Nvidia Reports after the Bell

Debt Ceiling still headline driver

I find myself at times feeling like a deer staring into the the headlines. Debt Ceiling, AI, Nvidia, China…what’s real, what’s not races through my mind. What’s real is that yesterday my nephew graduated from high school with a scholarship to Auburn University roughly nine years after his mother, my sister died to Sarcoma Cancer. Yesterday was a pretty real and cool day for me and my wife to watch him walk across the stage to receive his diploma. That was real. That was a justifiable emotional event. Nasdaq, S&P500 and Dow down yesterday was not a justifiable emotional event. You should not have had tears in your eyes as Nvidia close the day down -1.57% nor should you if #NVDA miss expected` EPS Normalized Estimate of $0.92 or Revenue Estimates of $6.52Billion. Emotional investing is not allowed.

Nvidia has been the golden child of markets over the last 90 days. Much of this is driven my the ChatGPT3 and Bard AI movement that has swept headlines. Is this massive move back to January 2022 highs justified? Doesn’t really matter. It is what it is. Yet the surrounding economic landscape is saying something different.

The Debt Ceiling

A rise of the Debt Ceiling is a double edge sword. If they agree to raise the ceiling it does two things. One, the United State goes further into debt. Its as if your Visa card is maxed out, your revenue is less than what is needed to pay the monthly bill, and Visa increases your limit by 3.22%. Chance are you will be in the same position 6 to 12 months from now. By raising the ceiling US still has a spending / revenue problem. Second, if raised, the US Treasury will issue US Treasury bonds to be sold to raise dollars to put into the US Treasury General Account to pay bills with. This action will take a shrinking amount to US Dollars, due to Quantitative Tightening out of the system which in turn cause dollars to come out of the stock markets. Less dollars to push Nvidia and the other seven or so stocks that have become the market, the sooner stocks begin to retrace.

Conclusion

Markets are due for a sell in May and go away event for many more reasons then just Wall Street going on vacation. So prepare for it. What sectors do well in past economic recessions and Debt Ceiling crisis? Typically,

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