Ep 50: SMU: NVDA Earnings, Market Participation & Fed Expectations

Stock Market Update (SMU)

Let's discuss and demystify the recent volatility in the stock market, NVDA earnings, Jackson Hole highlights including rate cuts, and the dreaded "R" word (recession). 🔮

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"If the Mag 7 is coming down, and the other 493 are participating, that is a recipe for sideways action."

~Jess Inskip

Who Are The Magnificent 7?

⁠⁠Alphabet⁠⁠ (GOOGL; GOOG), ⁠⁠Amazon⁠⁠ (AMZN), ⁠⁠Apple⁠⁠ (AAPL), ⁠⁠Meta Platforms⁠⁠ (META), ⁠⁠Microsoft⁠⁠ (MSFT), ⁠⁠NVIDIA⁠⁠ (NVDA), and ⁠⁠Tesla⁠⁠ (TSLA)

NVDA is the Taylor Swift of the Stock Market 🤡

Nvidia surpassed earnings, but saw its stock price decline 6.5% today. There's a supply issue, not a demand issue here. And just like there was a let-down for Swifties when Taylor didn't announce Reputation TV, just like Nvidia didn't meet expectations of the market and there was a let-down. But we're still betting on Taylor Swift, so take that correlation how you will (not advice). 😉

The Broadening: Group Participation in the Class Project

Earnings growth is now happening in the other 493 stocks of the S&P 500, indicating a broadening of the market.  Check out our episode: What Is Market Breadth (⁠⁠Ep. 45⁠⁠).

Fed (Papa) Powell Finally Gonna Cut Rates 🙌

The recent ⁠Jackson Hole meeting⁠ indicated that a rate cut is likely, with Fed Chair Jerome Powell focusing on the labor market and the need to avoid further pain. We would be shocked if there isn't a rate cut in September (0.50% is what's being anticipated). And remember, this de-inverts the yield curve and that means your HYSA interest will go down along with bonds, treasurys, CDs, etc.

Recession 🤫

Recessions are determined in hindsight by the ⁠⁠NBER,⁠⁠ based on factors such as depth, diffusion, and duration. We're going to revisit this topic in the next episode along with the business cycle as compared to the menstrual cycle.  😉

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