Markets eye Nvidia earnings following a lackluster US-China summit and rising Middle East tensions. Any post-expiration dip offers selective buying opportunities.
Glowing praises without substance - that's overtly evident, characterized the end of the Summit in Beijing, which was almost dismissive as relates to the Taiwan question (even though Xi probed Trump for an answer and nothing in a response.. aside that the United States doesn't need another war 9000 miles away.. and that is not a reassuring response to Taipei if he said that.
Market X-ray: so we had a sort of 'Vanity Fair' type summit with little formally achieved. Sure; the agricultural or aircraft deals; but not much when it comes to Iran or human rights, or even China's goal of getting high-end Nvidia chips.
And no real response regarding Elon's role; to wit: more or fewer EV's coming and what does it mean if Chinese 'cheap EV's' arrive soon in Canada, which typically uses American vehicles... but will the Chinese variations have a big surcharge as talk suggests, or not. Matters to our 'big-3', which might have to make drones instead of cars if this persists.
Nothing resolved and the market sets up with a dip that may presage more upside; but selectively and much remains murky on the geopolitical stage too.
May Expiration and frustration over minimal news from China, along with higher 'yields' in Japan; combined to throttle any upside. Actually a good session for buying under pressure 'if' you believe many techs will rebound ahead of and possibly in the wake-up a presumably solid ER from Nvidia on Wednesday. So any post-Expiration dip is likely a buy broadly speaking; although Indexes themselves are at high, thus debatably tense overall levels.
Next week we have clarification about what did and didn't happen in China; a realization that the higher rates in Tokyo that also drove Friday markets might not have wider applicability; although oil-price-induced inflation does; even if it is temporary.
Plus we deal with Iran unsettled and recognize that the Dept. of War has been feverishly restocking armament inventories in the Middle East during so-called ceasefire quiescence; but some sources (CIA?) say Iran is also doing similar, along coastal Persian Gulf areas. Obviously POTUS attention will refocus on war next week.
Bottom-line: China is basically done for now; Oil prices remain high and 'sell in May and go away' seasonally, keep traders mostly jittery, despite the great Thursday selective rally.
It may in fact be healthy that May Expiration Friday facilitated consolidation; at the same time of course charts look like this if Indexes are in a process that's often not ending well near-term. But there are many variable. Trump see this too; and don't be surprised if another rabbit leaps out of the proverbial hat to revive markets, even though 'tech' might anyway ahead of NVDA Wednesday.
Disclosure:
This is an excerpt from Gene's Daily Briefing (distributed nightly), which typically includes videos as well as more charts and analysis.
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