Editor’s note: The following is adapted from a May 9 2026 video discussion between two partners at iOne Capital. The conversation covers the U.S.–Iran conflict, semiconductors, gold, Bitcoin, private credit, and broader market risks.
Liu: A little over a month ago, we had a dedicated discussion on the U.S.–Iran conflict and its possible trajectory. At that time, the two countries were still engaged in hostilities, equity markets were under visible pressure, and uncertainty was arguably at its peak.
Looking back at that conversation, your view was that two things were likely to happen in April: either the U.S. military would provide escort operations, or the two sides would enter negotiations. After that, you expected the situation to de-escalate.
At this point, it appears that both scenarios have played out. The two countries entered negotiations in April, and over the past few days the U.S. military also conducted a trial escort operation. Iran did not make an all-out effort to obstruct it. That said, the overall pace of the situation seems somewhat slower than expected. How do you assess the current bargaining dynamics and possible outcomes from here?
Fan: At the moment, the U.S. and Iran are in a phase of limited tactical friction on the one hand, and bargaining at the negotiation table on the other. Although the U.S. escort operation was successful, forcing escorts through is not a strategically sustainable approach for Washington. It is also very difficult for Iran to accept such an arrangement.
Fundamentally, both sides would prefer to reach some form of understanding through negotiations. My base case has not changed: in the near future, perhaps this month or next month, the U.S. and Iran are likely to arrive at some type of temporary or informal agreement. Both sides will probably declare victory in their own way, and the Strait of Hormuz will begin functioning again.
Issues such as ballistic missiles, uranium enrichment, and economic sanctions may be left for later rounds of negotiations. Expectations on both sides are relatively low on those fronts.
Liu: Is that because, for both sides, reopening navigation through the Strait of Hormuz is the most beneficial and urgent objective? On other issues, the two sides have deep disagreements and little mutual trust, which makes a broader deal very difficult.
Fan: Exactly. Most of Iran’s crude oil exports pass through the Strait. Now that those exports are being blocked by the U.S., the impact on Iran’s economy is significant. Once inventories are filled, Iran could be forced to reduce production, which would create another layer of economic pressure.
Liu: So far, the blockade of the Strait does not seem to have had a visible impact on the U.S. Economy and inflation data have not been meaningfully affected. Is that one reason Trump had the confidence to block Iran’s exports through the Strait?
Fan: That should be one of the main reasons. The U.S. is now a net energy exporter and has effectively achieved energy self-sufficiency. Trump’s own policy agenda has also reinforced this trend.
Although crude oil futures prices are high, U.S. physical prices have not risen correspondingly because of domestic supply-demand conditions. At the same time, compared with the oil embargo period of the 1970s, the U.S. economy is much less dependent on energy. This is mainly due to changes in the structure of the economy and improvements in energy efficiency, both of which are clearly supported by data.
Liu: The market seems to have digested this round of risk rather quickly. The S&P 500 has now reached a new high. I remember that you said at the time that the market impact of this shock should be short-lived. It appears the market has validated that view. Is that still your assessment?
Fan: Based on the latest developments, I think we need to look at this in two parts.
The higher-probability outcome, and still our base case, is the one we discussed earlier: the Strait of Hormuz reopens. In that scenario, global oil prices would decline, and the current uncertainty would become a thing of the past.
There is also a lower-probability scenario in which the Strait remains blocked. If that persists for significantly more than one month, it would have a major impact on the global economy, especially in the Middle East, Asia-Pacific, and Europe. While the U.S. is relatively insulated, it would still be meaningfully affected. If signs of that scenario begin to emerge, markets could become volatile.
Liu: As we discussed in our previous session, however, the initiative still seems to be on Trump’s side. He knows that even in the worst-case scenario, he can still find a reason to declare victory and withdraw. Once that happens, Iran would naturally have no incentive to continue blocking the Strait.
