Despite PCE inflation exceeding expectations, the likelihood of a September rate hike remains low. Meanwhile, the market's scrutiny of the hardware sector has tightened, demanding clarification on Nvidia's revenue from Hopper shipments not reflected in guidance and its transaction with OpenAI.
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Regarding the exclusion of China Hopper shipment revenue from Nvidia's guidance, analysis suggests it's not highly significant, given the current small proportion of Hopper revenue from China. While not yet reflected in the current guidance, it is expected to act as a positive factor in the future. Nvidia's production is understood to be proceeding normally and smoothly.
The market is applying strict standards to the hardware sector, similar to the harsh scrutiny applied to software in the first half of the year. Expectations are particularly high for leading companies like Nvidia, and investors want to see if these companies can prove their value with actual results. A sentiment has formed where companies that saw significant gains in the first half are now being asked to show real performance.
Market curiosity is growing regarding Nvidia's $500 million financial platform agreement with OpenAI. Clarification is needed on how much capital is going into OpenAI and the extent of the guarantees. Furthermore, concerns are being raised across big tech companies about potential liabilities from future contract volumes not reflected in financial statements, necessitating an explanation for Nvidia's $200 million potential risk. The market also has questions about the reasons for the decrease in cash flow.
Personal Consumption Expenditures (PCE) inflation slightly exceeded expectations by 0.1%, but core PCE met estimates. Consequently, the prevailing market view is that the rise in PCE inflation is not enough to trigger a September rate hike. While inflation remains high, many believe it's not high enough for the Federal Reserve (Fed) to raise rates. According to CME FedWatch, the forecast for a September rate freeze remains at 64%, with a December rate hike being more likely.
The market expects Fed Chair Jerome Powell to provide clear economic insights during his Jackson Hole speech. Whether Powell expresses a hawkish or dovish stance, the market wants any form of message that will give hints about the direction of the economy. Preparations should also be made for the possibility of unexpected market movements if hawkish remarks are made.
Intraday volatility in August has fallen to a historical low. This indicates a significant moderation in volatility, despite the continued presence of market uncertainties. While optimism prevails in the market, some concerns about valuation burden and policy changes still exist.
According to Reuters, China's Moonshot AI, the company that established KimiChat, is in negotiations with Microsoft, Amazon, and Google for cloud service adoption. These moves raise concerns that intensified competition in AI technology could lead to reduced profitability for US frontier models. The global competition for AI technology leadership is becoming fiercer.
AI company Anthropic is focusing on securing computing power, even at the expense of free cash flow. This is seen as a proactive strategy to prepare for potential data center delays and maintain a competitive edge. They are actively acquiring necessary computing resources, demonstrating a commitment to strengthening technological competitiveness. Such investments highlight the importance of computing infrastructure as a core resource in the AI industry.
Salesforce has allayed market concerns by consistently reporting revenue growth. The announcement of an expanded partnership with AI company Anthropic was a crucial factor in the sharp rise in stock price. This partnership suggests that Salesforce is securing future growth engines through business expansion utilizing AI technology.
Meta has settled a lawsuit alleging that its social media platforms caused addiction in children. This settlement is expected to cost Meta a total of $16.7 billion, including $10 billion in legal fees. Additionally, Meta has agreed to limit Instagram usage for users under 18 to two hours per day and block usage at night. This reflects societal demands for digital well-being for children and adolescents.
Meta, while implementing restrictions related to child and adolescent SNS addiction, has also demanded that other social media platforms like TikTok and YouTube join in the regulation. Meta has set a conditional clause stating it would only bear 70% of the cost if it were to implement these measures alone, emphasizing shared responsibility with other platforms.
Apple has announced a new product launch event for September 9 with the slogan 'Surprise & Shine.' It is widely expected that foldable devices will be unveiled at this event. Foldable phone shipments are anticipated to exceed 10 million units this year, and Apple's entry into the foldable market is attracting significant attention.
More than 12 global financial institutions, including JPMorgan, Bank of America, Wells Fargo, and Santander, are pursuing the issuance of their own stablecoins. Initially, these will be issued primarily in dollars, with plans to expand to euros and G7 currencies. This move is interpreted as traditional financial institutions expanding into the digital asset market.
Bitcoin is gaining momentum, emerging as a hedge against a weakening dollar. Some experts predict that the price of Bitcoin could reach $150,000 by mid-next year. Amidst this optimistic market sentiment, Goldman Sachs has also raised its price targets for Coinbase and Robinhood, indicating a positive outlook on the cryptocurrency market.
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