Nvidia, after gaining $2.1 trillion YTD through July 10, gave up $418 billion or 12.6% since. Meta -13.6% in 5 days. Tesla should be kicked out of the Mag 7.
By Wolf Richter for WOLF STREET.
These numbers are just crazy when you actually think for one second about it: Since the high on July 10, over those five trading days, the Magnificent 7 – Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla – have lost $1.13 trillion in market capitalization. If that happened in Commercial Real Estate over a 12-month period it’s considered a massacre, calling for bailouts and rate cuts and whatnot. Here it’s just kind of a blip.
From the beginning of this year through the peak on July 10, the Mag 7 gained $5.0 trillion in market cap, exploding from $12 trillion to $17 trillion in less than seven months. $5 trillion is about the size of the entire debt of US Commercial Real Estate, all sectors of it combined, that’s now causing such headaches. And these seven stocks gained $5 trillion in less than seven months and then gave up $1.13 trillion in five days, and it’s of course no big deal because easy come, easy go, and it’s just a blip, and trillions don’t even matter here anymore.
In percentage terms, the Mag 7 gained 41% from the beginning of 2024 through the high on July 10, and then gave up 6.6% of their market cap in five days, no biggie, including the 3.2% drop today, the biggest so far this year:
Nvidia had gained the most (+172%), or $2.1 trillion YTD through July 10. But then its shares dropped by 12.6% over the past five days, including the 6.6% drop today. Its market cap dropped by $418 billion. In other words, it has given up 20% of that $2.1 trillion gain this year over the past five days. Easy come, easy go. No biggie.
Nvidia was briefly the most valuable stock in the universe. Today, with a market cap of $2.9 trillion, it was kicked out of the $3-trillion club, and has now dropped to third place, below Apple ($3.5 trillion) and Microsoft ($3.3 trillion).
The combined market cap of Apple, Microsoft, and Nvidia dropped by $650 billion in five days, and has now fallen below $10 trillion after the drop today, to $9.7 trillion, from $10.4 trillion on July 10.
Tesla gained the least this year through July 10 (+6.3%). And then, shares dropped 5.6% over the past five days and gave up all their gains of this year and are back where they’d started out the year.
It was kind of a funny year for Tesla. The stock fell hard for the first four months of the year, but since late April turned around and soared by 85% through the peak on June 10, before falling back, and today ending up where it had started the year.
Tesla doesn’t even belong into this lineup: It had been left behind. Its shares today at $248.49 are 40% below its all-time high of $414.50 in November 2021. It should be kicked out of the Mag 7.
Meta was up 49% in 2024 through July 10, but then lost the most of the Mag 7 over the past five days in percentage terms (-13.6%), including 5.7% today. In dollar terms, it lost $184 billion, the second-most behind Nvidia, after having gained $447 billion in 2024 through July 10.
If the Mag 7 combined market cap drops another 25% from today over the next x months, or by another $4 trillion – I mean, what’s a few trillion among friends – it would just bring the market cap back to the beginning of 2024. That kind of $4 trillion drop, after the $1.1 trillion drop over the past five days, would be the hugest loss ever for seven stocks in dollar terms, but it would just unwind six months of gains.
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The problem is that tech’s income stream relies on without consent surveillance of the general population for the purpose of exploiting they’re wealth
If we had a Supreme Court that wasn’t ignorant, then maybe that avenue might be available.
Just because you refuse to read the disclosures of the web sites you visit, does not mean that the web sites have done anything wrong. If you don’t like the surveillance, don’t visit the web sites.
Sure.
Anon1970,
+1000 100% correct.
As a retired IT “professional” I assume EVERY website is tracking/surveilling EVERY keystroke I make.
I also assume I am being video/photographically surveilled all the time I’m outside my residence.
I have my cellphone with me where ever I go. Somehow the vast cellular network knows where I am 100% of the time. I can get cellphone calls from anyone no matter where I am. If I didn’t want that I’d make sure my cellphone was totally off – not just in Airplane mode – whenever I was out.
@anon,
“As a retired IT “professional” I assume EVERY website is tracking/surveilling EVERY keystroke I make. ”
Won’t a VPN stop that from happening?
True, but you are also being video/photographed *inside* your home as well. Audio surveillance too. As long as all those devices are lying around.
And turning your phone off will not prevent all tracking. You need a Faraday bag if you want that. Or ditch it altogether.
Either way, there is too much metadata for anyone to ever comb through. This is where the real use of AI comes in.
Login PassKeys are god sent.
