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Big capex is not longer welcomed

US big tech continue to post higher capex outlook for 2026 and those figures are surprisingly large.

However, you now start to negative reactions.

1/ Their own stocks respond negatively

2/ Nvidia stock, which presumably is a beneficiary for higher capex, hasn’t responded very positively

#Why capex is less welcomed?

1/ It could just be higher inflation across the chain. higher price for infrastructure, power equipment and construction workers etc. Therefore, it’s a less-efficient use of money

2/ Investors don’t see immediate growth. The 2026 growth outlooks, which should be supercharged by already massive capex in 2025, is not impressive enough. Investors fear that marginal incremental growth coming from additional capex looks small, at least in the current year.

China’s missing inflation in early 2000s

In Our Dollar, Your Problem, author raised this question – why China didn’t see a faster inflation it should see. The higher inflation rationale is that when tradable goods sector productivity rises fast, this part of the economy will attract more workers, presumably from non-tradable goods sector. Thus, wage should rise and likely at a faster pace than the productivity gain in non-tradable goods sector, which should result in higher inflation in non-tradable goods sector to counter labor inflation.

In the books, the author mentioned one plausible explanation, which was Chinese gov could move massive population from rural areas to cities and factories. The amount of inflow was so large that wage increases were not seen. Thus, there is lower than expected service inflation.

This sounds reasonable.

I have additional arguments on #why China didn’t see strong inflation in non-tradable goods sector.

1/ The high-end of services are not priced fairly in China.

Unlike more capitalism-driven societies, the high-end supply and demand are exchanged in non-monetary channels. E.g. think about the high-end healthcare senior gov officials may receive in China – that’s not charged at the “market price”. Thus, you can’t measure the inflation, if that doesn’t carry a “price”.

In additional, the high-end services may not be available to the public or openly marketed. Thus demand is lower than it should be.

2/ High-end demand is shifted abroad.

Chinese wealthy like to shop, travel and live abroad.

This lowers the inflation across the board.

So they say central banks are buying gold

I did some research and tried to put pieces together.

1/ Central banks are buying, but top country is Poland (National Bank of Poland).

None of G7 is top buyers in 2025 till Nov.

German is a small buyer.

Source: IMF, respective central banks, World Gold Council

 

2/ The total buying from central banks surged in 2022

2022 vs 2021, more than doubled

2022 vs 2018, more than 50% surge

Year
Annual central bank net gold purchases, tonnes
2014 601.2
2015 579.6
2016 394.9
2017 378.6
2018 656.2
2019 605.4
2020 254.9
2021 450.1
2022 1080.0
2023 1050.8
2024 1089.4

Source: www.visualcapitalist.com

3/ Many gold buyers are Russia trading partners, except for Poland

Six of top seven central bank gold buyers in 2025 through Nov is a top Russia trading partner.

Poland (no)

Kazakhstan (yes)

Brazil (yes)

Azerbaijan (yes)

Turkey (yes)

China (yes)

Czech (yes)

Top Russia trading partners in 2024.

Source: oec.world

It looks possible that as Russia doesn’t want to accept or own USD, or it can’t use USD, its trading partners are buying gold as a form of payment.

 

Chatted with ChatGPT and created model for gold price

With a 5-year time frame, I tried to create a gold price model for 2028, based on 2023 gold price.

Gold_2028 (USD/oz)
– Low $4,087
– Base $6,070
– High $9,556

gold_2028_model_with_deficit_cb

Disclaimer: I am not expert on gold nor did I have spent considerable time in studying it. But I was trying to understand different drivers behind gold price. I asked ChatGPT to pick the coefficients, so there is little credibility behind these coefficients.

 

Notes of Paul Tudor Jones (PTJ) on AI bubbles

Paul Tudor Jones on the AI Bubble Debate by Bloomberg

The only way to reduce debt to GDP is to have obviously nominal growth exceed your interest rate.

