NVDA rockets beyond $1000 as FOMC frets over inflation: Market insights and actionable updates

• NVDA blows the place up!  Traders take it up and thru $1000.

• FOMC reveals that ‘many’ members remain concerned.’

• Oil tests are lower as higher rates create concerns about future demand.

• Gold backs off on those same higher rate concerns.

• Services PMI due at 8:30 – Household Help costs in PB surges.

• Try the Spring Pasta.

OK – Remember I said there was only ONE thing you really needed to know about yesterday….and it was NVIDIA (we’ll get to this in a moment).  But there was also the release of the May FOMC mins – and yesterday I said I didn’t think we would learn anything new; I was correct…. We didn’t.  But what we did learn was that concern is rising over the ‘sticky inflation’ picture and that did send stocks lower into the afternoon.

The Dow lost 201 pts or 0.5%, the S&P lost 15 pts or 0.3%, the Nasdaq gave up 31 pts or 0.2%, the Russell gave up 16 pts or 0.8%, the Transports added 23 pts or 0.2% (but remember how it got slammed on Tuesday), while the Equal Weight S&P lost 22 pts or 0.3%. 

The mins revealed what we all know…. let me say it again…rates are not going down right now, not in June, not July and not September.  And guess what else those mins said?  They said -

“Many* questioned whether policy was restrictive ENOUGH to bring inflation down to their target.” 

Mins from the meeting reveal that while some of the members of the committee agree that they are ‘well positioned’, others did suggest that they are ‘willing to tighten policy further’.

Ok – so let’s pull this apart…. *Many – is defined as a large number…. The FOMC committee is made up of 12 members…. So, what ‘s many?  It’s not 1, 2, 3 or 4.  Because that’s more like a ‘few’, right?  I mean 2 is a ‘couple’, and 7 would be a ‘majority’.  So, I assume that ‘many has to be 5 or 6? (40%-50%).  So, IF 5 or 6 members are questioning the policy – that suggests some concern that they are not sure that current policy is working….in fact - “participants noted disappointing readings on inflation over the first quarter”.   

And then guess what happened…. Davey Solomon – CEO at Goldy – came out with a lead article on Bloomberg.

“Goldman’s Solomon Says He Sees ‘ZERO’ Rate Cuts This Year”.

And then this morning the WSJ runs with this headline in a story by none other than Nicky Timiraos. (Nicky T).

“FED Minutes Point Toward Longer Wait for Rate Cut”.

In his article he replaced ‘many’ with ‘an unspecified number of officials’ that are willing to raise rates if ‘inflation materializes in a way that such action became appropriate”.

Recall what I told you in the past about the relationship between the FED and Goldman & the WSJ….…. When they want to leak a message – they turn to two organizations…. Goldy and the WSJ.  So, now are you gonna believe me when I say – Don’t hold your breath…..rates are anchored right here….and you better hope that inflation doesn’t turn up next month when we get the next CPI report – which by default SHOULD be up considering the very hot PPI report we got 2 weeks ago…(remember – and I hate to tell you - the that data from the PPI flows to the CPI, so a hotter PPI has to translate into a hotter CPI as those higher prices at the producer level get passed onto the consumer).

Ok – we good there? 

And then it was the news of the day…. NVDA!  And Jensen did not disappoint, in fact, if he wasn’t already, he is now considered something of a ‘God’…. every piece of that report just blew the place apart…the doors, windows and roof…. gone!  Here is all you need to know.  CEO Huang says that ‘demand is just so strong’ that “the next industrial revolution has begun’.  Yes, he blew away earnings per share, yes revenues blew the doors off, yes data center revenues blew the window’s out, and the 10 for 1 stock split blew the roof off the place….  and just to add more drama – he raised the estimates for the current quarter…told us that the Blackwell AI chip (the newest chip) is ready to ship now (vs. later this year) and demand for Hopper chips remains strong.  And before you go, he acknowledged that with such strong demand – we can expect NVDA to produce new generations of chips every 12 months (he described it as a ‘one year rhythm).  I mean I can go on, but do I need to?  The stock surged by 6.4% or $60/sh to end the after-hours session at $1009.70!  As my friend Dan Ives – Managing Director and Sr. Equity Research Analyst at Wedbush said – ‘The party is just getting started’!  This morning in the pre-mkt session – NVDA is trading up another $3 at $1,012. 

After that – what else is there to say?