Aren’t those tracking chips inside the covid injections monitoring us 24/7. I never thought of phones and cameras.
/s
I agree with you. Ever since the bush administration was caught taping every citizen, I kinda expect this.
I hope someone enjoys my “reality show” I’m putting on lol.
“He’s napping again! This dumbass!”
“Why’s he drink so much coffee?”
Unless you have a battery that can be removed (which most companies conveniently stopped offering), then you can’t be sure that your phone is actually off even when you turn it off.
How about you all get off distracting yourselves with this crapp and worry about something that doesn’t lend itself to jokes and frivolity?
CLIMATE CHANGE!
Although you did forget nano chips dropped by aircraft with suspicious looking contrails…and of course aliens keenly interested in what’s in our rear ends.
You are correct. Doesn’t mean this is how it should be, and presumably in a democratic republic, if the citizens grew any implements and demanded changes, they would be entitled to adjusting laws.
For now, I love changing preferences, shopping habits and search habits to the point of my searches offering straight, gay, trans, rich, poor, a little bit of everything. I also love when companies waste money advertising ( I’ll never but a Mercedes, nor anything from Hugo Boss or Adidas but they can spend money trying to convince me).
Of course, I’m in bed rehabilitating after surgery so I have the time. But it has been fun to see the changes in my advertising, email marketing, etc. I truly hope I’ve wasted a fair amount of Google’s algorithm time as it tries to develop a profile I’m continually changing.
The ‘web’ overblown garbage, where nothing is valued as everything. Things like drivable batteries are sold as any logic analyst of backwards development is filter and removed on behave of wasteful corporations and their government backing. Pay google or don’t show up on results, pay Apple or have no battery life on their wireless device, pay Tesla and add 300% inflation to the device that made America what it is, and let them all waste millions of times the energy any individual needs for thousands of lifetimes just to run surveillance on the you while they destroy the 1st amendment to keep you ‘inline’
Trump wanted Taiwan to pay more. Hours later Taiwan (investors) lost $$$, but Americans even way more. So far mission accomplished.
Like we have seen in this insanity cycle, I probably would bet the farm (If I am the gambling type, which I am not) this is a one day nothing burger reaction and likely it will bounce back to all time high again in a matter of a week.
Well, every cycle in human history is the same. A hope based society.
I suspect that most readers of this web site are not old enough to remember the “Nifty Fifty” in the years before the Middle East oil boycott of 1973.
Remember it well; a billion here, a billion there, pretty soon you’re talking real money while the crowds at Disneyland didn’t look like the convicts in old Folsom riding Pirates Of The Caribbean when not tuned into Country Joe and Vietnam Rag. And now all those little boxes made of ticky-tacky are priced in millions among the curbside fecal matter deposits. Progress
I remember. Even then, a lot of people thought the whole thing was pretty stupid.
Eventually, the Nifty Fifty collapsed. Where is Polaroid? Where is Xerox?
Same old, same old.
Don,
You lost me there.
BTFD is too entrenched in the psyche of investors. This isn’t going to go away easily.
The traders will be back in full force again…if not tomorrow then soon.
There is still plenty of money to be lost :)
BTFP —> BTFD :-)
Excellent timely article! A+++
Today sell-off was something different, it resembled something more profound than just a trend consolidation. Actually, today sell-off and the one during the previous week, look more like the last phase of the trend, the distribution phase.
I believe that this phase will extend over a couple of months, especially considering that the FED and the White House will do everything they can to take more time, at least till after November.
So, lets cross fingers, hope that they will be able to manage the situation and lets enjoy this next couple of months, it will be good till it last…
I agree that today’s selloff was suspect, hardly a collapse of s stock market bubble.
There are four active asset price bubbles that are inflated by monetary policy.
I agree dang, there are 4 asset classes in a bubble state, and today we witnessed very clearly the weakness of one of them.
Among, the Magnificent 7, the market action of NVIDIA and META was particularly interesting, as it showed a psychological state of fear in the market, resembling a price action over the market.
What makes it even more interesting is the fact that those two companies have performed the best in terms of earnings growth, also META is even the most conservatively valued among the Magnificent 7.
The suckers are always long…
I agree, the market had a different feel to it over the past few sessions. Perhaps he bull is finally starting to run out of steam?
It’s historically quite unusual for this kind of tech selloff to happen right before earnings season. Big Tech usually rallies into earnings, then extends the rally if earnings are good or sell off if earnings are bad.
