I. Performance of Global Equity Indices (in US dollars)
Data source: Bloomberg, compiled by Tiger Brokers
II. Key Market Themes
i. Emergency "Reassurances" by US and Japanese Central Banks: How Long Will the Recession Sentiment Last?
Recently, facing the severe turbulence in the capital markets and near-loss-of-control panic, the Federal Reserve and the Bank of Japan have both stepped in to calm the markets. The Deputy Governor of the Bank of Japan even directly stated, "Given the extreme turbulence in both domestic and international financial and capital markets, the central bank needs to temporarily maintain the current accommodative policy." This near-defeatist statement has somewhat reassured the precarious market sentiment.
On one hand, according to the Commodity Futures Trading Commission (CFTC) data, speculative traders' net short positions in the yen have dropped from $15 billion to $1 billion. Goldman Sachs estimates that about 90% of yen carry trades have been unwound. While this figure may not be precise, as long as the US economy does not face significant recession risks, the impact of yen carry trades should not be overly concerning.
On the other hand, last week’s US services PMI and initial jobless claims were better than expected, easing recession concerns and stabilizing stock prices. Additionally, after about a week of digestion, the market is regaining rationality, with expectations for a September rate cut returning to 25 basis points. This aligns with our viewpoint from last week: there is currently no strong evidence supporting an imminent US recession, and it will take time for the market to fully recover from its anxiety.
Data source: CFTC, Haver Analytics, Goldman Sachs Global Investment Research, compiled by Tiger Brokers
ii. Design Flaws, Delayed Shipments: Is NVIDIA's Chip in Trouble? Can We Still Expect the Month-End Financial Report?
Recently, news about Nvidia $英伟达(NVDA)$ 's new generation Blackwell chip "failing" is everywhere, with some saying there are design flaws in the chip and others saying Blackwell's shipments are delayed. After global media and financial institutions' hype, the AI sector has already seen a significant pullback in the market.
Firstly, rumors suggest that NVIDIA's basic b102 chip has design problems that require TSMC $台积电(TSM)$ to re-spin the wafer. According to industry insiders, TSMC identified the issue in mid-July and has since successfully re-spun the wafer. Although this will affect the shipment pace for this year, there is a possibility to recover some of the lost ground by expanding production by the end of the year and still achieve the planned large-scale shipments in 2025.
In addition, the CoWoS-L packaging yield is only 60%, causing market concern, but some institutions believe the yield can reach around 90%. Even if the yield does not meet expectations, Nvidia can use the CoWoS-S packaging on lower-end product lines, which has slightly lower performance but better yield, greatly reducing the negative impact of yield on shipments.
At last week's SMCI $超微电脑(SMCI)$ financial report conference call, when analysts asked about the impact of Blackwell, SMCI stated that large-scale revenue from Blackwell is expected to be achieved in 2025, with only samples in the second half of 2024, confirming that Blackwell's shipments are about a quarter later than previously expected in Q4.
We believe that although Nvidia currently has some short-term issues exposed, the overall demand and total sales volume of the Blackwell series are limitedly affected. At the same time, the demand for the older Hopper series is still strong, and Nvidia can reduce the negative impact of the delay by increasing supply. In addition, the expected price by analysts has not been affected by this.
Data source: Bloomberg, compiled by Tiger Brokers
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