TRUMP LEAVES CHINA, SEMIS DOWN, OPTIONS EXPIRATION DAY | MARKET OPEN

SUMMARY

Amit Kukreja provides a comprehensive analysis of a volatile market open, focusing on the aftermath of President Trump's China visit, semiconductor sector declines, and the impact of options expiration. The discussion covers geopolitical tensions, shifting investor sentiment, institutional trades, and sector rotations, with particular attention to technology, energy, and macroeconomic indicators.

MAIN POINTS

• The S&P 500 opens down 1.2% in pre-market trading, marking the first significant red day in weeks amid multiple negative headlines. [2:00]
• Nvidia stock falls after President Trump denies discussions about selling H200 chips to China, contradicting previous reports. [5:00]
• Bond yields spike, with the US 10-year reaching 4.5% and the 30-year surpassing 5% for the first time since 2007, reflecting market concerns over inflation. [7:00]
• Poet announces a $400 million dilution at $21 per share, causing a sharp pre-market drop, while other semiconductor and tech stocks also decline. [9:00]
• President Trump's China trip yields little substantive progress on major issues like Iran, Taiwan, and chip sales, leading to market uncertainty. [11:00]
• Market participants question the value of the China meeting as headlines about Nvidia and Iran are reversed or lack substance, contributing to negative sentiment. [15:00]
• US interest rate futures reflect a growing probability of a Fed rate hike by January, with expectations for rate cuts pushed further into the future. [17:00]
• Bill Ackman discloses a new position in Microsoft, joining other institutional investors in rotating into large-cap software and tech names. [19:00]
• Thrive Capital takes a rare public equity stake in Shopify, signaling confidence in the company's long-term prospects despite a recent stock decline. [21:00]
• Figma reports strong earnings with 46% revenue growth and high net dollar retention, but the broader software sector remains under pressure. [23:00]
• Amit interacts with viewers, discusses market sentiment polls, and acknowledges community milestones and personal stories. [25:00]
• Iranian officials express distrust of the US but indicate willingness to maintain a ceasefire and pursue diplomatic solutions, while Morgan Stanley revises its Fed rate cut timeline. [27:00]
• Historical market patterns suggest potential weakness from May to October in midterm years, with current conditions aligning with this thesis. [30:00]
• South Korea's Kospi and Samsung stocks drop sharply due to unresolved labor disputes, impacting global memory chip sentiment. [32:00]
• A new ETF is proposed to track GPU compute power futures, reflecting the growing financialization of AI infrastructure. [35:00]
• Options volume surges in non-traditional names like Nokia and Ford, highlighting increased retail and speculative activity in derivatives markets. [38:00]
• The market opens with mixed performance; some tech and software stocks show resilience while semiconductors and other sectors remain under pressure. [41:00]
• Amit reviews live price action, noting sector rotations, individual stock moves, and the impact of institutional trades on names like Microsoft and ServiceNow. [45:00]
• Discussion shifts to options market dynamics, with significant put buying and selling in Micron ahead of upcoming earnings. [49:00]
• Qualcomm and other US business leaders meet with Chinese officials, while global health concerns briefly surface with reports of a virus case on a ship. [52:00]
• Amit outlines his personal trading strategies, portfolio management, and the importance of conviction and mental health in long-term investing. [56:00]
• SpaceX prepares for a record-breaking IPO, targeting international retail investors to broaden its shareholder base. [1:01:00]
• Cerebras and other recent IPOs experience sharp post-listing declines, prompting caution about exuberant valuations and retail participation. [1:05:00]
• Debate continues over the valuation and future prospects of semiconductor and memory companies, with concerns about cyclicality and supply-demand dynamics. [1:09:00]
• US 30-year Treasury yields reach levels not seen since 2007, raising questions about the sustainability of current debt servicing costs. [1:11:00]
• Robinhood's ongoing product innovation and marketing strategies are discussed, with mixed reviews on recent credit card offerings and platform features. [1:19:00]
• Energy sector commentary emphasizes the continued dominance of oil and gas in global energy supply, with little progress on price containment. [1:24:00]
• Geopolitical risks around Taiwan come to the forefront as Trump signals possible changes to US arms sales policy, raising concerns about future conflict. [1:35:00]
• Jerome Powell's tenure as Fed Chair is reviewed, highlighting his defense of Fed independence, response to crises, and the legacy of asset price inflation. [1:58:00]
• Retail investor inflows remain robust, with leveraged ETF activity and cumulative purchases on track to surpass previous records if trends persist. [2:12:00]
• Institutional investors express concern about timing exits from the memory trade, while maintaining conviction in Nvidia's long-term growth. [2:25:00]
• Amit closes the session by reiterating that the day's red market action is not a cause for panic, emphasizing long-term investment discipline and upcoming events. [2:31:00]

