NACHO Is On, But Memory Chipmakers' Rally Isn’t Over

The nothing-burger that came out of the Xi-Trump summit drove home a new reality for global investors. The NACHO trade, which stands for “not a chance Hormuz opens,” is on. Prospects of prolonged inflation have risen, sending global bond yields higher and the US dollar stronger.

This sudden turn of risk sentiment threatens to knock AI stock frenzy off course. Heading into President Donald Trump’s visit to China, the MSCI World Semiconductor Index had rallied 47% this year, as if an energy shortage caused by the Iran war didn’t matter at all. Trump said he didn’t push China’s Xi Jinping to pressure ally Tehran to reopen the Strait of Hormuz, disappointing investors who had hoped for a quick resolution over one of oil trade’s most important routes.