5 Things You Need to Know to Start Your Day: Americas

Good morning. US stocks are set to recover after a tech-led selloff which slashed Nvidia’s market value by $212 billion. Here’s what’s movin [View in browser]( [Bloomberg]( Good morning. US stocks are set to recover after a tech-led selloff which slashed Nvidia’s market value by $212 billion. Here’s what’s moving markets. — [Sam Unsted]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Stocks recover [US stock futures are rising](, in line with a bounce in European and Asian equities, as fears about tensions in the Middle East eased and the focus shifted back to company earnings and upcoming economic data. That followed the worst weekly decline for the S&P 500 since March 2023, a selloff which took the index back below 5,000 points. Bitcoin, meanwhile, is barely moving after a [much-anticipated “halving”]( software update was completed. Nvidia slammed The slump for US stocks on Friday [was powered by the tech sector]( and particularly Nvidia, which dropped by 10%, its worst decline since March 2020 and wiping out about $212 billion in market value. AI-related stocks more broadly took the brunt of the hit. “People seemed to think the AI trade would go up forever. It got crowded and now it is unwinding something fierce,” said Dennis Dick, a proprietary trader at Triple D Trading. Mag 7 on horizon The earnings calendar is quite light for Monday but really gets moving through the remainder of the week, most notably with [reports ahead from Microsoft, Meta Platforms, Alphabet and Tesla](. The latest Markets Live Pulse survey showed confidence that [strong earnings will help to lift the S&P 500]( out of its morass, in spite of worries about a jump in bond yields, though [Wall Street strategists]( are split on whether Corporate America will be able to deliver. Dollar strength A [strong dollar is providing a stark wake-up call]( for markets too. Investors had come into the year betting on the greenback sliding amid US rate cuts, but a robust US economy and sticky inflation are sparking a significant rethink in bets on the Federal Reserve reducing borrowing costs. Bond traders, meanwhile, [face a test from a large slate of auctions]( in the Treasury market, which will help determine whether yields have peaked. Inflation persistence The Fed’s [preferred inflation gauge is coming up this week]( — with the PCE price index expected to provide further confirmation that progress on tackling inflation has stalled. That would support the shift in tone from policymakers to keep interest rates higher for longer than had been anticipated. The central bank’s semiannual Financial Stability Report on Friday showed [persistent inflation]( was seen as the biggest threat to stability. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - The ramifications of Elon Musk’s [robotaxi dreams](. - [TikTok vows a legal battle]( amid the US pressing for its sale or ban. - The secrets revealed [by a massive hack]( of psychotherapy records. - New York-style [bumper bonuses]( inch close for London bankers. - A half-dozen [bubble tea billionaires](. And finally, here's what Joe’s interested in this morning There are a few things on my mind this morning. The first is the chart of Nvidia. This thing rocketed straight higher for so long, it's not surprising to see it eventually take a real leg down. The stock is off about 20% from its recent high in late March. Since narrative follows price, expect to hear a lot more talk about whether or not the company's dominance in AI is really as unassailable as people have been lead to believe. For fun, here's a chart of Nvidia and Bitcoin together. There's a lot of denial about the fact that Bitcoin trades as a risk asset, and not as a momentum tech stock. But the chart is pretty clear here. Plus even beyond this chart, you can just look at how Bitcoin behaves every time there's something fresh about geopolitical risk (it goes down). One thing I've been wondering about is whether Bitcoin's correlation to risky assets will increase now that the ETF exists, and it (presumably) is traded as a component of conventional portfolios. It's probably too soon to say on that. Speaking of AI and tech, [on Odd Lots today]( we have an episode with Josh Wolfe, a longtime investor in the space. He believes that robotics will soon experience its own "ChatGPT moment" where people see huge leaps in what robots are capable of, now that they're increasingly being trained in the same manner as chatbots (tons and tons of visual data that allow the robot to learn about the real world). Meanwhile on Friday, Tracy Alloway and I [released an interview]( with Richmond Fed President Tom Barkin. One of the interesting ideas that Barkin has been talking about is that upward inflationary pressures may persist for sometime due to a change in business psychology. Basically the idea is that for the first time, over the last few years, businesses have seen that they can push price increases without necessarily taking a market share hit. So now that they've seen that experience, they may be inclined to try price increases again at some point. For now though, Barkin believes that the existing stance of monetary policy is such that it is still restrictive, and that with patients, inflation will return to target. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? 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