– Paul Tudor Jones

Here are notes for Paul’s interview and my opinions

  • Today feels like Oct 1999, but if this is a bubble, it’s a small one. Past bubbles ran 400–600%. Nasdaq is “only” ~200% off the bottom. Blow-off possible, not inevitable. [I agree; see my previous post Is it like internet bubble? in October]
  • Key bull case: rates. If Fed funds fall toward ~2.25–2.75%, that’s powerful fuel for equities. Markets look 6–9 months ahead, not at today’s data. [Sure]
  • Difference vs 1999: companies are profitable. [I don’t agree; I believe AI model companies like OpenAI etc. are losing a lot of money; let’s see when they publish numbers for IPOs]
  • Risk isn’t traditional leverage like in margin accounts — it’s derivative leverage: options, leveraged ETFs (up 250% from 2022 bottom), and trader-driven equity flows. [Very real]
  • Jones stays a trend follower. Recently, gold & silver > Bitcoin despite massive crypto inflows. He now expects precious metals to outperform crypto into year-end. [I wouldn’t agree back then; but I would be very wrong, so far]
  • Bond vigilantes were held in back; money debasement happened in gold and bitcoin instead. [True]
  • Biggest risk: concentration everywhere — stocks, investors, and policy power. [Agree]
  • Bottom line: short-term cautious, but Paul believes markets can be substantially higher by year-end. Likely long: Nasdaq. Short: Bonds.

Xiaomi smartphone GP may drop 30% given rising memory cost

Some simple calculation:

Xiaomi smartphone GPM was 12.6% in 2024, with 192bn revenue.

Xiaomi sold 1.64 billion smartphones that year.

The GP per handset is about 147 RMB in 2024

Across different smartphone models, memory cost is different, ranging from 50-500 per handset.

But in a nutshell, it’s about 12-18% of BOM.

It’s could be about 150 memory cost per handset for Xiaomi, which is similar to GP per handset.

Then if memory cost is rising 50-100%, the entire GP per handset could be at risk.

To offset, Xiaomi may increase prices for customers.

And as a large customer for memory chips, it may not receive full mark-up immediately.

In the end, maybe 1/3 of the memory cost impact of 120 need to be absorbed by Xiaomi.

Then GP per handset could be more like 100-110 RMB.

And as the price increases, volume could be impacted, plus the RMB appreciation recently (two-thirds of Xiaomi smartphone volume is overseas).

Total impact to Xiaomi smartphone GP could be like 65-75bn, or 25-30% negative impact from 2024 level.

Sea change?

1/ FSD approval in China.

I have seen various posts on Chinese social medias that Tesla FSD is being updated in China. Not many news mentions though. This was previewed by Elon Musk back in Nov 2025 and recently in Davos.

2/ TikTok US deal finalized

3/ Trump Administration Pushes Out Key Officials Focused on China Tech Threat – WSJ

4/ Medtronic and Mindray North America broaden strategic partnership

5/ H200 China approval after US approval

6/ BYD and ExxonMobil signed a long-term strategic cooperation memorandum on 26 January

 

—

Edit:

Jensen Huang on Jan 29 said H200 has yet to be approved in China.

Notes on JPY strength

Coordinated intervention

Reports that the New York Fed did “rate checks” (often interpreted as a potential prelude to intervention) plus Japan officials stressing coordination with the U.S. put the market on alert.

Previous examples

In March 2011, the G7 announced concerted intervention after extreme yen volatility following Japan’s earthquake.

What was happening in 2011?

Markets anticipated Japanese insurers and investors would bring money back to Japan to pay claims and fund rebuilding.

What’s happening now and why US wants a stronger yen now?

Excess volatility and disorderly FX moves can harm economic/financial stability

Japan’s finance minister has said the U.S. Treasury secretary shared concerns about “one-sided depreciation” of the yen, which signals the U.S. doesn’t want to be seen as tolerating a move that could be framed as giving Japan an unfair export boost.

A weak yen can worsen import-cost inflation and political stress in Japan.

Some exit from Japan might cause the temporary yen weakness (e.g. China selling).

 

 

Solana note

Solana’s price was up 86% in 2024 and down 34% in 2025.

Most of the pullback happened in q4 of 2025 which was around 40%.

At the end of Q3 2025, Solana price was about $208, still up compared with 2024 year end of $189.

Two most important drivers for Solana network and price are meme coins and stable coins.

For meme coin, it seems the frenzy has cooled down in 2025, using these indexes as reference: CoinDesk Meme Index or MarketVector Meme Coin Index.

On the stable coin side, adoption (stable coin on solana) has more than doubled from $5bn at end of 2024 to $13bn in Sep 2025 according to this, but no meaningful increase in 4q2025.