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

Good morning. Calm descends on markets after the Nvidia frenzy, Goldman Sachs economists push back rate cut view and China's tentative recov [View in browser]( [Bloomberg]( Good morning. Calm descends on markets after the Nvidia frenzy, Goldman Sachs economists push back rate cut view and China's tentative recovery. Here’s what’s moving markets. — [Sam Unsted]( Post-Nvidia calm Stock futures [are pretty flat]( following a blowout session peppered with indexes hitting records, all powered by the much-hyped and ultimately even-better-than-expected results from AI poster-child Nvidia. The S&P 500 and the Nasdaq 100 both hit new records, so did the Nikkei 225 in Japan. In the end, Nvidia ended up adding $277 billion in market value — [the biggest increase in market value in a single day ever]( — and the stock is rising again in premarket trading, raising the prospect that it will become the first chipmaker to hit the $2 trillion milestone. Maybe in June Economists at Goldman Sachs have pushed back their view on when the Fed will begin cutting interest rates to June, [dropping their forecast for a May cut](. They said recent comments from Fed officials show less concern about keeping rates too high for too long and have been clear that definitive evidence of cooling inflation is needed before cuts appear. Three Fed officials [hammered home that message](, saying that the central bank is on track to cut rates, just not anytime in the immediate future. Dumping Treasuries A money manager at Fidelity International has [sold the vast majority of holdings in US Treasuries]( from the funds he oversees on the expectation that the country’s economy still has room to expand. George Efstathopoulos sold most of the holdings in December and is now turning to more cyclical assets to benefit from economic growth. Deutsche Bank’s Jim Reid, meanwhile, [remains among the doubters]( that the US economy is headed for a soft landing. Tentative recovery Chinese assets are [showing signs of a recovery]( following a painful run of losses in the local stock market amid growing confidence that the improvement in the country will have depth. The decline in [home prices has also slowed](. China’s central bank is trying to underpin that by aiming to squeeze more value from its policy actions, [attempting to catch markets unaware]( with surprise easing measures. Quantitative hedge funds in the country, meanwhile, are admitting to [unprecedented failures in their stock-trading models]( during this wild stretch for the stock market. Underpricing disorder Financial markets are [underestimating the risk of global political and social turmoil]( coming from populist policies and from the potential erosion of the rule of law, according to former US Treasury Secretary Lawrence Summers. More broadly, the US and China are discussing new measures to prevent a [wave of sovereign defaults in emerging markets](, one of the most significant attempts in years at economic cooperation between the two. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Stock records and moon landings on [the Daybreak podcast](. - Inflows for Pimco this year [have been stunning](, its owner said. - A Houston-based startup [lands on the moon](. - An [insider trading charge]( for a husband snooping on his wife M&A work. - Forgiveness plan benefits for [Texan student loan borrowers](. - The ongoing risk of planes [disappearing off the map](. - A [profit beat and a buyback]( sends StanChart shares higher. And finally, here's what Kristine is interested in this morning All-time peaks for the major US equity indices further widen the gap between stocks and bonds, which are near the weakest levels in almost three months. That will probably stay the norm, at least until the Federal Reserve begins cutting rates. Thursday's record-high close for the S&P 500 has sent the 60-day correlation between equity and 10-year Treasury futures to about half as much the levels seen in late January: Stocks, of course, continue to ride the rally fueled by Nvidia, which saw the biggest ever boost to its value -- to the tune of $277 billion. Its current momentum is so relentless and encompassing that most risk assets have been swept up in the optimism. And there’s further room to go, given the fact that AI as a macro theme is really just in its infancy, as Bloomberg macro strategist Cameron Crise noted: It is certainly possible, indeed easy, to envisage a world where AI is the trusted assistant to virtually every white-collar endeavor, or perhaps even a significant portion of the workforce in data-related or intellectual-property service sector industries. From a macroeconomic perspective that should significantly boost labor productivity in those sectors, though there is also a question of what will happen to the displaced workers. The long-standing advice of “learn to code” will no longer apply when the AI robot can already do it better than most humans. Higher productivity, and by extension higher trend growth, should permit the economy to sustain a higher level of interest rates. As for bonds, there's a case to be made for a rebound at some stage, likely when the Fed carries out its first rate reduction. Until then, investors will probably find stocks infinitely more compelling than bonds -- especially when there’s about $6 trillion of cash on the sidelines waiting to be put to work. [Kristine Aquino]( is managing editor for [Bloomberg Markets Today](. Follow her on X at [@krisaqnews](. 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