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

Good morning. Stock futures are taking a breather this morning after a tech-fueled surge in the previous session propelled Nvidia’s market v [View in browser]( [Bloomberg]( Good morning. Stock futures are taking a breather this morning after a tech-fueled surge in the previous session propelled Nvidia’s market value to over $3 trillion. The focus now turns toward the European Central Bank’s first expected rate cut, ahead of US jobless claims data. -[Morwenna Coniam]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Nvidia tops three trillion Stock futures are hovering near Thursday’s umpteenth record-high close, fueled by a [tech-driven rally]( which saw Nvidia becoming the first computer-chip company ever to hit[$3 trillion in market value](. Now worth more than Apple, Nvidia’s shares have surged almost 150% so far this year, benefitting from a flood of AI spending, while the iPhone maker has been pressured by concerns over cooling demand from China and an European Union fine. ECB ready to cut The European Central Bank is poised to start [lowering interest ratesÂ](from a record-high level, confident that inflation is sufficiently contained to ease the burden on the economy. Where the ECB goes from here is unclear, with views becoming more cautious in the wake of data showing stronger-than-anticipated economic growth, inflation and wage increases. Wall of money The party for stocks may be set to continue, according to Goldman Sachs’s trading desk. A flood of cash from passive equity allocations will [pour into the stock market]( in early July, setting up a continuing rally through the early summer, they say. In addition, share prices should benefit from strong seasonal trends and rising engagement from retail investors. Apollo’s Kleinman says it’s `not ok’ It’s not such good news for private equity though, according to Apollo Global Management’s Scott Kleinman. [“Everything is not going to be ok,”]( he says. The industry, which didn’t take significant markdowns during the recent period of rate hikes, has to face up to the reality of lower valuations as “the lump” now moves through the system, meaning “fewer realizations and lower returns.” Coming Up… Eyes will be fixed on the ECB’s rate decision at lunchtime in Europe before turning US initial jobless claims data at 8.30 am ET, where an upside surprise could have an impact on the Fed’s  willingness to cut interest rates. The morning also sees the release of trade balance data for April. Names scheduled to report earnings after the close include Oracle, Adobe and Broadcom. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - The [UK’s wealthy are rushing to shelter their money]( ahead of the election amid pledges to scrap preferential taxation for non-domiciled residents - Cathie Wood says Ark is [well placed in AI](even after trimming back on Nvidia - Trafigura’s profit drops 73% as [commodity trading boom](cycle fades - A man in Mexico died after contracting a [strain of bird flu]( that hasn’t been confirmed in humans before - [Chanel’s record dividend](brings owners’ windfall to $12 billion And finally, here's what Joe’s interested in this morning Tracy Alloway and I have done a bunch of episodes of the [Odd Lots podcast]( about the transition to green energy, and one of my big takeaways is that offtake agreements matter a lot. I mean, on some level this is obvious. Businesses don't want to invest in building anything new if there's not some good reason to believe that the demand will be there. But in the business of carbon-free energy, the challenge is particularly acute, because there's been no steady-state market that makes demand predictable. Since so much of the costs in anything energy-related are for capex (wind and solar farms don't cost much to run once they're built), investors want some kind of guaranteed buyer. And so you see things like companies doing renewable energy projects, specifically in partnership with big cloud companies that want to power datacenters with carbon-free electricity. Stuff like that. [On today's show](, Tracy and I spoke with David Hardy, the CEO of the Americas division at Orsted, the Danish wind-power giant that's been working to build offshore capacity in the US, particularly in the northeast. It had a lot of struggles in 2023, owing to both supply chain issues and the surge in interest rates. Again, because the cost is all upfront, those initial financing conditions matter a lot. In the conversation, the concept of offtake, or guaranteed markets, came up in two different ways. The first is that the Inflation Reduction Act offers various tax credits and subsidies for about a decade. The government, along with various states, have been investing in renewable energy for a while. But the programs have in the past been short-lived, one or two years at a time, and then there's all this uncertainty about whether the benefits will be renewed or not. So if you're thinking about making some multi-billion investment, it's not great if you don't even know what the policy landscape will be by the time you're not building it. So, simply by dint of being in place for a long time, the IRA changes the landscape in a profound way, giving investors some kind of policy certainty for long projects. The other element, and this relates to supply chain challenges, is that the offtake sequence affects numerous companies across the ecosystem. A developer like Orsted has its own suppliers of things like foundation-equipment, or electrical gear, or even the Jones Act-compliant ships that transport material to the actual location of the offshore turbines. As Hardy explained, a number of these key suppliers can be fairly small, without much balance sheet capacity. Their ability to just ramp up cannot be taken for granted. To put it another way, those companies aren't just going to ramp up their production of various components without purchasing guarantees from a company like Orsted. They just don't have the financial bandwidth to expand otherwise. You can therefore see why building out a new, domestic supply chain is so tricky. Everything is a cascading sequence of guarantees, or assumed guarantees. There's the price the utility will pay for the wind. There's the tax credits. There's the demand for ships and turbines and gear, and when something doesn't materialize with a project, the effect ripples out. Anyway, as Hardy sees it, 2023 was something of an annus horribilis for offshore wind, with various projects (including a major Orsted project in New Jersey) having gotten canceled, with major writedowns. But this is just the growing pains of bootstrapping a new industry with its own supply chain, and that over time this network will emerge. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. 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