Breakfast | The Fed's hawkish minutes, the Dow posted its biggest monthly decline this month, and Nvidia broke through $1000 after hours

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Overnight Morning Market

The minutes of the Federal Reserve meeting showed that due to poor first-quarter inflation data, Fed officials expect to wait longer than they previously expected to have more confidence in inflation reaching the target, implying that they are not in a hurry to cut interest rates and high rates will be maintained for longer. Several officials also expressed their willingness to raise rates further once inflation reignites.

U.S. stocks closed under pressure on Wednesday due to the hawkish minutes of the Federal Reserve meeting, with all three major indices falling.

Nvidia fell nearly 0.5% during the day, with its stock price breaking $1000 after hours and rising 5.4% after hours, potentially increasing its market value by $110 billion. Tesla fell nearly 3%. Apple fell nearly 0.8%; Alphabet fell 0.8%, Netflix fell nearly 1.6%; Microsoft rose over 0.3%, hitting a new closing high for two consecutive days; Meta rose nearly 0.7%; Amazon closed roughly flat.

Most popular Chinese concept stocks continued to decline. Photovoltaic stocks rose across the board, with Daqo New Energy, JinkoSolar, and Canadian Solar rising by over 17%, 17%, and nearly 15% respectively. New energy vehicle startups all fell, with ZEEKR falling 2%, Li Auto down 0.9%, Nio down nearly 0.2%, and XPeng down over 0.2%. Pinduoduo initially rose nearly 7.6%, closing up 1.1%, with a market value still exceeding Alibaba's. Alibaba fell 4%, Baidu fell over 2%, JD.com fell nearly 2%, Tencent Music fell nearly 0.9%, NetEase fell nearly 0.6%, and Bilibili rose nearly 1%.

Blue Chips and Hot Stocks

Pinduoduo's first-quarter performance exceeded expectations, operating profit surpassing Alibaba

Pinduoduo's first-quarter revenue was 86.81 billion yuan, exceeding market expectations of 75.6 billion yuan and compared to 37.64 billion yuan in the same period last year. Operating profit increased by 275% year-on-year to 25.97 billion yuan, net profit attributable to ordinary shareholders increased by 246% to 28.00 billion yuan; non-GAAP adjusted net profit increased by 202% year-on-year to 30.60 billion yuan, significantly exceeding the expected 15.53 billion yuan.

Chen Lei, Chairman and Co-CEO of Pinduoduo Group, stated that the e-commerce industry is in a rapid development stage, with competition and opportunities accelerating. The significant intensification of industry competition in the past quarter will inevitably increase the company's expenses in the future; at the same time, the emergence of a large number of new technologies and markets will bring huge space and opportunities. Chen Lei emphasized that the company's performance development is not linear, sometimes "doing well," sometimes "deviating," and should not be simply measured by the performance of a quarter.

Chen Lei of Pinduoduo: Fighting hard will not overly focus on the short-term growth of Pinduoduo, but will focus on strengthening the three capabilities of supply chain, compliance, and service.

Nvidia's net profit surged by 628%, announces 1-for-10 stock split, revenue and guidance both exceed expectations

Nvidia's first-quarter sales and profits exceeded expectations, and it made a strong forecast for the second quarter. First-quarter revenue was $26 billion, exceeding the market's expectation of $24.65 billion and compared to $7.19 billion in the same period last year. Q1 data center revenue was $22.6 billion, with the market expecting $21.13 billion. Forecasted second-quarter revenue of $28 billion, with the market expecting $26.61 billion. Dividend for the quarter increased by 150% In the past year, with giants like Google and OpenAI purchasing billions of dollars worth of NVIDIA GPUs, the company's revenue has soared, with data center sales increasing by 427% year-on-year to reach $19.4 billion. NVIDIA's CFO Colette Kress attributed this to the shipment volume of the Hopper GPU, including the H100 GPU.

NVIDIA CEO Jensen Huang: The Blackwell chip will start shipping in the second quarter, with production ramping up in the third quarter. Currently, there are approximately 15,000 to 20,000 cross-disciplinary generative AI startups waiting to become NVIDIA's customers. The new chip Blackwell has already been fully put into production. Demand for the H200 and Blackwell far exceeds supply, and this situation may continue into next year.

NVIDIA: Has supplied unregulated products to Huawei, but expects the competition in the Chinese market to remain very intense.

Apple is reportedly hiring Cynthia Bowman as the head of diversity and inclusion.

Disney's Pixar Animation Studios, a subsidiary of Disney, is set to lay off around 175 employees, accounting for about 14% of the studio's total workforce.

Tesla's sales in the European market have dropped to a 15-month low.

Bilibili decides to cancel the redesign that displays playback duration metrics

Bilibili's community and product manager Fang Fang announced the decision to cancel the redesign that displays playback duration metrics, citing it as overly idealistic and confident, without considering the level of acceptance and understanding from the public. He emphasized that in the current recommendation algorithm, playback duration has become a very important statistical factor.