Either someone had inside information or this is just a coordinated dump so Wall St can load up more shares for cheap.
Also, the 5 companies historically considered part of Big Tech (Apple, MS, Google, Amazon, Facebook; no NVIDIA) have never all moved in the same direction after their respective earnings reports. (Although one company’s earlier report can affect another company’s stock before it reports, eg Google reports weak ad revenue -> Facebook sells off too -> FB shares rise after its own earnings when not as bad as feared, etc.)
So what your saying is that I should buy a share in a company that maybe be around in twenty five years. Risk is the best calculation.
Jackson Y, you are right, because it looks quite on the surface, but things are not as they look. For example take in consideration Meta, last earnings were disappointing for the market, as the company intend to increase it’s capex spending for data centers, and that’s why Meta shares plunged after the Q1 earnings. However, the market hyped by the promise for easier monetary conditions, pushed the price upward again at the previous high, and during the last 5 days it has been heading toward the previous low, which achieved during the selloff after Q1 earnings. If you think about it, there is nothing fundamentally that suggest that this earnings call will be different from the previous one for Meta, so the market is basically reacting the same way it did, pushing the price down. In the chart, you can see that all this market action is creating a pattern of double top, which is concerning. What can change the current trajectory of Meta price, is a change in monetary conditions, which can support higher valuation even if the companies fundamentals doesn’t change. You can notice similar situation (which might look different from each other on the surface, but which implies the same valuation’s issues in the core) for all Mag 7, and that’s why the FED needs to cut this month, because if it waits till Sep, it might be too late.
If it’s going to be like the dot.com bubble, we have a long way to go. Those stocks, the first computer crazies traded in their market the NASDAQ which lost 75 % from March 2000 to Oct 2002.
Now an opinion: if anything ‘Artificial Intelligence’ the term btw, first coined by IBM marketing 50 years ago, is even more overhyped than the dot.com stuff.
AI is a real thing, but it is in its infancy. It will become the driving force of the economy in probably 15-20 years. In that sense, buying in now makes a lot of sense for the very long term investor. Google is, IMHO, the best place to be over that long term. If only because it has its chips spread out over a lot of different technologies and its pretty deep in each.
Internet commerce was a real thing in 1999 but took 15-20 years to become a dominant force in the economy. In the meantime, companies like Amazon (first operational on July 16 1995) lost over 95% of their peak stock value when the dot-com bubble burst. AI will be around 20 years fro now. AI stocks may lose 95% of their value first.
The second biggest issue with AI, excepting the fact that it might take 2 more decades at least, to develop it at the point it can be broadly implemented across the various sectors of the economy, is the fact that it requires a lot of energy supply, and at the current moment we need further technological advances in the energy sector to be able to support the required demand increase for a further development and broader implementation of AI. The current capital allocation in the market is assimetrical, there is a huge part of the capital allocated to support the TECh sector, while the energy sector has been in scarcity conditions during the last 10 years, which constrains the development of new technologies. We need a huge capital reallocation.
AI will move much much faster than you guys are thinking.
You cannot equate acceptance by the general public with corporations drive to save money.
It may have taken decades for everyone to become comfortable purchasing t-shirts over the internet, but companies will have no such reticence in replacing workers with AI.
The stock play may not be the AI companies, but rather the companies successfully deploying AI and eliminating employees. How much more profitable could Meta be if they eliminated 80% of their employees?
Warren,
You guys refuse to even listen to those that you believe will develop AI. Meta (Mark Z.) said it during November earnings call, and even during the previous quarter call, they expect a meaningful slowdown of earnings growth during this year and the next couple of years, and that to develop AI it will require more time that anyone believes, meanwhile the earnings growth want be fueled by AI, and actually will be impacted negatively by the huge capex required to develop AI, and that’s why Meta’s shares plunged after the earnings call. However, you guys don’t want to listen to that, you just want to fuel your illusion that by 2030, chat GPT will replace humans, even though there is a huge contradiction with the fact that that technology is very nonefficient in terms of energy consumption, to not mention that the technological advancement required to be able to broadly automate the various sectors of the economy (so you can really have an meaningful impact in terms of productivity), is still very huge, and is even slowing down. Also, add to the overall picture that in the coming years the capital will become more scarce and expensive, which will meaningful constrain the investment in different sectors, and the further technological advancement in those sector. Productivity want grow in the coming years, it will decrease, and economic growth will slow down, no matter if you guys want to see it, or keep fulling your illusion of automated economy and flying Robotaxi by 2030.
