Waffles for the Win

Workarounds are the thing to avoid onerous tariffs

Investors starting to think that bark is worse than the bite

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Warm-Up
- Waffles for the Win
- Workarounds are the thing
- Learning about the First Sale Rule

Markets
- 42 Days? And counting
- Investors starting to think that bark is worse than the bite
- US Steel Deal - WOW!
- Fresh steam for speculation - lots of movement

Waffling
- What are your favorite way to eat waffles?
- Friday - 50% on Europe - Blah Blah
- 25% on Apple and every smartphone maker that brings in product to USA
- Sunday - Delay the Europe tariffs until July 9th
- Not sure where we are on

Results
- Markets swoon on the initial Europe Tariff announcement
- Markets (Overnight Futures) Popped higher on the Waffle
- Apple will look to eat and see a cut to margins -
---- Surely Apple will promise to build plants in the US and slow role it to get some relief
--- Apple recently announced a 250,000-square-foot advanced manufacturing facility in Houston that is expected to begin operations in 2026, indicating a timeline of roughly 1.5 to 2 years from announcement to production start (managed by Foxconn - manufacturing AI Driver Servers

China - Not bad
- China’s industrial profits rose for a second straight month in April, with their growth improving despite U.S. tariffs and persistent deflationary pressures, thanks to Beijing’s measures aimed at supporting businesses.
- Cumulative profits at major industrial firms climbed 3% last month compared to a year earlier, official data showed Tuesday, accelerating from a 2.6% growth in March.
- In the first four months this year, industrial profits rose 1.4%, year on year, according to the National Bureau of Statistics, bolstered by stronger earnings in the equipment and high-tech manufacturing sectors.

Facts though first:
- Foxconn’s Zhengzhou campus in China, often called “iPhone City,” spans over 1.4 million square meters (15 million square feet) and employs hundreds of thousands of workers. Approx 80% of Apple's annual iPhone production)
-- To replicate this in the U.S., Apple would likely need multiple facilities totaling 10–15 million square feet or more, depending on automation levels and vertical integration.

First Sale Rule
- Love this!-
- The first sale rule has been around since 1988
--- This is why markets/stocks/companies will always win
- The “first sale rule” is a concept in U.S. customs law that allows importers to use the lowest cost of a good to calculate duties.
- Under U.S. customs law, the first sale rule allows importers to base customs duties on the price of the initial transaction in a multi-tiered supply chain.

Example scenario:
- A Chinese manufacturer sells a t-shirt to a Hong Kong vendor for $5.
- The Hong Kong vendor resells it to a U.S. retailer for $10.
- The U.S. retailer sells it to consumers for $40.

- Using the first sale rule, the U.S. retailer can declare the $5 price for customs purposes, rather than the $10 resale price.
- This approach reduces the duty owed by excluding the middleman’s markup.

Asked AI to make easier to understand in an infographic

AI Info-graphic

Boeing Update
- The U.S. Justice Department said Friday that it has reached a deal with Boeing
- That will allow the aircraft maker to avoid prosecution over two crashes of its 737 Max planes that killed 346 people.
- The non-prosecution agreement would allow Boeing, a major military contractor and top U.S. exporter, to avoid being labeled a felon.
- The decision means Boeing won’t face trial as scheduled next month, as crash victims’ family members have urged for years.
- Out of the woods? A buy yet?

Wednesday - Big Day
- NVDA earnings
- Expectations are still for a good level of growth - but tempered bu reality
- In focus will be Blackwell chips and plans for China's AI market

New Clear Energy Update
- Friday - Trump Administration ordered the nation's independent nuclear regulatory commission to cut down on regulations and fast-track new licenses for reactors and power plants, seeking to shrink a multi-year process down to 18 months.
- The requirement was part of a batch of executive orders signed by Trump on Friday that aim to boost U.S. nuclear energy production amid a boom in demand from data centers and artificial intelligence.
- Stocks in the sector took off (we have on on the weekly picks)
- NuScale (SMR) is the only US Company with an SMR design approved by regulators.

Supreme Court on the FED
- The Supreme Court on Thursday strongly suggested that Federal Reserve board members would have special protection against being fired by a president in a ruling that, for now, allows President Donald Trump to fire two members of other federal agencies’ boards.
- “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the majority ruling said.
- In summary- A President is not prohibited from Firing a Fed official, it suggests that the Supreme court will be very resistant of approving.
---Markets will breath a sigh of relief on this

US Steel
- President Donald Trump on Friday cleared the merger of U.S. Steel and Nippon Steel, after the Japanese steelmaker’s previous bid to acquire its U.S. rival had been blocked on national security grounds. ($%% per share + investment)
- “This will be a planned partnership between United States Steel and Nippon Steel, which will create at least 70,000 jobs, and add $14 Billion Dollars to the U.S. Economy,” Trump said in a post on his social media platform Truth Social.
- U.S. Steel’s headquarters will remain in Pittsburgh and the bulk of the investment will take place over the next 14 months, the president said. U.S. Steel shares surged more than 20% to close at $52.01 per share after Trump’s announcement.
-- US Steel currently employees 21k - how we getting to 70k?
- US Steel did $15 billion in revenue last year and we are going to $14 billion additional to the US economy?
- Under details of the plan included in the document, the company will plow $11 billion into U.S. Steel's infrastructure through 2028. That includes $1 billion in a green field site, which is expected to grow by $3 billion over the following years and has not been previously reported.($4 Billion promised to build new steel mill)

Jony!
- OpenAI said last Wednesday that it’s buying Jony Ive’s AI devices startup io for about $6.4 billion in an all-equity deal that pushes the artificial intelligence company firmly into the world of hardware.
- Ive is taking on “deep creative and design responsibilities across OpenAI and io,” the company said in a statement.
- OpenAI said io is coming in-house, while Ive and his “creative collective” called LoveFrom will stay independent.
- In a blog post Wednesday, OpenAI CEO Sam Altman and Ive said that io was f...

DHUnplugged #754: Waffling Tactics

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