DETAILED ANALYSIS

The trading session opened with notable volatility as multiple macroeconomic and geopolitical factors converged to drive the S&P 500 down by over 1% in the pre-market. This marked the first significant red day in several weeks, breaking a streak of persistent gains. Key contributors to the negative sentiment included conflicting reports about US-China semiconductor policy, rising bond yields, and the expiration of mid-May options contracts, all of which created an environment ripe for profit-taking and heightened uncertainty.

A central catalyst for the market's decline was President Trump's statement aboard Air Force One, in which he denied any discussion about allowing Nvidia to sell its advanced H200 chips to China. This directly contradicted earlier reports suggesting that such sales would be permitted, causing Nvidia's stock to fall sharply and triggering a broader sell-off in semiconductor shares. The reversal of this narrative also undermined confidence in the outcomes of Trump's recent trip to China, which had been closely watched for potential breakthroughs on trade, technology, and geopolitical tensions.

The China trip itself yielded little substantive progress on major issues. While Trump described the meetings as productive, there were no concrete agreements on Iran, Taiwan, or tariffs. Notably, the Chinese side appeared more interested in discussing reunification with Taiwan than in addressing US concerns about Iran or global oil supply.

This lack of tangible results contributed to a sense of market disillusionment, as investors had hoped for at least some de-escalation of international tensions or new business opportunities for US firms.

Bond markets added to the pressure, with the US 10-year Treasury yield climbing to 4.5% and the 30-year surpassing 5% for the first time since 2007. These moves signaled growing investor anxiety about persistent inflation and the potential for higher interest rates. The spike in yields was further exacerbated by disappointing Consumer Price Index (CPI) and Producer Price Index (PPI) data earlier in the week, which suggested that inflationary pressures remain entrenched.

As a result, futures markets began to price in a greater likelihood of a Federal Reserve rate hike by January, while expectations for rate cuts were pushed further into the future. Morgan Stanley and other major banks revised their forecasts, now projecting no rate cuts until at least 2027, barring a significant economic downturn.

Within equities, the technology and semiconductor sectors bore the brunt of the selling. In addition to Nvidia, other names such as Micron, Samsung, and SK Hynix experienced notable declines, particularly after news broke of unresolved labor disputes at Samsung and a sharp drop in South Korea's Kospi index. The memory chip segment, which had been a major beneficiary of the AI-driven rally, faced renewed questions about the sustainability of its growth and the risk of cyclical downturns.

Analysts and institutional investors debated whether the current demand-supply dynamics would persist or if an eventual overbuild could lead to margin compression and earnings disappointments.

Amid the volatility, several corporate actions and institutional trades stood out. Poet Technologies announced a $400 million share dilution at $21 per share, leading to a steep pre-market drop and raising questions about short-term valuation versus long-term institutional confidence. Bill Ackman's disclosure of a new position in Microsoft signaled a rotation by some large investors into established software and cloud names, even as the broader sector remained under pressure.

