FTDS - When Will The Boom/Bust Rollercoaster End?
2024-06-15 04:00:00 ET
Summary
- NVIDIA has been up 155% year to date; its market cap is over $3 trillion.
- All previous stock market bubbles share the following in common: a narrow stock market rally that focuses on a small group of stocks in a small sector of the economy that Wall Street is working overtime on promoting.
- The Fed is going to be held to the headline number from the BLS because they are labor market economists and Phillips curve adherents who believe inflation comes from too many people working.
How can we know for sure the stock market is in a bubble? NVIDIA (NVDA) has been up 155% year to date; its market cap is over $3 trillion. The company has gained the equivalent of Amazon ( AMZN ) in just six months. And it is responsible for just over half of the S&P 500 gains this year. For comparison, the equal-weight S&P is up just over 4% this year. NVDA has added the equivalent of Berkshire Hathaway's (BRK) (BRK.A) ( BRK.B ) valuation in 6 weeks. BRK is the empire legendary investor Warren Buffett spent his entire lifetime building. NVDA is now worth over 10% of US GDP. That means [[AAPL]], [[MSFT]], and NVDA are now worth more than 1/3rd of our nation's entire economic output. All previous stock market bubbles share the following in common: a narrow stock market rally that focuses on a small group of stocks in a small sector of the economy that Wall Street is working overtime on promoting. AI fits this profile perfectly. I am not disputing that AI is going to be a productivity boom. Nevertheless, NVDA is now in a bubble. The stock is predicated on spurious and ephemeral demand for its chips, which will collapse in the economic downturn ahead....
When Will The Boom/Bust Rollercoaster End?