So if markets become volatile because of the blockade, the “TACO trade” — betting that Trump ultimately backs down — may still prove effective.
Fan: I agree. Reopening the Strait of Hormuz is in the interest of the entire world, including both the U.S. and Iran. What they are really fighting over now is political face-saving and who gets to claim greater leverage. In practice, both sides are looking for an off-ramp.
That is why we often see the seemingly contradictory pattern of both sides exchanging harsh public rhetoric while privately passing messages back and forth. If the market becomes volatile again for this reason, it would most likely be a good opportunity to buy the dip.
Semiconductors: Fundamental Upside, but Valuations Now Embed a Great Deal of Optimism
Liu: Let’s turn to the sector that has seen the strongest rally recently: semiconductors. It is not just Nvidia. Over the past few weeks, CPUs have suddenly become popular again, with some suggesting they may even catch up with GPUs. U.S. semiconductor ETFs have surged more than 50% in one month, and shares of Intel and Micron have doubled.
How do you assess the current state and outlook of the industry? Is this rally fundamentally driven, or are there signs of a bubble?
Fan: The sharp rally in U.S. semiconductors has been driven mainly by two factors.
First, demand for AI inference is increasing, and the importance of CPUs within the AI value chain has been rapidly re-rated. The industry’s conventional view had been that the CPU-to-GPU demand ratio was roughly 1:8. But recent industry research suggests that this ratio may move toward 1:1 or even higher. Recent earnings from AMD and Intel have also validated strong data center demand. As a result, valuations for chipmakers and related memory companies have surged.
Second, market expectations around AI manufacturing and related onshoring have accelerated. For example, companies such as Tesla and Apple have chosen to partner with Intel. From the government’s perspective, this also aligns with a broader geopolitical security strategy that Washington is actively promoting.
From a medium- to long-term perspective, both factors represent structural tailwinds for the U.S. semiconductor industry. In other words, the rally does have fundamental support. That said, market sentiment is extremely elevated at the moment, and much of the current pricing already reflects a very optimistic scenario for the next two years.
Liu: Sentiment is clearly very strong, and that itself is a risk. From a fundamental perspective, what risks should investors pay attention to?
Fan: Beyond the fact that high valuations increase downside risk, we also need to consider the industry’s cyclicality.
For example, if technology giants reduce their future capital expenditure budgets, actual demand may fail to match the market’s very high expectations. The semiconductor industry also has its own cycles. In memory chips, for instance, some of today’s shortages could turn into oversupply over the next year.
There are also company-specific technological uncertainties. For Intel, for example, the market still needs to see whether yields for its 18A or 14A chips can meet optimistic expectations.
Of course, these risk factors are difficult to evaluate even for professional investors. Therefore, our general advice for ordinary investors is that, given the current enthusiasm in the market, exposure to this segment should be reduced to a more cautious level. We would not recommend chasing the rally at this point.
Crypto and Gold: Bitcoin’s Institutional Transition Versus Gold’s Speculative Momentum
Liu: Compared with the excitement in semiconductors, the cryptocurrency sector still seems to be emerging from a winter. Over the past month, Bitcoin and Ethereum have recovered somewhat, but overall sentiment remains cautious, and the market is nowhere near the level of enthusiasm seen at prior peaks.
Gold also fell sharply from its previous high and now appears to be trading sideways. How do you view the outlook for crypto and gold?
Fan: Crypto and gold should be analyzed separately.
For cryptocurrencies, we are at a critical transition point. On the one hand, ownership is shifting from traditional crypto-native large holders toward institutions. The four-year Bitcoin cycle remains highly influential within the crypto community, and since last September we have seen significant selling pressure.
However, so far in this cycle, Bitcoin’s drawdown has been much smaller than the one four years ago. It also appears to be stabilizing and recovering.
A key reason is institutional buying. For institutions, crypto is increasingly viewed as a medium- to long-term strategic asset allocation. They care more about macro drivers and policy-level catalysts.
