| Good morning. Stocks fall as traders await PCE. US officials slow issuing of licenses to chipmakers. Ambani's Jio introduces new super-app. Here's what's moving markets. — Isabelle Lee Wall Street traders sent stocks down and bonds up after the latest round of economic data signaled a slowdown in momentum. Data showed the US grew at a softer pace than previously estimated — as both spending and inflation were marked down. Economic cooling means officials could have room to cut interest rates this year, but that might also be a concern for consumption and corporate profits. The S&P 500 dropped to 5,235, led by tech losses, while the Nasdaq 100 fell 1%. Federal Reserve Bank of New York President John Williams said he expects inflation to continue falling. Treasury two-year yields dropped five basis points to 4.92%. The dollar retreated. Ahead, traders are focused on the Fed's preferred price gauge. Economists expect the personal consumption expenditure price index minus food and energy to have risen 0.2% in April, the smallest advance so far this year. Separately, Trump Media & Technology Group shares dropped as much as 15% after a jury found Donald Trump guilty of multiple felonies at his hush-money trial, making him the first former US president to be convicted of crimes. US officials have slowed the issuing of licenses to chipmakers like Nvidia and Advanced Micro Devices for large-scale AI accelerator shipments to the Middle East, sources told Bloomberg. It's unclear how long the review will take nor is there a concrete definition of what constitutes a large shipment. Officials are particularly focused on high-volume sales as countries including the United Arab Emirates and Saudi Arabia look to import massive quantities of the chips used in AI data centers. The slowdown in exports is meant to give Washington time to develop a comprehensive strategy around how the chips will be deployed overseas. Apollo Global Management plans to expand its asset origination business to sell private credit to retail channels, including ETFs. The firm already sells credit instruments to insurers, including its own Athene unit, and institutional investors. Apollo has set a five-year goal of boosting annual origination to $200 billion to $250 billion. Private asset managers are looking beyond traditional institutional investors such as pension funds and endowments for sources of capital amid a tough fundraising environment. Blackstone and KKR are building wealth units, while Carlyle is readying its first European private credit fund for wealthy individuals. Mukesh Ambani's Jio Financial Services has introduced a new super-app for digital banking and payment services that will take on competitors like Google and Amazon in a crowded Indian market. The firm announced the test version of its platform, JioFinance, for UPI transactions, bill settlements and insurance-related services. The financial arm of the oil-to-telecom conglomerate plans to expand into mutual fund loans and mortgage lending. Asia's richest man's latest initiative comes as rival Adani Group is also reportedly in talks to expand into e-commerce and payments. Traders can look to a slew of data from the region Friday. There's Japan's industrial production, which likely posted a modest rise in April after a jump in March. There's China's official PMI surveys for May, which will likely show manufacturing continuing to grow at a modest pace, supported by solid production, and India's GDP numbers, which will show growth likely slowed to 7% year on year in the first quarter from 8.4% in the fourth quarter. Elsewhere, the US will see consumer income and spending data, and in Europe there's euro area CPI. Here's what caught our eye over the past 24 hours: - Wall Street aces big T+1 test with no rise in failed trades
- India's Jindal is said to join Venezuelan oil venture
- Iran-backed gangs blamed for Israeli embassy attacks
- Saudi Arabia seeks up to $12 billion in Aramco stake sale
- HSBC makes Middle East wealth push after hiring 100 bankers
- Walmart store managers can indeed make $500,000 a year
- The 10 people to watch in finance and investing in 2024
The US equities trading session was disappointing, given the rally in Treasuries as yields declined. The worry still seems to be about the toxic mix of still-high inflation and weakening growth. But with the Russell 2000 up but the Nasdaq, the S&P 500 and the Dow all down, it's hard to discern a pattern. Month-end trading complicates that. To get a handle on how 'stagflationary' things actually look, I've run through a battery of US data print flows and what I saw was troubling on the growth side. First, if you look at credit-fueled consumption data patterns they are all weak, including overall consumer credit and both revolving and non-revolving credit. Given the US personal savings rate is down to 3.2% after averaging 6% in the last expansion from 2009-2020, it suggests the next thing to give way is actual consumption. We'll get a look at that on Friday when PCE data comes out, following a GDP report that showed declining consumption growth last quarter. On the inflation side, we have to remember that the Fed's preferred PCE inflation gauge lobbed in a lot of low prints in the back half of 2023. From March to December, seven of the 10 monthly prints were 2% annualized or below. That will make for some difficult comps this year in the effort to get down to the Fed's 2% target allowing it to cut rates. But the reality is the Fed has already signaled it will cut well before we get to 2%. One could argue that the things holding the inflation rate up in core services inflation, like auto or home insurance, simply are not things the Fed should target with rate policy, and are secular issues beyond its control. If personal consumption growth in the US continues to underwhelm, we should expect to hear more of that kind of reasoning, preparing us for a cut. Monthly prints of 0.2% might be enough between now and the September Fed meeting to provide that cut in September. A low PCE number on Friday could see a decent-sized rally in Treasuries and give equities some breathing room as next week begins. Ed Harrison writes the Everything Risk newsletter. Follow him on X at @edwardnh. | 
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