🟢 [E2303] The memory chip shortage is impacting margins across other sectors including auto electronics, telecom equipment, and consumer electronics. Nintendo is cited as a stock in Wood's portfolio hit by these memory price concerns. Memory contract prices surged ~50% last quarter as suppliers maintain all the leverage.

🟢 [E2296] The US dollar's share of central bank reserves continues to decline, now running at 39.9%. This ongoing decline occurs alongside gold's rise to nearly 30% of reserves, supporting Wood's thesis of continuing fiat debasement and a transition to a de facto gold standard.

🟢 [E2297] Renewed bond volatility is a key risk given political pressure on the Fed to cut rates. Treasury yields have risen modestly (10Y up 11bp, 30Y up 7bp over past week to 4.24% and 4.86%) following Greenland-related jitters, though they remain 38bp and 29bp below recent highs in May 2025. Wood hears US banks have used SLR relaxation to increase Treasury holdings.

💬 [E2304] China Q4 data confirms no pickup in domestic demand. Nominal GDP growth was below real GDP for the 11th consecutive quarter. Real GDP hit 5% target for 2025, but nominal growth was only 4% for the year and 3.8% in Q4. Retail sales slowed to 0.9% YoY in December, a three-year low. Residential property sales fell 9.2% YoY in volume and 13% in value for 2025.

💬 [E2290] Wood notes a significant 'information arbitrage' exists between investors who have visited China since the pandemic and those who haven't. Chinese advances in renewable energy and battery storage technology are not fully understood by American investors, who significantly outnumber those aware of these developments because they have not been going to China.

💬 [E2306] China CPI inflation rose to a positive 0.8% YoY in December while PPI became less negative at -1.9% YoY. Household consumption accounted for 39.9% of nominal GDP in 2024. Wood notes CPI should become more important than PPI if China succeeds in its stated agenda of boosting household consumption share of GDP.

🟢 [E2305] Evidence of China's anti-involution policy is appearing: manufacturing fixed asset investment growth slowed to 0.6% YoY in 2025 (vs 9.2% in 2024), implying a 7.3% YoY decline in Q4. Construction and real estate sectors' share of nominal GDP fell to 12.1% in Q4, the lowest since Q1 2009. Net exports contributed 32.7% of 2025 real GDP growth.

💬 [E2300] Market rotation is already underway from AI to cyclicals. S&P500 Energy, Materials, and Industrials have outperformed since late October. However, Wood questions whether the market can look through an AI trade unwind given that Nvidia and four hyperscalers still account for 44% of S&P500 gains since 2023.

🟢 [E2295] Wood continues to want to own gold mining stocks despite investor vertigo after the rally, as the base case is continuing fiat debasement. He notes Canadian investors understand gold mining better than other geographies because gold mining stocks are now 13.6% of the MSCI Canada index. He acknowledges some experienced gold mining investors are anxious to take profits.

🟢 [E2294] Wood argues the world is moving to a de facto gold standard. Gold now accounts for an estimated 29.8% of world official reserves (up from 18.6% at end-2024), based on current gold price of US$4,866/oz. Central banks hold more in gold (US$5.71tn at current prices) than in Treasury securities (US$3.922tn foreign official holdings as of November).

🟡 [E2293] The divergence between hyperscaler underperformance and chipmaker outperformance 'cannot go on forever' but Wood notes it can be ignored while capex projections are still rising. The long-term outlook for memory must be bullish in the AI age, but a big market reset will occur if/when returns on AI capex are really questioned.

🟢 [E2292] Classic AI stocks have been underperforming since late October while energy, materials, and industrials outperform. The market cap-weighted index of four hyperscalers and Nvidia has declined 5.9% since peaking October 29 and underperformed S&P500 by 5.7%. Energy, Materials, Industrials have outperformed S&P500 by 11.4%, 13%, and 7.6% respectively over the same period.