Oil is once again testing trendline support at $77.50 – as the idea of ‘even higher rates’ caused many to scream demand destruction!  WTI fell 1.8% to end the day at $77.25 – below the line, but this morning, it is once again struggling to hold onto the line – up 55 cts at $77.80.  So here is the quick and dirty…. higher rates, will boost borrowing costs, stealing money away from what could be economic growth and weaker economic growth means weaker oil demand, and so it is what it is…. I am still bullish on oil and energy, - the US is producing oil at record rates, driven by advances in technologies and DEMAND, but I want to see what it does now….a failure to hold here – could see oil trade down to the $75.50 area….a level the ‘Kingdom’ does not want to see…recall they need oil to trade at $80+….and we know that they extended production cuts thru year end already, the question now is – will they increase those cuts if oil continues to slide?

Gold also took a hit after the FOMC announcement – the idea that rates will remain higher for longer OR God forbid go higher is not a positive for gold and other precious metals. Gold fell 1.8% yesterday and is down 1.2% this morning going from a high of $2,477 to $2,387.  Trendline support is $2,341 – We are about to test that and if the narrative continues to be possible rate hikes – then watch as that trendline fails to support the trend, taking us back to $2,300.

Eco data today is all about Manufacturing and Services PMI’s – will they show contraction or expansion?  Remember – we are 75% services economy, and the Services PMI is expected to be 51.4 (expansionary).  CNBC is running with a story about ‘Household Help in Palm Beach’.  Demand is surging and supply is SHORT…. Palm Beach Style ‘Hospitality/Home Professionals’ are demanding compensation of $120k - $200k/yr. plus benefits…401k plans, health care, maternity leave, paternity leave, time off etc. 

In addition, we will also get New Home Sales – expected to be down 2.2%, while Kansas City Fed Manufacturing is expected to be -7.

This morning – US futures are up…. Dow +35 pts, S&P’s +28, Nasdaq +165 and the Russell +6.  I am looking for the Nasdaq pierce 17k at some point today – earlier rather than later…. It closed at 16,801 last night and with Nasdaq futures up 165 pts in the pre-mkt we are just an hour away from creating another index record! 

In addition – expect all kinds of chatter around the FOMC minds and the latest Jamie Dimon commentary – which wasn’t bullish.  JPM expects to see the S&P fall by 20% this year…. they have an S&P target of 4200 and he is not ruling out a “hard landing’ saying the worst outcome will be ‘stagflation’.  I note that this is NOT a change of heart…. this has been his stance…. but after yesterday’s FOMC mins, it’s top of mind again today.

European markets are mixed…. Spain is down 0.2% while the Eurostoxx Index is up 0.4%.  UK’s Rishy Sunak announces a general election on July 4th to help settle the score over the national vote.  As the polls stand now - the Conservative Party would lose the vote…to the center left Labor Party.  UK inflation figures came in HOTTER than expected and that slashed the ‘rate cut bet’ that was expected in June.   

The S&P closed at 5307 down 14 pts  - There is going to be all kinds of action in the markets on the back of the NVDA results….expect to see markets rally as the newest ‘industrial revolution’ takes root….Any sector – and there are a lot of them that are using AI are going along for the ride.  Now that doesn’t mean you get all nuts and take all of your money and go all in, it just means make sure you have the right well diversified exposure.  Which includes TECH. 

Again, this is not the time to fall asleep, it is a very exciting time to be alive and to be a long-term investor. …. Grab your coffee and let’s go! Call me to discuss.

Springtime shells

This is a simple dish – take all of 20 mins to make and is a game changer if you enjoy pasta with peas, broccolini, asparagus, basil and pancetta.

For this you need:  1 lb. of medium pasta shells, frozen peas, asparagus (trimmed and cut into bite size pieces while leaving the flower tip whole), broccolini (trimmed and cut into bite size pieces while leaving the flower tip whole), fresh basil, white wine, diced pancetta, diced onion,  shallots, garlic, olive oil and of course – Fresh grated parmegiana cheese. 

Begin by bringing a pot of salted water to a rolling boil.

In a large sauté pan -begin by heating it up on med high heat, add olive oil – next add the diced pancetta and cook until it renders its fat and turns nice and crispy.  Remove and set aside – leaving the oil in the pan.

Now add the diced onion, shallots and garlic.  Sauté for 5 – 8 mins…Add in ½ c of the white wine (you can substitute with chicken broth), to deglaze the pan.  Now add in the peas, asparagus and broccolini pieces and sauté around for 10 mins – season with s&p…. then turn heat to low.

Add the pasta to the pot and cook until aldente (8 mins).  Using a slotted spoon, transfer the pasta to the sauté pan – add the chopped fresh basil – mix well.  Now add in a ladle (or two) of the pasta water (tears of the Gods).  This will depend on how much you cooked. If you use less than 1 lb. then use less water, Capisce? 

Now add in a handful or two of the fresh cheese and Bam!  Done.