This one’s for now
This was first sent to clients as MBMG’s November 2025 Outlook
I’ve seen the present brother, it is murder…. – Leonard Cohen
“Men, it has been well said, think in herds;
it will be seen that they go mad in herds,
while they only recover their senses slowly, and one by one”
– Extraordinary Popular Delusions and the Madness of Crowds , Charles Mackay
The flow of socioeconomic, financial and political news has become an overwhelming deluge, little of which makes any rational sense any more outside of its immediate context of short-term pursuit of immediate profit or benefit. This pursuit is, in itself, not only logical without reference to broader context, but is entirely natural.[1]
However, short-termism can have longer-term unintended consequences and the disregard of these, can later look like the popular delusions and madness lamented by Charles Mackay in his seminal nineteenth century work.[2]
It has struck us for some time that the prevailing environment fits even less neatly into monthly reviews and outlooks than it ever did before and therefore, we plan to continue the rather uneven pace of recent updates by sending out client notes at greater but more irregular frequency. In the works we have our latest stream of minimal consciousness and a summary of an eye-opening analysis of how the AI stock bubble manages to continue feeding itself both of which we intend to send in the coming weeks with a further note about the ‘resolution’ of the longest shutdown in US history before that.[3] But for now, we’re enclosing an edited transcript of Paul’s recent chat with CNBC’s Martin Soong.
I’m forever blowing bubbles,
Pretty bubbles in the air,
They fly so high, nearly reach the sky,
Then like my dreams, they fade and die.
Fortune’s always hiding, I’ve looked everywhere,
I’m forever blowing bubbles,
Pretty bubbles in the air.
– I’m forever blowing bubbles, Kenbrown & Kellette[4]
Paul recently joined CNBC’s Martin Soong for a wide-ranging chat about the state of the markets and various economies, starting with a discussion of China’s latest 5-year plan[5], with Martin asking Paul whether it was a surprise that the details that had been released of the plan didn’t more specifically reference AI (or what we at MBMG refer to as ‘Feigned Intelligence’).
Paul saw this as a reflection of China’s self-confidence and strength right now: – “They don’t have to talk about AI. One the one hand, you have [Nvidia CEO] Jensen Huang running around the world, and in particular running around Asia, at the moment doing his snake oil selling tour of APEC CEOs[6], whereas what we’ve seen coming out of XI has remained consistent for quite some time and is incredibly logical.
China has needed to pivot to a much more domestic consumption model; that’s not new, it’s something that’s been in the background rumbling away for years and policy has been heading in that direction.
We’ll probably see the continuation of a lot of the things that have actually been successful in China in terms of building the consistent growth of domestic consumption.
This could well end up in with markets reaching a point of disappointment if and when stimulus turns to be quite restrained with gradualist policy. Although we’re waiting for the details they’re unlikely to be mind-blowing because they don’t have to be while China remains on a reasonably steady course.
It doesn’t need to change course dramatically, especially its long-term focus. We’ve long been talking about one of the ways to play China is the domestic consumption theme and probably the best way to play that is that it’s exposure to domestically focused, typically smaller Chinese companies.
So, from a policy perspective, the plan sounds really logical. Also, I think that Chinese policymakers are highly aware that on a global level we have got a massive bubble in AI. They have learned the lesson from when they copied the US property boom that caused the Global Financial Crisis of 2007 to 2009.
China unfortunately copied that and had a property market bubble of its own 10 years later. I think this time they’re watching, they’re learning and they’re not going to repeat the western mistakes of creating a massive AI bubble. They don’t need to. This just shows that they think they have it under control. I think they’re probably right.”
Paul then commented on the expected meeting between Xi and Trump on the sidelines of the APEC Summit. Paul felt that while China might agree to “delay execution and implementation of their curbs on exports of ‘rare earth’ minerals[7] for another year in return for an acceptable quid pro quo”.[8]
Martin pressed Paul for what such a bargaining chip might be.
Paul felt that the tone of the White House rhetoric might need to change:-
“In the meantime Trump will have to give up resorting to childish threats of 100% tariff increases overnight.[9] America is the government with everything to lose here because China has its strategy in place. This isn’t a new strategy – it’s been in place for some time; hence I’ve been talking about increased exposure to domestic consumption plays for the last few years.
Exports and overseas markets are still important to China, they’re still a major part of GDP, especially exports to the United States and obviously China wants to keep a major part of that but China is much better prepared than America is for a world where China doesn’t have such an active trade relationship with the United States.
America has everything to lose and so President Xi has a strong negotiating position.[10]
In the short-term obviously things like Electric Vehicles (EVs) are a major factor in Chinese exports but Biden’s ban on chip exports from America to China[11] really messed up the relationship dynamics by forcing China to develop its own chip industry.
