The market liked the inflation news, they have pricing power (or shrinking power) : POTUS chides shrinkflation. Is Ozempic the perfect accompaniment for grocery shrinkflation? More is less. Inflation up, GDP down? Stagflation? AI is a trojan horse, that will weaponize computers. Forget the computer guided bomb, and just use the computer. AI is the Encyclopedia Brittanica in audiobook, read by the guy who used to do those Fed Ex commercials. It can talk faster than you can hear. Problem being the Encyclopedia is homogenized information. Its still garbage in garbage out, and my garbage is better than yours. There will be tons more data gathered, so figure that one out, already they are talking about under sized data centers. We may all have to sit in the dark so our data can be stored properly.
As a student of history, it’s almost comical to see how the entire market rises or falls on one company beating or missing adjusted EPS figures or will the FED cut interest rates by 25bp this May (as though 25bp is a meaningful amount of interest change). Only since the 90s did we start to deify government bankers with their own bobblehead dolls, allowed them to change the definitions of recession, unemployment (anyone else remember the FUNemployment media blitz of 2009?), and inflation, and cheered them when they opted to remain in government jobs for decades. Few remember that Paul Volcker boosted the Fed Funds Rate by 400bp in October 1979 or that he raised it again by 500bp in March 1980. Do you know how much the market cared? NOT ONE BIT – the S&P 500 was 456 in August 1979 and was 453 in August of 1980.
Inflation is the tripwire, current narrative says the Fed has it under control. I even somewhat agree with that, but 200,000 numbers on jobless claims & markets hitting new highs will stoke inflation. There is a wildcard regarding AI, when will the layoffs come as part of all the efficiency? That timing on layoffs, is also what reverses passive flow... Interesting times.
Interesting thought: Last year (and for a bit this year) we had a split market with the S&P 493, and particularly lesser tech stocks, going through a quasi recession while the MAG 7 chugged on higher. Maybe this year the weaker non mag 7 stocks have been appropriately repriced and are growing on genuine earnings from a truer base value. Oaktree is seeing similar things in the High Yield Bond market where (according to them) the weaker companies have been weeded out of the market so the remains are as strong as they've ever seen in the high yield category. Still means I am not sure what is going to happen with the Big 7 (Big 6?) but hey, who does?
It’s pretty clear to me this face ripping rally today is about NVDA. I consider it insanity, but I don’t operate on the day trading level for the most part so I’m not prone to understand such things. I just do my thing. It’s been working for me rather swimmingly for a couple decades
I missed out on most of NVDA's gains, which is very annoying. But how about quite recent profits of +35% with Toyota and +70% with NVO? That ain't small change either. Only a few stocks are exploding, but plenty are doing very well indeed.
The market liked the inflation news, they have pricing power (or shrinking power) : POTUS chides shrinkflation. Is Ozempic the perfect accompaniment for grocery shrinkflation? More is less. Inflation up, GDP down? Stagflation? AI is a trojan horse, that will weaponize computers. Forget the computer guided bomb, and just use the computer. AI is the Encyclopedia Brittanica in audiobook, read by the guy who used to do those Fed Ex commercials. It can talk faster than you can hear. Problem being the Encyclopedia is homogenized information. Its still garbage in garbage out, and my garbage is better than yours. There will be tons more data gathered, so figure that one out, already they are talking about under sized data centers. We may all have to sit in the dark so our data can be stored properly.
Thanks for sharing those 10 lessons, Herb. Hearing " This time it's different." is no different from other toppy markets which corrected.
Markets are never wrong – opinions often are. This also a good reason to learn how to read charts.
As a student of history, it’s almost comical to see how the entire market rises or falls on one company beating or missing adjusted EPS figures or will the FED cut interest rates by 25bp this May (as though 25bp is a meaningful amount of interest change). Only since the 90s did we start to deify government bankers with their own bobblehead dolls, allowed them to change the definitions of recession, unemployment (anyone else remember the FUNemployment media blitz of 2009?), and inflation, and cheered them when they opted to remain in government jobs for decades. Few remember that Paul Volcker boosted the Fed Funds Rate by 400bp in October 1979 or that he raised it again by 500bp in March 1980. Do you know how much the market cared? NOT ONE BIT – the S&P 500 was 456 in August 1979 and was 453 in August of 1980.
Inflation is the tripwire, current narrative says the Fed has it under control. I even somewhat agree with that, but 200,000 numbers on jobless claims & markets hitting new highs will stoke inflation. There is a wildcard regarding AI, when will the layoffs come as part of all the efficiency? That timing on layoffs, is also what reverses passive flow... Interesting times.
Interesting thought: Last year (and for a bit this year) we had a split market with the S&P 493, and particularly lesser tech stocks, going through a quasi recession while the MAG 7 chugged on higher. Maybe this year the weaker non mag 7 stocks have been appropriately repriced and are growing on genuine earnings from a truer base value. Oaktree is seeing similar things in the High Yield Bond market where (according to them) the weaker companies have been weeded out of the market so the remains are as strong as they've ever seen in the high yield category. Still means I am not sure what is going to happen with the Big 7 (Big 6?) but hey, who does?
It’s pretty clear to me this face ripping rally today is about NVDA. I consider it insanity, but I don’t operate on the day trading level for the most part so I’m not prone to understand such things. I just do my thing. It’s been working for me rather swimmingly for a couple decades
I missed out on most of NVDA's gains, which is very annoying. But how about quite recent profits of +35% with Toyota and +70% with NVO? That ain't small change either. Only a few stocks are exploding, but plenty are doing very well indeed.