Evergrande Auto: Ordered to return subsidies totaling 1.9 billion RMB, trading of shares has been suspended on the Hong Kong Stock Exchange from 10:56 am on May 17, 2024, pending the publication of insider information related to the company. Trading of the company's shares will remain suspended until further notice.

US chemical giant DuPont to split into three independent companies

The new DuPont will consist of the Water & Protection business, Industrial Solutions (including healthcare), and the existing businesses retained within the company. The Electronics company will primarily consist of the existing semiconductor technology and interconnect solutions business. The Water company will be composed of DuPont's current water solutions business. The company expects to complete the split within 18 to 24 months. DuPont has also appointed CFO Lori Koch as the new CEO of the company.

Private biotechnology company Aktis Oncology announces a partnership agreement with Eli Lilly to develop radiopharmaceuticals for cancer, with a deal value of up to $1.1 billion.

Apple has begun seeking to dismiss the US Department of Justice's lawsuits against the App Store, the smartphone market, and other antitrust litigation.

Chips and Artificial Intelligence

News Corp and OpenAI have signed a milestone multi-year global partnership, where News Corp's news content will be integrated into OpenAI.

Meta is reportedly considering new payment agreements with media publishers to acquire artificial intelligence training data.

Negotiations for Snowflake's proposed acquisition of the startup Reka AI for over $1 billion have collapsed, shattering the company's vision of bringing more generative AI capabilities in-house

Cryptocurrency

Market News: The U.S. House of Representatives has enough votes to pass the Republican-supported cryptocurrency regulatory framework bill, and the voting is ongoing.

ETF Analyst Eric Balchunas: The most optimistic speculation is that we will receive news from the U.S. Securities and Exchange Commission (regarding the spot Ethereum ETF) around 4:00 p.m. Eastern Time tomorrow (4:00 a.m. Friday Hong Kong time).

Cancellation of Collateral Plan or Weakening Demand for Spot Ethereum ETF

Many in the crypto market believe that the key modifications made by issuers to the spot Ethereum ETF application are favorable for the Ethereum blockchain but unfavorable for the ETF product itself. Issuers including Fidelity and Ark have canceled plans to collateralize the Ethereum ETF.

Fox Business News Reporter: The SEC and spot Ethereum ETF issuers believe there is still some work to be done on the S-1 filing issues.

ETF Analyst James Seyffart stated on the social platform X that Grayscale has submitted a revised 19b-4 filing for its Ethereum Mini Trust.

UK Financial Regulator Approves First Batch of Crypto ETPs

The UK aims to catch up with other major financial centers in the digital asset field. Among them, WisdomTree Inc. has listed two physically backed crypto ETPs for tracking Bitcoin and Ethereum on the London Stock Exchange, approved by the Financial Conduct Authority (FCA) of the UK.

Startups

Media: NVIDIA Competitor Groq Partners with Morgan Stanley to Raise $300 Million

The new round of financing will double its total funding, bringing it closer to competitors such as Cerebras in terms of total funding. Nearly eight years ago, Jonathan Ross, one of the inventors of Google's dedicated chip Tensor Processing Unit, founded Groq, positioning the company's product as an alternative to NVIDIA chips.

Macro: A Look at the World

Fed Meeting Minutes: Slowing Balance Sheet Reduction Will Not Affect Policy Stance

Almost all participants expressed support for the Fed's decision to begin slowing the pace of reducing securities holdings in June. Some participants also emphasized that slowing the pace of balance sheet reduction does not mean that the ultimate reduction in the balance sheet size will be smaller than other reduction methods. Some participants commented that slowing the pace of balance sheet reduction will help transition smoothly from ample reserve balances to sufficient reserve balances. Participants generally believe that continuing to monitor reserve conditions indicators will be important as the balance sheet reduction continues.

Participants are willing to further tighten monetary policy when necessary; many officials are uncertain about the restrictiveness of the policy. "As needed" is an important qualifier. Nevertheless, the uncertainty about the actual restrictiveness of the policy on the economy means that there is also uncertainty about whether further tightening of policy is really off the table.

Traders are reducing bets that the Fed will cut rates more than once this year, as the Fed meeting minutes show that policymakers believe inflation may take longer to ease than previously expected. Fed funds rate futures indicate a 59% chance of a rate cut by the Fed before September, slightly lower than the level before the minutes were released The probability of a second rate cut before December is 50%, lower than the earlier 54%.

"The Fed's megaphone": Due to setbacks in inflation progress, Fed officials expect the wait for a rate cut to be longer.

According to Nick Timiraos, Fed officials concluded at the recent meeting that they need to keep rates at the current level for longer than previously expected.

Goldman Sachs CEO: Expects no rate cuts by the Fed this year.

The U.S. announced new tariff details on China, with tariffs on electric cars and other products set to take effect in August