Image Source: PixabayMARKETSAsian stocks are poised for a subdued trading day following a cautious session on Wall Street. Traders are eagerly anticipating Wednesday’s earnings report from Nvidia Corp.(NVDA), the chipmaker central to the artificial intelligence boom that has fueled the current bull market.An otherwise sleepy macro week could get a shot of adrenaline mid-week when Nvidia reports its Q1 results. This marks the anniversary of the “guidance heard ‘around the world,” when Jensen Huang declared that the future might have arrived early. Since then, the narrative around Nvidia and AI has dramatically shifted. Expectations are high, and the guidance is crucial. Revenue growth has been meteoric, and everyone is eager to see if the trend continues.it’s worth reiterating, even though it might seem obvious: the entire rally, the macroeconomic landscape, everything hinges on one key player, NvidiaA significant portion of the valuation premium for US mega-caps is intricately linked to the AI narrative. Countless optimistic macroeconomic scenarios envision a productivity surge powered by AI. Projections about AI capital expenditures shape optimistic forecasts for various companies seen as potential beneficiaries in future phases of technological advancement. The ripple effects are extensive.Much like the early days of Apple Inc.(AAPL), many in the financial world believe that the AI investment cycle is still in its nascent stages.The AI-led rally showed its strength as Nvidia shares surged over 2% on Monday. This boost came following multiple bullish analyst calls emphasizing the company’s leading market position. Additionally, several Wall Street firms raised their price targets on the chipmaker ahead of its earnings report, indicating that shares could potentially climb up to 30% from their current levels.The anticipation of the Federal Reserve’s shift towards rate cuts has influenced trading activities across financial markets in recent days. Last Friday, the Dow Jones Industrial Average surpassed the 40,000 mark for the first time, while the S&P 500 achieved a string of record highs. These milestones have prompted a notable shift in sentiment, with Morgan Stanley strategist Michael Wilson, a prominent Wall Street bear, adopting a positive stance on the stock market and forecasting additional gains.Sell-side research isn’t “news.” It’s important to remember that sell-side commentary, in any form, is simply an opinion that lands in clients’ mailboxes daily. A mea culpa for a market miscall shouldn’t be treated as significant news either. After all, everyone makes mistakes in market predictions. What truly matters is the underlying analysis and the potential insights these opinions might offer, rather than the fact that a particular call was wrong.After missing a 30% rally from the October lows, Mike Wilson has been more cautious this year about making bold predictions regarding the benchmark equity indices. He attributed this to the pervasive ambiguity in macro-policy. While Wilson did have a target for the S&P 500—initially set at 4,500—that is nearly 1000 points off. Tell me how valuable are sell-side targets?FOREX MARKETSIn the absence of top-tier economic data, FX traders closely monitored statements from Federal Reserve officials overnight. Atlanta Fed President Bostic remarked on the gradual slowdown of the US economy, echoing sentiments shared by most Fed members, including Jefferson, who cautioned against anticipating a swift decline in inflation following recent data. Mester highlighted the impact of labor market rebalancing on inflation. Tonight, Governor Waller will address the US economy, with market participants eager to glean insights, considering his previous influential speeches on job vacancy rates and the cautious approach to rate cuts.All in all, their comments indicated that the recent data indicating a slowdown in inflation during April was insufficient to alter their stance on reducing interest rates at the upcoming June meeting.Despite some upward movement in the DXY spurred by hawkish comments from the Fed, FX markets continued to trade within the 104-105 range for the DXY.Asian FX markets, however, exhibited weakness in response to the stronger Dollar.OIL MARKETSJune RBOB futures reached a two-week high overnight, peaking at $2.5830, before settling $0.0343 lower at $2.5399 per gallon. This decline comes amidst consumer pessimism and a reduction in discretionary spending, which negatively impacts driving demand. Despite projections from AAA indicating a record 38.4 million Americans will travel by road during the Memorial Day holiday weekend, marking a 4% increase from last year, gasoline inventory in the United States remains elevated. As of May 10, gasoline inventory stood at 9.437 million barrels, representing a 4.3% increase compared to the same period last year, according to data from the Energy Information Administration.The passing of Iranian President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian over the weekend had minimal effects on crude contracts on Monday. Both the international and U.S. benchmarks saw declines of $0.26 and $0.27 per barrel, respectively. July Brent settled at $83.71 per barrel, while June WTI futures settled at $79.80 per barrel ahead of expiration Tuesday afternoon. Notably, July WTI settled at a $0.50 per barrel discount to the expiring contract.More By This Author:Rate Cut Confidence Keeps Volatility In Check
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