My base case for this year is that macro liquidity will not be in a highly restrictive state. In particular, as industrial indicators begin to recover, once geopolitical conflicts enter a calmer phase, macro liquidity is likely to expand. That would be positive for crypto.
Another potentially more important factor is whether the crypto bill known as the CLARITY Act passes this year. This legislation is critical for financial institutions seeking to enter the crypto industry. If passed, it would help move crypto from a relatively marginal role into the mainstream and provide formal recognition from financial institutions. That could significantly accelerate application growth across the crypto industry over the next five years.
Liu: Current market predictions suggest the bill has roughly a 70% probability of passing this year, which looks fairly optimistic.
Fan: Yes. Combined with the fact that industry sentiment remains relatively depressed after the sharp decline, I believe this is a good time to add exposure.
Liu: How do you view gold?
Fan: The main narrative behind gold’s previous surge was central bank buying. That fundamental story remains valid, but from the perspective of price action, central bank purchases alone could not have pushed gold prices to such an extent. There was clearly a significant speculative component.
Another narrative was that gold could hedge geopolitical uncertainty. But if we look closely at recent price action, gold has effectively started to behave more like a risk asset. Whenever uncertainty around the Strait of Hormuz has increased and oil prices have risen, gold has actually declined. So that narrative has at least partially broken down.
Liu: Another popular argument is that gold serves as a hedge against the dollar or U.S. Treasuries.
Fan: That logic is indeed valid. But in actual data, global demand for the dollar and U.S. Treasuries has not declined meaningfully. We can see that the U.S. 10-year Treasury yield has remained relatively stable, roughly within the 4% to 5% range. Therefore, the return generated by this logic has not been particularly evident.
Taking all factors together, the primary driver behind gold’s sharp rally appears to have been speculative positioning by trend-following investors. From a historical perspective, after gold has experienced such a strong and rapid rise, it has typically entered a multi-year period of adjustment, or even contraction.
Therefore, based on gold’s fundamentals and historical precedent, we continue to advise ordinary investors to treat gold as a long-term, low-weight diversification tool rather than as a short-term directional trading vehicle.
Private Credit: A Contained Risk, Not a Systemic One
Liu: Finally, let’s discuss some risks in the U.S. market. One area that attracted attention recently was private credit. How do you assess the impact of this risk?
Fan: The risk in private credit is rooted mainly in the revaluation of the software industry caused by the impact of AI. After the selloff in SaaS stocks, investors began questioning the value of private loans to companies in the sector. That led to redemption pressure at related funds and created a self-reinforcing cycle, resulting in liquidity risk.
However, this risk is limited to specific industries and specific product structures. It is not a systemic risk. Default rates remain low, around 2%. Risk exposure at banks and other large institutions is manageable.
From the perspective of public markets, share prices in the sector have already digested the initial wave of panic. For example, if we look at the SaaS-related ETF IGV, we can see that it has already begun to rebound from the bottom.
In fact, I believe the market likely overestimated the damage AI would cause to the software industry during the panic phase. Leading SaaS companies, because of their data integration capabilities, compliance barriers, and customer stickiness, are likely not only to continue growing but also to use AI to strengthen the competitiveness of their products.
For long-term investors, it may be worth considering selective bottom-fishing through ETFs or leading companies in the sector.
Market Risks for the Rest of the Year
Liu: Aside from the geopolitical macro risks and private credit risks we discussed, what other identifiable risks do you see for the remainder of this year?
Fan: I believe the policy approach of the new Federal Reserve Chair, Walker, could become a source of market volatility.
This is not necessarily because I have a specific view on Walker personally. Rather, it is based on historical patterns. Generally speaking, during the first two to three months after a new Fed chair takes office, markets tend to be relatively nervous. There is usually a period of adjustment between the market and the new Fed chair.
That said, these adjustment periods typically end with markets regaining stability. Therefore, if we see meaningful volatility, it could again become a buying opportunity.
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