I'm glad to see the new development on the tariff front; A look at another blowout earnings report from Nvidia; Last chance to see the presentation on a huge AI opportunity; Joby Aviation just soared 29%

1) Stocks are on the move today on two pieces of good news...

The first is a court ruling blocking much of President Donald Trump's tariff agenda. A the second is another blowout earnings report from tech bellwether Nvidia (NVDA).

Regarding the former, three judges of the Court of International Trade – including one appointed by Trump – ruled yesterday that he can't impose tariffs under the International Emergency Economic Powers Act ("IEEPA") of 1977.

When Trump announced the big tariffs last month, he said the U.S. trade deficit had created a national emergency. And the IEEPA gives the president extensive powers to address national emergencies.

However, the three-judge panel said the trade deficit didn't fit the IEEPA's definition of an "unusual and extraordinary threat." And it said that it wouldn't be constitutional for Congress to delegate "unbounded tariff authority" to Trump.

As you would expect, the Trump administration is challenging the ruling.

(I'll note that one of my readers named Gregory B. predicted this outcome and shared his thoughts in a post on social platform X last month – and linked to two in-depth analyses. You can see it here.)

Here's this morning's Wall Street Journal report on the ruling: Trade Court Strikes Down Trump's Global Tariffs. Excerpt:

Trump has used IEEPA to underpin most of his second-term tariffs – from duties on Canada, Mexico and China imposed over fentanyl smuggling to the far-reaching reciprocal tariffs levied in early April on virtually every U.S. trading partner. Trump later paused the reciprocal tariffs for 90 days to allow for negotiations...

The [decision from the judges] blows a hole in global trade talks, already under way with more than a dozen nations, which began after the reciprocal tariffs were imposed. It also throws into question recent agreements with the U.K. and China.

And here's another new WSJ article on it: Tariff Ruling Is a Setback for Trump but Doesn't End Trade War. Excerpt:

The decision by a little-known U.S. federal court heightened uncertainty over the U.S. assault on global trade, the latest in a series of escalations and reversals over trade policy that have whipsawed financial markets and scrambled corporate decision-making.

The bottom line, say trade experts, is that the global trade war is far from over. While a setback for Trump, the ruling is unlikely to deter him from seeking to rewrite the rules of global commerce in America's favor or lead him to abandon tariffs as the principal tool to do so.

The Trump administration asked the court late Wednesday to pause the ruling while it pursues an appeal. Not doing so would endanger foreign policy and national security, the administration said in its motion for a stay.

In a post yesterday, my friend Chris Irons who publishes the QTR's Fringe Finance blog thinks this ruling is good news for President Trump and the markets: Trump's Tariff (E)scapegoat. Excerpt:

Most of these very aggressive tariffs were never meant to be permanent. They were leverage – blunt but effective instruments to force negotiations, draw lines, and signal that the days of America being the global economic doormat were over. Mission accomplished on that front. China, Mexico, the EU – everyone was forced back to the table. But that leverage comes with side effects: higher prices, agitated supply chains, the occasional bad headline about farmers in the Midwest, iPhones getting pricier and general bitching and whining from the left.

And as Chris continues, Trump now has a "strategic scapegoat and off-ramp":

If he wants to pivot away from tariffs – or at least scale them back – he can do so without appearing to cave. He can simply shrug and say, "My hands are tied, the courts made the call."

It's a ready-made scapegoat. Politically, that's gold. He doesn't have to walk back anything, doesn't have to "admit" tariffs had drawbacks. He just shifts, pivots, and keeps moving – without the wet blanket on the stock market and the media baggage.

As Chris concludes:

This is textbook game theory. Trump is now in a position where he can pursue the path of least political resistance with the highest strategic upside. He can offload the political costs of ending tariffs onto the judiciary, claim victory for the pressure they brought, strike new and better deals, energize the markets, and move into 2025 as the economic maestro who finished what he started.

I share Chris' optimism about the impact of this ruling – I think it's likely to be good for our economy and stocks.

2) I feel like a broken record commenting on Nvidia's (NVDA) latest quarterly earnings report...

But once again, the chipmaker reported another stunning quarter after the market close yesterday.

Revenue soared 12% from the previous quarter and 69% year over year. And adjusted earnings per share fell 9% sequentially but grew 33% year over year.

The company also gave strong guidance for the second quarter, with revenue expected to grow 2% sequentially and 50% year over year.

Once again, these are incredible numbers.

Here's a WSJ article with more details about the earnings report: Nvidia's Business Is Booming Despite Being Shut Out of China. Excerpt:

The chip titan has been on a roller-coaster over the past few months after the Trump administration moved to limit sales of chips to the Chinese market and then cleared the way for multibillion-dollar deals for processors in the Middle East.

Nvidia, which has emerged as one of the world's most-valuable companies because its chips provide the computing power needed in a global AI arms race, posted another quarter of record-breaking sales on Wednesday.

Revenue reached $44.06 billion for its fiscal first quarter, a 69% increase that was curtailed by Washington's new limits on China chip sales. The company was unable to ship $2.5 billion of its H20 processors and projected $8 billion in lost revenue for the current quarter due to the policy.

Investors are breathing a sigh of relief that the impact of restricted sales in China wasn't worse. The stock rose as much as 6% earlier this morning.

Analysts expect Nvidia to generate $199 billion of revenue and earn $4.28 per share for its current fiscal year. So with a roughly $3.5 trillion market cap, that means the stock is trading at about 18 times revenue and about 33 times earnings.

Those are nosebleed valuations, especially given the uncertainty about sales in China and the fact that the year-over-year comparisons are going to keep getting more difficult going forward after such explosive growth.

I've said many times previously that Nvidia is a great company – and it may do very well going forward. But, to repeat what I wrote after the company's last earnings report in February, this is the kind of stock I like to pound the table on when it's down at least 50% (if not 75%).

That said, I'll also repeat what I wrote then:

But the fact that I wouldn't buy Nvidia today doesn't mean I would sell it...

... if I owned Nvidia, I would hang on... I dedicated an entire e-mail to explain my somewhat counterintuitive thinking on September 5.

As I've said many times before, you must let your winners run!

3) Massive investments in artificial intelligence ("AI") have been driving demand for Nvidia's chips – and here's your last chance to see the special presentation on a huge story in the AI space...

I recently joined my friend Jeff Brown – the founder of our corporate affiliate Brownstone Research – to issue a big warning for June 2. It could be the catalyst to at least double your money on five different investments and reshape the U.S. on a scale unseen since 1999.

This might be the greatest AI investment opportunity of the decade – so don't miss out. Get all the details here before the presentation from Jeff and me goes offline at midnight tonight.

4) And to close out today, I'll note that electric air-taxi company Joby Aviation (JOBY) soared 29% yesterday on news of carmaker Toyota Motor (TM) becoming its top shareholder.

On Wednesday evening, Joby announced that Toyota had closed the first $250 million of a previously announced $500 million total investment in the company. (You can see the press release here.)

Longtime readers know that I think Joby has "moonshot" potential. (For more on this innovative company that I visited 20 months ago, see the five e-mails I've written about it, most recently on December 13 – it includes links to the previous four.)

The investment from Toyota is exciting news. And looking ahead, the launch of commercial service in Dubai early next year could be a catalyst for another big move higher in the stock.

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.