For the week ending August 25, 2023

What Happened

Semiconductor and top-five S&P 500 holding NVIDIA posted blockbuster revenue, profit and guidance surrounding the Artificial Intelligence (AI) movement. More HERE

What’s It Mean

Highly anticipated semi-conductor darling NVIDIA, who shook the world with their previous quarterly earnings a few months ago, posted highly anticipated quarterly results this week and did not disappoint. The company reported top line sales of $13.51B vs an expected 11.22B and net profit of $2.70 per share vs. $2.09. Furthermore, the company expects $16B in revenue for their upcoming fiscal 3rd quarter.

Why do we care?

We’ve not been shy about our view regarding just how real the AI movement is and what it may mean for the technology sector. Ironically the stock traded somewhat lower after this blockbuster report, which tells us much of the good news was already baked in, however, the jaw dropping numbers give credibility to the idea that this movement has legs and may just be getting started.

Our eyes are focused on what this means for other companies who may be tagging along for the ride. Data centers were the biggest part of the NVIDIA’s earnings gain which translates to greater data center construction across the landscape.

In our opinion this is another glimpse into how similar the environment we’re in may replicate the mid to late 90’s and the feverish dot-com boom. A highly anticipated IPO is coming soon through a company called ARM. We believe, the performance of this IPO will tell us a lot about the speculative juices that may be flowing on Wall Street.

Logan sat down with Schwab network to discuss this and other Semiconductor investments. You can check that out HERE
What Happened

Jerome Powell spoke at Jackson Hole Economic Symposium – Markets move higher.

What’s It Mean

Each year The Federal Reserve Bank of Kansas hosts an economic forum for Central Bankers, policymakers, economists, and academics to discuss domestic and global economic affairs. Last year, this was the arena from which Powell harnessed his inner Paul Volker to deliver a strong message to the bond and equity market alike.

Powell delivered a much different message this year reiterating the Federal Open Market Committee’s (FOMC’s) desire to focus on the data and their confidence in the strong consumer and declining inflation. In our opinion, the tone was in-line with what markets desired to hear and as a result, indices repaired a decent amount of the prior day’s damage.

Why do we care?

The Fed continues to remain in control of markets and their liquidity driven future. Despite strong underpinnings in certain areas such as AI, should the Fed continue on their interest rate path, we believe sooner, or later higher rates may spark irreversible damage and thrust the economy into the highly anticipated recession.

While our views remain quite a bit more optimistic, the fact remains that the Fed will control the fate of the markets in the near future and the economic data informing their decisions will remain a focal point throughout 2023.

What Happened

Mortgage Demand has now slipped to a 28-year low.

What’s It Mean

The housing market is slowing and slowing fast.

Why do we care

This has been one of the biggest areas of concern regarding inflation. Interest rate hikes initially did not hinder the real estate environment at all, however, now it seems to be having a significant impact. The next step in a natural economic cycle would be for prices to begin declining to meet decreasing demand. We’ll be watching for this to be a final blow for the inflationary data the Fed relies so heavily on. In our view, this is just around the corner and worth watching for.

Georgia On Our Minds!

Last week we introduced you to our newest team member, Georgia. Unfortunately, while Kline sure has a nice ring to it, I personally apologize for relaying her last name incorrectly.

While I could blame autocorrect or a memory lapse, allow me to publicly apologize and once again introduce you to Georgia Kilgore, NOT Georgia Kline!

 

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