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MAY 7, 2024

AI CRYPTO BOOM

In the past few days, native cryptocurrencies of blockchain projects leveraging artificial intelligence (AI) have been driving the crypto market recovery. RNDR, the utility token of The Render Network, a decentralized GPU-based rendering solutions provider, saw an impressive 40% surge to $10.432 in just seven days, outperforming the top 100 cryptocurrencies by market value. Other AI coins like AGIX, TAO, and FET also experienced gains ranging between 17% and 23%, surpassing the broader market performance. This trend signifies a growing interest in AI-related investments, with NVDA shares also rallying. Nvidia is set to release its first-quarter earnings on May 22, with expectations of a significant 403% year-on-year increase in earnings per share by Zacks Investment Research. The positive sentiment surrounding AI coins is expected to continue as they remain closely tied to developments in the AI sector. Speculation around the launch of OpenAI’s ChatGPT Version 5 and Apple’s upcoming AI-related announcements further bolsters the excitement in the AI market, indicating a potential AI super cycle currently in progress.

BONDS TO BE TESTED

The global bond market is currently facing a crucial test as the U.S Treasury prepares to sell $125 billion in bonds. Following Federal Reserve Chair Jerome Powell’s signal of possible interest rate cuts, investors have been showing interest in purchasing bonds. Notably, with U.S. Treasury yields higher than earlier this year, there has been a rise in demand for bonds in recent auctions. This week’s bond sales include $58 billion in three-year Treasuries on Tuesday and $67 billion in 10- and 30-year Treasury securities later in the week. These sales will serve as a litmus test to gauge investor appetite for bonds, particularly amidst recent decreases in yields. Moreover, it is worth noting that the ongoing bond rally will likely be influenced by the upcoming U.S. inflation report, which will be released next week.

SALES DECREASED

In April, Tesla sold 62,167 of its China-made electric vehicles, which was an 18% decrease from the previous year. The drop in deliveries for the locally produced Model 3 and Model Y vehicles was also significant, falling by 30.2% compared to March. These figures contrast with the general trend of increasing electric vehicle sales in China, where growth has slowed due to factors like weakening demand and intensified competition. The China Passenger Car Association (CPCA) did not specify the destinations of Tesla’s exports, which include markets in Europe. Moreover, Tesla’s main rival in the Chinese market, BYD, reported a notable increase in sales. Nonetheless, despite this, it is worth remarking that Tesla has been strategically adjusting its pricing and workforce in various markets. Furthermore, following this news, Tesla’s stock prices experienced a decrease of over 1%.

ABOVE EXPECTATIONS

Disney’s fiscal second-quarter earnings exceed expectations, with streaming services Disney+ and Hulu turning a profit for the first time. The entertainment streaming revenue rose by 13%, leading to a total of $5.64 billion in revenue. The company reported an increase in Disney+ subscribers and higher average revenue per user. Disney+ core subscribers grew by over 6 million to a total of 117.6 million, while Hulu subscribers increased by 1% to 50.2 million. Key financial highlights include adjusted earnings per share of $1.21, beating the expected $1.10, and revenue of $22.08 billion, slightly below the expected $22.11 billion. Moreover, Disney’s CEO, Bob Iger, expressed satisfaction with the results, noting that the entertainment streaming segment was profitable for the quarter, with expectations to achieve profitability in combined streaming businesses by Q4. The U.S. parks and experiences revenue increased by 7%, reaching $5.96 billion, while international sales soared by 29%. Furthermore, despite reporting a loss in earnings attributable to the company, Disney remains optimistic about its future performance. However, although Disney’ overall performance was positive, shares dropped by more than 8% following the earnings report.

INTERNATIONAL NEWS

According to market pricing, the Bank of England is unlikely to implement its first interest-rate cut until late summer. In fact, there is about a 75% likelihood of a 25 basis point rate cut in August, based on money market pricing data from LSEG. Market strategists believe that any validation of this outlook by BOE officials at their upcoming meeting would further bolster the pound’s rally. As investors await for the meeting on Thursday, the sterling pound has experienced a slight dip against the U.S. dollar and euro, nonetheless, it is still worth remarking that the pound has outperformed all other G-10 currencies in 2024, except for the U.S. dollar, thanks to high U.K. interest rates and evidence of solid economic growth. Moreover, as of what is expected to happen in the next meeting, the Monetary Policy Committee is widely expected to mirrow the Federal Reserve and maintain the key rate at 5.25%.

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