Of course Mark Z. would say that.
He wants everyone else to not bother with that whole AI thing.
And then you have Dreamworks co-founder Jeffrey Katzenberg who thinks AI will replace 90% of animators.
AI is an over hyped marketing word. From what I can tell this is machine learning. I use chatgpt daily and it doesn’t create truly original content. It basically uses what already exists and copies it. It still saves me a lot of time, but it is not AI – at least not what I view that to mean as a software engineer. It’s great at pattern recognition though so it’s great for repetitive tasks. It however is wrong quite often because it’s only as good as the data it’s trained on and it can’t tell when to deviate from a pattern.
Anyways a lot is over hyped, but also some companies offer really good time saving ‘Ai’ products, so like .com a few of these companies will probably make a lot of money and a lot will not.
Also with regards to timeline I went to a talk in 2016 hosted by Deloitte talking about getting ready for the AI future. They predicted we’ve have fully self driving cars in the next 3-5 years amongst other things. We’re still nowhere close. The technology behind a lot of these things is so complex and has so many unsolved problems, true AI could be 10 years out or it could be 50+ years out.
Agree. The eventual benefits of AI will be large. But they will require significant investment. Training models is not cheap or easy if you want sufficient precision. I did that for a living so I know how hard it can be.
The gains will come but slowly. The bigger question is not technical feasibility but how this changes society. What will displaced people do. Economists will say that they will be redeployed. This is just theory. People displaced by China outsourcing or by the internet were not deployed at least not in equally paying jobs.
We had to create so much of debt to keep all these displaced people busy.
The social implications of such a technology is not talked much. Maybe it will when the applications emerge and real jobs are lost.
Aman, I’m sure a great number of government jobs will be lost.
Maybe the AI bot that is replacing the live government persons can be trained to actually answer a phone (remember those things)?
I imagine the majority of financial blogs will be AI generated in the near future.
And the majority of blog posts.
Agreed, LLMs are so far a lot of hype and very little substance. Neural networks have been around decades, I designed some 25 years ago and you couldn’t give them away then, much less sell them.
A lot of the end product is more or less theft or alteration of others content. And thats when its not complete junk pulled out of thin air.
These machines made of the interfaces between trillions of ON or OFF switches and human designed machine communications systems for “speaking” to all said machines……
Everything is about resolution and there are some time scales and sizes we are just completely locked out of…..PERIOD!!!…can always guess, though, or invent new language to “think” and guess in…….
Too bad few get Biology, and even fewer realize talking about Biology outside of the context of evolution is a waste of…well, resolution. Recon in the smoke. What’s there IS there……better be right about it……..
NBay – the ongoing belief/effort in the attempt to force an analog universe into digital clothing, and, ‘as clothes make the man’, thereby govern its behavior…best.
may we all find a better day.
Nice, Dustoff. If that were put into some kind mathematics language it would probably be called “elegant”.
Like the well known “Energy and matter are the same “stuff” and it takes one BIG shitload of energy to equal some matter……so we need a really really really BIG number….how about the speed of light times itself?”. (No, the A/H bombs don’t prove it, just a “feature” of some local elements, which the Curies paid a high price for discovering). No math or insights used or derived to make one, just shaped charge chemical explosives principles and LOTSA trial and error on whatever……..Mass or energy.
Hell, we can’t even measure the speed of light, only the round trip speed…..how do we know both legs are the same?….maybe it bumped into more shit on the return trip, making it slower then?
Kinda like land speed records.
But we could be sorta right about these things…….or sorta wrong.
AI is just computers 1.0, internet 2.0, the cloud 1.0 etc etc. it’s just a description of automation via computer/software engineering. It’s a lot of marketing and BS. People taking credit for a direction humanity has been heading for some time.
The efficiency that boosts GDP will be nice. I could live without the hype.
It’s been 34 years since IBM’s ‘Deep Blue’ beat Kasparov, world’s top chess player. Wiki calls this a ‘milestone in AI’ development,
Taking the Wright bros flight as a milestone in aviation, 34
years later the DC 3 was a completely reliable means of transportation and a few are still working today. In those explosive years, civil aviation was actually ahead of military aviation. In the mid 30s the DC 3 was faster than anyone’s fighters.
If 34 years ago was the milestone for AI, how long is the ‘very long term’ before it comes anywhere near the rate of progress in aviation in the same period?
It was combinatorial optimisation that beat Kasparov in chess. A bit better than Mechanical Turk.
The “AI” part beat the gullible audience.
