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Breakfast Bites - Thu May 25, 2023

Rise and shine everyone.

The big news today is still Nvidia’s earnings beat yesterday after market and the massive raise in guidance to $11B in Q2 when they just delivered $7B in revenues for Q1. The stock is still rallying past +25%.

The rally is pulling up the S&P500 and the Nasdaq, while Dow futures remain muted, quite possibly on the news that the 3rd largest ratings agency, Fitch, has put the US on Credit Watch Negative, i.e., looking at a possible country downgrade. This rattled the markets badly the last time it happened in 2011, when the US was actually downgraded from AAA.

The US Dollar is also rallying while Copper and Gold try to recover from lows. WTI Oil declined 1.25%. Bitcoin remains below $26,500.

We have the second estimate for GDP data coming out today at 8:30am ET along with Jobless Claims.

Finally, we also have important earnings from Best Buy, Dollar Tree and Medtronic before the open and Costco, Autodesk and Ulta after the close.

Join Mayhem and Ayesha today for a Twitter Spaces at 1:30pm ET for a discussion on Macro and Markets. We will also be hosting out Thesis Thursday live on Discord at 12pm where each of us will pitch our stock picks. A recording will be posted to the feed.

Asia and Australia

  • Asian equities ended mostly lower Thursday. Japan closed mixed with Nikkei up on tech support, Topix flat. Australia closed at seven-week low. Hang Seng hit its lowest since beginning December before modest afternoon rally.

  • Bank of Korea's kept benchmark 7D repo rate unchanged at 3.5% for third consecutive meeting, as widely expected, also cut its FY23 GDP forecast.

  • Ahead of the data's release on Friday Tokyo May core inflation forecast to have moderated to 3.4% y/y from 3.5% in April. BOJ is not eyeing a policy change.

  • China's economic growth will get a bigger boost if PBOC cuts RRR for banks rather than interest rates.

  • Singapore's economy grew by 0.4% y/y in Q1 versus flash estimate 0.1% but, export outlook cut.

Europe, Middle East, Africa

  • European equity markets mixed. STOXX 600 +0.2%, FTSE 100 (0.1%), DAX unch, CAC (0.1%)

  • Q1 final GDP for Germany was (0.3%) vs 0.0% expected q/q, or (0.5%) vs (0.1%) expected y/y. - confirms a winter recession.

  • French business confidence fell back below its long-term average in May at 99 versus consensus 101 and prior 101

  • Goldman Sachs noted STOXX 600 EPS grew at fastest annual pace since 1980s since 2019, and see post-pandemic cycle remaining much healthier for EU earnings.

The Americas

  • McCarthy still optimistic of reaching debt ceiling deal in time to avert default but gaps remain on spending levels. Spending cuts will not bode well for GDP growth, since Government spending was the largest boost to Q1 GDP.

  • The May FOMC meeting minutes showed officials split on need for further hikes, as some stressed that the language in the policy statement should not be interpreted as signaling either that decreases in the target range are likely or further increases in the target range had been ruled out.

  • Yields on T-bills maturing in early June surge above 7% amid debt ceiling fears

  • Meta slashes business teams in final three-part-round of layoffs

  • Desktop Metal trading higher after report Stratasys to acquire the company, deal expected this week


(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)

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