Nvidia's beat-and-raise was solid but lacked a major positive surprise, leading to profit-taking given high valuations and rising risk aversion from yields and inflation concerns. China revenue is zeroed out in guidance, with the question shifting from whether Washington will allow sales to whether Beijing even wants to buy, as domestic alternatives emerge.

AI capex and productivity are driving US growth and expected to continue. The Fed needs to get past tariff inflation and oil pass-through before cutting rates, with cuts pushed to 2027. Central bank divergence is the theme for this year, with ECB hiking due to stronger oil pass-through while Fed and BOE are more patient. A weaker dollar is possible later in the year if the Fed cuts.

J.P. Morgan is leaning in aggressively in the Middle East during the conflict, increasing risk limits and lending. Deal-making has remained robust despite the war, though ECM and M&A have slowed slightly. Private credit is not systemic but credit more broadly is a concern. Inflation and rates are the most important risk, with more pressure to hike than cut.

Trump's 'final stages' comment confused markets, initially interpreted as a peace deal breakthrough but walked back. There is movement behind the scenes via Pakistan as mediator, with Iran assessing the latest US proposal. Iran's threats of retaliation beyond the Middle East are serious, as they caused significant damage in the Gulf and Israel before the ceasefire.

Nvidia delivered 85% revenue growth and 90% data center growth, but the market has grown accustomed to perfection and wants more. The AI trade is broadening beyond Nvidia to networking, CPUs, and memory names. China revenue is zeroed out in guidance, with the question shifting to whether China even wants to buy as domestic alternatives emerge.