“I believe art is a connection, like passing on a flame.” – Wangechi Mutu
Chart of the Day
Good morning!
There’s an old saying: If you can’t beat ’em, join ’em. In business, sometimes it’s not a bad idea to join ’em even if you’re beating them.
That seems to be the path Nvidia is choosing. Although it has long enjoyed dominance in the semiconductor industry, the company on Monday announced NVLink Fusion, a program that will help customers build semi-customized AI infrastructure that incorporates CPUs, GPUs, and ASICs designed by other companies, such as Qualcomm, Marvell, MediaTek, and Fujitsu. On the surface, it might seem like this initiative, by making it easier for companies to use competitors’ products, could potentially lower demand for Nvidia’s CPUs. Yet as many analysts noted, NVLink Fusion could ultimately make Nvidia’s long-term prospects more secure.
As Rolf Bulk of New Street Research told CNBC, “the added flexibility improves the competitiveness of Nvidia’s GPU-based solutions versus alternative emerging architectures, helping Nvidia to maintain its position at the center of AI computing.”
Nvidia’s decision to make its industry-leading technology more openly available for use with other companies’ products is not exactly unheard of. In fact, it’s a long-established tactic. Readers who remember the pre-streaming, pre-DVD era might also remember how JVC won the VHS-Betamax wars: by aggressively licensing its VHS technology to other manufacturers and pursuing the movie industry, JVC’s VHS was able to decimate Sony’s Betamax despite arriving late to the game.
As a result, JVC enjoyed years of significant revenue through royalties paid by manufacturers of VHS equipment – including Sony itself, eventually.
More recently, in late 2023, Tesla decided to open up its high-speed Supercharger network to electric vehicles made by other companies. Tesla’s reasoning appears similar to Nvidia’s: by alleviating range anxiety and fears about recharging times, Tesla hoped to expand the size of the EV market in a way that, while benefiting competitors, would also boost its own growth.
The move also gave Tesla influence over broader EV charging standards while diversifying its revenue stream. While it’s still unclear whether Tesla has achieved its strategic objectives with this decision, it has created a significant and growing revenue stream while also providing data about driving and charging habits of EV owners that could someday prove invaluable.
Unlike with Tesla, Nvidia’s move this week has a more obvious motivation behind it. Last month, major competitors Broadcom, AMD, and Intel joined the Ultra Accelerator Link (UALink) consortium, which seeks to establish an open industry standard for AI accelerator interconnection. It seems likely that Nvidia wants to counter them.
Still, both Nvidia and Tesla might be hoping that their respective moves end up being as successful as JVC’s collaborative VHS approach.
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Question: What would it take for you to be convinced to try using BNPL?
Answer: Venezuela style hyper inflation. If that happens I’ll BNLP my DoorDash burritos.
Catch up with FS Insight
Stocks are 3% from all-time highs, yet this is one of the “most hated” rallies as investors are looking for reasons for stocks to fall, rather than upside. This is a good sign.
Technical
My view is that this minor pullback likely gets to 5809 before finding strong support and should not violate 5700 and/or the uptrend from April without warning of a possible stronger decline.
Crypto
Bitcoin keeps climbing as ETF inflows stay strong, the Coinbase premium holds, and CME basis widens. A single whale on Hyperliquid is riding a 40× long worth $830 million with a $100k liquidation line, a pocket of high leverage in an otherwise tame market.
