Bloomberg Daybreak Weekend: US Economic Data, Nvidia Earnings, Poland Election, Bank of Korea

US Economic Outlook: GDP and Inflation

• 📉 First quarter GDP is expected to show a modest downward revision, potentially reaching only 0% growth, indicating a soft economic reading.
• ⚠️ While trade may have dragged down GDP, the focus on accounting misses the larger point of weak domestic demand compared to foreign.
• 📈 April's Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation measure, is projected to show a 0.1% rise, but underlying details suggest rising goods prices due to tariffs and falling services prices.
• 🔮 Even with a weak aggregate inflation reading, the details foreshadow higher prices ahead as firms pass on increased costs.

Nvidia Earnings Preview

• 🚀 Despite recent stock volatility and export restrictions to China, Nvidia is expected to deliver a strong earnings beat and raise guidance.
• 💰 A significant charge due to export restrictions is anticipated, but it's a known quantity and non-GAAP numbers, which investors focus on, are not expected to be impacted.
• 🇨🇳 Nvidia is developing a new China-variant chip and expects to regain some lost revenue in the second half of the year.
• 🔗 The company is opening up its NVLink connectivity system to the broader semiconductor industry, reducing concerns about proprietary systems and vendor lock-in.

Poland's Presidential Election

• 🗳️ Poland is at a crossroads, with a runoff election between centrist Warsaw Mayor Rafal Chazovski and Law and Justice rival Karol Navroi determining the country's direction within the EU.
• 🇪🇺 The election is a test for liberal Europe, with one vision favoring increased EU cooperation and another prioritizing NATO and US security guarantees.
• ⚖️ The outcome could impact Poland's relationship with the EU, particularly concerning justice reforms and security policy.
• 🇵🇱 Prime Minister Donald Tusk's pro-EU coalition needs an ally in the presidential palace to maintain its agenda and influence within the EU.

Bank of Korea and South Korean Economy

• 🇰🇷 South Korea's economy is under significant strain due to political instability, US tariffs, and slowing growth momentum.
• 📉 Exports to the US have dropped, particularly in vehicles, though semiconductor sales saw a jump.
• 💸 The Korean won has faced downward pressure but is showing slight gains, while inflation remains relatively stable due to weak domestic demand.
• 🏦 The Bank of Korea is expected to cut interest rates by 25 basis points to boost the economy, balancing weak growth with stable inflation.

Global Economic Themes

• 🌍 Investors are navigating high policy uncertainty and market volatility, with a potential rotation from US markets to other global stock markets in Europe and Asia.
• 📈 Opportunities may lie in India's fixed income and China's stock markets, themes often overlooked due to the dominance of US market narratives.
• ⏳ A longer-term investment horizon is advised, focusing on themes in Europe and Asia over the near-term.