Breakfast | Federal Reserve Chairman hints at delaying rate cuts to hit the stock market, major changes in NYSE settlement imminent

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Overnight Morning Market

Federal Reserve Chairman Powell's remarks hinting at delaying rate cuts further weakened the market's bets on Fed rate cuts. Among the three major US stock indexes, only the Dow closed higher, while the S&P and Nasdaq fell for three consecutive days. The small-cap Russell 2000 index fell by 0.42%, underperforming the broader market and falling for three consecutive days.

Tesla fell by 2.7%, extending its three-day decline. Apple dropped by 1.9%, Alphabet by 0.3% for the third consecutive day, Amazon for three consecutive days, while Microsoft and Netflix maintained gains throughout the day. Nvidia maintained gains throughout the day, AMD rose by nearly 2%. Super Micro Computer (SMCI) rose by nearly 11%, Astera Labs (ALAB) rose by 4.5%.

Overall, popular Chinese concept stocks continued to decline, underperforming the broader market. Xiaomi fell by nearly 2%, Nio dropped by over 2%, Li Auto fell by nearly 0.7%, XPeng dropped by 0.4%. Caviar supplier Richemont Group ADR (TWG) fell by 51.50% on its first day of listing, Bilibili dropped by over 2%, NetEase by nearly 2%, Alibaba and JD.com by over 1%, Pinduoduo by nearly 0.7%.

Blue Chips and Hot Stocks

Meta Platforms launches new WhatsApp chat filters.

Amazon's US PRIME membership grew by 8% to a historic high of 180 million.

Boeing whistleblower: 787 aircraft should be grounded.

Musk: Tesla is simplifying its sales and delivery systems.

Bank of America's first-quarter revenue was $25.98 billion, a 1.6% year-on-year decrease, better than the market's expected $25.46 billion, with investment banking revenue increasing by 35% year-on-year.

Morgan Stanley's first-quarter net revenue was $15.136 billion, a 4% year-on-year increase; net profit attributable to company shareholders was $3.412 billion, a 14% increase. Investment banking revenue increased by 19% year-on-year.

Johnson & Johnson (JNJ.N) first-quarter sales were $21.38 billion, in line with market expectations of $21.39 billion. Adjusted earnings per share for the first quarter were $2.71, exceeding market expectations of $2.65.

LVMH Group's first-quarter revenue was €20.69 billion, below market expectations of €21.18 billion. Fashion and leather organic sales increased by 2%, below the market's expected growth of 3.22%.

JD.com's CEO Liu Qiangdong made his first appearance on AI digital live streaming, with over 10 million viewers in both of JD's major procurement and sales live streaming rooms.

Media: Apple CEO Cook aims to improve investment quality in Vietnam.

Veteran US game publisher Take-Two will lay off 5% of its workforce, cancel multiple projects in development, aiming to reduce costs. As of the end of the last fiscal year, Take-Two had a total of 11,580 full-time employees.

Alibaba's Alimama launches "Full-Site Promotion", a product that, with the help of a payment-free linkage mechanism, can activate Taobao's overall traffic delivery and improve overall ROI, driving a comprehensive increase in transaction volume, based on LMA's large model technology, it can provide AI intelligent product selection recommendations for merchants.

Chips and Artificial Intelligence

DeepMind CEO: Google will invest over $100 billion in artificial intelligence Adobe explores collaboration with OpenAI to enhance AI video tools. Equipped with NPU unit, supports WiFi 7. The Ryzen Pro 8040 series and Ryzen Pro 8000 series both adopt 4nm process technology.

AMD launches the latest chips Ryzen Pro 8040/8000 series for AI computers.

Baidu releases Wenxin Big Model 4.0 Tool Edition, reducing inference costs to 1% of a year ago; Wenxin One Word user base and API daily call volume both exceed 200 million.

Startups

Microsoft announced a $1.5 billion investment in UAE AI giant G42 on Tuesday.

Baichuan Intelligence completes a new round of financing worth hundreds of millions of dollars, with a valuation potentially exceeding $13 billion this year.

IPO Opportunities

Market news: Japanese chip maker Kioxia plans to go public as early as October.

UK trading services provider Marex Group plans to go public in the US to raise $300 million, with an offering price of $18-21 per share.

Macro: Insights into the World

Inflation remains sticky, Fed Chair hints at delaying rate cuts

Powell stated that inflation lacks further progress. The central bank may need more time to gain confidence in the rate cut. Given the strong labor market and progress in inflation so far, allowing restrictive policies more time to work, letting data and evolving prospects guide the Fed would be appropriate.

"Fed Whisperer": Powell lowers rate cut expectations

Nick Timiraos wrote that Fed Chair Powell's remarks indicate a significant shift in the Fed's outlook after inflation data has been stronger than expected for the third consecutive month, seemingly dispelling hopes of a preemptive rate cut by the Fed. Powell also hinted that if inflation is stronger than expected, further rate hikes are less likely.

Fed Vice Chair Jefferson: If necessary, policy will remain restrictive for a longer period.

ECB President Lagarde: Will cut rates quickly unless there is a major setback.

Andrew Grantham, economist at the Bank of Nova Scotia: It is reasonable for Canada to start cutting rates in June.

NYSE to implement T+1 settlement from May 28

NYSE (New York Stock Exchange Main Board Market), NYSE American, NYSE Arca (New York Stock Exchange High Growth Board Market), NYSE Chicago, and NYSE National will adopt T+1 settlement. The settlement date for trades occurring on May 24 and May 28 will be May 29, with no ex-dividend securities on May 28.

Xi Jinping meets with German Chancellor Scholz. Xi Jinping emphasized that the more turbulent the world is, the more both sides need to enhance the resilience and vitality of their bilateral relationship.

China's National Healthcare Security Administration and other departments: Launch a special campaign nationwide to rectify illegal activities related to healthcare funds.

China Securities Regulatory Commission: Companies with high R&D intensity or investment will not be subject to delisting even if dividends do not meet the standard.

Russia considers lifting export duties on gold Canada will raise capital gains taxes for companies and individuals.

Japan intervened in the yen market last night, causing the USD/JPY to drop nearly 100 points rapidly.

A member of the Bank of Korea stated that the recent weakening of the Korean won exceeds that of other currencies, but is not enough to cause concern.

The Indonesian rupiah fell below 16,000 against the US dollar for the first time since 2020. The Indonesian central bank conducted three interventions to stabilize the exchange rate of the Indonesian rupiah.

Amid escalating war risks, options traders are betting on oil prices rising to $250. About 3,000 contracts of June call options for US crude oil with a strike price of $250 were traded at a unit price of one cent. This is likely a "lottery ticket" trade, where if prices soar to unprecedented levels by mid-next month, the ticket could be a winner