Both the Dow and the Russell are off sharply and nearly 75% of stocks are DOWN today, which might come as a surprise to some of you rookie punks out there, especially since $NVDA posted great numbers. While great, you have to understand that what is good for $NVDA isn’t good for everyone else. Their success in AI is part of a broader increase in productivity and only a select few firms stand to profit from this AI proliferation directly. To clarify, AI will increase ALL margins for companies who deploy it; but only some make the chips and expand the server space and design the chips.
To be clear: $NVDA, $CDNS, $SNPS, $AMD, $MU, $AMZN, $MSFT, $TSM and $CLS are the best plays in AI.
Other than that, markets are merely continuing the path of least resistance, which is LOWER and this jives with the fact that I am or was very bullish to the point of expressing emotion. No worries, as I am back to behaving like a well oiled machine, +30bps for the session, hedge with some $TZA.
My general sense of things is bullish but perhaps not for today and maybe not for tomorrow. We have gains of nearly 12% on the NASADAQ this year, about midway through the year, and the economy seems to be doing fine alongside corporate profits. While it might chagrin some of you reading this to learn Pax Americana is not on the ropes, find solace in the idea that eventually it’ll all collapse.
But it’s not happening now. When it does, I will be the first to cry wolf.
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Counter-intuitive but the first rate cut EVERYONE is watching for after being coaxed by the Fed, and thinks they want, is actually an an event to be feared.