Good Afternoon. A 25% revenue acceleration in one quarter is not supposed to be greeted with a shrug. But that is the story this morning: Nvidia reported $81.6 billion in Q1 fiscal 2027 revenue (up 85% year-over-year), data center revenue up 131%, and a Q2 guide above the high end of every published estimate -- and the stock opened only modestly higher before drifting downward. Meanwhile, the FOMC minutes from yesterday read hawkish.

—Rosie, Wyatt, Evan & Conor

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The News: Nvidia reported first-quarter fiscal 2027 revenue of $81.6 billion, up 85% year-over-year and 20% sequentially, beating consensus of $78.97 billion. Adjusted EPS came in at $1.87, against a $1.75 expectation. Data center revenue grew 131% year-over-year. The company guided Q2 revenue to a range with a midpoint that exceeded the high end of Visible Alpha estimates. Shares opened roughly flat in early trade.

Why It Matters: This is the cleanest beat-and-raise we have seen out of Nvidia since the original ChatGPT moment. But the stock reaction tells you investors are sitting on substantial gains from the YTD rally and have nowhere left to add. For investors, the immediate question is whether this was the last "everyone owns it" quarter or just a pause. For chip customers, the company's guidance commentary on Blackwell Ultra supply through 2027 is the single most important data point in the entire report.

What to Watch: Whether the broader AI capex complex -- Vertiv, Eaton, Constellation, the data center REITs -- can carry the leadership baton if Nvidia rests here.

Source: MarketBeat

The News: Walmart reported first-quarter fiscal 2027 results before the open, with U.S. comparable sales up 4.2% and total revenue growth in line with the company's prior guidance range. Management raised its full-year sales and operating-income outlook, citing strength in grocery, e-commerce, and advertising. Walmart Connect (the company's ad business) grew 31% year-over-year. CFO John David Rainey said the company was absorbing tariffs without raising prices "where we can."

Why It Matters: Three big-box retailers in two days (Walmart, Target, Lowe's) have now confirmed the trade-down consumer is real and getting larger. For investors, Walmart's ability to grow Connect ads at 31% while holding pricing on essentials is one of the strongest competitive moats in the entire S&P 500. For consumers, the message is that Walmart is choosing to absorb tariff cost rather than raise prices -- a powerful disinflation force.

What to Watch: Whether Costco confirms the same dynamic in its quarter next week. If yes, that is a clean three-for-three on the trade-down thesis.

Source: Walmart Corporate

The News: The Federal Reserve released minutes from the April 28-29 FOMC meeting yesterday afternoon, showing "most members" of the committee viewed inflation risks as having "moved higher" since the March meeting. The minutes also revealed that three voting members had argued for stronger anti-easing language in the statement, and one (Miran) had favored an immediate 25 basis-point cut. Staff economic projections showed GDP growth slightly above the March projection.

Why It Matters: This is the most hawkish set of FOMC minutes since late 2023 and effectively closes the door on a June rate cut. For investors, the takeaway is that the back end of the Treasury curve still has room to rise, and any growth disappointment will be welcomed by rate-cut hopefuls. For mortgage and auto borrowers, it means rates are not coming down in time for the summer buying season.

What to Watch: Whether incoming Chair Warsh telegraphs a continuation of the Powell-era patience at his June 17-18 debut meeting.

Source: Federal Reserve

The News: The S&P Global Flash U.S. Manufacturing PMI rose to 55.3 in May, up from 54.5 in April and beating market expectations of 53.8. Output grew at the fastest pace in over four years and job creation came in at the highest reading since June 2025. The composite output index held at 51.7, while services slipped slightly. New orders for manufacturing rose at the fastest pace since early 2022.

Why It Matters: This is the strongest U.S. manufacturing reading in nearly four years, fully validating the reshoring and onshoring narrative we have been tracking since the November tariff packages. For investors, this also explains why long-duration yields are climbing: a hot manufacturing economy is incompatible with summer rate cuts. For workers, the job creation in manufacturing is real, with multiple regional Fed surveys (Empire State, Philly Fed) also confirming the trend.

