The New York Fed Manufacturing Index continued to reflect contracting business conditions in April. Although the Empire State Manufacturing Survey general business conditions index rebounded in this month, it remained below zero at -8.1, which indicates contraction in the sector.
US stocks have taken a hit this year, but the pain – as usual – varies widely by sector. The spread between the best and the worst performing sectors year to date has widened sharply to more than 19 percentage points, based on a set of ETFs through Monday’s close (Apr. 14).
One week of trading doesn’t change decades of precedent for the world’s primary “safe” asset, but reports that the global marketplace is rethinking risk for US government bonds is deeply unsettling for several reasons.
The US Treasury market will be closely watched this week as investors consider if the risk premium for the world’s “safe asset” is in the process of resetting high. A possible warning sign: the 10-year yield rose sharply last week despite growing concerns that US economic growth is slowing. The flight-to-safety trade, which usually benefits Treasuries and the US dollar, was conspicously absent in recent days. “The market is re-assessing the structural attractiveness of the dollar as the world’s global reserve currency and is undergoing a process of rapid de-dollarization. Nowhere is this more evident than the continued and combined collapse in the currency and US bond market as this week comes to a close,” Deutsche Bank strategist George Saravelos wrote in a note to clients Friday.
● The Thinking Machine: Jensen Huang, Nvidia, and the World’s Most Coveted Microchip
Stephen Witt
Review via The Economist
Jensen Huang co-founded Nvidia in 1993 and has run it since, making him one of Silicon Valley’s longest-serving CEOs. He is among the most approachable—happy to entertain journalists when other tech bosses skulk behind a PR firewall—and, with his signature black leather jacket, among the most recognisable. Yet he remains an elusive subject. Nvidia’s $73bn in net profit last year, not far behind Microsoft’s $88bn, points to a strategic genius at work. His rambling disquisitions on earnings calls scream dumb luck. Which is it?
A new book suggests the answer is both. “The Thinking Machine” by Stephen Witt, a journalist, is the second such corporate biography; “The Nvidia Way” by Tae Kim, a former equity analyst, was published in December and covers similar ground. But Mr Witt approaches his subject with a more critical eye and more verve. He weaves together the story of the man, his company and the computer science that led to large language models (llms) such as ChatGPT, which brought “generative” AI to the masses in 2022.
The “fair value” for the US 10-year Treasury yield edged higher in March vs. the previous month and is now approaching the 4.0% mark – the highest estimate in 16 years. The analysis is based on the average of three models run by CapitalSpectator.com.
A key technical signal for the US stock market looks set to go risk-off in the days ahead, based on the S&P 500’s 50-day vs. 200-day averages. Short of a strong rally in the immediate future, the so-called death cross may be near, which some traders will view as a bearish signal for the market’s outlook. Although the signal’s history is far from perfect for market timing, it’s widely followed and so a risk-off switch will likely be seen as a new factor tipping the odds in favor of a bear-market forecast.
The official first-quarter GDP report from the government that’s scheduled for Apr. 30 is expected to post a sharp slowdown in growth, based on the median estimate from several sources compiled by CapitalSpectator.com.
Trump pauses tariffs for 90 days for most countries and hikes import fees for China. What hasn’t change is that uncertainty for the global economy continues. No one’s quite sure what will happen after the 90-day pause. One source of confusion is how the administration will negotiate dozens of bilateral trade deals. “That is a huge task to negotiate simultaneously with that many trading partners over that many issues,” said Greta Peisch, who was general counsel for the U.S. trade representative’s office during the Biden administration.
Is inflation or slower growth, and perhaps recession, the priority? This basic question hangs over the Federal Reserve as it grapples with deciding how to respond to global trade war.