PBMs. I'll send the responses and see if he can get any traction." – Subscriber S.H.
Corey McLaughlin comment: Thanks for the heads-up.
It turns out that just a few days ago, incidentally, Grassley, the 92-year-old Republican from Iowa, and 20 other senators, introduced bipartisan legislation to reform pharmacy benefit managers. It's called the PBM Price Transparency and Accountability Act. Grassley said in an announcement about it...
Iowans at my 99 county meetings are fed up with the high cost of prescription drugs, and for good reason. PBMs are driving local pharmacies in Iowa out of business and making it harder for Iowans to access the medications they need. That's why I'm introducing legislation with my colleagues to put patients over pharmacy benefit managers by shining a light on the complex and opaque tactics these middlemen use. This landmark bill builds on the bipartisan legislation I spearheaded during my time as Finance Chairman, and includes several proposals I helped craft.
Clearly, the presence of PBMs in the health-insurance chain directly impacts many Americans, pharmacies, and costs of prescriptions. And this effect is not widely understood.
Similar bills have passed various Senate committees in recent years, but they never made it over the finish line into law. You can read more details about this one here. We'll see how far it goes.
"I think it's time we quit using the wildly misleading, and frankly inaccurate, PCE or CPI for assessing inflation rates. Everyone knows these numbers are not indicative of the true inflation rate. The Chapwood Index is much more 'true to life' for average Americans. The latest Chapwood Index would suggest the true inflation rate [is] 3-4 times the government's official rate. Thus, the labor market coupled with the true inflation rate signals we are solidly in the 'stagflation' camp. And short of another [Paul] Volcker-like action, the Fed has nothing left in its arsenal..." – Subscriber Jim V.
McLaughlin comment: Thanks for the note and the recommendation, Jim. From what I see, I love everything about the Chapwood Index and need to look at it more often. Here's how it's described...
The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 150 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation.
Money manager Ed Butowsky of Chapwood Investments began calculating the Chapwood Index in 2008. Because of the government's CPI-based cost-of-living increases, his late mother's alimony payments had been under-adjusted.
Seeking to create a better representation of the inflation rate, Butowsky surveyed friends to determine the 150 items they bought most frequently and asked them to periodically track prices in America's largest cities.
Today, the index shows changes in prices for items like Starbucks coffee, Advil, insurance, gasoline, toothpaste, oil changes, car washes, pizza, Internet service, home repairs, pet food, etc. As explained on the Chapwood Index's website...
The Index forces middle-class Americans to recognize that their dependence on income increases pegged to the much-lower CPI virtually guarantees that they will run out of money before they die, because people are living longer and there is a huge difference between the CPI and the real world.
As an example, the CPI rose 3.5 percent in 2023. But in Boston, the Chapwood Index shows that the real cost of living increase was 13.6 percent. This means that if you work in the Boston area and got [a] 3.5 percent raise in your salary, it wasn't nearly enough to cover the increase in your day-to-day expenses.
So, yeah, check out the Chapwood Index and search for your city or the one closest to you and see inflation's true effect on your budget.
For example, the index tells us that the true cost-of-living increase here in the Baltimore area has averaged more than 12% annually over the past five years. That feels more accurate than the roughly 4% average annual gain over the same span for the area, according to the consumer price index ("CPI").
All this said, the Federal Reserve and government agencies will still make decisions rooted in the CPI and personal consumption expenditures ("PCE") measures of inflation. So I won't ignore them... Their findings still matter to the markets.
All the best,
Corey McLaughlin with Nick Koziol
Baltimore, Maryland
December 9, 2025