Thrive Capital's rare public equity investment in Shopify also drew attention, suggesting selective conviction in high-quality growth stories despite recent price weakness.

Earnings reports continued to influence sentiment, with Figma delivering impressive results—46% revenue growth and strong net dollar retention—yet still struggling to attract significant buying interest in a risk-off environment. The software sector as a whole remained bifurcated, with some names like ServiceNow and Salesforce showing resilience, while others lagged amid concerns about commoditization and competition from AI-native solutions.

Options market activity highlighted the speculative fervor and shifting risk appetite among both retail and institutional participants. Unusual volume was observed in names like Nokia and Ford, with derivatives trading outpacing that of traditional tech giants. The expiration of options contracts added to intraday volatility, as traders repositioned and hedged against further downside.

Notably, Micron saw large put buying and selling ahead of its upcoming earnings, reflecting divergent views on the stock's near-term trajectory.

The session also featured discussion of new financial products and market innovations. A proposed ETF to track GPU compute power futures underscored the increasing financialization of AI infrastructure, while the rapid growth of the DRAM ETF—reaching $10 billion in assets in just 43 days—demonstrated the intense demand for exposure to the semiconductor supply chain. At the same time, caution was advised regarding recent IPOs such as Cerebras, which experienced sharp post-listing declines and raised concerns about excessive valuations and the risk of retail investors becoming bag holders.

Geopolitical developments remained a persistent backdrop. Iranian officials reiterated their distrust of the US but expressed a willingness to maintain a ceasefire and pursue diplomatic solutions, while also signaling readiness to resume hostilities if necessary. The ongoing blockade in the Strait of Hormuz and elevated oil prices continued to weigh on global markets, with the US Energy Secretary predicting further pipeline development in the Middle East as a potential remedy.

Meanwhile, the Taiwan issue resurfaced as a flashpoint, with Trump hinting at possible changes to US arms sales policy and Chinese officials pressing for reunification. These tensions fueled speculation about the potential for future conflict and the implications for global supply chains, particularly in semiconductors.

Macroeconomic commentary addressed the challenges of navigating a market environment characterized by high valuations, concentrated sector leadership, and the ever-present risk of policy shifts. Historical patterns were invoked to suggest that midterm election years often see market weakness from May to October, and current conditions appeared to align with this thesis. However, the resilience of the AI and tech rally, underpinned by robust earnings and retail inflows, complicated efforts to call a definitive top.

Retail investor participation remained robust, with cumulative inflows on track to surpass previous records if current trends persist. Leveraged ETF activity, particularly in triple-leveraged semiconductor and Nasdaq products, highlighted the ongoing appetite for risk despite mounting macro headwinds. Institutional investors, meanwhile, expressed concern about timing exits from the memory trade, with many viewing it as a tactical opportunity rather than a long-term investment.

In contrast, conviction in Nvidia's long-term growth remained strong, with analysts projecting further upside based on its dominant position in AI hardware.

Energy sector commentary emphasized the continued dominance of oil and gas in global energy supply, with little progress on price containment despite political rhetoric. The session also touched on the legacy of Jerome Powell as Federal Reserve Chair, noting his defense of Fed independence, response to multiple crises, and the impact of monetary policy on asset prices and inequality. As Powell's term ended, attention shifted to his successor and the challenges ahead in balancing inflation control with economic growth.

Throughout the broadcast, Amit provided personal insights into portfolio management, trading strategies, and the psychological aspects of investing. He emphasized the importance of conviction, adaptability, and mental health, particularly in the face of market drawdowns and underperforming positions. The session concluded with a reminder that short-term volatility is a normal part of investing, and that long-term discipline and quality stock selection remain the keys to compounding wealth over time.

LINKS

• Amit Kukreja's Twitter/X profile for market commentary and updates.
• Amit's Deep Dives Substack for in-depth stock and market analysis.
• Registration link for the Singapore meetup event.

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