News We’re Following
Breaking News
- 2 Israeli Embassy Aides Are Fatally Shot Outside Event in Washington NYT
- Trump Tells European Leaders in Private That Putin Isn’t Ready to End War, European Officials Say WSJ
Markets and economy
- A Treasury Auction Sparked a Stock Market Rout. Why It’s Not Time to Panic Just Yet. BR
- The Deficit Is Unsettling Bond Traders. Here’s How That Affects the Economy. WSJ
- Bitcoin hits new record high above $111,000 as rally marches on CNBC
- Why Sam Altman is one of tech’s great survivors FT
Business
- What Sam Altman Told OpenAI About the Secret Device He’s Making With Jony Ive WSJ
- Walmart AI details leaked during Microsoft Build conference CNBC
- Nestlé boss says his predecessor ‘weakened the fabric’ of the company FT
- CoreWeave raises $2bn in junk bond offering FT
Politics
- House Passes Trump Tax Bill After Last-Minute Changes WSJ
Overseas
- Ramaphosa wins plaudits following Trump meeting SEM
- China increases WHO donations as US retreats SEM
Of Interest
- The Art of the Alix Earle Deal WSJ
- Inside the Knicks’ biggest collapse ever ATH
- Walmart is reportedly cutting jobs to lower costs, in another way to deal with tariffs MW
| Overnight |
| S&P Futures +10
point(s) (+0.2%
) Overnight range: -10 to +16 point(s) |
| APAC |
| Nikkei -0.84%
Topix -0.58% China SHCOMP -0.22% Hang Seng -1.19% Korea -1.22% Singapore -0.06% Australia -0.45% India -0.88% Taiwan -0.61% |
| Europe |
| Stoxx 50 -0.92%
Stoxx 600 -0.9% FTSE 100 -0.72% DAX -0.73% CAC 40 -1.0% Italy -0.97% IBEX -0.84% |
| FX |
| Dollar Index (DXY) +0.24%
to 99.8 EUR/USD -0.27% to 1.13 GBP/USD -0.1% to 1.3406 USD/JPY -0.19% to 143.4 USD/CNY +0.06% to 7.2059 USD/CNH +0.02% to 7.2054 USD/CHF +0.08% to 0.8262 USD/CAD +0.12% to 1.3876 AUD/USD -0.16% to 0.6426 |
| Crypto |
| BTC +2.16%
to 110623.03 ETH +6.07% to 2661.9 XRP +1.84% to 2.4282 Cardano +5.18% to 0.8018 Solana +5.56% to 179.16 Avalanche +5.52% to 24.46 Dogecoin +4.7% to 0.2405 Chainlink +4.25% to 16.61 |
| Commodities and Others |
| VIX -2.2%
to 20.41 WTI Crude -1.38% to 60.72 Brent Crude -1.39% to 64.01 Nat Gas -0.98% to 3.33 RBOB Gas -1.47% to 2.118 Heating Oil -1.84% to 2.1 Gold -0.18% to 3308.93 Silver -0.46% to 33.23 Copper -1.25% to 4.58 |
| US Treasuries |
| 1M -3.1bps
to 4.23% 3M -2.4bps to 4.3139% 6M -1.6bps to 4.2788% 12M -4.9bps to 4.0724% 2Y -2.3bps to 3.9964% 5Y -2.8bps to 4.1323% 7Y -2.4bps to 4.3525% 10Y -1.8bps to 4.5806% 20Y -2.4bps to 5.0991% 30Y -0.8bps to 5.0838% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 5.9bps to -38.7
bps 10Y-2 Y Spread widened 0.3bps to 58.0 bps 30Y-10 Y Spread widened 1.1bps to 50.1 bps |
| Yesterday's Recap |
| SPX -1.61%
SPX Eq Wt -2.18% NASDAQ 100 -1.34% NASDAQ Comp -1.41% Russell Midcap -2.38% R2k -2.8% R1k Value -1.93% R1k Growth -1.49% R2k Value -2.9% R2k Growth -2.71% FANG+ -0.75% Semis -1.66% Software -2.41% Biotech -2.54% Regional Banks -3.54% SPX GICS1 Sorted: Comm Srvcs +0.67% Cons Staples -0.92% Materials -1.24% SPX -1.61% Indu -1.68% Tech -1.78% Energy -1.8% Cons Disc -1.91% Utes -1.91% Fin -2.05% Healthcare -2.37% REITs -2.63% |
| USD HY OaS |
| All Sectors +5.7bp
to 374bp All Sectors ex-Energy +5.8bp to 336bp Cons Disc +5.9bp to 368bp Indu +6.9bp to 284bp Tech +8.2bp to 342bp Comm Srvcs +3.8bp to 536bp Materials +5.2bp to 350bp Energy +4.6bp to 426bp Fin Snr +7.2bp to 308bp Fin Sub +2.0bp to 279bp Cons Staples +7.9bp to 265bp Healthcare +4.2bp to 375bp Utes +6.4bp to 253bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 5/22 | 9:45AM | May P S&P Manu PMI | 49.9 | 50.2 |
| 5/22 | 9:45AM | May P S&P Srvcs PMI | 51.0 | 50.8 |
| 5/22 | 10AM | Apr Existing Home Sales | 4.1 | 4.02 |
| 5/22 | 10AM | Apr Existing Home Sales m/m | 1.99 | -5.85 |
| 5/23 | 10AM | Apr New Home Sales | 695.0 | 724.0 |
| 5/23 | 10AM | Apr New Home Sales m/m | -4.0 | 7.4 |
| 5/27 | 8:30AM | Apr P Durable Gds Orders | -8.2 | 7.5 |
| 5/27 | 10AM | May Conf Board Sentiment | 87.0 | 86.0 |
| 5/28 | 2PM | May 7 FOMC Minutes | n/a | 0.0 |
