Trump Ramps Up Iran Threats Ahead of Talks | The China Show 4/10/2026
Speakers
Summary
- Markets in Asia-Pacific set for first weekly gain since the Iran war began, with Taiwan's index close to recouping all losses, signaling a shift in focus away from acute war headlines.
- Strait of Hormuz remains effectively closed with less than 10 ships passing (vs. 135 pre-war); Iran's proposal to charge tolls presents a major logistical and compliance hurdle for reopening.
- China's March PPI turned positive (+0.5%) for the first time since Sept 2022, driven by war-induced energy shock; CPI at +1% remains well below the official 2% target.
- Barclays' Jian Chang views China's inflation as manageable "cost-push," expects minimal pass-through to CPI even with $100 oil, and sees exports (especially green tech) as the key GDP driver.
- China's EV and hybrid exports surged ~140% in March due to global energy shock, but domestic sales are in a deepening slump (e.g., BYD, Tesla, Mercedes saw double-digit declines).
- Chinese airlines are disproportionately hit by oil prices due to strict regulatory caps on hedging and weak post-COVID finances; the government is considering subsidies or low-interest loans.
- Lumentum CEO states optical products are sold out through 2027 due to hyperscaler demand; the company is adding capacity but still can't keep up.
- Bank of Korea held rates, revised forecasts to lower growth and higher inflation, but Governor called the shock "temporary" and pushed back against market pricing for three hikes this year.
- JPMorgan's Julio Callegari sees asymmetry in Asia fixed income: local markets are priced for hikes, creating opportunities in rates (e.g., Australia, Korea) if central banks deliver less than expected.
- A shipping ETF (ticker not specified) is up 780% YTD, acting as a real-time market proxy for Strait of Hormuz tensions and energy flow disruptions.
- Taiwan opposition leader's meeting with Xi Jinping is framed as "deterrence through dialogue," potentially giving Beijing leverage ahead of the upcoming Xi-Trump summit.
- Beijing's vast economic investments in Gulf nations (Iran's rivals) constrain its ability to support Tehran, with Chinese infrastructure projects now caught in the crossfire.
Trade Ideas
CEO Michael Hurlston stated Lumentum "can't keep up with demand" and is "basically sold out of our products through 2027," even as it adds capacity in Japan and the US. Hyperscaler demand for optical and photonic products for AI/data centers is overwhelming current industry supply. The company is acquiring brownfield fabs to bring capacity online faster (2 years vs. 4 for greenfield). Unprecedented demand visibility and strategic capacity expansion underpin strong revenue and earnings trajectory for the medium term. A prolonged Middle East conflict could cause hyperscalers to trim capital expenditure. However, the CEO highlighted resilience from the secular copper-to-optics transition and unique products like optical circuit switches.
Up Next
This Bloomberg Markets video, published April 10, 2026, features Michael Hurlston discussing LITE. 1 trade idea extracted by AI with direction and confidence scoring.
Speakers: Michael Hurlston · Tickers: LITE