Good morning investors! Tech had a bad day yesterday as investors moved to other names.
Today we cover:
Private credit is powering AI
Lululemon reports
CBDCs…
📊 Economy and News
Private Credit Powers the AI Buildout
Broadcom’s earnings call reframed the AI narrative from “who sells the chips” to “who finances the infrastructure.” CEO Hock Tan highlighted an “AI XPU platform” — a custom AI compute solution — backed by private credit giants Apollo, Blackstone, and others. The group plans to deploy over 20 gigawatts of capacity through 2028, with Apollo launching an initial ~$35 billion tranche.
Private credit is stepping in as cash-strapped companies turn to debt to rent massive AI compute. Google recently raised $80B in equity (following a $35B debt raise) for the same reason. As Michael Burry noted, the AI boom isn’t just a chip cycle — it’s a complex web of private credit, insurers, SPVs, and off-balance-sheet risks.
Markets reacted accordingly: financials rotated higher ($GS +5%, $AXP +4%, $JPM +3.3%), while semis dipped on Broadcom’s reaction. Blackstone shares popped, underscoring that financing the “AI factories” could be highly profitable — at least until the music stops.
Jane Street is even in talks to build its own data center, signaling the rising pain of renting compute power.
Global hits:
Ireland’s unemployment rate edges up to 4.9% in May.
Aussie home prices set for weakest growth in four years as rates bite.
Japan’s real wages extend gains, consumer spending decline slows in April.
Reminder: Hezbollah and Israel trade new strikes as uncertainty surrounds US-Iran talks.
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📈 Stocks
S&P 500 7,584.31 (+0.41%)
DJIA 51,561.93 (+1.73%)
NASDAQ 26,830.96 (-0.086%)
BRENT CRUDE 94.93 (-0.12%)
* Prices as of Jun 5th, 12:20 AM UTC
Lululemon Slashes Outlook on Media Criticism and Weak Product Launches
Lululemon lowered its full-year 2026 sales and earnings guidance and issued a disappointing outlook for the current quarter, citing negative media coverage and disappointing product launches.
Interim CEO Meghan Frank highlighted spikes in negative commentary—particularly around the proxy battle with founder Chip Wilson and questions about product composition—that hurt traffic and sales. She noted that not all recent launches met expectations.
Key Guidance Cuts:
Full-year sales: $11.0B–$11.15B (previously $11.35B–$11.50B)
Full-year EPS: $10.95–$11.15 (previously $12.10–$12.30)
Q2 sales: $2.45B–$2.48B (vs. ~$2.60B expected)
Q2 EPS: $1.76–$1.81 (vs. ~$2.68 expected)
The company beat lowered expectations in Q1, reporting $2.47B in revenue (+4% YoY) and EPS of $1.69. However, North American comparable sales fell 5%—the fifth straight quarter of declines—while international sales (led by China) grew strongly.
Gross margin dropped sharply to 54.2% due to tariffs and increased discounting, pressuring profitability. Lululemon expects North American sales to remain weak in the near term.
Shares fell about 11% in extended trading and are down roughly 40% year-to-date.
Interesting: Partners Group warns it could cap more fund withdrawals after triggering private equity rout.
Quantinuum closed little changed in its Nasdaq debut, bringing its market value to $15.7 billion.
CrowdStrike CEO says AI security fears will become a bigger tailwind in coming quarters.
Universal Music Group ended the day 5.8% down following reports that Pershing Square had sold its stake in the group, after two failed takeover attempts.
Docusign Reports: DocuSign slipped after hours despite a strong quarter as investors do not have full faith in the company’s ability to utilize AI. Its guidance is also decent. For the quarter, the company expects revenue to be in the range of $865 millions to $869 millions, excluding the impact of foreign currency exchange rates on year-over-year.
💵 Personal Finance
CBDCs: The Future of Money or Digital Authoritarianism?
Central Bank Digital Currencies (CBDCs) represent the most significant evolution in money since the invention of the credit card. Over 130 countries are exploring or piloting CBDCs, with China’s digital yuan already in widespread use and the Bahamas’ Sand Dollar operational for years.
Proponents argue CBDCs modernize payment systems, enhance financial inclusion, and give central banks better tools to manage the economy. Programmable money could enable instant stimulus payments, reduce fraud, and lower cross-border transaction costs. In developing nations, CBDCs offer a path to bring the unbanked into the formal economy using mobile phones.
However, critics raise serious concerns about privacy and government control. A CBDC could theoretically allow authorities to track every transaction, set expiration dates on money, or even restrict spending categories. This programmability, while powerful for policy, risks turning money into a tool of surveillance and social control.
The United States remains cautious. The Federal Reserve has studied a digital dollar extensively but has not committed to issuance, citing concerns over financial stability and the role of commercial banks. Europe’s digital euro project faces similar debates around privacy safeguards.
Geopolitically, CBDCs could reshape global finance. A successful digital yuan might challenge dollar dominance in international trade, especially in countries aligned with China. This has accelerated Western interest in their own digital currencies as a defensive measure.
For investors, CBDCs could disrupt traditional banking and payment companies while creating opportunities in blockchain infrastructure and cybersecurity. Stablecoins and decentralized finance (DeFi) may evolve alongside — or in competition with — CBDCs.
The coming years will determine whether CBDCs become tools of empowerment or instruments of control. Success depends on striking the right balance between innovation, privacy, and stability. One thing is certain: the future of money is digital, and central banks are determined to lead the transition rather than follow it.
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