Yesterday, on the surface, it was a day of waiting that tested the patience of many, and some of those investors blinked. But the selling was always contained and there was still an oasis of action (more on the improbability of an Artificial Intelligence (A.I.) rally later).

The Energy (XLE) Sector was very intriguing, again, after a massive drawdown in crude oil.

Watching Financials (XLF) as those regional banks’ names has run out of steam. I’m unsure if it’s related, but Real Estate (XLRE) was the hardest hit on the day. Weakness in Industrials (XLI) and Materials (XLB) is somewhat baffling. However, Consumer Discretionary (XLY) was down, but there were monster moves for several retailers.

Nvidia (NVDA) Surpasses the Hype!

The company posted solid results, but I’m shocked at the initial reaction. This is parabolic. Part of the hype is linked to comments that this is just the beginning of what will be a transportive decade

On the surface, the data looks mixed, but the earnings statement exudes excitement.

Chips Ahoy

When I began on the Street, the experts didn’t like semiconductor chips. Back then, they said they were commodities doomed to go down in price. I’m not sure how much of that was Moore’s Law (bless his soul), but semis are powering the world of today and tomorrow. Yet, there is still lots of resistance to owning them. Today, the semis will soar on the back of NVDA financial results.

Keep an eye on retailers as well – consumers are spending like it’s going out of style.

We will be watching the cybersecurity names as well.

Portfolio Approach

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Today’s Session

Debt ceiling headlines will nudge the market around, but it is all about NVidia (NVDA), which could set the record for largest single session increase in market cap- ever.

There has been a ton of economic data out as well that’s moving a different needle.

From revisited GDP:

• PCE headline 3.8 from 3.7 consensus 3.7
• PCE core 5.0 from 4.4 consensus 4.9
• Price Index 4.2 from 4.0 consensus 4.0

Take a Hike

Don’t look now, but rate hikes are back on the table.  After -maybe- pausing at the next meeting, where there is only a 58% cause of a pause, the street is looking for hike in July.

This is not denting the market at all, which acts like it wants to rally hard.

Retail Earnings

People are shopping.  Consumers are living on borrowed time but do not care. I thought there would be more sanity, but all the stimulus money unlocked an insatiable need to spend, and even as it goes away, there is a lot of room on credit cards.

We were positioned on the lower end, but folks are not trading down to that level yet.

Comments

On the debt ceiling, wondering beyond the fear of: if it is or not passed in time. What about what's in it or if something similar to the budget continuations we've been plagued with for decades occurs. Any thought on what might be considered positive vs. a negative market reaction? Terry Dowler on 5/25/2023 9:52:37 AM

Around the consumer and the credit card usage increases, not sure how widespread this is. However, with rising interest rates, I'm seeing a lot of low-rate balance transfer offers out there on both existing and for new card accounts (assuming the applicant is in good standing and/or has a good credit score). Any thoughts on how that might prolong the Fed-R in relation to that part of their data model, regarding spending in what they want to see? Terry Dowler on 5/25/2023 10:32:57 AM

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