Breakfast Bites - Nvidia Earnings today

Rise and shine everyone.

Happy Nvidia earnings day to all those who celebrate. All eyes will be on numbers for Nvidia after the close - EPS Estimates for the quarter are $3.37 (+480% YoY Growth) and Revenue Estimates are $16.191B (+173% YoY) growth. Last quarter, the company put out what was thought to be an outrageous target for revenue at $11B and yet, they had a clean beat over that number delivering $13.5B. Sequential growth estimates for EPS and Revenue are 24.81% QoQ and 19.8% QoQ, respectively. These numbers are yet again outrageous. And while I have not skin in this game directly, I almost don’t want to see the company miss.

Yesterday, we saw heavy buying in NVDA ahead of today’s earnings and in Microsoft, based on the news of Sam Altman’s hiring for a special AI research team. This propelled the Nasdaq-100 to cross the 16,000 mark.

The market seems to be giving up some of those gains this morning, with US Equity Futures trading lower. Rates are marginally lower and the yield curve is inverting again at -0.49%. Oil was gaining ground earlier today but, now off it’s highs. Gold had pulled back, and now off it’s lows. The US Dollar Index continues to inch lower at 103.38. And Bitcoin remains above 37k.

The major macro news for today is the Fed’s minutes released at 2pm. It’s unlikely that we will see much in the way of a market reaction as almost all of us have already made up our minds that the Fed is on pause and rate cuts will be pulled forward for next year.

Asia and Australia

• Asian equities ended mixed Tuesday. Another strong day in Taiwan as it closes in on an 18-month high, South Korea also had a solid day.

• Hong Kong started brightly once more with its property stocks gaining but fell in its afternoon session and again failed to break its key 18K resistance level; mainland stocks were mixed.

• Australia ended with small gains, India higher, Southeast Asia mixed. Japan closed slightly lower.

• PBOC has directed banks to bring forward some of their lending projects to Q4, 2023 and cap loans in Q1, 2024, in an attempt to smooth the credit cycle. This could give equities some positive flows, although, it still seems that any good news is short-lived. We’ve reached a point where the market is now skeptical of how valid these measure will be.

• Reserve Bank of Australia minutes showed that there was a debate whether to hike or hold. Nevertheless, the minutes seem hawkish with the board concerned about not reaching inflation targets even by 2025. Added that staff forecasts for inflation would also be higher if they were not predicated on 1-2 more rate hikes. The hiking cycle for Australia may not be over.

Europe, Middle East, Africa

• European equity markets mostly weaker. Follows little change in prior session.

• BoE Governor Bailey warned in a speech late Monday it is still far too early to declare victory on inflation and it needs to make sure it gets prices all the way back to its 2% target. Said it is far too early to be thinking about rates cuts and warned there remained a risk borrowing costs might need to increase in the coming months.

• BoE is not the only one warning about rate hikes. Belgian central bank chief Wunsch warned bets on ECB rate cuts risks could prompt rate increases if it undermines the current policy stance. Said rates should stay unchanged in December and January.

• Central Bankers are trying to undo the loosening of financial conditions since the start of April as bond yields pull back and equity markets turn bullish.

• Sweden’s Riksbank to hike by another 25bps tomorrow, according to consensus. This likely to be the final hike because of lower growth concerns. Inflation is decelerating but, still remains quite high at 6.1% YoY core inflation. And the weakness in the Swedish Krona means costly imports push inflation up further.

The Americas

• Yesterday’s 20Y Treasury Auction went relatively well, with decent demand flowing in. The 20Y yield fell post auction and the TLT was 0.61% for the day. Bullish momentum continues in the pre-market.

• Demand for new credit in the U.S. over the last year has declined and will likely stay soft in the future, according to a survey released on Monday by the New York Federal Reserve. There was a "notable" decline in credit over the last year, with application rates at 41.2%, compared to 44.8% in 2022 and the pre-pandemic 2019 level of 45.8%, the regional Fed bank's quarterly Survey of Consumer Expectations Credit Access survey showed.

Chart of the Day: It seems like the market moves with Twitter Sentiment.

Calendar

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