I guess u know the Turk had a skilled midget player inside the console.
Even if not quite yet, “peak tech” is destined to happen – the whole thing is so over-inflated and over-hyped. Like so much else, it will look obvious in hindsight.
It looks obvious now…
Yes, that’s what I’m seeing in the numbers I look at. So much of tech depends on consumer discretionary affordability, and so many of its revenue streams are easy cut-backs for households and businesses.
$1.1 Trillion is small in comparison of a real Bear Market will do.
Every Bear Market starts with a normal 10% correction.
This Bull Run has been huge with small corrections.
Bull markets do not last forever.
Manias do not last forever either.
Are we the verge of new Tech Bubble, End of a long Bull Run, or somewhere in the middle ?
This Tech AI rise in stocks has been huge. Corrections happen, and Bear Markets happen, giving investors a chance to buy cheap.
I do not know the future. Barely understand the past.
Thankfully, Wolf gives great insights.
hmm…this time is different as I am being told over and over again when it comes to stock or houses..same thing was said about the car markets too and we get to see in real time how that’s going..
Nobody can predict the future prices of stocks or bonds. The so called experts are just guessing. If Trump is elected there will be a lot volatility. Trump and Biden are mercantilists. Smith and Ricardo destroyed the economic tenets of mercantilism. Trump and Biden do not understand the importance of free trade
They know nothing. Has Trump ever read a book?
Bernard, whatever the causes of this political surge are (from one or another sophisticated standpoint), and whatever the deficiencies in its reasoning, or the results may be, the political movement is here, and surging. It has evolved a very easy-to-grasp narrative about the world that is spreading rapidly. A person does not get more votes from having proficiency in economics. Votes come now from retail-level marketing skill, and guess who is displaying that right now?
I think the main pushback against globalization is more about national security and preserving the value of labor domestically. There are other arguments against it; a recent book called “The Six Faces of Globalization” went over all the various angles. A few of them are:
The establishment narrative: that free trade is always a win-win. The book says that this narrative is now “under fire from all sides.”
The global threats narrative: that free trade is a lose-lose arrangement in that it’s a major driver of things like pandemics and climate change.
And various win-lose scenarios, such as where globalization is helping multinational corporations to exploit their workers.
My own view is that globalization has been a net negative, since it undermines our (incoherent) economic system which relies on the scarcity of labor as the primary source of value. It’s also probably a net driver of climate change, and people who think that any economic benefits outweigh the environment cost don’t understand the scale of the threat there. I think that AI is going to be a net negative for the same reasons.
@Matt B
You are way too kind.
>The establishment narrative: that free trade is always
>a win-win. The book says that this narrative is
>now “under fire from all sides.”
Ah, no.
This narrative is now and always was Utter Bullshit.
Optimal trade policy maximizes the Pareto efficiency of the Nash equilibrium. It’s that simple. :-/
It will matter when the losses become 10 trillion. Or more. It’s coming, it’s just taking longer than most of us thought it would. AI is way, way overhyped and time will show that to be the case.
As happened with the first wave of Internet stocks, with AI I expect a consolidation, lots of smaller fish will fail or be bought up, and big survivors/winners will emerge.
I have a slug of MSFT and GOOG I bought in January 2023, still up 74% and 67% respectively from then, and I plan to hold onto it.
These stocks will all be $1000+ by 2035. Buy the dip yo.
No doubt mind boggling and won’t end well just the timing . Yesterday was VIX option expiration day that happens every month and may have allowed the option players an opportunity to sell and with summer breaks fewer buyers. The markets do what they do . So much of these stocks are owned by index funds hard to comprehend where sellers and buyers actually come from . The federal government free money printing press during Covid that is being unwound . The money left has been moving into the mag 7 based on what? AI fast chips . Glad this article was not written by AI!!
Is a mechanism for true price discovery coming back?
…LOL.
Yeah, I couldn’t keep a straight face either Wolf.
Hedge accordingly.
This bubble still has a lot of air waiting to be let out…
What could possibly cause markets to rethink their positioning? I don’t know….how about if there is a complete change in economic policies that is almost the opposite of the current policies. There would be the potential for the redirecting of trillions of dollars from changes in Immigration, Energy, and Global Economic policies. If this type of change is coming the rotation has just begun. The markets are beginning to take this possibility seriously.
Unless Trump wins the election Tesla is doomed. I don’t see Trump winning the 2024 election. Microsoft should do well in 2026 which is two and a half years away. Meta is a big league world class short if I ever saw one. One of those rare long term shorts.
