Wait – now NVIDIA's stock price is the reason the Fed isn't cutting rates????
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[i][b]Photo above[/b] - aerial view of NVIDIA's new "Voyager" office campus, in Santa Clara, California. The company is now being scapegoated as a reason why the Fed won't cut interest rates . . . [/i] Disclaimer – the link below is NOT attributed to the views of Federal Reserve chairman Jerome Powell. It's a bunch of financial reporters who claim they have background remarks from unnamed Federal Reserve sources, saying [i]“don't expect interest rate cuts anytime soon.” [/i] Okay . . . what's the problem THIS time, guys? I thought inflation was licked. At least core inflation, which excludes food, shelter, and gasoline. Those things actually make up about 60% of my monthly spending, so I'm not sure how you can calculate inflation without them. Never mind . . . the Fed evidently has added the S&P 500 index to its inflationary watchlist. This is what reporters seem to be saying. Read the link if you don't believe me.
When people crow that “[i]the S&P 500 hit a new all-time high[/i]” last week, what they really mean is that NVIDIA (planet Earth's hottest AI stock) is at an all-time high. In fact, NVIDIA shares are up 250% over the past 12 months. Wait - it gets better: NVIDIA is up about 2,000 percent since the 2020 election. The election of course had nothing to do this. Investors just want to jump on the bandwagon, because AI is the next big thing. Like electric cars which turned out to be too expensive to buy without tax subsidies, crypto currencies, lithium ore (down 80% since it peaked), and Covid 19 vaccines. Don't despair - there actually ARE some “next big things” which are doing well. Apple, Microsoft, Google . . . they all hit new highs in 2023. After being down 50% in 2022. Sure hard to tell what the next big thing is going to be, ain't it? It wasn't US Treasury Bills. Those suckers sunk like a stone when the Federal Reserve tripled interest rates.
So now the Fed (on deep background) is denying a rate cut is coming anytime soon. Maybe this is the truth, or maybe they're just trying to talk the market down. Either way, it's a problem. Home buyers and builders need lower rates. Carmakers too. Even solar panel makers. So, if there's a legitimate reason to keep rates high, I'd like to hear what it is.
But if the Fed is simply trying to talk the market down, that might be worse. It's only been a few weeks since Jerome Powell (Fed chairman) made an emergency visit to CBS' 60 minutes. Because the stock market was slumping. Powell assured everyone that rate cuts would come sooner or later. And that the National Debt was way too high. Hmmm . . . was he hinting at a connection, and that rate cuts would reduce the interest expense on the $34 trillion national debt? Who can tell? But we do know this: Powell told TV viewers that the Fed doesn't care about the stock market. He looked right into the camera and said that, with a straight face. And today somebody at the Fed is telling Wall Street reporters that interest rates are going to stay high, to punish us because the S&P 500 index and NVIDIA doing so well.
This is called cognitive dissonance. Both can't be true at the same time. Can you set the record straight, Mr. Powell? Homebuyers and people on apartment rental waiting lists want to hear more.
@SusanInFlorida I don’t currently own any but am considering to buy some I the near future when I have available cash. The amount I purchase will depend on how much cash I have but will likely to be about 10 shares.
I’m hoping that Nvidia does a share split in the not too distant future.
@justanothername at $800 a share currently, a lot of investors are hoping for a split before buying in. Perhaps 10 for 1, to make the share price only $80?
