Macro Matters

Fed Minutes Show Officials Rally Around Higher-for-Longer Rates

During their early May meeting, Federal Reserve officials agreed on maintaining higher interest rates to tackle inflation, with many expressing concerns that current policies might not be strict enough. The recent minutes reveal a readiness to implement tighter measures if necessary, though there's also room for a more measured approach if inflation consistently moves towards the 2% goal or if the job market weakens unexpectedly.

ECB Rate Path Beyond June Looks Increasingly Uncertain

The European Central Bank is motivated to deliver its first interest-rate cut in June, but the path afterwards is increasingly uncertain, given sticky inflation and wages, rates strategists at Societe Generale Research say in a note. Terminal rate expectations reached new highs above 2.75% and may well continue to 3.00%, driving the 10-year German Bund yield back to the 2.75%-3.00% area, they say. "Yet, it is hard to expect much more as long as the ECB remains biased towards policy easing." The 10-year Bund yield is trading 1 basis point lower at 2.60%, according to Tradeweb.

US existing home prices accelerated in April

The report from the National Association of Realtors on Wednesday showed the median price for existing homes soared by 5.7% compared to the previous year, reaching $407,600, setting a record for the month of April. An increase in home prices was observed across all four regions. Notably, at least 27% of homes sold in the past month fetched prices above their listed values, suggesting that bidding wars were common in certain localities.

Smart Money Flow

AI and Tech stocks have seen the largest increase in ownership breadth over the last 12 months (richard)

"'Long copper' has become a crowded trade, with net speculative long positioning increasing significantly in recent weeks."

JPMorgan Says Hedge US Election Risk for Mexican ‘Super Peso’

JPMorgan Chase & Co. warns that the US elections in November might bring more instability to the Mexican peso than Mexico's own elections. The bank recommends investors hedge their risks by engaging in a specific derivatives strategy: selling a three-month digital call option on the USD/MXN with a strike price of 18.50, while simultaneously taking a longer, six-month position on a digital call at the same strike, according to strategists Saad Siddiqui and Tania Escobedo Jacob.

Crop Index Erases 2024 Loss, Rekindling Food Inflation Worries

Adverse weather has sparked a rebound in a Bloomberg farm commodity index, hinting at a possible rise in consumer food prices due to tighter supplies from wheat to coffee. The index has seen its largest weekly jump since July, moving away from its 2024 lows and raising concerns about persistent higher crop costs amid climate change and geopolitical issues.

Top Corporate News

NVIDIA's financial report stated, "The Blackwell platform has been fully put into production and is expected to be delivered to customers this year."

Jensen Huang stated in latest earnings call that the Blackwell architecture GPU will start shipping in the second quarter, ramp up production in the third quarter, and is expected to be deployed in customer data centers in the fourth quarter. It is expected that Blackwell will bring in a substantial amount of revenue this year.

Alphabet, Meta Offer Millions to Partner With Hollywood on AI

Alphabet Inc. and Meta Platforms Inc. are in talks with Hollywood studios to license content for their AI video generation tools, offering hefty sums for partnerships. Similarly, Microsoft-backed OpenAI is engaged in discussions, though all parties have remained tight-lipped about the negotiations. Studios are interested in AI's cost-cutting potential but are cautious about content rights and unauthorized use—concerns highlighted by Scarlett Johansson's recent objection to OpenAI's use of her likeness without permission.

Tesla Posts Jobs for AI and Autopilot After Weeks of Staff Cuts

After a period of significant layoffs, Tesla Inc. is showing signs of expanding its workforce, with 17 new job listings in the San Francisco area focused on Autopilot and AI technology—primarily engineering roles. This is a notable change from the sparse career page seen in recent weeks, amidst company-wide cuts that are anticipated to affect at least 10% of Tesla's staff by June.

Intuit's TurboTax Lost 1 Million Free Users This Tax Season

Intuit Inc. reported tax season revenue that exceeded estimates as more customers opted for higher-priced features. Still, the shares fell on investor concerns about a loss in the number of people who use the company’s TurboTax service for free.

Fiscal third-quarter revenue increased 12% to $6.74 billion, Intuit said Thursday in a statement. Analysts, on average, estimated $6.64 billion, according to data compiled by Bloomberg. The period that ended April 30 — including tax season — is the most critical for the maker of TurboTax and other financial software. Profit, excluding some items, was $9.88 a share, while analysts, on average, projected $9.38.

Temu-Owner PDD’s Sales Soar After Global Drive Gains Pace

PDD Holdings Inc. saw its shares jump 6% on the back of a robust earnings report, with revenue more than doubling to 86.8 billion yuan ($12 billion) and net income soaring to 28 billion yuan, marking its second consecutive quarter of triple-digit growth. The retailer's success, partly due to expanding beyond the unpredictable Chinese market into places like the US, is a positive sign for Hong Kong's market. Despite challenges from a rocky Chinese economy and strong performance expectations set by outpacing giants like Alibaba and Tencent, PDD's recent results show promise for the post-Covid Chinese economic landscape.

Astra Aims to Almost Double Sales to $80 Billion by 2030

Aiming high, AstraZeneca Plc, under CEO Pascal Soriot's direction, has set an ambitious goal to nearly double its sales to $80 billion by 2030, building on a successful pivot to cancer treatments. Last year's revenue of $45.8 billion will be bolstered by launching 20 new medicines by decade's end, five more than initially planned, with a significant portion expected to emerge from its oncology division and potentially rake in over $5 billion each per year. This announcement comes as AstraZeneca gears up for its first investor day in a decade, signaling Soriot's commitment to maintaining a leading position in the cutthroat cancer drug market and expanding into burgeoning areas like weight-loss treatments.

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