May 30, 2025 / by Meraki Global Advisors
NVDA
Arguably the most important release of the recent earnings period occurred this past week, NVDA. According to the sell side it was a pretty good quarter!
Except for 5 analysts, 31 had positive commentary on the name post the results.
So, why mention?
Well, anytime a dominant market leading name prints good numbers and then trades flat within a day, we think it’s worth noting.
In all fairness the name had had a great recent run back, so some could argue the positive results were already reflected in the price. But when the name leading one of the biggest driving infrastructure trends in decades reacts like this to a good print, we felt it worthy of mentioning.
That trend is what lead us to this chart, from Apollo.
Reminder that the most recent GDP QoQ looked like such.
If we take the Apollo chart at face value, GDP would be -1.2% without the data center investment contribution.
More concerning is that despite the data center buildout contribution, recent revisions for the US GDP are headed in the wrong direction.
GDP revisions headed lower, while Real yields are headed higher, according to the above chart. If real yields were headed higher due to strong growth expectations that would be much more comforting, but yields heading higher while expectations are headed lower is not a preferable combination.
As we mentioned at the top, NVDA is at the forefront of the infrastructure buildout trend, and the trend is adding 1% to GDP growth according to Apollo, so why is the stock flat post good results?
Are the people making the revisions seeing something the stock is not?
Super Core PCE
Super Core PCE turned negative MoM for first time since April of 2020. Healthcare, which is rarely negative, along with Food Service & Accommodations and Transportation Services were all still positive. Those 3 constituents account for 53% of the total number.
Looked at another way, adding Fed Funds Rate – Upper Bound to chart, for perspective on where the FED is at right now compared to previous occasions when the Super Core PCE MoM was negative. One could argue the white line looks a bit out of place.
Pending Home Sales
Pending Home Sales were released this past week, Thursday May 29th. Month over Month they were down 6.3%. This hardly an unfamiliar number range of late for this metric.
But when looking at absolute levels the view differs a bit.
So, if the real estate market is going to help contribute to the US economy/GDP, it has some real work to do.
Especially when one considers the present level of inventory.
Arguably the 2 most important factors that need to be in place for the consumer to purchase a home are interest rates, directly impacting their monthly payment, and job confidence, knowing they have a means to make those monthly payments for some extended period.
The later factor, which until recently, according to the “hard” data, has not been in question. The Unemployment rate is near all-time lows.
But is it possible some cracks in the employment picture are forthcoming?
Job openings are now back to pre-pandemic levels.
If the ability to replace an old job with a new one is becoming harder to do, as suggested by the math above, then the confidence needed to make monthly payments on a new property are also in question, aren’t they?
If we overlay the present condition of the consumer as well, we think they are even more focused on job confidence than interest rates.
Although this is a daunting chart, the response to it would be that wages have also steadily increased during the period highlighted, 2020 to present.
According to the Bureau of Labor Statistics cost of civilian compensation index, the cost of comp has increased 22.2% during the same period.
Conclusion
It is hard to see much changing in terms of home sales going forward if those job openings continue to move lower and affect the consumer in terms of confidence.
Japanese Yields
We have seen more than a few posts alluding to the yields on Japanese TSY’s moving higher.
This post we saw on LinkedIn is a bit on the alarmist side, but worth pointing out some highlights.
https://www.linkedin.com/posts/jacques-mechelany_endgame-macro-a-major-shift-is-underway-activity-7333391913145823234-FQs7
“End Game Macro: A major shift is underway in global bond markets, and it’s starting in Japan. Japanese life insurers some of the largest institutional investors in the world are now selling Japanese government bonds (JGBs) at the fastest pace on record. Why? Because their duration gap has turned sharply negative for the first time in modern history.”
“The duration gap measures the mismatch between the interest rate sensitivity of assets and liabilities. A positive gap means an insurer’s assets (like long-term bonds) respond more to rate changes than their liabilities (like annuity payments), which is generally manageable. But now, the gap has flipped to −1.48 years, the lowest on record. That means rising interest rates are hammering insurers: their liabilities are becoming more expensive faster than their assets can keep up forcing them to unwind long-duration holdings to stop further P&L damage.”
“Bottom line:
This isn’t just about Japan. It’s the leading edge of global duration stress. The BOJ’s failure to maintain policy control is forcing private capital to do what central banks fear most exit long duration at scale. The Japanese lifers are the canary. If this continues, other markets will follow. Watch the yield curve, watch FX hedging costs, and most of all watch what they sell next.”
The move in the yields may also be exacerbated by the lack of liquidity.
“Liquidity in the Japanese bond market has sunk to levels seen in the wake of the Lehman bankruptcy.
The chart shows an indicator of JGB liquidity, and this accords with anecdotal evidence of poor dealing conditions on JGB trading desks. Further, the BOJ survey of Japanese bond traders shows poorly functioning markets
Japanese yields have been rising sharply and the curve bear steepening, with 30 and 40-year issues making new highs this week. This potentially an issue for the rest of the world. Japan is the world’s largest net creditor and has huge stock foreign assets.”
https://www.linkedin.com/posts/activity-7331303909187072001-9vHX
A lot above to alarm investors, but we thought taking a longer look at the relationship between US and JPN 30yr TSY’s might offer some perspective.
In the bottom panel we have both the US and Japanese 30yr TSY’s, and in the top panel we have the spread between them. It appears to us the spread bounces around between 100 and 250 bps, and with it presently at 192bps we don’t believe there is reason to be overly concerned at this moment.
Updated Regulations
Both the Philippines and India regulators had some updates to existing regulations this past week.
SEBI : New Changes to F&O Trading | Positive Brokers, Exchange & Ancillary players
– Regulator has relaxed proposed curbs on trading in Index Options by introducing much higher threshold for Net & Gross position limits
– New regulations are significantly better than consultation paper that was released in Feb’25:
1) There is no intra-day limit as was proposed in the consultation paper
2) EoD Net limit was proposed to be INR5b is now set at INR15b
3) EoD Gross limit that was proposed to be at INR15b is now set at INR100b
The above limits are per PAN.
>> Consultation paper had raised concerns especially for volumes that came from HFTs & Prop books. However, these relaxed norms are very much acceptable to the participants
>> One more positive step by regulator supportive of trading environment
Have a great weekend!
Best,
Meraki Trading Team