Since listing in 1999, Nvidia has suffered a huge correction every few years ever since its first correction, which started just a year after listing when it fell by over 90%, after a surge not too dissimilar to the run up that it had recently.
Nvidia falling by 90% shouldn’t be a shock – it should be a base case – it’s just what Nvidia does – it spikes by several 100% and then crashes by somewhere between 60 and 90%. There have been 15 episodes over the 25 years that it’s been listed[12] but what’s really different this time though is that the previous times when Nvidia’s share price collapsed, it wasn’t in any way systemic. Twenty-five years ago, it was just a relatively small new entrant to the NASDAQ.[13] Today, Nvidia is obviously the biggest company in the world[14], the leader of S&P 500 and also the leader of the US listed stock markets. It’s also a major factor in the US economy. When we get Nvidia’s next reset, which is now overdue, the reverberations will be much, much wider than just the NVDA stock price. It’s really going to be a systemic problem.”
Paul also picked up on comments that Nvidia’s Jensen Huang had made about needing to open the chip export door to China:
“When Jensen Huang talks about how AI and tech needs to be American AI because it’s actually in danger of becoming more and more Chinese, then you know that in fact that’s already started to happen. Mistake after mistake of the various US administrations are all starting to come home to roost so the next 90% Nvidia share price collapse which is now overdue, is becoming more imminent.
China’s response to the Biden ban on chips has seen China, in a relatively short space of time, develop a significant chip industry. There’s still a gap and China is still playing catch up and so anything that America can do [such as easing restrictions on high-grade chips] to help to play catch up even faster is obviously going to go down well with China and could also be a short-term boost that keeps the AI bubble growing.”
Paul noted that one problem with this would be that domestic narrative in America has been about how dangerous it would be to let China get absolutely leading-edge chips, and that this would therefore be a “hard sell” to the Us electorate heading into mid-term elections, even for Donlad Trump, “the Master of the flip-flop.”
However, that “last sugar rush” for the AI frenzy appears to have been ruled out by China’s reticence to buy, rather than America’s reluctance to sell, so that places the AI bubble on even shakier ground.
For more information and to speak with our advisors, please contact us at info@mbmg-investment.com or call on +66 2 665 2534.
About the Author:
Paul Gambles is licensed by the SEC as both a Securities Fundamental Investment Analyst and an Investment Planner.Disclaimers:
1. While every effort has been made to ensure that the information contained herein is correct, MBMG Investment Advisory cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Investment Advisory. Views and opinions expressed herein may change with market conditions and should not be used in isolation.
2. Please ensure you understand the nature of the products, return conditions and risks before making any investment decision.
3. An investment is not a deposit, it carries investment risk. Investors are encouraged to make an investment only when investing in such an asset corresponds with their own objectives and only after they have acknowledge all risks and have been informed that the return may be more or less than the initial sum.
[1] As acknowledged by Adam Smith in the serially misquoted passage –“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” Smith’s acknowledgement is widely misused as a defence of a capitalist free market that not only didn’t yet exist in Smith’s day but, at least in its current form, stands for almost everything that Smith opposed in his writing and teachings.
[2] For anyone who still hasn’t read Mackay, we’d commend it once again – a free version can be found at – https://www.gutenberg.org/files/24518/24518-h/24518-h.htm and various other websites.
[3] A resolution has now been passed but the wave of relief following this seems to disregard the potential for deeper damage with consequences that only become fully apparent later.
[4] A Tin Pan Alley song/waltz from 1918 first popularised in the USA by various dance bands. In the UK it was performed by many artists and ultimately featured in the repertoire of Vera Lynn. The song was used by Pears Soap in advertising campaigns before being later adopted by fans of West Ham United.
[5] Since Mao Zedong’s proclamation of the People’s Republic of China in 1949, following the defeat of the Kuomintang in the aftermath of World War II, China’s economy has been shaped through the Plenums of the CCP’s Central Committee and the national congresses of the Party, which are held every five years and since 1953 have resulted in the issuance of successive Five-Year Plans for the economy, although since 2006, these have been referred to as ‘guidelines’, 规划 ( guīhuà) rather than plans, 计划 ( jìhuà), drawing a distinction from the Soviet-inspired tradition of central bureaucracy. Recent strategies have increasingly focused on issues such as environmental protection and education & training. The fifteenth five-year plan (for the period 2026-2030) was unveiled last month (although there has been consultation during the last couple of years about the shape this might take). The WEF (https://www.weforum.org/stories/2025/10/how-china-s-15th-five-year-plan-signals-a-new-phase-of-strategic-adaptation/), notwithstanding whatever its own agenda may be, has described the plan “not as a continuation of business-as-usual, but as a recalibrated strategy for a world that looks far more unpredictable than it did five years ago”, noting that “Those shifts carry global implications, from cross-border technology ecosystems to supply-chain design and capital flows” creating a critical juncture for China’s modernization journey where “strategic opportunities exist alongside risks and challenges, while uncertainties and unforeseen factors are rising”. The WEF analysis highlighted the following key tenets:
China’s domestic growth model is shifting from infrastructure investment and away from property to new drivers, with technology “a central arena for competition, which both requires and pressures China’s push towards innovation self-reliance and industrial resilience. Against this backdrop, the 2026–30 plan aims not only to uplift growth, but to reshape its foundations”, with consumption no longer solely as an economic booster, as household-centred policies are seen as underpinning growth resilience: employment, childcare, education and social safety nets which are no longer simply “livelihood” issues, but also productivity and confidence issues. “The goal appears to be less cyclical stimulus and more structural empowerment.”