I’m no fan of the politics but: Who DO you see winning?
The chorus to replace the incumbent is growing. I saw orange as long ago as last October.
As stated: it’s a commercial dog and pony show. Only one side is performing.
I come here for prose like this: “and trillions don’t even matter here anymore…”
TSMC conveniently beat estimates. Yeah, right.
Here is the support of the US Dollar—the US stock market. You don’t need gold. Not yet anyway.
Great article Wolf! It makes me wonder: what is the total dollar value of collateral that Mag7 and SP500 are supporting on margin trades? What happens if $10Trillion in collateral vaporizes?
I have long wondered how the next “great margin call” will look.
I have heard that derivatives markets are measured in the quadrillions (huh? Total real global economy is $100 Trillion?).
The greatest trick the central banks ever pulled was making sure the margin call never comes.
Wolf,
Noticed the Buffet Indicator is flashing big red neon lights.
What do you think about that in this context?
Much like inverted yield curve, maybe this metrics really doesn’t matter as much anymore as we’re in the new normal of nothing will ever allow to correct, at least not back to fundamentals..
How long has this been flashing red now, same with the yield curve that all talking heads like to refer to as for sure sign of a recession…yet we are, market and asset holders still partying and taking that rocket to the mars.
since the S&P 500 is clearly overvalued, what is a reasonable portfolio allocation across U.S. equities, international equities, and bonds/treasuries, if you want maximum returns on a 10-year investment horizon?
Don’t overlook income-based mutual funds.
I thought I was going to use my MMFs to buy into the S&P500 when it fell to the low 3000s in 2022 or 2023, but it never got below ~3580
Not money market funds.
Research funds that invest in high yield bonds, sr. secured loans, BDCs, CLOs etc. Many of them yield 8-12% annualized.
Managed futures and covered calls are also interesting strategies. For fun & entertainment only of course, not actual investment advice.
Usually will be a pullback in August/September/October based on seasonality for an election year.
This is about a 65-70% likelihood based on past cycles.
Your mileage may vary.
The loss is nothing compared to how much they gained. Fat cats already sold for profit. Wall Street won. Bitcoin won. Federal Reserve made it possible.
The Federal Reserve had nothing whatsoever to do with this massive idiotic manic speculation in stocks.
Vast legions of suckers wishing for riches, and buying in very late in a sector price surge, sure helped the process. Can I blame a person for positioning himself in front of a cascade of money being voluntarily thrown his way?
Yes, those persons are very much to blame for this.
@Kevin: I totally agree with you. Federal Reserve absolutely made people chase after returns with their NIRP and ZIRP policies. The government also went along with the lower income tax rate for dividends vis-a-vis the regular rate on interest earned.
If savings accounts provided a decent 4-5% return with the same income tax rate as dividends, you wouldn’t see this level of manic activity in the stock market.
I have no doubt that Fed and interest rate taxation policies were intended to get the money pouring into the stock market.
Further, the 401k plans also channel vast amounts of money into the stock market automatically. (There is also the racket of the huge financial institutions getting a piece of every investment dollar irrespective of their performance but that is another topic altogether.)
So under these circumstances, why would anyone be surprised with stock market manias.
Re, wolf street November 16, 2022:
“The US stock markets are around $40 trillion. The cryptos never amounted to one-tenth of that. Two-thirds of the losses are now already behind us. And the remainder of crypto, what’s left of it, just amounts to 2% of the stock market. If that remnant too goes away, like goes to zero, people outside the crypto zone won’t even notice – that remaining $850 billion on a global scale is just too small.”
As with the crypto winter back then, euphoric speculation and casino bubble the mania today is confirmation that it’ll take more than a few trillion in losses to matter a bit — there is no pain threshold.
The obvious elephant in the room is moral hazard and the global belief in bailouts — connected to mentality that no investment fails — everybody wins and never pain. This tiny loss is a buying opportunity that can’t lose, or so were to believe.
The magnificent 7 concentration has destroyed indexing diversification and amplified passive risk into a new unrecognizable monster — a genie out of the bottle — that is spinning chaos faster than anyone can comprehend — with the possible exception of computer traded algorithms that help nudge the chaotic danger into narrower bands of opportunity.
I harp on broken models and distorted data, but in reality, the markets love this chaos — hiding behind the old fashioned narrative that markets want stability or certainty — I think we can anticipate greater volatility and extreme whipsaw instability that will be equally profitable and destructive.
