To The Moon

Macro Highlights

In Japan, Governor Ueda successfully persuaded the Prime Minister to agree to a 25bp rate hike to 0.75% in December, marking the official end of Japan’s ultra-low interest rate era. With the potential retracement of the trillion-dollar yen carry trade, markets are concerned about spillover risks. However, since this coincides with the Fed’s pause in rate cuts, the impact is expected to be less severe than the 2022 year-end “carry trade plunge.”

In the US, the Fed officially ended balance sheet reduction on Monday, signaling a key shift in liquidity direction. Markets widely expect the next FOMC to announce a Reserve Management Purchase (RMP) program, potentially starting $35B/month of short-term bond purchases from January, indicating a policy shift from “draining” to “injecting” liquidity.

Regarding signals from potential new Fed leadership, Trump has recently publicly supported Hassett, who even advocated a 25bp rate cut next week, sparking market speculation of a more dovish future policy. However, Deutsche Bank notes that even if he takes office, the 2026 U.S. economy may not support aggressive rate cuts, and internal hawkish resistance would likely limit loose policy.

On the employment front, November ADP employment fell by 32,000, the largest decline since March 2023, reflecting a weakening labor market. Nevertheless, the reaction in USD, long-term yields, and U.S. futures was limited, suggesting markets are focusing more on the upcoming nonfarm payrolls and FOMC meeting.

Big Tech Performance This Week

As of the close on December 4: Tesla: +6.5%, Meta: +4.4%, Apple & NVDA: ~+1%, Amazon, Microsoft, Google slight decline

Weekly Big Tech Highlight — What’s the Significance of Amazon’s Trainium Chip?

$Amazon.com(AMZN)$ held its AWS re:Invent conference, releasing updates on key products. The stock initially rose but ended the week down 0.02% by Thursday, reflecting market differentiation between Amazon and Google chips.

1. Trainium Updates at re:Invent

• AWS has deployed over 1 million Trainium chips.

• Trainium2: Fastest AI chip ramp in AWS history.

• Trainium3 GA: 4.4x compute, 4x energy efficiency, ~4x memory bandwidth improvement over Trainium2.

• Trainium4: Designed to remain interoperable with Nvidia, including NVLink Fusion chip interconnect technology.

2. What Does Trainium Mean for Amazon? Why Has the Stock Performed Flat?

Overall, the pace of Trainium upgrades has accelerated, with AWS building a more complete self-developed acceleration ecosystem to support its rapidly growing GenAI workloads.

Both Citi and Morgan Stanley believe that the primary significance of Trainium lies in strengthening AWS’s competitiveness and cost structure.

Large-scale deployment of Trainium allows for more controllable compute costs, helps more customers move from PoC to production, and improves the profitability structure of AWS’s GenAI services.

Given the significant cost pressures AWS faces in the GenAI competition, self-developed chips can enhance efficiency in training and inference, providing AWS with greater flexibility in pricing for enterprise customers.

However, this does not mean replacing Nvidia, nor does it create a closed-loop AI system like Google’s. At the conference, the AWS CEO emphasized a strong relationship with Nvidia, and Trainium4 is specifically designed to support Nvidia NVLink interconnects.

AWS’s GenAI clients still heavily rely on Nvidia GPUs, making Trainium a complementary rather than substitute solution.

This explains why, despite launching its own chips, Amazon’s stock declined this week while Google’s soared over 60% this year. Morgan Stanley and Citi’s latest price targets for Amazon are $315 and $320, respectively, implying a potential upside of around 35%.

Options Insight:

December monthly options show current price above max pain; recent performance is relatively strong. Max open put at $200, call at $260, little change from last week.

Why Hold Big Tech — “TANMAMG” Portfolio

Seven tech giants (“Magnificent Seven”) in an equal-weight, quarterly-rebalanced portfolio.

• Backtested since 2015: cumulative return 3137.63%, vs. SPY 300.36%, excess return 2837.26%.

• YTD 2025: big tech return 26.19%, exceeding SPY 17.79%.