Industrial modernization supplants the previous headline theme of technological innovation: “The sequencing reflects a practical focus: turning laboratory breakthroughs into scalable, high-value production capacity. Frontier sectors such as advanced manufacturing, semiconductors, next-generation information technology and aerospace rise to the top because they offer both strategic resilience and growth multipliers.”
Innovation must lead to real-world value: “During the 14th Plan, the priority was ‘breakthroughs’. Under the new plan, the emphasis moves to conversion, application and ecosystem shaping. The message is clear: progress from zero-to-one matters, but the decisive impact will come from one-to-100. This recalibration suggests competitive pressure is pushing a more outcome-driven innovation culture.”
Economic security and opening up are now interlinked, reinforcing openness but through “a more strategic lens. Rather than emphasizing quantity of trade and investment, it highlights consolidating high-standard opening-up and deepening cooperation in specific regions and industries. This reflects a reality in which de-risking and diversification pressures globally are reshaping how interdependence is managed, not abandoned.”
Governance of regional growth will be more selective.
[6] Nvidia’s CEO had attended the 2025 Asia-Pacific Economic Cooperation (APEC) CEO Summit in Gyeongju, cheerleading the so-called AI revolution, throwing chips into the Asian pot, announcing a major deal to build out Korean AI infrastructure (i.e. sell the Seoul government billions of Dollars of Nvidia chips – in the distorted world of AI, nobody sells or buys any more – instead they enter into strategic partnerships to supply or build out) and, according to Nvidia’s in-house propaganda (https://blogs.nvidia.com/blog/korea-ai-apec-ceo-summit/), Huang “emphasized that AI will have a profound impact on every industry and stressed the importance of building AI infrastructure, noting that the AI era presents enormous opportunities for South Korea. He also spoke at a press conference about the virtuous cycle of AI investment driven by profitability and the ongoing transition to accelerated computing.” One of the major challenges facing Nvidia right now is the constrained demand for imported chips in the world’s largest economy (since 2016 China has been the world’s largest economy as measured by purchasing power parity (PPP) and the second largest in terms of nominal GDP), as an unintended consequence of American industrial policy originated by the first Trump administration and ramped up under the Biden White House, which pretty much forced China to develop a domestic chip sector (see https://www.economist.com/science-and-technology/2025/10/22/chinas-chipmakers-are-cleverly-innovating-around-americas-limits). Obviously, China developing its own chip industry smacks of genuinely free markets, which is something that America has consistently been opposed to since assuming global economic pre-eminence, especially in the post-WW2 era (cf Kicking Away the Ladder: Development Strategy in Historical Perspective. By Ha-Joon Chang (2002) and is therefore deeply unsettling for market leaders, such as Nvidia (https://timesofindia.indiatimes.com/technology/tech-news/nvidia-ceo-jensen-huang-has-a-complaint-says-china-has-made-it-very-clear-they-dont-want-/articleshow/124894809.cms), caught between Trump’s cluelessness on trade policy and Biden’s ineptitude – we suspect that Biden had been inculcated to cheerlead the extent to which US behemoths like Apple, Microsoft, Meta (formerly Facebook), Alphabet (formerly Google) achieve global dominance by predation on participants in economies that were unable to compete and were denied the protection to be able to develop to a level to be able to do so (hence kicking away the ladder – a phrase coined in the nineteenth century by German economist Friedrich List to describe the exploitative behaviour of primarily the British Empire) but bungled the execution, whereas the Trump administration seems to completely lack understanding of this.
[7] Rare-earth minerals contain one or more of the 17 rare-earth elements, which have unique geochemical properties that prevent them from easily forming minerals, and are therefore not normally found in deposits large or concentrated enough for mining. This is the reason they are called “rare earths”. (https://en.wikipedia.org/wiki/Rare-earth_mineral). The unique properties of these elements have become essential in manufacturing magnets for ‘speakers, microphones, communication devices, and many other modern necessities’, in construction materials and in renewable energy, conductivity, aircraft assembly, and as a radioactive tracer. America, which also has rare earth deposits, currently imports around 10,000 tonnes per year of rare earth magnets from China, whereas Europe imports more than 25,000 tonnes.
