Exit Powell, Enter Risk: The Bond Market's Farewell Message

Big tech provides big boost to equities Stocks have continued to soar off the recent lows in March, fueled by strong quarterly results. Semiconductor and data center plays have done the heavy lifting in recent weeks, with moves accelerating to the upside after making new highs. Big tech names Google and Apple saw positive reactions from earnings results, while META, Amazon, and Microsoft saw mixed results. Big tech continues to post strong results and guidance, exceeding S&P500 estimates threefold.

Jerome Powell's farewell pump Jerome Powell enters his last few days as sitting Fed Chair. The S&P 500 delivered a 14.7% annualized total return during Powell's tenure, the third-best showing for any Fed chair since 1970, according to Bespoke Investment Group. Markets kept finding new engines during Powell's tenure, rebounding stronger from the pandemic, inflation, historic rate-hiking cycle, global trade restructuring, and geopolitical risks. To cap his tenure off, he defended Fed independence, perhaps his most underrated legacy. Powell steered the Federal Open Market Committee to mostly unanimous decisions, building consensus across 11 other central bankers who almost certainly didn't agree with him or each other. He kept his public language careful enough that markets could hear him without panicking. Powell will cement himself as a central banker who handled extraordinary crises with calm and integrity through ever-changing market environment, and protected the institution he served. Markets will close out his tenure with year-to-date best monthly returns.

GameStop won't stop; Plans to make bid for eBay GameStop wants to buy eBay for $56 billion. Wall Street has one big question, how will they do it? One the surface it seems like an intriguing opportunity, but on paper, it's more complex. GameStop has a market capitalization of nearly $11 billion with $9 in cash and cash equivalents. Years earlier, they were on the verge of bankruptcy. Ryan Cohen stepped in as Chairman and CEO to turn around the company, now they are making small steps in the right direction. eBay is a secondary market platform that can open opportunities for GameStop based on their business model. The only problem? eBay is worth 4-5 times GameStop. How can they afford such a move? Ryan Cohen demeanor during an interview on CNBC's morning show, Squawk Box, left viewers and hosts perplexed. The financing question was the most awkward moment. Michael Burry, who in weeks prior, announced a position in the company, was turned away from such events and sold out of his stake in the company. In summary, the acquisition would require cash, stock, and financing to make it work, and Cohen's immediate action to the deal would to be cut eBay's operating costs as it is a "asset light" business.

Long-Term treasury yields on the verge of decade-long breakout This is one of the most significant bond market stories in years. The 30-year bond yield has surged past 5%. The 5% mark on the 30-year has acted as a ceiling for two years. It was tested in late 2023 and early 2025, but failed to sustain above this level both times. A sustained break above 5% would push yields into territory unseen in nearly two decades, with the 2023 peak near 5.17% sitting as the next major test. Three forces are converging simultaneously that could lead to multi-year breakout: 1. Geopolitical risks remain elevated. Although market has largely brushed off war risks and oil supply shocks, they cannot be ruled out. The Strait of Hormuz is still closed. Higher energy prices flow directly into inflation expectations, which push long-end yields higher 2. Inflation back on the table. The prices paid component of the ISM index surged to the highest level since April 2022 as companies experienced higher energy costs and elevated tariff charges. The PCE price index, the Fed's preferred inflation measure, rose to an annual rate of 3.5% in March, above the Fed's 2% annual target. 3. The Fed Chair succession. Many say the days of Fed independence are behind us, as Jerome Powell steps off and Kevin Warsh, Trump's nominee to step into the seat. Kevin Warsh is known to be more dovish and it could fall into Trump's desire to bring interest rates down. There is a risk that premature interest rate cuts could lead to a "bear steepening" of the yield curve, where short-term rates remain low or fall but longer-term rates nonetheless rise, a scenario where the bond market essentially overrules the Fed.

Nvidia to $10 Trillion? Adam Parker appeared on a financial podcast segments and was noted for saying he could see Nvidia surging to $10 trillion market capitalization. As of today, Nvidia sits around $4.8 trillion market cap, implying that it could more than double from here. The financial foundation of Nvidia has solidified, with early bears not anticipating revenue acceleration to persist, Nvidia reporting 65% topline revenue growth and nearly a quarter-trillion in revenue for FY 2026. To make things more exciting, hyperscalers have shown no sign of slowing down, committing over $600 billion in capex this year. Parker also noted that Nvidia is a sector, not a stock. This phrase captures something fundamental about how Nvidia has transcended its original identity. Nvidia has positioned itself as the foundational infrastructure layer for the global AI economy. It no longer competes for traditional semiconductor market share. Nvidia's hardware has the ability to touch every industry, from AI computing, vehicle manufacturing, robotics, to even healthcare AI. Nvidia's chips are the toll booth on every dollar spent building the AI economy, and that economy is only in its early innings.