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

Good morning. Nvidia’s blowout earnings ripple across global stock markets and traders position themselves for more Treasury selloffs. Here’ [View in browser]( [Bloomberg]( Good morning. Nvidia’s blowout earnings ripple across global stock markets and traders position themselves for more Treasury selloffs. Here’s what’s moving markets. — [Sam Unsted]( Nvidia blowout “[The most important stock on planet earth](” did not disappoint. Chipmaker Nvidia’s results [blew past sky-high expectations](, extending its streak of consensus-busting reports. That has sent its shares up by around 13% in premarket trading, which would add around $210 billion to its market value should it hold into regular trading. The group said that generative AI has hit “the tipping point” with demand surging globally and [no signs of the slowdown some had feared]( heading into the results. Tech ripples Nvidia managing to clear the high bar set for its results has rippled through global markets, particularly technology stocks. [Nasdaq 100 futures are rising by nearly 2%](, with the chipmaker the primary reason, while S&P 500 futures are up 1%. The Nikkei 225 benchmark in Japan [touched a record high](, surpassing a previous peak in 1989, and the Stoxx 600 index in Europe is also set for a record high, with the technology sectors in each fueling the rise. Treasury selloff bets Bond traders are [bracing themselves for a renewed selloff in the market](, prompting a surge in trading for options targeting higher yields and with long positions in Treasuries being unwound. That comes after a fresh round of losses this year as sticky inflation and resilient economic growth caused traders to trim bets on the speed and depth of Federal Reserve cuts. Fed concerns Minutes from the Federal Reserve’s latest meeting, meanwhile, showed that most officials [remain more worried about the risk of cutting rates too quickly than keeping them high for too long](. As officials have consistently said, the minutes indicate that more evidence is wanted that inflation is firmly on the path to the 2% target before any cuts materialize, with some policymakers raising concerns that this progress might stall. Coming Up… The Fed’s Philip Jefferson, Patrick Harker, Lisa Cook and Neel Kashkari are all set to speak today and we’ll get the latest PMI readings for the US on its services and manufacturing industries. PMIs have been flowing through in Europe, showing unexpected strength in France, unexpected weakness in German manufacturing and a robust performance in the UK services industry. Nvidia will continue to dominate the earnings day, with numbers also due from soft drinks maker Keurig Dr Pepper and drugmaker Moderna. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - Nvidia, Goldman and Boeing on [the Daybreak podcast](. - China’s [“quant quake”]( and the 2007 US meltdown. - A woman set to break [Goldman’s glass ceiling]( is leaving. - Biden calls Putin a [“crazy SOB.”]( - The impact of one business decision on the [battle against malaria](. - [A24 movies]( become a private-equity Hollywood bet. - Google is pausing [Gemini image generation]( of people. And finally, here's what Tracy’s interested in this morning The stock market is not the economy. But of course, in the [immortal words of Renaissance Macro's Neil Dutta](, it's not not the economy either. The morning after Nvidia released another set of blockbuster earnings seems a pretty good time to consider the full meaning of that statement. Continued enthusiasm for AI means Nvidia beat expectations for revenue and earnings per share, and gave a pretty upbeat outlook for current sales too. Now, we could also talk about what investors might be getting wrong here. Hype cycles are a real thing. The rise of passive investing means flows into one hot stock tend to beget more flows, success breeds more success in that scenario. (There's also [more and more talk]( of [dispersion trades]( that risk unsettling the broader markets; Nvidia's outperformance means its attracted plenty of [attention in Options Land](). But even if share price surges are short-lived, they can still matter for the real economy. For one, if a company's stock price is going up, then its management is under less pressure to trim costs -- for instance by cutting workers. And here, it's interesting to compare and contrast with [fourth-quarter results from Rivian]( yesterday afternoon, which came in just before the Nvidia news. Rivian, which went public back in 2021 at a $66 billion valuation, said it was cutting 10% of its salaried staff due to "economic uncertainty." Its shares have fallen more than 30% so far this year. Of course, there's also a reflection of excitement over the future shape of the economy reflected in Nvidia's share price too, with CEO Jensen Huang talking about how "accelerated computing and generative AI have hit the tipping point." As my Bloomberg colleague Cameron Crise writes, that comment is "the very essence of a macro theme, representing not only a profound impact upon the stock or the tech sector specifically, but also upon productivity trends in the broader economy more generally." What's most interesting to me is that, when it comes to the real economy, Nvidia's continued ability to crush it seems challenging for workers almost anyway you slice it. There's obviously the 'macro-ness' of the AI story that's currently propelling Nvidia higher, suggesting a future where workers are being actively replaced in the name of productivity. But Nvidia's continued outperformance also raises the bar in terms of relative share price performance. And if you're an executive who can't get a piece of the hot market action by attaching yourself to the AI story, then you're probably going to be tempted to push share prices up the old-fashioned way: by cutting workers. (And naturally, AI can help with that). So, let's say it together once again. The stock market is not the economy. But it's not not the economy either. Tracy Alloway is the co-host of Bloomberg’s Odd Lots podcast. Follow her on X [@tracyalloway]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? 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