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Good morning! It’s Thursday and we’re covering the troubling chip sell-off, Jerome Powell’s economic outlook, and the surge in retail sales data. Was this email forwarded to you? Join 190,000 self-directed investors and sign up here. 

Risking chips on the table

It’s rare for a single 24-hour period to provide a snapshot of the entire market. Rarer still when that snapshot begins with Nvidia announcing a $5.5 billion charge on restricted chips and ends with the most bearish investor survey in decades. 

But here we are. 

Over the last trading session, markets reacted negatively to the news that Nvidia would need a new license to export H20 chips — originally engineered to skirt Biden-era export controls — to China and other countries. AMD followed with a warning of its own $800 million charge from US curbs on its chip exports to China. 

Those two stocks shed more than 9% each Wednesday, and the semiconductor industry at large erased more than a quarter of a trillion dollars in market value.

Meta and Apple also both dropped roughly 4%. 

Those are jarring figures in any context.

What’s more troubling is that these trade war developments landed alongside the latest Bank of America Global Fund Manager Survey, which revealed a generational collapse in sentiment: 

• 5th most bearish survey in the last 25 years

• A record 82% of investors forecast weaker global growth

• Nearly half of respondents expect a “hard landing”

• 80% say the biggest tail risk is a trade war triggering a global recession

The results suggest something deeper than a stretch of bad tape.

That makes semiconductors — arguably the most future-looking corner of the market — a timely litmus test.

Buying a chip stock is no longer a straightforward bet on AI, but a gamble on the stability of the global economic order. 

Indeed, Nvidia’s position in the AI boom has been so dominant that even its lower-tier chips had massive demand. The fact that those now require a special license to sell into China — a market that accounted for an estimated $16 billion in H20 demand — illustrates how fast politics can outpace innovation. 

The same week Nvidia disclosed its $5.5 billion setback, it rolled out a $500 billion plan to manufacture AI technology in the US. What looked like an olive branch to the White House have already been forgotten by markets. The structural headwinds might be too big to ignore.

Chip stocks have long powered the “US exceptionalism” narrative. But the majority of fund managers, according to BofA, say that theme has now peaked. 

It’s hard to know what to rally behind when the sector that’s meant to define the future looks so vulnerable. 

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Market snapshot

Elsewhere:

📊 Jerome Powell sees an economic puzzle ahead. The Fed chief said Wednesday that it will be difficult to balance inflation with economic growth in the coming months as tariffs roll out. He gave no indication on rates: “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance.” (WSJ)

📈 Retail sales surged in March. A jump in vehicle purchases helped fuel consumer spending last month, with buyers rushing to auto dealerships to get ahead of potential tariffs. The data rose 1.4% in the last month from February, above the 1.2% expected and the highest since January 2023. (Yahoo Finance)

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Rapid-fire:

• Apple’s market cap dropped below $3 trillion as the stock dropped more than 2.3% Wednesday (Yahoo Finance)

• OpenAI says its newest AI model can “think with images” and even understand low-quality sketches (CNBC)

• Treasury Secretary Scott Bessent urges US CEOs to stop worrying about tariffs and get back to business (Yahoo Finance)

• California is almost out of its pandemic-era inventory hole (ResiClub)

• There are more than 37 million crypto tokens in existence today (Pomp Letter)

• Wall Street’s trading desks just logged record revenue from volatile equity trading in the first quarter (CNBC)

Last thing:

About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].