When the pandemic was unfolding, markets globally united in fear — nobody really wants to experience that again, but the assumption of bailouts is playing a role in risk mismanagement — as well as misallocation of future funding
10:41 AM 7/18/2024
Dow 40,923.49 -274.59 -0.67%
S&P 500 5,561.82 -26.45 -0.47%
Nasdaq 17,893.69 -103.24 -0.57%
VIX 15.61 1.13 7.80%
Gold 2,456.50 -3.40 -0.14%
Oil 83.36 0.51 0.62%
The declines in the stock indices have by now more than doubled. The market got on an elevator and pushed the wrong button.
How do you see the seasonally weak period (Aug to October) playing out?
Bit of a VIX spike today and looks like the insane TSMC ADR premium (vs. local share price) is starting to budge a bit (meaning US investors are paying a premium for TSMC shares vs. locally traded TSMC shares, on top of not getting full value for the currency exchange rate, on top of being an overpriced stock in an overpriced sector in an overpriced market) [just writing this out makes me feel like I am in the midst of the 90’s tech bubble].
Are you thinking continued weakness or that the Fed will talk a bunch of dovish crap in July and loosen financial conditions again?
Hmm…sorry but the plunge protection team need their much deserved summer break. They have been working countless OT since rate cut mania after Christmas.
I think they will be back in office next week though. Refuel of Nvidia will re-commence by middle of next week for sure.
Some people got cold feet. 🥶 🦶
MW: Domino’s Pizza’s stock slides 10% after Q2 revenue falls short of estimates
DPZ -13.83%
Dominos pizza tastes so bad.
How do people even put it in their mouths?
Haha
Volatility brings more volatility.
People seem to think the “big flush” already happened in 2022. Even just before that, it had “already happened” during COVID (what a tough couple weeks).
Copper even made a new ATH this year and it is looking like the Dr. is falling ill.
Still important supports below. Also looking like this might be “it.” Whatever that is.
1:04 PM 7/18/2024
Dow 40,665.02 -533.06 -1.29%
S&P 500 5,544.59 -43.68 -0.78%
Nasdaq 17,871.22 -125.70 -0.70%
VIX 15.95 1.47 10.15%
Gold 2,444.80 -15.10 -0.61%
Oil 82.29 -0.56 -0.68%
roaring 20’s 2.0
As a wannabe investor I’m hanging on in money market purgatory — which is not as bad as hell.
I’m curious about where to through my future darts and always busy turning over ideas.
There’s a lot that can happen between Fed meetings and the inauguration and obviously everything under the sun that can unexpectedly change investing narratives.
Nonetheless, was just looking at simple concepts related to a lower dollar. In July 1994, May 95 and October 2006 — Fed fund rate was about where it is now, the 3 month treasury was always above 5.2% during this months— and 10y always above 6%.
I didn’t look at CPI but I assume inflation was elevated during those periods too.
The purpose of looking at that, is to wonder what might happen to treasury yields if the dollar policy — or strength of dollar declines. During those periods above, the dollar was in the mid $80 range — far lower than our current range hovering at $104.
In this world of odd dynamics, it’s difficult to think prior patterns are useful, but ack around October’s 2022 and 23 — the dollar was high, while the 10y was headed to 5% — so any prognostication is dicey.
If rates stay higher for longer, seems like the dollar isn’t going to crash 20% and yields will probably not crash up or down — but if Fed starts an aggressive cutting cycle, perhaps in conjunction with a recession, then, ahhh, no idea what I’ll do — purgatory might be as good as it gets?
Nonetheless, with deficit and layers of inflationary things brewing and bubbling, rates may stay higher for longer anyway — but I can’t foresee magical growth in equities, even if euphoric stupidity keeps chasing illusions — duh?
Wall street and stock markets are glorified casinos where “the house” always wins. FOMO, gambling addictions, greed and lots of promotion by the casino (Wall Street) keep the suckers coming in and staying in until they eventually lose and the house ends up with all the chips.
The game and the odds never change. Only the rhetoric produced by the house and their shills does. (Barron’s, WSJ, Forbes, MarketWatch, MSNBC and all the others) Gamblers are made to believe an 8% annual return over one’s lifetime is a home run. At the same Wall Street returns of 500, 600, 700, 1000% are not uncommon for the house.
There isn’t anyone on Wall Street consistently making those kind of returns. Finance is an up and down business by nature. If people made 1000% annual returns for 2 decades they would literally own everything on earth. No tree grows to the sky.