What to Watch: Whether services PMI continues to soften. A services-led growth scare is the one thing that would re-open the rate-cut conversation.

Source: Trading Economics

The News: The Treasury Department's $16 billion 20-year bond auction yesterday afternoon cleared at a higher yield than the when-issued level, signaling tepid demand. The cover ratio came in below the six-auction average, and indirect buyers (a proxy for foreign demand) took the lowest share since November. The 30-year yield rose to 5.18% in the wake of the auction, the highest closing level of 2026.

Why It Matters: Foreign demand for U.S. long-duration paper is the single most-watched indicator in the bond market right now, and yesterday's auction was a tangible step lower. For investors, weak demand at the long end means term premium continues to rise and that any growth slowdown will not be enough to offset the supply-driven yield pressure. For mortgage borrowers, the 30-year fixed is now tethered to the 30-year Treasury, and both are reaching multi-decade highs.

What to Watch: Next week's 7-year and 2-year auctions. If indirect buyers show up there, this was an idiosyncratic 20-year story. If not, the supply concern is structural.

Source: Fortune

The News: The S&P Global Eurozone Flash Composite PMI held at 51.7 in May, unchanged from April. Manufacturing slipped to 50.2 (a two-month low) and services held in expansion territory. Germany's manufacturing reading at 51.4 also slipped versus April, while France's came in at 50.2. The release noted "subdued growth in May amid a price surge."

Why It Matters: Europe is doing the opposite of the U.S.: a softening manufacturing trajectory paired with sticky inflation. For investors, that combination keeps the ECB on its data-dependent hold and is bearish the euro versus the dollar in the near term. For Eurozone growth watchers, manufacturing back at the 50 line is the warning the ECB has been quietly worried about.

What to Watch: ECB's June 5 decision and whether President Lagarde signals an earlier-than-expected return to cuts.

Source: S&P Global PMI

The News: Japan's S&P Global Flash Manufacturing PMI for May came in below the 50-line again, with output and new orders both contracting. Services growth slowed, leaving the composite reading at its weakest point since late 2024. The data lands just as overnight swaps imply a 77% probability of a Bank of Japan rate hike at the June 16 meeting.

Why It Matters: This is the BoJ's actual dilemma in real time: inflation is sticky enough to support a hike, but real economy data is too soft to justify it cleanly. For investors, that ambiguity keeps the yen in a wide range and Japan equity volatility elevated. For Japanese consumers, the slowdown means imported food and energy will stay structurally expensive without a stronger yen.

What to Watch: USD/JPY into the June 16 BoJ meeting. A break below 150 would suggest markets expect a hike; a hold above 152 says no hike.

Source: S&P Global PMI

The News: Iran's Foreign Minister Abbas Araghchi arrived in Geneva for the first formal nuclear talks since the May 19 UAE drone incident. Both sides emerged from a six-hour session saying "constructive progress" was made and a follow-up round would be held over the weekend. Brent crude declined to $106.80 on the headlines, the first time below $107 since the May 15 ultimatum.

Why It Matters: Real diplomatic engagement -- as opposed to the "deal or attack" ultimatum from earlier in the week -- is a meaningful de-escalation signal. For investors, the easing oil price is the cleanest disinflation force in the global economy right now. For consumers, every $1 drop in Brent ultimately translates into about 2.5 cents per gallon at the U.S. pump within 6-8 weeks.

What to Watch: Whether the weekend round delivers framework language or just another delay. If framework language emerges, expect Brent to test $100.

Source: Reuters

Q: Why are frogs so happy?

A: Because they eat whatever bugs them.

a cost that has already been incurred and cannot be recovered. In rational decision-making, sunk costs should be ignored, since they do not change based on future actions; only incremental costs and benefits should be considered going forward.

Usage: "The factory equipment we bought last year is a sunk cost -- whether or not it depreciates over the next decade should have no influence on whether we expand production today."

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