🟢 [E2291] Memory stocks (Hynix, Micron) have massively outperformed as they hold leverage over AI buyers. Hynix and Micron are up 193% and 236% in USD terms over the past five months as memory contract prices surged ~50% last quarter. Hynix has sold out entire 2026 production already. Meanwhile hyperscalers Microsoft, Amazon, Meta are down 14%, 5%, 5% since November.

🟢 [E2298] Wood removed Bitcoin from all GREED & fear portfolios, taking profit on a position that appreciated 335% since inception. The original investment was in Grayscale Bitcoin Trust in late June 2023 at a 29% discount to Bitcoin, transferred to VanEck Bitcoin ETF in February 2024. He notes he did not sell at the recent BTC peak of US$126,251 in early October.

🟢 [E2302] Wood's global equity portfolio is up 88% in USD on a total-return basis since inception in January 2023, compared to 74.1% gain in MSCI AC World Index. This outperformance includes the 335% gain from Bitcoin position which has now been closed.

🟢 [E2301] Wood made portfolio adjustments: removed MakeMyTrip from Asia ex-Japan portfolio, replaced with JSW Energy at 4% weight. Increased Rio Tinto, GMR Airports, Samsung Electronics by 1pp each, Samsung Life by 2pp, funded by removing Zomato. In India portfolio, replaced MakeMyTrip with Chola Finance and InterGlobe Aviation with Max Healthcare, both at 4% weight.

🟢 [E2299] The bullish thematic for US equities in 2026 is that OBBBA incentives combined with US$100-150bn of tax refunds will drive a cyclical pickup and capex cycle broadening beyond AI. However, macro data does not yet reflect this hope — non-AI investment continues to contract while AI capex dominates.

🟢 [E2288] Hyperscalers are transitioning from asset-light to asset-heavy businesses, now investing directly in energy. Alphabet acquired a renewable energy developer for US$4.75bn in December — the first time a tech company has bought an energy developer in-house, making energy capex rather than opex. Alphabet can afford this with US$141bn cash net of debt.

🟢 [E2282] Wood argues AI-related capex continues to dominate while non-AI investment contracts. Real AI-related capex (information processing equipment, software, data center construction) rose 15.3% YoY in 3Q25 and 25% over two years, while real non-residential private fixed investment excluding AI declined 2.8% YoY and was down 2.4% over two years. The capex divergence is stark and accelerating.

🔴 [E2287] Wood argues the key risk for US equities is whether markets can look through an AI trade unwind. His base case for 2026 is that investors will start to question the lack of returns on AI capex. However, he acknowledges this concern is being ignored while capex projections continue rising and the cycle can persist longer.

🟢 [E2285] Memory makers hold unprecedented pricing power in the AI capex cycle. Hynix's next fab will cost an estimated US$80bn to construct, while Micron has broken ground on a US$100bn 'mega fab' in Upstate New York. Hynix is reportedly asking major customers like Nvidia to contribute to production costs to lock in supply, with negotiations underway.

🟡 [E2286] Wood's base case remains that AI will turn out like the capex-intensive airline industry rather than a winner-takes-all network effect. The key question is when investors will start questioning returns on AI capex, with the cycle already three years old. Despite evidence of market broadening, Nvidia and four hyperscalers still account for 44% of S&P500 gains since 2023 (50% including Broadcom, Palantir, Oracle).

🟢 [E2283] TSMC announced capex guidance of US$52-56bn for 2026, up from US$41bn in 2025 — a 27-37% increase. This confirms the AI infrastructure buildout is accelerating rather than peaking, despite Wood's thesis that investors will eventually question returns on AI capex.

🟢 [E2284] The four major hyperscalers' capex is projected to increase from US$360bn in 2025 to US$480bn in 2026, a 33% increase according to consensus estimates. Wood notes this divergence between hyperscaler underperformance and chipmaker outperformance 'cannot go on forever' but is being ignored while capex projections rise.

💬 [E2289] Wood argues renewable energy purchases make more sense than financing small modular reactor development (as Meta has done). He believes the quickest way to solve America's electricity generation bottleneck from data center buildout is to import Chinese battery storage technology, though American investors remain unaware of China's renewable energy advances.