Breakfast | CPI crushes rate cut expectations, US stocks collectively plunge, Morgan Stanley bullish on NVIDIA to $1000

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Overnight Morning Market

The heavyweight inflation data released on Wednesday in the United States exceeded expectations for the second consecutive month: the year-on-year growth rate of CPI in March accelerated to 3.5%, higher than expected, while core CPI unexpectedly rose to 3.8% in February, continuing to exceed expectations for the third consecutive month.

The rising CPI inflation for consecutive months has dashed investors' expectations of a rate cut by the Federal Reserve, with the expected first rate cut time being pushed back from September to November. The three major indices collectively closed lower for the first time this week. The S&P 500 fell by 0.95%, the Dow fell by 1.09%, and the Nasdaq fell by 0.84%.

Tesla fell by 2.9%, Apple fell by 1.1%, Alphabet fell by 0.3%, Amazon rose by nearly 0.2%, NVIDIA rose by nearly 2%, Intel fell by nearly 3%, AMD and Qualcomm fell by over 2%, Arm fell by over 1%, Micron Technology fell by nearly 0.4%. SoundHound fell by 7%, C3 fell by over 5%, SMCI rose by nearly 0.5%.

Most popular Chinese concept stocks fell. Nio fell by over 2%, Xiaomi fell by nearly 2%, Li Auto fell by 0.6%, XPeng rose by nearly 2%. Bilibili fell by over 2%, Pinduoduo and NetEase fell by over 1%, Baidu fell by nearly 2%, JD.com fell by 0.1%; Alibaba rose by over 2%.

Blue Chips and Hot Stocks

Morgan Stanley: Raised NVIDIA's target price from $795 to $1000.

TSMC's revenue in March was NT$195.21 billion, a year-on-year increase of 34% and a month-on-month increase of 7.5%. The total revenue for the first quarter of 2024 was NT$592.64 billion, a year-on-year increase of 16.5%, marking the largest increase since 2022.

JD.com will invest one billion in cash and one billion in traffic as rewards to attract more original authors and high-quality content institutions to settle in.

According to sources, Apple assembled iPhones worth $14 billion in India in the last fiscal year, doubling production.

XPeng announced its official entry into the Hong Kong and Macau markets, with deliveries expected to start in the third quarter of this year in Hong Kong.

Insiders: Musk will visit India this month and meet with Indian Prime Minister Modi. Musk will make announcements regarding Indian factories and investments during his visit to India.

Shimao Group: Will consider whether to apply for a recognition order to the High Court based on the progress of the restructuring at a later stage.

ByteDance's profit soared by 60% in 23 years? Official response: Profit growth and data rumors are not true.

Chips and Artificial Intelligence

Adobe buys video resources to build a text-to-video model

Adobe has started purchasing video resources to build its AI text-to-video generator, with video acquisition costs averaging around $2.62 per minute, but could go up to around $7.25 per minute. They are developing video generation technology and plan to discuss more related content later this year.

Market news: OpenAI founder Sam Altman met with UAE officials during his trip to the Middle East this week and proposed an AI alliance plan.

Google: Will invest $1 billion to enhance digital connectivity with Japan Meta announced the launch of the latest version of the next-generation AI training and inference chip project MTIA, a custom chip series designed specifically for AI workloads. Compared to the first generation, the latest version significantly improves performance and helps strengthen content ranking and recommendation ad models. The company's goal is to reduce dependence on companies like Nvidia.

Micron Technology launches the world's first quad-port SSD.

Cryptocurrency

In early Asian trading, Bitcoin touched $71,000 per coin.

Hong Kong is reportedly set to launch the first batch of spot Bitcoin ETFs this month.

Uniswap Labs, the creator of the largest decentralized exchange for Ethereum, has stated that the U.S. Securities and Exchange Commission (SEC) has warned of possible enforcement action against the company, issuing a "Wells notice" to the company. The reason is currently unclear, but they may claim that Uniswap is an unregistered securities exchange, similar to the lawsuits filed against Coinbase and Binance last year.

Macro: Taking You Around the World

Fed meeting minutes: Inclined to reduce the pace of balance sheet reduction by about half per month, recent data has not boosted confidence in inflation, and the recent rise in inflation should not be seen solely as statistical abnormality. Investors seem to have lowered their expectations for a larger rate cut. Almost all participants believe that transitioning to a less restrictive policy stance at some point this year is appropriate.

U.S. March non-seasonally adjusted CPI year-on-year recorded 3.5%, higher than the expected level of 3.4%, the highest level since September 2023. U.S. February wholesale sales recorded a monthly rate of 2.3%, the largest increase since March 2022.

After the CPI announcement, the probability of a 25 basis point rate cut by the Fed before June dropped from 56% to 23%, and the market has fully digested the delay of the Fed's first rate cut from September to November.

Biden Rare Statement: The start of rate cuts will be delayed by at least one month

The situation of core CPI exceeding expectations for three consecutive months poses a new blow to Biden's re-election prospects, intensifying concerns that voters will punish Biden for high prices. Biden stated that the report on Wednesday may delay the start of rate cuts by at least one month, but he is unsure how the Fed will ultimately act.

J.P. Morgan: Even if the Fed does not cut rates, the stock market will rise, and positive news will outweigh discussions about maintaining high rates for a longer period.

Goldman Sachs: It's time to take profits on U.S. tech stocks. Goldman Sachs Asset Management is divesting from tech stocks with high valuations and shifting focus to sectors like energy stocks and the Japanese stock market.

Goldman Sachs: Fed's first rate cut in July, abandoning the imminent rate cut in June

BlackRock: Fed's interest rate tools are outdated, rate cuts may not happen until late 2024 or later.

China's Ministry of Finance responds to Fitch's downgrade of China's sovereign rating outlook: Fails to proactively reflect the positive role of fiscal policy.

The UK announces a temporary suspension of import tariffs on over 100 goods, including auto parts and fruit juice, until June 2026. This is in response to business demand, helping companies reduce import costs and maintain competitiveness.

Reuters: Iran's Mehr news agency has removed reports of closing the airspace over the Iranian capital Tehran and denied publishing such reports