It's not the economy, it's Nvidia stupid! And nothing else matters!


With USD$2 trillion market cap in its crosshairs, NVDA stock soared overnight, extending overnight gains after beating-and-raising again...

Adding the most market cap in a single-day ever - up $277BN...

...That's more than the entire value of BHP and more!

That is 2 Goldmans, half a JPMorgan, or a whole Netflix or Adobe added in a day.

MAG7 stocks added over $500BN today to a new record high, second only to 11/10/22's explosion higher driven by AAPL...

And all that market cap gain was driven by a $2.1BN 'guide-up' on Q1 revenue.

And as goes NVDA, so goes the entire stock market with Nasdaq leading the charge (up 3%) and the S&P up over 2%. Small Caps lagged with a mere 0.75% gain...

Source: Market Watch

Elsewhere, US macro was positive with initial jobless claims tumbling and existing home sales rising (though admittedly less than expected).

But, the economy doesn't matter...

Source: Bloomberg

Higher yields don't matter...

Source: Bloomberg

Tumbling rate-cut expectations don't matter...

Source: Bloomberg

Rising bond volatility doesn't matter...

Source: Bloomberg

Valuations don't matter (Tech is now trading 7 turns richer than the market - the highest since 2005)...

Source: Bloomberg

Finally, bear in mind what the FOMC said in the Minutes yesterday

"Several participants mentioned the risk that financial conditions were or could become less restrictive than appropriate, which could add undue momentum to aggregate demand and cause progress on inflation to stall."

Well, financial conditions are very easy compared to Fed Funds...

Source: Bloomberg

...and US financial conditions are extremely easy relative to the EU and UK...

Source: Bloomberg

In other words, the higher NVDA goes, the tighter credit spreads compress, and the more the MOMO and FOMO funboys chase this insane market, the longer The Fed will sit on its hands and not cut rates. Of course, that assumes we get through March without a banking crisis.

Have a good weekend!

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