[8] This article from Reuters summarises they key aspects of the agreement between Presidents Xi and Trump https://www.reuters.com/world/us/what-did-trump-xi-agree-tariffs-export-controls-fentanyl-2025-11-01/ However, it should be noted that reliable organisations such as Bloomberg have reported that Chinese orders have now fallen back again https://www.bloomberg.com/news/articles/2025-11-12/china-s-purchases-of-us-soybeans-stall-despite-trade-truce, leading right-wing websites such as Tucker Carlson’s Daily Caller to accuse China of back-stabbing https://dailycaller.com/2025/11/13/is-china-already-stabbing-trump-in-back-on-recent-trade-deal/
[9] In the first ‘100 days’ of his Presidency, Trump threatened to levy tariffs of at least 100% on many imports from China before extending a truce until November. Following their 30th October meeting, Trump indicated that a trade deal was coming ‘pretty soon’ and in particular, announced an immediate end to retaliatory tariffs levied on Chinese goods in response to Beijing’s alleged failure to stop the flow of ingredients used to make fentanyl. The White House subsequently confirmed details which broadly confirmed Paul’s take on the deal, including U.S. tariff reductions and a pause in Beijing’s new restrictions on rare earth minerals and magnets:- “The deal, which also includes resumption of Chinese purchases of American soybeans, averts Trump’s threatened 100% tariff on Chinese goods and extends a delicate trade truce between the world’s two largest economies for about a year.”
[10] A number of other commentators have also noted this but expressed concerns about the risks to stability posed by changes in the relationship dynamic, for instance Research Fellow Kevin Chen’s article- https://www.channelnewsasia.com/commentary/us-china-trade-deal-rare-earths-xi-trump-5450516
[11] In fairness to Joe Biden, the first Trump administration in prohibited the use and procurement of equipment from certain Chinese suppliers by U.S. government agencies in 2018-9 due to “security concerns” (the specific rationale given by FCC commissioner, Ajit Pai, was that they were Chinese and therefore obligated to work with Chinese intelligence services). This ban strengthened the growth trajectory of the Chinese technology sector, which by 2020 included eight of the twenty fastest growing chip manufacturers in the world. By 2021, this increased to nineteen out of twenty. In 2022 President Biden banned the sale of advanced AI chips to China, again citing so called ‘national security risks’. President Trump has lifted the ban in return for US chipmakers paying a 15% levy on proceeds to the US government, although there has been much discussion about lifting the remaining restrictions on the highest-grade chips, such as Nvidia’s Blackwell. However, in a neat volte face, China has now seemingly banned the import of US chips into China, which has rendered this point moot – https://internationalbanker.com/finance/why-china-has-banned-domestic-firms-from-buying-nvidias-ai-chips/
[12] NVDA is an incredibly volatile stock, which has exhibited strong periods of outperformance, followed by sharp pullbacks of greater than 50% (three times in 2000, 2001, a -90% drop in 2002, twice in 2003, a -65% drop in 2004, 2006, a fall of -85% in 2007-08, 2010, 2011, 2018 &most recently -70% in 2021).
[13] We explained this in our outlook for February this year “Nvidia isn’t just another stock anymore—it’s the entire market’s keystone. AI euphoria has turned it into the most important trade of this cycle, but that also makes it the most dangerous—with the potential to determine the fate of tech and, by extension, the broader equity market. The history of Nvidia, a company whose unofficial motto is ‘only 30 days from going out of business’ has historically ridden cycles of huge booms and massive busts, often getting ahead of itself before collapsing under its own weight when gravity exerts a devastating pull….. Nvidia is priced for perfection in a highly imperfect world. Nvidia’s previous periodic corrections were painful for shareholders but had limited broader impact. Today, Nvidia’s impact would be more systemic. A major stumble could trigger a cascading effect across American and global equities, forcing a brutal reassessment of overinflated valuations. Valuations in Asia, including Chinese technology, look relatively more attractive.” – This is now available online at https://mbmg.substack.com/p/you-want-it-darker-nvidia-killed
[14] In October 2023, Nvidia’s market capitalisation (the aggregated price of all its shares) fell below $300 billion – that’s not insignificant and currently would fall just outside the 30 biggest American stocks by market cap. Although it’s fallen back to just over $4.5 trillion at the time of writing, just a couple of weeks ago, Nvidia’s market cap broke through the $5 trillion barrier, representing almost 15% of the NASDAQ 100 and 8% of the S&P500 (https://finance.yahoo.com/news/nvidia-forms-5-trillion-club-110000846.html). One of NVDA’s periodic 90% price collapses alone would result in a 13.5% fall in the NDX or 7.2% of the SPX, quite aside from the devastation that it would wreak across the entire US AI, tech and broader stock neighbourhoods.