Markets are adjusting to the Fed’s latest signals—and investors are recalibrating fast. In this week’s Steady Investor, we unpack the forces moving sentiment, including:
- Volatility returns–and it may stick around
- Fed signals tough road ahead as trade disputes intensify
- The U.S. ramps up chip export restrictions again
Market Volatility is Back, and Likely Here to Stay for a While – Following the intense volatility last seen in 2020 during the pandemic, markets have remained relatively calm. That period appears to be over. The stretch of calm was historical in nature—356 sessions without a single-day S&P 500 drop of 2% or more. In 2025, however, all major U.S. indexes are down at least 6% year-to-date, with the Nasdaq falling into bear market territory, having shed over 20% from its high.Market turbulence has intensified, with trillions in equity value swinging in and out of the market in minutes, and recession expectations fluctuating by the hour. The Cboe Volatility Index (VIX) recently hit its highest level since the pandemic-induced crash, then experienced its biggest one-day percentage drop ever.1
Volatility Index, 2020 – Present
Worried About a Recession? Make Sure Your Portfolio is Ready
Fast-moving tariffs, global trade tensions, and caution from the Fed are pointing to more than just short-term volatility. These shifts could signal the end of the relative stability investors have enjoyed in recent years.
The truth? You can’t predict the next recession—but you can prepare for it. Our free guide—A Recession is Coming: 6 Insights to Know You’re Prepared1— was designed to help protect your portfolio through uncertainty.
Inside you’ll learn:
- Signals and indicators of a coming recession
- The typical scope and impact of recessions
- Key strategies to protect your portfolio in a market downturn
- Avoiding the biggest mistake investors make in a recession
- Plus, more insights that may help investors get through the next recession with minimal damage
Download Your Copy Today: A Recession is Coming: 6 Insights to Know You’re Prepared3
Last week, more than 98 billion shares traded hands on the NYSE and Nasdaq—the highest weekly volume on record. Options trading shows a surge in defensive positioning, with investors buying VIX call options betting on the index hitting 55 or 60 (vs. 32.64 currently) and hedging with S&P 500 put options. Skew—a measure of demand for downside protection—is at its highest level since 2020. Despite the wild swings, however, corporate earnings reports for Q1 are expected to be solidly positive, offering a counterpoint to the volatility. With trade uncertainty taking center stage, however, investors should likely expect volatility to continue. Just remember, it works both ways—up and down.
Fed Chairman Warns of “Challenging Scenario” for Policy as Trade Fights Escalate – In a widely discussed speech this week, Federal Reserve Chair Jerome Powell acknowledged the difficult position the central bank faces as it tries to navigate the economic risks arising from an escalating trade war. With tariffs intensifying under President Trump’s trade policies, Chairman Powell emphasized that monetary policy has limitations in addressing the fallout of such unpredictable and politically-driven developments.Speaking at a central banking conference, Powell noted that while the Fed is prepared to act as needed to support the economy, it cannot fully offset the uncertainty and direct disruptions caused by trade tensions. This includes damage to business confidence, supply chains, and global growth, all of which complicate the Fed’s decision-making.Markets are responding accordingly. Expectations are building that the Fed may be forced to cut rates, not because of weakness in traditional economic indicators like employment or inflation, but to buffer against volatility. In this high-stakes environment, Powell faces the challenge of reassuring markets without overreacting to transient shocks. As tariffs bite and uncertainty grows, the Fed may need to act—but its tools may not be enough to fully neutralize the fallout from an unpredictable trade war.4
The U.S. Continues to Tighten Export Controls on Chips – The Trump administration’s latest export restrictions on advanced AI chips mark a significant escalation in U.S.-China tech tensions, with major investment implications for semiconductor companies and global supply chains. The new controls prohibit Nvidia and AMD from selling high-performance AI chips—specifically Nvidia’s H20 and AMD’s MI308—to Chinese buyers, blocking a critical channel of growth for both firms.Nvidia, which had previously modified chips to navigate earlier restrictions, now faces steeper hurdles. The company reported $12 billion in H20 chip sales to China last fiscal year, representing 70% of its China business. Orders surged to $18 billion in Q1 2025 alone, largely driven by Chinese hyperscalers like Alibaba, Tencent, and ByteDance—many of which rushed to buy ahead of the ban. Nvidia now expects a $5.5 billion hit in Q1 due to the new rules; AMD forecasts up to $800 million in charges.This policy shift reinforces U.S. efforts to slow China’s AI development while reshaping the global chip market. Additional U.S. export decisions expected in May could further shape global capital flows and tech sector valuations.5
Recession Fears Looming? Make Sure Your Portfolio is Ready – Recession fears are real, and market swings in response to trade tensions only add to the uncertainty. Trying to time the market or react impulsively to policy changes isn’t a strategy—it’s a risk.
With volatility intensifying and recession risks on the horizon, preparation is key. We recommend downloading our free guide, A Recession is Coming: 6 Insights to Know You’re Prepared6 to learn how long-term investors can stay resilient through uncertainty.
Inside, you’ll get insights on:
- Signals and indicators of a coming recession
- The typical scope and impact of recessions
- Key strategies to protect your portfolio in a market downturn
- Avoiding the biggest mistake investors make in a recession
- Plus, more insights that may help investors get through the next recession with minimal damage
Disclosure
2 Fred Economic Data. April 17, 2025. https://fred.stlouisfed.org/series/VIXCLS
3 ZIM may amend or rescind the guide “A Recession is Coming: 6 Insights to Know You’re Prepared” for any reason and at ZIM’s discretion.
4 Wall Street Journal. April 16, 2025. https://www.wsj.com/economy/central-banking/powell-warns-of-challenging-scenario-for-fed-in-cushioning-trade-war-fallout-81d17965?mod=djemMoneyBeat_us
5 Wall Street Journal. April 17, 2025. https://www.wsj.com/economy/trade/trump-chip-exports-nvidia-h20-china-amd-d2c4c866?mod=economy_lead_pos1
6 ZIM may amend or rescind the guide “A Recession is Coming: 6 Insights to Know You’re Prepared” for any reason and at ZIM’s discretion.
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