Cautionary tale: a uP firmware consultant friend, now departed, put his life savings into Cisco between 1995 and 2000. As it soared from 2 to 100, his wife thought him a genius and his kids all hit him up for loans. However, just as night follows day, he then rode Cisco all the way down from 100 to 5. His fat wife left him, filed for divorce, and his kids called him an idiot to his face. He had a stroke and became disabled. His house was repossessed. And he lived on state assistance in a long term care home for 2 years while recovering some use of his limbs. Needing the money, he sold his Cisco out at 10, the top of a dead cat bounce in 2004. On a visit, asked what he told others about his Cisco adventure. He replied with a sardonic laugh that he tells people he got a double.
There is an old saying that nothing matters…. until it does.
The fact is the market, and the economy is at the end of the can kicking ability. Banks are sitting on a half trillion dollars in unrealized losses that can turn into realized loses at the hint of a banking crisis. The market is overvalued and valuations are looking worse and worse as the economy weakens.
The FED is in a box, knowing whatever it does at this point will have negative results. It is trying in vain to keep inflation under control, but is killing the economy as it does.
When the markets crash, or the banks begin collapsing, it will have to lower rates which will signal the beginning of the next recession. Recessions always follow peak interest rates…. every time. Look at a chart if you do not believe it.
Wow! I remember a time when being a Billionaire was very unusual. Just being worth several million was significant. Now we’re talking Trillions.
When it comes to businesses, in profits we trust. If the software companies can prove profits commensurate to their price then they won’t keep bleeding.
What does a chart of the sp 500 look like without the Magnificent 7 ?
Thanks
Yes, I think it is just a small blip. Next week NASDAQ will probably break new records. We are in the era of infinite money. Trillions don’t matter anymore. Dollar lost its purchasing power.
Damn, quite the selloff this week. I was expecting a selloff to come “any” time now, given the parabolic move from S&P ~4950 to ~5650 in under 3 months. But I wasn’t expecting it this week.
Instead, I thought it would have coincided with one of 3 things:
(1) high June inflation reading from last week’s CPI report (which didn’t happen);
(2) bad earnings reports from Big Tech (late July to early August)
(3) seasonal rise in volatility in September, with Wall St money managers returning from summer vacation (media would attribute it to anything from macro to election uncertainties)
These selloffs always tend to happen out of the blue, on no news, when people least expect it. But those who bought the right put options at the right time made out like bandits … as much as +5,000% return in 3 days. 💰
Vereenigde Oostindische Compagnie (Dutch East India Company) had 7.9T USD historically adjusted market capitalization, yes 7.9T not 7.9B, and it lasted around 200 years (1602-1799), market capitalization of today’s giants is still nothing, and they will not last. Bubbles can go to crazy levels, today’s bubble is still under average, and can go on and on, depending on LIQUIDITY, thus it is PONZI scheme of capital gains, nothing else.
Another “crazy” fact? If S&P drops to 3500 (~39%), it will not be BEAR market! It will be REVERSION TO THE MEAN event. Technically S&P will still be BULL market after 40% drop. But hey, everyone is day trading nowadays.
The narrative is that America controls the new AI movement, but I’ve seen reports out of China that it’s largest tech company is developing a system based on photons, not electrons. Which means a new technology that doesn’t need massive amounts of electricity to operate. If that’s true, then Nvidia and the others may already be has-beens.
It’s an expensive arms race, and energy consumption will play an interesting role. All these processing approaches are fairly fragile and unstable, but the winners will need to provide stability and efficiency. China obviously has competition:
Quandela, the European leader in photonic quantum computing, and Welinq, a leading quantum networking company, proudly announce a transformative partnership for the quantum industry. This collaboration combines Quandela’s expertise in photonic quantum computing with Welinq’s pioneering full-stack quantum interconnects technology to provide custom quantum links for photonic quantum computers, setting new industry standards and paving the way for clusters of interconnected and error-corrected photonic quantum computers.
“Quandela, the European leader in photonic quantum computing, and Welinq, a leading quantum networking company, proudly announce a transformative partnership for the quantum industry. This collaboration combines Quandela’s expertise in photonic quantum computing with Welinq’s pioneering full-stack quantum interconnects technology to provide custom quantum links for photonic quantum computers, setting new industry standards and paving the way for clusters of interconnected and error-corrected photonic quantum computers.”
ROTFNFLMFNAO!!!!!!
What is a Photon?….how can it have no mass and still wear “suitable” clothes (to copy Dustoff’s elegant notion above)…just curious…….