April 16th Market Overview

Happy Wednesday.

Rough day in the markets. Stocks took a beating with tech leading the way down. New export rules blocking Nvidia chips to China hit semiconductor stocks hard. Fed Chair Powell didn't help when he warned about tariffs hurting the economy. Gold hit new records as investors ran for safety.

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Let's dig in...

Executive Summary

• The US government indefinitely imposed export license requirements for Nvidia $NVDA H20 processors to China, forcing the company to announce a substantial $5.5 billion Q1 charge related to inventory and commitments.
  

• Federal Reserve Chair Powell warned that tariffs could create a “challenging scenario” where the Fed faces difficult trade-offs between controlling inflation and supporting employment.
  

• March retail sales jumped 1.4% (vs 1.2% expected), with vehicle purchases up as consumers rushed to buy ahead of auto tariffs, raising questions about future spending sustainability.
  

• Market volatility spiked, with the VIX climbing 9.86% as gold prices achieved their largest daily gain since April 2020, signaling heightened investor anxiety about trade tensions.
  

Market Overview

Key Market Drivers

1. Chip Export Controls: US now requires licenses for Nvidia $NVDA ( ▼ 2.87% ) H20 processors to China. Company taking $5.5B Q1 charge; similar restrictions apply to AMD $AMD ( ▼ 0.9% ) MI308 chips.
   

2. Powell on Tariffs: Fed Chair warned tariffs could simultaneously increase inflation while weakening economic activity, creating policy conflicts.
   

3. Retail Sales Surge: Sales rose 1.4% in March as buyers rushed purchases ahead of tariffs, suggesting potential future weakness.
   

4. Trade Tensions Escalate: Trump ordered critical minerals import investigation, California announced tariff lawsuit, and WTO downgraded global trade forecast from +2.7% to -0.2%.
   

Stock Spotlight

United Airlines $UAL ( ▼ 1.03% ): Beat Q1 expectations (EPS $0.91 vs $0.74); dual guidance: $11.50-$13.50 EPS if economy stable, $7.00-$9.00 if recession occurs.

Semiconductor equipment manufacturer $ASML ( ▲ 0.82% ): Q1 bookings missed estimates; CEO cited tariff uncertainty but noted AI remains primary growth driver.

J.B. Hunt $JBHT ( ▲ 3.61% ): Q1 earnings fell 8%, specifically citing retailer uncertainty over tariffs.

Nvidia $NVDA ( ▼ 2.87% ): US requiring licenses for H20 exports to China; $5.5B Q1 charge; multiple analysts lowered targets (BofA to $160, Piper to $150).

AMD $AMD ( ▼ 0.9% ): Facing similar restrictions; warned of up to $800M in charges related to MI308 AI chips.

Big Name Updates

Tesla $TSLA ( ▼ 0.08% ): Pausing China parts shipments for Cybercab and Semi; Piper cut target to $400 on missed Q1 deliveries.

Meta $META ( ▼ 0.17% ): Zuckerberg offered $450M to settle FTC case, far below agency’s $30B demand.

Amazon $AMZN ( ▼ 0.99% ): Surveying US sellers on tariff impacts to assess supply chain disruptions.

Apple $AAPL ( ▲ 1.4% ): Rumored iPhone fold could exceed $2,000 at launch.

Other Notable Company News

Taiwan Semiconductor $TSM ( ▲ 0.05% ): Raising US fabrication prices by 30% due to increasing costs amid trade tensions.

FIGMA: Filed confidential S-1 for potential IPO despite market volatility.

CoreWeave $CRWV ( ▼ 4.03% ): First to bring Nvidia’s GB200 NVL72 systems to market.

Abbott $ABT ( ▲ 0.99% ): Forecasts “a few hundred million dollars” tariff impact this year, starting Q3.

Nissan $NSANY ( ▲ 2.06% ): Accelerating plans to increase US production to 80% of US-sold cars, up from 50%.

Sector Watch

Bond Market

The U.S. Treasuries declined, benchmark 10-year note yield falling to 4.341%.

In munil bonds, key House Republicans signaled they do not support altering the tax-exempt status of interest payments. This provides reassurance to the $4 trillion muni market, which finances state and local infrastructure projects like schools, roads, and sewers.

Policy Watch

Federal Reserve Developments:

• Fed Chair Powell warned tariffs create "difficult trade-offs" between fighting inflation and supporting employment

• Cleveland Fed President Hammack indicated potential need to cut rates "quickly" if growth falters, but favors holding steady amid current uncertainty

US Trade Actions:

• President Trump joined Japanese delegation negotiations focused on tariffs, military support costs, and "trade fairness"

• Commerce Department launched Section 232 investigation into critical minerals imports (rare earths, uranium) on national security grounds; findings due in 270 days

• California Governor Newsom announced lawsuit challenging Trump administration's tariff authority, citing economic harm to the state

International Responses:

• China appointed Li Chenggang, former WTO ambassador, as new top trade negotiator

• Hong Kong suspended US-bound postal shipments, citing "unreasonable" tariffs and May 2 elimination of duty-free treatment for low-value parcels

Economic Impact:

• World Trade Organization downgraded 2025 global trade forecast from +2.7% growth to -0.2% decline, directly attributing change to tariff impacts
  
  

What to Watch

1. Fed Policy Direction: Key Fed officials' upcoming statements on navigating inflation/growth trade-offs

   • Note any shift in prioritization between price stability and employment goals

   • Watch for signals of potential rate cuts if tariff impacts worsen economic outlook
     

2. Semiconductor Sector Fallout: How chip companies respond to export restrictions

   • $NVDA and $AMD management comments on strategic pivots and China market alternatives

   • Potential ripple effects on suppliers, equipment makers, and AI-focused clients
     

3. US-China Trade Escalation: Interaction between new Chinese trade negotiator and US officials

   • Signs of negotiation willingness versus hardening positions

   • Targeted retaliatory actions against specific US industries or companies
     

4. Earnings Season Tariff Impact: Company guidance reflecting trade policy uncertainty

   • Sector-specific exposure patterns across retail, manufacturing, and technology

   • Adoption of dual-scenario guidance approaches similar to $UAL's model
     

5. Critical Minerals Investigation: Progress of Section 232 probe and market implications

   • Price movements in rare earths, uranium, and dependent industries

   • Responses from key suppliers including Canada, Australia, and African nations

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- John