📉 NVDA's Earnings: Stock Plunges

Good Morning!

The tech rally hits a speed bump as Nvidia's stellar earnings still fall short of sky-high expectations. Markets turn red, with Taiwan's TSMC sliding 2% and Nasdaq futures dipping 0.7%. All eyes now on German and Spanish inflation data, potentially influencing ECB's policy decisions. U.S. jobless claims also in focus as Powell monitors labor market health.

In today’s email:

• NVDA: Stellar earnings but stock down 7%!

• Bitcoin: Still sitting here around $59k, jobs data in focus

• OpenAI: Raising a round at $100 Billion+ valuation

• NFTs: OpenSea served with a Wells Notice

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THE BIG IDEA

Nvidia's stellar earnings report met with market skepticism, highlighting challenges in the AI-driven tech sector

In a plot twist worthy of a Silicon Valley thriller, Nvidia's latest earnings report has left Wall Street scratching its head. Despite crushing expectations with a 122% year-over-year revenue surge to over $30 billion and forecasting an 80% jump to $32.5 billion for the current quarter, Nvidia's stock took a 7% nosedive in after-hours trading.

Why the long face, Wall Street? It seems Nvidia's success has become its own worst enemy. The AI chip titan has been riding high on the artificial intelligence wave, ballooning its market cap to a cool $3 trillion+. But with great valuation comes great expectations, and even beating analyst estimates wasn't enough to satisfy the market's insatiable appetite for growth.

The plot thickens with whispers of "buyside expectations" in the $33-34 billion range, making Nvidia's forecast look like small potatoes in comparison. Add a slight dip in gross margins to 75.1% from 78.4%, and you've got a recipe for investor jitters.

But don't write off Nvidia just yet

CEO Jensen Huang is betting big on the future, claiming next-gen AI models will demand "10, 20, 40 times" more computing power. With plans to ship "several billion dollars" worth of cutting-edge Blackwell tech this quarter, Nvidia's not backing down from the AI arms race.

As the dust settles, one thing's clear: in the high-stakes world of AI chips, even perfection might not be good enough. Nvidia's rollercoaster ride serves as a cautionary tale for tech giants everywhere – in the AI gold rush, expectations can be your toughest competitor.

MARKETS AT A GLANCE

TOP NEWS

Bond markets face reality check after summer rally

The bond party's cooling off. After a sizzling summer run, government bonds are sobering up to economic realities. Treasury yields took a nosedive, but don't pop the champagne yet. With inflation still lurking and a nail-biter U.S. election ahead, this rally might hit a wall. Smart money's betting on a soft landing, not a crash. Time to reassess those portfolios!

OpenAI seeks $100 billion+ valuation in new funding round, led by Thrive Capital

AI powerhouse OpenAI is eyeing a jaw-dropping $100 billion+ valuation in its latest funding round. Thrive Capital's leading the charge with a cool $1 billion investment. This comes hot on the heels of OpenAI's SearchGPT announcement, potentially shaking up Google's search dominance. With skyrocketing revenue and a slew of new products, OpenAI's betting big on its AI-powered future.

China's property market fix faces slow progress, but officials remain committed to long-term reforms

Beijing's grand plan to rescue the housing market is off to a sluggish start. Only a fraction of the 300 billion yuan lifeline has been tapped, and cities are dragging their feet on buying unsold homes. Officials are playing the long game, aiming to transform the sector into a stable economic pillar. Sure, it might mean short-term pain and a slower recovery, but China's betting on sustainable growth over quick fixes. Will this cautious approach pay off? Only time will tell.

CRYPTO

SEC's Wells Notice to OpenSea sparks industry-wide outrage, raising concerns about NFT regulation and crypto innovation

OpenSea's Wells Notice from the SEC has set the crypto world ablaze. The agency's threat to sue the NFT giant for securities violations has unleashed a storm of criticism from industry heavyweights. From the Winklevoss twins to crypto advocates in Congress, the consensus is clear: This move reeks of overreach.

Uniswap and Across propose ERC-7683, a new Ethereum token standard to tackle liquidity fragmentation in DeFi

Uniswap Labs and Across Protocol have introduced ERC-7683, a new Ethereum standard for cross-chain intents. This proposal aims to solve liquidity fragmentation issues in DeFi by creating a unified framework for cross-chain actions. The standard simplifies complex blockchain interactions, allowing for automated, user-friendly token swaps across chains. While designed for Uniswap X, it's open for any DApp to implement, potentially revolutionizing cross-chain liquidity management.

Hong Kong's Project Ensemble is pioneering tokenization in banking with its new CBDC sandbox

Hong Kong has launched a sandbox for Project Ensemble, targeting the integration of tokenization into traditional banking through a wholesale central bank digital currency (CBDC). Key players like HSBC and Microsoft are involved, focusing on areas like green finance and liquidity management. This initiative aims to redefine interbank settlements and enhance financing efficiency, marking a pivotal step in the evolution of digital finance in the region. Eddie Yue from the HKMA emphasized the strong industry interest in innovative solutions since the project's inception in March.

Arthur Hayes: Fed's rate cut strategy likened to consuming sugar for quick energy, with potential consequences for global markets

Here's the skinny: As the Fed, BOE, and ECB cut rates, the yen's flexing its muscles. This currency shake-up could trigger a massive unwinding of yen-financed positions, potentially derailing the market's sugar rush. But fear not! Our monetary maestros have a backup plan. If things go south, expect the Fed to crank up the money printer faster than you can say "quantitative easing." It's all part of the pre-election playbook to keep the markets riding high.

GOLD

Dollar's share in global reserves declines, gold gains prominence amid geopolitical tensions

The US dollar's dominance in global foreign exchange reserves is waning, dropping from 71% in 2001 to 54.8% in Q1 2024. Central banks are diversifying into lesser-used currencies and gold, with the latter's inclusion pushing the dollar's share to 48.2%. This shift, driven by geopolitical tensions and sanction risks, could eventually constrain US debt financing and impact global financial stability.

DAILY ECONOMIC CALENDAR (ET)

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