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All eyes on Nvidia earnings, a trade group warns of a secret chip network by Huawei and investors sell billions of dollars worth of Chinese [View in browser]( [Bloomberg]( All eyes on Nvidia earnings, a trade group warns of a secret chip network by Huawei and investors sell billions of dollars worth of Chinese blue-chip stocks. — [Kristine Aquino]( AI hopes US equity futures and European stocks climbed as [investors set their sights on Nvidia earnings](. The company, the chipmaker at the heart of the artificial intelligence hype, is expected to report higher second-quarter revenue than it forecast three months ago. Traders are bracing for a move of about 10% in the stock following the result, options market positioning shows. “Anything less than absolutely fantastic could trigger a sharp downside correction in Nvidia’s stock price, which rallied 345% since the October dip,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. Secret network [Huawei is building a collection of secret semiconductor-fabrication facilities across China](, according to the Semiconductor Industry Association, the leading trade group for chip companies globally. Huawei, a maker of telecom equipment, has been at [the heart of US-China tensions]( over security. The company is receiving an estimated $30 billion in state funding from the government, the SIA said. The US Commerce Department prohibits Huawei from working with American companies in almost all circumstances. But if it’s constructing and buying facilities under the names of other companies without disclosing its involvement, it may be able to circumvent those restrictions, the SIA said. China exodus [Global investors have offloaded the equivalent of more than $10 billion of Chinese blue-chip stocks]( over a record 13 days. Foreigners have sold shares of companies including those of major lender China Merchants Bank and Kweichow Moutai, China’s largest liquor maker. The 10 most-sold stock by foreigners in the latest rout were among the 50 largest ones in the benchmark CSI 300 Index, which has extended its loss this month to almost 8% — among the worst performances in equity markets globally. Everything rally S&P 500 futures rose 0.5% as of 6:25 a.m. in New York, while Nasdaq 100 contracts climbed 0.6%. The Bloomberg Dollar Spot Index traded near its highs of the day, pressuring all Group-of-10 currencies. Treasury yields pulled back across the curve, mirroring even deeper declines in European bond rates. Gold advanced for a third day and Bitcoin gained after a two-day decline, while Brent crude slid nearly 1%. Coming up… At 7 a.m., we’ll get data on mortgage applications, followed by the latest reading for S&P Global’s US business activity gauge at 9:45 a.m. and new home sales data at 10 a.m. The US will sell $16 billion of 20-year bonds at 1 p.m. Beyond Nvidia, key earnings include Peloton, Bath & Body Works, and Abercrombie & Fitch. What we’ve been reading This is what’s caught our eye over the past 24 hours: - UK growth optimism is pierced by[a surprise drop in business activity]( - [The race to ditch Russian uranium]( starts in New Mexico’s desert - [Is Gap’s CEO `kenough’](to execute a turnaround with staying power? - A stagnation in other social networks has[made LinkedIn a go-to platform]( - [Athens wildfires burn for a second day](, threatening homes and forests - [Once a target of US authorities](, Atiku Bagudu is Nigeria’s budget minister - Have consumer goods price rises [finally peaked](? And finally, here's what Joe’s interested in this morning… A simple argument that you could make is that Fed tightening hasn’t had much of a dampening effect on economic activity, because there's a lot of fixed-rate mortgage debt out there, and so that limits the pass-through effect of higher rates. Yesterday [Bob Burgess of Bloomberg Opinion]( posted this remarkable chart, showing that the effective rate of interest on US mortgage debt is still just 3.6%. It's barely ticked up at all. It's not even back to where it was pre-Covid, despite the fact that actual mortgage rates are at their highest level in more than 20 years. In theory, there's a lot more room for this to rise. Eventually debt gets rolled over or it gets reset. Old mortgages get paid off. New ones take their place. And so if you wanted to make an argument that monetary policy works with lags, and that we haven't really felt the impact of the tightening yet, then you could point to this. Of course, the US is fairly unique globally in terms of how typical a 30-year fixed mortgage is. And in many places around the world, houses are bought with floating rate debt, with the impact of higher rates felt quickly and directly on homeowners. And in fact what's theoretically true, may be true in practice as well. [James McIntyre of Bloomberg Economics]( posted this great chart of Australia, showing how sharply retail sales have rolled over in the last year, amid the jump in rates. [As he wrote in a note last week](, the Reserve Bank of Australia "may be forced to start cutting rates ahead of other central banks." In other words, while the US may still be waiting for the effect of monetary policy to dampen activity domestically. Elsewhere around the world, hikes are not only already slowing down household consumption in a notable way, the impact may soon get to the point where rate cuts are in order. Follow Bloomberg's Joe Weisenthal on Twitter [ @TheStalwart](. 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